Annual Financial Report

RNS Number : 8135D

MITIE Group PLC

28 June 2019

 

Mitie Group plc

28 June 2019

LEI number: 213800MTCLTKEHWZMJ03

Mitie Group plc (the 'Company') - Annual Financial Report

Following the release on 6 June 2019 of the Company's final results for the year ended 31 March 2019 (the 'Final Results Announcement'), the Company announces that it has published its Annual Report and Accounts for 2019 (the 'Annual Report and Accounts'). 

The Company's 2019 Annual General Meeting will be held at Linklaters LLP, One Silk Street, London EC2Y 8HQ on 30 July 2019 at 11:30am.

Copies of the Annual Report and Accounts and the Notice of the Annual General Meeting for 2019 (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. 

Copies of the Annual Report and Accounts, the AGM Notice and the form of proxy in relation to the AGM are being submitted to the National Storage Mechanism and will shortly be available for inspection at: www.hemscott.com/nsm.do.

The Final Results Announcement included a set of financial statements and a review of the development and performance of the Company.  In compliance with Disclosure Guidance and Transparency Rule (DTR) 6.3.5, the Company has extracted and set out below certain information from the Annual Report and Accounts.  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 Final Results Announcement issued on 6 June 2019.  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 Annual Report and Accounts.  Page numbers and cross-references in the extracted information below refer to page numbers and cross-references in the Annual Report and Accounts.

The information contained in this announcement and in the Final Results Announcement does not constitute the Group's statutory accounts but is derived from those accounts.  The statutory accounts for the year ended 31 March 2019 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

1. Political

Political and economic uncertainty in the UK may adversely affect our customers' approach to outsourcing decisions and our ability to plan and invest. The lack of clarity of the timing and impact of Brexit adds further uncertainty.

Impacts on:

·	Customer: build market-leading positions in higher growth segments and increase customer NPS
·	Cost: strengthen our balance sheet and maintain cost discipline to remain competitive
·	Technology: embed technology into the heart of our offering
·	Viability statement

Change in year: Increased

As the vast majority of Mitie's client base is within the UK, we are particularly exposed to uncertainties in the UK's political and economic landscape. A major aspect of this uncertainty continues to be the ongoing negotiations for the UK to leave the European Union (Brexit). This may result in changes to the regulatory framework, as well as restrictions in the supply of labour and materials.

Political and economic factors also influence the decisions taken by both public and private sector clients on which activities should be outsourced and the amount of discretionary spend available for outsourcing activities. This may result in fewer opportunities for Mitie and have a consequential negative impact on our financial performance.

It is important that we are able to offer competitive, innovative and high-quality solutions to clients, and demonstrate the value we bring to them. We also need to ensure that we carefully monitor and identify the most appropriate opportunities in both the public and private sectors.

Controls and mitigating actions

●	Maintain blend of public and private sector clients
●	Appointment to the Crown Commercial Services Framework
●	Appointment of Chief Government & Strategy Officer and team
●	Regular reviews of sales opportunities by all business sales leaders
●	Dedicated account managers to focus on integrated strategic accounts
●	Focus on high-margin opportunities with growth potential
●	Drive for greater customer retention through improvements in the value we deliver
●	Development of new and innovative service offerings

Future plans

●	Ensure the focus on strategic accounts generates growth opportunities
●	Maintain dialogue with key public and private sector clients to demonstrate the value we offer
●	Leverage the most appropriate opportunities through the Crown Commercial Services Framework to increase public sector contracts

2. Structural complexity

Mitie has historically operated using complex manual processes and an organisational model with a high and misaligned cost base, rather than leveraging its technology. If we do not address these issues we will be unable to execute client contracts efficiently, resulting in sub-optimal customer experiences and erosion of sustained profitable growth.

Impacts on:

·	Customer: build market-leading positions in higher growth segments and increase customer NPS
·	People: create a 'Great Place to Work' for our employees
·	Cost: strengthen our balance sheet and maintain cost discipline to remain competitive
·	Technology: embed technology into the heart of our offering
·	Viability statement

Change in year: New risk

Mitie's business and organisational model has evolved with a large number of unnecessary complexities, including multiple and inconsistent processes, isolated IT systems, and unclear organisational and reporting structures. These complexities have required a disproportionately high cost base in order to maintain them.

The business transformation project (Project Helix), and a number of other improvement initiatives over the past two years, have made substantial progress, but further work is required to simplify and standardise these underlying processes and to ensure that we are able to deliver acceptable margins and growth from our business.

We are continuing to address internal costs by leveraging the opportunities from outsourcing back-office functions, including in Finance and IT. In addition, we are investing in IT systems improvements across the business, notably in Engineering Services, HR and Finance. We will also continue to simplify end-to-end processes and the structure of the organisation.

Mitie is now embracing technology to deliver a digital experience to both internal and external users. If we fail to do this we could be unable to deliver profitable growth, our opportunities to invest in new technology and offerings could be limited and our bids could be uncompetitive.

Controls and mitigating actions

●	Successful delivery of Project Helix and other improvement and simplification initiatives
●	IT, financial and operational systems improvements across the business
●	Outsourcing of back-office functions in IT and Finance
●	Simplification of the business structure into divisions
●	Clarification of accountabilities and responsibilities, particularly for strategic accounts
●	Focus on sourcing and procurement processes to simplify supplier base and leverage cost opportunities
●	Use of digital technologies for customers and employees

Future plans

●	Successfully complete improvement projects for IT systems in Engineering Services
●	A comprehensive review of end-to-end processes across the business to improve efficiency and control, remove unnecessary tasks and reduce costs. A Digital Transformation Officer has already been appointed who is responsible for this initiative
●	Legal entity rationalisation
●	Finance modernisation programme
●	Commence a further transformational review to simplify the business

3. Cyber

Failure of critical infrastructure, including through a cyber-attack, could affect client delivery operations and cause critical delays in internal processes.

Impacts on:

·	Customer: build market-leading positions in higher growth segments and increase customer NPS
·	Cost: strengthen our balance sheet and maintain cost discipline to remain competitive
·	Technology: embed technology into the heart of our offering
·	Viability statement

Change in year: Decreased

The reliability and effectiveness of our technology is vitally important to ensure that we can meet our contract obligations, deliver improvements in operational processes, generate meaningful management information and help deliver value for our clients. In many cases clients rely upon us to look after their critical data and infrastructure.

We are continuing to invest in technology to simplify our business, as well as improving resilience and security to protect against systems failure or a cyber-attack. During the year we have commenced an upgrade programme to ensure we meet the Government's Cyber Essentials Plus requirements. This has involved a substantial programme to upgrade and replace computers within the organisation. We have also delivered a number of system improvements in the year including People Hub, a standardised and integrated HR solution.

We have also outsourced our routine IT operations to a partner which will help improve efficiency and effectiveness and build in greater resilience to failures. This also allows us to focus on higher value technology developments for clients. We will continue to invest in systems and technology to replace the legacy estate, automate processes and ensure the smooth and efficient operation of our business. It is also important to have effective business continuity and disaster recovery plans, and this is another key focus.

Controls and mitigating actions

●	Clear strategy to invest in technology improvements, both in internal systems and client offering
●	Outsourcing of routine IT operations to partner organisation to improve resilience and controls
●	Upgrades to legacy systems to reduce complexity and improve management information
●	Rationalisation of ERP systems and infrastructure
●	Leveraging new technologies such as AI and big data
●	Maintenance and testing of effective disaster recovery plans
●	Improvements to cyber security controls across all systems and infrastructure
●	Dedicated IS PMO to ensure all projects with an IS element are managed effectively and risks are minimised

Future plans

●	Upgrade to the Engineering Services operational and financial systems to improve security and efficiency
●	Look for opportunities to leverage the outsource partner's development capabilities

4. Funding

Inability to maintain access to and renew suitable sources of funding due to a perceived risk in both our business and the sector as a whole, may impact our ability to maintain profitable business performance.

Impacts on:

·	Customer: build market-leading positions in higher growth segments and increase customer NPS
·	Cost: strengthen our balance sheet and maintain cost discipline to remain competitive
·	Technology: embed technology into the heart of our offering
·	Viability statement

Change in year: Stayed the same

In order to be able to meet our financial commitments, we need to have access to a number of affordable sources of finance. Our core debt facilities include a revolving credit facility and private placement loan notes. We need to have sufficient liquidity to be able to pay suppliers and staff, whilst also investing in the business and ensuring that we have enough options for profitable growth.

In the past few years there has been significant concern about the financial strength and viability of companies operating in our sector. This has continued during the year with a number of high-profile incidents occurring relating to our competitors. Any actual or perceived weaknesses in our financial position could restrict our access to finance or attract high interest rates.

We have been focused on maintaining strong financial discipline in the management of our working capital and investment decisions and on minimising our levels of debt. This has included working with our back-office process outsource partner to improve processes and efficiency.

Controls and mitigating actions

●	Regular forecasting of cash flow and net debt
●	Thorough focus on working capital cycles with a clear set of KPIs
●	Maintenance of strong banking, debt and equity relationships
●	Strong focus on and monitoring of cash collection
●	Regular reviews of payment terms with customers and supply chain

Future plans

●	Continue to work with a range of financial institutions to ensure we can access affordable finance sources
●	Focus on working capital processes to reduce cycle times and average net debt
●	Improve accrued income and billing processes

5. Legal

Failure to comply with applicable laws and regulations may lead to fines, prosecution and damage to our reputation.

Impacts on:

·	People: create a 'Great Place to Work' for our employees
·	Technology: embed technology into the heart of our offering
·	Viability statement

Change in year: Stayed the same

Our business is subject to a wide range of laws and regulations. Given the nature of our business, these include, amongst others, health & safety, employment, anti-bribery and corruption and statutory wage requirements.

Failure to comply with applicable laws and regulations could result in prosecution and/or significant fines, and, from a reputational perspective, could damage our relationships with clients and our ability to win work. We may also face debarment from public sector contracts.

We continue to ensure that we have effective governance and oversight of our compliance with applicable laws and regulations and continuously assess the impact of changes in relevant legislation. It is also important that we provide appropriate communications and training for our people to ensure that they are aware of their obligations, and that regular monitoring of compliance is undertaken.

Controls and mitigating actions

●	Regular monitoring of legal and regulatory changes by Group Functions including Company Secretariat, Legal and Quality, Health, Safety and Environment (QHSE)
●	Code of Conduct communicated to all employees
●	Group-wide policies updated for changes to laws and regulations and maintained in the online Business Management System (BMS)
●	Regular and thorough external regulatory audits
●	Training and awareness material communicated to employees and monitoring of completion performed
●	Externally hosted whistleblowing service available

Future plans

●	Introduction of further mandatory training courses to relevant employees via our Learning Hub
●	Ongoing review of BMS to update policies and procedures

6. Market share

A loss of market share through competitors improving their offering and price, and potentially targeting some of our key contracts, or from new entrants deploying new business models, could have a significant impact on our revenue and profit.

Impacts on:

·	Customer: build market-leading positions in higher growth segments and increase customer NPS
·	Technology: embed technology into the heart of our offering
·	Viability statement

Change in year: New risk

In the recent past, many companies in our sector have experienced financial and operational difficulties, and as a result there has been a strong focus on strategy, costs, investments and business structure. For those organisations that have successfully addressed their issues there may be opportunities to increase market share through more competitive or innovative offerings, which may impact our ability to retain current clients and win future business.

Additionally, there is also the possibility of a new entrant disrupting the market by deploying a new low-cost business model for FM, potentially through a technology platform, which would challenge the structure and approach of the existing organisations, including Mitie. This could also potentially significantly erode our market share and decrease new opportunities.

It is important that we continue to prioritise the transformation of our business, particularly through improving processes and simplifying business structure, focusing on minimising costs and developing innovative solutions for clients, such as the Connected Workspace. In this way, we will be able to deliver genuine value for current and future clients.

Controls and mitigating actions

●	Continued focus on simplifying business processes and structure
●	Investment in new and innovative technologies - including Connected Workspace
●	Focus on client relationships and Net Promoter Score
●	Regular reviews of sales opportunities arising
●	Replacing and upgrading operational and financial systems
●	Standard processes and tools for sales and CRM teams

Future plans

●	Deployment of strategic account managers for key contracts
●	Complete Project Forte launched to improve IT systems in Engineering Services

7. Health, safety and environment

Failure to maintain appropriately high standards in health, safety and environmental management may result in harm to employees, client staff or members of the public, and consequential fines and reputational damage.

Impacts on:

·	People: create a 'Great Place to Work' for our employees
·	Viability statement

Change in year: Stayed the same

As a company we are committed to maintaining the highest levels of health, safety and environmental (HSE) standards. The services we deliver could potentially present an increased risk of a health and safety incident involving our employees, client staff or even members of the public. Our activities also carry a risk of damage to the environment. It is essential that we manage these risks in a highly diligent and effective manner.

At all levels in the organisation, safety is our number one priority and we ensure that all risks are properly assessed and managed, our employees are trained, our expectations of how they perform their work are clearly explained, and adherence to health and safety standards is regularly monitored. If we do not manage these risks appropriately, it could lead to harm to individuals and damage to the environment, and consequently prosecution, fines and significant damage to our reputation.

Controls and mitigating actions

●	A comprehensive QHSE strategy has been developed
●	Major cultural HSE programme, LiveSafe, launched in the year, with clear rules and training for staff
●	Regular training and communication delivered throughout the company, in accordance with LiveSafe principles
●	Certified H&S management systems to OHSAS 18001 and environmental system to ISO14001
●	Deployment of an improved incident recording, monitoring and reporting system
●	Regular HSE reviews conducted at divisional and Group level
●	Clear and standardised KPIs introduced to monitor progress and improvements
●	Targeted QHSE procedural audit programme introduced

Future plans

●	Build on the principles of LiveSafe and ensure regular communication and engagement with staff
●	Transition from OHSAS health and safety management system to ISO45001

8. Incident at client site

A high-profile incident or accident occurring at an FM client site, or a location operated by our Care & Custody business, as a result of negligent staff actions, inconsistent vetting or ineffective training and communications for staff, could have a significant impact on our reputation and current and future contracts.

Impacts on:

·	Customer: build market-leading positions in higher growth segments and increase customer NPS
·	People: create a 'Great Place to Work' for our employees
·	Cost: strengthen our balance sheet and maintain cost discipline to remain competitive
·	Viability statement

Change in year: New risk

We deliver services to clients at a number of important and high-profile sites across the country. These include locations with substantial historical and cultural significance and high level of scrutiny by governmental bodies, media organisations and the general public. If a major incident occurred at one of these sites, whether through the negligent or deliberate act of Mitie employees, it could attract a large amount of publicity and have a highly negative impact on our reputation. It would also be likely to limit our chances of winning future contracts and potentially retaining current clients.

In order to make sure we manage this risk, it is important that we have appropriate polices and processes in place, which clearly set out the expectations of our employees. We also need to communicate these effectively and deliver regular and relevant training to employees. In addition, it is important that we ensure our employees have been appropriately vetted to determine who is eligible to work on particular contracts and sites, so that we are able to meet the specific requirements of our clients.

It is also necessary to have effective business continuity plans in place for our operations, so that we can continue to deliver a high-quality service to clients in the event of a disruptive incident. Should an incident occur, a comprehensive and tested crisis response plan is essential to ensure that we would be able to minimise the impact on our employees and clients, the public and the environment.

Controls and mitigating actions

●	Custodial operations working within Standard Operations Procedures (SOP), bespoke to each site for Care & Custody business
●	Contingency plans are regularly tested and compliance to SOPs regularly audited for Care & Custody sites
●	Health and safety strategy - LiveSafe programme launched this year as part of the strategy
●	Certified H&S management systems to OHSAS 18001 and environmental system to ISO14001
●	Comprehensive training plans on safety, security and risks
●	Regular updates to employees on new safety and operational requirements
●	Internal and external compliance audits
●	Effective vetting programme tailored to the individual risks of each client and site
●	Tested business continuity and crisis response plans
●	Standardised and comprehensive investigation process

Future plans

●	Review and further testing of business continuity and crisis response plans
●	Transition from OHSAS health and safety management system to IS045001

9. Data management

Ineffective processes and controls to manage our data and customers' data may result in a major data breach leading to fines, remediation costs and reputational damage.

Inability to maintain access to sources of funding due to concerns over our financial strength could have a significant impact on our performance and client relationships

Impacts on:

·	Customer: build market-leading positions in higher growth segments and increase customer NPS
·	Technology: embed technology into the heart of our offering
·	Viability statement

Change in year: Stayed the same

One of the most important assets we have is the data we hold, which includes information concerning our business operations, employees, clients, suppliers and others. This information is vital to enable us to run our business efficiently and profitably. We need to maintain adequate controls to mitigate risks associated with loss or theft of data which would damage our reputation with clients and potentially expose us to significant fines from regulators.

In order to ensure confidential and sensitive data is processed, transmitted and stored securely, we have implemented formal technical and procedural controls. These controls are deployed across our IT systems and are subject to regular review and testing. Effective information security procedures help to prevent or minimise the impact of any breaches of security.

We have an ongoing programme of work to ensure we are compliant with the requirements of the General Data Protection Regulation (GDPR).

Controls and mitigating actions

●	Centralised information security team in place
●	Information Security Management System (ISMS) in place and certified to ISO/IEC27001:2013 for key information assets
●	IT security controls in place to proactively test, monitor, identify and respond to cyber threats
●	Information security requirements established on all new projects, including outsourcing of routine operations
●	Cyber essential accreditation
●	Cyber insurance policy

Future plans

●	Regular reviews of information management to ensure compliance with GDPR
●	Expansion of dedicated data privacy team
●	Ensure seamless transition to IT outsource partner with data standards maintained
●	Working towards achieving cyber essential plus accreditation

10. Employees

Inability to recruit, retain and reward suitably talented employees, as well as failure to implement appropriate development plans, simple consistent processes across the business and a One Mitie approach, could negatively impact our operational and financial performance.

Impacts on:

·	People: create a 'Great Place to Work' for our employees
·	Viability statement

Change in year: Decreased

It is important for the success of our business that we continue to recruit, develop, motivate and retain talented individuals. If we are unable to do so there would be an adverse impact on the profitable and successful delivery of our contracts, and we would be limited in our ability to win future opportunities and grow the business.

We need to have the right level of experience and expertise available and be able to develop a culture of high standards of achievement, compliance to the Mitie values and good governance and control. In order to achieve this, we also need to provide development opportunities for our employees to enable them to reach their full potential.

In addition, it is important that we maintain a stability and consistency in our senior leadership team to provide high-quality direction for the business and deliver our strategy.

An important element of the culture is ensuring that we have a One Mitie way of operating and collaborate effectively across the business. This will give greater consistency in processes and controls and allow for seamless movement of staff across the Group.

Controls and mitigating actions

●	Deployment of new HR resourcing system across the Group
●	Launch of online training and development hub, People Hub
●	Simplified approach and consistent process to both temporary and permanent recruitment
●	Regular communications from leadership team - including ELT country-wide roadshow
●	Specific plans developed to address results of employee survey
●	Competitive remuneration, terms and conditions
●	Training and development programmes for senior leadership
●	Regular employee offers
●	Developed talent identification, management and development plans
●	Succession plans are in place for critical roles, especially for the senior leadership team
●	Clear performance management framework

Future plans

●	Further enhance online HR and training systems
●	Launch of new induction programme, mandatory for new starters
●	Salary benchmarking
●	New competency framework to be developed

11. Market sentiment

Negative sentiment towards the outsourcing sector could lead to fewer opportunities, including reduced IFM volumes, and challenges to our business model and profit growth.

Impacts on:

·	Customer: build market-leading positions in higher growth segments and increase customer NPS
·	People: create a 'Great Place to Work' for our employees
·	Technology: embed technology into the heart of our offering
·	Viability statement

Change in year: New risk

In the past two years, the activities and results of a number of companies operating in our sector have generated significant negative publicity, which potentially affects Mitie's reputation and raises concerns with current and future clients. This has included the liquidation of Carillion and the administration of Interserve. The viability of outsourced facilities management companies to deliver operational performance to sufficiently high standards, whilst also managing costs appropriately, has been the subject of much scrutiny.

In particular, the opportunities for integrated facilities management contracts may decrease in both the public and private sector, as organisations look to spread the risk of these services amongst a greater number of providers.

In order to address these concerns, it is important that we are able to consistently deliver a high-quality and valued service on our existing contracts and demonstrate this to potential new clients. We need to ensure that we develop and maintain a business model and offering which can successfully deliver profitable growth and exploit new opportunities as they arise, whilst adapting to the needs of the market.

Controls and mitigating actions

●	Inclusion and maintenance on Crown Commercial Service Framework
●	Dedicated management of strategic accounts
●	Regular financial performance reviews
●	Focus on improving Net Promoter Score
●	Strong relationships with financial institutions
●	Process and IT systems improvement programmes
●	Long-term contract portfolio and spread of client base

Future plans

●	Further improvement and transformation opportunities to be explored

12. Contract losses

If we do not ensure that we produce bids for contracts which are competitive, financially viable and have a balanced approach to risk, and/or fail to deliver on our contract obligations, we may damage our client relationships, which may lead to cancellation of contracts resulting in financial losses.

Impacts on:

·	Customer: build market-leading positions in higher growth segments and increase customer NPS
·	People: create a 'Great Place to Work' for our employees
·	Cost: strengthen our balance sheet and maintain cost discipline to remain competitive
·	Technology: embed technology into the heart of our offering
·	Viability statement

Change in year: Stayed the same

In order to deliver consistent and profitable growth, it is important that we continue to bid for and secure contracts at acceptable margins. It is also essential that we successfully mobilise and deliver our contracts. In order to achieve this, we must monitor and control costs, deliver on the contract obligations and meet client expectations.

We need to develop competitive bids, which provide a fair balance of risk and reward that is properly reflected within the contract terms and conditions. Our offering needs to be compelling and innovative and provide a balance between cost and margin pressure, which is a key feature of the sector in which we operate. It is also important to make sure we have the skills and resources available to execute on our contracts successfully.

Once we have mobilised the contracts, we need to monitor a relevant set of Key Performance Indicators (KPIs) to ensure that we are delivering on the obligations to which we have agreed and communicating with clients to understand if they are satisfied with our performance. It is also important to assess and agree any variations to the contract services and terms and amend the KPIs accordingly.

If we are unable to deliver the services as agreed in our contracts, it could negatively impact our customer relationships and reputation and lead to legal disputes and termination of contracts. This could then lead to potentially failing to retain existing clients and secure new contracts, with a detrimental effect on our financial performance.

Controls and mitigating actions

●	Bid Committee approval for complex bids
●	Detailed contracting guidelines developed and rolled out
●	Clear delegated authorities register
●	New Sales and CRM teams in place
●	Use of specialist mobilisation teams for complex contracts
●	Strategic account management
●	Risk registers in place for large-scale contracts
●	KPI/SLA formal reviews with customers
●	Improved CRM capabilities with active relationship management
●	Focus on Net Promoter Score
●	Launch of Sales Academy to train sales teams
●	Appointment of Chief Government & Strategy Officer to coordinate all interfaces with the Cabinet Office

Future plans

●	Post sales review of loss-making contracts to ensure we identify and apply lessons learned for our future bids

Statement of Directors' responsibilities in respect of the Annual Report, the remuneration report and the financial statements

The following statement is extracted from page 88 of the 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 Annual Report and Accounts and is not connected to the extracted information set out in this announcement or the Final Results Announcement:

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and applicable law and have elected to prepare the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) including FRS 101 Reduced Disclosure Framework.

Under company law, the Directors must not approve the financial statements unless they are satisfied that these give a true and fair view of the state of affairs of the Group and Company and of their profit or loss for the period.

In preparing these financial statements, the Directors are required to:

●	select suitable accounting policies and then apply them consistently;
●	make judgements and accounting estimates that are reasonable and prudent;
●	for the Group financial statements state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements;
●	for the Parent Company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Parent Company financial statements;
●	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group or Parent Company will continue in business;
●	prepare a Directors' report, a strategic report and Directors' remuneration report which comply with the requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for ensuring that the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group's position and performance, business model and strategy.

Website publication

The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance

with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Directors' responsibilities pursuant to DTR4.1

The Directors confirm to the best of their knowledge:

●	the Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group; and
●	the management report includes a fair review of the development and performance of the business and the financial position of the Group and the Parent Company, together with a description of the principal risks and uncertainties that they face.

Related party transactions

The following extract from the Annual Report and Accounts refers to related party transactions as set out in Note 34:

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this Note.

During the year, the Group derived £0.5m (2018: £0.8m) of revenue from contracts with joint ventures and associated undertakings and received £nil (2018: £0.6m) of dividends. At 31 March 2019 trade and other receivables from joint ventures and associates of £nil (2018: £0.2m) were outstanding and loans to joint ventures and associates of £nil (2018: £nil) were included in financing assets.

Mitie Group plc has a related party relationship with the Mitie Foundation, a charitable company. During the year, the Group made donations and gifts in kind of £0.4m (2018: £0.3m) to the Foundation.

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.

The Group's key management personnel include the Executive Directors, Non-Executive Directors and the Executive Leadership team. Details of the Directors' remuneration is included in Note 7. The underlying remuneration for other key management personnel, including the share-based payments

charge is £4.0m (2018: £4.4m).

The Company's preferred supplier for delivering apprenticeships to its employees is Aspire Achieve Advance Limited (3aaa), a company whose chairman is also Mitie Group plc's Non-Executive Chairman. The Company pays into a government mandated Apprenticeship Levy Fund, and 3aaa

withdraw from that fund to provide the apprenticeship training. On 11 October 2018, the directors of 3aaa presented a petition to the Court for the compulsory winding up of the company. This petition was accepted by the Court and the Official Receiver was appointed as liquidator on 24 October 2018. During the year ended 31 March 2019, 3aaa withdrew £0.6m (2018: £0.2m) from the fund in respect of training provided or to be provided.

-Ends-
 

For further information, contact:

Claire Lovegrove

Head of Media Relations

T: [phone]

M: [phone]

E: [e-mail]

Anna Gavrilova

Head of Investor Relations

T: [phone]

M: [phone]

E: [e-mail]

Peter Dickinson

General Counsel and Company Secretary

T: [phone]

M: [phone]

E: [e-mail]

Notes for editors

About Mitie Group

Founded in 1987, Mitie is the UK's leading facilities management and professional services company. It offers a range of specialist services, including Engineering Services, Security, Professional Services, Cleaning and Environmental Services, Care and Custody, and Catering.

Mitie employs 52,500 people across the country, looking after a large, diverse, blue-chip customer base, from banks and retailers, to hospitals, schools and government offices. It takes care of its customers' people and buildings, by delivering the basics brilliantly and by deploying advanced technology. It is pioneering the Connected Workspace, using smart analytics to provide valuable insight and deliver efficiencies to create outstanding work environments for customers.

Find out more at www.mitie.com

 

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