Mitie losses top £100m
Facilities management contractor Mitie has reported a half-year loss of more than £100m before tax.
The property maintenance company blamed the loss on rising labour costs reductions in higher margin project work.
The Mitie board has also decided to quit the domiciliary healthcare market in a major strategy shift. A write off of £107.1m of goodwill in this business substantially accounted for the losses. “This has been a difficult decision, but it is the right option for the long-term future of Mitie and its strategic focus on FM,” the board said.
For the six months to 30th September 2016, Mitie made a pre-tax loss of £100.4m on revenue down 2.6% to £1,094m. Operating profit was down 39% to £35.4m.
The company said: “Currently we are in the middle of one of the periods where there is a lot of change happening. Growth in the UK economy is low and wages are rising because of increases to the minimum wage, pension costs and apprentice levies. This, and the resulting differentials in pay, will cause labour to be more expensive in the UK over the coming years. Together with an anticipated increase in the costs of imported goods and services we are likely to see price rises in a range of markets in the future. This period of transition in the UK economy will create pressures for our clients but our evolving outsourcing model will generate more opportunities.”
As previously reported, Baroness Ruby McGregor-Smith steps down as chief executive on 12th December 2016 after almost 10 years in the role and will be replaced by Phil Bentley, formerly of Cable & Wireless and British Gas.
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This article was published on 21 Nov 2016 (last updated on 21 Nov 2016).