Shares in FTSE 250-listed waste management outsourcer Mitie opened over three per cent higher at 297p this morning after it heralded a year of "significant progress" with rises in revenue, profit and earnings.
In its results for the year ending 31 March, Mitie reported a 5.8 per cent rise in revenue to £2.3bn as operating profit rose 0.9 per cent to £128.6m.
Operating profit at Mitie's healthcare arm fell 61.4 per cent to £4.9m from £12.7m, and 27.8 per cent at its property management business, from £14.4m to £10.4m.
Earnings per share at the group came in at 11.7p - a 6.4 per cent rise on last year's figure.
Why it's interesting
Mitie was forced to issue a profit warning to investors last month, with its home care and social housing businesses strained by pricing pressures in the local government sector. A number of homecare branches have been closed or streamlined, while the company has withdrawn from many areas not considered to be economically viable.
Cuts to local government budgets have affected a number of other outsourcers, such as Mears and Interserve which have both moved into the market.
Mitie said it now expects a shift towards more long-term contracts. Today it told investors it was "confident of the longer-term growth drivers in the homecare market, which is valued at £17bn". It added: "Like other developed nations, the UK has an ageing population, with the number of over 85s expected to double in the next 25 years."
What Mitie said
Chief executive Ruby McGregor-Smith said:
We see considerable opportunities across our markets, to provide clients with higher quality, innovative services that save them money. We also see this as a positive environment in which to start and grow business, and we plan to back entrepreneurs to do this through our £20m "Mitie Model" entrepreneurial fund.
We are focused on generating profits backed by cash, maintaining strong margins and growing the dividend. With a substantial order book and sales pipeline, we are now well placed to deliver good growth.
Homecare and housebuilding struggles are undoubtedly a concern, but did not cause enough damage to halt profit or revenue growth. Other areas of the business, such as the renewal of a five-year £250m contract with Vodafone, remain strong.