Shares in formerly unloved facilities management group Mitie (MTO) jumped 8% to a post-pandemic high of 77.4p after the firm posted solid results for the year to the end of March and said the current year would likely be ‘materially ahead of prior expectations’.

Revenues for the last financial year, including share of joint ventures and associates and the Interserve acquisition, grew 19% to £2.59 billion.

Without the Interserve business, which outperformed management expectations, revenues were 1.6% lower, although in common with most firms Mitie saw a marked acceleration in the second half compared with the first half of the year.

Operating profits were down 26% to £63.4 million, impacted by a higher proportion of low-margin income and reduced project work due to the pandemic.

BOLSTERED BALANCE SHEET

However, the firm finished the year with a much-strengthened balance sheet thanks to a £190 million equity raise and the refinancing of £250 million of bank loans. In addition, daily net debt fell significantly to £47 million against £327 million the previous year.

Chief executive Phil Bentley called it ‘a defining year of strategic progress and financial resilience’ and said Mitie now had ‘a clear pathway to deliver growth and sustainable free cash flow’.

Interserve performed above expectations, and Bentley said his team had identified additional cost synergies to take the forecast run rate from an initial estimate of £35 million to £42 million within two years.

‘With some high-quality new contract wins, short-term support to the public sector and additional synergies from the integration of Interserve, we now anticipate FY22 will be materially ahead of our prior expectations’, he added.

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Issue Date: 10 Jun 2021