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Investment in housing stock delayed due to post-Grenfell costs
Investment in housing stock has been delayed due to expected post-Grenfell costs, outsourcing company Mitie has claimed.
The company said in its annual results for the last financial year that one of its large customers “has delayed planned investment in its housing stock with the expectation that funds will be diverted to risk and compliance related improvements”.
The government has now promised to cover the costs of removing and replacing dangerous cladding, but some social landlords have other Grenfell-related fire safety costs, including installing sprinklers.
Mitie has a number of contracts with housing associations and local authorities, providing a variety of property services from maintenance and repairs to security.
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According to its results, Mitie’s property management arm had “a challenging year”, with the division being considered for sale but then withdrawn in December 2017.
Its revenue was down from £257.7m in the previous year to £237.9m, with operating profit falling by 35.8% from £12.3m to £7.9m.
Nevertheless, in the financial year, the arm won some new contracts during the year, including the refurbishment of 150 homes for displaced residents from Grenfell Tower under a contract with the Royal Borough of Kensington and Chelsea.
In the coming financial year, Mite plans to integrate its property management arm into its engineering services arm. Phil Bentley, chief executive of Mitie, said it “is beginning now to focus on key social housing opportunities”.
The overall company saw its profits fall 6% for the 2017/18 financial year, with its chief executive calling the market “challenging”.
For the year ended 31 March 2018, the overall company made a £77.1m adjusted operating profit before other items, down 6% from £82m in the previous financial year.
Revenue, however, was up from £2.1bn to £2.2bn, and the company’s order book grew 2.4% to £4.5bn.
Mr Bentley said: “We are one year into our transformation programme and we are where we need to be. It has been a year of discovery, simplification and significant change, all set against a challenging market.
“We have made much progress, building the foundations that will ensure that Mitie is at the forefront of the UK facilities management industry.”
Since the collapse of Carillion in January, the spotlight has been on government contractors like Mitie, with another outsourcer, Capita, announcing a £700m fundraise in April after posting a £513m loss for 2017.
