MITIE, the rapidly expanding strategic outsourcing and energy services group, says it is on track to continue its long record of sustainable, profitable growth.
The Bristol-based group has won a number of major contracts over the past few months and in an interim management statement today it reported a strong order book and pipeline of sales opportunities which will add to its organic growth.
It highlighted excellent client relationships across the public and private sectors in the UK extending to a growing international portfolio as well as:
- Energy services capabilities that are transforming the outsourcing model;
- Market leading technology providing a competitive edge and operational excellence;
- Incentives at all levels which result in better performance and support an entrepreneurial culture;
- A robust balance sheet and no significant pension deficit.
"These enablers provide a strong, differentiated proposition and the platform for future growth," says the company.
In the private sector its sales pipeline remains buoyant with new and retained work across a range of markets including:
- A five-year contract with FriendsLife, one of the UK's leading providers of financial products and services, to provide integrated facilities management for a total value of £28m;
- Managing and delivering building repair services as part of a £20m dual-supplier solution on a four-year contract with LV=, the UK's largest friendly society and provider of insurance, retirement and investment products;
- A contract to provide cleaning and environmental services for a British chain of cinemas, at more than 100 branches nationally, for a three-year period at a total value of £13.6m
- An interior fit-out project for Derwent London, worth£10.5m over eight months;
- A five year contract with CapGemini to provide integrated FM for a total value of £10m
In the public sector, the company remains focused on the justice, health, local authority and social housing markets. Here again there has been new business and retentions including a partnership agreement with the Prison Service to bid for the management of all nine prisons currently involved in the prison competition announced by Secretary of State for Justice Kenneth Clarke in July 2011. MITIE has invested significantly in the justice sector and it says this new agreement will create a compelling and competitive proposition in bidding for 15-year prisons management contracts. As a result of the partnership, MITIE has withdrawn its separate bids for the management of HMP Coldingley and HMP Wolds.
Recent successes include:
- Retaining a contract with Birmingham Primary Care Trusts and Birmingham Community Healthcare NHS Trust (BCHC) to provide cleaning and environmental services, with a total value of £8.4m over three years
- A new contract with Coventry University Enterprises to provide total security management over a three-year period worth a total of £5.1m
One setback was a decision by Edinburgh City Council on January 19 not to approve an integrated facilities management contract for which MITIE was recommended as preferred bidder.
However, the company says the pipeline of outsourcing opportunities for the delivery of local public services remains strong across the UK and it will continue to invest in this area to support its future growth.
The energy services market is significant for MITIE, with 35% of the group's revenues derived in this area. In fact MITIE is ranked as the UK's second largest energy services company in the UK through delivering business continuity through security of supply, value through cost reduction, reduction of carbon emissions and renewable energy.
In December, MITIE was appointed to deliver a £35m energy centre that will create Scotland's largest energy self-sufficient community, generate new jobs and help counter fuel poverty. More than 1,200 homes in Cardenden, Fife, will receive all their heat and hot water from a new energy centre powered by 38,000 tonnes of waste wood. MITIE will develop and operate the scheme, working in partnership with Ore Valley Housing Association, boosting the local economy by creating 50 local jobs in the construction phase and up to 12 further permanent positions once the centre is running. Residents will benefit from energy bills up to 10% less than market prices, helping to counter fuel poverty. The scheme will also save 21,000 tonnes of CO2 each year, the equivalent of the emissions generated by 3,533 Fife homes. The project commences in April 2012.
Elsewhere, MITIE acquired last month the leading energy and carbon specialist Utilyx Holdings. It specialises in strategic planning, procurement and risk management, all of which are designed to manage the business impact of energy consumption and rising energy costs.
Utilyx clients include Scottish Water, Iceland and McDonald's and MITIE says its acquisition will complement and enhance MITIE's existing CarbonCare energy services capabilities. The company says Utilyx has annualised revenues of more than £7m and is well placed to support MITIE's progress in the growing energy services market in the UK. It paid £15m in cash on completion with up to a further £1.2m dependent on future business performance.
MITIE has also acquired a majority stake in the UK's leading access and disability consultancy company Direct Enquiries Holdings which has an annual turnover of approximately £1.4m. The initial cash payments was £300,000 with further cash payments dependent on financial performance over a five-year period.
The Bristol-based group, which set up a £10m Entrepreneurial Fund a year ago, has participated in more than 100 successful start-ups over the last 25 years, recently invested in a start-up business to provide facilities management services to the leisure, sports and entertainment industries. To date, MITIE has invested more than £4m from the Entrepreneurial Fund in start-ups, second generation equity schemes and other equity incentive based businesses.
It says its strong balance sheet "continues to provide us with capacity for the development of organic growth and for further value creating acquisitions should they arise".
It adds that it is optimistic about "the continued opportunities for growth for MITIE, but recognises the wider uncertainties in the global economy and in certain of our more cyclical markets. The search for cost and energy efficiencies is a priority for governments and businesses across our markets, and delivering better quality services, innovation and efficiency is core to what we do".
MITIE's full year results will be announced on May 21.
