Buoyant Mitie looks set to clean up come the public-sector cutbacks

OUTSOURCING and cleaning specialist Mitie highlighted its resistance to recession yesterday as it booked a double-digit revenue rise and said its bid pipeline had reached "unprecedented" levels.

• Celtic Park is one of the contracts that helped Mitie to a full-year pre-tax profits scoreline of 91.7m. Picture: SNS

The firm, whose Scottish client base includes Standard Life, Edinburgh University and Celtic FC, is likely to be one of the main beneficiaries of spending cuts in the public sector.

Unveiling a 13 per cent increase in annual revenues to 1.72 billion, chief executive Ruby McGregor-Smith said the firm expected increased government outsourcing and a low- carbon drive among clients to support growth.

Mitie, which employs about 6,500 in Scotland out of a UK-wide headcount that tops 56,000, has seen its long-term order book swell to 6.4bn from 4.9bn a year earlier.

"It's never just about cost cutting," noted McGregor-Smith. "We are here to increase efficiencies but also improve services. Healthcare, education and central government departments, for example, have really got to improve their energy ratings and hit their carbon reduction commitments.

"I think the use of innovative energy products is the way to go."

The group, which also cleans the Tower of London and supplies attendants to the Tate Britain art gallery, said the acquisitions of Dalkia and EPS had increased its presence in the social housing market and also meant it could offer more integrated services, whereby Mitie provides a range of activities to the same client.

That side of the business now accounts for 57 per cent of revenues, up from 33 per cent last year.

As well as the stronger sales and bumper order book, the Bristol-based firm posted a better-than-expected 17 per cent rise in pre-tax profits to 91.7 million for the year to 31 March.

Investors will be rewarded with a dividend of 7.8p per share, up 13 per cent on the year before.

Analysts at stockbroker Collins Stewart said the pressure on organisations, particularly in the public sector, to outsource was only likely to increase. "Mitie remains well positioned to benefit," they added, reiterating a "buy" rating on the shares.

Caroline de La Soujeole, an analyst at Seymour Pierce, said revenues were in line with her estimate of 1.71bn, although much of that had come from acquisitions, with underlying growth described as "disappointing".

McGregor-Smith said the company was likely to expand its Scottish workforce in the current year. Recent contract wins north of the Border have included 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.