Mitie (MTO) saw its adjusted operating profit rise by 5.4 per cent to £33m in the first half of the year, boosted by its detention and escorting services contract with the Home Office and last year’s acquisition of Vision Security. But further growth was hindered by lower margins that were secured on certain contract renewals. This includes the extension of its integrated facilities management contract with Lloyds Banking (LLOY), which has shifted to a ‘payment-by-results’ arrangement.
As ‘Project Helix’ comes to an end, the group has mobilised the second phase of its transformation programme. Dubbed ‘Project Forte’, it aims to modernise the technology infrastructure of the technical services business, the largest contributor to group adjusted operating profit. Targeting £10m-£15m of net run-rate savings by the end of the 2022 financial year, it will cost £30m to deliver. Restructuring costs during the period came in at £7.2m.
The outsourcer has cautioned that full-year revenue will be held back by broader economic uncertainty impacting its variable works and projects business – this is in addition to ongoing industry challenges of rising labour costs and margin pressures. Adjusted operating profit growth is expected to be in the mid-single digits.
Broker Peel Hunt forecasts adjusted pre-tax profit of £70.4m and EPS of 15.7p for the full year, rising to £78.3m and 17.9p in 2020.
| MITIE (MTO) | ||||
| ORD PRICE: | 131p | MARKET VALUE: | £481m | |
| TOUCH: | 130-132p | 12-MONTH HIGH: | 170p | LOW: 106p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 11p* | NET DEBT: | £147m** | |
| Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 0.97 | 12.0 | 2.5 | 1.33 |
| 2019 | 1.08 | 14.6 | 3.1 | 1.33 |
| % change | +11 | +22 | +24 | - |
| Ex-div: | 19 Dec | |||
| Payment: | 4 Feb | |||
| *Includes intangible assets of £331m, or 90p a share, Excludes lease liabilities of £89m | ||||
