Facilities Services

	2008 £m	2007 £m	Increase %
Revenue	820.4	732.1	12.1
Operating profit before amortisation	48.9	41.5	17.8
Reported operating profit margin before amortisation	6.0%	5.7%	0.3pps
Underlying operating profit margin before amortisation	6.0%	6.0%	-

Our Facilities Services division combines the operating activities of our broad range of FM services. The division has had a good year with new contract awards across the division increasing revenue by 12.1% to £820.4m (2007: £732.1m) and operating profit growing by 17.8% to £48.9m (2007: £41.5m). Reported operating profit margins increased by 0.3% to 6.0% (2007: 5.7%) whilst underlying operating profit margins were maintained at 6.0% (2007: 6.0%). Our medium-term target range for this division is 6.0% to 7.0%.

Within Facilities Services this year, we have had a focus on consolidation which will allow our businesses to work together more easily and assist them in delivering effective multi-service and FM contracts going forward. We now recognise five business lines as follows: Cleaning and Environmental Services which encompasses the cleaning, landscaping and pest control businesses with revenues this year of £269.6m (2007: £236.9m); Facilities Management which comprises the Managed Services, Business Services and Pfibusinesses which had revenues of £136.4m (2007: £124.0m); Security with revenue of £257.4m (2007: £241.8m); Engineering Maintenance with revenue of £135.2m (2007: £109.7m) and Catering with revenue of £21.8m (2007: £19.7m).

We set out below a range of contract awards.

Within the government sector, we have been awarded a five-year contract to provide an FM solution for The Office for National Statistics delivering project management services as well as a full solution to provide facilities services for their UK estate.

We have also recently been awarded a large contract with the Atomic Weapons Establishment to provide security services, where our team will be under the operational and tactical control of the MoD Police to manage access and egress at their Aldermaston and Burghfield sites.

Our national contract with Her Majesty’s Courts Service to provide security services continues to expand, with additional revenue secured in the last financial year. This enlarged contract is the largest single manned guarding contract in the UK security industry.

Our focus on the education sector has enabled us to win several new cleaning contracts with Carnegie College in Fife, and both Stevenson College and the new Queen Margaret University Campus in Edinburgh.

We have secured a key role in Perth and Kinross Council’s Investment in Learning project – a public private partnership agreement between Perth and Kinross Council and Axiom Education (Perth and Kinross) Limited to build five new primary schools and four secondary schools on six campus style sites. We have been appointed as the FM partner to deliver a comprehensive FM service for a 30-year period.

Our contract awards in the financial and professional services sector include a major new contract with Barclays to provide cleaning, security and waste management services at more than 50 of their main buildings around the country.

We have extended our existing contract with Willis to deliver facilities services to the new Willis Tower building in the City, which Willis moved into in February 2008. MITIE will deliver all the cleaning and security services on this site, which is 330,000 sq ft in size with 2,000 occupants, from spring 2008.

MITIE has also recently been awarded a contract with Newedge, a company formed by the amalgamation of the brokerage businesses of Calyon and Société Générale. The new contract is for MITIE to deliver a multi-service package of mail and courier services, as well as front of house services, hospitality and café trolley services for their 750 staff.

In addition to the contract with HBOS to provide the cleaning, landscaping and pest control to their high-street branches around the UK, which started in February 2007, we have now extended our contract to provide these services to a further 130 of their major office sites around the country. The contract has doubled in value and now involves over 2,000 MITIE people.

Another valued contract award for MITIE was with the top five international law firm, Linklaters. Having been a client since May 2001 and having already renewed once in 2004, we are very pleased that the contract was extended for a third period in a recent tender exercise. MITIE provides 38 people delivering mail and archiving services in London and Colchester. We also provide several technology solutions on site. Our document management business was recently awarded an exciting new five-year contract with Herbert Smith, delivering mailroom, stationery, reprographics and records management services to their offices in London.

In the manufacturing and logistics sector, MITIE has been awarded a specialist health and hygiene contract to clean the Fox’s biscuits site, part of Northern Foods.

Working in the property management sector, we have been awarded a major contract with NB Entrust to deliver cleaning, pest control and landscaping to 150 sites in the south east as well as delivering the same services along with security and engineering maintenance to a further 70 sites in the south west.

Within the retail sector, we have been awarded work at more Somerfield stores to add to our cleaning contract in the south east.

In the transport sector, we have secured a prestigious three-year contract to deliver FM consultancy services to Dubai World Central (DWC). DWC is one of the most strategically important commercial infrastructure developments ever launched in the Persian Gulf. DWC, a 140km² urban aviation project centred on the world’s largest international airport, aims to transform the region into one of the most powerful global centres for logistics, tourism and commerce.

Another great award is with St Pancras International, a flagship contract for our specialist transport team which includes cleaning and pest control.

In May 2007, MITIE’s specialist transport security team was re-awarded a three-year contract for the provision of hold baggage screening services for all flights departing from Bristol International Airport.

MITIE has also been awarded a contract with BAA at Heathrow Terminal 5, providing cleaning and waste management for one of the largest single sites in Europe.

In the utilities sector, we have been awarded contracts with EDF Energy to clean two power stations in Lincolnshire as well as a new contract with British Nuclear Group involving over 55 MITIE people, providing mail, graphics, reprographics, document production, fleet technical support and signage services.

In addition to the work secured earlier in the year with Cable & Wireless to deliver engineering maintenance services throughout 725 of their sites in the UK and Ireland, MITIE has expanded its relationship to provide an FM service, delivering cleaning, office services, helpdesk and other ancillary services to their UK and Ireland estate, including their Bracknell HQ.

"Facilities Services has seen increased opportunities."