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UPDATE 1-Mitie optimistic on outsourcing outlook after 4 pct profit rise
May 19, 2014 / 12:01 PM / 3 years ago

UPDATE 1-Mitie optimistic on outsourcing outlook after 4 pct profit rise

(Adds CEO, analyst comments)

By Li-mei Hoang

LONDON, May 19 (Reuters) - British outsourcer Mitie reported a 4.3 percent rise in full-year pretax profit on Monday, beating average analysts' expectations, and was confident of building on its track record of producing sustainable, profitable growth.

Mitie, which runs services from maintenance and cleaning to baggage screening at London's Heathrow airport, said it expected opportunities in the outsourcing market to grow, particularly in Britain, its biggest market, where the economy is picking up.

"The outlook in the next five years in the UK particularly (is) becoming increasingly positive," CEO Ruby McGregor-Smith told Reuters.

The company, which generates 64 percent of group revenue from the private sector, said it will focus on driving growth by pursuing larger outsourcing contracts after it won a 180 million pound deal to run two UK immigration centres for the British government in February.

"We see in the long-term more public sector opportunities," McGregor-Smith said.

Larger rivals in outsourcing G4S and Serco, who have long had high-value contracts with the British government, have faced heavy criticism after an audit showed both firms had charged the British taxpayer for tagging criminals who were not being monitored.

Mitie reported a 8.2 percent rise in full-year group revenue and raised its total dividend for the year by 6.8 percent to 11 pence per share. Pretax profit rose to 113.3 million pounds ($191 million) for the year to end-March. This compared with an average estimate of 110.4 million in a Thomson Reuters poll of 10 analysts.

The company said its order book for the year ahead stood at 8.7 billion and that it had secured 84 percent of revenue for the coming year.

"The shape of the group has changed significantly in recent years, and the business is now operating in more attractive markets," Cantor Fitzgerald analyst Caroline de La Soujeole said.

The company is aiming to expand its activities in the healthcare market. It is getting out of mechanical and electrical engineering construction and is cutting exposure to part of its former asset management business.

Exceptional losses from its mechanical and electrical engineering construction business were 13.6 million. In addition, the company said the reduction of its exposure to the design and build element of its former asset management business would see a one-off exceptional charge of 25.4 million.

Shares in Mitie were up 2.1 percent to 317 pence by 1104 GMT, making it one of the biggest gainers in the FTSE 250 index.

$1 = 0.5942 British Pounds Reporting by Li-mei Hoang, Editing by Paul Sandle and Jane Merriman

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