Mitie Group Annual Report 2009

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FY2009 Annual Report · Mitie Group

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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

MITIE Group PLC
Annual Report and Accounts 2009

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Group proﬁle

Shareholder information

We’re a strategic outsourcing
and asset management company.

What does that mean?

Providing everything from strategic
consultancy, to facilities and
project management, to world-class
delivery on the ground.

We work with our clients
in three ways:
Strategy and consultancy
Facilities and project management
Service delivery
In other words,

we think,
we manage,
and we deliver.

This Annual Report and Accounts contains forward-looking statements.
Such statements do not relate strictly to historical or current facts and can
be identiﬁed by the use of words such as ‘anticipate’, ‘expect’, ‘intend’, ‘will’,
’project’, ‘plan’ and ‘believe’ and other words of similar meaning in connection
with any discussion of future events. These statements are made by the Directors
of MITIE Group PLC in good faith based on the information available to them
as at the date of approval of this Annual Report and Accounts and will not
be updated during the year. These statements, by their nature, involve risk
and uncertainty because they relate to, and depend upon, events that may
or may not occur in the future. Actual events may differ materially from those
expressed or implied in this Annual Report and Accounts and accordingly all
such statements should be treated with caution. Nothing in this Annual Report
and Accounts should be construed as a proﬁt forecast.

Results

2010 Interim management statement

10 July 2009

2010 Half-yearly results

23 November 2009

Dividends

2009 Half-yearly dividend 3.3p paid

5 February 2009

2009 Final dividend 3.6p (proposed)

2009 Final ex dividend date

2009 Final dividend record date

2009 Final dividend last date for
receipt/revocation of DRIP mandate

2009 Final dividend payment date

Annual General Meeting

8 July 2009

10 July 2009

20 July 2009

7 August 2009

2009 Annual General Meeting

10 July 2009 2.30pm

Company details

MITIE Group PLC
8 Monarch Court
The Brooms
Emerson Green
Bristol BS16 7FH

Telephone: 0117 970 8800
Fax: 0117 302 6743
Email: group@mitie.co.uk
Website: www.mitie.co.uk

Registered number: SC 19230

Registrars

Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU

Telephone: 0870 162 3100
Website: www.mitie-shares.com

Dividend reinvestment plan (DRIP)
MITIE has set up a dividend reinvestment
plan (DRIP) to enable you to build
your shareholding by using your cash
dividends under a standing election
to buy additional shares in MITIE. If you
would like to receive further information,
including details of how to apply,
please call Capita Registrars on
0871 664 0381 or contact them by sending
an email to: ssd@capitaregistrars.com

MITIE online share portal
MITIE has launched a shareholder portal
where shareholders can register and can:

– access information on shareholdings

and movements;

– update address details;

– view dividend payments received

and register bank mandate instructions;

– sell MITIE shares;

– complete an online proxy voting

form; and

– register for e-communications allowing
MITIE to notify shareholders by email
that certain documents are available
to view on its website. This will further
reduce MITIE’s carbon footprint as well
as reduce costs.

If you wish to register, please sign up at:
www.mitie-shares.com

Corporate website
This report can be downloaded in PDF
format from the MITIE website, which also
contains additional general information
about MITIE. Please visit: www.mitie.co.uk

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MITIE Group PLC
Annual Report and Accounts 2009

Overview

Financial and operational highlights

Revenue
£1,521.9m +8.2%

Operating profit before amortisation*
£80.5m +11.5%

Earnings per share before other items**
17.2p +15.4%

Dividend per share
6.9p +15.0%

2009/10 budgeted revenue secured
74%

Order book
£4.9bn +£0.5bn

Underlying Group margins
5.3% +0.2%

Multi-service and FM as % of revenue
33% +5%

Net funds
£10.9m

Cash conversion
97.5%

* Of acquisition related intangible assets.
**Other items are non-cash acquisition related items, being amortisation of

intangible assets and unwinding of discount on deferred contingent consideration.

Visit our website to get more information:

mitie.co.uk/investors

Contents

Overview

Highlights

MITIE at a glance

Financial record

Chairman’s statement

Business review

Chief Executive’s strategy review

Market overview

Key performance indicators

Key factors that could affect our business

Operating review

Financial review

Corporate responsibility

Governance

Directors’ and governance report

Statement of Directors’ responsibilities

Remuneration report

Accounts

Independent auditors’ report to
the members of MITIE Group PLC

Consolidated income statement

Consolidated statement of
recognised income and expense

Consolidated balance sheet

Consolidated cash ﬂow statement

Notes to the consolidated
ﬁnancial statements

Independent Auditors’ report to
the members of MITIE Group PLC

Company balance sheet

Notes to the Company ﬁnancial statements

Shareholder information

IBC

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MITIE Group PLC
Annual Report and Accounts 2009

MITIE at a glance

We are a strategic outsourcing
and asset management company
that delivers a range of integrated
services to support the buildings
and infrastructure of our clients.
Key facts:
Revenue
£1,521.9m
People employed
51,486
Order book
£4.9bn
Location and listing
UK based – FTSE 250
Financial position
Strong balance sheet –
net funds of £10.9m

There is a lot more to MITIE than
you might think. All of our thinking,
managing and delivering is
centred around our clients’ needs.
They always come ﬁrst.

Think:
Forward thinking strategy and consultancy
ideas to keep our clients ahead of the game.

Manage:
Practical, experienced management
of people, resources, time and money
to achieve success for our clients.

Deliver:
A broad range of integrated service delivery
to make buildings and their facilities
smarter, greener, safer and better run.

Energy

Environment

Value

Property management

Facilities management

Project management

Security

Plumbing

Engineering

Climate control

Cleaning

Front of house

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MITIE Group PLC
Annual Report and Accounts 2009

Overview

We provide services
to our clients through
three key service areas…
Facilities Management
Integrated facilities management
(FM) and a range of services including:
energy management; space planning,
document management; front of
house; catering; cleaning; maintenance;
landscaping; pest control; security;
waste and environmental management.

Property Management
Framework and partnering agreements;
project management; roofing; repairs
and redecoration; interior fit-out;
plumbing and heating; social housing
maintenance and refurbishment and
fire protection.

Asset Management
Provision, integration, management
and maintenance of technical assets
meeting the demands of the low-carbon
economy. Energy design; generation and
certification; mechanical and electrical
infrastructure; data and life systems.

...which serve and
support the following
market sectors
Government
Finance and professional
Manufacturing
Education
Social housing
Retail
Property management
Technology and
communications
Healthcare
Utilities
Transport and logistics
Leisure
Construction

18%
14%
9%
9%
8%
7%
7%

6%
6%
5%
5%
3%
3%

1 Public sector
2 Private sector

41%
59%

Technical asset management

Catering

Mail and repro

Pest control

Landscaping

Maintenance

Waste

Painting

Refurbishment

Rooﬁng

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MITIE Group PLC
Annual Report and Accounts 2009

Financial record

Revenue
+8.2%

£m

Earnings per share before
other items** +15.4%

1,521.9

1,407.2

1,228.8

17.2

14.9

935.6

799.7

12.3

9.9

8.8

2005

2006

2007

2008

2009

2005

2006

2007

2008

2009

Operating profit before
amortisation* +11.5%

£m

Earnings per share
+16.8%

80.5

72.2

59.9

48.3

44.3

14.3

11.9

9.8

8.8

16.7

2005

2006

2007

2008

2009

2005

2006

2007

2008

2009

Profit before tax
+11.8%

£m

Dividend per share
+15.0%

75.9

67.9

6.9

6.0

56.6

47.9

50.5

5.1

4.3

3.4

2005

2006

2007

2008

2009

2005

2006

2007

2008

2009

* Of acquisition related intangible assets.
**Other items are non-cash acquisition related items, being amortisation of intangible assets

and unwinding of discount on deferred contingent consideration.

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MITIE Group PLC
Annual Report and Accounts 2009

Overview

Chairman’s statement

We are delighted to announce that
MITIE has delivered another year of
double-digit earnings growth, against
a backdrop of unprecedented market
conditions. Revenues have grown by
8.2% to £1,521.9m, operating profit before
amortisation* (EBITA) by 11.5 % to £80.5m
and cash conversion stands at 97.5%.
This result is particularly pleasing in a year
where economic conditions have been
extremely challenging and demonstrates
the resilience of the MITIE business,
which is well diversified in terms of its
client base and market sector exposure.

Strategy
Our strategy is to deliver stakeholder value
through a focus on sustainable profitable
growth. To achieve this we have to
anticipate changes in our markets and
react quickly. Currently our clients are
increasing levels of outsourcing and seeking
supply chain efficiencies through larger
integrated contracts. In response to
our clients’ changing needs, we have
improved our operating structure, invested
in additional specialist resources and while
we are experiencing slowing in some areas,
we are seeing record levels of opportunity
and are securing many exciting long-term
integrated contracts.

Acquisitions remain a key part of our
strategy. With no gearing at the year end,
we are extremely well positioned to take
advantage of value creating opportunities.
We look for quality companies with strong
management teams that complement or
fit within our existing business and operate
in growth markets.

We are delighted that Terry Morgan has
agreed to join the Board on 1 July 2009 as a
Non-Executive Director. He will, immediately
following the conclusion of the AGM on the
10 July 2009, assume the role of Chairman
of the Remuneration Committee from
Ishbel Macpherson. Terry is currently Chief
Executive of Tube Lines and will become
Chairman of Crossrail later this year.
Terry has extensive experience of change,
strategy and operations across a number
of large, complex organisations and he will
make a valuable contribution to our Board.

People
Since becoming Chairman, I have been
extremely impressed by the strength,
depth and positive attitude of the MITIE
team. As part of my induction programme,
I visited all of our divisions and the quality
of our people is self-evident.

The effective day-to-day management
of our business is critical. It requires the skill
and expertise that comes only with hard
work, commitment and experience.
MITIE’s financial results and strength have
only been possible due to the hard work
of its people, whose expertise and
dedication remain our most important
assets. We would therefore like to thank
them all for their contribution to another
excellent set of results.

Outlook
We have entered the new financial year
in a positive position, with a strong order
book and bid pipeline, committed banking
facilities and no debt.

We recognise the economic challenges
that are facing our own business and that
of our clients, but see continued opportunities
for sustainable profitable growth for MITIE
through our ability to enhance efficiency
in extended scope outsourced solutions
and the introduction of innovation in asset
management for our clients. We look forward
to another good year of growth for MITIE.

Roger Matthews
Chairman

Results
Our performance during the year,
saw revenues grow by 8.2% to £1,521.9m
(2008: £1,407.2m). Operating profit before
amortisation* (EBITA) increased by 11.5% to
£80.5m (2008: £72.2m), reflecting an enhanced
margin of 5.3% (2008: 5.1%) with profit before
tax rising by 11.8% to £75.9m (2008: £67.9m).
Adjusted earnings per share grew by 15.4%
to 17.2p per share (2008: 14.9p per share).

The business remains very cash generative
and has reported a cash inflow from
operations of £94.4m (2008: £78.2m) for the
year, which represented cash conversion
of 97.5% (2008: 90.3%). The balance sheet
is extremely strong with net funds at the year
end of £10.9m (2008: net debt £15.6m).
We have secured bank facilities of £230.0m,
which are in place to January 2012, of which
£10.0m was utilised at the year end. This leaves
the Group well positioned to take advantage
of acquisition opportunities as they arise.

We are pleased to report growth of 11.4% in
our order book during the year, which now
stands at an impressive £4.9bn (2008: £4.4bn).

Dividend
On the basis of our strong performance
during the year and our solid prospects for
the future, the Board is recommending an
increased final dividend of 3.6p per Ordinary
share adding up to a total dividend per
share for the year of 6.9p, a 15.0% increase
on 2008 in line with our dividend policy to
maintain dividends in line with underlying
earnings growth at a cover ratio of 2.5 times
adjusted earnings. Subject to shareholder
approval at the Annual General Meeting,
the dividend will be paid on 7 August 2009 to
shareholders on the register at 10 July 2009.

Main Board
There were a number of changes to the
Board during the year. David Ord and
Cullum McAlpine both retired from the
Board on 31 July 2008. As a result, I was
appointed Non-Executive Chairman and
Chairman of the Nomination Committee
and David Jenkins was appointed Senior
Independent Director and Chairman of the
Audit Committee. The Board is extremely
grateful for the leadership and valuable
contributions from David and Cullum during
their six years on the Board and wish them
every success in the future.

“MITIE has continued its growth
record in 2009.”

*Of acquisition related intangible assets.

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MITIE Group PLC
Annual Report and Accounts 2009

Business review
A review of our strategy by the Chief Executive

MITIE is in a strong position. We have an
excellent track record, an experienced
management team, a strong balance
sheet and a broad client base.

Overall the Group is performing very well
and making strong progress. We are seeing
a clear trend for increased outsourcing
and a drive for efficiency as client budgets
come under pressure during this stage of
the economic cycle. We expect to benefit
from this trend, and see opportunities for
growth as we contribute to our clients’
cost and operational efficiency through
extended scope outsourced solutions
and the introduction of innovation in
asset management. Our financial strength,
strategic consultancy, management
experience and broad range of services
mean that MITIE is an attractive partner
for both new and existing clients alike.

Against this backdrop of opportunity
however, certain areas of our business
such as our interior fit-out, retail engineering
and our plumbing business with its exposure
to the new build housing market have been
affected by the recession. These areas of
our business are continuing to experience
challenging conditions. However, as markets
improve they should be some of the first
to benefit.

Our strategy:
To deliver stakeholder value
through a focus on sustainable
proﬁtable growth.
Strategy achieved by:

1. Clients
Deliver value to our clients by providing world-class service;
2. People
Recruit, motivate and retain the best talent in the industry;
3. Risk
Take a long-term view to protect our business and manage risk;
4. Responsibility
Act responsibly and build a reputation that enhances
our brand to all stakeholders;
5. Integration
Leverage our strong position to secure more integrated
and larger scale contracts;
6. Proﬁtability
Focus on growing a proﬁtable business, maintaining margins;
7. Acquisitions
Supplement our organic growth with selective acquisitions.

As an organisation that deals with change
on a daily basis for our clients, we also
continually assess the efficiency of how we
work. The current market conditions have
reinforced this behaviour and we are
taking a responsible approach to the
review of our activities, with the long-term
future of the business our priority. We have
considered the ways we engage with our
clients, our management structure and
our risk profile.

We are being cautious about the credit
risk that we take on at the moment.
This could have an effect on our top line
growth in certain markets but our client
acceptance criteria will give us stability
in the long term. Our margins are under
pressure, but this is not a new trend
and we are skilled at focusing on the
maintenance and development of our
margin performance. Naturally, we protect
our margins by ensuring that we always
have an efficient cost base.

As part of this process, we have
made changes to the structure of our
business. With effect from 1 April 2009
our Engineering Services division has
been renamed Asset Management to
demonstrate the move away from the
traditional contracting environment
to a total asset lifecycle approach
which will include consultancy, design,
installation and maintenance and we
will be enhancing our asset maintenance
capability going forward through the
combination of Engineering Maintenance
and Services. Property Services becomes
Property Management to show the wider
range of property management and project
management abilities that we now offer,
whilst Facilities Services becomes Facilities
Management to reflect the shift in emphasis
towards total facilities management and
multiple services contracts as clients look for
better value and improved levels of service.

Our teams are highly motivated, focused
on supporting our clients in these very
uncertain market conditions, and are using
their experience and fresh thinking to give
us a competitive edge. We are pleased
that we are dealing with the current
climate really well and are securing some
great new contracts.

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MITIE Group PLC
Annual Report and Accounts 2009

Business review

2. People
It is easy to say that our people are
our greatest asset but they really are.
We are only as good as the people that
prepare our client strategies, manage
projects and facilities, and deliver services.
As they are so important to us, we have
a three part people strategy.

Firstly, we make sure that each employee
has the best possible career journey with
MITIE. We have a consistent approach
that reinforces our culture and values.
We evaluate skills, identify gaps and
provide appropriate training and support
to ensure success. We use a performance
management process so that we can be
fair in our measurement of performance
and appraisal. This encourages good
levels of performance and minimises
employment risks.

Secondly, we have an integrated
Human Resources (HR) team structure
to provide a professional and efficient
service that meets the needs of our
people and the future requirements
of the business. We employ specialists in
key areas including the management
of TUPE, pensions and employment law.

The third part of our people strategy
makes sure that we will have the right
talented people for the future. We have
a structured approach to succession
planning, reward and incentivisation,
leadership, management development
and professional development. It gives
us a motivated MITIE team that is
determined to outperform the market.

The result is that we have a very people
centric business with a strong leadership
and management style but with the
ﬂexibility to drive the Group forward.

3. Risk
We take risks everyday as part of our daily
life. In business it is our duty to understand
the risks we face, appreciate the impact
that those risks may have on our people,
clients or wider stakeholders and to
devise appropriate strategies to manage,
mitigate or eliminate these risks. MITIE
does all of that and we then ensure that
everyone in the business understands their
role in our risk management process and
can behave accordingly.

Having an appropriate risk management
process does not mean that we are so
measured in our approach that we lose
competitive advantage. We classify our
risks into four areas, strategic, operational,
ﬁnancial and compliance. Strategic risks
are those that could affect our long-term
strategic objectives. Operational risks
arise from our day-to-day activities which,
if not managed, could affect business
performance. Financial risks have a
direct impact on our ﬁnancial position
and compliance risk covers risks that
relate to legal and regulatory sanctions
and damage to goodwill arising from
failure to comply with applicable laws
and regulations.

The assessment of risks is part of our
culture. Every MITIE business has a risk
register that identiﬁes the particular issues
relating to that part of our operations
and activities. These are consolidated
into the overall MITIE Group risk register,
which considers our high-level risks and is
reviewed and considered by our Board.
Our risk management team conducts
regular reviews and assessments
to ensure that our risk identiﬁcation and
management processes remain relevant
to the shape of our business, the wider
market conditions and most importantly
that any risk mitigation strategies are
being followed.

People
Our MITIE Stars awards recognise
people who show true passion for
their work, going above and beyond
the call of duty.

Risk Management
We empower our people to stop
and think before doing their work.
Safety is part of our culture.

1. Clients
Our clients are at the centre of everything
that we do. If we do not have satisﬁed
clients who are prepared to make a
positive recommendation about MITIE
we do not have a sustainable future.
From their ﬁrst day with us, our people
are trained to think about our clients’
objectives. What does the client want
from MITIE? How can we contribute to
their business and organisational issues?

Our clients expect us to deliver value
for money. In this economic climate,
we continually evaluate our cost base
to ensure that we are deploying resources
efficiently. This applies to all areas of
our business and we run a lean business
to make sure that our clients feel the full
beneﬁt from our efforts.

Our clients represent the future of our
business so we make sure that we have
the best possible relationships with them,
understand the issues that affect them
and regularly engage with them at all
levels. To make sure that we are getting
it right we conduct client satisfaction
surveys to check that we are providing
a quality service and are in tune with our
clients’ strategic direction.

Clients
We apply strategic thinking,
management skill and an unrivalled
range of services to meet our
clients’ needs.

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MITIE Group PLC
Annual Report and Accounts 2009

Business review
A review of our strategy by the Chief Executive

4. Responsibility
Corporate Responsibility (CR) has always
been at the core of the way we work at
MITIE and is an essential part of our culture.
Our success for over 21 years has come
from having a responsible business model
that has responded to the ever-changing
requirements of an increasingly wide
group of stakeholders. CR is part of our
business strategy because it helps us
to deliver sustainable proﬁtable growth.

5. Integration
MITIE is an integrated business. Integration
is important for efficiency and supports
our client proposition of seamless service
delivery. All of our businesses use common
systems and processes and are transitioning
to a common ﬁnancial and HR platform.
This is important because as clients ask us
to provide a wider range of services they
want to be dealing with just one MITIE
team that operates the same way.

Integration however, is more than
systems; it is also about attitude,
ownership and leadership.

Increasingly, our clients want us to be
integrated with their own operations
so that we can help them to achieve
their business and organisational goals.
They want a seamless service that
reinforces their corporate image,
so that their employees and clients
can’t tell where they stop and we start.
This is crucial and allows them to maintain
a complete focus on their core business
areas and activities.

We have ﬁve pillars in our CR framework.

Health and Safety is critical. We employ
over 50,000 people and good health
and safety performance is vital for
their wellbeing and improves business
performance.

Community engagement is also important.
Our people want to work for a company
that is recognised for helping to make
a difference to the lives of others,
whether that is through our volunteering
programmes or charity work.

The environmental agenda makes it
imperative for us to manage and reduce
our impact on the Environment. We also
support our clients to improve their energy
efficiency, reduce waste streams and
improve cost efficiency.

Focusing on our People helps to improve
business results. We train, develop and
reward our people well, which improves
retention, motivation and stability.

We develop our Service Delivery
capabilities to support the needs and core
businesses of our clients and the changing
market. This helps to maintain our long-
term relationships and contributes to the
successes of our respective organisations.

6. Proﬁtability
Ultimately, the objective of any commercial
organisation is to be proﬁtable. MITIE has
a 21-year track record of continuous
proﬁtable growth. We have a total ﬁnancial
focus on proﬁts and cash. In these markets
with changing risk proﬁles it is still important
to achieve revenue growth through taking
market share, but it is crucial to maintain
proﬁt margins and be paid on a timely
basis for the work we have performed.
Our cash conversion target is 90%.

We manage our ﬁnancial performance
with a series of key performance indicators
that are consistent and applied throughout
the business.

Integrated offer
At Heathrow Terminal 5 our people
are an integral part of the travelling
experience.

Responsibility
We invest in seven MITIE Construction
Skills Centres in secondary schools
around the UK, providing over 1,000
14-16 year-old boys and girls and
their communities with access to
construction skills and qualiﬁcations,
career advice and work experience.

Proﬁtability
We recognise that focusing on
proﬁtability rather than top line growth
is a key factor in creating value for
our stakeholders, so we have always
based the senior team’s incentives
on proﬁt-related performance.
The results? A 21-year track record
of continuous growth in earnings.

MITIE Group PLC
Annual Report and Accounts 2009

Business review

We monitor our progress towards
meeting our strategic goals through
our ﬁnancial and non-ﬁnancial key
performance indicators, which are
set out on pages 12-13.

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7. Acquisitions
We have a low market share in all of our
markets. We expect to grow organically
by taking market share from competitors
but we are also well positioned to create
stakeholder value through acquisition.
At 31 March 2009, we had no net debt
and undrawn committed funding facilities
of £220.0m out of a £230.0m total facility.
This gives us the financial capacity
and flexibility to make selected, value
enhancing acquisitions should the Board
consider this to be appropriate.

Our approach to acquisitions remains
conservative. We are looking for quality
businesses with strong management teams
that complement or fit within our existing
business and operate in growth markets.

Acquisitions
We have a track record of
delivering and integrating selective
acquisitions to support our strategic
growth objectives.

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MITIE Group PLC
Annual Report and Accounts 2009

Business review
A review of our strategy by the Chief Executive

Market overview
We have a wide range of clients,
and exposure to many market sectors.
This provides us with a balanced portfolio
of market conditions and protects our
earnings from fluctuations. This is particularly
important in the current economic climate
where we are seeing uncertainty in some
sectors that is likely to continue in the
short-term.

Currently our business demonstrates
a 59/41 private/public sector split in its
revenues and we believe that this remains
an appropriate split for our business and
mix of services. It is possible that this may
change in the short-term as a higher
proportion of GDP is represented by
government spending, but is appropriate
in the longer-term.

We target our sales and marketing
resources at those sectors that we
believe offer the greatest opportunity
and our sector focus varies as economic
conditions change. Our business model
gives us the flexibility to take advantage
of opportunities as they arise.

Public sector
Overview
Public sector spending is likely to take
an increasingly dominant position
as UK economic conditions remain
uncertain.

Key facts:
– Spending committed until 2012 in
areas such as education, housing
and healthcare;

– Capital and maintenance expenditure

split 50:50;

– Trend towards consolidation

of suppliers and procurement
of integrated FM services; and

– Pressures on public purse likely

to encourage further outsourcing,
more commercial procurement
and increased spend on FM services.

Education and healthcare are
good areas to be established in
During the year, we have been
successful in increasing our penetration
of the education and healthcare
markets. We have secured key
contracts in the Building Schools for
the Future scheme to provide facilities
management to schools in Derbyshire
and Kent. In the healthcare market,
we have secured more work with
Great Ormond Street and new work
with North Middlesex Hospital and
St George’s Healthcare NHS Trust.

Private sector
Overview
We have a high quality private sector
client base with strong representation
across many sectors. However, most
private sector businesses are expected to
be cutting back on expenditure over the
next 12–18 months as economic conditions
remain uncertain. Clients are focused on
optimising the efficiency of their cost base.
This means that outsourcing contracts
are becoming larger, covering more
services and wider geography.
Consolidation, particularly amongst our
clients, creates uncertainty, but also
provides an opportunity to increase
market share.

Key facts:
– Construction sector will be challenging

for at least 18 months;

– More opportunity in FM where

MITIE provides essential services;

– Availability of labour should improve;

and

– Selectivity of opportunities is crucial.

Summary of key sectors
Education
Education is a solid long-term market
for both capital and operational
expenditure. There is a trend towards
the procurement of integrated FM services
which counteracts the diverse nature of
sector funding. Both the Building Schools
for the Future and PFI programmes are
major drivers of growth. MITIE is the largest
PFI FM education service provider in UK.
Target market size is £13.0bn pa and
our market share is 1.0%.

Government (central and local)
Government spending is forecast to
remain stable in the short-term. In the
medium-term, budgets will be under
pressure as tax revenues decrease.
Government departments and local
authorities such as existing clients: the
Department for Communities and Local
Government; the Department for Culture
Media and Sport; and The Department
for Education and Skills will require greater
efficiencies from service partners.

Summary of key sectors
Finance and professional services
MITIE has a significant presence in the
finance services sector with all businesses
having major contracts. We are very well
placed to work in partnership with clients
such as PwC, Standard Life, and Barclays
to increase cost effiency and to provide
facilities management and service delivery
across the UK. The current impetus for
change is creating an unprecedented
number of opportunities. Target market size
is £5.0bn pa and our market share is 4.3%.

Transport and logistics
Transport is a key sector for MITIE. It is
a long-term growth sector where our
specialist services and sector focus
are highly attractive to clients. We are
having a high degree of success in this
sector, extending existing and securing
new contracts with BAA, FirstGroup and
Eurostar. Target market size is £11.0bn pa
and our market share is 0.7%.

MITIE Group PLC
Annual Report and Accounts 2009

Business review

Looking forward
We are delivering a strong and consistent
ﬁnancial and operational performance.
Our business is growing well and we
are experiencing a very strong sales
pipeline. Clients’ budgets in both the
public and private sector are under
pressure, supporting demand for efficiency
and value for money, which in turn leads
to more outsourcing.

We know that the global economic
environment is going to remain challenging
for some time but we operate in a market
where contracts are becoming more
sophisticated, larger and longer term in
duration. This gives us conﬁdence in our
business model as we expand our strategic
offering to our clients.

We have a ﬂexible business, which can
easily adapt to meet our clients’ changing
needs. With the signiﬁcant level of current
opportunities, we are conﬁdent that our
future performance will remain strong.

We are encouraged by the contracts that
we have recently secured and anticipate
continued strong growth in the years ahead.

Ruby McGregor-Smith
Chief Executive

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Healthcare
Healthcare is a market with considerable
potential for increased levels of outsourcing
with spending driven by the UK’s ageing
population demographic. The sector
offers stable revenue streams and low
credit risk with clients such as: St George’s
and North Middlesex Hospital in London;
Hull Hospital; and Great Ormond Street
Hospital. Target market size is £11.0bn pa
and our market share is 0.8%.

Retail
The majority of the retail market is
focused on cost reduction. We are
working closely with our clients to meet
their business needs. Target market is
£5.0bn pa and our market share is 2.1%.

Property management
This market is heavily inﬂuenced
by property occupancy levels.
Traditionally, contracts are single service.
There is little trend towards multi-service
or FM contracts. Target market size is
£6.0bn pa and our market share is 1.8%.

Leisure
As a high proportion of leisure spend is
discretionary we are introducing innovation
for our clients to improve efficiency.
Target market size is £2.0bn pa and our
market share is 2.3%.

Local Government Strategic Partnerships
will leverage private sector skills and
ﬁnance to improve efficiency. There will
be a trend towards larger contracts with
a broader range of management and
service provision. Target market size is
£7.0bn pa and our market share is 3.9%.

Social housing
Social housing is a key public policy area
with the need for sustainable communities
high on the agenda. The development
and maintenance of high quality public
housing stock is a core part of government
strategy. Decent Homes programmes and
repair and maintenance contracts offer
us considerable opportunity. Government
has ambitious plans for affordable housing
through the Homes and Communities
Agency to support local governments
and communities. This sector, with
clients such as Birmingham City Council,
Dacorum Borough Council and Milton
Keynes District Council offers good
growth potential with long-term contracts.
Target market size is £10.0bn pa and
our market share is 1.2%.

Utilities
The utilities companies represent an
attractive market for MITIE with dependable
cash ﬂow and spending commitments.
In common with many other sectors the
drive for improved operational efficiency
is leading to larger, longer term contracts.
Sustainability and renewable energy are
key areas. We have a good presence in this
market with major contracts with RWE npower
and Thames Water. Target market size
is £8.0bn pa and our market share is 1.0%.

Technology and communications
Our focus in this area is in data centre
and infrastructure support and regular
maintenance and support activities.
MITIE supports the capital and revenue
expenditure streams in this market.
Target market size is £4.0bn pa and
our market share is 2.3%.

Manufacturing
An important sector for MITIE and one
where we are actively supporting our clients
in these challenging times. Our focus is to
develop our long-standing relationships with
key clients such as Rolls-Royce. Target market
size is £5.0bn pa and our market share is 2.7%.

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MITIE Group PLC
Annual Report and Accounts 2009

Business review
How we performed – Our KPIs

1. Clients

2. People
;

KPI:
Non-
financial

84.0

85.0

86.0

88.0

KPI:
Non-
financial

91.4

92.0

93.0

2006

2007

2008

2009

Description:
In order to achieve sustainable, proﬁtable growth,
we monitor the percentage of existing contracts
retained in our Facilities Management division on
a rolling 12-month basis.

Target:
Achieve contract retention rates in excess
of 90.0%.

Comment:
We have improved our contract retention rate
in our Facilities Management division to 88.0%.

Not
measured
2006

2007

2008

2009

Description:
MITIE is a people business and we pride
ourselves in creating and nurturing outstanding
management. Monitoring how successful we
are in retaining our people is an important
measure for us.

Target:
Enhance focus on the development and retention
of management to maintain a retention rate of
over 90.0%.

Comment:
We have increased our management retention
rates to 93.0%.

6. Proﬁtability

KPI:
Financial

5.1

5.3

KPI:
Financial

1.8

1.2

1.4

1.1

2006

2007

2008

2009

2006

2007

2008

2009

Description:
Our operating proﬁt before amortisation* (EBITA)
margin provides us with a good indicator of
the proﬁtability of our business. Where we have
material, non-recurring charges, such as integration
costs, we exclude these from our measure.

Target range:
Maintain EBITA margins between 5.0% and 6.0%
per annum.

Comment:
We have improved our margin by 0.2% to 5.3%.

*Of acquisition related intangible assets.

Description:
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 continue to monitor and control capital
expenditure, and target growth and acquisitions
in areas that do not require substantial capital
expenditure.

Target range:
Maintain below 2.0% of revenue.

Comment: We have reduced our KPI to 1.1%
keeping it well below the 2.0% target level.

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MITIE Group PLC
Annual Report and Accounts 2009

Business review

3. Risk

4. Responsibility

5. Integration

per 1,000
employees

tonnes equivalent
CO2 per employee

KPI:
Non-
financial

6.1

5.1

KPI:
Non-
financial

0.70

0.64

75%

Single
service

4.0

3.9

50%

25%

Multi-service
& FM

2006

2007

2008

2009

Description:
Reportable accidents are deﬁned as fatalities,
major injuries and injuries resulting in absence
from work of over three days. Our people are
our greatest asset. Providing them with a safe
environment in which to work is of paramount
importance to us, so we use a KPI for reportable
accidents to assess our performance.

Objective:
Retain focus on reducing the risk of accidents
in our business.

Comment:
Our focus on health and safety has enabled
us to reduce reportable accidents to 3.9 per
1,000 employees.

Not
measured
2006

2007

2008

2009

2007

2008

2009

Description:
We are conscious of the impact of our operations
on the environment. Our CO2 emissions are
calculated using DEFRA conversion factors
following a review of our fuel and utilities usage.
The rate of CO2 emissions per MITIE employee is
calculated using the average number of people
employed during the year.

Objective:
Understand and minimise the environmental
impact of our operations.

Comment:
Our normalised CO2 emissions per employee
are consistent with the prior year.

Description:
With 67% of our revenue being generated
through single service contracts, we have a great
opportunity for growth through expanding our
relationships with existing clients by providing other
services. We have seen a trend in the markets
towards multi-service and FM contracts over the
past few years and we are well positioned to meet
the demands of this trend due to our broad range
of services.

We measure the percentage of revenue that is
generated by these types of contracts in order to
measure how well we are performing in this arena.

KPI:
Financial

114.4

KPI:
Financial

26.5

95.0

97.5

90.3

18.6

17.6

15.0

7. Acquisitions
Acquisitions remain a key part of our
strategy as detailed on page 9. We seek
to acquire quality companies with quality
management that complement or fit
within our existing business.

2006

2007

2008

2009

2006

2007

2008

2009

Description:
The efficiency with which we manage the
generation of cash is an important indicator
for our business. MITIE is 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 the Group’s earnings before interest, tax,
depreciation and amortisation (EBITDA) to cash
is one of the signiﬁcant cash-ﬂow indicators
for MITIE.

Target range:
Over 90.0% of Group EBITDA converted to cash.

Comment:
We have achieved our target this year with 97.5%
of Group EBITDA being converted to cash.

Description:
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 earnings of the Group.
Dividend cover is calculated by reference to our
underlying, cash-based earnings which we measure
using our basic EPS before amortisation of intangibles,
imputed interest charges relating to acquisitions and
material non-recurring charges. There were no material
non-recurring charges in 2009 or 2008. The adjusted
EPS after these items is 17.2p (2008: 14.9p) giving rise
to underlying growth of 15.4%.

Target range:
At least in line with underlying earnings growth
at a cover rate of 2.5 times adjusted earnings.

Comment:
Our dividend growth for the year is 15.0 %,
giving cover of 2.5 times adjusted earnings.

We have completed the successful integration
of the acquisitions that we made in March 2008:

– The acquisition of Catering Partnership has
expanded the scale and capability of our
catering offering and has enabled us to bid
for signiﬁcantly larger contracts in this market.

– The DW Tilley rooﬁng business acquisition has
been successfully integrated with our existing
rooﬁng business to form a truly national rooﬁng
refurbishment company.

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MITIE Group PLC
Annual Report and Accounts 2009

Business review
Key factors that could affect our business

MITIE’s system of internal control is designed to support our strategy and to identify and
manage the risks that have the potential to impact upon MITIE and upon the environment
in which we operate. On page 44 of the Directors’ and governance report, we have
detailed the processes that we use to identify and manage these risks. In the table below,
we have highlighted the principal risks and uncertainties that could aﬀect us.

Risk area
Financial risk, including liquidity
Strategy area
– Risk
– Responsibility
– Proﬁtability
– Acquisitions
– Clients

Potential impacts

Mitigation

Funding may not be readily available
to support the expansion of the
Group’s activities.

Pension fund assets may not meet future
pension liabilities.

Financial performance of the business
could be adversely affected by uncertain
economic conditions. Loss of clients,
a reduction in services taken by clients,
and failure to adhere to credit terms as
a result of changes in their own financial
position could affect the Group.

Committed banking facilities of £230.0m
are in place until 2012 in addition to £35.0m
of overdraft facilities to support day-to-day
operations and strategic growth targets.
Operational cash ﬂow is prioritised through
a set of KPIs and the Group had net funds
of £10.9m at 31 March 2009.

Trustees manage the pension liabilities and
the required contribution rates are set on
the basis of independent actuarial advice.
The Group’s own deﬁned beneﬁt scheme
is well funded, and we aim to maintain
a broadly neutral funding position in the
medium-term.

Management of pension risk on contracts
requires the support of independent advisers
and the approval of the Group Finance
Director, and in certain cases, the Board.

Financial trading performance compared
to budget is reviewed on a monthly basis.
Cash performance is monitored daily.

Systems are in place to monitor and
manage credit risk exposure across the
Group’s client base.

Large account management strategy
including Director level client relationships
where appropriate, ensures a consistent
focus on changes in our clients’
environments and financial position.

Responsibility for Health and Safety rests
with the Chief Executive who is supported
by the Board, line management and
advised by the Head of Health, Safety and
Environment and a network of dedicated
health, safety and environment advisers.

A structured training programme is in place
to develop and improve employee health
and safety knowledge.

Processes and procedures are
accredited to OHSAS 18001and are
under regular review to ensure a safe
working environment for our employees,
our clients and the public.

Health, safety and environment
Strategy area
– Risk
– Responsibility
– People
– Clients

Health and Safety failures may lead
to a serious injury or fatality of an
employee, client or member of the public.
Property damage or air/water pollution
may lead to signiﬁcant ﬁnancial penalties,
loss of reputation, criminal convictions
and business disruption.

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Risk area
Infrastructure and systems
Strategy area
– Clients
– Risk
– Responsibility
– Proﬁtability

New business, business
retention and contracting
Strategy area
– Clients
– Risk
– Proﬁtability

Acquisitions
Strategy area
– Risk
– Proﬁtability
– Acquisitions

Employment regulations
Strategy area
– Clients
– People
– Risk
– Responsibility
– Proﬁtability

Skill shortages
Strategy area
– Clients
– People
– Risk

MITIE Group PLC
Annual Report and Accounts 2009

Business review

Potential impacts

Mitigation

A system failure, failure to control systems
implementation, including SAP, or the
collapse of our infrastructure would limit
MITIE’s ability to meet operational and
regulatory commitments which may lead
to contractual breaches and ﬁnes.

Investment in our infrastructure and systems
will improve the reliability of our services
and enhance our brand reputation.

The Group is increasingly tendering for,
and securing, more complex and larger
multi-service business. If risks are not priced
correctly on a complex or large multi-
service contract the ﬁnancial performance
of the contract will be affected, leading to
pressure on service delivery and potentially
loss of business over time.

Greater opportunities to secure new
work in the current climate as potential
clients focus on cost efficiencies and
look to outsource their non-core services.

The strategic risks associated with
acquisitions include a failure to ensure
a cultural ﬁt; a failure to gain visibility of,
and price in, key risk issues; and a failure
to realise synergistic and operational
targets following acquisitions. These may
result in ﬁnancial targets not being met.

Infrastructure requirements are regularly
reviewed by the Board to ensure they are
appropriate to the operations undertaken
and assist with the successful delivery of
services to clients.

New systems implementations are
appropriately resourced and controlled.

The internal control environment includes
a strict bid and contract review process
along with an approval mechanism.
The bid and contract review involves
both internal and external specialists,
and for material bids, the Board.

Potential opportunities and the bid pipeline
is monitored by the Executive Board.

An experienced due diligence team,
supported by internal specialists and
external professionals advise the
Executive Board throughout each
acquisition process.

All material acquisitions are approved
by the Board and following the purchase
an Executive Director is appointed as
an integration sponsor who is responsible for
ensuring a smooth and successful transition.

Failure to adhere to regulations concerning
the transfer of staff in and out of the
business would result in business disruption
and signiﬁcant ﬁnes.

Early involvement of HR and legal
specialists prior to transfer supported
by external specialists.

The employment of persons who do not
have the right to work in the UK would
lead to signiﬁcant ﬁnancial penalties and
damage to the MITIE brand and reputation.

Processes are in place to ensure that
all legally required documentation
is obtained from employees and
subsequently monitored.

Without the right mix of employees MITIE
would be unable to deliver, mobilise and
service existing and new contracts.

Regular review of remuneration,
incentivisation and reward structures.

Ongoing emphasis on equity based
incentivisation for employees and other
employee incentive and reward schemes.

MITIE has signed up to the UK Government’s
Skills Pledge to help all eligible employees
achieve the equivalent of ﬁve GCSEs at
grades A*- C

Construction, Engineering and Facilities
Management apprentice schemes
are in place.

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MITIE Group PLC
Annual Report and Accounts 2009

Business review
Operating review

On 1 April 2009 we took a decision to
rebrand our three operating divisions
to Facilities Management (previously
Facilities Services), Property Management
(previously Property Services) and Asset
Management (previously Engineering
Services). Further, we elected to enhance
our Asset Management proposition
through its combination with our
Engineering Maintenance business,
which had previously been a part of our
Facilities Services business. The commentary
and ﬁnancial data below reﬂects the
performance of our three divisions in the
organisational structures that applied during
the period to 31 March 2009, and reﬂects
the new branding. A proforma analysis
of the ﬁnancial results of the business for
the year ended 31 March 2009 in the new
organisation is set out in the Notes to the
Consolidated Financial Statements.

Facilities Management
Our Facilities Management division delivers
facilities consultancy, management and
service delivery to our clients. Within the
division, during the year ended 31 March
2009 we recognised five principal business
lines which were: facilities management,
which comprises our managed services,
business services, client services and
PFI businesses; cleaning and environmental,
which encompasses our cleaning,
landscaping and pest control businesses;
Security; engineering maintenance;
and catering.

The division has had a good year securing
many new contracts and expanding
many existing contracts by providing
additional services adding to our order
book which has increased to £4.2bn
(2008: £3.6bn).

Revenue in the division increased by
14.8% to £942.2m (2008: £820.4m) with
operating profit growing by 10.8% to
£54.2m (2008: £48.9m). Operating profit
margins decreased to 5.8% (2008: 6.0%)
as we have enhanced investment in
our business development capabilities.

Results summary

Facilities Management

2009
£m

2008 Change
%

£m

Revenue

942.2

820.4

+14.8

Operating profit
before amortisation* 54.2

48.9

+10.8

Operating margin

5.8% 6.0%

–0.2

* Of acquisition related intangible assets

During the year, we have focused on
developing our facilities management
(FM) and multi-service offerings and on
increasing the integration between our ﬁve
business lines in the bidding and operation
of our contracts. We have improved
our processes for managing customer
relationships and co-ordinating our sales
process to promote cross selling by
enhancing the management information
shared across the division.

We are seeing opportunities as well
as challenges from the effects of the
recession as clients look for innovative
solutions to reduce costs and exposure
to risk. During the year, we have seen
an increasing number of opportunities
in bidding for new contracts within the
division as well as an increase in existing
clients looking to reduce costs. Our ability
to work together with clients through
multi-service and FM contracts,
consolidating their supply chains
and internal management structures,
along with our efﬁcient processes and
technology, helps them to create savings
and efﬁciencies. Where appropriate,
we have also been able to support clients
by proactively identifying temporary cost
reduction measures to existing services.

Our national coverage and wide range
of capabilities means that we are one
of a limited number of service providers
that can deliver full scope FM contracts.
The economic climate is providing an
impetus for clients to move towards larger
multi-service and FM contracts in order
to consolidate their supply chains and
save costs.

In order to take full advantage of the
opportunities within this market area,
which provides signiﬁcant potential
for MITIE, we have invested in our FM
capabilities during the year, recruiting
key individuals to the business to provide
enhanced strategic leadership that will
complement our proven service delivery
capability in this area.

During the year, we have secured new
work in both the private and public sectors
as all organisations look to outsourcing
non-core services to create efﬁciencies.
Our work to identify key market sectors
during the year has been supported by
notable successes including:

Within the education sector, MITIE has
solidiﬁed its position as the largest provider
of FM services to PFI schools in the UK
following success in the government's
£45.0bn Building Schools for the Future
(BSF) programme to rebuild or refurbish
all schools in England.

In December, we secured preferred bidder
status on the Derbyshire County Council
BSF project. The contract will total £65.0m
for MITIE, running over a period of 25 years
and will see MITIE providing FM services to
46 schools across the county. The contract
forms part of the Equitix consortium,
which has been selected as preferred
bidder working in partnership with
Derbyshire County Council as part of the
ﬁrst phase of their £750.0m transformation
of secondary education.

Standard Life
At Standard Life’s headquarters in
Edinburgh, our ‘ingredients’ food
service team has achieved a catering
sales increase by introducing a
new food and signage concept.
The concept reflects the high quality
fresh food offer and provides clear
labelling and communication to
help Standard Life employees with
their food and beverage choices.
Our continued commitment and
focus on enhancing the customer's
experience is aimed at improving
the perception of workplace catering
as a real employee benefit.

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MITIE Group PLC
Annual Report and Accounts 2009

Business review

Kate Glassup
Aviation Director, MITIE

Our work with BAA has grown from
a cleaning contract at Terminal 5
to one of our largest multi-service
contracts working at all of BAA’s
London airports.
BAA
Think
MITIE has proved itself as a valuable multi-skilled
partner to BAA, helping to assist it with its objective
of reducing its supplier base whilst delivering a
quality service to meet the needs of its passengers
and airlines. Through careful planning we were able
to recruit, train and obtain airside security clearance
for 400 new cleaners for the opening of Terminal 5
to ensure that the service at the UK’s largest free
standing building could start on schedule. We have
also assisted BAA to develop a robust new service
for its passengers with restricted mobility (PRM)
after new legislation required the airport operator
to provide a uniﬁed service instead of individual
airlines taking care of their own passengers.
This has enabled MITIE and BAA to standardise
the PRM service making it easier for passengers
with disabilities to travel through Stansted Airport
and Heathrow Terminals 1, 2 and 4.

Manage
MITIE now manages more than 1,200 people on the
BAA contract coping with the peaks and troughs
in seasonal demands and supplying extra people
depending on the security alert status. Our specialist
cleaners work at height, especially at Terminal 5
where it is essential that the ﬂoor to ceiling glass
walls and the departure lounge’s single-span,
waveform glass roof are clean in order to let the
natural light in and enhance the amazing views
of the world’s busiest international airﬁeld.
By investing in the latest heavy duty cleaning
technology, we have been able to increase
the productivity of our people and increase the
efﬁciency of the service, reducing costs. We have
also invested in the PRM service and are the only
company in the UK to own ambulifts that can lift
passengers with restricted mobility on to the new
Airbus A380 plane.

Deliver
MITIE delivers a range of services at different airports
for BAA including delivering the waste management
at Heathrow Terminal 5, the cleaning at Heathrow
Terminals 1, 5 and at Gatwick’s North and South
Terminals and the PRM service on behalf of BAA at
Heathrow Terminals 1, 2, 4 and at Stansted Airport.
We also provide people to help passengers comply
with liquid restrictions before going through security
at Heathrow Terminals 1 and 2.

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MITIE Group PLC
Annual Report and Accounts 2009

Business review
Operating review

Barclays
Think
As one of Barclays’ top facilities providers, we have
worked together to ﬁnd different and joined up
ways of providing our services, maximising the
cost savings provided to Barclays whilst consistently
raising our standards across the services to meet
and exceed increased service level targets of 90%.

We have been steadily expanding
our relationship with Barclays for
the last 12 years to make it one of
our largest multi-service contracts.

Manage
We have implemented our leading IT systems to
help us manage the contract efﬁciently, including
our Tracker system, which monitors the 1,500
cleaners that clean the Barclays retail branches
at night. The system allows us to track lone workers
and teams, making sure that they are safe and that
the branches will always be clean and tidy for their
customers each morning. In order to make sure that
standards are being met, our Vision IT system allows
us and the client to view live audit data on cleaning
standards. We also manage mobile cleaning and
engineering teams, who are always on-hand to be
on-site within two hours, to react to any emergency
calls from our 24-hour Customer Support Centre.

Deliver
MITIE has more than 2,400 people involved in the
Barclays contract, providing the cleaning, security,
pest control and waste management services
to Barclays Corporate ofﬁces as well as the
cleaning at 1,340 of its retail branches and
mechanical and engineering maintenance to
400 of its retail branches around the UK. We have
also recently secured the contract to provide front
of house and telephony services to Barclays head
ofﬁce in Canary Wharf.

Wendy Cuthbert
Head of Corporate Real Estate Services – UK, Barclays

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MITIE Group PLC
Annual Report and Accounts 2009

Business review

In other areas of the transport and logistics
sector, we have secured a ﬁve-year
contract with FirstGroup plc valued at
£26.0m over ﬁve years to provide support
services to their bus division. MITIE will be
cleaning, moving and refuelling all of
FirstGroup’s buses as well as cleaning their
premises and workshops in the London
and Berkshire areas. We have also secured
a new security contract with the Port of
Felixstowe adding to our existing three-year
catering contract which was secured
in May 2008 to provide staff catering,
hospitality and vending services.

The last 12 months have been challenging
ones for the ﬁnance and professional
sector, and just as the sector was one of
the ﬁrst to feel the effects of the credit crisis,
it has also been one of the ﬁrst sectors to
look to outsourcing to try to reduce costs.

We have been steadily extending the
scope of our relationship with Standard
Life. MITIE was already working with
Standard Life, providing them with
engineering and interior ﬁt-out services on
several of their new developments around
the country. In turn, this led to MITIE securing
a ﬁve-year cleaning contract last year.
In June 2008, we furthered our relationship
by securing our largest ever catering
contract to provide Standard Life with staff
restaurants, café bars, delis, retail shops,
hospitality and ﬁne dining for the next
ﬁve years. This success has been built
on the back of expanding the scale and
capability of our catering business through
the acquisition of Catering Partnership
in March 2008, which now allows MITIE
to bid competitively for signiﬁcantly larger
catering contracts.

We have secured several new contracts
in Canary Wharf including a new contract
with Citigroup to provide front of house
reception and security services at their
Canary Wharf UK headquarters. We have
also secured a three-year contract with
Credit Suisse, to provide cleaning and
washroom services at their offices in Canary
Wharf and Pall Mall (valued at £6.1m).

We have also signed a 31-year contract
to deliver total facilities management to
three new PFI schools in Kent. MITIE will be
working for Telereal Trillium who is leading
a consortium of partners in a £600.0m
deal to completely rebuild or substantially
refurbish the first ten secondary schools in
Kent’s extensive BSF programme. This initial
contract award for MITIE is valued in
excess of £40.0m, and, with a further eight
PFI schemes likely to be added to the
contract, it is expected that the overall
contract value will increase substantially
over the term. MITIE has the exclusive rights
to deliver FM to the schools, which will
include the overall management and
helpdesk, engineering and building fabric
maintenance, security and all soft services
comprising caretaking, cleaning, catering
and grounds maintenance.

In the utilities sector, we have been
made preferred bidder for a six-year
integrated facilities management contract
with Thames Water Utilities Ltd (TWUL).
The estimated total value of the contract
for MITIE is over £100.0m, which will cover
TWUL’s entire estate, including their head
office and laboratory as well as operational
buildings throughout the Thames region.

MITIE will have responsibility for managing
and delivering a variety of expertise and
services, which will include a tailored asset
management strategy, enabling the client
to identify and target effective capital
investment, reducing annual operational
expenditure. This will be combined with a
range of other services, driven through a
dedicated helpdesk system.

In the technology and communications
sector, our contract with Cable and
Wireless continues to grow, having secured
new catering and security contracts with
the telecommunications company. The
three-year catering contract includes the
provision of staff restaurants, cafés, deli bars
and hospitality at seven Cable and Wireless
offices around the country, including its
Europe, Asia and US business head office
in Bracknell. The new security management
contract, over three years, will include the

provision of manned guarding, electrical
security and response services to more than
900 Cable and Wireless sites in the UK and
more than 15 sites in Europe.

Our original FM and mechanical and
engineering contracts with Cable and
Wireless have also been expanded to
include its acquisition of telecommunication
company THUS in 2008, meaning that the
total value of work that we perform for
Cable and Wireless is now in excess of
£20.0m per annum.

We have secured a new integrated FM
contract with Syngenta, a world-leading
agribusiness, following a tender process
that aimed to consolidate their supply
chain and improve the management of
their international research centre estate
near Bracknell. The three-year contract
includes maintenance, helpdesk, cleaning,
landscaping, waste, mailroom and
reprographics services.

In the healthcare sector we have secured
a multi-service contract with St George’s
Healthcare NHS Trust, whose main site in
Tooting, South West London, is one of the
UK’s largest teaching hospitals. The seven-
year contract will result in the employment
of 500 people providing cleaning and
catering services across the Trust’s estate.

Our healthcare team has also successfully
retained its domestic and portering services
contract with North Middlesex University
Hospital NHS Trust, which it has held since
2003. The new contract will run for a further
three years, with an enlarged scope,
which includes the provision of on-site
security services.

MITIE has had a very successful
year increasing our presence in the
transport and logistics sector, securing
several signiﬁcant, high-proﬁle contracts.

Our new contract with Eurostar will see
MITIE providing security services at their
St Pancras International, Ebbsﬂeet
International and Ashford International
terminals as well as taking responsibility
for security at their Temple Mills engineering
base. MITIE’s specialist transport security
team will work alongside Eurostar’s own
team to support them in providing a safe,
secure environment for travellers and staff.
The team of over 330 ofﬁcers will undertake
a variety of roles including customer service
support, searching of trains, passengers and
baggage, and 24-hour control of access in
and out of all sites.

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MITIE Group PLC
Annual Report and Accounts 2009

Business review
Operating review

Property Management
Our Property Management division
provides property maintenance and
project management services, including
a complete range of repair, refurbishment,
redecoration and ﬁt-out expertise for both
the private and public sectors with a focus
on social housing.

Property Management is focused on
providing services that support everyday
lives, creating and maintaining better
working and living environments.
Whether this is in social housing, healthcare,
education, industry or commerce,
our ability to satisfy our markets will stand
us in good stead to maintain growth,
both now and in the future.

During the year Property Management
increased revenue by 4.3% to £297.9m
(2008: £285.7m). The integration of the
DW Tilley rooﬁng business, which was
acquired in March 2008, was successfully
completed in the period. Operating proﬁt
grew by 19.3% to £17.9m (2008: £15.0m)
with operating margins up at 6.0%
(2008: 5.3%).

In the current volatile market, Property
Management is following a dual strategy:
to deliver services that are cash generative
in the immediate term; and secondly,
through longer term relationships and forms
of partnering agreements that can deliver
beneﬁts for both our clients and MITIE,
whilst adding to our forward revenue
visibility. Our forward order book for the
division remains at £0.5bn (2008: £0.5bn).

Results summary

Property Management

2009
£m

2008 Change
%

£m

Revenue

297.9

285.7

+4.3

Operating profit
before amortisation* 17.9

15.0

+19.3

Operating margin

6.0% 5.3%

+0.7

* Of acquisition related intangible assets.

The successful integration of our latest
acquisition, national roofing specialists
DW Tilley Ltd, has increased our national
coverage and strengthened our presence
in the roofing market where we focus on
renewal and repair in both the public and
private sectors.

Our enlarged roofing business, together
with the national footprint of our other
niche services in decoration, specialist
coatings and fire protection has resulted
in generating further value to clients who
are now able to draw on a wider range
of services. Aligning our services even
closer to the needs of our clients through
our multi-service offering is helping to drive
organic growth.

In the commercial property management
market, we have seen a shift away from
the development of new space towards
an increase in the reconfiguration of
existing space to accommodate change.
This stabilising effect is creating opportunity
for our refurbishment teams. At the same
time, clients have a need for increased
property maintenance to enable the
building and businesses within them
to continue to operate effectively and
efficiently. Property Management is
well placed to benefit from these market
changes. Indeed we have recently
secured a significant contract as part of
MITIE’s facilities management contract with
Thames Water, a large proportion of which
is capital work refurbishment.

In the public sector, we will benefit from
the government’s Fiscal Stimulus Package,
following the announcement to bring
forward £3.0bn of capital spending from
2010/11 to 2009/10. In a sector that is
benefiting from government spending
and where healthy competition is driving
innovation, we are confident of our ability
to grow and will continue to make further
investments in this area.

Tenant Liaison Officer of the year
In March, Kelly Onley a Tenant Liaison
Officer (TLO) working for MITIE on our
responsive repairs and voids contract
with Milton Keynes Council won the
Contractors Tenant Liaison Officer
of the Year award at the Connecting
People Awards (Southern Region)
final. Kelly, who has worked with MITIE
for a little over two and a half years,
received the award for her hard
work and passion in providing a
great service to her tenants. Kelly is
responsible for liaising with tenants
in 12,000 homes over a widespread
geographic area. She plays a key
role in the lives of many tenants and
is a listening ear if there is anything
that they are unsure about. MITIE is
very proud of what Kelly has achieved
and is committed to providing this
same level of service that Kelly has
been recognised for, throughout our
social housing contracts.

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MITIE Group PLC
Annual Report and Accounts 2009

Business review

Telereal Trillium
Think
A key objective of the project was to ensure that
the absolute minimum amount of waste was sent
to landﬁll. An extensive consultation exercise
enabled us to establish a number of opportunities
to re-use and recycle a broad range of materials
resulting in us achieving a recycling rate for the
project of more than 99%. With the building fully
occupied throughout, we also carried out extensive
planning in order to refurbish the building with
minimal disruption to tenants. We were able to
create extra space and improved lighting on the
main ofﬁce ﬂoor by removing the screed ﬂooring
to maximise ﬂoor to ceiling height and by
introducing 26 roof lights to ensure the maximum
amount of daylight is achieved. Each roof light
was equipped with electric solar controlled blinds
to reduce heat gain and solar glare.

Manage
Our management of the project has not only
led to us delivering a tailor-made service to
satisfy all our clients’ requirements, but also
resulted in the project consistently achieving
a score in excess of 35 out of 40 in the Considerate
Contractors Scheme. Removing the screed ﬂooring
from the main ofﬁce ﬂoor meant that we had
to remove 520 tonnes of screed with pneumatic
breakers with a noise window of only two and
a half hours a day.

Deliver
Work included a full strip out of both the reception
and the main ofﬁce ﬂoor areas to create better
working conditions. We transformed the reception
area to reﬂect the client’s corporate image.
This included the installation of new reception
desks, marble ﬂooring and audiovisual equipment.

We have recently completed
the 111,000 sq ft refurbishment
of 236 Gray’s Inn Road, London,
for Telereal Trillium, one of MITIE’s
largest customers.

David O'Sullivan
Senior Projects Manager, Telereal Trillium

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MITIE Group PLC
Annual Report and Accounts 2009

Business review
Operating review

Val Bagnell
Executive Director, Sentinel Housing Association

MITIE has recently been awarded
a new ﬁve-year asset management
contract with Sentinel Housing
Association, the largest local housing
association in North Hampshire.

Sentinel Housing Association
Think
In line with Sentinel’s customer objectives, we have
questioned and challenged our overall approach
to ensure all customers receive a prompt and
efficient service that offers real benefits. We have
worked with Sentinel to undertake value engineering
workshops to streamline key service processes.
One example of this is the introduction of the
repair time allocation system. Working with Sentinel,
we devised a system that detailed the different
types of repairs and the average time it takes to
complete the job. It also included the operatives
available for the repair along with their trade
expertise. This system has enabled the customer
service centre to predict the time it takes to
complete the repairs as well as making sure
the right person is allocated to the right job.
As a result, Sentinel’s customers benefit from a
direct appointments system and a more efficient
and cost-effective repairs service.

Manage
We understand the importance of reducing
the turnaround times for empty houses in order
to save costs for our clients and increase the
number of available homes. We have worked
with Sentinel to rationalise workﬂow to avoid
duplication and waste by adopting ‘lean thinking’
methods. By managing the voids process as
a whole, and communicating with all parties
concerned we can reduce the time wasted before
and after our involvement. As a result, we have
signiﬁcantly reduced the key to key turnaround
time for void properties.

Deliver
MITIE now repairs and maintains more than
7,300 homes in the North Hampshire area for
Sentinel and will be delivering Decent Homes,
planned works and gas servicing over the next
ﬁve years. By employing local people, we help
to create sustainable communities and pride
ourselves on providing better standards of living
for our customers.

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MITIE Group PLC
Annual Report and Accounts 2009

Business review

Our work in the social housing sector
includes response, repair, cyclical
maintenance and Decent Homes
contracts. Our principal focus within the
sector is to secure repair and maintenance
works, which provide better long-term
opportunities. However, we have also been
successful in securing a number of new
Decent Homes contracts during the year
as we have seen an increasing number
of opportunities, with funding being
released by the government in order
to try to accelerate the progress of the
Decent Homes programme to meet
the government’s target to upgrade
3.6m homes in the UK.

Amongst the new repairs and
maintenance work secured during the
year, we will be providing day-to-day
responsive repairs to 6,500 properties
throughout Hampshire, Wiltshire and
Berkshire in a four-year contract with
Wessex Housing Partnership with a total
value of £9.2m. We have also signed
a contract with Origin Housing Group,
valued at £7.2m over four years, to deliver
a responsive repairs, voids and adaptations
service to the tenants of 5,300 homes across
North London and the Home Counties.
In North Hampshire, we have renewed and
expanded our repairs and maintenance
contract with Sentinel Housing Association.
The contract, valued at £50.0m over five
years started, in April 2009 and will see us
delivering services to 7,300 homes. We have
also been successful in securing a five-year
painting contract with Gloucester City
Homes valued at £3.0m, which will involve
painting the outside of all 4,700 of the
organisation’s homes as well as communal
areas in a number of buildings. In Essex,
we successfully achieved a contract
extension from Thurrock Council to paint
an additional 2,600 of their properties.

Decent Homes projects secured during
the year include a five-year contract
with Bracknell Forest Homes, which has
a total value of £17.5m. This newly formed
not-for-profit housing association owns and
manages 5,600 ex-council properties and
the contract will see us fitting new kitchens
and bathrooms in half of these homes
as well as carrying out electrical work.
We have secured an £8.0m Decent Homes
contract with Redbridge Homes to replace
kitchens, bathrooms, heating and electrics
in approximately 1,200 homes.

We have also entered into a five-year,
£12.5m Decent Homes agreement with
Knightstone Housing Association. We will
be replacing kitchens, bathrooms, windows,
doors and central heating in approximately
3,000 Knightstone homes across the
South and West of England. In Liverpool,
we secured a framework contract to deliver
Decent Homes works to Liverpool Mutual
Homes where MITIE is one of eight partners
who will be allowed to bid for £350.0m of
improvement works over the next four years.

Within the government sector, we secured
a £9.0m, three-year contract with Walsall
Council to deliver response and planned
maintenance to civic buildings across the
borough. The contract will involve working
at about 800 properties in Walsall including
schools, leisure centres, libraries, museums
and other council-owned buildings,
and will see us engaging the local supply
chain from the outset.

Earlier in the year, we succeeded in
securing several new fit-out projects
within the ﬁnance and professional sector.
These include a £2.0m refurbishment
project for Scottish Widows at 24 Hanover
Square. The project included upgrading
the building's infrastructure and refurbishing
all seven floors of the building. The work
included installing new power, data and
heating and cooling systems, updating the
core areas with new lavatories and
installing a new lift as well as carrying out
decoration and floor finishes throughout.
We also secured a £3.0m interior fit-out
contract with FirstRand Bank, which will
see us fitting out their newly consolidated
London office. This involves transforming
27,000 sq ft of the building, which includes
creating a new client reception area,
as well as fitting out meeting, conference
and breakout areas.

As expected, we have experienced a
slow down in some niche areas of Property
Management during the year. This has
affected both our plumbing and heating
work with new-build housing projects and
our interior fit-out work within the private
sector. Our exposure to both these areas is
minimal and in the second half of the year,
we have focused on deploying these
transferable skills into public sector work.

Dudley Council
As a partner to Dudley Council
delivering a cyclical interior and
exterior painting programme to help
improve its 23,000 properties, MITIE has
enabled maximum efficiency and
use of resources for our customer by
combining interior works programmes
with exterior, focusing on exterior
painting from March to December,
and concentrating our resources on
interior painting programmes between
December and March. Dudley Council
receives a service that doesn’t peak
or trough, and what’s more, tenants
benefit from improved scheduling
and a better consultation process.
Both MITIE and Dudley Council share
office accommodation, and the
success of delivering our service
from a joint working environment has
justified our client’s decision to invest
in similar shared arrangements on
all of its other partnering contracts.
Even better, our work won a ‘very
highly commended’ award from the
Painting and Decorating Association,
which speaks volumes about what
we do.

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MITIE Group PLC
Annual Report and Accounts 2009

Business review
Operating review

Asset Management
Our Asset Management division provides
the integration, management and
maintenance of technical assets to meet
the demands of the low-carbon economy
including; energy design, generation
and certiﬁcation, infrastructure projects,
building services and mechanical and
electrical engineering. On 1 April 2009,
our Engineering Maintenance business
was combined with Asset Management
to further enhance our market proposition
in this area.

The Asset Management division continued
its transition to a new business model
with a lower risk work mix, resulting in
an expected drop in revenue for the
year of 6.4% to £281.8m (2008: £301.1m).
Operating proﬁt for the division increased
by 1.2% to £8.4m (2008: £8.3m) and
operating margins grew by 0.2% to 3.0%
(2008: 2.8%).

Results summary

Asset Management

2009
£m

2008 Change
%

£m

Revenue

281.8

301.1

–6.4

Operating profit
before amortisation

8.4

8.3

Operating margin

3.0% 2.8%

+1.2

+0.2

Asset Management has continued
to evolve its business during the year to
meet the changing requirements of our
clients as they respond to government
legislation on energy generation and
carbon output. Energy performance and
efﬁciency are now evaluated on a different
set of criteria and we are working with
many clients to achieve demanding
new objectives.

Within this context of accelerating
change, we have made signiﬁcant
progress towards our aim of building more
long-term partnerships with our clients.
Public and private sector organisations
alike are incorporating the drive to reduce
energy consumption within their strategic
plans for upgrading their estates, regardless
of the economic environment. Framework
agreements already in place are yielding
substantial beneﬁts for our clients and for
MITIE, and valuable new business contracts
have been secured during the year.
Our order book has decreased slightly
to £0.2bn (2008: £0.3bn).

Organisations that support large estates
are turning to us for our knowledge
and expertise to help them mitigate the
impact of legislation and comply with
measures such as the Carbon Reduction
Commitment, while optimising efﬁciency
and returns on investment. Our strength
here is being able to approach the
project holistically, from establishing the
right energy procurement mix to designing
and integrating the electrical and
mechanical equipment.

Asset Management operates broadly
across public and private sector markets,
ensuring a secure business base in
uncertain economic times.

The public sector market has remained
strong and focused primarily on health
and education. In the healthcare sector,
we are helping our clients reduce costs,
direct more resources into their core clinical
and welfare objectives and work towards
wider NHS efﬁciency targets.

We provided Guy’s and St Thomas’ Hospital
with two embedded generation systems
that will generate signiﬁcant savings by
enabling electricity to be produced on-site,
while using the waste heat for space
heating and hot water. It will also reduce
the hospital’s dependence on traditional
forms of energy supply.

During the year we have provided
further support on the enabling works
for the 10-year redevelopment at
Great Ormond Street Hospital. Again,
we have demonstrated our effectiveness
in providing operational continuity in
mission critical situations. In this fully
occupied site, meticulous planning and
proactive communications are essential,
to ensure minimum disruption to patients
and staff and complete resilience for
clinical activities. Our experience of working
in live environments has ensured that each
section of the enabling works has been
successfully achieved to tight timescales.

University Campus Suffolk
MITIE has engineered a new-build
state-of-the-art energy efficient
building for University Campus Suffolk.
The design provides energy cost
savings for the client by minimising
the energy footprint of the building
utilising a combination of technologies
including low energy cooling systems,
intelligent lighting and a heat
recovery system. MITIE was instrumental
in ensuring the design concept was
developed to a successful outcome
and working with the architects
and other contractors, delivered
the building in time for the new
2008 university intake against a very
challenging programme. The building
was awarded an ‘excellent’ rating
by BREEAM (Building Research
Establishment’s Environmental
Assessment Method), the leading
and most widely used environmental
assessment method for buildings.

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MITIE Group PLC
Annual Report and Accounts 2009

Business review

University of Plymouth
Think
MITIE has been working closely with the University
of Plymouth for over ﬁve years, developing a real
understanding of the unique set of pressures,
inﬂuences and needs that face the higher
education market. With all the projects that we
undertake we get involved with the design teams
at an early stage in order to provide our engineering
expertise and a different perspective when looking
at the design strategy.

Manage
Recognising the importance of working as part
of an integrated team, we have established strong
relationships with the learning facilities and estates
Departments, other university staff, main contractors
and consultants making us a trusted and reliable
source of expertise. Our professionalism and
commitment to ﬁnish each project on time and
to budget has ensured that the relationship with
the University of Plymouth has gone from strength
to strength with beneﬁts of our ongoing relationship
resulting in quicker response times, knowledge of
university procedures and better integration with
all members of the team.

Deliver
To date, MITIE has managed 17 projects for the
University in the last eight years with a total value
of more than £20.0m. Our work for the University has
included heating, lighting, air conditioning, cabling,
wiring and other mechanical and electrical works.
Projects have included work on residential units and
academic buildings including the University’s striking
Roland Levinsky building.

MITIE’s strong relationship with the
University of Plymouth has delivered
numerous benefits to the University's
ongoing improvement programme.

Chris Bunce
Deputy Director of Learning Facilities, University of Plymouth

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MITIE Group PLC
Annual Report and Accounts 2009

Business review
Operating review

Great Ormond Street Hospital (GOSH)
Think
In this fully occupied site, MITIE has demonstrated
its effectiveness in providing operational continuity
in mission critical situations. Meticulous planning
and proactive communications have been
essential to ensure minimum disruption to patients
and staff and complete resilience for clinical
activities. Our experience of working in live
environments has ensured that each section
of the projects that we have undertaken has
been successfully achieved to tight timescales.

Manage
Working at height, the projects have involved
large crane lifts of heavy equipment into and
out of the centre of the site, and MITIE has
worked closely with the GOSH Estates department
and the hospital’s project consultants to minimise
the impact of these and all other activities on the
daily operation of the hospital.

Deliver
The engineering projects that MITIE has delivered
to GOSH include chiller replacements, infrastructure
works and other work totalling more than £6.2m.
Added to this, MITIE also provides the cleaning in
the hospital and event services within the hospital’s
roof garden.

MITIE provides a range of services
to Great Ormond Street Hospital
including engineering projects
helping with the £320.0m phase 2
of the hospital’s redevelopment.

Graham Mills
Estates Director, Great Ormond Street Hospital

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MITIE Group PLC
Annual Report and Accounts 2009

Business review

This year we have undertaken further
work in the ﬁnance and professional sector
for Standard Life Investments, a client that
MITIE works with across all three divisions.
In planning their new ofﬁce in Guildford,
the company employed us to develop a
bespoke energy solution that would meet
government legislation that at least 10%
of all new buildings’ energy should come
from renewable sources. We evaluated
the potential of numerous technologies
to achieve the necessary compliance,
optimise efﬁciency and provide a sensible
pay back period within the life cycle
model. The ground-source system we
speciﬁed delivers substantial savings against
a traditional system of a similar scale.

In technology and infrastructure, we have
extended into framework agreements
with several major banking institutions and
continue to work with data centre owners
and operators within the technology and
communications sector. Some of our
projects involve providing huge amounts of
resilient power and cooling to data centre
spaces, for clients including Global Switch.
The work we undertake is targeted at
increasing the effective use of power and
providing continuity and stability for critical
data systems in the most efﬁcient and
sustainable way.

Our work with EDF Energy in the utilities sector
has successfully demonstrated our expertise
in the management of energy. MITIE has
established a strategic partnership with
EDF Energy, one of the UK’s largest energy
companies, to assist them in developing
embedded, on-site electricity generation
schemes to meet the obligations of the
Carbon Emissions Reduction Target (CERT).
This came into effect in April 2008 and
requires suppliers to help redirect energy
generation away from national networks
to local schemes. In addition, we extended
our involvement in the provision of
efficient energy generation by securing
a partnership to distribute and deploy
Proven wind turbines.

In the education sector, we are working
with schools, colleges and universities to
upgrade existing facilities and develop
new ones. Two of our projects, at University
Campus Suffolk and Penryn College in
Cornwall, have been awarded an Excellent
BREEAM rating – the world’s most widely
used environmental assessment method
for buildings. The technologies deployed
to achieve this include biomass boilers,
solar hot water collection, rainwater
recovery and wind turbines. At Barnet
College, a ground-source system is now
bringing natural heat from 100 metres
below the earth’s surface. Under our
ongoing framework agreement with the
University of Plymouth, three prestigious new
buildings were completed in 2008, two of
them general academic buildings and the
third an accommodation block, together
with substantial refurbishment works.

We continued to undertake a large
amount of work in the government sector.
Debut, Regional Prime Contractor in the
South West for Defence Estates, has
responsibility for the delivery of novel and
complex capital works projects through
their supply chain partner. We have been
working under this framework agreement
for over ﬁve years and continue to
undertake a variety of large projects
characterised by highly collaborative
methods and a pricing structure that
provides certainty for each project for
all concerned.

The private sector market has been
affected by the economic downturn but,
despite this, MITIE has continued to develop
its business. Property owners and occupiers,
driven by changing legislation, are focusing
on the need to develop new models for
managing their estates and on ways to
redirect capital expenditure away from
non-core activities. We are providing
innovative solutions that will deliver greater
returns on investment through major gains
in efﬁciency that will also meet government
targets on energy and carbon.

At 200 Aldersgate, a challenging City site
comprising two linked blocks on a major
roundabout at the end of London Wall,
we are providing infrastructure
refurbishment, Category A ﬁt-out and the
replacement of 19 separate plant areas.

Sainsbury’s
MITIE has helped Sainsbury’s to pilot
new ways to reduce the retailer’s
carbon footprint at its new store on
the outskirts of Dartmouth by installing
two quiet revolution wind turbines
that will provide renewable energy
that will be used on-site. The store has
been specifically designed to reduce
the amount of CO2 emitted into the
atmosphere and it is expected to
save about a third on its energy bills.

13012_R&A08_p28-35.qxd:Layout 1 28/5/09 12:15 Page 28

MITIE Group PLC
Annual Report and Accounts 2009

Business review
Financial review

MITIE has delivered another set of strong
results for the year, building on our 21-year
track record of growth. Our business
model continues to show resilience despite
economic uncertainties and our earnings
continue to be backed by solid cash flows
and good future visibility.

Key performance indicators (KPIs)
MITIE is committed to delivering sustainable
profitable growth which consistently
delivers stakeholder value. Our results have
reflected this through year-on-year growth
in revenues, earnings and dividends over
a 21-year period and our strategy is geared
to ensure this continues.

We have carefully selected our financial
KPIs to ensure that the overall financial
performance of the Group is measured,
reported and aligned to our strategy.
Our financial KPIs focus on the level and
quality of our earnings and cash flows,
the control of capital expenditure and the
sustainability of dividends. The Group has
performed strongly against these measures
during this and previous years and we
are satisfied that the historic trends in
our KPI performance demonstrate our
continued commitment to a profitable
and sustainable business model.

We are pleased to report another
year of double-digit earnings and
dividend growth.

Revenue

Operating profit before
acquisition related amortisation

Amortisation of acquisition
related intangible assets

Operating profit

Net investment revenue
and finance costs

Profit before tax

Tax

Profit after tax

Effective tax rate

Basic EPS before other items*

Basic EPS

Dividend per share

2009
£m

2008
£m

Increase
%

1,521.9

1,407.2

8.2

80.5

72.2

11.5

(1.9)

78.6

(2.7)

75.9

(21.5)

54.4

28.3%

17.2p

16.7p

6.9p

(1.9)

70.3

(2.4)

67.9

(20.6)

47.3

30.3%

14.9p

14.3p

6.0p

11.8

15.0

15.4

16.8

15.0

* Other items are non-cash acquisition related items, being amortisation of intangible

assets and unwinding of discount on deferred contingent considerations.

13012_R&A08_p28-35.qxd:Layout 1 28/5/09 12:15 Page 29

MITIE Group PLC
Annual Report and Accounts 2009

Business review

Sustainable profitable growth
Revenue for the year ended 31 March 2009
increased by 8.2% to £1,521.9m. Our revenue
streams are supported by a diverse portfolio
of clients, exposure to a wide industry
sector base and supported by a strong
order book which now stands at £4.9bn.
Looking forward, revenue for the year
ended 31 March 2010 is now 74% secured
(2008: 78%).

Operating profit before amortisation
of acquisition related intangible assets
(EBITA) increased by 11.5% to £80.5m
(2008: £72.2m). We monitor and manage
EBITA profit margins for the Group as one of
our financial KPIs and are pleased to report
an increase in the Group’s EBITA margin
to 5.3% (2008: 5.1%) in the year. This reflects
the strengthening of margins in Property
Management to 6.0% (2008: 5.3%) and
Asset Management to 3.0% (2008: 2.8%)
offset by a small reduction in Facilities
Management to 5.8% (2008: 6.0%)
where we have enhanced investment
in our business development capabilities
in that area.

The charge in respect of the amortisation
of intangible assets arising on acquisitions
remains consistent with the prior year at
£1.9m (2008: £1.9m) reflecting the absence
of acquisitions in the year. Operating profit
after the amortisation of intangibles relating
to acquisitions was £78.6m (2008: £70.3m).

Investment and finance charges for the
year increased to £2.7m (2008: £2.4m).
This charge includes the non-cash finance
charges of £0.6m (2008: £0.8m) relating to
the unwinding of the discounted deferred
contingent consideration in respect of
acquisitions made in prior years and £0.6m
(2008: nil) in respect of the mark to market
of three callable interest rate swaps.
Excluding the non-cash finance charges,
investment and finance charges for the
year reduced to £1.5m (2008: £1.6m).

The tax charge for the year was £21.5m
(2008: £20.6m) representing an effective
rate of tax on our profit on continuing
operations of 28.3% (2008: 30.3%).

These results generated profit after tax
for the year of £54.4m (2008: £47.3m),
an increase of 15.0% on the prior year.
After minority interest charges of £1.3m
(2008: £2.3m), £53.1m (2008: £45.0m)
is attributable to the shareholders of
MITIE Group PLC.

Cash flow and liquidity
The underlying cash performance of the
Group remains excellent and is a key focus
area for our financial and operational
teams around the Group.

The conversion of EBITDA to cash is a
financial KPI for the Group. In the year
ended 31 March 2009, we converted
97.5% of our EBITDA to cash (2008: 90.3%),
continuing our track record of consistently
achieving our KPI target level of 90%.

Strong operating cash of £94.4m, up 20.7%
on the prior year has helped to reduce
our net debt. At 31 March 2009, we had
no net debt (2008: £15.6m), and instead
held net funds of £10.9m comprising cash
balances of £28.5m (2008: £42.6m), loans
of £10.0m (2008: £50.0m) and loan notes
and obligations under finance leases of
£7.6m (2008: £8.2m). Deposits held by our
captive reinsurance company which are
not readily available to the Group but
are included in our cash balance totalled
£7.3m (2008: £12.4m) at 31 March 2009.

The Group’s committed banking facility,
which expires in January 2012, remains
unchanged from the prior year end at
£230.0m. The principal covenants in respect
of this facility require that the maximum
level of debt must not exceed 3.5 times
EBITDA and that the minimum profit to
interest cover ratio for the Group is 3:1.
The Group has operated within these
covenants throughout the year.
The average borrowing rate on drawn
funds under the facility during the year
was LIBOR + 40 basis points. Our overdraft
facilities total £35.0m (2008: £40.0m).

Stakeholder value
Our track record of delivering stakeholder
value through earnings and dividend
growth continued this year with basic
EPS before other items increasing by 15.4%
to 17.2p per share (2008: 14.9p per share).
Basic EPS before acquisition-related
amortisation increased by 16.3% to 17.1p
per share (2008: 14.7p per share) while
basic EPS was 16.7p per share (2008: 14.3p
per share), an increase of 16.8%. Our fully
diluted basic EPS measure rose to 16.5p
per share (2008: 14.1p per share).

Our basic EPS result continues to support
our commitment to dividend growth in line
with our adjusted earnings per Ordinary
share after excluding other items. This policy
ensures that our dividends continue to
track our underlying earnings and are
not distorted by non-cash accounting
adjustments relating to amortisation and
imputed finance charges arising from
acquisitions. This has resulted in a full year
dividend of 6.9p per share (2008: 6.0p per
share), an increase of 15.0% for the year
and reflects a dividend cover of 2.5 times
on our adjusted EPS measure. Our final
dividend for the year ended 31 March
2009 will be paid, subject to shareholder
approval, on 7 August 2009 to shareholders
on the register as at 10 July 2009.

Pensions
The strength of our balance sheet
and hence our future financial stability
is supported further by the strength of
our pension scheme funding despite the
significant recent decline in pension asset
values. This places the Group in a position
of strength in the market. During the year,
we completed the triennial valuation
of the Group’s own defined benefit pension
scheme which was scheduled to take
place as at 31 March 2008. No material
actuarial surplus or deficit arose on the
completion of this valuation.

13012_R&A08_p28-35.qxd:Layout 1 28/5/09 12:15 Page 30

MITIE Group PLC
Annual Report and Accounts 2009

Business review
Financial review

The net position of all the pension schemes
included on the Group’s balance sheet
is a small net deficit of £0.4m (2008: £7.5m
surplus). The main MITIE Group defined
benefit scheme continued to show
a small surplus of £3.0m (2008: £9.9m).

The Group also contributes to a
number of defined contribution pension
schemes as well as making contributions
to its customers’ defined benefit
pension schemes under Admitted Body
Local Government status and other
arrangements in respect of certain
employees who have transferred to the
Group under TUPE. The Group’s defined
benefit pension obligations in respect
of schemes in which the Group is
committed to funding amounted
to £3.4m (2008: £2.4m).

Employee incentivisation
MITIE is a people business and it is
essential that we continue to offer structures
that allow our management teams to
participate in the success of the Group
which in turn delivers value to our
stakeholders. The opportunity for certain
of our management teams to own an
equity stake in some of our subsidiary
businesses has been key to the success
of the Group.

This year we elected to acquire some
or all of the minority interests in the equity
share capital of seven of our subsidiaries.
The total maximum consideration payable
in respect of these acquisitions is £13.3m,
being satisfied by £0.9m in cash and £10.0m
by the issue of 4.6 million new 2.5p Ordinary
shares valued at 218.75p per share.
The balance of £2.4m of the consideration
is deferred and will be paid in new MITIE
shares by 30 September 2010 subject to
the attainment of specified profit targets
by the relevant companies in the financial
years to 31 March 2010.

In addition, we settled deferred
consideration totalling £0.5m in respect
of the acquisition last year of part of the
minority shareholdings in MITIE Technology
& Infrastructure Limited which was satisfied
by the issue of 0.2 million new MITIE shares.
£0.7m of deferred consideration in respect
of the purchase last year of Catering
Partnership Holdings Limited was settled
in cash. During the year £1.2m of loan notes
in respect of the acquisition of MITIE Pest
Control Limited (formerly Eagle Pest Control
Services UK Limited) were also redeemed.

Summary
MITIE has delivered another set of strong
results for the year, building on our 21-year
track record of growth. Our business model
continues to show resilience despite
economic uncertainties and our earnings
continue to be backed by solid cash flows
and good future visibility.

We retain our focus on growth going
forward, and will utilise our financial
strength to support that growth objective
be it acquisitive, organic or through
the use of our start-up model. Overall,
our balance sheet is strong, and with low
gearing and committed facilities we have
a sound platform for future sustainable
profitable growth.

Suzanne Baxter
Group Finance Director

13012_R&A08_p28-35.qxd:Layout 1 28/5/09 12:15 Page 31

Business review
Corporate responsibility

Despite the challenging global economic
situation, our commitment to Corporate
Responsibility (CR) remains undiminished
and undeterred. CR is a key differentiator
for us and our commitment to, and delivery
of, our CR strategy makes sound business
sense. Our CR programme contributes
to our ability to sustain our growth in the
future as clients look to do business with
responsible, like-minded organisations.

MITIE Group PLC
Annual Report and Accounts 2009

Business review

Think
Our Corporate Responsibility strategy
is fully integrated into our long-term
mission to responsibly deliver quality
services, opportunity for our people
and sustainable growth.

Manage
Our CR activities draw on professionals
from across the whole MITIE Group with
a diverse range of skills, qualifications
and experience. Together they bring
a wealth of good ideas on how we can
act responsibly, and deliver effectively
to our stakeholders.

Deliver
It’s everyone at MITIE’s responsibility
to support and contribute to MITIE’s
CR objectives; working hard to improve
their surroundings, and upholding our
reputation as a world-class business
delivering world-class services.

Key CR (Social, Economic, Ethical and Environmental) Business Risks and Opportunities

Key CR issues
Social Issues –
community investment

– Shortage of funds for community

infrastructure development

Economic Issues –
barriers to employment

– Insufﬁcient skill levels

– Educational under-achievement

– Low aspiration levels

Ethical issues –
business practice

– Ethical procurement within supply chain

– Ethical business relationships

Environmental issues –
carbon footprint
– Reduce energy consumption and waste

– Increase recycling

Business impact

MITIE action

A decrease in public investment levels
could impact business opportunities.

– Employee volunteering in community

projects.

Potential challenges in recruiting high
calibre employees due to low literacy,
numeracy and employability skill levels
in some area.

– Employee pro-bono professional support.

– In-kind donations of equipment

and vehicles.

– Employee fundraising for charities.

– Skills Pledge ‘skills for life’ literacy
and numeracy training.

– Comprehensive learning and
development programme.

– Construction Skills Centres and
Real Apprentice programme.

Potential damage to MITIE’s reputation
affecting business if MITIE’s supply
chain partners are perceived to be
operating unethically.

– Ethical Business Practice Policy

compliance.

– Prequaliﬁcation procedures and
CR audits of suppliers undertaken.

Reducing carbon footprint should reduce
costs and impact of volatile energy prices.

– Signiﬁcant internal capacity utilised
to measure, monitor and manage
carbon footprint.

– Investment in IT solutions reducing

travel dependency.

– Increased recycling facilities.

– Company vehicle carbon cap and

improved fuel procurement reducing
transport related costs and emissions.

13012_R&A08_p28-35.qxd:Layout 1 28/5/09 12:15 Page 32

MITIE Group PLC
Annual Report and Accounts 2009

Business review
Corporate responsibility

MITIE Group PLC endorses the Business for
Social Responsibility deﬁnition of Corporate
Responsibility as; ‘achieving commercial
success in ways that honour ethical
values and respect people, communities,
and the natural environment.’ The national
recognition we have received and the
numerous achievement awards we have
won to date demonstrate our commitment
to implementing CR.

Stakeholder engagement is central
to our CR practices; motivating and
rewarding our people, working with clients,
developing a responsible and proﬁtable
business for investors, and interacting with
local communities.

We are proud of our public profile in
CR and are particularly pleased to have
increased our score of 81.5% and retained
our Silver status in the Business in the
Community (BitC)/Financial Times
Companies that Count index. We are
pleased to announce that our Real
Apprentice scheme and Construction
Skills Centres have also been reaccredited
in The BitC Big Tick Awards for Excellence
2009. Our 2009 report on CR activities has
been published and is available on our
website at www.mitie.co.uk.

The key CR (social, economic, ethical
and environmental) business risks and
the material impact that these may
have on the business have been
identiﬁed and assessed. MITIE has carefully
considered these risks and has realised
opportunities and implemented initiatives
to mitigate them.

Corporate Responsibility report 2009
Our annual Corporate Responsibility
report gives a comprehensive
overview of our CR approach,
performance and targets. To order
a copy or download a PDF version,
please visit:
www.mitie.co.uk/cr

Health and safety
We recognise that for effective
management of health and safety
to occur throughout MITIE, ownership
and engagement begins at the highest
level. Responsibility for health and safety
is led at main board level by Ruby
McGregor-Smith, Chief Executive.
Ruby is supported by the management
team of each business, MITIE’s Head of
Health, Safety and Environment (HSE),
and a network of experienced and
dedicated HSE professionals.

During the year we commenced the first
phase of a health and safety leadership
programme aimed at enhancing the
knowledge of MITIE’s senior managers
in modern health and safety risk
management. The first phase of the
programme was targeted at the operating
board of each MITIE business. 117 senior
managers have since taken part in the
workshops; actively participating and
committing to an improved re-focus
on risk management. Our significant
investment of time and resource in this
area is a demonstration of our commitment
to achieving continual improvement in
health and safety management.

Effective management systems
We are wholly committed to improving
our health and safety performance
via a management system approach.
To this end it is a requirement for every MITIE
business to be certified to the internationally
recognised standard for health and safety
management systems – OHSAS 18001.
During the year, our Property Management
division achieved certification in full to
OHSAS 18001 and, in addition, two newly
acquired businesses (one in Property
Management, the other in our catering
business) were subject to a rigorous
integration programme into the health
and safety management system. Both new
businesses achieved certification to OHSAS
18001 during April 2009. We are happy to
report that 98% of MITIE businesses have
now achieved 18001 certification.

We are pleased to have retained
our Silver status in the BitC/Financial
Times Companies that Count index
with a score of 81.5%.

13012_R&A08_p28-35.qxd:Layout 1 28/5/09 12:15 Page 33

MITIE Group PLC
Annual Report and Accounts 2009

Business review

Health and Safety training
At MITIE our people are our greatest asset,
and as such we place the highest priority
in ensuring our people have the right
competencies to carry out their work safely.
We have developed a prioritised approach
to managing health and safety risks,
with significant training focus and resource
directed at key risks to the business, such
as work at height, occupational road
risk, slips and trips and manual handling.
Our formal training programmes in support
of these areas continued during the year,
with the following training achievements:

Course

2009

2008

Health and Safety
Leadership

IOSH Managing Safely

117

390

Managing Work at Height 423

–

297

138

People
MITIE is dedicated to implementing a
comprehensive and proactive Human
Resources strategy with policies to ensure
that all employees are treated equally,
fairly and in a responsible manner.
We’re committed to providing an
environment that enables our people
to reach their full potential.

Employee development and training is
essential for us to maintain our competitive
edge in our challenging market sectors.
We offer a comprehensive range of career
and personal development programmes.
During the year we spent over £3.4m
on training courses providing over 35,000
delegate days across 445 different courses.
Our training centre at Frimley Green,
Surrey was used on 200 days during the
same period, hosting training courses
and meetings for over 2,600 people
including six Corporate Responsibility
Awareness seminars.

Skills Pledge
In our Corporate Responsibility report
2008 we reported our commitment
to the UK Government’s Skills Pledge.
Over the past year we’ve established
a dedicated Skills Pledge team drawing
on the knowledge and expertise of our
HR, Training, and Communications
specialists from across MITIE. The team
has developed the framework, established
the relationships, and implemented the
policies to offer our people some excellent
learning and development opportunities.

MITIE’s Facilities Management division
is the first to implement the Skills Pledge.
Working in conjunction with our delivery
partner Jigsaw Training, we now offer
our people a number of Skills for Life
courses to help them brush up on their
Maths and English skills, as well as access
to National vocational qualifications
(NVQs) and apprenticeships.

Our challenging target is to deliver
8,700 National Vocational Qualifications
by 2012. This investment will enable
us to have a better skilled and qualified
workforce, bringing tangible business
benefits and competitive advantage
as well as enhancing the literacy,
numeracy and employability potential
of our people.

Talent management
Our award-winning Real Apprentice
Scheme is now in its fourth year and has
recently been reaccredited in the BitC
Awards for Excellence 2009. In the last
four years, the scheme has also won the
2006 Premises and Facilities Management
(PFM) Partners with People Award and
the Greater London Training Award.
In particular, we’re very proud that four
of the original seven apprentices who
joined MITIE following the pilot scheme
in 2005 are still with us today.

The Real Apprentice scheme has
an 80% retention rate after six months’
employment. The 77th apprentice to
successfully complete the programme
has recently been offered a full-time job
with us. The East London Business Alliance
now cites the scheme as a blueprint
for other employers to follow and has
rolled out Real Apprentice programmes
with ten other employers across three
East London boroughs.

MITIE respects the rights of its people
and those of our supply chain partners
by endorsing the tenets of the International
Labour Organisation Declaration on
Fundamental Principles and Rights at
Work and the Ethical Trading Initiative
‘Base Code’. Our investment and
commitment to equality and diversity
has increased signiﬁcantly during the
past year and will continue to develop as
we implement new initiatives and training
opportunities to support our people.

Service delivery
MITIE is committed to proactively
developing mutually beneﬁcial trading
relationships and promoting corporate
responsibility with our commercial
stakeholders, based upon a foundation
of trust and co-operation.

In 2007, we established a Supplier
Improvement Programme to ensure that
our signiﬁcant suppliers are aligned with
our CR principles and are accountable
for their own supply chains. The supplier
improvement programme includes CR
audit reviews of signiﬁcant suppliers
undertaken by professionals from our
Sustainable Procurement Forum. This has
proven to be invaluable in sharing best
practice and also in identifying areas
where room for further improvement
can be made.

MITIE’s Sustainable Procurement Forum
was established to:

– Adopt and share best practice

purchasing and supply standards;

– Develop mutually beneﬁcial collaborative

trading relationships; and

– Promote sustainable and ethical

trading practices.

Our clients expect us to be able to
demonstrate high levels of CR performance
and because of our commitment to
CR, we are able to respond positively to
their increasingly tougher prequaliﬁcation
and tender requirements. We also utilise
our considerable environmental
experience and capabilities by providing
sustainability related guidance for our
clients, helping them to reduce their
carbon footprint.

13012_R&A08_p28-35.qxd:Layout 1 28/5/09 12:15 Page 34

MITIE Group PLC
Annual Report and Accounts 2009

Business review
Corporate responsibility

Environment
We are aware of the impact that our
business operations may have on the
natural environment and we endeavour
to minimise and mitigate such effects
where possible by utilising environmentally
benign materials and practices. We respect
our environment and share best practice
with all of our stakeholders as we strive to
achieve our environmental targets.

Vehicle fleet management
Between April 2008 and March 2009 we
have purchased 150 low CO2, emission,
fuel efficient vehicles as part of our vehicle
replacement programme – helping to
decrease the impact on the environment.
We have achieved our aim to reduce
our average vehicle fleet CO2 to below
160 CO2 g/km. Our fleet average emissions
for 2009 are nearly 4% lower at 154 CO2 g/km.

This has seen a reduction of around 14%
in CO2 emissions compared to the vehicles
they replaced.

Key Performance Indicators

Total revenue

Average number of employees

Total CO2 emissions

Normalised CO2 emissions per employee

Normalised CO2 emissions per £m revenue

We will continue to reduce the average
vehicle fleet CO2 emissions by purchasing
another 100 low emission vehicles as
part of our replacement programme
and by investing in on-board telematic
tracker systems.

Sustainability strategy
MITIE is a member of the Renewable Energy
Certification Scheme, British Wind Energy
Association and have Building Research
Establishments (BRE) micro-regeneration
accreditation.

We constantly seek to improve the
environmental performance of our vehicle
fleet by investigating alternative fuels and
lower emission engine types.

Vehicle fleet fuel consumption accounts
for around 90% of our CO2 emissions and
improvements in fleet management to
reduce this impact have been prioritised
with immediate improvements realised.
New fleet vehicles purchased have
the latest Euro V compliant engines and
lower emissions ratings. Changes to fuel
procurement, the introduction of car
sharing schemes and the installation of
telematic vehicle trackers to optimise
travel distances have reduced fuel
consumption and emissions.

During the year we also made further
investments in telephone and video
conferencing facilities to help reduce
business related travel.

We have significant sustainability expertise
at every level of our organisation which
is demonstrated in the comprehensive
range of services offered to our clients.
This expertise and experience is underpinned
by formal academic qualifications and
professional chartered status of many of
its key people. MITIE provides continuing
professional development opportunities
to its people to enhance their potential.
We currently have 12 qualified Low Carbon
Energy assessors and 21 going through the
CIBSE approved training process to become
qualified Energy Assessors/Low Carbon
Consultants to enable them to inspect
buildings and authorise them to issue Energy
Performance Certificates and Display of
Energy Certificates.

Unit

£m

No.

Tonnese

2009

1,521.9

50,054

32,280

0.64

21.2

2008

1,407.2

47,959

30,627

0.64

21.8

Change
%

+8.2

+4.4

+5.4

–

–2.7

CO2 equivalent emissions were calculated using DEFRA conversion factors.

MITIE has increased revenue by 8.2% and employed 4.4% more people over the previous ﬁnancial reporting period. CO2 emissions have
increased by 5.4% – whilst normalised emissions per employee have been maintained and normalised emissions per £m revenue have
decreased by 2.7%.

13012_R&A08_p28-35.qxd:Layout 1 28/5/09 12:16 Page 35

MITIE Group PLC
Annual Report and Accounts 2009

Business review

Community
MITIE’s community investment strategy
is not simply about making financial
donations to causes and charities.
We pride ourselves on committing our
time, resources and specialist skills to
supporting the communities we serve.
In return we create long-term
relationships with future MITIE clients,
suppliers and employees.

At the cornerstone of MITIE’s community
investment strategy is our extensive
volunteering programme. During the
year professionals from every level of
MITIE participated in seven World of
Work days across the UK. The days are
a great way to share our experiences,
knowledge and offer advice to the
bright young minds of the future,
all while raising the profile of our business
and promoting career opportunities
with MITIE to people from a diverse
range of backgrounds.

During the year our people participated
in seven World of Work events at schools
throughout the UK; a number of schools,
including Stoke Newington School,
are home to MITIE’s Constructions Skills
Centres where we offer vocational
training to pupils. “MITIE’s volunteers
always go above and beyond the
call of duty. The pupils find their passion
infectious and they play an integral role
in showing them that there is a whole
world of jobs out there for the taking”,
Les Prior, Work Related Learning Project
Officer, Ealing and Hillingdon Education
Business Partnership.

Research underpins our own experiences
that clear business benefits result
from employee supported volunteer
programmes. Clients increasingly expect
their suppliers to ‘add value’ above
and beyond their contracted service
commitments and our community
investment programme is clearly
able to demonstrate that we do this.

In total, we spent 458 days on volunteering
projects during the year.

Construction Skills Centres
MITIE’s Construction Skills Centres at seven
schools throughout the UK are providing
craft skills and vocational education to
about 500 students each year – significantly
improving their employment prospects.
We were proud to host a ‘Seeing is
Believing’ visit at our Skills Centre at Castle
Vale School, Birmingham in 2008. This event
demonstrated the value of employer
engagement and helped to increase
understanding of social issues among
business leaders and educationalists.

The Skills Centre visit inspired action by
encouraging other business leaders to
work together to address serious issues
facing society such as skills shortages
and low aspiration levels. Our example
was commended by HRH Prince Charles
at St. James Palace in February 2009.

We feel our direction echoes the BitC
statement: ‘Education, employability
and economic renewal are serious issues
across the UK which impact on both
business and society. They need to be top
of the corporate agenda – it’s never been
more important’.

Community Investment

Total Community investment

Profit before tax

Total Community investment as % of profit before tax

Donations to charity and community projects

Match-funded cash donations to charities

Value of employee time volunteered

Value of gifts in-kind donations

Community affairs management costs

Unit

£k

£m

£k

2009

603.7

75.9

0.80

184.0

21.1

103.2

200.9

94.5

2008

592.1

67.9

0.87

151.2

13.4

102.9

211.1

113.5

Change
%

+2.0

+11.8

–0.07

+21.7

+57.5

+0.3

–4.8

–16.8

Political donations – it is not MITIE’s policy to contribute political donations.

MITIE’s community investment increased by £11.6k (2.0%) compared to the previous reporting period. For clarity and accountability
purposes we have reported separately the value of ‘gifts in-kind’ and ‘expenses and leveraged funds’. Increased donations to
charities (21.7%) and match-funding (57.5%) respectively are the most notable differences reported for this period.

Our actions speak louder than words and we’re committed to embedding our corporate responsibilities into everyday operations,
policies, procedures and practices, while remaining true to the core MITIE value that defines the business: providing opportunities for
people to develop to their full potential.

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MITIE Group PLC
Annual Report and Accounts 2009

Directors’ and governance report

Introduction
The Directors submit their report together with the audited consolidated ﬁnancial statements of the MITIE group of companies (Group)
for the year ended 31 March 2009. The Directors’ and governance report is comprised of the Directors’ report, the corporate governance
report, the report of the Audit Committee, the Directors’ responsibility statement, all other parts of this Annual Report and Accounts
and those documents that are referred to within this report and are available at www. mitie.co.uk/investors_corporate-governance.

Compliance with the Code
The Board recognises that the manner in which the Group is governed is critical to the long-term success of the business and
is committed to the principles of corporate governance, for which the Board is accountable to shareholders, as detailed in the
Combined Code on Corporate Governance published by the Financial Reporting Council in June 2006 (Code). This report, together
with the Directors’ Remuneration Report, provides details of key aspects of MITIE’s corporate governance environment and explains
the manner in which the Board has applied the principles and provisions of good governance as set out in Section 1 of the Code.

The Board conﬁrms that throughout the year ended 31 March 2009 the Group has complied with the provisions set out in Section 1
of the Code with the exception that:

– the Board did not consist of at least an equal number of independent Non-Executive and Executive Directors (Code A.3.2) between
1 April 2008 and 31 March 2009 – further details relating to this non-compliance are provided on page 39 – this non-conformance will
be rectiﬁed upon the appointment of Terry Morgan; and,

– the Audit Committee did not consist of at least 3 independent Non-Executive Directors (Code C.3.1) between 31 July 2008 and
31 March 2009 – further details relating to this non-compliance are provided on page 42 – this non-conformance will be rectiﬁed
upon the appointment of Terry Morgan;

– the Nomination Committee did not consist of a majority of independent non-executive directors (Code A.4.1) between 31 July 2008
and 31 March 2009 if the Chairman is included in such calculation – further details relating to this non-compliance are provided on
page 41.

These non-compliances have principally arisen following the retirements of David Ord and Cullum McAlpine as Directors of the
Company and the appointment of Roger Matthews to the role of Chairman (having previously been an independent Non-Executive
Director). During the reporting period the Board has been conducting an extensive search for an additional Non-Executive Director
and is pleased to announce that Terry Morgan will be joining the Board as an independent Non-Executive Director on 1 July 2009.
Further details of this search process and appointment are given on page 39.

Basis of report
This report (together with the other parts of this Annual Report and Accounts and other documents incorporated by reference) has
been prepared, and is published, in accordance with, and in reliance upon, applicable English company law and the liabilities of
the Directors in relation to this report are subject to the limitations provided by such law.

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MITIE Group PLC
Annual Report and Accounts 2009

Governance

Board of Directors
Roger Matthews * ‡
Non-Executive Chairman and Chairman of the Nomination Committee
Roger was appointed as a Non-Executive Director of MITIE Group PLC in December 2006 and was later appointed as Non-Executive
Chairman in July 2008. 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 is Non-Executive Chairman of LSL Property Services PLC.

Ian Stewart
Non-Executive Deputy Chairman
Ian was appointed as Chief Executive of MITIE Group PLC in 2001 and was appointed as Non-Executive Deputy Chairman on
30 March 2007. Ian was a founding member of MITIE. He is a Non-Executive Director of Generation (UK) Limited, suppliers of scaffolding,
access and safety systems.

Ruby McGregor-Smith ‡
Chief Executive
Ruby was appointed as Group Finance Director of MITIE Group PLC in December 2002, later appointed as Chief Operating Ofﬁcer in
September 2005 and subsequently as Chief Executive in March 2007. Prior to joining MITIE, Ruby held a range of senior roles within the
support services sector, primarily at Serco Group plc. In addition, she is a Non-Executive Director of Michael Page International plc and
Chair of Race for Opportunity, a part of the Business in the Community (BitC) organisation with a focus on diversity in the workplace.

Suzanne Baxter
Group Finance Director
Suzanne was appointed as Group Finance Director of MITIE Group PLC in April 2006. Suzanne is a Chartered Accountant. Prior to joining
MITIE, she specialised in mergers and acquisitions related transaction support and also 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 BitC organisation with a focus
on gender diversity in the workplace, and is also a member of the Finance and Risk committee of BitC.

Roger Goodman
Group Corporate Development Director
Roger joined MITIE Group PLC in 1993 and was appointed as an Executive Director in August 2001. Roger is a Non-Executive Director
of The Business Services Association and Asset Skills Council, which advocates the growth of the support services industry proﬁle and
the development of skills in the sector. In addition, he is Chairman of Networkers International plc.

Bill Robson
Director responsible for Property Services
Bill joined MITIE Group PLC in January 1992 following the acquisition of Trident Maintenance Services Limited and was appointed
as an Executive Director in August 2001.

David Jenkins * † ‡
Senior Non-Executive Director and Chairman of the Audit Committee
David was appointed as a Non-Executive Director in March 2006. David was previously a senior Partner with Deloitte LLP
in London having spent over 20 years in Assurance and Advisory Services. David is Chairman of Development Securities PLC
and a Non-Executive Director of Renewable Energy Systems Holdings Limited. He is a Governor of Downe House School.

Ishbel Macpherson * † ‡
Non-Executive Director and Chairman of the Remuneration Committee
Ishbel was appointed as a Non-Executive Director in July 2005. Ishbel was previously an investment banker for over 20 years specialising
in UK mid-market corporate ﬁnance and held positions at Dresdner Kleinwort Wasserstein and Hoare Govett. Ishbel is a Non-Executive
Director of Dignity plc and GAME Group plc and Senior Independent Non-Executive Director at Speedy Hire Plc and Hydrogen
Group plc.

Graeme Potts *
Non-Executive Director
Graeme was appointed as a Non-Executive Director in July 2006. Graeme previously held appointments with Inchcape PLC, RAC
Motoring Services and Reg Vardy plc. He is a Non-Executive Director of BEN, the Motor & Allied Trades Benevolent Fund and is
Non-Executive Chairman of Bikers Legal Defence Limited. Graeme is a Managing Director of Eden (GM) Limited, a motor retail group.

† Member of the Audit Committee
‡ Member of the Nomination Committee
* Member of the Remuneration Committee.

Further biographical details of those Directors seeking re-appointment at the 2009 AGM are provided in the Notice of AGM which
will be available at www.mitie.co.uk\investors on 8 June 2009.

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MITIE Group PLC
Annual Report and Accounts 2009

Directors’ and governance report

Business review
Principal activities
MITIE Group PLC (the Company) is the holding company of the Group. The principal activity of the Company is to provide
management services to the Group. The Group’s activities are focused on the provision of strategic outsourcing and asset
management services in support of the buildings, facilities and infrastructure of its clients. Further details of the subsidiary
undertakings of the Company principally affecting the proﬁts or net assets of the Group in the reporting period are listed in
Note 36 to the ﬁnancial statements.

Business review
The Company is required to set out a fair review of the business of the Group during the reporting period (including an analysis of
the position of the Group at the end of the reporting period and the principal risks and uncertainties facing the Group). Details of
this review are contained in this Directors and Governance Report and the following sections of this Annual Report and Accounts:

– the Chairman’s statement on page 5;

– the Chief Executive’s review on pages 6 to 11;

– the operating review (including the statement of principal risks and uncertainties) on pages 14 to 27; and

– the ﬁnancial review on pages 28 to 30.

Proﬁt and dividends
The proﬁt before taxation for the ﬁnancial year is £75.9m (2008: £67.9m). The Directors have declared / recommended dividends
as follows:

– paid (on 5 February 2009) an interim dividend of 3.3p per Ordinary share

– recommended a ﬁnal dividend of 3.6p per Ordinary share

– total Ordinary dividend 6.9p per share (2008: 6.0p)

£10.7m

£11.6m

£22.3m

The ﬁnal dividend, subject to shareholder approval at the AGM, will be paid on 7 August 2009 to ordinary shareholders on the register
on 10 July 2009. The Company operates a Dividend Re-Investment Plan (DRIP).

Going concern
The Directors acknowledge the Financial Reporting Council guidance on going concern issued in November 2008. The Group beneﬁts
from a well diversiﬁed portfolio of service offerings providing stability in the current economic climate. In addition the Group has a
broad, diverse customer base with a good balance between public and private sectors underpinned by a large number of long-term
contracts contributing to a forward order book of £4.9bn. MITIE beneﬁts from a very strong balance sheet; the Group has available
£230.0m of committed funding lines, of which £220.0m remained undrawn at 31 March 2009, which are not renewable until 2012 and
the Group currently operates well within the ﬁnancial covenants associated with this facility. As a consequence, the Directors believe
that the Group is well placed to manage its business risk successfully and accordingly the Group continues to adopt the going
concern basis in preparing its annual report and accounts.

Corporate governance
Board of Directors
The membership of the Board as at 31 March 2009 and biographical details of the Directors (including details of committee
chairmanships and other positions held) are given on pages 36 and 37. During the year two Non-Executive Directors retired from
the Board (David Ord and Cullum McAlpine). David Ord was succeeded as Chairman by Roger Matthews (a Non-Executive Director
of the Company since December 2006) on 31 July 2008. Roger Matthews consequently stepped down from the Audit Committee.
Cullum McAlpine was succeeded as Senior Independent Non-Executive Director and as Chairman of the Audit Committee by
David Jenkins on 31 July 2008. David Jenkins consequently stepped down as Chairman of the Nomination Committee and was
replaced by Roger Matthews. These retirements and Board changes occurred in accordance with the Board’s pre-existing orderly
succession planning.

Directors are appointed and may be removed in accordance with the Articles of Association of the Company and the provisions
of the Companies Acts. All Directors are subject to re-election at intervals of no more than three years in accordance with the Articles
of Association and the Code. The Notice of AGM contains details of those Directors who are retiring by rotation and are proposed for
re-election. As part of the formal Board evaluation, the Board has considered the performance of each Director seeking re-election
and is satisﬁed that they continue to be effective and demonstrate clear commitment to their role.

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MITIE Group PLC
Annual Report and Accounts 2009

Governance

Director independence
During the year, Non-Executive Director independence was considered by the Board. The Board determined that all Non-Executive
Directors as at 31 March 2009, 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’ prior role with Deloitte LLP (previously Deloitte & Touche LLP), MITIE’s external auditors. The Board
determined that David is independent given that he had not been involved in the provision of services to MITIE and the passage
of time since his departure from Deloitte LLP.

Board and committee composition and balance
As part of the ongoing review of Board performance (as set out below) the Nomination Committee and the Board speciﬁcally
reviewed the roles of Chairman and Senior Independent Non-Executive Director, and the composition and chairmanship of each of
its committees. The Board and the Nomination Committee recognised that, partly as a result of the changes in Board composition
detailed above, there was an imbalance in the number of non-independent Directors and independent Non-Executive Directors.
The Board was broadly satisﬁed that its composition was appropriate having regard in particular to the integrity, skills, knowledge and
experience of its Directors and the size and nature of the business, and having regard to its desire that the Board does not become too
large and unwieldy. However, it was mindful of the need to maintain a balanced board and consequently announced the initiation of
a search process for an additional independent Non-Executive Director to serve on the Board and the Audit Committee. The
Nomination Committee reviewed the skills, knowledge and experience required to ﬁll this additional position and provided a detailed
speciﬁcation to the external search consultancy engaged to conduct the search process. This detailed search process
was concluded on 30 March 2009 when the Board was pleased to announce that Terry Morgan will be joining the Board as an
independent Non-Executive Director on 1 July 2009. Terry will serve on the Audit Committee and will Chair the Remuneration Committee
with effect from 10 July 2009. Further details in relation to Terry Morgan are provided in the notes to the Notice of AGM. Following Terry’s
appointment the board will consist of four independent Non-Executive Directors, a Non-Executive Director deemed non-independent
as a result of his prior role as CEO of the Group, the Non-Executive Chairman and four Executive Directors. This will
not result in absolute compliance with Code A.3.2 of the Combined Code and whilst the Board remains broadly satisﬁed with the
composition and balance following Terry’s appointment, it will continue to keep the matter under careful review.

Director appointment, induction and training
The Board has a general policy that: all new Directors are subject to election by the shareholders at the ﬁrst AGM after their
appointment; that each new Director receives a tailored induction suitable to their role; and, that all new Directors receive a tailored
information pack which includes 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.

Review of Board performance
The Board is committed to effective and rigorous review of its performance and that of the committees and individual Directors and
accordingly a formal evaluation of the performance and effectiveness of the Board, its committees and of each Director is performed
annually. Director performance evaluation for the current year has been carried out using a combination of formal appraisal
questionnaires completed by all Board members and through informal meetings and discussions. The results of these reviews are
reported to the Board and used to improve the Board’s performance. 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. Notwithstanding this, several further
improvements in board operation have been implemented during the reporting year including the restructuring of reporting format
and content, the greater use of board brieﬁngs by non-Director executive board members, and the rotation of Board meetings around
various Group operational locations.

Directors’ interests and rights
Details of the beneﬁcial and non-beneﬁcial interests (including share options) of each Director and connected persons in the Ordinary
share capital of the Company are provided in the Remuneration Report. None of the Executive or Non-Executive Directors has a
service contract with a notice period greater than 12 months. All Directors have access to management and the operating businesses
of MITIE at their request and have secure remote access to Board and other relevant papers held on a dedicated online facility.

Directors’ indemnities
The Company maintains Directors’ and ofﬁcers’ liability insurance providing appropriate cover for any legal action brought against
its Directors and/or ofﬁcers. The 2007 AGM approved various amendments to the Memorandum and Articles of Association of the
Company to extend the protection provided to Directors in respect of any litigation against Directors relating to their position as a
Director of the Company. These changes were made possible by recent amendments to company law. The amended Memorandum
and Articles of Association speciﬁcally provide that the Company may indemnify Directors against any liability incurred in connection
with any negligence, default, breach of duty or breach of trust in relation to the Company and that the Company may fund defence
costs. Individual Directors would still be liable to pay damages awarded to the Company in any action against them by the Company
and to repay their defence costs (to the extent funded by the Company) if their defence was unsuccessful.

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MITIE Group PLC
Annual Report and Accounts 2009

Directors’ and governance report

Director conﬂicts
The Board has a formal policy on the declaration and management of director conﬂicts in accordance with the amendments to the
Articles of Association approved by shareholders at the 2008 AGM. Any potential situation or transactional conﬂict must be reported as
soon as possible to the Chairman, the Chief Executive and the Company Secretary. Where a potential conﬂict is authorised (under the
statutory powers and powers granted under the Articles of Association to the Board), such conﬂict is kept under ongoing review.

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 Half-yearly and Annual Report and Accounts; appointing and removing the Chairman, Directors and
Company Secretary; and monitoring the Group’s corporate governance arrangements. These matters are set out in a schedule
of matters reserved for the Board which was approved by the Board on 19 March 2009 and which is available at
www.mitie.co.uk/investors_corporate-governance.

Chairman and Chief Executive: division of responsibility
There is a clear division between the roles of Chairman and Chief Executive as formally set out in the terms of reference for each of
these roles. These terms of reference have been reviewed as part of the review of the job speciﬁcation of the Chairman. The Chairman
is responsible for the effective running of the Board. This includes ensuring that the Non-Executive Directors contribute effectively
and that the Board is aware of the views of major shareholders. He is also responsible for ensuring that the Board addresses major
challenges faced by MITIE and for the effective performance of the Board and its committees. The Chairman is available to consult
with shareholders throughout the year and will be available at the AGM. The Chief Executive is responsible for all aspects of the
operation and management of the Group and its business within the authorities delegated by the Board.

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 MITIE’s registered ofﬁce, the head ofﬁce and at the AGM. The Senior Independent
Non-Executive Director is available to shareholders should they have concerns which have not been resolved through the normal
channels of Chairman, Chief Executive or Group Finance Director or for which such contact is inappropriate in the circumstances.

External appointments and commitments
Executive Directors are permitted to accept appointments outside the Group providing permission is sought from the Chairman and
the Chief Executive and that the additional appointments do not interfere with the Directors’ ability to effectively discharge their duties.
The commitments outside the Group of the Executive Directors are detailed in the remuneration report on page 58. Executive Directors
are entitled to retain any fees earned from these external appointments.

Board meetings
Directors are supplied with an agenda and supporting papers for all Board 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 reports
on: current trading and performance; corporate development activities; health and safety; and, matters relating to corporate
governance. The Board will also receive, from time to time, detailed presentations from non-Board members on operational
matters. The Board, its committees and its Directors have access to the advice and services of the Company Secretary and, where
appropriate, external independent legal advice funded by MITIE. In addition to scheduled Board and committee meetings during
the year, the Chairman met with the Non-Executive Directors on several occasions without the Executive Directors being present.

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MITIE Group PLC
Annual Report and Accounts 2009

Governance

All Directors are expected, where possible, to attend all Board meetings and the AGM. During the year ended 31 March 2009,
there were 6 scheduled Board meetings. Additional unscheduled Board meetings were held to deal with administrative matters,
predominantly for the approval of the issue of shares. Dedicated budget review 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

Number of meetings held in year

R J Matthews(1)

I R Stewart

R McGregor-Smith(2) (3)

S C Baxter(2)

N R Goodman

W Robson

D S Jenkins

I J S Macpherson

G J Potts

D C Ord(4)

C McAlpine(4)

Board

Audit Remuneration

Nomination

–

(1) Roger Matthews stepped down from the Audit Committee and was appointed to the Remuneration and Nomination Committee upon his appointment as Chairman

on 31 July 2008

(2) Ruby McGregor-Smith and Suzanne Baxter attend the Audit Committee meetings on the invitation of the Committee Chairman

(3) Ruby McGregor-Smith attends the Remuneration Committee meetings on the invitation of the Committee Chairman

(4) David Ord and Cullum McAlpine resigned as Directors on 31 July 2008

Board committees
The Board has four formally constituted committees: the Audit Committee; the Executive Committee; the Nomination Committee;
and the Remuneration Committee. The duties and responsibilities of each committee are set out in its terms of reference which are
available at www. mitie.co.uk/investors_corporate-governance. Further details in relation to the composition, role and functioning of
each committee are set out below. In addition the Group operates an Executive Board. It is not a formally constituted committee of
the Board, operating solely under the delegated powers of the Chief Executive, but is charged with supporting the Chief Executive in
the operational management of the Group.

Executive Committee
The Executive Committee members are Ruby McGregor-Smith; Suzanne Baxter; Roger Goodman and Bill Robson. It functions primarily
as an approval and signing committee and meets on an ad hoc basis, as and when required, with powers speciﬁcally delegated to it
on a case by case basis by the Board in respect of speciﬁc matters.

Nomination Committee
As at 18 May 2009, the members of the committee are: Roger Matthews (committee Chairman); Ishbel Macpherson; David Jenkins;
and Ruby McGregor-Smith. During the year the Nomination Committee’s members were: David Jenkins and Ishbel Macpherson, both
of whom are independent Non-Executive Directors; Cullum McAlpine who was an independent Non-Executive Director prior to his
retirement as a Director; David Ord, who was the Chairman prior to his retirement as a Director; and Ruby McGregor-Smith, who is
a non-independent Executive Director. The committee is compliant with the Code in that throughout the reporting period there has
been a majority of independent directors if the Chairman is excluded for the purposes of this calculation. If the Chairman is included,
and deemed non-independent, for the purposes of this calculation then the committee was not compliant with Code A.4.1 for
the period from 31 July 2008 to 31 March 2009. During the year four meetings of the committee took place. 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. During the year the committee oversaw the Board succession planning as
described more fully above.

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MITIE Group PLC
Annual Report and Accounts 2009

Directors’ and governance report

Remuneration Committee
As at 18 May 2009, the members of the committee are: Ishbel Macpherson (committee Chairman); David Jenkins; Roger Matthews;
and Graeme Potts. During the year the Remuneration Committee’s members were Ishbel Macpherson; David Jenkins and Graeme
Potts, all of whom are independent Non-Executive Directors; Cullum McAlpine who was an independent Non-Executive Director prior
to his retirement as a Director; and, Roger Matthews, who was independent prior to 31 July 2008 and upon appointment as Chairman,
but who is no longer deemed independent under the Code, following his appointment as Chairman. The committee held four meetings
during the year. The Board has previously reported that a search has been initiated to recruit an additional Non-Executive Director to
join the Board and on 30 March 2009 announced the appointment of Terry Morgan with effect from 1 July 2009. Upon appointment
Terry will serve on both the Audit Committee and the Remuneration Committee and will assume the role of Chairman of the Remuneration
Committee from Ishbel Macpherson with effect from 10 July 2009.

The key duty of the Remuneration Committee is to make recommendations to the Board on the individual remuneration packages
of Executive Directors. As a part of this process the committee oversaw the administration of the Group LTIP, ESOS and SAYE schemes
(as further detailed in the Remuneration Report) and the benchmarking and review of Executive Director remuneration. During the
year the committee has been advised by the external remuneration consultant Kepler Associates in relation to Executive Director
remuneration through formal benchmarking with market and industry comparators. Kepler Associates do not have any connection
with the Group other than their formal appointment as advisers by the Remuneration Committee. The Board is responsible for reviewing
and setting the remuneration of the Non-Executive Directors. Further details on Executive and Non-Executive Director remuneration are
given in the Remuneration Report.

Audit Committee
Role of the Committee
The Audit Committee is generally responsible for:

– monitoring and reviewing the integrity of the Group’s ﬁnancial statements and of any formal announcements relating to the Group’s

ﬁnancial performance, and for reviewing any signiﬁcant ﬁnancial reporting judgements therein;

– monitoring and reviewing the independence and objectivity of the Group’s external auditors, the objectivity and effectiveness of the
audit process and the effectiveness and implementation of the Group policy on the provision of non-audit services (the Non-Audit
Services Policy);

– monitoring and reviewing the integrity and effectiveness of the Group’s internal ﬁnancial controls environment, internal audit function

and business risk management structures;

– making recommendations to the Board on shareholder resolutions for the appointment of, and remuneration for, external auditors.

The terms of reference of the committee are available at www.mitie.co.uk/investors_corporate-governance and include the
requirements of Rule 7.21 of the Disclosure and Transparency Rules (DTR) and the Code that the Company has a formally constituted
audit committee comprised of independent Non-Executive Directors.

The chairman of the committee will be available at the AGM to answer any questions about the work of the committee.

Committee composition
The committee consists entirely of independent Non-Executive Directors and is currently chaired by David Jenkins. During the year the
Audit Committee comprised David Jenkins; Ishbel Macpherson; Roger Matthews; and Cullum McAlpine. Cullum McAlpine ceased to
be a member of the committee upon his retirement from the Board on 31 July 2008. David Jenkins succeeded Cullum McAlpine as
Chairman of the committee on 31 July 2008. Roger Matthews left the committee immediately upon his appointment as Chairman
of the Company on 31 July 2008.

All members of the committee are considered as being appropriately experienced to fulﬁl their duties, whilst David Jenkins and Ishbel
Macpherson continue to be deemed, as at the date of this report, by the Board to have signiﬁcant, recent and relevant ﬁnancial
experience through their qualiﬁcations and their previous appointments.

The committee ordinarily consists of at least three members and requires two members to be present to be quorate. Between
31 July 2008 (the date of retirement of Cullum McAlpine and Roger Matthews ceasing to be a member of the committee upon his
appointment as Chairman) and 31 March 2009 the committee comprised only two members (contrary to Code C.3.1). As mentioned
above, the Board has previously reported that a search has been initiated to recruit a suitably qualiﬁed additional Non-Executive
Director to join the Board and serve on the Audit Committee and on 30 March 2009 announced the appointment of Terry Morgan with
effect 1 July 2009. Upon appointment Terry will serve on the Audit Committee and the Remuneration Committee.

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MITIE Group PLC
Annual Report and Accounts 2009

Governance

Meetings of the committee
During the year the Audit Committee held 3 meetings (see above summary). The Audit Committee invited the external auditors,
Chief Executive, Group Finance Director and Head of Business Risk to attend relevant parts of the meetings of the committee.
The matters under consideration at these meetings included:

– generally monitoring the Group’s ﬁnancial reporting process and the statutory audit of the annual and consolidated group accounts;

– the Half-yearly Financial 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 fees for the external auditors;

– the effectiveness of the external auditors including the appropriateness and skills of the audit team;

– compliance with the Non-Audit Services Policy by the external auditors and maintenance of auditor independence;

– the approval of the Group risk assurance framework and the internal audit plan for the year ending 31 March 2009 and for the year

ending 31 March 2010;

– the review of key internal audit reports and ﬁndings; and,

– generally monitoring the effectiveness of the internal control, audit and risk management systems and functions.

The committee also met separately with the external auditors and the Head of Business Risk without the presence of the
Executive Directors.

External auditors
The Audit Committee is committed to ensuring the independence and objectivity of the external auditors and conﬁrms that the
requirements of the Non-Audit Services Policy have been met throughout the year. The Audit Committee has approved a Non-Audit
Services Policy that ensures that the Audit Committee has visibility over the levels of non-audit work performed by the Auditors and
requires the consent of the chairman of the Audit Committee for any non-audit spend with the auditors that, on an annual basis
cumulatively exceeds 50% of the annual audit fee and/or where any item, regardless of amount, is considered signiﬁcant. The Audit
Committee is satisﬁed that this policy provides sufﬁcient control over the levels of non-audit spend with the Auditors whilst providing
sufﬁcient ﬂexibility for the Group Finance Director to approve expenditure on advice below those levels. This policy generally 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 MITIE 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 LLP also maintains its own internal controls designed to safeguard its independence.
A summary of the fees paid to the external auditors is given in Note 4 to the ﬁnancial statements.

Internal audit
The remit of the Audit Committee also includes monitoring the internal audit function (as reported above) and the arrangements by
which employees may raise concerns regarding any matters of ﬁnancial reporting or other perceived 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 risks that result in a material, unmitigated exposure to the Group.

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MITIE Group PLC
Annual Report and Accounts 2009

Directors’ and governance report

Internal control
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 upon 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.

Internal audit function
The Group operates an internal audit function which reports directly to the Group Counsel and the Chairman of the Audit Committee.
During the reporting period the size of the internal audit function has been doubled in recognition of the increasing size and complexity
of the Group and the increasing emphasis placed upon remediation, rectiﬁcation and re-audit of issues identiﬁed through the internal
audit programme.

Internal control systems: 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 business to work within. This
framework is designed to balance the need for Group-wide consistency and control with the autonomy that local management
require to develop and manage each operating business successfully. In order to delegate responsibilities clearly and effectively to the
Group’s operating businesses, and to ensure compliance with the matters reserved for the Board, a formal delegated authorities matrix
is issued to all operating subsidiaries that includes both ﬁnancial and non-ﬁnancial authorities and 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 has a team of specialist resources with individuals
responsible for speciﬁc functions including legal, health and safety, IT, insurance, human resources, tax, pensions, purchasing, ﬁnance
and business risk. Regular dialogue between these functions and the operating businesses provides additional support and forms a key
part of the system of internal control.

Internal control systems: information and communication
The Group maintains a number of systems and processes that report relevant information to Group executive management and the
Board as necessary. This includes ﬁnancial and non-ﬁnancial information regarding business performance, compliance with policy
and procedure, relevant regulations and business critical matters. At an operational level each division and business holds regular
executive 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 also regularly
attend these meetings.

Internal control systems: 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 the
Group and its principal businesses to consider strategic, operational, ﬁnancial and compliance risks and the effectiveness of the
mitigating controls based on a pre and post controls risk evaluation. The principal risks identiﬁed from this process are recorded on the
Group’s risk register which is maintained by the Group’s Business Risk function. This register is reviewed periodically (at least twice per
year) by the Board.

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 set out above.
Speciﬁcally, 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 internal audit reports from the business risk function and via meetings with
the Head of Business Risk. 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 Business Risk who reports to the General Counsel 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 Executive Directors on their control responsibilities and in particular, those relating to speciﬁc matters reported
by internal or external audit.

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MITIE Group PLC
Annual Report and Accounts 2009

Governance

Reviewing the effectiveness of the system of internal control
The Board performs a formal annual 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 central team function and an independent report from the Head of Business Risk
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.

Auditors
Disclosure of information to the auditors
Each of the Directors in ofﬁce as of the date of approval of this Annual Report and Accounts conﬁrms that:

– so far as he/she is aware, there is no relevant audit information (being information required by the auditors in the preparation of their

report) of which the Company’s auditors are unaware; and

– he/she has 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 and to establish that the Company’s auditors are aware of such information.

This conﬁrmation is given, and should be interpreted, in accordance with Section 234ZA of the Companies Act 1985.

Re-appointment of auditors
On 1 December 2008, Deloitte & Touche LLP changed its name to Deloitte LLP. Deloitte LLP has expressed their willingness to continue
in ofﬁce as auditors and the resolution to reappoint them will be proposed at the forthcoming AGM.

Share capital and shareholder matters
Capital structure and powers of shareholders
Details of changes to the Company’s share capital are given in Note 27 to the ﬁnancial statements. The Company has a single class
of shares – 2.5p Ordinary shares – with no right to any ﬁxed income and with each share carrying the right to one vote at general
meetings of the Company. Under the Company’s Articles of Association holders of Ordinary shares are entitled to participate in any
dividends pro rata to their holding. The Board may propose and pay interim dividends and recommend a ﬁnal dividend for approval
by the shareholders at the AGM. A ﬁnal dividend may be declared by the shareholders in a general meeting by ordinary resolution,
but such dividend cannot exceed the amount recommended by the Board.

Certain shares that are issued as consideration upon acquisition by the Company of the shares of minority shareholders in MITIE
Model companies have restrictions placed upon them that prevent the transfer of such shares for periods of up to two years
following allotment. Otherwise, there are no speciﬁc restrictions on the size of any shareholding or on the transfer of shares, which are
both governed by the provisions of the Articles of Association of the Company (available at www. mitie.co.uk/investors_corporate-
governance) and prevailing legislation. The Directors are not aware of any agreements between Company shareholders that may
result in restrictions on the transfer of securities or on voting rights. No person has any special rights of control over the Company’s
share capital.

Details of employee share schemes are set out below and in Note 33 to the Accounts. Shares held by the MITIE Employee Beneﬁt
Trust 2007 and the MITIE Employee Beneﬁt Trust 2008 abstain from voting.

The 2008 AGM authorised:

– the Directors to allot (under s80 Companies Act 1985) up to 118,691,000 shares (representing 37.5% of the issued share capital as
at the date of the Notice of AGM) – during the reporting period, the Directors utilised this authority (and the preceding authority)
to allot 6,194,836 shares;

– the dis-application (under ss94-95 Companies Act 1985) of pre-emption rights over allotted shares up to a total of 15,841,116 shares

(representing 5% of the issued share capital as at the date of the Notice of AGM); and

– the Company to make market purchases of its own shares up to a total of 31,682,321 shares (representing 10% of the issued share

capital as at the date of the Notice of AGM).

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MITIE Group PLC
Annual Report and Accounts 2009

Directors’ and governance report

Further details of these authorisations are available in the notes to the 2008 Notice of AGM (available at www. mitie.co.uk/investors).
Shareholders are referred to the 2009 Notice of AGM (which accompanies this report and/or is available at www. mitie.co.uk/investors)
which contains similar such provisions. During the year to 31 March 2009 there have been no purchases by the Company of MITIE
shares. The exact amount and timing of future purchases will be determined by the Company and will be dependent on market
conditions and other factors. It is the Company’s present intention to cancel any shares it buys back, rather than hold them in treasury,
but this policy will be reviewed on a case by case basis. Further details on the proposed renewal of powers for share buyback and the
allotment of shares in the Company are provided in the Notice of AGM.

With regards to the appointment and replacement of Directors, the Company is governed by its Articles of Association, the Code,
the Companies Acts and related legislation. The Articles may be amended by special resolution of the shareholders. The powers of the
Directors are described in the Matters Reserved to the Board (available at www. mitie.co.uk/investors_corporate-governance) and as
set out above.

Under the terms of certain shareholder agreements relating to MITIE Model companies and the articles of association of those
companies, certain minority shareholders in such companies may provide an option for the purchase by the Company of their minority
shares. The mechanism for calculating the price to be paid in respect of such transfer is transparent, on an arms-length basis, and in
accordance with the pricing structure generally applicable for other transfers under the MITIE Model. Details of these structures are
generally available (to the extent incorporated into the articles of association for individual MITIE Model companies) from Companies
House at www.companieshouse.gov.uk. There are also a number of other agreements with provisions that take effect, alter or
terminate upon a change of control of the Company such as bank facility agreements, property lease arrangements and employee
share plans. None of these are considered to be signiﬁcant in terms of their likely impact on the business or the Group as a whole.
The Directors are not aware of any agreements between the Company and its directors or employees that provide for compensation
for loss of ofﬁce or employment that occurs solely because of a take-over bid.

Substantial interests in share capital
As at 15 May 2009 the Company has been notiﬁed of the following signiﬁcant holdings of voting rights in its shares under the Disclosure
and Transparency Rules:

Majedie Asset Management Limited

Invesco Limited

Mirabaud Investment Management Limited

Legal & General Group PLC

Fidelity International Limited

Number of
Ordinary shares
of 2.5p each

% of
share capital

16,327,802

16,135,005

15,673,517

12,666,918

10,065,118

5.05%

4.99%

4.95%

3.92%

3.22%

Shareholder communications
The Board 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 Half-yearly Financial Report, the Annual Report and
Accounts, the Corporate Responsibility 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 Half-yearly Financial Report and Preliminary
Results announcements which are led by the Chief Executive and Group Finance Director. The Chairman and Senior Independent
Non-Executive Director, are available for additional meetings with shareholders upon request. The Company believes that such
meetings should be at the instigation of shareholders and should not be at the active solicitation of the Company. During the reporting
period, no such requests were received by the Company, although all the Non-Executive Directors were present at the 2008 AGM
and entered into direct discussions with shareholders both with, and without, Executive Directors present. Latest Group information,
ﬁnancial reports, corporate governance and CR matters, Half-yearly Financial Report and Preliminary Results presentations, major
shareholder information and all announcements are made available to shareholders via the MITIE website (www.mitie.co.uk) 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 Board 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 detailed analyst feedback
following the Half-yearly Financial Report and Preliminary Results presentations. The AGM also allows shareholders to address and
discuss any issues surrounding the Group directly with the Executive and Non-Executive Directors.

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MITIE Group PLC
Annual Report and Accounts 2009

Governance

Electronic communications
The Directors remain committed to improving and extending the methods in which the Company communicates with its shareholders
and wish to move towards an increase in electronic communication. At the 2007 AGM, shareholders approved certain amendments
which aligned the Company’s Articles of Association with the new provisions of the Companies Act 2006 in relation to electronic
shareholder communications. The Board has been disappointed with the level of uptake by shareholders to date and would wish
to encourage all shareholders to register to receive communications from the Company electronically thus realising the environmental
and cost beneﬁts of reduced printing and carriage of hard copy reports and other communications. Details on how to register are
provided on the inside back cover of this report.

AGM
The 2009 AGM will be held at the ofﬁces of UBS, 2 Finsbury Avenue, London EC2M 2PP at 2.30pm on 10 July 2009. The Notice of AGM will
be available at www. mitie.co.uk\investors on 8 June 2009.

Operational matters
Employee involvement and employee equity-based incentivisation
The Board remains committed to fostering and developing a culture of employee involvement in the business through communication
with employees and equity involvement whereby employees are enabled to build a stake in the Company through the Company’s
various equity-based incentive schemes.

Direct communication with employees continues to have a high priority. The Group communicates with employees through the use
of: Group-wide mailings and updates; employee-focused initiatives; the use of Group-wide and business speciﬁc intranet sites; and,
provision of access to broadcasts of periodic ﬁnancial presentations. 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.
The Group continues to operate its Group-wide MITIE Stars programme to recognise and reward exceptional performance by its
people and in 2008 launched MITIE’s Got Talent as a Group-wide talent contest to encourage employee engagement and
recognition. The Group CR Report contains further details of these initiatives. Employees remain actively involved in the Group’s
activities via an employee forum. This year the forum held two meetings chaired by the Group HR director. The Board will continue to
seek increasing involvement and activity of the employee representatives.

The Board believes that the Group’s culture of employee equity involvement is a signiﬁcant driver in the Group’s growth performance
and that this assists in attracting and retaining skilled and committed employees. During the year the Group has continued to operate
its Long Term Incentive Plan (LTIP) to incentivise and reward senior members of the MITIE management team and its Executive Share
Option Scheme (ESOS) for certain other employees below Board level. During the reporting period shareholders approved
modiﬁcations to the Group’s SAYE Scheme (SAYE) to reduce the savings contract period from ﬁve years to three years with the aim of
increasing employee uptake. The Board is pleased to report that uptake in the subsequent SAYE award increased against uptake in
2007. The Board will continue to review and, where appropriate, recommend amendments to equity-incentive schemes, in order to
maximise the effectiveness and incentive value of such schemes.

The LTIP and the ESOS are both discretionary schemes and are therefore not open to application by all employees of the Group.
The SAYE, an Inland Revenue approved scheme, is open to all UK employees. The ESOS, established in 2001, has been approved by
Her Majesty’s Revenue and Customs (HMRC) and options over shares to an individual limit of £30,000 can be awarded under the
approved element of the scheme. Options have in the past been awarded under this scheme to Executive Directors but, following the
introduction of the LTIP, the ESOS has been focused on employees below main Board level. Under the ESOS, there is a limit on the grant
level set at 100% of an individual’s base salary and the scheme has, following changes to the scheme approved by shareholders at
the 2007 AGM, a single performance threshold for vesting of the options – average growth in earnings per share over the three-year
vesting period must exceed inﬂation (measured as RPI) plus 4%. The scheme permits the grant of share appreciation rights and the
settlement of outstanding unapproved options with share appreciation rights. Further details of grants under the three equity-based
incentive schemes are provide in Note 33 to the ﬁnancial statements.

The Group has historically grown by giving entrepreneurial managers the opportunity to create wealth by taking the risk of starting a
new business, taking equity stakes at fair value in those new businesses in conjunction with MITIE and then, dependent on a pre-agreed
pricing structure, offering to sell that stake to MITIE predominantly in exchange for MITIE shares, at the option of MITIE. This incentivisation
scheme typically provides for such managers to elect to offer their stake in their business to MITIE between the ﬁfth and tenth years
from the date of establishment of the business. Recipients of shares under this incentivisation scheme are generally restricted from
selling the MITIE shares received as consideration for a minimum of two years. The Board believes that this is a unique business model
that has driven MITIE’s past performance and continues to ensure a close alignment of interest between MITIE shareholders and the
management and employees of the Group. It is the Board’s current intention to continue to utilise such structures.

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MITIE Group PLC
Annual Report and Accounts 2009

Directors’ and governance report

Employee involvement, disability and opportunities
The Board remains committed to developing further 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, sexual orientation or any other aspect of diversity. Applications from disabled persons are always fully
considered, bearing in mind the aptitudes of the applicant concerned. It is the policy of the Group that the training, career
development and promotion of disabled persons (including those who become disabled whilst employees of the Group) should,
as far as reasonably possible, be identical to that of other employees.

Financial instruments
The Group’s ﬁnancial instruments comprise bank loans, ﬁnance leases, overdrafts and performance guarantees. In addition, various
other ﬁnancial instruments such as trade creditors and trade debtors arise from its trade. The use of interest rate swaps and currency
swaps are used to manage interest and currency risk when necessary or material. The principal objective of these instruments is to raise
funds for general corporate purposes and to manage ﬁnancial risk. Further details of these instruments are given in Note 22 to the
ﬁnancial statements.

Payment of creditors
The Group’s policy is to comply with the terms of payment agreed with suppliers, preferably on the Group’s standard purchasing terms
(as notiﬁed to suppliers), or otherwise to adhere to the suppliers’ standard terms. At 31 March 2009, the Group had 34 days’ purchases
outstanding (2008: 40 days).

Fixed values
The Board does not believe that there is any material difference between the book value and the current open market value of the
Group’s interests in land and buildings.

Events after the balance sheet date
There have not been any signiﬁcant events since the balance sheet date.

Future developments
The operating review sets out the Board’s view on likely future developments of the Group.

Research and development
Given the nature of the Group’s activities it does not carry out any material research and development work.

Donations
Donations to charity and community projects made during the year amounted to £184,018 (2008: £151,154). It is the Group’s policy
not to make political donations, and during the reporting period no political contributions were made (2008: £nil). The total value of
community investment as disclosed in more detail in our CR Report 2009 was £603,659 (2008: £592,132).

Branch ofﬁces
The Group does not operate any registered branch ofﬁces outside of the UK but does have subsidiary companies in Guernsey and
Jersey and operates outside of the UK on a client-speciﬁc basis. Further details of the Group’s principal subsidiaries are given in Note 36
to the ﬁnancial statements.

By order of the Board

Marie-Claire Haines
Company Secretary

18 May 2009

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MITIE Group PLC
Annual Report and Accounts 2009

Governance

Statement of Directors’ responsibilities

Statement of Directors’ responsibilities in respect of the accounts
The Directors are responsible for preparing the Annual Report and Accounts. The Directors are required to prepare the ﬁnancial
statements for the Group in accordance with International Financial Reporting Standards as adopted by the EU (IFRS) and have
chosen to prepare Company ﬁnancial statements in accordance with United Kingdom Generally Accepted Accounting Practice
(UK GAAP).

In the case of International Financial Reporting Standards (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 IFRS where applicable. The 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 IFRS requirements 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 judgements 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; safeguarding the assets; taking reasonable steps for the prevention and detection of fraud and other
irregularities; and, the preparation of a Directors’ report and Directors’ remuneration report which comply with the relevant requirements
of the Companies Acts.

The Directors are also responsible for the maintenance and integrity of the Company website. Financial statements published by the
Company on this website are prepared in accordance with UK legislation which may differ from legislation in other jurisdictions.

To the best of each Director’s knowledge: the ﬁnancial statements, prepared in accordance with the applicable set of accounting
standards and contained within this Annual Report and Accounts, give a true and fair view of the assets, liabilities, ﬁnancial position
and proﬁt or loss of the Group and the undertakings included in the consolidation taken as a whole; and, the management report,
which is incorporated into the Directors’ report includes a fair review of the development and performance of the business and the
position of the Company and the undertakings included in the consolidation taken as a whole, together with the description of the
principal risks and uncertainties they face.

By order of the Board

Ruby McGregor-Smith
Chief Executive

18 May 2009

Suzanne Baxter
Group Finance Director

18 May 2009

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MITIE Group PLC
Annual Report and Accounts 2009

Remuneration report

Introduction
This remuneration report summarises MITIE’s remuneration policy and particularly, its application in relation to the Directors.
Where this information is required to be audited by MITIE’s auditors we have marked this as ‘audited information’. Shareholders will
be able to vote on this remuneration report at the 2009 AGM. Further details are contained in the Notice of AGM which is available
at www.mitie.co.uk/investors.

The role of the Remuneration Committee
Details of the composition and responsibilities of the Remuneration Committee are given in the Directors’ and Governance Report
on page 42. During the reporting year, committee meetings have included consideration of the following items:

– reviewing the external competitiveness of the structure and value of Executive Director remuneration;

– reviewing and approving Executive Director base salaries, annual bonus payments and equity-related incentive awards;

– reviewing and approving awards under the 2008/9 bonus plan and setting award levels and targets for the 2009/10 bonus plan;

– reviewing and approving vesting levels for grants made under the MITIE Group PLC Executive Share Option Plan (ESOS) and MITIE

Group PLC SAYE Scheme (SAYE);

– setting individual award levels and approving structure and performance targets for the MITIE Group PLC Long Term Incentive Plan

(LTIP), and setting overall award levels and approving structure and performance targets for all share schemes;

– reviewing, amending and approving the draft remuneration report to shareholders and the remuneration related resolutions to be

put to the shareholders at 2009 AGM.

The terms of reference of the Committee are available on the Group’s website www.mitie.co.uk and upon request from the
Company Secretary at thecompanysecretary@mitie.co.uk

We have structured our remuneration report into the following parts:

Executive remuneration at a glance
Key messages along with key information on policy and pay.

Remuneration explained
An explanation of our overall reward structure and performance during the year.

Remuneration in detail
Full audited detailed disclosure of our remuneration.

Executive remuneration at a glance
Principles of our remuneration policy

Performance linked

Shareholder aligned

Comprehensive and simple

Company performance determines a significant element of our remuneration.
Failure to achieve success is reflected in our performance linked pay elements.

Our discretionary schemes are based on EPS growth aligning the interests
of shareholders and members of our senior executive team.

Our remuneration policy is not overcomplicated and allows our executives
to concentrate on growth of the Group.

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MITIE Group PLC
Annual Report and Accounts 2009

Governance

Executive remuneration explained
General remuneration policy
The remuneration policy for the Company’s Executive Directors and other Group senior executives is shaped by the need to align the
interests with the interests of MITIE’s shareholders. The policy has particular regard to the Company’s and the Group’s long-standing
culture of encouraging equity ownership in order to achieve this alignment. The Committee, and the Board, continue to believe that
the principle of equity incentivisation has been a key driving force in the past success of the Group and that consequently, in order to
maintain and develop further MITIE’s performance culture, the remuneration packages of Executive Directors and other Group
executives should continue to contain significant performance-related equity-based elements.

Ongoing assessment
The Committee is advised by its external remuneration consultants, Kepler Associates; in addition, the Group Human Resources Director
provides guidance to the Committee members. Kepler Associates provide no other services to the Company.

The Committee tests the remuneration structure regularly to ensure that it remains aligned with business needs and is appropriately
positioned relative to the market. Benchmarking is conducted against sector and size comparators, in respect of base salary, total
cash and total remuneration, provided by our external remuneration consultants. The Committee also takes account of a range of
other factors when determining appropriate salary levels including market conditions and the responsibilities and skills of the individual
Directors. The Committee believes that the executive team should be motivated by the success of the Company and as such upper
quartile performance should be rewarded with an upper quartile package.

At the time of signing this report the Committee is reviewing the structure of the Executive Director remuneration package to ensure
it remains appropriate for 2009. The Committee will confirm the agreed structure following consultation with the Company’s major
shareholders, and disclose any changes in the 2009/10 Remuneration report.

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MITIE Group PLC
Annual Report and Accounts 2009

Remuneration report

Remuneration package
The overall package for Executive Directors consists of a fixed element (salary and certain benefits) and a variable element (annual
performance-related bonus and long-term equity-based incentives). The balance between these fixed and variable elements is set
out in this Remuneration Report.

Base salary – Reviewed annually, as described above.

Beneﬁts – The benefits package for the Executive Directors consists of private healthcare and the provision of a company car
allowance.

Annual bonus – Variable remuneration is designed to drive further MITIE’s performance. The annual bonus scheme is structured to align
a significant element of the remuneration of Executive Directors with short-term Company performance. Bonuses to Executive Directors
are awarded at a maximum of 100% of base salary, dependent on the achievement of Group budgeted performance levels or
performance against the budget of the respective areas of the business within the individual Director’s direct control. Targets were
achieved in the year ended 31 March 2009, resulting in the payment of maximum bonuses at a rate of 100% of salary.

The Committee is currently reviewing the structure of the 2009 annual bonus and will finalise the plan following consultation with the
Company’s major shareholders.

Share based incentives – The LTIP and the Executive Director Share-ownership Policy are designed to engender long-term decision
making and sustainable growth:

LTIP
Historically, Executive Directors and senior executives were incentivised through a mix of options granted under the ESOS and
through shareholdings in the Company acquired through equity participation in subsidiary companies of the Group that were
structured in accordance with the MITIE Model. In 2007 this policy was replaced by the sole use of awards granted under the LTIP.
Certain Executive Directors still retain options granted under the ESOS and details of this scheme can be found on page 55. There is no
re-testing of performance conditions for any incentive programme.

The LTIP was established in 2007 and is the principal equity-based incentive scheme for Executive Directors. Awards may be granted,
under a joint-ownership structure or through direct grants, in the form of nil-cost options, conditional shares or forfeitable shares.
The Committee may also decide to grant cash-based awards of an equivalent value to share-based awards or to satisfy share-based
awards in cash, although it does not currently intend to do so. An award may not be granted after 26 July 2017. No payment (other
than in respect of any individual recipients electing to pay income tax and national insurance, where appropriate) is required for the
grant of an award.

In 2008, with the approval of shareholders, the upper limit on the market value (as at grant) of awards that an individual Executive
Director may receive in any ﬁnancial year was raised from 100% to 200% of annual base salary in that ﬁnancial year. The Committee
only intends to use this upper limit in respect of awards to Ruby McGregor-Smith the Chief Executive and Suzanne Baxter the Group
Finance Director and the previous upper limit of 100% of annual base salary will continue to be applied to other Executive Directors.
In exceptional circumstances, such as recruitment or retention, the rules currently allow for this limit to be increased to 250% of any
employee’s annual base salary. As part of its review of the change in the upper grant limit, the Committee considered the introduction
of a second performance target for awards of over 100% of an Executive Director’s base salary. The Committee decided against this
believing it would dilute the clarity and simplicity of the scheme, and that a single target is more in keeping with the other successful
equity-based incentive schemes that operate within the Group.

Awards are not transferable, except on death, and are not pensionable. The scheme rules, in line with standard industry practice,
contain provision for pro-rata vesting in the event of retirement, redundancy, disability, and/or death. In the event of a change-of-
control, awards will be pro-rated both for time and performance, subject to the discretion of the Committee.

The Committee continues to believe that EPS is the most appropriate long-term performance measure for MITIE. It brings the advantages
of simplicity and visibility of the value of the award which the Committee believes enhances the LTIP’s effectiveness as an incentive
tool. Awards will normally vest after three years provided that certain performance criteria have been met. All awards are subject
to performance conditions that require adjusted EPS, less inflation (measured by the retail prices index – RPI), to exceed certain
performance thresholds over a three-year period. Where EPS growth is less than inflation plus the lower performance threshold
per annum none of the awards will vest. Awards vest in full for EPS growth equal to inflation plus the upper performance threshold.
Vesting is on a straight-line basis for performance between these levels. For LTIP awards made in 2008, the lower and upper performance
thresholds were RPI+5% p.a. and RPI+14% p.a. respectively. The Committee is currently reviewing the EPS targets that will apply to 2009
LTIP awards to ensure that these remain stretching and achievable in the current economic climate.

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MITIE Group PLC
Annual Report and Accounts 2009

Governance

Share ownership policy
A share-ownership policy for Executive Directors was introduced in 2007 at the same time as the LTIP. Under this policy, all Executive
Directors are required, over time, to build and maintain a shareholding in the Company worth 100% of base salary. During 2008,
this requirement was increased to 150% in respect of any Executive Director who is granted an LTIP award of more than 100% of their
base salary. The Committee recognises that the principal mechanism for building up this holding will be on the exercise of LTIP awards
and accordingly, until such time as the shareholding requirement is met, Executive Directors will be expected to retain no fewer than
50% of shares (net of taxes) that vest under the LTIP. For the coming year, we do not propose to amend the share ownership policy.

R McGregor-Smith

S C Baxter

N R Goodman

W Robson

Target holding as
at 1 May 2009

221,955

145,983

138,661

Number of Ordinary
shares owned
as at 31 March 2009

183,799

10,000

899,421

1,500,713

% of target
holding achieved as
percentage of salary
as at 1 May 2009

83%

649%

1,082%

Non-Executive Director remuneration
The remuneration for the Chairman is recommended by the Committee for approval by the Board and reﬂects the responsibilities
and commitment of this role. The remuneration level for the role was last reviewed in 2007, following receipt of advice from external
remuneration consultants in relation to market comparators, and was maintained at the level paid to the previous Chairman on the
appointment of Roger Matthews on 31 July 2008.

The fees for the Non-Executive Directors are set by the Chairman and the Executive Directors and they are reviewed annually.
The fee level is designed both to recognise the contribution and responsibilities of the role and to attract individuals with the experience
and skills required to contribute to the future development of the Board and the Group. The Non-Executive Directors are paid a basic
fee with an additional fee for chairmanship of committees, together with expenses incurred in carrying out their duties on behalf
of the Company. Non-Executive Directors are not eligible to participate in any of the Company’s share schemes or the annual
bonus scheme, nor do they receive pensions or ancillary beneﬁts. Fee levels for the reporting year were maintained at 2007 levels.
Further details of fees paid to Non-Executive Directors are provided in the audited section of this report.

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MITIE Group PLC
Annual Report and Accounts 2009

Remuneration report

Remuneration in detail
Introduction
This section of the report provides detail required under statute or under best practice guidelines that has not already been provided
above. Where this information is required to be audited by MITIE’s auditors we have marked this as ‘audited information’. We believe
that this report complies with the principles of good corporate governance in relation to directors’ remuneration in accordance with
the Combined Code 2006, the Directors’ Remuneration Report Regulations 2002, relevant company law, and the Listing Rules of the
Financial Services Authority. Other than as set out below, no other changes in Directors’ interests have taken place since 1 April 2009
and no equity-based incentives have been granted to any Director since 1 April 2009.

Directors’ remuneration
Table 1 provides details of Directors’ remuneration paid to or receivable by each person who served as a Director during the year.

Table 1: Directors’ remuneration (audited information)

Executive Directors

R McGregor-Smith

S C Baxter

N R Goodman

W Robson

Non-Executive Directors

R Matthews

I R Stewart

D S Jenkins

I J S Macpherson

G Potts

D C Ord (Chairman)(1)

C McAlpine(1)

Total

Base
salary/fees
£’000

Performance
related
bonuses
£’000

Beneﬁts
£’000

Pensions
£’000

2009
Total £’000

2008
Total £’000

435

290

275

107

435

290

275

–

898

636

578

107

1,614

1,275

3,030

769

571

507

121

2,765

Notes:
(1) David Ord and Cullum McAlpine retired as Directors on 31 July 2008.

Pension and benefits
The pension beneﬁts of Directors who are members of the MITIE Group PLC Deﬁned Beneﬁt Pension Scheme are set out in Table 2
below. The transfer values of the Directors’ accrued beneﬁts under the deﬁned beneﬁt pension scheme calculated in a manner
consistent with retirement beneﬁt schemes (which do not represent a sum paid or payable to the individual Director) are set out in
Table 3. Suzanne Baxter is not a member of the MITIE Group PLC Deﬁned Beneﬁt Pension Scheme as the scheme was closed to new
entrants in 2005. Pension contributions for Suzanne Baxter at a rate of 13.5% of base salary (2008: 13.5%) are paid into a separate
deﬁned contribution pension scheme (see Table 1).

Table 2: Deﬁned beneﬁt pension scheme beneﬁt (audited information)

R McGregor-Smith

N R Goodman

W Robson

Increase in
Accrued
accrued
pension pension during
the year
£’000

31 March 2008
£’000

Real increase
in accrued

Accrued
pension
pension 31 March 2009
£’000

£’000

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MITIE Group PLC
Annual Report and Accounts 2009

Governance

Table 3: Deﬁned beneﬁt pension scheme transfer values (audited information)

Transfer values
31 March 2008
£’000

Contributions
made by
the Director
£’000

Increase in
accrued
pension
over the year
£’000

Transfer
value of
pension
increase
(after inﬂation,
net of

Transfer value
contributions) 31 March 2009
£’000

£’000

R McGregor-Smith

N R Goodman

W Robson

389

367

(2)

413

367

Equity-based incentive schemes
As set out above, the Group operates four formal equity-based incentive schemes. The interests of Directors’ in each of these schemes
is set out in Tables 4 and 5. No options have been issued to any Directors under the MITIE Group PLC SAYE Scheme. There has not been
any variation in the terms and conditions governing any of the grants listed below since the relevant grant date. No price is payable
upon award in respect of ESOS or LTIP awards (other than income tax and National Insurance in respect of certain LTIP awards).
Applicable exercise prices for options awarded are set out in Table 4. The performance conditions relating to the awards to Directors
detailed below are the same as for any other member of the schemes who received awards at the same time.

The share options detailed in Table 4 were granted under the ESOS and the performance conditions that applied at the date of
grant require a percentage growth in the Company’s earnings per share equal to or in excess of 10% per annum compound over
the period from the date of grant of the option to the date on which the option ﬁrst becomes exercisable. Since the grant to Ruby
McGregor-Smith and Suzanne Baxter detailed in Table 4, there have been no grants to Directors under the ESOS (both the unapproved
part and the HM Revenue & Customs approved part), and it is the Company’s policy that equity-based incentives for Directors in the
current reporting period will be based solely upon LTIP awards.

The LTIP awards made in 2007 and 2008 (detailed in Table 5) are subject to the performance conditions that require adjusted EPS,
less inﬂation (measured by the retail prices index – RPI), to exceed certain performance thresholds over a 3-year period. Where EPS
growth is less than inﬂation plus 5% per annum, none of the awards will vest. Awards vest in full for EPS growth equal to inﬂation plus
14% per annum. Vesting will be on a straight line basis for performance between these levels.

Table 4: Director interests in options granted under the MITIE Group PLC 2001 Executive Share Option Scheme (audited information)

ESOS options
outstanding at
1 April 2008

Granted
during
the year

Lapsed
during
the year

Exercised
during
the year

ESOS options
outstanding at
31 March 2009

Exercise price
p

Exercisable
between

R McGregor-Smith

Unapproved scheme

S C Baxter

Unapproved scheme

Approved scheme

100,000

35,000

15,000

–

100,000

15,000

35,000

162

191

06-08/06-15

06-09/06-16

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MITIE Group PLC
Annual Report and Accounts 2009

Remuneration report

Table 5: Director interests in nil-cost options granted under the MITIE Group PLC 2007 Long Term Incentive Plan (audited information)

LTIP options Granted during
the year at
212.25p/share*

outstanding at
1 April 2008

Lapsed
during
the year

Exercised

LTIP options
during outstanding at
31 March 2009

the year

R McGregor-Smith

S C Baxter

N R Goodman

W Robson

145,440

–

409,894

102,201

–

273,262

94,340

–

129,564

94,340

–

129,564

–

145,440

409,894

102,201

273,262

94,340

129,564

94,340

129,564

Exercise Price
p

Exercisable
between

Nil cost

07-10/07-11

Nil cost

08-11/08-12

Nil cost

07-10/07-11

Nil cost

08-11/08-12

Nil cost

07-10/07-11

Nil cost

08-11/08-12

Nil cost

07-10/07-11

Nil cost

08-11/08-12

*The Directors acquired a conditional joint beneficial interest with the MITIE Employee Benefit Trust 2008 in the shares awarded under the LTIP scheme in 2008.
The full beneficial interest will only transfer to the Director if the performance criteria applicable to the award are met.

Share dilution
The Company has stated its intent to manage dilution rates within the ABI guidelines of 10% of issued Ordinary share capital in respect
of both all-employee schemes and discretionary schemes (the ESOS, LTIP and SAYE) and 5% in respect of discretionary schemes (the
ESOS and the LTIP). In calculating compliance with these guidelines the Company allocates available ‘headroom’ on a ten-year ﬂat-
line basis, making adjustments for projected lapse rates and projected increases in issued share capital. Options granted under the LTIP
are satisﬁed through the market-purchase of shares held by MITIE Group PLC EBT 2007 and the MITIE Group PLC EBT 2008. The potential
dilution of the Company’s issued share capital is set out in Table 6 in respect of all outstanding options granted under the Company’s
equity-based incentive schemes and which are to be satisﬁed through the allotment of new shares.

Table 6: Share dilution

All share plan (maximum 10%)

Discretionary share plans (maximum 5%)

Current
total
dilution

7.7%

4.0%

Total shareholder return performance
Table 7 shows the total shareholder return performance of MITIE shares compared with the FTSE 250 and FTSE 350 Support Services
indices over a 5-year period to 31 March 2009. The Committee is of the opinion that these comparators provide a clear picture of the
performance of MITIE relative to a range of companies of comparable size as well as a speciﬁc group of companies within the same
sector. Total shareholder return is calculated according to the Directors’ Remuneration Report Regulations 2002 and assumes that all
dividends are reinvested.

The market price of the Company’s shares as at 31 March 2009 was 187.00p. The highest and lowest prices during the year were
245.00p and 158.25p respectively.

Table 7: MITIE 5-year total shareholder return

MITIE
FTSE 250
FTSE 350

300

250

200

150

100

)
0
0
1
o
t

d
e
s
a
b
e
r
(
R
S
T

Apr 2004

Source: Data stream

Apr 2005

Apr 2006

Apr 2007

Apr 2008

Apr 2009

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MITIE Group PLC
Annual Report and Accounts 2009

Governance

Directors’ interests in shares
Tables 8 and 9 detail the beneﬁcial interests of the Directors (who were in ofﬁce on 31 March 2009) in the share capital of the Company
and in the share capital of certain of the Company’s subsidiary companies respectively. The interests of Directors in these subsidiary
companies were acquired under the MITIE Model, further details of which are given in the Directors’ and governance report on page 47.
No such interests have been acquired by Directors since 2004 and it is the Company’s policy that Directors will not be entitled to
participate in any MITIE Model investments in the current reporting period.

Table 8: Director share ownership audited

Number
of Ordinary
MITIE shares
owned as at
1 April 2008
(or date of
appointment
if later)

Number
of Ordinary
MITIE shares
owned as at
31 March 2009

183,799

10,000

899,421

111,498

10,000

872,108

1,500,713

60,000

20,000

2,020,000

50,000

25,651

15,000

50,000

25,651

15,000

Number
of shares
31 March 2009

Number
of shares
1 April 2008

2,000

–

4,000

4,500

2,000

1,500

10,000

4,500

Executive Directors:

R McGregor-Smith

S C Baxter

N R Goodman

W Robson

Non-Executive Directors:

R Matthews

I R Stewart

D S Jenkins

I J S Macpherson

G Potts

Table 9: Director interests in MITIE subsidiary companies (under the MITIE Model) audited

R McGregor-Smith

MTIIE Engineering Services (Edinburgh) Ltd

MITIE Engineering Services (West Midlands) Ltd

MITIE Services (Retail) Ltd

MITIE Transport Services Ltd

N R Goodman

MITIE Catering Services Ltd

B Ordinary shares of £1 each

C Ordinary shares of £1 each

B Ordinary shares of £1 each

–

8,333

On 19 March 2009, MITIE Group PLC acquired the minority interest in MITIE Engineering Services (West Midlands) Ltd, including
Ruby McGregor-Smith’s holding of 1,500 B Ordinary shares of £1 each. The consideration paid to Ruby McGregor-Smith of £1 was
paid in cash. On 28 August 2008, MITIE Group PLC acquired 60% of the minority interest in MITIE Services (Retail) Ltd, including 6,000
B Ordinary shares of £1 each held by Ruby McGregor-Smith. The consideration paid to Ruby McGregor-Smith of £158,160 was paid
in 72,301 MITIE Group PLC shares of 2.5p each and £1.56 in cash. On 28 August 2008, MITIE Group PLC acquired the minority interest
in MITIE Catering Services Ltd, including Roger Goodman’s holding of 8,333 B Ordinary shares of £1 each. The consideration paid to
Roger Goodman of £59,747.61 was paid in 27,313 MITIE Group PLC shares of 2.5p each and £0.42 cash.

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MITIE Group PLC
Annual Report and Accounts 2009

Remuneration report

Employment contracts for Executive Directors
The Executive Directors’ service contracts are available for inspection at MITIE’s registered ofﬁce, the head ofﬁce and at the AGM.
All the Executive Directors have rolling service contracts which provide for a maximum of 12 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:

Table 10: Executive Director service contracts

Ruby McGregor-Smith

Suzanne Baxter

Roger Goodman

Bill Robson

Date of
agreement

Notice
period

01-Apr 03

12 months

10-Apr 06

12 months

01-Apr 03

12 months

01-Apr 03

12 months

Policy on external appointments
The Board recognises that the appointment of Executive Directors to non-executive positions at other companies can be beneﬁcial
both for the individual Director and the wider Group through the broadening of their experience and knowledge. Roger Goodman
receives £40,000 per annum in fees in respect of his role as Chairman of Networkers International plc. Ruby McGregor-Smith receives
£45,000 per annum in fees in respect of her role as a Non-Executive Director of Michael Page International plc. As set out in Directors’
and governance report, Executive Directors are entitled to retain any fees earned from external appointments.

Non-Executive Directors engagement terms
The terms of appointment of the Non-Executive Directors’ are available for inspection at MITIE’s registered ofﬁce, the head ofﬁce and
at the AGM. The Non-Executive Directors are engaged for terms of three years which are terminable on six months’ notice.

Table 11: Non- Executive Director engagement terms

Date of
engagement
terms

Notice
period

Date of
leaving

Notes

Roger Matthews

04-Dec 06

6 months

Ian Stewart

David Jenkins

Ishbel Macpherson

Graeme Potts

David Ord

30-Mar 07

31-Jan 06

6 months

27-Jul 05

01-Aug 06

26-Apr 04

6 months

Cullum McAlpine

03-Aug 05

6 months

This report was approved by the Board and has been signed on its behalf by:

Ishbel Macpherson
Chairman Remuneration Committee

18 May 2009

–

Appointed Chairman on 31 July 2008;
Chairman of Nomination Committee

Deputy Chairman

– Senior Independent Non-Executive Director
and Chairman of Audit Committee

– Chairman of Remuneration Committee

–

Retired on
31 July 2008

13012_R&A08_p36-59.qxd:Layout 1 28/5/09 12:19 Page 59

Accounts

MITIE Group PLC
Annual Report and Accounts 2009

Accounts

Independent auditors’ report
to the members of MITIE Group PLC

Consolidated income statement

Consolidated statement of
recognised income and expense

Consolidated balance sheet

Consolidated cash ﬂow statement

Notes to the consolidated
ﬁnancial statements

Independent auditors’ report
to the members of MITIE Group PLC

Company balance sheet

Notes to the Company ﬁnancial statements

Shareholder information

IBC

MITIE Group PLC
Annual report and accounts 2009

Independent auditors’ report to the members of MITIE Group PLC

For the year ended 31 March 2009

We have audited the group financial statements of
MITIE Group PLC for the year ended 31 March 2009
which comprise the Consolidated Income Statement, the
Consolidated Statement of Recognised Income and Expense,
the Consolidated Balance Sheet, the Consolidated Cash Flow
Statement and the related notes 1 to 36. 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 2009.

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 (IFRSs) 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 review,
the Operating review, Financial review and the Corporate
Governance statement that is cross referred from the Business
Review section of the Directors' Report.

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 Statement
reflects the company's compliance with the nine provisions
of the 2006 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.

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 IFRSs as adopted by the European Union,
of the state of the group’s affairs as at 31 March 2009 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 LLP
Chartered Accountants and Registered Auditors
Bristol, United Kingdom

18 May 2009

Consolidated income statement

For the year ended 31 March 2009

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

Continuing operations

Revenue

Cost of sales

Gross profit

Other administrative expenses

Amortisation of intangible assets

Total administrative expenses

Operating profit

Investment revenue

Other finance costs

Unwinding of discount on
deferred contingent
consideration

Total finance costs

Profit before tax

Tax

Profit for the year

Attributable to:

Equity holders of the parent

Minority interests

Earnings per share (EPS)

– basic

– diluted

Notes

3, 4

Before
other items*
£m

Other items*
£m

1,521.9

(1,261.6)

260.3

(179.7)

(0.1)

(179.8)

80.5

0.8

(2.9)

–

(1.9)

–

2009

Total
£m

1,521.9

(1,261.6)

260.3

(179.7)

(2.0)

(181.7)

78.6

Before
other items*
£m

Other items*
£m

1,407.2

(1,145.2)

262.0

(189.8)

–

(1.9)

(189.8)

72.2

0.8

1.2

(2.9)

(2.8)

(1.9)

–

2008

Total
£m

1,407.2

(1,145.2)

262.0

(189.8)

(1.9)

(191.7)

70.3

1.2

(2.8)

–

(0.6)

–

(0.8)

(2.9)

(0.6)

(3.5)

(2.8)

(0.8)

(3.6)

78.4

(22.2)

56.2

54.9

1.3

56.2

17.2p

17.0p

(2.5)

0.7

(1.8)

–

(1.8)

(0.5)p

75.9

(21.5)

54.4

53.1

1.3

54.4

16.7p

16.5p

70.6

(21.4)

49.2

46.9

2.3

49.2

14.9p

14.7p

(2.7)

0.8

(1.9)

–

(1.9)

(0.6)p

67.9

(20.6)

47.3

45.0

2.3

47.3

14.3p

14.1p

* Other items are non-cash acquisition related items, being amortisation of intangible assets and unwinding of discount on deferred contingent consideration.

MITIE Group PLC
Annual report and accounts 2009

Consolidated statement of recognised income and expense

For the year ended 31 March 2009

Actuarial (losses)/gains on defined benefit pension schemes

Tax credit/(charge) on actuarial movement taken directly to equity

Net (expense)/income on defined benefit pension schemes recognised directly in equity

Notes

Profit for the year

Total recognised income and expense for the financial year

Attributable to:

Equity holders of the parent

Minority interests

2009
£m

(12.0)

3.3

(8.7)

54.4

45.7

44.4

1.3

2008
£m

6.8

(2.0)

4.8

47.3

52.1

49.8

2.3

Consolidated balance sheet

As at 31 March 2009

Non-current assets

Goodwill

Other intangible assets

Property, plant and equipment

Deferred tax assets

Retirement benefit surplus

Total non-current assets

Current assets

Inventories

Trade and other receivables

Cash and cash equivalents

Total current assets

Total assets

Current liabilities

Trade and other payables

Financing liabilities

Provisions

Current tax liabilities

Total current liabilities

Net current assets

Non-current liabilities

Financing liabilities

Provisions

Retirement benefit obligation

Deferred tax liabilities

Total non-current liabilities

Total liabilities

Net assets

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

Notes

2009
£m

2008
£m

201.2

203.3

24.4

44.1

7.3

3.0

16.9

45.2

6.6

9.9

280.0

281.9

2.5

285.8

28.5

316.8

2.4

314.4

42.6

359.4

596.8

641.3

(260.2)

(289.6)

(13.7)

(3.2)

(13.5)

(54.5)

(2.0)

(10.7)

(290.6)

(356.8)

26.2

2.6

(4.5)

(17.2)

(3.4)

(4.5)

(29.6)

(3.7)

(27.2)

(2.4)

(6.2)

(39.5)

(320.2)

(396.3)

276.6

245.0

MITIE Group PLC
Annual report and accounts 2009

Consolidated balance sheet continued

As at 31 March 2009

Equity

Share capital

Share premium account

Merger reserve

Share-based payments reserve

Own shares reserve

Other reserves

Retained earnings

Equity attributable to equity holders of the parent

Minority interests

Total equity

Notes

2009
£m

8.1

24.4

67.2

4.4

(5.2)

0.2

167.4

266.5

10.1

276.6

2008
£m

7.9

19.0

60.4

2.9

(2.0)

0.2

143.7

232.1

12.9

245.0

The financial statements were approved by the Board of Directors and authorised for issue on 18 May 2009. They were signed on its
behalf by:

Ruby McGregor-Smith
Chief Executive

Suzanne Baxter
Group Finance Director

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

Notes

Consolidated cash flow statement

For the year ended 31 March 2009

Net cash from operating activities

Investing activities

Interest received

Purchase of property, plant and equipment

Purchase of subsidiary undertakings

Purchase of other intangible assets

Disposals of property, plant and equipment

Net cash outflow from investing activities

Financing activities

Repayments of obligations under finance leases

Proceeds on issue of share capital

Repayments of loan notes on purchase of subsidiary undertakings

Bank loans (repaid)/raised

Purchase of own shares

Equity dividends paid

Minority dividends paid

Net cash (outflow)/inflow from financing

Net (decrease)/increase in cash and cash equivalents

Net cash and cash equivalents at beginning of the year

Net cash and cash equivalents at end of the year

Net cash and cash equivalents comprise:

Cash at bank

Reconciliation of net cash flow to movement in net funds/(debt)

Net (decrease)/increase in cash and cash equivalents

Bank loans repaid/(raised)

Repayments of loan notes on purchase of subsidiary undertakings

Issue of loan notes on acquisition of subsidiary undertakings

Increase in finance leases

Decrease/(increase) in net debt during the year

Opening net debt

Closing net funds/(debt)

2009
£m

73.6

0.8

(15.0)

(2.2)

(9.0)

2.8

(22.6)

(1.6)

1.9

(1.2)

(40.0)

(3.2)

(20.8)

(0.2)

(65.1)

(14.1)

42.6

28.5

2009
£m

(14.1)

40.0

1.2

–

(0.6)

26.5

(15.6)

10.9

2008
£m

58.1

1.1

(17.8)

(26.9)

(6.6)

4.6

(45.6)

(1.4)

3.5

(8.0)

30.0

(2.0)

(17.3)

(0.3)

4.5

17.0

25.6

42.6

2008
£m

17.0

(30.0)

8.0

(1.6)

(0.9)

(7.5)

(8.1)

(15.6)

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements

For the year ended 31 March 2009

1. Basis of preparation and significant accounting policies

Basis of preparation
The Group’s financial statements for the year ended 31 March 2009 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.

As more fully detailed in the Directors’ and governance report, the Group’s financial statements have been prepared on a going
concern basis.

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 2008 except for the adoption of new standards
and interpretations, noted below. Adoption of these standards and interpretations did not have any significant effect on the financial
position or performance of the Group.

– IFRIC 12 ‘Service Concession Arrangements’; and

– IFRIC 14 IAS 19 ‘The Limit of a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’;

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

– IFRIC 13 ‘Customer Loyalty Programmes’;

– IFRIC 15 ‘Agreements for the Construction of Real Estate’;

– IFRIC 16 ‘Hedges of a Net Investment in a Foreign Operation’;

– IFRIC 17 ‘Distributions of Non-Cash Assets to Owners’;

– IFRIC 18 ‘Transfers of Assets from Customers’;

– IAS 1 (Revised) ‘Presentation of Financial Statements’;

– IAS 27 (Revised) ‘Consolidated and Separate Financial Statements’;

– IFRS 3 (Revised) ‘Business Combinations’; and consequential amendment to; IAS 27 ‘Consolidated and Separate Financial

Statements’, IAS 28 ‘Investments in Associates’ and IAS 31 ‘Interests in Joint Ventures’;

– IFRS 8 ‘Operating Segments’;

– Amendments to IAS 32 and IAS 1 ‘Puttable Financial Instruments and Obligations Arising on Liquidation’;

– Amendments to IAS 39 ‘Financial Instruments: Recognition and Measurement’;

– Amendments to IFRS 1 and IAS 27 ‘Cost of an Investment in a Subsidiary, Jointly-Controlled Entity or Associate’;

– Amendment to IFRS 2 ‘Share-based Payment’;

– Amendments resulting from May 2008 Annual Improvements to IFRSs; and

– Amendments resulting from April 2009 Annual Improvements to IFRSs.

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, except for the treatment of acquisition of subsidiaries when IFRS 3 comes
into effect for business combinations for which the acquisition date is on or after 1 April 2010.

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 Practice
(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.

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

1. Basis of preparation and significant accounting policies continued
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 a 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.

Intangible assets
Intangible assets identified in a business acquisition are capitalised at fair value as at the date of acquisition.

Development expenditure relating to software is capitalised as an intangible asset if the asset created can be identified, if it is probable
that the asset created will generate future economic benefits and if the development cost of the asset can be measured reliably.

Following initial recognition, the carrying amount of an intangible asset is its cost less any accumulated amortisation and any
accumulated impairment losses. Intangible assets are reviewed for impairment annually, or more frequently when there is an indication
that they may be impaired. Amortisation expense is charged to administrative expenses in the income statement on a straight-line basis
over its useful life.

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements continued

1. Basis of preparation and significant accounting policies continued
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. Revenue represents fee income recognised in respect of services provided during the period (stated net of value
added tax) and is earned almost exclusively within the United Kingdom.

Revenue from multi-service contracts consists of various components which operate independently of each other and for
which reliable fair values can be established. Each component is accounted for separately as if it were an individual contractual
arrangement.

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.

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
Operating profit is stated before investment revenue and finance costs.

Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the
assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which
they are incurred.

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.

Non-monetary 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.

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

1. Basis of preparation and significant accounting policies continued
Retirement benefit costs
The Group operates and participates in a number of defined benefit schemes. In respect of the 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 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 straight-
line 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.

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements continued

1. Basis of preparation and significant accounting policies continued
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
Leasehold improvements
Plant and vehicles

– over 50 years
– period of the lease
– 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.

Financial instruments
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. The Group derecognises financial assets and liabilities only when the contractual rights
and obligations are discharged or expire.

Assets that are assessed not to be individually impaired are subsequently assessed for impairment on a collective basis. Objective
evidence of impairment for a portfolio of receivables includes the Group’s past experience of collecting payments, the number
of delayed payments in the portfolio past the average credit period as well as observable changes in national or local economic
conditions that correlate with default on receivables.

The carrying amount of the financial asset is reduced by the impairment loss directly with the exception of trade receivables, where
the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectable, it is
written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance
account. Changes in the carrying amount of the allowance account are recognised in the income statement.

Financial assets comprise loans and receivables and are measured at initial recognition at amortised cost. Appropriate allowances
for estimated irrecoverable amounts are recognised where there is objective evidence that the asset is impaired.

The Group uses derivative financial instruments such as interest rate swaps to hedge and manage risks associated with interest.
The Group does not currently designate any derivative financial instruments as qualifying for hedge accounting. Such derivative
financial instruments are stated at fair value through profit and loss (through investment revenue and finance costs) with fair value
determined by reference to market rates.

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.

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. There are no financial liabilities classified as held for trading.

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

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

1. Basis of preparation and significant accounting policies continued
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 straight-
line 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 appropriate discount rates to use in order to calculate present values. The carrying value of goodwill is £201.2m (2008:
£203.3m) at the balance sheet date; see Note 11. Management do not consider that any reasonably foreseeable change in the key
assumptions would result in an impairment.

Retirement benefit obligations
The calculation of defined benefit obligations is dependent on material key assumptions including discount rates, mortality rates, future
returns on assets and future contribution rates. The present value of defined benefit obligations at the balance sheet date is £126.1m
(2008: £129.4m); see Note 34.

The sensitivity of defined benefit obligations to changes in principal actuarial assumptions is shown below:

Discount rate

Inflation

Mortality rate

Change in
assumption

+/-0.5%

+1 year

Change in
liability
£m

+/-11.7

+/-9.1

+2.9

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements continued

3. Business and geographical segments

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

On 1 April 2009 we took a decision to rebrand our three operating divisions to Facilities Management (previously Facilities Services),
Property Management (previously Property Services) and Asset Management (previously Engineering Services). Further we elected to
enhance our Asset Management proposition through its combination with our Engineering Maintenance business, which had previously
been a part of our Facilities Services business. The financial data below reflects the performance of our three divisions in the
organisational structures that applied during the period to 31 March 2009, but reflects the new branding. A proforma analysis of the
financial results of the business for the year ended 31 March 2009 is also set out below.

Business segments – structure to 31 March 2009

2009

2008

Facilities Management

Property Management

Asset Management

Total

Revenue
£m

942.2

297.9

281.8

1,521.9

* Of acquisition related intangible assets.

Business segments – structure from 1 April 2009

Operating
profit before
amortisation*
£m

Margin
%

Profit
before tax
£m

54.2

17.9

8.4

80.5

5.8

6.0

3.0

5.3

51.0

17.1

7.8

75.9

2009

Operating
profit before
amortisation*
£m

Margin
%

Profit
before tax
£m

48.9

15.0

8.3

72.2

6.0

5.3

2.8

5.1

44.6

14.6

8.7

67.9

Revenue
£m

820.4

285.7

301.1

1,407.2

Operating
profit before
amortisation*
£m

Margin
%

Profit
before tax
£m

47.2

17.9

15.4

80.5

6.0

3.5

5.3

44.3

17.1

14.5

75.9

Revenue
£m

781.8

297.9

442.2

1,521.9

Facilities Management

Property Management

Asset Management

Total

* Of acquisition related intangible assets.

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

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

Facilities
Management
2009
£m

Property
Management
2009
£m

Asset
Management
2009
£m

160.8

234.0

394.8

45.5

105.4

150.9

19.3

83.2

102.5

Total
2009
£m

225.6

422.6

648.2

(51.4)(i)

596.8

(146.9)

(74.8)

(66.3)

(288.0)

(32.2)(i)

(320.2)

276.6

17.1

16.2

7.4

2.0

13.5

10.8

9.9

1.8

2.2

3.6

(4.4)

0.2

1.4

1.8

1.9

–

3. Business and geographical segments continued

Other segmental analysis – structure to 31 March 2009

Assets by segment

Goodwill and other intangible assets

Divisional assets

Unallocated

Total assets

Liabilities by segment

Divisional liabilities

Unallocated

Total liabilities

Total net assets

Capital movements

Tangible assets

Depreciation charge

Intangible assets

Intangible amortisation

(i) Relates to interdivisional funding.

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements continued

3. Business and geographical segments continued

Assets by segment

Goodwill and other intangible assets

Divisional assets

Unallocated

Total assets

Liabilities by segment

Divisional liabilities

Unallocated

Total liabilities

Total net assets

Capital movements

Tangible assets

Depreciation charge

Intangible assets

Intangible amortisation

(i) Relates to interdivisional funding.

Facilities
Management
2008
£m

Property
Management
2008
£m

Asset
Management
2008
£m

152.7

250.8

403.5

50.1

107.2

157.3

17.4

95.0

112.4

Total
2008
£m

220.2

453.0

673.2

(31.9)(i)

641.3

(162.8)

(81.7)

(75.8)

(320.3)

(76.0)(i)

(396.3)

245.0

20.0

14.4

63.8

1.9

14.4

9.6

13.8

1.7

3.4

3.1

44.7

0.2

2.2

1.7

5.3

–

Geographical segments
Predominantly all of the Group’s operations are located in the United Kingdom and the Channel Islands. The Group considers all
operations form part of that single reportable geographical segment.

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

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

Depreciation of property, plant and equipment

Amortisation of intangible assets

Gain on disposal of property, plant and equipment

Staff costs (Note 5)

A detailed analysis of auditors’ remuneration is provided below:

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

Fees payable to the Company’s auditors and their associates for the audit of the Company’s subsidiaries

Total audit fees

Tax services

Other services

Total non-audit fees

Total

2009
£m

16.2

2.0

(0.8)

2008
£m

14.4

1.9

(1.7)

763.6

697.7

2009
£’000

418

463

554

2008
£’000

390

430

189

619

In addition to the amounts shown above the auditors received fees of £16,000 (2008: £14,500) for the audit of the Group pension
schemes and £23,000 (2008: £13,000) of fees were incurred in relation to acquisitions and have been included in acquisition costs.

5. Staff costs

Number of people

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

Facilities Management

Property Management

Asset Management

Total Group

The number of people employed at 31 March was:

Total Group

Their aggregate remuneration comprised:

Wages and salaries

Social security costs

Other pension costs

Share-based payments (Note 33)

2009

2008

45,898

2,716

1,440

50,054

43,654

2,761

1,544

47,959

51,486

49,505

2009
£m

695.5

57.3

8.4

2.4

2008
£m

634.4

53.9

7.9

1.5

763.6

697.7

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.

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements continued

6. Investment revenue

Interest on bank deposits

Other interest receivable

7. Finance costs

Interest on bank overdrafts and loans

Interest on obligations under finance leases

Interest rate swaps charge (Note 22)

Unwinding of discount on deferred contingent consideration

Total interest expense

Less: amounts included in the cost of qualifying assets

2009
£m

0.7

0.1

0.8

2009
£m

2.5

0.3

0.6

4.0

(0.5)

3.5

2008
£m

0.2

1.0

1.2

2008
£m

2.6

0.3

–

0.8

3.7

(0.1)

3.6

Borrowing costs included in the cost of qualifying assets during the year arose on the general borrowing pool and are calculated by
applying an average capitalisation rate of 4.9% (2008: 6.3%) to expenditure on such assets.

8. Tax

Current tax

Deferred tax (Note 19)

Corporation tax is calculated at 28.0% (2008: 30.0%) of the estimated assessable profit for the year.

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

Profit before tax

Tax at the UK corporation tax rate of 28.0% (2008: 30.0%)

Expenses not deductible for tax purposes

Tax losses not recognised/previously unrecognised

Profit on disposal of property

Prior year adjustments

Tax charge for the year

2009
£m

21.4

0.1

21.5

2009
£m

75.9

21.3

1.1

(0.5)

–

(0.4)

21.5

2008
£m

19.4

1.2

20.6

2008
£m

67.9

20.4

0.8

0.1

(0.1)

(0.6)

20.6

In addition to the amount charged to the consolidated income statement, deferred tax relating to retirement benefit costs and share-
based payments amounting to £2.5m has been credited directly to equity (2008: £2.3m charge) (see Note 19). The benefit of tax savings
relating to retirement benefit costs and share-based payments amounting to £nil (2008: £0.8m) has been credited directly to equity.

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

9. Dividends

Amounts recognised as distributions to equity holders in the year:

Final dividend for the year ended 31 March 2008 of 3.2p (2007: 2.7p) per share

Interim dividend for the year ended 31 March 2009 of 3.3p (2008: 2.8p) per share

Proposed final dividend for the year ended 31 March 2009 of 3.6p (2008: 3.2p) per share

2009
£m

10.1

10.7

20.8

11.6

2008
£m

8.4

8.9

17.3

10.1

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.

10. 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:

Number of shares

Weighted average number of Ordinary shares for the purpose of basic EPS

Effect of dilutive potential Ordinary shares: share options

Weighted average number of Ordinary shares for the purpose of diluted EPS

2009
million

318.3

4.0

322.3

2008
million

314.3

4.9

319.2

The weighted average number of Ordinary shares in issue during the year excludes those held by the MITIE Group PLC Employee Benefit
Trust (see Note 28).

11. Goodwill

Cost

At 1 April 2007

Acquisition of subsidiaries

Acquisition of minorities

At 1 April 2008

Changes in fair values of subsidiaries acquired in prior years

Decrease in deferred contingent consideration for subsidiaries acquired in prior years

Acquisition of minorities

At 31 March 2009

Accumulated impairment losses

At 1 April 2007

At 1 April 2008

At 31 March 2009

Carrying amount

At 31 March 2009

At 31 March 2008

£m

148.4

49.5

5.4

203.3

(0.1)

(11.7)

9.7

201.2

–

201.2

203.3

Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to
benefit from that business combination. Goodwill has been allocated to CGUs in the following business segments, which is how goodwill
is monitored by the Group internally.

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements continued

11. Goodwill continued

Cost

Facilities Management

Property Management

Asset Management

2009
£m

144.5

41.0

15.7

201.2

2008
£m

140.2

47.1

16.0

203.3

The Group tests goodwill at least annually for impairment.

The recoverable amounts of the CGUs 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 CGUs. 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% (2008: 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 CGUs are as follows:

Facilities Management

Property Management

Asset Management

No reasonably foreseeable change in the key assumptions would result in an impairment.

12. Other intangible assets

Cost

At 1 April 2007

Additions

At 1 April 2008

Additions

At 31 March 2009

Amortisation

At 1 April 2007

Charge for the year

At 1 April 2008

Charge for the year

At 31 March 2009

Carrying amount

At 31 March 2009

At 31 March 2008

2009
%

10.6

Customer
relationships
£m

Software and
development
costs
£m

11.7

2.3

14.0

–

14.0

1.8

1.9

3.7

1.9

5.6

8.4

10.3

–

6.6

9.5

16.1

–

0.1

16.0

6.6

2008
%

11.4

Total
£m

11.7

8.9

20.6

9.5

30.1

1.8

1.9

3.7

2.0

5.7

24.4

16.9

Customer relationships are amortised over the remaining period of the contract, which currently ranges between six and eight years.
Software and development costs are amortised over their useful life of between five and ten years, once they have been brought
into use.

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

Freehold
properties
£m

Leasehold
properties
£m

Plant and
vehicles
£m

6.2

–

(1.4)

4.8

0.3

–

5.1

0.7

0.1

(0.2)

0.6

0.1

–

0.7

4.4

4.2

6.1

1.2

–

7.3

0.2

–

7.5

1.1

0.7

–

1.8

1.0

–

2.8

4.7

5.5

Total
£m

74.7

20.0

1.0

(13.1)

82.6

17.1

(21.7)

78.0

33.2

14.4

(10.2)

37.4

16.2

(19.7)

33.9

44.1

45.2

2008
£m

0.6

1.8

2.4

2008
£m

170.9

108.2

3.3

42.6

325.0

62.4

18.8

1.0

(11.7)

70.5

16.6

(21.7)

65.4

31.4

13.6

(10.0)

35.0

15.1

(19.7)

30.4

35.0

35.5

2009
£m

1.3

1.2

2.5

2009
£m

159.5

87.3

5.6

28.5

280.9

13. Property, plant and equipment

Cost

At 1 April 2007

Additions

Acquisition of subsidiaries

Disposals

At 1 April 2008

Additions

Disposals

At 31 March 2009

Accumulated depreciation and impairment

At 1 April 2007

Charge for the year

Disposals

At 1 April 2008

Charge for the year

Disposals

At 31 March 2009

Carrying amount

At 31 March 2009

At 31 March 2008

The net book value of plant and vehicles held under finance leases included above was £4.7m (2008: £3.8m).

14. Inventories

Work-in-progress

Materials

15. Financial assets

Trade receivables (Note 16)

Amounts recoverable on contracts (Note 17)

Other debtors

Cash and cash equivalents (Note 18)

All financial assets are classified as loans and receivables.

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements continued

16. Trade and other receivables

Amounts receivable for the sale of services

Allowance for doubtful debt

Amounts recoverable on contracts (Note 17)

Other debtors

Prepayments and accrued income

Ageing of trade receivables:

Neither impaired nor past due

Not impaired and less than three months overdue

Not impaired and more than three months overdue

Impaired receivables

Allowance for doubtful debt

Movement in the allowance for doubtful debt:

Balance at the beginning of the year

Impairment losses recognised

Amounts written off as uncollectable

Amounts recovered during the year

2009
£m

166.0

(6.5)

159.5

87.3

5.6

33.4

285.8

2009
£m

111.7

43.2

7.5

3.6

(6.5)

159.5

2009
£m

4.6

2.3

(0.3)

(0.1)

6.5

2008
£m

175.5

(4.6)

170.9

108.2

3.3

32.0

314.4

2008
£m

127.2

39.8

4.4

4.1

(4.6)

170.9

2008
£m

3.5

3.7

(1.0)

(1.6)

4.6

Before accepting new customers, the Group uses external credit scoring systems to assess the potential customer’s credit quality and
defines credit limits by customer. Limits and scoring are updated as appropriate. The maximum exposure to credit risk in relation to trade
receivables at the balance sheet date is the fair value of trade receivables.

In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the trade receivable
from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base
being large and unrelated. Accordingly, the Directors believe that there is no further credit provision required in excess of the allowance
for doubtful debt. The average credit period taken on sales of services was 33 days (2008: 38 days).

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

17. Amounts recoverable on contracts

Contracts in progress at the balance sheet date

Amounts due from contract customers included in trade and other receivables

Amounts due to contract customers included in trade and other payables

Contract costs incurred plus recognised profits less recognised losses to date

Less progress billings

At 31 March 2009, retentions held by customers for contract work amounted to £18.5m (2008: £19.1m).

2009
£m

87.3

(1.1)

86.2

930.0

(843.8)

86.2

2008
£m

108.2

(1.7)

106.5

980.7

(874.2)

106.5

18. Cash and cash equivalents

Cash and cash equivalents

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

2009
£m

28.5

2008
£m

42.6

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.

Included in cash and cash equivalents are deposits totalling £7.3m (2008: £12.4m) 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 recognised international credit-rating agencies and are managed through regular review.

19. 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:

At 1 April 2007

(Charge)/credit to income

Charge to equity

(Charge)/credit to goodwill

At 1 April 2008

Credit/(charge) to income

Credit/(charge) to equity

At 31 March 2009

Accelerated
tax
depreciation
£m

Retirement
benefit
obligations
£m

Business
combinations
£m

Share-based
payments
£m

Short-term
timing
differences
£m

Tax losses
£m

0.9

(0.6)

–

0.3

0.1

–

0.4

(0.1)

(0.7)

(2.0)

–

(2.8)

(1.3)

3.3

(0.8)

(3.3)

1.0

–

(0.7)

(3.0)

0.5

–

(2.5)

2.0

0.3

(0.3)

–

2.0

(0.2)

(0.8)

1.0

4.1

(1.2)

–

0.8

3.7

(0.2)

–

3.5

0.2

–

0.2

1.0

–

1.2

Total
£m

3.8

(1.2)

(2.3)

0.1

0.4

(0.1)

2.5

2.8

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:

Deferred tax assets

Deferred tax liabilities

Net deferred tax asset

2009
£m

7.3

(4.5)

2.8

2008
£m

6.6

(6.2)

0.4

The Group has unutilised income tax losses of £5.6m (2008: £3.5m) that are available for offset against future profits. In addition the Group
has £0.5m (2008: £0.5m) of capital losses. Deferred tax assets have not been recognised in respect of £1.7m (2008: £3.1m) of these losses
as their recoverability is uncertain.

20. Financial liabilities

Trade creditors (Note 21)

Other creditors

Accruals and deferred income

Financing liabilities (Note 22)

2009
£m

156.5

8.1

51.2

18.2

234.0

2008
£m

173.6

6.6

55.2

58.2

293.6

All financial liabilities are held at amortised cost with the exception of interest rate swaps which are classified as fair value through profit
and loss (see Note 22).

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements continued

21. Trade and other payables

Payments received on account

Trade creditors

Other taxes and social security

Other creditors

Accruals and deferred income

2009
£m

1.6

156.5

42.8

8.1

51.2

260.2

2008
£m

1.1

173.6

53.1

6.6

55.2

289.6

Trade creditors and accruals and deferred income principally comprise amounts outstanding for trade purchases and ongoing costs.
The average credit period taken for trade purchases is 34 days (2008: 40 days).

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

22. Financing liabilities

Bank loans

Secured loan notes

Unsecured loan notes

Interest rate swaps

Obligations under finance leases (Note 24)

Included in current liabilities

Included in non-current liabilities

2009
£m

10.0

1.9

1.6

0.6

4.1

18.2

13.7

4.5

18.2

2008
£m

50.0

1.9

2.8

–

3.5

58.2

54.5

3.7

58.2

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

During the year £1.2m of loan notes in respect of MITIE Pest Control Limited (formerly Eagle Pest Control Services UK Limited)
were redeemed.

Included in non-current liabilities are £2.9m (2008: £2.1m) of obligations under finance leases (see Note 24) and £1.6m (2008: £1.6m)
of unsecured loan notes which are repayable between 2009 and 2013.

During the year, the Group entered into a series of callable swaps, which represented good value at the time, to convert from a
variable rate to a fixed rate of interest. As a result of the dramatic fall in interest rates these swaps had a negative mark to market value
of £0.6m at 31 March 2009 which will reverse as the mark to market valuation tends towards zero as the swaps approach maturity or
cancellation. The contracts in place have a weighted average strike price of 4.4% and a maximum maturity of 2011.

The weighted average interest rates paid during the year on the overdrafts and loans outstanding
were as follows:

Overdrafts

Bank loans

Loan notes

2009
%

2008
%

4.4

4.9

3.0

6.4

6.3

4.9

At 31 March 2009, the Group had available £220m (2008: £180m) 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 1.2% and are currently determined at 0.4% over LIBOR. The secured loan notes are backed by a bank guarantee. Details of the
Group’s contingent liabilities are provided in Note 31.

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

23. Financial risk management objectives
The Group’s Treasury function monitors and manages the financial risks relating to the operations of the Group. These risks include credit
risk, foreign currency risk, liquidity risk and market risk.

Credit risk
The Group’s credit risk to all of its banks and financial counterparties is monitored on an ongoing basis and formally reported quarterly.
The value of business placed with financial institutions is reviewed on a daily basis.

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. In addition, where appropriate, certain debts are
subject to credit insurance.

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

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 flows from operations. Bank facilities which allow for appropriate headroom in the Group’s daily
cash movements are then arranged.

The tables below summarise the maturity profile of the Group’s financial liabilities:

At 31 March 2009

Trade creditors

Other creditors

Accruals and deferred income

Financing liabilities

Financial liabilities

At 31 March 2008

Trade creditors

Other creditors

Accruals and deferred income

Financing liabilities

Financial liabilities

Within
one year
£m

In the second
to fifth years
£m

156.5

8.1

51.2

13.7

229.5

–

4.5

Within
one year
£m

In the second
to fifth years
£m

173.6

6.6

55.2

54.5

289.9

–

3.7

Total
£m

156.5

8.1

51.2

18.2

234.0

Total
£m

173.6

6.6

55.2

58.2

293.6

Financial assets at 31 March 2009 and 31 March 2008 have a maturity of less than one year.

Market risk
The Group’s activities expose it to the financial risks of interest rates. The Group’s Treasury function reviews its risk management strategy
on a regular basis and will appropriately enter into derivative financial instruments in order to manage interest rate risk. Group policy is
not to trade in financial instruments.

If interest rates had been 0.5% higher/lower and all other variables were held constant, the Group’s profit after tax for the year ended
31 March 2009 and reserves would decrease/increase by £0.1m (2008: £0.1m).

Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the
return to stakeholders through the optimisation of debt and equity. The capital structure of the Group consists of net funds/(debt) per
Note 25 and equity per Note 28.

The Group’s capital structure is reviewed regularly. The Group is not subject to externally imposed regulatory capital requirements with
the exception of those applicable to the Group’s captive insurance subsidiary.

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements continued

24. Obligations under finance leases

Amounts payable under finance leases:

Within one year

In the second to fifth years inclusive

Less: future finance charges

Present value of lease obligations

Less: Amount due for settlement within twelve months

Amount due for settlement after twelve months

Minimum lease payments

Present value of lease payments

2009
£m

1.5

3.3

4.8

(0.7)

4.1

(1.2)

2.9

2008
£m

1.4

2.5

3.9

(0.4)

3.5

(1.4)

2.1

2009
£m

1.4

2.7

4.1

–

4.1

(1.2)

2.9

2008
£m

1.4

2.1

3.5

–

3.5

(1.4)

2.1

The average remaining lease term is 33 months (2008: 23 months). For the year ended 31 March 2009, the average effective borrowing
rate was 5.8% (2008: 5.8%). 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.

25. Analysis of net funds/(debt)

Cash and cash equivalents (Note 18)

Bank loans

Net cash/(debt) before loan notes and obligations under finance leases

Loan notes (Note 22)

Obligations under finance leases (Note 24)

Net funds/(debt)

2009
£m

28.5

(10.0)

18.5

(3.5)

(4.1)

10.9

2008
£m

42.6

(50.0)

(7.4)

(4.7)

(3.5)

(15.6)

26. Provisions

At 1 April 2008

Unwinding of discount on deferred contingent consideration

Utilised during the year

Other movements in the year

At 31 March 2009

Included in current liabilities

Included in non-current liabilities

At 1 April 2007

Unwinding of discount on deferred contingent consideration

Utilised during the year

Other movements in the year

At 31 March 2008

Included in current liabilities

Included in non-current liabilities

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

Deferred
contingent
consideration
£m

Insurance
reserve
£m

20.9

0.6

(1.2)

(9.3)

11.0

8.3

–

(3.3)

4.4

9.4

Deferred
contingent
consideration
£m

Insurance
reserve
£m

0.3

0.8

(0.2)

20.0

20.9

8.6

–

(3.2)

2.9

8.3

Total
£m

29.2

0.6

(4.5)

(4.9)

20.4

3.2

17.2

20.4

Total
£m

8.9

0.8

(3.4)

22.9

29.2

2.0

27.2

29.2

During the year £0.5m of deferred contingent consideration in respect of the purchase last year of part of the minority shareholdings
in MITIE Technology & Infrastructure Limited was settled by the issue of new MITIE shares giving rise to a merger reserve of £0.5m;
furthermore £0.7m of deferred consideration in respect of the purchase last year of Catering Partnership Holdings Limited was settled
in cash.

Provision is made for deferred contingent consideration, which may become payable from 2009 – 2013 subject to profit targets being
attained, at the best estimate of the Directors. A total of £2.4m was provided for deferred contingent consideration to the minority
shareholders of MITIE Interiors Limited, MITIE Property Services (Eastern) Limited and MITIE Technology & Infrastructure Limited.

In addition, £11.7m of deferred contingent consideration has been released through goodwill.

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.

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements continued

27. Share capital

Ordinary shares of 2.5p

Authorised

At 31 March 2008 and 31 March 2009

2009

Allotted and fully paid

At beginning of year

Issued for acquisitions

Issued under share option schemes

At end of year

2008

Allotted and fully paid

At beginning of year

Issued for acquisitions

Issued under share option schemes

At end of year

Number
million

£m

500.0

12.5

316.8

4.8

1.4

323.0

312.4

2.4

2.0

316.8

7.9

0.1

8.1

7.8

0.1

–

7.9

During the year 4.8m (2008: 2.4m) Ordinary shares of 2.5p were allotted in respect of acquiring minority interests at a mid-market price of
218.8p (2008: 237.2p) giving rise to share premium of £3.6m (2008: £nil) and a merger reserve of £6.8m (2008: £5.5m).

During the year 1.4m (2008: 2.0m) Ordinary shares of 2.5p were allotted in respect of share option schemes at a price between 95p and
220p (2008: 58p and 220p) giving rise to share premium of £1.8m (2008: £2.4m).

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

28. Reserves

Balance at 1 April 2008

Shares issued and net premium
arising in respect of acquisitions

Shares issued and net premium in
connection with exercise of share
options

Profit for the year attributable to
equity holders of the parent

Dividends paid

Purchase of own shares by
Employee Benefit Trust

Share-based payments

Tax charge on items taken directly
to equity

Net actuarial loss on defined
benefit pension schemes

Tax credit on actuarial gain taken
directly to equity

Net expense on defined benefit
pension schemes recognised
directly in equity in the year

Balance at 31 March 2009

Share-
based
payments
reserve
£m

Own shares
reserve
£m

Other
reserves
£m

Retained
earnings
£m

2.9

(2.0)

0.2

143.7

Called-up
share capital
£m

7.9

0.1

Share
premium
account
£m

19.0

Merger
reserve
£m

60.4

3.6

6.8

0.1

1.8

–

1.5

–

(3.2)

–

8.1

–

Total
£m

232.1

10.5

1.9

53.1

(20.8)

(3.2)

2.4

–

53.1

(20.8)

–

0.9

(0.8)

(12.0)

3.3

–

The Own shares reserve represents the cost of 2.2m shares in MITIE Group PLC purchased in the market and held by the MITIE Group PLC
Employee Benefit Trust to satisfy options under the Group’s share option schemes (see Note 33).

24.4

67.2

4.4

(5.2)

–

0.2

(8.7)

167.4

(8.7)

266.5

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements continued

28. Reserves continued

Balance at 1 April 2007

Shares issued and net premium
arising in respect of acquisitions

Shares issued and net premium in
connection with exercise of share
options

Profit for the year attributable to
equity holders of the parent

Dividends paid

Purchase of own shares by
Employee Benefit Trust

Share-based payments

Tax credit on items taken directly to
equity

Net actuarial gain on defined
benefit pension schemes

Tax charge on actuarial gain taken
directly to equity

Net income on defined benefit
pension schemes recognised
directly in equity in the year

Balance at 31 March 2008

Called-up
share capital
£m

7.8

0.1

–

7.9

Share
premium
account
£m

16.6

Share-
based
payments
reserve
£m

1.9

Merger
reserve
£m

54.9

–

5.5

2.4

–

1.0

–

(2.0)

–

Own shares
reserve
£m

Other
reserves
£m

Retained
earnings
£m

0.3

110.2

Total
£m

191.7

5.6

2.3

45.0

(17.3)

(2.0)

1.5

0.5

6.8

–

45.0

(17.3)

–

0.5

6.8

–

(0.1)

–

(2.0)

19.0

60.4

2.9

(2.0)

–

0.2

4.8

143.7

4.8

232.1

The Own shares reserve represents the cost of 0.8m shares in MITIE Group PLC purchased in the market and held by the MITIE Group PLC
Employee Benefit Trust to satisfy options under the Group’s share option schemes (see Note 33).

29. Acquisition of subsidiaries
Purchase of minority interests

Minority interests

Goodwill

Total purchase consideration

Shares issued – MITIE Group PLC

Deferred contingent consideration

Cash consideration

Total purchase consideration

MITIE
Interiors Ltd
£m

MITIE
Services
(Retail) Ltd
£m

MITIE
Catering
Services Ltd
£m

MITIE
Property
Services
(Eastern) Ltd
£m

Other
companies
£m

1.4

4.2

5.6

3.2

2.2

0.2

5.6

0.7

2.6

3.3

3.0

–

0.3

3.3

0.6

1.2

1.8

1.5

–

0.3

1.8

0.4

0.6

1.0

0.9

0.1

–

1.0

0.5

1.1

1.6

1.4

0.1

1.6

Total
£m

3.6

9.7

13.3

10.0

2.4

0.9

13.3

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

2009
£m

78.6

2.4

1.5

(5.5)

16.2

2.0

(0.8)

94.4

(0.1)

28.6

(29.6)

1.1

94.4

(18.6)

(2.2)

73.6

2008
£m

70.3

1.5

2.1

(4.7)

14.4

1.9

(1.7)

83.8

10.1

(36.9)

21.5

(0.3)

78.2

(17.6)

(2.5)

58.1

30. Notes to the cash flow statement

Reconciliation of operating profit to net cash from operating activities

Operating profit

Adjustments for:

Share-based payment expense

Pension charge

Pension contributions

Depreciation of property, plant and equipment

Amortisation of intangible assets

Gain on disposal of property, plant and equipment

Operating cash flows before movements in working capital

(Increase)/decrease in inventories

Decrease/(increase) in receivables

(Decrease)/increase in payables

Increase/(decrease) in provisions

Cash generated by operations

Income taxes paid

Interest paid

Net cash from operating activities

Additions to fixtures and equipment during the year amounting to £2.1m (2008: £2.2m) 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.

31. Contingent liabilities
The Company is party with other Group companies to cross guarantees of each other’s bank loans, commitments and overdrafts of
£265m (2008: £270m).

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.

Deferred contingent consideration relating to acquisitions has been accrued at the Directors’ best estimate of the likely future obligation
of £11.0m (2008: £20.9m) per Note 26. The actual amounts payable may vary up to a maximum of £31.0m (2008: £31.2m) dependent
upon the results of the acquired businesses.

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 £20.6m (2008: £9.2m) in the ordinary course of business. These are not expected to result in any
material financial loss.

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements continued

32. Operating lease arrangements
The Group as Lessee

Minimum lease payments under operating leases recognised in income for the year

2009
£m

4.7

2008
£m

5.2

At the balance sheet date, the Group had total outstanding aggregate commitments for future minimum lease payments under non-
cancellable operating leases, which fall due as follows:

Within one year

In the second to fifth years inclusive

After five years

33. Share-based payments
Equity-settled share option schemes
The Company has four share option schemes:

2009
£m

3.6

8.2

3.7

15.5

2008
£m

1.5

5.8

7.6

14.9

The MITIE Group PLC Long Term Incentive Plan (LTIP)
The LTIP was introduced in 2007. The awards of shares or rights to acquire shares (the awards) are offered to a small number
of key senior management. Where offered as options the exercise price is nil. The vesting period is three years. If the awards remain
unexercised after a period of four years from the date of grant, the awards expire. The awards may be forfeited if the employee
leaves the Group. Before the awards can be exercised, a performance condition must be satisfied; the number of awards that
vest is determined by a sliding scale above the Retail Price Index per annum compound growth in earnings per share over a
three-year period.

The MITIE Group PLC 1991 Executive share option scheme
The Executive share option scheme exercise price is equal to the average market value of the shares over the five day period
immediately preceding 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 exercise price is equal to the average market value of the shares over the five day period
immediately preceding 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 in respect of awards prior to July 2007 and 4.0% above the Retail Price per
annum thereafter.

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

33. Share-based payments continued
The MITIE Group PLC 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. For options granted prior to
September 2008, the vesting period is five years. For options granted in September 2008 and thereafter, the vesting period is three years.
If the options remain unexercised after a period of six months from the date of vesting, the options expire. Options may be forfeited if the
employee leaves the Group.

Details of the share options outstanding during the year are as follows:

2009

Weighted
average
exercise price
(in p)

Number of
share options
(million)

2008

Weighted
average
exercise price
(in p)

Number of
share options
(million)

Outstanding at beginning of the year

Granted during the year

Forfeited during the year

Exercised during the year

Outstanding at the end of the year(i)

13.8

6.7

(1.8)

(1.4)

17.3

163

155

176

129

162

12.9

4.5

(1.6)

(2.0)

13.8

Exercisable at the end of the year

2.2

144

1.7

143

194

148

116

163

132

(i) Included within this balance are 0.6m (2008: 0.8m) options that have not been recognised in accordance with the transitional provisions of 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 Group recognised the following expenses related to share-based payments:

Long Term Incentive Plan share options

2001 Executive share options

2001 Savings Related share options

2009
£m

1.1

0.6

0.7

2.4

2008
£m

0.4

0.5

0.6

1.5

The weighted average share price at the date of exercise for share options exercised during the year was 201p (2008: 264p). The options
outstanding at 31 March 2009 had exercise prices (other than nil in the case of the LTIP) ranging from 95p – 254p (2008: 58p – 254p) and
a weighted average remaining contractual life of 4.7 years (2008: 5.1 years). In the year ended 31 March 2009, options were granted in
June, July and September 2008 in respect of the LTIP, Executive and Savings Related share option schemes. The aggregate of the
estimated fair values of the options granted on those dates is £4.0m. In the year ended 31 March 2008, options were granted in July and
August 2007 in respect of the LTIP, Executive and Savings Related share option schemes. The aggregate of the estimated fair values of
the options granted on those dates is £3.0m.

The fair value of options is measured by use of the Black-Scholes model. The inputs into the Black-Scholes model are as follows:

Share price (p)

Exercise price (p)

Expected volatility (%)

Expected life (years)

Risk-free rate (%)

Expected dividends (%)

2009

2008

133–230

0–254

27–30

3–6

0–254

27–30

4–6

4.17–5.25

1.43–3.15

1.43–2.29

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.

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements continued

34. 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 Group paid employer contributions of
£2.9m (2008: £3.2m) during the year.

Defined benefit schemes
Group defined benefit scheme
The Group operates a defined benefit pension scheme called the MITIE Group PLC Pension Scheme where MITIE Group PLC is the
principal employer following the merger of the MITIE Group PLC Passport Pension Scheme with the MITIE Group PLC Pension Scheme
in May 2008.

The assets of the scheme are held separately from the Group. Contributions to the scheme are charged to the income statement
so as to spread the cost of pensions over the employees’ working lives with the Group.

Under the scheme, the employees are entitled to retirement benefits varying between 0 and 66 % 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 valuation of the Group scheme’s assets and the present value of their defined benefit obligations was carried
out at 1 April 2008 by Mr Chris Bamford, Fellow of the Institute of Actuaries.

Other defined benefit schemes
Grouped together under ‘Other schemes’ are one (2008: three) scheme in which the Group is a participating employer and a
number of 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.

Key assumptions used for IAS 19 valuation:

Discount rate

Expected return on scheme assets:

Equity instruments

Debt instruments

Property

Other assets

Expected rate of salary increases

Inflation

Future pension increases

Group schemes

Other schemes

2009
%

6.60

8.00

5.00

7.50

3.50

4.00

3.00

2008
%

2009
%

6.30

6.60

8.00

5.00

7.50

5.25

4.30

3.30

8.00

5.00

7.50

3.50

3.00

2008
%

6.30

8.00

5.00

7.50

5.25

3.80

3.30

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 and alternate assets.

The sensitivity of defined benefit obligations to changes in principal actuarial assumptions is shown in Note 2.

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

34. Retirement benefit schemes continued

Amounts recognised in administrative expenses in respect of these defined benefit schemes are as follows:

Current service cost

Interest cost

Expected return on scheme assets

Group scheme
£m

Other schemes
£m

(2.2)

(5.0)

6.3

(0.9)

(1.3)

(3.2)

3.9

(0.6)

2009

Total
£m

(3.5)

(8.2)

10.2

(1.5)

Group schemes
£m

Other schemes
£m

(3.2)

(4.5)

6.2

(1.5)

(2.0)

(3.3)

4.7

(0.6)

Amounts recognised in the consolidated statement of recognised income and expense are as follows:

Actual return on scheme assets

Expected return on scheme assets

Experience adjustments arising on plan
liabilities

Group scheme
£m

Other schemes
£m

(14.9)

(6.3)

11.3

(9.9)

(9.1)

(3.9)

10.9

(2.1)

2009

Total
£m

(24.0)

(10.2)

22.2

(12.0)

Group schemes
£m

Other schemes
£m

1.8

(6.2)

12.0

7.6

(1.3)

(4.7)

5.2

(0.8)

2008

Total
£m

(5.2)

(7.8)

10.9

(2.1)

2008

Total
£m

0.5

(10.9)

17.2

6.8

The cumulative amount of actuarial loss recognised since 1 April 2004 in the consolidated statement of recognised income and
expense is £10.5m (2008: £1.5m gain).

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:

Fair value of scheme assets

Present value of defined benefit obligations

Surplus/(deficit) in scheme

Contract adjustment

Net pension asset/(liability)

Group scheme
£m

Other schemes
£m

77.3

(74.3)

3.0

–

3.0

45.8

(51.8)

(6.0)

2.6

(3.4)

2009

Total
£m

123.1

(126.1)

(3.0)

2.6

(0.4)

Group schemes
£m

Other schemes
£m

88.6

(78.7)

9.9

–

9.9

52.3

(50.7)

1.6

(4.0)

(2.4)

2008

Total
£m

140.9

(129.4)

11.5

(4.0)

7.5

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements continued

34. Retirement benefit schemes continued
Movements in the present value of defined benefit obligations were as follows:

At 1 April

Service cost

Interest cost

Contributions from scheme members

Actuarial gains and losses

Benefits paid

Acquisition of subsidiaries

Contract transfers

At 31 March

Group scheme
£m

Other schemes
£m

78.7

2.2

5.0

1.8

(11.3)

(2.1)

–

74.3

50.7

1.3

3.2

0.5

(4.2)

(1.4)

–

1.7

51.8

Movements in the fair value of scheme assets were as follows:

At 1 April

Expected return on scheme assets

Actuarial gains and losses

Contributions from the sponsoring companies

Contributions from scheme members

Benefits paid

Acquisition of subsidiaries

Contract transfers

At 31 March

Group scheme
£m

Other schemes
£m

88.6

6.3

(21.2)

3.9

1.8

(2.1)

–

77.3

52.3

3.9

(13.0)

1.6

0.5

(1.4)

–

1.9

45.8

The analysis of the scheme assets at the balance sheet date was as follows:

Equity instruments

Debt instruments

Property

Other assets

At 31 March

Group scheme
£m

Other schemes
£m

32.6

17.3

12.8

14.6

77.3

29.8

8.5

4.5

3.0

45.8

2009

Total
£m

129.4

3.5

8.2

2.3

(15.5)

(3.5)

–

1.7

126.1

2009

Total
£m

140.9

10.2

(34.2)

5.5

2.3

(3.5)

–

1.9

123.1

2009

Total
£m

62.4

25.8

17.3

17.6

123.1

Group schemes
£m

Other schemes
£m

82.7

3.2

4.5

2.7

(12.0)

(2.4)

–

78.7

60.6

2.0

3.3

0.5

(8.2)

(1.0)

4.5

(11.0)

50.7

Group schemes
£m

Other schemes
£m

83.2

6.2

(4.4)

3.3

2.7

(2.4)

–

88.6

61.4

4.7

(6.0)

1.4

0.5

(1.0)

2.1

(10.8)

52.3

Group schemes
£m

Other schemes
£m

44.3

17.8

14.9

11.6

88.6

37.2

8.1

4.3

2.7

52.3

2008

Total
£m

143.3

5.2

7.8

3.2

(20.2)

(3.4)

4.5

(11.0)

129.4

2008

Total
£m

144.6

10.9

(10.4)

4.7

3.2

(3.4)

2.1

(10.8)

140.9

2008

Total
£m

81.5

25.9

19.2

14.3

140.9

The pension schemes have invested in property occupied by the Group with a fair value of £3.2m (2008: £3.2m) generating rental of
£0.3m (2008: £0.3m). At 31 March 2009 the pension schemes held 17,000 of MITIE Group PLC shares (2008: 53,000). The pension schemes
have not invested in any 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 87.3 years (2008: 85.1 years) and for a female aged 65.0 years the expected life is 89.7 years
(2008: 88.0 years). Mortality for the other schemes is that used by the relevant scheme actuary.

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

2009
£m

77.3

(74.3)

3.0

2008
£m

88.6

(78.7)

9.9

11.3

12.0

(15.3)%

(15.2)%

(21.2)

(27.4)%

(4.1)

(4.8)%

2009
£m

45.8

(49.2)

(3.4)

2008
£m

52.3

(54.7)

(2.4)

10.9

5.2

(22.2)%

(10.0)%

(13.0)

(28.4)%

(6.0)

(11.5)%

2007
£m

83.2

(82.7)

0.5

(3.2)

3.9%

(0.5)

(1.0)%

2007
£m

61.4

(61.4)

–

(1.0)

1.6%

–

Group schemes

2005
£m

49.0

(56.6)

(7.6)

(3.7)

7.0%

2.3

5.0%

2006
£m

74.0

(72.2)

1.8

(8.2)

11.4%

9.3

12.6%

Other schemes

2006
£m

2005
£m

–

34. Retirement benefit schemes continued
The history of experience adjustments is as follows:

Fair value of scheme assets

Present value of defined benefit obligations

Surplus/(deficit) in the scheme

Experience adjustments on scheme liabilities

Percentage of scheme liabilities

Experience adjustments on scheme assets

Percentage of scheme assets

Fair value of scheme assets

Present value of defined benefit obligations

Deficit in the scheme

Experience adjustments on scheme liabilities

Percentage of scheme liabilities

Experience adjustments on scheme assets

Percentage of scheme assets

The estimated contributions expected to be paid to the Group schemes during the current financial year are £5.0m (2008: £3.0m) and
to other schemes £1.6m (2008: £1.4m). As at 31 March 2009, contributions of £1.4m (2008: £0.7m) due in respect of the current reporting
period had not been paid over to the schemes.

35. 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.

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. No balances were outstanding at the year end.

Amounts paid to key management personnel are given in the audited section of the Directors’ remuneration report. MITIE’s Long Term
Incentive Plan (LTIP) was also offered to a small group of key senior management.

MITIE Group PLC
Annual report and accounts 2009

Notes to the consolidated financial statements continued

36. Principal subsidiaries
The companies set out below are those which were part of the Group at 31 March 2009 and in the opinion of the Directors significantly
affected the Group’s results and net assets during the year. Principal subsidiaries are incorporated in the United Kingdom; shareholdings
in companies marked * are held directly by MITIE Group PLC.

Division

Activities

Principal subsidiaries

At 31 March
2009
% Voting
rights owned

At 31 March
2009
% Ownership
interest

At 31 March
2009
% Nominal
value owned

Facilities Management Our Facilities Management division

MITIE Facilities Services Ltd*

100.0%

MITIE Cleaning & Support
Services Ltd

MITIE Services (Retail) Ltd

MITIE Transport Services Ltd

MITIE Security Holdings Ltd

95.9%

83.3%

86.1%

93.4%

95.9%

83.3%

86.1%

93.4%

95.9%

83.3%

86.1%

99.9%

delivers facilities consultancy,
management and service delivery
to our clients. Within the division,
during the year ended 31 March
2009 we recognised five principal
business lines which were: Facilities
Management, which comprises our
managed services, business services,
client services and PFI businesses;
Cleaning and Environmental,
which encompasses our cleaning,
landscaping and pest control
businesses; Security; Engineering
Maintenance; and Catering.

Property Management Our Property Management division

MITIE Property Services (UK) Ltd*

MITIE Interiors Ltd*

Robert Prettie & Co Ltd

79.2%

100.0%

79.2%

100.0%

79.2%

100.0%

MITIE Engineering Holdings Ltd*

100.0%

Asset
Management

provides property maintenance
and project management services,
including a complete range of repair,
refurbishment, redecoration and
fit-out expertise for both the private
and public sector with a focus on
social housing.

Our Asset Management division
provides the integration, management
and maintenance of technical assets
to meet the demands of the low-
carbon economy including; energy
design, generation and certification,
infrastructure projects, building services
and mechanical and electrical
engineering. On 1 April 2009, our
Engineering Maintenance business was
combined with Asset Management to
further enhance our market proposition
in this area.

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.

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

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 2009 which
comprise the Company Balance Sheet and the related notes
37 to 50. 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 2009 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
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 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, Chief
Executive’s Review, Operating Review, Financial Review and
Corporate Governance Statement that is cross referred from
the Business Review section of the Directors' Report.

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.

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 2009;

– 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 LLP
Chartered Accountants and Registered Auditors
Bristol, United Kingdom

18 May 2009

MITIE Group PLC
Annual report and accounts 2009

Company balance sheet

As at 31 March 2009

Fixed assets

Tangible assets

Investments in subsidiary undertakings

Total fixed assets

Current assets

Debtors

Total current assets

Total assets

Creditors: amounts falling due within one year

Provisions

Total current liabilities

Net current liabilities

Total assets less current liabilities

Creditors: amounts falling due after more than one year

Provisions

Total liabilities

Net assets

Capital and reserves

Share capital

Share premium account

Merger reserve

Share-based payments reserve

Own shares reserve

Other reserves

Profit and loss account

Equity shareholders’ funds

Notes

2009
£m

17.1

471.4

488.5

33.1

2008
£m

8.4

467.7

476.1

33.4

521.6

509.5

(112.3)

(2.4)

(114.7)

(133.1)

(1.1)

(134.2)

(81.6)

(100.8)

406.9

375.3

(1.6)

(8.6)

(1.6)

(18.9)

(124.9)

(154.7)

396.7

354.8

8.1

24.4

67.2

4.4

(5.2)

0.3

297.5

396.7

7.9

19.0

60.4

3.2

–

0.3

264.0

354.8

The financial statements were approved by the Board of Directors and authorised for issue on 18 May 2009. They were signed on its
behalf by:

Ruby McGregor-Smith
Chief Executive

Suzanne Baxter
Group Finance Director

MITIE Group PLC
Annual report and accounts 2009

Overview

Business review

Governance
Accounts

Notes to the Company financial statements
For the year ended 31 March 2009

37. 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.

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
Software and development costs

– 3–10 years
– 5–10 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.

100

MITIE Group PLC
Annual report and accounts 2009

Notes to the Company financial statements continued

37. Significant accounting policies continued
Financial instruments
Trade receivables are measured at initial recognition at fair value. Appropriate allowances for estimated irrecoverable amounts are
recognised in the profit and loss account 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.

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 profit
and loss account 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. Options over the Company’s shares awarded to employees of the Company’s subsidiaries
are accounted for as a capital contribution within the carrying value of Investments in subsidiary undertakings.

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 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 34 to the consolidated financial statements sets out the details of the IAS 19 ‘Employee Benefits’ net pension
liability of £0.4m (2008: £7.5m asset).

38. 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 2009 of £53.1m (2008: £27.0m
before an exceptional unrealised gain of £187.7m which arose on the insertion of intermediate holding companies within the Group).

The auditors’ remuneration for audit services to the Company was £45,000 (2008: £40,000).

The average number of persons employed, being full time equivalents, by the Company during the year, including Directors, was 111
(2008: 107).

The costs incurred in respect of these employees were:

Wages and salaries

Social security costs

Pension costs

Share-based payments (Note 49)

2009
£m

8.2

1.0

0.5

1.2

10.9

2008
£m

6.7

0.8

0.3

0.5

8.3

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.

MITIE Group PLC
Annual report and accounts 2009

101

Overview

Business review

Governance
Accounts

39. Dividends

Amounts recognised as distributions to equity holders in the year:

Final dividend for the year ended 31 March 2008 of 3.2p (2007: 2.7p) per share

Interim dividend for the year ended 31 March 2009 of 3.3p (2008: 2.8p) per share

Proposed final dividend for the year ended 31 March 2009 of 3.6p (2008: 3.2p) per share

2009
£m

10.1

10.7

20.8

11.6

2008
£m

8.4

8.9

17.3

10.1

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.

40. Tangible fixed assets

Cost

At 1 April 2008

Additions

Disposals

At 31 March 2009

Accumulated depreciation

At 1 April 2008

Charge for the year

Disposals

At 31 March 2009

Carrying amount

At 31 March 2009

At 31 March 2008

Plant and
vehicles
£m

Software and
development
costs
£m

3.7

0.8

(1.4)

3.1

1.9

0.6

(1.1)

1.4

1.7

1.8

6.6

8.9

–

15.5

–

0.1

–

0.1

15.4

6.6

Total
£m

10.3

9.7

(1.4)

18.6

1.9

0.7

(1.1)

1.5

17.1

8.4

102

MITIE Group PLC
Annual report and accounts 2009

Notes to the Company financial statements continued

41. Investments in subsidiary undertakings

Shares at cost

At 1 April 2008

Additions

Decrease in deferred contingent consideration for subsidiaries acquired in prior years

Capital contribution re share-based payments

At 31 March 2009

Provision for impairment

At 1 April 2008

At 31 March 2009

Carrying amount

At 31 March 2009

At 31 March 2008

Details of the acquisitions in the year are provided in Note 29 of the consolidated financial statements and a listing of principal
subsidiaries in Note 36.

42. Debtors

Amounts owed by subsidiary undertakings

Other debtors

Prepayments and accrued income

Corporation tax

The Directors consider that the carrying amount of debtors approximates their fair value.

43. Creditors: amounts falling due within one year

Trade creditors

Amounts owed to subsidiary undertakings

Other taxes and social security

Overdraft

Bank loans

Secured loan notes

Deferred tax

Accruals and deferred income

2009
£m

26.9

0.6

4.3

1.3

33.1

2009
£m

3.8

19.0

2.2

71.6

10.0

1.9

1.1

2.7

£m

479.3

14.1

(11.6)

1.2

483.0

11.6

471.4

467.7

2008
£m

28.0

1.5

2.1

1.8

33.4

2008
£m

0.8

15.3

2.5

56.4

50.0

3.1

0.3

4.7

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.

Details of the loan note movements in the year are provided in Note 22 of the consolidated financial statements.

112.3

133.1

MITIE Group PLC
Annual report and accounts 2009

103

Overview

Business review

Governance
Accounts

44. Creditors: amounts falling due after more than one year

Unsecured loan notes

Details of the unsecured loan notes are provided in Note 22 of the consolidated financial statements.

45. Provisions

At 1 April 2008

Utilised during the year

Other movements in the year

At 31 March 2009

Falling due within one year

Falling due after more than one year

Details of provisions are provided in Note 26 of the consolidated financial statements.

46. Share capital

Ordinary shares of 2.5p

Authorised

At 31 March 2008 and 31 March 2009

2009

Allotted and fully paid

At beginning of year

Issued for acquisitions

Issued under share option schemes

At end of year

2008

Allotted and fully paid

At beginning of year

Issued for acquisitions

Issued under share option schemes

At end of year

2009
£m

1.6

2008
£m

1.6

Deferred
contingent
consideration
£m

20.0

(0.5)

(8.5)

11.0

2.4

8.6

Number
million

£m

500.0

12.5

316.8

4.8

1.4

323.0

312.4

2.4

2.0

316.8

7.9

0.1

8.1

7.8

0.1

–

7.9

Details of movements in share capital during the year are provided in Note 27 of the consolidated financial statements.

104

MITIE Group PLC
Annual report and accounts 2009

Notes to the Company financial statements continued

47. Reserves

Called-up
share capital
£m

Share
premium
account
£m

At beginning of year

7.9

19.0

Merger
reserve
£m

60.4

Shares issued and net
premium arising in respect of
acquisitions

Shares issued and net
premium in connection with
exercise of share options

Purchase of own shares

Share-based payments

Profit for the year

Dividends paid to
shareholders

0.1

3.6

6.8

0.1

1.8

–

Balance at 31 March 2009

8.1

24.4

67.2

Share-based
payments
reserve
£m

Own shares
reserve(i)
£m

Other
reserves
£m

Profit
and loss
account(ii)
£m

0.3

264.0

3.2

–

1.2

–

4.4

–

(5.2)

–

1.2

53.1

(20.8)

297.5

(5.2)

0.3

Total
£m

354.8

10.5

1.9

(5.2)

2.4

53.1

(20.8)

396.7

(i) The presentation of the Company’s investment in Own shares has changed during the year to be included in the Own shares reserve; as a result the £5.2m above

includes £2.0m of shares purchased in the previous period

(ii) £187.7m is non-distributable (having arisen from internal restructuring in the year end 31 March 2008)

48. Contingent liabilities
Details of contingent liabilities have been given in Note 31 of the consolidated financial statements.

49. Share-based payments
Equity-settled share option schemes
The Company has four share option schemes as described in Note 33 of the consolidated financial statements.

The Company recognised the following expenses related to share-based payments:

Long Term Incentive Plan share options

2001 Executive share options

2001 Savings Related share options

2009
£m

1.1

0.1

0.0

1.2

2008
£m

0.4

0.1

0.0

0.5

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 33 of the consolidated financial statements.

50. Related parties
Directors’ transactions
Details of related party transactions have been given in Note 35 of the consolidated financial statements.

The Company has taken advantage of the exemption in FRS 8 not to disclose transactions with companies within the Group.

13012_R&A08_Cover.qxd:13012_R&A08_Cover.qxd 28/5/09 12:31 Page 2

Group proﬁle

Shareholder information

We’re a strategic outsourcing
and asset management company.

What does that mean?

Providing everything from strategic
consultancy, to facilities and
project management, to world-class
delivery on the ground.

We work with our clients
in three ways:
Strategy and consultancy
Facilities and project management
Service delivery
In other words,

we think,
we manage,
and we deliver.

Results

2010 Interim management statement

10 July 2009

2010 Half-yearly results

23 November 2009

Dividends

2009 Half-yearly dividend 3.3p paid

5 February 2009

2009 Final dividend 3.6p (proposed)

2009 Final ex dividend date

2009 Final dividend record date

2009 Final dividend last date for
receipt/revocation of DRIP mandate

2009 Final dividend payment date

Annual General Meeting

8 July 2009

10 July 2009

20 July 2009

7 August 2009

2009 Annual General Meeting

10 July 2009 2.30pm

Company details

MITIE Group PLC
8 Monarch Court
The Brooms
Emerson Green
Bristol BS16 7FH

Telephone: 0117 970 8800
Fax: 0117 302 6743
Email: group@mitie.co.uk
Website: www.mitie.co.uk

Registered number: SC 19230

Registrars

Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU

Telephone: 0870 162 3100
Website: www.mitie-shares.com

MITIE online share portal
MITIE has launched a shareholder portal
where shareholders can register and can:

– access information on shareholdings

and movements;

– update address details;

– view dividend payments received

and register bank mandate instructions;

– sell MITIE shares;

– complete an online proxy voting

form; and

If you wish to register, please sign up at:
www.mitie-shares.com

Corporate website
This report can be downloaded in PDF
format from the MITIE website, which also
contains additional general information
about MITIE. Please visit: www.mitie.co.uk

13012_R&A08_Cover.qxd:13012_R&A08_Cover.qxd 28/5/09 12:31 Page 1

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

MITIE Group PLC
Annual Report and Accounts 2009

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Printed on Take 2 Silk, a paper containing 75%
FSC certiﬁed recycled pulp diverted from landﬁll.
Take 2 Silk is certiﬁed according to the rules of
The Forest Stewardship Council.

If you have ﬁnished reading the Report and no
longer wish to retain it please pass it on to other
interested readers or dispose of it in your recycled
paper waste. Thank you.

Design and production:
Radley Yeldar | www.ry.com

Print:
MITIE Document Solutions