Mitie to cut 480 jobs and consider selling property management business
In a pre-close statement for the half year ended 30 September 2017 today, the firm said it has instructed Evercore Partners International to explore a potential sale of its property management business, having already received expressions of interest from third parties.
The new management’s ‘Project Helix’ transformation programme, which is expected to cut group operating costs by £40 million a year by 2020, also includes outsourcing certain accounting and finance functions, automating many administration activities, rationalising the corporate structure by cutting tiers of management and consolidating three London offices into a single new office in the Shard.
The company said the upgrades involved in Project Helix will cost more than previously expected and is now estimating implementation costs incurred in the current year at £24m, as opposed to previous forecasts of £15m.
“These initiatives and other aspects of the transformation programme are expected to result in headcount reduction of approximately 480 by the end of the current financial year,” it added.
In September, shares in Mitie tumbled after the firm warned that full-year profits would come in “materially below” expectations as uncertainty caused by the EU referendum was driving clients to renew or extend larger contracts with existing suppliers and to defer investment decisions.
Mitie also blamed lower UK growth rates, changes to labour laws and public sector spending cuts for the profit warning.
Weeks later it was revealed that Ruby McGregor-Smith is to step down as a director and chief executive to be replaced by former British Gas boss Phil Bentley.
Then in November the firm issued its second profit warning in two months as it faced fresh hits from economic uncertainty and rising staff costs.
The timing and content of these two profit warnings are now under investigation by the Financial Conduct Authority (FCA).
Meanwhile, the firm said its order book is up 3% against the previous half-year period.
“Overall we are making steady progress in the transformation of Mitie,” said Peter Dickinson, the group’s acting chief executive.
“Top line growth in the first 6 months has been encouraging, our dedicated focus on putting customers at the heart of our business and identifying cost savings is beginning to deliver and we are investing at pace in talent, capabilities and systems.
“Transforming a large, diverse business such as Mitie is neither linear nor without challenges, but the programme remains on track. I expect to see the positive impact of our endeavours as we move into the second half of the year.”