Britain’s Mitie (MTO.L) has struck a deal to sell its home healthcare business to specialist investor Apposite Capital for a nominal 2 pounds and is taking another writedown on the value of the loss-making business.
The provider of pest control, property cleaning and security services has had a difficult year, issuing three profit warnings and overhauling its management.
It revealed in November it would withdraw from the low-margin home healthcare services market, and said on Wednesday its total writedown on the business and losses from it would be 36.8 million pounds ($45.5 million) in the current year.
This is in addition to the 115.3 million pound ($143 million) writedown it made in the first half.
Mitie’s exit from the healthcare market follows a similar move by peer Mears (MERG.L), as the UK government has cut spending in the sector over the past four years, causing firms to struggle with low-margin contracts.
Although construction and support services have weathered the initial impact of the Brexit vote better than feared, uncertainty is causing public and private clients to delay awarding new contracts, depressing the outlook for firms such as Mitie.
Outsourcing firms Capita (CPI.L) has issued multiple warnings, while support services and construction firms Interserve (IRV.L) and Carillion (CLLN.L) have noted a slowdown in their UK businesses.
Mitie said it would contribute 9.45 million pounds by making payments to Apposite in April and July to fund the healthcare business’s trading losses and the cost of the turnaround plan.
Shares in Mitie were up 1.8 percent at 210 pence at 0813 GMT.