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Mitie posts £1.3m loss as it exits M&E

Mitie Group has posted a loss of £1.3m for the six months to 30th September 2014, after incurring exceptional charges of £58.3m.

The charges, which are “far higher than forecast”, according to analysts Liberum, relate largely to the group’s M&E division and cutbacks in its asset management arm.

The group also described its H1 results for its healthcare division as “challenging” - operating profit was down by 19.6 per cent. Profits in the group’s property management arm also took a significant hit, falling by 24.7 per cent.

The company said it expected the property management division’s results to improve in the second half of the financial year, as new contracts get underway.

The group’s exit from M&A will be complete in this financial year, with losses of £6.9m incurred over the last sixth months - Mitie said that total losses from this arm of the business would be between £11m and £15m for the full year.

Despite the loss in its M&E division, the group said it is “well positioned for the long term”, supported by an order book of £8.5bn.

Growth was led by the group’s facilities management arm, which saw revenue grow by 6.3 per cent in the half year to 30th September 2014. Over the same period, facilities management had a contract retention rate of 90 per cent.

Over the past six months, the group’s facilities management has been boosted by the retention of its integrated FM contract with Vodafone for a further five years, valued at £250m, and has been awarded a range of new FM contracts including with Royal Cornwall Hospitals valued at £90m over seven years and Heathrow Airport valued at £40m over three years.

It has also begun work on a contract with the Home Office to run two immigration centres at Heathrow, valued at £180m over eight years.

Ruby McGregor-Smith, chief executive of Mitie, said: “We have delivered a strong performance in our facilities management business during the first half of the year, and we expect to gain further positive momentum through the rest of the year.

“We have significantly de-risked our group by finalising the exit from our loss-making businesses. We are focused on investing in and maximising the long-term growth potential of our facilities management, property management and healthcare businesses.

“Our order book and sales pipeline are substantial. We are in a good position to deliver growth and look ahead with confidence.”

In its full year results last year, the group said it would be moving away fromdesign and build work after incurring exceptional charges of £25.4m.

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