Budget cuts hit revenues at outsourcing group Mitie

Revenues at outsourcing group Mitie slipped as it came under pressure from cuts to healthcare budgets and uncertainty caused by next month's Brexit vote.

Mitie chief executive Ruby McGregor-Smith. Picture: Ed Robinson/OneRedEye

The FTSE 250 firm, whose clients in Scotland include Scottish & Southern Energy and Aberdeen Harbour, said its sales fell 1.8 per cent to £2.2 billion in the year to the end of March compared with a year ago, as local council care budgets have been squeezed by central government.

Mitie added that the UK government’s decision to hold the European Union poll on 23 June had caused “a number of our clients to either delay or cancel projects until after the referendum”.

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However, Mitie’s pre-tax profits more than doubled in the period to £96.8 million, after it was hit by £45.7m of charges the previous year due to a number of management contracts it exited.

The group said sales at its healthcare unit, which looks after people in their own homes, fell 14.7 per cent to £78m, after the unit endured “a challenging year”.

It added that the UK government’s introduction of the national living wage in April would also add to costs at the unit over the coming year. The move lifts minimum hourly pay to £7.20 for over-25s, from its previous level of £6.50, and to at least £9 an hour by 2020.

Chief executive Ruby McGregor-Smith said: “Mitie has had a good year, with strong margins and profits. Our business model is flexible, resilient, low risk and has proven to be responsive to client needs and market conditions over three decades.

“We continue to see a range of good outsourcing opportunities across our key markets and anticipate modest growth in the coming year.”