Bundled services prove key to better profits at Mitie

Mitie, which provides services from cleaning to engineering, said yesterday that revenue for the year to March 31 was up 10 per cent to £1.89bn, with profit before tax and other items up 15.3 per cent to £105.7m.

The company, which employs more than 60,000 people across the UK and Europe including 11,500 in the north of England, works on a number of contracts in the region including catering and cleaning services for Yorkshire Water.

Recent contract wins include a five-year contract to provide cleaning services to Hull Royal Infirmary and Castle Hill Hospital in Hull as well as painting work for a number of housing associations.

John Telling, corporate affairs director, said: “We find that because Mitie has national coverage, we are winning lots of work with clients who have a spread of offices across the whole country. The fact that we have the ability to work on that basis has helped us win work in Yorkshire.”

It has offices in Leeds and Barnsley as well as a number of contract offices in the region.

Chief executive Ruby McGregor said: “What we are seeing is as our contracts grow, they are growing in scale and complexity.

“Whereas five years ago the group did lots more single services work, what we are now doing is lots of bigger bundled contracts and I think that is what’s driving the growth.”

Investec analyst Guy Hewett said the results were in line with its expectations. “We continue to believe Mitie is very well placed to benefit from clients’ needs to save costs and that the group’s breadth of services and expertise in energy services provides a real point of difference,” he said.

Mitie has a sales pipeline of £11.4bn based on private sector clients, which make up 63 per cent of revenue, looking for more integrated services and ways of reducing energy usage.

The group said it also expected to benefit from public sector opportunities in local government, justice and health as the Government looks to cut costs.

Mitie said energy services now generated 34 per cent of its revenue and that it hoped to repeat recently won facilities and energy management contracts with the likes of Vodafone with other existing clients, as well as increase overseas work having moved into Europe with Rolls Royce this year.

Ms McGregor said: “Forty-three percent of our top 100 clients have multi-national operations and most of those are within Europe, so there is no reason why in the next two to three years we couldn’t win more.”

The FTSE 250 company, which increased its total dividend for the year by 15.4 per cent to nine pence, added that 81 per cent of its 2011/12 budgeted revenue had been secured.