Shares in FTSE 100 outsourcing group Mitie (LSE:MTO) fell as much as 5% in early trading after it reported a £1.3m first-half loss.
Mitie grew headline revenue and profit before tax by 4.8% and 3% respectively, but charges to the tune of £58.3m incurred exiting its loss-making businesses drove the company into the red. The majority of these charges due to “significant deterioration” in the value of remaining contracts in the design and build element of the Asset Management business, which the company is trying to exit.
The mechanical and electrical engineering construction business lost £6.9m over the period, and is expected to lose between £11m and £15m before it is fully disposed of by the end of the year.
Including the £58.3m announced today, Mitie has reported large exceptional items over the last three accounting periods totalling £155m, a considerable sum for a company with a market cap of £1bn.
However, with an £8.5bn strong order book and 74% of budgeted revenues for next year already secured, management remain confident. CEO Ruby McGregor-Smith CBE said:
“We have significantly derisked our group by finalising the exit from our loss-making businesses,” noting the group’s “order book and sales pipeline are substantial.”
Looking forward, McGregor-Smith said: “We are in a good position to deliver growth and look ahead with confidence.”
This confidence is reflected in the 5.2p interim dividend, a 6.1% hike over last year’s pay-out.
Before exceptional costs Mitie reported EPS of 12p for the first half. If the company can match that in the second half it trades on a forward PE of under 12, while yielding nearly 4%. Furthermore, Mitie has an incredible dividend record, upping its payment every year since 1999.
