Among Mitie’s cleaning contracts is the Scottish parliament at Holyrood (Scottish Parliament)

Mitie promises bright high-tech future after suffering £43m loss

13 June 2017 | By GCR Staff 1 Comment

Shares in Scottish outsourcing and facilities management company Mitie rose 13.5% yesterday despite an announcement that it made an operating loss of £43m ($55m) for the year to April 2017.

Investors were impressed by the firm’s commitment to cost cutting and a new technology programme – including, possibly, connected mops – which the company said would “deliver the most efficient and effective service, at the lowest cost to our clients”.

The company said in its financial statement that its losses arose from “one-off accounting adjustments”, which wiped out its adjusted operating profit of £82m.

Apart from accounting matters, it said its returns were down $11m owing to lower margins, and £2m because of increased overheads.

The accounting adjustments were triggered by a review of its books by KPMG, which found that its accounting practices were “less conservative” than others in the market.

The company is implementing a cost reduction plan, dubbed Operation Helix, that is intended to reduce the firm’s outgoings by £45m. This has already led to a 3,000 cut in staff numbers, which have fallen to 56,279 from 59,332, and a plan to introduce more sophisticated technology into the workplace.

Operation Helix is the initiative of Phil Bentley, the company’s chief executive, who replaced Baroness McGregor-Smith in December 2016. Helix is itself part of a wider plan called “Beyond FM … to the Connected Workspace” intended eventually to lift margins to 5.5%.

Bentley said: “We are now focused on the future of the business and I am encouraged that our order book has held up and our pipeline is growing. Following a full strategic review we are investing in technology in the workspace to meet our customers’ evolving needs and we are embarking on a major cost reduction programme.”

Among the technological solutions to be introduced are hand-held devices for capturing and recording data to the use of drones for pest control. Mitie will partner with Microsoft to install sensors in the facilities it manages, and may even install GPS trackers in its cleaners’ mop heads.

So far, the firm has announced a £10m capital investment in temperature sensors, mobile phone access, predictive maintenance and behavioural analysis of CCTV footage in the buildings it runs.

In the results statement, Mitie said: “The business is embarking on a multi-year transformation programme, designed to standardise and simplify our operations to deliver the most efficient and effective service, at the lowest cost to our clients.

“This will begin with the integration of our core workforce, to create a highly flexible and skilled team with the optimal support systems. We will automate work flow management for scheduling, tasking and billing. Our engineers will have the necessary training and tools to operate in the safest and most effective manner and deliver the highest quality of service for our customers.

“Longer term, our vision is to use technology to link outputs to the Connected Workspace, providing the most responsive and valued service in the market. By using a combination of existing building systems and environment sensors, along with energy data, asset data, and workplace data, we will provide tailored solutions to suit each client’s unique requirements.”

McGregor-Smith left Mitie after a profit warning last September that caused shares to fall 30%. She blamed the warning on the outcome of the Brexit referendum, the minimum wage, councils not spending enough and the failure of an expansion into homecare for the elderly.

Image: Among Mitie’s cleaning contracts is the Scottish parliament at Holyrood (Scottish Parliament)