Mitie first-half profit drops despite revenue rise

FTSE 250 outsourcer Mitie posted a drop in profit for the first half on Monday despite a rise in revenue, as it continues to invest in its cost-saving programme.

In the six months to the end of September, pre-tax profit fell to £6.1m from £15.8m the year before, on revenue of £959.7m, up from £922.6. Operating profit from continuing operations on a statutory basis dropped to £14.8m from £23.9m in the first half of last year, mostly due to investment in the group's cost-saving programme, Helix.

Meanwhile, the interim dividend was cut 66.8% to 1.33p per share.

The company said it has renewed and won new contracts across its businesses, with especially good performances from Security, where revenues are up 9.9% and Care & Custody, where revenues are up 28.6%. It has also lost a number of contracts as part of the normal ebb and flow of the business and one notable contract in Engineering Services.

New wins across the business 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.

Chief executive Phil Bentley said: "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.

"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."

Earlier on Monday, the Financial Reporting Council said it was opening an investigation under its accounting scheme in relation to the preparation and approval of Mitie's accounts for the year ended 31 March 2016. Mitie later clarified that the investigation is into individuals and not the company 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," the company said.

"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)."

At 1410 GMT, the shares were up 1.2% to 227.50p.