UPDATE: Mitie Clarifies Not Being Probed By UK Accounting Watchdog

LONDON (Alliance News) - Outsourcing company Mitie Group PLC late Monday said that it is not ...

Alliance News 20 November, 2017 | 2:36PM
Email Form

LONDON (Alliance News) - Outsourcing company Mitie Group PLC late Monday said that it is not being investigated by the UK accounting watchdog in relation to the preparation and approval of the company's financial statements for the year ended March 31, 2016.

"Although the investigation is into members (ie persons who are regulated by the FRC Financial Reporting Council, including inter alia members of the Institute of Chartered Accountants in England and Wales) and not Mitie itself, the FRC's announcement failed to state this expressly, which has caused a number of market commentators to incorrectly assume that Mitie is being investigated," Mitie said in a clarification statement.

"We can confirm that this investigation is not into Mitie itself and that Mitie is not the subject of any new FRC investigation. We can further confirm that the investigation does not relate to any current directors of Mitie, any former non-executive directors of Mitie or Sandip Mahajan (who recently stepped down from his role as Group CFO)," the company added.

The Financial Reporting Council earlier in the day said it has decided to probe the "preparation and approval of the financial statements for Mitie Group PLC for the year ended 31 March 2016". The new probe is in addition to the FRC's ongoing investigation, announced back in July, in relation to the conduct of Deloitte LLP's audit of Mitie under the audit enforcement procedure.

The regulator also said that its concerns, in a separate probe into the company's 2016 financial year report, have been "satisfactorily addressed". The investigation, which was initiated in October 2016, related to the impairment testing of the goodwill allocated to the company's healthcare unit.

Mitie Monday morning published its results for the first half of 2018 financial year, which revealed a drop in profit and a consequent dividend cut.

The company declared an interim dividend of 1.33 pence for the first half, down 67% from 4.00p last year.

Mitie's revenue rose to GBP959.7 million in the six months ended September 30 from GBP922.6 million last year, which the company attributed to "good revenue growth" in security and engineering services. Mitie said this was offset by a moderate decline in its professional services & connected workspace business.

Operating profit from continuing operations fell to GBP14.8 million in the first half from GBP23.9 million in the prior year period, which Mitie said was primarily due to investment in its Helix cost savings programme and connected workspace proposition.

Under its cost-savings programme, Mitie expects to see a reduction of GBP40 million in net operating costs on an annualised basis by 2020.

As a result of the increased investment, pretax profit fell to GBP6.1 million from GBP15.8 million last year.

Mitie also said its order book remains strong at GBP5.9 billion, adding that it has renewed and won new contracts across its businesses. The company noted especially good performances from security, where revenue rose 9.9%, and care & custody, where revenue increased 29%. Mite also noted a loss of a "notable contract" in engineering services.

New wins include a new contract award from a multinational grocery retailer, a global leader in e-commerce and cloud computing, and a major homewares and household goods retailer, Mitie said.

Looking ahead Mitie said: "It has been a busy six months, the business is re-energised."

Mitie expects full-year revenue growth to be in the range of 3% to 4% and its medium-term margin expectation remains unchanged at 4.5% to 5.5%.

"This has been a period of transformation and investment for Mitie. We have had a solid six months with a modest uptick in revenue. We have continued to build foundations, take out costs, simplify systems and processes, invest in our capabilities and put the customer at the heart of our organisation," Chief Executive Phil Bentley said in the company's interim results statement.

"We have had a number of good recent wins, we have attracted some high-quality talent to the business, our connected workspace proposition is gaining traction and we are already seeing the benefits of our HR and IT change programmes. We have much more to do, but we are very much on track," Bentley added.

Mitie shares were up 1.2% at 227.50 pence in afternoon trade.

By Tapan Panchal; tapanpanchal@alliancenews.com

Copyright 2017 Alliance News Limited. All Rights Reserved.

Email Form

Securities Mentioned in Article

Security Name Price Change (%) Morningstar
MITIE Group PLC 34.70 GBX 1.91 -

About Author

Alliance News

Alliance News provides Morningstar with continuously updating coverage of news affecting listed companies.

Audience Confirmation

By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies