Two years into its transformation programme, there are tentative signs of progress at Mitie (MTO). Exceeding its self-admittedly conservative pre-close guidance, adjusted operating profit increased by 6 per cent to £88.2m for FY2019.
But in management’s own words “there remains more to do”. With contract renewals during the year having lower initial margins, this is expected to have a dilutive effect on operating profit growth in FY2020. Although the overall order book remained broadly flat at £4.1bn, in the group’s largest division, engineering services, the order book contracted by 11.6 per cent. This reflects a broader pattern of new contract wins and renewals being offset by the unwinding of existing contracts.
Exceptional costs of £38m (albeit lower than last year’s £82.1m) include £15.1m in restructuring costs from “Project Helix” and a £20m provision for pension debt. Targeting efficiencies in engineering services, the implementation of “Project Forte” is expected to cost a further £30m.
Analysts at Peel Hunt have revised their forecasts upwards, anticipating adjusted pre-tax profits of £79.4m and EPS of 17.4p in 2020.
| MITIE (MTO) | ||||
| ORD PRICE: | 149.2p | MARKET VALUE: | £546m | |
| TOUCH: | 149-149.8p | 12-MONTH HIGH: | 211p | LOW: 106p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 18 | |
| NET ASSET VALUE: | * | NET DEBT: | £141m | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 2.27 | 41.5 | 9.7 | 11.7 |
| 2016 | 2.15 | 91.9 | 20.1 | 12.1 |
| 2017 | 2.12 | -58.2 | -14.7 | 4.0 |
| 2018** | 2.03 | -15.4 | -4.9 | 4.0 |
| 2019 | 2.22 | 36.4 | 8.3 | 4.0 |
| % change | +9 | - | - | - |
| Ex-div: | 27 Jun | |||
| Payment: | 09 Aug | |||
| *Negative shareholder equity, includes intangible assets of £345m, or 94p a share, **Restated | ||||
