Mitie Group PLC (LON:MTO) saw its shares jump higher in early trading as an improving pipeline and steady order book offset a hefty, but expected full-year operating loss as the struggling outsourcing group took big one-off accounting adjustments.
For the year ending March 31, the FTSE 250 firm posted an operating loss of £42.9mln, a turnaround from a £107.6mln profit a year earlier, after £34.5mln of accounting adjustments, with the operating loss before one-offs coming in at £6.3mln.
READ: Mitie revenues hold steady even as it takes further write-downs
Mitie’s adjusted operating profit still fell to £82.0m, down from £95.2mln a year earlier, due to lower gross margins and increased overheads.
The group’s adjusted revenue was £2.14bn, marginally higher than the previous year’s £2.13bn, with its core Facilities Management business growing 3%
But the firm’s year-end net debt position improved at £147.2mln, against £178.3mln a year earlier, with a lender definition amendment agreed and covenants in compliance
Phil Bentley, who took over as Mitie’s chief executive last December, said: "This has been a challenging year for Mitie. We have reported a loss as a result of the one-off accounting adjustments arising from the Accounting Review.
“We are now focused on the future of the business and I am encouraged that our Order Book has held up and our Pipeline is growing.”
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In early trading, Mitie shares jumped 13.5%, or 33.3p higher to 280.1p.
Analysts at Liberum raised their rating for Mitie to 'hold' from 'sell' with an increased target price of 250p, up from 165p, highlighting the reduced risk the firm that will need a rights issue.
They also increased their 2018 and 2019 earnings per share estimates by 13% and 29% respectively, although they have re-based their dividend forecasts.
The group is not paying a final dividend, meaning the total payout for the year is 4.0p, down from 12.1p a year earlier.
-- Adds share price, broker comment --