Ever since its exit from the M&E market in 2013, it’s not been plain sailing for FM and outsourcing specialist Mitie.
The £2.1bn-turnover company revealed the full cost of its restructuring programme in its latest full-year results, released yesterday, with the firm posting an operating loss of £42.9m for the year to 31 March 2017.
That has capped a turbulent 12 months for Mitie, with long-serving board members departing, a new chief executive appointed and a new chairman incoming – not to mention job cuts across the firm.
The company is now expecting “modest growth in underlying profits” in the year ahead but has cut more than 3,000 jobs in the last year alone.
So where did it all go wrong?
The company announces its exit from mechanical engineering contracting, with the business generating margins “well below” the group’s average.
At the time, Mitie argued the market would not be able to offer “strong margins and good growth opportunities”.
Mitie took a £22.1m hit in its results for the year to 31 March 2013, and said it did not expect any further material costs after its exit from the market.
Despite this, the group still made a pre-tax profit of £108.6m on revenue of £1.98bn.
The firm sees pre-tax profit hit £113.3m in its results for the year to 31 March 2014, while revenue rose to £2.14bn.
Big contract wins in the year included a £75m deal to deliver integrated facilities management for Network Rail, a £15m deal at Heathrow Airport for technical facilities management, and a £110m deal for FM services for Capita.
However, the firm said it would be moving away from design-and-build work after incurring £25.4m of exceptional losses in an effort to reduce its exposure to the construction market.
Cutbacks in the firm’s asset management arm and its exit from M&E hit Mitie with £58.3m of exceptional costs in its half-year results for the six months to 30 September 2014.
The costs pushed the firm into a £1.3m loss.
At the time, city analysts said the exceptional charges were “far higher than expected”, with additional losses due to the exit from M&E being racked up throughout the year.
Mitie issues a profit warning ahead of its 2015 results, with the firm blaming market pressures in its homecare and social housing businesses.
Losses from its exit from M&E continued, as the firm revealed it would lose up to £16m in its full-year results for 2015.
However, ahead of the results, Mitie said that there would be no further charges as a result of either the M&E business or the legacy design-and-build contracts.
The company said that its exit from M&E was “undoubtedly the right thing to do” after posting stable growth in turnover and a slim increase in pre-tax profit in its 2015 results.
Mitie’s pre-tax profit for the year ended 31 March 2015 stood at £114.1m, compared with £113.3m for the same period the year before, while revenue increased by 5.8 per cent to £2.3bn, up from £2.1bn in 2014.
The group reiterated that its exit from M&E aimed to reduce its exposure to “high-risk” construction-related markets, and “was not an easy decision”.
The firm warned on the impact of the new living wage measures and project cancellations in its 2016 results.
Mitie said that it had seen “a number of its clients” delay or cancel projects in the run up to the EU referendum in June of that year.
It added that government initiatives would lead to “significant increases to the cost of employing people, especially people on lower incomes”.
Revenue for the year to 31 March 2016 slipped to £2.23bn, down from £2.27bn a year earlier, but pre-tax profit slipped slightly to £113.2m.
The firm issues a profit warning, with “significant economic pressures” hitting profit and revenue at the business.
It added that results would be “significantly lower” after a slowdown in property maintenance and healthcare work.
Chief executive Ruby McGregor-Smith announces her departure after nearly 10 years at the helm.
It emerged that she had asked board members to begin the search for a successor in 2015.
Former Cable & Wireless boss Phil Bentley was announced as the firm’s new CEO.
Mitie issues another profit warning after posting a pre-tax loss of £100.4m in the first half of 2016.
The company posted a £100.4m pre-tax loss for the six months to 30 September, which it said was largely down to writedowns totalling £117.2m on the value of its healthcare services business.
As a result, Mitie said it had decided to withdraw from the domiciliary healthcare market and has placed its healthcare business under strategic review.
The group hires former Balfour Beatty finance director Sandip Mahajan as its new chief financial officer, replacing Suzanne Baxter.
In a trading update, it adds that its property management and technical FM divisions had been “impacted by client deferrals and investment plan delays, respectively”. The firm added that its cleaning division was under-performing.
It added it expected to write down £14m in one-off charges in results for 2017.
Around 160 jobs are cut as part of the company’s cost reduction programme.
The cost of restructuring the business has increased by £5m to £15m, while the firm said it would also negotiate an amendment to its banking covenants to permit “further one-off charges”.
The firm also announced the appointment of former Informa chief Derek Mapp as its new chairman, who will take over from incumbent Roger Matthews in July 2017.
The company slumps to a £42.9m operating loss in its full-year results for the year to 31 March 2017.
The results also revealed the firm had shed over 3,000 staff in just one year, while revenue fell to £2.13bn, down from £2.15bn.
Mitie is now half-way through a £45m cost efficiency programme, and completed its exit from the domiciliary healthcare market with a £132.3m loss.
Its property management arm, which predominantly serves the social housing sector, posted an operating loss of £4.5m, compared with a profit of £16.8m a year earlier.
However, the firm has said it expects to return to modest profit growth in the year ahead, while its share price has steadily improved since yesterday’s announcement.