Struggling outsourcer Mitie (MTO) enjoys a share price lift of over 9% to 269.4p despite reporting a loss for year ending 31 March 2017. This suggests the market was probably expecting a far worse set of numbers than those revealed.
Some of the lowlights of Mitie’s year include selling its homecare business for just £2.00 in the beginning of March this year. It bought the business, named Enara, for £112m five years previously.
To add insult to injury, Mitie has had to pay the purchaser, private equity firm Apposite Capital, almost £10m to take the business off its hands to fund trading losses.
The FTSE 250 company also issued three profit warnings in the last year so perhaps it is understandable that investors were preparing for the worse.
Mitie’s adjusted revenues are up slightly, reaching £2.14bn in what recently appointed chief executive Phil Bentley describes as ‘a challenging year’. An accounting review resulted in £34.5m of ‘prior period adjustments’ taking the level of one-off items to £88.3m. This led to a reported loss of £42.9m.
Light at the end of the tunnel
Joe Brent, an analyst at Liberum, updated Mitie to ‘hold’ from ‘sell’, saying that the ‘new leadership and new strategy will be delivered quickly’. He adds that managment has exhibited ‘huge energy’ in transforming the business and could do so relatively quickly.
Brent also says that the new unitary structure of the management team should yield £10m of cost benefits in 2018 and £15m in 2019.
Bentley says in the results statement that he is ‘encouraged that our order book has held up and our pipeline is growing’. It’s too early to say what impact the election result will have on Mitie. Some of its new initiatives could benefit the company.
‘We can see that Mitie is well positioned to take advantage of its position in facilities management industry to be one of the pioneers in the Connected workspace, which uses real time data to improve the facilities management offering. By creating data lakes and applying data analytics, it is possible to help with space and energy management, and move from reactive to predictive maintenance,’ says Brent.
The company seems to have taken measures to address the difficulties it was facing and may be positioned well for the future. Whatever form it takes.
