Monday, 19 September 2016

Mitie (MTO) ... yet another "one-off"

Monday 19th September 2016

Palm to forehead (Thwack!) time for holders of Mitie (MTO, mkt cap £742m) this morning. 

The group has announced a profit warning where: 
"Operating profit for the full year is now expected to be materially below management's previous expectations as a result of a continuation of the pressures experienced in the first half and further one-off costs of organisational change associated with our cost efficiency programmes, which are expected to total up to £10m in the year."
"further one-off costs" ... hmm. Doesn't the fact that they are labelled "further" kind of suggest they may no longer be "one-off"?

In fact, Mitie has a long history of so-called "one-off" or "re-structuring" associated costs. On my maths, these "other items" together with restructuring, acquisition related and exit costs, have cumulatively totaled c. £216m since 2011. Make that c. £226m as of this morning's update. 

However, I fear there will be yet, further, "one-off" costs to come. I continue to believe that Mitie's P&L has been writing profits its balance sheet can't cash. 

Mitie's amounts recoverable on contracts and other trade receivables classed as non-current assets, continued to pile up in the last accounts. Now standing at near £90m from £0 in 2010. 

Mitie amounts recoverable on contracts and other trade receivables classed as non-current assets, £m
Source: Mitie annual reports
Mitie share price
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