City accountancy watchdog widens its probe into Mitie

● Third investigation into outsourcer comes as underlying profits rise

The UK’S accounting watchdog has launched a new investigation into outsourcing group Mi tie’ s financial statements for the year to endMarch 2016.

The Financial Reporting Council( FRC) said the new probe was related to the “preparation and approval” of the relevant accounts. But Mitie said yesterday that it understood the new inquiry did not relate“to any current directors of Mi tie, any former nonexecutive directors or Sandip Mah a jan( who as was announced on 13 November 2017 stepped down from his role as group CFO ( chief financial officer)”.

The latest probe is the third recent regulator y look at the accounts of the group, whose high-profile clients in Scotland include the Holy rood building, Royal Bank of Scotland and Edinburgh life assurer Standard Life.

It follows a string of profit warnings from Mitie as it has battled to contend withr ising labour costs and the cost of extracting itself from lowmargin contracts take non during the economic downturn.

The most recent FRC probe also adds to an ongoing investigation into accountancy group De lo it te’ saudi ting of Mitie’s books, announced in July.

But the company said the watchdog has now closed its separate corporate reporting review into the firm’s annual report and 2016 accounts, “and that they do not intend to pursue the matter further”.

The latest regulatory developments came as Mi tie reported a jump in earnings, suggesting progress is being made with sweeping restructuring measures announced by Phil Bentley after he took over as chief executive last year, including an overhaul of its cleaning and engineering divisions.

The company revealed that half- year adjusted operating profits rose nearly 6 per cent to £ 32.6 million from £ 30.8m, while revenue was up 3.9 per cent at £ 959.7m, short of the £ 1.1 billion it forecast in S ep - tember.

Its order book at the end of September stood at £ 5.93bn, up from £ 5.87bn a year earlier.

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 turn around plan, the company is aiming to trim costs by £40 ma 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 S ep - t ember that it was axing around 480 jobs from its 53,000- strong workforce.