Mitie writes down up to £15m on construction jobs

Facilities management company Mitie is to write down £10-15m in losses as it looks to scale down its loss-making construction business.

In a trading update, the firm said the construction business, held within its asset management division, had “existing commitments on a small number of legacy projects where we are carrying design and build risk.”

It said the losses would be “non-recurring, exceptional losses in relation to some of these contracts,” and would include restructuring costs and the impact of reassessing the carrying value of the contracts in its accounts.

“We currently estimate these one-off losses in the second half of this financial year will be in the region of £10m-£15m. Going forward, design and build risk remains on a small number of material energy contracts and we continue to closely monitor their operational and financial performance.”

These losses are in addition to the fact it will write down up to £9m in the second half it year, to 31 March, on the exit from its loss making M&E business. The loss was flagged at the firm’s interim management statement in January.

However, the firm reported strong trading in its core facilities management business, announcing it had won a £75m contract renewal from Network Rail for FM services to 100 Network Rail buildings for five years.

It’s statement said: “The re-positioning of Mitie has strengthened our business, enabling us to concentrate on the FM and healthcare markets that offer strong growth potential, reduce our exposure to cyclical markets and generate long-term secured revenues, underpinned by strong margins.”