- Operating profit before other items of £128.9m, generating a 5.8% margin (2015: £128.6m, 5.7%)
- Operating profit has grown 100.9% to £112.5m, generating basic EPS growth of 119.6%
- Strong dividend growth of 3.4% to 12.1 pence per share
- Cash conversion of 75.2% (2015: 126.5%); five-year average 100.3%
- Net debt of £178.3m or 1.2x EBITDA (2015: £177.8m)
Good overall progress
- Good performance in Facilities Management business (84% of group revenues); very strong operating profit margin of 6.3%
- Market leading integrated FM business accounts for one-third of revenues and after a successful period of retentions and extensions, have no major rebids until 2019; this underpins the strength of our long-term prospects
- Revenue growth in FY16 was impacted by lower discretionary and project spend, as well as some delayed starts on new contracts
- Recent flow of new FM contract awards will see a return to modest revenue growth in FY17
- Property Management business (13% of group revenues) delivered good growth and substantial margin improvement
- Recovery underway in Healthcare business (3% of group revenues)
Capital allocation
- We prioritise the use of our cash to: invest for organic growth; acquire small bolt-on businesses; grow dividends at least in line with the underlying earnings of the group; and buy back shares to offset share issues under share schemes and the Mitie model
- In addition, we are initiating a buyback programme to return surplus cash to shareholders whilst maintaining modest year-end gearing levels of between 1 to 1.5x EBITDA; this will be up to £20m in the financial year ending March 2017 and will be reviewed annually going forward. Shares purchased will be cancelled
Well positioned for the future
- 82% of 2016/17 budgeted revenue secured (prior year: 85%)
- Sales pipeline buoyant at £9.1bn (2015: £9.7bn) and order book remains strong at £8.5bn (2015: £9.0bn)
- We remain the number one FM provider in the UK and continue to see a good range of opportunities, particularly in the private sector where our partnership model and technology-led approach sets us apart
Ruby McGregor-Smith CBE, Chief Executive of Mitie Group plc, commented:
“Mitie has had a good year, with strong margins and profits. I am delighted that the dividend is increasing for the 27th consecutive year.
“We are a pure services business with a strong position in our chosen markets. We operate long-term contracts for a blue chip client base and are well diversified across the private and public sectors.
“Our business model is flexible, resilient, low risk and has proven to be responsive to client needs and market conditions over three decades.
“We continue to see a range of good outsourcing opportunities across our key markets and anticipate modest growth in the coming year. We remain positive about the group’s prospects for the future.”
* Other items are described in Note 3
Mitie will be presenting its preliminary results for the year ended 31 March 2016 at 09.30 on Monday 23 May 2016. A live webcast of the presentation will be available online at www.mitie.com/investors at 09.30. The recorded webcast of the presentation and a copy of the accompanying slides will also be available on our website later in the day. Mitie expects to publish its Annual Report and Accounts (containing financial statements that comply with IFRS) in June 2016 and copies will be available from Mitie’s registered office and on its website www.mitie.com. Mitie’s Annual General Meeting will take place at 11.30 on 12 July 2016.
Legal disclaimer
This announcement contains forward-looking statements. Such statements do not relate strictly to historical facts and can be identified by the use of words such as ‘anticipate’, ‘expect’, ‘intend’, ‘will’, ‘project’, ‘plan’, and ‘believe’ and other words of similar meaning in connection with any discussion of future events. These statements are made by the Directors of Mitie in good faith based on the information available to them as at 23 May 2016 and will not be updated during the year. These statements, by their nature, involve risk and uncertainty because they relate to, and depend upon, events that may or may not occur in the future. Actual events may differ materially from those expressed or implied in this document and accordingly all such statements should be treated with caution. Nothing in this document should be construed as a profit forecast.
Except as required by law, Mitie is under no obligation to update or keep current the forward-looking statements contained in this report or to correct any inaccuracies which may become apparent in such forward-looking statements.
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