Annual Financial Report

RNS Number : 4907N

MITIE Group PLC

11 June 2010

 



11 June 2010

MITIE Group PLC

MITIE Group PLC (the "Company") - Annual Financial Report

Following the release on 17 May 2010 of the Company's preliminary results for the year ended 31 March 2010 (the 'Preliminary Announcement'), the Company announces that it has published its Annual Report and Accounts for 2010 (the 'Annual Report and Accounts').  

The Company's 2010 Annual General Meeting will be held at Ground Floor East, Cottons Centre, Cottons Lane, 47/49 Tooley Street, London SE1 2QG on 14 July 2010 at 2.30pm.

Copies of the Annual Report and Accounts and the Notice of the Annual General Meeting for 2010 (the 'AGM Notice') are available to view on the Company's website: www.mitie.com.  Hard copies have been mailed to those shareholders who have elected to continue to receive paper communications. 

Pursuant to Listing Rule 9.6.1, two copies of each of the Annual Report and Accounts, the AGM Notice, and the form of proxy in relation to the AGM are being submitted to the UK Listing Authority and will be shortly be available for inspection at the Document Viewing Facility of the UKLA which is situated at:

Financial Services Authority

25 The North Colonnade

Canary Wharf

London E14 5HS

The Preliminary Announcement included a set of financial statements and a review of the development and performance of the Company.  In compliance with Disclosure and Transparency Rule (DTR) 6.3.5 the Company has extracted and set out below certain information from its Annual Report and Accounts 2010.  This information is included herein solely for the purpose of complying with DTR 6.3.5 and the requirements it imposes on the Company as to how to make public its annual financial reports.  It should be read in conjunction with the Company's Preliminary Announcement issued on 17 May 2010.  Together these constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service.  This material is not a substitute for reading the full 2010 Annual Report and Accounts.  Page numbers and cross-references in the extracted information below refer to page numbers and cross-references in the 2010 Annual Report and Accounts.

The information contained in this announcement and in the Preliminary Announcement does not constitute the Group's statutory accounts but is derived from those accounts.  The statutory accounts for the year ended 31 March 2010 have been approved by the Board and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

Principal Risks and Uncertainties The principal risks and uncertainties relating to the Company are set out pages 36 and 37 of the 2010 Annual Report and Accounts from which the following is extracted in full and unedited text:

MITIE's risk is classified into four areas: strategic; operational; financial; and compliance. The assessment of risk is part of our culture and every business segment has a comprehensive risk register that feeds through to the Group risk register which is reviewed by our Board. We give careful consideration to all the risks in our business and how we can best mitigate those risks, but we are also focused on the key risks, and correspondingly opportunities, that help meet our business objectives. Below is a summary of the risks that we currently see as critical to our business. On page 45 of the Directors' and governance report there is more detail of our risk identification and management processes.

Category	Examples of risks	Mitigation
Strategic Risks
Business development	Adaptability of bid teams to market changes. Pricing of tenders. Agreement of contractual terms and conditions.  Changes to scale and scope of contract works.	Relationship management programmes in place with clients and key targets. Investment in and a regular review of bid pipeline. Tender and contractual review process with clearly defined approval process.
Competitive positioning	Investment in new technologies.. Attraction and retention of talented people. Bid strategy. Client retention.  Maintenance of competitive funding structure.	Focus on innovation.  Business case for investment in new technologies. On going recruitment of new talent. Strong relationships with equity and debt funders.  Attractive reward and retention models for key teams.
Acquisitions	Strategic and cultural fit. Risk assessment. Due diligence. Synergies. Integration issues. Pension liabilities.  Increased gearing.  Management.	Experienced due diligence team. Deferred consideration. Post acquisition reviews. Clear strategy.
Trading Overseas	Knowledge of local regulations and practices. Exchange rate risk. Management control over operations. People management.	Building overseas knowledge through existing work in some overseas jurisdictions. Involvement of external specialists. Management of foreign currency exposure.
Financial Risks
Market conditions / Economic climate	Client credit risk. Changing customer requirements. Price competition. Change in government policy/spending.	Limits in place to manage exposure to individual customers and sub-contractors. Group-wide credit exposure consolidation tool. Credit Insurance. Ongoing dialogue with financial community.  Change control procedures.
Counterparties	Availability and cost of funding. Covenants. Credit risk of insurers and funding providers. Defined benefit pension schemes. Client and supply chain exposure.	£230m facility spread across four banks and ongoing relationships with funders. £40m overdraft facility in place. Daily review of bank balances and quarterly review of covenants.  Controls over acceptance of counterparty risk.  Audit of key counterparties.
Operational risks
IT/Systems	Availability and confidentiality of systems and data. Payment of employees.  Provision of technology based management information solutions to clients.	Investment in innovation.  Malicious software protection. Multiple network routes to data centres. Support on all systems. Experienced in-house IT resources.
Finance system	Systems implementation and development programmes. Processing of high volume transactions. Payment of employees and suppliers.	Project team, governance and roll-out plan in place for new developments. Involvement of key business stakeholders. In-house resources maintaining business as usual environment.  IT Steering Committee comprising senior executives and relevant professionals.
People	Attraction and retention of talented people. Staff mix. Management training.  Legislative compliance.	Competitive remuneration. Employee reward system. Management and personal development plans. Apprenticeship programmes and MITIE talent programmes.  Governance and audit structures to ensure legislative compliance.
Sub-contractors and suppliers	Performance of sub-contractors and suppliers affecting client relationships.  Counterparty risk including health and safety and insurance.   Over reliance on key service providers	Vetting and induction procedures. Document monitoring. Performance monitoring. Divisional T&Cs in place.  Insurance.
Trade disruption	Access to premises. Payment of employees. Nationwide event. Legislation.  Contractual obligations.  Industrial relations.	Flexible workforce and network access. Business Continuity Plans.
Health, safety & environment	Working at height. Working with electricity, gas or asbestos. Driving. Fire & water management.  Slips and trips.	On going training for all staff supported by 96 QHSE professionals. Provision of appropriate equipment and PPE. Specific procedures in place for high risk areas. Internal & external audits.
Compliance risks
Insurance and material  litigation	Insurance covenants.  Visibility of claims.  Increasing operational scale.	Group and divisional management systems. Annual review of insurance cover. All incidents reported within 48 hours.  Risk reduction programmes run in conjunction with insurers.
Regulatory	Jurisdictional legislature and changes to it.  Industry licensing.  Capital market regulations.  Banking covenant compliance.	Departmental responsibility for relevant regulatory requirements. Expert external advisors. Compliance systems in place. Ongoing training and guidance. Conformance monitoring.

Directors' Responsibility Statement

The following statement is extracted from page 50 of the 2010 Annual Report and Accounts and is repeated here for the purposes of Disclosure and Transparency Rule 6.3.5 to comply with Disclosure and Transparency Rule 6.3.  This statement relates solely to the 2010 Annual Report and Accounts and is not connected to the extracted information set out in this announcement or the Preliminary Announcement:

"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, Listing Rules and Disclosure and Transparency Rules (DTRs).

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."

Related party transactions

The following extract from the Annual Report and Accounts refers to related party transactions.

"The company makes management charges to all of its subsidiaries, whether they are wholly owned or otherwise, and receives dividends from its subsidiaries, according to their ability to remit them.  Other details of related party transactions have been given in Note 34 of the consolidated financial statements."

Notes to editors

For further information, please contact:

Erica Lockhart, Investor, Public and Media Relations Manager

T: 020 3123 8675 M: 07979 784488

John Telling, Head of Corporate Affairs

T: 020 3123 8673 M: 07979 701006

 

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