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Mitie home care probe hit by delay amid damaging allegations over treatment of staff: Mitie's investigation into its home care division is taking longer than expected as the firm tries to get to the bottom of damaging allegations about the way it treated staff
Mitie issues profit warning: Outsourcing group Mitie [LON:MTO] issued a profit warning as increased competition for local authority housing maintenance contracts and a tough homecare market meant profits are now lower than expected, sending shares more than 8% lower at one point. The FTSE 250-listed company also said in its pre-close update that the cost of closing its mechanical and electrical engineering business could reach a maximum of £16 million during the year to the end of March Broker Peel Hunt expects overall pretax profits of £95.2 million on revenue of £2.3 billion, giving 20p in earnings per share for the year to the end of March. Market consensus in November last year was for £118 million in pretax profits. The company still has a stable and cash-generative business in long-term maintenance contracts with blue chip clients such as Lloyds Banking Group and hospital trusts. These contracts generate about 85% of group revenue. However, growth could be slow as the half year results showed the order book was down to £8.5 billion from £8.7 billion. Mitie should be able to ride out this tough trading over the long term, but the shares, on 13 times forecast earnings and paying a prospective dividend yield of 4%, hold few attractions. We said avoid the shares back in August 12, at 305.8p, since when they have fallen by 9%. The update showed few signs of a turnaround, so the recommendation remains — avoid. Mitie at 276p-16.4p. Questor Says “Avoid”.
Next few days will tell whether MTO underwent a false breakout from its 200 day MA.
Today MTO is breaking its 200 day MA. Good news for buyers, but it also has to break major pivot high at 304p to make real headway. Bullish.
Almost at its 200 day MA and filling the gap from 17th Novemeber. RSI and Stochastic are high though and it could have a pullback before going higher. Wait and see for me.
Outsourcing woes laid bare at Mitie: Outsourcing group laid bare the challenges facing the U.K. outsourcing sector as it slumped to a first-half loss, sending shares 4% lower. Mitie has expanded into construction projects in addition to building maintenance for clients such as Lloyds Banking Group and local councils. The company said it was now exiting loss-making parts of the business to focus on the core building maintenance operation. There are two parts of Mitie’s business that are proving to be very painful at the moment. Firstly, it is exiting from its loss-making mechanical and electrical engineering construction business; secondly, it is drastically cutting back its asset management arm, where it built energy-from-waste plants. The company said that as a result of “significant deterioration” in the financial performance on these contracts it would book £45.7 million of charges during the first half. Questor thinks this largely comes down to chasing revenue growth by bidding too cheaply to win the work in the first place. In terms of the balance sheet, debt levels are rising. Net debt increased to £223.8 million at September 30, from £221.8 million at the same stage last year, against a net asset value of £373.2 million, or 110p per share. Market consensus is for revenues to edge up to £2.25 billion in the current year, giving adjusted pretax profits of £118 million, and earnings per share of 24.9p. That leaves the shares trading on 11.7 times forecast earnings and offering a prospective dividend yield of 4%. However Questor is uncomfortable with the gap between adjusted and reported pretax profits and would rather wait to reassess the situation once the troublesome businesses have been fully exited. We said avoid the shares back in August 12, at 305.8p, since when they have fallen by 9%, the recommendation remains, avoid. Mitie at 276.7p-14½p Questor Says “Avoid”.
I reckon this will head south - no major wins or decent sales focus at present
Avoid Mitie until it exits loss making business: Outsourcing group Mitie offers investors a steady dividend income backed by excellent revenue visibility, but Questor remains cautious. Mitie said it had made a “positive start” to the new financial year. The outsourcer has extended its £250 million contract with Vodafone, looking after the mobile phone group’s 1,500-strong U.K. property portfolio, for another five years. Signing long-term contracts to provide cleaning and general maintenance for buildings gives Mitie excellent visibility on its future revenues. The company said 90% of the budgeted revenue for the current financial year had been secured by June 30, a slight improvement from the 89% secured at the same stage last year. However, Mitie’s contracts are not risk-free. The company, which also installs wiring and lighting inside buildings, has to estimate the costs of delivering its service when bidding for work. There are two parts of Mitie’s business that are proving to be very painful at the moment. The company is exiting from its loss-making mechanical and electrical engineering construction business; and is drastically cutting back its asset management arm, where it built energy-from-waste plants. In terms of the balance sheet, the company is relatively sound. Management said the financial position at June 30 was similar to that reported at March 31, which Questor takes as net debt of around £187 million, against a net asset value of £401 million, or 110p per share. Questor is uncomfortable with the amount of exceptional costs recently and would rather wait to reassess the situation once the troublesome businesses have been fully exited. Mitie at 305.8p-0.7p Questor Says “Avoid.”
going nicely anywhere between 3.50-4.00 by 2013
http://www.professionalsecurity.co.uk/news/case-studies/bae-systems-contract/? BAE Systems contract A three year security contract with BAE Systems, the defence, aerospace and security manufacturer, has gone to MITIE. The contract will see the facilities management company working with the Workplace Services team in BAE Systems’ Real Estate Solutions, whose responsibilities include providing security services to about 7,000 employees on 22 sites across the UK. The contract firm will be responsible for physical security, ensuring all needs are met from incident management, to manned guarding and systems monitoring. The outsourced services firm says that it was awarded the contract because of its technology-led approach based on MiTec, its technology centre based in Northern Ireland which provides remote security, its ability to operate through its MiTSM and eLearning platforms, and its specialist knowledge of the critical national infrastructure and defence sector. Bob Forsyth, pictured, managing director of MITIE’s total security management business, said: “It’s exciting to be working with like-minded clients like BAE Systems who are embracing the integrated approach to security. We’re really looking forward to developing our partnership over the next three years.” Colin Efford, Head of Delivery for Workplace Services, added: “We were really impressed with MITIE’s joined-up thinking to technology and the ‘one team’ ethos. MITIE’s systems will give us true visibility of the contract, enabling us to reduce costs and take an output specification approach.”
We are back in business.... £3 before Christmas?
Ex dividend today so fall is roughly in line with the dividend (5.7 pence)
Are we going to see £3 per share again this year? Mitie has been doing really well and I hope we will see £2.9 + p/s sooner than later! Best luck to all holders.
The UK economy has not improved and many companies in the private sector continue to tread water at best. Faced with tough market conditions and an ever-increasing need to cut costs and improve efficiency, the outsourcing of non-core services is an attractive option for many of these companies. Central government and local authorities are also cutting costs wherever possible and the public sector continues to offer significant opportunity. This is particularly true in the justice, social housing, education and health sectors, all areas where we are active. Outsourcing is an industry that grew out of response to recession, and has continued to evolve in response to economic pressures. According to a report published in November 2012 by Oxford Economics for the Business Services Association, the total value of outsourcing in the UK is currently estimated to be in the region of £199 billion, with a 64%-36% split in favour of the private rather than the public sector. This equates to almost 7.5% of the total economy-wide output, but perhaps more importantly, the report found that the outsourced service sector pays 9.5% of government tax revenues and employs 10.5% of the UK workforce.
We have made significant progress as a result of the key strategic steps taken during the year, and are in a strong position to grow in our chosen outsourcing markets. Our focus remains on achieving organic growth in our primary outsourcing markets in the UK, supplemented by selective acquisitions and the development of our integrated business model overseas. Financially robust, we have a clear strategy for the development of our business and are confident that we will continue to build on our strong track record of sustainable, profitable growth.
Strong headline financial performance · Organic headline revenue growth of 5.0% · We are exiting our cyclical mechanical and electrical engineering contracting businesses, which generated margins well below the group average - business closure costs of £22.1m were incurred, with no further material costs expected · Excellent conversion of EBITDA to cash of 125.7% (headline cash conversion is 108.7%), well above stated long-term KPI of 80% (2012: 83.7%) · Net debt at 31 March 2013 of £192.2m or 1.8x statutory EBITDA (2012: £106.9m, 0.8x EBITDA) · Total dividend for the year up 7.3% to 10.3 pence per share (2012: 9.6 pence per share)
looks like decent hold in overbought market...rel value if you were
But the firm added that going forward, it would actively seek to sell off cyclical businesses which were unable to reach margin targets in the long term. "Over the last five years we have seen fundamental changes in our sectors which in some cases we believe are structural," Mitie said. "Whilst we see significant opportunities in many areas - for example, within energy and integrated facilities management as well as healthcare - we believe some other areas will continue to be challenged."
Outsourcing firm Mitie said it was performing in line with management expectations as strong organic growth was driven by new and expanded contracts. It continues to expect total revenue growth to be higher in the second half than seen in the first. This confidence was down to both organic revenue contributions, including its facilities management contract with Lloyds Banking Group, and its healthcare acquisition, Enara Group, the firm said. Mitie said despite on-going weak economic conditions affecting its more cyclical markets and some delays in energy infrastructure projects, the company remained very positive about the range of outsourcing opportunities across its key markets. "We are confident that we will continue to build on our long track record of sustainable profitable growth," the statement said.
MITIE Group: Oriel Securities reduces target price from 330p to 315p, add rating unchanged.
Broker comment Seymour Pierce Analyst Caroline de La Soujeole is bullish on Mitie and commented: "In light of today's statement, we leave our full year 2013 forecasts unchanged, expecting adjusted pre-tax profits of £115.5m (capital IQ consensus £114.6m). The shares are trading on an undemanding rating of 11.8 times full-year 2013 earnings falling to 10.5 times in full year 2014 and a yield of 3.5%. In our view this rating fails to reflect the fact that Mitie is now evolving in areas with higher growth and higher margin potential. We reiterate our 'Buy' recommendation with a 330p target price."
Net finance costs for the first six months of the year were £4.1m (2011: £3.7m), with the increase reflecting the increased costs of finance of the group following the refinancing of its banking facilities in 2011. Leverage at the period end remained low with net debt at £132.9m (2011: £119.3m), which represents one times earnings before interest, tax, depreciation and amortisations (EBITDA) on a rolling 12-month basis. Following the acquisition of the Enara Group on October 9th it expects gearing to be maintained at less than two times EBITDA at March 31st 2013. Ruby McGregor-Smith CBE, Chief Executive of Mitie said: "We have made this progress in the face of a tough economic climate and a difficult macroeconomic outlook, with continuing challenges within our more cyclical markets. However, we remain positive about the range of outsourcing and energy services opportunities across our key markets and continue to see a growing order book as well as a strong pipeline of sales opportunities. "We expect total revenue growth to be higher in the second half as a result of both the organic revenue contribution from new and expanded contracts including Lloyds Banking Group, and the acquisition of Enara." She continued: "We are confident that we will continue to build on our long track record of sustainable, profitable growth." The interim dividend was up 4.5% to 4.6p (2011: 4.4p).
FTSE 250 outsourcing group Mitie appears to be suffering some pressure on margins, which coupled with higher costs has resulted in disappointing interims. Although revenues grew 5.6% to £1,026.6m (2011: 971.7m) in the six months ended September 30th 2012, pre-tax profits fell 12.9% to £37.7m (2011: £43.3m) after the cost of sales climbed from £818.7m to £874.8m. The operating profit margin before other items was down at 5.2% (2011: 5.3%). Looking at it by division, its facilities management business increased margins to 6.8% (2011: 6%), margins at its technical facilities management business were flat at 5%, while its property management business saw margins drop to 3.1% (2011: 4.6%), and at its asset management business margins plummeted to minus 8.2% (2011: 1.2%). In the first half of the year Mitie's order book increased by £0.4bn or 4.7% to £9.0bn (March 2012: £8.6bn). Its sales pipeline currently stands at £10.5bn (March 2012: £11.2bn). Looking ahead, revenue visibility is good, with 98% of budgeted revenue for 2012/13 secured (prior year: 97%), and 72% of forecast revenue for 2013/14 secured (prior year: 68%).