21st Nov 2016 07:16
LONDON (Alliance News) - Facilities management and outsourcing firm Mitie Group PLC on Monday said it swung to a substantial pretax loss for the first half of its financial year after it decided to write off the value of its Healthcare business.
Mitie issued a profit warning in September driven by a range of factors, including lower high-margin work in its facilities management business and the impact of a local authority budget squeeze on its units handling maintenance work and homecare services for local councils.
Its Healthcare unit handles the homecare work and, on Monday, Mitie said it has decided to withdraw from the domiciliary healthcare market and placed its business serving this sector under review. As a result, it has written down all goodwill and intangibles related to the business.
This decision has meant the group has booked a GBP128.1 million one-off charge, mostly on the Healthcare division, for the half to the end of September. This pushed it to a pretax loss of GBP100.4 million in the period, compared to a GBP45.1 million profit a year earlier.
The group also trimmed its dividend to 4.00 pence from 5.40 pence a year prior, a reflection of the problems it currently faces.
Revenue in the half was down 2.6% year-on-year to GBP1.09 billion from GBP1.12 billion a year prior, hit by delays in contracts being awarded in the UK due to economic uncertainty in the country. Mitie said it did win a number of new facilities management contracts in the half, however, including with UK railways operator Network Rail and the Scottish Police Authority.
The company said its sales pipeline stood at GBP9.3 billion, up from GBP9.1 billion in March, though its order book shrunk to GBP7.7 billion from GBP8.5 billion in March.
"The first half of this year has been difficult but we are not alone in facing significant macroeconomic challenges. The steps we have taken to counter these impacts include the restructuring of both frontline and support functions across FM and the decision to withdraw from the domiciliary care market. Second half performance is expected to improve with our new operating model as we adapt to market conditions," said Ruby McGregor-Smith, Mitie's outgoing chief executive.
McGregor-Smith will leave on December 12 after a decade at the helm of Mitie and will be replaced by Phil Bentley, the former chief executive of British Gas.
By Sam Unsted; [email protected]; @SamUAtAlliance
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