Outsourcing firm with a Mitie order book of work

Outsourcing firm Mitie is sitting on a record order book after securing most of its budgeted revenues in just the first three month of the financial year.

The company, which employs about 6,000 people in Scotland out of a 61,000-strong workforce, said it had made “significant progress in each of its key target markets” and had seen “good levels of organic growth” in the period since 1 April.

It added yesterday that revenues and profit were developing in line with management’s expectations.

By the end of June, Mitie had secured 85 per cent of budgeted revenues for the financial year to April, compared to 78 per cent at the same point last year.

The group provides services from cleaning to engineering, and has recently pushed into the energy services market. Its clients north of the Border include the Scottish Parliament and Edinburgh and Stirling castles.

Mitie said it was seeing a steady flow of contract awards in the public sector, particularly in local government, justice, health and social housing, as the UK government and local authorities look to cut costs by outsourcing services.

The pipeline of private sector work, which makes up more than 60 per cent of revenue, also remains buoyant, the firm noted, while contract wins such as the installation of solar panels at social housing projects shows how it is trying to tap into new markets.

The company has plans to expand internationally and recently completed its acquisition of facilities management specialist Service Management International (SMI), paying £1.5 million for the half of the business it did not already own.

It said the acquisition would help it support overseas clients. Mitie also gains existing SMI clients including Motorola, Honeywell and Brittany Ferries.

Mitie, whose UK clients include BT and Rolls-Royce as well as hospitals and housing associations, also claimed it is now the second largest energy services company in the UK, with 34 per cent of its revenues derived from that area.

The division helps businesses and government departments to reduce their energy consumption, but has also branched out into providing secure back-up electricity and renewable energy.

Mitie is one of only two companies bidding for the first projects in the NHS Carbon and Energy Fund, a £200m initiative for NHS trusts to upgrade their energy infrastructure. Kevin Lapwood, an analyst at Seymour Pierce, said the group had grown its business in the building energy services market at a time when new legislation will make this a “hot topic” for most major UK public and private sector institutions.

He said Mitie’s shares were still trading on an undemanding rating and at a “significant discount” to a facilities management peer group average.

“In our view this rating fails to reflect the fact that Mitie is now evolving in areas with higher growth and higher margin potential,” he said. “We reiterate our ‘buy’ recommendation and 300p target price.”