Annual Financial Report

RNS Number : 5111T

MITIE Group PLC

08 June 2009

 



8 June 2009

MITIE Group PLC

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

Following the release on 18 May 2009 of the Company's preliminary results for the year ended 31 March 2009 (the 'Preliminary Announcement'), the Company announces that it has published its Annual Report and Accounts for 2009 (the 'Annual Report and Accounts').  

The Company's 2009 Annual General Meeting will be held at UBS Investment Bank, 1 Finsbury Avenue, London, EC2M 2PP on 10 July 2009 at 2.30pm.

Copies of the Annual Report and Accounts and the Notice of the Annual General Meeting for 2009 (the 'AGM Notice') are available to view on the Company's website: www.mitie.co.uk.  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 the 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 results 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 2009.  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 18 May 2009.  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 2009 Annual Report and Accounts. Page numbers and cross-references in the extracted information below refer to page numbers and cross-references in the 2009 Annual Report and Accounts. 

The information contained in this announcement and in the Preliminary Announcement does not constitute the Group's statutory accounts as defined in section 240 of the Companies Act 1985 but is derived from those accounts.  The statutory accounts for the year ended 31 January 2009 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 14 and 15 of the 2009 Annual Report and Accounts from which the following is extracted in full and unedited text:

'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	Potential impacts	Mitigation
Financial risk, including liquidity Strategy area: - Risk - Responsibility - Profitability - Acquisitions - Clients	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.
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.	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.
Infrastructure and systems Strategy area: - Clients - Risk - Responsibility - Profitability	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.	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
New business, business retention and contracting Strategy area: - Clients - Risk - Profitability	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 multiservice 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 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.
Acquisitions Strategy area: - Risk - Profitability - Acquisitions	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.	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.
Employment regulations Strategy area: - Clients - People - Risk - Responsibility - Profitability	Failure to adhere to regulations concerning the transfer of staff in and out of the business would result in business disruption and significant fines. 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.	Early involvement of HR and legal specialists prior to transfer supported by external specialists. Processes are in place to ensure that all legally required documentation is obtained from employees and subsequently monitored.
Skill shortages Strategy area - Clients - People - Risk	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.'

Directors' Responsibility Statement

The following statement is extracted from page 49 of the 2009 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 2009 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.

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.

'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.  

The Company has taken advantage of the exemption in FRS 8 not to disclose transactions with companies within the Group.' (Note 50)

Notes to editors 

For further information, please contact: 

David Revis, Investor Relations and PR Manager 

T: 020 7034 7306 M: 07979 702465 

John Telling, Head of Corporate Affairs 

T: 020 7034 7304 M: 07979 701006

 

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