Mitie cuts 160 jobs as another £50m in write-downs revealed

Mitie has cut 160 jobs this year during the first wave of a major cost reduction programme.

The redundancies were revealed in a trading update which also saw the firm confirm another £40m – £50m in write downs.

The latest write-downs are on top of the £14m announced in January as the firm took a “more conservative judgement on contractual positions”.

Accountants at KPMG have now completed a two-day review of Mities’s books which was presented to the firm’s Audit Committee yesterday.

Mitie said: “KPMG commented that our application of percentage of completion accounting and costs of contract mobilisation is less conservative, albeit still justifiable, than others in the market.

“In response to these findings, and in addition to the £14m of one-off charges identified in the January trading update, the Board currently expects to write down its balance sheet by between £40m and £50m.

“Of this total, only £6m relates to provisions which are expected to result in cash outflows in FY’18, with the majority being non-cash write-downs of trading assets, and having no impact on the future profitability of the business.

“In addition, the review has identified a number of material errors which may necessitate restating our FY’16 accounts.  This would likely result in an increase in FY’17 reported results of between £10m and £20m.”

The cost of the firms restructuring has also increased by £5m to £15m since January as anoher 160 roles were lost.

Mities said it will reveal full details of its cost cutting programme at the preliminary results announcement on June 12.

CEO Phil Bentley said: “FY’17 has undoubtedly been a challenging year but Mitie remains a strong and successful business, and is continuing to deliver for our customers.

“Whilst these accounting adjustments in FY’17 affect our reported profits, they do not affect the underlying strength of our business.

“Mitie has a well-diversified portfolio of high quality customers and an outstanding range of capabilities. 

“We have appointed a new Executive Leadership Team – with a new way of working – and we are confident the business will generate significant shareholder returns over the forthcoming years.” 

 

from Construction Enquirer http://www.constructionenquirer.com/2017/05/03/mitie-cuts-160-jobs-as-another-50m-in-write-downs-revealed/

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