responseability deliverability profitability sustainability - Mitie

esponseability 

deliverability 

profitability 

sustainability 

MITIE Group PLC Annual Report 2007

01 Responseability 

Why we succeed 

02 Deliverability 

What we do 

04 Profitability 

How we are doing 

06 Sustainability 

Chairman’s statement 

08 Chief Executive’s statement 

10 Strategy 

18 Operating review 

30 Finance Director’s statement 

33 Corporate responsibility 

36 Board of Directors 

37 Accounts

esponseability 

MITIE is able to succeed because of the ability 

of its people and their responsive approach to their 

customers. MITIE attracts people who want to work 

in an organisation that is filled with capable 

individuals who are allowed the freedom to make 

decisions to improve the services that are 

experienced by their customers. MITIE people 

are motivated by the opportunities that they have, 

whether from an equity stake, career progression 

or simply being part of a great responsible company. 

Everyone in MITIE is passionate about delivering 

the best possible service. Everyone knows that to stay 

ahead we need to work together, be flexible, smart 

and listen to our customers. 

It isn’t rocket science but it works. 

MITIE Group PLC Annual Report and Accounts 2007 1

deliverability 

MITIE is passionate about delivering. 

Delivering quality services and what we promise 

to our customers has made MITIE one of the 

UK’s market leaders in delivering Facilities, Property 

and Engineering Services. 

Services 

Revenue 

Facilities Services 

£732.1m 

Catering 

Cleaning 

Document Management 

and Front of House Services 

Energy Services 

Engineering Maintenance 

Facilities Management 

Landscaping and Grounds Maintenance 

Pest Control 

Security 

Waste and Environmental Services 

Property Services 

£215.1m 

Building Refurbishment, Fit-Out 

and Maintenance 

Engineering Services 

£281.6m 

Mechanical and Electrical Engineering 

Total 

£1,228.8m

We deliver professional, flexible, cost-effective 

solutions, through our partnerships with clients. 

Our extensive range of Facilities, Property and 

Engineering Services is designed to maintain, 

manage and improve their buildings and 

surroundings. Whether procuring single, 

bundled or facilities management services 

our clients can be assured that we always 

deliver service with passion. 

Single services 

78% of our services are provided in single, 

stand alone contracts. We recognise that 

our customers want the best possible 

service from specialists in each area. 

Bundled services 

14% of our revenue comes from customers who 

want more than one MITIE service.They like the 

consistent approach, ethos and processes that 

comes from having a wider range of services 

provided by one company. They also like the 

opportunities for economies of scale. 

Facilities management 

In addition to pure service provision MITIE 

also provide the management and delivery 

of facilities services. Facilities management 

accounts for 8% of our revenues.

profitability 

2007 2006 Growth Growth 

(£m) (£m) (£m) (%) 

Revenue on continuing operations 1,228.8 935.6 293.2 31.3% 

Operating profit before amortisation 

and integration costs 62.2 48.3 13.9 28.8% 

Operating profit before amortisation 59.9 48.3 11.6 24.0% 

Profit before tax 56.6 50.5 6.1 12.1% 

2007 2006 Growth Growth 

(p) (p) (p) (%) 

Earnings per share before amortisation 

and discontinued operations 12.3 10.6 1.7 16.0% 

Earnings per share before amortisation 12.3 9.9 2.4 24.2% 

Earnings per share 11.9 9.8 2.1 21.4% 

Dividend per share 5.1 4.3 0.8 18.6% 

4 MITIE Group PLC Annual Report and Accounts 2007

Revenue 

Operating profit 

before amortisation 

and integration costs 



Profit before tax 

(£m) 

565.8 

694.5 

799.7 

935.6 

1,228.8 

(£m) (£m) (£m) 

03 

04 

05 

06 

07 

Earnings per share 



Dividend per share 

12.3 

11.9 

5.1 

1.9 

7.3 

32.6 

8.3 

8.8 

39.7 

9.9 

44.3 

6.5 

48.3 

7.6 

62.2 

8.8 

9.8 

2.5 

3.4 

4.3 

32.6 

38.7 

44.3 

48.3 

59.9 

31.8 

38.2 

47.9 

50.5 

56.6 

03 04 05 06 07 03 04 05 06 07 03 04 05 06 07 


before amortisation and 

discontinued operations 

(p) 

12.3 

(p) (p) (p) 

7.3 

8.3 

10.1 

10.6 

03 04 05 06 07 03 04 05 06 07 03 04 05 06 07 

03 

04 

05 

06 

07 

Note: 03 and 04 under UK GAAP, 2005 restated under IFRS.

sustainability 

This has been a year of strong performance at MITIE and the 

Group is in great shape to sustain its excellent track record. 

The Group celebrates its 20th anniversary in May 2007, and 

over the past twelve months we have successfully managed 

the transition to a new senior management team under 

Chief Executive, Ruby McGregor-Smith. 

Chairman’s statement 

Ruby’s appointment marks a new era for the Group. 

She has clearly demonstrated her commitment to MITIE 

as well as the ability to take on this new role in her four 

years with the Company, firstly as Group Finance Director 

and latterly as Chief Operating Officer. Her new role as 

Chief Executive is providing important continuity and 

strong leadership for the Group. 

MITIE has a reputation for consistent sustainable growth. 

Our revenue and profit have grown in every one of our 

20 years, delivering an annual compound growth rate 

in revenue, both from acquisitions and organic growth, 

of 41.4% per annum. I am pleased that our record 

of growth continues. 

Results 

Revenue in the year to 31 March 2007 rose to £1,228.8m 

(2006: £935.6m), an increase of 31.3% on continuing 

operations, while profit before tax and intangible 

amortisation from continuing operations rose by 14.8% 

to £58.2m (2006: £50.7m). Profit before tax rose by 12.1% 

to £56.6m (2006: £50.5m). Basic earnings per share (EPS) 

increased by 21.4% to 11.9p (2006: 9.8p), while EPS 

pre-amortisation and discontinued activities rose 

by 16.0% to 12.3p (2006:10.6p). 

Dividend 

The Board is recommending a final dividend of 2.7p per 

share, which gives a total of 5.1p (2006: 4.3p) for the year. 

This represents an increase of 18.6%. We have adopted 

a dividend cover metric based on post tax earnings 

before amortisation and integration costs per share to 

ensure that dividend payments to Shareholders track the 

underlying profitability of our business. Our dividend cover 

is set at 2.5 times on this adjusted measure of EPS. Our 

dividend payment timetable has been brought forward 

and the final dividend will be paid on 3 August 2007 

to Shareholders on the Register at the close of business 

on 6 July 2007. Over the last five years, our annual 

compound dividend growth has been 28.0%. 

Share buyback programme 

Although we have not bought any shares this year under 

this programme, we will be seeking to renew the authority 

granted by our Shareholders to purchase up to 10% of the 

Company’s issued share capital at the Annual General 

Meeting (AGM) on 26 July 2007. 

Acquisitions 

The year to 31 March 2007 has not been a year of 

external acquisitions but one that has largely been spent 

integrating the businesses we bought in the previous year. 

I am pleased to be able to report that the integration has 

gone very well, and that the enlarged Security business 


“We have a very able and 

experienced management team.” 

is winning new contracts and experiencing good levels 

of organic growth. It has performed well and we have 

achieved the synergy savings that we anticipated. 

The Group continues to seek acquisitions that contribute 

to the development of its capabilities. In April 2007, MITIE 

completed the acquisition of the specialist plumbing, 

heating and mechanical services business, Robert Prettie 

& Co Limited (Robert Prettie).This business focuses on the 

housing market in the Midlands and Yorkshire and adds 

to the capabilities of our growing Property Services 

organisation. 

In line with our business model, we purchased the 

minority interests in eight MITIE businesses for a total 

maximum purchase consideration of £4.1m. In addition, 

we successfully implemented Second Generation Equity 

Plans in Property Services and Landscaping.The Property 

Services scheme required Shareholder approval which 

was granted in July 2006. 

People 

Ian Stewart was one of the founding members of MITIE 

and has successfully led the Group as Chief Executive 

over the past six years, guiding it through a period of 

significant change and development. I would like to 

thank him on behalf of the Board for his exceptional 

contribution and am pleased that the Board will continue 

to benefit from his sound advice as Non-Executive 

Deputy Chairman. 

Sir John Jennings was Non-Executive Deputy Chairman 

and Senior Independent Non-Executive Director until his 

retirement after nine years on 31 March 2007, and I would 

like to thank him for his substantial and long-standing 

contribution to MITIE’s success. 

Cullum McAlpine, who has served as one of our 

Non-Executive Directors for over three years, has been 

appointed to the role of Senior Independent Non- 

Executive Director. In addition, David Jenkins, who 

has been a Non-Executive Director since early 2006 

has taken over Sir John’s role as Chairman of the 

Nominations Committee. 

Colin Acheson who is the Director responsible for 

Engineering Services will be retiring from MITIE in March 

2008; he remains as Chairman of the Engineering division 

until this date.An internal successor, Mike Tivey, will lead 

our Engineering Services business going forward. Colin 

has worked in our Engineering business since 1989 

and has made a major contribution to its growth. I would 

like to thank him for all of his efforts. 

I would like to welcome to the Board three new Directors 

who have been appointed during the year. Suzanne 

Baxter was appointed as Group Finance Director in 

April 2006. Graeme Potts and Roger Matthews were 

appointed as Non-Executive Directors on 27 July 2006 

and 4 December 2006 respectively.They all bring 

considerable relevant experience to the MITIE Board. 

We now have over 44,000 employees and I would like 

to thank them all for their efforts during this financial year 

and throughout our 20-year history. While it is important 

that the Group has a quality leadership team, it is the 

everyday application of our motivated employees 

who deliver our services that enables MITIE to satisfy 

its customers and to succeed as a business. 

Corporate governance 

Good corporate governance is essential for ensuring the 

future growth and success of MITIE.The Board recognises 

its responsibilities and conducts itself appropriately in 

order to protect the interests of all MITIE stakeholders. 

Corporate responsibility (CR) 

CR is embedded within our strategy. For the second year 

in succession therefore, MITIE is publishing a separate 

report that will also be available on our corporate 

website, and which expands on areas already covered 

in this Annual Report. 

It focuses on MITIE’s efforts in developing skills and 

protecting the environment and is structured to describe 

our successes with our own people in the workplace, 

our work with customers to deliver their CR strategies 

in their marketplace, our efforts with local communities 

and, most importantly, our progress in the area of 

health and safety. 

Outlook 

MITIE is a Group that has a passion for providing quality 

services to its customers. It is the energy, drive and 

enthusiasm of our people that makes MITIE different. 

There are considerable opportunities available to MITIE. 

We have great plans for the future and I am looking 

forward to our development in the years ahead. We 

have a very able and experienced management team 

that will take the business forward and I know that they 

will do so with the same energy and determination 

that has made the Group what it is today. 

We have a very clear strategy. We are financially strong 

and we are in a position to continue our excellent 

progress. 

David C Ord 

Chairman 


chief executive’s 

statement 

The last year has been an important one for MITIE. It has 

been a year of great achievement with the highlights being 

the successful integration of our enlarged Security and 

Landscaping businesses, the development of our Board and 

the continued organic growth of our three divisions Facilities 

Services (formerly Support Services), Property Services and 

Engineering Services. We have changed the name of Support 

Services to Facilities Services because this more accurately 

reflects the range of services that we provide to our clients. 

From a personal perspective, I am pleased 

to present the results of our activities to you 

in my new role as Chief Executive of MITIE. 

I believe that MITIE has the ability to take 

full advantage of the opportunities that its 

markets offer and I feel privileged to be 

leading the business at this exciting time 

in its development. 

In 2007, we achieved growth in revenue of 

31.3%, 17.4% of which was organic. Organic 

growth is an important measure for us 

as it reflects the success of both new and 

traditional services in our expanding client 

base. We are pleased to report the 

achievement of double digit organic 

revenue growth across all three of our 

divisions in 2007 – a reflection of the 

strength of our business offering. 

“I feel privileged to be 

leading the business 

at this exciting time 

in its development.” 


Our ability to introduce growth through 

acquisition is of increasing importance. 

We are pleased to have successfully 

managed the integration of the 

Landscaping and Security acquisitions 

made last year and the delivery of the 

planned synergy benefits.These activities 

have produced a Landscaping business 

with a national capability and a Security 

business that is the second largest 

manned guarding business in the UK. We 

continue to seek acquisitions that augment 

our service delivery capabilities and were 

pleased to announce the acquisition of 

Robert Prettie in April 2007 to enhance 

our Property Services business. 

Order book 

The success of our bidding activity and 

the strength of our business is reflected 

in our order book, which now stands at 

£4.1bn, and we start the year to March 

2008 with some 75% (2006: 72%) of our 

budgeted revenue already secured. 

Our order book reflects some impressive 

contract wins including those at HBOS, 

Marks & Spencer and Birmingham City 

Council. 

Our people 

I recognise that the success of MITIE is 

a reflection of the success of our people 

and I would like to thank all of our 

employees for their contribution to this 

year’s impressive results and for providing 

continued flexible support to our clients. 

At MITIE our people have a broad range 

of talents and backgrounds and we are 

committed to supporting a culture that 

continues to give opportunity to our 

people and that encourages inclusion 

and diversity in our business. 

“This year we have 

continued our 20-year 

track record of 

revenue,dividend 

and earnings growth.” 

Our future success will be built upon the 

delivery of a clear strategy and vision. It will 

be underpinned by the continuation and 

development of our unique equity ethos, 

which will be measured by a challenging 

set of key performance indicators. 

I am excited about the future for MITIE. 

It is an immense pleasure to work with 

such a dedicated and aspirational team. 

No day at MITIE is the same and our 

common goals of growth, providing 

responsive services to our clients and 

developing our people drive us all. 

MITIE has delivered another year of strong 

growth in revenue, profits and dividends. 

We continue to focus on our growth 

strategy by increasing market share whilst 

maintaining margins. We believe in getting 

the basics right – delivering excellent 

service to our customers and maintaining 

our reputation for quality. We have a great 

business, a motivated, entrepreneurial 

team and excellent prospects for further 

sustainable growth. 

Ruby McGregor-Smith 

Chief Executive 

Looking forward 

MITIE’s equity-based business model 

has delivered a consistent track record 

of revenue and earnings growth over 

the 20 years since the Group’s formation. 

MITIE employed 44,866 people at 

31 March 2007 and is now responsive 

to a broad stakeholder base. 


strategy 

The best UK services company 

MITIE has always had a clear strategy of increasing 

market share and maintaining margins. 

Our strategy has been formulated to enable 

us to achieve our vision which is to be the best 

UK services company. We have a strategic focus 

on four values which emphasise what makes 

MITIE different.These are underpinned by specific 

objectives for each area in terms of our clients, 

operations, growth and people. 


MITIE values 

Responseability 

Clients 

– Build excellent 

relationships 

– Continually 

improve tender 

and rebid 

success rates 

– Work together 

efficiently 

– Innovate 

Deliverability 

Operations 

– Deliver cost effective, 

efficient solutions 

– Ensure robust systems 

and processes 

– Maintain highest 

health and safety 

and environmental 

standards 

The best 

UK services 

company 

Profitability 

Growth 

– Achieve consistent, 

sustainable revenue 

growth 

– Engage all 

stakeholders 

responsibly 

– Deliver expected 

profits and cash 

Sustainability 

People 

– Recruit the best 

– Maintain culture 

of opportunity 

– Promote development 

and motivation 

– Continue share 

ownership ethos 


Strategy continued 

Responseability 

Increase market share with flexible service delivery 

MITIE has always put its clients first and strong client relationships are 

at the heart of our delivery model. We aim to provide high quality, 

responsive services to our clients and will continue to innovate and 

build our bundled and integrated service offerings. We have a flexible 

approach so that our customers can choose any combination of our 

services to meets their needs. 

MITIE operates in highly fragmented markets that are growing but 

always changing.As a result, while MITIE still has relatively small market 

shares in all of its areas of operations, there is still plenty of room for 

organic growth.Acquisitions have increased over the past few years 

and are likely to feature in our future where it is appropriate. 

MITIE has three divisions; Facilities Services, Property Services and 

Engineering Services. Overall across MITIE, single services represent 78% 

of our revenue, bundled services 14% and facilities management 8% 

with the majority of the revenue of both Property and Engineering 

Services being provided as a single service. 

Facilities Services delivers services in three ways; through single, 

bundled and facilities management contracts. 

Market share by service 

10.8% 

4.0% 

4.5% 

3.8% 

3.0% 

2.6% 2.4% 

3.3% 

3.6% 

4.1% 

1.0% 

Business 

Services 

Catering Cleaning Engineering 

Maintenance 

Landscape 

Managed 

Services 

Pest Control PFI Security Property 

Services 

Engineering 

Services


Single 

services 

Bundled 

services 

Facilities 

management 

62% 

24% 

14% 

Our markets influence how we operate 

as a business. In the first wave 

to outsourcing in the 1980s clients 

outsourced single services, such 

as Cleaning, Security or Catering, 

and they typically had a manager 

who looked after each of the services. 

62% of our Facilities Services are still 

delivered as single service contracts 

because most customers still want 

to buy that way.And we believe 

it is important, and valuable, for MITIE 

to be seen as a specialist company 

providing specialist services. 

Bundling is when a client decides 

to have more than one service 

provided by a single service provider. 

For the client, bundling means 

improved efficiency: it can mean 

just one invoice a month, the services 

being managed as one, a reduced 

number of systems to audit and a 

smaller number of suppliers to 

manage. But sometimes the customer 

chooses to have separate contracts 

because that works for them. We 

are flexible, we have to be, because 

our customers want choice. 

And for the supplier of services, 

it provides opportunity. 24% of our 

business is now delivered in bundles, 

and we anticipate this increasing 

over the medium-term, because the 

bundles are getting bigger and 

we are getting better at delivering 

them. Bundles represent a key part 

of our strategy and will be a major 

driver of organic growth. 

Bundling has created behavioural 

changes within our companies. 

The MITIE Model has been excellent 

at forming management teams that 

are extremely focused on growing 

single service companies.They have 

concentrated on becoming the best 

single service provider operating 

in their region. Now that the market 

is changing they are putting that 

energy into becoming the best at 

providing bundles with their MITIE 

colleagues from other parts of the 

Group – as well as remaining 

the best single service provider. 

Facilities management represents 

14% of our Facilities Services business. 

The proportion is growing, and as MITIE 

grows in scale, opportunities for us to 

compete successfully for larger private 

and public sector contracts will also 

open up.This is an area where we 

will be investing resources in the future. 

The potential for MITIE is significant 

in this area and we are very focused 

on growing facilities management. 

This area of business includes PFI 

contracts, where we already lead 

the market in delivering managed 

services to schools. 

At the moment MITIE performs 

very little work overseas. But there 

is a growing trend for certain types 

of customer to want to procure 

services across a number of territories. 

We have therefore formed an alliance 

with independent service providers 

in France and Germany to offer a 

common platform for providing these 

services in Europe.This alliance trades 

as Service Management International 

Limited and it enables us to compete 

for such international contracts. 



Deliverability 

Maintain service excellence 

Delivering quality services to our clients has enabled MITIE to grow. 

We provide safe, reliable services with robust systems and processes. 

We manage risk effectively and maintain the highest health, safety 

and environmental standards. 

MITIE’s strength and the basis for its success has been its ability 

to deliver excellent services and we are structured to maintain that 

operational excellence. Our structure is designed to respond to the 

needs of our clients and provide services to meet their requirements. 

MITIE acknowledges that to improve our position in our chosen market 

place, we must provide an efficient and total quality service to all 

our clients.To this end we are committed to meeting and exceeding 

the requirements of ISO9001:2000. 

We recognise the importance of involving all levels of our workforce 

in the continuous development, management and review of our 

Business Management Systems to ensure their ongoing effectiveness. 

The provision of a quality service is reliant on good leadership 

and positive management; it is therefore the responsibility of all levels 

of management to promote quality in all aspects of our work.The 

management responsibility extends to ensuring that the requirements 

of the management systems are followed to meet the needs 

of customers and other interested parties. 

Organisation chart 

MITIE 

Property 

Services 

Engineering 

Services 

Facilities 

Services 

Business 

Services 

Catering Cleaning Engineering 

Maintenance 

Landscape 

Managed 

Services 

Pest Control PFI Security 


Profitability 

Responsibly satisfy the needs of our stakeholders 

We regularly review our business model to ensure that it meets the 

needs of our clients, Shareholders, employees and wider stakeholder 

groups. We operate a responsible business model and will aim 

to continue to grow both organically and through acquisition, with 

clear profit margin aspirations and targets for the generation of cash. 

MITIE is committed to operating as an inclusive and diverse business 

which adopts open and honest communication with all of its 

stakeholders. Being a responsible company is embedded in our 

business practices and makes sound business sense and provides 

an opportunity to gain strategic competitive advantage. 

MITIE recognises the impact that its working practices have upon 

the environment and society. We actively consider the following issues: 

– Treatment of employees and employment policies 

– Community relationships 

– Environment and sustainability 

– Human rights 

– Ethical conduct with suppliers, customers and competitors 

– Corporate governance 

– Health, safety and welfare 

– Charitable causes 

– Corporate communication 

– Diversity of our workforce 

Profit growth (£m) 

profit before tax 

56.6 

47.9 

50.5 

38.2 

31.8 

03 04 05 06 07 

Note: 03 and 04 under UK GAAP, 2005 restated under IFRS. 



Sustainability 

Motivate our people to achieve sustainable organic growth 

As a service business, our people are our greatest asset. Sustaining the 

quality of our people and enabling them to fulfil their potential is vital 

to our future. We will develop the MITIE Model to continue our culture 

of equity ownership for our staff and will manage our business to 

enable us to recruit and retain the best people to support our growth. 

We have achieved high growth organically because we have been 

able to motivate our people to out-perform. It is the culture of MITIE. 

We behave responsibly as a business and we are a great company 

to work for. People enjoy working for MITIE. We motivate people through 

career development, respect, rewards and recognition and we are 

all passionate about what we do for MITIE. 

The model ingrains an entrepreneurial attitude into MITIE. Every part 

of the Group operates with a customer obsessed, cost conscious, 

cash focused culture.That makes a real difference. 

We have introduced a Second Generation Equity Plan to provide 

opportunities for existing management teams in some of our older 

businesses.This protects the earnings of our existing Shareholders 

and allows both them and the management teams to benefit from 

the super growth that they are achieving. 

We are acutely aware that we need to be able to motivate all of 

our employees, so we have always used Executive share options and 

an employee share-save scheme. We are now proposing to introduce 

a Long-Term Incentive Plan (LTIP) to help maintain the MITIE culture 

of entrepreneurial teamwork. 

The MITIE Model has stood the test of time. It is flexible, evolving 

and is still a way of generating exceptional organic growth. 

Organic revenue growth (%) 

18.3 

17.4 

15.5 

13.6 

13.5 

03 04 05 06 07 

Note: 03 and 04 under UK GAAP, 2005 restated under IFRS.

Senior management 

Colin Acheson 

David Freeman 

Colin Hale 

Matthew Quill 

Patrick Stirland 

Suzanne Baxter 

Martyn Freeman 


Bill Robson 

John Telling 

Jeff Flanagan 

Roger Goodman 

Peter Mosley 

Alison Saunders 

Mike Tivey 


operating 

review 

MITIE manages its operations with a clear set of targets and 

regularly evaluates the principal risks and uncertainties associated 

with its operations. It has robust systems and processes that support 

the operations, allowing our businesses to achieve sustainable, 

profitable growth. 

Key performance 

indicators (KPI’s) 

We manage our business by monitoring a range 

of financial and non-financial KPI’s. Some of these 

indicators, such as growth levels and profitability, 

have always been used within our business. Some, 

such as carbon emissions, are new and as reported 

in our CR Report, we are striving to enhance 

our measurement and understanding of these 

indicators for MITIE. 

Organic growth 

03 13.6% 

04 18.3% 

05 15.5% 

06 13.5% 

07 17.4% 

Conversion of EBITDA to cash 

03 111.6% 

04 86.8% 

05 84.9% 

06 95.0% 

07 114.0% 

Dividend growth 

03 18.8% 

04 31.6% 

05 36.0% 

06 26.5% 

07 18.6% 

Group EBITA(before integration costs) 

03 £32.6m 

04 £39.7m 

05 £44.3m 

06 £48.3m 

07 £62.2m 

Capital expenditure (as% of turnover) 

03 1.4% 

04 1.8% 

05 1.3% 

06 1.2% 

07 1.8% 

Note: 03 and 04 under UK GAAP, 2005 restated under IFRS. 

Financial KPI’s 

Our equity ethos has driven a culture 

of financial focus through the Group 

and our principal financial indicators 

are shown to the right. 

Group earnings before interest, 

tax and amortisation (EBITA) 

Whilst we maintain a focus on 

profitability and Shareholder returns 

at a number of levels, our EBITA 

margin provides an indicator of 

the financial performance of our 

operational businesses.We monitor 

this indicator before and after the 

application of charges for sharebased 

payments.Whilst the difference 

between the two measures of EBITA 

is marginal, EBITA before that charge 

will be the most consistent indicator 

of our underlying trading 

performance going forward. Where 

we have non-recurring charges, such 

as integration costs on acquisitions, 

we exclude these from our measure. 

We target the attainment of medium 

term underlying EBITA margins before 

share-based payments and nonrecurring 

charges such as integration 

costs associated with acquisitions 

at between 5% and 6% at Group 

level.The target ranges for our three 

divisions are shown to the right. 

Conversion of Group EBITDA 

to cash 

The efficiency with which we 

manage the generation of cash is an 

important indicator for our business. 

The MITIE Model and the Group are 

built on a sound understanding of 

the importance of cash and working 

capital management and that ethos 

remains critical to our business.The 

conversion of Group EBITDA to cash 

is a significant cash flow indicator 

for us, but it is not the only one. 

We monitor daily and weekly cash 

flow trends too, a discipline that has 

served us well this year as we have 

moved to a marginal net debt 

position for the majority of the year 

following the acquisitions in Security. 

This gives us confidence of our ability 

to increase our gearing should the 

right acquisition opportunities arise 

in the future. 


Capital expenditure 

Our strength lies in the management 

of people and in the provision of 

suitable assets to support their work, 

but our business is not capital 

intensive. We have historically exited 

capital intensive businesses and 

continue to target growth in areas 

that do not have substantial capital 

requirements. 


It is important that we continue to 

target a progressive dividend policy 

that provides an appropriate return 

to Shareholders and that provides 

a dividend which grows in line with 

the underlying profitability of the 

Group. We have also reviewed our 

dividend payment policy to ensure 

that it is consistent with market 

practice, and will be paying future 

dividends earlier than we have done 

historically. Our final dividend for the 

year ended 31 March 2007 will be 

paid on 3 August 2007. Historically, 

that dividend would have been 

paid on 28 September 2007. 

Going forward, our dividend cover 

will be calculated by reference to 

our basic EPS before amortisation 

of intangibles and non-recurring 

charges. 

Non-financial KPI’s 

We utilise a range of non-financial 

KPI’s across our business which 

has been developed to support 

our business offering, to enhance 

service delivery and to ensure that 

our services are tailored to the 

needs of our clients. 

Our principal non-financial KPI’s 

are shown below. 

Further information on our health 

and safety and environmental 

performance is provided in our CR 

Report which is being sent separately 

to Shareholders and is available 

on our website, www.mitie.co.uk 

FINANCIAL KPI’S 

Measurement 

KPI Target Year ended 31 March 2007 Year ended 31 March 2006 

Group EBITA Maintain existing margins 5.1%* 5.1% 

Conversion of EBITDA 

Over 90% of Group EBITDA 

to cash converted to cash 114.0% 95.0% 

Capital expenditure Maintain below 2.0% of revenue 1.8% 1.2% 


*Before non-recurring integration costs. 

DIVISIONAL EBITA TARGET RANGES 

At least in line with underlying profit 

growth at a cover rate of 2.5 times 

adjusted earnings 18.6% 26.5% 

Measurement 

Year ended 31 March 2007 

Division Target After share-based payments Before share-based payments 

Facilities Services Between 6.0 and 7.0% per annum 6.0%* 6.1%* 

Property Services Between 4.5 and 5.0% per annum 4.9% 5.0% 

Engineering Services Between 3.0 and 4.0% per annum 2.8% 2.9% 

Total Group Between 5.0 and 6.0% per annum 5.1%* 5.2%* 

*Before non-recurring integration costs. 

Measurement 

Year ended 31 March 2006 

Division Target After share-based payments Before share-based payments 

Facilities Services Between 6.0 and 7.0% per annum 6.4% 6.5% 

Property Services Between 4.5 and 5.0% per annum 5.4% 5.5% 

Engineering Services Between 3.0 and 4.0% per annum 2.5% 2.6% 

Total Group Between 5.0 and 6.0% per annum 5.1% 5.2% 

NON-FINANCIAL KPI’s 

Measurement 

KPI Objective Year ended 31 March 2007 Year ended 31 March 2006 

Reportable accidents Retain focus on reducing the risks 5.1 per 1,000 6.1 per 1,000 

of accidents in our business employees employees 

Management turnover 

Enhance focus on the development 

and retention of key staff to maintain 

key staff turnover below 10% 8.6% not measured 

Retention of existing contracts Active contract retention rates 

within Facilities Services in excess of 90% 85.0% 84.0% 

Forward order book Increase order book £4.1bn not measured 

Carbon dioxide emissions Understand and minimise 0.7 tonnes equivalent not measured 

the environmental impact 

CO2 per employee 

of our operations 


Operating review continued 

Statement of 

principal risks 

and uncertainties 

The Group has an established risk management 

and corporate governance framework which is described 

in the corporate governance statement. Within this 

framework, MITIE classifies risks in four categories 

according to their potential impact on the Group: 

– Strategic risks – those that 

concern the long-term strategic 

objectives of the business; 

– Operational risks – those that 

arise during day to day activities 

of the business which if not 

managed, could impact upon 

the running of the business 

and the ability of the business 

to deliver on its strategy; 

– Financial risks – those that 

directly impact upon the 

finances of the business; and 

– Compliance risks – those that 

relate to legal or regulatory 

sanctions, financial loss, or the 

loss of reputation that may arise 

as a result of failure to comply with 

applicable laws and regulations. 

Principal strategic risks 

Principal operational risks 

New business 

As MITIE’s business develops, the 

Group will increasingly tender for 

larger, more complex and multiservices 

contracts.Associated with 

this is an increase in risks surrounding 

the appropriate pricing of contracts 

to ensure a fair balance of risk 

and reward, agreeing fair commercial 

terms and meeting contractual 

obligations and expectations. 

The crystallisation of the downside 

of such risks could have a detrimental 

impact on the Group’s profitability 

and reputation, whilst sound 

management and acceptance 

of these risks will benefit the Group’s 

service delivery capabilities and 

financial position. 

To address these risks, MITIE’s system 

of internal control incorporates 

stringent contract review and 

approval mechanisms. Depending 

on the nature of the contract and risks 

identified, a dedicated commercial 

bid team and specialists are used. 

Effective contract management 

and contract monitoring procedures 

are designed to ensure that risks 

are managed through the life 

of the Group’s contracts. 

Loss of major contracts 

MITIE has a number of major contracts 

which although not individually 

material by value to the Group are 

important to our future growth. We 

adopt a key account management 

strategy for these contracts which 

includes Director-level client 

relationships.This helps to ensure 

that we mitigate the risk of losing 

any of these contracts. 

Acquisitions 

MITIE continues to seek to acquire 

businesses that fit with, or compliment, 

its range of service offerings and 

its culture.The potential strategic risks 

associated with such activity include 

an inability to achieve a cultural 

fit and to manage the financial and 

operational transition of the acquired 

business into the Group. If the downside 

risks associated with this activity were 

to materialise they could lead to 

business disruption, loss of profits 

and reduced investor confidence. 

These potential risks are mitigated 

by an experienced acquisitions team, 

supported by internal and external 

specialists and the Executive Directors 

who closely monitor the acquisition 

process.All acquisitions require 

full Board approval, and following 

acquisition an Executive Director 

is charged with the responsibility 

of ensuring that the business 

acquired is integrated successfully. 

Health, safety 

and environment 

The range and nature of activities that 

MITIE undertakes give rise to a range 

of potential health, safety and 

environmental risks.These risks have 

potential to impact upon all 

stakeholders, including employees, 

the public and the environment. 

Specific risks include working at 

height, installing and maintaining 

electrical systems, using machinery 

and harmful chemicals and working 

on hazardous sites and in public 

areas.The consequences of these 

risks may include injury, loss of life, 

environmental damage, disruption 

to business activities, loss of reputation 

and financial penalty. 

To manage these risks MITIE continues 

to develop a culture where every 

employee takes responsibility for their 

health and safety and where all 

operational activity has a strong safety 

focus. Health and safety matters are 

the first item on the agenda at all 

Board meetings.The Chief Executive 

is responsible for health and safety 

and is supported by divisional 

Managing Directors, the Head of 

Health and Safety and a network 

of dedicated local health and safety 

experts. MITIE places employee 

training at the forefront of improving 

health and safety standards 

throughout the Group and has 

continued to develop a safety training 

programme covering specific areas 

of health and safety in conjunction 

with the Institute of Occupational 

Safety and Health (IOSH). 


Overall responsibility for the 

management of risk lies with 

the Board. 

Other factors not discussed within 

this statement could also impact 

the Group and accordingly, this 

statement should not be considered 

to represent an exhaustive list 

of all of the potential risks and 

uncertainties, both positive and 

negative, that may affect the 

Group.The areas of MITIE’s activities 

to which the principal risks and 

uncertainties of the Group are 

perceived to be attributable 

are set out below. 

Principal financial risks 

Principal compliance risks 

Employee skill shortages 

MITIE recognises that there will be 

skill shortages in some sectors of 

the business.This could impact upon 

our ability to service new contracts 

adequately and subsequently 

MITIE’s ability to grow. 

To recruit and retain the people MITIE 

needs, remuneration, incentivisation 

and reward structures are regularly 

reviewed.The Group continues 

its emphasis on share ownership 

and operates the MITIE Model, 

a Save as You Earn share scheme, 

Executive Share Option schemes 

and is proposing to introduce a LTIP. 

A new reward scheme for all 

employees was launched in the 

year which entitles employees 

to a series of discounts and offers. 

MITIE places great emphasis on 

succession planning and the training 

and development of its employees. 

As part of this MITIE is dedicated to 

providing work based learning and 

training opportunities and currently 

employs 241construction, engineering 

and other apprentices. 

Externally, MITIE supports vocational 

education by providing Construction 

Skills Centres in secondary schools 

across the UK.The first Skill Centre was 

established in 2001, with a further three 

developed in both 2005 and 2006. 

They provide externally accredited 

vocational education for over 400 

students.A further two Skills Centres 

are also planned for 2007. 

Liquidity 

Maintaining a sufficient level of liquidity 

and financial capacity is essential to 

enable MITIE to meet its foreseeable 

obligations and achieve its strategy. 

Failure to manage liquidity could 

impact upon the ability of the Group 

to grow. Risks impacting upon the 

Group’s liquidity include the ability 

to manage working capital, limited 

banking facilities and commercial 

credit exposure. 

The management of liquidity risk is 

the responsibility of the Group Treasury 

department which operates within 

a framework of policies and 

procedures which are approved 

by the Board. Monitoring of daily 

and weekly cash flows by senior 

management and the Board ensures 

that the activities of the department 

operate within this framework. 

Furthermore, new five-year committed 

banking facilities of £150m were put 

in place during the year. 

Pensions 

Risk associated with the operation 

and management of the Group’s 

pension funds concern the ability 

of the pension assets to meet future 

pension liabilities. Within MITIE this 

applies to MITIE’s own pension 

schemes and also to pension 

schemes associated with employees 

who have transferred to MITIE under 

the Transfer of Undertakings Protection 

of Employment legislation (TUPE). 

Regarding MITIE’s own defined benefit 

schemes,Trustees manage the funds 

and set the required contribution rates 

based on an independent actuarial 

valuation.This valuation is sensitive 

to changes in assumptions made 

regarding future events, including 

mortality rates and the long-term 

return on schemes’ assets.The funding 

position of the schemes is regularly 

reviewed. 

In respect of pension schemes 

associated with transferring 

employees, the principal risk to 

MITIE concerns employees who are 

members of a Local Government 

Pension Scheme, and the potential 

for scheme liabilities to exceed 

scheme assets. MITIE manages this 

risk by ensuring that appropriate 

advice is obtained in the bidding and 

transfer process, that risk is priced fairly 

and that agreement is reached with 

the scheme provider on how potential 

future liabilities will be met and on 

the funding position on transfer. 

Further information regarding pensions 

is shown in Note 30. 



Business review 

MITIE’s business is structured into three divisions: Facilities 

Services which delivers services either singly, bundled or 

as a complete facilities management service, Property 

Services and Engineering Services. 


Facilities Services has had a strong year with good 

levels of growth across the business.The second half 

of the year was particularly pleasing with a number 

of substantial single service contract wins. 

2007 2006 

£m £m Growth 

Revenue 732.1 516.0 41.9% 

Operating profit 41.5 33.0 25.8% 

Operating profit margin 5.7% 6.4% 

Integration costs 2.3 – 


before integration costs 43.8 33.0 32.7% 

Operating profit margin 

before integration costs 6.0% 6.4% 


Security is the largest facilities service 

business and grew by 177.3% last 

year.This growth was principally 

attributable to the acquisitions made 

in the prior year, but also reflected 

organic growth of 40% for the 

enlarged business.The integration 

of the manned guarding businesses 

has gone well, and has generated 

annualised synergy savings of £3m, 

of which £2.5m have been realised 

this year.These activities have 

resulted in the establishment of 

a nationally focused business which 

is now the UK’s second largest 

provider of manned guarding 

security services. 

Security has delivered an excellent 

sales performance, with client 

retention in line with expectations. 

We are finding that our market 

position is creating opportunities of 

a scale previously not available to us. 

In January, Security extended its 

long-established relationship with 

Her Majesty’s Courts Service (HMCS) 

by securing all seven of the regional 

contracts tendered.The contracts 

are for an initial term of four years 

with the option of a two-year 

extension. Security’s work with HMCS 

has grown from a regional contract 

with a value of £8m per annum to 

a portfolio of contracts which is now 

worth in excess of £22m per annum. 

We have also focused on the retail 

sector, which has significantly 

different requirements to other 

business areas, and the successful 

completion of a short-term contract 

with Marks & Spencer led to 

the award of a three-year contract 

to cover all stores nationwide. 

The market remains competitive 

although shows signs of consolidation 

with some smaller suppliers exiting 

the market. We have a strong 

revenue pipeline, and during 2007 

we will be launching a dedicated 

transportation team to build on our 

experience in aviation to other parts 

of the broader transportation sector. 

The forthcoming requirement for 

security guards in Scotland to be 

licensed and trained will allow us to 

use our experience in England and 

Wales to secure additional market 

share north of the border. 

With over 22,000 employees, 

Cleaning is our largest employer 

and was the first to operate under 

the Second Generation Equity Plan. 

Its strengthened and restructured 

sales team is winning increasingly 

large contracts. 

Major wins during 2006/07 include 

HBOS, to clean more than 1,000 

of its bank branches around the 

country.This is one of our largest 

single contracts and, with work that 

we already do with Barclays and 

other major banks, consolidates 

our position as the leading provider 

of specialist retail bank cleaning 

in Britain. 

Among our specialist cleaning 

business, Health and Hygiene, 

our specialist food manufacturing 

and healthcare cleaning team, won 

the high profile Great Ormond Street 

Hospital account. Retail won a major 

contract to clean over 500 Somerfield 

stores nationwide, while Transport has 

recently been awarded a contract 

to provide cleaning services 

at Heathrow’s Terminal 5 (T5). 

Over the next year Cleaning will 

be maintaining its concentration 

on improving client retention. It will 

also be putting particular emphasis 

on working with other MITIE teams 

to expand the level of bundled 

services opportunities from our 

existing client base. 





For all of the services we provide 

our aim is to be the best. We 

recognise that our customers 

want the best possible services 

from specialists in each area. 

That is what we provide: 

Security provides static, electronic 

and mobile guarding, as well as 

remote monitoring services, gallery 

attendants, warden and key 

holding services. 

Cleaning serves offices and industrial 

buildings, transport, healthcare and 

retail premises and services include 

window cleaning, recycling and 

waste management. 

Engineering Maintenance provides 

heating and ventilating services, 

lighting and boiler maintenance, 

plumbing and water hygiene 

and estate maintenance. 

Pest Control offers services 

to manage insects, birds 

and other pests. 

Landscaping includes sports 

ground maintenance, exterior 

landscape design and maintenance 

for facilities such as golf courses; 

and also arboriculture and interior 

plant care. 

Business Services will run post 

rooms, reception and switchboards, 

as well as records management 

and reprographics. 

Catering offers hospitality 

and executive dining, vending 

and employee catering. 

Schools, museums and leisure 

facilities are included in the large 

and specifically non-housing 

contract that Engineering 

Maintenance won from Birmingham 

City Council.Also in Birmingham, 

the contract for BULLRING Shopping 

centre was re-secured. New 

Engineering Maintenance sections 

specialising in Fire Alarm 

Maintenance and Water Treatment 

have started and the business has 

also invested in a web-enabled 

system to provide customers with 

better asset maintenance reporting. 

As well as these three substantial 

businesses, we also have four 

developing businesses within Facilities 

Services, namely Pest Control, 

Landscaping, Business Services 

and Catering. Our strategy is to grow 

these businesses to a top five position 

in their respective markets. 

Pest Control made a small 

acquisition of trade and assets 

during the year, started a new 

business in London and continued 

to make progress towards developing 

a national pest control offer. It also 

won a five-year contract with BAA, 

which includes Heathrow, Gatwick, 

Stansted and Southampton airports. 

Following the acquisition of Lyndhurst 

Services Limited in February 2006, 

we integrated it with our existing 

Landscape businesses in December 

2006 to create MITIE Lyndhurst 

Services Limited, under a Second 

Generation Equity Plan. 

The implementation of Business 

Services’ largest contract, 

with PricewaterhouseCoopers, 

has continued to go well and 

has included the provision of 

work placements as part of our 

multiple award winning ’Real 

Apprentice’ scheme. 

Business Services has developed a 

suite of innovative software solutions 

for print management, package 

tracking, desktop courier booking 

and e-procurement that will be rolled 

out to its clients over the next twelve 

months. Our Document Solutions 

business has added a design 

and desktop publishing capability 

to its printing and fulfilment services. 

The strategy for the next twelve 

months is to concentrate growth in 

the financial services sector in which 

it already holds key contracts and 

in the legal and professional sector 

in which it currently provides services 

to seven out of the top 20 global 

law firms. 

Catering has continued to make 

progress during the year. In particular 

the new start-up businesses in 

London and the North of England 

have achieved contract gains 

including the Brewery in Chiswell St, 

London, which is a hospitality venue 

for over 1,000 people, Beechcroft 

LLP in Bristol and London and the 

Matalan distribution centre in 

Manchester. In our Catering business 

we concentrate on providing fresh 

food that is cooked well. We use only 

the best ingredients in terms of both 

food and people to ensure that our 

customers receive exactly what they 

need. Our nutritionists work closely 

with our clients to help produce 

healthy menus that help combat 

the effects of city living. In each of the 

services we provide our aim is to be 

the best. We recognise that our 

customers want the best possible 

services from specialists in each area. 

That is what we provide. 


Over the past few years MITIE 

companies have experienced 

a rise in the number of clients who 

are looking to procure bundles 

of services; that is more than one 

service provided by a single service 

provider. With bundles, the client 

is happy to outsource the service 

delivery, but retains management 

control of the process. 

Bundling can arise in a number 

of ways: 

1. MITIE provides a single service 

which is well received by the client, 

who then, over a period of time 

adds services as the relationship 

matures. We call this natural 

bundling. Natural bundling can 

involve a single contract with the 

original service provider; a series 

of individual contracts with the 

individual MITIE companies; or a 

master or framework contract that 

is amended as services are added. 

2.The client wishes to reduce its 

supplier base and negotiates with 

a number of providers that can 

deliver the services. We call this 

a negotiated bundle. With this type 

of bundle the client typically places 

as great an emphasis on culture, 

relationships and the ability to bring 

innovation to the services, as to 

pure price. 

3. Some clients use bundling simply 

to reduce costs.The philosophy 

being that the more work in the 

bundle, the more efficiencies will 

result and service providers will 

accept a lower margin in return 

for the scale and length of the 

contract term. We call this 

price bundling. 

MITIE is involved in all three. 





“Our flexibility makes sure that we 

are able to produce a solution that 

meets the needs of our customers.” 

The largest bundled contract that 

we have is with Rolls-Royce.This 

began eleven years ago as a single 

cleaning contract on one site.That 

developed into a national Cleaning 

contract, to which was later added 

a mechanical and electrical 

Engineering Maintenance element. 

In recent years Catering, Security, 

Landscaping, Business Services and 

Pest Control have been added too. 

This contract now covers over 900 

people working on nine sites across 

the Rolls-Royce estate from Inchinnan 

in Scotland to Bristol. 

The British Nuclear Group’s 

reprocessing plant at Sellafield has 

now become established as our 

second largest bundle. During 

2006/07 MITIE won a service contract 

at Sellafield which bundles Cleaning 

with Engineering Maintenance work, 

Security and Business Services.This 

contract involves over 200 people. 

Bundles can originate with any 

of our businesses, and it is the ability 

of our managers to make the 

connections between one service 

and another, that is driving our 

success in this area of the 

outsourcing market. 

In 2006/07, for example: 

– A Business Services contract with 

the London Stock Exchange was 

extended to include cleaning; 

– Goodrich Corporation, a global 

supplier of systems and services 

to the aerospace, defence and 

homeland security markets, 

expanded its contract with 

Cleaning to include Waste and 

Environmental on three Birmingham 

sites.The services include hazardous 

waste disposal, confidential waste 

destruction and industrial recycling 

solutions; and 

– Bookham Technology has added 

Engineering Maintenance to a 

bundle that began with Catering 

and Cleaning. 

Facilities management 

We principally provide integrated 

facilities management services 

through our Managed Services 

and PFI businesses. 

We have had a good year in facilities 

management. We secured 

a managing agent contract with 

Cable & Wireless to oversee the 

facilities management service 

provision across its UK estate. We 

were also pleased to be selected 

to provide services to the UK 

Government through the Office 

of Government Commerce (OGC) 

Property and facilities management 

Framework Agreement as well as 

additional services for the Big Lottery 

Fund and Littlewoods Shop Direct. 

We were also awarded a three-year 

contract with leading biotechnology 

company Amgen that also includes 

Engineering Maintenance, Catering, 

Security and Pest Control. 

It is this ability to draw together 

a range of MITIE’s service offerings 

that is one of our main strengths in 

the facilities management market. 

We will always choose the service 

delivery method that is best for the 

client.That flexibility makes sure that 

we are always able to produce 

a solution that meets the needs 

of our customers. 

In the PFI market, we signed five PFI 

school contracts during the year 

bringing the number of schools that 

we manage to 85.This makes MITIE 

the UK’s leading provider of facilities 

management services to PFI schools. 

We are also currently part of three 

consortia tendering for Building 

Schools for the Future contracts. 

An increasingly important part 

of our facilities management service 

delivery is our approach to energy 

efficiency and the environment. 

We have been nominated for a 

number of awards for our approach 

to the environment and one of our 

managers was recognised as 

Nemex Energy Manager of the Year. 

Furthermore, an energy awareness 

and energy efficiency campaign 

that we undertook with the National 

Offender Management Service 

was a finalist in the PFM Partners 

in Sustainability Award. 

The current order book for this 

division is £3.4bn. 


Managed services 



“Robert Prettie adds significantly 

to our range of services in the 

housing sector.” 


MITIE Property Services provides repair and 

maintenance, painting, roofing and fire protection, 

refurbishment, interior fit-out services and the supply 

and installation of office furniture across several 

market sectors. 

2007 2006 


Revenue 215.1 163.5 31.6% 



As the social housing market 

becomes increasingly important 

to us we have continued our strategy 

of reducing our exposure to one-off 

refurbishment contracts, striving 

instead for long-term relationships 

through framework or partnership 

arrangements with owners, 

occupiers, managers or 

property portfolios. 

We are also focusing on our painting 

business where we believe we have 

the necessary skills and experience 

to benefit from the higher margins 

and improved cash flows. 

Two large social housing contracts 

that started on 1 April 2006 are both 

performing well.To date we have 

carried out over 112,000 repairs for 

Birmingham City Council on their 

southern estate of 27,000 homes and 

reinstated 2,500 empty properties. On 

our Milton Keynes contract we have 

completed 37,000 routine repairs on 

their portfolio of 12,600 homes and 

reinstated 1,100 empty properties. 

Additional packages of work have 

been secured as a result of our 

developing relationship with Milton 

Keynes Council including disabled 

adaptations and security screening 

work. We have had further success 

in securing a sizeable contract from 

Stevenage Borough Council for the 

delivery of kitchens and bathrooms, 

and Decent Homes Standard 

work for a number of other 

housing associations. 

Since the end of the financial 

year we acquired Robert Prettie, 

a specialist plumbing, heating 

and mechanical services business 

concentrating on the housing 

market in the Midlands and Yorkshire. 

Robert Prettie employs over 250 staff. 

This acquisition adds significantly 

to MITIE Property Services’ range 

of services in the housing sector 

and complements its existing 

regional operations. Robert Prettie 

works in partnership with Local 

Authorities, Councils, Developers 

and Registered Social Landlords on 

kitchen and bathroom installation, 

heating replacement, gas servicing, 

maintenance and call out services. 

There has also been strong organic 

growth across all other areas of the 

business. Large painting contracts 

have been secured for Angus 

Council and Dudley Metropolitan 

Borough Council. Refurbishment 

wins include additional work from BT, 

Royal Mail and LandSecurities Trillium. 

Our Interiors business won three large 

contracts for a city institution on their 

London office campus, a large fit-out 

contract for Scottish Widows and a 

further contract from Standard Life. 

The majority of these new fit-out 

contracts will be delivered in the year 

ending 31 March 2008 thus giving 

a strong secured order book for this 

business stream. Our Fire Protection 

business has had a very successful 

year helped by its involvement in 

the T5 project at Heathrow Airport. 


division is £450.3m. 


“Our national presence makes 

us an attractive partner.” 


Engineering Services covers the design and installation 

of mechanical and electrical systems, information 

and communication technology, air conditioning, 

utilities infrastructure and retail engineering, serving 

a wide range of clients from many different sectors. 

2007 2006 


Revenue 281.6 256.1 10.0% 



The progress of Engineering Services 

this year has been achieved as 

a direct result of a repositioning 

strategy.This began with specific 

margin improvements resulting from 

the restructuring of aspects of the 

business, and derived further benefit 

from a more balanced work mix. 

We have placed particular emphasis 

on developing sectors in which 

we have specific skills that are 

fundamental to the effective delivery 

of our customers’ capital projects. 

We have a strong order book for 

2007 and beyond and our scale 

and national presence make us 

an attractive partner. We have 

framework agreements with 

organisations such as Plymouth 

University, NHS Wales and the 

National Physical Laboratory. 

In addition, repeat opportunities 

are being serviced by the regional 

contracting businesses for customers 

such as Urban Splash in Birmingham 

and Cardonald College in Glasgow. 

The demand for increased resilience 

of organisations’ data infrastructure 

is providing substantial opportunities 

for our Technology division, with 

business critical projects having 

been undertaken in 2006 for 

customers such as IBM, Centrica 

and Logica – and we have an 

extensive pipeline for 2007 and 2008. 

Activity in the retail and social 

housing sectors has been a 

significant contributor within the 

period and is expected to maintain 

its contribution in 2007. We continue 

to build on contracts with Primark, 

Marks & Spencer and Bhs and 

work closely with a number of 

housing associations. 

We have been actively involved 

for some time in the design and 

application of more efficient forms 

of energy generation and 

distribution. More customers are 

seeking to reduce their energy 

footprint and we have invested in 

the required technical, design and 

application skills that will be needed 

in the future. Engineering Services 

now has the accredited technical 

competence, delivery capability, 

commercial model and track record 

that has resulted in a compelling 

low carbon offer for the construction 

and improvement of heating, 

cooling, lighting resilience and 

motive power within the built 

environment. For example, 

Kingsmead School in Cheshire is 

currently the most energy efficient 

school in the UK with innovative 

features from MITIE such as a 

biomass boiler burning reclaimed 

wood pellets to provide heating; 

a rainwater recycling system that 

provides water to flush lavatories; 

solar panels and photovoltaic cells 

generating energy. Two combined 

heat and power schemes (CHP) 

have also recently been installed 

by MITIE Engineering at Sussex 

University and Bristol University which 

will generate around 20% of their 

electrical requirement and reduce 

overall CO2 omissions. 

Future prospects for Engineering 

Services look encouraging in the light 

of the rationalisation of the industry’s 

way of procurement and both new 

and impending legislation on the 

energy performance of buildings. 

Customers are looking to combine 

contracts and enter three to five 

year commitments to secure supply 

in a market where demand is picking 

up. Engineering has the ability and 

scale to deliver multiple projects 

consistently on a national basis 

and will be able to take advantage 

of this trend. 


division is £254.2m. 


finance 

director’s 

statement 

Our financial results for the year reflect strong organic growth levels 

across our businesses and we are starting to see the synergistic 

benefits from our acquisitions in our underlying profitability. 

Key performance indicators (KPI’s) 

Our financial KPI’s of profit margins before the 

amortisation of intangibles, interest and tax (EBITA) and 

profit to cash conversion levels are important indicators 

of the trading performance of the Group. We are satisfied 

that the levels of performance in these measures across 

our three business sectors of Facilities Services, Property 

Services and Engineering Services, and for the Group 

overall are consistent with our medium-term targets. 

Furthermore, our strategy of operating low capital 

intensive businesses continues and capital expenditure 

levels continue to be managed within the target range 

of less than 2% of revenue. 

Finally, our results support the continued growth in 

dividends. We are adopting a dividend cover metric 

based on post tax earnings attributable to ordinary 

Shareholders before amortisation of intangibles and 

integration costs per share to ensure that dividend 

payments to Shareholders track the underlying operating 

profits of our business.This has resulted in a dividend for 

the full year of 5.1p per share (2006: 4.3p), an increase 

of 18.6% for the year.This reflects a dividend cover of 2.5 

times based on our adjusted EPS measure and 2.3 times 

based on basic EPS. In addition, for future dividends we 

have brought forward our traditional dividend payment 

cycle to reduce the period between the declaration date 

and the payment date. Our final dividend for the year 

ended 31 March 2007 will be paid on 3 August 2007. 

Historically that dividend would have been paid on 

28 September 2007. 

Growth in revenue 

Revenue from continuing operations for the Group 

increased by 31.3 % to £1,228.8m (2006: £935.6m) in the 

year.This result has been driven by an organic revenue 

growth rate for the Group as a whole of 17.4% and from 

the impact of acquisitions made in the previous year. 

At the divisional level, double digit organic growth 

rates continue to be achieved in all three divisions. Our 

Facilities Services business achieved revenues of £732.1m 

(2006: £516.0m) of which £159.0m (2006: £24.2m) was 

generated by the acquisitions made in the prior year. 

Underlying organic growth levels in Facilities Services 

were some 16.5% (2006: 11.7%) and reflect success 

in our traditional single services activities as well as our 

integrated and bundled offerings. Revenues in Property 

Services have increased organically by 31.6% (2006: 

16.6%) in the period to £215.1m (2006: £163.5m), largely 

reflecting the impact of new social housing contracts 

that commenced in April 2006, whilst Engineering Services 

revenues of £281.6m (2006: £256.1m) reflect controlled 

organic growth of 10.0% as the business continues 

its focus on sustainable growth. 

Profitability 

Operating profit before amortisation of intangibles (EBITA) 

of £59.9m (2006: £48.3m) is stated after the impact of 

non-recurring gross acquisition integration costs of £2.3m 

(2006: £nil) in respect of the consolidation of our enlarged 

Security business. It also includes a charge for sharebased 

payments of £1.1m (2006: £0.7m) which reflects 

the accounting charges in respect of our Save As You 

Earn and Executive Share Option schemes. 

EBITA profit before integration costs increased by 28.8% 

to £62.2m (2006: £48.3m) reflecting a margin of 5.1% 

(2006: 5.1%).The maintenance of margins at a Group 

level has been achieved through an improvement 

of operating profit margins in our traditional Facilities 

Services business (before acquisitions) and through the 

improvement in operating profits in Engineering Services 

to £7.8m or 2.8% of revenue (2006: £6.4m; 2.5% 

of revenue).These areas of operating profit margin 

improvement have been offset by the dilution in operating 

profit margins in Property Services to 4.9% (2006: 5.4%) 

as expected, following the increase in the proportion of 

social housing contracts undertaken by that business. 

The charge in respect of the amortisation of intangible 

assets arising on acquisitions was £1.6m (2006: £0.2m). 

This related primarily to the acquisitions in Security in 

the prior year. Operating profit after the amortisation 

of intangibles was £58.3m (2006: £48.1m). 


“The underlying cash flow 

performance of the Group 

remains strong.” 

2007 2006 Increase 

£m £m % 

Revenue 1,228.8 935.6 31.3% 

Operating profit before amortisation 

of intangibles, discontinued operations 

and integration costs 62.2 48.3 28.8% 

Integration costs (2.3) – 

59.9 48.3 24.0% 

Amortisation of intangibles (1.6) (0.2) 

58.3 48.1 21.2% 

Net investment revenue and finance cost (1.7) 2.4 

Profit before tax 56.6 50.5 12.1% 

Tax (17.4) (15.5) 

Profit after tax 39.2 35.0 12.0% 

Discontinued operations – (2.4) 

39.2 32.6 20.2% 

Effective tax rate on continuing operations 30.7% 30.7% 

Basic EPS before amortisation and discontinued operations 12.3p 10.6p 16.0% 

Basic EPS before amortisation 12.3p 9.9p 24.2% 

Basic EPS 11.9p 9.8p 21.4% 

Dividend per share 5.1p 4.3p 18.6% 

Investment and finance costs for the period moved 

to a cost of £1.7m (2006: income £2.4m) reflecting the 

movement of the Group to a net debt position for the 

majority of the current year (2006: net cash) following 

the funding of acquisitions made in the prior year. 

The tax charge for the period was £17.4m (2006: £15.5m), 

representing an effective rate of tax on our profit on 

continuing operations of 30.7% (2006: 30.7%). 

These results generated a profit for the period of £39.2m 

(2006: £32.6m) an increase of 20.2% on the prior year. 

Of this, £37.0m or 94.4% (2006: £30.2m, 92.6%) is 

attributable to the Shareholders of MITIE Group PLC. 

Growth in earnings per share (EPS) 

Basic EPS before the amortisation of intangible assets 

and discontinued operations increased by 16.0% to 

12.3p per share (2006: 10.6p per share). Diluted 

EPS before intangible amortisation and discontinued 

operations increased by 15.2% to 12.1p per share 

(2006: 10.5p per share). 

After intangible amortisation and discontinued 

operations, basic EPS was 11.9p (2006: 9.8p). On the 

same basis, diluted EPS was 11.8p (2006: 9.7p). 


Finance Director’s statement continued 

Pensions 

The Group contributes to a range of defined benefit 

and defined contribution pension schemes. It operates 

two MITIE Group PLC defined benefit schemes and the 

net surplus before tax included in the Group’s balance 

sheet arising from those two pension schemes was 

£0.5m (2006: £1.8m). 

In addition, MITIE makes contributions to its customers’ 

defined benefit pension schemes under Admitted Body 

Local Government and other arrangements in respect 

of certain employees who have transferred to the Group 

under TUPE.The values of the assets and liabilities 

attributable to the Group in respect of those schemes 

are equal and therefore no surplus or deficit is included 

in the Group balance sheet at the end of the year. 

Acquisitions 

The Group acquired some or all of the minority interests 

in the equity share capital of eight of its subsidiaries in 

accordance with the MITIE Model.The total maximum 

consideration payable in respect of those acquisitions 

is £4.1m.The consideration will be largely settled in the 

shares of MITIE Group PLC. 

In August 2006, the Group also settled deferred 

consideration of £0.8m in respect of the acquisition of 

shares in MITIE Business Services Limited, MITIE Engineering 

Services (Swansea) Limited and MITIE Security (North) 

Limited in August 2005. 

The total of MITIE Group PLC shares issued in respect 

of these transactions was 1,727,180. 

Other acquisition related transactions include the 

settlement of deferred consideration of £10.8m in respect 

of the acquisition of MITIE Security (London) Limited 

(formerly MITIE Trident Security Limited).This transaction 

was settled through the issue of £8.9m of loan notes 

and cash of £1.9m. Further deferred consideration 

of £1.2m was settled in loan notes in respect of the 

acquisition of MITIE Pest Control Limited (formerly Eagle 

Pest Control Services UK Limited). £2.0m of deferred 

consideration was converted into loan notes in respect 

of The Watch Security Limited and subsequently £1.0m 

was redeemed during the year. 

Cash flow 

The underlying cash flow performance of the Group 

remains strong with the conversion of EBITDA to cash 

of 114% (2006: 95%).This was a particularly strong 

performance and we continue to target more 

sustainable levels of 90%–100% going forward. 

At 31 March 2007, the net funds position of the Group 

was £5.6m (2006: net debt £23.4m) with loans of £20.0m 

being drawn at that time (2006: £31.0m). Deposits held by 

the Group’s reinsurance subsidiary, which are not readily 

available to the Group, totalled £10.3m at 31 March 2007 

(2006: £9.6m). 

In March 2006, the Group moved into a net debt position 

following the acquisition of Initial Security Limited, having 

historically held net cash.The underlying operating cash 

flows of the Group have been strong during the year 

returning the Group to net cash at the year end. However, 

the Group maintained a net debt position for the majority 

of the year, and this is reflected in the financing costs 

within the income statement. 

Group Treasury has responsibility for managing and 

reducing financial risks and ensuring sufficient liquidity 

is available to meet foreseeable needs. It operates within 

policies and procedures approved by the Board which 

have not changed during the year. Borrowings are 

arranged centrally by Group Treasury and made 

available to operating subsidiaries on commercial terms. 

The Board’s ongoing policy is to finance the Group 

through retained earnings and borrowings. 

During the year the Group reviewed its banking facilities 

and established a committed five-year £150m revolving 

credit facility.The principal covenants in respect of this 

facility put a cap on the maximum level of debt within 

the Group at 3.5 times EBITDA, and require a minimum 

ratio of profit to interest payable of 3:1.The Group has 

operated within these covenants throughout the year. 

Events after the balance sheet date 

On 2 April 2007, MITIE announced the acquisition 

of Robert Prettie, a specialist plumbing, heating and 

mechanical services business concentrating on the 

housing market in the Midlands and Yorkshire.The initial 

consideration was £8.6m, of which £7.0m was in cash, 

£1.6m in loan notes and £0.8m of cash retained against 

potential warranty claims. Debt of £3.7m was assumed 

by MITIE on the acquisition. Deferred consideration on 

the acquisition up to a maximum £23.3m is payable 

in a combination of loan notes and cash based on 

performance over a three-year period.The deferred 

consideration can be triggered between 2010 and 2012. 


Group Finance Director 


corporate 

responsibility 

At MITIE, our approach to CR is an integral part of the way we 

do business. Responsible business practice is not only the right 

approach to take from a moral and ethical standpoint, 

it also makes good business sense. 

We know that our customers prefer to work with an 

organisation that manages its business responsibly and 

that this approach will provide not only long-term benefits 

for the environment and the communities in which we 

operate, but also for the future profitability of our Group. 

CR and sustainability have always been high on our 

agenda. However, we have recognised the need for an 

increased focus on formally setting our objectives and 

on being able to measure their impact against set 

targets. We have identified five priority strategic areas in 

line with Business in the Community (BitC) best practice: 

Health and Safety, Workplace, Marketplace, Environment 

and Community, and we are committed to measuring 

our performance in these areas. 

We have published a separate CR Report which 

will be issued to all of our Shareholders and to other 

stakeholders.This provides more details on our CR 

activity and our related performance measures. 

Health and safety 

Health and safety is of paramount importance at MITIE. 

It is the first item on every Board agenda. Our employees 

are our most important asset and it is essential for them 

to be able to work in a healthy environment that is free 

from risks and danger. 

MITIE has comprehensive systems and processes in place 

for the management of health and safety. In the coming 

year, we want to raise the profile of health and safety even 

further and use it as an enabler of increased efficiency 

and enhanced working practices. We are introducing 

a new annual Group-wide Health and Safety Performance 

Programme.This will set the standards for our business, 

define expectations, and help us to further improve our 

health and safety performance.This initiative will ensure 

that health and safety remains a core objective in 

all aspects of MITIE’s service delivery. 

We also understand that training is key to improving safety 

skills and awareness. Eighteen months ago, we focused 

management and operator training across many areas 

of the business on working at height and are now seeing 

the benefits with the number of accidents that occur 

having been reduced by 16%. With such tangible results, 

our continued investment in training is easy to 

understand: this year we spent over 18,900 hours training 

and developing the core safety competencies of 

our people in courses that impact upon the success 

of our business. 

Workplace 

The number of people employed by MITIE on 31 March 

2007 was 44,866. It is critical that we motivate our people 

and create enthusiastic, respected employees who want 

to do their jobs better than anyone else. We understand 

that motivation comes in many shapes and sizes. It 

can be about the way people are treated at work, 

the recognition given for a job well done, being kept 

informed, or opportunities to develop skills and careers. 

In recognition of our employees’ hard work we run 

numerous annual awards schemes that reward staff that 

have gone the extra mile for colleagues or customers, 

and in February 2007 we launched an Employee Rewards 

Scheme that offers all employees discounts on a huge 

range of goods and services. 

Engaging with our people is equally important to our 

success and to that effect we have a corporate intranet 

site, a senior management magazine, and a Group-wide 

newspaper. Encouragingly, these tools have recently 

received recognition for their strategic impact in 

supporting sustainable growth and engaging employees 

via the BIFM Communications and Marketing Award 2006. 

This year has also seen us establish the MITIE Central 

Academy of Service Excellence, which provides internal 

and external training courses for staff and clients in a 

wide range of disciplines. Investing in people in this way 

is vital; we understand that relevant training will help 

us motivate staff and enhance their skill sets, while 

improving service delivery for clients. MITIE is also keen 

to introduce more skills and new talent to the industry as 

a whole and supports apprenticeships across the Group, 

with around 240 apprentices currently working in our 

various businesses. 

In line with this, we launched a new apprenticeship 

scheme with Dumfries and Galloway Housing Partnership 

for the construction of social housing.At the other end 

of the country, we ran our ’Real Apprentice’ scheme, 

a programme that for the last two years has been helping 

to provide opportunities to young people in East London, 

an area with some of the highest rates of unemployment 

in the country.The scheme is run in partnership with the 

East London Business Alliance and has already won 

numerous awards, including a prestigious Big Tick 

Excellence Award 2007 and the 2006 PFM Partners with 

People Award. It guarantees jobs to successful candidates 

who complete ten weeks in an office support 

work-placement with MITIE at client sites including 

PricewaterhouseCoopers and Merrill Lynch.This year saw 

another 16 young people offered jobs by MITIE, following 

in the steps of the nine who were recruited in 2005/06 


Corporate responsibility continued 

and who are still with us.The ’Real Apprentice’ has been 

hailed as a best-practice blueprint scheme for helping 

to tackle unemployment issues in urban regeneration 

areas and has been such a success that as it enters 

its third year, we are planning on rolling it out in other 

areas of the country. 

Marketplace 

CR is not only an essential part of what MITIE does 

internally.The services we offer and the skills we have 

mean that we can help others achieve their Corporate 

Responsibility targets too – whether that be through 

energy management, skills development, 

or, for example, through food. 

With buildings estimated to be responsible for almost 

half of the UK’s carbon dioxide emissions, proactivity by 

MITIE is critical for our clients. Heating, ventilation, lighting 

and air conditioning all need to be considered in the fight 

to keep efficiency high and carbon dioxide emissions to 

a minimum, which MITIE, with 20 years of experience in 

this arena, is in a prime position to achieve; transforming 

the ideals behind sustainability into commercially viable 

realities. MITIE has its own registered low carbon 

consultants and teams of specialists.These teams 

are helping to ensure the design and application 

of more efficient forms of energy generation 

and distribution in the built environment. 

MITIE’s catering business recognises that the sourcing 

of food is also a key CR issue to us. One measure of 

its impact is food miles – the distance that food travels 

from farm to plate. Excessive food miles can cause 

environmental, social and economic damage. We 

are seeking to reduce our own food miles index by 

10% over the next twelve months via reduced delivery 

frequencies, increased order delivery values and local 

sourcing. Quite apart from the environmental impact 

of transporting goods, locally produced food retains 

investment in local communities and is often both fresher 

and more nutritious. We established a Sustainable 

Procurement Forum in the year, which is drawing 

up an expanded ethical trading code to help us 

source products in the most ethical manner. 

Some sustainability issues are clear cut. Others are 

not. We believe it is truly important to be alive to issues, 

communicate with our stakeholders and proactively 

meet as many of our sustainability targets as possible. 

Environment 

Almost all of MITIE’s operations involve working with 

buildings.As buildings produce almost half of the UK’s 

greenhouse gas emissions, MITIE has an important role 

to play in helping the country to meet its tough climate 

change targets. 

During the year we carried out a major exercise to 

measure, for the first time, the energy, water, fuel and 

waste used and produced throughout our organisation. 

This is a major part of our commitment to improving 

how we measure and benchmark our impacts 

against set targets. 

This initiative will help us to focus our efforts on positively 

reducing our environmental impact. We think that 

calculating and monitoring our Carbon Footprint and 

reducing our rate of CO2 emission is much more effective 

than simply buying ’carbon credits’ in the market. 

Importantly, MITIE is not only investing in reducing the 

size of its own carbon emissions, but are helping our 

clients to reduce theirs too. MITIE has sought to align 

its energy goals with those of its clients for some time 

now and is already working with customers to develop 

innovative ways that will help them to make a difference. 

For example, our Security business is now offering energy 

patrols that will switch off lights and machinery and 

report faults. We also provide comprehensive waste 

management and recycling services under 

our TREEHUGGER® brand. 


“MITIE enables people to fulfil 

their potential.” 

Community 

MITIE enables people to fulfil their potential – the people 

– in the communities that we work among, as well as 

the people who work for us. 

We have been creating a network of Construction Skills 

Centres across the country since opening our first centre 

in Portsmouth in 2001.The Skills Centres represent MITIE’s 

largest community investment and greatest commitment; 

we opened the fifth, sixth and seventh of these centres 

during 2006 – in Birmingham, Ipswich and in Hackney, 

London – and will be opening the eighth in Airdrie in 

Lanarkshire, later in 2007.They give young people a 

chance to realise their potential, offering vocational 

training for all, and are currently helping over 420 14–16 

year olds to learn a range of construction skills and obtain 

nationally recognised vocational qualifications as part of 

the National Curriculum.The courses in our Skills Centres 

are delivering qualifications that are equivalent to the 

attainment of five GCSE’s. 

Everyone benefits from the Skills Centres: from the young 

individuals whose skills sets, qualifications and 

employment prospects are improved, the schools whose 

attendance and pass rates have increased and who 

have access to new funding sources, and to the 

communities that have access to new facilities out of 

school hours. Not forgetting MITIE, whose employees are 

motivated by their involvement and whose future contains 

a home grown local pool of talent. Indeed, the scheme 

has been so successful that it was rewarded a 2007 

Big Tick Excellence Award by Business in the Community. 

MITIE can make a difference.That is why we are delighted 

to be one of just three employers invited by the London 

Development Agency to be part of a new public and 

private sector partnership in East London.This is designed, 

in part, to help deliver central government targets on 

increasing levels of employment.That, after all, is central 

to what MITIE does. 

We believe that providing employment skills to young 

people is one of the most important things that a 

responsible organisation can do. However, this only forms 

the tip of our community investment iceberg. We have 

also been involved in dozens of community initiatives 

over the past twelve months, ranging from painting murals 

in schools in Bristol to helping local regeneration and 

making and selling a CD with client Rolls-Royce that 

raised over £25,000 in two hours for charity. We do this 

because the work that MITIE does every day takes us into 

the very heart of the communities in which we operate, 

some of which are among the most disadvantaged 

in the country. 

As we look to the future, our people remain top of our 

strategic agenda. We will continue to invest time, energy 

and resources into remaining true to the ethos that 

defines our business: giving opportunity to individuals, 

whatever their background. We are committed to 

constantly evaluating new opportunities and risks which 

will help to shape our CR strategy over the coming years. 


Board of Directors 

David Ord‡ 

Non-Executive Chairman 

David was appointed as Non-Executive 

Chairman of MITIE Group PLC in 

September 2003, having previously been 

appointed as Non-Executive Director in 

October 2002. David is Managing Director 

of The Bristol Port Company which owns 

and operates the Avonmouth and 

Portbury docks. 

Ian Stewart 

Non-Executive Deputy Chairman 

Ian was appointed as Non-Executive 

Deputy Chairman on 30 March 2007 

having previously held the position of 

Chief Executive since 2001. Ian was a 

founding member of MITIE. He is Non- 

Executive Director of Generation (UK) 

Limited, suppliers of scaffolding, access 

and safety systems. 

Ruby McGregor-Smith ACA 


Ruby joined the Group in December 

2002 as Group Finance Director. She was 

promoted to Chief Operating Officer in 

September 2005 and subsequently to 

Chief Executive in March 2007. Prior to 

joining the Group, Ruby held a range of 

senior roles within the support services 

sector, primarily at Serco Group plc. 

Suzanne Baxter ACA 


Suzanne joined the Board of MITIE in April 

2006 as Group Finance Director. Suzanne 

previously held a number of commercial 

and operational roles with Serco Group 

plc. Suzanne holds a seat on the 

Opportunity Now Advisory Board, a part 

of the Business in the Community (BitC) 

organisation with a focus on workplace 

diversity, and is also a member of the 

Finance and Risk Committee of BitC. 

Roger Goodman 

Group Corporate Development Director 

Roger joined MITIE in 1993 working 

alongside Ian Stewart in the Cleaning 

division. He was appointed to the Board 

in August 2001.Through his appointment 

to the Boards of The Business Services 

Association and Asset Skills Council, 

Roger advocates the growth of the 

support services industry profile and 

the development of skills in the sector. 

In addition, he is the Chairman 

of Networkers International plc. 

Bill Robson 

Director responsible for Property Services 

Bill joined the Group in January 1992 

following the acquisition of Trident 

Maintenance Services Limited. He was 

appointed to the Board as Director 

responsible for Property Services in August 

2001 and he has recently overseen the 

restructure of the Group’s Property 

Services division and the introduction 

of a Second Generation Equity Plan. 

Colin Acheson 

Director responsible for 


Colin was appointed to the MITIE Board 

in August 2001 as Director responsible for 

Engineering Services, having joined the 

Group in December 1989. Colin also 

serves on the Boards of The Platform 

Company (UK) Limited, which specialises 

in the hiring of powered access platforms, 

and The British Quality Foundation which 

promotes business performance 

improvement and excellence. 

Colin Hale 

Director responsible for Managed 

Services, PFI and 


Colin joined the Group in April 1998 

and was appointed to the Board in 

August 2001. Prior to joining the Group, 

Colin was a Director of a facilities 

management company. 

David Jenkins*†‡ FCA 

Non-Executive Director and Chairman 

of the Nomination Committee 

David was appointed as Non-Executive 

Director in March 2006. Prior to retirement 

in May 2004, David was a senior Partner 

with Deloitte & Touche LLP in London 

having spent over 20 years in Assurance 

and Advisory Services. David is Chairman 

of Development Securities PLC and also 

serves on the Board of Renewable Energy 

Systems Limited. He is a Governor of 

Downe House School. 

Ishbel Macpherson*† 

Non-Executive Director and Chairman 

of the Remuneration Committee 

Ishbel joined the Board in July 2005 

as Non-Executive Director. Ishbel was 

an investment banker for over 20 years 

specialising in UK mid market corporate 

finance and previously held positions at 

Dresdner Kleinwort Wasserstein and Hoare 

Govett. Ishbel is also a Non-Executive 

Director of Hydrogen Group plc and 

GAME Group plc. Ishbel is also a Governor 

of The University of Westminster. 

Roger Matthews† ACA 

Non-Executive Director 

Roger was appointed as Non-Executive 

Director to the Board in December 2006. 

Roger previously held the roles of Group 

Finance Director of J. Sainsbury PLC and 

Group Managing Director and Group 

Finance Director of Compass Group PLC. 

Roger currently serves as Non-Executive 

Chairman of both Land of Leather 

Holdings PLC and LSL Property 

Services PLC. 

Cullum McAlpine*†‡ 

Senior Independent Non-Executive 

Director and Chairman of the 

Audit Committee 

Cullum was appointed as a Non- 

Executive Director to MITIE in April 2003. 

He is also a Director of Sir Robert 

McAlpine Limited and Chairman of 

Renewable Energy Systems Limited. 

Graeme Potts* 

Non-Executive Director 

Graeme was appointed as Non-Executive 

Director to the Board in July 2006. Graeme 

has extensive experience of the 

automotive retail and business services 

sectors having held previous directorate 

appointments with Inchcape PLC, RAC 

Motoring Services and Reg Vardy plc. 

He currently holds a Non-Executive 

Directorship with BEN, the Motor & Allied 

Trades Benevolent Fund and is Chairman 

of Bikers Legal Defence Limited. 

* Member of the Remuneration Committee. 

† Member of the Audit Committee. 

‡ Member of the Nomination Committee. 


Accounts contents 

38 Directors’report 

40 Directors’remuneration report 

45 Corporate governance 

50 Independent auditors’report to the members of MITIE Group PLC 

51 Consolidated income statement 

52 Consolidated statement of recognised income and expense 

53 Consolidated balance sheet 

54 Consolidated cash flow statement 

55 Notes to the consolidated financial statements 

80 Independent auditors’report to the members of MITIE Group PLC 

81 Company balance sheet 

82 Notes to the Company financial statements 

87 Useful information for Shareholders

Directors’report 

The Directors submit their report together with the audited 

consolidated financial statements of the Group for the year 

ended 31 March 2007. 

Principal activities and business review 

The Group remains focused on the provision of services in 

support of the buildings and infrastructure of clients.The principal 

activity of the Company is to provide management services to 

the Group. 

A review of the Group’s activities, operations, future developments, 

principal risks and financial performance during the year is 

contained in the Chairman’s statement, the Chief Executive’s 

statement, the Group Finance Director’s statement, the operating 

review, the statement of principal risks and uncertainties, the 

business review and the corporate governance report. 

Profits for the year 

The Group profit before taxation for the year ended 31 March 

2007 was £56.6m (2006: £50.5m). 

Dividends 

Subject to the usual Shareholder approval, the Directors 

recommend a final dividend of 2.7p per Ordinary Share to be 

paid on 3 August 2007 to ordinary Shareholders on the register 

on 6 July 2007, which together with the interim dividend of 

2.4p paid on 30 March 2007 makes a total of 5.1p for the year 

(2006: 4.3p). 

In line with market practice, the Directors have agreed to bring 

forward the date on which both the final and interim dividends 

are paid.The Company’s financial calendar can be found in 

Shareholder information on page 87. 

The Group is introducing a Dividend Re-Investment Plan (DRIP), 

which will be available with effect from the payment date of 

the proposed final dividend for the year ended 31 March 2007. 

Shareholders, if they choose to do so, will be able to receive their 

dividends in MITIE Group PLC shares.The Company will continue 

to pay a cash dividend directly to those Shareholders who 

choose not to participate in the DRIP. An invitation to participate 

in the DRIP will be sent to Shareholders with the Group’s Annual 

Report and Accounts. 

Events after the balance sheet date 

On 2 April 2007, MITIE acquired the entire issued share capital 

of Jabez Holdings Limited, which owns (through an intermediate 

holding company) 100% of the share capital of Robert Prettie 

& Co Limited (Robert Prettie). 

The initial consideration was £8.6m, which was settled in cash of 

£7.0m and through the issue of £1.6m of loan notes. In addition, 

£0.8m was retained against potential warranty claims. Potential 

deferred consideration up to a maximum of £23.3m may be paid 

between 2010 and 2012 based on performance over three years. 

This will be settled in cash and loan notes up to a maximum total 

consideration of £32.7m. In addition MITIE assumed debt of 

£3.7m on the transaction. 

Robert Prettie is a specialist plumbing, heating and mechanical 

services business concentrating on the housing market in the 

Midlands and Yorkshire, and employs over 250 staff. In the year 

ended 31 March 2006, Robert Prettie reported consolidated 

revenue of £34.3m and profit before tax of £2.8m. 

The acquisition adds significantly to MITIE Property Services’ range 

of services in the housing sector and complements its existing 

regional operations. Robert Prettie works in partnership with local 

authorities, councils, developers and registered social landlords 

on kitchen and bathroom installation, heating replacement, gas 

servicing, maintenance and call out services. 

Further details of the acquisition are set out in Note 25 of the 

financial statements. 

Share capital and substantial interests 

Details of changes to the Company’s share capital during the 

year and the number of Ordinary Shares in issue at the year end 

are detailed in Note 23 to the financial statements. 

The Company has been notified of the following interests in 3% 

or more of the issued share capital of the Company as at 

17 May 2007: 

Number of Ordinary 

% of Share 

Shares of 2.5p each 

capital 

Mirabaud Investment 

Management Ltd 17,433,752 5.59 

Goldman Sachs Group Inc 16,704,886 5.35 

Legal & General Group plc 12,514,604 4.00 

Prudential plc 12,427,019 3.98 

Fidelity Corp. and Fidelity 

International Ltd 10,065,118 3.22 

In June 2004 the Company commenced a share buyback 

programme which has continued pursuant to the renewed 

authority given by Shareholders at the AGM in 2006. During the 

year to 31 March 2007 there have been no further purchases 

of shares. In the year ended 31 March 2006, 992,305 Ordinary 

Shares were purchased by the Company representing 0.3% of 

the issued share capital of the Company, for a total consideration 

of £1.6m.The exact amount and timing of future purchases, and 

the extent to which repurchased shares may be held as treasury 

shares rather than being cancelled, will be determined by the 

Company and will be dependent on market conditions and 

other factors. 

Directors 

Details of the Board of Directors are given on page 36. 

Details of Directors’ interests in the Ordinary Share capital of the 

Company are shown on page 42. 

On 10 April 2006, Suzanne Baxter was appointed to the Board as 

Group Finance Director. Graeme Potts and Roger Matthews were 

appointed Non-Executive Directors of the Company on 27 July 

2006 and 4 December 2006 respectively. Sir John Jennings retired 

from the Board and resigned his Non-Executive directorship on 

30 March 2007. Ian Stewart stepped down as Chief Executive 

on 30 March 2007 but continues to serve on the Board as Non- 

Executive Deputy Chairman. Ruby McGregor-Smith was 

appointed Chief Executive on 30 March 2007. 

In accordance with the Company’s Articles of Association, Roger 

Goodman, Colin Hale,William Robson and Ian Stewart will retire 

by rotation and, being eligible, offer themselves for re-election at 

the AGM. Graeme Potts and Roger Matthews, both having been 

appointed since the last AGM, will also retire and offer themselves 

for election. 

The Board considers that the performance of those Directors 

proposed for election or re-election continues to be effective 

and that they demonstrate a strong commitment to their role. 


Statement of Directors’ responsibilities in respect 

of the financial statements 

The Directors are responsible for preparing the Annual Report and 

the financial statements.The Directors are required to prepare 

accounts for the Group in accordance with International Financial 

Reporting Standards (IFRS’s) and have chosen to prepare 

Company financial statements in accordance with United 

Kingdom Generally Accepted Accounting Practice (UK GAAP). 

In the case of IFRS accounts, International Accounting Standard 1 

requires that financial statements present fairly for each financial 

year the Company’s financial position, financial performance 

and cash flows.This requires the faithful representation of the 

effects of transactions, other events and conditions in accordance 

with the definitions and recognition criteria for assets, liabilities, 

income and expenses set out in the International Accounting 

Standards Board’s ’Framework for the Preparation and Presentation 

of Financial Statements’. In virtually all circumstances, a fair 

presentation will be achieved by compliance with all applicable 

IFRS’s. Directors are also required to: 

• Properly select and apply accounting policies; 

• Present information, including accounting policies, in 

a manner that provides relevant, reliable, comparable and 

understandable information; and 

• Provide additional disclosures when compliance with the 

specific requirements in IFRS’s is insufficient to enable users to 

understand the impact of particular transactions, other events 

and conditions on the entity’s financial position and financial 

performance. 

In the case of UK GAAP accounts, the Directors are required to 

prepare financial statements for each financial year which give 

a true and fair view of the state of affairs of the Company and 

of the profit or loss of the Company for that period. In preparing 

these financial statements, the Directors are required to: 

• Select suitable accounting policies and then apply them 

consistently; 

• Make judgments and estimates that are reasonable and 

prudent; and 

• State whether applicable accounting standards have been 

followed, subject to any material departures disclosed and 

explained in the financial statements. 

The Directors are responsible for keeping proper accounting 

records which disclose with reasonable accuracy at any time 

the financial position of the Company, for safeguarding the 

assets, for taking reasonable steps for the prevention and 

detection of fraud and other irregularities, and for the preparation 

of a Directors’ report and Directors’ remuneration report which 

comply with the requirements of the Companies Act 1985. 

Auditors and disclosure of information to auditors 

Each of the Directors in office as of the date of approval of this 

report confirms that: 

• So far as they are aware, there is no relevant audit information 

(as defined in the Companies Act 1985) of which the 

Company’s auditors are unaware; and 

• They have each taken all the steps that he/she ought to have 

taken as a Director to make himself/herself aware of any 

relevant audit information (as defined) and to establish that 

the Company’s auditors are aware of that information. 

Deloitte & Touche LLP have expressed their willingness to continue 

in office as auditors and the resolution to reappoint them will be 

proposed at the forthcoming AGM. 

Going concern 

After making enquiries, the Directors have formed a judgement 

that there is a reasonable expectation that the Company has 

adequate resources to continue in operational existence for the 

foreseeable future. For this reason, the Directors continue to adopt 

the going concern basis in preparing the accounts. 

Electronic communications 

The Directors are keen to improve and extend the methods in 

which the Company communicates with its Shareholders and 

wish to move towards an increase in electronic communication. 

This will mean that Shareholders will be able to elect to receive 

all Company communications via email. 

At the forthcoming AGM, Shareholders will be asked to approve 

an amendment which will align the Company’s Articles of 

Association with the new provisions of the Companies Act 2006. 

This will allow the Company to send any document or information 

to Shareholders electronically or to provide access to it via its 

website, www.mitie.co.uk 

Employee involvement 

The Directors remain committed to a culture that encourages 

the inclusion and diversity of all of the Group’s employees 

through respecting and appreciating their differences, and to 

promoting the continuous development of employees through 

skills enhancement and training programmes.The Group’s 

employment policies are designed to attract, retain, train and 

motivate the very best people, recognising that this can be 

achieved only through offering equal opportunities regardless 

of gender, race, religion, age, disability or any other aspect 

of diversity. 

Communication with our employees continues to have a high 

priority.The Company maintains a Group-wide intranet site and 

delivers biannual publications to all employees.Through the use 

of their own communication processes each of the Group’s 

businesses is encouraged to ensure that employees are kept 

informed on Group and individual business developments. 

Employees remain actively involved in the Group’s activities 

via our Employee Forum.This year the forum held two meetings 

chaired by Ian Stewart. Following Ruby McGregor-Smith’s 

appointment as Chief Executive, she will chair all future Employee 

Forums indicating to the employee representatives the importance 

that both Ruby McGregor-Smith and the Group attach to this 

forum.We look forward to an increase in involvement and activity 

of our employee representatives. 

In maintaining a culture of share ownership, the Directors believe 

that employees should be encouraged to build a stake in the 

Company through the ownership of MITIE Group PLC shares.The 

Directors are recommending, subject to Shareholder approval, 

the introduction of a LTIP to reward, retain and incentivise senior 

members of the MITIE management team.The Group also 

operates a Save As You Earn Share Scheme and an Executive 

Share Option Scheme in the shares of MITIE Group PLC. In 

addition, it continues to support the MITIE Model and employee 

participation in the shares of certain of its subsidiaries. 

Payment of creditors 

The Group’s policy is to comply with the terms of payment agreed 

with suppliers.Where terms are not negotiated, the Group 

endeavours to adhere to the suppliers’ standard terms.At 

31 March 2007, the Group had 48 days’ purchases outstanding 

(2006: 55 days) and the Company had 17 days’ purchases 

outstanding (2006: 17 days). 

Financial instruments 

The Group’s policy with regards to financial instruments and 

the risks to the Group are discussed in the Group Finance 

Director’s statement. 

Charitable donations 

Charitable donations made during the year amounted to 

£116,650 (2006: £105,800). Donations were made to local 

charities serving the communities in which the Group operates. 

As a matter of policy, no political contributions were made during 

the year (2006: £nil). 


Company Secretary 

18 May 2007 


Directors’remuneration report 

Introduction 

This remuneration report has been prepared in accordance with 

Schedule 7A of the Companies Act 1985 and summarises the 

Company’s remuneration policy and particularly its application in 

connection with the Directors.The report also describes how the 

Company applies the principles of good corporate governance 

in relation to Directors’ remuneration in accordance with the 

Combined Code 2003 and the Directors’ Remuneration Report 

Regulations 2002. 

Shareholders will be provided with an opportunity to vote on 

this Remuneration report as set out in this Annual Report at the 

forthcoming AGM. Further details are contained in the Notice 

of AGM. 

Shareholder approval will also be sought for the introduction 

of the MITIE Group LTIP for selected Executive Directors and other 

senior executives of MITIE. Details of this new plan are being sent 

to Shareholders and enclosed in the Notice of AGM. 

Shareholder approval will also be sought to permit certain 

changes to the rules of the Executive Share Option Scheme and 

the Save As You Earn scheme as outlined in the Notice of AGM. 

Information not subject to audit 

Remuneration Committee 

The Remuneration Committee (the Committee) has responsibility 

for determining the remuneration packages of the Executive 

Directors and the Chairman. It is also responsible for overseeing 

the operation of all share schemes operated by the Group.The 

terms of reference of the Committee are available on the Group’s 

website, www.mitie.co.uk or on request. 

Throughout the year, the members of the Committee were Ishbel 

Macpherson (Chairman), David Jenkins, Cullum McAlpine and 

Sir John Jennings (retired 30 March 2007). Graeme Potts was 

appointed a member on 30 March 2007 following Sir John 

Jennings’ retirement.All members of the Committee are 

independent Non-Executive Directors. 

By invitation of the Committee, meetings may also be attended 

by David Ord and the other Non-Executive Directors, Ian Stewart 

and Ruby McGregor-Smith. No person is present during 

discussions relating to their own remuneration. 

During the year, the Committee engaged New Bridge Street 

Consultants LLP (NBSC) to assist with a review of senior executive 

remuneration, with a particular focus on the introduction of the 

LTIP. Other than remuneration advice, NBSC does not provide any 

other services to the Company. 

Remuneration policy 

The remuneration policy for the Executive Directors and other 

senior executives of MITIE is shaped by the need to recruit, 

retain and motivate individuals of the right calibre.The policy 

also has regard to the Company’s culture, taking into account 

the MITIE Model, which encourages equity ownership in order 

to maximise the alignment between the Company’s Executives 

and its Shareholders. In order to maintain and further develop 

its performance culture, the Company’s policy is that Executive 

remuneration packages contain significant performance 

related elements. 

Annual bonus 

The annual bonus is designed to enable the Executive Directors 

to share in the success of the Group and, where relevant, the 

divisions for which the Executive Director is responsible. 

All the Executive Directors have a maximum annual bonus 

potential of 100% of salary. 

For Ian Stewart (until becoming Non-Executive Deputy Chairman 

at which point he ceased to be eligible for a bonus), Ruby 

McGregor-Smith and Suzanne Baxter, their bonus for the year 

ended 31 March 2007 was based on the achievement of Group 

budgeted profit before tax and amortisation. 

Service contracts 

All the Executive Directors have rolling service contracts which 

provide for a maximum of twelve months’ notice from either party. 

There are no provisions for compensation on termination of 

employment set out within the contracts of the Executive 

Directors. 

The dates of the contracts of the Executive Directors are set 

out below: 

Date of 

principal Notice Date of 

Executive Directors contract period leaving 

Colin Acheson 1 April 2003 12 months – 

Suzanne Baxter (1) 10 April 2006 12 months – 

Roger Goodman 1 April 2003 12 months – 

Colin Hale 1 April 2003 12 months – 

Ruby McGregor-Smith 1 April 2003 12 months – 

Bill Robson 1 April 2003 12 months – 

Ian Stewart (2) 1 April 2003 12 months – 

(1) 

Suzanne Baxter was appointed to the Board on 10 April 2006. 

(2) 

Ian Stewart stepped down from his role as Chief Executive on 30 March 

2007 to become Non-Executive Deputy Chairman. 

Policy for Non-Executive Directors’ fees and appointment 

The fees for the Non-Executive Directors are set by the Board, 

and are reviewed annually. Non-Executive Directors are not 

eligible to participate in any of the Company’s incentive 

schemes, nor do they receive pensions or ancillary benefits. 

The fee levels of the Non-Executive Directors take account 

of the knowledge and experience that they bring to the Group. 

The Chairman, David Ord, received a fee of £80,000 worth of 

MITIE Group PLC shares defined at the mid-market price for MITIE 

Group PLC shares for the year ended 31 March 2007, which 

covered all his duties.The cash equivalent based on the value 

of MITIE Group PLC shares at 31 March 2007 was £90,000 (2006: 

£92,000). Sir John Jennings received 40,000 MITIE Group PLC 

shares in respect of all his fees for the year ended 31 March 2007. 

The cash equivalent of those shares was £96,000 (2006: £80,000). 

The remaining Non-Executive Directors received base fees of 

£40,000 (2006: £40,000), with additional fees of £5,000 (2006: £nil) 

for chairing a Committee of the Board with the exception of 

Cullum McAlpine who received total fees of £29,000 in the year 

ended 31 March 2007 (2006: £29,000). 

Letter of Notice Date of 

Non-Executive Directors appointment period leaving 

David Jenkins (1) 31 January 2006 6 months – 

Sir John Jennings 26 April 2004 6 months 30 March 

2007 

Cullum McAlpine (2) 3 August 2005 6 months – 

Ishbel Macpherson (3) 27 July 2005 6 months – 

Roger Matthews 4 December 2006 6 months – 

David Ord 26 April 2004 6 months – 

Graeme Potts 1 August 2006 6 months – 

Ian Stewart (4) 30 March 2007 6 months – 

(1) 

David Jenkins was appointed Chairman of the Nomination Committee 

on 30 March 2007 following Sir John Jennings’ retirement. 

(2) 

Chairman of the Audit Committee. 

(3) 

Chairman of the Remuneration Committee. 

(4) 

Ian Stewart was appointed Non-Executive Deputy Chairman 

on 30 March 2007. 

For the remaining Executive Directors, one third of their bonus was 

dependent on the achievement of Group budgeted profit before 

tax and amortisation, with the balance being based on specific 

targets relating to the performance of that individual’s area of 

responsibility. 


Total Shareholder Return performance graph 

The graph below shows the value of £100 invested in MITIE shares on 1 April 2002 compared with £100 invested in the FTSE 250 Index 

and the FTSE 350 Support Services Index on the same date.The other points are the values at intervening financial year ends: 

The market price of the Company’s shares as at 31 March 2007 was 230.3p.The highest and lowest prices during the year were 

261.8p and 176.0p respectively. 

Rebased to 100 

From 01 April 2002 to 30 March 2007 

240 

220 

200 

180 

160 

140 

120 

100 

80 

60 

40 

Apr - 02 Mar - 03 Mar - 04 Mar - 05 Mar - 06 Mar - 07 

MITIE (+72.4%) FTSE 250 (+117.8%) 

FTSE 350 Support Services (+19.1%) 

Source: Datastream. 

Information subject to audit 

Directors’ remuneration 

The table below provides details of Directors’ remuneration paid to or receivable by each person who served as a Director at any time 

during the year: 

Performance 

Base related 2007 2006 

salary/fees bonuses Benefits Pensions Total Total 

£’000 £’000 £’000 £’000 £’000 £’000 

Executive Directors 

C S Acheson (1) 195 146 16 11 368 202 

S Baxter (2) 197 197 16 26 436 – 

N R Goodman 231 231 16 11 489 397 

C S Hale 239 239 16 11 505 491 

R McGregor-Smith 290 290 16 11 607 534 

W Robson 205 205 16 11 437 377 

I R Stewart (3) 332 332 28 3 695 633 

Non-Executive Directors 

D S Jenkins 40 – – – 40 3 

C McAlpine 29 – – – 29 29 

I J S Macpherson 45 – – – 45 27 

R Matthews 13 – – – 13 – 

D C Ord (Chairman) 90 – – – 90 92 

G Potts 27 – – – 27 – 

Former Non-Executive Directors 

M J Chande (4) – – – – – 30 

Sir John Jennings 96 – – – 96 80 

Total 2,029 1,640 124 84 3,877 2,895 

(1) 

Colin Acheson waived his entitlement to bonuses amounting to £49,000 (2006: £58,000). 

(2) 

Suzanne Baxter was appointed as a Director on 10 April 2006. 

(3) 

Ian Stewart was appointed Non-Executive Deputy Chairman on 30 March 2007. He received no fees in respect of his Non-Executive directorship 

for the year ended 31 March 2007. 

(4) 

Under an agreement to provide the Group with the services of Manish Chande, fees were paid to a third party, Mountgrange Limited, of £nil 

(2006: £29,925). 

N R Goodman was released by the Company to serve as Chairman for Networkers International plc with effect from 1 May 2006. 

He receives £25,000 per annum in fees from Networkers International plc which he retains. No other Executive Director receives any 

fees in respect of a Non-Executive Directorship held by them outside of the Group. 


Directors’remuneration report continued 

Pensions table 

The pension benefit of Directors who are members of the MITIE Group PLC defined benefit pension scheme is set out below: 

Increase in 

Accrued pension accrued pension Real increase in Accrued pension 

31 March 2006 during the year accrued pension 31 March 2007 

£’000 £’000 £’000 £’000 

C S Acheson 35 3 1 38 

N R Goodman 20 2 1 22 

C S Hale 13 2 1 15 

R McGregor-Smith 5 2 1 7 

W Robson 24 2 1 26 

I R Stewart 129 18 14 147 

The following table sets out the transfer values of the Directors’ accrued benefits under the defined benefit pension scheme calculated 

in a manner consistent with retirement benefit schemes: 

Increase in accrued Real increase In 

Transfer values Contributions made pension over the year accrued pension Transfer value 

31 March 2006 by the Director (net of contributions) (net of contributions) 31 March 2007 

£’000 £’000 £’000 £’000 £’000 

C S Acheson 397 8 3 8 506 

N R Goodman 294 8 2 12 368 

C S Hale 116 8 2 5 161 

R McGregor-Smith 32 8 2 3 53 

W Robson 282 8 2 9 360 

I R Stewart 2,378 10 18 239 2,867 

The transfer values disclosed above do not represent a sum paid or payable to the individual Director. Instead they represent 

a potential liability of the scheme. 

Suzanne Baxter is not a member of the MITIE Group PLC Defined Benefit Pension Scheme as the Scheme is closed to new entrants. 

Pension contributions for Suzanne Baxter are paid into a separate defined contribution pension scheme. 

Directors’ interests in shares and share options 

The beneficial interests of the Directors who were in office on 31 March 2007 in the share capital of the Company are as shown below: 

1 April 2006 

or if later date 

31 March 2007 of appointment 

Ordinary Shares Ordinary Shares 

of 2.5p of 2.5p 

Number 

Number 

Executive Directors 

C S Acheson 764,100 1,173,100 

S Baxter 10,000 – 

N R Goodman 1,237,213 1,237,213 

C S Hale 441,134 466,134 

R McGregor-Smith 88,012 57,494 

W Robson 1,500,713 1,500,713 

Non-Executive Directors 

D S Jenkins 50,000 – 

C McAlpine 40,000 40,000 

I J S Macpherson 25,651 5,900 

R Matthews 20,000 – 

D C Ord 222,761 200,542 

G Potts 15,000 – 

Sir John Jennings 544,000 744,000 

I R Stewart 3,020,000 4,020,000 


Directors also had beneficial interests in the share capital of subsidiary companies as follows: 

31 March 2007 1 April 2006 

Number 

Number 

R McGregor-Smith 

MITIE Catering Services (London) Ltd B Ordinary Shares of £1 each 5,000 5,000 

MITIE Engineering Services (Edinburgh) Ltd B Ordinary Shares of £1 each 2,000 2,000 

MITIE Engineering Services (North East) Ltd B Ordinary Shares of £1 each 1,500 1,500 

MITIE Engineering Services (West Midlands) Ltd B Ordinary Shares of £1 each 1,500 1,500 

MITIE Industrial Cleaning (North) Ltd B Ordinary Shares of £1 each – 1,750 

MITIE Landscape (Northern) Ltd B Ordinary Shares of £1 each – 3,300 

MITIE Security (South West) Ltd B Ordinary Shares of £1 each 3,200 3,200 

MITIE Services (Retail) Ltd B Ordinary Shares of £1 each 10,000 10,000 

MITIE Transport Services Ltd C Ordinary Shares of £1 each 4,500 4,500 

N R Goodman 

MITIE Catering Services Ltd B Ordinary Shares of £1 each 8,333 8,333 

On 24 July 2006, MITIE Group PLC acquired the minority interest in MITIE Industrial Cleaning (North) Limited, including Ruby McGregor- 

Smith’s holding of 1,750 Ordinary Shares of £1 each.The consideration paid to Ruby McGregor-Smith of £1,487 was satisfied in cash. 

On 4 December 2006, MITIE Group PLC acquired the minority interest in MITIE Landscape (Northern) Limited, including Ruby McGregor- 

Smith’s holding of 3,300 Ordinary Shares of £1 each.The consideration paid to Ruby McGregor-Smith of £6,105 was satisfied in cash. 

Directors also had interests in share options as follows: 

Options Options Market 

outstanding outstanding price on 

at Granted Lapsed Exercised at exercise Exercise 

1 April during during during 31 March date price 

2006 the year the year the year 2007 p p Exercisable between 

R McGregor-Smith 

Approved scheme 22,700 – – (22,700) – 237 132 – 

Unapproved scheme 77,300 – – (77,300) – 237 132 – 

Unapproved scheme 100,000 – – – 100,000 – 127 12.06.2007 to 12.06.2014 

Unapproved scheme 100,000 – – – 100,000 – 162 24.06.2008 to 24.06.2015 

Unapproved scheme – 100,000 – – 100,000 – 191 22.06.2009 to 22.06.2016 

S Baxter 

Approved scheme – 15,000 – – 15,000 – 191 22.06.2009 to 22.06.2016 

Unapproved – 35,000 – – 35,000 – 191 22.06.2009 to 22.06.2016 


Directors’remuneration report continued 

The share options stated above were granted under the MITIE 

Group PLC Executive Share Option Scheme 2001. 

Ruby McGregor-Smith’s gain on the exercise of share options 

was £105,000 (2006: £nil). 

The performance criterion for the Scheme that must be met 

requires a percentage growth in the Group’s earnings per share 

equal to or in excess of 10.0% per annum compound over the 

period from the date of grant of the option to the date on which 

the option first becomes exercisable.The performance criterion 

selected is no different for the Directors than for any other 

member of the Scheme. Proposals for changes to the 

performance criterion for the Scheme will be proposed 

to Shareholders at the AGM. 

No payment was made for the grant of the options and there 

have been no variations to the terms and conditions or 

performance criterion for share options since the grant date. 

The market price of Ordinary Shares of 2.5p each at 31 March 

2007 was 230.3p and the highest and lowest prices during the 

year were 261.8p and 176.0p respectively. 

Other than as stated above, no other changes in Directors’ 

interests have taken place since 1 April 2007 and no options 

have been granted to any Director since 1 April 2007. 

This report was approved by the Board and has been signed 

on its behalf by: 

Ishbel Macpherson 

Chairman Remuneration Committee 

18 May 2007 


Corporate governance 

The Board recognises that the manner in which the Group 

is governed is critical to the long-term success of the business. 

This includes managing all internal day to day aspects of the 

business but also managing the impact MITIE has on the wider 

community and environment.The Board strives to act responsibly 

in everything it does and when interacting with its stakeholder 

groups.The Board is committed to ensuring that high standards 

of corporate governance are achieved throughout the Group 

and strongly believes that any corporate governance initiatives 

need to promote and support good business practices. 

This statement, together with the Directors’ report and Directors’ 

remuneration report, provides details of key aspects of MITIE’s 

corporate governance environment and explains the manner 

in which the Board of MITIE Group PLC has applied the principles 

and provisions of good governance as set out in section 1 

of Combined Code issued in July 2003. 

The Board 

Board responsibility 

Matters that are exclusively dealt with by the Board include 

setting Group objectives and strategies; approving business 

plans and budgets and monitoring performance against these; 

approving material tenders, acquisitions, disposals, and business 

start-ups; approving the Group’s Interim and Annual Reports; 

appointing and removing the Chairman, Directors and Company 

Secretary; and monitoring the Group’s corporate governance 

arrangements.These matters are set out in the Group’s ’Schedule 

of Matters Reserved for the Board’ which was updated during the 

year and approved by the Board on 19 May 2006 and which is 

available on the Group’s website, www.mitie.co.uk 

Board of Directors 

At the start of the year there were six Executive Directors, four 

Independent Non-Executive Directors and the Chairman.As 

a result of a number of changes to the Board during the year, 

details of which are set out in this statement, at 31 March 2007 

the Board consisted of six Executive Directors, five Independent 

Non-Executive Directors, one Non-Executive Director, Ian Stewart, 

not considered independent and the Chairman.The names 

and biographical details of these Directors are set out on page 

36.The balance of the Board is discussed in the Nomination 

Committee section of this statement. 

On 30 March 2007 Ruby McGregor-Smith was appointed Chief 

Executive following the retirement of Ian Stewart who assumed 

the role of Non-Executive Deputy Chairman. Ruby joined the 

Board of MITIE in December 2002 as Group Finance Director 

and was subsequently appointed as Chief Operating Officer 

in September 2005. 

On 10 April 2006 Suzanne Baxter was appointed to the Board 

as Group Finance Director. Suzanne is a Chartered Accountant 

and has extensive experience of the sector following seven years 

operating at divisional board level within Serco Group plc. 

Two new Independent Non-Executive Directors have also been 

appointed during the year: Graeme Potts on 27 July 2006 and 

Roger Matthews on 4 December 2006. Graeme was previously 

Managing Director for Inchcape UK, Europe & South America 

Retail and a member of the Board of Inchcape Plc. He has 

extensive experience in the automotive retail and business 

services sectors as well as the PLC environment. Roger is currently 

a Non-Executive Chairman for LSL Property Services PLC and 

Land of Leather Holdings PLC. Roger has gained extensive 

experience in the food retail and business services sectors as 

Group Finance Director for J. Sainsbury PLC and as a main Board 

member of Compass Group PLC. 

Specialist recruitment consultants were used to help identify 

suitable candidates for these positions after due consideration 

was given by the Nomination Committee to the nature of the role 

and the skills and experience required by the Board. Following 

an assessment of all individuals identified and a detailed 

interview process, the Nomination Committee recommended 

these appointments to the Board. 

Sir John Jennings retired from the Board and from his positions 

as Deputy Chairman, Senior Independent Non-Executive Director 

and Chairman of the Nomination Committee on 30 March 2007 

having served on the Board for nine years. Cullum McAlpine 

was appointed to the role of Senior Independent Non-Executive 

Director and David Jenkins was appointed Chairman of the 

Nomination Committee. 

Chairman and Chief Executive 

To ensure that there remains a clear division between the role 

of Chairman and Chief Executive, the responsibilities associated 

with these roles have been reviewed and their Terms of 

Reference updated. 

As Chairman, David Ord is responsible for the effective running 

of the Board.This includes ensuring that the Non-Executive 

Directors contribute effectively, that there are constructive 

relations between Executive and Non-Executive Directors and that 

the Board is aware of the views of major Shareholders. David is 

also responsible for ensuring that the Board addresses major 

challenges faced by MITIE and that the performance of the 

Board and its Committees is effective. 

The Chairman is available to consult with Shareholders throughout 

the year and is available at the AGM. 

As Chief Executive, Ian Stewart was responsible for all aspects of 

the operation and management of the Group and its business 

during the year within the authorities delegated by the Board.This 

responsibility passed to Ruby McGregor-Smith on 30 March 2007. 

The role of the Executive and Non-Executive Directors 

The Executive Directors are collectively responsible for proposing 

strategy and for making and implementing operational 

decisions. Non-Executive Directors are responsible for exercising 

their independent skill and judgement and contributing to the 

formulation of strategy, policy and decision making. 

The terms of appointment of the Non-Executive Directors 

and the Executive Directors’ service contracts are available for 

inspection at the Company’s Registered Office, the Head Office 

and at the AGM. 

Company Secretary 

Suzanne Baxter, the Group Finance Director, was appointed 

Company Secretary on 30 June 2006 following the resignation 

of Corina Ross.As Company Secretary, Suzanne is responsible 

for ensuring that Board procedures and applicable rules and 

regulations are observed, including advising on all governance 

matters. 

Director independence 

During the year Non-Executive Director independence was 

considered by the Board.The Board determined that all 

Non-Executive Directors at 31 March 2007, with the exception 

of the Deputy Chairman Ian Stewart, were independent in mind 

and judgement, and free from any material relationship that 

could interfere with their ability to discharge their duties 

effectively. Specific consideration was given to David Jenkins’ 

previous role with Deloitte & Touche LLP, MITIE’s external auditor. 

The Board determined that David is independent given that he 

was not involved in the provision of services to MITIE.Additional 

consideration was given to directorships held by both Cullum 

McAlpine and David Jenkins on the Board of Renewable Energy 

Systems Holdings Limited and two of its subsidiaries.The Board 

does not consider these directorships to adversely impact either 

of the Non-Executive Director’s independence after giving due 

consideration to the integrity, contribution and conduct of each 

of these Directors. 


Corporate governance continued 

External appointments and commitments 

Executive Directors are permitted to accept appointments 

outside the Group providing permission is sought from the Chief 

Executive and that the additional appointments do not interfere 

with the Director’s ability to effectively discharge their duties.The 

commitments outside the Group of the Executive Directors are 

described within the Board of Directors profiles on page 36. 

Executive Directors are entitled to retain any fees earned from 

these external appointments. 

Board meetings 

Procedures are in place to ensure that each Director is supplied 

with an agenda and supporting papers for all meetings on 

a timely basis.This ensures that each Director is appropriately 

briefed and able to properly discharge their duties. Papers 

submitted regularly for the Board’s review include a report on 

current trading and performance, matters relating to corporate 

development activities (for example, acquisitions and minority 

share acquisitions) and matters relating to corporate 

governance.The Board will also receive, from time to time, 

detailed presentations from non-Board members on matters 

of significance. 

The Board, its Committees and its Directors have access to the 

advice and services of the Company Secretary and, if required, 

external independent legal advice.Associated costs are funded 

by MITIE. 

All Directors are expected, where possible, to attend all Board 

meetings and the AGM. During the year ended 31 March 2007, 

there were seven scheduled Board meetings.Additional 

unscheduled Board meetings were held to deal with specific 

matters, predominantly for the approval of the issue of shares, 

while dedicated strategy and budgeting meetings have also 

been held. 

Directors’ attendance at scheduled Board and Committee 

meetings (Audit, Remuneration and Nomination) of which they 

are members is shown in the following table: 

Director Board Audit Remuneration Nomination 

Number of 

meetings held 

in year 7 3 5 5 

D C Ord 6 – – 5 

I R Stewart (1) 7 – – – 

C S Acheson 7 – – – 

S C Baxter (1, 2) 7 – – – 

N R Goodman 7 – – – 

C S Hale 7 – – – 

R McGregor-Smith (1) 7 – – – 

W Robson 5 – – – 

D S Jenkins 7 3 5 5 

Sir J S Jennings (3) 6 3 5 5 

I J S Macpherson 7 3 5 5 

R J Matthews (4) 2 – – – 

C McAlpine 7 3 5 5 

G Potts (5) 4 – – – 

(1) 

Ian Stewart, Ruby McGregor-Smith and Suzanne Baxter all attended 

the Audit Committee meetings by invitation. 

(2) 

In her capacity as Company Secretary, Suzanne Baxter also attended 

Remuneration and Nomination Committee meetings on one occasion. 

(3) 

Sir John Jennings retired from the Board on 30 March 2007. 

(4) 

Roger Matthews was appointed to the Board on 4 December 2006 

and has attended all meetings since being appointed. 

(5) 

Graeme Potts was appointed to the Board on 27 July 2006 and has 

attended all meetings since being appointed. 

In addition to scheduled Board and Committee meetings during 

the year, the Chairman met with the Non-Executive Directors on 

eight occasions without the Executive Directors being present. 

Director appointment, induction, training and appraisal 

Subsequent to appointment by the Board, all new Directors are 

subject to re-election by the Shareholders at the first AGM after 

their appointment.All Directors have also been re-elected within 

a three-year period, as required by MITIE’s Articles of Association. 

Directors due for re-election at the next AGM are shown in the 

Directors’ report. 

None of the Executive or Non-Executive Directors has a service 

contract with a notice period greater than twelve months. 

Each new Director receives a tailored induction suitable to their 

role. For example, the induction for the Group Finance Director, 

Suzanne Baxter, included formal meetings with, and 

presentations from, key Directors and senior managers of the 

Group and a two-week tour of key operating businesses and 

meetings with the respective management of those businesses. 

The induction for Graeme Potts and Roger Matthews, two new 

Non-Executive Directors, included meetings with the Chief 

Executive and Group Finance Director.All new Directors also 

received a tailored information pack which included a copy of 

MITIE’s Memorandum and Articles of Association, latest Annual 

Report and Accounts, Committee Terms of Reference and copies 

of recent Board Minutes and supporting papers.All Directors 

have access to management and the operating businesses 

in MITIE at their request. 

The Board is committed to effective and rigorous review of 

its performance and that of the Committees and individual 

Directors.To this end, an evaluation of the performance and 

effectiveness of the Board, its Committees and of each Director 

is performed each year. 

Executive Director performance evaluation for the current year 

has been carried out using a combination of formal appraisal 

questionnaires completed by all Board members, assessing 

performance against agreed targets and through various 

meetings with the Chief Executive.The performance of the 

Non-Executive Directors, including the Chairman, the Board 

as a whole and its Committees is also evaluated using formal 

appraisal questionnaires, completed by all Board members, 

and through informal meetings and discussions. Feedback from 

these activities is collated and reported to the Chairman, Chief 

Executive and the Board. Results of the prior year appraisal 

process identified an overall level of satisfaction with the 

performance of the Board and that of its Committees and 

Directors.Additionally, action taken in response to this feedback 

included the need to continue to monitor the balance of 

Executive and Independent Non-Executive Directors, and the 

sector relevant expertise of the Independent Non-Executive 

Directors, and minor changes to the information reported to the 

Board. Similarly, action will be taken throughout the current year 

to introduce improvements as identified in the evaluation exercise 

undertaken for the year ended 31 March 2007. 

The Committees 

Executive Committee 

The Executive Committee’s current members include the 

Executive Directors of MITIE Group PLC. Senior divisional 

management are also invited to attend all scheduled meetings. 

During the year the Committee was chaired by the then Chief 

Operating Officer, Ruby McGregor-Smith. Ruby continues to chair 

the Committee in her role as Chief Executive. 

During the year the specific responsibilities of the Executive 

Committee were reviewed by the Board. Subsequently the 

Committee’s Terms of Reference were updated and approved 

by the Board on 24 November 2006. 

These responsibilities include assisting the Board and Chief 

Executive to develop and implement strategy, operational plans, 

policies, procedures and budgets, manage the day to day affairs 

of the Group, monitor operating and financial performance and 

assess and control risks that impact upon the business. 

In advance of each Executive Committee meeting a pack is 

distributed to each member and attendee.This pack includes 

reports on operational performance, health and safety, finance, 

corporate responsibility, marketing, quality, risk management, 

internal audit, human resources and strategic projects.The 

Committee also regularly receives presentations from senior 

managers in conjunction with the reports submitted. 


Eight scheduled Executive Committee meetings were held during 

the year with additional unscheduled meetings being held more 

regularly to deal with specific matters. 

Audit Committee 

The Audit Committee consists entirely of Independent Non- 

Executive Directors and is chaired by Cullum McAlpine. During 

the year the Audit Committee comprised David Jenkins, Sir John 

Jennings, Ishbel Macpherson and Cullum McAlpine. On 30 

March 2007 Sir John Jennings ceased to be a member of 

the Committee following his retirement from the Board. Roger 

Matthews was appointed to the Committee on that date. 

All members of the Committee are considered as being 

appropriately experienced to fulfil its duties, while David Jenkins 

and Roger Matthews are deemed by the Board to have 

significant, recent and relevant financial experience through 

their qualifications and their previous appointments. 

During the year the Audit Committee invited the external auditors, 

Chief Executive, Chief Operating Officer, Group Finance Director 

and Head of Internal Audit to attend all meetings.The Committee 

also met separately with the external auditors and the Head of 

Internal Audit without the presence of the Executive Directors. 

Report of the Audit Committee 

During the year the Audit Committee held three meetings which 

were all attended by each member.The matters under 

consideration at these meetings included: 

• The Group’s Interim Report and Annual Report and Accounts; 

• Critical accounting policies and judgements; 

• The review of the external auditors’ audit plan, nature 

and scope of work and overall summary of key issues and 

judgements; 

• The re-appointment of the external auditors; 

• The approval of the letter of representation and fees 

of the external auditors; 

• The effectiveness of the external auditors including the 

appropriateness and skills of the audit team; 

• Compliance with the Group policy on the provision of non-audit 

services by the external auditors and maintenance 

of auditor independence; 

• The approval of the Internal Audit plan for the year ending 

31 March 2008; 

• The review of key Internal Audit reports and findings; and 

• The effectiveness of the Internal Audit function. 

The Audit Committee is committed to ensuring the 

independence and objectivity of the external auditors and 

confirm that the requirements of the Group’s policy on the 

provision of non-audit services were met.This policy restricts the 

external auditors from performing work which will result in them 

auditing their own work, making management decisions for the 

Group, creating a conflict of interest, finding themselves in the role 

of advocate for the company or creating any potential threat to 

their independence.Additionally, the external auditors will only be 

considered for the provision of non-audit services if they are best 

suited to perform the work in question. Deloitte & Touche LLP also 

maintains its own internal controls designed to safeguard their 

independence. 

A summary of the fees paid to the external auditors is given 

in Note 5 to the accounts. 

The remit of the Audit Committee also includes monitoring 

the arrangements by which employees may raise concerns 

regarding matters of financial reporting or other improprieties 

across the Group. During the year ’whistle-blowing’ activity has 

been communicated to the Committee along with the results 

of investigations carried out.These investigations have not 

identified any material risks to the Group. 

Remuneration Committee 

During the year the Remuneration Committee’s members were 

David Jenkins, Sir John Jennings, Ishbel Macpherson and Cullum 

McAlpine, all of whom are Independent Non-Executive Directors. 

The Committee is chaired by Ishbel Macpherson. On 30 March 

2007 Sir John Jennings ceased to be a member of the Committee 

following his retirement from the Board and Graeme Potts was 

appointed to the Committee.The members attended all 

Remuneration Committee meetings of which there were five 

during the year. 

The key duty of the Remuneration Committee is to make 

recommendations to the Board on the individual remuneration 

packages of Executive Directors and the Chairman.As a part 

of this process the Committee also considered the introduction 

of a LTIP to reward, retain and incentivise senior members of the 

MITIE management team. External remuneration consultants 

(New Bridge Street Consultants LLP) were also used to assist the 

Committee to determine levels of remuneration through 

comparisons with market and industry, and to advise on 

the introduction of the proposed LTIP. 

During the year the members of the Committee met to take into 

consideration the performance of each Director and implement 

its remuneration policy.The Committee also considered and 

approved the level of remuneration for the new Group Finance 

Director and Company Secretary. Details of the remuneration 

policy and the remuneration of the Directors are contained within 

the Directors’ remuneration report. 

The day to day monitoring and approval of senior management 

remuneration is delegated to the Executive Committee with any 

significant variations to the structure of senior management 

remuneration being referred to the Remuneration Committee. 

The Board is responsible for reviewing and setting the 

remuneration of the Non-Executive Directors. 

Nomination Committee 

During the year the Nomination Committee comprised David 

Jenkins, Sir John Jennings, Ishbel Macpherson, Cullum McAlpine 

and David Ord. On 30 March 2007 Sir John Jennings ceased to 

be Chairman and a member of the Committee following his 

retirement and David Jenkins was appointed Chairman. During 

the year five meetings took place which all members attended. 

A key function of the Committee is to evaluate the balance and 

composition of the Board and ensure that new Directors bring 

the requisite skills, knowledge and experience required for the role 

being considered. 

The Board and Committee recognise that, following changes 

to the membership of the Board during the year, there remains 

an imbalance in the number of Executive and Independent 

Non-Executive Directors and that the composition of the Board 

has not complied with provision A.3.2 of the Combined Code 

regarding the balance of the Board.The Board and Committee 

are satisfied that the current composition is appropriate having 

regard in particular to the integrity, skills, knowledge and 

experience of its Directors and the size and nature of the 

business.The Committee is also keen to ensure that the Board 

does not become too large and unwieldy.The composition of 

the Board will remain under review and, if considered necessary, 

will be subject to change as the need arises. 

The Committee ensured that on appointment to the Board the 

new Non-Executive Directors received a letter of appointment 

setting out their obligations and commitment. 

A full evaluation of succession planning was also undertaken 

by the Committee during the year.As such, the Committee also 

fulfiled its obligations in considering the retirement of Sir John 

Jennings and Ian Stewart and the succession of Cullum 

McAlpine as Senior Independent Non-Executive Director 

and Ruby McGregor-Smith as Chief Executive. 

The specific duties and responsibilities of each Committee are set 

out in its Terms of Reference which are available on the Group’s 

website, www.mitie.co.uk 

No individual Director is Chairman of more than one Committee 

to ensure that undue reliance is not placed on a particular 

Director or Committee member. 


Corporate governance continued 

Shareholder communications 

The Board of Directors is committed to an ongoing dialogue 

with institutional and private investors.The principal method of 

communication between the Board and Shareholders remains 

news announcements, the Interim Report, the Annual Report and 

Accounts, the CR Report and MITIE’s website, www.mitie.co.uk.A 

full programme of formal and informal events, institutional investor 

meetings and presentations are also held following the Interim 

and Annual Results announcements which are led by the 

Executive Directors.The Chairman and Non-Executive Directors 

may attend and are available for additional meetings with 

Shareholders on request. 

Latest Group information, financial reports, corporate governance 

and corporate responsibility matters, Interim and Annual 

Results presentations, major Shareholder information and all 

announcements are made available to Shareholders via the MITIE 

website which has a specific area dedicated to investor relations. 

Significant importance is attached to investor feedback on the 

Group’s performance, and as such the Executive Committee 

receives an Investor Relations Report at each meeting detailing 

corporate news, share price activity, investor relations activity 

and major Shareholder movements.The Board is updated by 

the Executive Directors on these matters and receives analyst 

feedback following the Interim and Annual Results presentations. 

The AGM also allows for Shareholders to address and discuss any 

issues surrounding the Group directly with the Executive and Non- 

Executive Directors. 

Internal control and risk management 

The Board recognises that it is responsible for the Group’s system 

of internal control and for reviewing its effectiveness.This system 

is designed to support the Group’s pursuit of achieving its 

objectives and strategies and also the identification and 

management of risks that may impact upon MITIE and the 

environment in which the Group operates.The system of internal 

control is designed to manage rather than eliminate the risk of 

failing to achieve these objectives and strategies, and it will only 

provide reasonable, and not absolute, assurance against 

material misstatement and loss. 

Key features of MITIE’s system of internal control are set out below. 

Culture, responsibility and accountability 

The Board and senior management are responsible for 

maintaining and developing a culture of integrity, competence, 

fairness and responsibility throughout the Group. Essential to this 

is the recruitment and retention of highly skilled individuals who 

promote the highest standards of integrity, competence, 

governance and ethical behaviour. 

Group policies and procedures support the business by providing 

an operational internal control framework for the Group, each 

division and operating subsidiary to work within which is 

appropriate to the nature of the business being undertaken. 

This framework is designed to balance the need for Group-wide 

consistency and control with the autonomy local management 

require to develop and manage each operating subsidiary 

successfully. 

In order to delegate responsibilities clearly and effectively to the 

Group’s operating subsidiaries, and to ensure consistency with 

the updated Schedule of Matters Reserved for the Board, a 

revised Delegated Authorities Matrix has been approved by the 

Board and implemented in the year.The matrix focuses on both 

financial and non-financial authorities and includes matters 

relating to strategy, contract approval, recruitment, capital 

expenditure, banking transactions and specific Group policies. 

Each operating subsidiary is headed by a Managing or Regional 

Director who has authority to manage their business within this 

framework of delegated authorities and Group policies and 

procedures outlined above. 

To support the business further, the Group Head Office has 

a team of specialist resources with individuals responsible for 

specific functions including legal, health and safety, IT, insurance, 

human resources, finance and internal audit. Regular dialogue 

between these functions and the operating businesses provides 

additional support, forms a key part of the system of internal 

control and ensures that compliance with policies and 

procedures is effectively monitored. 

The level of support provided to the business by the Group Head 

Office is constantly under review and, where necessary, has been 

enhanced during the year to strengthen the Group’s system 

of internal control. 

Information and communication 

The Group maintains a number of systems and processes that 

report relevant information to Group management and the 

Board and Executive Committee as necessary.This includes 

financial and non-financial information regarding business 

performance, compliance with policy and procedure, relevant 

regulations and business critical matters. 

At a local level each company and division hold regular Board 

meetings.To maintain and develop relationships between 

separate divisions, and to address specific matters, regional 

meetings are also held and are attended by regional 

representatives of each division. Senior Group management 

regularly attend these meetings. 

The Group also maintains an extensive intranet which allows all 

employees to access key information as well as Group policies, 

procedures and guidelines. 

Risk management 

The Board confirms that there is a continuing process for 

identifying, evaluating, and managing significant risks faced 

by the Group.The Board also confirms that this process has been 

in place throughout the year under review and up to the date 

of approval of the Annual Report and Accounts, and that this 

process is monitored by the Board in accordance with the 

revised guidance on Internal Control issued by the Financial 

Reporting Council. 

The process for identifying, evaluating and managing principal 

risks requires each division and the Group Head Office to 

consider strategic, operational, financial and compliance risks 

and the effectiveness of the mitigating controls based on a pre 

and post controls risk evaluation. Larger divisions maintain similar 

processes on a subsidiary, regional or contract basis, depending 

upon the structure of each division and the nature of contracts 

undertaken, and consolidate the information into a divisional 

risk register. 

These risk registers are reported to the Group’s Business Risk 

function for review every six months and are consolidated into 

a Group Risk Register which is reviewed by the Board and the 

Executive Committee twice a year. 

The Group’s risk management framework is regularly reviewed 

to ensure that it is effective and tailored to meet the needs of the 

business. Changes during the year include refining the process 

for identifying, evaluating and reporting principal risks, revision 

of the Group Risk Management Policy and the provision of 

associated training. 


Monitoring the system of internal control 

The Board is responsible for monitoring the Group’s system of 

internal control and for reviewing its effectiveness. Monitoring 

is carried out throughout the year via the receipt and review of 

various reports, presentations and discussions with management, 

as discussed earlier in this statement, and by reviewing the work 

of each Committee. For example, the Audit Committee supports 

the Board by monitoring and guiding the activities of the Internal 

Audit function, including approving the internal audit programme, 

reviewing regular reports from the function and via meetings with 

the Head of Internal Audit.The internal audit programme is 

designed to provide a level of assurance over key risks as 

identified in the Group Risk Register and is developed by the 

Head of Internal Audit who reports to the Group Finance Director 

and independently to the Audit Committee. 

The Audit Committee also receives regular reports from the 

external auditors who contribute a further independent 

perspective on certain aspects of the internal financial control 

systems arising from their work.As necessary the Audit Committee 

will have dialogue with the Chief Executive and Group Finance 

Director on their control responsibilities, and in particular, those 

relating to specific matters reported by internal or external audit. 

Reviewing the effectiveness of the system of internal control 

Monitoring the system of internal control ensures that any 

relevant matters are brought to the Board’s attention and allows 

the Board to consider on a day to day basis the effectiveness 

of the system of internal control.Additionally, the Board performs 

a formal assessment of the operation and effectiveness of the 

system of internal control and updates this assessment prior 

to the signing of the Annual Report and Accounts.This includes 

consideration of reports on principal risks, controls and their 

effectiveness from the heads of each Head Office function 

and an independent report from the Head of Internal Audit 

summarising key audit findings.The Board also holds discussions 

with senior management and reviews the results of a formal 

internal controls review and system effectiveness confirmation 

from each operating subsidiary. 

The Board confirms that management has taken steps during 

the year to improve further the system of internal control, embed 

effective controls further into the operations of the Group and 

to address improvements as they come to management’s 

attention.These steps are monitored to ensure they are 

implemented appropriately and that ultimately they are effective. 

Compliance with the Combined Code 

The Board confirms that throughout the year ended 31 March 

2007 the Group has complied with the provisions set out in 

Section 1 of the Combined Code issued in July 2003 with the 

exception that the Board has not consisted of an at least equal 

number of Executive and Independent Non-Executive Directors. 


Independent auditors’report to the members of MITIE Group PLC 

We have audited the group financial statements of MITIE Group 

PLC for the year ended 31 March 2007 which comprise the 

Consolidated income statement, the Consolidated balance 

sheet, the Consolidated cash flow statement, the Consolidated 

statement of recognised income and expense and the related 

Notes 1 to 32.These group financial statements have been 

prepared under the accounting policies set out therein.We have 

also audited the information in the Directors’ remuneration report 

that is described as having been audited. 

We have reported separately on the parent company financial 

statements of MITIE Group PLC for the year ended 31 March 2007. 

This report is made solely to the company’s members, as a body, 

in accordance with section 235 of the Companies Act 1985. Our 

audit work has been undertaken so that we might state to the 

company’s members those matters we are required to state 

to them in an auditors’ report and for no other purpose.To the 

fullest extent permitted by law, we do not accept or assume 

responsibility to anyone other than the company and the 

company’s members as a body, for our audit work, for this 

report, or for the opinions we have formed. 

Respective responsibilities of directors and auditors 

The directors’ responsibilities for preparing the Annual Report, 

the Directors’ remuneration report and the group financial 

statements in accordance with applicable law and International 

Financial Reporting Standards (IFRS’s) as adopted by the 

European Union are set out in the Statement of Directors’ 

Responsibilities. 

Our responsibility is to audit the group financial statements in 

accordance with relevant legal and regulatory requirements 

and International Standards on Auditing (UK and Ireland). 

We report to you our opinion as to whether the group financial 

statements give a true and fair view, whether the group financial 

statements have been properly prepared in accordance with 

the Companies Act 1985 and Article 4 of the IAS Regulation and 

whether the part of the Directors’ Remuneration Report described 

as having been audited has been properly prepared in 

accordance with the Companies Act 1985.We also report to 

you whether in our opinion the information given in the Directors’ 

report is consistent with the group financial statements.The 

information given in the Directors’ report includes that specific 

information presented in the Chairman’s statement, the Chief 

Executive’s statement, the Group Finance Director’s statement, 

the Operating review and the Corporate governance report 

that is cross referred from the business review section of the 


Basis of audit opinion 

We conducted our audit in accordance with International 

Standards on Auditing (UK and Ireland) issued by the Auditing 

Practices Board.An audit includes examination, on a test basis, 

of evidence relevant to the amounts and disclosures in the group 

financial statements and the part of the Directors’ remuneration 

report to be audited. It also includes an assessment of the 

significant estimates and judgments made by the directors in the 

preparation of the group financial statements, and of whether 

the accounting policies are appropriate to the group’s 

circumstances, consistently applied and adequately disclosed. 

We planned and performed our audit so as to obtain all the 

information and explanations which we considered necessary 

in order to provide us with sufficient evidence to give reasonable 

assurance that the group financial statements and the part 

of the Directors’ remuneration report to be audited are free from 

material misstatement, whether caused by fraud or other 

irregularity or error. In forming our opinion we also evaluated the 

overall adequacy of the presentation of information in the group 

financial statements and the part of the Directors’ remuneration 

report to be audited. 

Opinion 

In our opinion: 

• the group financial statements give a true and fair view, in 

accordance with IFRS’s as adopted by the European Union, 

of the state of the group’s affairs as at 31 March 2007 and 

of its profit for the year then ended; 

• the group financial statements have been properly prepared 

in accordance with the Companies Act 1985 and Article 4 

of the IAS Regulation; 

• the part of the Directors’ remuneration report described 

as having been audited has been properly prepared in 

accordance with the Companies Act 1985; and 

• the information given in the Directors’ report is consistent 

with the group financial statements. 

Deloitte & Touche LLP 

Chartered Accountants and Registered Auditors 

Bristol, United Kingdom 

18 May 2007 

In addition we report to you if, in our opinion, we have not 

received all the information and explanations we require for 

our audit, or if information specified by law regarding director’s 

remuneration and other transactions is not disclosed. 

We review whether the Corporate governance report reflects the 

company’s compliance with the nine provisions of the 2003 

Combined Code specified for our review by the Listing Rules 

of the Financial Services Authority, and we report if it does not. 

We are not required to consider whether the board’s statements 

on internal control cover all risks and controls, or form an opinion 

on the effectiveness of the group’s corporate governance 

procedures or its risk and control procedures. 

We read the other information contained in the Annual Report 

as described in the contents section and consider whether 

it is consistent with the audited group financial statements. 

We consider the implications for our report if we become aware 

of any apparent misstatements or material inconsistencies with 

the group financial statements. Our responsibilities do not extend 

to any further information outside the Annual Report. 


Consolidated income statement 

For the year ended 31 March 2007 

2007 2006 

Before Amortisation Before Amortisation 

amortisation of intangible amortisation of intangible 

and assets and and assets and 

discontinued discontinued 

discontinued discontinued 

operations operations Total operations operations Total 

Notes £m £m £m £m £m £m 

Continuing operations 

Revenue 3, 4 1,228.8 – 1,228.8 935.6 – 935.6 

Cost of sales (999.8) – (999.8) (757.0) – (757.0) 

Gross profit 229.0 – 229.0 178.6 – 178.6 

Other administrative expenses (169.1) – (169.1) (130.3) – (130.3) 

Amortisation of intangible assets – (1.6) (1.6) – (0.2) (0.2) 

Total administrative expenses (169.1) (1.6) (170.7) (130.3) (0.2) (130.5) 

Operating profit 3, 5 59.9 (1.6) 58.3 48.3 (0.2) 48.1 

Investment revenue 7 0.8 – 0.8 2.6 – 2.6 

Finance costs 8 (2.5) – (2.5) (0.2) – (0.2) 

Profit before tax 58.2 (1.6) 56.6 50.7 (0.2) 50.5 

Tax 9 (17.9) 0.5 (17.4) (15.5) – (15.5) 

Profit for the year from continuing operations 40.3 (1.1) 39.2 35.2 (0.2) 35.0 

Discontinued operations 

Loss for the year from discontinued operations – – – – (2.4) (2.4) 

Profit for the year 40.3 (1.1) 39.2 35.2 (2.6) 32.6 

Attributable to: 

Equity holders of the parent 38.1 (1.1) 37.0 32.8 (2.6) 30.2 

Minority interests 2.2 – 2.2 2.4 – 2.4 

40.3 (1.1) 39.2 35.2 (2.6) 32.6 

Earnings per share (EPS) 

– Basic 11 12.3p (0.4)p 11.9p 10.6p (0.8)p 9.8p 

– Diluted 11 12.1p (0.3)p 11.8p 10.5p (0.8)p 9.7p 


Consolidated statement of recognised income and expense 


2007 2006 

Notes £m £m 

Actuarial (losses)/gains on defined benefit pension schemes 30 (4.7) 1.1 

Tax credit/(charge) on items taken directly to equity 24 1.5 (2.6) 

Net expense recognised directly in equity (3.2) (1.5) 

Profit for the year 39.2 32.6 

Total recognised income and expense for the financial year 36.0 31.1 

Attributable to: 

Equity holders of the parent 33.8 28.7 

Minority interests 2.2 2.4 


Consolidated balance sheet 

As at 31 March 2007 

2007 2006 

Notes £m £m 

Non-current assets 

Goodwill 12 148.4 143.8 

Other intangible assets 13 9.9 11.5 

Property, plant and equipment 14 41.5 34.5 

Deferred tax assets 18 7.7 4.9 

Retirement benefit surplus 30 0.5 1.8 

Total non-current assets 208.0 196.5 

Current assets 

Inventories 15 7.9 8.8 

Trade and other receivables 16 272.8 244.3 

Cash and cash equivalents 17 25.6 9.6 

Total current assets 306.3 262.7 

Total assets 514.3 459.2 

Current liabilities 

Trade and other payables 19 (255.7) (214.5) 

Financial liabilities 20 (30.9) (33.8) 

Provisions 22 (0.3) (11.7) 

Current tax liabilities (8.2) (7.6) 

Total current liabilities (295.1) (267.6) 

Net current assets 11.2 (4.9) 

Non-current liabilities 

Financial liabilities 20 (2.8) (1.0) 

Provisions 22 (8.6) (10.2) 

Deferred tax liabilities 18 (3.9) (4.7) 

Total non-current liabilities (15.3) (15.9) 

Total liabilities (310.4) (283.5) 

Net assets 203.9 175.7 

Equity 

Share capital 23 7.8 7.7 

Share premium account 24 16.6 13.7 

Merger reserve 24 54.9 52.0 

Revaluation reserve 24 (0.2) (0.2) 

Capital redemption reserve 24 0.3 0.3 

Other reserve 24 0.2 0.3 

Share-based payments reserve 24 1.9 1.4 

Retained earnings 24 110.2 90.1 

Equity attributable to equity holders of the parent 191.7 165.3 

Minority interests 12.2 10.4 

Total equity 203.9 175.7 

The financial statements were approved by the Board of Directors and authorised for issue on 18 May 2007.They were signed on 

its behalf by: 






Consolidated cash flow statement 


2007 2006 

Notes £m £m 

Net cash from operating activities 26 63.9 32.1 

Investing activities 

Interest received 0.7 2.5 

Purchase of property, plant and equipment (20.8) (13.8) 

Purchase of subsidiary undertakings (3.9) (85.5) 

Disposals of property, plant and equipment 3.6 2.6 

Net cash outflow from investing activities (20.4) (94.2) 

Financing activities 

Repayments of obligations under finance leases (0.9) (0.2) 

Proceeds on issue of share capital 2.5 2.1 

Repayments of loans on purchase of subsidiary undertakings (1.0) (11.6) 

Bank loans (repaid)/raised (11.0) 31.0 

Share buybacks – (1.6) 

Equity dividends paid (14.9) (11.3) 

Minority dividends paid (0.2) (0.2) 

Net cash (outflow)/inflow from financing (25.5) 8.2 

Net increase/(decrease) in cash and cash equivalents 18.0 (53.9) 

Net cash and cash equivalents at beginning of the year 7.6 61.5 

Net cash and cash equivalents at end of the year 25.6 7.6 

Net cash and cash equivalents comprises: 

Cash at bank 25.6 9.6 

Overdraft – (2.0) 

25.6 7.6 


Notes to the consolidated financial statements 

1. Basis of preparation and significant accounting policies 

Basis of preparation 

The Group’s financial statements for the year ended 31 March 2007 are prepared in accordance with International Accounting 

Standards (IAS) and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board 

and as adopted for use in the European Union. 

The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those followed in the 

preparation of the Group’s annual financial statements for the year ended 31 March 2006. In the current year, the Group has adopted 

all of the new and revised standards and interpretations that are relevant to its operations and effective for the current annual 

reporting period.This adoption had no financial impact on the financial statements. 

The following standards and interpretations have been issued but are not yet effective: 

• Amendment to IAS 1 ’Presentation of Financial Statements: Capital Disclosures’; 

• Amendment to IAS 23 ’Borrowing Costs’; 

• IFRS 7 ’Financial Instruments: Disclosures’; 

• IFRS 8 ’Operating Segments’; 

• IFRIC 8 ’Scope of IFRS 2’; 

• IFRIC 9 ’Reassessment of Embedded Derivatives’; 

• IFRIC 10 ’Interim Financial Reporting and Impairment’; 

• IFRIC 11 ’IFRS 2 – Group and Treasury Share Transactions’; and 

• IFRIC 12 ’Service Concession Arrangements’. 

The Directors do not anticipate that the adoption of these standards and interpretations will have a material financial impact on the 

Group’s financial statements in the period of initial application. 

Significant accounting policies under IFRS 

The significant accounting policies adopted in the preparation of the Group’s IFRS financial information are set out below. 

Basis of consolidation 

The consolidated financial statements comprise the financial statements of MITIE Group PLC and all its subsidiaries.The financial 

statements of the parent Company and subsidiaries are prepared in accordance with UK Generally Accepted Accounting Principles 

(UK GAAP).Adjustments are made in the consolidated accounts to bring into line any dissimilar accounting policies that may exist 

between UK GAAP and IFRS. 

All inter-company balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated 

in full. 

Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date 

on which control is transferred out of the Group. 

Interests of minority shareholders are measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent 

liabilities recognised. 

Business combinations 

The acquisition of subsidiaries is accounted for using the purchase method.The cost of the acquisition is measured at the aggregate 

of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group 

in exchange for control of the acquiree, plus any costs directly attributable to the business combination.The acquiree’s identifiable 

assets, liabilities and contingent liabilities that meet the conditions for recognition are recognised at their fair value at the acquisition 

date, except for non-current assets (or disposal groups) that are classified as held for resale in accordance with IFRS 5 ’Non Current 

Assets Held for Sale and Discontinued Operations’, which are recognised and measured at fair value less costs to sell. 

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business 

combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, 

after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities 

exceeds the cost of the business combination, the excess is recognised immediately in profit or loss. 

Goodwill 

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the 

identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Cost of acquisition 

includes all deferred amounts that become payable in the future. 

Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated impairment losses. It is 

reviewed for impairment at least annually.Any impairment is recognised immediately in profit or loss and is not subsequently reversed. 

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the 

synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more 

frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than 

the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the 

unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.An impairment loss 

recognised for goodwill is not reversed in the subsequent period. 

On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of 

the profit or loss on disposal. 

Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts subject to 

being tested for impairment at that date. Goodwill written off to reserves under UK GAAP prior to 1998 has not been reinstated and is 

not included in determining any subsequent profit or loss on disposal. 


Notes to the consolidated financial statements continued 

1. Basis of preparation and significant accounting policies continued 

Intangible assets 

Intangible assets acquired separately are capitalised at cost. Intangible assets identified in a business acquisition are capitalised at fair 

value as at the date of acquisition. 

Following initial recognition, the carrying amount of an intangible asset is its cost less any accumulated amortisation and any 

accumulated impairment losses.Amortisation expense is charged to administrative expenses in the income statement on a straightline 

basis over its useful life. 

Revenue 

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be 

reliably measured. Other than in respect of long-term contracts, described below, revenue represents fee income recognised in respect 

of services provided during the period (stated net of value added tax). 

Revenue is earned solely within the United Kingdom. 

Revenue from long-term contracts represents the sales value of work done in the year, including fees invoiced and estimates in respect 

of amounts to be invoiced after the year end. Profits are recognised on long-term contracts where the final outcome can be assessed 

with reasonable certainty. In calculating this, the percentage of completion method is used based on the proportion of costs incurred 

to the total estimated cost. Cost includes direct staff costs and outlays. Full provision is made for all known or anticipated losses on 

each contract immediately such losses are forecast. 

Gross amounts due from customers are stated at the proportion of the anticipated net sales value earned to date less amounts billed 

on account.To the extent that fees paid on account exceed the value of work performed, they are included in creditors as gross 

amounts due to customers. 

Variations in contract work and claims are included to the extent that they have been agreed with the customer. 

Revenue from bundled contracts consists of various components which operate independently of each other and for which reliable 

fair values can be established.Accordingly, each component is accounted for separately as if it were an individual contractual 

arrangement. 

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, 

which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net 

carrying amount. 

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established. 


Operating profit is ’Profit from operations’ stated before investment revenue and finance costs. 

Leasing 

Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are 

capitalised at the inception of the lease at the fair value of the leased item or, if lower, at the present value of the minimum lease 

payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve 

a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. 

Capitalised leased assets are depreciated over the shorter of the estimated life of the asset or the lease term. 

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. 

Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease-term. 

Any lease incentives are amortised over the lesser of the life of the operating lease or to the first opportunity for termination. 

Foreign currency 

Transactions in foreign currencies are recorded at the rate of exchange at the date of transaction. Monetary assets and liabilities 

denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date. Nonmonetary 

items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when 

the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not 

retranslated. 

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit 

or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit 

or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are 

recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly 

in equity. 

Retirement benefit costs 

The Group operates two defined benefit pension schemes and participates in a number of other defined benefit schemes. In respect 

of the other schemes in which the Group participates, the Group accounts for its legal and constructive obligations over the period 

of its participation which is for a fixed period only. 

In addition, the Group operates a number of defined contribution retirement benefit schemes for all qualifying employees. 

Payments to the defined contribution and stakeholder pension schemes are charged as an expense as they fall due. 

For the defined benefit pension schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with 

actuarial valuations being carried out at each balance sheet date.Actuarial gains and losses are recognised in full in the period in 

which they occur.They are recognised outside the profit and loss and presented in the statement of recognised income and expense. 


Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straightline 

basis over the average period until the benefits become vested. 

The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation 

as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets.Any asset resulting from this 

calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the plan. 

Taxation 

The tax expense represents the sum of the tax currently payable and deferred tax.The tax currently payable is based on taxable profit 

for the year.Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense 

that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.The Group’s liability 

for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities 

in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using 

the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred 

tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary 

differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the 

initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit 

nor the accounting profit. 

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer 

probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. 

Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, 

in which case the deferred tax is also dealt with in equity. 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax 

liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax 

assets and liabilities on a net basis. 

Property, plant and equipment 

Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is charged 

so as to write off the cost of the assets over their estimated useful lives and is calculated on a straight-line basis as follows: 

Freehold buildings and long leasehold property – over 50 years 

Leasehold improvements 

– period of the lease 

Plant and equipment 

– 3-10 years 

Annually the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication 

that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in 

order to determine the extent of the impairment loss (if any).Where the asset does not generate cash flows that are independent from 

other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. 

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash 

flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of 

money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount 

of the asset (cash-generating unit) is reduced to its recoverable amount.An impairment loss is recognised as an expense immediately. 

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised 

estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have 

been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years.A reversal of an 

impairment loss is recognised as income immediately. 

Inventories 

Inventories are stated at the lower of cost and net realisable value. 

Costs represent materials, direct labour and overheads incurred in bringing the inventories to their present condition and location. 

Net realisable value is based on estimated selling price, less further costs expected to be incurred to completion and estimated selling 

costs. Provision is made for obsolete, slow moving or defective items where appropriate. 

Investments 

All investments are initially recorded at cost, being the fair value of the consideration given and including acquisition charges 

associated with the investment. Subsequently they are reviewed for impairment if events or changes in circumstances indicate 

the carrying value may not be recoverable. 


Trade receivables are measured at initial recognition at fair value.Appropriate allowances for estimated irrecoverable amounts 

are recognised in the income statement where there is objective evidence that the asset is impaired. 

Cash and cash equivalents comprise cash in hand and demand deposits, and other short-term highly liquid investments that 

are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. 



1. Basis of preparation and significant accounting policies continued 

Interest bearing bank loans and overdrafts are stated at the amount of the net proceeds after deduction of issue costs. Finance 

charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis 

in the income statement and are added to the carrying amount of the instrument to the extent that they are not settled in the period 

in which they arise. 

Trade payables are measured at fair value. 

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. 

Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the 

contractual provisions of the instrument. 

Provisions 

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable 

that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be 

made of the amount of the obligation.Where the Group expects some or all of a provision to be reimbursed, for example under an 

insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.The 

expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of 

money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current 

market assessments of the time value of money and, where appropriate, the risks specific to the liability.Where discounting is used, 

the increase in the provision due to the passage of time is recognised as a borrowing cost. 

Pre-contract costs 

All bid costs are expensed through the income statement up to the point where contract award (or full recovery of costs) is virtually 

certain. Bid costs incurred after this point are then capitalised within trade and other receivables. On the contract award these bid 

costs are amortised through the income statement over the contract period by reference to the stage of completion of the contract 

activity at the balance sheet date. 

Share-based payments 

The Group operates a number of executive and employee share option schemes. For all grants of share options and awards, the fair 

value as at the date of grant is calculated using the Black-Scholes model and the corresponding expense is recognised on a straightline 

basis over the vesting period based on the Group’s estimate of shares that will eventually vest. 

The Group has taken advantage of the transitional provisions of IFRS 2 in respect of equity-settled awards and has applied IFRS 2 only 

to equity-settled awards granted after 7 November 2002 that had not vested before 1 April 2005. 

2. Critical accounting judgements and key sources of estimation uncertainty 

Critical judgements in applying the Group’s accounting policies 

In the process of applying the Group’s accounting policies, which are described in Note 1 above, management has made the 

following judgements that have the most significant effect on the amounts recognised in the financial statements. 

Revenue recognition 

Revenue is recognised for certain project based contracts based on the stage of completion of the contract activity.This is measured 

by comparing the proportion of costs incurred against the estimated whole-life contract costs except where this would not be 

representative of the stage of completion. 

Key sources of estimation uncertainty 

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have 

a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are 

discussed below. 

Impairment of goodwill 

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill 

has been allocated.The value in use calculation involves an estimation of the future cash flows of cash-generating units and also the 

selection of the appropriate discount rates, which involves judgement, to use in order to calculate present values.The carrying value 

of goodwill is £148.4m (2006: £143.8m) at the balance sheet date; see Note 12. 

Retirement benefit obligations 

The calculation of retirement benefit obligations is dependent on material key assumptions including discount rates, future returns on 

assets and future contribution rates.The present value of retirement benefit obligations at the balance sheet is £143.3m (2006: £72.2m); 

see Note 30. 


3. Business and geographical segments 

The Group manages its business on a service division basis.These divisions are the basis on which the Group reports its primary 

segment information. 

Business segments 

For management purposes, the Group is currently organised into three operating divisions – Facilities Services (formerly Support 

Services), Property Services and Engineering Services. 

Principal activities are as follows: 

Facilities Services offers a flexible range of services supporting the occupiers of buildings.This ranges from Engineering Maintenance 

and Facilities Management to Security. 

Property Services act as a main contractor improving buildings either by fitting them out, refurbishing or maintaining them. 

Engineering Services is predominantly a mechanical and electrical services specialist installing heating, lighting, air conditioning 

and data cabling. 

The Group was also previously involved in scaffolding operations.That operation and segment was discontinued with effect from 

30 September 2004. 

Segment information about these businesses is presented below. 

2007 2006 

Profit before 

Profit before 

interest tax Profit interest tax 

and before and Profit 

Revenue amortisation Margin tax Revenue amortisation Margin before tax 

£m £m % £m £m £m % £m 

Facilities Services 732.1 41.5 5.7 37.4 516.0 33.0 6.4 34.3 

Property Services 215.1 10.6 4.9 10.9 163.5 8.9 5.4 9.0 

Engineering Services 281.6 7.8 2.8 8.3 256.1 6.4 2.5 7.2 

Continuing operations 1,228.8 59.9 4.9 56.6 935.6 48.3 5.1 50.5 

Discontinued operations – – – – – (2.4) – (2.4) 

Total 1,228.8 59.9 4.9 56.6 935.6 45.9 4.9 48.1 

The revenue analysis above is net of inter segment sales which are not considered significant. 

The results set out above are stated after integration costs of £2.3m (2006: £nil) relating to acquisitions made in the prior year. 

The results of the Group before the effect of integration costs are as follows: 

Profit before 

interest tax 

Profit 

and 

before 

Revenue amortisation Margin tax 

£m £m % £m 

Facilities Services 732.1 41.5 5.7 37.4 

Add: Integration costs – 2.3 – 2.3 

Total 732.1 43.8 6.0 39.7 

Property Services 215.1 10.6 4.9 10.9 

Engineering Services 281.6 7.8 2.8 8.3 

Total continuing operations 1,228.8 62.2 5.1 58.9 

2007 



3. Business and geographical segments continued 

Facilities Property Engineering 

Services Services Services Total 

2007 2007 2007 2007 

Other segment information £m £m £m £m 

Assets by segment 

Intangible assets 140.6 5.6 12.1 158.3 

Divisional assets 226.5 75.5 100.6 402.6 

367.1 81.1 112.7 560.9 

Unallocated assets (46.6) (1) 

Total assets 514.3 

Liabilities by segment 

Divisional liabilities (159.7) (55.0) (81.2) (295.9) 

Unallocated liabilities (14.5) (1) 

Total liabilities (310.4) 

Total net assets 203.9 


Tangible assets 12.7 7.0 2.8 22.5 

Depreciation charge 9.0 2.4 1.6 13.0 


Intangible amortisation 1.6 – – 1.6 

Facilities Property Engineering 

Services Services Services Total 

2006 2006 2006 2006 

Other segment information £m £m £m £m 

Assets by segment 


Divisional assets 197.1 55.0 87.8 339.9 

335.4 60.4 99.4 495.2 

Unallocated assets (36.0) (1) 

Total assets 459.2 

Liabilities by segment 

Divisional liabilities (142.0) (34.7) (67.2) (243.9) 

Unallocated liabilities (39.6) (1) 

Total liabilities (283.5) 

Total net assets 175.7 


Tangible assets 10.0 2.1 1.7 13.8 

Depreciation charge 6.8 1.5 1.5 9.8 

Intangible assets 101.5 – 1.3 102.8 

Intangible amortisation 0.2 – – 0.2 

(1) 

Relates to interdivisional funding. 

The 2006 comparatives have been revised to separately identify assets and liabilities that are not directly attributable to 

a business segment. 


Geographical segments 

All Group operations are located in the United Kingdom and the Channel Islands.The Group considers all operations form part of that 

single geographical segment. 

4. Revenue 

The following analysis is provided for additional information: 

2007 2006 

£m £m 


Cleaning 220.9 204.7 

Security 241.8 87.2 

Engineering Maintenance 109.7 102.3 

Managed Services 84.9 71.6 

Business Services 24.1 16.8 

PFI 15.0 10.7 

Catering 19.7 13.6 

Landscape 10.3 4.4 

Pest Control 5.7 4.7 

Total Facilities Services 732.1 516.0 

Property Services 215.1 163.5 

Engineering Services 281.6 256.1 

Total 1,228.8 935.6 

5. Operating profit 

Operating profit has been arrived at after charging/(crediting): 

2007 2006 

£m £m 

Depreciation of property, plant and equipment 13.0 9.8 

Amortisation of intangible assets 1.6 0.2 

Gain on disposal of property, plant and equipment (1.1) (0.6) 

Staff costs (see Note 6) 455.9 391.9 

Auditors’ remuneration for audit services (see below) 0.5 0.4 

A more detailed analysis of auditors’ remuneration is provided below: 

2007 2006 

£’000 £’000 

Fees payable to the Company’s auditors for the audit of the Company’s annual accounts 35 30 

Fees payable to the Company’s auditors and their associates for other services to the Group: 

– The audit of the Company’s subsidiaries pursuant to legislation 350 309 

Total audit fees 385 339 

Tax services 40 56 

Other services 56 67 

Total non-audit fees 96 123 

Total 481 462 

£26,000 (2006: £39,000) of fees were incurred in relation to acquisitions and have been included in the acquisition costs. In addition 

to the amounts shown above, the auditors received fees of £11,750 (2006: £10,300) for the audit of the Group pension schemes. 



6. Staff costs 

2007 2006 

Number Number 

The average number of people employed during the financial year was: 

Facilities Services 38,429 29,298 

Property Services 2,697 1,826 

Engineering Services 1,241 1,297 

Total Group 42,367 32,421 

The number of people employed at 31 March was: 

Total Group 44,866 41,762 

2007 2006 

£m £m 

Their aggregate remuneration comprised: 

Wages and salaries 417.3 356.0 

Social security costs 30.6 31.5 

Other pension costs 6.9 3.7 

Share-based payments (Note 29) 1.1 0.7 

455.9 391.9 

Details of Directors’ remuneration and interests are provided in the audited section of the Directors’ remuneration report and should 

be regarded as an integral part of this Note. 

7. Investment revenue 

2007 2006 

£m £m 

Interest on bank deposits 0.1 1.6 

Other interest receivable 0.7 1.0 

0.8 2.6 

8. Finance costs 

2007 2006 

£m £m 

Interest on bank overdrafts and loans 2.3 0.2 

Interest on obligations under finance leases 0.2 – 

2.5 0.2 


9.Tax 

2007 2006 

£m £m 

Current tax 17.9 15.4 

Deferred tax (Note 18) (0.5) 0.1 

17.4 15.5 

Corporation tax is calculated at 30.0% (2006: 30.0%) of the estimated assessable profit for the year. 

The charge for the year can be reconciled to the profit per the income statement as follows: 

2007 2006 

£m £m 

Profit before tax: 

Continuing operations 56.6 50.5 

Discontinued operations – (2.4) 

Tax at the UK corporation tax rate of 30.0% 17.0 14.4 

Expenses not deductible for tax purposes 0.6 1.1 

Tax losses not recognised 0.3 0.7 

Profit on disposal of property (0.1) – 

Prior year adjustments (0.4) (0.7) 

Tax charge for the year 17.4 15.5 

In addition to the amount charged to the income statement, deferred tax relating to retirement benefit costs, share-based payments 

and short-term timing differences amounting to £1.8m (2006: £0.5m charged) has been credited directly to equity (see Note 18). 

The benefit of tax savings relating to retirement benefit costs and share-based payments amounting to £0.5m (2006: £1.0m) has been 

credited directly to equity. 

10. Dividends 

2007 2006 

£m £m 

Amounts recognised as distributions to equity holders in the period: 

Final dividend for the year ended 31 March 2006 of 2.4p (2005: 1.8p) per share 7.6 5.6 

Interim dividend for the year ended 31 March 2007 of 2.4p (2006: 1.9p) per share 7.5 5.9 

15.1 11.5 

Proposed final dividend for the year ended 31 March 2007 of 2.7p (2006: 2.4p) per share 8.4 7.3 

The proposed final dividend is subject to approval by Shareholders at the Annual General Meeting and has not been included 

as a liability in these financial statements. 

11. Earnings per share 

Basic and diluted earnings per share have been calculated in accordance with IAS 33 ’Earnings Per Share’. 

The calculation of the basic and diluted EPS is based on the following data: 

2007 2006 

Number of shares million million 

Weighted average number of Ordinary Shares for the purpose of basic EPS 310.6 305.9 

Effect of dilutive potential Ordinary Shares: share options 4.4 3.2 

Weighted average number of Ordinary Shares for the purpose of diluted EPS 315.0 309.1 

Basic EPS on continuing operations is 11.9p (2006: 10.6p). Basic and diluted EPS on discontinued operations in 2006 was (0.8)p. 



12. Goodwill 

Cost 

At 1 April 2005 52.7 

Acquisition of subsidiaries 74.6 

Increased consideration for subsidiaries acquired in prior years 9.0 

Acquisition of minorities 7.5 

At 1 April 2006 143.8 

Acquisition of subsidiaries/assets 0.3 

Decreased consideration for subsidiaries acquired in prior years (0.1) 

Acquisition of minorities 2.5 

Changes in fair values of subsidiaries acquired in prior year 1.9 

At 31 March 2007 148.4 

£m 

Accumulated impairment losses 

At 1 April 2005 – 

At 1 April 2006 – 

At 31 March 2007 – 

Carrying amount 

At 31 March 2007 148.4 

At 31 March 2006 143.8 

Changes in fair values of subsidiaries acquired in the prior year relate to revisions in estimates of bad debts and property related 

provisions.As these are not material prior year goodwill has not been restated. 

Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGU’s) that are expected 

to benefit from that business combination. Goodwill has been allocated to CGU’s in the following business segments, which is how 

goodwill is monitored by the Group internally. 

2007 2006 

£m £m 

Facilities Services 130.7 126.8 



148.4 143.8 

The Group tests goodwill at least annually for impairment. 

The recoverable amounts of the CGU’s are determined from value in use calculations.The key assumptions for the value in use 

calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the 

period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money 

and the risks specific to the CGU’s.The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs 

are based on past practices and expectations of future changes in the market. 

The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next five 

years and extrapolates cash flows for the following five years based on an estimated growth rate of 2% per annum.This rate does not 

exceed the average long-term growth rate for the relevant markets. 

The rates used to discount the forecast cash flows from CGU’s are as follows: 

2007 2006 

% % 

Facilities Services 9.2 8.0 




13. Other intangible assets 

Customer 

relationships 

£m 

Cost 

At 1 April 2005 – 

Acquired on acquisition of subsidiaries 11.7 

At 1 April 2006 11.7 

Additions – 

At 31 March 2007 11.7 

Amortisation 

At 1 April 2005 – 

Charge for the year 0.2 

At 1 April 2006 0.2 


At 31 March 2007 1.8 


At 31 March 2007 9.9 

At 31 March 2006 11.5 

Customer relationships are amortised over the remaining period of the contract, which ranges on average between six 

and eight years. 

14. Property, plant and equipment 

Long 

Freehold leasehold Plant and 

properties properties vehicles Total 

£m £m £m £m 

Cost 

At 1 April 2005 4.7 3.2 44.3 52.2 

Additions 0.8 1.5 11.5 13.8 

Acquisition of subsidiaries 1.4 0.4 3.5 5.3 

Disposals (0.9) – (7.1) (8.0) 

At 1 April 2006 6.0 5.1 52.2 63.3 

Additions 0.5 1.2 20.8 22.5 

Disposals (0.3) (0.2) (10.6) (11.1) 

At 31 March 2007 6.2 6.1 62.4 74.7 

Accumulated depreciation and impairment 

At 1 April 2005 0.5 0.4 24.1 25.0 

Charge for the year 0.1 0.4 9.3 9.8 

Disposals – – (6.0) (6.0) 

At 1 April 2006 0.6 0.8 27.4 28.8 

Charge for the year 0.1 0.4 12.5 13.0 

Disposals – (0.1) (8.5) (8.6) 

At 31 March 2007 0.7 1.1 31.4 33.2 


At 31 March 2007 5.5 5.0 31.0 41.5 

At 31 March 2006 5.4 4.3 24.8 34.5 

The net book value of plant and vehicles held under finance leases included above was £2.4m (2006: £1.8m). 



15. Inventories 

2007 2006 

£m £m 

Work-in-progress 6.9 8.0 

Finished goods 1.0 0.8 

7.9 8.8 

16.Trade and other receivables 

2007 2006 

£m £m 

Amounts receivable for the sale of services 218.9 211.3 

Amounts recoverable on contracts 23.4 17.9 

Other debtors 7.2 2.2 

Prepayments and accrued income 23.3 12.9 

272.8 244.3 

The average credit period taken on sales of services was 65 days (2006: 76 days). Interest is charged on overdue debts when 

appropriate.An allowance has been made for estimated irrecoverable amounts from the sale of services of £3.5m (2006: £3.9m). 

This allowance has been determined by considering the recoverability of each debt. 

The Directors consider that the carrying amount of trade and other receivables approximates their fair value. 

Credit risk 

The Group’s principal financial assets are bank balances and cash and trade and other receivables. 

The Group’s credit risk is primarily attributable to its trade receivables.The amounts presented in the balance sheet are net 

of allowances for doubtful receivables.An allowance for impairment is made where there is an identified loss event which, based 

on previous experience, is evidence of a reduction in the recoverability of the cash flows. 

The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers. 

17. Cash and cash equivalents 

2007 2006 

£m £m 

Cash and cash equivalents 25.6 9.6 

25.6 9.6 

Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months 

or less.The carrying amount of the assets approximates their fair value.All balances are held in sterling. 

Included in cash and cash equivalents are deposits totalling £10.3m (2006: £9.6m) held by the Group’s insurance subsidiary, which 

are not readily available for the general purposes of the Group. 

The credit risk on liquid funds and financial instruments is limited because the counterparties are banks with high credit-ratings 

assigned by international credit-rating agencies. 

18. Deferred tax 

The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current and 

prior reporting period: 

Accelerated Retirement Short-term 

tax benefit Business Share-based timing Tax 

depreciation obligations combinations payments differences losses Total 

£m £m £m £m £m £m £m 

At 1 April 2005 1.0 2.3 – 0.7 0.4 – 4.4 

(Charge)/credit to income (0.2) (0.2) – 0.2 (0.1) 0.2 (0.1) 

(Charge)/credit to equity – (2.6) – 0.4 1.7 – (0.5) 

(Charge) to goodwill – – (3.6) – – – (3.6) 

At 1 April 2006 0.8 (0.5) (3.6) 1.3 2.0 0.2 0.2 

Credit/(charge) to income 0.1 (1.1) 0.5 0.4 0.6 – 0.5 

Credit to equity – 1.5 – 0.3 – – 1.8 

(Charge)/credit to goodwill – – (0.2) – 1.5 – 1.3 

At 31 March 2007 0.9 (0.1) (3.3) 2.0 4.1 0.2 3.8 


Certain deferred tax assets and liabilities have been offset.The following is the analysis of the deferred tax balances (after offset) for 

financial reporting purposes: 

2007 2006 

£m £m 

Deferred tax assets 7.7 4.9 

Deferred tax liabilities (3.9) (4.7) 

Net deferred tax asset 3.8 0.2 

The Group has unutilised income tax losses of £3.7m (2006: £3.1m) that are available for offset against future profits. In addition the 

Group has £0.8m (2006: £1.2m) of capital losses. Deferred tax assets have not been recognised in respect of £3.8m (2006: £3.6m) 

of these losses as their recoverability is uncertain. 

Deferred tax has been calculated at the current corporation tax rate of 30%, as the expected reduction in the corporation tax rate 

to 28% has not yet been substantively enacted. 

19.Trade and other payables 

2007 2006 

£m £m 

Payments received on account 1.0 – 

Trade creditors 155.3 133.4 

Other taxes and social security 45.5 40.7 

Other creditors 2.6 1.1 

Accruals and deferred income 51.3 39.3 

255.7 214.5 

Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs.The average credit 

period taken for trade purchases is 48 days (2006: 55 days). 

The Directors consider that the carrying amount of trade and other payables approximates their fair value. 

20. Financial liabilities 

2007 2006 

£m £m 

Overdraft – 2.0 

Bank loans 20.0 31.0 

Secured loan notes 9.9 – 

Unsecured loan notes 1.2 – 

Obligations under finance leases (Note 21) 2.6 1.8 

33.7 34.8 

Included in current liabilities 30.9 33.8 

Included in non-current liabilities 2.8 1.0 

33.7 34.8 

Included in non-current liabilities are £1.6m (2006: £1.0m) of obligations under finance leases (see Note 21) and £1.2m (2006: £nil) 

of unsecured loan notes which are repayable between 2008 and 2013. 

All borrowings are in sterling.The Directors estimate that the carrying amount of the Group’s borrowings approximates their fair value. 

The bank loans are repayable within one year and the overdrafts are repayable on demand. 

2007 2006 

% % 

The weighted average interest rates paid during the period on the overdrafts and loans 

outstanding were as follows: 

Overdrafts 5.6 5.4 


Loan notes 4.3 – 

At 31 March 2007, the Group had available £117m (2006: £34m) of undrawn committed borrowing facilities in respect of which all 

conditions precedent had been met.The facilities have an expiry date of January 2012.The loans carry interest rates which are 

currently fixed at 5.8% and are currently determined at 0.4% over LIBOR.The overdraft carries interest at 0.9% over base rate.The secured 

loan notes are backed by a bank guarantee. Full details of the Group’s contingent liabilities are provided in Note 27. 



20. Financial liabilities continued 

Foreign currency risk 

The Group has very limited trading transactions in foreign currency and currently there is no hedging of these exposures.Any material 

transactions would be appropriately hedged. 

Liquidity risk 

The Group monitors its risk to a shortage of funds using a cash flow projection model which considers the maturity of the Group’s 

assets and liabilities and the projected cash flow from operations. Bank facilities which allow for appropriate headroom in the Group’s 

daily cash movements are then arranged. 

Interest rate risk 

All Group debt is currently due to short-term working capital fluctuations and hence is not hedged as at 31 March 2007. 

21. Obligations under finance leases 

Minimum lease payments 

Present value 

of lease payments 

2007 2006 2007 2006 

£m £m £m £m 

Amounts payable under finance leases: 

Within one year 1.0 0.8 1.0 0.7 

In the second to fifth years inclusive 1.9 1.3 1.6 1.2 

2.9 2.1 2.6 1.9 

Less: future finance charges (0.3) (0.3) – – 

Present value of lease obligations 2.6 1.8 2.6 1.9 

Less: Amount due for settlement within twelve months (1.0) (0.8) (1.0) (0.7) 

Amount due for settlement after twelve months 1.6 1.0 1.6 1.2 

The average remaining lease term is 28 months (2006: 22 months). For the year ended 31 March 2007, the average effective borrowing 

rate was 5.3% (2006: 5.1%). Interest rates are fixed at the contract date.All leases are on a fixed repayment basis and no arrangements 

have been entered into for contingent rental payments. 

All lease obligations are denominated in sterling. 

The fair value of the Group’s lease obligations approximates their carrying amount. 

The Group’s obligations under finance leases are secured by the lessors’ rights over the leased assets. 


22. Provisions 

Contingent 

deferred Insurance 

consideration reserve Total 

£m £m £m 

At 1 April 2006 15.4 6.5 21.9 

Additional provision in the year 0.3 3.8 4.1 

Converted to loan notes during the year (12.1) – (12.1) 

Utilised during the year (3.3) (1.7) (5.0) 

At 31 March 2007 0.3 8.6 8.9 

Included in current liabilities 0.3 

Included in non-current liabilities 8.6 

8.9 

Contingent 

deferred Insurance 

consideration reserve Total 

£m £m £m 

At 1 April 2005 3.2 6.0 9.2 

Additional provision in the year 12.2 1.8 14.0 

Utilised during the year – (1.3) (1.3) 

At 31 March 2006 15.4 6.5 21.9 

Included in current liabilities 11.7 

Included in non-current liabilities 10.2 

21.9 

During the period £1.9m of deferred consideration was paid in respect of MITIE Security (London) Limited (formerly MITIE Trident Security 

Limited). In addition, £8.9m of loan notes were issued to the original shareholders of MITIE Security (London) Limited (formerly MITIE 

Trident Security Limited) in respect of the settlement of deferred consideration. 

£1.2m of loan notes were also issued to the vendors of MITIE Pest Control Limited (formerly Eagle Pest Control Services UK Limited). 

£0.8m of deferred consideration in respect of the purchase last year of the minority shareholdings in MITIE Business Services Limited, 

MITIE Engineering Services (Swansea) Limited and MITIE Security (North) Limited was settled by the issue of new MITIE shares. 

£0.5m was paid to the vendors of MITIE Lyndhurst Services Limited (formerly Lyndhurst Services Limited). 

£2.0m was converted into loan notes in respect of The Watch Security Limited and subsequently £1.0m was redeemed during the year. 

Provision is made for contingent deferred consideration, which may become payable in August 2007 subject to certain profit targets 

being attained, at the best estimate of the Directors.A total of £0.3m was provided for deferred consideration to the minority 

shareholders of MITIE Air Conditioning (London) Limited and MITIE Engineering Maintenance (South West) Limited. 

The provision for insurance claims represents amounts payable by MITIE Reinsurance Company Limited in respect of outstanding 

claims incurred at the balance sheet dates.These amounts will become payable as each year’s claims are settled. 



23. Share capital 

Ordinary Ordinary 

Shares Shares 

of 2.5p of 2.5p 

Number £m 

Authorised at 1 April 2006 and 31 March 2007 340,000,000 8.5 

2007 

Allotted and fully paid 

At beginning of year 308,762,569 7.7 

Issued as Directors’ remuneration 46,219 - 

Issued for acquisitions 1,727,180 – 

Issued under share option schemes 1,913,227 0.1 

At end of year 312,449,195 7.8 

2006 



Issued as Directors’ remuneration 66,773 – 

Issued for acquisitions 4,832,770 0.1 

Issued under share option schemes 1,681,551 – 

Own shares acquired (992,305) – 

At end of year 308,762,569 7.7 

During the year 46,219 (2006: 66,773) Ordinary Shares of 2.5p were allotted as remuneration in respect of services provided by Directors 

at a market price of 239.0p (2006: 199.5p) giving rise to share premium of £0.1m (2006: £0.1m). 

During the year 1,727,180 (2006: 4,832,770) Ordinary Shares of 2.5p were allotted in respect of acquiring minority interests at a midmarket 

price of 191.2p (2006: 166.0p) giving rise to share premium of £0.4m (2006: £nil) and a merger reserve of £2.9m (2006: £7.9m). 

During the year 1,913,227 (2006: 1,681,551) Ordinary Shares of 2.5p were allotted in respect of share option schemes at a price 

between 165p and 191p (2006: 138p and 162p) giving rise to share premium of £2.4m (2006: £2.2m). 

During the year nil Ordinary Shares of 2.5p were purchased (2006: 992,305 at market prices between 158.5p and 164.0p).These were 

then cancelled. 


24. Reserves 

Share- 

Called-up Share Capital based 

share premium Merger Revaluation redemption Other payment Retained 

capital account reserve reserve reserve reserve (1) reserve earnings Total 

£m £m £m £m £m £m £m £m £m 

Balance at 1 April 2006 7.7 13.7 52.0 (0.2) 0.3 0.3 1.4 90.1 165.3 

Shares issued and net 

premium arising in 

respect of acquisitions – 0.4 2.9 – – – – – 3.3 


premium in connection 

with exercise of share options 0.1 2.5 – – – (0.1) – – 2.5 

Profit for the period 

attributable to equity 

holders of the parent – – – – – – – 37.0 37.0 

Dividends paid – – – – – – – (15.1) (15.1) 

Expense in relation to sharebased 

payments – – – – – – 1.1 – 1.1 

Transfer in relation to sharebased 

payments – – – – – – (0.6) 0.6 – 

Tax charge on items taken 

directly to equity – – – – – – – 0.8 0.8 

Net actuarial loss on defined 

benefit pension schemes – – – – – – – (4.7) (4.7) 

Tax credit on actuarial loss 

taken directly to equity – – – – – – – 1.5 1.5 

Net expense on defined benefit 

pension schemes recognised 

directly in equity in the year – – – – – – – (3.2) (3.2) 

Balance at 31 March 2007 7.8 16.6 54.9 (0.2) 0.3 0.2 1.9 110.2 191.7 

Share- 

Called-up Share Capital based 

share premium Merger Revaluation redemption Other payment Retained 

capital account reserve reserve reserve reserve (1) reserve earnings Total 

£m £m £m £m £m £m £m £m £m 

Balance at 1 April 2005 7.6 11.5 44.1 (0.2) 0.3 0.6 0.7 71.4 136.0 


premium arising in 

respect of acquisitions 0.1 – 7.9 – – – – – 8.0 


premium in connection 

with exercise of share options – 2.2 – – – (0.3) – – 1.9 

Own shares acquired – – – – – – – (1.6) (1.6) 

Profit for the period 

attributable to equity 

holders of the parent – – – – – – – 30.2 30.2 

Dividends paid – – – – – – – (11.5) (11.5) 

Expense in relation to 

share-based payments – – – – – – 0.7 – 0.7 

Tax charge on items taken 

directly to equity – – – – – – – 3.1 3.1 

Net actuarial gain on defined 

benefit pension schemes – – – – – – – 1.1 1.1 

Tax charge on actuarial gain 

taken directly to equity – – – – – – – (2.6) (2.6) 

Net expense on defined benefit 

pension schemes recognised 

directly in equity in the year – – – – – – – (1.5) (1.5) 

Balance at 31 March 2006 7.7 13.7 52.0 (0.2) 0.3 0.3 1.4 90.1 165.3 

(1) 

This is a non-distributable reserve. 



25. Acquisition of subsidiaries 

Purchase of minority interests 

MITIE 

Landscape 

MITIE MITIE (Northern) 

Engineering MITIE Air MITIE Air Engineering MITIE Ltd and MITIE 

Maintenance Conditioning Conditioning Services Environ- Landscape 

(South West) (London) (Wales) (Retail) mental (Southern) 

Ltd Ltd Ltd Ltd Ltd Ltd Total 

£m £m £m £m £m £m £m 

Minority interests 0.6 0.2 – 0.1 0.5 0.2 1.6 

Goodwill 1.6 0.3 0.1 0.1 – 0.4 2.5 

Total purchase consideration 2.2 0.5 0.1 0.2 0.5 0.6 4.1 

Shares issued – MITIE Group PLC 1.8 0.4 0.1 0.2 – – 2.5 

Deferred contingent consideration 0.2 0.1 – – – – 0.3 

Cash consideration being 

cash outflow in the period 0.2 – – – 0.5 0.6 1.3 

In addition, MITIE acquired the minority interest in MITIE Industrial Cleaning (North) Limited for £61,000. 

Purchase of subsidiary post balance sheet date 

On 2 April 2007 MITIE acquired 100% of Robert Prettie for total consideration of £23.0m.The transaction will be accounted for 

by the purchase method of accounting. Below we provide provisional information on fair values acquired. 

Book Fair value Fair 

value adjustments value 

£m £m £m 

Net assets acquired 

Intangible assets 8.6 (6.7) 1.9 

Deferred tax liability – (0.6) (0.6) 

Property, plant and equipment 0.2 – 0.2 

Inventories 4.9 (0.2) 4.7 

Trade and other receivables 1.2 – 1.2 

Cash and cash equivalents 0.2 – 0.2 

Trade and other payables (6.3) (0.2) (6.5) 

Current tax liabilities (0.7) – (0.7) 

Loans (3.7) – (3.7) 

Pension liabilities (0.4) – (0.4) 

Net assets acquired 4.0 (7.7) (3.7) 

Goodwill 26.7 

Total consideration 23.0 

Satisfied by 

Cash 7.0 

Loan notes 1.6 

Deferred contingent consideration 14.0 

Directly attributable costs 0.4 

Total consideration 23.0 

Net cash outflow arising on acquisition 

Cash consideration 7.0 

Cash and cash equivalents acquired (0.2) 

Loans repaid 3.7 

Net cash outflow 10.5 

The goodwill arising on the acquisition of Robert Prettie is attributable to the underlying profitability of the company, expected 

profitability arising from new business and the anticipated future operating synergies arising from assimilation into the Group. 


26. Notes to the cashflow statement 

2007 2006 

Reconciliation of operating profit to net cash from operating activities £m £m 

Operating profit from continuing operations 58.3 48.1 

Operating loss from discontinued operations – (2.4) 

Adjustments for: 

Share-based payment expense 1.1 0.7 

Pension charge 1.8 2.6 

Pension contributions (5.2) (3.2) 

Depreciation of property, plant and equipment 13.0 9.8 

Amortisation of intangible assets 1.6 0.2 

Gain on disposal of property, plant and equipment (1.1) (0.6) 

Operating cash flows before movements in working capital 69.5 55.2 

Decrease/(increase) in inventories 0.9 (2.2) 

Increase in receivables (28.5) (29.5) 

Increase in payables 39.4 31.2 

Increase in provisions 2.1 0.5 

Cash generated by operations 83.4 55.2 

Additional pension contributions – (7.8) 

Income taxes paid (17.0) (15.1) 

Interest paid (2.5) (0.2) 

Net cash from operating activities 63.9 32.1 

Additions to fixtures and equipment during the year amounting to £1.7m (2006: £0.1m) were financed by new finance leases. 

Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank 

and other short-term highly liquid investments with a maturity of three months or less. 

27. Contingent liabilities 

The Company is party with other Group companies to cross guarantees of each other’s bank loans, commitments and overdrafts 

of £190m (2006: £105m). 

The Company and various of its subsidiaries are, from time to time, party to legal proceedings and claims that are in the ordinary 

course of business.The Directors do not anticipate that the outcome of these proceedings and claims, either individually or in 

aggregate, will have a material adverse effect on the Group’s financial position. 

In addition, the Group and its subsidiaries have provided guarantees and indemnities in respect of performance, issued by financial 

institutions on its behalf, amounting to £19.0m (2006: £6.1m) in the ordinary course of business.These are not expected to result in any 

material financial loss. 

28. Operating lease arrangements 

The Group as Lessee 

2007 2006 

£m £m 

Minimum lease payments under operating leases recognised in income for the year 4.4 4.5 

At the balance sheet date, the Group had total outstanding commitments for future minimum lease payments under non-cancellable 

operating leases, which fall due as follows: 

2007 2006 

£m £m 

Within one year 1.8 1.0 

In the second to fifth years inclusive 2.7 2.9 

After five years 1.8 1.3 

6.3 5.2 



29. Share-based payments 

Equity-settled share option schemes 

The Company has four share option schemes: 

The MITIE Group PLC 1991 Executive share option scheme 

The Executive share option scheme is open to all employees.The exercise price is equal to the market value of the shares on the date 

of grant.The vesting period is three years. If the options remain unexercised after a period of ten years from the date of grant, the 

options expire. Options may be forfeited if the employee leaves the Group. No options have been granted under this scheme since 

August 2001. 

The MITIE Group PLC 2001 Executive share option scheme 

The Executive share option scheme is open to all employees.The exercise price is equal to the market value of the shares on the date 

of grant.The vesting period is three years. If the options remain unexercised after a period of ten years from the date of grant the 

options expire. Options may be forfeited if the employee leaves the Group. Before options can be exercised, the performance condition 

that must be satisfied is that the percentage growth in the earnings per share over a three year period must be equal or greater than 

10.0% per annum compound. 

The MITIE Group PLC 1991 and 2001 Savings Related share option scheme 

The Savings Related share option scheme is open to all employees.The exercise price is not less than 80.0% of the market value of the 

shares on the day preceding the date on which invitations to participate in the Scheme are issued.The vesting period is five years. If 

the options remain unexercised after a period of five years and nine months from the date of grant, the options expire. Options may be 

forfeited if the employee leaves the Group. No options have been granted under the 1991 scheme since August 2001. 

Details of the share options outstanding during the year are as follows: 

2007 2006 

Weighted 

Weighted 

average 

average 

Number exercise Number exercise 

of share price of share price 

options (p) options (p) 

Outstanding at beginning of period (1) 12,279,752 130 12,089,064 124 

Granted during the period 3,870,461 177 3,278,927 149 

Forfeited during the period (1,377,747) 141 (1,406,688) 150 

Exercised during the period ( 1,913,227) 125 (1,681,551) 138 

Outstanding at the end of the period 12,859,239 143 12,279,752 130 

Exercisable at the end of the period 1,739,348 126 2,098,698 124 

The Group recognised the following expenses related to share-based payments: 

2007 2006 

£m £m 

2001 Executive share options 0.6 0.4 

2001 Savings Related share options 0.5 0.3 

1.1 0.7 

(1) 

Included within this balance are 2,263,571 (2006: 3,719,291) options that have not been recognised in accordance with IFRS 2 as the options were 

granted on or before 7 November 2002.These options have not been subsequently modified and therefore do not need to be accounted for in 

accordance with IFRS 2. 

The weighted average share price at the date of exercise for share options exercised during the period was 216p (2006: 181p). 

The options outstanding at 31 March 2007 had exercise prices ranging from 58p–191p (2006: 58p–174p) and a weighted average 

remaining contractual life of 5.12 years (2006: 5.18 years). In the year ended 31 March 2007, options were granted on 22 June 2006 

and 24 July 2006 in respect of the Executive and Savings Related share option schemes respectively.The aggregate of the estimated 

fair values of the options granted on those dates is £1.5m. In the year ended 31 March 2006, options were granted on 23 June 2005 

and 20 July 2005 in respect of the Executive and Savings Related share option schemes respectively.The aggregate of the estimated 

fair values of the options granted on those dates is £1.1m. 


The fair value of options is measured by use of the Black-Scholes model.The inputs into the Black-Scholes model are as follows: 

2007 2006 

Share price (p) 130-193 98-161 

Exercise price (p) 120-191 99-162 

Expected volatility (%) 28-30 28-30 

Expected life (years) 4-6 5-6 

Risk-free rate (%) 4.17-5.12 4.17-5.12 

Expected dividends (%) 1.43-2.29 1.43-2.12 

Expected volatility was based upon the historical volatility over the expected life of the schemes.The expected life is based upon 

historical data and has been adjusted based on management’s best estimates for the effects of non-transferability, exercise restrictions 

and behavioural considerations. 

30. Retirement benefit schemes 

Defined contribution schemes 

The Group operates a number of defined contribution retirement benefit schemes for qualifying employees.The assets of the schemes 

are held separately from those of the Group in funds controlled by the scheme providers. 

The total cost charged to income of £1.7m (2006: £1.1m) represents contributions payable to these schemes by the Group at rates 

specified in the rules of the schemes.As at 31 March 2007, contributions of £0.5m (2006: £0.1m) due in respect of the current reporting 

period had not been paid over to the schemes. 

Defined benefit schemes 

Group defined benefit schemes 

The Group operates two defined benefit pension schemes called the MITIE Group PLC Pension Scheme and the MITIE Group PLC 

Passport Pension Scheme. 

The assets of the schemes are held separately from the Group. Contributions to the schemes are charged to the Income Statement 

so as to spread the cost of pensions over the employees’ working lives with the Group. 

Under the schemes, the employees are entitled to retirement benefits varying between 0 and 66 per cent of final salary on attainment 

of a retirement age of 65. No other post-retirement benefits are provided.The schemes are funded schemes. 

The most recent actuarial valuations of the Group schemes’ assets and the present value of their defined benefit obligations were 

carried out at 1 April 2005 by Mr David Higgs, Fellow of the Institute of Actuaries. 

Other defined benefit schemes 

Grouped together under ’Other schemes’ are schemes where the Group has allocated sections of two multi-employer schemes in 

which the Group is a participating employer and several schemes to which the Group makes contributions under Admitted Body 

status to our customers’ defined benefit schemes in respect of certain TUPE employees.These valuations are updated by the actuaries 

at each balance sheet date.The present values of the defined benefit obligations, the related current service cost, and past service 

cost were measured using the projected unit credit method. 

For the Admitted Body Schemes (principally the West Midlands Pension Fund), which are all part of the Local Government Pension 

Scheme, the Group will only participate for a finite period up to the end of the contracts.The Group is required to pay regular 

contributions as decided by the relevant Scheme Actuaries and detailed in the schemes’ Schedule of Contributions. In a number of 

cases contributions payable by the employer are capped and any excess recovered from the body that the employees transferred 

from. In addition, in certain cases, at the end of the contract the Group will be required to pay any deficit (as determined by the 

Scheme Actuary) that is remaining for its notional section of the scheme. 

Group schemes 

Other schemes 

2007 2006 2007 2006 

% % % % 

Key assumptions used for IAS 19 valuation: 

Discount rate 5.30 5.10 5.30 – 

Expected return on scheme assets: 

Equity instruments 8.00 8.00 8.00 – 

Debt instruments 5.00 5.00 5.00 – 

Property 7.50 7.50 7.50 – 

Other assets 5.25 5.00 5.25 – 

Expected rate of salary increases 4.00 3.75 3.75 – 

Future pension increases 3.00 3.00 3.00 – 

The overall expected return on assets is calculated as the weighted average of the expected return of each asset class.The expected 

return on equities is the sum of dividend growth and capital growth net of investment expenses.The return on gilts and bonds is the 

current market yield on long-term bonds.The expected return on property has been set equal to that expected on equities less a 

margin.The expected return on other assets is the rate earned by the scheme on cash. 



30. Retirement benefit schemes continued 

Amounts recognised in administrative expenses in respect of these defined benefit schemes are as follows: 

2007 2006 

Group Other Group Other 

schemes schemes Total schemes schemes Total 

£m £m £m £m £m £m 

Current service cost (3.2) (1.5) (4.7) (3.0) – (3.0) 

Interest cost (3.7) (2.7) (6.4) (3.2) – (3.2) 

Expected return on scheme assets 5.3 4.0 9.3 3.6 – 3.6 

(1.6) (0.2) (1.8) (2.6) – (2.6) 

Amounts recognised in the consolidated statement of recognised income and expense are as follows: 

2007 2006 



£m £m £m £m £m £m 

Actual return on scheme assets 4.8 4.0 8.8 12.9 – 12.9 

Expected return on scheme assets (5.3) (4.0) (9.3) (3.6) – (3.6) 

Experience adjustments arising on plan liabilities (3.2) (1.0) (4.2) (8.2) – (8.2) 

(3.7) (1.0) (4.7) 1.1 – 1.1 

The cumulative amount of actuarial loss recognised since 1 April 2004 in the consolidated statement of recognised income and 

expense is £5.3m (2006: £0.4m). 

The amounts included in the balance sheet arising from the Group’s obligations in respect of its defined benefit retirement benefit 

schemes are as follows: 

2007 2006 



£m £m £m £m £m £m 

Fair value of scheme assets 83.2 61.4 144.6 74.0 – 74.0 

Present value of defined benefit obligations (82.7) (60.6) (143.3) (72.2) – (72.2) 

Surplus/(deficit) in scheme 0.5 0.8 1.3 1.8 – 1.8 

Contract adjustment – (0.8) (0.8) – – – 

Net pension asset 0.5 – 0.5 1.8 – 1.8 

Movements in the present value of defined benefit obligations were as follows: 

2007 2006 



£m £m £m £m £m £m 

At 1 April 72.2 – 72.2 56.6 – 56.6 

Service cost 3.2 1.5 4.7 3.0 – 3.0 

Interest cost 3.7 2.7 6.4 3.2 – 3.2 

Reclassification (0.4) 0.4 – – – – 

Contributions from scheme members 2.1 0.5 2.6 2.2 – 2.2 

Actuarial gains and losses 3.2 0.3 3.5 8.2 – 8.2 

Benefits paid (1.3) (0.1) (1.4) (1.0) – (1.0) 

Contract transfers – 55.3 55.3 – – – 

At 31 March 82.7 60.6 143.3 72.2 – 72.2 


Movements in the fair value of scheme assets were as follows: 

2007 2006 



£m £m £m £m £m £m 

At 1 April 74.0 – 74.0 49.1 – 49.1 

Expected return on scheme assets 5.3 4.0 9.3 3.6 – 3.6 

Actuarial gains and losses (0.5) – (0.5) 9.3 – 9.3 

Contributions from the sponsoring companies 3.9 1.3 5.2 11.0 – 11.0 

Contributions from scheme members 2.2 0.5 2.7 2.1 – 2.1 

Reclassification (0.4) 0.4 – – – – 

Benefits paid (1.3) (0.1) (1.4) (1.1) – (1.1) 

Contract transfers – 55.3 55.3 – – – 

At 31 March 83.2 61.4 144.6 74.0 – 74.0 

The analysis of the scheme assets at the balance sheet date was as follows: 

2007 2006 



£m £m £m £m £m £m 

Equity instruments 47.8 46.6 94.4 46.6 – 46.6 

Debt instruments 3.0 7.6 10.6 2.8 – 2.8 

Property 15.3 5.1 20.4 3.4 – 3.4 

Other assets 17.1 2.1 19.2 21.2 – 21.2 

At 31 March 83.2 61.4 144.6 74.0 – 74.0 

The pension schemes have invested in property occupied by the Group with a fair value of £3.2m (2006: £nil) generating rental of 

£0.3m (2006: £nil).The pension schemes have not invested in any of the Group’s own financial instruments or other assets used by the 

Group.Transactions between the Group and the pension schemes are conducted at arm’s length. 

The mortality for the Group schemes is based upon up to date tables which project mortality improvements in the future. For a male 

aged 65.0 years the expected life is 85.1 years (2006: 85.1 years) and for a female aged 65.0 years the expected life is 88.0 years 

(2006: 88.0 years). Mortality for the other schemes is that used by the relevant scheme actuary. 

The history of experience adjustments is as follows: 

Group schemes 

Other schemes 

2007 2006 2005 2007 2006 2005 

£m £m £m £m £m £m 

Fair value of scheme assets 83.2 74.0 49.0 61.4 – – 

Present value of defined benefit obligations (82.7) (72.2) (56.6) (61.4) – – 

Surplus/(deficit) in the scheme 0.5 1.8 (7.6) – – – 

Experience adjustments on scheme liabilities (3.2) (8.2) (3.7) (1.0) – – 

Percentage of scheme liabilities 3.9% 11.4% 7.0% 1.6% – – 

Experience adjustments on scheme assets (0.5) 9.3 2.3 – – – 

Percentage of scheme assets 1.0% 12.6% 5.0% – – – 

The estimated contributions expected to be paid to the Group schemes during the current financial year are £3.4m (2006: £3.2m) 

and to other schemes £1.2m (2006: £nil). 



31. Related party transactions 

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are 

not disclosed in this Note. 

During the year the Group received rent of £3,500 (2006: £36,000) from The Platform Company (Holdings) Limited, a Company in which 

C S Acheson held a Directorship. During the year, a freehold property was sold to The Platform Company (Holdings) Limited for 

£565,000. No fees were paid by The Platform Company (Holdings) Limited in respect of the services provided by C S Acheson either 

to the Group or C S Acheson (2006: £nil). No balances were outstanding at the year end (2006: £nil). 

During the year the Group provided services amounting to £166,000 (2006: £164,000) to The Bristol Port Company Limited, a Company 

in which D C Ord held a Directorship.At the end of the year the amount owed to the Group was £nil (2006: £14,000). 

During the year the Group provided services amounting to £5,384,000 (2006: £7,951,000) to Sir Robert McAlpine Limited, a Company 

in which C McAlpine held a Directorship.At the end of the year the amount owed to the Group was £1,308,000 (2006: £1,602,000). 

During the year the Group earned interest of £142,000 (2006: £140,000) on loan notes and loans with Generation (UK) Limited, a 

Company in which I R Stewart held a Directorship. In addition, Generation (UK) Limited paid rent to the Group of £120,000 (2006: 

£120,000). £nil was outstanding at the year end (2006: £nil). No fees were paid by Generation (UK) Limited in respect of the services 

provided by I R Stewart either to the Group or I R Stewart (2006: £nil). 

No material contract or arrangement has been entered into during the year, nor existed at the end of the year, in which a Director 

had a material interest. 

Amounts paid to key management personnel are given in the audited section of the Directors’ remuneration report. 

32. Subsidiaries 

The companies set out below are those which were part of the Group at 31 March 2007 and in the opinion of the Directors significantly 

affected the Group’s results and net assets during the year. 

At 31 March 2007 

% Ordinary Shares 

owned 

Cleaning 

Security 


Managed Services 

Business Services 

PFI 

Catering 

Landscape 

Pest Control 

MITIE Cleaning and Support Services Ltd (1)(2) 95.89 

MITIE Cleaning Services Ltd (2) 95.89 

MITIE Services (Retail) Ltd (2) 57.60 

MITIE Transport Services Ltd (2i) 86.08 

MITIE Security Systems Ltd 100.00 

MITIE Aviation Security Ltd (1) 100.00 

MITIE Security (South West) Ltd 51.00 

MITIE Security Ltd (formerly Initial Security Ltd) 100.00 

MITIE Security (London) Ltd 100.00 

MITIE Engineering Maintenance (Caledonia) Ltd 57.00 

MITIE Engineering Maintenance (North) Ltd 51.00 

MITIE Engineering Maintenance (South West) Ltd 100.00 

MITIE Engineering Maintenance Ltd 100.00 

MITIE Managed Services Ltd 100.00 

MITIE Managed Services (Southern) Ltd 100.00 

MITIE Managed Services (South West and Wales) Ltd 68.93 

MITIE Business Services Ltd 100.00 

MITIE Document Solutions Ltd 68.00 

MITIE PFI Ltd 100.00 

MITIE Catering Services (London) Ltd 57.10 

MITIE Catering Services (Northern) Ltd 63.50 

MITIE Catering Services Ltd 51.11 

MITIE Lyndhurst Services Ltd 75.00 

MITIE Pest Control Ltd 100.00 

MITIE Pest Control (London) Ltd 55.08 



Engineering 

Administration 

At 31 March 2007 

% Ordinary Shares 

owned 

KBS Fire Protection Systems Ltd 79.00 

MITIE Flooring (Southern) Ltd 75.47 

MITIE Interiors Ltd 54.00 

MITIE McCartney Fire Protection Ltd 75.16 

MITIE Property Services (Eastern) Ltd 68.00 

MITIE Property Services (UK) Ltd 75.82 

MITIE Property Services Ltd 100.00 

MITIE Spaceworks Ltd 65.00 

MITIE Air Conditioning (London) Ltd 91.79 

MITIE Air Conditioning (Midlands) Ltd 89.15 

MITIE Air Conditioning (North) Ltd 100.00 

MITIE Air Conditioning (Scotland) Ltd 80.00 

MITIE Air Conditioning (South West) Ltd 100.00 

MITIE Air Conditioning (Wales) Ltd 100.00 

MITIE Air Conditioning (West) Ltd 100.00 

MITIE Engineering Ltd 69.55 

MITIE Engineering Projects Ltd 63.00 

MITIE Engineering Services (Bristol) Ltd 100.00 

MITIE Engineering Services (Cardiff) Ltd 100.00 

MITIE Engineering Services (Edinburgh) Ltd 54.00 

MITIE Engineering Services (Guernsey) Ltd 100.00 

MITIE Engineering Services (Jersey) Ltd 100.00 

MITIE Engineering Services (Leeds) Ltd 62.67 

MITIE Engineering Services (Liverpool) Ltd 54.00 

MITIE Engineering Services (Midlands) Ltd 55.50 

MITIE Engineering Services (North East) Ltd 83.14 

MITIE Engineering Services (North) Ltd 100.00 

MITIE Engineering Services (Peninsula) Ltd 100.00 

MITIE Engineering Services (Retail) Ltd 100.00 

MITIE Engineering Services (Scotland) Ltd 100.00 

MITIE Engineering Services (SE Region) Ltd 100.00 

MITIE Engineering Services (South West) Ltd 100.00 

MITIE Engineering Services (Swansea) Ltd 100.00 

MITIE Engineering Services (West Midlands) Ltd 64.00 

MITIE Engineering Services Ltd 100.00 

MITIE Environmental Ltd 100.00 

MITIE Scotgate Ltd (1) 100.00 

MITIE Technology Ltd 53.64 

Cole Motors Ltd 100.00 

MITIE Facilities Management Ltd 100.00 

MITIE Payroll Services Ltd (1) 100.00 

MITIE Resources Ltd (1) 100.00 

MITIE Property Investments Ltd 100.00 

MITIE Reinsurance Company Ltd 100.00 

(1) 

Shareholdings held by intermediate subsidiary undertakings. 

(2) 

Denotes Company operates 13 four-weekly period. 

All companies were incorporated in and operate within the United Kingdom, except for MITIE Reinsurance Company Limited and 

MITIE Engineering Services (Guernsey) Limited, which are registered and operate in Guernsey, and MITIE Engineering Services (Jersey) 

Limited, which is registered and operates in Jersey. 

Certain companies (as noted in the table above) operate on the basis of 13 four-weekly periods and have drawn up their accounts 

to 31 March 2007. 

The Group has a 33% interest in an associate company, Service Management International Limited.As this is not considered material, 

separate disclosure of its results, assets or liabilities have not been included in the financial statements. 

The companies listed above represent the principal operating subsidiary companies of the Group.A full list of subsidiary companies 

will be annexed to the next annual return. 


Independent auditors’report to the members of MITIE Group PLC 

We have audited the parent company financial statements 

of MITIE Group PLC for the year ended 31 March 2007 which 

comprise the Company balance sheet and the related Notes 

33 to 46.These parent company financial statements have been 

prepared under the accounting policies set out therein. 

We have reported separately on the group financial statements 

of MITIE Group PLC for the year ended 31 March 2007 and on the 

information in the directors’ remuneration report that is described 

as having been audited. 

This report is made solely to the company’s members, as a body, 

in accordance with section 235 of the Companies Act 1985. Our 

audit work has been undertaken so that we might state to the 

company’s members those matters we are required to state to 

them in an auditors’ report and for no other purpose.To the fullest 

extent permitted by law, we do not accept or assume 

responsibility to anyone other than the company and the 

company’s members as a body, for our audit work, for this report, 

or for the opinions we have formed. 

Respective responsibilities of directors and auditors 

The directors’ responsibilities for preparing the Annual Report, 

the Directors’ Remuneration Report and the parent company 

financial statements in accordance with applicable law and 

United Kingdom Accounting Standards (United Kingdom 

Generally Accepted Accounting Practice) are set out in the 

Statement of Directors’ Responsibilities. 

Our responsibility is to audit the parent company financial 

statements in accordance with relevant legal and regulatory 

requirements and International Standards on Auditing (UK 

and Ireland). 

We report to you our opinion as to whether the parent company 

financial statements give a true and fair view and whether the 

parent company financial statements have been properly 

prepared in accordance with the Companies Act 1985.We also 

report to you whether in our opinion the information given in the 

Directors’ report is consistent with the parent company financial 

statements.The information given in the Directors’ report includes 

that specific information presented in the Chairman’s statement, 

the Chief Executive’s statement, the Group Finance Director’s 

statement, the Operating Review and the Corporate Governance 

report that is cross referred from the business review section of the 


Basis of audit opinion 

We conducted our audit in accordance with International 

Standards on Auditing (UK and Ireland) issued by the Auditing 

Practices Board.An audit includes examination, on a test basis, 

of evidence relevant to the amounts and disclosures in the 

parent company financial statements. It also includes an 

assessment of the significant estimates and judgments made 

by the directors in the preparation of the parent company 

financial statements, and of whether the accounting policies 

are appropriate to the company’s circumstances, consistently 

applied and adequately disclosed. 

We planned and performed our audit so as to obtain all the 

information and explanations which we considered necessary 

in order to provide us with sufficient evidence to give reasonable 

assurance that the parent company financial statements are free 

from material misstatement, whether caused by fraud or other 

irregularity or error. In forming our opinion we also evaluated the 

overall adequacy of the presentation of information in the parent 

company financial statements. 

Opinion 

In our opinion: 

• the parent company financial statements give a true and fair 

view, in accordance with United Kingdom Generally Accepted 

Accounting Practice, of the state of the company’s affairs as 

at 31 March 2007; 

• the parent company financial statements have been properly 

prepared in accordance with the Companies Act 1985; and 

• the information given in the Directors’ report is consistent with 

the parent company financial statements. 

Deloitte & Touche LLP 

Chartered Accountants and Registered Auditors 

Bristol, United Kingdom 

18 May 2007 

In addition we report to you if, in our opinion, the company has 

not kept proper accounting records, if we have not received all 

the information and explanations we require for our audit, or if 

information specified by law regarding directors’ remuneration 

and other transactions is not disclosed. 

We read the other information contained in the Annual Report 

as described in the contents section and consider whether it is 

consistent with the audited parent company financial statements. 

We consider the implications for our report if we become aware 

of any apparent misstatements or material inconsistencies with 

the parent company financial statements. Our responsibilities do 

not extend to any further information outside the Annual Report. 


Company balance sheet 

As at 31 March 2007 

2007 2006 

Notes £m £m 

Fixed assets 

Tangible assets 36 2.0 1.7 

Investments in subsidiary undertakings 37 218.1 208.2 

Total fixed assets 220.1 209.9 

Current assets 

Debtors 38 43.3 33.6 

Total current assets 43.3 33.6 

Total assets 263.4 243.5 

Creditors: amounts falling due within one year 39 (114.0) (107.1) 

Provisions 41 (0.3) (12.2) 

Total current liabilities (114.3) (119.3) 

Net current liabilities (71.0) (85.7) 

Total assets less current liabilities 149.1 124.2 

Creditors: amounts falling due after more than one year 40 (1.2) – 

Provisions 41 – (3.2) 

Total liabilities (115.5) (122.5) 

Net assets 147.9 121.0 

Capital and reserves 

Share capital 42 7.8 7.7 

Share premium account 43 16.6 13.7 

Merger reserve 43 54.9 52.0 

Capital redemption reserve 43 0.3 0.3 

Profit and loss account 43 68.3 47.3 

Equity shareholders’ funds 147.9 121.0 

The financial statements were approved by the Board of Directors and authorised for issue on 18 May 2007. They were signed on 

its behalf by: 






Notes to the Company financial statements 

33. Significant accounting policies 

Basis of accounting 

The separate financial statements of the Company are presented as required by company law.They have been prepared under 

the historical cost convention and in accordance with applicable United Kingdom Accounting standards and law. 

The principal accounting policies are summarised below.They have been applied consistently throughout the year and the 

preceding year. 

Prior year comparatives 

Other than the change noted below, the accounting policies have been applied consistently throughout the current and previous 

year.The Company has adopted the revision to ’FRS 20 Share-based Payment’ from 1 April 2006 which requires that options over the 

Company’s shares awarded to employees of the Company’s subsidiaries be accounted for as a capital contribution. Consequently, 

the carrying value of Investments in subsidiary undertakings has been increased by £2.2m up to 31 March 2007.The impact on prior 

year is not material, therefore a prior year adjustment has not been made. 

Investments 

Fixed asset investments in subsidiaries are shown at cost less any provision for impairment. 

Tangible fixed assets 

Tangible fixed assets are stated at cost less accumulated depreciation and any impairment in value. Depreciation is charged so 

as to write off the cost of the assets over their estimated useful lives and is calculated on a straight-line basis as follows: 

Plant and vehicles 

– 3-10 years 

The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate the 

carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable 

amount, the assets or cash-generating units are written down to their recoverable amount.The recoverable amount of tangible fixed 

assets is the greater of net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to 

their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks 

specific to the asset. 

Provisions 

Provisions are recognised when the Company has a present obligation as a result of a past event and it is probable that an outflow of 

resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount 

of the obligation.Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, 

the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.The expense relating to 

any provision is charged to the profit and loss account, net of any reimbursement. If the effect of the time value of money is material, 

provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments 

of the time value of money and, where appropriate, the risks specific to the liability.Where discounting is used, the increase in the 

provision due to the passage of time is recognised as a borrowing cost. 

Taxation 

Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted 

or substantively enacted at the balance sheet date. 

Deferred tax is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax, or a right 

to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law.Timing differences 

arise from the inclusion of items of income and expenditure in tax computations in periods different from those in which they are 

included in the financial statements. Deferred tax is not provided on timing differences arising from the revaluation of fixed assets where 

there is no commitment to sell the asset, or on unremitted earnings of subsidiaries and associates where there is no commitment 

to remit these earnings. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be 

recovered. Deferred tax assets and liabilities are not discounted. 


Trade receivables are measured at initial recognition at fair value.Appropriate allowances for estimated irrecoverable amounts are 

recognised in the income statement where there is objective evidence that the asset is impaired. 

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are 

readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. 

Interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including 

premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the income statement 

and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. 

Trade payables are measured at fair value. 

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. 

Financial assets and financial liabilities are recognised on the Company’s balance sheet when the Company becomes a party 

to the contractual provisions of the instrument. 

Share-based payments 

The Company operates a number of executive and employee share option schemes. For all grants of share options and awards, 

the fair value as at the date of grant is calculated using the Black-Scholes model and the corresponding expense is recognised 

on a straight-line basis over the vesting period. 


Pensions 

Pension costs represent amounts paid to one of the Group’s pension schemes. For the purposes of FRS 17 ’Retirement Benefits’ the 

Company has been unable to identify its share of the underlying assets and liabilities of the main Group defined benefit pension 

scheme on a consistent and reasonable basis.Therefore the Company is accounting for contributions to the scheme as if it were 

a defined contribution scheme. Note 30 to the consolidated financial statements set out the details of the IAS 19 ’Employee Benefits’ 

net pension asset of £0.5m (2006: £1.8m). 

34. Profit for the year 

As permitted by section 230 of the Companies Act 1985 the Company has elected not to present its own profit and loss account 

for the year. MITIE Group PLC reported a profit after taxation for the financial year ended 31 March 2007 of £33.6m (2006: £9.2m loss). 

The auditors’ remuneration for audit services to the Company was £25,000 (2006: £23,000). 

The average number of persons employed, being full time equivalents, by the Company during the year, including Directors, was 

76 (2006: 68). 

The costs incurred in respect of these employees were: 

2007 2006 

£m £m 

Wages and salaries 6.4 5.3 

Social security costs 0.7 0.6 

Pension costs 0.3 0.3 

7.4 6.2 

Detailed disclosures of Directors’ remuneration and share options are given in the audited section of the Directors’ remuneration report 

contained in the consolidated financial statements. 

35. Dividends 

2007 2006 

£m £m 

Amounts recognised as distributions to equity holders in the period: 

Final dividend for the year ended 31 March 2006 of 2.4p (2005: 1.8p) per share 7.4 5.6 

Interim dividend for the year ended 31 March 2007 of 2.4p (2006: 1.9p) per share 7.5 5.7 

14.9 11.3 

Proposed final dividend for the year ended 31 March 2007 of 2.7p (2006: 2.4p) per share 8.4 7.3 

The proposed final dividend is subject to approval by Shareholders at the Annual General Meeting and has not been included 

as a liability in these financial statements. 

36.Tangible fixed assets 

Plant and 

vehicles 

£m 

Cost 

At 1 April 2006 3.0 

Additions 0.8 

Disposals (0.1) 

At 31 March 2007 3.7 

Accumulated depreciation 

At 1 April 2006 1.3 


Disposals (0.1) 

At 31 March 2007 1.7 


At 31 March 2007 2.0 

At 31 March 2006 1.7 


Notes to the Company financial statements continued 

37. Investments in subsidiary undertakings 

Shares at cost 

At 1 April 2006 219.8 

Additions 7.7 

Capital contribution re share-based payments 2.2 

At 31 March 2007 229.7 

£m 

Provision for impairment 

At 1 April 2006 11.6 

At 31 March 2007 11.6 


At 31 March 2007 218.1 

At 31 March 2006 208.2 

Full details of the acquisitions in the year are provided in Note 25 of the consolidated financial statements and a listing of subsidiaries 

in Note 32. 

38. Debtors 

2007 2006 

£m £m 

Amounts owed by subsidiary undertakings 34.7 26.1 

Other debtors 4.3 4.4 

Prepayments and accrued income 2.4 1.2 

Corporation tax 1.9 1.9 

43.3 33.6 

The Directors consider that the carrying amount of debtors approximates their fair value. 

39. Creditors: amounts falling due within one year 

2007 2006 

£m £m 

Trade creditors 1.8 1.0 

Amounts owed to subsidiary undertakings 15.5 11.7 

Other taxes and social security 1.8 1.0 

Overdraft 63.7 60.7 


Secured loan notes 9.9 – 

Accruals and deferred income 1.3 1.7 

114.0 107.1 

The Directors consider that the carrying amount of creditors approximates their fair value. 

The Company’s bank overdrafts are part of the Group’s banking arrangements and are offset against credit balances within 

the Group.The Company has adequate liquidity to discharge all current obligations. 

Full details of the loan notes issued in the year are provided in Note 20 of the consolidated financial statements. 


40. Creditors: amounts falling due after more than one year 

2007 2006 

£m £m 

Unsecured loan notes 1.2 – 

1.2 – 

Details of the unsecured loan notes are provided in Note 20 of the consolidated financial statements. 

41. Provisions 

Contingent deferred 

consideration 

£m 

At 1 April 2006 15.4 

Additional provision in the year 0.3 

Converted to loan notes during the year (12.1) 

Utilised during the year (3.3) 

At 31 March 2007 0.3 

Falling due within one year 0.3 

Falling due after more than one year – 

0.3 

Full details of provisions are provided in Note 22 of the consolidated financial statements. 

42. Share capital 

Ordinary Ordinary 

Shares Shares 

of 2.5p of 2.5p 

Number £m 

Authorised at 1 April 2006 and 31 March 2007 340,000,000 8.5 

2007 




Issued for acquisitions 1,727,180 – 

Issued under share option schemes 1,913,227 0.1 

At end of year 312,449,195 7.8 

2006 




Issued for acquisitions 4,832,770 0.1 

Issued under share option schemes 1,681,551 – 

Own shares acquired (992,305) – 

At end of year 308,762,569 7.7 

Full details of movements in share capital during the year are provided in Note 23 of the consolidated financial statements. 


Notes to the Company financial statements continued 

43. Reserves 

Called-up Share Capital Profit and 

share premium Merger redemption loss 

capital account reserve reserve account Total 

£m £m £m £m £m £m 

At beginning of year 7.7 13.7 52.0 0.3 47.3 121.0 

Shares issued and net premium arising in respect 

of acquisitions – 0.4 2.9 – – 3.3 

Shares issued and net premium in connection with 

exercise of share options 0.1 2.5 – – – 2.6 

Share-based payments – – – – 2.3 2.3 

Profit for the period – – – – 33.6 33.6 

Dividend paid to Shareholders – – – – (14.9) (14.9) 

Balance at 31 March 2007 7.8 16.6 54.9 0.3 68.3 147.9 

44. Contingent liabilities 

Details of contingent liabilities have been given in Note 27 to the consolidated financial statements. 

45. Share-based payments 

Equity-settled share option schemes 

The Company has four share option schemes as described in Note 29 to the consolidated financial statements. 

The Group recognised the following expenses related to share-based payments: 

2007 2006 

£m £m 

2001 Executive share options 0.1 0.0 

2001 Savings Related share options 0.0 0.0 

0.1 0.0 

The fair value of options is measured by use of the Black-Scholes model.The inputs into the Black-Scholes model are as described 

in Note 29 to the consolidated financial statements. 

46. Related parties 

Directors’ transactions 

Details of related party transactions have been given in Note 31 to the consolidated financial statements. 

The Company has taken advantage of the exemption in FRS 8 not to disclose transactions with companies within the Group. 


Useful information for Shareholders 

Results 

2007 Half year 27 November 2006 

2007 Full year 21 May 2007 

2008 Half year 26 November 2007 

Dividends 

2007 Interim 2.4p (2006: 1.9p) Paid 30 March 2007 

2007 Final (proposed) 2.7p (2006: 2.4p) Ex dividend date 4 July 2007 

Record date 6 July 2007 

Last date for receipt/revocation of DRIP dividend mandate 13 July 2007 

Payment date 3 August 2007 

Annual General Meeting 26 July 2007 

Capital history 

Mid market price 2 April 2001 

(date of sub-division) 152.5p 

Mid market price 31 March 2007 230.3p 

2007 high/low 261.8p/176.0p 

Registrars 

Computershare Investor Services PLC T: 0870 702 0010 

Lochside House 

www.computershare.com 

7 Lochside Avenue 

Edinburgh Park 

Edinburgh 

EH12 9DJ 

Company 

MITIE Group PLC T: 0117 970 8800 

8 Monarch Court F: 0117 302 6743 

The Brooms 

E: group@mitie.co.uk 

Emersons Green 

www.mitie.co.uk 

Bristol 

BS16 7FH Registered number: SC 19230 

These financial statements may be downloaded in PDF format from the Group’s website, which also contains additional general 

information on the Group. 


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Printed by MITIE Document Solutions 


MITIE Group PLC 

8 Monarch Court 

The Brooms 

Emersons Green 

Bristol 

BS16 7FH 

T: 0117 970 8800 

F: 0117 302 6743 

E: group@mitie.co.uk 

www.mitie.co.uk

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