Outsourcing group Mitie saw its profits tumble after sales at its healthcare unit slumped by almost a fifth.

The firm, which has clients such as the Scottish Government, Standard Life Investments, Rolls-Royce, Vodafone and the Home Office, said half-year profits slipped 12.1 per cent to £50.1 million in the six months to the end of September compared to a year ago, after running into problems at its healthcare division.

It said its healthcare unit, which looks after people in their own homes, saw sales fall 19.1 per cent to £39m, following the closure of a number of bases its staff worked from as it exited low pricing regions.

It added that increased regulation and higher staff costs also saw this unit swing to a £2.1m operating loss from a £4.5m operating profit a year ago.

But it said this arm had recently been awarded two new significant London contracts in Kensington and Chelsea and Hammersmith & Fulham, which have the potential to generate £25m over the next five years.

The group said it remained positive about its healthcare business, because it was driven by an ageing population who wanted care in their homes rather than in hospitals or care homes.

However, it added it expected the division to take 18 months to return to profitability.

The group also said it was "positive" about the introduction of the national living wage after Chancellor George Osborne announced in July he would raise the country's hourly minimum wage from April next year to £7.20 for over 25s, from its current level of £6.50, and to at least £9 an hour by 2020.

Mitie said the move "will ensure that many of our people are better rewarded and feel more motivated to do the jobs they do, as well as improve retention rates across our business".

It added that the introduction of the national living wage would have no material impact on future earnings.

Mitie employs around 70,000 staff in areas that include transport and logistics, finance and professional services and social housing.

Chief executive Ruby McGregor-Smith said: "We are the market leader in integrated facilities management and are particularly pleased with recent contract awards and retentions.

"This gives us confidence we will deliver a good full-year performance."

Analysts at Investec said: "Today's interims point to the need for a much stronger second half, given the 12.1 per cent decline in profits before tax announced this morning."

However, the broker held its full-year pre-tax profit forecast for the group at £118.6m.