Shares in Mitie (MTO) slump 8.7% to 241.45p as it warns that revenue for the year to 31 March 2016 will come in below market expectations.

Projects are getting delayed or cancelled as a result of increased economic pressures and uncertainty, it says.

Britain's largest provider of facilities management services also insists it can adapt to legislative changes which significantly increase the cost of doing business for large employers in the UK.

Increases in Britain's minimum wage can in part be passed on through price rises during contract negotiations, according to a trading update from the company.

Alongside wage increases, a new apprentice levy charge on payrolls and additional labour legislation means there is an 'increase in the overall cost of more labour-intensive services', Mitie's management adds.

'We have a flexible, resilient business model and a track record of responding to changing market conditions and client needs,' says the trading statement.

'Due to current macroeconomic factors, we anticipate modest growth in the next financial year. Our focus remains on generating profits backed by strong cash flows, whilst maintaining a robust balance sheet and margins within our target range.'

Progress in recent months includes facilities management contract wins and renewals with Sellafield, Deloitte, Thales (HO.:EPA)Daily Mail (DMGT), NHS Property Services, Vodafone (VOD), Ladbrokes (LAD), Sainsbury's (SBRY) and Dixons Carphone (DC.).

Analysts remain sceptical of Mitie's ability to stave off margin pressure in facilities management and to turn around poor performance in its Healthcare unit, which was loss-making in the six months to 30 September 2015.

'Management expects the [Healthcare] business to return to profit over the next 18 months, driven by the replacement of low-margin/loss-making contracts (which are being exited), with new, higher-margin contracts,' wrote Peel Hunt analyst Christopher Bamberry in a 22 January 2016 note.

'Given previous management’s over-optimism with regard to what the Healthcare division can deliver, we remain sceptical.'

Earnings per share in the 12 months to 31 March 2016 were forecast by Bamberry at 25.1p in the note published before today's update. That figure rises to 26.8p a year after.

Issue Date: 24 Mar 2016