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MITIE Group PLC Annual Report and Accounts 2012 The strategic outsourcing and energy services company 25 years… never stop looking forward. Over the last 25 years our entrepreneurial spirit and passionate people have been a constant force driving us forward. We’ve certainly adapted and changed over the years, and will continue to do so for years to come. Keeping in-step with To mark the 25th year of MITIE, we asked what our customers need, photographer Ed Robinson to document how far we’ve come and what we stand for today through a series of 25 images… and delivering beyond You can keep up to date with all things MITIE during our milestone year by following us across our social media channels. their expectations is what facebook.com/mitiepeople twitter.com/mitie_group_plc youtube.com/user/MITIEGroupPLC makes us special… #25mitie it’s what makes us MITIE. MITIE Group PLC Annual Report and Accounts 2012 Introduction This year… Overview More on our Business review work with Essex 20 County Council Accounts Independent auditor’s report to the members of MITIE Group PLC 74 Consolidated income statement 75 Consolidated statement of comprehensive income 76 Governance Consolidated balance sheet 77 Consolidated statement of changes in equity 79 Consolidated statement of cash flows 80 Notes to the consolidated financial statements 82 Independent auditor’s report to the members of MITIE Group PLC 121 Accounts Company balance sheet 122 Notes to the Company Overview More on financial statements 123 our work Shareholder information IBC MITIE at a glance 4 with Diageo Chairman’s statement 6 Business review Chief Executive’s strategy overview 8 Key performance indicators 16 Other financial targets 19 New contract summary 25 22 Governance Marketplace overview 28 Directors’ report: Board of Directors 48 Operating review 30 Directors’ report: corporate Sustainability overview 39 governance statement 49 Financial review 42 Directors’ report: statement Factors that could affect our business 46 of Directors’ responsibilities 63 Directors’ remuneration report 64 36 More on our work with NMK Directors’ report The Directors present the Annual Report and Accounts for the year ended 31 March 2012. References to ‘MITIE’, the ‘Group’, the ‘Company’, ‘we’, or ‘our’ are to MITIE Group PLC or to MITIE Group PLC and its subsidiary companies where appropriate. The Directors’ Report that has been prepared, and is published, in accordance with, and in reliance upon, applicable English company law and the liabilities of the Directors in relation to that report are subject to the limitations and restrictions provided by such law. Legal disclaimer The Annual Report and Accounts 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 the date of approval of the Annual Report and Accounts for the year ended 31 March 2012 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. 1 MITIE Group PLC Annual Report and Accounts 2012 MITIE Entrepreneurs We have never lost sight of our entrepreneurial culture At MITIE, entrepreneurialism has always been at the heart of our organisation. MITIE stands for Management Incentive Through Investment Equity. Since we started 25 years ago, we’ve been partnering with entrepreneurs to grow businesses and we’re as passionate about this today as we were when we started. 2 MITIE Group PLC Annual Report and Accounts 2012 The ‘MITIE Model’ is for entrepreneurial In 2011 we launched a £10m fund to management teams who have an idea encourage more entrepreneurs to join for growing a business as a part of MITIE. us. We have spent nearly half of that It’s structured so that the management fund and have plans to launch another team takes an equity stake of up to 49% one soon. We’re looking to start Overview in a business which they grow over a businesses that expand the range of five to ten year period, and is eventually services we offer to our existing clients, acquired by MITIE in full. or that will lead us into new markets. Our range of services is incredibly broad MITIE has supported over 100 start-up and we’re open to all ideas that fit with businesses to grow using the MITIE MITIE’s strategy and have the potential Model, with a 95% success rate. It has to attract a growing client base. shaped our entrepreneurial culture, supported our excellent track record We are always looking to enter rapidly of growth, and provided the basis growing markets that have huge Business review for hundreds of people to develop potential for outsourcers to provide successful careers in outsourcing. new and innovative solutions. Governance 100+ MITIE has supported over 100 start-up businesses Accounts 95% The MITIE model has a 95% success rate Care and Custody After working in the Justice sector for many years, Colin, Paul and Alex started MITIE’s Care and Custody. business three years ago. The business £10m supports a core part of MITIE’s Entrepreneurial fund launched in 2011 justice strategy. Client Services Debra and David started MITIE’s Client Services business five years ago. They now create exceptional, memorable experiences at their clients’ sites across the UK. MITIE Millions eventevent In May, six entrepreneursreneurs pitched for their sharehare ooff our £10m entrepreneurialurial fund. www.mitie.com/entrepreneursentrepreneurs 3 MITIE Group PLC Annual Report and Accounts 2012 Our business Shaping our business to meet the needs of our customers… We specialise in strategic outsourcing and energy services, bringing together the expertise and capabilities of MITIE to help our clients achieve their organisations’ goals and make their property portfolios more efficient. We operate through our four divisions… of services es manage dles ciliti men un nt and re fa ement t a r b geme prog ed anag Mec nd o na rap at y m han a s a Environ hi r rg ces Sp ic e t m ent men cs g ne servi ecia al ra c en em tal te E bile list a n i g ser o te nd g rv um na consulting a vi In l m cts and maint ch e c a ess nd c a je en n e e o cc au es n ro an ic le o s m a d io , p c a c t D te d itin t gn e l t f is s le g a si se ri t l a b N e Bu r c e g a d il v a c ia in W is d ic l r g i e h c e D n n e t e ti g s n n e s l h g a m ic u o g in p C r i C s o t L a e a Technical a h n n e f l e o a r l g b r a o c i n g o n g i t t n g s Facilities facilities e n n n d n e m C i a o m r P S f e a e e l a d n r management management n i C e n t n g e t s e n a e i y r n y n s g p t n £937.3m37.3m £472.8m£472.8 e t a ri e o a y r n u g ti m c s c s c y p s e e d e e s a S e n r c n v r a e v d L i R i c c c e revenueevenue revenuerevenu e o s s n t r o l s irs a g p in e n r -li d ry n d a d n n a t R io u e t g n -o a in t e E r C n id fi w s l e o e e a D e a st s m r b g v e c a u l m l y i s o e P v c v h u m Propertyoperty AssetAsse e e r i e n n l a w n e l g i o t e e s y tr c n i r p n i e a r managementagement managementmanage g y e n m e y t d d n f c r r e n g e d a n e n e v a e i £524.3m24.3m £68.1m£68.1 s a l l n r t e s n g p r u u a l u t e i n o s o t c s o r r e p n a n I t l t f m a u p e t a i e r o d i t e e c i n d i n ffi s u r n t a n e o t c c - E R revenue revenue b a t E n e i fi l t n L e e l r o e e e n n r n o g w i r o d i g r e e y t t - n y e c c t p n t a e m s e a e l n t e e I r c r e a o f r b r r o v c i h g g p t r o i c m n n e n n y a e r i a a e F s i n d o h n c c n c m a s e r o l a i R e c o h t a f m o o a p P r is n M e a r t o r a g i p a n d m t c n i n t b c a i g g n fi fi a r n t g e s n i g u n e y i f n t t c m r a e tr P a e l s u u r h n e e P m a d t b j g n n t i e g n a e g r m c d o n i o o e p t r d v l e i u e r u t l p o y c B r p m e f f m e a e c i r n n n t e t a n o e e a t i u t s e l l l u f s A e c u r e …where there is a growing shift in focus towards Energy Services which currently contribute around 34% of group revenue.