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Mitie Group sells social care business for £2 in wake of profit warning

Mitie expects to incur further losses in its full year results after offloading its UK social care business for £2
Mitie Group
Mitie Group sells its social care division for just £2

Struggling outsourcer Mitie Group PLC (LON:MTO) has sold its UK social care division to Apposite Capital for just £2 in the wake of its profit warning.

The company said it will contribute £9.45mln to the funding of trading losses and the cost of the turnaround plan as part of its disposal of division, which includes Enara Group Limited and Complete Care Holdings Limited.

Enara, which provides home-care to those with illness and disabilities, reported an operating loss of £8.8mln in the 10 months to 31 January. The Complete Care business, offering nursing services to homes, recorded an operation loss of £2.4mln during the period.

Mitie expects a further £36.mln of losses in the current financial year, reflecting the operating losses of the two businesses, the £9.35mln contribution to turnaround plan and £14.8mln for net asset write offs and costs of separation.

Last month the company issued its third profit warning in four months and announced chief financial officer Suzanne Baxter was stepping down. Baxter will be replaced by Sandip Mahajan, formerly the group director of finance at Balfour Beatty.

Baxter’s decision to leave follows last October’s departure of chief executive Ruby McGregor-Smith, who has been succeeded by Phil Bentley. McGregor-Smith spent 10 years at the business and left amid a poor performance at the group.

Mitie now expects underlying operating profit for the full year to 31 March 2017 will be in the range of £60mln to £70mln, including ongoing healthcare losses, but before the previously disclosed £10mln one-off costs of change.

The group revealed that its Property Management and Technical Facilities Management divisions have been affected by clients' reluctance to pull the trigger on contracts, which means a number of deals expected to complete in the first quarter are now expected to be landed in the second quarter.

Shares rose 8.56% to 224.40p in morning trading. 

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MITIE Group PLC Timeline

October 10 2016

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