LONDON (ShareCast) - (ShareCast News) - The City watchdog has begun to probe the timing and preparation of a profit warning last September by Mitie Group, which is already being investigated by another regulator over its accounts.
Mitie revealed on Monday that the Financial Conduct Authority had on Friday told the facilities management outsourcing group that an investigation "in connection with the timeliness" of the profit warning that was announced by the company on 19 September 2016.

The FCA is also looking at "the manner of preparation and content of the company's financial information, position and results for the period ending 31 March 2016", which follows the launch of another investigation by the Financial Reporting Council that is thought to be focused on the role of auditor Deloitte.

Mitie said it was "fully cooperating with the FCA but does not intend to update the market until completion of the investigation".

Last September Mitie warned that full year profits would be materially lower than expected due to a drop-off in higher margin contracts in the first-half and the cost of new efficiency programmes, with the property management segment having been "significantly" hit by local authority budget pressures.

In November the FTSE 250 company reported a slide into losses in the first half, cut its dividend and warned on full year profits again as it announced the decision to withdraw from the domiciliary healthcare market

Chief executive Ruby McGregor-Smith stepped down in December after ten years at the helm, just a few weeks before the third profits warnings in five months came in January, while June's annual results under new CEO Phil Bentley saw Mitie slip into losses after stomaching £88m of one-off accounting charges after an accounting review by KPMG led to balance sheet write-downs of £44.9m.

Shares in Mitie were under the cosh in early trading on Tuesday but had largely levelled out at 264.8p by late morning.

"While we thought it may be turning a corner with new leadership and a focus on cutting costs, this is not the kind of thing to reassure investors who are only now beginning to warm to the stock again after apparently shaking off last year's loss," said analyst Neil Wilson at ETX Capital.

He noted that it was 'aggressive' accounting practices that pushed the group into a loss last year.

"These charges were worth over £88m and while investors will have hoped this was the end of it, the FCA investigation will be an unwanted distraction."

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