UK watchdog launches fresh investigation into Mitie’s accounts
It adds to an ongoing investigation into Deloitte’s auditing of Mitie’s books, announced in July.
Britain’s accounting watchdog has launched a fresh investigation into Mitie’s financial statements for 2016.
The Financial Reporting Council (FRC) said the probe was related to the ”preparation and approval” of Mitie’s accounts for the year ending March 31 2016, but the outsourcing giant said it understands that it does not relate to any current or former directors of the group, including former finance chief Sandip Mahajan, who the company announced earlier this month was stepping down.
It comes just months after the Financial Conduct Authority (FCA) said it was launching its own investigation into the preparation and content of Mitie’s financial statements for the period, as well as the “timeliness” of a profit warning announced in September 2016.
FRC announcements in connection with Mitie Group plc’s 2016 annual report and accounts https://t.co/DvrU6fftWs— FRC (@FRCnews) November 20, 2017
The most recent FRC probe also adds to an ongoing investigation into Deloitte’s auditing of Mitie’s books, announced in July, but the watchdog has now closed its corporate reporting review into the firm’s annual report and 2016 accounts, saying that its concerns have been “satisfactorily addressed”.
The watchdog said the results of the ongoing investigations would be released “as appropriate in due course”.
Mitie, which has already been under pressure amid a string of recent profit warnings, updated markets with half-year results that showed a narrowing of bottom-line losses to £5.5 million for the six months to September 30, compared to a loss of £86.8 million a year earlier.
Revenues, meanwhile, rose 4% to £959.7 million, from £922.6 million.
Chief executive Phil Bentley said: “This has been a period of transformation and investment for Mitie. We have had a solid six months with a modest uptick in revenue.
“We have continued to build foundations, take out costs, simplify systems and processes, invest in our capabilities and put the customer at the heart of our organisation.”
As part of a turnaround plan, the company is aiming to trim costs by £40 million a year by 2020, with moves to simplify its corporate structure, outsource and automate some back office functions, merge its London offices into one and also overhaul its group-wide IT.
The group has also moved to shut its defined benefit pension scheme to future accruals from mid-November – which will save around £850,000 a year – and confirmed in September that it was axing around 480 jobs from its 53,000-strong workforce by the end of its financial year in March.
Mitie has overhauled its management as part of recovery efforts, with Mr Bentley appointed last December, and also recruited new chairman Derek Mapp in May.
Chief financial officer Mr Mahajan – who was hired on February 10 – resigned earlier this month, with the group immediately appointing Paul Woolf as his replacement.
Mr Mahajan now serves as the group’s chief financial transformation officer.
Mr Bentley said Mitie has had a “number of good recent wins” and assured on the company’s performance.
He said: “We have attracted some high-quality talent to the business, our Connected Workspace proposition is gaining traction and we are already seeing the benefits of our HR and IT change programmes. We have much more to do, but we are very much on track.”
An analyst note led by Liberum’s head of research Joe Brent gave kudos to Mr Bentley’s turnaround plan.
It said: “We remain confident that Phil Bentley will succeed with his transformation and believe that the new structure can provide a platform to consolidate once systems and management are established.”
Mitie Group shares were trading higher by 1.5p in morning trading at 226.3p.