TIDMMTO
RNS Number : 7540P
MITIE Group PLC
10 June 2015
10 June 2015
Mitie Group plc
Mitie Group plc (the "Company") - Annual Financial Report
Following the release on 18 May 2015 of the Company's
preliminary results for the year ended 31 March 2015 (the
'Preliminary Announcement'), the Company announces that it has
published its Annual Report and Accounts for 2015 (the 'Annual
Report and Accounts').
The Company's 2015 Annual General Meeting will be held at
Rothschild, New Court, St Swithin's Lane, London EC4N 8AL on 13
July 2015 at 2.30pm.
Copies of the Annual Report and Accounts and the Notice of the
Annual General Meeting for 2015 (the 'AGM Notice') are available to
view on the Company's website: www.mitie.com. Hard copies have been
mailed to those shareholders who have elected to continue to
receive paper communications.
Copies of the Annual Report and Accounts, the AGM Notice, and
the form of proxy in relation to the AGM are being submitted to the
National Storage Mechanism and will shortly be available for
inspection at: www.hemscott.com/nsm.do.
The Preliminary Announcement included a set of financial
statements and a review of the development and performance of the
Company. In compliance with Disclosure and Transparency Rule (DTR)
6.3.5 the Company has extracted and set out below certain
information from its Annual Report and Accounts 2015. This
information is included herein solely for the purpose of complying
with DTR 6.3.5 and the requirements it imposes on the Company as to
how to make public its annual financial reports. It should be read
in conjunction with the Company's Preliminary Announcement issued
on 18 May 2015. Together these constitute the material required by
DTR 6.3.5 to be communicated to the media in unedited full text
through a Regulatory Information Service. This material is not a
substitute for reading the full Annual Report and Accounts. Page
numbers and cross-references in the extracted information below
refer to page numbers and cross-references in the Annual Report and
Accounts.
The information contained in this announcement and in the
Preliminary Announcement does not constitute the Group's statutory
accounts but is derived from those accounts. The statutory accounts
for the year ended 31 March 2015 have been approved by the Board
and will be delivered to the Registrar of Companies following the
Company's Annual General Meeting.
Principal Risks and Uncertainties
Identified principal risks to the achievement of our strategic
business objectives are outlined in the section below, together
with their potential impact and the mitigation measures in place.
The Board believe these risks to be the most significant with the
potential to impact our strategy, our financial and operational
performance and, ultimately, our reputation. There may be other
risks which are currently unknown to the group or which may become
material in the future. Our key risk categories continue to be:
strategic, financial, operational, and regulatory.
Strategic risks
Risk Mitigation
Contract bidding, mobilisation Central to achieving our Our bid, mobilisation
and management strategy is the successful and contract management
delivery of our contract processes operate under
portfolio, particularly strict delegated authorities
our large scale, complex and are subject to rigorous
integrated FM contracts. executive management
Our strong financial position oversight and approval
relies on our ability for the large and complex
to successfully bid, mobilise, integrated FM contracts.
operate and manage such These contracts are
contracts. supported by teams of
We see an increasingly experienced bid, mobilisation
complex service offering and operational delivery
as a business differentiator specialists to mitigate
to our clients, supported the risk of failure
by more sophisticated at any stage. On-going
and contract assurance occurs
complex technological together with regular
solutions. When compared client dialogue to ensure
to our more traditional service delivery remains
business activities, these in line with the client's
solutions necessarily expectations. Through
carry increased risk around these activities we
bidding, design, delivery aim to develop long
and successful implementation. term client relationships,
Winning new and retaining supported by a strengthened
existing contracts of framework to retain
this nature continues our existing client
to be critical for the base.
future success of our
business. Investment and support
for the development
and deployment of technical
solutions is governed
by our Board to provide
assurance on their on-going
performance.
Company performance The UK market remains We continue to be focused
and resourcing requirements our principal macro-economic on the delivery of sustainable,
impacted by change exposure, with only very profitable
to the market and economic limited exposure to the growth and during the
conditions wider global economy. year we completed our
We anticipate a continued exit strategy from more
improvement in the pipeline cyclical, complex, margin-diluting
of new opportunities and markets and have de-risked
so our business model the business as a result.
needs to adapt and grow We continue to strategically
with any on-going economic target growth areas
upturn. Our ability to with good margins, underpinned
recognise and respond by the right supporting
to variations in the volume, business infrastructure
value and range of services and our financial exposure
required, particularly to rapid changes in
from our private sector the economic environment
clients, may impact the is mitigated through
Group's ability to win the continued development
or retain significant of our long term diverse
business opportunities. contract portfolio.
Resilience is provided Formal control occurs
by our diverse business over entry into new
portfolio during times business areas and is
of economic change, with subject to Board approval.
varying demands on our
resources dependent on
the way in which our client
base responds to the economic
cycle. We are well placed
to adapt to any policy
changes from the Government.
Protecting our reputation Maintaining a strong reputation The basis for effective
is vital to our success reputational management
as a business. A loss is a strong corporate
in market confidence in governance framework
our ability to maintain supported by clear and
current business or undertake demonstrable values
new client opportunities and behaviours, clearly
may be caused by an adverse communicated at all
impact to our reputation levels of our business.
which may, in turn, significantly Our governance and ethical
affect our financial performance business frameworks
and growth prospects; provide a set of linked
this is particularly the policies, procedures,
case in our public sector training programmes
contracts where the need and audits, all centred
for transparency is paramount. on our code of conduct
Significant impact to (One Code), to address
our reputation could be specific issues which,
caused by any incident if realised, may give
involving major harm to rise to reputational
one of our people or our impact. These frameworks
clients/partners, corrupt were further strengthened
practices involving fraud in 2014/15 to ensure
or bribery, inadequate our people are aware
financial control processes of their responsibilities.
or failure to comply with A strong and consistent
regulatory requirements. 'tone from the top'
Impacts of this type would is provided by our senior
potentially result in management to ensure
financial penalties, losses our values and expected
of key contracts, an inability behaviours are clear
to win new business and and understood by everyone.
challenges in retaining We have also strengthened
key staff and recruiting our public relations
new staff. and external communications
programme to ensure
a fair and balanced
view of our services
is provided to our clients
and other interested
parties. As our business
continues
to grow and develop
into new sectors we
will remain strongly
focused on protecting
the strength of our
reputation through effective
governance, leadership,
the continued enhancement
of our ethical business
framework, and through
maintaining open and
transparent relationships
with all stakeholders.
Financial risks Risk Mitigation
Financial strength Our financial strength We have mature financial
and access to appropriately makes us an attractive governance arrangements
scaled and diverse partner to our clients in place, providing
sources of funding and stakeholders (including oversight and monitoring
our funding partners). of our financial performance
Our ability to grow if including daily monitoring
our financial performance of bank balances, cash
deteriorates, by weakening flow reporting on a
profitability and limiting daily and weekly basis
our ability to access and regular financial
diverse sources of funding performance and balance
on competitive terms, sheet reviews, which
causing an increase in include detailed working
the cost of borrowing capital reviews. We
or cash flow issues which have strong banking,
could, in turn, further debt finance and equity
affect our financial performance. relationships, a diverse
As a people business staff committed long term
costs remain our most funding portfolio and
significant area of expenditure. appropriate levels of
Our ability to pay our gearing for our business.
people and suppliers regularly
and at specific times
relies upon funding being
continually available
and, in particular, our
ability to manage our
cash flow and working
capital exposures.
Reliance on material We depend on a number We are limited on the
counterparties of significant counterparties dependency of any one
such as insurers, banks, counterparty and hence
clients and suppliers the impact of any potential
to maintain our business failure, through strategic
activities. The failure development of a diverse
of a key business partner, and robust counterparty
supplier, subcontractor, base. The
financer or other provider Board undertakes a formal
could materially affect review of material counterparty
the operational and financial risk at divisional and
effectiveness of our business business level.
and our ability to trade.
Ensuring on-going relationships
with our material counterparties
will underpin the Group's
ability to meet its strategic
objectives. Lloyds Banking
Group is a material counterparty
to the Group, providing
both banking facilities
and being our largest
client, accounting for
7% of the Group's revenue.
Operational risks Risk Mitigation
Significant health, Due to our diverse operational The Board, through effective
safety or environmental portfolio, the potential governance, oversight
incident to cause significant harm and management standards
to our employees, our maintains its commitment
business partners, members to the highest standards
of the public, or to damage of quality, health,
the environment will always safety and environmental
exist. We have an unwavering (QHSE) performance,
commitment to safeguarding which remains the first
our people and protecting item on every Board
the environment wherever agenda.
we operate. Failure to Our performance is achieved
maintain our high standards through two cornerstones,
could result in a significant QHSE management systems
incident affecting an and employee engagement.
employee, their family, Our well established
friends or colleagues management systems are
or lead to regulatory certified to the ISO
action, financial impact 9001, 14001 and OHSAS
or damage to our reputation. 18001 standards, and
our Work Safe Home Safe!
programme is central
to achieving employee
engagement, having been
revised and strengthened
during the year. To
support our management
system and engagement
programme we focus on
developing training
programmes to ensure
every employee, at
every level of the business,
has the core competencies
required
to do their work safely.
We have a network of
dedicated and experienced
QHSE professionals who
strive to deliver continual
improvement in support
of the operational delivery
of our services.
System, process or Sophisticated, interdependent The basis of our governance
control failure may business systems underpin framework is provided
impact our operational our operations. Such systems by our core policies,
performance form the basis for our which are subject to
contract management and continual review and
business support activities optimisation to manage
and we foresee increasing our growing and diversifying
future reliance on such business requirements
capability. These systems, in line with sound governance
in conjunction with our practice. Our internal
governance framework of control effectiveness
policies and procedures, continues to be reviewed
will help to drive innovation formally, supported
in customer requirements, by a programme of internal
improve our operational audits and self-certification
efficiency and provide on the operation of
the foundation of our key controls and procedures.
business support functions. Formal testing of our
As such they remain critical business critical systems
for the control and success occurs to ensure
of the business and the effective recovery following
achievement of our strategic a potential disaster
aims. scenario and we
Operational failure may have in place an assurance
result in a significant programme to test the
impact on operational adequacy of our mitigation
delivery, contract management activity. IT related
and client expectations governance oversight
due to the business critical is provided by the IT
nature of these systems. steering group (compromising
System failure could also senior management) who
result in a breakdown continue to monitor
in the controls around the effectiveness of
high volume transactions the information security
and compliance areas such management system, which
as vetting and employment is aligned with recognised
legislation. Financial international standards.
or other misstatements,
fines through statutory
non-compliance issues
and loss of client and/or
regulator confidence could
occur as a result.
Attracting and retaining Attracting and retaining To ensure a pipeline
skilled people the best skilled people of opportunities exist
at all levels of the business for staff at every level
is critical. This is particularly of the business our
the case in ensuring we career development and
have access to a diverse talent management programmes
range of views and experience are a key focus for
and in attracting specific our management teams.
expertise at both managerial Additionally, to ensure
and operational levels a talent pool is identified,
where the market may be developed and ready
highly competitive. Failure for succession if needed,
to attract new talent, succession plans exist
or to develop and retain for key management.
our existing employees, We are also aiming to
could impact our ability develop the next generation
to achieve our strategic of leaders via our graduate
growth objectives. As programme. Our focus
we continue to grow and on training and competency
diversify into new areas, at all levels of the
this risk will continue business continues to
to be a focus for the ensure that we develop
Board. our people and enable
them to successfully
manage the changing
profile of our business.
Regulatory risks Risk Mitigation
Non-compliance with As a major employer, further A key element of our
the developing regulatory development of the regulatory management system is
framework and legal framework in the legal compliance
areas where we work may framework, developed
have a material financial to ensure proactive
and reputational impact identification of legal
on the business. As such and regulatory requirements
we continue to provide in our diverse range
a strong focus on ensuring, of business areas. Our
as a minimum requirement, operational teams remain
legal and regulatory compliance primarily responsible
in all of our business for ensuring legal compliance,
areas, in particular where supported by experienced
we enter into new areas. teams of functional
Failure to achieve this experts and backed up
could lead to enforcement by our assurance teams.
action, fines, adverse Where required we obtain
publicity and therefore specialist technical
potential damage to our advice to support our
reputation, all of which in-house teams. We continue
would threaten the ability to proactively monitor
to achieve our strategic the developing regulatory
objectives. framework to plan and
budget for on-going
compliance.
Directors' Responsibility Statement
The following statement is extracted from page 85 of the Annual
Report and Accounts and is repeated here for the purposes of
Disclosure and Transparency Rule 6.3.5 to comply with Disclosure
and Transparency Rule 6.3. This statement relates solely to the
Annual Report and Accounts and is not connected to the extracted
information set out in this announcement or the Preliminary
Announcement:
"The Directors are responsible for preparing the Annual Report,
the Directors' remuneration report and the financial statements in
accordance with applicable law and regulations. The Directors are
required to prepare the financial statements for the group in
accordance with International Financial Reporting Standards as
adopted by the EU (IFRS) and Article 4 of the International
Accounting Standard (IAS) Regulation and have chosen to prepare
Company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (UK GAAP).
In the case of IFRS accounts, IAS 1 requires that financial
statements present fairly for each financial year the Company's
financial position, financial performance and cash flows. This
requires the faithful representation of the effects of
transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities,
income and expenses set out in the International Accounting
Standards Board's 'Framework for the Preparation and Presentation
of Financial Statements'. In virtually all circumstances, a fair
presentation will be achieved by compliance with IFRS where
applicable. The Directors are also required to:
- properly select and apply accounting policies;
- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
- provide additional disclosures when compliance with the
specific IFRS requirements is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and,
- make an assessment of the Company's ability to continue as a going concern.
In the parent company accounts, the Directors have elected to
prepare the financial statements in accordance with UK GAAP. The
Directors are required to prepare financial statements for each
financial year which give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for
that period. In preparing these financial statements, the Directors
are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
- prepare financial statements on the going concern basis unless
it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for keeping adequate accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company, safeguarding of the assets, the
reasonable steps taken for the prevention and detection of fraud
and other irregularities, and the preparation of a Directors'
remuneration report which complies with the relevant requirements
of the Companies Acts, Listing Rules and Disclosure and
Transparency Rules (DTRs).
The Directors are also responsible for the maintenance and
integrity of the Company website. Financial statements published by
the Company on this website are prepared in accordance with UK
legislation which may differ from legislation in other
jurisdictions.
To the best of each Director's knowledge:
- the financial statements, prepared in accordance with the
applicable set of accounting standards and contained within this
Annual Report and Accounts, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
group and the undertakings included in the consolidation taken as a
whole;
- the strategic report includes a fair review of the development
and performance of the business and the position of the Company and
the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face; and
- the Annual Report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's performance,
business model and strategy."
Related party transactions
The following extract from the Annual Report and Accounts refers
to related party transactions as set out in Note 37:
"Transactions between the Company and its subsidiaries, which
are related parties, have been eliminated on consolidation and are
not disclosed in this Note.
During the year, the group derived GBP0.3m (2014: GBP10.5m) of
revenue from contracts with joint ventures and associated
undertakings. At 31 March 2015 trade and other receivables of
GBPnil (2014: GBP7.5m) were outstanding and loans to joint ventures
and associates of GBP1.1m (2014: GBP14.8m) were included in
Financing assets.
Mitie Group plc has a related party relationship with the Mitie
Foundation, a charitable company, as R McGregor-Smith and S C
Baxter are two of the trustees of the Foundation. During the year,
the group made donations of GBP25,000 (2014: GBP63,000) and gifts
in kind of GBP277,000 (2014: GBP298,000) to the Foundation. At the
end of the year GBP23,000 (2014: GBP17,000) was due to the
Foundation and the Foundation had GBP11,000 (2014: GBP3,000) held
within creditors as an amount accrued to Mitie Group plc.
No material contract or arrangement has been entered into during
the year, nor existed at the end of the year, in which a Director
had a material interest.
The group's key management personnel are the directors and
Non-Executive Directors whose remuneration is disclosed in the
audited section of the Directors' remuneration report. The
share-based payment charge for key management personnel was GBP1.6m
(2014: GBP1.5m)."
-Ends-
For further information, contact:
John Telling
Group Corporate Affairs Director, Mitie Group plc
T: +44 (0)20 3123 8673 E: john.telling@mitie.com
M: 07979 701006
Helen Greenwood
Investor & Public Relations Manager, Mitie Group plc
T: +44 (0)20 3123 8731 E: helen.greenwood@mitie.com
Notes for editors
What is Mitie?
Mitie is a facilities management company.
We work with people who want to perform better - now and in the
future. We help our clients to run more efficient and effective
businesses by looking after their facilities, their energy needs
and the people they're responsible for.
We're all about developing our people to excel every day,
challenge the status quo, and inspire change in the way people live
and work.
Find out more at www.mitie.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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