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Mitie: the next G4S?

The outsourcer is bulking up its security division
October 10, 2018

Following a series of disposals, Mitie (MTO) has announced an acquisition that makes it look like management is betting on the security business as a critical part of its recovery strategy.

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The group will buy Vision Security Group for £14m on a debt-free, cash-free basis, which will add considerable heft to Mitie’s security operations. VSG had revenues of £192m in the last full financial year (to September 2017), while Mitie’s existing security operations recorded revenues of £432m in the year to March 2018. Jason Towse, managing director of Mitie’s security division, said the deal “will create the largest intelligence and technology-enabled security business in the UK”.

Market dominance is far from certain, however. Security giant G4S (GFS) had sales of £1.33bn in 2017, and its strategy focuses on building out its technological capabilities to drive growth. What’s more, VSG made a statutory pre-tax loss of £2.7m in the last financial year.

Recent financial performance doesn’t, however, mean the deal is a write-off, VSG is expected to report modest profitability in its upcoming full-year filing, while Mitie’s own security business has been a bulwark of profitability in the otherwise troubled group. It grew consistently over the last three years – against a backdrop of poor performance in much of the rest of the group.