It has become de rigueur to blame corporate underperformance on the upcoming EU referendum. Mitie Group (MTO) links increased anxieties over the vote with the decision by some clients to "either delay or cancel projects". It's difficult to say whether this was responsible for the fall-away in full-year revenues that was foreshadowed in March, although the subsequent markdown now seems rather severe given the modest extent of the pullback. And although operating profits were flat once you disregard last year's exceptional charges, Mitie needn't have bothered with the Brexit shtick; these were actually a solid enough set of results considering recent changes in spending patterns by local authority clients.
Management now anticipates a return to modest revenue growth through to next March, due to a "recent flow" of facilities management (FM) contract awards. That's significant given the business segment accounts for 84 per cent of the top line. Cash conversion remains robust, although the group allocated additional working capital in support of a small number of key rebids and contract extensions. Mitie now has no major contract rebids until 2019.
UBS anticipates adjusted profits of £133m for the March 2017 year-end (from £129m in FY2016), leading to EPS of 25.7p.
| MITIE GROUP (MTO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 274p | MARKET VALUE: | £978m | |
| TOUCH: | 274.2p-275p | 12-MONTH HIGH: | 341p | LOW: 237p |
| DIVIDEND YIELD: | 4.4% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 116p* | NET DEBT: | 43% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 2.00 | 94.5 | 20.5 | 9.6 |
| 2013 | 2.12 | 56.3 | 11.8 | 10.3 |
| 2014 | 2.21 | 68.4 | 13.4 | 11.0 |
| 2015 | 2.27 | 41.5 | 9.7 | 11.7 |
| 2016 | 2.23 | 96.8 | 21.3 | 12.1 |
| % change | -2 | +133 | +120 | +3 |
Ex-div: 23 Jun Payment: 4 Aug *Includes intangible assets of £532m, or 149p a share. | ||||
