A strong performance in the first six months of the year reflects good underlying momentum across all divisions, the facilities management (FM) contractor Mitie said on release of the plc’s results for the first half of 2022.
Security guarding and related security is part of the ‘business services’ arm of the plc. Security revenue was down 30 per cent, from £572m to £398m, due squarely to the end of covid-only work, ‘short-term, higher margin’. Similarly cleaning revenue was down 4pc. Overall, revenue in business services fell 24pc, from £775m to £592m. Business Services mobilised three significant contracts in the first quarter; for BAE Systems, property developer Hammerson and (on the security side) John Lewis Partnership and the high street discount retailer Poundland.
Phil Bentley, Group Chief Executive, pictured, said: “New contract wins, recent acquisitions and pricing have more than replaced the short-term revenue boost from COVID-related contracts in the first half of last year. Our strategy is delivering underlying revenue growth and cost savings from our margin enhancement initiatives, whilst inflationary pressures are being carefully managed.
“In the first six months of the year we have invested £19m in three fast growing, high margin businesses and, looking forward, we continue to see opportunities to invest in future growth through ‘bolt-on’ acquisitions. We returned £70m to shareholders via the share buyback programme and the FY22 final dividend, and are increasing our interim dividend to 0.7 pence per share.
“As always, we owe our 68,000 colleagues huge thanks for their hard work across all our contracts, including the mobilisation of a record number of new contracts in the first half of this year. We continue to be focused on ensuring Mitie is an ‘employer of choice’ by providing a market leading employee benefits package. With the current cost-of-living crisis, a number of initiatives focused on supporting our lower paid colleagues are being launched in the second half.
“Although inflationary pressures will continue into the second half, historically our second half performance is stronger, with increased revenues from projects, seasonal winter work, and the ramp-up of margin enhancement savings coming through as the year unfolds. We therefore expect to deliver operating profit before other items of at least £145m for FY23 [financial year 2023].”
The report said that acquisition of Emma Shaw’s consultancy Esoteric had reinforced Mitie’s position as ‘the UK’s leading intelligence and technology-led security business’. On that note of security using intel, the report said that Mitie Intelligence Services (MIS) is proving to be a ‘significant advantage in winning and retaining contracts in multiple sectors’, notably retail. As for retail, the report hailed the start in June of a data sharing agreement between major retail clients and the police’s National Business Crime Centre, for tackling organised and prolific crime gangs, and as a forum more generally.
As for the Protect Duty, whereby venues and hundreds of thousands of PALs (publicly accessible locations) would have a legal responsibility to protect from acts of terror, the report said that MIS ‘is well positioned to work with customers’ when, the firm anticipates, the Duty becomes law in 2023.
Revenue for the half year was £1,922.9m. That was described as ‘slightly ahead’ of the same period last year, £1,912m; the firm noted a loss of revenue from ‘short-term COVID-related’ contract work such as managing covid testing centres and quarantine hotels. As for strategy, the company said that it was ‘targeting mid to high single-digit revenue growth’ (inclusive of inflation), and operating profit margins of 4.5 per cent to 5.5pc over the medium term (actual operating profit margins for the first half of the year was 3.5pc).
On the ‘decarbonisation’ side, although such decarbonisation business is still small, the firm sees public and private sector clients’ ‘net zero’ aims as a way to gain and retain contracts. The firm said it had contractors from existing customers, such as Network Rail and Amazon, for electric vehicle charging and solar panels.
The company said that it has launched a £10m ‘Winter Support’ package of new benefits, for ‘assisting with the current cost of living crisis’, such as one-off bonuses, the removal of fees for using salary finance and retail discounts.
