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Pretax loss for Mitie following Healthcare write off

22 November 2016

After issuing a profit warning in September, Mitie has announced a pretax loss for the first half of its financial year after it wrote off the value of its Healthcare business.

Reasons for the profit warning included reducing margins for its FM division and local authority budget reductions impacting on its maintenance and home care services projects.

The company has now announced it will withdraw from the healthcare market and is reviewing its operations as a result, writing down its goodwill and other related aspects.

This is expected to deliver improved performance in the second half of its financial year.

The announcement also included a reduced dividend, down to 4p from 5.4p for the same period last year.

A charge of £128.1m has been booked for the first half year to the end of September, mainly due to its Healthcare business, resulting in a pretax loss of £100.4m.

It had recorded a profit of £45.1m for the same period 12 months earlier. Although revenue was 2.6% lower compared to the previous year, it reported an increased sales pipeline, rising to £1.12bn from £1.09bn.

Mitie chief executive Ruby McGregor-Smith has announced she will leave next month and will be replaced by former British Gas chief executive Phil Bentley.

Ms McGregor-Smith said the company had not been alone in dealing with "significant macroeconomic challenges".

As a result, the company had restructured its frontline and support FM functions, as well as withdrawing from the domiciliary care sector.

"Second half performance is expected to improve with our new operating model as we adapt to market conditions," said Ms McGregor-Smith.

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