Final Results

RNS Number : 7441H

MITIE Group PLC

12 June 2017

Mitie Group plc

Moving "Beyond FM…to the Connected Workspace", following a year of change

Preliminary results for the year ended 31 March 2017

Group Results Continuing operations	FY17	FY16 Restated¹	YoY change
Adjusted²
Revenue	£2,140.0m	£2,133.4m	0.3%
Operating profit	£82.0m	£95.2m	-13.9%
Reported
Revenue	£2,126.3m	£2,146.9m	-1.0%
Operating (loss) / profit before other items	£(6.3m)	£113.9m	-105.5%
Operating (loss) / profit	£(42.9m)	£107.6m	-139.9%
Basic (loss) / earnings per share	(14.7p)	20.1p	-173.1%
Operating cash flow	£151.1m	£114.6m	31.8%
Net debt	£147.2m	£178.3m	-17.4%
Dividend per share	4.0p	12.1p	-66.9%
Order book³	£6.5bn	£6.6bn	-1.0%
Sales pipeline⁴	£8.7bn	£7.9bn	10.1%

¹FY16 numbers have been restated to correct material errors found during the Accounting Review

² For this year an Alternative Performance Measure has been provided to adjust for one-off items in both FY17 and FY16 to reflect a more meaningful analysis of our Adjusted operating performance before other items. For details see Financial Review.

³Basis for calculation of order book changed to remove anticipated unsecured work, now included in pipeline

⁴Basis for calculation of pipeline changed to include anticipated unsecured work, no longer included in order book

Highlights

• A strategic review has been conducted, a new strategy ("Beyond FM…to the Connected Workspace") launched and a major £45m cost efficiency programme ("Project Helix") is underway, led by a new management team and a refreshed Board

• Adjusted Revenue of £2.14bn (FY16: £2.13bn) rose marginally in a challenging year, with our core Facilities Management business growing 3%

• The Accounting Review has been completed with £34.5m of prior periods adjustments* (of which £20.9m expenses were restated in FY16). Within the reported operating loss, £88.3m of one-off items were recognised in FY17

• The reported operating loss of £(42.9)m (FY16: profit of £107.6m) arises from the one-off accounting adjustments

• Adjusted operating profit², which provides a better like-for-like performance comparison, fell by £13.2m to £82.0m (FY16: £95.2m) due to lower gross margin (£10.7m) and increased overheads (£2.5m)

• Year-end net debt position at £147.2m (FY16: £178.3m) has fallen; lender definition amendment agreed and covenants in compliance

• The exit from the domiciliary healthcare market has been completed with a £132.3m loss from the discontinued operations

• The Board is not recommending a final dividend. Total dividend for the year is 4.0p (FY16: 12.1p)

* Excluding healthcare goodwill of £26m

** Gross, before re-investments

Phil Bentley, Chief Executive of Mitie, commented:

"This has been a challenging year for Mitie. We have reported a loss as a result of the one-off accounting adjustments arising from the Accounting Review. We are now focused on the future of the business and I am encouraged that our Order Book has held up and our Pipeline is growing.

Following a full strategic review we are investing in technology in the workspace to meet our customers' evolving needs and we are embarking on a major cost reduction programme. With the support of our 53,000 colleagues, we will take Mitie "Beyond FM…to the Connected Workspace".

_________________________________

For further information please contact:

John Telling, Group Corporate Affairs Director. M: +44 (0) 7979 701006 E: john.telling@mitie.com

Anna Chen, IR Manager. M: +44 (0) 781 852 7265 E: anna.chen@mitie.com

Mitie will be presenting its preliminary results for the year ended 31 March 2017 at 09.00 on Monday 12 June 2017. A live webcast of the presentation will be available online at www.mitie.com/investors at 09.00. The recorded webcast of the presentation and a copy of the accompanying slides will also be available on our website later in the day.

About Mitie

Mitie is a FTSE 250 business providing a wide range of facilities management and professional services, from real estate consultancy, project management, energy consultancy, compliance, risk assessment and security systems to cleaning, catering, engineering, technical and environmental services and a range of specialist services.

We work in partnership with organisations to deliver long-term savings, managing and maintaining some of the nation's most recognised landmarks for a range of blue-chip public and private sector customers.

We are the UK's largest Facilities Management Company employing some 53,000 people across the country.

Legal disclaimer

This announcement contains forward-looking statements. Such statements do not relate strictly to historical facts and can be identified by the use of words such as 'anticipate', 'expect', 'intend', 'will', 'project', 'plan', and 'believe' and other words of similar meaning in connection with any discussion of future events. These statements are made by the Directors of Mitie in good faith based on the information available to them as at 12 June 2017 and will not be updated during the year. These statements, by their nature, involve risk and uncertainty because they relate to, and depend upon, events that may or may not occur in the future. Actual events may differ materially from those expressed or implied in this document and accordingly all such statements should be treated with caution. Nothing in this document should be construed as a profit forecast.

Except as required by law, Mitie is under no obligation to update or keep current the forward-looking statements contained in this report or to correct any inaccuracies which may become apparent in such forward-looking statements.

This statement contains insider information.

Overview

It has been a challenging year for Mitie. The Group reported a statutory loss for FY17, impacted by one-off accounting adjustments arising from the Accounting Review. The underlying business remained resilient with Adjusted Revenue broadly unchanged despite the challenges and wider economic uncertainties. The Board has implemented its succession plans, with new and effective leadership in place to guide Mitie through its next phase of growth and development.

With refreshed leadership in place the business is in a strong position to focus on the future. The Group has completed a comprehensive, independent and management review of its accounting policies, judgements made under those policies and the balance sheet. Based on the results of the review, and the new information available to the Board, the Board has taken the appropriate action and agreed substantial balance sheet write-downs and prior year adjustments. The balance sheet has now been addressed and a number of measures implemented to strengthen the finance function and financial disciplines within the business.

A decision was made during the year to focus on the core business and against continuing to fund the ongoing losses and long-term turnaround plan of our healthcare business. The domiciliary healthcare business was exited in February 2017 and has resulted in a substantial impairment of goodwill and loss on disposal.

A strategic review was conducted at the end of FY17. We have since developed a new strategy, paving the way forward to building the foundations for shareholder value creation. The four strategic imperatives are:

1. Put our customers at the heart of our business

2. Transform our cost base and restore our balance sheet strength

3. Build a winning culture and team, to develop and retain our people

4. Uplift our investment in technology to provide customer insights and ease of doing business with

Mitie is a market leader in the provision of facilities management ("FM") services and has a portfolio of blue chip clients. Revenues, profits and cash flows have demonstrated their resilience and net debt was lower than expected at the year end. The Group plan to make significant investments in its people and the transformation programme will deliver significant cost efficiencies in the future. Leveraging technology and extending our customer proposition into strategic consultancy will support our future growth aspirations, as will our strong UK market position.

It is the Group's intention to maximise the potential of its core business in FM and address the longer term opportunity of moving "Beyond FM… to the Connected Workspace".

Results

Although lower reported revenue, at £2.13bn (2016: £2.15bn), reflects the revenue impact of the Accounting Review, adjusted revenue at £2.4bn, was marginally ahead of last year. The reported operating loss for the year was £(42.9)m (2016: profit £107.6m) with basic earnings per share decreasing to (14.7)p (2016: 20.1p). Adjusted profit, however, fell by only £15m to £82.0m (2016: £95.2m).

Net debt at the year-end was £147.2m (2016: £178.3m). The Group has agreed an amendment to its loan agreements with its debt providers that has allowed it to make more conservative accounting judgements and remain in compliance with its covenants. Net assets of the group reduced by £271.7m to £89.8m, principally driven by the losses on disposal of Healthcare.

During this period, our order book has remained flat at £6.5bn (2016: £6.6bn). Our sales pipeline currently stands at £8.7bn (2016: £7.9bn).

Dividend

Reflecting the lower earnings of the business and to improve our balance sheet strength the Board has decided not to recommend a final dividend this year, making the full year dividend 4.0p per share (2016: 12.1p per share).

Board Changes

The Company implemented a succession plan: Ruby McGregor-Smith left the business after nine years as Chief Executive and 15 years on the Board and Suzanne Baxter left after 10 years as Finance Director, with Phil Bentley (Chief Executive) and Sandip Mahajan (Finance Director) appointed in December 2016 and February 2017 respectively. As previously announced, Derek Mapp joined the Board as Chairman-elect on 9 May 2017 (and will take over from Roger Mathews following the AGM on 26 July 2017) and Nivedita Krishnamurthy joined the Board as a Non-Executive Director on 1 June 2017.

Outlook

It has been a challenging year but we are confident that our new management team is capable of taking the business through its next stage of growth and development. Mitie is a business with an outstanding client base, great people and a diverse portfolio of long-term FM contracts. We are investing in a major transformation programme to improve our customer proposition, increase operational efficiency, streamline processes, leverage technology and develop and retain our people. We expect a return to modest growth in underlying profits this year.

With our new investment-led strategy, we believe that there is a significant opportunity to transform Mitie into a more focused, higher growth/higher margin business which, in time, will result in materially increased shareholder value.

Financial Review

Reported financial performance

Reported revenue was £2,126.3m (2016:£2,146.9m), a modest decline due to the revenue impact of the Accounting Review, offset by favourable currency movements. As a consequence of the Accounting Review, prior year errors, goodwill impairments and costs of change, Operating loss was £(42.9)m (2016: profit £107.6m). Altogether this constitutes a disappointing year for the Group.

Accounting Review

As announced in the January 2017 trading update, the new Executive Management Team, with the approval of and working closely with the Audit Committee, commissioned a wide-ranging Accounting Review. This Accounting Review included independent support from KPMG to review and advise management on the most material balance sheet judgements in relation to long-term complex contracts, accrued income, work in progress and mobilisation, as well as providing support to management in considering some complex and technical accounting analysis. The fieldwork concluded in May 2017 and its findings have since been approved by the Audit Committee.

The Accounting Review identified a number of prior year errors that, due to their materiality, required the restatement of results for periods before 31 March 2017. The nature of these errors is outlined in Note 1 and led to an error of £60.5m, of which £26.0m is a restatement of goodwill impairment in 2016, £20.9m relates to FY16 and £13.6m relates to earlier years. As a consequence, the net impact of prior year adjustments in 2016 is £20.9m before other items. Throughout this report, the 2016 comparatives are described as "Restated" which means they are stated after adjustment for these errors.

In response to the Accounting Review, the Group has included additional material balance sheet write-downs of £44.9m and has created new provisions and accruals of £14.8m resulting in a pre-tax adjustment to Net Assets of £59.7m. These are additional to the £14.0m of one-off charges identified in the January 2017 trading update.

A key finding of the Accounting Review was that the Group's accounting was less conservative than peers. In response, £39.7m of additional asset write-downs were recognised which were more judgemental in nature, and would result in no future cash outflow.

Management considers that the Accounting Review and resulting write-down of the balance sheet at 31 March 2017 reflects a fair and balanced assessment process.

Alternative Performance Measure

The results of the Accounting Review, which led to both prior year adjustments as well as asset write-downs of a non-recurring nature, make it difficult to assess underlying operating performance, which is a key focus for both investors and others seeking to assess the group's performance. Therefore, for this year (and for comparatives in the year ending 31 March 2018), an Alternative Performance Measure has been provided to adjust for both other items and one-off items in both FY17 and FY16, to reflect more meaningful analysis of our like-for-like operating performance (referred to as "Adjusted Revenue" and "Adjusted Profit").

In considering its presentation of Adjusted Revenue and Adjusted Profit, management has sought to ensure that items considered to be non-recurring reflect a fair and balanced position. Reported operating loss of £6.3m (2016: profit £113.9m) is increased to an Adjusted Profit of £82.0m (2016: £95.2m) through recognition of one off items of £88.3m (2016: £18.7m). Where appropriate, management has sought to reflect a like-for-like position in arriving at its Adjusted Revenue and Profit for 2016. The most material items are as follows;

	2017 £m	2016 Restated £m
Revenue
Adjusted revenue	2,140.0	2,133.4
One offs:
Adjustment to accrued income on long term complex contracts	(20.4)	6.4
Accrued Income, debtors, prepayments included in trade & other receivables	(4.5)	8.3
Effects of foreign currency	11.3	-
Other one off items	-	(1.2)

Before Other Items	2,126.3	2,146.9
Other Items	-	-
Total revenue as reported	2,126.3	2,146.9

Operating Profit
Adjusted Operating Profit	82.0	95.2
Impairment and amortisation of intangible assets (note 15)	(10.5)	-
Adjustment to accrued income on long term complex contracts	(20.4)	6.4
Accrued Income, debtors, prepayments included in trade & other receivables	(36.4)	0.1
Impairment of mobilisation asset	(5.7)	-
Other provisions & Accruals	(4.6)	7.6
Other one off items	(10.7)	4.7

Before Other Items	(6.3)	113.9
Other Items	(36.6)	(6.3)
Total operating (loss)/profit as reported	(42.9)	107.6

A summary of material items is as follows:

Impairment and Amortisation of intangible assets

As part of the Accounting Review, management reassessed the valuation of other intangible assets. This related to both the ongoing usefulness and the useful life of each asset. The review found that a £3.0m write down of software and development expenditure was appropriate. In addition, a reduction in anticipated useful life led to an increased amortisation charge of £7.5m. Management does not consider these charges to reflect adjusted performance and therefore has treated them as non-recurring.

Adjustment to accrued income on long-term complex contracts

Long-term complex contracts accounted for under the percentage of completion method involve a series of forward looking assumptions and judgement is required to assess the balance of those assumptions. In its review, management considered that it was appropriate to exclude from the forecast anticipated but uncontracted project work and anticipated energy savings. A total of £20.4m (2016: credit £6.4m) has been written off the Accrued Income balance on long term complex contracts. In calculating the 2016 Adjusted Revenue and Profit, the non-recurring increase in lifetime margin recognised on a significant contract has been excluded. Management does not consider these charges to reflect current trading and therefore has treated them as non-recurring.

Accrued income, debtors and prepayments included in trade and other receivables

In its review of trading assets, management considered the degree of judgement in the recognition of accrued income, the recoverability of debtors, the appropriateness of prepayment assets and the valuation of other receivables. Management concluded that it was appropriate to either write off or increase the level of provisions made against such items, totalling £36.4m (2016: nil).

Further items recognised in other categories include impairment of Mobilisation assets, other provisions and other one off items totalling £20.0m (2016: £12.4m).

The group intends to revert to its usual presentation of profit before other items next year as the Accounting Review is anticipated to be a one off event. The Adjusted results are presented after adding back the £88.3m (2016: credit £18.7m) identified as part of the Accounting Review above.

Adjusted revenue and operating profit

The Group's Adjusted revenue increased marginally in the year, from £2,133.4m to £2,140.0m. This was principally due to strong revenue growth in Security offset by a significant volume decline in Property Management. Adjusted operating profit has fallen by 14% in the year from £95.2m to £82.0m, driven by volume decline in Property Management and a difficult year for both Cleaning and Engineering Services.

Other items before discontinued operations

Other items (with the exception of goodwill which is described below) total £21.6m (2016: £6.3m). This includes £14.9m of one-off costs of organisation change. The nature of these costs are to support the group's cost efficiency and transformation programmes and specifically relate to project management support for the change process, together with the costs of redundancy for people leaving the business. Secondly, £6.7m (2016: £6.3m) relates to the amortisation of acquisition related intangible assets. The tax credit on other items was £4.1m (2016: £1.3m) resulting in other items after tax of £(32.5)m (2016: £(5.0)m).

Tax contribution

We manage all taxes, both direct and indirect, to ensure that we pay the appropriate amount of tax in each country whilst ensuring that we respect the applicable tax legislation and utilise, where appropriate, any legislative reliefs available. This tax strategy is reviewed, regularly monitored and endorsed by the Board.

Mitie is a significant contributor of revenues to the UK Exchequer, paying £534m in the year to March 2017 (2016: £507m). This comprised £15m of UK corporation tax and £519m of indirect taxes including business rates, VAT and payroll taxes paid and collected. As our business is primarily based in the UK, our effective tax rate should track the UK statutory tax rate. Due to losses incurred during the year we do not expect to pay any corporate tax in FY18 and will be obtaining a repayment of tax overpaid in prior years. The amount due is shown as a current tax asset on our balance sheet.

Discontinued Operations

In February 2017, Mitie completed the disposal of its UK social care division comprising the domiciliary care and homecare businesses, Enara Group Limited and Complete Care Holdings Limited, to Apposite Capital LLP, a specialist healthcare investor, for a cash consideration of £2.

The Group agreed to contribute £9.45m to the funding of trading losses and the cost of the turnaround plan, payable in two tranches. The first tranche (£5.4m) was paid on 1 April 2017 with the second (£4.05m) to be paid on 1 July 2017. The total loss on disposal was £30.4m.

The Audit Committee appointed KPMG to review the circumstances surrounding the judgement made on Healthcare goodwill at 31 March 2016. As a result of the review the Audit Committee has considered that one or more errors had been made in preparation of the plan that was approved by the Board and formed the basis for impairment testing of Healthcare goodwill. Correction of these errors reduces the value in use by £64.0m which results in an impairment to Healthcare of £26.0m at 31 March 2016, and this has been adjusted in the prior year figures. The remaining £81.1m Healthcare goodwill has been written off in the year ended 31 March 2017 along with other intangible assets written off and amortised in the year totalling £11.4m (2016: £10.1m). In addition £0.3m restructure costs have been incurred. These other items, in addition to the trading loss incurred for the period to disposal of £12.0m, resulted in a total loss from discontinued operations of £132.4m (2016: £39.0m), after tax credits of £2.8m (2016: £3.0m).

Mitie Model

Mitie historically operated an investment programme known as the Mitie Model. No new Mitie Model arrangements were created during the year and this past construct will be replaced by a more traditional Group LTIP Programme. At 31 March 2017, Mitie holds majority interests in six Mitie Model companies with a carrying value of £2.3m, disclosed as non-controlling interests in the balance sheet.

The Group will be ceasing its practice of buying back shares to offset shares issued under the Mitie Model or future LTIP arrangements.

Balance sheet

The Group's net assets reduced significantly at 31 March 2017 to £89.8m (FY16: £361.5m). The £271.7m reduction is principally driven by £132.4m relating to the discontinued Healthcare operations, along with £59.7m of adjustments relating to the Accounting Review and £29.6m of net actuarial loss on the Group's pension schemes.

Goodwill and intangible assets

Goodwill and other intangible assets of £397.1m (2016: £504.1m) were held on the balance sheet at 31 March 2017. Impairment of the goodwill in relation to Healthcare accounts for £81.1m of this reduction, along with amortisation and impairment charges totalling £36.9m.

In addition, the Board has carefully reviewed the carrying value of goodwill in the Property Management CGU and while it considers that the business plan is achievable, it has also come to the conclusion that considering the balance of risks and opportunities, a disappointing performance in FY17 and sensitivity analysis, an impairment of £15.0m is appropriate, reducing that CGU's goodwill to £70.2m (2016: £85.2m).

Other goodwill balances have been maintained and there were no acquisitions during the year giving rise to goodwill.

Working capital & invoice discounting

Operating cash flow improved to £151.1m (2016: £114.6m). In order to properly understand the true working capital performance, it is helpful to strip out both the effects of the one-off write-offs and the utilisation of invoice discounting.

The one-off write-offs either reduce debtors or increase provisions, both of which have the effect of a one-time improvement on working capital, which offsets the reported base level of EBIT.

The Group has used non-recourse invoice discounting for a number of years. During the year, our utilisation of invoice discounting facilities increased by £28.5m (FY16 increase: £23.1m). Net other trade payables/receivables increased by £18.0m, largely as a consequence of extending credit terms.

After stripping out these effects, working capital from continuing operations has improved by £18.0m (2016: £(34.4)m).

Cash

As a result of the net working capital movement, net debt at 31 March 2017 was £147.2m (2016: £178.3m).

Net debt and lender covenants

As at 31 March 2017, the Group has £527m of committed funding arrangements. In September 2016, we extended our £275m multi-currency Revolving Credit Facility (RCF) for a further two years to July 2021, with no change to terms. Our £252m of US Private Placement notes are spread over four maturities between December 2017 and 2024.

Mitie's two key covenant ratios are leverage cover (ratio of net debt to EBITDA to be no more than 3x) and interest cover (ratio of EBITDA to net finance costs to be no less than 4x). Following the end of the year, the group approached its lenders to seek their agreement to exempt further asset write-downs of £39.7m from covenant calculations. These write-downs are judgemental in nature and will not result in future cash outflows. Lender approval was received and these write-downs are included in these accounts. Due to the technical provisions of IAS1 and the timing of this approval being received after the year end, it has been necessary to classify the drawn amounts under the RCF and the US Private Placement notes (total £300m) as current rather than non-current liabilities.

Retirement benefit schemes

The net deficit on our defined benefit pension schemes was £74.2m (2016: £35.5m). The increase has been principally driven by a 95 basis point reduction in the discount rate used by the Group to determine its pension obligations. This has been principally driven by a reduction in corporate bond yields. The accounting deficit on Mitie's principal defined benefit scheme at 31 March 2017 was £70.7m (2016: £34.4m). Whilst this deficit has fallen since the half year by £10.5m, Mitie intends to develop a deficit reduction plan in the autumn of 2017, once the actuarial triennial valuation at 31 March 2017 is completed.

The Group also makes contributions to customers' defined benefit pension schemes under Admitted Body arrangements as well as to other arrangements in respect of certain employees who have transferred to the Group under TUPE. Mitie's net defined benefit pension deficit in respect of schemes in which it is committed to funding amounted to £3.5m (2016: £1.1m).

The Group has commenced consultation with those employees who continue to accrue benefits under defined benefit arrangements with a view to moving to a defined contribution basis in line with the majority of employees in the Company and the wider market.

Articles - Borrowing Powers

Due to the reduction of net assets, it has become necessary to address the borrowing powers limit contained in the Company's Articles of Association. The borrowing powers limit is a constitutional requirement and is not connected with the Group's ability to borrow money from commercial lending markets but is an internal constitutional constraint. The limit is currently set at 2x adjusted net assets, which the Board believes is insufficient cover in light of the write-offs reported in the financial statements, given the normal intra-year swings in net debt. Therefore, the Company is holding an Extraordinary General Meeting on 12 June 2017 to seek shareholders' permission to increase this limit to a fixed amount of £1.5bn. This does not indicate that the Company wishes to increase its level of indebtedness per se; rather control over the Company's ability to raise funding continues to be primarily limited through the application of lender covenant ratio requirements, as detailed above. However, our lenders do require the Group to be compliant with its Articles at all times.

Operating Review

In January 2017, the Company announced a new organisation and a new leadership team. The financial and operating performance of our 6 business units reflect this new organisation, and the way we run the business.

All numbers here are reported on the 'Alternative Performance Measure', which provides a better like-for-like performance comparison.

Cleaning & Environmental Services

£m	FY17	FY16 Restated
Revenue	395.4	408.7
Adjusted revenue	399.0	407.1
Operating profit before other items	6.0	25.5
Adjusted operating profit	20.3	23.6
Order book	811	894

We remain one of the largest cleaning services providers in the UK, offering a full suite of cleaning services as well as specialist services, such as pest control, landscaping, and gritting. The new division unites our Cleaning business with our Pest Control and Landscaping businesses (Environmental Services). Waste Management, which previously sat within Environmental Services, has been realigned with Professional Services due to the advisory nature of its services.

The business reported £395.4m of revenue and £6.0m of operating profit before other items. Adjusted operating profit was down 14% year on year to £20.3m. The significant under-performance in Cleaning was partly offset by the strong performance from Environmental Services.

It was a difficult year for Cleaning, with revenues down 5% with further deterioration in margins. The business faces significant structural headwinds from service commoditisation, low barriers to entry, and price competition.

Despite a difficult trading year, the business secured a number of contracts with high-profile customers, including an expanded street furniture cleaning and maintenance contract with Transport for London (TfL), a renewal with Hinchingbrooke Health Care NHS Trust and an expansion with Amazon.

Our client retention rate for FY17 was below expectations. Our NPS score tells a similar story, with a slippage of 4 points, but we anticipate an improvement as we realign our sales force and bolster our proposition post the recent restructure.

We recognise the structural headwinds of the overall Cleaning sector and we are responding to these pressures by: extending our capabilities into more technical areas of work; simplifying our overhead structure; and introducing improved technology for better workforce management. To improve our workforce management and employee engagement, we have accelerated the implementation of Workplace+, a handheld-enabled, all-in-one operations portal for scheduling, payslips and supplies. In FY16, there were no cleaning operatives on Workplace+, at the end of FY17 there were 15%, and our target is to have more than 80% of our operatives on the portal by the end of FY18. The wide adoption of Workplace+ will also allow the business to better communicate with our employees, measure and analyse productivity patterns, and enable rapid roll-out of best practices.

Technology has a key role to play in the shift towards a demand-based workforce where cleaning is performed at optimal efficiency. It will also allow us to improve employee engagement, enhance our internal communications, cement the 'Mitie-way' of doing things, and create genuine efficiencies through a 'connected' workforce.

The Environmental Services segment has outperformed this year, contributing c.50% to overall divisional adjusted operating profits. We saw strong revenue growth of 23% and adjusted profit growth of 4%.

The Pest Control business had a solid year with continued organic profit growth. It renewed contracts with Mitchell & Butler, Young's and Homeserve. The business continues to expand by targeting growth in food manufacturing, retail and distribution, as well as through innovative solutions such as drone technology. Used with a number of our clients, drone technology enables safer and more efficient inspections. The business has also invested extensively in an operations platform, to improve the efficiencies of our technicians, customer experience and reporting.

Landscaping has had an exceptional year following the successful mobilisation of contracts secured at the end of FY16. The business has commenced work on several new contracts: Merseyrail, NHS Property Services, JPMorgan and The Southern Co-operative. However, earnings from gritting were softer than expected due to a milder than average winter in the UK.

Over the next 12 months, the focus will be on looking after our customers better, by getting the basics right. This means simplifying our business structure and making operations more efficient and effective. Our goal is to transform our cost base by eliminating role duplication and ineffective processes, and to improve productivity by using existing toolkits and standardising how we operate.

Security

£m	FY17	FY16 Restated
Revenue	404.2	364.4
Adjusted revenue	404.2	364.4
Operating profit before other items	16.1	20.8
Adjusted operating profit	19.9	19.8
Order book	876	776

We are currently the 2nd largest integrated security services provider in the UK, uniquely delivering a full suite of services and products, including security personnel, remote monitoring, mobile response solutions, and fire and security systems - all underpinned by a risk-based ethos. Working across all sectors we are the leading provider in the transport and aviation and retail sectors along with critical security environments.

The new Security division comprises Security Management, Front of House, Document Management, and our employee vetting business - Procius. The grouping of these businesses allows us to further develop our technology capabilities and enhance solutions in a collaborative and integrated way. Our goal is to build upon and strengthen our market-leading position, continue to influence buying behaviours, and cement long-term partnerships with our customers through innovative operating models.

In a highly competitive market, our focus is to deliver sustainable growth through a converged service offering, challenging traditional procurement approaches by raising awareness of risk-based, technology-driven solutions. We want to be known as industry and thought leaders in risk-based deployment, across all the sectors we operate in. We strive to attract and retain our customers through the provision of exceptional service, and we are pleased to report a 67% increase in our NPS score in FY17.

The division reported £404.2m of revenue and £16.1m of operating profit before other items. Adjusted operating profit remained relatively flat, margin deteriorated, impacted by contract losses from Front of House. Strong sales performance has resulted in 13% growth in our order book to £876m.

Earlier this year, we were awarded an expanded contract with leading supermarket chain, Sainsbury's, where we have implemented a risk-based deployment model, applying software and handheld technology to capture incidents and analyse data to drive informed decision making.

Over the last 12 months, the Security Management team has renewed a number of major contracts, including Citigroup, Technicolor, John Radcliffe Hospital, DP World and Strathclyde Passenger Transport. Customer retention rate closed at 84% vs. 77% in the prior year. In FY17, our new business wins came in at 30% above the previous year. Notable contract awards include the expansion of Sainsbury's, London City Airport, BNP Paribas and NHS Property Services. Our sales pipeline has doubled year-on-year to £1.2bn. We believe this is only the beginning of a paradigm shift towards innovative risk-based solutions, and we will continue to refine our proposition and look to gain further market share to become the industry's leading security provider.

Our Document Management business had a solid year with 100% client retention and organic growth across its portfolio. Similar to security, the document management market is trending towards the increased use of technology. The business has a national footprint offering a full range of document process outsourcing services ranging from managed print solutions and outsourcing of mail room activities to a complete customised restructuring of document work flows and processes. Recent deployments include the implementation of hybrid mail into the second largest local authority in the UK as well as one of the largest private sector landlords and new mail tracking technology into clients including: PwC, Holman Fenwick Willan and Herbert Smith Freehills.

Our front of house business was the recipient of the prestigious Customer Focus Award at this year's UK Customer Satisfaction Awards. However, our trading performance was significantly impacted by contract losses. In FY18 the business will undergo a rebrand and repositioning of its offering in the market, which will strengthen its market position and ensure our delivery meets our customers' needs. The business is looking to advance under new leadership and move towards sustainable growth for the coming years.

Procius, our employee vetting business, which is one of the UK's largest providers and the leader in the transport and aviation sector of pre and post-employment screening and criminal records checking services, continues to deliver strong growth. In FY17, we saw an increasing demand for our services across existing customers such as British Airways, Jet2 and EasyJet along with significant contract wins, including Ovo Energy and Arsenal Football Club. Procius has also widened its product offering to cover a broader range of employment lifecycle services, which will deliver further growth opportunities in FY18.

We expect further growth in FY18, supported by a solid delivery model - combining risk analysis, technology deployment, off-site monitoring and responsive services and we will continue to refine our proposition in order to challenge and lead the market with our approach to transformational client contracts.

Catering

£m	FY17	FY16 Restated
Revenue	134.3	126.6
Adjusted revenue	132.7	126.6
Operating profit before other items	4.7	5.4
Adjusted operating profit	5.3	5.3
Order book	458	463

Our goal is to be recognised as the UK and Ireland's most distinctive, technology-enabled workplace catering experts, where the "Well Being" of our clients' employees is high on the agenda. We look to achieve this by concentrating on our core strength: creating food with personality, served by people who are passionate about delivering the highest quality of service. Our catering division is comprised of Gather & Gather - our core brand, and Creativevents - our specialist outdoor catering business.

Our people have always played a major part in our overall proposition, and we are proud to report our staff retention rate increased to 71% in FY17. In FY17, Gather & Gather received two prestigious awards in recognition of its innovative approach. The first award was the BIFM Brand Impact Award, recognising Gather & Gather's founding mission of 'bringing food and people together' to enhance the workplace. The second award was won by head chef, Clark Crawley, who won Gold as part of the English National Culinary team in the Culinary Olympics.

The business reported revenue of £134.3m and operating profit before other items of £4.7m. Despite a solid 6% top line growth, adjusted operating profit was flat due to contrasting performances between Creative Events and Gather and Gather.

Gather & Gather delivered solid revenue growth, underpinned by a number of new wins in Ireland, including a contract expansion with LinkedIn. Our order book remains relatively stable at £458m. We have also established a new baseline for NPS of 6.

External market forces such as food inflation have pushed up our cost base and impacted our margin. Food inflation is an ongoing factor. We believe that our core offering is attractive and marketable, as we pay particular attention to the provenance of our ingredients, how the food is served and how it impacts workplace productivity. We continue to win contracts over competitors due to our customised approach to service delivery.

Food is an integral driver of workplace productivity, and we are engaging our own team and industry experts to develop technology that will form a key pillar of Mitie's overall connected workspace proposition. For example, Gather & Gather has introduced a mobile application to improve the customer experience. The app is live with a number of prestigious clients, allowing our customers to pre-order, collect loyalty, leave feedback and receive targeted push notifications.

Creativevents had a challenging year, impacted by external factors such as adverse weather conditions and reduced attendances at events following terrorism incidents in Europe. Furthermore, we continued to exit non-profitable contracts after recent changes to management. Despite the challenging backdrop of FY17, we continue to provide retail bars, food and hospitality for a range of prestigious clients, including Royal Ascot, the RHS Chelsea Flower Show, the Farnborough Air Show and Lord's Cricket Ground.

The focus over the next 12 months is to fine-tune our offering, and broaden the Gather & Gather brand and its reach. We have established a strong presence in the media sector but there are attractive opportunities in the financial and professional services sector. Our goal is to build on our recent contract wins, and show that we can adapt our style to suit professional services firms.

Engineering Services

£m	FY17	FY16 Restated
Revenue	797.4	800.3
Adjusted revenue	809.0	788.4
Operating profit before other items	0.2	53.7
Adjusted operating profit	37.9	42.0
Order book	3,259	3,325

*The difference between 'Reported' and 'Adjusted' revenue relates largely to Adjustment to POC balances and accrued income as part of the Accounting Review

We are one of the leading providers of engineering services in the UK, delivering technical and building maintenance services across a wide range of sectors and real estate assets. In addition to our core maintenance offer, we provide critical specialist services such as heating, cooling, lighting, water treatment and building controls.

We have combined our Hard FM business, and the management team of Integrated FM, into one division: Engineering Services. Engineering services has historically been the service line with the largest share of our integrated contracts; therefore, by combining and streamlining operations, we can create financial and operational synergies.

The overall business reported revenue of £797.4m and operating profit before other items of £0.2m. The adjusted operating profit declined 9.8% to £37.9m. Adjusted operating margin also declined from 5.3% to 4.7%. The underlying trading performance has been impacted by lower margin on chargeable works. Nevertheless with contract extensions and new business wins our order book remains steady at £3.3bn.

Despite the challenges above, we continued to pursue a number of large opportunities and have delivered the following:

• Extension and expansion of our contract with Thales

• Retention of Allianz Insurance

• Expansion of our contract at Heathrow Airport

• An extension with the Scottish Parliament

• Retention and expansion with Manchester Airport Group

• An extension with Lakeside North Harbour business centre

The business also successfully mobilised contracts with NHS Property Services and CTIL with combined revenue in excess of £40m p.a. We see a significant amount of untapped potential in both revenue and margins, given our critical mass in the UK. With this in mind, we have fast-tracked the roll-out of a standardised mobile workflow solution, MiJobs. Prior to MiJobs, the business had several different mobile-enabled workflow solutions, and we have migrated all mobile engineers to MiJobs over the last 12 months. Our national footprint coupled with more effective workflow management, will mean improved operational efficiency and superior service delivery for our customers.

Over the next 12 months, our focus is on getting the basics right. The business is embarking on a multi-year transformation programme, designed to standardise and simplify our operations to deliver the most efficient and effective service, at the lowest cost to our clients.

This will begin with the integration of our core workforce, to create a highly flexible and skilled team with the optimal support systems. We will automate work flow management for scheduling, tasking and billing. Our engineers will have the necessary training and tools to operate in the safest and most effective manner and deliver the highest quality of service for our customers.

Longer term, our vision is to use technology to link outputs to the Connected Workspace, providing the most responsive and valued service in the market. By using a combination of existing building systems and environment sensors, along with energy data, asset data, and workplace data, we will provide tailored solutions to suit each client's unique requirements.

Professional Services & Connected Workspace

£m	FY17	FY16 Restated
Revenue	90.9	97.9
Adjusted revenue	90.9	97.9
Operating profit before other items	4.2	5.5
Adjusted operating profit	6.7	5.6
Order book	221	190

Professional Services & Connected Workspace is our new consultancy services division that thinks strategically, operates collaboratively, and leverages technology to make a real difference to our clients' real estate and facilities services. By combining our consultancy capabilities with strategic account management, we are advising our clients on how to save them money and improve their working environments. Linking these capabilities with the new technologies and analytics incorporated in our Connected Workspace platform, we are very well placed to take our services Beyond FM. Mitie has over 3,000 clients and a wide product offering, which provides us with a wealth of opportunities to deliver more to our clients by cross-selling and expanding service delivery.

The professional services team brings together our consultancy businesses, including Source8, Mitie Waste and Utilyx (Energy Services), allowing us to develop and provide comprehensive and joined-up propositions for our clients. Our capabilities are aligned with our Real Estate and Facilities Management offerings, and include property and real estate, technology, risk management, energy and sustainability. Our strategic sales and account management team has been re-built under new leadership, with new processes, to better target and manage our most important strategic accounts.

Within this division we are building the Connected Workspace solutions and capabilities. The Connected Workspace is a set of evolving technology-driven solutions that will enable Mitie to improve the delivery of facilities services and provide superior value to our clients. For example, we are supporting a 20% estate reduction target through design and smarter workplace management for one of our largest customers. We are using real-time data capture for analysis and monitoring to drive efficiencies through occupancy-based energy controls and maintenance regimes.

The division reported £90.9m of revenue and £4.2m of operating profit before other items. The adjusted operating profit was up 22% from previous year. This is a relatively new division, formed in the last quarter of FY17. Over the last 12 months, the combined business saw a significant increase in consulting activities with existing and new clients. Despite revenue decline from the Waste business, it secured contracts with JLL, a large national leisure operator, and expanded existing contracts with Network Rail and Manchester Airport Group. The professional services team was engaged to deliver strategic planning, real estate reduction, and design and move projects for prestigious clients such as ED&F Man.

Our focus is to differentiate Mitie's proposition in the market through the provision of world-class professional services and industry-leading Connected Workspace solutions. With the reach of our products, the extent of our client base and our 53,000 colleagues, we will collect and analyse real-time data, and develop targeted strategies that enhance the productivity and wellbeing of our clients' workspaces.

Public Services - Property Management

£m	FY17	FY16 Restated
Revenue	257.6	313.6
Adjusted revenue	257.7	313.5
Operating profit before other items	(4.5)	16.8
Adjusted operating profit	12.3	16.2
Order book	663	639

The Property Management business provides a wide range of maintenance services in the UK, predominantly to clients in the social housing sector. The business also delivers claims handling and repair services for insurance companies, and is the largest painting and commercial refurbishment roofing provider in the UK.

Property Management reported revenue of £257.7m and an operating loss before other items of £4.5m. Adjusted operating profit was disappointing at £12.3m down 25% year on year. This was impacted by a shortfall of in-year project revenue, affecting both top-line growth and the overall blended margin.

Revenue from the social housing business was negatively impacted by delays in client capital spend, with its adjusted profit also impacted by a reduction in higher margin project works. In adjusted profit terms, the painting business had a positive year, and the roofing business remained relatively flat versus previous year.

In light of the performance during the year, the Board has carefully reviewed the carrying value of goodwill and while it is confident that the business plan is deliverable, it has also come to the conclusion that an impairment of £15.0m is appropriate, reducing the goodwill to £70.2m (FY16: £85.2m).

The business has had a challenging trading year. Nevertheless, our order book has remained buoyant, growing 4% to £663m. The current order book contains over £100m of annual revenues held within long-term (c.10yr) partnering contracts in housing, with a blue chip client list.

Even though our NPS score declined marginally year-on year, we did achieve a 100% success rate on long-term maintenance housing contract re-bids.

Under new leadership, the sales and marketing team has relaunched its value proposition to address the changing landscape of the social housing market, developing two new propositions:

• Integrated Property Management - bundling services to provide enhanced asset management services

• Partnership Solutions - to provide innovative long-term solutions to address sector spending challenges

Our goal is to differentiate our offering in a relatively commoditised market, by creating long-term partnerships, thinking differently, and working innovatively to achieve our customer's strategic goals.

We have seen some early traction, with notable wins including a 7+7yr Integrated Property Management contract with national social housing provider, Home Group, worth ~£12.5m p.a; and a 5+5+5yr Integrated Property Management contract with new client Islington and Shoreditch Housing Association.

Technology has been an integral part of our integrated and partnership offerings, as it brings efficiency and decision making benefits to our clients. For example, the introduction of our thermal-imaging drone service to help with home surveys. We will continue to invest and deploy technology to improve the value we provide to our customers.

The main focus for the next 12 months is to get the basics right, invest in our people, deliver the highest quality service to customers - at the right cost for our clients - and continue to invest in the communities in which we work.

Public Services - Care & Custody

£m	FY17	FY16 Restated
Revenue	46.4	35.6
Adjusted revenue	46.5	35.5
Operating profit before other items	2.2	2.1
Adjusted operating profit	2.9	2.7
Order book	244	310

Our Care & Custody business delivers a range of public services for vulnerable adults in secure environments, on behalf of the UK government. These include managing immigration detention centres for the Home Office, forensic medical examiner (FME) and custody support services for police forces across England and Wales, and offender healthcare provision in two prisons on behalf of NHS England.

Care & Custody had a good year, delivering revenue growth of 31% up from £35.6m in the previous year to £46.4m. Operating profit was £2.1m in FY16 and £2.2m in FY17. Adjusted profit was £2.9m up 7.4% year on year, despite building in some overhead relating to upcoming bids.

Following the acquisition of Tascor Medical Services (now Care & Custody Health), we have won c.£50m of new business over the year. Expansion into the forensic medical services market helped secure several flagship contract wins in the police FME segment. We have also seen significant growth in the sales pipeline, with an increase from £1.6bn to £2.9bn due to several large Home Office contracts coming to market.

One of our flagship contract awards was for the provision of FME services to Greater Manchester Police; a contract which also includes liaison and diversion services, delivered through partnerships with the NHS and the Cheshire and Greater Manchester Community Rehabilitation Company. We envisage this model of contract being adopted by other police forces, which should bolster our pipeline in the future.

In order to deliver high-quality services, we need to attract and retain the highest quality people. We have created specific career paths and provide access to training and education. We are currently pursuing a number of options to develop training and apprenticeships for detention custody officers, clinicians and managers, to upskill them and to create long-term careers for ambitious and motivated individuals who want to join our team. We see this approach as vital to helping secure a sustainable recruitment pipeline; with an ageing and tightening labour market, attracting and retaining talented individuals in this sector can be difficult.

Our focus is to build on existing relationships, ensuring we have a clear understanding of our clients' needs, and design solutions that meet and exceed their expectations. This involves maintaining the highest standards for those in our care. We recognise that our policies and processes must reflect and respond to relevant legislation, and actively embrace external regulatory scrutiny. We underpin these principles by promoting a culture of openness, transparency and high performance.

Consolidated income statement

For the year ended 31 March 2017

				2017		2016 - Restated*^…
	Notes	Before other items £m	Other items^‡£m	Total £m	Before other items £m	Other items^‡£m	Total £m
Continuing operations
Revenue	3,4	2,126.3	-	2,126.3	2,146.9	-	2,146.9
Cost of sales		(1,896.5)	-	(1,896.5)	(1,849.8)	-	(1,849.8)
Gross profit		229.8	-	229.8	297.1	-	297.1

Administrative expenses		(236.7)	(36.6)	(273.3)	(183.8)	(6.3)	(190.1)
Share of profit of joint ventures and associates	17	0.6	-	0.6	0.6	-	0.6
Operating (loss)/profit	4,7	(6.3)	(36.6)	(42.9)	113.9	(6.3)	107.6

Investment revenue	9	-	-	-	0.1	-	0.1
Finance costs	10	(15.3)	-	(15.3)	(15.8)	-	(15.8)
Net finance costs		(15.3)	-	(15.3)	(15.7)	-	(15.7)

(Loss)/profit before tax		(21.6)	(36.6)	(58.2)	98.2	(6.3)	91.9

Tax	11	3.3	4.1	7.4	(19.5)	1.3	(18.2)
(Loss)/profit from continuing operations after tax		(18.3)	(32.5)	(50.8)	78.7	(5.0)	73.7
Discontinued operations
Loss from discontinued operations	6	(11.4)	(121.0)	(132.4)	(5.0)	(34.0)	(39.0)
(Loss)/profit for the year		(29.7)	(153.5)	(183.2)	73.7	(39.0)	34.7

Attributable to:
Equity holders of the parent		(30.5)	(153.5)	(184.0)	71.6	(39.0)	32.6
Non-controlling interests		0.8	-	0.8	2.1	-	2.1
		(29.7)	(153.5)	(183.2)	73.7	(39.0)	34.7
(Loss)/earnings per share (EPS) attributable to equity shareholders of the parent
From continuing operations:
- basic	13	(5.5)p	(9.2)p	(14.7)p	21.6p	(1.5)p	20.1p
- diluted	13	(5.4)p	(9.2)p	(14.6)p	21.3p	(1.4)p	19.9p
From continuing and discontinued operations:
- basic	13	(8.7)p	(43.7)p	(52.4)p	20.1p	(10.9)p	9.2p
- diluted	13	(8.6)p	(43.3)p	(51.9)p	19.9p	(10.8)p	9.1p

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of the year ended 31 March 2016.

… See Note 6 for further detail on the re-presentation of the prior year comparatives due to the treatment of the Healthcare business as a discontinued operation.

‡ Other items are as described in Note 5.

Consolidated statement of comprehensive income

For the year ended 31 March 2017

	Notes	2017 £m	2016 Restated* £m
(Loss)/profit for the year		(183.2)	34.7

Items that will not be reclassified subsequently to profit or loss
Remeasurement of net defined benefit pension liability	38	(35.4)	3.0
Income tax relating to items not reclassified		5.5	(1.6)
		(29.9)	1.4
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations		1.3	0.2
Gains/(losses) on hedge of a net investment taken to equity		0.1	(0.7)
Cash flow hedges:
(Losses)/gains arising during the year		26.2	6.7
Reclassification adjustment for losses included in profit and loss		(21.4)	(4.4)
Income tax charge relating to items that may be reclassified		0.3	(0.7)
		(3.1)	1.1

Other comprehensive (expense)/income for the financial year		(33.0)	2.5

Total comprehensive (expense)/income for the financial year		(216.2)	37.2

Attributable to:
Equity holders of the parent		(217.0)	35.1
Non-controlling interests		0.8	2.1

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of the year ended 31 March 2016.

Consolidated balance sheet

At 31 March 2017

	Notes	2017 £m	2016 Restated* £m	2015 Restated* £m
Non-current assets
Goodwill	14	343.9	439.5	464.4
Other intangible assets	15	53.2	64.6	73.8
Property, plant and equipment	16	32.3	49.3	53.3
Interest in joint ventures and associates	17	0.6	0.6	1.1
Derivative financial instruments	18	-	14.4	8.0
Trade and other receivables	19	50.3	84.8	58.5
Deferred tax assets	23	22.2	10.4	13.9
Total non-current assets		502.5	663.6	673.0

Current assets
Inventories	24	6.8	9.9	11.0
Trade and other receivables	19	381.0	432.1	416.8
Derivative financial instruments	18	35.8	-	-
Current tax asset		12.1	-	-
Cash and cash equivalents	25	129.1	93.1	96.4
Total current assets		564.8	535.1	524.2

Total assets		1,067.3	1,198.7	1,197.2

Current liabilities
Trade and other payables	26	(559.9)	(496.1)	(476.6)
Current tax liabilities		-	(3.9)	(2.9)
Financing liabilities	27	(310.8)	(1.9)	(1.8)
Provisions	29	(20.4)	(8.5)	(10.5)
Total current liabilities		(891.1)	(510.4)	(491.8)

Net current (liabilities)/assets		(326.3)	24.7	32.4

Non-current liabilities
Trade and other payables	26	(3.4)	(2.5)	(8.0)
Financing liabilities	27	(1.3)	(283.9)	(279.2)
Provisions	29	(6.4)	(0.5)	(7.4)
Retirement benefit liabilities	38	(74.2)	(35.5)	(35.8)
Deferred tax liabilities	23	(1.1)	(4.4)	(7.5)
Total non-current liabilities		(86.4)	(326.8)	(337.9)

Total liabilities		(977.5)	(837.2)	(829.7)

Net assets		89.8	361.5	367.5

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of 31 March 2016 and 1 April 2015.

Consolidated balance sheet continued

As at 31 March 2017

	Notes	2017 £m	2016 Restated* £m	2015 Restated* £m
Equity
Share capital	32	9.2	9.3	9.4
Share premium account	33	130.6	127.7	122.6
Merger reserve	33	91.8	80.1	80.1
Own shares reserve	33	(42.2)	(48.8)	(47.5)
Other reserves	33	10.3	9.9	7.6
Hedging and translation reserve	33	(8.0)	(4.6)	(6.4)
Retained (losses)/earnings		(104.2)	185.0	198.7
Equity attributable to equity holders of the parent		87.5	358.6	364.5

Non-controlling interests		2.3	2.9	3.0
Total equity		89.8	361.5	367.5

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of 31 March 2016 and 1 April 2015.

The consolidated financial statements of Mitie Group plc, company registration number SC019230 were approved by the Board of Directors and authorised for issue on 12 June 2017. They were signed on its behalf by:

Phil Bentley	Sandip Mahajan
Chief Executive	Chief Financial Officer

Consolidated statement of changes in equity

For the year ended 31 March 2017

	Share capital £m	Share premium account £m	Merger reserve £m	Own shares reserve £m	Other reserves £m	Hedging and translation reserve £m	Retained earnings £m	Total £m	Non-controlling interests £m	Total equity £m
At 1 April 2015 -as reported	9.4	122.6	80.1	(47.5)	7.6	(6.4)	209.2	375.0	3.3	378.3
Restatements*	-	-	-	-	-	-	(10.5)	(10.5)	(0.3)	(10.8)
At 1 April 2015 - restated*	9.4	122.6	80.1	(47.5)	7.6	(6.4)	198.7	364.5	3.0	367.5
Profit for the year	-	-	-	-	-	-	32.6	32.6	2.1	34.7
Other comprehensive expense	-	-	-	-	-	1.8	0.7	2.5	-	2.5
Total comprehensive income	-	-	-	-	-	1.8	33.3	35.1	2.1	37.2
Shares issued	-	5.1	-	-	-	-	-	5.1	-	5.1
Dividends paid	-	-	-	-	-	-	(42.2)	(42.2)	(0.2)	(42.4)
Share buybacks	(0.1)	-	-	-	0.1	-	(15.3)	(15.3)	-	(15.3)
Purchase of own shares	-	-	-	(6.6)	-	-	-	(6.6)	-	(6.6)
Share-based payments	-	-	-	5.3	2.2	-	0.3	7.8	-	7.8
Tax on share-based payment transactions	-	-	-	-	-	-	0.1	0.1	-	0.1
Acquisitions and other movements in non-controlling interests	-	-	-	-	-	-	10.1	10.1	(2.0)	8.1
At 31 March 2016 - restated*	9.3	127.7	80.1	(48.8)	9.9	(4.6)	185.0	358.6	2.9	361.5

Loss for the year	-	-	-	-	-	-	(184.0)	(184.0)	0.8	(183.2)
Other comprehensive expense	-	-	-	-	-	(3.4)	(29.6)	(33.0)	-	(33.0)
Total comprehensive expense	-	-	-	-	-	(3.4)	(213.6)	(217.0)	0.8	(216.2)
Shares issued	0.1	2.9	11.7	-	-	-	-	14.7	-	14.7
Dividends paid	-	-	-	-	-	-	(37.4)	(37.4)	(0.1)	(37.5)
Purchase of own shares	-	-	-	-	-	-	-	-	-	-
Share buybacks	(0.2)	-	-	(0.2)	0.4	-	(24.4)	(24.4)	-	(24.4)
Share-based payments	-	-	-	6.8	-	-	2.4	9.2	-	9.2
Acquisitions and other movements in non-controlling interests	-	-	-	-	-	-	(16.2)	(16.2)	(1.3)	(17.5)
At 31 March 2017	9.2	130.6	91.8	(42.2)	10.3	(8.0)	(104.2)	87.5	2.3	89.8

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of the profit for the year ended 31 March 2016 and of retained earnings at 1 April 2015.

Consolidated statement of cash flows

For the year ended 31 March 2017

		Notes	2017 £m	2016 Restated* £m
Operating (loss)/profit	- continuing operations		(42.9)	107.6
	- discontinued operations		(135.2)	(42.0)
Adjustments for:
Share-based payment expense		37	6.2	5.2
Defined benefit pension charge		38	4.3	4.4
Defined benefit pension contributions		38	(2.4)	(3.0)
Acquisition costs		5	1.2	0.3
Depreciation of property, plant and equipment		16	14.1	15.1
Amortisation of intangible assets		15	23.8	17.0
Share of profit of joint ventures and associates		17	(0.6)	(0.6)
Impairment of goodwill and intangible assets			109.2	33.2
Loss/(profit) on disposal of businesses			30.4	(0.5)
Loss on disposal of property, plant and equipment			1.0	-
Operating cash flows before movements in working capital			9.1	136.7

Decrease in inventories			3.2	1.1
Decrease/(increase) in receivables			74.8	(41.7)
Increase in payables			58.4	16.4
Increase in provisions			5.6	2.1
Cash generated by operations		40	151.1	114.6

Income taxes paid			(15.3)	(15.7)
Interest paid			(12.7)	(13.4)
Acquisition costs		5	(0.3)	(0.3)
Net cash inflow from operating activities			122.8	85.2

Investing activities
Interest received			0.1	-
Purchase of property, plant and equipment			(14.5)	(15.7)
Purchase of subsidiary undertakings, net of cash acquired		34	-	(0.6)
Purchase of non-controlling interests		34	(1.4)	(7.4)
Dividends received from joint ventures and associates			0.6	0.7
Investment in derivative financial instruments			-	1.9
Purchase of other intangible assets		15	(12.4)	(8.9)
Disposals of property, plant and equipment			1.0	2.2
Disposal of subsidiaries, including cash disposed			(1.7)	-
Net cash outflow from investing activities			(28.3)	(27.8)

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of the year ended 31 March 2016.

Consolidated statement of cash flows continued

For the year ended 31 March 2017

	Notes	2017 £m	2016 Restated* £m
Financing activities
Repayments of obligations under finance leases		(1.6)	(3.1)
Proceeds on issue of share capital		0.1	5.0
Bank loans repaid		-	(2.2)
Proceeds from new borrowings		1.7	-
Proceeds from re-issue of Treasury shares	33	2.4	(3.7)
Share buybacks	32	(24.4)	(14.4)
Equity dividends paid	12	(37.4)	(42.3)
Non-controlling interests dividends paid		(0.1)	(0.2)
Other financing items		0.4	-
Net cash outflow from financing		(58.9)	(60.9)

Net increase/(decrease) in cash and cash equivalents		35.6	(3.5)
Net cash and cash equivalents at beginning of the year		93.1	96.4
Effect of foreign exchange rate changes		0.4	0.2
Net cash and cash equivalents at end of the year	25	129.1	93.1

The above statement of consolidated cash flows includes cash flows from both continuing and discontinued operations. Further details of the cash flows relating to discontinued operations are shown in Note 6.

Reconciliation of net cash flow to movements in net debt	Notes	2017 £m	2016 Restated* £m
Cash drivers
Net increase/(decrease) in cash and cash equivalents		35.6	(3.5)
(Increase)/decrease in bank loans		(1.7)	0.3
Non-cash drivers
Non-cash movement in private placement notes and associated hedges		(4.4)	3.0
Effect of foreign exchange rate changes		0.4	0.2
Decrease/(increase) in finance leases		1.2	(0.5)
Decrease/(increase) in net debt during the year		31.1	(0.5)

Opening net debt		(178.3)	(177.8)
Closing net debt	31	(147.2)	(178.3)

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of the year ended 31 March 2016.

0B1.	Basis of preparation and significant accounting policies

(a) Basis of preparation

The group's financial statements for the year ended 31 March 2017 have been prepared in accordance with International Financial Reporting Standards (IFRSs) adopted for use in the European Union and therefore the group's financial statements comply with Article 4 of the EU IAS Regulation.

As more fully detailed in the Directors' report, the group's financial statements have been prepared on a going concern basis.

The group's financial statements have been prepared on the historical cost basis, except for certain financial instruments which are required to be measured at fair value.

Accounting standards that are newly effective in the current year

The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those followed in the preparation of the group's annual financial statements for the year ended 31 March 2016 except for the following amendments, which were effective for the first time in the current year but had no impact on the results or financial position of the group:

- Amendments to IAS 1 'Presentation of financial statements' - disclosure initiative

- Amendments to IAS 16 and IAS 38: Clarification of acceptable methods of depreciation and amortisation

- Amendments to IFRS 11 'Joint Arrangements' - Accounting for acquisitions of interests in joint operations; and

- Amendments resulting from annual improvements to IFRSs 2012-2014 and 2013-2015 cycle.

Accounting standards that are not yet mandatory and have not been applied by the group

The following standards and interpretations have been issued but are not yet mandatorily effective (and in some cases have not yet been adopted by the EU) and have not been applied by the group:

- IFRS 9 'Financial instruments'

- IFRS 15 'Revenue from contracts with customers'

- IFRS 16 'Leases'

- Amendments to IFRS 2 'Share-based payment' - classification and measurement of share-based payment transactions

- Amendments to IAS 7 'Cash flow statements' - disclosure initiative

- Amendments to IAS 12 'Income taxes' - recognition of deferred tax assets for unrealised losses

- Amendments to IFRS 10 'Consolidated financial statements' and IAS 28 'Investments in associates and joint ventures'- sale or contribution of assets between an investor and its associate or joint venture.

The directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the group in future periods, except as noted below:

- IFRS 9 will impact both the measurement and disclosures of financial instruments

- IFRS 15 introduces a new revenue recognition model and is due to be effective for periods beginning on or after 1 January 2018. It will have a material impact on the reported assets and income statement of the group. The group is conducting a detailed review of IFRS 15 with the view to early adopting the standard for the year ending 31 March 2018.

The review of the impact of IFRS 15 is continuing and will be completed during 2017. The key impacts identified to date are:

Percentage of completion accounting on long-term complex contracts -The 5 step model for revenue recognition contained in IFRS15 introduces the concept of performance obligations. Performance obligations are the contractual promise by an entity to transfer goods or services to a customer. Percentage of completion accounting does not provide an appropriate representation of the satisfaction of performance obligations on these long-term complex contracts and consequently will no longer be considered applicable to these contracts. Therefore, it will not be appropriate to carry forward accrued revenue in relation to percentage of completion accounting on these contracts.

Mobilisation costs - under IFRS 15, costs of mobilising new contracts will have to meet different criteria in order to be classified as a cost of fulfilling a contract. This change will materially affect both (i) the amount of costs capitalised on long-term complex contracts that have been accounted for under the percentage of completion method and (ii) the amount of costs that have been capitalised previously as mobilisation costs.

- IFRS 16 Leases will require nearly all leases to be recognised on the balance sheet as liabilities with corresponding assets being created. It will be effective for periods beginning on or after 1 January 2019.

Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these standards until detailed reviews have been completed.

(b) Significant accounting policies under IFRS

The significant accounting policies adopted in the preparation of the group's IFRS financial information are set out below.

Basis of consolidation

The consolidated financial statements comprise the financial statements of Mitie Group plc and all its subsidiaries.
The parent company has applied FRS101 - Reduced Disclosure Framework in the preparation of its individual financial statements. FRS101 applies IFRS as adopted by the European Union with certain disclosure exemptions.

Subsidiaries are consolidated from the date on which control is transferred to the group and cease to be consolidated from
the date on which control is transferred out of the group. The results, assets and liabilities of joint ventures and associates are accounted for under the equity method of accounting. Where necessary, adjustments are made to the financial statements
of subsidiaries, joint ventures and associates to bring the accounting policies used into line with those used by the group.

All inter-company balances and transactions, including unrealised profits arising from inter-group transactions, have been eliminated in full.

Interests of non-controlling interest shareholders are measured at the non-controlling interest's proportion of the net fair value of the assets and liabilities recognised. Changes in a parent's ownership interest in a subsidiary that do not result in a loss of control are accounted for within shareholders' equity. No gain or loss is recognised on such transactions and goodwill is not
re-measured. Any difference between the change in the non-controlling interest and the fair value of the consideration paid
or received is recognised directly in equity and attributed to the owners of the parent.

Statutory and non-statutory measures of performance

The financial statements contain all the information and disclosures required by the relevant accounting standards and regulatory obligations that apply to the group.

The group has elected to provide some further disclosures and performance measures, reported as "before other items", in order to present our financial results in a way that demonstrates the performance of continuing operations excluding the results from restructuring and acquisition related costs, and the amortisation or write off of acquired intangible assets and goodwill. Results before other items are a non-statutory measure.

Other items are defined as items of income or expenditure which, in the opinion of the Directors, are material or unusual in nature or of such significance that they require separate disclosure on the face of the income statement in accordance with IAS 1 'Presentation of Financial Statements'. Should these items be reversed disclosure of this would also be as other items. Further detail of other items is set out in Note 5 to the financial statements.

Following the issuance of the Guidelines on Alternative Performance Measures (APMs) by the European Securities and Markets Authorities (ESMA) in June 2015, the Group has included a section in its Annual Report with the aim of providing transparency and clarity on the measures adopted internally to assess performance. This section is included on Page [165] of the [Annual Report].

Foreign currency

The financial statements of each of the group's businesses are prepared in the functional currency applicable to that business. Transactions in currencies other than the functional currency are recorded at the rate of exchange at the date of transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date.

Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included
in the income statement for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

On consolidation, the assets and liabilities of the group's overseas operations, including goodwill and fair value adjustments arising on their acquisition, are translated into sterling at exchange rates prevailing at the balance sheet date. Income and expenses are translated into sterling at average exchange rates for the period. Exchange differences arising are recognised directly in equity in the group's hedging and translation reserve. On disposal of a foreign operation, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement.

Revenue

Revenue represents income recognised in respect of services provided during the period (stated net of sales taxes) and is earned predominantly within the United Kingdom. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be reliably measured. When revenue is recognised but has not yet been billed accrued income arises. Deferred income arises when the group has billed clients in advance of recognising revenue.

All bid costs are expensed through the income statement up to the point where contract award or full recovery of the costs is virtually certain. The confirmation of the preferred bidder for a contract by a client is the point at which the award of a contract is considered to be virtually certain.

Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract at the balance sheet date. Revenue from time and material contracts is recognised at the contractual rates as labour hours and tasks are delivered and direct expenses incurred. In other cases, the group distinguishes between the following types of contract:

Revenue recognition: repeat service-based contracts (single and bundled contracts)

Revenue is recognised on a straight-line basis unless this is not an accurate reflection of the work performed. Where a straight-line basis is not appropriate, for example if specific works on contracts represent a significant element of the whole, revenue is recognised based on the percentage of completion method, based on the proportion of costs incurred at the balance sheet date relative to the total estimated cost of completing the contracted work.

Costs incurred, after the confirmation of preferred bidder, that are specific costs incurred to ensure that the project or programme has appropriate organisational, operational and technical infrastructures and mechanisms in place to enable the delivery of full services under the contract target operating model are defined as mobilisation costs. These costs are included within trade and other receivables on the balance sheet provided that the costs relate directly to the contract, are separately identifiable, can be measured reliably and that the future net cash inflows from the contract are estimated to be no less than the amounts capitalised.

Such costs may be incurred when a contract is awarded, or when there is a subsequent change in the scope of contracted services. The mobilisation costs are amortised over the contracted period (including any contracted extension periods), generally on a straight-line basis, or on a basis to reflect the profile of work to be performed over the contracted period if the straight-line basis is not considered to be appropriate for the specific contract to which the costs relate. If the contract becomes loss making, any unamortised costs are written off and the expected loss is provided for immediately.

Revenue recognition: long-term complex contracts

The group has a number of long-term contracts for the provision of complex project-based services, predominantly integrated facilities management contracts. These are contracts which are transformational in nature and usually five years in initial duration.

In this context, transformational means that the cost to the client over the life of the contract is reduced as a result of significant transformations in service provision. Typically these contracts are priced to average the annual charge to the client over the contract period and involve the provision of multiple service lines, with a single management team providing an integrated service.

Where the outcome of such complex project-based contracts can be measured reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date. This is measured by the proportion of contract costs incurred for work performed to date compared to the total estimated contract costs using the percentage of completion methodology.

Contract costs used to determine the stage of completion are recognised in the income statement as expenses in the period in which they are incurred and include transition costs, which are similar in nature to mobilisation costs under repeat service-based contracts. Transition costs are expenses incurred in the performance of transitioning services provided after confirmation of preferred bidder and before commencement of full services under the contract target operating model; no profit margin is recognised for these transition costs.

Contract costs also include transition costs arising when there is a subsequent change in the scope of contracted services and include budgeted cost savings. Where the outcome of a complex project-based contract cannot be estimated reliably, contract revenue is recognised to the extent that it is probable that contract costs will be recovered. Full provision is made for all known or anticipated losses on each contract immediately as losses are forecast. In a number of long-term complex contracts, the achievement of certain key performance indicators (KPIs) is a significant act which enables revenue to be recognised. KPIs are generally measured contemporaneously with the performance of the service, rather than being measured over a long period or retrospectively.

Revenue recognition: other

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

Borrowing costs

Borrowing costs consist of interest and other costs that are incurred in connection with the borrowing of funds. Borrowing costs are recognised in profit or loss in the period in which they are incurred, with the finance charges relating to the direct cost of debt issue spread over the period to redemption using the effective interest method.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset
is realised, based upon tax rates and legislation that have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities; or when they relate to income taxes levied by the same taxation authority and the group intends to settle its current tax assets and liabilities on a net basis.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the group's interest in the fair value
of the identifiable assets and liabilities of a subsidiary at the date of acquisition.

Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated impairment losses. It is reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement for the period and is not subsequently reversed.

For the purpose of impairment testing, goodwill is allocated to each of the group's cash-generating units (CGUs) expected to benefit from the synergies of the combination. CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is charged so as to write off the cost less expected residual value of the assets over their estimated useful lives and is calculated on a straight-line basis as follows:

Freehold buildings and long leasehold property	50 years
Leasehold improvements	period of the lease
Plant and vehicles	3-10 years

Annually the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of any impairment loss. Where the asset does not generate cash flows that are independent from other assets, the group estimates the recoverable amount of the CGU to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount
of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or CGU) in prior years. A reversal of an impairment loss is recognised as income immediately.

Intangible assets

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

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

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

Joint ventures and associates

The group has an interest in joint ventures which are entities in which the group has joint control. The group also has an interest in associates which are entities in which the group has significant influence.

The group accounts for its interest in joint ventures and associates using the equity method. Under the equity method the group's share of the post-tax result of joint ventures and associates is reported as a single line item in the consolidated income statement. The group's interest in joint ventures and associates is carried in the consolidated balance sheet at cost plus post-acquisition changes in the group's share of net assets.

Inventories

Inventories are stated at the lower of cost and net realisable value.

Costs represent materials, direct labour and overheads incurred in bringing the inventories to their present condition and location. Net realisable value is based on estimated selling price less further costs expected to be incurred to completion and estimated selling costs. Provision is made for obsolete, slow moving or defective items where appropriate.

Financial instruments

Financial assets and financial liabilities are recognised on the group's balance sheet when the group becomes a party to the contractual provisions of the instrument. The group derecognises financial assets and liabilities only when the contractual rights and obligations are transferred, discharged or expire.

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

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

Financial assets comprise loans and receivables and are measured at initial recognition at fair value and subsequently at amortised cost. Appropriate allowances for estimated irrecoverable amounts are recognised where there is objective evidence that the asset is impaired. Cash and cash equivalents comprise cash in hand, demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes
in value.

Financial liabilities comprise trade payables, financing liabilities, bank and other borrowings, put options on non-controlling interests and deferred contingent consideration. These are measured at initial recognition at fair value and subsequently at amortised cost with the exception of derivative financial instruments which are measured at fair value,
and deferred contingent consideration which is measured at the Directors' best estimate of the likely future obligation.
Bank and other borrowings are stated at the amount of the net proceeds after deduction of transaction costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the income statement.

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

Derivative financial instruments and hedge accounting

The group uses derivative financial instruments, including cross currency interest rate swaps and forward foreign
exchange contracts, to manage the group's exposure to financial risks associated with interest rates and foreign exchange. Derivative financial instruments are initially recognised at fair value at the date the derivative contract is entered into and
are subsequently remeasured to their fair value, determined by reference to market rates, at each balance sheet date and included as financial assets or liabilities as appropriate. The resulting gain or loss is recognised in the income statement immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the income statement depends on the nature of the hedge relationship.

The group may designate certain hedging instruments including derivatives as either fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges. At the inception of the hedge relationship, the group documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the group documents whether the hedging instrument that is used in a hedging relationship is highly effective in offsetting changes in fair values or cash flows of the hedged item.

Fair value hedges

Hedges are classified as fair value hedges when they hedge the exposure to changes in the fair value of a recognised asset
or liability. Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement immediately, together with any changes in the fair value of the hedged item that are attributable to the hedged risk. The change in the fair value of the hedging instrument and the change in the hedged item attributable to the hedged risk are recognised in the line of the income statement relating to the hedged item. Hedge accounting is discontinued when the group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, exercised, or no longer qualifies for hedge accounting. The fair value adjustment to the carrying amount of the hedged item arising from the hedged risk is amortised to the income statement from that date.

Cash flow hedges

Hedges are classified as cash flow hedges when they hedge the exposure to changes in cash flows that are attributable to
a particular risk associated with either a recognised asset or liability or a forecast transaction. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in other comprehensive income and accumulated in equity within the group's translation and hedging reserve. The gain or loss relating to any ineffective portion is recognised immediately in the income statement.

Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to the income statement in the periods when the hedged item is recognised in the income statement, in the same line as the recognised hedged item. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability. Hedge accounting is discontinued when the group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, exercised, or no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income at that time is accumulated in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in the income statement.

Hedges of net investments in foreign operations

Hedges are classified as net investment hedges when they hedge the foreign currency exposure to changes in the group's share in the net assets of a foreign operation. Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive income and accumulated in the group's translation and hedging reserve. The gain or loss relating to any ineffective portion is recognised immediately in the income statement. Gains or losses on the hedging instrument relating to the effective portion of the hedge accumulated in equity are reclassified to the income statement in the same way as exchange differences relating to the foreign operation as described above.

Leasing

Finance leases, which transfer to the group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased item or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the income statement.

Capitalised leased assets are depreciated over the shorter of the estimated life of the asset or the lease term.

Leases where the lessor retains substantially all the risks and benefits incidental to ownership of the asset are classified as operating leases. Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term. Any lease incentives are amortised on a straight-line basis over the non-cancellable period for which the group has contracted to lease the asset, together with any further terms for which the group has the option to continue to lease the asset if, at the inception of the lease, it is judged to be reasonably certain that the group will exercise the option.

Provisions

Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.

Business combinations

The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree. Acquisition costs incurred are expensed. The acquiree identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition are recognised at their fair value at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for resale in accordance with IFRS 5 'Non-Current Assets Held for Sale and Discontinued Operations', which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the group's interest in the net fair value of the acquired identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in the income statement.

Where applicable, the consideration for an acquisition includes any assets or liabilities resulting from a contingent consideration arrangement, measured at fair value at the acquisition date. Subsequent changes in such fair values are adjusted against the cost of acquisition where they result from additional information, obtained within one year from the acquisition date, about facts and circumstances that existed at the acquisition date. All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are recognised in accordance with IAS 39, either in the income statement or as a change to other comprehensive income. Changes in the fair value of contingent consideration classified as equity are not recognised.

Any business combinations prior to 1 April 2010 were accounted for using the standards in place prior to the adoption of
IFRS 3 (revised 2008) which differ in the following respects: transaction costs directly attributable to the acquisition formed part of the acquisition costs; contingent consideration was recognised if, and only if, the group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable; and subsequent adjustments to the contingent consideration were recognised as part of goodwill.

Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

Share-based payments

The group operates a number of executive and employee share option schemes. Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market based vesting conditions. For all grants of share options and awards, the fair value as at the date of grant is calculated using the Black-Scholes or Monte Carlo models and the corresponding expense is recognised on a straight-line basis over the vesting period based on the group's estimate of shares that will eventually vest. At each balance sheet date, the group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions. Save As You Earn (SAYE) options are treated as cancelled when employees cease to contribute to the scheme, resulting in an acceleration of the remainder of the related expense.

Retirement benefit costs

The group operates and participates in a number of defined benefit schemes. In respect of the schemes in which the group participates, the group accounts for its legal and constructive obligations over the period of its participation which is for a fixed period only.

In addition, the group operates a number of defined contribution retirement benefit schemes for all qualifying employees.

Payments to the defined contribution and stakeholder pension schemes are charged as an expense as they fall due.

For the defined benefit pension schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if applicable) are recognised in full in the period in which they occur. They are recognised in the statement of comprehensive income.

Current service cost and past service cost are recognised in the income statement, in administrative expenses, whilst the net interest cost is recognised in net finance costs.

The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the plan.

During the year there was an apparent significant shortfall in the expected profitability of the group for the year ended 31 March 2017. New executive directors were appointed in December and January and they immediately launched an accounting review process to provide confidence that all relevant accounting standards were appropriately reflected in its financial reporting.

Following additional information becoming available, the review work has identified a number of prior year errors that, due to their materiality, require the restatement of the results for the year ended 31 March 2016, as well as the consolidated balance sheet positions as at 31 March 2016 and at 31 March 2015.

These prior year restatements relate to the following areas:

Impairment of Healthcare goodwill

The Healthcare goodwill impairment testing for the year ended 31 March 2016 was carried out by reference to a business plan, which incorrectly included within it an apprenticeships business and certain other assumptions. Correcting for these errors in the goodwill impairment model would have resulted in Healthcare goodwill being impaired by £26.0m in the year ended 31 March 2016. This amount has now been written-off to the consolidated income statement in the year ended 31 March 2016.

Additionally there was a material disclosure error in the 2016 Annual Report and Accounts, in that there was a failure to disclose the significant judgements made on the inclusion of expansion plans into other new service lines to the Healthcare business adjacent to existing skills and assets already in the Business. See note 2 for further details.

Intangible asset write off

Errors arising from the incorrect application of accounting policies during the impairment testing of other intangible assets for the year ended 31 March 2014 resulted in the carrying value of capitalised software costs within intangible assets being overstated at 31 March 2015 and 31 March 2016. At 31 March 2015 this resulted in a net asset value of £2.8m being written off to the consolidated income statement together with a corresponding increase in the deferred tax asset of £0.5m. In the consolidated income statement for the year ended 31 March 2016 a credit for £0.5m has now been included in respect of amortisation no longer required, and a corresponding reduction in the deferred tax asset of £0.1m.

Under-accrual of costs

A number of under-accruals, or under-provisions, of various categories of costs have been identified in relation to prior years. These costs have now been written off to the consolidated income statement in the relevant years and were incurred in relation to:

i) employee bonuses that were paid during the year ended 31 March 2017 but related to the financial years ended 31 March 2015 and 31 March 2016 totalling £8.3m (2015 - £0.6m and 2016 - £7.7m).

ii) under-provision of insurance liabilities that were outstanding at 31 March 2015 (£5.6m) and 31 March 2016 (£0.3m) and contract related provisions of £2.2m in the year to 31 March 2016.

The tax impacts of these adjustments were credits to the consolidated income statement of £1.3m in 2015 and £2.0m in 2016.

Overstatement of trade receivables and accrued income

Certain revenue recognition polices relating to the inclusion of disputed items in project revenues, the deferral in recognition of commercial claims and the recognition of profit margins on accrued income balances were not applied correctly, resulting in an over statement of trade receivables and accrued income at 31 March 2015 (£4.6m) and 31 March 2016 of (£11.2m). These amounts have now been written off to the consolidated income statement along with a corresponding credit to tax of £1.0m in 2015 and £2.2m in 2016.

Summary

A summary of the combined impact of the prior year adjustments on the consolidated income statement and consolidated statement of cash flow for the year ended 31 March 2016 as well as the consolidated balance sheet as at 31 March 2016 arising from the restatements is as follows:

Consolidated income statement for the year ended 31 March 2016

	As previously reported £m	Discontinued operations £m	As reported continuing operations £m	Impairment of healthcare goodwill £m	Intangible asset write off £m	Under-accrual of costs £m	Over-statement of trade receivables and accrued income £m	Restated £m
Continuing operations
Revenue	2,231.9	(75.8)	2,156.1	-	-	-	(9.2)	2,146.9
Gross profit	322.6	(15.1)	307.5	-	-	-	(10.4)	297.1
Operating profit/(loss)	112.5	16.0	128.5	-	0.5	(10.2)	(11.2)	107.6
Profit before tax	96.8	16.0	112.8	-	0.5	(10.2)	(11.2)	91.9
Tax	(19.3)	(3.0)	(22.3)	-	(0.1)	2.0	2.2	(18.2)
Profit after tax	77.5	13.0	90.5	-	0.4	(8.2)	(9.0)	73.7
Loss from discontinued operations	-	(13.0)	(13.0)	(26.0)	-	-	-	(39.0)
Profit for the year	77.5	-	77.5	(26.0)	0.4	(8.2)	(9.0)	34.7

Consolidated statement of cash flow for the year ended 31 March 2016

	As reported £m	Impairment of healthcare goodwill £m	Intangible asset write off £m	Under accrual of costs £m	Over-statement of trade receivables and accrued income £m	Restated £m
Net cash flow from operating activities	85.2	-	-	-	-	85.2
Net cash outflow from investing activities	(27.8)	-	-	-	-	(27.8)
Net cash outflow from financing activities	(60.9)	-	-	-	-	(60.9)
Net (decrease)/increase in cash and cash equivalents	(3.5)	-	-	-	-	(3.5)
Net cash and cash equivalents at beginning of the year	96.4	-	-	-	-	96.4
Effect of foreign exchange rates	0.2	-	-	-	-	0.2
Net cash and cash equivalents at end of the year	93.1	-	-	-	-	93.1

Consolidated balance sheet as at 31 March 2016

	As reported £m	Impairment of healthcare goodwill £m	Intangible asset write off £m	Under-accrual of costs £m	Over-statement of trade receivables and accrued income £m	Restated £m
Non-current assets
Goodwill	465.5	(26.0)	-	-	-	439.5
Other intangible assets	66.9	-	(2.3)	-	-	64.6
Property, plant and equipment	49.3	-	-	-	-	49.3
Interest in joint ventures and associates	0.6	-	-	-	-	0.6
Derivative financial instruments	14.4	-	-	-	-	14.4
Trade and other receivables	86.0	-	-	-	(1.2)	84.8
Deferred tax assets	10.0	-	0.4	-	-	10.4
Total non-current assets	692.7	(26.0)	(1.9)	-	(1.2)	663.6
Current assets
Inventories	9.9	-	-	-	-	9.9
Trade and other receivables	446.7	-	-	-	(14.6)	432.1
Cash and cash equivalents	93.1	-	-	-	-	93.1
Total current assets	549.7	-	-	-	(14.6)	535.1

Total assets	1,242.4	(26.0)	(1.9)	-	(15.8)	1,198.7
Current liabilities
Trade and other payables	(487.8)	-	-	(8.3)	-	(496.1)
Current tax liabilities	(10.4)	-	-	3.3	3.2	(3.9)
Financing liabilities	(1.9)	-	-	-	-	(1.9)
Provisions	(0.4)	-	-	(8.1)	-	(8.5)
Total current liabilities	(500.5)	-	-	(13.1)	3.2	(510.4)

Net current assets	49.2	-	-	(13.1)	(11.4)	24.7
Non-current liabilities
Trade and other payables	(2.5)	-	-	-	-	(2.5)
Financing liabilities	(283.9)	-	-	-	-	(283.9)
Provisions	(0.5)	-	-	-	-	(0.5)
Retirement benefit liabilities	(35.5)	-	-	-	-	(35.5)
Deferred tax liabilities	(4.4)	-	-	-	-	(4.4)
Total non-current liabilities	(326.8)	-	-	-	-	(326.8)

Total liabilities	(827.3)	-	-	(13.1)	3.2	(837.2)

Net assets	415.1	(26.0)	(1.9)	(13.1)	(12.6)	361.5

Total equity	415.1	(26.0)	(1.9)	(13.1)	(12.6)	361.5

Consolidated balance sheet as at 1 April 2015

	As reported £m	Impairment of healthcare goodwill £m	Intangible asset write off £m	Under-accrual of costs £m	Over-statement of trade receivables and accrued income £m	Restated £m
Non-current assets
Goodwill	464.4	-	-	-	-	464.4
Other intangible assets	76.6	-	(2.8)	-	-	73.8
Property, plant and equipment	53.3	-	-	-	-	53.3
Interest in joint ventures and associates	1.1	-	-	-	-	1.1
Derivative financial instruments	8.0	-	-	-	-	8.0
Trade and other receivables	58.5	-	-	-	-	58.5
Deferred tax assets	13.4	-	0.5	-	-	13.9
Total non-current assets	675.3	-	(2.3)	-	-	673.0
Current assets
Inventories	11.0	-	-	-	-	11.0
Trade and other receivables	421.4	-	-	-	(4.6)	416.8
Cash and cash equivalents	96.4	-	-	-	-	96.4
Total current assets	528.8	-	-	-	(4.6)	524.2

Total assets	1,204.1	-	(2.3)	-	(4.6)	1,197.2
Current liabilities
Trade and other payables	(476.0)	-	-	(0.6)	-	(476.6)
Current tax liabilities	(5.2)	-	-	1.3	1.0	(2.9)
Financing liabilities	(1.8)	-	-	-	-	(1.8)
Provisions	(4.9)	-	-	(5.6)	-	(10.5)
Total current liabilities	(487.9)	-	-	(4.9)	1.0	(491.8)

Net current assets	40.9	-	-	(4.9)	(3.6)	32.4
Non-current liabilities
Trade and other payables	(8.0)	-	-	-	-	(8.0)
Financing liabilities	(279.2)	-	-	-	-	(279.2)
Provisions	(7.4)	-	-	-	-	(7.4)
Retirement benefit liabilities	(35.8)	-	-	-	-	(35.8)
Deferred tax liabilities	(7.5)	-	-	-	-	(7.5)
Total non-current liabilities	(337.9)	-	-	-	-	(337.9)

Total liabilities	(825.8)	-	-	(4.9)	1.0	(829.7)
		-
Net assets	378.3	-	(2.3)	(4.9)	(3.6)	367.5
		-
Total equity	378.3	-	(2.3)	(4.9)	(3.6)	367.5

2.	19BCritical accounting judgements and key sources of estimation uncertainty

Critical judgements in applying the group's accounting policies

In the process of applying the group's accounting policies, which are described in Note 1 above, management has made the following judgements that have the most significant effect on the amounts recognised in the financial statements.

Revenue recognition

The group's revenue recognition policies, which are set out in Note 1(b), are central to how the group measures the work it has performed in each financial year, some of these could be considered as key sources of estimation uncertainty.

The revenue recognised for certain long-term complex project-based services is based on the stage of completion of the contract activity. This is measured by comparing the proportion of costs incurred, which include transition costs reflecting costs incurred in the performance of transitioning services, against the estimated whole-life contract costs. This requires significant judgements to be made in forecasting the outcomes of the long-term contracts.

Particular judgement is required in evaluating the operational and financial business plans for these contracts to forecast the expected whole-life contract billings, costs and margin and to assess the recoverability of any resulting accrued income through the life of the contract. In forming the judgement around expected whole-life contract billings, account is taken of potential deductions from and increments to revenue that may arise from the application of performance related measures under contracts.

This requires management to apply judgements and estimates that draw on the knowledge and experience of the group's project managers and delivery teams together with the group's commercial and finance professionals. Whilst there may be a broad range of possible outcomes based on the relevant circumstances of the individual contract, the group has controls in place whereby all significant contracts are reviewed on a monthly basis and reforecast quarterly.

The amounts recognised as revenue, profit and contract assets are sensitive to changes in assumptions, for example:

1. Revenue measurement - in line with the group's revenue recognition policy for long-term complex contracts, revenue is recognised on these contracts to the extent that the outcome of the project can be reliably measured. For long-term complex contracts this requires judgements to be made on which elements of the contract can be accurately forecast. These contracts will usually comprise fixed revenue streams, variable works and project works. Project works are not included as part of a long-term complex contract on the basis that these amounts are discretionary and consequently cannot be reliably forecast. Therefore these projects are accounted for separately. The revenue streams that it is considered can be reliably forecast will comprise the fixed elements (for example for ongoing cleaning and security services) and variable works.

2. Contract profitability and costs to complete - long-term complex contracts are transformational in nature and there is a commitment to work in partnership with the client from the outset of the contract to drive significant cost savings and efficiencies throughout the life of the contract. During the mobilisation of a contract a target operating model is developed. This target operating model shows how the services that are part of the contract will be delivered during the contract and is subject to a continuous review/improvement process throughout the duration of the contract. The target operating model, cost saving initiatives identified and revenue pipeline will be combined into a financial plan for the individual contract. Only cost saving initiatives that are considered to be reasonably certain in terms of timing and scale are included in the plan. Management's ability to forecast accurately the costs to complete the contract involves judgements around cost savings to be achieved over time, anticipated profitability of the contract, as well as contract specific performance KPIs. Where a contract is anticipated to make a loss, these judgements are also relevant in determining whether or not an onerous contract provision is required and how this is to be measured.

3. Renegotiation of terms - the group often enters into renegotiations of existing contract terms such as the timing or the specifications of the services to be delivered. Depending on the outcome of such negotiations, the timing and amount of revenue recognised may be different.

4. Recoverability of contract related assets - linked to the profitability of contracts above, management is also required to determine the recoverability of contract related assets, accrued income and accounts receivable. Judgement is required in determining whether or not the future economic benefits from contracts are sufficient to recover these contract assets.

Review of accounting policies and estimates
The group has undertaken an accounting review process to provide confidence that all relevant accounting standards were appropriately reflected in its financial reporting. The review has considered how the group's accounting policies have been applied and interpreted, which has resulted in a number of more conservative applications of accounting estimates and judgements in the following areas:

1. Work in progress - For certain Engineering Services projects profit margins on work in progress will only be recognised when the project is complete

2. Transition costs on long-term complex contracts - the methodology for recognising revenue on transition costs incurred at the start of a contract has been changed. No gross profit margin will be applied to the revenue attributable to these costs.

3. Uncontracted revenue streams on long-term complex contracts - the approach to assessing the full life profitability of long-term complex contracts has been revised. Uncontracted project works are excluded from the percentage of completion calculation for these contracts and instead accounted for as repeat service based contracts.

4. Mobilisation costs incurred at the commencement of contracts - the items incurred at the outset of the contract, which are spread over the contract life, have been reassessed with more items being expensed immediately.

Profit before other items

Other items are items of financial performance which the Group believes should be separately identified on the face of the income statement to assist in understanding the underlying financial performance achieved by the Group. Determining whether an item is part of other items or not requires judgement.

Other items after tax of £153.5m (2016 restated: £39.0m) were charged to the income statement for the year ended 31 March 2017. An analysis of the amounts included in other items is detailed in Note 5.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Assessment of a prior year error in relation to goodwill on the Healthcare CGU

Healthcare goodwill at 31 March 2016 has a carrying value of £107.2m, with value-in-use calculated at £145.4m; at 30 September 2016 it was determined that the carrying value of this goodwill was fully impaired and written down to a nil value. Subsequently a large proportion of the Healthcare Cash Generating Unit ("CGU") was sold for a dowry payment of £9.5m (see Note 6 'Discontinued operations and disposal of subsidiaries' for further details on the sale of the Healthcare division).

As explained in the Audit Committee report on page [.] the FRC's Corporate Reporting Review Committee has an open enquiry in this area. During the course of preparation of our response to its February 2017 letter, new evidence came to light that had not previously been provided to the external auditor, the Audit Committee or the Board. The Audit Committee appointed KPMG to review the circumstances surrounding the judgement made on Healthcare Goodwill at 31 March 2016.

As a result of the review, the Audit Committee has considered whether there were one or more errors, which in accordance with IAS8, require a prior year adjustment.

As part of this assessment the Audit Committee considered the further information that was available at 31 March 2016 but had not been communicated to the external auditor, the Audit Committee or the Board. It has concluded that:

• One or more errors had been made in the preparation of the plan that was approved by the Board and formed the basis for the impairment testing of Healthcare goodwill. Correction of those errors reduces the value in use by £64m which results in an impairment to Healthcare goodwill of £26m as at 31 March 2016. The Audit Committee believes that this is a prior period error in accordance with IAS 8 and consequently a prior year adjustment is made in these accounts to goodwill at 31 March 2016 (see Note 1(c) 'Prior year restatements' for further details on the prior year restatements made).

• A number of other judgements were made in respect of the impairment testing of Healthcare goodwill at 31 March 2016, which were impacted by the discovery of further information and has been considered by the Board and Audit Committee as part of the preparation of the 2017 Annual Report and Accounts.

These judgements relate to the inclusion in the plans for Healthcare of expansion into new service lines to the Healthcare business adjacent to existing skills and assets already in the Business, namely provision of Telecare services, community healthcare and supply of temporary staff on an agency basis.

Additionally, the inclusion of Tascor, acquired in January 2016, subsequently renamed Care & Custody Health and retained by Mitie following the disposal of the Healthcare business in February 2017, was regarded as part of the Healthcare CGU, rather than with the CGU that included Care & Custody (Soft FM CGU).

Had these been regarded as prior year errors rather than changes in judgement the amount of the prior year adjustment would have increased by £44m.

The Directors have specifically reviewed the IAS8 'Accounting Policies, Changes in Accounting Estimates and Errors' definition of a change in accounting estimate which states "that changes in accounting estimates result from new information or new developments and, accordingly, are not corrections of errors". The Committee has carefully reconsidered the judgements it made in the light of the discovery of new information and notwithstanding this becoming available and taken into account, considers that the judgements made as to what should be classified as a prior year error has been formed on a reasonable basis. However, the Committee recognises that the failure to disclose these judgements in the 2016 Annual Report and Accounts was in itself a material disclosure error.

Measurement and impairment of goodwill and other intangible assets

The measurement of intangible assets other than goodwill on a business combination involves estimation of future cash flows and the selection of suitable discount rates. Determining whether goodwill and other intangible assets are impaired requires an estimation of the value in use of the CGUs to which the goodwill has been allocated. The value in use calculation involves an estimation of the future cash flows of CGUs and also the selection of appropriate discount rates to use in order to calculate present values.

The carrying value of goodwill and other intangible assets is £397.1m (2016 restated: £504.1m) at the balance sheet date; see Notes 14 and 15. A sensitivity analysis has been performed and the Board has concluded that no reasonably foreseeable change in the key assumptions would result in an impairment of the goodwill of the Soft Facilities Management and Hard Facilities Management CGUs.

Further sensitivity testing was performed for the group's Property Management CGU where the financial performance of the business has deteriorated during the year. On the basis of this review the Board has concluded that an impairment of £15.0m is required. A sensitivity analysis is included in Note 14.

Useful economic life of other intangible assets

The group holds £53.2m of other intangible fixed assets, of which £46.6m is attributable to software and development expenditure. Determining the appropriate useful economic life (UEL) and amortisation profile for these assets requires a level of judgement.

Following the review of accounting policies and estimates (as discussed in the section above), a more accurate application of accounting policy has been applied. The group has undertaken a reassessment of the UEL of software related intangible assets and has adopted a revised amortisation profile for these assets. This change in estimate results in an additional £7.5m of amortisation in the year ended 31 March 2016.

Provisions, contingent liabilities and onerous contracts

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. Judgements are required in order to assess whether these legal proceedings and claims are probable and the liability can be reasonably estimated, resulting in a provision. Or, alternatively, whether the items meet the definition of contingent liabilities.

When a contract is expected to incur future unavoidable losses and has therefore become onerous, judgment is required to assess the future expected revenue and costs and hence to determine the appropriate level of provision.

Provisions are liabilities of uncertain timing or amount and therefore in making a reliable estimate of the quantum and timing of liabilities judgement is applied and re-evaluated at each reporting date. The Group recognised provisions at 31 March 2017 of £26.8m (2016 restated: £9.0m). Further details are included in Note 29.

Measurement of defined benefit pension obligations

The measurement of defined benefit obligations requires judgement. It is dependent on material key assumptions including discount rates, life expectancy rates, future returns on assets and future contribution rates. The present value of defined benefit obligations at the balance sheet date is £263.3m (2016: £201.9m); see Note 38 for further detail and a sensitivity analysis.

3.	23BRevenue

Continuing operations	2017 £m	2016 Restated* £m
Rendering of services	2,124.6	2,141.9
Construction contracts	1.7	5.0
Total revenue as disclosed in the consolidated income statement	2,126.3	2,146.9
Investment revenue (Note 9)	-	0.1
Total revenue as defined in IAS 18	2,126.3	2,147.0

4.	25BBusiness and geographical segments

Revenue, operating profit before other items and operating profit margin before other items are the primary measure of performance that are reported to and reviewed by the Chief Operating Decision Maker of the business.

Business segments - structure during the year

The group manages its business on a service division basis. With effect from 1 April 2016, the divisional structure was reorganised into three trading divisions being Facilities Management, Property Management and Healthcare. These divisions are the basis on which the group reported its primary segmental information and are unchanged from the previous reporting period, with the exception of Soft FM and Hard FM, which were previously reported separately and then subsequently reported as one Facilities Management division, and Tilley Roofing which transferred from Facilities Management to Property Management.

	2017				2016 - Restated*
	Revenue £m	Operating profit/(loss) before other items¹£m	Operating profit/(loss) margin before other items¹ %	Profit/(loss) before tax £m	Revenue £m	Operating profit/(loss) before other items¹ £m	Operating profit/(loss) margin before other items¹ %	Profit/(loss) before tax £m
Facilities management ‡#	1,822.6	1.5	0.1	(13.9)	1,795.5	95.8	5.3	84.5
Property management ‡	257.3	(9.2)	(3.6)	(9.3)	313.8	14.9	4.7	15.0
Healthcare	46.4	1.4	3.0	1.6	37.6	3.2	8.5	(1.3)
Other items+ (Note 5)	-	-	-	(36.6)	-	-	-	(6.3)
Continuing operations	2,126.3	(6.3)	(0.3)	(58.2)	2,146.9	113.9	5.3	91.9
Healthcare#	59.2	(11.9)	(20.1)	(11.9)	75.8	(5.9)	(7.8)	(5.9)
Other items+	-	-	-	(123.2)	-	-	-	(36.1)
Discontinued operations	59.2	(11.9)	(20.1)	(135.1)	75.8	(5.9)	(7.8)	(42.0)
Total	2,185.5	(18.2)	(0.8)	(193.3)	2,222.7	108.0	4.9	49.9

Note:

1. Other items are as described in Note 5.

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of the year ended 31 March 2016.

+ Other items can be analysed by business segment as follows: Facilities Management £15.6m (2016: £4.7m); Property Management £20.7m (2016: £1.6m); and Healthcare £0.3m (2016: nil). Other items in respect of discontinued operations is comprised of amounts in respect of the impairment of goodwill, loss on disposal of the healthcare business, restructuring costs and acquisition related items. All of these amounts are shown before tax. Impairments have been recognised in the Property Management £15.0m (2016; £nil) and the discontinued Healthcare £81.1m (2016: £26.0m) segments.

‡ Tilley Roofing has transferred from Facilities Management to Property Management in the segments above. Tilley Roofing results included in Property Management are as follows - Revenue £34.8m (2016: £34.4m), Operating profit before other items £0.8m (2016: £1.5m), and Profit before tax £0.7m (2016: £1.6m).

# Care and Custody (Health) has transferred from Facilities Management to Healthcare in the segments above. Care and Custody results included in Healthcare continuing operations are as follows - Revenue £46.5m (2016: £35.5m). Operating profit before other items £1.7m (2016: £1.5m) and profit before tax £1.9m (2016: £1.6m).

Business segments - structure from 1 April 2017. The Property Management division has been combined into a Public Services division along with Care & Custody (Health) and Care & Custody, which were previously included within the Healthcare and Facilities Management divisions respectively. The Facilities Management division has been split out into Cleaning & Environmental Services, Security, Catering, Engineering Services and Professional Services & Connected Workspace.

Business segments - structure from 1 April 2017

	2017				2016 - Restated*
	Revenue £m	Operating profit/(loss) before other items¹£m	Operating profit/(loss) margin before other items¹ %	Profit/(loss) before tax £m	Revenue £m	Operating profit/(loss) before other items¹ £m	Operating profit/(loss) margin before other items¹ %	Profit/(loss) before tax £m
Cleaning & Environmental Services	395.4	6.0	1.5	5.4	408.7	25.5	6.2	25.2
Security	404.2	16.1	4.0	17.0	364.4	20.8	5.7	21.7
Catering	134.3	4.7	3.5	4.4	126.6	5.4	4.3	5.1
Engineering Services	797.4	0.2	0.0	(8.1)	800.3	53.7	6.7	45.2
Professional Services & Connected Workspace	90.9	4.2	4.6	4.3	97.9	5.5	5.6	5.7
Public Services‡	304.1	(2.3)	(0.8)	(1.5)	349.0	18.9	5.4	20.0

Corporate overheads	-	(35.2)	n/a	(43.1)	-	(15.9)	n/a	(24.7)
Other items+ (Note 5)	-	-	-	(36.6)	-	-	-	(6.3)
Continuing operations	2,126.3	(6.3)	(0.3)	(58.2)	2,146.9	113.9	5.3	91.9
Healthcare‡	59.2	(11.9)	(20.1)	(11.9)	75.8	(5.9)	(7.8)	(5.9)
Other items+	-	-	-	(123.2)	-	-	-	(36.1)
Discontinued operations	59.2	(11.9)	(20.1)	(135.1)	75.8	(5.9)	(7.8)	(42.0)
Total	2,185.5	(18.2)	(0.8)	(193.3)	2,222.7	108.0	4.9	49.9

Note:

2. Other items are as described in Note 5.

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of the year ended 31 March 2016.

+ Other items can be analysed by business segment as follows: Cleaning & Environmental Services £1.3m (2016: £nil), Security £0.6m (2016: £0.2m), Catering £0.4m (2016: £0.3m), Engineering Services £8.8m (2016: £3.5m), Professional Services & Connected Workspace £1.5m (2016: £0.5m), Public Services £17.9m (2016: £1.5m) and Corporate overheads £6.1m (2016: £0.3m). Other items in respect of discontinued operations is comprised of amounts in respect of the impairment of goodwill, loss on disposal of the healthcare business, restructuring costs and acquisition related items. All of these amounts are shown before tax. Impairments have been recognised in the Public Services £15.0m (2016; £nil) and the discontinued Healthcare £81.1m (2016: £26.0m)

‡ Care and Custody (Health) has transferred from Healthcare to Public Services in the segments above. Care and Custody (Health) results included in Public Services are as follows - Revenue £46.5m (2016: £35.5m), Operating profit before other items £2.2m (2016: £2.1m), and Profit before tax £2.4m (2016: £2.3m).

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

No single customer accounted for more than 10% of external revenue in 2017 or 2016.

IFRS 8 requires that a measure of segment assets should be disclosed only if that amount is regularly provided to the chief operating decision maker and consequently no segment assets are disclosed.

Geographical segments

	2017				2016 - Restated*
	Revenue £m	Operating profit/(loss) before other items¹	Operating profit/(loss) margin before other items¹ %	Profit/(loss) before tax £m	Revenue £m	Operating profit/(loss) before other items¹ £m	Operating profit/(loss) margin before other items¹ %	Profit/(loss) before tax £m
United Kingdom	2,018.1	(4.8)	(0.2)	(54.8)	2,060.3	117.9	5.7	96.5
Other countries	108.2	(1.5)	(1.4)	(3.4)	86.6	(4.0)	(4.6)	(4.6)
Continuing operations	2,126.3	(6.3)	(0.3)	(58.2)	2,146.9	113.9	5.3	91.9
United Kingdom	59.2	(11.9)	(20.1)	(135.1)	75.8	(5.9)	(7.8)	(42.0)
Other countries	-	-	-	-	-	-	-	-
Discontinued operations	59.2	(11.9)	(20.1)	(135.1)	75.8	(5.9)	(7.8)	(42.0)
Total	2,185.5	(18.2)	(0.8)	(193.3)	2,222.7	108.0	4.9	49.9

Note:

3. Other items are as described in Note 5.

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of the year ended 31 March 2016.

25.	27BOther items

The group separately reports the impairment of goodwill, the write off and amortisation of acquisition related intangible assets, the results of disposals, restructure costs, acquisition costs and other exceptional items and their related tax effect as other items:

	2017
Continuing operations	Impairment of goodwill £m	Healthcare disposal £m	Restructure costs £m	Acquisition related items £m	Total £m
Administrative expenses	(15.0)	-	(14.9)	(6.7)	(36.6)
Other items before tax	(15.0)	-	(14.9)	(6.7)	(36.6)
Tax	-	-	3.0	1.1	4.1
Other items after tax	(15.0)	-	(11.9)	(5.6)	(32.5)
Discontinued operations
(Loss) from discontinued operations net of tax	(81.1)	(30.4)	(0.3)	(9.2)	(121.0)
Total	(96.1)	(30.4)	(12.2)	(14.8)	(153.5)

		2016 Restated*
Continuing operations	Impairment of goodwill £m	Businesses being exited £m	Restructure credit £m	Acquisition related items £m	Total £m
Administrative expenses	-	(2.2)	2.2	(6.3)	(6.3)
Other items before tax	-	(2.2)	2.2	(6.3)	(6.3)
Tax	-	0.4	(0.4)	1.3	1.3
Other items after tax	-	(1.8)	1.8	(5.0)	(5.0)
Discontinued operations
(Loss) from discontinued operations net of tax	(26.0)	-	-	(8.0)	(34.0)
Total	(26.0)	(1.8)	1.8	(13.0)	(39.0)

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of the year ended 31 March 2016.

Impairment of goodwill

Following the Board's decision to withdraw from the domiciliary healthcare market, the remaining carrying value of goodwill was fully impaired during the year. In addition an impairment of £15.0m has been recognised in relation to the Property Management CGU. See Note 14 for further details.

Healthcare disposal

During the year the group decided to withdraw from the domiciliary healthcare market and completed the sale of the Healthcare division on 28 February 2017. See Note 6 for further details.

Restructure costs

The restructure costs included in other items relate to one-off costs of organisational change associated with the group's cost efficiency and change programmes. These one-off incremental expenses are analysed below:

	Continuing operations £m	Discontinued operations £m	2017 £m	2016 £m
Credit from design & build asset management contracts in Energy Solutions	-	-	-	2.2
Redundancy payments	(9.2)	(0.3)	(9.5)	-
Cost of change team	(3.4)	-	(3.4)	-
Expenditure and provisions in respect of property closure	(2.3)	(0.1)	(2.4)	-
Restructuring (costs)/credit	(14.9)	(0.4)	(15.3)	2.2
Taxation	3.0	0.1	3.1	(0.4)
Restructuring (costs)/credit net of taxation	(11.9)	(0.3)	(12.2)	1.8

Acquisition related items

Acquisition related items include the write offs and amortisation charge for acquisition related intangibles £5.5m (2016: £6.0m), and the accrual of contingent consideration that is required to be treated as remuneration £0.9m (2016: nil) and acquisition costs £0.3m (2016: £0.3m). Acquisition related items from discontinued operations relate to the impairment and amortisation of acquisition related intangibles net of tax £9.2m (2016: £8.0m). See Note 15 for further details.

26.	Discontinued operations and disposal of subsidiaries

As a result of the Board's decision to withdraw from the domiciliary healthcare market, the sale of the Healthcare division completed on 28 February 2017. The disposal resulted in the control of Enara Group Limited (Enara) and Complete Care Holdings Limited (Complete Care) passing to Apposite Capital LLP (Apposite) for £2. In addition the Group agreed to contribute a £9.5m "dowry payment" to the funding of trading losses of the business and the turnaround plan.

The trading results of the Healthcare business have been classified as discontinued operations as defined by IFRS 5 'Non-current assets held for sale and discontinued operations'.

The net assets of Healthcare at the date of disposal were as follows:

	2017 £m
Non-current assets
Other intangible assets	1.5
Property, plant and equipment	1.1
Deferred tax assets	0.4
Total non-current assets	3.0

Current assets
Trade and other receivables	14.7
Cash and cash equivalents	1.7
Total current assets	16.4

Total assets	19.4

Current liabilities
Trade and other payables	(5.3)
Financing liabilities	(0.1)
Current tax liabilities	(0.4)
Total current liabilities	(5.8)

Net assets	13.6
Deferred contribution payable to purchaser	9.5
Other costs of disposal	7.3
Total consideration	-
Loss on disposal	(30.4)

Net cash outflow arising on disposal:
Consideration on disposal	-
Cash and cash equivalents disposed of	1.7
	1.7

Of the £9.5m contribution to trading losses, nil was paid during the financial year ended 31 March 2017. The group paid £5.4m of the contribution to Apposite on 1 April 2017. The remaining £4.1m is payable on 1 July 2017.

The results of the Healthcare discontinued operations in the current and prior periods are presented below:

	2017 £m	2016 £m
Revenue	59.2	75.8
Cost of sales	(48.8)	(60.7)
Gross profit	10.4	15.1
Administrative expenses	(22.4)	(21.0)
Operating loss before other items	(12.0)	(5.9)
Other items	(123.2)	(36.1)
Operating loss before tax	(135.2)	(42.0)
Tax	2.8	3.0
Loss from discontinued operations for the year	(132.4)	(39.0)

Of the £2.8m (2016: £3.0m) of tax credits included in the above results, £2.2m (2016: £2.1m) relates to other items.

The effect of discontinued operations on segment results is disclosed in Note 4.

Cash flows from discontinued operations included in the consolidated cash flow statement are as follows:

	2017 £m	2016 £m
Net cash flows from operating activities (after tax)	(8.8)	(9.4)
Net cash flows from investing activities	(0.4)	(0.4)
Net cash flows from financing activities	-	-
	(9.2)	(9.8)

37.	31BOperating profit

Operating profit has been arrived at after charging:

Continuing and discontinued operations	2017 £m	2016 Restated* £m
Depreciation of property, plant and equipment (Note 16)	14.1	15.1
Amortisation of intangible assets (Note 15)	23.8	17.0
Impairment of goodwill (Note 14)	96.1	26.0
Impairment of other intangible assets (Note 15)	3.0	1.0
Impairment of acquisition related intangible assets (Note 15)	10.1	6.2
Loss on disposal of property, plant and equipment	1.0	-
Loss on disposal of subsidiary (Note 6)	30.4	-
Impairment loss recognised on trade receivables	12.6	1.3
Write downs of inventories recognised as an expense	1.4	-
Impairment loss recognised on accrued income	4.5	-

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of the year ended 31 March 2016.

A detailed analysis of auditor's remuneration is provided below:

	2017 £000	2016 £000
Fees payable to the company's auditor for the audit of the Company's annual accounts	40	35
Fees payable to the company's auditor and its associates for the audit of the Company's subsidiaries pursuant to legislation	1,037	731
Total audit fees	1,077	766

Other audit related services to the group	70	59
Tax services*	85	74
Corporate finance service	-	53
Other services	15	22
Total non-audit fees	170	208

Total	1,247	974

* The tax services expense recognised in the year to 31 March 2017 relates to the financial years ended 31 March 2016 (£76k) and 31 March 2015 (£9k).

348.	35BStaff costs

Number of people	2017	2016 Restated
The average number of people employed during the financial year was:
Facilities Management	49,585	51,499
Property Management	2,354	2,498
Healthcare	4,340	5,335
Total group	56,279	59,332

The number of people employed at 31 March was:

Total group

52,798

59,591

Their aggregate remuneration comprised:	2017 £m	2016 Restated £m
Wages and salaries	1,068.9	1,026.0
Social security costs	82.2	79.2
Other pension costs	16.7	21.3
Share-based payments (Note 37)	6.2	5.2
	1,174.0	1,131.7

Details of Directors' remuneration and interests are provided in the audited section of the Directors' remuneration report and should be regarded as an integral part of this Note.

36B9.

37BInvestment revenue

Continuing operations	2017 £m	2016 £m
Interest on bank deposits	-	0.1
	-	0.1

38B10.

39BFinance costs

Continuing operations	2017 £m	2016 £m
Interest on bank facilities	3.1	3.6
Interest on private placement loan notes	9.6	9.6
Bank fees	1.0	1.1
Interest on obligations under finance leases	0.2	0.2
Gain arising on derivatives in a designated fair value hedge	(4.9)	(0.8)
Loss arising on adjustment for the hedged item in a designated fair value hedge	5.0	0.9
Net interest on defined benefit pension scheme assets and liabilities	1.3	1.2
	15.3	15.8

411.

41BTax

Continuing and discontinued operations	2017 £m	2016 Restated* £m
Current tax	(0.9)	17.0
Deferred tax (Note 23)	(9.3)	(1.8)
	(10.2)	15.2
Continuing operations	(7.4)	18.2
Discontinued operations (Note 6)	(2.8)	(3.0)
	(10.2)	15.2

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of the year ended 31 March 2016.

Corporation tax is calculated at 20% (2016: 20%) of the estimated taxable profit for the year. A reconciliation of the tax charge to the elements of loss before tax per the consolidated income statement elements is as follows:

	2017			2016 - Restated*
Continuing and discontinued operations	Before other items £m	Other items £m	Total £m	Before other items £m	Other items £m	Total £m
Loss before tax	(33.6)	(159.8)	(193.4)	92.4	(42.4)	50.0
Tax at UK rate of 20% (2016: 20.0%)	(6.7)	(32.0)	(38.7)	18.5	(8.5)	10.0
Reconciling tax charges for:
Non-tax deductible charges	0.4	0.3	0.7	0.2	-	0.2
Share-based payments	0.8	-	0.8	0.8	-	0.8
Loss on disposal of business	-	6.1	6.1	-	-	-
Impairment of goodwill	-	19.2	19.2	-	5.2	5.2
Overseas tax rates	0.1	-	0.1	0.2	-	0.2
Impact of change in statutory tax rates	1.2	0.1	1.3	(0.1)	(0.1)	(0.2)
Prior year adjustments	0.3	-	0.3	(1.0)	-	(1.0)
Tax (charge)/credit for the year	(3.9)	(6.3)	(10.2)	18.6	(3.4)	15.2
Effective tax rate for the year	11.5%	3.9%	5.3%	20.1%	8.0%	30.4%

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of the year ended 31 March 2016.

In addition to the amounts charged to the consolidated income statement, tax credits relating to retirement benefit costs and hedged items amounting to £5.8m (2016: £2.3m charge) have been taken directly to the statement of comprehensive income and nil relating to share-based payments has been charged (2016: £0.1m credited) directly to equity.

The effective tax rate on profit before other items is generally higher than the statutory tax rate due to entertaining costs, commercial property depreciation and share-based payment charges not being wholly tax deductible and tax losses incurred overseas. However, as losses were incurred in 2017 the effective rate is lower than the statutory tax rate due to permanent differences such as those described above and the impact of a change in tax rates.

The UK corporation tax rate reduced from 20% to 19% from 1 April 2017 and will reduce to 17% from 1 April 2020. This will reduce the group's future current tax charge accordingly. The UK deferred tax assets and liabilities at 31 March 2017 have been adjusted to reflect these changes. A current tax provision is recognised when the group has a present obligation as a result of a past event and it is probable that the group will be required to settle that obligation.

412.	43BDividends

	2017 £m	2016 £m
Amounts recognised as distributions in the year:
Final dividend for the year ended 31 March 2016 of 6.7p (2015: 6.5p) per share	23.3	23.1
Interim dividend for the year ended 31 March 2017 of 4.0p (2016: 5.4p) per share	14.1	19.2
	37.4	42.3
Proposed final dividend for the year ended 31 March 2017 of nil (2016: 6.7p) per share	-	23.4

413.	45BEarnings 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:

From continuing operations	2017 £m	2016 Restated* £m
Net (loss)/ profit before other items attributable to equity holders of the parent	(19.1)	76.6
Other items net of tax	(32.5)	(5.0)
Net (loss)/ profit attributable to equity holders of the parent	(51.6)	71.6

From continuing and discontinued operations	2017 £m	2016 Restated* £m
Net (loss)/profit before other items attributable to equity holders of the parent	(30.5)	71.6
Other items net of tax	(153.5)	(39.0)
Net (loss)/profit attributable to equity holders of the parent	(184.0)	32.6

Number of shares	2017 million	2016 million
Weighted average number of Ordinary shares for the purpose of basic EPS	351.0	355.4
Effect of dilutive potential Ordinary shares: share options	3.7	4.1
Weighted average number of Ordinary shares for the purpose of diluted EPS	354.7	359.5

	2017 p	2016 Restated* p
From continuing operations:
Basic (loss)/ earnings before other items per share ^‡	(5.5)	21.6
Basic (loss)/ earnings per share	(14.7)	20.1
Diluted (loss)/ earnings before other items per share^‡	(5.4)	21.3
Diluted (loss)/ earnings per share	(14.6)	19.9
From continuing and discontinued operations:
Basic (loss)/ earnings before other items per share^‡	(8.7)	20.1
Basic (loss)/ earnings per share	(52.4)	9.2
Diluted (loss)/ earnings before other items per share^‡	(8.6)	19.9
Diluted (loss)/ earnings per share	(51.9)	9.1

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of the year ended 31 March 2016.

‡ Other items are as described in Note 5.

The weighted average number of Ordinary shares in issue during the year excludes those accounted for in the own shares reserve (see Note 33).

414.	47BGoodwill

	£m
Cost
At 1 April 2015	464.4
Acquisition of subsidiaries	0.7
Impact of foreign exchange	0.4
At 1 April 2016	465.5
Change in consideration C&C Health	(0.1)
Disposal of subsidiary	(107.1)
Impact of foreign exchange	0.6
At 31 March 2017	358.9

Accumulated impairment losses
At 1 April 2015	-
Impairment of healthcare goodwill - restated*	(26.0)
At 1 April 2016 - restated*	(26.0)
Impairment of healthcare goodwill	(81.1)
Impairment of property goodwill	(15.0)
Disposal of subsidiary	107.1
At 31 March 2017	(15.0)

Carrying amount
At 31 March 2017	343.9
At 31 March 2016 - restated*	439.5

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of the year ended 31 March 2016.

Impairment of healthcare goodwill

As explained in Note 6 to these Financial Statements, during the financial year the Board decided to withdraw from the domiciliary healthcare market and the sale of the Healthcare division was completed on 28 February 2017.

In light of the group's decision to withdraw from the domiciliary healthcare market and the healthcare loss recorded in the first half of the year, the group undertook an impairment review of the goodwill and intangible assets associated with the Healthcare business. This reassessment of the estimate of the recoverable amount of the Healthcare CGU resulted in a full impairment of the carrying value of goodwill and acquisition related intangible assets for the Healthcare CGU.

Goodwill impairment testing

Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from that business combination. Additions during the year relate to goodwill recognised on one acquisition. More details are presented in Note 34.

Goodwill has been allocated to CGUs, which align with the business segments, as this is how goodwill is monitored by the group internally. The group tests goodwill at least annually for impairment or more frequently if there are indicators that goodwill may be impaired.

A summary of the goodwill balances and discount rates used to assess the forecast cash flows from the CGUs is as follows:

	Discount rate 2017 %	Discount rate 2016 %	Goodwill 2017 £m	Goodwill 2016 Restated* £m
Facilities Management - Soft	8.4	7.9	172.4	171.8
Facilities Management - Hard	8.5	8.0	101.3	101.3
Property Management	12.1	9.2	70.2	85.2
Healthcare	-	9.1	-	81.2
			343.9	439.5

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of the year ended 31 March 2016.

Key assumptions

The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to revenue and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. The growth rates are based on forecast inflation. Changes in revenue and direct costs are based on past practices and expectations of future changes in the market.

Growth rates and terminal values

The group prepares cash flow forecasts derived from the most recent one year financial budgets approved by the Board, extrapolated for four future years by the expected growth applicable to each unit with a terminal value using an inflationary growth rate assumption of 2.0%.

Discount rates

The pre-tax discount rates used to assess the forecast cash flows from CGUs are derived from the Company's post-tax Weighted Average Cost of Capital, which was 7.3% at 31 March 2017 (2016: 7.0%), and is adjusted for the risks specific to the business being assessed and the market in which the CGU operates. All CGUs have the same access to the group's treasury functions and borrowing lines to fund their operations.

Sensitivity analysis

A sensitivity analysis has been performed and the Directors have concluded that no reasonably foreseeable change in the key assumptions would result in an impairment of the goodwill of any of the Soft Facilities Management and Hard Facilities Management CGUs. In particular, a 1% increase in the discount rate or a 1% decrease in the terminal value growth rate would not result in impairment in any of these CGUs.

Impairment testing for new business segment structure

As detailed in Note 4 to the financial statements the business segments structure has been amended from 1 April 2017. This amendment to business segment structure has necessitated a restructuring of the CGUs categorisation used for goodwill impairment testing.

A summary of the goodwill balances and discount rates used to assess the forecast cash flows from the CGUs within the new business segment structure is as follows:

	Pre-tax discount rate %	Post-tax discount rate %	Goodwill 2017 £m
Cleaning & Environmental Services	8.4	7.3	33.1
Security	8.4	7.3	101.7
Catering	9.1	7.8	15.7
Engineering Services	8.4	7.3	107.5
Professional Services & Connected Workspace	10.3	8.8	15.7
Public Services	12.1	9.8	70.2
			343.9

Impairment testing and sensitivity analyses have been undertaken for the CGUs in this new structure and the Directors have concluded that no reasonably foreseeable change in the key assumptions would result in an impairment of the goodwill of any of the Cleaning & Environmental Services, Security, Catering, Engineering Services or Professional Services & Connected Workspace CGUs.

Review of the carrying value of goodwill in the Property Management CGU

In the year the Property Management CGU (which now forms the bulk of the Public Services CGU) reported a loss of £9.2m principally from irrecoverable debts and accrued income in certain contracts which are being exited. As part of its annual review of impairment, the Group has updated its estimate of the recoverable amount of the CGU, including various downside scenarios, which has resulted in an impairment of £15.0m being taken resulting in a goodwill carrying value of £70.2m at 31 March 2017.

Key assumptions

The key assumptions underpinning the calculations of the net present value of future cash flows include:

- The calculations are based on a five year plan approved by the Board

- Adjusted revenue of £267.4m in FY17 and compound annual revenue growth of 2.9%

- Adjusted operating profit of £10.2m (after management charges) underpinning the growth in operating margin of 1.3% over the first five years of the plan. This includes the best estimate of the outcome of contractual disputes discussed further in note 35

- A terminal value growth rate of 2.0%, based on inflationary projections

- Pre-tax discount rate for the CGU of 12.1% which has been adjusted for the risks specific to the market in which the CGU operates

In reviewing the carrying value, the following factors have also been considered:

- Circumstances surrounding the in-year loss and future trading expectations

- The controls framework in the Property Management business

- Macro pressures in the social housing market

- Route to new sales

- Management resource to deliver the budget

Sensitivity analysis for Property Management CGU impairment testing

The value in use conclusions are reliant on the accuracy of managements forecasts and the assumptions that underlie them as well as the discount rate and growth rates applied. Sensitivity analysis was performed on the forecasts to consider the impact of certain trading scenarios and changes in assumptions both individually and in combination. A combination of these sensitivities concluded that an impairment of £15.0m represented the Audit Committee's best estimate. A 1.0% change in discount rate would result in a £7.5m sensitivity. A £1.0m change in operating profit would result in a £7.6m sensitivity.

15.	51BOther intangible assets

	Acquisition related
	Customer relationships £m	Other £m	Total acquisition related £m	Software and development expenditure £m	Total £m
Cost
At 1 April 2015	88.4	10.9	99.3	55.7	155.0
Additions	-	-	-	8.9	8.9
Reclassifications from property, plant and equipment (Note 16)	-	-	-	8.5	8.5
At 1 April 2016	88.4	10.9	99.3	73.1	172.4
Additions	-	-	-	12.4	12.4
Disposal of subsidiary	-	-	-	(2.9)	(2.9)
Reclassifications from property, plant and equipment (Note 16)	-	-	-	14.5	14.5
Impact of foreign exchange	-	-	-	0.2	0.2
At 31 March 2017	88.4	10.9	99.3	97.3	196.6

Amortisation
At 1 April 2015 - restated*	51.2	8.8	60.0	21.2	81.2
Charge for the year - restated*	9.5	0.4	9.9	7.1	17.0
Impairment of intangible asset - restated*	-	-	-	1.0	1.0
Impairment of acquisition related intangible assets	6.2	-	6.2	-	6.2
Reclassifications from property, plant and equipment (Note 16)	-	-	-	2.4	2.4
At 1 April 2016 - Restated	66.9	9.2	76.1	31.7	107.8
Charge for the year	6.4	0.4	6.8	17.0	23.8
Impairment of software and development expenditure	-	-	-	3.0	3.0
Impairment of acquisition related intangible assets	10.1	-	10.1	-	10.1
Disposal of subsidiary	-	-	-	(1.4)	(1.4)
Impact of foreign exchange	-	-	-	0.1	0.1
At 31 March 2017	83.4	9.6	93.0	50.4	143.4

Carrying amount
At 31 March 2017	5.0	1.3	6.3	46.9	53.2
At 31 March 2016 - restated*	21.5	1.7	23.2	41.4	64.6

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of 31 March 2016.

Customer relationships are amortised over their useful lives based on the period of time over which they are anticipated to generate benefits. These currently range from four to eight years. Other acquisition related intangibles include acquired software and technology which are amortised over their useful lives which currently range from three to ten years. Software and development costs are amortised over their useful lives of between five and ten years, once they have been brought into use.

During the year the group has undertaken a reassessment of the Useful Economic Life of software and development expenditure related intangible assets and has adopted a revised amortisation profile for these assets. This change in accounting estimate resulted in an additional £7.5m of amortisation in the year ended 31 March 2017.

The customer relationships relating to the Healthcare business were impairment tested at 30 September 2016 in accordance with IAS 36 following the decision to withdraw from the domiciliary healthcare market and the healthcare loss recorded in the half year. As a result, an impairment of £10.1m (2016: £6.2m) was recognised.

Reclassifications from property, plant and equipment relate to completed software and development expenditure which was held in plant and vehicles whilst being developed.

516.	53BProperty, plant and equipment

	Freehold properties £m	Leasehold properties £m	Plant and vehicles £m	Total £m
Cost
At 1 April 2015	2.7	18.0	109.4	130.1
Additions	-	0.6	18.6	19.2
Acquired with subsidiaries	-	-	0.2	0.2
Reclassifications to intangible assets (Note 15)	-	-	(8.5)	(8.5)
Reclassifications within property, plant and equipment	-	0.5	(0.5)	-
Disposals	(1.1)	(0.3)	(17.2)	(18.6)
At 1 April 2016	1.6	18.8	102.0	122.4
Additions	-	0.3	14.4	14.7
Reclassifications to intangible assets (Note 15)	-	-	(14.5)	(14.5)
Disposals	(0.3)	(2.3)	(25.3)	(27.9)
Disposal of subsidiaries	-	(0.1)	(5.3)	(5.4)
Impact of foreign exchange	-	0.1	0.2	0.3
At 31 March 2017	1.3	16.8	71.5	89.6

Accumulated depreciation and impairment
At 1 April 2015	0.6	8.4	67.8	76.8
Charge for the year	0.1	1.4	13.6	15.1
Reclassifications to intangible assets (Note 15)	-	-	(2.4)	(2.4)
Reclassifications within property, plant and equipment	-	0.3	(0.3)	-
Disposals	(0.2)	(0.3)	(15.9)	(16.4)
At 1 April 2016	0.5	9.8	62.8	73.1
Charge for the year	-	1.5	12.6	14.1
Disposals	(0.1)	(0.7)	(25.1)	(25.9)
Disposal of subsidiaries	-	-	(4.3)	(4.3)
Impact of foreign exchange	-	-	0.3	0.3
At 31 March 2017	0.4	10.6	46.3	57.3

Carrying amount
At 31 March 2017	0.8	6.2	25.2	32.3
At 31 March 2016	1.1	9.0	39.2	49.3

The net book value of plant and vehicles held under finance leases included above was £2.8m (2016: £4.0m).

Additions to plant and vehicles during the year amounting to £0.2m (2016: £3.5m) were financed by new finance leases.

517.	55BInterest in joint ventures and associates

The group's interests in joint ventures and associates are accounted for in the consolidated financial statements using the equity method.

The group's share of result of joint ventures and associates included in the consolidated income statement was as follows:

	2017 £m	2016 £m
Revenue	3.7	3.9
Operating profit	0.6	0.6
Share of profit of joint ventures and associates	0.6	0.6

The group's share of net assets of joint ventures and associates as at 31 March 2017 was as follows:

	2017 £m	2016 £m
Non-current assets	-	-
Current assets	0.8	0.9
Current liabilities	(0.2)	(0.3)
Non-current liabilities	-	-
Interest in joint ventures and associates	0.6	0.6

Joint ventures and associate undertakings are not material to the group. None have significant restrictions on the ability to transfer funds to the group in the form of cash dividends, or to repay loans or advances made by the group. These results have been taken from unaudited management accounts.

58B18.

Derivative financial instruments

	2017 £m	2016 £m
Derivative financial instruments (Note 28)	35.8	14.4
	35.8	14.4

Included in current assets	35.8	-
Included in non-current assets	-	14.4
	35.8	14.4

0B19.

61BTrade and other receivables

	2017 £m	2016 Restated* £m
Amounts receivable for the sale of services	201.8	212.8
Provision for doubtful debts	(16.2)	(4.6)
Trade receivables	185.6	208.2
Amounts recoverable on construction contracts (Note 20)	0.1	2.6
Mobilisation costs (Note 22)	21.0	28.6
Accrued income	178.1	224.1
Prepayments‡	22.7	35.9
Other debtors#	23.8	17.5
	431.3	516.9

Included in current assets	381.0	432.1
Included in non-current assets+	50.3	84.8
	431.3	516.9

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of 31 March 2016.

+ Non-current trade and other receivables comprise accrued income on long-term complex contracts of £40.8m (2016 restated: £67.5m) and mobilisation costs of £9.5m (2016 restated: £17.3m) which are further analysed in Notes 21 and 22 respectively.

‡ Prepayments include costs incurred for fixed price services where income will be recognised over the contract period.

# Accrued income includes cost incurred for project and reactive works in the Engineering Services division where income will be recognised on completion.

At 31 March 2017 the group utilised £110.7m of invoice discounting facilities (2016: £82.2m).

Ageing of trade receivables:

	2017 £m	2016 Restated* £m
Neither impaired nor past due	159.4	157.7
Not impaired and less than three months overdue	26.8	38.1
Not impaired and more than three months overdue	15.4	14.4
Impaired receivables	0.2	2.6
Provision for doubtful debts	(16.2)	(4.6)
	185.6	208.2

Movement in the provision for doubtful debts:

	2017 £m	2016 Restated* £m
Balance at the beginning of the year	4.6	8.4
Impairment losses recognised	13.9	2.1
Amounts written off as uncollectable	(0.8)	(4.3)
Amounts recovered during the year	-	(1.6)
Disposal of business	(1.5)	-
Impact of foreign exchange	-	-
	16.2	4.6

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of 31 March 2016.

The average credit period taken on sales of services was 27 days (2016 restated: 29 days).

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

20.	65BAmounts recoverable on construction contracts

	2017 £m	2016 Restated* £m
Construction contract costs incurred plus recognised profits less recognised losses to date	39.7	46.3
Less progress billings	(39.6)	(43.7)
Amounts due from construction contract customers included in trade and other receivables	0.1	2.6

Included in current assets	0.1	2.6
Included in non-current assets	-	-
	0.1	2.6

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of 31 March 2016.

At 31 March 2017, retentions held by customers for contract work amounted to £2.3m (2016: £4.7m) and was held in accrued income.

B21.	67BAccrued income on long-term complex contracts

	2017 £m	2016 Restated* £m
At 1 April	70.6	43.8
Amounts recognised in the income statement	(20.4)	26.8
At 31 March	50.2	70.6

Included in current assets	9.4	3.1
Included in non-current assets	40.8	67.5
	50.2	70.6

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of 31 March 2016.

£21.2m of the accrued income on long-term complex contracts is attributable to transition costs (2016: £26.5).
The accrued income on long-term complex contracts balance at the end of each subsequent financial year is projected to be:

	2017 £m	2018 £m	2019 £m	2020 £m	2021 £m	2022 £m
2017	n/a	40.8	27.8	16.9	8.8	3.2
2016 - Restated	67.5	54.3	36.8	24.4	14.1	5.5

22.	69BMobilisation costs

	2017 £m	2016 £m
At 1 April	28.6	30.6
Additions	12.4	12.0
Amounts recognised in the income statement	(20.0)	(14.0)
At 31 March	21.0	28.6

Included in current assets	11.5	11.3
Included in non-current assets	9.5	17.3
	21.0	28.6

Under IFRS 15 mobilisation costs will be replaced by fulfilment costs. The criteria for capitalising costs as a fulfilment cost will be focussed on the individual task being performed. The potential impact of this is being reviewed as part of the overall IFRS 15 review project.

70B23.

71BDeferred tax

The following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and prior reporting period:

	Losses £m	Accelerated tax depreciation £m	Retirement benefit obligations £m	Intangible assets acquired £m	Share options £m	Short-term timing differences £m	Total £m
At 1 April 2015 - restated*	-	1.0	7.1	(7.5)	1.9	3.9	6.4
Credit/(charge) to income	-	0.4	0.9	3.1	(0.4)	(2.2)	1.8
(Charge)/credit to equity and the statement of comprehensive income	-	-	(1.6)	-	(0.2)	(0.5)	(2.3)
Acquisition of subsidiaries	-	-	-	-	-	0.1	0.1
At 1 April 2016 - restated*	-	1.4	6.4	(4.4)	1.3	1.3	6.0
Credit/(charge) to income	0.8	5.1	0.7	3.3	(0.3)	(0.3)	9.3
(Charge)/credit to equity and the statement of comprehensive income	-	-	5.5	-	(0.3)	0.6	5.8
Acquisition of subsidiaries	-	-	-	-	-	-	-
At 31 March 2017	0.8	6.5	12.6	(1.1)	0.7	1.6	21.1

Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

	2017 £m	2016 Restated* £m
Deferred tax assets	22.2	10.4
Deferred tax liabilities	(1.1)	(4.4)
Net deferred tax asset	21.1	6.0

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of 31 March 2016.

The group has unutilised income tax losses of £14.2m (2016: £9.3m) that are available for offset against future profits. In addition the group has £0.8m (2016: £0.8m) of capital losses.

A deferred tax asset has been recognised in respect of certain unutilised losses and allowances on the basis that there are expected future profits to be generated. Deferred tax has been calculated using the corporation tax rates disclosed in note 11.

72B24.

73BInventories

	2017 £m	2016 £m
Work-in-progress	-	2.5
Materials	6.8	7.4
	6.8	9.9

74B25.

75BCash and cash equivalents

	2017 £m	2016 £m
Cash and cash equivalents	129.1	93.1

Cash and cash equivalents comprise cash held by the group and short-term bank deposits with an original maturity of three months or less. The carrying amount of the assets approximates their fair value.

Included in cash and cash equivalents are deposits totalling £0.6m (2016: £0.9m) held by the group's insurance subsidiary, which are not readily available for the general purposes of the group.

At 31 March 2017 the group utilised £110.7m of invoice discounting facilities (2016: £82.2m).

76B26.

77BTrade and other payables

	2017 £m	2016 Restated* £m
Payments received on account	1.8	0.1
Trade creditors	244.7	206.8
Other taxes and social security	84.3	82.7
Other creditors	24.5	9.6
Accruals	160.4	151.4
Deferred income	47.6	48.0
	563.3	498.6

Included in current liabilities	559.9	496.1
Included in non-current liabilities	3.4	2.5
	563.3	498.6

* See Note 1(c) for an explanation and analysis of the prior year adjustments included above in respect of 31 March 2016.

Trade creditors, accruals and deferred income principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 71 days (2016: 40 days).

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

78B27.

79B Financing liabilities

	2017 £m	2016 £m
Bank loans - under committed facilities	15.3	13.6
Private placement notes	294.0	268.2
Obligations under finance leases (Note 30)	2.8	4.0
	312.1	285.8

Included in current liabilities	310.8	1.9
Included in non-current liabilities	1.3	283.9
	312.1	285.8

As discussed in Note 42, following the year end the Group's lenders have agreed to an amendment to covenant calculation definitions. In accordance with the requirements of IAS 1, it has been necessary to classify the drawn amounts on the funding arrangements as current rather than non-current liabilities. The final maturity dates of all facilities remain unchanged.

The banking facilities and private placement notes are unsecured but have financial and non-financial covenants and obligations commonly associated with these arrangements. Included in current financing liabilities are £1.5m (2016: £1.9m) of obligations under finance leases (see Note 30).

With the exception of derivative financial instruments and the private placement notes, all financing liabilities are held at amortised cost. The Directors estimate that their carrying value approximates their fair value. Derivative financial instruments are initially recognised at fair value at the date the contract is entered into and are subsequently remeasured to their fair value through profit or loss unless they are designated as hedges for which hedge accounting can be applied (see Note 28). The carrying value of the private placement notes at 31 March 2017 includes a fair value adjustment for interest rate and currency risk of £0.2m (2016: £0.7m). The fair value of the private placement notes is not significantly different from their carrying value.

At 31 March 2017, the group had available £257.9m (2016: £259.4m) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met. The facilities have an expiry date of July 2021. The loans carry interest rates which are currently determined at 1.0% over LIBOR. Details of the group's contingent liabilities are provided in Note 35.

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

	2017 %	2016 %
Overdrafts	2.1	2.1
Bank loans	1.2	1.3
Private placement notes	3.8	3.8

Private placement notes

On 13 December 2012, the group issued US$153.0m and £55.0m of private placement (PP) notes in the United States Private Placement market. This followed the issue on 16 December 2010 of US$96.0m and £40.0m of PP notes in the United States Private Placement market. The PP notes are unsecured and rank pari passu with other senior unsecured indebtedness of the group. In order to manage the risk of foreign currency fluctuations and to manage the group's finance costs through a mix of fixed and variable rate debt, the group has entered into cross currency interest rate swaps. The swap contracts have the same duration and other critical terms as the borrowings and are considered to be highly effective. The amount, maturity and interest terms of the PP notes are as shown below:

Tranche	Maturity date	Amount	Interest terms	Swap interest
7 year	16 December 2017	US$48.0m	US$ fixed at 3.39%	£ fixed at 3.88%
7 year	16 December 2017	US$48.0m	US$ fixed at 3.39%	£ LIBOR + 1.26%
9 year	16 December 2019	£40.0m	£ fixed at 4.38%	n/a
10 year	16 December 2022	US$76.0m	US$ fixed at 3.85%	£ fixed at 4.05%
10 year	16 December 2022	US$77.0m	US$ fixed at 3.85%	£ fixed at 4.02%
10 year	16 December 2022	£25.0m	£ fixed at 3.87%	n/a
12 year	16 December 2024	£30.0m	£ fixed at 4.04%	n/a

28.	83BFinancial instruments

Classification

The group's principal financial assets are cash and cash equivalents, trade receivables and derivative financial instruments. With the exception of derivative financial instruments, all financial assets are classified as loans and receivables.

The group's principal financial liabilities are trade payables, financing liabilities and deferred contingent consideration. With the exception of derivative financial instruments, private placement notes and deferred contingent consideration, all financial liabilities are held at amortised cost.

Derivative financial instruments and private placement loan notes are measured initially at fair value at the date the contract is entered into and are subsequently remeasured to their fair value through the income statement unless they are designated as hedges for which hedge accounting can be applied. Deferred contingent consideration is measured at the Directors' best estimate of the likely future obligation.

Details of the significant accounting policies and methods adopted (including the criteria for recognition, the basis of measurement and the bases for recognition of income and expense) for each class of financial asset, financial liability and equity instrument are disclosed in Note 1.

Risk management objectives

The group's treasury function monitors and manages the financial risks relating to the operations of the group. These risks include those arising from interest rates, foreign currencies, liquidity, credit and capital management. The group seeks to minimise the effects of these risks by using effective control measures and, where appropriate, derivative financial instruments to hedge certain risk exposures. The use of financial derivatives is governed by group policies and reviewed regularly. Group policy is not to trade in financial instruments. The risk management policies remain unchanged from the previous year.

Interest rate risk

The group's activities expose it to the financial risks of interest rates. The group's treasury function reviews its risk management strategy on a regular basis and will appropriately enter into derivative financial instruments in order to manage interest rate risk. Having issued US$249.0m and £95.0m of notes in the US PP fixed rate market, the group has swapped US$48.0m into floating rate debt.

Interest rate sensitivity

The interest rate sensitivity has been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the balance sheet date was outstanding for the whole year. All financial liabilities, other than financing liabilities, are interest free.

If interest rates had been 0.5% higher/lower and all other variables were held constant, the group's profit after tax for the year ended 31 March 2017 and reserves would decrease/increase by £0.5m (2016: £0.4m).

Foreign currency risk

The group has limited exposure to transactional foreign currency risk from trading transactions in currencies other than the functional currency of individual group entities and some exposure to translational foreign currency risk from the translation of its operations in Europe. The group considers the need to hedge its exposures appropriately and will enter into forward foreign exchange contracts to mitigate any significant risks.

In addition, the group has fully hedged the US dollar exposure on its PP notes into sterling using cross currency interest rate swaps (see Hedging activities below).

At 31 March 2017 £6.9m (2016: £5.0m) of cash and cash equivalents were held in foreign currencies. Included in bank loans were £15.3m (2016: £13.6m) of loans denominated in foreign currency.

Liquidity risk

The group monitors its liquidity risk using a cash flow projection model which considers the maturity of the group's assets and liabilities and the projected cash flows from operations. Bank facilities, which allow for appropriate headroom in the group's daily cash movements, are then arranged. Details of the group's bank facilities can be found in Note 27.

The tables below summarise the maturity profile (including both undiscounted interest and principal cash flows) of the group's financial liabilities:

Financial liabilities at 31 March 2017	Within one year £m	In the second to fifth years £m	After five years £m	Total £m
Trade creditors	244.7	-	-	244.7
Other creditors	24.5	-	-	24.5
Financing liabilities	106.2	70.2	181.2	357.6
Deferred contingent consideration	0.3	-	-	0.3
Financial liabilities	375.7	70.2	181.2	627.1

Financial liabilities at 31 March 2016	Within one year £m	In the second to fifth years £m	After five years £m	Total £m
Trade creditors	206.8	-	-	206.8
Other creditors	9.6	-	-	9.6
Financing liabilities	28.5	140.6	170.8	339.9
Deferred contingent consideration	0.4	-	-	0.4
Financial liabilities	245.3	140.6	170.8	556.7

Credit risk

The group's credit risk is monitored on an ongoing basis and formally reported quarterly. The value of business placed with financial institutions is reviewed on a daily basis.

The group's credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies and are managed through regular review.

The amounts presented in the balance sheet in relation to the group's trade receivables are net of provisions for doubtful debts.

The group's credit risk is primarily attributable to its trade receivables. Before accepting a new customer, the group uses external credit scoring systems to assess the potential customer's credit quality and define an appropriate credit limit which is reviewed regularly.

In determining the recoverability of a trade receivable, the group considers the credit quality of the counterparty. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. The Directors believe that there is no further provision required in excess of the provision for doubtful debts at the balance sheet date.

The maximum exposure to credit risk in relation to trade receivables at the balance sheet date is the fair value of trade receivables. The group's customer base is large and unrelated and, accordingly, the group does not have a significant concentration of credit risk with any one counterparty or group of counterparties.

Capital management risk

The group manages its capital to ensure that entities in the group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of debt and equity. The capital structure of the group consists of net debt per Note 31 and equity per the consolidated statement of changes in equity.

The group's capital structure is reviewed regularly. In 2013, the Board approved a share purchase policy to maintain share numbers at a broadly consistent level year on year with the aim of ensuring that the interests of shareholders are not diluted by the issue of shares that support the group's various share schemes, nor by the issue of shares as consideration for earn outs under the Mitie model. During the year, the group bought back 9.1m (2016: 5.2m) shares at a cost of £24.4m (2016: £15.2m) and subsequently cancelled these shares. From time to time shares are bought to be held in Treasury in order to offset shares issued under various share schemes and to hedge against shares to be issued in the future. During the year, nil (2016: 2.3m) shares were bought to be held in Treasury at a total cost of £nil (2016: £6.6m). Further details are provided in Notes 32 and 33.

The group is not subject to externally imposed regulatory capital requirements with the exception of those applicable to the group's captive insurance subsidiary, which is monitored on a regular basis.

Hedging activities

Cash flow hedges

The group holds a number of cross currency interest rate swaps designated as cash flow hedges on US$ 201.0m of PP notes. Biannual fixed interest cash flows arising over the periods to December 2022 and denominated in US$ from the US Private Placement market are exchanged for fixed interest cash flows denominated in sterling. The group also holds a number of forward exchange currency contracts designated as hedges of highly probable forecast transactions. All cash flow hedges were assessed as being highly effective as at 31 March 2017.

Fair value hedges

The group holds a number of cross currency interest rate swaps designated as fair value hedges on US$ 48.0m of PP notes. Fixed interest cash flows denominated in US$ from the US Private Placement market are exchanged for floating interest cash flows denominated in sterling. All fair value hedges were assessed as being highly effective as at 31 March 2017.

Hedge of net investment in foreign operations

Included in bank loans at 31 March 2017 was a borrowing of €9.5m (2016: €9.5m) which has been designated as a hedge of the net investment in the Republic of Ireland business of Dalkia FM in Ireland and is being used to hedge the group's exposure to foreign exchange risk on this investment. Gains or losses on the translation of the borrowing are transferred to equity to offset gains or losses on the translation of the net investment.

Derivative financial instruments

The carrying values of derivative financial instruments at the balance sheet date were as follows:

	Assets 2017 £m	Assets 2016 £m	Liabilities 2017 £m	Liabilities 2016 £m
Cross currency interest rate swaps designated as cash flow hedges	27.0	10.3	-	-
Cross currency interest rate swaps designated as fair value hedges	8.8	4.1	-	-
Derivative financial instruments hedging private placement notes	35.8	14.4	-	-

Derivative financial instruments are measured at fair value. Fair values of derivative financial instruments are calculated based on a discounted cash flow analysis using appropriate market information for the duration of the instruments.

Financial instruments fair value disclosure

Fair value measurements are classified into three levels, depending on the degree to which the fair value is observable:

- Level 1 fair value measurements are those derived from quoted prices in active markets for identical assets or liabilities;

- Level 2 fair value measurements are those derived from other observable inputs for the asset or liability; and

- Level 3 fair value measurements are those derived from valuation techniques using inputs that are not based on observable market data.

The Directors consider that the derivative financial instruments fall into Level 2 and that deferred contingent consideration falls into Level 3.

Deferred contingent consideration is measured at the Directors' best estimate of the likely future obligation based on the attainment of certain profit targets. In assessing the likely future obligation, the Directors have used their experience and knowledge of market conditions, alongside internal business plans and growth forecasts. Actual amounts payable may
vary up to a maximum of £0.3m (2016: £0.4m) dependent upon the results of the acquired businesses.

The following table shows the reconciliation from the opening to closing balances for Level 3 fair values:

	Deferred contingent consideration £m
At 1 April 2016	0.4
Change in consideration C&C Health (Note 14)	(0.1)
At 31 March 2017	0.3

There were no transfers between levels during the year. All contracts are gross settled.

829.	89BProvisions

	Legal costs £m	Healthcare provision £m	Deferred contingent consideration £m	Insurance reserve £m	Onerous leases £m	Contract costs £m	Total £m
At 1 April 2016 - Restated	-	-	0.4	6.4	-	2.2	9.0
Amounts recognised in the income statement	2.0	6.0	-	7.0	0.1	3.7	18.8
Amounts recognised through goodwill	-	-	(0.1)	-	-	-	(0.1)
Utilised within captive insurance subsidiary	-	-	-	(0.1)	-	-	(0.1)
Utilised in the period	-	-	-	(6.7)	-	-	(6.7)
Reclassified from accruals	-	-	-	5.9	-	-	5.9
At 31 March 2017	2.0	6.0	0.3	12.5	0.1	5.9	26.8
	10.101.0				-
Included in current liabilities	2.0	6.0	0.3	6.1	0.1	5.9	20.4
Included in non-current liabilities	-	-	-	6.4	-	-	6.4
	2.0	6.0	0.3	12.5	0.1	5.9	26.8

The provisions balance includes the following items:

The legal costs provision relates to professional fees payable and the potential cost of settlement of outstanding claims against the company.

The Healthcare provision relates to the anticipated costs of separation of the Healthcare business from the group, that is anticipated to crystallise over the next two years. See Note 6 for more detail on disposal.

The insurance reserve provides for the self-insured element of Fleet and Liability claims that will typically settle over 3-5 years. This includes a provision for claims that are expected but have not yet been reported.

Contract cost provisions relate to various obligations arising in the ordinary course of providing services in line with commercial contracts that may require settlement largely over periods up to two years.

930.	91BObligations under finance leases

	Minimum lease payments		Present value of lease payments
	2017 £m	2016 £m	2017 £m	2016 £m
Amounts payable under finance leases:
Within one year	1.7	2.0	1.5	1.9
In the second to fifth years inclusive	1.2	2.3	1.3	2.1
	2.9	4.3	2.8	4.0
Less: future finance charges	(0.1)	(0.3)	-	-
Present value of lease obligations	2.8	4.0	2.8	4.0
Less: amount due for settlement within 12 months	(1.5)	(1.9)	(1.5)	(1.9)
Amount due for settlement after 12 months	1.3	2.1	1.3	2.1

The average remaining lease term is 22 months (2016: 23 months). For the year ended 31 March 2017, the average effective borrowing rate was 1.8% (2016: 4.1%). Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. All lease obligations are denominated in sterling.

The fair value of the group's lease obligations approximates their carrying amount. The group's obligations under finance leases are protected by the lessors' rights over the leased assets.

31.	93BAnalysis of net debt

	2017 £m	2016 £m
Cash and cash equivalents (Note 25)	129.1	93.1
Bank loans (Note 27)	(15.3)	(13.6)
Private placement notes (Note 27)	(294.0)	(268.2)
Derivative financial instruments hedging private placement notes (Note 28)	35.8	14.4
Net debt before obligations under finance leases	(144.4)	(174.3)

Obligations under finance leases (Note 30)	(2.8)	(4.0)
Net debt	(147.2)	(178.3)

932.	95BShare capital

Ordinary shares of 2.5p	Number million	£m
Allotted and fully paid
At 1 April 2015	375.2	9.4
Share buybacks	(5.2)	(0.1)
Issued under share option schemes	2.1	-
At 1 April 2016	372.1	9.3

Share buybacks	(9.1)	(0.2)
Issued for acquisitions	6.0	0.1
Issued under share option schemes	0.1	-
At 31 March 2017	369.1	9.2

During the year 9.1m (2016: 5.2m) Ordinary shares of 2.5p were purchased at a cost of £24.4m (2016: £15.2m) and subsequently cancelled.

During the year 6.0m (2016: nil) Ordinary shares of 2.5p were allocated in respect of the acquisition of non-controlling interests at a mid-market price of 244.4p (2016: nil) giving rise to share premium of £2.8m (2016: nil) and merger reserve of £11.7m (2016: nil).

During the year 0.1m (2016: 2.1m) Ordinary shares of 2.5p were allotted in respect of share option schemes at a price between 201.0p and 260.2p (2016: 162.0p and 318.6p) giving rise to share premium of £0.1m (2016: £5.1m).

33.	97BReserves

Share premium account

The share premium account represents the premium arising on the issue of equity shares (see Note 32).

Merger reserve

The merger reserve represents amounts relating to premiums arising on shares issued subject to the provisions of Section 612 of the Companies Act 2006.

Own shares reserve

The group uses shares held in the Employee Benefit Trust and SIP Trust to satisfy options under the group's LTIP and SIP share option schemes respectively. During the year nil Treasury shares were purchased (2016: 2.3m at a cost of £6.6m). Treasury shares are held so that they can be reissued at a later date if required (see details of Capital management risk in Note 27). Proceeds from the issue of 1.2m (2016: 1.3m) Treasury shares to satisfy Group share schemes in the year were £2.4m (2016: £3.7m) at a cost of £3.4m (2016: £3.8m).

The own shares reserve at 31 March 2017 represents the cost of 15.2m (2016: 17.5m) shares in Mitie Group plc, with a weighted average of 16.5m (2016: 18.8m) shares during the year.

Other reserves

Other reserves are comprised of the share-based payment reserve of £9.4m (2016: £9.4m), the revaluation reserve of £(0.2)m (2016: £(0.2)m), the capital redemption reserve of £0.9m (2016: £0.5m) and other reserves of £0.2m (2016: £0.2m).

The share-based payment reserve represents credits relating to equity-settled share-based payment transactions that have not yet fully vested (see Note 37).

Hedging and translation reserve

The hedging and translation reserve of £(8.0)m (2016: £(4.6)m) includes balances in respect of the group's cash flow hedges
(see Note 28). The net cash flow hedge movement during the year of £(4.8)m (2016: £2.3m) is included within Other comprehensive income. The hedging and translation reserve also includes balances arising on translation of the group's overseas operations and in respect of net investment hedges.

34.	99BAcquisitions

Current year acquisitions - purchase of non-controlling interests

On 24 August 2016, the group purchased employee minority shareholdings of three of its successful 'Mitie Model' businesses: Mitie Business Services UK Limited (MBSUKL), Mitie Technical Facilities Management Limited (MTFML), and Mitie Care and Custody Limited (MCCL) in accordance with the respective articles of association and shareholders' agreements of those companies.

The total maximum consideration for all three purchases amounted to £16.1m. This was be satisfied with £1.4m in cash and as to the remaining £14.7m by the issue of 6,015,255 new ordinary shares of 2.5p each in Mitie valued at 244.38 p per share. This is the average of the closing middle market price for the five banking days immediately preceding 26 July 2016. Earlier in this financial year, Mitie purchased its own shares in the market to offset this share issue. The purchased shares were cancelled following their acquisition.

As a result of these acquisitions Mitie owns 100% of the issued share capital of MBSUKL and MTFML, and 93.14% of the issued share capital of MCCL. The shareholdings purchased, primarily held by certain of the employees and senior management of the relevant subsidiary companies, are detailed below:

- MBSUKL - 27.29% of the issued share capital, comprising 116,000 B ordinary shares of £0.01 each, for a consideration of £0.8m. The consideration was satisfied by £0.1m in cash and £0.7m by the issue of 275,428 new Mitie Shares;

- MTFML - 8.93% of the issued share capital, comprising 952,000 B ordinary shares of £0.01 each, for a consideration of £12.1m. The consideration was satisfied by £1.0m in cash and £11.1m by the issue of 4,563,029 new Mitie Shares; and

- MCCL - 27.42% of the issued share capital, comprising 170,022 B ordinary shares of £0.01 each, for a consideration of £3.2m. The consideration was satisfied by £0.3m in cash and £2.9m by the issue of 1,176,798 new Mitie Shares.

Prior year acquisitions - purchase of Tascor Medical Services Limited

On 29 January 2016, Mitie acquired the leading UK custodial medical services provider for a total consideration of £0.6m. The business has been renamed Care and Custody (Health) Limited. The transaction has been accounted for by the acquisition method of accounting in accordance with IFRS 3 (2008). The provisional acquisition accounting as disclosed in the 2016 Annual Report and Accounts was reviewed during the year resulting in a £0.1m reduction to the consideration payable and the value of goodwill.

135.	105BContingent liabilities

The Company and various of its subsidiaries are, from time to time, party to contractual disputes that arise in the ordinary course of business. Specifically, there are three ongoing contractual disputes with clients of Mitie's Property Management business which are subject to claims or potential claims of a material nature. In one instance, discussions are ongoing between the Company and the counterparty, to determine both liability and potential quantum. In relation to the other two matters, arbitration proceedings have commenced. 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, other than as provided for in the accounts. In appropriate cases, a provision is recognised based on best estimates and management judgement but there can be no guarantee that these provisions (which may be subject to potentially material revision from time to time) will result in an accurate prediction, due to the uncertainty of the actual costs and liabilities that may be incurred. The Directors will continue to monitor events as matters progress

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 £23.8m (2016: £23.6m) in the ordinary course of business. These are not expected to result in any material financial loss.

The group participates in several industry multi-employer defined benefit schemes. These multi-employer schemes have historically not been able to calculate the group's share of net liabilities and the group funds the schemes through paying employer pension contributions. In the event that a multi-employer scheme is able to calculate the group's share of net pension liability, then this liability would then be recognised in the group's financial statements. Where the group (or subsidiary of the group) exits such schemes, pension legislation may require the group to fund the group's share of the total amount of net liabilities with a one-off cash payment (a section 75 debt). Contingent liabilities related to the Retirement Benefit Schemes are disclosed in Note 38.

There is currently a specific National Minimum Wage enquiry being undertaken by the government in relation to two individuals in one Division. In respect of this enquiry the directors believe their risk to be immaterial. Based on the outcome of this enquiry, there is an uncertainty as to whether further enquiries could be initiated over a wider population across the Group. At this stage, due to the nature and complexity of assessing compliance, it is not possible to estimate the potential economic exposure. In common with other UK businesses with a large number of employees operating near the minimum wage, the Group is at risk of potential deficiency in respect of current and past employees. As part of a wider HR transformation project, the Directors are reviewing the end to end processes and systems. In the event that deficiency is found the scope of the deficiency will be defined.

136.	107BOperating lease arrangements

The group as lessee

	2017 £m	2016 £m
Minimum lease payments under operating leases recognised in income for the year	32.1	27.4

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

	2017 £m	2016 £m
Within one year	24.7	19.7
In the second to fifth years inclusive	30.6	30.5
After five years	7.6	5.4
	62.9	55.6

Operating lease payments represent rentals payable by the group for certain of its office properties and hire of vehicles and other equipment. These leases have average durations ranging from three to ten years. No arrangements have been entered into for contingent rental payments.

137.	109BShare-based payments

The Company has six equity-settled share schemes. The group also awards performance-related bonuses for Executive Directors which are deferred in shares and are accounted for as a share-based payment charge.

Discretionary share plans:

The Mitie Group plc Long Term Incentive Plan (LTIP)

The LTIP was introduced in 2007. The awards of shares or rights to acquire shares (the awards) are offered to a small number of key senior management. Where offered as options the exercise price is £nil. The vesting period is three years, although for awards granted in 2015 and subsequently some are subject to a holding period of up to a further two years. If the awards remain unexercised after a period of twelve months from the date of vesting the awards expire. The awards may be forfeited if the employee leaves the group. Before the awards can be exercised, performance conditions must be satisfied which are based on movements in a range of market and non-market measures over a three year period.

The Mitie Group plc 2001 Executive share option scheme (ESO)

The Executive share option scheme exercise price is equal to the average market value of the shares over the five day period immediately preceding the date of grant. The vesting period is three years. If the options remain unexercised after a period of ten years from the date of grant the options expire. Options may be forfeited if the employee leaves the group.

The Mitie Group plc 2011 Executive share option scheme (ESO)

The Executive share option scheme exercise price is equal to the average market value of the shares on the business day preceding grant or, if the Remuneration Committee decides, the average market value of shares over a number of preceding business days (not to exceed 20). The vesting period is three years. If the options remain unexercised after a period of ten years from the date of grant the options expire. Options may be forfeited if the employee leaves the group. Before options can be exercised, a performance condition must be satisfied; the performance condition is linked to the percentage growth in earnings per share over a three year period.

The Conditional share plan (CSP)

The CSP was introduced in 2014. The awards of shares or the rights to acquire shares (the award) are offered to a small number of key senior management. Where offered as options the exercise price is £nil. The vesting period is determined at the discretion of the Remuneration Committee and is generally two or three years. If the awards remain unexercised after a period of ten years from the date of grant the awards expire. The awards may be forfeited if the employee leaves the group.

Non-discretionary share plans:

The Mitie Group plc 2011 SAYE scheme

The SAYE scheme is open to eligible UK resident employees. The exercise price is not less than 80% of the market value of the shares determined using either: the share price preceding the date on which invitations to participate in the scheme are issued, or an average share price over five days preceding the invitation date. The vesting period is three years. If the options remain unexercised after a period of six months from the date of vesting, the options expire. Options may be forfeited if the employee leaves the group.

The Share Incentive Plan (SIP)

The SIP was introduced in 2011 and is a open to all eligible UK resident employees. Under the scheme, eligible employees are invited to invest in partnership shares which are purchased in the market on their behalf and held in a separate UK trust. One Matching Share is awarded for every ten partnership shares purchased and has a holding period of three years. Matching Shares are funded by way of market purchases.

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

	2017		2016
	Number of share options (million)	Weighted average exercise price (p)	Number of share options (million)	Weighted average exercise price (p)
Outstanding at 1 April	21.4	162	22.1	157
Granted during the year	7.5	87	8.1	170
Forfeited during the year	(5.4)	178	(4.6)	130
Exercised during the year	(2.6)	98	(4.2)	192
Outstanding at 31 March	20.9	141	21.4	162

Exercisable at the end of the year	3.5	213	2.2	216

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

	2017 £m	2016 £m
Discretionary share plans	4.8	4.0
Non-discretionary share plans	1.4	1.2
	6.2	5.2

The movement on the share-based payment reserve, which is part of other reserves, comprises the charge to the income statement for the year of £6.2m (2017: £5.2m) net of the cumulative charge to the income statement of £6.2m (2017: £3.0m) in respect of schemes that have vested in the year, which is released to retained earnings.

The share based payment entry in own share reserve of £6.8m (2016: £5.3m) reflects the use of Treasury shares and shares held by the Employee Benefit Trust in settlement of exercised share options. The £2.4m (2016: £0.3m) in retained earnings includes £6.2m relating to vesting schemes described above net of the cost of shares used to settle options and dividend equivalents.

The weighted average share price at the date of exercise for share options exercised during the year was 234p (2016: 313p). The options outstanding at 31 March 2017 had exercise prices (other than nil in the case of the LTIP, the CSP and the matching shares under the SIP) ranging from 201p - 319p (2016: 191p - 319p) and a weighted average remaining contractual life of 4.0 years (2016: 3.8 years). In the year ended 31 March 2017, options were granted in June, July, December, January and March in respect of the SAYE, LTIP, CSP and deferred bonus schemes. The aggregate of the estimated fair values of the options granted on those dates was £11.1m (2016: £6.9m).

The fair value of options is measured by use of the Black-Scholes and Monte Carlo models.

The inputs into the Black-Scholes model are as follows:

	2017	2016
Share price (p)	276 - 318	251 - 318
Exercise price (p)	0 - 319	0 - 319
Expected volatility (%)	23 - 30	25 - 30
Expected life (years)	3 - 4	3 - 5
Risk-free rate (%)	0.13 - 1.1	0.13 - 1.1
Expected dividends (%)	3.5 - 4.7	3.5 - 4.1

The inputs into the Monte Carlo model are as follows:

	2017	2016
Share price (p)	247 - 319	251 - 319
Average correlation with TSR benchmark (%)	26 - 35	26 - 32
Expected volatility (%)	18 - 23	18 - 24
Expected life (years)	3	3
Risk-free rate (%)	0.16 - 1.29	0.64 - 1.29

Expected volatility was based upon the historical volatility over the expected life of the schemes. The expected life is based upon historical data and has been adjusted based on management's best estimates for the effects of non-transferability, exercise restrictions and behavioural considerations.

38.	113BRetirement benefit schemes

The group has a number of pension arrangements for employees:

a) Defined contribution schemes for the majority of its employees; and

b) Defined benefit schemes which include a group scheme and other, smaller schemes.

The group operates a number of defined contribution pension schemes for qualifying employees. The group has a defined benefit pension scheme called the Mitie Group plc Pension Scheme (Group scheme) where Mitie Group plc is the principal employer. The group participates in a number of other defined benefit schemes (Other schemes) in respect of certain employees who joined the group under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

Defined contribution schemes

A defined contribution scheme is a pension scheme under which the group pays contributions to an independently administered fund - such contributions are based upon a fixed percentage of employees' pay. The group has no legal or constructive obligations to pay further contributions to the fund once these contributions have been paid. Members' benefits are determined by the amount of contributions paid, together with investment returns earned on the contributions arising from the performance of each individual's chosen investments and the type of pension the member chooses to take at retirement. As a result, actuarial risk (that pension will be lower than expected) and investment risk (that the assets invested in do not perform in line with expectations) are borne by the employee.

The group's contributions are recognised as employee benefit expense when they are due.

The group operates three separate schemes: a stakeholder defined contribution plan, which is closed to new members; a self-invested personal pension plan, which is closed to new members; and a group personal pension (GPP) plan. Employer contributions are payable to each on a matched basis requiring employee contributions to be paid. Employees have the option to pay their share via a salary sacrifice arrangement. The scheme used to satisfy auto-enrolment compliance is a master trust, The People's Pension.

During the year, the group made a total contribution to the defined contribution schemes of £13.7m (2016: £13.3m) and contributions to the auto-enrolment scheme of £4.3m (2016: £4.1m), which are included in the income statement charge. The group expects to make contributions of a similar amount in the coming year.

Defined benefit schemes

Group scheme

The Group scheme provides benefits to members in the form of a guaranteed level of pension payable for life. The level of benefits provided depends on members' length of service and their final pensionable pay.

The Group scheme closed to new members in 2006, with new employees able to join one of the defined contribution schemes. Pensions in payment are generally increased in line with RPI inflation, subject to certain caps and floors. Benefits are payable on death and other events such as withdrawal from active service.

The Group scheme is operated under the UK regulatory framework. Benefits are paid to members from the trust-administered fund, where the Trustee is responsible for ensuring that the scheme is sufficiently funded to meet current and future benefit payments. Plan assets are held in trust and are governed by pension legislation. If investment experience is worse than expected or the actuarial assessment of the scheme's liabilities increases, the group's financial obligations to the scheme rise.

The nature of the relationship between the group and the Trustee is also governed by regulations and practice. The Trustee must agree a funding plan with the sponsoring company such that any funding shortfall is expected to be met by additional contributions and investment outperformance. In order to assess the level of contributions required, triennial valuations are carried out with the scheme's obligations measured using prudent assumptions (which are determined by the Trustee with advice from the scheme actuary). The most recent triennial valuation was carried out as at 31 March 2014.

The scheme Trustee's other duties include managing the investment of the scheme's assets, administration of plan benefits and exercising of discretionary powers. The group works closely with the Trustee to manage the scheme.

Other defined benefit schemes

Grouped together under Other schemes are a number of schemes to which the group makes contributions under Admitted Body status to clients' (generally local government or government entities) defined benefit schemes in respect of certain employees who transferred to Mitie under TUPE. The valuations of the Other schemes are updated by an actuary at each balance sheet date.

For the Admitted Body schemes, which are largely sections of the Local Government Pension Scheme, the group will only participate for a finite period up to the end of the relevant contract. The group is required to pay regular contributions as decided by the relevant scheme actuaries and detailed in each scheme's Contributions Certificate, which are calculated every three years as part of a triennial valuation. In a number of cases contributions payable by the employer are capped and any excess is recovered from the entity that the employees transferred from. In addition, in certain cases, at the end of the contract the group will be required to pay any deficit (as determined by the scheme actuary) that is assessed for its notional section of the scheme.

Further information in respect of the Group scheme and Other schemes

The table below sets out the details of the latest funding valuation of the Group scheme as at 31 March 2014.

The group made a total contribution to the Group scheme of £2.0m during the year (2016: £2.5m). The group expects to make contributions of around £2.0m to the Group scheme in the coming year. Employees' contribution to the cost of the scheme (9.1% of pensionable salaries) is generally paid through a salary sacrifice arrangement.

The group made contributions to the Other schemes of £0.3m in the year (2016: £0.4m). The group expects to make contributions of around £0.3m to the Other schemes in the coming year.

Details of latest funding valuation

	Group scheme
Date of last formal funding valuation	31 March 2014
Assets at valuation date	£143.6 million
Funding liabilities at valuation date	£149.6 million
Deficit at valuation date	£6.0 million
Contribution rate agreed to meet the cost of benefits accruing, including related expenses	23.0% of pensionable salary
Employer contribution rate (including expenses)	13.9% of pensionable salary
Employee contribution rate	9.1% of pensionable salary

To eliminate the funding deficit the Trustee and the group have agreed that additional contributions (i.e. over and above those required to cover benefits being accrued) will be paid into the scheme of £11.1m by 31 March 2024 (or if less, the deficit at that time). The group has provided security for this liability by a UK clearing bank letter of credit building up to that value to 2024.

Under this recovery plan, if the assumptions made are borne out in practice, the deficit would be eliminated by 31 March 2024.

Group scheme details

The following table sets out details of the membership of the Group scheme:

Scheme details at last valuation date

	Group scheme
Active members - by number	349
Active members - by proportion of funding liability	34%
Total pensionable salary roll pa	£16.9m
Deferred members - by number	1,195
Deferred members - by proportion of funding liability	47%
Total deferred pensions pa (at date of leaving scheme)	£3.6m
Pensioner members - by number	515
Pensioner members - by proportion of funding liability	19%
Total pensions in payment pa	£1.9m

Accounting assumptions

The assumptions used in calculating the accounting costs and obligations of the group's defined benefit pension schemes, as detailed below, are set after consultation with independent, professionally qualified actuaries.

The discount rate used to determine the present value of the obligations is set by reference to market yields on high quality corporate bonds. The assumptions for price inflation are set by reference to the difference between yields on longer-term conventional government bonds and index-linked bonds. The assumption for increases in pensionable pay takes into account expected salary inflation, the cap at CPI, and how often the cap is likely to be exceeded.

The assumptions for life expectancy have been set with reference to the actuarial tables used in the latest funding valuations, with a lower 'best-estimate' allowance for future improvements to mortality.

Principal accounting assumptions at balance sheet dates

	Group scheme		Other schemes
	2017 %	2016 %	2017 %	2016 %
Key assumptions used for IAS 19 valuation:
Discount rate	2.65	3.60	2.65	3.60
Expected rate of pensionable pay increases	2.00	1.70	3.40	3.10
Retail price inflation	3.40	3.10	3.40	3.10
Consumer price inflation	2.40	2.10	2.40	2.10
Future pension increases	3.40	3.10	3.40	3.10

	Group scheme
	2017 Years	2016 Years
Post retirement life expectancy:
Current pensioners at 65 - male	88.0	88.0
Current pensioners at 65 - female	90.0	89.0
Future pensioners at 65 - male	89.0	89.0
Future pensioners at 65 - female	91.0	91.0

Life expectancy for the other schemes is that used by the relevant scheme actuary.

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

Sensitivity of defined benefit obligations to key assumptions

	Impact on defined benefit obligations
	Change in assumption	Increase/(decrease) in obligations %	Increase/(decrease) in obligations £m
Increase in discount rate	0.1%	(2.1)%	(5.5)
Increase in RPI inflation*	0.1%	1.6%	4.2
Increase in CPI inflation (excluding pay)	0.1%	0.5%	1.3
Increase in salary growth	0.1%	0.4%	1.1
Increase in life expectancy	1 year	4.0%	10.5

* Including other inflation-linked assumptions (CPI inflation, pension increases, salary growth)

The sensitivity information shown above has been prepared using the same method as adopted when adjusting the results of the latest funding valuation to the balance sheet date.

Some of the above changes in assumptions may have an impact on the value of the scheme's investment holdings.
For example, the Group scheme holds a proportion of its assets in UK corporate bonds. A fall in the discount rate as a result of lower UK corporate bond yields would lead to an increase in the value of these assets, thus mitigating the increase in the defined benefit obligation to some extent.

The duration, or average term to payment for the benefits due, weighted by liability, is around 22 years for the Group scheme.

Amounts recognised in financial statements

The table below outlines where the group's post-employment amounts are included in the financial statements.

	2017			2016
	Group scheme £m	Other schemes £m	Total £m	Group scheme £m	Other schemes £m	Total £m
Current service cost	(3.2)	(0.3)	(3.5)	(3.6)	(0.3)	(3.9)
Total administration expense	(0.8)	-	(0.8)	(0.5)	-	(0.5)
Amounts recognised in operating profit	(4.0)	(0.3)	(4.3)	(4.1)	(0.3)	(4.4)
Net interest cost	(1.3)	-	(1.3)	(1.2)	-	(1.2)
Amounts recognised in profit before tax	(5.3)	(0.3)	(5.6)	(5.3)	(0.3)	(5.6)

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

	2017			2016
	Group scheme £m	Other schemes £m	Total £m	Group scheme £m	Other schemes £m	Total £m
Actuarial (losses)/gains due to changes in financial assumptions	(52.5)	(3.7)	(56.2)	6.3	0.4	6.7
Actuarial gains/(losses) due to liability experience	0.8	-	0.8	3.1	-	3.1
Return on scheme assets, excluding interest income	18.7	1.3	20.0	(6.2)	(0.6)	(6.8)
	(33.0)	(2.4)	(35.4)	3.2	(0.2)	3.0

The amounts included in the balance sheet arising from the group's obligations in respect of its defined benefit retirement benefit schemes are as follows:

	2017			2016
	Group scheme £m	Other schemes £m	Total £m	Group scheme £m	Other schemes £m	Total £m
Fair value of scheme assets	177.8	11.3	189.1	156.9	9.5	166.4
Present value of defined benefit obligations	(248.5)	(14.8)	(263.3)	(191.3)	(10.6)	(201.9)
Net pension liability	(70.7)	(3.5)	(74.2)	(34.4)	(1.1)	(35.5)

All figures above are shown before deferred tax.

Reconciliation of group balance sheet

Movements in the present value of defined benefit obligations in the year in respect of both the Group and Other schemes were as follows:

	2017			2016
	Group scheme £m	Other schemes £m	Total £m	Group scheme £m	Other schemes £m	Total £m
At 1 April	191.3	10.6	201.9	197.1	10.4	207.5
Current service cost	3.2	0.3	3.5	3.6	0.3	3.9
Interest cost	6.8	0.4	7.2	6.6	0.4	7.0
Contributions from scheme members	0.1	0.1	0.2	0.1	0.1	0.2
Actuarial losses/(gains) on liabilities arising from changes in financial assumptions	52.5	3.7	56.2	(6.3)	(0.4)	(6.7)
Actuarial (gains)/losses on liabilities arising from experience	(0.8)	-	(0.8)	(3.1)	-	(3.1)
Benefits paid	(4.6)	(0.3)	(4.9)	(6.7)	(0.2)	(6.9)
At 31 March	248.5	14.8	263.3	191.3	10.6	201.9

The defined benefit obligation of the Group scheme is analysed by participant status below:

	2017 £m	2016 £m
Active	85.0	62.2
Deferred	103.1	78.4
Pensioners	60.4	50.7
At 31 March	248.5	191.3

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

	2017			2016
	Group scheme £m	Other schemes £m	Total £m	Group scheme £m	Other schemes £m	Total £m
At 1 April	156.9	9.5	166.4	162.2	9.5	171.7
Interest income	5.5	0.4	5.9	5.4	0.3	5.7
Actuarial gains and losses	18.7	1.3	20.0	(6.2)	(0.6)	(6.8)
Contributions from the sponsoring companies	2.0	0.3	2.3	2.5	0.4	2.9
Contributions from scheme members	0.1	0.1	0.2	0.1	0.1	0.2
Expenses paid	(0.8)	-	(0.8)	(0.4)	-	(0.4)
Benefits paid	(4.6)	(0.3)	(4.9)	(6.7)	(0.2)	(6.9)
Contract transfers	-	-	-	-	-	-
At 31 March	177.8	11.3	189.1	156.9	9.5	166.4

The history of experience adjustments is as follows:

	Group scheme
	2017 £m	2016 £m	2015 £m	2014 £m	2013 £m
Fair value of scheme assets	177.8	156.9	162.2	143.8	134.0
Present value of defined benefit obligations	(248.5)	(191.3)	(197.1)	(160.8)	(163.7)
Deficit in the scheme	(70.7)	(34.4)	(34.9)	(17.0)	(29.7)
Experience adjustments on scheme liabilities	0.8	3.1	1.2	0.1	0.1
Percentage of scheme liabilities	(0.3)%	(1.6)%	(0.6)%	(0.1)%	(0.1)%
Experience adjustments on scheme assets	18.7	(6.2)	13.0	3.6	3.9
Percentage of scheme assets	10.5%	(3.2)%	8.0%	2.5%	2.9%

	Other schemes
	2017 £m	2016 £m	2015 £m	2014 £m	2013 £m
Fair value of scheme assets	11.3	9.5	9.5	16.2	7.9
Present value of defined benefit obligations	(14.8)	(10.6)	(10.4)	(18.3)	(8.1)
Deficit in the scheme	(3.5)	(1.1)	(0.9)	(2.1)	(0.2)
Experience adjustments on scheme liabilities	-	-	(0.1)	0.3	0.2
Percentage of scheme liabilities	-	-	0.9%	(1.8)%	(2.8)%
Experience adjustments on scheme assets	1.3	(0.6)	0.8	(0.3)	0.5
Percentage of scheme assets	11.5%	(6.1)%	8.4%	(1.9)%	6.1%

Fair values of the assets held by the schemes were as follows:

	2017			2016
	Group Schemes £m	Other Schemes £m	Total £m	Group Schemes £m	Other Schemes £m	Total £m
Equities	66.4	7.6	74.0	56.9	6.0	62.9
Government bonds	26.8	1.6	28.4	22.3	1.4	23.7
Corporate bonds	21.7	0.8	22.5	19.2	0.7	19.9
Property	16.2	0.8	17.0	17.0	0.8	17.8
Diversified growth fund	46.6	-	46.6	40.2	-	40.2
Cash	0.1	0.5	0.6	1.3	0.6	1.9
Total fair value of assets	177.8	11.3	189.1	156.9	9.5	166.4

The investment portfolios are diversified, investing in a wide range of assets, in order to provide reasonable assurance that no single asset or type of asset could have a materially adverse impact on the total portfolio. To reduce volatility, certain assets are held in a matching portfolio, which largely consists of government and corporate bonds, designed to mirror movements in corresponding liabilities.

Around 73% (2016: 73%) of the assets are held in equities, property and pooled investment vehicles which seek a higher expected level of return over the long term.

£7m (2016: £7m) of the property assets represent freehold property, the rest are quoted property investments.

The sensitivity of the defined benefit obligations for the Group scheme to changes in the principal assumptions is shown in the table below:

Sensitivity of defined benefit obligation to key assumptions is as follows:

	Impact on defined benefit obligation
	Change in assumption	Increase in assumption	Decrease in assumption
Discount rate	0.1%	Decrease by 2.1%	Increase by 2.2%
RPI inflation*	0.1%	Increase by 1.6%	Decrease by 1.6%
CPI inflation (excluding pay)	0.1%	Increase by 0.5%	Decrease by 0.4%
Pay increases	0.1%	Increase by 0.4%	Decrease by 0.4%
Life expectancy	1 year	Increase by 4.0%	-

* Including other inflation-linked assumptions (CPI inflation, pension increases, salary growth)

The sensitivity information shown above has been prepared using the same method as adopted when adjusting the results of the latest funding valuation to the balance sheet date.

The duration, or average term to payment for the benefits due, weighted by liability, is around 22 years for the Group scheme.

Risks and risk management

The Group scheme, in common with the majority of UK plans, has a number of risks. These areas of risk and the ways in which the group has sought to manage them, are set out in the table below.

The risks are considered from both a funding perspective, which drives the cash commitments of the group, and from an accounting perspective, i.e. the extent to which such risks affect the amounts recorded in the group's financial statements:

Risk	Description
Asset volatility	The funding liabilities are calculated using a discount rate set with reference to government bond yields, with allowance for additional return to be generated from the investment portfolio. The defined benefit obligation for accounting is calculated using a discount rate set with reference to corporate bond yields. The Group scheme holds a large proportion of its assets (73%) in equities and other return-seeking assets (principally diversified growth funds (DGFs) and property). The returns on such assets tend to be volatile and are not correlated to government bonds. This means that the funding level has the potential to be volatile in the short term, potentially resulting in short-term cash requirements or alternative security offers, which are acceptable to the Trustee and an increase in the net defined benefit liability recorded on the group's balance sheet.. Equities and DGFs are considered to offer the best returns over the long term with an acceptable level of risk and hence scheme holds a significant proportion of these types of asset. However, the schemes' assets are well-diversified by investing in a range of asset classes, including property, government bonds and corporate bonds. The Group scheme holds 26% of its assets in DGFs which seek to maintain high levels of return whilst achieving lower volatility than direct equity funds. The allocation to return seeking assets is monitored to ensure it remains appropriate given the scheme's long-term objectives. The investment in bonds is discussed further below.
Changes in bond yields	Falling bond yields tend to increase the funding and accounting obligations. However, the investment in corporate and government bonds offers a degree of matching, i.e. the movement in assets arising from changes in bond yields partially matches the movement in the funding or accounting obligations. In this way, the exposure to movements in bond yields is reduced.
Inflation risk	The majority of the scheme's benefit obligations are linked to inflation. Higher inflation will lead to higher liabilities (although caps on the level of inflationary increases are in place to protect the plan against extreme inflation). The majority of the Group scheme's assets are either unaffected by inflation (fixed interest bonds) or loosely correlated with inflation (equities), meaning that an increase in inflation will also increase the deficit.
Life expectancy	The majority of the schemes' obligations are to provide a pension for the life of the member, so increases in life expectancy will result in an increase in the obligations.

Areas of risk management

Although investment decisions in the scheme are the responsibility of the Trustee, the group takes an active interest to ensure that pension plan risks are managed efficiently. The group and Trustee have agreed a long-term strategy for reducing investment risk where appropriate.

Guaranteed Minimum Pension ("GMP") is a portion of pension that was accrued by individuals who were contracted out of the State Second Pension prior to 6 April 1997. At present there is an inequality of benefits between male and female members who have GMP. The UK Government intends to implement legislation to equalise benefits, which could result in an increase in the value of GMP for males. This would increase the defined benefit obligations. At this stage, it is not possible to quantify the impact of this change, and therefore no provision has been made.

Appendix - Alternative Performance Measures

The group presents various APMs as the Directors believe that these are useful for users of the financial statements in helping to provide a balanced view of, and relevant information on, the group's financial performance, position and cash flows. These APMs are mainly measures which disclose the Adjusted performance of the group excluding specific items which are regarded as non-recurring. The group separately reports acquisition costs, the amortisation of acquisition related intangible assets, exceptional items and other specific items in the income statement which, in the Directors' judgement, need to be disclosed separately (see notes 5, 6 and 7) by virtue of their nature, size and incidence in order for users of the financial statements to obtain a proper understanding of the financial information and the underlying performance of the business.

APMs presented	2017 £m	2016 Restated £m
Revenue
Adjusted revenue	2,140.0	2,133.4
One offs:
Adjustment to accrued income on long-term complex contracts	(20.4)	6.4
Accrued Income, debtors, prepayments included in trade & other receivables	(4.5)	8.3
Effects of foreign currency	11.3	-
Other one off items	-	(1.2)

Before Other Items	2,126.3	2,146.9
Other Items	-
Total revenue as reported	2,126.3	2,146..9

Operating Profit
Adjusted Operating Profit	82.0	95.2
Impairment and amortisation of intangible assets (note 15)	(10.5)	-
Adjustment to accrued income on long-term complex contracts	(20.4)	6.4
Accrued Income, debtors, prepayments included in trade & other receivables	(36.4)	0.1
Impairment of mobilisation asset	(5.7)	-
Other provisions & Accruals	(4.6)	7.6
Other one off items	(10.7)	4.7

Before Other Items	(6.3)	113.9
Other Items	(36.6)	(6.3)
Total operating profit as reported	(42.9)	107.6

The total adjustments presented above impact business segments as follows;

Adjustments to Revenue	2017 £m	2016 Restated £m
Cleaning and Environmental Services	3.6	(1.7)
Security	-	-
Catering	(1.6)	-
Engineering Services	11.7	(11.8)
Professional Services & Connected Workspace	-	-
Public Services	-	-
Total Adjustments	13.7	(13.5)

Adjustments to Operating Profit	2017 £m	2016 Restated £m
Cleaning and Environmental Services	14.4	(1.9)
Security	3.8	(1.0)
Catering	0.7	-
Engineering Services	37.5	(11.6)
Professional Services & Connected Workspace	2.5	-
Public Services	17.4	-
Corporate Centre	12.0	(4.2)
Total Adjustments	88.3	(18.7)

This information is provided by RNS

The company news service from the London Stock Exchange

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Final Results

Discontinued operations

Accounting standards that are newly effective in the current year

Accounting standards that are not yet mandatory and have not been applied by the group

Basis of consolidation

Statutory and non-statutory measures of performance

Foreign currency

Revenue

Revenue recognition: repeat service-based contracts (single and bundled contracts)

Revenue recognition: long-term complex contracts

Revenue recognition: other

Borrowing costs

Intangible assets

Inventories

Derivative financial instruments and hedge accounting

Leasing

Business combinations

Share-based payments

Impairment of Healthcare goodwill

Intangible asset write off

Under-accrual of costs

Overstatement of trade receivables and accrued income

Consolidated income statement for the year ended 31 March 2016

Revenue recognition

Profit before other items

Measurement and impairment of goodwill and other intangible assets

Useful economic life of other intangible assets

Provisions, contingent liabilities and onerous contracts

Measurement of defined benefit pension obligations

Impairment of goodwill

Healthcare disposal

Restructure costs

From continuing operations:

From continuing and discontinued operations:

Cost

Accumulated impairment losses

Carrying amount

Impairment of healthcare goodwill

Goodwill impairment testing

Key assumptions

Growth rates and terminal values

Discount rates

Sensitivity analysis

Impairment testing for new business segment structure

Review of the carrying value of goodwill in the Property Management CGU

Key assumptions

Private placement notes

Interest rate risk

Interest rate sensitivity

Foreign currency risk

Hedging activities

Cash flow hedges

Hedge of net investment in foreign operations

Derivative financial instruments

Financial instruments fair value disclosure

Merger reserve

Own shares reserve

Other reserves

Hedging and translation reserve

Prior year acquisitions - purchase of Tascor Medical Services Limited

The Mitie Group plc Long Term Incentive Plan (LTIP)

The Mitie Group plc 2001 Executive share option scheme (ESO)

The Mitie Group plc 2011 Executive share option scheme (ESO)

The Conditional share plan (CSP)

The Mitie Group plc 2011 SAYE scheme

The Share Incentive Plan (SIP)

Defined contribution schemes

Group scheme

Other defined benefit schemes

Further information in respect of the Group scheme and Other schemes

Principal accounting assumptions at balance sheet dates

Appendix - Alternative Performance Measures

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