Bright future for Mitie as new contracts mean more staff taken on

Published on Monday 23 November 2009 21:20

MITIE, the outsourcing, security and cleaning specialist, has taken on hundreds of staff north of the Border as it continues to win new contracts from cost-conscious companies and public bodies.

The FTSE250 group, whose Scottish client base includes Standard Life, the Scottish Parliament and Celtic Football Club, also expects to gain from post-election public spending cuts as the volume of work being outsourced to the private sector multiplies.

Outlining the continuing expansion in Scotland, where more than 6,500 staff are now employed by the firm out of a UK-wide headcount that tops 54,000, chief executive Ruby McGregor-Smith said the Scottish end of the business was growing "thanks to some really interesting work".

Mitie has strengthened its relationship with Holyrood, securing a five-year technical facilities management contract to add to the cleaning work it already undertakes for the Scottish Parliament building.

Other business wins include a four-year painting contract with the University of Edinburgh and a deal with Edinburgh City Council to replace kitchens and bathrooms, also for four years.

The group, whose Scottish workforce was closer to 6,000 at the start of the year, has also been awarded a national cleaning contract to service the Co-operative store chain. No values were disclosed.

News of the progress north of the Border came as Mitie posted a 12.5 per cent hike in underlying pre-tax profit to 42.3 million in the six months to 30 September.

Turnover at the Bristol-headquartered group grew by 5.3 per cent to 801.1m, while the interim shareholder dividend went up by 12.1 per cent to 3.7p.

McGregor-Smith admitted the past few months had presented a "challenging" backdrop but said the business was on track for its 22nd year of growth.

Mitie claims to be one of only two FTSE250 companies to have grown earnings per share for 21 consecutive years.

"The fact that we are growing through the downturn and many others are not shows that we are a beneficiary (of the recession]," said McGregor-Smith.

On the subject of looming public-spending cuts, she said Mitie was well placed to benefit "whichever government is in".

"There will be cuts and that means the whole way public bodies outsource will change. The packages they outsource will become bigger, with more integrated work, although the timing of these is uncertain."

Currently, the group's revenue breakdown is roughly 40 per cent public, 60 per cent private sector. McGregor-Smith said that ratio was likely to see a "bit of swing over the next couple of years" in favour of public-sector work.

Mitie (Management Incentive Through Investment Equity), said the integration of Dalkia Technical Facilities Management, bought for 120m, was "progressing well".

Altium Securities analyst Karl Green said he was likely to lift full-year earnings forecasts for the group by about 5 per cent following the results.

"Mitie has indicated that its sales pipeline is at unprecedented levels and we believe that larger players with multiservice offerings are likely to take market share in these trickier trading conditions," he added.