Mitie Group shares were up 6.9% to 65.9p in late morning trading on Thursday after the firm announced a 58% climb in revenue to £3.9 billion in FY 2022 against £2.5 billion in FY 2021.
The company attributed its soaring revenue to new contract wins, growth at Interserve Facilities Management and £448 million from flexible rapid-response Covid-19-related contracts.
Mitie Group reported a 184% growth in operating profit before other items of £167 million from £59 million, with a higher operating profit margin of 4.2% against 2.3% the last year, as a result of contributions from its higher-margin, Covid-19 contracts.
The firm’s operating profit after other items rose to £72 million against £4 million the year before, reflecting the company’s stronger performance over the year.
Its legacy Interserve business saw a 90% rate of contract renewal in the term, with cost synergies of £30 million.
Meanwhile, Mitie Group commented that its new contract wins, 90% renewal level and extensions hit approximately £3.8 billion in total contract value, with a book-to-bill ratio of 105%.
“Through our investment-led strategy, Mitie has reached an inflection point earlier than anticipated. We delivered a strong financial performance in FY22, with good underlying growth,” said Mitie Group CEO Phil Bentley.
“The Group is now able to leverage its capital base to focus on long-term value creation, accelerating investment in growth and delivering enhanced shareholder returns.”
“Thanks to the hard work of our 72,000 colleagues, Mitie has recovered strongly from the pandemic, delivering a record £4bn of revenue in FY22, operating profit of £167m and free cash flow of £133m. The Interserve business is performing strongly under our stewardship and our ability to rapidly mobilise flexible contracts led to robust COVID-related business.”
The company announced an average daily net debt fall to £25 million compared to £47 million, with net cash of £27 million at the end of the year and a free cash inflow of £133 million from £25 million in the previous year, as a result of increased profitability and lower working capital.
The Mitie Group also mentioned its acquisitions of £27 million in fast growing, high return business disposals, including the disposal of Mitie Document Management for £40 million.
The company commented that it anticipated mid-to-high single digit revenue growth, along with good operating margin progress, on the back of its recent contract wins from institutions including Netflix, Poundland, Primark and Hammerson, and contract renewals for its military base support in Cyprus, Ascension Islands and the Falklands.
The firm noted an EPS before other items of 9.2p, marking a significant increase from 3.1p linked to a higher operating profit and a lower effective tax rate.
The Mitie Group highlighted its initial £50 million share buyback scheme launched in the year in a bid to increase returns to shareholders, and confirmed a final dividend recommendation of 1.4p per share, with a total dividend of 1.8p for FY 2022.