Mitie in fresh blow as second City probe launched

Troubled outsourcing group Mitie on Tuesday admitted it had been hit with a second accounting investigation in less than a month.

The embattled company revealed that the Financial Conduct Authority is investigating its profit warning last September which caused its value to plunge more than £240 million.

The alert was the first indication of a series of problems at the business which said it is suffering from Brexit, lower public spending and rising wages. The 30% collapse in the share price led to the departure of chief executive Baroness Ruby McGregor-Smith (pictured) in December.

The FCA told the company, now led by ex-British Gas chief Phil Bentley, that it was looking into the timeliness of last September’s profits warning and the preparation of its accounts for the financial year ending March 2016.

Mitie — which runs Harmondsworth immigration detention centre near Heathrow and carries out cleaning and security for companies including Lloyds — said it is “fully co-operating” but would not comment on the probe until it was completed.

The company has already taken a £50 million writedown on its accounts this year, saying some of its accounting practices were “less conservative” than rivals. The industry watchdog, the Financial Reporting Council, also began looking into Deloitte’s auditing of the company in July. Deloitte declined to comment.

An earlier review by KPMG in January found that mistakes had been made but that no accounting standards had been broken.

Mitie remains among the most shorted stocks on the London market, and, before September’s warning, some analysts had been sceptical of the company’s prospects and accounting practices.

Shares in other outsourcers, including Serco and G4S, also fell earlier this year as they compete for low-margin work. Mitie shares today edged down 1.5p to 264.3p.