Half-Yearly Financial Report
MITIE Group PLC
26 November 2007
26 November 2007
MITIE Group PLC
Half-yearly financial report for the six months to 30 September 2007
A further period of strong growth
Financial Highlights
For six months to 30 September 2007
2007 2006 Growth
£m £m
Revenue 682.1 585.0 16.6%
Operating profit before amortisation 34.4 28.1 22.4%
Profit before tax 32.2 26.3 22.4%
2007 2006 Growth
p p
Basic earnings per share before amortisation 7.0 5.7 22.8%
Basic earnings per share 6.8 5.5 23.6%
Dividend per share 2.8 2.4 16.7%
Key points
• Strong revenue growth of 16.6% to £682.1m; organic growth 12.5%
• Operating profit before amortisation up 22.4% to £34.4m
• Basic EPS up 23.6% to 6.8p
• Interim dividend up 16.7% to 2.8p
• Operating profit margins at 5.1%
• 94% of 2007/08 forecast revenue secured
Ruby McGregor-Smith, Chief Executive of MITIE Group PLC, commented:
'We have delivered a strong performance in the first half of the year. Our broad
service offering across our Facilities, Property and Engineering Services
divisions enables us to meet the growing demand from clients for bundled
services. During the period we also acquired Robert Prettie and successfully
integrated it within our Property Services division. We remain confident of
another successful year.'
For further information, please contact:
David Revis, Investor Relations Manager
T: 020 7034 7102 M: 07979 702465
John Telling, Head of Corporate Affairs and Emerging Markets
T: 020 7034 7106 M: 07979 701006
MITIE will be presenting its interim results for the period ending 30 September
2007 at 0930hrs on Monday 26 November 2007 at UBS Investment Bank, Seventh
Floor, 1 Finsbury Avenue, London, EC2M 2PP.
A webcast of MITIE's results presentation with interactive Q&A functionality
will be available online at www.mitie.co.uk at 0930hrs. A copy of the slides
will be available to download from the webcast interface as well as from the
MITIE website later in the day.
High resolution images are available for the media to download free of charge
from www.vismedia.co.uk.
ABOUT MITIE - Passionate About Service
MITIE is the UK's market leader in delivering Facilities, Property and
Engineering Services.
MITIE employs more than 44,000 employees in the UK and trains and motivates them
to deliver for our clients. By recruiting and retaining the best people we aim
to ensure our 6,500 public and private sector clients are continually satisfied
with the service they receive from us.
We deliver professional, flexible, cost-effective solutions, through our
partnerships with clients. Our extensive range of Facilities, Property and
Engineering Services is designed to maintain, manage and improve their buildings
and surroundings. Whether procuring single, managed or bundled services our
clients can be assured that we always aim to deliver the highest level of
service.
MITIE provides an extensive range of the Facilities Services that organisations
may wish to outsource including catering, cleaning, document management, front
of house services, energy services, engineering maintenance, integrated
facilities management, landscaping, grounds maintenance, pest control, security
and waste and environmental services. We also offer Property and Engineering
Services, improving buildings for our customers by providing building
refurbishment, fit-out and maintenance services, together with mechanical &
electrical engineering.
Strong client relationships are at the heart of MITIE's business and we will
continue to innovate and build our bundled and integrated service offerings. We
have a flexible approach so that our customers can choose any combination of our
services to meet their needs.
Interim Management Report
Overview of financial performance
The first half of the year to 31 March 2008 has seen strong growth across all
three of our divisions and our revenue has increased by 16.6% to £682.1m (2006:
£585.0m). We have again delivered double-digit organic revenue growth, with
revenues ahead by 12.5% (2006: 11.6%), whilst the acquisition of Robert Prettie
& Co Limited (Robert Prettie), which completed on 2 April 2007, has brought in a
further £24.1m of revenue to the Group.
Revenue in our Facilities Services division grew organically by 10.1% to £381.4m
(2006: £346.5m). In Property Services, revenue grew by 38.8% to £141.7m (2006:
£102.1m) reflecting organic growth of 15.2% and revenue of £24.1m from Robert
Prettie, whilst in Engineering Services, organic growth drove revenue up 16.6%
to £159.0m (2006: £136.4m).
We achieved our goal of maintaining operating profit margins in the range of 5%
to 6%, delivering margins before amortisation of 5.1% (2006: 4.8%; 5.0%
pre-integration costs). Operating profit margins before amortisation in our
Facilities Services division were 5.9% (2006: 5.6%: 5.9% pre-integration costs),
reflecting growth over those reported in the prior period after non-recurring
integration costs relating to acquisitions in our security business in 2006 and
maintaining underlying margins stated before those non-recurring costs. In
Property Services, margins grew to 5.3% from 4.7% reflecting the change in mix
brought about by the acquisition of Robert Prettie, whilst in Engineering
Services margins were maintained at 2.8% (2006: 2.8%).
Operating profit before amortisation rose by 22.4% to £34.4m (2006: £28.1m).
Profit before tax was up by 22.4% to £32.2m (2006: £26.3m), and our basic
earnings per share (before amortisation) grew by 22.8% to 7.0p (2006: 5.7p).
The Board has declared an interim dividend of 2.8p per share (2006: 2.4p) which
represents an increase of 16.7% from last year. This dividend will be paid on 8
February 2008 to shareholders on the register on the 11 January 2008.
Our balance sheet remains strong and provides capacity for future acquisitive
and organic growth. Our defined benefit pension schemes show a net surplus of
£1.7m (2006: £0.5m deficit) and we retain our focus on the management of capital
expenditure and working capital.
Net debt before loan notes and finance leases at 30 September 2007 was £8.5m
(2006: £20.8m), whilst total net debt stood at £23.5m (2006: £31.4m).
We continue to focus on the management of our working capital and cashflow and
use a rolling 12 month measure of the conversion of EBITDA to cash (cash
conversion) as an indicator of the efficiency of our cash management activities.
In the 12 month period to 30 September 2007, cash conversion was 100% (2006:
83%).
Acquisitions
On 2 April 2007, we acquired the plumbing and heating company Robert Prettie for
an initial consideration of £8.6m and a potential maximum consideration of
£32.7m, depending on performance over the three year period following
acquisition. The fair value of deferred consideration on this acquisition of
£14.0m is included within provisions in the consolidated balance sheet. This
acquisition has added significantly to the capabilities of our Property Services
division in the housing sector and has complemented the existing regional
operations. Robert Prettie works in partnership with local authorities,
councils, developers and registered social landlords on kitchen and bathroom
installations, heating replacement, gas servicing, maintenance and call out
services.
In August 2007, we acquired minority interest shares from the management of four
MITIE subsidiary companies, KBS Fire Protection Systems Limited, MITIE
Engineering Services (Liverpool) Limited, MITIE McCartney Fire Protection
Limited and MITIE Technology Limited.
The maximum aggregate consideration for the four purchases amounted to £6.6m,
which was settled by the issue of 2,279,508 new MITIE Group PLC ordinary shares
of 2.5p each (valued at 237.25p per share, being the closing market price per
MITIE share on 9 August 2007 and totalling £5.4m) and £0.1m cash. The balance of
£1.1m of the consideration is deferred and will be paid in new MITIE shares by
30 September 2008 subject to the attainment of specified profit targets by the
relevant companies in the year to 31 March 2008.
We also settled deferred consideration of £0.2m in respect of the purchase in
August 2006 of the minority shareholdings in MITIE Engineering Maintenance
(South West) Limited which was settled by the issue of 69,792 new MITIE shares.
In addition, the minority interest shares in MITIE Security (South West) Limited
were acquired for £0.6m as part of the plan to introduce the second generation
scheme within our Security business.
Markets
Growth in our markets remains buoyant. In 2007, revenues in our target markets
grew to £44.7bn (Source: IC Market Tracking(R) Facility Services in United
Kingdom) with MITIE having only a 2.7% overall market share. We see clear
opportunities to continue to grow our offer in the fragmented markets in which
we operate. With the exception of Security, where we have a 12% market share,
our market share is below 5% in our other businesses. We continue to target an
increase in our overall market share.
The support services market is undergoing consolidation, both through
acquisition and in the delivery of services through larger, national scope or
bundled contracts. We are well placed to make appropriate acquisitions and to
take advantage of this trend towards larger scale contracts, where we can
self-deliver a broad range of single, bundled and integrated facilities
management contracts to meet the changing needs of our clients.
Equity incentivisation
Equity incentivisation within MITIE now takes several forms including: a first
generation model for new 'start ups'; a second generation model for our more
mature businesses; a Savings Related Share Option Scheme (SAYE) for all
employees; an Executive Share Option Scheme and a Long Term Incentive Plan
(LTIP) for key senior management.
We continue to start new businesses and support first generation equity
start-ups within MITIE. In October we started MITIE Client Services Limited.
This business sits within the Facilities Services division and will provide
clients with high quality, client facing support services including reception,
switchboard, helpdesk and events management.
As part of the development of our equity incentivisation model, we have
introduced a second generation equity scheme into some of our established
businesses in order to provide an equity opportunity for the new management
teams within those businesses.
Second generation schemes have been set up in our Property Services division and
also in the Cleaning and Security businesses within our Facilities Services
division. The second generation scheme in Security was introduced on 4 October
2007 following shareholder approval at an EGM. The introduction of this scheme
is important for the successful development and consolidation of our Security
business which has grown rapidly, particularly over the last two years.
Our LTIP scheme was introduced in July 2007 following shareholder approval at
the AGM. EPS growth targets over three years form the basis of the performance
criteria for the LTIP, with shares being offered to a small number of key
management.
People
We are committed to recruiting, training, motivating and retaining the best
people in the industry to work for MITIE. Our people are at the heart of our
company and it is their passion and enthusiasm that allow MITIE to prosper. The
depth of operational skill that is available within each of our chosen service
lines allows us to deliver high quality services through trained specialists who
are committed to exceeding our customers' expectations.
In June 2007, MITIE became one of the first employers to make the UK
Government's Skills Pledge. Our commitment to the Skills Pledge forms part of
our strategy to ensure that our people are appropriately skilled and trained to
deliver excellent services to our clients, and to take advantage of the
opportunities offered to them.
Reliability and track record
Our success in delivering sustainable growth by achieving high standards of
service to customers, whilst remaining cost conscious and cash focused, has
enabled us to grow profit and revenue every year since MITIE was formed in 1987.
We have also grown or maintained EPS every year since 1988 when MITIE shares
were listed on the London Stock Exchange.
Future prospects
The outlook for MITIE remains extremely positive and we are well positioned to
deliver future profitable growth. We have a strong, established market position
and the ability to combine and bundle our broad range of services.
We retain our focus on our people and on the delivery of excellent services to
our clients. We continue to see many areas of potential growth and are
developing our business to meet the needs of our markets whilst providing more
efficient services and support to our operational team and our clients.
As part of our growth strategy, we will continue to consider selective
acquisitions and have the financial capacity to support this objective. Overall,
our focus remains to increase market share in our selected markets whilst
maintaining our margins within their target ranges.
We remain confident of another successful year.
Divisional Review
MITIE's business is structured into three divisions: Facilities Services which
delivers services through either single, bundled or facilities management
contracts, Property Services and Engineering Services.
The first half of the year has seen our teams secure new work which has added to
our order book and now means that 94% of our forecast revenue for the year is
secured.
Facilities Services
Our Facilities Services division delivers a broad range of complementary
services to clients through either single, bundled or facilities management
contracts. The majority of our business is still delivered through single
service contracts but we are continuing to see an increasing demand from clients
for bundled services as they recognise the benefits that can be realised through
rationalising their supply chain.
Facilities Services has had a strong start to the year with revenues increasing
by 10.1% to £381.4m (2006: £346.5m). Profit before interest, tax and
amortisation was up by 15.4% to £22.5m (2006: £19.5m) and the operating profit
margin before amortisation was 5.9% (2006: 5.6%).
Single Services
62.0% of our Facilities Services contracts are delivered as single service
contracts. We recognise that our single services customers want the best
possible service delivered individually by the specialists employed by MITIE.
Notable single service contract wins in the period include:
•Cable & Wireless - An engineering maintenance contract to provide M&E
maintenance services throughout 725 sites of the Cable & Wireless estate in
the UK and Ireland, covering all stages of the equipment lifecycle from
assistance with design through to aftercare and end of life disposal.
•Atomic Weapons Establishment (AWE) - A security contract where our team
of officers will provide security support services to aid the MOD Police who
manage the security of AWE's sites at Aldermaston and Burghfield in
Berkshire.
•Herbert Smith - A document management contract where the services
provided will include the management of this leading City law firm's mail,
reprographics and records management. This is a strategically important win
as we have been seeing the level of interest in outsourcing document
management services in the legal sector increasing during the last six
months.
•Terminal 5 (BAA) - A three year cleaning and waste management contract
for Heathrow Terminal 5, which is one of the largest buildings in Europe,
involving over 300 MITIE people.
Bundled Services
The bundling of services occurs when a client decides to procure more than one
service from a single service provider. For the client, bundling means improved
efficiency. It can mean just one invoice a month, services being managed
together, a reduced number of systems to audit and a smaller number of suppliers
to manage, whilst retaining the control of in-house facilities management.
For MITIE, the bundling of services also provides a significant and developing
opportunity - 24.0% of our Facilities Services division revenue is delivered
through bundled contracts and we anticipate that this will increase over the
medium-term. The bundling of services represents a key part of our strategy and
will be a major driver of organic growth. Notable bundled services wins during
the period include:
•HBOS - In addition to the cleaning, landscaping and pest control contract
for all HBOS branches around the UK which started in February 2007, we have
now extended our contract to provide bundled services to a further 130 of
their major office sites around the country. The contract has doubled in
value and now involves over 2,000 MITIE people.
•Merrill Lynch - We have re-secured work to provide both the mail and
distribution services as well as the front of house services contract. This
includes the provision of the reception, switchboard and helpdesk services
to Merrill Lynch's London estate and was the first contract win for our new
Client Services start-up.
•Nokia - This contract started as a maintenance contract in 1999, adding
cleaning in 2004. The contract was successfully re-tendered in 2007 for a
further period of three years when mail services were also added to the
contract.
Facilities Management
Facilities Management (FM) represents 14.0% of the revenue of our Facilities
Services division. As our scale in each of our chosen markets grows, we are
seeing increasing opportunities to compete for larger private and public sector
contracts. This is a growth area for MITIE and one we are very focused on.
Facilities Management also includes PFI contracts, where we are already the
market leader in delivering managed services to schools. Notable Facilities
Management wins in the period include:
•Perth & Kinross Council - A public private partnership agreement with
Axiom Education (Perth & Kinross) Limited for a project to build and operate
7 new schools on 6 sites. MITIE is part of the Axiom consortium and has won
a contract for the delivery of full FM services for a 30 year period.
Following completion of construction, provision of FM services will commence
at the first school in June 2009 with the remaining schools opening over the
following two years.
Property Services
Our Property Services division provides refurbishment, maintenance, interior
fit-out, passive fire protection, roofing and painting services, benefiting a
wide range of customers through making a positive impact in the workplace and
helping to sustain communities through growth and change.
The division has had a good start to the year, winning sizable long-term
contracts, both repeat business and new work, for varied services covering many
different sectors.
The integration of our latest acquisition, plumbing and heating specialist
Robert Prettie operating within the Midlands, has increased our national
coverage and strengthened our presence in the housing sector in the areas of
social housing and new house fit-out for private developers.
There has been strong organic growth across the division during the period. This
has been driven by a shift from more traditional contracting to longer term
relationships through framework agreements and partnering initiatives.
Revenue in the period was up 38.8% to £141.7m (2006: £102.1m), driven by organic
growth of 15.2% (2006: 30.6%) and revenue from Robert Prettie of £24.1m. Profit
before interest, tax and amortisation increased by 56.3% to £7.5m (2006: £4.8m)
and the operating profit margin before amortisation was 5.3% (2006: 4.7%),
reflecting the change in mix brought about by the acquisition of Robert Prettie.
Notable contract wins include:
•Helical Bar PLC - A structural commercial refurbishment of Clareville
House in SW1 including the creation of additional internal space and the
installation of new lifts and a new copper roof. This will turn the
building into high quality office space with retail and restaurant
accommodation at ground floor level and leisure usage at basement level.
•Dacorum Borough Council - We have been selected as the service provider
to maintain the Council's housing stock of 10,700 properties based in Hemel
Hempstead. Dacorum Borough Council will be transferring its skilled
management team and operatives to MITIE providing a seamless and continued
service to the residents of the borough delivered from new offices in the
heart of Hemel Hempstead.
•Deutsche Bank - A contract to fit out 25,000 sq ft across two floors at
Pinners Hall, which is prime office space right in the heart of the City of
London. The work includes reconfiguring air conditioning systems and
installing new fire alarms and lighting within a new metal ceiling system.
•Bruntwood - A contract to provide additional refurbishment services at
The Plaza in Liverpool to create a remodelled ground floor entrance, a
three-storey glazed atrium, a new ground floor reception, retail space and
bespoke meeting areas. MITIE has already refurbished seven floors
(approximately 200,000 sq ft) of the 15-storey building, which Bruntwood is
remodelling extensively prior to letting each floor, some of which will be
serviced office space.
Engineering Services
Our Engineering Services division covers the design and installation of
mechanical and electrical systems, information and communication technology, and
energy and utilities infrastructure, serving a wide range of clients from many
different sectors.
New contracts helped to drive revenue up 16.6% to £159.0m (2006: £136.4m).
Profit before interest, tax and amortisation increased by 15.8% to £4.4m (2006:
£3.8m) with the operating profit margin before amortisation maintained at 2.8%
(2006: 2.8%). The shift from traditional contracting activities has continued
with technology, retail and social housing now accounting for up to 40% of the
work mix.
Major contract wins include:
•National Physical Laboratory - We have been working at the National
Physical Laboratory since 2005 undertaking upgrades to a number of
laboratories and offices together with the replacement and upgrade of plant
and equipment in the utility pods. We are currently onsite in Teddington
working on a project to create a new facility to house a linear accelerator,
an electrical device for the acceleration of subatomic particles, generating
high energy X-rays which target and destroy cancer cells.
•Data centre provider - A contract with one of the world's leading
providers of data centre space, for the design and construction of two new
resilient power stations and the refurbishment of an existing power station
within one of their London data centres.
•Standard Life Investments - We have been employed on a new build,
state-of-the-art office development in central Guildford as a result of our
substantial knowledge and expertise of renewable technologies. Our design
team integrated with the client's professional team at an early stage and
proposed the idea of a bespoke energy solution which embraced renewable
technology, the main feature being a ground coupled heat exchanger linked to
a water source variable refrigerant flow heat pump system.
•Easter Group - Our client is a leading developer of Green office space,
and was the driver for a new build business park development near Reading.
MITIE's knowledge of geo-thermal energy technologies was crucial to this
contract award and demonstrated a full understanding of the complete service
solution needed to help make the customers vision a reality. Collaborating
with the professional team early on, the services carried out by MITIE
include the design, build and installation of closed loop borefields and of
a ground source heat pump system.
Key performance indicators
In order to manage and monitor our performance, we employ a range of key
performance indicators (KPIs) that we use to manage and assess our business
performance and retain our focus on profitable growth. Our financial KPIs are
focused in the following areas:
Margins
Target - Maintain Group operating profit margins before amortisation
The operating profit margin before amortisation for the first half of the year
was 5.1% (2006: 4.8%; 5.0% before non-recurring integration costs). Operating
profit margins before amortisation in Facilities Services of 5.9% (2006: 5.6%)
and in Property Services of 5.3% (2006: 4.7%) showed enhancement compared to the
prior period, whilst in Engineering Services margins were maintained at 2.8%
(2006: 2.8%).
Cash conversion
Target - Convert over 90% of Group EBITDA to cash
The efficiency with which we manage the generation of cash within MITIE is an
important indicator for our business. The cash flow within MITIE is cyclical and
we monitor average annualised rates of the conversion of profits to cash. In the
12 months to 30 September 2007, we converted 100% (2006: 83%) of EBITDA to cash.
Cash conversion for the six months to 30 September 2007 was 62% (2006: 84%)
reflecting the reversal of short-term timing differences in April 2007. In our
Annual Report for the year ended 31 March 2007 we reported cash conversion of
114%, driven by particularly strong cash conversion in the second half of the
year of 141%, and that more sustainable levels of 90%-100% would be expected
going forwards. We continue to support this view in respect of the Group's
ongoing cash conversion.
Capital expenditure
Target - Maintain below 2% of revenue
We have continued to meet our target of keeping our capital expenditure to below
2% of revenue with capital expenditure levels at 1.3% (2006: 1.6%) of revenue
during the first six months.
Dividend growth
Target - Maintain in line with underlying earnings at 2.5 times cover
Our dividend policy is to maintain dividend growth at least in line with the
underlying profit growth of the business after adjusting for amortisation and at
a cover ratio of 2.5 times. The Board has declared an interim dividend of 2.8p
per share (2006: 2.4p) which represents an increase of 16.7% compared to the
prior period interim dividend.
Statement of principal risks and uncertainties
We have an established risk management and corporate governance framework for
identifying, evaluating and managing significant risks faced by MITIE. We
recognise that risks and uncertainties offer the potential for both upside and
downside changes within our business. We employ internal and external
specialists to manage our risk profile and regularly review our system of
internal control to ensure that risks are appropriately identified and
addressed.
Our principal risks and uncertainties for the second six months of the financial
year remain the same as detailed on pages 20 and 21 in MITIE's 2007 Annual
Report, a copy of which is available on our website at www.mitie.co.uk. We have
summarised the risks below:
New business - As our business develops, we will increasingly tender for larger
and more complex contracts creating new or larger scale risks as well as the
opportunity for enhanced returns.
Acquisitions - We continue to seek acquisitions that fit with or complement our
existing business and acknowledge the risks surrounding appropriate pricing and
integration of any new business.
Health, safety and environment - The range of activities that we undertake
carries with it a broad spectrum of health, safety and environmental risks with
the potential to impact a number of stakeholder groups including our employees,
the public and our clients.
Employee skills shortages - MITIE is a people business and our success relies on
our ability to recruit and retain the best talent throughout the organisation.
Liquidity - Maintaining sufficient liquidity is essential for ensuring that we
can meet our strategic targets and manage our day to day commitments.
Pensions - We manage our exposure to pension scheme liabilities through the use
of specialist in-house and external advisers and through established procedures
to ensure compliance with current regulations.
Statement of directors' responsibilities
The Directors of MITIE Group PLC confirm that to the best of their knowledge
this condensed set of financial statements has been prepared in accordance with
IAS34 as adopted by the European Union, and that the interim management report
includes a true and fair view of the assets, liabilities, financial position and
profits of the MITIE Group PLC as required by the Disclosure and Transparency
Rules (DTR) 4.2.4 and a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8.
By order of the Board
Ruby McGregor-Smith
Chief Executive
MITIE Group PLC
26 November 2007
CONDENSED CONSOLIDATED INCOME STATEMENT
30 September 30 September
2007 2006
(unaudited) (unaudited)
---------------------------------------------------------------------------------------------------------
Notes Before Amortisation of Total Before Amortisation of Total
amortisation intangible amortisation intangible
assets assets
£m £m £m £m £m £m
---------------------------------------------------------------------------------------------------------
Continuing
operations
Revenue 3 682.1 - 682.1 585.0 - 585.0
Cost of sales (557.3) - (557.3) (476.6) - (476.6)
---------------------------------------------------------------------------------------------------------
Gross profit 124.8 - 124.8 108.4 - 108.4
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
Other
administrative
expenses (90.4) - (90.4) (80.3) - (80.3)
Amortisation
of intangible
assets - (0.9) (0.9) - (0.8) (0.8)
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
Total
administrative
expenses (90.4) (0.9) (91.3) (80.3) (0.8) (81.1)
---------------------------------------------------------------------------------------------------------
Operating
profit 2 34.4 (0.9) 33.5 28.1 (0.8) 27.3
Investment
revenue 0.7 - 0.7 0.2 - 0.2
Finance costs (2.0) - (2.0) (1.2) - (1.2)
---------------------------------------------------------------------------------------------------------
Profit before tax 33.1 (0.9) 32.2 27.1 (0.8) 26.3
---------------------------------------------------------------------------------------------------------
Tax (10.1) 0.3 (9.8) (8.3) 0.2 (8.1)
---------------------------------------------------------------------------------------------------------
Profit for the
period from
continuing
operations 23.0 (0.6) 22.4 18.8 (0.6) 18.2
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
Profit for the period 23.0 (0.6) 22.4 18.8 (0.6) 18.2
---------------------------------------------------------------------------------------------------------
Attributable to:
Equity holders
of the parent 21.8 (0.6) 21.2 17.6 (0.6) 17.0
Minority
interests 1.2 - 1.2 1.2 - 1.2
---------------------------------------------------------------------------------------------------------
23.0 (0.6) 22.4 18.8 (0.6) 18.2
---------------------------------------------------------------------------------------------------------
Earnings per share
(EPS)
- Basic 6 7.0p (0.2)p 6.8p 5.7p (0.2)p 5.5p
- Diluted 6 6.9p (0.2)p 6.7p 5.6p (0.2)p 5.4p
---------------------------------------------------------------------------------------------------------
31 March
2007 (audited)
---------------------------------------------------------------------------------------
Notes Before Amortisation of Total
amortisation intangible
assets
£m £m £m
---------------------------------------------------------------------------------------
Continuing operations
Revenue 3 1,228.8 - 1,228.8
Cost of sales (999.8) - (999.8)
---------------------------------------------------------------------------------------
Gross profit 229.0 - 229.0
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Other administrative expenses (169.1) - (169.1)
Amortisation of intangible assets - (1.6) (1.6)
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Total administrative expenses (169.1) (1.6) (170.7)
---------------------------------------------------------------------------------------
Operating profit 2 59.9 (1.6) 58.3
Investment revenue 0.8 - 0.8
Finance costs (2.5) - (2.5)
---------------------------------------------------------------------------------------
Profit before tax 58.2 (1.6) 56.6
---------------------------------------------------------------------------------------
Tax (17.9) 0.5 (17.4)
---------------------------------------------------------------------------------------
Profit for the period from
continuing operations 40.3 (1.1) 39.2
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Profit for the period 40.3 (1.1) 39.2
---------------------------------------------------------------------------------------
Attributable to:
Equity holders of the parent 38.1 (1.1) 37.0
Minority interests 2.2 - 2.2
---------------------------------------------------------------------------------------
40.3 (1.1) 39.2
---------------------------------------------------------------------------------------
Earnings per share (EPS)
- Basic 6 12.3p (0.4)p 11.9p
- Diluted 6 12.1p (0.3)p 11.8p
---------------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
30 September
-------------------------------------------------------------------
Year to
2007 2006 31 March
(unaudited) (unaudited) 2007 (audited)
£m £m £m
-----------------------------------------------------------------------------------
Actuarial losses on defined benefit
pension schemes - (3.2) (4.7)
Tax credit on actuarial loss taken
directly to equity - 1.0 1.5
-----------------------------------------------------------------------------------
Net expense on defined benefit pension schemes
recognised directly in equity - (2.2) (3.2)
Profit for the period 22.4 18.2 39.2
-----------------------------------------------------------------------------------
Total recognised income and expense for
the financial period 22.4 16.0 36.0
-----------------------------------------------------------------------------------
Attributable to:
Equity holders of the parent 21.2 14.8 33.8
Minority interests 1.2 1.2 2.2
-----------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET
30 September
-------------------------------------------------------------------------
Notes 2007 2006 31 March
(unaudited) (unaudited) 2007 (audited)
£m £m £m
--------------------------------------------------------------------------------------
Non-current assets
Goodwill 179.8 146.6 148.4
Other intangible assets 14.4 10.7 9.9
Property, plant and equipment 41.8 36.4 41.5
Deferred tax assets 7.0 5.1 7.7
Retirement benefit surplus 2.1 - 0.5
--------------------------------------------------------------------------------------
Total non-current assets 245.1 198.8 208.0
--------------------------------------------------------------------------------------
Current assets
Inventories 10.8 10.1 7.9
Trade and other receivables 309.3 256.4 272.8
Cash and cash equivalents 13.2 9.2 25.6
--------------------------------------------------------------------------------------
Total current assets 333.3 275.7 306.3
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Total assets 578.4 474.5 514.3
--------------------------------------------------------------------------------------
Current liabilities
Trade and other payables (279.7) (220.4) (255.7)
Financial liabilities (33.2) (30.5) (30.9)
Provisions (1.1) (2.9) (0.3)
Current tax liabilities (10.1) (7.0) (8.2)
--------------------------------------------------------------------------------------
Total current liabilities (324.1) (260.8) (295.1)
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Net current assets 9.2 14.9 11.2
--------------------------------------------------------------------------------------
Non-current liabilities
Financial liabilities (3.5) (10.1) (2.8)
Provisions (25.7) (10.3) (8.6)
Retirement benefit obligation (0.4) (0.5) -
Deferred tax liabilities (3.9) (3.7) (3.9)
--------------------------------------------------------------------------------------
Total non-current
liabilities (33.5) (24.6) (15.3)
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Total liabilities (357.6) (285.4) (310.4)
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Net assets 2 220.8 189.1 203.9
--------------------------------------------------------------------------------------
Equity 11
Share capital 7.9 7.8 7.8
Share premium account 17.5 15.0 16.6
Merger reserve 60.4 54.9 54.9
Revaluation reserve (0.2) (0.2) (0.2)
Capital redemption reserve 0.3 0.3 0.3
Other reserve 0.1 0.3 0.2
Share-based payments reserve 2.1 1.5 1.9
Own shares reserve (2.0) - -
Retained earnings 124.0 97.8 110.2
--------------------------------------------------------------------------------------
Equity attributable to equity holders
of the parent 210.1 177.4 191.7
--------------------------------------------------------------------------------------
Minority interests 10.7 11.7 12.2
--------------------------------------------------------------------------------------
Total equity 220.8 189.1 203.9
--------------------------------------------------------------------------------------
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
30 September
--------------------------------------------------------------------------
Notes 2007 2006 31 March
(unaudited) (unaudited) 2007 (audited)
£m £m £m
--------------------------------------------------------------------------------------
Net cash from operating activities 7 16.4 19.0 63.9
Investing activities
Interest received 0.7 0.2 0.7
Purchase of property, plant and equipment (7.4) (9.6) (20.8)
Purchase of subsidiary undertakings (11.7) (2.3) (3.9)
Purchase of other intangible assets (3.6) - -
Disposals of property, plant and equipment 2.9 2.1 3.6
--------------------------------------------------------------------------------------
Net cash outflow from
investing activities (19.1) (9.6) (20.4)
--------------------------------------------------------------------------------------
Financing activities Repayments of
obligations under finance leases (0.6) (0.1) (0.9)
Proceeds on issue of share capital 0.8 0.9 2.5
Repayments of loans on purchase of
subsidiary undertakings (1.0) - (1.0)
Bank loans repaid - (1.0) (11.0)
Purchase of own shares (2.0) - -
Equity dividends paid (8.4) (7.4) (14.9)
Minority dividends paid (0.2) (0.2) (0.2)
--------------------------------------------------------------------------------------
Net cash outflow from financing (11.4) (7.8) (25.5)
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Net (decrease)/increase in cash and cash
equivalents (14.1) 1.6 18.0
--------------------------------------------------------------------------------------
Net cash and cash equivalents at
beginning of the period 25.6 7.6 7.6
--------------------------------------------------------------------------------------
Net cash and cash equivalents at end of
the period 11.5 9.2 25.6
--------------------------------------------------------------------------------------
Net cash and cash equivalents comprises:
Cash at bank 13.2 9.2 25.6
Overdraft (1.7) - -
--------------------------------------------------------------------------------------
11.5 9.2 25.6
--------------------------------------------------------------------------------------
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 September 2007
1. Basis of preparation
The condensed financial statements for the six months to 30 September 2007 have
been prepared on the basis of the accounting policies set out in the Group's
latest annual financial statements for the year ended 31 March 2007. These
accounting policies are drawn up in accordance with International Accounting
Standards (IAS) and International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board and as adopted for use in the
European Union. The condensed financial statements for the six months to 30
September 2007 have been prepared in accordance with IAS 34 'Interim Financial
Reporting'.
The condensed consolidated financial statements are unaudited and have not been
subject to review. They do not include all the information and disclosures
required in the annual financial statements, and therefore should be read in
conjunction with the Group's annual financial statements as at 31 March 2007.
The financial information presented for the year ended 31 March 2007 does not
represent full statutory accounts within the meaning of Section 240 of the
Companies Act 1985. A copy of the statutory accounts for that year has been
delivered to the Registrar of Companies. The auditor's report on those accounts
was not qualified and did not contain statements under section 237(2) or (3) of
the Companies Act 1985.
Significant accounting policies
The accounting policies and methods of computation adopted in the preparation of
the condensed consolidated financial statements are consistent with those
followed in the preparation of the Group's annual financial statements for the
year ended 31 March 2007, 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.
•Amendment to IAS 1 'Presentation of Financial Statements: Capital Disclosures';
•IFRS 7 'Financial Instruments: Disclosures';
•IFRIC 8 'Scope of IFRS 2';
•IFRIC 9 'Reassessment of Embedded Derivatives';
•IFRIC 10 'Interim Financial Reporting and Impairment';
•IFRIC 11 'IFRS 2 - Group and Treasury Share Transactions'; and
•Amendment to IAS 23 'Capitalisation of Borrowing Costs'.
2. Segmental analysis
Six months to 30 September 2007 Six months to 30 September 2006
---------------------------------------------------------------------------------------------------------
Revenue Profit before Margin Profit before Revenue Profit before Margin Profit before
interest tax tax interest tax tax
and and
amortisation amortisation
£m £m % £m £m £m % £m
---------------------------------------------------------------------------------------------------------
Facilities
Services 381.4 22.5 5.9 20.3 346.5 19.5 5.6 17.5
Property
Services 141.7 7.5 5.3 7.1 102.1 4.8 4.7 4.8
Engineering
Services 159.0 4.4 2.8 4.8 136.4 3.8 2.8 4.0
---------------------------------------------------------------------------------------------------------
Total
continuing
operations 682.1 34.4 5.1 32.2 585.0 28.1 4.8 26.3
---------------------------------------------------------------------------------------------------------
The prior period results set out above are stated after integration costs of
£1.1m relating to acquisitions. The results of the Group before the effect of
integration costs are as follows:
Six months to 30 September 2006
-----------------------------------------------------------------------------------------------
Revenue Profit before Margin Profit
interest tax before
and tax
amortisation
£m £m % £m
-----------------------------------------------------------------------------------------------
Facilities
Services 346.5 19.5 5.6 17.5
Add:
Integration
costs - 1.1 - 1.1
-----------------------------------------------------------------------------------------------
Total 346.5 20.6 5.9 18.6
-----------------------------------------------------------------------------------------------
Property
Services 102.1 4.8 4.7 4.8
Engineering
Services 136.4 3.8 2.8 4.0
-----------------------------------------------------------------------------------------------
Total
continuing
operations 585.0 29.2 5.0 27.4
-----------------------------------------------------------------------------------------------
Year to 31 March 2007
--------------------------------------------------------------------------------
Revenue Profit before Margin Profit
interest tax before
and tax
amortisation
£m £m % £m
--------------------------------------------------------------------------------
Facilities Services 732.1 41.5 5.7 37.4
Property Services 215.1 10.6 4.9 10.9
Engineering Services 281.6 7.8 2.8 8.3
--------------------------------------------------------------------------------
Total
continuing
operations 1,228.8 59.9 4.9 56.6
--------------------------------------------------------------------------------
The results set out above are stated after integration costs of £2.3m relating
to acquisitions. The results of the Group before the effect of integration costs
are as follows:
Year to 31 March 2007
--------------------------------------------------------------------------------
Revenue Profit before Margin Profit
interest tax before
and tax
amortisation
£m £m % £m
--------------------------------------------------------------------------------
Facilities Services 732.1 41.5 5.7 37.4
Add: Integration costs - 2.3 - 2.3
--------------------------------------------------------------------------------
Total 732.1 43.8 6.0 39.7
--------------------------------------------------------------------------------
Property Services 215.1 10.6 4.9 10.9
Engineering Services 281.6 7.8 2.8 8.3
--------------------------------------------------------------------------------
Total
continuing operations 1,228.8 62.2 5.1 58.9
--------------------------------------------------------------------------------
2. Segmental analysis continued
Six months to Six months to
30 September 30 September
2007 2006
--------------------------------------------------------------------------------------------------
Other segment Facilities Property Engineering Total Facilities Property Engineering Total
information Services Services Services Services Services Services
£m £m £m £m £m £m £m £m
--------------------------------------------------------------------------------------------------
Assets by
segment
Intangible
assets 142.1 35.5 16.6 194.2 139.7 5.5 12.1 157.3
Divisional
assets 216.3 91.6 109.8 417.7 195.5 72.3 82.9 350.7
--------------------------------------------------------------------------------------------------
358.4 127.1 126.4 611.9 335.2 77.8 95.0 508.0
Unallocated
assets (33.5)(i) (33.5)(i)
--------------------------------------------------------------------------------------------------
Total assets 578.4 474.5
--------------------------------------------------------------------------------------------------
Liabilities by
segment
Divisional
liabilities (143.3) (73.9) (92.9) (310.1) (144.3) (48.3) (66.4) (259.0)
Unallocated
liabilities (47.5)(i) (26.4)(i)
--------------------------------------------------------------------------------------------------
Total
liabilities (357.6) (285.4)
--------------------------------------------------------------------------------------------------
Total net
assets 220.8 189.1
--------------------------------------------------------------------------------------------------
Capital
expenditure
Tangible assets 6.5 1.2 1.0 8.7 4.7 3.8 1.1 9.6
Depreciation
charge 4.5 1.5 0.8 6.8 4.1 1.0 0.8 5.9
Intangible
assets 2.3 30.0 4.5 36.8 2.3 - 0.5 2.8
Intangible
amortisation 0.8 0.1 - 0.9 0.8 - - 0.8
--------------------------------------------------------------------------------------------------
(i) Relates to interdivisional funding.
The 2006 comparatives have been revised to separately identify assets and
liabilities that are not directly attributable to
a business segment.
Year to 31 March 2007
--------------------------------------------------------------------------------
Other segment information Facilities Property Engineering Total
Services Services Services
£m £m £m £m
--------------------------------------------------------------------------------
Assets by segment
Intangible
assets 140.6 5.6 12.1 158.3
Divisional
assets 226.5 75.5 100.6 402.6
--------------------------------------------------------------------------------
367.1 81.1 112.7 560.9
Unallocated assets (46.6)(i)
--------------------------------------------------------------------------------
Total assets 514.3
--------------------------------------------------------------------------------
Liabilities by segment
Divisional
liabilities (159.7) (55.0) (81.2) (295.9)
Unallocated liabilities (14.5)(i)
--------------------------------------------------------------------------------
Total
liabilities (310.4)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total net
assets 203.9
--------------------------------------------------------------------------------
Capital expenditure
Tangible assets 12.7 7.0 2.8 22.5
Depreciation
charge 9.0 2.4 1.6 13.0
Intangible
assets 3.9 0.2 0.5 4.6
Intangible
amortisation 1.6 - - 1.6
--------------------------------------------------------------------------------
(i) Relates to interdivisional funding.
3. Revenue
The following analysis is provided for additional information:
Six months to 30 September Year to
-------------------------------------------------------------- 31 March
2007 2006 2007
£m £m £m
--------------------------------------------------------------------------------
Facilities Services
Cleaning 117.4 105.4 220.9
Security 130.4 121.2 241.8
Engineering Maintenance 52.9 49.0 109.7
Integrated Services 50.6 44.6 99.9
Business Services 11.5 10.5 24.1
Catering 9.8 7.7 19.7
Landscape 5.5 5.4 10.3
Pest Control 3.3 2.7 5.7
--------------------------------------------------------------------------------
Total Facilities Services 381.4 346.5 732.1
--------------------------------------------------------------------------------
Property Services 141.7 102.1 215.1
Engineering Services 159.0 136.4 281.6
--------------------------------------------------------------------------------
Total 682.1 585.0 1,228.8
--------------------------------------------------------------------------------
4. Dividends
The proposed interim dividend of 2.8p (2006: 2.4p) per share (not recognised as
a liability at 30 September 2007) will be paid
on 8 February 2008 to shareholders on the Register on 11 January 2008.
The dividend disclosed in the cash flow represents the final ordinary dividend
of 2.7p (2006: 2.4p) per share as proposed in the
31 March 2007 financial statements and approved at the Group's AGM (not
recognised as a liability at 31 March 2007).
5. Taxation
Income tax on profit before intangible amortisation for the six months ended 30
September 2007 is based on an effective rate of 30.5%, which has been calculated
by reference to the projected charge for the full year. The reduction in the
corporation tax rate next year to 28% has not materially impacted deferred tax.
6. 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:
Six months to 30 September Year to
------------------------------------------------------------------- 31 March
Number of shares 2007 2006 2007
--------------------------------------------------------------------------------
Weighted average number of Ordinary
shares for the purpose of basic EPS 313.2 309.2 310.6
Effect of dilutive potential Ordinary
shares: share options 4.5 3.6 4.4
Weighted average number of Ordinary
shares for the purpose of diluted EPS 317.7 312.8 315.0
--------------------------------------------------------------------------------
7. Notes to the cash flow statement
Six months to 30 September Year to
------------------------------------------------------------------- 31 March
Reconciliation of operating profit 2007 2006 2007
to net cash from operating (unaudited) (unaudited) (audited)
activities £m £m £m
--------------------------------------------------------------------------------
Operating profit from
continuing operations 33.5 27.3 58.3
Adjustments for:
Share-based payment expense 0.6 0.6 1.1
Pension charge 0.8 0.8 1.8
Pension contributions (2.4) (1.7) (5.2)
Depreciation of property, plant
and equipment 6.8 5.9 13.0
Amortisation of intangible
assets 0.9 0.8 1.6
Gain on disposal of property,
plant and equipment (1.0) (0.6) (1.1)
--------------------------------------------------------------------------------
Operating cash flows before
movements in working capital 39.2 33.1 69.5
--------------------------------------------------------------------------------
Decrease/(increase) in
inventories 2.0 (1.3) 0.9
Increase in receivables (35.3) (12.1) (28.5)
Increase in payables 17.0 6.4 39.4
Increase in provisions 2.8 2.6 2.1
--------------------------------------------------------------------------------
Cash generated by operations 25.7 28.7 83.4
--------------------------------------------------------------------------------
Income taxes paid (8.0) (8.5) (17.0)
Interest paid (1.3) (1.2) (2.5)
--------------------------------------------------------------------------------
Net cash from operating
activities 16.4 19.0 63.9
--------------------------------------------------------------------------------
8. Acquisition of subsidiaries
Purchase of minority interests
MITIE McCartney KBS Fire MITIE MITIE MITIE Security Total
Fire Protection Protection Technology Ltd Engineering (South West)
Ltd Systems Services Ltd
Ltd (Liverpool) Ltd
£m £m £m £m £m £m
------------------------------------------------------------------------------------------------------------
Minority interests 0.7 0.1 1.0 0.6 0.2 2.6
Goodwill 0.5 - 1.6 2.1 0.4 4.6
------------------------------------------------------------------------------------------------------------
Total purchase consideration 1.2 0.1 2.6 2.7 0.6 7.2
Shares issued - MITIE Group PLC 1.2 0.1 2.0 2.1 - 5.4
Deferred contingent consideration - - 0.5 0.6 - 1.1
------------------------------------------------------------------------------------------------------------
Cash consideration being cash
outflow in the period - - 0.1 - 0.6 0.7
------------------------------------------------------------------------------------------------------------
During the period £1.0m of loan notes in respect of The Watch Security Limited
were redeemed.
Furthermore £0.2m of deferred consideration in respect of the purchase last year
of the minority shareholdings in MITIE Engineering Maintenance (South West)
Limited was settled by the issue of new MITIE shares.
Purchase of subsidiary
On 2 April 2007 MITIE acquired 100% of Robert Prettie for total consideration of
£23.2m. The transaction has been accounted for by the purchase method of
accounting.
Book value Fair value Fair value
adjustments
£m £m £m
--------------------------------------------------------------------------------
Net assets acquired
Intangible assets 8.6 (6.7) 1.9
Deferred tax liability - (0.4) (0.4)
Property, plant and equipment 0.2 - 0.2
Inventories 4.9 (0.4) 4.5
Trade and other receivables 1.2 - 1.2
Cash and cash equivalents 0.2 - 0.2
Trade and other payables (6.3) (0.2) (6.5)
Current tax liabilities (0.7) - (0.7)
Loans (3.7) - (3.7)
Pension liabilities (0.4) - (0.4)
--------------------------------------------------------------------------------
Net assets acquired 4.0 (7.7) (3.7)
Goodwill 26.9
--------------------------------------------------------------------------------
Total consideration 23.2
--------------------------------------------------------------------------------
Satisfied by Cash 7.0
Loan notes 1.6
Deferred contingent consideration 14.0
Directly attributable costs 0.6
--------------------------------------------------------------------------------
Total consideration 23.2
--------------------------------------------------------------------------------
Net cash outflow arising on acquisition
Cash consideration 7.0
Cash and cash equivalents acquired (0.2)
Loans repaid 3.7
--------------------------------------------------------------------------------
Net cash outflow 10.5
--------------------------------------------------------------------------------
The goodwill arising on the acquisition of Robert Prettie is attributable to the
underlying profitability of the company, expected profitability arising from new
business and the anticipated future operating synergies arising from
assimilation into the Group.
The full exercise to determine the assets acquired is still to be completed,
thus the values are provisional; this exercise will be completed for the full
year financial statements. The company contributed £24.1m to revenue and £2.0m
to the Group's profit before tax for the period. Integration costs of £0.4m have
been absorbed within the Property Services division. As the Group acquired
Robert Prettie on 2 April 2007 there is no difference between the revenue and
profit as reported from that which would have been made had the acquisition been
on the first day of the financial period.
The unwind of discounted deferred contingent consideration gave rise to a £0.4m
finance charge in the period.
9. Analysis of net debt
30 September
--------------------------------------------------------------- 31 March
2007 2006 2007
£m £m £m
--------------------------------------------------------------------------------
Cash at bank 13.2 9.2 25.6
Overdraft (1.7) - -
--------------------------------------------------------------------------------
Net cash and cash equivalents 11.5 9.2 25.6
Bank loans (20.0) (30.0) (20.0)
--------------------------------------------------------------------------------
Net (debt)/cash before loan notes and
obligations under finance leases (8.5) (20.8) 5.6
--------------------------------------------------------------------------------
Loan notes (11.7) (8.9) (11.1)
Obligations under finance leases (3.3) (1.7) (2.6)
--------------------------------------------------------------------------------
Net debt (23.5) (31.4) (8.1)
--------------------------------------------------------------------------------
10. Share capital
Ordinary Ordinary
Shares Shares
of 2.5p of 2.5p
Number £m
--------------------------------------------------------------------------------
Authorised
At 30 September 2006 and 1 April 2007 340,000,000 8.5
Authorised during the period 160,000,000 4.0
--------------------------------------------------------------------------------
At 30 September 2007 500,000,000 12.5
--------------------------------------------------------------------------------
Allotted and fully paid
At 1 April 2007 312,449,195 7.8
Issued for acquisitions 2,349,300 0.1
Issued under share option schemes 684,750 -
--------------------------------------------------------------------------------
At 30 September 2007 315,483,245 7.9
--------------------------------------------------------------------------------
At 1 April 2006 308,762,569 7.7
Issued for acquisitions 1,727,180 0.1
Issued under share option schemes 734,020 -
--------------------------------------------------------------------------------
At 30 September 2006 311,223,769 7.8
--------------------------------------------------------------------------------
At the company's AGM on 26 July 2007 the Company's authorised share capital was
increased from 340,000,000 to 500,000,000 Ordinary Shares of 2.5p each.
During the period 2,349,300 (2006: 1,727,180) Ordinary Shares of 2.5p were
allotted in respect of acquiring minority interests at
a mid-market price of 237.2p (2006: 191.2p) giving rise to share premium of £nil
(2006: £0.4m) and a merger reserve of £5.5m (2006: £2.9m).
During the period 684,750 (2006: 734,020) Ordinary Shares of 2.5p were allotted
in respect of share option schemes at a price between 58p and 191p (2006: 58p
and 174p) giving rise to share premium of £0.9m (2006: £0.9m).
11. Reserves
Share-
Share Capital based Own
Called-up premium Merger Revaluation redemption Other payments shares Retained
share capital account reserve reserve reserve reserve(i) reserve reserve earnings Total
£m £m £m £m £m £m £m £m £m £m
------------------------------------------------------------------------------------------------------------------------
Balance at
1 April 2007 7.8 16.6 54.9 (0.2) 0.3 0.2 1.9 - 110.2 191.7
Shares
issued
and net
premium
arising in
respect
of
acquisitions 0.1 - 5.5 - - - - - - 5.6
Shares
issued
and net
premium
in
connection
with
exercise of
share
options - 0.9 - - - (0.1) - - - 0.8
Profit for
the
period
attributable
to equity
holders of
the
parent - - - - - - - - 21.2 21.2
Dividends
paid - - - - - - - - (8.4) (8.4)
Purchase of
own shares
by
Employee
Benefit
Trust - - - - - - - (2.0) - (2.0)
Share-based
payments - - - - - - 0.2 - 0.4 0.6
Tax credit
on
items taken
directly to
equity - - - - - - - - 0.6
0.6---------------------------------------------------------------------------------------------------------------------
---
Net
actuarial
loss
on defined
benefit
pension
schemes - - - - - - - - - -
Tax credit
on actuarial
loss taken
directly to
equity - - - - - - - - - -
------------------------------------------------------------------------------------------------------------------------
Net expense
on defined
benefit
pension
schemes
recognised
directly in
equity in
the period - - - - - - - - - -
------------------------------------------------------------------------------------------------------------------------
Balance at
30 September
2007 7.9 17.5 60.4 (0.2) 0.3 0.1 2.1 (2.0) 124.0 210.1
------------------------------------------------------------------------------------------------------------------------
(i) This is a non-distributable reserve.
11. Reserves continued
Share-
Share Capital based Own
Called-up premium Merger Revaluation redemption Other payments shares Retained
share capital account reserve reserve reserve reserve(i) reserve reserve earnings Total
£m £m £m £m £m £m £m £m £m £m
------------------------------------------------------------------------------------------------------------------------
Balance at
1 April 2006 7.7 13.7 52.0 (0.2) 0.3 0.3 1.4 - 90.1 165.3
Shares
issued
and net
premium
arising in
respect of
acquisitions 0.1 0.4 2.9 - - - - - - 3.4
Shares
issued
and net
premium in
connection
with exercise
of share
options - 0.9 - - - - - - - 0.9
Profit for
the period
attributable
to equity
holders of
the parent - - - - - - - - 17.0 17.0
Dividends
paid - - - - - - - - (7.6) (7.6)
Share-based
payments - - - - - - 0.1 - 0.5 0.6
------------------------------------------------------------------------------------------------------------------------
Net
actuarial
loss
on defined
benefit
pension
schemes - - - - - - - - (3.2) (3.2)
Tax credit
on
actuarial
loss
taken
directly to
equity - - - - - - - - 1.0 1.0
------------------------------------------------------------------------------------------------------------------------
Net expense
on
defined
benefit
pension
schemes
recognised
directly in
equity in
the
period - - - - - - - - (2.2) (2.2)
------------------------------------------------------------------------------------------------------------------------
Balance at
30 September
2006 7.8 15.0 54.9 (0.2) 0.3 0.3 1.5 - 97.8 177.4
------------------------------------------------------------------------------------------------------------------------
(i) This is a non-distributable reserve.
12. Contingent Liabilities
The Company is party with other Group companies to cross guarantees of each
other's bank loans, commitments, facilities and overdrafts of £190m (2006:
£103m).
The Company and various of its subsidiaries are, from time to time, party to
legal proceedings and claims that are in the ordinary course of business. The
Directors do not anticipate that the outcome of these proceedings and claims,
either individually or in aggregate, will have a material adverse effect on the
Group's financial position.
In addition, the Group and its subsidiaries have provided guarantees and
indemnities in respect of performance, issued by financial institutions on its
behalf, amounting to £7.2m (2006: £10.8m) in the ordinary course of business.
These are not expected to result in any material financial loss.
13. 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 period, nor
existed at the end of the period, in which a Director had a material interest.
Amounts paid to key management personnel are disclosed in the Directors'
remuneration report of our Annual Report. During the period, MITIE's Long Term
Incentive Plan (LTIP) was introduced and offered to a small group of key senior
management.
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