Given the ongoing troubles at Serco (SRP), investors may breathe a sigh of relief upon viewing the latest financial results from rival outsourcing company Mitie (MTO). Turnover increased for the 27th year in a row, with organic revenue growth coming in at a respectable 5 per cent, led by a good showing at the core facilities-management business. Importantly, margins held steady at around 6 per cent, which helped the group deliver low double-digit earnings growth.
Profits nevertheless continue to be suppressed by supposedly exceptional losses. These stemmed firstly from the group's ongoing withdrawal from engineering-construction services, secondly from the decision to axe a loss-making segment of the asset-management business. Mitie’s management told us these businesses are now expected to have very little impact on the group. Finance director Suzanne Baxter instead plans to hone in on the fast-growing healthcare market, where she sees "an opportunity for double-digit growth".
One thing that could slightly unnerve the market is Mitie’s lower order book, which fell to £8.7bn from £9.2bn. Analysts from UBS nevertheless point out that 84 per cent of the current year’s budgeted revenue is already secured, roughly comparable to the situation a year ago. They expect underlying EPS of 26.3p this year, up from 23.6p.
MITIE (MTO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 318p | MARKET VALUE: | £1.2bn | |
| TOUCH: | 317-318p | 12-MONTH HIGH: | 346p | LOW: 246p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 109p* | NET DEBT: | 46% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 1.7 | 80 | 16.9 | 7.8 |
| 2011 | 1.9 | 87 | 18.6 | 9 |
| 2012 | 2.0 | 95 | 20.5 | 9.6 |
| 2013 | 2.1 | 56 | 11.8 | 10.3 |
| 2014 | 2.2 | 68 | 13.4 | 11 |
| % change | +5 | +21 | +14 | +7 |
Ex-div: 25 Jun Payment: 6 Aug *Includes intangible assets of £539m, or 147p a share | ||||
