It is not hard to see why shares in outsourcer Mitie (MTO) fell on release of these weak first-half results. Tightening government spending on homecare services meant the group was forced to shut some of its healthcare branches, while margins for the 'hard' facilities management (FM) segment, which provides maintenance and specialist services, took a hit as some rebid contract work came with less favourable terms. Strip out the effect of contract provisions incurred last year and the group's operating profit fell 9.5 per cent to £58.1m.
There were some brighter spots, notably in the 'soft' FM business, which provides services including cleaning, waste management and security. Operating profit grew 5.2 per cent to £42.4m, while new business included security contracts with E.ON and Belfast City Airport and cleaning contracts with Westfield Shopping Centre and Santander.
Broker Investec Securities expects adjusted EPS of 25p for the March 2016 year-end, up from 24.2p in 2015.
MITIE GROUP (MTO) | ||||
---|---|---|---|---|
ORD PRICE: | 314p | MARKET VALUE: | £1.14bn | |
TOUCH: | 313-314p | 12-MONTH HIGH: | 341p | LOW: 264p |
DIVIDEND YIELD: | 3.8% | PE RATIO: | 15 | |
NET ASSET VALUE: | 106p* | NET DEBT: | 57% |
Half-year to 30 Sept | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2014 | 1.10 | -1.3 | -1.0 | 5.2 |
2015 | 1.12 | 45.1 | 9.9 | 5.4 |
% change | +2 | - | - | +4 |
Ex-div: 17 Dec Payment: 1 Feb *Includes intangible assets of £533m, or 147p a share |