Troubled outsourcing firm Mitie Group PLC (LON:MTO) got some respite today, with its shares jumping after it revealed its current year revenues have held steady even as it plans to take further write-downs and restate its accounts to March 2016.
In early morning trading, Mitie shares topped the FTSE 250 leaders board, gaining 6.6%, or 14.0p to 225.4p.
In a trading update, the firm said it will write-down £40mln-£50mln after its auditor, KMPG found that the way it booked work-in-progress on long-term contracts and costs relating to contracts was less conservative than rivals.
READ: Mitie issues third profit warning in four months
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But Mitie added: “Trading performance, before the impact of the Accounting Review, is largely in line with previous expectations and referenced in our January trading update.
“Revenues remained flat in FY'17 compared to FY'16, reflecting what has been a challenging environment.”
The pest control, ancillary healthcare and property services provider, undertook a review of its accounts after issuing three profit warnings in a year, when the firm was hit by uncertainty surrounding the Brexit vote and rising costs.
2016/17 has “undoubtedly been a challenging year”
Phil Bentley, Mitie’s CEO, 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.”
Under Bentley, who only took over as CEO in December, Mitie has exited its loss-making home healthcare business and overhauled its management.
The company said the latest write-down, made on top of a previously announced £14mln one-off charge, would involve a £6mln outflow of cash in the year to March 2017.
But it added that the rest would be an asset write-down that would have no impact on profitability.
Talks with lenders started, results release delayed
Mitie also said it was starting talks with lenders to change its banking arrangement and was seeking to raise its borrowing limits to a fixed amount of £1.5bn, and it would hold an investor meeting in June 12 to seek approval.
The firm added that it would delay release of its full-year results, previously scheduled for May , until June 12 to give it time to start talks with lenders and allow the auditors to complete their work.