Mitie
Transformation
Facilities
Annual Report
and Accounts 2024
Mitie Group plc Annual Report and Accounts 2024
Facilities Transformation Three-Year Plan, page 24
Strategic report
04 Financial and non-financial highlights
05 A compelling investment case
06 Chairman’s statement
08 Our customers' changing needs
10 Positive macro-trends
12 Our expertise
14 Our customers
16 Our core capabilities
16 Intelligent Engineering Maintenance
18 Intelligent Projects
20 Intelligent Security
22 Intelligent Cleaning & Hygiene
24 Our new Three-Year Plan (FY25 – FY27)
26 Chief Executive’s review
32 Key performance indicators
36 Our business model
38 Stakeholder engagement
42 Section 172 statement
45 Operating review
45 Business Services
46 Technical Services
47 Central Government & Defence
48 Communities
49 Finance review
54 Our environment and social value framework
56 People
61 Environment
63 TCFD
76 Community
77 Responsible supply chain
78 Principal risks and uncertainties
89 Non-financial and sustainability information statement
90 Viability statement
Governance
92 Chairman’s introduction to governance and the Board
93 Board of Directors
96 Board leadership and Company purpose
98 Division of responsibilities
100 Board activities: stakeholder engagement
101 Strategy and the Boardroom
103 Culture at Mitie
107 Board effectiveness and evaluation
110 Nomination Committee report
114 Audit Committee report
123 Environment, Social & Governance (ESG)
Committee report
126 Directors’ remuneration report
149 Directors’ report
152 Statement of Directors’ responsibilities
Financial statements
154 Independent auditor’s report to the members
of Mitie Group plc
161 Consolidated incomestatement
162 Consolidated statement of comprehensive income
163 Consolidated statement of financial position
165 Consolidated statement of changes in equity
166 Consolidated statement of cash flows
168 Notes to the consolidated financial statements
222 Company statement of financial position
223 Company statement of changes in equity
224 Notes to the Company financial statements
228 Appendix – Alternative Performance Measures
232 Shareholder information
Our customers’ changing needs
8
Our new Three-Year Plan
24
Our technology-led solutions
12
Our exceptional colleagues
13
Strategic report Governance Financial statements
03
Mitie Group plc
Annual Report and Accounts 2024
Record year of delivery.
All medium-term targets achieved
Mitie delivered a record performance and further strategic progress in
the year ended 31 March 2024. In this final year of our previous Three-Year
Plan (FY22 – FY24), we have demonstrated a strong track record of
achievement, having met or significantly exceeded all of our medium-term
targets. Our new Three-Year Plan (FY25 – FY27) pivots the business from
traditional Facilities Management to technology-led Facilities Transformation,
with ambitious targets to accelerate growth and enhance shareholder returns.
Revenue, including share
of JVs and associates
£4 , 511m
+11%
FY23: £4,055m
Operating profit before
other items
1,2
£210m
+30%
FY23: £162m
Basic earnings per share
before other items
1
12.3p
+29%
FY23: 9.5p
Dividend per share
4.0p
+38%
FY23: 2.9p
Group revenue
£4,445m
+13%
FY23: £3,945m
Operating profit
2
£166m
+42%
FY23: £117m
Free cash flow
£158m
+£92m
FY23: £66m
Average daily net debt
£161m
+£77m
FY23: £84m
Employee engagement
63%
+6ppt
FY23: 57%
Net Promoter Score
+60
+18pt
FY23: +42
Employee turnover
13%
-6ppt
FY23: 19%
Carbon emissions
3
290,207
-10%
FY23: 322,553
Financial
Non-Financial
Details of our full KPIs on pages 32 to 35
1. Other items are as described in Note 4 to the consolidated financialstatements.
2. Operating profit includes share of profit after tax from joint ventures and associates.
3. Scope 1, 2 and 3 global carbon emissions (tonnes CO
2
e), net of 4,500 carbon credits.
Alternative Performance Measures (APMs)
The Group’s performance measures continue to include some measures which are
not defined or specified under IFRS. A reconciliation of the APMs to the equivalent
IFRS measures is provided in the Appendix – Alternative Performance Measures on
pages 228 to 231.
KPI KPI KPI KPI
KPI KPI
KPIKPI KPI KPI
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Mitie Group plc
Annual Report and Accounts 2024
Total pipeline
£18.6bn
27% growth year-on-year
Customer type
Revenue, including share of
joint ventures and associates
%
Government 53
Non-government 47
Customer type
Revenue, including share of
joint ventures and associates
%
Government 53
Non-government 47
Customer type
Revenue, including share of
joint ventures and associates
%
Government 53
Non-government 47
Total order book £11.4bn
Including share of joint
ventures and associates
£bn
1 year 2.6
1–2 years 2.1
>2 years 6.7
A compelling investment case.
Creating value
We are the leader in our industry, with a loyal and diverse blue-chip
customer base and a core set of capabilities that are differentiated by
our technology and people. Our new Three-Year Plan is expected to
extend our market leadership position. It targets the delivery of high
single-digit revenue growth annually, an operating margin of at least
5% and sustainable free cash flow of c.£150m per annum by FY27.
We will also maintain a return on invested capital (ROIC) of >20%.
Strong track record of delivery
• Met or significantly exceeded all
medium-term targets in previous Plan
• Total Shareholder Return of 80% from
FY22 to FY24 (#10 in FTSE 250)
• Proven track record of winning and
retaining contracts, and improving
contract profitability
• Added value to acquisitions through
demonstratable revenue/cost synergies
• Eliminated off balance sheet financing
and built a robust balance sheet
Technology innovation
• Data-driven ‘intelligent’ solutions
enabled through investment in the
Mitie Digital Platform
• Capabilities being enriched by Artificial
Intelligence/Machine Learning (AI/ML),
for example to deliver predictive
maintenance and risk-based security
resource deployment
• Strategic partnerships with global IT
companies (e.g. Microsoft, Vodafone)
• Industry-leading cyber security
credentials (e.g. 4.1 NIST rating)
Scale and market leadership
• Clear UK market leader with 13%
share (twice that of next competitor)
• Market leadership in each of our
core service lines
• Unique offer of transformational
Projects alongside technology-led
Integrated Facilities Management (IFM)
• Expertise across a wide range of
sectors and in critical environments
• Diversified customer base with inflation
protection on the majority of contracts
ESG leadership
• Recognised as a global Environmental,
Social and Governance (ESG) leader
• Ambitious Net Zero targets validated
by the Science Based Targets initiative
• One of the UK’s largest fleets of
electric vehicles (EVs)
• Industry-leading benefits packages
for all our colleagues
• Top Employer for the sixth consecutive
year, and a record 63% of surveyed
colleagues ‘fully engaged’
Attractive market dynamics
• Operating in the largest and most
dynamic Facilities Management (FM)
market in Europe
• Integrated/bundled contracts the norm
and growing faster than wider market
• Exposure to high growth sectors
(e.g. data centres, defence, healthcare,
life sciences and TMT)
• Capabilities underpinned by positive
macro-trends (e.g. decarbonisation,
modernisation of the built environment
and regulatory changes)
1
4
2
53
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Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Low risk: 10.5 A List Platinum Score: AA
13%
Mitie’s market share
Frost & Sullivan, 2023
Chairman’s statement
A year of significant progress
Dear Mitie Shareholder
This has been another year of significant
progress for your company. Our customers are
at the heart of everything we do, and we have
been on the front foot in responding to their
changing needs as a trusted partner. In October
2023, we set out our new Three-Year Plan
(FY25 – FY27), pivoting from traditional Facilities
Management to technology-driven Facilities
Transformation, with ambitious financial
targets that will continue to drive growth
and shareholder returns.
We see the changing landscape as a world of
opportunity, in which we are well positioned to
benefit. Our competitive advantage lies in the
technology that we have invested in over the
past six years, coupled with our market-leading
position in each of our core service lines and
our transformational Projects work.
This unique approach enables us to work hand
in hand with our customers to transform their
built estates, and enhance the lived experience
for their own colleagues and customers.
As a result, I am delighted to report that our
Net Promoter Scores – what our customers
really think of Mitie – are at record levels.
It goes without saying that none of this would
be possible without the enduring commitment
and hard work of our talented colleagues.
Collectively, we have not only faced into
challenges during the year, given the ongoing
geopolitical and macroeconomic uncertainties,
but also celebrated success, with many
colleagues benefiting significantly from our
Save As You Earn schemes.
I am extremely proud of the resilience your
company has shown. In this final year of our
previous Three-Year Plan (FY22 – FY24), we
have demonstrated a strong track record of
achievement, having met or significantly
exceeded all of our stretching financial targets,
and delivered an 80% Total Shareholder Return
(#10 in FTSE 250) over the three-year period.
The delivery of these targets and significant
value creation for shareholders has been
reflected in the 92.5% vesting of the 2021
Enhanced Delivery Plan.
FY24 revenue and operating profit before other
items reached the record levels of £4,511m
(FY23: £4,055m) and £210m (FY23: £162m),
respectively, resulting in an operating margin of
4.7% (FY23: 4.0%). Earnings per share before
other items increased by 29% to 12.3p.
As we enter our new Facilities Transformation
Three-Year Plan (FY25 – FY27), the Board will
continue to both support and challenge the
executive leadership team to drive growth and
returns, while ensuring that we maximise our
positive contribution to the environment and
the communities we serve.
One Mitie
In visiting a number of our sites across the UK
and Gibraltar, my admiration for our 68,000
colleagues across the business has continued to
grow. Through the collaborative ‘One Mitie’ way
of working that is embedded in our culture, our
people have gone the extra mile to overcome
numerous challenges and deliver outstanding
results. I would like to thank each of them for
their dedication to our success this year.
Attracting, retaining and developing talent is a
top priority. We offer industry-leading benefits
packages to our people, which includes the
provision of free shares to all employees, for the
fourth year running, and we were delighted to
be recognised as a Top Employer for the sixth
consecutive year, and one of the most diverse.
This commitment to our people is reflected in a
record 63% (FY23: 57%) of surveyed employees
‘fully engaged’.
ESG leadership
Sustainability and social value are fundamental
to our business, and I am delighted that we
continue to be recognised for our leadership.
We see the changing landscape
as a world of opportunity in
which we are well positioned to
benefit. I would like to thank our
exceptional Mitie colleagues for
their dedication to our success
this year.
Derek Mapp
Chairman
06
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
We received validation from the Science Based
Targets initiatives (SBTi) in April 2023 for our
commitment to ambitious Net Zero targets,
which will see us become carbon neutral for
our operations by the end of 2025.
In February, we secured a place on the CDP’s
Climate Change A List for exemplary carbon
reporting and environmental management, a
distinction awarded to only 2% of the 21,000
organisations assessed annually. We have also
retained our Platinum status in the Sustainable
Facilities Management Index (SFMI) for the
third consecutive year and, shortly after year
end, we had our Low risk rating reconfirmed
by Sustainalytics.
Stakeholder engagement
The Board has a duty to understand the needs
of all our stakeholders and to act on their
feedback, and one of the many ways we do
so is through an extensive programme of
engagement. For our colleagues – many of
whom work on the frontline – the Board
members undertake a range of listening sessions
to hear their views and ensure the lines of
communication are always open. Board
members also attend equality diversity and
inclusion (ED&I) events run by our diversity
networks across Mitie and participate in our
annual Team Talk Local events.
It has been my pleasure to not only engage
with shareholders on my annual Chairman’s
governance roadshow, but to join Jennifer
Duvalier, Chair of the Remuneration
Committee, in an extensive consultation on
our new remuneration policy, ahead of its
submission for approval at our 2024 AGM.
During FY24, we started work on a new
materiality assessment, to ensure that we are
responsive to our stakeholders’ views on all
ESG matters, and we expect to share the initial
findings in our 2024 ESG Report.
Board composition
We feel passionately that the composition of
our Board should reflect wider society and
comprise a diverse range of skills and experience
to promote strong governance. Currently, 44%
of Board positions are held by women and 22%
are ethnically diverse. This goes together with
our proactive approach to succession planning,
both at Board level and across the executive
leadership team.
We were delighted to welcome Penny James to
the Board as a new Non-Executive Director in
February 2024. Penny brings extensive financial
services experience, strong leadership skills
and financial and risk expertise. She has joined
the Audit and Nomination Committees and
is expected to become Chair of the Audit
Committee when Mary Reilly steps down
following the completion of the FY25 Annual
Report and Accounts.
Shareholder returns
Our capital allocation policy prioritises a
progressive dividend, the market purchase of
all shares to fulfil employee incentive schemes,
strategic infill M&A in high growth markets
and the return of surplus funds to shareholders.
It is underpinned by a target leverage range of
0.75x to 1.5x (average net debt/EBITDA).
Within this context, the Board is recommending
a final dividend of 3.0p per share which, when
added to the 1.0p interim dividend paid in
respect of the first six months of the year, takes
the total dividend for FY24 to 4.0p per share.
This is a 38% increase on the prior year (FY23:
2.9p) and represents a payout ratio of 33%
(FY23: 30%). The final dividend will be paid
on 5 August 2024, following approval at the
2024 AGM.
During FY24, we completed our second £50m
share buyback programme and, in aggregate, we
have returned £173m to shareholders through
buybacks and dividends over the past two years.
Our free cash flow generation and strong
balance sheet support our latest £50m share
buyback programme, which was launched in
April 2024.
Closing remarks
I am tremendously proud to have been a part
of Mitie’s journey over the past seven years.
Your company has embraced immense change
and tackled challenges with agility and resilience,
to emerge as the market leader in Facilities
Transformation in the UK, with significant
growth opportunities ahead.
I would like to thank my fellow Board members,
alongside our shareholders, customers,
colleagues and partners, for their unwavering
support and commitment to shaping Mitie for
this exciting next stage of the journey.
Derek Mapp
Chairman
Further reading
Strategic report Governance Financial statements
See pages 24 to 25
See pages 49 to 53
See pages 54 to 77
See pages 38 to 41
See pages 92 to 109
See pages 126 to 148
Facilities Transformation
Three-Year Plan (FY25 – FY27)
Financial performance
Our environment and social
value framework
Stakeholder engagement
Governance report
Directors’ remuneration
report
07
Mitie Group plc
Annual Report and Accounts 2024
Our customers’ needs are changing
We create and deliver innovative technology-led solutions to meet
the evolving needs of our customers and help them to respond to
new regulatory, social, environmental and operational challenges.
Customer needs
How we are helping
Optimising
asset performance and
maximising productivity
Our customers seek to reduce the
downtime of their critical assets to
improve productivity, de-risk operations
and reduce costs. They look for a partner
that can predict, prevent and fix issues
with minimum intrusion, provide a
holistic view of asset performance and
recommend areas for improvement to
achieve ‘best in class’ across their estates.
• Building automation
• Remote monitoring
• Predictive maintenance
• De-risking operations
• Workplace consulting & design
• Building fitouts and retrofits
• Connected technologies
• Space optimisation
• Real-time tracking & spill detect
• Demand-led robotics
• Eco-friendly cleaning solutions
• Circular economy
Transforming
estates, workplaces and
customer experience
We work with our customers to
transform the ‘lived’ experience across
their estates; to create a ‘Great Place to
Work’. Our customers are increasingly
prioritising user-centric, collaborative
spaces that are commute-worthy,
space-optimised and flexible, to engage
with their customers, attract talent and
optimise hybrid working.
Creating
healthier and more
sustainable spaces
Our customers look for efficient, flexible
and reliable cleaning solutions that adjust
to daily and seasonal usage and demand
patterns, provide proof of service and
cleanliness, use eco-friendly products and
scale with their future business needs.
We also work with our customers to
maximise the reuse of resources and
minimise waste.
Engineering Maintenance spotlight Projects spotlight Cleaning & Hygiene spotlight
See page 17 See page 19 See page 23
Mitie Group plc
Annual Report and Accounts 2024
08
Customer needs
How we are helping
• Risk assurance
• Perimeter hardening
• AI video analytics
• Biometrics
• Carbon data capture/reporting
• Renewable power and storage
• Energy independence
• Network optimisation
Protecting
people, property
and assets
Assurance of safety and security is
imperative to our customers and this
requires intelligence, technology and
skilled people. Our customers need to be
able to make rapid, informed decisions
in response to evolving threats and rising
levels of business crime. They must also
prepare for tightening building safety and
Martyn’s Law legislation.
Accelerating
the path to
Net Zero
In their quest to decarbonise assets and
fleets, our customers need a trusted
partner that can help them achieve
Net Zero targets by assessing their
current environmental impact, identifying
opportunities for improvement and
delivering practical solutions to reduce
carbon emissions, save costs and secure
energy supplies.
Security spotlight Projects spotlight
See page 21 See page 19
Mitie Group plc
Annual Report and Accounts 2024
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Strategic report Governance Financial statements
Positive macro-trends
Our service lines and sectors have attractive growth prospects that are
underpinned by positive macro-trends, ranging from decarbonisation
and the circular economy to the modernisation of the built environment
and changes in the regulatory landscape.
Decarbonisation
Investment in public and
private sector renewable
energy projects has increased
significantly in recent years. For
example, the UK Infrastructure
Bank is providing £22bn of
infrastructure finance to tackle
climate change and support
regional and local economic
growth.
According to the World
Economic Forum, c.40% of all
global carbon emissions come
from the built environment.
In the UK, over 80% of
commercial buildings do not
currently meet the Minimum
Energy Efficiency Standards
required by 2030.
These regulatory requirements,
alongside our customers’ own
Net Zero ambitions and
appetite for modern and
sustainable spaces, are creating
a wave of demand for
building modernisation and
decarbonisation works that is
expected to accelerate over
the years ahead.
Increasing data
centre investment
The UK data centre market is
expected to see investment
of £8bn per annum by 2029
(Arizton). Major cloud service
providers are expanding their
UK data centre presence, with
future growth being driven by
the Internet of Things, high
performance computing and
developments in Artificial
Intelligence (AI). Additionally,
the UK Government is actively
promoting digital infrastructure
through initiatives such as its
national AI strategy, aimed at
accelerating investment and
positioning Britain as a global
leader in this area.
Repurposing the
electricity grid
The nation’s energy
infrastructure is becoming
increasingly reliant on renewable
sources, requiring substantial
investment to modernise
and upgrade the UK’s Grid
infrastructure and build
sufficient storage capacity. To
meet these needs, National Grid
is investing up to £54bn in its
infrastructure network by 2030.
Evolving
workplaces
We continue to see an increasing
proportion of capital budgets
being channelled into the
redesign of workspaces, as
organisations embrace hybrid
working and focus on amenities,
collaborative spaces, technology
enablement, wellness and
sustainability to attract and retain
talent. According to the Building
Controls Industry Association,
the UK market for building
control systems installations
was worth £600m in 2023.
£22bn
UK Infrastructure
Bank fund
£8bn p.a.
UK data centre
investments
£600m
UK addressable
market
£54bn
National Grid
Upgrade Programme
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Mitie Group plc
Annual Report and Accounts 2024
Business areas
Link to business areas:
Link to business areas: Link to business areas:
Link to business areas:
Engineering Maintenance Security Cleaning & Hygiene Projects Waste Care & Custody
Circular economy
The circular economy is a
growing part of many of our
customers’ ESG agendas. It aims
to keep resources in use for as
long as possible, maximise their
lifecycle value and reuse them at
the end of their useful life.
According to BDO, £880m of
capital has been invested in the
UK circular economy in areas
such as building retrofits, waste
recycling and environmental
advisory services.
Private sector as
first line of defence
Tragic events such as the
Manchester Arena bombing
have catalysed the forthcoming
Martyn’s Law legislation, which
places the responsibility to
protect public safety with
business owners. Mitie has
played a meaningful role in
shaping this legislation and is
proactively engaging with
customers to develop and
implement security best practice,
ahead of what is perceived to
be the most significant piece of
legislation to impact the industry
in decades.
Simultaneously, the UK
Government is increasingly
outsourcing security services to
the private sector. According to
Frost & Sullivan, the security
services market, excluding
equipment, was worth £5.0bn
in 2023.
Evolving response
to immigration
According to the Home Office,
more than 84,000 people applied
for asylum in 2023 and more
than 29,000 arrived in the UK by
crossing the English Channel in
small boats. With the continued
high numbers of people arriving in
the UK, immigration will remain
a political priority requiring
significant investment and further
support from the private sector.
Growth in 5G
5G availability in the UK
remains low, ranking 39th out
of 56 advanced and developed
markets according to Opensignal.
We see pent-up demand for
the deployment of new 5G
infrastructure across the UK,
the ongoing decommissioning
of Huawei equipment and the
Shared Rural Network initiative,
a joint venture between the UK
Government and the big four
mobile network operators to
provide 4G coverage to 95%
of the UK.
Increasing defence
spending
The Ministry of Defence (MoD)
has stated that the UK’s defence
capability must evolve from
one designed for major conflict
and war to one designed for
permanent and sustained
global engagement. The UK
Government has announced
that it will increase defence
spending to 2.5% of GDP by
2025, resulting in an additional
£75bn invested over the next six
years. The MoD has c.130,000
built assets in the UK and
overseas territories. Around a
third of the UK estate needs
modernisation, while the wider
estate must adapt to meet the
sector’s decarbonisation agenda.
Increasing
business crime
Rates of theft, fraud, insider
threats and cyber crime have
accelerated in recent years as a
result of the cost-of-living crisis,
among other factors. The retail
sector has been particularly
affected by this, alongside acts of
violence and abuse towards shop
floor colleagues. According to
the British Retail Consortium,
the total cost of retail crime
more than doubled year-on-year
to £3.3bn in 2023. Mitie recently
led the way in creating Pegasus,
part of a new specialist police
unit funded by retailers, to
provide a national response to
organised crime. Read more on
page 21.
£5.0bn
addressable UK market
29,000
small boat arrivals
£1bn
addressable UK market
£75bn
increase in UK defence
spend over next six years
£3.3bn
annual cost of
retail crime
£880m
UK capital deployed
Strategic report Governance Financial statements
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Mitie Group plc
Annual Report and Accounts 2024
Link to business areas: Link to business areas:
Link to business areas:
Link to business areas:
Link to business areas:
Link to business areas:
Our expertise.
Accelerated by technology...
At the heart of everything we do are our people and a commitment to
technology that enables us to deliver smarter services to our customers
across the broad sectors we serve. More efficiently. More effectively.
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Annual Report and Accounts 2024
Intelligent Engineering Maintenance
We help customers to optimise the performance and
productivity of their assets through an extensive suite of
engineering services that enable predictive maintenance
and remote monitoring. We have the UK’s largest team
of trained engineers, implementing solutions to ensure
that buildings comply with regulations, and infrastructure
and systems remain fully operational.
See page 16
Intelligent Projects
We bring together technology and expertise from
across the Group to offer an unrivalled breadth and
depth of self-delivery capability to consult, design and
deliver projects that transform our customers’ estates,
workplaces and experiences, and accelerate their path
to Net Zero. We continue to build our capabilities both
organically and through infill acquisitions.
See page 18
Intelligent Security
We protect our customers’ property and assets and
keep people safe. Our delivery is underpinned by leading
risk and threat intelligence, technology and a team of
fully vetted, highly trained security professionals at our
Security Operations Centres, working together with our
front-of-house colleagues.
See page 20
Intelligent Cleaning & Hygiene
We create healthier and more sustainable spaces for
our customers, using technologies such as sensors,
spill detect computer vision and our Merlin Connect
operating platform to deliver demand-led cleaning
solutions. These provide customers with assurance over
cleanliness and drive efficiency and productivity gains.
See page 22
Our core capabilities
Our divisions
Our core capabilities are delivered through four divisions:
Business Services (including Spain, Waste and Landscapes);
Technical Services; Central Government & Defence; and
Communities (including Care & Custody).
See Operating review on pages 45 to 48
Our competitive advantage is embedded in our people
and industry-leading technology, and this has been a key
contributor to a record Net Promotor Score of +60.
Through our ongoing investment in technology and
strategic partnerships with global IT companies, we
continue to enhance our unique Mitie Digital Platform
and deliver transformative, ‘intelligent’ solutions to meet
the changing needs of our customers.
These solutions leverage our deep capabilities to
aggregate workflow and workforce data across the built
environment through our data lake and are increasingly
being enriched by the application of Artificial Intelligence
and Machine Learning (AI/ML).
Our cyber-security credentials are industry leading. We
consistently score above A90 on the SecurityScorecard
(an independently assessed measure), we are a Cyber
Essentials Plus and ISO 27001 certified company and
we have a NIST maturity rating of 4.1.
Read more about our ‘intelligent’ core capabilities on
pages 16 to 23.
Strategic partnerships
Technology
...and our exceptional colleagues
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Annual Report and Accounts 2024
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Annual Report and Accounts 2024
Healthcare and life sciences
Corporate and professional services
We have a loyal and diverse
blue-chip customer base...
Retail and logistics
Transport and aviation
Public sector and defence
Manufacturing
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Annual Report and Accounts 2024
Strategic report Governance Financial statements
...that recognises our people
and innovative solutions
Customer satisfaction How our customers describe us
Collaborative
The Mitie team are collaborative and
accessible for any issues. They adopt
our values and seem to genuinely care
about the service they are delivering.
Atomic Weapons Establishment (AWE)
Mitie’s Integrated Facilities Management
delivery has been exceptional, supporting
us during testing and fluid conditions.
National retail company
Mitie’s technical expertise and innovative
solutions have consistently exceeded
expectations. Mitie’s proficiency, reliability
and forward-thinking approach make
them the standout choice for anyone
seeking unparalleled engineering solutions.
International logistics company
Exceptional
Innovative
Record customer satisfaction
Exceptional response rate
59%
Compared with 24% average
B2B response rate
86%
of customers say Mitie brings
new ideas and innovation
84%
of customers are satisfied
with Mitie technology
900+
employees recognised
with Mitie Stars based on
customer nominations
NPS
-27
-10
+12
+24
+39
+42
+60
FY18 FY19
FY20
Previous Three-Year Plan
FY21 FY22 FY23 FY24
OUR CORE CAPABILITIES
Intelligent Engineering Maintenance
OUR CORE CAPABILITIES
Market size
£9.4bn
Mitie market share
19%
UK Engineering market Mitie Engineering revenue by division
Customer need:
Optimising asset
performance and
maximising productivity
Projected market growth
4% p.a.
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Annual Report and Accounts 2024
Market data source: Frost & Sullivan 2023
Growth drivers
• Tighter building codes, environmental
regulations and health and safety
requirements
• Demand for predictive maintenance
and remote monitoring to reduce asset
downtime and increase productivity
• Requirements to extend asset
lifecycles through proactive and
intelligent maintenance
• Increased public infrastructure
investments to narrow regional
differences and meet climate challenge
• Net Zero ambitions to reduce waste,
energy usage and carbon emissions
#1 in UK
The largest provider of technology-led
engineering (hard) services
Our position
What sets us apart
Scale and capability
We have the largest national mobile
engineering workforce and self-delivery
engineering capability in the UK.
Technology
We create intelligent buildings through sensor
technology and remote monitoring, turning big
data into insights, transforming facilities, reducing
asset downtime and saving energy and money
for our customers.
People
We are one of the UK’s largest employers
of trained and multi-skilled engineering
professionals. We attract and retain the best
talent with expertise in all core asset classes
and from across multiple industries.
Key statistics
• 1,000+ locally based mobile engineers
covering every postcode
• 2.5m assets maintained for our customers
• 6.3m square feet of critical space maintained
• 1.75m planned maintenance visits per year
• 15% energy and maintenance savings achieved
• 95% remote fix for connected assets
£1.8bn
FY24 revenue
(includes Projects revenue, other than Advisory,
Design & Build)
Our revenue
Mitie
Competitors
A
B
C
Top three competitors
CBRE
OCS
JLL/Integral
A. Technical Services 55%
B. CG&D 35%
C. Communities 10%
ENGINEERING
MAINTENANCE SPOTLIGHT
Strategic report Governance Financial statements
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Annual Report and Accounts 2024
Optimising asset
performance in critical
environments
The challenge
In critical environments such as national
infrastructure, healthcare settings, data centres
and manufacturing, asset downtime and
sub-optimal performance can compromise
productivity and security and, in some
circumstances, materially impact on the smooth
running of UK society and the economy.
For many of our customers, the associated costs
are too high to allow for reactive maintenance,
and unnecessary engineer visits often disrupt
business-critical operations. Organisations are
increasingly looking to technology-enabled
predictive asset and building infrastructure
management to address these constraints.
Our solution
Mitie’s Intelligent Engineering solutions are the
smart response to asset performance, lifecycle
and productivity challenges.
We help our customers to optimise asset
performance, meet compliance standards,
increase productivity and enhance working
environments.
We use building sensor technology and remote
monitoring to collect and analyse real-time
data that can be used to improve the energy
efficiency and sustainability of buildings, reduce
costs and extend asset lifecycles through
predictive maintenance, optimise space
utilisation and improve indoor air quality to
enhance the comfort and safety of employees
and customers.
We also build digital twins to monitor, analyse
and optimise buildings and the equipment
inside them.
Artificial Intelligence and Machine Learning is
increasingly being used to detect anomalies,
trigger actions and generate recommendations
using complete asset histories based on log
notes and past work orders.
We are developing diagnostic dashboards to
predict failures and remote fix issues, reducing
the number of engineer visits required to
customer sites.
The outcome
We have installed more than 30,000 sensors in
c.700 buildings, and we are transforming estates
for customers across diverse environments.
For a large retail bank, we now identify c.25% of
heating and cooling issues before they reach the
helpdesk. For a manufacturer, we have reduced
faults on its critical machinery by 70%.
For our healthcare customers, we remotely
monitor drug storage temperatures to provide
early warning of fluctuations and support drug
efficacy. We also monitor water tap usage by
remotely measuring temperature and flow rates
to prevent contamination with legionella. This
supports digitised compliance and optimises
NHS resources by allowing infrequently used
systems to be flushed on demand.
Mitie’s technical expertise
and innovative solutions
have consistently
exceeded expectations.
The seamless integration of
cutting-edge technologies
and a commitment to
sustainable practices
further cements their
position as market leader.
National retail customer
OUR CORE CAPABILITIESOUR CORE CAPABILITIES
Intelligent Projects
£12bn
Market size
£3bn
Market size
£1bn
Market size
£3bn
Market size
Building
infrastructure
Decarbonisation
technologies
Telecoms
infrastructure
Fire & Security Representative
competitors
CBRE
NG Bailey
TClarke
Dalkia
Briggs & Forrester
Customer needs
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Annual Report and Accounts 2024
Our position
By bringing together our capabilities across
the Group, we are a leading UK projects
business, serving both public and private sector
customers.
Growth drivers
• Investment in workplaces to make them
more user-centric and commute-worthy
• Decarbonisation of real estate portfolios
to meet regulatory requirements and
Net Zero ambitions
• Capital deployment into asset lifecycle
upgrades to improve performance
• Accelerated growth in sectors such as
data centres, healthcare and logistics
• Significant upgrades to Grid networks
and investment in battery solutions
• Continued roll-out of 5G and
decommissioning of Huawei equipment
What sets us apart
Full asset lifecycle approach
We offer an unrivalled range of services across
all asset classes through the full cycle of consult,
design, build and maintain. We solve big
picture challenges for our customers, from
decarbonisation strategies to workplace
programmes and building technology solutions.
Technology and innovation
Our Projects Centre of Excellence drives
innovation and productivity. It oversees
operational standards and manages our Projects
technology platform which includes design
technologies, BIM models, project management
tools and building sensor technologies.
Scale
We leverage our national scale and leadership
position in the UK to upsell projects work as we
continue to grow our capabilities organically and
through strategic infill M&A.
£1.1bn
FY24 revenue
Our revenue
Operational highlights
• Projects Centre of Excellence
• 2,200 highly skilled project managers
• 300 consulting professionals
• 4,000+ projects delivered annually
• c.80% of revenue from core Mitie customers
• £100k – £150k typical project value
• 1–3 months typical length of project
Transforming
estates,
workplaces
and customer
experience
Accelerating
the path to
Net Zero
Sources: ONS, Deloitte, Solar Energy UK, Verdantix, DCMS, AMA Research
Mitie revenue (£m) Mitie revenue (£m) Mitie revenue (£m) Mitie revenue (£m)
+14%
CAGR
+33%
CAGR
+124%
CAGR
+53%
CAGR
1,000
800
600
400
200
0
FY21 FY23FY22 FY24
200
150
100
50
0
FY21 FY23FY22 FY24
100
75
50
25
0
FY21 FY23FY22 FY24
50
30
40
20
10
0
FY21 FY23FY22 FY24
PROJECTS SPOTLIGHT
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Best-in-class data
centre delivery
KLON-02 is the second of four planned data centres at the Kao
Data Campus in Harlow, Essex. Based on our successful track
record with KLON-01, Mitie was appointed to provide strategic
advice, design and project management. The three-storey structure
houses substantial c.850 square metre data halls, switch, pump and
security rooms, plant areas and office space.
The project was successfully delivered on time and within budget.
All Mechanical & Electrical testing and commissioning was
carried out to industry standards and overseen by independent
commissioning managers. The Considerate Constructors Scheme
rated the work as Excellent, and the project is expected to achieve
a BREEAM Excellent rating.
Mission-critical turbine engine
assembly hall
We recently completed the full refurbishment and fit out of a
100-year-old manufacturing facility in Derby for Rolls-Royce.
The facility was identified for reconfiguration and infrastructure
development to accommodate Rolls-Royce’s mission-critical
turbine engine assembly and off-wing maintenance activities.
The scope of the project included the replacement of the entire
concrete floor slab, remediation of structural steelwork, and
the installation of new mechanical & electrical and fire & safety
equipment and high-level gantry cranes. We also developed
new office and welfare areas and improved local access routes.
We have provided Rolls-Royce with a state-of-the-art production
facility and modern office space, that is expected to improve
productivity and help to attract the best talent for our customer.
Decarbonising and modernising
the UK’s Defence estate
Mitie’s projects across the Defence estate continue to lead the way
in innovative, technology-enabled and sustainable works.
Our air source heat pump programme at Glencorse Barracks in
Scotland won an Army Sustainability Award, and our hangar heating
technique at RAF Lossiemouth was recognised as best in class –
ensuring these vast buildings are only heated in the areas in
which troops operate. We have also commenced work on the
refurbishment of housing for Service families across the estate.
Meanwhile, at the MoD’s overseas locations, we continue to
support operational activity, completing the construction of a new
bulk fuel installation in Cyprus and supporting humanitarian and
military operations in the region.
Intelligent Security
OUR CORE CAPABILITIES
Market size
£7.8bn
£0.9bn
FY24 revenue
(includes Projects revenue)
#1 in UK
Leading converged security services provider
Mitie market share
12%
Projected market growth
4% p.a.
Our position
What sets us apart
Intelligence
Our team of dedicated analysts review
large-scale data sets from intelligence software
platforms and open source data feeds to
monitor crime and incident trends, enabling
our customers to make informed decisions
and implement appropriate security measures.
Technology
Through our ISOCs, we lead in the delivery
of sophisticated, technology-led solutions to
support our customers’ complex security
needs and changing risk profiles. Alongside our
proprietary intelligence software, Merlin 24/7,
Protect, our new cutting-edge technologies
include AI video analytics and biometrics.
People
We attract the best people, including former
police officers and military and intelligence
professionals, with a deep understanding of
operational intelligence and the expertise to win,
retain and transform large security contracts.
Our revenue
UK Security market Mitie Security revenue by type
Top three competitors
G4S
OCS
Bidvest Noonan
A. Security services/SOCs 81%
B. Fire & Security 15%
C. Emergency response 2%
D. Intelligence services 2%
Customer need
Protecting people,
property and assets
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Annual Report and Accounts 2024
Mitie
Competitors
A
B
C
D
Note: substantially all of Mitie’s Security revenue is
delivered through the Business Services division
Market data sources: Frost & Sullivan 2023, AMA Research
Growth drivers
• Shift towards a more holistic approach
in response to the evolving threat
landscape
• Increasing business crime, with theft,
burglary, fraud and antisocial behaviour
all on the rise
• Advances in complex, integrated security
and building systems with cloud-based
solutions and remotely managed services
• Demand for data analytics, automation
and AI-enabled systems and services
• Tightening legislation, including the
Building Safety Act 2022, the Fire Safety
Act 2021 and Martyn’s Law
Key statistics
• 21,000 security professionals
• 250 intelligence analysts and assurance
representatives
• Two Intelligence Security Operations Centres
(ISOCs) in Northampton and Craigavon
• 11 dedicated customer Security Operations
Centres (SOCs) within our ISOCs
• 73,000 Fire & Security systems maintained
• 17,000 CCTV and alarm systems monitored
• 120,000 lone workers protected by
our systems
SECURITY SPOTLIGHT
Delivering converged
security solutions to combat
retail crime and grow our
sector leadership
The challenge
According to the British Retail Consortium, the
total cost of retail crime was c.£3.3bn in 2023,
almost twice that of the prior year. There were
more than 1,300 violent or abusive incidents
against shop workers every day. A total of 8,800
incidents resulted in injury, although only around
a third of these were reported to the police and
a very small number were prosecuted.
Our solution
Mitie is the leading provider of security services
to the UK retail sector, with c.30% market share.
We serve major brands, including Sainsbury’s,
M&S and the Co-operative Group, and we have
expanded our relationships with Landsec and
Westfield to protect their destination shopping
centres and retail parks.
Our converged security offering is centred on
intelligence, technology and people. We employ
industry-leading sector specialists, and we have
strong connections with law enforcement.
Through our ISOCs, our software harnesses
millions of data points to help our customers
understand the frequency, location and timing
of threats.
We also analyse thousands of incidents daily to
identify patterns and secure convictions, with a
focus on Organised Criminal Groups (OCGs).
The outcome
Against a backdrop of escalating business crime,
our converged security solutions are filling a
widening gap in the provision of public sector
assurance and policing.
For a national food retailer, we have recorded
and managed 1.2m incidents and secured over
37,000 arrests by store detectives, resulting in
c.4,000 weeks in prison for prolific offenders.
Overall, we delivered a £48m return on its
investment through reduced shrinkage and
contract efficiencies.
More widely, with the support of the Policing
Minister and the Home Office, Mitie worked
with Katy Bourne OBE, the Association of Police
and Crime Commissioners’ (APCC) lead for
business and retail crime, to spearhead the
creation of Pegasus, a business and police
partnership, in 2023.
Pegasus radically improves the way retailers
can share intelligence with the police to better
understand the tactics of OCGs and identify
more offenders. It includes the development of
a new information-sharing platform and training
for retailers. We are the only private security
company playing a role in this initiative, providing
industry leadership alongside intelligence,
technology and people.
I am very grateful to all the
contributors to Pegasus and to
Mitie in particular for helping
to get Pegasus airborne.
Katy Bourne OBE,
APCC Lead for Business
and Retail Crime
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Intelligent Cleaning & Hygiene
OUR CORE CAPABILITIES
Market size
£8.3bn
#1 in UK
The largest UK provider of
Cleaning & Hygiene services
Mitie market share
8%
Our position
UK Cleaning & Hygiene market Mitie Cleaning & Hygiene revenue
by division
Customer need
Creating healthier and
more sustainable spaces
Projected market growth
3% p.a.
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Mitie Group plc
Annual Report and Accounts 2024
Mitie
Competitors
A
B
C
Top three competitors
ISS
OCS
Sodexo
A. Business Services 63%
B. CG&D 12%
C. Communities 26%
Source: Frost & Sullivan 2023
Growth drivers
• Improving user experience through
healthier working environments to
create commute-worthy workplaces
• Customers aligning with partners
focused on delivering social goals, energy
management and carbon reporting
• Demand for eco-friendly cleaning
products and greener estates
• Advances in robotics and sensors
enabling organisations to maximise
cleaning productivity
• Big data and advanced analytics creating
opportunities to deliver greater value at
lower cost
What sets us apart
Research & Development
At our Cleaning & Hygiene Centre of
Excellence, we develop technology-enabled
solutions (e.g. disinfection systems and
antimicrobial surface protectants). We use this
centre to showcase our capabilities, experienced
colleagues and commitment to innovation.
Technology
We combine sensor technology, cleaning robots,
spill detect computer vision and our proprietary
platform, Merlin Connect, to deliver flexible,
demand-led cleaning solutions, improve cleaning
quality, ensure compliance and increase
efficiency and productivity for our customers.
Sustainability
We use eco-friendly cleaning products and our
demand-led solutions reduce energy and water
usage for our customers.
£0.7bn
FY24 revenue
Our revenue
Operational highlights
• 25,000 highly trained colleagues
• Cleaning & Hygiene Centre of Excellence
• 40 NHS trusts supported
• 20m sq ft of retail space cleaned every day
• 1,000+ cleaning robots
• UK’s largest robotic cleaning fleet at
Heathrow airport
CLEANING & HYGIENE
SPOTLIGHT
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Delivering
demand-led and
flexible cleaning
services
The challenge
Our customers are increasingly looking for
demand-led and flexible services to improve
the quality and effectiveness of cleaning,
support business growth and variability, mitigate
rising labour costs and inflation, reduce the
environmental footprint of cleaning products
and vehicle fleets, and increase employee
engagement and retention.
Our solution
Our technology platform, Merlin Connect, is
unique to Mitie. It significantly improves the
quality of the cleaning we provide and allows
our customers to verify this through proof of
presence, paperless audits and a real-time
customer dashboard. The platform supports
incident escalation and reactive task allocation,
risk assessments, electronic cleaning schedules,
health and safety standard operating procedures
and real-time visibility of delivery to specification.
Simultaneously, the platform enables efficiency
gains by analysing the data it generates to match
service to demand, eliminate downtime and
benchmark our teams. It is increasingly being
adopted across a range of critical environments,
including operating theatres, server rooms and
pharmaceutical laboratories.
The outcome
For an international e-commerce company,
we support 54 sites across the UK with 1,200
cleaning technicians. From the outset, we
worked with the customer to understand its
needs, including its focus on staff retention,
drive to reduce costs and requirement for
significant operational flexibility.
Together we have designed a service
solution that includes a bespoke engagement
programme, where we train our day and
night shift cleaning colleagues to support
our customer’s 24/7 operations.
We also implemented Merlin Connect to
monitor footfall and occupancy across the
customer’s distribution centres and office
spaces. Our software has identified efficiency
gains of 10% and enables peak demand
planning to better manage the seasonality
of our customer’s business.
The outcomes are impressive. Our staff attrition
rate of 10% and Net Promoter Score of 100
are industry-leading, helping us to increase our
revenue from this customer by 50% year-on-
year by expanding our cleaning services and
cross-selling engineering and projects work.
Mitie’s meticulous attention
to detail ensures a spotless
environment, surpassing
industry standards. Their
dedication to maintaining
a pristine and safe space
showcases an unwavering
commitment to customer
satisfaction, making them
my unequivocal choice for
superior cleaning services.
Large logistics customer
OUR NEW THREE-YEAR PLAN (FY25 – FY27):
Facilities Transformation
• Participate in high-growth, high-margin adjacencies
• Enhance existing capabilities
• Provide access to Mitie customers, systems and funding
• Maintain high-performing and entrepreneurial culture
Our Facilities Transformation Three-Year Plan (FY25 – FY27) will
enhance the built environment and ‘lived’ experience for our
customers and their people, by improving productivity, security and
cleanliness, while reducing their carbon footprint. It is centred on
three key pillars of growth and sets out ambitious financial targets.
Key pillars of growth
Infill M&A
• Market-leading consult/design/build capabilities
• Access to Mitie’s large, diverse blue-chip customer base
• Standards and technology through Projects Centre of Excellence
• Full asset lifecycle/upgrade approach
Projects
upsell
• High win rates, renewal rates and IFM penetration
• Stable, inflation-linked revenues; strong order book
• Clear leadership positions in all core services
• Significant economies of scale
• Investment to maintain technology leadership
Key Account
growth
See pages 26 to 31
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Mitie Group plc
Annual Report and Accounts 2024
Our medium-term financial targets (FY25 – FY27)
Strong financial
performance
Disciplined capital
allocation
High single digit
revenue growth
ROIC >20%
Progressive dividend policy
(30% – 40% dividend payout ratio)
Proactive capital allocation
EPS growth >
revenue growth
Operating margin
>5% (FY27)
FCF generation
c.£150m p.a.
(FY27)
See pages 26 to 31 See page 30
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Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Average leverage 0.75x – 1.5x
Chief Executive’s review
A record year of delivery
We have met or significantly exceeded all of the targets in our previous
Three-Year Plan (FY22 – FY24)
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Mitie Group plc
Annual Report and Accounts 2024
Our divisions are all performing well, with
Technical Services, Central Government &
Defence and Communities delivering double
digit revenue growth, and Business Services
more than replacing all of the revenue from
certain short-term public sector contracts.
As a result of this positive outturn, we have
met or significantly exceeded all of the financial
targets set out in the previous Three-Year Plan
(FY22 – FY24), and this has been reflected in
Mitie’s Total Shareholder Return over the
period (80% TSR; #10 in FTSE 250).
We have now started to execute our new
Facilities Transformation Three-Year Plan
(FY25 – FY27), through which we expect to
accelerate growth and extend Mitie’s market
leadership position. Our confidence in
achieving this is underpinned by a record £19bn
pipeline of opportunities, through which we
will add further Key Accounts and deliver
transformational Projects in higher growth
categories, as well as by strategic M&A, which
will add to our existing Projects capabilities.
We have secured a number of new contracts
and projects in the fourth quarter of FY24
and first quarter of FY25, which give us good
business momentum and we expect to offset,
in the medium-term, the contracts lost and
ending in FY24. Margin enhancement initiatives
are also expected to deliver further benefits
in the current year, and we will continue to
generate strong cash flows and enhanced
shareholder returns.
My appreciation goes to our 68,000 colleagues.
Through their hard work, allied to our
technology-led approach, Mitie is transforming
the built environment and the lived experience
for thousands of public and private sector
customers and their colleagues.
FY25 will be another year of delivery towards
our medium-term targets and meeting our high
single digit revenue growth expectations for
the year.
Metric Target Achievement in FY24
Annual revenue growth Mid-to-high single digit 11%
Operating profit margin 4.5% to 5.5% 4.7%
EBITDA £200m £268m
Free cash flow £100m per annum £158m
Average leverage 1.0x maximum 0.6x
ROIC >20% 26.4%
We are pleased with our strong
performance in FY24, having
delivered record revenue,
operating margin expansion and
a good return on invested capital.
Mitie is a cash generative business
with a robust balance sheet, and
we are committed to investing
in accelerated growth, as well
as returning surplus funds to
shareholders via share buybacks.
Phil Bentley
Chief Executive Officer
Our Facilities Transformation Three-Year
Plan (FY25 – FY27), pages 24 to 25
Overview
Mitie delivered a strong financial performance
and made further strategic progress in the year
ended 31 March 2024. Revenue (including share
of JVs and associates) grew by 11% to a record
£4,511m (FY23: £4,055m), operating profit
before other items grew by 30% to £210m
(FY23: £162m) and basic EPS before other items
grew by 29% to 12.3p (FY23: 9.5p).
We achieved an operating profit margin before
other items of 4.7% (FY23: 4.0%) in the full year,
which included a margin of 5.3% in the second
half of the year. Sustainable margin improvement
was a key pillar of our previous Three-Year Plan
(FY22 – FY24), and, building on the successful
delivery of this, we have a clear path to achieving
an operating margin of at least 5% by FY27.
Based on the equivalent statutory measures,
Group revenue increased by 13% to £4,445m
(FY23: £3,945m), operating profit increased
by 42% to £166m (FY23: £117m) and basic
EPS increased by 44% to 9.8p (FY23: 6.8p).
The increase in basic EPS reflected improved
profitability and a £5m reduction in other items
after tax to £32m (FY23: £37m). Further details
are set out in the Finance review.
Our strategy and targets
Our achievements against all of the targets
(based on alternative performance measures)
in the previous Three-Year Plan (FY22 – FY24)
are highlighted on page 26.
Our new Three-Year Plan (FY25 – FY27)
pivots the business from traditional Facilities
Management to technology-driven Facilities
Transformation. Mitie is the market leader in
the UK, with deep capabilities to aggregate
workflow and workforce data across the
built environment, and a trusted partner to
thousands of blue-chip public and private
sector organisations. We have advanced our
core capabilities through targeted investments
in technology and strategic M&A, alongside the
work of our exceptional colleagues, to meet the
changing needs of our customers.
Our customers are looking for asset
optimisation, a reduced carbon footprint and
higher levels of assurance for security and
cleanliness, whilst embracing hybrid-working
and creating a ‘Great Place to Work’. This all
requires cyber-secure data driven insights to
inform better decision-making.
These needs for transformation are
underpinned by attractive macro trends,
including decarbonisation, the modernisation of
the built environment, and changes in legislation
and the regulatory landscape, that benefit both
our core service lines and Projects business.
Our ambitious financial targets (based on
alternative performance measures) for our new
Facilities Transformation Three-Year Plan are set
out below and are designed to deliver enhanced
shareholder returns over the period.
• High single digit revenue compound annual
growth rate
• >5% operating margin by FY27
• EBITDA >£300m by FY27
• EPS growth above that of revenue growth,
despite higher corporation tax rates
• £150m annual free cash flow by FY27
Accelerating growth
Our technology-led Facilities Transformation
strategy is expected to deliver accelerated
growth through the key pillars of: 1) Key
Account growth; 2) Projects upsell; and 3)
Infill M&A. We are targeting high single digit
revenue growth annually.
In FY24, organic growth through Key Accounts
(net wins and contract growth) and Projects
upsell contributed 7% to revenue growth,
inclusive of contract re-pricing of 4%. Infill M&A
completed since 1 April 2022 contributed a
further 4% of inorganic growth.
Key Account growth:
New contract wins, scope increases and
extensions/renewals totalled £6.2bn Total
Contract Value (TCV) in FY24 (FY23: £4.3bn).
New and expanded Key Accounts of £4.4bn
TCV included: Aena in Spain; further Amazon
sites; the Defence Infrastructure Organisation
(DIO) overseas estate in Germany and wider
Europe; Department for Transport (DfT);
Future Defence Infrastructure Services (FDIS)
Service family housing refurbishment projects
work; Home Office immigration services;
Landmarc scope increases; Landsec additional
cleaning and security; and Phoenix Group.
Notable extensions/renewals of £1.8bn TCV
included: the Department for Work and
Pensions (DWP); the Foreign Commonwealth &
Development Office (FCDO); GSK; HMRC;
the Home Office and Ministry of Justice; JLL;
Landsec; Lloyds Banking Group (LBG); Network
Rail; and Sky.
Mitie’s renewal rate reduced to 79% (FY23:
>90%). We have a large, diversified portfolio of
customers, and contract renewals are therefore
completed on a rolling basis throughout each
year. During FY24, two notable contracts with a
combined c.£70m per annum secured contract
value were not renewed (one due to pricing
and the other seeking an international provider),
and this was reflected in the renewal rate. Both
contracts were handed over towards the end
of FY24, although we will continue to provide
sub-contracted Security, Waste and Landscaping
services for one and expect to continue
delivering higher margin Projects work for both.
Key Account growth – record wins and renewals/extensions,
and pipeline of new opportunities
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Annual Report and Accounts 2024
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£18.6bn pipeline of opportunities£6.2bn TCV wins and renewals/extensions
6.5
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
20
15
10
5
0
FY20
FY20
FY21
FY21
FY22
FY22
FY23
FY23
FY24
FY24
£bn£bn
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Annual Report and Accounts 2024
Projects upsell – one of the largest UK Projects businesses, with broad capabilities
Chief Executive’s review
continued
Our total order book increased by 18% to
£11.4bn (FY23: £9.7bn), including an increase of
£0.5bn TCV from the consolidation of
Landmarc. Our pipeline of new opportunities
stands at a record £18.6bn.
Projects upsell:
In FY24, we continued to see sustained demand
from our customers for transformational
projects across their estates and, as a result,
Projects revenue across the Group increased
by 37% to £1.1bn (FY23: £0.8bn).
The largest driver of this growth was buildings
infrastructure work, including lifecycle upgrades
to improve asset efficiency, the design and build
of inspirational workplaces, and retrofits to
ensure buildings meet evolving regulatory
requirements. This work accounted for over
70% of Projects revenue and grew by c.40%
year-on-year. We continue to see demand for
decarbonisation technologies, such as solar,
electric vehicle (EV) charging and battery
storage, whilst data centre fitouts have also
been an area of growth as major cloud-service
providers expand their UK presence. We have
enhanced our expertise in this area through
the acquisitions of JCA Engineering and
GBE Converge.
Projects are delivered across all of our divisions,
with the largest contributors to revenue growth
in FY24 being Central Government & Defence
and Technical Services (see Operating Review
for further details by division).
Our projects are typically short in duration (one
to three months, on average), individually £100k
- £150k on average, and around 80% of revenue
is delivered through Key Accounts upsell. Whilst
some projects are one-off in nature, we often
work with customers on rolling programmes,
such as the refit of branches for LBG, solar
panel installations at David Lloyd Clubs and
the refurbishment of housing for the DIO.
Underpinning our work is the Mitie Projects
Centre of Excellence (PCoE), driving innovation
and productivity, and managing the operating
platform including construction, design &
management regulations, the project
management playbook, and QHSE standards
and training. The PCoE also serves as a
knowledge centre to support our 2,500
Projects employees across the business.
Infill M&A:
During FY24, Mitie completed seven acquisitions
for a combined consideration of £66m, net
of cash acquired and excluding employment-
linked earnouts.
Our position as a leader in the intelligence and
technology-led Fire & Security market has been
enhanced by the acquisitions of RHI Industrials
(May) – a leading installer of high-tech security
and access controls, and GBE Converge
(November) – a leading independent provider
of fire, security and information and
communications technology solutions.
Smaller security acquisitions included Linx
International (April) – a leading risk management
and consulting business, and Biservicus
(September) – a Spanish security business.
Enhancing our Mechanical & Electrical (M&E)
engineering credentials, we acquired JCA
Engineering (September) – a leading principal
contractor for complex engineering projects
across the UK, with a particular focus on critical
environments such as data centres, healthcare
and life sciences. We also purchased the assets
of G2 Energy (via a liquidation process in July) –
a leading high voltage and battery energy
storage contractor, and Cliniwaste (October) –
a specialist in treating plastic waste.
Additionally, in November, Mitie completed an
agreement with its joint venture partner in the
‘Landmarc’ military training estate to amend
the shareholders’ agreement. This resulted in
Landmarc being consolidated as a subsidiary
of Mitie from this date and enables Landmarc
to benefit from the wider capabilities of
our business.
Operating margin
progression
We have a clear path to a target operating
profit margin before other items of at least 5%
by FY27. This will be achieved through our
ongoing programme of margin enhancement
initiatives and operational leverage, alongside the
contribution from higher margin infill M&A and
Projects works. We expect these management
actions to more than offset the continued
impact of inflation and pressure on contract
pricing in a highly competitive environment.
£1.1bn
Projects revenue
+37% y-o-y
c.80%
of revenue from
core customers
£150k
typical project value
1-3mths
typical project length
David Lloyd – solar PV installations
KAO – data centre fitout
Rolls-Royce – production hall refurb
Pillswood – battery storage
29
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Our customers’ changing needs (see pages 8 and 9)
Expertise acquired over our previous Three-Year Plan (FY22 – FY24)
Future M&A targets
Fire &
Security
Design
Sustainability
Consulting
Decarbonisation
Technologies
Infill M&A – enhancing our Projects capabilities in higher growth segments
Optimising asset
performance
and maximising
productivity
Transforming estates,
workplaces and
customer experience
Creating healthier
and more sustainable
spaces
Protecting people,
property and assets
Accelerating the
path to Net Zero
In FY24, the Group achieved the final target in
its previous Three-Year Plan (FY22 – FY24),
reaching an operating profit margin before other
items of 4.7%. This represents an increase of
0.7ppt on the prior year (FY23: 4.0%), and an
increase of 2.4ppt since the start of the Plan
(FY21: 2.3%). Consistent with the previous year,
our H2 performance exceeded that of H1, both
for revenue and operating profit, resulting in an
operating profit margin of 5.3% in the second
half of FY24.
The increase across the year reflects improved
underlying trading and the delivery of £40m of
savings through margin enhancement initiatives,
more than offsetting the net impact of cost
inflation that we were unable to pass through to
customers (£6m) and the completion of certain
short-term public sector contracts (£16m).
Approximately £28m of these savings were
delivered through our Target Operating
Model (TOM) programme, optimising
our organisational structure, centralising
transactional finance teams, outsourcing
certain back-office functions and consolidating
systems and processes. The balance of savings
were delivered through further Interserve
synergies (£5m), Operational Excellence
initiatives (£4m), and the continued roll out of
the Coupa digital supplier platform across the
divisions (£3m). The costs associated with the
delivery of margin enhancement initiatives are
included in ‘cash other items’.
We expect to complete the TOM initiatives
during FY25. Over the new Facilities
Transformation Three-Year Plan (FY25 – FY27),
the focus for margin enhancement initiatives
will shift towards operations and contract
efficiencies, including an optimised organisational
structure within customer accounts, improved
contract productivity, and an increase in the use
of Artificial Intelligence (AI) analytics to drive
efficiencies in the deployment of resources and
raise customer engagement.
Sustainable free cash
flow generation
£
Mitie is cash generative, a function of strong
profitability, tight working capital control and
a disciplined approach to capex. In FY24,
the Group generated £228m of cash from
operations (FY23: £117m), leading to a free
cash inflow of £158m (FY23: £66m). This free
cash inflow reflected growth in operating profit,
alongside working capital process improvements
that contributed a one-off benefit of c.£25m in
the year.
The Group is targeting free cash flow generation
of c.£150m per annum by FY27, as we expect
increased profitability and continuing working
capital process improvements to offset
structural headwinds from growth in the
Projects business and customers demanding
longer payment terms. Strong free cash flow
generation, combined with our robust balance
sheet, underpins the proactive and disciplined
capital allocation of our financial resources.
0.7ppt
operating profit margin
expansion to 4.7%
£40m
savings through margin
enhancement initiatives
£158m
Free cash flow generation
A MITIE BUSINESS
A MITIE BUSINESS
A MITIE BUSINESS
A MITIE BUSINESS
A MITIE BUSINESS
A MITIE BUSINESS
A MITIE BUSINESS
A MITIE BUSINESS
A MITIE BUSINESS
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RHI
INDUSTRIALS
A MITIE BUSINESS
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30
Mitie Group plc
Annual Report and Accounts 2024
Proactive and disciplined
capital allocation
Our capital allocation policy prioritises a
progressive dividend (within a target payout
range of 30-40%) and the purchase of all shares
to fulfil employee share schemes to mitigate
shareholder dilution. We will also continue to
pursue strategic infill M&A, primarily targeting
higher growth, higher margin projects businesses
in the key areas of Buildings Infrastructure,
Decarbonisation and Fire & Security. Excess
funds will be returned to shareholders through
share buybacks.
Consistent with this approach, the Board is
recommending a final dividend of 3.0p per share
which, when added to the 1.0p interim dividend
paid, takes the total dividend for FY24 to 4.0p
per share. This is a 38% increase on the prior
year (FY23: 2.9p) and represents a payout ratio
of 33% (FY23: 30%). The final dividend will be
paid on 5 August 2024, following approval at the
2024 AGM.
During FY24, we completed a £50m share
buyback programme, net of £8m cash proceeds
received from the vesting of the 2020 Save As
You Earn (SAYE) scheme (c.30m shares were
purchased via the buyback to fulfil this scheme).
We also purchased 20m shares at a cost of
£20m for employee incentive schemes, and we
invested £66m in the seven infill acquisitions
outlined on page 28.
Over the past two years (FY23 and FY24), we
have purchased a total of 127m shares (of which
95m have been cancelled) for £100m net cost
via share buybacks and 70m shares for £57m
into our trusts for employee incentive schemes.
The average price per share for these combined
share purchases was 80p.
We commenced our current £50m share
buyback programme on 15 April 2024. We will
hold c.10m shares in treasury to fulfil the 2021
SAYE scheme, vesting in January 2025, and
cancel all shares purchased in excess of this.
Within the current programme we have
purchased 7m shares at an average price of 119p.
Strong balance sheet
Closing net debt of £81m (FY23: £44m) reflects
our strong free cash flow generation being
more than offset by capital deployment actions
totalling £150m, alongside a £45m increase in
lease obligations as we continue to transition our
fleet to electric vehicles (EV) and extend the
duration of leases. Average daily net debt was
£161m in FY24 (FY23: £84m) and leverage was
0.6x average net debt / EBITDA (FY23: 0.4x).
We are targeting a leverage range of 0.75x
to 1.5x in our new Facilities Transformation
Three-Year Plan (FY25 – FY27).
Recognised
industry leader
Technology leadership
Our competitive advantage is embedded in our
people and industry-leading technology, and
this has been a key contributor to a record
Net Promotor Score of +60. Through ongoing
investment, we continue to enhance our unique
Mitie Digital Platform and deliver transformative,
data-driven, ‘intelligent’ solutions to meet the
changing needs of our customers.
This includes Intelligent Engineering – where
we are leading in predictive and preventative
maintenance; Intelligent Security – where we
are pioneering the deployment of resources
in response to risk and threat intelligence;
Intelligent Cleaning & Hygiene – where we are
delivering demand-led cleaning via our sensor
technology; and Intelligent Projects – where our
new Emissions Intelligence service will enable
the automation of emissions data capture and
reporting, and the creation of Net Zero
pathways for our customers.
These solutions leverage our deep capabilities
to aggregate workflow and workforce data
across the built environment through our data
lake and are increasingly being enriched by the
application of Artificial Intelligence and Machine
Learning (AI/ML).
Chief Executive’s review
continued
Capital allocation – investment in growth and increasing shareholder returns
1. Progressive dividend policy
2. No share dilution
3. Infill M&A
4. Share buybacks
33% pay-out ratio
FY24 FY25-27
Market purchase of
20m shares for incentive
schemes for £20m
£66m of acquisitions
completed
Acquired 58m shares
(26m cancelled) for £50m
1
Pay-out ratio 30% – 40%
c.15m shares p.a.
c.£75m of acquisitions p.a.
Excess funds returned
to shareholders
Leverage 0.75x – 1.5x (average net debt/EBITDA)
1. Net spend, including c.£8m cash receipts from the exercise of 2020 SAYE scheme shares (vested in December 2023).
31
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
During FY24, we have been developing Mitie’s
GenAI diagnostic dashboards (Mozaic) in each
of our core service lines, using real-time data to
increase visibility across our customers’ estates
and inform decision-making. Through our
predictive analytics capabilities, we are evolving
our service delivery to demand-led cleaning and
front of house services, threat intelligence and
carbon reporting, and predicting and resolving
asset issues before they fail.
We are also developing GenAI benchmarking
dashboards to compare the performance
of customer estates to industry standards
and competitors, in areas such as energy
consumption, to identify opportunities for
improvement. These dashboards are being
piloted on several Key Accounts in the retail,
distribution and financial services sectors.
Smart Workplaces was launched in H1, to
consult, design and deliver workplaces that
improve the ‘lived’ experience and, through
the adoption of smart technologies, optimise
occupancy levels, footprint and the provision of
wider services within the building. It includes
our digital twin offering, which enables 3D
visualisation, experiential design simulations
and building information modelling (BIM), to
help customers reimagine their workplaces
of the future.
Our strategic partnerships with global IT
companies such as Microsoft, Vodafone,
ServiceNow and Wipro are also developing.
In March 2024, we launched our ‘Emissions
Intelligence’ service in partnership with
Salesforce.com to provide carbon reporting
and reduction tools, complementing our
existing suite of Plan Zero services.
We are also leveraging our partnership with
Microsoft (MS) to deliver increasingly predictive
and preventative solutions to our customers
and enhance internal processes. During FY24,
we fully integrated Azure ChatGPT into Aria/
ESME (which allows customers to report
issues via an app), delivering improved
customer communications and raising case
accuracy to 97%. MS Copilot is delivering
efficiency savings, and we are implementing
AutoGenAI to continue enhancing bid quality
and response times.
Our cyber security credentials are industry
leading. We consistently score above A90 on the
Security Scorecard (an independently assessed
measure), we are a Cyber Essentials Plus and
ISO27001 certified company and we have a
NIST maturity rating of 4.1.
Environment, Social and
Governance (ESG) leadership
Mitie is recognised as a leader in ESG among
global industry peers. These initiatives form a
key part of how we do business, ensuring we
grow sustainably and responsibly. Our leading
credentials also enable us to work with our
customers to realise their own sustainability
and Net Zero ambitions.
During FY24, we secured a place on the CDP
Climate Change A List, placing us among only
2% of 21,000 organisations that are assessed
annually. We received a Platinum rating from the
Sustainable Facilities Management Index (SFMI)
for the third consecutive year and, shortly after
the year end, we received a ‘Low’ risk rating
from Sustainalytics of 10.5 (previously 12.4)
placing us on the threshold of their ‘Negligible’
risk band.
We have ambitious targets to achieve Net Zero
for our operations by the end of 2025, and
across our supply chain by 2035, and received
validation from the Science Based Targets
initiative (SBTi) in April 2023. Our largest
carbon emissions relate to our vehicles, and we
transitioned a further c.1,900 from diesel to
electric vehicles (EVs) in FY24. Our fleet of over
5,000 EVs is one of the largest in the UK and we
won Transport/Fleet Management Project of
the Year (edie) for our ambitious EV transition
plan, among other awards.
We continue to offer career development
opportunities and industry-leading benefits to
our colleagues in order to attract and retain
the best talent. During FY24, we supported
over 1,200 colleagues through apprenticeships
and expanded our offer to over 90 technical,
professional and managerial courses across
a diverse range of areas from heat pump
engineers and data technicians to security
officers, business administrators and
project managers.
We were named in the top 100 Apprenticeship
Employers for the third consecutive year, in
addition to being recognised as a Top Employer
UK and an Inclusive Top 50 UK Employer for
the sixth consecutive year.
Our environment and social value
framework, pages 54 to 77
>5,000
Our fleet of EVs is one of
the largest in the UK
2025
Ambitious target to
achieve Net Zero for
our operations
32
Mitie Group plc
Annual Report and Accounts 2024
Key performance indicators
Monitoring our progress
Mitie’s key performance indicators (KPIs)
are reviewed by the Board and Executive
Committee to monitor performance against
the Group’s most important priorities.
These include measures for evaluating financial
and non-financial performance and balancing
the interests of all stakeholders, including our
shareholders, customers and colleagues.
Our record results in FY24 demonstrate the
resilience of the business and our strong track
record of delivery. We have made further
progress against all KPIs and have met or
significantly exceeded all of the targets in the
final year of our previous Three-Year Plan (FY22
– FY24). We are well positioned to deliver our
new Facilities Transformation Three-Year Plan
(FY25 – FY27) and ambitious financial targets.
A detailed review of performance can be
found in the Chief Executive’s review and the
Finance review.
Operating profit (£m) and margin (%)
before other items
From continuing operations
4.7%
Operating margin
FY23 4.0%
Basic EPS before other items (p)
From continuing operations
Dividend per share (p) and payout ratio (%)
From continuing operations
29%
increase from
previous year
38%
increase from
previous year
Description
Basic earnings per share (EPS) before other items represents our profit after tax
and before other items, divided by the weighted average number of shares in the
year. Our strategy focuses on creating value for shareholders and is expected to
drive EPS growth above that of revenue growth over the medium term.
A reconciliation of basic EPS before other items to the equivalent statutory
measure is provided in Appendix – Alternative Performance Measures on
pages 228 to 231. EPS for FY20 has been restated for the bonus element of
the 2020 Rights Issue.
Our achievement
Basic EPS before other items increased by 29% to 12.3p, reflecting the increase
in operating profit before other items, reduction in net finance costs and benefit
from share buybacks, which more than offset an increase in the underlying
corporation tax rate compared with the prior year.
Find out more on page 51
Description
Dividend per share (DPS) represents the amount of our profit after tax and
before other items that is paid out to shareholders (as an interim and final
dividend), divided by the weighted average number of shares in the year.
The dividend payout ratio reflects the percentage of Basic EPS before other
items that is paid out as dividends. We are targeting a progressive dividend with
a payout ratio of 30% – 40% over the medium term.
DPS for FY20 has been restated for the bonus element of the 2020 Rights Issue.
Our achievement
DPS increased by 38% to 4.0p, reflecting growth in our profitability and a payout
ratio of 33%. The dividend payment is consistent with our wider capital allocation
policy, and reinforces our confidence in continuing to deliver against our strategic
priorities, including the ability to generate sustainable free cash flow.
Find out more on page 7
Revenue (£m)
From continuing operations, including share
of joint ventures and associates
11%
increase from
previous year
Description
Revenue growth reflects new and expanded Key Accounts, the ability to upsell
Projects and the contribution from strategic infill M&A, alongside Mitie’s broader
reputation in the sector. Our target is to achieve high single digit revenue growth
annually over the medium term.
Our achievement
Revenue, including share of joint ventures and associates of £4,511m, a new record
for the Group, reflects 11% growth compared with the prior year. This was
achieved through Key Accounts (including net wins and re-pricing), Projects upsell
and the contribution from recent acquisitions (despite the completion of certain
short-term public sector contracts).
Find out more on page 49
Description
Operating profit and the operating profit margin before other items reflect the
profit we generate after deducting the cost of goods sold and operating expenses.
Profitability can be enhanced by delivering higher-margin projects work, improving
operational efficiencies and reducing our cost base. Our target is to achieve an
operating margin of at least 5% by FY27. A reconciliation of operating profit
before other items to the equivalent statutory measure is provided in Appendix –
Alternative Performance Measures on pages 228 to 231.
Our achievement
Operating profit before other items increased by 30% to £210.2m, driven by
strong revenue growth alongside the benefits from margin enhancement initiatives
and the lower than anticipated impact of inflation. The operating margin increased
by 0.7ppt to 4.7%.
Find out more on pages 49 and 50
FY23
FY21
FY22
FY20
£4,055m
£2,529m
£3,997m
£2,103m
FY 24
£4 , 511m
FY23
FY21
FY22
FY20
9.5p
3.1p
9.2p
7.3p
FY 24
12.3p
FY23
FY21
FY22
FY20
30%
0%
20%
10%
FY 24 33%
4.0p
2.9p
0p
0.7p
1.8p
FY23
FY21
FY22
FY20
4.0%
2.3%
4.2%
3.7%
FY 24 4.7%
£210.2m
£162.1m
£166.9m
£58.8m
£78.1m
Financial
33
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Free cash flow (£m)
Linked to our strategic pillars
£91.9m
increase from
previous year
Description
Free cash flow represents the cash we generate from our operations, after
movements in working capital, that is available to reinvest in our business
for organic and acquisition-led future growth or to return to shareholders.
Our target is to deliver free cash flow of c.£150m annually by FY27.
A reconciliation of free cash flow to the equivalent statutory measure is provided
in Appendix – Alternative Performance Measures on pages 228 to 231.
Our achievement
Free cash flow of £157.6m is £91.9m above the prior year, reflecting the increase in
operating profit, alongside working capital process improvements that contributed
a one-off benefit of c.£25m in the year, following the consolidation of activities into
the shared service centre among other factors.
Find out more on page 52
Return on invested capital (%)
From continuing operations
1.0ppt
increase from
previous year
Description
Return on invested capital (ROIC) is calculated as operating profit before other
items and after tax divided by invested capital. It is a measure of how efficiently the
Group utilises its invested capital to generate profits. We are targeting a ROIC of
>20% annually over the medium term.
The ROIC calculation and a reconciliation of the Group’s net assets to invested
capital are provided in Appendix – Alternative Performance Measures on pages
228 to 231. The ROIC metric used for the purposes of the Enhanced Delivery Plan
requires further adjustments under the detailed rules agreed with shareholders.
Our achievement
ROIC of 26.4% remains above our target of >20%. The 1.0ppt increase from
the prior year is a result of the increase in profit, partially offset by an increase
in invested capital driven by the strategic acquisitions completed in FY24.
Find out more on page 51
FY23
FY21
FY22
FY20
25.4%
8.2%
29.9%
22.3%
FY 24 26.4%
FY23
FY21
FY22
FY20
£146.6m
£30.5m
£(24.5)m
FY 24
£65.7m
£157.6m
Total order book (£bn)
Including retentions and new wins
18%
increase from
previous year
Description
Total order book includes secured fixed-term contract work, and projects and
variable work (including estimated unsecured work). The total order book
reflects our success at winning and retaining customers, and upselling our services.
Improved customer service, market share gains and qualifications on public sector
frameworks are expected to increase the total order book in the medium term.
See Note 3 to the consolidated financial statements for analysis of the secured
order book (which excludes unsecured projects and variable work).
Our achievement
The total order book increased by 18% to £11.4bn, driven by new wins, scope
increases and extensions/renewals across each of the divisions. This includes an
increase of £0.5bn TCV arising on the consolidation of Landmarc.
Find out more on page 4
FY23
FY22
£9.7bn
£9.5bn
FY21
£9.3bn
FY 24
£11.4 bn
Average daily net debt (£m)
and leverage ratio (x)
£76.4m
increase from
previous year
Description
Average daily net debt reflects how much we owe our debt providers.
The leverage ratio is calculated as average daily net debt divided by EBITDA
before other items. We are targeting a leverage ratio of 0.75x - 1.5x, through
cash generation, working capital discipline and appropriate capital allocations.
Our achievement
Average daily net debt of £160.7m increased by £76.4m compared with the prior
year, reflecting strong free cash flow generation being reinvested into planned
capital deployment actions, including returns to shareholders (through share
buybacks and dividends paid), strategic acquisitions and share purchases for
employee incentive schemes.
Find out more on page 52
FY23
FY22
0.4x
0.1x
FY21
0 .5x
FY 24 0.6x
£160.7m
£84.3m
£24.7m
£47.1m
FY20
2.7x
£327.6m
Accelerating
growth
Operating
margin
progression
Cash
generation
ESG
leadership
Linked to
remuneration
34
Mitie Group plc
Annual Report and Accounts 2024
Non-Financial
Key performance indicators
continued
Lost time injury frequency rate
Per million hours worked
0.05
decrease from
previous year
Description
Mitie’s efforts to keep its people safe are of great importance and Mitie continues
to focus on improving safety performance. Our overarching objective is to make
Mitie the safest place to work, because we care, value and protect our people,
the environment and society. Our injury rate is just one measure to monitor our
progress towards zero harm and includes all injury severities.
Our achievement
Mitie’s commitment to ensuring near-misses and hazardous conditions are
reported has helped to maintain a low number of injuries. It means potential
risks can be identified and addressed before matters escalate. Accident rates
have reduced compared with the prior year.
Find out more on page 59
Employee engagement (%)
6ppt
increase from
previous year
Description
The Group’s success is underpinned by the way Mitie leads and engages with its
people. The employee engagement (MyVoice) survey asks colleagues at Mitie how
they feel about working within the organisation, and what improvements could be
made. Beyond the annual survey, the Board and senior management regularly
travel to UK and overseas locations to engage with all employees, including our
frontline colleagues.
Our achievement
The most recent annual MyVoice survey took place in April 2024. The participation
rate increased by 6ppt to 60% of colleagues compared with the prior year. The
overall employee engagement score rose by 6ppt to a record high of 63% of
surveyed colleagues ‘fully engaged’ in the year.
Find out more on page 60
Employee turnover (%)
Females in senior leadership team (%)
6ppt
reduction from
previous year
4ppt
increase from
previous year
Description
Mitie measures the number of employees leaving us voluntarily over a 12-month
period against our overall headcount. Voluntary attrition has been a focus area for
a number of years as we strive to create a ‘Great Place to Work’ and become the
employer of choice in our industry.
The data for FY21 and earlier is for Mitie prior to the acquisition of Interserve.
Our achievement
Employee turnover reduced by 6ppt to 13%. We provide our colleagues with a
comprehensive industry-leading benefits package, including free shares, virtual GP
access for all colleagues and those in their household, and life assurance for all
colleagues. We also host a range of events attended by the Board and leadership
team to promote diversity and inclusion, and ensure our colleagues have their say.
Find out more on page 56
Description
Mitie measures the number of females in the senior leadership team against the
total headcount of the senior leadership team. The senior leadership team includes
the MGX (Executive Committee) and those on the MLT (Mitie Leadership Team).
Our achievement
We have increased the number of females in the senior leadership team by 4ppt
to 32%. We have a well-developed ED&I strategy at Mitie, and we continue to
focus on increasing the representation of women in senior roles across the
business, and supporting their ongoing career progression.
Find out more on page 57
FY23
FY21
FY22
FY20
19%
12%
19%
16%
FY 24 13%
FY23
FY22
28%
24%
FY21
21%
FY20
18%
FY 24 32%
FY23
FY21
FY22
FY20
3.87
2.85
3.55
3.9 4
FY 24 3.82
FY23
FY21
FY22
FY20
57%
55%
50%
46%
FY 24 63%
Linked to our strategic pillars
Accelerating
growth
Operating
margin
progression
Cash
generation
ESG
leadership
Linked to
remuneration
35
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Net Promoter Score (index)
Rebased to include Interserve
18pt
increase from
previous year
Description
Customer Net Promoter Score (NPS) is a widely used measurement derived
by asking customers how likely they are to recommend a company’s products
and services to others. NPS continues to be an important metric for Mitie,
to understand our customers’ overall satisfaction with the quality of services
provided and their willingness to recommend our products and services.
Our achievement
Mitie’s overall NPS score has reached a record +60, a meaningful 18pt
improvement on the prior year and more than double the score reported in
FY21, shortly after the acquisition of Interserve. Supplementary to the main
NPS question, we ask a number of questions to understand how our customers
feel about partnering with Mitie. The responses recognise our collaborative
approach and the innovation and technology we are bringing to our customers.
The FY24 survey captured feedback from over 1,000 customers.
Find out more on page 15
Carbon emissions (Scope 1, 2 and 3)
(tonnes CO
2
e)
Description
Mitie has set ambitious targets to reach Net Zero operational carbon emissions
by the end of 2025, with non-operational emissions targeted by 2035. Mitie will
eliminate emissions from power and transport, eradicate non-sustainable waste
and enhance inefficient buildings to meet the highest environmental standards.
In April 2023, Mitie received validation from the SBTi.
Mitie first reported Scope 3 global emissions data in FY23. Only UK emissions data
is externally verified at present.
Our achievement
Mitie’s Scope 1, 2 and 3 global emissions reduced by 10% to 290,207 tonnes
CO
2
e in FY24 (inclusive of 4,500 verified emissions reduction carbon credits).
Within this, Scope 1 and 2 global emissions reduced by 5% to 21,371 tonnes
CO
2
e (excluding the 4,500 carbon credits), largely reflecting a reduction in gas
consumption as we remove fossil fuel heating systems, and the continued transition
of the fleet to EV. We have continued to enhance our Scope 3 data capture and
reporting, and also benefited from suppliers reducing their own carbon emissions.
Find out more on pages 70 to 75
FY23
322,553
FY 24 290,207
FY23
FY21
FY22
+42
+24
+39
FY 24 +60
10%
reduction from
previous year
36
Mitie Group plc
Annual Report and Accounts 2024
Our business model
Creating value for stakeholders
Our people
We know that our people
give their best when we show
them we care. Our success is
underpinned by the way Mitie
inspires, motivates and engages
with its people, who in turn take
personal pride in their work
and deliver exceptional service
to our customers.
See pages 56 to 60
Our technology
We are enhancing our unique
Mitie Digital Platform and
delivering transformative
solutions through technology
investment. We build operational
excellence through efficiencies
and automation and create value
by improving the customer
experience. This Platform
differentiates us in the market,
creating compelling and frictionless
experiences and driving adoption,
loyalty and retention.
See page 12
Our expertise
We are a trusted partner because
of our market-leading service
and because we place customers
at the heart of our business.
We use our expertise to improve
efficiency, deliver innovative,
technology-led solutions and make
a valuable, measurable difference.
See page 12
Our scale and reach
We are the UK market leader for
our industry and in each of our
core service lines. We also hold
leading sector positions, including
in central government, defence,
retail, manufacturing, transport
and logistics. The scale of our
operations allows for extensive
self-delivery, and our national
reach enables us to service large
customers with a presence
throughout the UK.
See pages 16 to 23
Our strategy
Our strategy is focused on
margin-accretive growth and
enhanced shareholder returns.
We will continue to build on our
core business and extend our
market leadership. Our growth
will be accelerated by the key
pillars of Key Accounts wins and
retentions, Projects upsell and
strategic infill M&A.
See pages 24 to 25
Our commitment to society
Our vision is to make a lasting
positive impact on society by
delivering long-term benefits for
the environment, developing a
skilled workforce to support a
brighter future for all and leaving
a legacy for the communities in
which we operate.
See page 54
Our financial position
We have a strong balance sheet,
low leverage and an investment
grade credit rating. We are
focused on generating sustainable
free cash flow, which will
enable us to deliver enhanced
shareholder returns and
improved outcomes for all
of our stakeholders.
See page 49 to 53
We deliver exceptional service, every day. We provide our customers with integrated FM,
bundled or single line services, underpinned by technology to improve the customer experience
and deliver efficiencies across service lines and sectors.
Our customers expect us to deliver outstanding working environments that are welcoming, efficient and
safe. Buildings and workspaces are about the people in them, the progress they enable, the environment
they influence and the communities they serve. Our business is focused on delivering the exceptional,
every day, and creating value for our colleagues, customers and wider stakeholders.
Our resources and capabilities
Our core service lines
Intelligent
Engineering
Maintenance
Intelligent
Security
Intelligent
Cleaning
& Hygiene
Intelligent
Projects
See page 18
See page 22
See page 20
See page 16
37
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Diligence, innovation and design
We start by engaging with a new or existing customer
to understand its needs or any changes to its
requirements. Using our strategic frameworks to help
link operational objectives to the bigger picture, we
design an innovative solution, leveraging our expertise,
knowledge and technology.
Mobilisation, transition and transformation
We look to mobilise our contracts in the most efficient
way. Once in operation, we are continually looking for
opportunities to remove cost, drive efficiencies, expand
our offering where it would be of benefit to customers
and become a valued strategic partner.
Insights to drive value and
continuous improvement
Using our proprietary technology, we continuously
collect and analyse information about our
customers’ buildings and assets, and the wellbeing
of their employees, to drive greater value and
continuous improvement.
Communities and environment
Mitie’s vision is to generate social value
through everyday operations, leaving a
legacy for the communities in which we
work to support a brighter future for all.
See page 41
Government
Mitie is a significant contributor of tax
to the UK Exchequer, including UK
corporation tax and employer’s
National Insurance contributions.
See page 41
Equity shareholders and debt holders
Creating value through growth and margin
enhancement, while delivering sustainable
free cash flow, will deliver higher returns.
See page 38
Recognising that every customer is different, our
approach is tailored to each customer’s unique needs
and is designed to deliver continual improvements
throughout the life of the contract.
Customer NPS
+60
Employee
engagement
63%
Supplier NPS
+14
MSCI rating
AA
ROIC
26.4%
Taxes paid
£963m
Suppliers
We are committed to ensuring a
responsible supply chain by requiring our
suppliers to comply with our Procurement
Policy and Supplier Social Value Policy.
In turn, our suppliers get access to more
prestigious customers.
See page 39
Colleagues
We are creating a ‘Great Place to Work’,
showing our colleagues that we care.
We inspire, motivate and engage with our
people, providing industry-leading benefits
alongside enhanced training and development
to upskill them.
See page 40
Customers
We are a trusted partner for our customers,
helping them create exceptional workplaces.
See page 38
How we do it The value we create
38
Mitie Group plc
Annual Report and Accounts 2024
Stakeholder engagement
Playing a crucial part in our strategy
Our equity shareholders range from global
institutions to small retail investors, including all
of our frontline colleagues to whom we have
gifted free shares. We also have international
debt holders.
Why we engage
Access to capital from supportive, long-term
investors (the owners of our business) is
vital to our success. We also need access to
sources of liquidity and other banking services.
Our priority is to ensure our stakeholders
understand and support Mitie’s strategy,
performance and culture.
How the Group engages
• Annual Report and Accounts
• Stock Exchange announcements and
press releases
• AGM (hybrid to maximise shareholder
participation)
• Corporate website, including
Investors section
• Results presentations and post-results
engagement (roadshows)
• Capital market events and site visits
• Ad hoc analyst and investor interactions
How the Board engages and is kept informed
• Annual Chair roadshow (also attended
by NEDs)
• Ad hoc investor engagement with the Chair
and NEDs
• Board consideration of, and responses to,
investor feedback and queries
• Investor Relations report is a standing agenda
item for the Board
Key issues
• Financial performance, including growth in
revenue and profit
• Free cash flow generation and balance
sheet strength
• Capital allocation, including strategic infill
M&A, dividends and share buybacks
• Remuneration policy and executive
remuneration
• Governance and transparency
• Sustainability (ESG) performance
• Our approach to our people and how
it defines our culture
Actions taken in FY24
• 106 investor and bank sales team meetings
with executive management
• 27 meetings and emails between Chair/NEDs
and shareholders (including remuneration
policy consultation)
• Two formal results presentations with Q&A
• Capital Markets Day to introduce our
Facilities Transformation Three-Year Plan
(FY25 - FY27) and new targets
• Ongoing engagement with revolving credit
facility (RCF) providers, private placement
noteholders and credit rating agency
• Discussions with our RCF providers to extend
the facility (completed in October 2023)
• Ongoing engagement with the trustees of
Mitie’s defined benefit pension schemes,
including to agree the latest triennial
valuation and amend the schedule of
contributions for the main scheme
(to reflect the reduced deficit)
Measurement (link to KPI)
• Revenue
• Operating profit and margin
• EPS
• Dividend
• ROIC
• Total order book
• Free cash flow
• Average daily net debt and leverage
• Carbon emissions
Our large blue-chip customers across both the
private and public sectors include critical national
infrastructure, manufacturing, healthcare, retail,
professional services, transport and logistics
organisations.
Why we engage
To grow profitably and sustainably, we need
strong relationships with a loyal customer base
that will increase their spend over time and
recommend Mitie. Customer engagement helps
us to develop these relationships and improve
the customer experience.
How the Group engages
• Regular engagement by senior leadership
with customers
• Customer experience and satisfaction surveys
• Contractual measurement through KPIs
• Participation in industry forums and events
• Regular communications, including press
releases, website and social media
• Newsletters, articles, thought leadership and
case studies
How the Board engages and is kept informed
• Customer experience survey results
• Regular Board updates on customer views
• Accounts health and performance reviews
Key issues
• Technology and innovation
• Health, safety and sustainability
• Quality assurance and insights
• Economic outlook, i.e. inflationary rises,
cost of living and geopolitical uncertainty
• Regulatory compliance, governance and
transparency
• Decarbonisation
• Energy security
Actions taken in FY24
• Annual customer experience programme
measuring Net Promotor Score (NPS)
• Over 1,000 actions identified through
the annual NPS programme, focusing
on customer priorities, innovation and
service delivery
• User experience surveys, bespoke to service
delivery and customers
• VIP strategic conversation programme –
insights from top 20 customers
• Incorporated Cabinet Office biannual
survey results into joint Cabinet Office and
Mitie commitments across strategic public
sector accounts
• Hosted and attended topical industry events
• Customer engagement programme to
showcase our centres of excellence in
Birmingham, Manchester and Northampton
Measurement (link to KPI)
• Customer satisfaction (customer NPS)
• User experience surveys
• Helpdesk user surveys
• 360 feedback from Cabinet Office
supplier survey
• Satisfaction ratings for individual
contract performance
• Engagement and satisfaction with
events management
Equity shareholders and debt holders
Customers
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Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Mitie has a broad supply chain, generating a
spend of more than £2bn per annum and
actively promoting SMEs, VCSEs and diversely
owned businesses.
Why we engage
Over 8,000 suppliers make a vital contribution
to Mitie’s performance. We encourage our
suppliers to work collaboratively and responsibly,
to ensure continual improvement in our
operations. We are committed to ensuring a
responsible supply chain.
How the Group engages
• Supplier NPS survey of Mitie’s Preferred
Supplier List (PSL)
• Supplier Management Programme, on to
which Mitie suppliers are inducted
• Communications through various channels,
including MitieSuppliers.com and Coupa
(our digital supplier platform)
How the Board engages and is kept informed
• Chief Procurement Officer updates are
provided at Board meetings
• A report is issued for every Board meeting,
highlighting key developments affecting the
business, including the impact of inflation,
latest deals with suppliers and progress
against targets
• Monthly business reviews are conducted
with each business division and internal
stakeholder group
Key issues
• Economic outlook, i.e. inflationary rises, cost
of living and geopolitical uncertainty
• M&A and subsequent integration and
standardisation of processes within
acquired entities
• High standards of product quality and
service delivery
• Continuous operational improvement and
cost control
• Responsibility and integrity, including ESG
matters, trust and ethics
Actions taken in FY24
• Improved www.mitiesuppliers.com, the
platform through which suppliers can access
key information
• Development of a robust suite of
PowerBi dashboards and reports to
monitor performance
• Continued as a corporate member of
Minority Supplier Development UK
• Supported Social Enterprise UK, encouraging
local enterprises into Mitie supply chain
• Re-launch of the Supplier Management
Programme, defining five core values all
Preferred Suppliers will be measured against
• Launch of a new Preferred Supplier List
optimisation initiative
Measurement (link to KPI)
• Average daily net debt and leverage ratio
• Carbon emissions
• Supplier satisfaction score (supplier NPS)
• Diversity in the supply chain (e.g. VCSE, SME,
racial diversity, disabled and women-owned)
Suppliers
Engagement in action
Capital Markets Day – October 2023
In October 2023, the Mitie senior leadership team hosted a Capital
Markets Day at its head office in The Shard. The event was attended by
over 50 guests, including institutional investors, sellside equity research
analysts, lending relationship banks, Cabinet Office representatives and
corporate advisors.
During the afternoon, 10 members of the leadership team, including
the CEO and CFO, introduced Mitie’s new Facilities Transformation
Three-Year Plan (FY25 – FY27). They outlined how our customers’
needs are changing, explained how Mitie is differentiated from its
competitors and set out how the Group will achieve the ambitious
new financial targets that have been set for the period.
The event featured a series of presentations and showcased Mitie’s
leading technologies in action in its newly launched Transformation Hub.
This Hub continues to be used for technology demonstrations to a
range of stakeholders, including customers, journalists, investors, and
other debt and equity market participants.
40
Mitie Group plc
Annual Report and Accounts 2024
Stakeholder engagement
continued
Mitie’s exceptional and diverse colleagues work
around the clock, caring and supporting each
other, our customers and the communities
we serve.
Why we engage
Mitie is a destination employer within the
Facilities Management industry. We promise
to provide our people with a place of work
where they can thrive and be their best every
day, and to create a diverse and inclusive
workplace where every colleague can reach
their full potential.
How the Group engages
• Regular employee engagement surveys with
action taken on feedback
• A mix of online and offline communications,
campaigns and channels
• MyMitie – our Employee Value Proposition
campaign
• Recognition of our exceptional and long-
service colleagues through Mitie Stars
• Town Hall company updates, CEO updates,
podcasts and videos
• Annual performance reviews, and learning
and development training
• Career development through MyCareer
• Confidential whistleblowing service
• Senior leadership outreach events
How the Board engages and is kept informed
• Colleague listening sessions: engaging with and
responding to feedback from colleagues at
events throughout the year, led by Jennifer
Duvalier, the designated NED for workforce
engagement and attended by Board members
(two to three per session)
• Direct access to the CEO via ‘Grill Phil’, his
interactive feedback channel
Key issues
• Culture and values
• Reward and recognition
• Tools to do the job: systems, processes
and technology
• Health, safety and wellbeing
• Equality, diversity and inclusion
• Learning and development
• Rising cost of living
• People manager engagement
• Ability to attract, recruit and retain key talent
Actions taken in FY24
• Awarded 20,000 Mitie Stars and invested
£66,580 prize money in reward schemes, as
showcased at the Mitie Recognition Event
• Awarded free shares to all colleagues for the
fourth year in a row
• Delivered 20 diversity network events,
with our six flagship events having over
500 colleagues attending
• Launched carer’s leave 12 months earlier
than government guidelines
• Expanded our apprenticeship offer to more
than 90 technical, professional and managerial
courses, including a Senior Women in
Leadership Level 7 course in partnership
with Corndel
• Delivered 14 Board listening events with
Board members, both in the UK and overseas
• Delivered 371 leadership events through the
Team Talk Local initiative
Measurement (link to KPI)
• Females in senior leadership
• Racial diversity in senior leadership
• Employee turnover
• Lost time injury frequency rate
• Number of apprentices
• Employee engagement
Colleagues
Engagement in action
Board listening sessions
Board listening sessions are firmly established in our annual engagement
calendar and form a core part of the MyVoice pillar of our Employee
Value Proposition. During these sessions, small diverse groups of 10–20
colleagues from across the business, particularly those working on the
frontline, meet with Board members to share their views on what it is
like to work at Mitie.
The discussions create a cycle of feedback; helping to inform decision-
making related to our people strategy and ensuring that colleagues hear
about the actions that have been taken in response to their feedback to
help drive engagement and trust. They also support our commitment
to ensuring that Mitie’s Board and executive leadership team are visible
and accessible to colleagues.
During FY24, Board members participated in 14 listening sessions
at locations across the UK, including to meet with colleagues in our
newly acquired businesses, and in Cyprus, the Falkland Islands (virtual),
Gibraltar and Spain. Board members also joined a further three
diversity network events. Session summaries are presented at Board
meetings, and actions are assigned and tracked through to completion,
with participating colleagues being kept informed of progress.
41
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Our communities comprise those who live and
work locally to our operations and those who
represent the needs of the communities we
operate in, including charities, independent
bodies and local government.
Why we engage
Building positive relationships with local
communities is important for our performance
and helps us to recruit and retain talented
people. We support our communities
through a wide range of volunteer and
fundraising initiatives.
How the Group engages
• Employee volunteering
• The Mitie Foundation programmes
• Careers events hosted in the local
communities where we work
• Local charity fundraising events
• Local community events
• Giving Back volunteering days
• Meeting local politicians
How the Board engages and is kept informed
• Mitie’s ESG Committee is chaired by a NED
• The ESG Committee oversees new initiatives
and monitors progress on priorities, including
volunteering, mental health and the Armed
Forces Covenant
• Each priority has an agreed target, with
performance reported via Mitie’s Social
Value dashboard
• The Committee Chair provides an update
at each Board meeting
Key issues
• Jobs and investment
• Local operational and environmental impact
• ESG performance
• Rising cost of living
Actions taken in FY24
• 24,626 volunteering hours delivered
• Volunteering events undertaken with
Poppy Appeal, Macmillan coffee mornings,
NSPCC and Career Ready Plus
• Introduced sponsored internships with
Mencap and DFN Project SEARCH
• Mitie sponsoring and promoting the
Army Rugby Union
• Contributed £110,000 to good causes
Measurement (link to KPI)
• Carbon emissions
• Volunteer hours
• Community investment
The services we provide on behalf of the UK
Government affect the lives of thousands of
people every day. Public sector work accounts
for over half of our revenue annually.
Why we engage
The UK Government sets the regulatory
framework, and our continued engagement
enables us to support in shaping new policies,
regulations and standards. The decisions of
government and other regulators can have a
major impact on our business, our customers
and the wider community.
How the Group engages
• Responses to government consultations
• Participation in industry forums
• Conferences and speaking opportunities
• Annual Report and Accounts
• Attendance at events with Parliamentary
stakeholders
• Letters to and meetings with policymakers
to share relevant updates
• Engagement with relevant All-Party
Parliamentary Groups
How the Board engages and is kept informed
• Regular updates in Board papers
• Material issues discussed at Board meetings
Key issues
• Mitie’s financial performance
• Major business updates
• Mitie’s ESG performance
• Mitie’s governance processes and
transparency
• How existing or anticipated legislation is
impacting or may impact our business
• Mitie’s experience of public sector
procurement processes
Actions taken in FY24
• Regular executive meetings with the Cabinet
Office (CO) and CO Director for Markets
and Suppliers
• Annual, quarterly and monthly Partnership
Executive Meetings with the CO and
government department representatives
• Submitted annual strategic review for Mitie
to the CO for its assessment
• 24 meetings and events with senior
government stakeholders
• Hosted panel session at the Labour Party
Conference on how the Apprenticeship
Levy could evolve to boost green skills
• Working with our external public affairs
consultants, we foster senior stakeholder
relationships and lobby across the public
sector and the political spectrum
Measurement (link to KPI)
• Customer satisfaction (customer NPS)
• Satisfaction ratings for individual
contract performance
• Meetings with policymakers
• Evidence submissions and engagements
related to policy
Communities
Government
42
Mitie Group plc
Annual Report and Accounts 2024
Section 172 statement
Considering our stakeholders in key business decisions
Key decisions in the year
We believe that considering our stakeholders in
key business decisions is not only the right thing
to do but is fundamental to our ability to drive
value creation over the longer term. Balancing
the needs and expectations of our stakeholders
has never been a more important or challenging
task. Board Directors are bound by their duties
under the Companies Act 2006 (the Act) to
promote the success of the Company for the
benefit of our members as a whole. In doing
so, however, we must have regard for the
interests of all of our stakeholders, to ensure
the long-term sustainability of the Company.
The Board is therefore responsible for ensuring
that it fulfils its obligations to those impacted by
our business, in its stakeholder consideration
and engagement. Stakeholder consideration
is embedded throughout the business, with
the Board and senior management actively
engaged in a wide range of communication
and engagement initiatives.
The following pages comprise our Section 172(1)
statement, setting out how the Board has, in
performing its duties over the course of the
year, had regard to the matters set out in
Section 172(1) (a) to (f) of the Act, alongside
examples of how each of our key stakeholders
has been considered and engaged. Further
information can also be found throughout
the Strategic report and in our exploration
of key strategic decisions made in the
Governance report.
Details of Mitie’s key stakeholders, how the
Group has engaged with them during FY24
and the outcomes of that engagement are set
out on pages 38 to 41. Engagement activities
specifically carried out by the Board collectively
and individually can be found on page 100.
The Board made various decisions during the
year, promoting the Company’s purpose,
strategy and long-term sustainability. All Board
decisions are made having considered the
matters set out in Section 172(1) of the Act,
and here we analyse some of these decisions
and considerations in detail.
New three-year plan (FY25 – FY27)
In September 2023, the Board approved Mitie’s new Facilities Transformation
Three-Year Plan (FY25-FY27), which sets out ambitious financial targets.
The plan will enhance the built environment of Mitie’s customers by improving
productivity, working environments, security and cleanliness, while reducing their
carbon intensity.
When reviewing the plan, during its development, the Board considered the UK
Facilities Management market, margin enhancement initiatives, financial targets
and divisional growth plans, as well as the key role of technology and talent.
• Focus on simplifying and improving our employees’ experience; and
• Empowering Mitie’s people to best serve our customers and use their voice
to improve our business.
• M&A strategy focused on driving facilities transformation; and
• Mitie’s strong balance sheet and low leverage provides a good platform
from which to invest in growth and increase shareholder returns.
• M&A strategy focused on driving facilities transformation; and
• Investing in technology, creating an integrated ecosystem of
connected technologies.
Employees
Shareholders
Customers
• Accelerating the path to Net Zero.
Community and environment
Actions taken by the Board
• The Board considered detailed papers prepared by
management on the plan at the July 2023 Board
meeting and September strategy day; and
• Held a Capital Markets Day in October to present
the Plan.
Outcome and impact of the decision
The Board approved the plan at the strategy day in
September 2023. The plan will extend Mitie’s market
leadership positions in the UK – the largest and most
dynamic FM market in Europe – and will enable Mitie to
reach its full potential, both financially and through Mitie’s
positive contribution to the environment and society.
43
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Key decisions in the year
Acquisitions
Mitie completed seven strategic acquisitions during FY24: Linx International
(April), RHI Industrials (May), the purchase of the assets of G2 Energy via a
liquidation process (July), JCA Engineering (September), Biservicus (September),
Cliniwaste (October) and GBE Converge (November). Mitie also completed the
step acquisition of Landmarc in November 2023, when the Group obtained
control of the business.
When considering each proposed acquisition, the Board considered the strategic
benefits and risks for stakeholders.
• New colleagues benefit from becoming part of a larger, more profitable
company;
• They also benefit from our established engagement mechanisms, culture and
values, substantial learning and development opportunities, technology and
innovation, benefits and rewards;
• Potential employee synergies on consolidation; and
• Talent flight risk from new colleagues.
• Opportunities to enhance our portfolio of services, enabling us to deliver new
and complementary services to existing customers as well as new customers;
• Roll-out of our customer-facing technologies to the customers of the acquired
business, improving those customers’ experience; and
• Risk of renegotiation or early termination of customer contracts.
• Impact on EPS and return on invested capital;
• Potential cost synergies, as well as the possibility of unexpected liabilities and costs
or inaccurate assumptions and estimates relating to benefits and synergies;
• Expected stronger financial profile supporting a progressive dividend policy; and
• Possible difficulties integrating the acquired business.
• Impact on our social value agenda and Plan Zero targets and milestones.
Employees
Customers and suppliers
Shareholders
Community and environment
Actions taken by the Board
• Consideration of detailed Board papers prepared and
presented by divisional management and the output
from a comprehensive due diligence process;
• Consideration of the proposed acquisitions in the
context of Mitie’s strategy; and
• Discussion and decision on the structure and timing
of post-investment reviews, based on learnings from
previous acquisitions.
Outcome and impact of the decision
After due consideration of the matters set out in Section
172 of the Act, related risks and opportunities, and the
impact on wider stakeholders, the Board approved the
acquisitions. These acquisitions enhanced Mitie’s position
as leader in the intelligence and technology-led Fire &
Security market (Linx, RHI, GBE and Biservicus) and
Mitie’s Mechanical & Electrical (M&E) engineering
credentials within the Buildings Infrastructure segment of
the Projects business (JCA Engineering). The acquisition
of Cliniwaste enhanced Mitie’s self-delivery capabilities in
support of its existing clinical waste contract with the
NHS, as well as helping to achieve its sustainability targets.
44
Mitie Group plc
Annual Report and Accounts 2024
Share buyback and purchase of shares for all employee
incentive schemes
In April 2023, Mitie announced a share buyback programme up to a maximum
consideration of £50m, split into two tranches of £25m. The announcement also
confirmed the Board’s decision to purchase shares for all employee incentive
schemes to eliminate the otherwise dilutive effect to shareholders of issuing
new shares to fulfil the schemes.
When discussing the proposal, the Board considered the cash flow generated
during FY23 and the strength of the balance sheet, as well as the ability to
support future growth opportunities and increased returns to shareholders
in relation to the capital allocation policy.
Mitie Group plc Pension Scheme
Following the completion of the latest triennial valuation of the Mitie Group plc
Pension Scheme (the Scheme), which showed a material reduction in the Scheme
deficit, the Board considered several recommendations from management
to reduce the annual deficit repair contributions and/or accelerate the exit
from Mitie’s obligations under the Scheme. When discussing the proposal the
Board considered:
Actions taken by the Board
• Consideration of detailed Board papers prepared and
presented by management on Mitie’s capital allocation
policy, including updates on financial performance
and liquidity;
• Discussions on the rationale for a buyback
programme, including the quantum and methodology,
governance and affordability, level of distributable
reserves, mechanics, execution and the timing of such
purchases; and
• Consideration of detailed Board papers prepared and
presented by management on proposed share plan
funding, including cash cost and affordability.
Outcome and impact of the decision
During the year, a total of 58.6m shares were purchased
under the buyback programme, of which 32.5m were
bought back into treasury to satisfy Mitie’s 2020 SAYE
scheme which vested in December 2023. The remaining
shares were cancelled. As at 31 March 2024, 27.4m
2020 SAYE options had been exercised by employees,
resulting in Mitie receiving £7.5m from the 27.3p option
price paid. This cash was used towards the funding of the
shares cancelled under the share buyback programme,
resulting in a net outlay of £50m for the return of value
to shareholders.
Further information on our discretionary share plans,
including the outcome of the July 2021 Enhanced
Delivery Plan, can be found in the Directors’
remuneration report, which begins on page 126.
The Company has since launched a further £50m
buyback programme for FY25 as part of the capital
allocation policy.
Actions taken by the Board
• Consideration of detailed Board papers prepared and
presented by management setting out background,
current position, options and recommendations for
theScheme.
Outcome and impact of the decision
Improved market conditions, together with Mitie’s
contributions, had materially reduced the Scheme
deficit and Mitie’s consequent exposure to the Scheme
and provided the opportunity to begin planning for
extinguishing Mitie’s overall liability.
In January 2024, the Board approved a proposal for
management to seek an agreement with the trustee of
the Scheme to reduce near-term cash contributions as
part of discussions to finalise the March 2023 valuation.
This resulted in a reduction in deficit contributions from
c.£14m to c.£7m per annum.
A full settlement could be considered in due course.
• Return of value to shareholders and offsetting of any dilution from new
share issues in connection with Mitie employee incentive schemes;
• Impact on distributable reserves and ability to pay dividends; and
• Impact on capital available for future M&A activities.
• Significant cash saving creating headroom in free cash flow.
Pension scheme
• Ability to continue to meet Mitie’s 2021 commitment to reach a fully funded
position on a long-term funding basis by 2030; and
• Maintain a secure funding position for the Scheme within regulatory
parameters, thereby ensuring that Scheme members’ interests continue
to be protected.
• Ability to stay well within financial covenant ratios and maintain financing
headroom, ensuring RCF banks and private placement noteholders were
not disadvantaged.
• Launch of buyback programme sends a positive signal that the Company
is doing well and has a strong balance sheet; and
• Save As You Earn (SAYE) schemes to be satisfied with Treasury shares
rather than shares held by the Mitie Group plc Employee Benefit Trust,
mitigating unnecessary stamp duty expenses for employees.
Shareholders
Debt holders and rating agency
Pension scheme
• Ensuring the Mitie Group pension scheme was not unfairly treated as a
result of implementing the buyback programme.
Employees, customers and suppliers
Shareholders
Key decisions in the year
Section 172 statement
continued
45
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Operating review
Our divisional performance
Business Services
Business Services is the UK’s largest provider of technology-led Security and Cleaning & Hygiene services across c.2,000
contracts, with sector expertise in Retail, Transport, Central Government and Financial & Professional services. It also provides
Landscaping and Waste services, and Mitie’s Spanish business is reported within the division.
Performance highlights
Performance highlights
• Revenue increased by 5% to £1,490m (FY23:
£1,414m), reflecting contract re-pricing,
acquisitions, increased projects work, and net
wins, partially offset by the completion of
higher margin short-term public sector works
• Operating profit before other items increased
by 5% to £97.0m (FY23: £92.3m), largely
reflecting margin enhancement initiatives and
the contribution from acquisitions
• £2.2bn TCV of contract wins, scope increases
and extensions/renewals (FY23: £1.3bn)
resulted in a 39% increase in the total order
book to £2.5bn (FY23: £1.8bn)
• Five acquisitions completed, building on the
division’s leading position in the UK
intelligence and technology-led Fire & Security
market, and expanding its security offering
in Spain
• Awards include: six British Security Awards
2023; three Fire & Security Matters Awards
2023; one UK Outstanding Security
Performance Award 2024; Pro-Landscaper
Sustainable Company of the Year; and four
Retail Risk Fraud Awards 2023
Operational performance
Business Services delivered a resilient
performance in FY24, with revenue benefiting
from contract re-pricing, the contribution from
acquisitions, increased project works, and net
wins. This growth was partially offset by the
completion of higher margin, short-term public
sector works, such as the Afghan Relocations
and Assistance contract, and residual
Covid works.
The division secured £2.2bn TCV of contract
wins, scope increases and extensions/renewals
primarily in the Critical National Infrastructure
(CNI), financial services, and retail sectors.
Wins and scope increases included for Aena in
Spain, further Amazon sites, expanded security
provision for the Home Office, expanded
cleaning and security services across Landsec’s
estate, Lloyds Banking Group (LBG) projects
work, London South Bank University, and
Phoenix Group. The largest extensions were
LBG, Landsec and Network Rail, while other
notable renewals and extensions included
HMRC, JLL and Sky.
Margin enhancement initiatives continued at
pace and offset the impact of the completion
of the higher margin, short-term public sector
works. The initiatives primarily focused on
operational excellence and productivity
improvements, including enhancing the
Workplace+ workforce management app, in
order to optimise workforce productivity, and
to improve workflows across core services.
Mitie’s Fire & Security business has further
strengthened its position as a leading integrated
systems provider through organic growth, and
through the acquisitions of RHI Industrials (May
2023) and GBE Converge (November 2023).
These businesses have broadened the scope of
the division’s fire protection, electronic security
and remote monitoring services to encompass
perimeter security, civil engineering, and IT
networking & managed services capabilities.
They have also boosted the division’s projects
pipeline in CNI growth markets, including
numerous perimeter security projects for
National Grid and National Gas, and c.£30m
of data centre fitout projects.
Mitie also acquired Linx International (April
2023), the Biservicus security business in Spain
(September 2023), and Cliniwaste (October
2023), a specialist in treating single use plastic
waste in clinical environments.
Spain revenue increased by 12%, with new
contract wins more than offsetting the
completion of Covid work in the prior year.
New wins included Aena (airport operator),
Dirección General de Racionalizatión y
Centralización de la Contratación (Ministry of
Finance) and Administrador de Infraestructuras
Ferroviarias (state owned railway company).
Waste revenue increased by 4%, primarily
through organic contract growth. Waste
benefited from Group contract wins including
DIO and Phoenix Group and extensions
including Covent Garden, JLL, Landsec and LBG.
Landscapes revenue increased by 5%. New
wins included Amazon, Canal and River Trust,
Scottish Power and Yorkshire Water, whilst
contract extensions were secured with the DfT,
LBG and Network Rail. Within Landscapes,
Biotecture (living walls specialist) secured
notable projects with Mace Group, McLaughlin
& Harvey and Rybrook Group.
5%
Revenue growth
5%
Operating profit growth
£2.5bn
Total order book
Business Services, £m FY24
Restated
1
FY23 Change
Revenue 1,490 1,414
2
5%
Security 823 782 5%
Cleaning 407 390 4%
Spain 114 102 12%
Waste 77 74 4%
Landscapes 69 66 5%
Operating profit before other items 97.0 92.3
2
5%
Operating profit margin before other items 6.5% 6.5%
2
–
Total order book £2.5bn £1.8bn 39%
Number of employees 39,157 38,124 3%
1. Restated to reflect the change to divisional reporting from H1 FY24 to include Spain, Waste and Landscapes.
2. Includes £15m revenue and £7.0m operating profit from Covid contracts. Excluding this, the underlying operating
profit was £85.3m and the operating profit margin was 6.1%.
46
Mitie Group plc
Annual Report and Accounts 2024
Operating review
continued
Technical Services
Technical Services is the UK’s largest provider of Engineering and Maintenance services, serving c.350 contracts. Through existing
capabilities and infill M&A, the division also delivers transformational engineering projects in the high-growth categories of
Buildings Infrastructure, Decarbonisation and Telecoms Infrastructure.
Performance highlights
Performance highlights
• Revenue increased by 15% to £1,326m (FY23:
£1,154m), benefiting from continued growth
in projects work, acquisitions, contract
re-pricing, and prior year contract wins
• Operating profit before other items increased
by 30% to £44.3m (FY23: £34.1m), reflecting
contract growth, margin enhancement
initiatives, and acquisitions, partly offset by
unrecoverable cost inflation
• £1.2bn TCV of contract wins, scope increases,
extensions/renewals (FY23: £1.0bn) resulted
in a 6% reduction in the total order book to
£1.5bn (FY23: £1.6bn), due to contract losses
• JCA Engineering and G2 Energy acquired,
expanding the division’s engineering
projects capabilities
• Awards include: Best Low Carbon Solution –
Telca 2023; Net Zero Strategy – Energy
Management Awards; People Management &
Talent Retention – IWFM Awards 2023;
Project of the Year – CN Specialist Awards
(Custom Solar); UK Partner in Safety/National
Award for Safest Contractor – INEOS
Operational performance
Technical Services delivered a strong revenue
performance as a result of the continued
growth in project works, growth in the recent
acquisitions, contract re-pricing and prior year
contract wins (e.g. Dublin Airport Authority,
National Grid and NATS).
Notable contract wins and scope increases in
FY24 included Amazon, BAE Systems, LBG
projects work, Phoenix Group and the Scottish
Government. Extensions were secured with
LBG, Mitie’s largest private sector customer,
with the division continuing to benefit from
project work related to its branch refurbishment
programme. Contracts were also renewed with
GSK, Network Rail and Sky.
Margin enhancement initiatives were delivered
across the Target Operating Model and
Operational Excellence programmes, as well
as through divisional overhead cost savings.
During FY24, a new helpdesk Optimiser tool
was launched to further improve the efficient
deployment of engineers. The division is also
investing in Gen AI Mozaic to build customisable
dashboards and provide data-led insights using
Artificial Intelligence.
The Technical Services operating margin
increased by 0.3ppt to 3.3% in FY24 (FY23:
3.0%). It remains below that of the Group as a
whole due to factors including: 1) the division
absorbing the management cost of IFM
contracts; 2) a higher depreciation charge
relating to investments in technology; 3) a higher
exposure to non-recoverable cost inflation;
and 4) the investment required in recent infill
acquisitions, and underperformance in the
Telecoms business, where the terms of certain
frameworks are being renegotiated.
Approximately half of Mitie’s £1.1bn Projects
revenue is delivered through Technical Services.
During FY24, Technical Services enhanced
its projects capabilities, including in design,
mechanical and engineering works, and in
high-tech building infrastructure (such as data
centres), through the acquisitions of JCA
Engineering and G2 Energy (assets purchased
in July through a voluntary liquidation process).
There have been notable early successes, with
JCA winning a significant project for Kao at its
Harlow data centre campus, and G2 winning
a contract for Mytilineos Energy & Metals to
deliver high voltage electrical infrastructure.
The division has benefited from continued
growth in a wider range of projects delivered
to customers including the BBC, the Scottish
Government, LBG and Deloitte. One of the
largest projects completed in FY24 was the full
refurbishment and fitout of a 100-year-old
manufacturing facility for Rolls Royce to support
mission-critical turbine engine assembly.
Technical Services, £m FY24 FY23
1
Change
Revenue 1,326 1,154 15%
Maintenance 795 770 3%
Projects 531 384 38%
Operating profit before other items 44.3 34.1 30%
Operating profit margin before other items 3.3% 3.0% 0.3ppt
Total order book £1.5bn £1.6bn (6)%
Number of employees 9,552 9,841 (3)%
1. Projects revenue restated to include £230m of projects delivered for customers as part of large FM contracts
(previously reported in Maintenance).
15%
Revenue growth
30%
Operating profit growth
£1.5bn
Total order book
47
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Performance highlights
• Revenue grew by 13% to £938m (FY23:
£828m), benefiting from increased project
works, the consolidation of Landmarc,
and contract re-pricing, partly offset by
net contract losses
• Operating profit before other items grew
by 34% to £80.4m (FY23: £59.8m), largely
reflecting the delivery of margin enhancement
initiatives and increased levels of higher
margin projects and variable work
• £1.7bn TCV of contract wins, scope increases,
extensions/renewals and the Landmarc
consolidation (FY23: £1.7bn) resulted in a
33% increase in the total order book to
£3.2bn (FY23: £2.4bn)
• Awards include: Gold (Ascension, DWP,
Gibraltar and Hestia) – RoSPA; 12th
consecutive President’s Gold (Cyprus) –
RoSPA; 17th consecutive Gold (Project
Armada) – RoSPA Order of Distinction
Operational performance
CG&D performed well in FY24, with revenue
growth driven by sustained demand for higher
margin transformational projects across
contracts such as the Department for Work and
Pensions (DWP) and the Ministry of Defence
(MoD), through Landmarc (consolidated as a
subsidiary from November 2023), and Future
Defence Infrastructure Services (FDIS), as well
as from pricing. These increases more than
offset the loss of revenue from two contracts
that ended during the year (one lost due to
pricing and one which was strategically not
re-bid due to its fragmented operations across
European sites). A further notable contract was
lost (also on pricing) and terminated at the end
of FY24.
During the year, the division secured £1.2bn
TCV of contract wins, scope increases,
extensions/renewals and £0.5bn TCV from
the consolidation of Landmarc. Notable
wins included the Defence Infrastructure
Organisation overseas estate in Germany and
wider Europe, hard services and projects
work for the DfT, and soft services for the
Government Property Agency’s Central region.
Notable contract extensions included the
Foreign Commonwealth & Development
Office, the DWP, and the Home Office and
Ministry of Justice.
Projects work continued to grow, with the
most significant being a c.£100m programme
to support the DWP Critical Security
Infrastructure project to upgrade all security
related assets at c.600 sites across their estate.
Approximately two thirds of the programme
was delivered in FY24, with the balance
expected to be completed during FY25.
Critical projects work to support the MoD’s
defence estate included the delivery of
housing refurbishments for Service families,
refurbishment of runways and taxiways at the
Mount Pleasant Complex airfield in the Falkland
Islands, and construction of a new bulk fuel
installation facility at RAF Akrotiri, Cyprus.
CG&D continued to roll out and benefit from
the new technologies initially introduced in
FY23, such as Aria and Mozaic, and completed
the implementation of Mitie’s Azure Secure
Cloud infrastructure. The division saw ongoing
improvements in the utilisation levels of mobile
engineers and has introduced the Coupa
digital supplier platform across a number of
contracts to streamline the purchasing process.
The ‘Mitie First’ strategy to insource services
resulted in an additional £16m of cross-selling
revenue synergies in FY24.
Central Government & Defence (CG&D)
The CG&D division is one of the UK’s largest providers of services to the MoD and other UK Government departments,
providing hard and soft services and transformational projects. CG&D delivers services across 24 contracts and 27 government
departments and agencies, at over 3,000 locations in the UK and overseas.
Performance highlights
CG&D, £m FY24 FY23
1
Change
Revenue including share of JVs and associates 938 828 13%
Central Government 524 439 19%
Defence 414 389 6%
Operating profit before other items 80.4 59.8 34%
Operating profit margin before other items 8.6% 7.2% 1.4ppt
Total order book £3.2bn £2.4bn 33%
Number of employees 6,879 5,576 23%
1. No change following the change to divisional reporting effective from H1 FY24.
13%
Revenue growth
34%
Operating profit growth
£3.2bn
Total order book
48
Mitie Group plc
Annual Report and Accounts 2024
Performance highlights
• Revenue increased by 15% to £757m (FY23:
£659m), primarily benefiting from higher
volumes in Care & Custody, projects and
variable works and contract re-pricing which
more than offset net contract losses
• Operating profit before other items increased
by 25% to £39.1m (FY23: £31.4m) reflecting
reduced losses on one particularly challenging
PFI contract, margin enhancement initiatives
and contract growth
• £1.1bn TCV of contract wins, scope increases
and extensions/renewals (FY23: £0.3bn)
resulted in an 8% increase in the total order
book to £4.2bn (FY23: £3.9bn)
• Awards include Estates & Facilities Team
of the Year and Highly Commended for
Healthcare Supplier of the Year – Institute
of Healthcare Engineering & Estates
Management (IHEEM)
Operational performance
Communities delivered strong revenue and
profit growth in FY24, driven by an increase in
the provision of services for the Immigration
Escorting Services contract, projects and
variable works (including increased lifecycle
projects in healthcare and education settings
and work to remove reinforced autoclaved
aerated concrete from public buildings),
contract re-pricing and operational efficiencies.
The division continues to make progress in
driving transformation and implementing margin
enhancement initiatives. This helped to deliver
an improved performance on one particularly
challenging PFI contract, reducing losses to
£3.9m in FY24 (FY23: £8.4m). We continue to
expect this contract to achieve profitability in
FY26, after further productivity improvements
and re-sets to pricing.
In FY24, £1.1bn TCV of contract wins, scope
increases and extensions/renewals were
secured. This included new contracts with
London South Bank University to deliver
IFM services across multiple sites, as well as
an increase in the provision of services for
the Immigration Escorting Services contract.
The increase in the order book also reflects
indexation on long-term contracts and an
increase in projects volumes being delivered
as the performance of certain PFI contracts
continues to improve. Notable contract
extensions were awarded for the Heathrow
Immigration Removal Centre and for King
George Hospital.
Shortly after the year end, the division was
awarded a 10-year £329m TCV contract to
operate HMP Millsike, the UK’s first all-electric
prison. When opened in 2025, the Category C
prison will hold 1,500 people who will spend
their sentences learning the skills needed to
find work on release.
Communities has continued to develop its
technology capabilities. FY24 saw successful
trials of Mitie’s Merlin for Cleaning application
in a healthcare setting and a new partnership
with Vodafone using IoT to track the location
of non-static assets, such as wheelchairs, in
hospital settings. Further technology roll outs
are planned in FY25.
Communities
The Communities division delivers sustainable outcomes as a trusted partner to the public sector across Local Government &
Education, Healthcare and Care & Custody. The division operates over 100 PFI and traditional commercial contracts.
Performance highlights
Communities, £m FY24
Restated
1
FY23 Change
Revenue including share of JVs and associates 757 659 15%
Local Government & Education 265 240 10%
Healthcare 275 250 10%
Care & Custody 217 169 28%
Operating profit before other items 39.1 31.4 25%
Operating profit margin before other items 5.2% 4.8% 0.4ppt
Total order book £4.2bn £3.9bn 8%
Number of employees 12,384 10,634 16%
1. Restated to reflect the change to divisional reporting from H1 FY24 to include Care & Custody. Local Government &
Education was previously reported as Education and Campus & Critical.
Operating review
continued
15%
Revenue growth
25%
Operating profit growth
£4.2bn
Total order book
49
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Finance review
A strong financial performance
Revenue
Revenue for FY24 of £4,511m, including share of
revenue from joint ventures and associates, has
improved by 11.2% compared to last year (FY23:
£4,055m). Of this growth, 7.1% was organic,
driven by net new wins, organic growth on
existing contracts, and organic projects growth
(totalling £194m), as well as pricing of £177m,
offset by the completion of short-term public
sector contracts (£81m). Strategic acquisitions
contributed £166m of growth in the year.
Revenue growth from net wins included NATS,
John Lewis, and Phoenix Group, and growth on
existing contracts included higher revenue in
Business Services in response to the heightened
levels of retail crime.
Organic projects growth was £189m in the year,
and was driven by Technical Services, from a
range of works across large key accounts, and by
CG&D from various large Central Government
contracts, as well as FDIS.
Organic growth also includes headwinds from
the completion of short-term, high margin public
sector contracts in FY24, including the Covid
contracts and the wind down of the Afghan
Relocations and Assistance contract, which
reduced revenue by £81m year on year, as well
as contract losses.
The impact of the repricing of revenue for
inflation in FY24 was £177m (+4%) (FY23:
£163m), and inorganic growth was £166m
(+4%), primarily related to projects, through the
acquisitions of JCA Engineering, RHI Industrials
and GBE Converge, but also from the Landmarc
step acquisition, which is explained below.
Total projects revenue for the year, including
acquisitions, was £1.1bn (FY23: £0.8bn).
Operating profit
Operating profit before other items was
£210.2m (FY23: £162.1m), an increase of
£48.1m (+29.7%) in the year. The improvement
was driven by margin enhancement initiative
savings of £40.3m, net wins, projects and other
trading (£19.9m), and strategic acquisitions
(£9.7m), including the step acquisition of
Landmarc which is explained below. The
completion of high margin short-term public
sector contracts provided a headwind of
£15.6m, and inflation had a negative impact
on operating profit of £6.2m.
Alternative Performance
Measures
In addition to presenting statutory measures, the
Group presents its results before other items.
Management believes this is useful for users of
the financial statements, providing both a
balanced view of the financial statements, and
relevant information on the Group’s financial
performance. Accordingly, the Group separately
reports the cost of restructuring programmes,
acquisition and disposal related costs (including
the amortisation of acquisition related intangible
assets), gains or losses on business disposals, and
other exceptional items as ‘other items’.
Financial performance
The reported Income Statement is set out
below:
£m unless otherwise specified FY24 FY23
Revenue including share
of joint ventures
and associates 4,510.7 4,055.1
Group revenue 4,445.2 3,945.0
Operating profit before
other items 210.2
162.1
Other items (44.5) (45.1)
Operating profit 165.7 117. 0
Net finance costs (9.4) (11. 5 )
Profit before tax 156.3 105.5
Tax (25.4) (14.4)
Profit after tax 130.9 91.1
Profit attributable to
non-controlling interest (4.6) –
Profit attributable to
owners of the parent 126.3 91.1
Basic earnings per share
before other items 12.3p 9.5p
Basic earnings per share 9.8p 6.8p
Financially, FY24 has been a good
year. Revenue and operating profit
have reached new highs, with
the operating margin boosted
by ongoing margin enhancement
initiatives. Strong free cashflow
generation underpins our
continued investment in growth
and returns to shareholders.
Simon Kirkpatrick
Chief Financial Officer
50
Mitie Group plc
Annual Report and Accounts 2024
Finance review
continued
Of the incremental £40.3m of profit from
margin enhancement initiatives, the TOM
programme contributed £27.9m through
initiatives such as the outsourcing of finance
activities, optimisation of the Group’s
organisational structure, and helpdesk
consolidation. The final Interserve cost
synergies contributed £4.6m, taking the total
synergies to £56m, and there were savings
from the Digital Supplier Platform and
Operational Excellence programmes of £7.8m.
The net wins, projects and other trading
increase of £19.9m was primarily driven by
organic projects growth. All divisions made a
positive contribution, but projects profit was
particularly strong in Technical Services and
CG&D. Margin on this organic projects growth
was higher than the Group average, despite
underperformance in the Telecoms business,
where the pricing of certain frameworks is
being renegotiated.
Of the £9.7m of profit growth from strategic
acquisitions, £5.1m came from the step
acquisition of Landmarc, and £4.6m from
the other acquisitions. The most significant
contributions were from JCA Engineering and
RHI Industrials, partially offset by £2.9m of year
one losses from G2 Energy, which is rebuilding
its order book after being acquired through a
liquidation process.
Through the contractual protections that
we have in place, and our strong customer
relationships, we were able to recover 97% of
cost inflation from customers in the period.
The element that we were not able to recover
resulted in a reduction in operating profit
of £6.2m.
Operating profit after other items was £165.7m
(FY23: £117.0m), a year on year improvement
of 41.6%. This included net charges from other
items of £44.5m (FY23: £45.1m), which are
explained below.
Landmarc step acquisition
Landmarc has historically been reported as
a joint venture within the Group results.
However, on 16 November 2023, amendments
to the shareholder agreement were approved
which gave Mitie control of Landmarc. As a
result, Landmarc has been consolidated into
the Group as a subsidiary from that date.
A change of this nature is known as a ‘step
acquisition’, which requires the Group’s
interest in the joint venture to be fair valued
at the date on which it becomes a subsidiary.
The credit related to this fair value uplift for
Landmarc must be recognised in the income
statement, and has been reported as a
£17.9m gain within other items, given that
it is acquisition-related and is material.
Further details are set out in Note 29 to
the consolidated financial statements.
The Group has reported a year on year increase
in revenue (including share of JVs and associates)
of £34.1m from Landmarc, comprising £42.6m
from the step acquisition offset by a net £8.5m
organic reduction related to a change in revenue
mix. Operating profit before other items from
Landmarc increased by £10.2m, comprising
£5.1m from the step acquisition and £5.1m
from organic growth. The increase in operating
profit reflects a change in revenue mix in FY24
towards higher margin services.
The consolidation of Landmarc also gives rise to
the recognition of a minority interest deduction,
which represents the non-controlling interest’s
(49%) share of Landmarc’s profit after tax. In
FY24 the deduction is £4.6m. As a result of this
minority interest deduction, whilst the step
acquisition of Landmarc does benefit operating
profit (and profit after tax) for the Group, it
has no impact on earnings per share before
other items.
Corporate overheads
Corporate overheads represent the costs of
running the Group and include costs for central
functions such as commercial and business
development, finance, marketing, legal and HR,
as well as the Board governance obligations of a
publicly listed company. Corporate overhead
costs have reduced by 9% to £50.6m (FY23:
£55.5m), reflecting overhead savings across
functions and shared services.
Other items
£m FY24 FY23
Target Operating Model
(TOM) (20.4) ( 7.9)
Digital supplier platform
(DSP) (3.7) (3.4)
Margin enhancement
initiatives (24.1) (11. 3)
Employment-linked
earnout charges (9.5) (0.2)
Other acquisition
related costs (4.0) (3.5)
Acquisition related costs
before non-cash items (13.5) (3.7)
Landmarc step
acquisition gain 17.9 –
Amortisation of acquisition
related intangible assets (24.8) (21.4)
Acquisition related costs (20.4) (25.1)
Workflow optimisation
(Project Forté) – (8.7)
Total other items (44.5) (45.1)
The Group incurred £44.5m of other items in
FY24 (FY23: £45.1m). This included a net £6.9m
(FY23: £21.4m) of non-cash items, comprising
£24.8m (FY23: £21.4m) of amortisation of
acquisition related intangible assets, partially
offset by the £17.9m (FY23: £nil) fair value gain
from the Landmarc step acquisition, which is
explained above.
The remaining other items of £37.6m (FY23:
£23.7m) are cash in nature. These cash other
items comprise the costs of delivering the
Group’s margin enhancement initiatives of
£24.1m (FY23: £11.3m) and acquisition related
costs of £13.5m (FY23: £3.7m).
The increase in the margin enhancement
initiative costs primarily relates to the TOM
programme, reflecting the ramp up of activities
and significant increase in savings to £28m in
FY24 (FY23: £6m).
The largest element of the acquisition related
costs is employment-linked earnout charges
(£9.5m), of which JCA Engineering is the most
significant. These earnout payments will be
made if post acquisition performance targets
are hit, and employment conditions are satisfied.
Although the vast majority of the earnout
charges were not paid in FY24 (they will be
settled in future periods, at the end of the
relevant performance periods), they have been
classified as ‘cash’ other items because they will
ultimately be settled in cash.
Within the £4.0m of other acquisition related
costs is a net £1.1m charge within the
Communities division, related to movements
on balance sheet provisions recognised on the
acquisition of Interserve. The net charge includes
an additional £9.0m provision on a PFI contract,
where Mitie is liable for rectifying latent defects
in the construction by a third party. This has
been largely offset by progress on other
contracts, resulting in provisions of £7.9m being
released. The additional charge and releases
have been classified as other items as they
relate to liabilities that were inherited with
the Interserve acquisition and are material,
one-off adjustments.
Net finance costs
Net finance costs improved (decreased) by
18% to £9.4m in FY24 (FY23: £11.5m).
Finance costs benefited from the improved
interest rates negotiated for the US Private
Placement (USPP) notes, which became
effective from December 2022 (£0.9m benefit),
together with the termination of the Group’s
customer invoice discounting facility (£0.5m
benefit). The £9.4m includes a £1.4m increase in
the interest charge on lease liabilities, reflecting
the transition of the fleet to more expensive
electric vehicles (EVs), the related increase in
the average duration of the leases, and the
expansion of the fleet through acquisitions.
51
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Finance income improved, mainly due to
increased interest rates on deposited funds
(£1.5m benefit).
Tax
The tax charge for the year was £25.4m (FY23:
£14.4m), at an effective tax rate (ETR) of 16.3%
(FY23: 13.6%). The £25.4m is the net of the tax
charge on profit before other items, and the tax
credit on other items.
The tax charge on profit before other items was
£37.9m (FY23: £22.6m), at an ETR of 18.9%
(FY23: 15.0%). This is lower than the standard
corporation tax rate of 25%, primarily due to
the benefit of a tax credit of £8.8m (FY23:
£5.3m) related to the recognition of deferred
tax assets for losses acquired with the Interserve
business. Excluding the impact of this benefit, the
ETR before other items would have been 23.3%
(FY23: 18.5%).
Offsetting the £37.9m charge was a tax credit
for other items of £12.5m (FY23: £8.2m) at an
ETR of 28.1% (FY23: 18.2%), which is higher than
the standard tax rate primarily due to the fair
value gain from the Landmarc step acquisition
not being taxable.
Mitie is a significant contributor of revenues to
the UK Exchequer, paying £962.8m of taxes in
the year (FY23: £850.1m). Of this total, £173.8m
(FY23: £158.5m) relates to taxes borne by Mitie
(principally UK corporation tax and employer
National Insurance contributions) and £789.0m
(FY23: £691.6m) relates to taxes collected by
Mitie on behalf of the UK Exchequer (principally
VAT, income tax under PAYE and employee
National Insurance contributions).
The Group paid corporation tax of £16.9m
(FY23: £19.8m) in the year, of which £12.7m
(FY23: £14.0m) was paid in the UK, and £4.2m
(FY23: £5.8m) overseas.
Joint ventures and associates
Operating profit includes Mitie’s share of the
profit after tax for its joint ventures and
associates of £6.4m (FY23: £8.3m). These profits
primarily relate to Landmarc. The year on year
reduction reflects the step acquisition of
Landmarc from a joint venture to a subsidiary in
November 2023, from which point its profits
were no longer classified as being from joint
ventures and associates. The Landmarc step
acquisition is explained above.
Earnings per share
Basic earnings per share before other items
increased by 29% to 12.3p (FY23: 9.5p). This
improvement is due to the increase in operating
profit in the year (+3.6p), the reduction in net
finance charges (+0.1p), and the reduction in the
weighted average number of shares as a result
of the ongoing share buyback programme
(+0.6p). These improvements were partially
offset by the increased tax charge (-1.1p),
which was driven by the increase in the UK
corporation tax rate to 25%, and the new
non-controlling interest deduction arising
from the step acquisition of Landmarc (-0.4p).
As noted above, the step acquisition of
Landmarc increases operating profit for the
year, but after related deductions for tax and
minority interest, it has no overall impact on
earnings per share before other items.
Basic earnings per share increased by 44% to
9.8p (FY23: 6.8p). This included an improvement
related to the lower other items after tax
(+0.2p). Whilst the level of other items within
operating profit is largely unchanged year on
year, the ETR on other items is higher in FY24
due to the fair value gain from the Landmarc
step acquisition not being taxable.
Return on invested capital (ROIC)
£m unless otherwise specified FY24 FY23
Operating profit before
other items 210.2 162.1
Tax
1
(39.7) (24.3)
Operating profit before
other items after tax 170.5 137.8
Invested capital 645.0 543.1
ROIC % 26.4% 25.4%
1. Tax charge has been calculated on operating profits
before other items using the ETR for the year of 18.9%
(FY23: 15.0%).
ROIC (before other items) has improved by
1.0ppt to 26.4% in FY24 (FY23: 25.4%) as a
result of the increase in operating profit, partially
offset by increases in the ETR and invested
capital. The increase in invested capital has been
driven by the acquisitions completed in FY24.
Balance sheet
£m FY24 FY23
Goodwill and
intangible assets 645.1 564.9
Property, plant and
equipment 204.7 156.9
Interests in joint ventures
and associates
0.9 8.8
Working capital balances (200.1) (179.2)
Provisions (113. 2) (111. 4 )
Net debt (80.8) (44.1)
Net retirement benefit
liabilities (0.8) (0.2)
Deferred tax 7.9 20.4
Other net assets 10.0 5.6
Total net assets 473.7 421.7
As at 31 March 2024 the Group’s reported net
assets stood at £473.7m, an increase of £52.0m
since 31 March 2023. Net debt increased to
£80.8m (FY23: £44.1m), mainly as a result of
the planned capital allocation actions and the
increase in lease liabilities, both of which are
discussed further below (in the ‘Cash flow and
net debt’ section).
Goodwill and intangible assets have increased by
£80.2m as a result of acquisitions undertaken
in the year, including the step acquisition of
Landmarc (explained above). These acquisitions
resulted in additional goodwill of £49.4m and
acquired intangible assets of £55.5m, with the
increase partially offset by the amortisation of
intangible assets during the year.
Property, plant and equipment increased by
£47.8m, due to the continued transition of our
leased fleet to more expensive EVs, the related
increase in the average duration of the leases,
and the expansion of the fleet through
acquisitions. During FY24, 1,900 EVs were
added, taking the proportion of EVs to 66%
of the total fleet.
The net deferred tax asset balance has
decreased by £12.5m during the year,
primarily as a result of deferred tax liabilities
of £13.7m being recognised on newly acquired
intangible assets.
Provisions
Provisions at 31 March 2024 of £113.2m (FY23:
£111.4m) largely comprise contract specific
costs of £49.2m (FY23: £49.3m), the insurance
reserve of £27.2m (FY23: £26.2m), and pension
provisions of £21.7m (FY23: £21.7m), which
mainly relate to Section 75 pension liabilities.
See Note 20 to the consolidated financial
statements for further details on provisions.
Provisions have increased by £1.8m during the
year, including the net £1.1m increase in balance
sheet provisions from the Interserve acquisition
explained above (in the ‘Other items’ section).
Retirement benefit schemes
The Group’s net retirement benefit liabilities
on an IAS 19 basis are broadly unchanged at
£0.8m (FY23: £0.2m). The net liabilities include
a surplus of £3.0m relating to the Landmarc
scheme, which is now reported within
retirement benefit assets (rather than
within the Group’s share of interests in joint
ventures and associates), as a result of the
consolidation of Landmarc from November
2023. In the summary balance sheet above,
the surplus is offset by deficits related to the
main Group scheme (£1.4m) and other smaller
schemes (£2.4m).
52
Mitie Group plc
Annual Report and Accounts 2024
Finance review
continued
During the year a formal funding valuation of
the main Group scheme as at 31 March 2023
was completed. This indicated a funding
shortfall of £19.4m on an actuarial basis, an
improvement of £72.7m since the last valuation
as at 31 March 2020. The Group made deficit
repair contributions of £10.6m in the year and
has agreed to continue to make deficit repair
contributions over the next four years to
eliminate the funding shortfall by 2027.
Cash flow and net debt
£m FY24 FY23
Operating profit before
other items 210.2 162.1
Add back: depreciation,
amortisation & impairment 57.9 52.4
EBITDA before other items 268.1 214.5
Other items (37.6) (23.7)
Other operating
movements 3.9 (4.0)
Operating cash flows
before movements in
working capital 234.4 186.8
Working capital
movements
1
(4.3) (38.8)
Capex, capital element of
lease payments & other (54.3) (59.6)
Interest payments (9.7) (11.9)
Tax payments (16.9) (19.8)
Dividends from
joint ventures 8.4 9.0
Free cash inflow 157.6 65.7
Share buybacks
2
(50.4) (50.7)
Purchase of own shares
into trusts (19.6) (37.7)
Acquisitions (34.7) (20.2)
Dividends paid (44.0) (28.9)
Lease liabilities & other (45.6) 1.0
Increase in net debt
during the year (36.7) (70.8)
Closing net (debt) (80.8) (44.1)
Average daily net (debt) (160.7) (84.3)
Leverage
3
(average daily
net debt/EBITDA before
other items) 0.6x 0.4x
1. Adjusted to exclude movements in restricted cash and
other adjustments which do not form part of net debt
(as explained in the Alternative Performance Measures
Appendix to the consolidated financial statements).
2. FY24 share buybacks are presented net of the
proceeds received from the exercise of SAYE schemes.
3. Leverage uses post-IFRS 16 net debt.
Operating cash flows before movements in
working capital increased by £47.6m to £234.4m
(FY23: £186.8m), due to the strong operating
profit generation before other items in FY24.
As explained above, cash other items exclude
non-cash amortisation of acquisition related
intangible assets and the non-cash fair value gain
related to the Landmarc step acquisition.
The Group generated a free cash inflow of
£157.6m for FY24, which was underpinned by
the strong trading performance, reductions in
capex, as well as working capital process
improvements.
In FY24 there was a cash outflow from working
capital of £4.3m (FY23: £38.8m), reflecting
investments required to support the growth
of the projects businesses, partially offset by
one-off working capital process improvements
of c.£25m. These improvements have been
made possible by the consolidation of
activities into the shared service centre and
implementation of the Coupa digital supplier
platform, as well as rationalisation of our
supplier base and alignment of our VAT groups.
The working capital outflow in FY23 primarily
related to the decision to terminate the invoice
discounting facility.
Capex, the capital element of lease payments &
other decreased by £5.3m compared to FY23,
with a £5.4m reduction in capex the key driver.
Both interest and tax payments were lower in
FY24, with the £2.2m decrease in net interest
payments resulting from the improved rates
achieved through the refinancing of the
Revolving Credit Facility (RCF) and USPP facility,
as well as higher interest rates on deposits, and
closure of the customer invoice discounting
facility in FY23. Tax payments were lower by
£2.9m, due to the utilisation of losses.
The planned £50m share buyback programme
was successfully completed in FY24 and Mitie
bought back further shares using the £8m of
receipts from the exercise of SAYE schemes.
This resulted in the purchase of 58.6m shares,
of which 26.1m shares were cancelled, for a net
spend of £50m. The remaining 32.5m shares
acquired were retained in order to satisfy the
2020 SAYE scheme that vested in December
2023. A further 19.7m shares have been
purchased from the market (19.1m into the
Employee Benefit Trust (EBT) and 0.6m into
the SIP Trust), which will be used to settle
other share incentive schemes.
A new £50m share buyback programme was
announced on 15 April 2024, from which c.10m
of the shares purchased will be held in treasury
to satisfy the 2021 SAYE scheme, which vests in
January 2025. The remainder will be cancelled.
Acquisitions (including GBE Converge, RHI
Industrials, JCA Engineering and the step
acquisition of Landmarc) have increased net
debt by £34.7m. This includes gross acquisition
costs paid of £87.6m, and employment-linked
earnout payments of £0.7m, partially offset by
net cash of £22.0m acquired with the projects
businesses, and £31.6m from the step acquisition
of Landmarc.
Dividend payments of £44.0m in FY24
comprised the final FY23 dividend (£28.6m),
the interim FY24 dividend (£12.9m) and
dividends paid to non-controlling interests
(£2.5m). The recommended final FY24 dividend
of 3.0p will result in a 38% increase in the total
dividend per share to 4.0p for FY24 (FY23: 2.9p),
representing a payout ratio of 33%.
Lease liabilities & other includes an increase
in lease liabilities in FY24 (net of capital
repayments) of £44.6m (FY23: £6.9m), as we
transition our fleet to EVs. By the end of FY24,
66% of the total fleet was electric, compared
with 46% at the end of FY23.
Net debt
Average daily net debt of £160.7m for FY24 was
£76.4m higher than in FY23 (£84.3m), resulting
in an average leverage ratio (average daily net
debt/EBITDA before other items) of 0.6x for
FY24, compared with 0.4x for FY23.
Closing net debt of (£80.8m) as at 31 March
2024 was £36.7m higher (FY23: £44.1m).
Total financial obligations (TFO), including net
retirement benefit liabilities of £0.8m (FY23:
£0.2m), were £81.6m (FY23: £44.3m), and
increased in line with the movement in net debt.
These increases during FY24 were mainly due
to the planned capital allocation activities of
£148.7m, and a net increase in lease liabilities
of £44.6m, exceeding the free cash inflow of
£157.6m. These capital allocation activities relate
to acquisitions completed in the period (£66.3m,
net of £22.0m cash acquired), share buybacks
(£50.4m, net of £8.0m proceeds received
from the exercise of SAYE schemes), share
purchases for employee incentive schemes
(£19.6m) and dividends paid (£44.0m),
partially offset by Landmarc cash acquired
on consolidation (£31.6m).
53
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Liquidity and covenants
As at 31 March 2024, the Group had £400.0m
of committed funding arrangements, comprising
a £250.0m RCF, and £150.0m of USPP notes.
In September 2023 the RCF was increased by
£100m, from £150m to £250m, and its maturity
was extended to October 2027, with a further
one year extension option at the mutual
agreement of all parties. In FY23 (December
2022), £121.5m of USPP notes matured and
were replaced by £120.0m of new notes,
issued on more favourable terms, with
maturities in December 2030 through to
2034. The remaining £30.0m of USPP notes
are due to mature in December 2024.
On 28 July 2023, DBRS Morningstar
confirmed Mitie’s credit rating of BBB with
a ‘stable’ outlook.
Mitie’s two key covenant ratios are leverage
(ratio of consolidated total net borrowings to
adjusted consolidated EBITDA) and interest
cover (ratio of consolidated EBITDA to
consolidated net finance costs), with a maximum
of 3.0x and minimum of 4.0x respectively.
Covenant ratios are measured on a post-IFRS 16
basis with appropriate adjustments for leases,
being primarily the exclusion of lease liabilities
from net debt and the inclusion of a charge
equivalent to lease payments against EBITDA.
As at 31 March 2024, the Group was
operating well within these ratios at < 0x
covenant leverage and 72.6x interest cover.
Areconciliation of the calculations is set out
in the table below:
£m FY24 FY23
Operating profit
before other items 210.2 162.1
Add: depreciation,
amortisation &
impairment 57.9 52.4
Headline EBITDA 268.1 214.5
Add: covenant
adjustments
1
21.9 18.2
Leases adjustment
2
(43.3) (38.6)
Consolidated EBITDA (a) 246.7 194.1
Full-year effect of
acquisitions & disposals 11.1 0.5
Full-year effect of
Landmarc step
acquisition 5.7 –
Adjusted consolidated
EBITDA (b) 263.5 194.6
Net finance costs 9.4 11. 5
Less: covenant
adjustments (0.4) (0.4)
Leases adjustment
3
(5.6) (4.2)
Consolidated net
finance costs (c) 3.4 6.9
Interest cover (ratio
of (a) to (c)) 72.6x 28.1x
Net debt 80.8 44.1
Impact of hedge
accounting &
upfront fees 2.5 1.8
Leases adjustment
4
(174.0) (129.4)
Consolidated total
net cash (d) (90.7) (83.5)
Covenant leverage
(ratio of (d) to (b)) < 0x < 0x
1. Covenant adjustments to EBITDA relate to
share-based payments charges, and pension
administration expenses and past service costs.
2. Leases adjustment for EBITDA relates to depreciation
charge for leased assets and interest charge for lease
liabilities (i.e. application of a charge equivalent to
lease payments).
3. Leases adjustment for net finance costs relates to
interest charge for lease liabilities (i.e. removal of
interest on lease liabilities).
4. Leases adjustment for net cash relates to lease liabilities
(i.e. removal of lease liabilities).
54
Mitie Group plc
Annual Report and Accounts 2024
Our environment and social value framework
Enhancing lives and assuring a better,
more sustainable future
Innovation
Innovation is embedded
within all our pillars, to
ensure Mitie remains at the
forefront of technology
and ‘best-in-class’ service
delivery.
People
People are Mitie’s greatest
asset, and we have a duty of
care to ensure they are
equipped to be productive
in the office and at home.
Environment
The climate emergency is
humanity’s biggest challenge.
We believe it is key for all of
our people to understand
our environmental impact.
Community
We are an active part of
the communities in which
we operate, helping to
deliver social value, not
only for Mitie, but also for
our customers.
Responsible
supply chain
Mitie has a robust and
responsible supply chain that
is engaged in the creation
of positive social impacts
across all areas of business.
Our social value framework
Find out more
on page 56
Find out more
on page 61
Find out more
on page 76
Find out more
on page 77
Making a positive contribution
Our workforce of 68,000 colleagues deliver
transformational services to over 3,000 blue-chip
customers. It is through the dedication and hard
work of our teams that we are able to positively
impact the lives of millions of people in the UK
and beyond – a responsibility we value deeply.
Our core values are embedded in environmental
stewardship and social responsibility. We are
committed to nurturing a skilled workforce; not
only by providing meaningful employment and
development opportunities to individuals but
also by driving economic and social progress
within the local communities in which we work.
Throughout our operations, we prioritise
sustainable practices and the preservation of
natural resources to ensure a greener future
for generations to come.
Furthermore, as industry leaders in
Environmental, Social and Governance (ESG), we
are able to support our customers in achieving
their own goals while championing the health of
our planet and the communities we serve.
Our social value framework
Mitie’s Social Value Framework is aligned to the
Government’s Social Value Model and the UN
Sustainable Development Goals (SDGs), and it
underpins our approach to sustainability and
social value throughout the value chain.
Each of the five pillars of our Social Value
Framework has objectives and targets, and
progress is published monthly on Mitie’s website.
At Mitie, we believe in harnessing
the power of technology to drive
positive change and create a better
future for all. Our commitment
to sustainability guides our
decision-making, as we strive to
minimise our environmental
footprint and create social value.
By embedding technology across
our operations, we not only
enhance productivity and efficiency
but also empower our workforce
and the communities we work in.
Through initiatives such as our
Emissions Intelligence service, in
partnership with Salesforce, and
The Connected Workspace we are
proud to lead the way in leveraging
technology for sustainable growth,
social impact and lasting value.
Jason Roberts
Group Director for Sustainability
& Social Value
Our industry-leading approach
We have set ambitious Plan Zero targets to reach
Net Zero for our operations by 2025; being 25
years ahead of the UK Government’s 2050 target.
Good progress has been made since the launch of
Plan Zero four years ago and we are working on
transition plans to set out our roadmap for
progress through to the end of the decade.
During the year, we secured a place on the CDP’s
Climate Change A List for our disclosures, by
demonstrating the significant progress we have
made, including the validation of our science-
based targets by the Science Based Targets
initiative (SBTi), the ongoing transition of our
fleet to EV and our improved carbon data
capture and reporting.
We have maintained our Platinum status within
the Sustainable Facilities Management Index for
the third consecutive year and, shortly after
the year end, we had our Low Risk rating
reconfirmed by Sustainalytics, with an improved
score that places us on the threshold of
Negligible Risk.
We have 14 social value and responsible business
targets which are tracked and reviewed by our
ESG Committee. By continuously monitoring our
operations, and measuring processes and results,
we can ensure that we are delivering progress
across all aspects of ESG.
In FY24, we achieved 13 of our 14 social value
and responsible business targets, as set out on
the following page.
P
E
O
P
L
E
I
N
N
O
V
A
T
I
O
N
I
N
N
O
V
A
T
I
O
N
E
N
V
I
R
O
N
M
E
N
T
C
O
M
M
U
N
I
T
Y
R
E
S
P
O
N
S
I
B
L
E
S
U
P
P
L
Y
C
H
A
I
N
55
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Progress against our social value targets
In FY24, we achieved 13 of our 14 social value and responsible business targets across People, Environment, Community and Responsible Supply Chain.
The one target we did not achieve was for 35% of women on our senior leadership team. We continue to focus on increasing the representation of women
in senior roles across the business and supporting their ongoing career progression, and this was reflected in a 4ppt increase to 32% of women on our senior
leadership team at the end of FY24. We will continue to work towards our 40% target in FY25.
Page
reference
Target
FY24
Actual
FY24
Achieved?
Tar get
FY25
Environment
Scope 1 and 2 emissions, net of carbon credits –
global emissions (tonnes)
Scope 3 emissions – global emissions (tonnes)
% of fleet zero carbon
1
Waste to landfill (tonnes)
61
62
61
62
16,900
296,507
65%
50
16,871
273,336
66%
0
12,775
275,752
80%
0
Responsible supply chain
Spend with VCSEs
% of spend with SMEs (commitment to maintain public sector %
SME spend above 33% target)
% of spend on Supplier Management Framework
77
£2m
32%
39%
£3.36m
48%
54%
£2.25m
33%
40%
76
20,720
26,312
2.39%
24,626
37, 611
4.21%
23,680
28,943
2.34%
Community
Volunteer paid hours
Health and wellbeing training hours delivered
Armed Forces recruitment
This target relates to maintaining Armed Forces recruitment
atapercentage of 0.5% above population average
People
% of employees, where Mitie sets salary, paid Real Living Wage
% of employees through apprenticeship scheme
% of women on senior leadership team
% of racially diverse colleagues on senior leadership team
58
58
57
58
100%
4.30%
35%
10%
100%
4.49%
32%
15%
100%
5%
40%
20%
1.
We have reduced the FY25 target for % of fleet zero carbon from 85% to 80% to reflect the increased size of our overall fleet of vehicles, due to organic growth and strategic infill
acquisitions, and the limited availability of commercially and operationally viable EV options for specialist vehicles and our highest mileage drivers.
56
Mitie Group plc
Annual Report and Accounts 2024
Our environment and social value framework
continued
People
Our vision is to be the
destination employer in
our industry, creating a
‘Great Place to Work’,
and a truly inclusive
culture where our
people are supported
to achieve their full
potential.
Introduction
Our vision is to be the destination employer
in our industry, leading in how we treat our
colleagues and supporting the communities
we serve.
We set ambitious targets to ensure that we
continue to strive for diversity across our
workforce, our colleagues receive a fair wage and
market-leading benefits for the work they do,
and we promote learning and development
opportunities, including through apprenticeships.
In FY24, we achieved our in-year targets for racial
diversity, engagement and employees completing
apprenticeship schemes.
We continue to promote gender diversity and
have increased the proportion of women on
our senior leadership team by 4ppts to 32%
(FY23: 28%), compared with a target of 35%.
Employee attrition (one of our KPIs – see page
34) reduced by 6ppt to 13% during the year,
reflecting our ongoing commitment to creating
a ‘Great Place to Work’.
Together We Are Mitie
Mitie is one of the UK’s largest employers, with
68,000 colleagues deployed across the UK.
We work with many leading national and
global organisations, and our colleagues all play
a vital role, not only in Mitie’s success, but that
of our customers. They also make a significant
contribution to the UK economy and help to
keep the country running day-to-day.
We know that our people give their best when
we show that that we care, and we put the safety
and wellbeing of our colleagues at the forefront
of everything we do. We are proud to be a
company that actively listens, takes action and
celebrates diversity and we strive to be a ‘Great
Place to Work’ for all.
We also take career development seriously and
we are committed to ensuring that all colleagues
have the support they need to progress at Mitie.
Developing skills for the future is something we
are passionate about, both for Mitie’s growth
and for wider society. As our colleagues develop,
and our business grows, we are dedicated to
recognising and rewarding everyone for a job
welldone.
MyMitie
We are continually evolving our Employee Value Proposition, MyMitie,
which has seven strategic pillars:
MyVoice – ensuring our colleagues
have their say, and their voices
are heard
Held 14 Board listening sessions, facilitated 371
events through Team Talk Local, and ran our
annual engagement survey (see pages 40
and 60)
Celebrated 10 years of the Mitie Foundation
and delivered 24,626 volunteering hours
(see page 76)
Held our annual achievement event at
The Shard, including a top prize of £10k, and
awarded 20,000 Mitie Stars during the year
Built bitesize content to embed learning
practices into everyday operations and
expanded our apprenticeship offering to
90 courses (FY23: 70)
Issued free shares for the fourth consecutive
year; many colleagues benefited from 2020
Save as You Earn scheme vesting
Launched LiveSafe safety champion network
and introduced carer’s leave earlier than
government guidelines
Increased our activity among our diversity
networks, with at least 500 colleagues joining
each of our six events
MyCareer – our learning and
development offering
MyCommunity – our
commitment to building
connections, taking positive
actions and giving back
MySlice – our industry-leading
benefits package
MyAchievement – recognising
our colleagues’ successes
MyWellbeing – prioritising our
colleagues’ health and wellbeing
MyStory – our colleagues telling
their own stories to inspire others
and drive belonging
FY24 achievementsStrategic pillars
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Count Me In
Mitie’s award-winning inclusion learning and
development programme, Count Me In, helps
to create an environment where everyone feels
supported, included and able to bring their true
self to work. In FY24, we have seen 72,000
colleague interactions with our Count Me In
programme, equating to over 3,600 hours of
focused learning across the business.
Our commitment to fostering a truly inclusive
culture has been further enhanced by the
launch in September 2023 of a learning and
development programme, Leading with Respect,
which has been completed by 69% of our
business leaders to date. The content is focused
on ED&I, health and wellbeing, safety, and
employee relations, and it empowers our leaders
to effectively manage grievances, absences and
investigations through a colleague-focused lens.
Equality, diversity and inclusion
(ED&I)
Employee networks
We have continued to work with our six diversity
networks, including the Mitie Women Can and
CHORD (race and ethnicity) networks, to
increase awareness of the challenges faced by the
different groups and address biases. Colleagues
from a variety of grades, genders and ethnicities
across the business take part in network activities.
Each network has an executive sponsor, and we
continually monitor the success of our ED&I
strategy to identify areas where we can do better.
Members of the Board also regularly join our
network events, providing them with the
opportunity to better understand the lived
experiences of colleagues and create a cycle of
feedback that informs decision-making and drives
engagement and trust.
Reward
Colleague benefits
We offer a broad range of rewards and benefits
for our people under the ‘MySlice’ banner, which
enables our colleagues to find benefits to suit
their needs. Our benefits cover health insurance,
life insurance, virtual GP service and lifestyle
products, with mortgage advice being one of the
additional benefits added for FY24. During the
year, we saw a 33% increase in the uptake of our
flexible benefits plan Choices.
Rewards also include free shares, access to
all-employee share schemes, and incentive plans.
To date, we have awarded free shares for four
consecutive years, with frontline colleagues
typically receiving 100 free shares each per year.
The 2020 Save As You Earn share option scheme
(SAYE scheme) that vested in December 2023
was a great success with over 1,500 participants,
many of whom are frontline workers, benefiting
from an average gain of £14,000 on their
savings. We launched the 2023 SAYE scheme in
December with over 3,000 colleagues choosing
to take part.
We offer enhanced maternity pay to all colleagues
eligible for statutory maternity pay (SMP),
alongside life assurance for all colleagues. In
September, we enhanced our family-friendly
policy by including carer’s leave, providing one
week’s unpaid leave per year for colleagues when
they need unplanned leave.
In FY25, we will continue to improve our benefits
offering to lead the industry, with a renewed
focus on frontline incentive schemes.
Inclusion Allies
Our Inclusion Allies programme is sponsored
by a member of Mitie’s executive team and
operates in partnership with Inclusive Employers.
The four-week programme is designed to take
colleagues on a personal journey to allyship.
They explore privilege, circles of influence and
the boundaries of their role and are given a
framework and techniques to challenge exclusion
and approach difficult conversations. 150
colleagues at different levels from across the
organisation have completed the programme
and are acting as role models.
Women in leadership
Our Senior Women in Leadership programme
is sponsored by our Chief People Officer and is
designed to support women at Mitie to achieve
our most senior roles. The programme is
underpinned by a Level 7 Leadership
apprenticeship delivered in collaboration with
Corndel College London and paired with
1:1mentoring. We also ensure that our
performance reviews and talent assessments
are based on objective criteria, lowering the
chance for bias in any of our selection and
progression processes. In FY24, we increased
the representation of women in the senior
leadership team by 4ppts to 32%.
Diversity data
We have made positive steps towards a more
inclusive culture in the last year. More of our
colleagues who have disabilities or are LGBTQ+
have shared their personal data with us, with
our disclosure rate for those with disabilities
increasing from 1.1% (673 colleagues) to 1.8%
(1,026 colleagues) and our disclosure rates
from colleagues who are LGBTQ+ increasing
from 2.6% (1,537 colleagues) to 3.5% (2,110
colleagues) since the data was first reported
in October 2022.
Gender breakdown
At 31 March 2024 Male Female Total % Male % Female
Board 5 4 9 56% 44%
Senior leadership team 51 24 75 68% 32%
Employees 40,760 27,385 68,145 60% 40%
£422,152
total savings for our
colleagues on MiDeals
4m
Free shares gifted
to colleagues
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Annual Report and Accounts 2024
Our environment and social value framework
continued
People
Investing in the jobs of tomorrow
through apprenticeships
We support c.1,200 colleagues at any given
time through apprenticeships and expanded
our offer during FY24 to over 90 technical,
professional and managerial courses across
a diverse range of areas from heat pump
engineers and data technicians to security officers,
business administrators and project managers.
We exceeded our target to support 4.3% of
eligible people taking part in an apprenticeship
programme (FY24: 4.5%).
Our apprenticeships have received external
recognition, including Top 100 Apprenticeship
Employer, and we have joined The 5% Club,
demonstrating our commitment to provide
‘earn and learn’ opportunities.
We have enhanced the pastoral care provided
to learners on programmes by providing extra
guidance, mentorship and peer networks
throughout their apprenticeship journey.
We also held our first annual Apprenticeship
Awards in February 2024 to coincide with
National Apprenticeship Week, recognising
the standout achievements of our colleagues.
We have seen over 90% of our learners stay
with Mitie to progress their career following
completion of their qualification.
Recognition
Our award scheme, Mitie Stars, is dedicated to
recognising the teams and individuals who go
above and beyond for customers and colleagues.
Learning and development
Learning throughout Mitie
At Mitie, we want all colleagues to feel that Mitie
offers much more to them than just a job. We are
dedicated to creating an environment where our
people can grow and flourish, both professionally
and personally. We recognise the busy nature
of our business and, in FY24, we devised an
approach to ensure that colleagues have control
over their learning experience and can develop
new skills at their own pace. To complement the
courses available on our digital learning platform,
we have introduced development webinars that
are accessible to all colleagues and cover a varied
range of topics.
We are proud of our corporate sustainability
achievements. In 2023, we launched our Action
Now learning campaign to inspire, educate and
empower colleagues to make individual positive
changes in their personal lives for the benefit of
the environment and society. Learning resources
include articles, videos and team activities.
Our business leaders are critical to our success
and we have focused on providing them with
the tools to embed team learning into their
day-to-day operations.
Gender pay
As at 5 April 2023, Mitie’s median gender pay
gap had increased slightly to 7.3% (2022: 6.8%),
although it remains significantly below the UK
average of 14.3% (ONS). Mitie’s mean gender
pay gap decreased year on year to 11.2%
(2022: 12.0%).
Our gender pay gap exists because there are
fewer women in senior positions than men.
Senior positions are typically higher paid and
eligible for bonuses to keep pace with market
practices and ensure we continue to attract and
retain the best talent.
To address this imbalance, we continue to raise
the awareness of gender equality issues and
topics, and we support colleague development
through programmes, including through
female-only cohorts of our Level 7 leadership
apprenticeships in partnership with Corndel.
We regularly review our family-friendly policies
and we have developed inclusive recruitment
principles for our senior hires.
Ethnicity pay
As at 5 April 2023, Mitie’s median ethnicity pay
gap had reduced to -1.3% (2022: 1.1%), while the
mean ethnicity pay gap decreased to 13.5% (2022:
14.8%). We remain committed to our target of
20% racial diversity on the senior leadership
team by FY25 (FY24: 15%) and our ambition is
to increase the number of pay gaps we report,
to include disability and LGBTQ+.
Living wage
We want our colleagues to feel valued for the
work they do so we voluntarily sign up to the
Living Wage Foundation to demonstrate this
commitment, as we believe fair pay is imperative
for our colleagues. Being a recognised service
provider means that we work with our
customers, building case studies which set out
the value of the Real Living Wage, to encourage
them to sign up to the Real Living Wage.
We have met our FY24 target for 100% of
employees to be paid the Real Living Wage,
where Mitie controls their salary.
23,430
colleagues received a
Mitie Star
40,745
colleagues accessed our
digital learning platform
£66,580
awarded in prizes to Mitie
Star recipients
71,119
instructor-led course places
attended by colleagues
To complement the People Manager Hub,
launched in FY23, we developed ‘Grab and Go’
guides consisting of eight practical, hands-on
workshop guides designed for leaders to deliver
impactful learning experiences to colleagues.
They cover subjects such as wellbeing, managing
change and handling conflict.
Mitie’s senior leaders are responsible for fostering
a high-performance culture among their teams.
In FY24, we introduced new development tools,
including 360 feedback, to support leaders
in leveraging individual strengths to drive
collaboration and innovation. A team report is
developed for leaders to map team strengths,
build stronger networks and embed more
effective ways of working.
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Priorities for FY25
Our people agenda is always evolving to
ensure that we remain a ‘Great Place to
Work’. In FY25, we will focus on:
• Continuing to invest in future talent,
including apprentices, high potential
colleagues, diverse cohorts and core
teams including sales
• Expanding our digital and GenAI
capabilities through a digital upskilling
programme to equip colleagues with a
standard level of digital literacy
• Embedding our expansive engagement
programme to reach all colleagues
through a blend of our leadership
outreach programme, Team Talk Local
and Board listening sessions
• Continuing to improve our industry-
leading benefits packages
As a large business, Mitie contributes to the
Apprenticeship Levy each year, with this money
being used to fund apprenticeship training and
development for existing colleagues and new
recruits. Since the Levy was introduced in 2017,
we have reinvested £14.8m in apprenticeship
programmes.
Recent changes to the Apprenticeship Levy allow
the gifting of up to 50% (previously 25%) of our
prior year contributions to other organisations
to develop their future talent pipeline through
apprenticeship schemes. At the end of FY24, we
passed the £2m milestone for our Apprenticeship
Levy gifting pledges. This has enabled c.25 small
and medium-sized enterprises (SMEs) and local
community services across the UK to fund
apprenticeship schemes for future talent, with a
focus on areas that are aligned to our strategy or
contribute to our social value agenda.
MyWellbeing
Health, safety and wellbeing
Mitie places its people at the heart of our success
through the cultivation of collaborative ways of
working, empowering individuals to be proactive
stewards of Health, Safety, and the Environment
(HSE) and nurturing a support system that
enables adaptability, resilience, and positive
change in achieving ‘the exceptional, every day’.
We aspire to be recognised as a leading force in
HSE throughout our industry, by fostering a
workplace culture where HSE responsibilities are
not merely policies, but integral values embraced
by all.
Our aspiration for Zero Harm is underpinned
by our core values and influenced through
the LiveSafe programme enabling proactive
leadership, leading to better trust and
accountability in all aspects of health, safety
and wellbeing management.
In turn, we understand that this will also benefit
the business by helping to increase performance,
influence ownership, improve customer service,
reduce absence, reduce accidents, and increase
creativity and innovation, ultimately embedding
a thriving culture throughout the organisation.
Health, safety and wellbeing are also key metrics
in demonstrating that we are a responsible
business and adding social value which will help
to attract new colleagues and customers.
Throughout FY24, MyWellbeing initiatives and
interventions have been a priority for Mitie,
primarily to ensure our colleagues go home
safely at the end of their shift.
We launched MyWellbeing Week, providing
managers with information and a toolkit to
improve engagement with frontline colleagues.
The intended outcome was to increase the
quality and quantity of LiveSafe Leadership visits
and raise awareness about the diverse range of
services available to our colleagues.
In the two months following MyWellbeing Week,
our managers completed an amazing 8,001 visits
to their frontline colleagues. Furthermore, our
frontline colleagues have done an exceptional job
with reporting hazard observations. Over the last
12 months 65,425 events were logged. This data
demonstrates our colleagues’ engagement with
health, safety and wellbeing as well as Mitie’s
commitment to caring for our people.
Mitie’s lost time injury frequency rate (one of
our KPIs – see page 34) reduced from 3.87 to
3.82 per million hours worked during FY24.
Mental Health Awareness Week
A further benefit of MyWellbeing Week was the
engagement around Mental Health Awareness
Week. A range of MiNet communications were
created to raise awareness and at many of Mitie’s
office locations, drop-in sessions were organised.
A range of collateral was also created, and this
helped the business to disseminate important
information to those ‘hard to reach’ colleagues.
Mitie has over 400 fully trained Mental Health
First Aiders (one of the largest cohorts in the
UK), who are populated into a directory which
helps colleagues to reach out for support
as required.
Safety Stand Down
Mitie introduced Stand Down Days in FY24,
which are a deliberate pause in operations, where
managers, supervisors and frontline colleagues
come together to discuss safety protocols,
reinforce best practices in the workplace and
address concerns.
The benefits of a Stand Down Day cannot be
underestimated. They foster an open line of
communication between colleagues about
concerns, which ensures that everyone is aligned
to Mitie’s health, safety, and wellbeing objectives.
This proactive approach helps to identify and
mitigate potential risks before they become
real threats.
Awards and recognition
We have worked hard to create safe and secure
work environments and we are proud to have
received awards from the Royal Society for the
Prevention of Accidents (RoSPA) across the
business. These awards show the benefits of
LiveSafe, our QHSE initiative that includes training
and workshops, to encourage a safety-conscious
culture. We received 16 awards in FY24,
compared to nine awards in the prior year.
Where we care for each other
Together we are Mitie
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Annual Report and Accounts 2024
Our environment and social value framework
continued
Annual survey – MyVoice
Insights and actions undertaken in FY24 (in response to the April 2023 survey)
Upload survey insights (You Said) Action taken (We Did)
Pay, reward and recognition
• Review benefits for our frontline
colleagues, acknowledging the
impact of inflation and rising cost
of living
• Develop Mitie Stars
• Launched our fourth award of free shares for all colleagues
• Increased the number of discounts across a range of retailers and partnerships through our reward platform
• Launched 2023 SAYE scheme, offering colleagues risk-free savings with the opportunity to benefit from
Mitie’s success
• Delivered the annual Mitie Recognition event, with CEO and Board sponsorship, celebrating our colleagues’
achievements
Autonomy, empowerment
and collaboration
• Ensure colleagues are listened to
and given a voice, and develop
team collaboration
• Increased the number of Board Listening sessions to expand reach across targeted teams within the business
alongside Board representation at diversity network and wider flagship events
• Regular all-colleague communications of Mitie’s strategy, operational changes and colleague experience
• Created new leadership cohort (top 250 leaders) to increase networking across the business
• Delivered CEO-led leadership events to provide updates on strategy
Systems and processes
• Improve access to and use of
different systems
• Ensure our systems and processes
maximise productivity
• Ran focus groups to explore areas for systems improvement as part of the MyMitie employee app discovery phase
• Transformed our onboarding experience by automating the process to reduce the pressure on people managers
and provide a seamless first experience of Mitie for new recruits
• Streamlined the purchasing and expenses process through Coupa, resulting in faster payment timelines for
colleagues and suppliers
Communication barriers
• Develop communications within
Mitie so everyone is in touch
• Business case and discovery project underway to launch employee app for all Mitie colleagues
• Changed our approach to senior leadership outreach events, to empower a wider range of leaders with
high-quality materials to deliver face-to-face sessions to more colleagues, more often. This approach enabled
371 events to take place through the Team Talk Local initiative compared with 12 in person events in the prior year
• Project underway to launch the MyMitie employee app for Mitie colleagues
Date Action
March – April 2023 Launched in April 2023, the MyVoice (formerly Upload) engagement survey was translated into multiple languages
and completed via several mediums. We also ran a campaign to drive colleague participation, including details of the
actions from the 2022 survey. Colleague participated increased to 54% (2022: 47%).
June 2023 Survey results were presented at the June 2023 Board meeting with clear areas of focus (see table below). Our
overall employee engagement score was 57% (2022: 50%).
July 2023 – March 2024 Next steps were established to address matters raised and initiatives were communicated to colleagues. We
provided each functional leader and strategic account manager (SAM) with access to an action planning tool and
colleague engagement guidance. Additionally, a ‘you said, we did’ campaign was amplified through the MyVoice pillar
of activities (e.g. Board listening sessions and Team Talk Local events) and via targeted business unit channels.
People
Mitie’s annual colleague engagement survey provides feedback that management acts upon to improve
the working experience at Mitie. The results of the MyVoice annual survey also provide the Board with
a Group-wide snapshot of how our colleagues rate Mitie’s culture and engagement.
The most recent MyVoice survey took place in April 2024, with the employee engagement score rising
by a record 6ppt to 63%. The timeline of events and insights from the prior year survey are detailed in
the tables below, alongside the actions taken during FY24 in response to feedback from our colleagues.
During FY25, we will continue to address the matters raised in the FY24 survey.
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Strategic report Governance Financial statements
Environment
We are a socially
responsible business,
committed to creating
positive environmental
impacts across our
entire value chain. The
actions we are taking to
mitigate climate change
and foster sustainability
reflect our dedication to
leaving a lasting legacy
for future generations.
Advancing Plan Zero:
our path to Net Zero emissions
Our groundbreaking Plan Zero initiative
continues to set industry standards as we
strive to achieve Net Zero direct operational
carbon emissions by the end of 2025, with
non-operational emissions targeted by 2035.
The transition of our fleet to EVs is central to this,
and positions our EV fleet as one of the largest
in the UK. Furthermore, we are enhancing the
energy efficiency of our built estate by reducing
energy consumption, replacing gas boilers with
low-carbon heat pumps, and championing
initiatives that embrace circular economy
principles and biodiversity.
Validation and carbon
reduction targets
In April 2023, we received validation from the
SBTi, joining c.2,000 organisations that are
committed to reducing their carbon footprint.
We are one of only c.250 participants globally
with targets across all three categories (near-
term, long-term and Net Zero).
In recognition of our carbon reduction
commitment, we also secured a place on the
CDP’s Climate Change A List in March 2024,
placing us among only 2% of the 21,000
organisations assessed annually.
Reporting and
emissions management
Our comprehensive environmental metrics and
emissions data demonstrate transparency and
accountability. By continually tracking progress
against our carbon targets, we remain aligned
with our sustainability goals. Our Scope 1 and 2
emissions management focuses on mitigating
gas and electricity consumption increases,
partly driven by rising building occupancy levels,
increased EV charging and recent strategic
acquisitions (including those that strengthen
our capabilities to provide customers with
decarbonisation services). We introduced
Scope 3 global reporting in FY23, and continue
to enhance our data capture and reporting.
We recently launched a new managed carbon
reporting and reduction service, Emissions
Intelligence, to empower organisations to be
more confident in their emissions reporting and
improve their efficiency, as well as to increase
the transparency of their progress towards
Net Zero goals. This new service combines our
decarbonisation expertise with the Salesforce
Net Zero Cloud ESG management platform,
enabling customers to house all their ESG-related
data in one place and connect it with other data
and systems in their organisation.
The platform spans Scope 1, 2 and 3 carbon
emissions, supplier engagement, energy, waste
and water management, while also incorporating
social and governance metrics.
Fleet electrification and
renewable energy adoption
In FY24, Mitie’s Scope 1 and 2 global emissions
reduced by 5% to 21,371 tonnes CO
2
e (location
based) compared with the prior year.
Inclusive of 4,500 verified emissions reduction
carbon credits, our Scope 1 and 2 net emissions
reduced to 16,871 tonnes CO
2
e, improving on
our FY24 target of 16,900 tonnes CO
2
e.
As a primarily UK-focused business, our UK
emissions are the largest contributor, totalling
20,493 tonnes CO
2
e (FY23: 21,115). The 3%
improvement on the prior year reflects a 25%
reduction in emissions from gas consumption
for heating across our estate as we continue
to replace fossil-fuelled heating systems with
low-carbon heat pumps.
UK emissions from electricity consumption
increased by 18% due to the ongoing transition
of our fleet to EV. During FY24, we transitioned
a further 1,871 vehicles, resulting in a total of
5,065 EVs in operation as at 31 March 2024
(66% of our fleet) and a further reduction in our
Scope 1 emissions originating from fossil fuels.
Despite the expansion in our overall fleet size
arising from recent strategic acquisitions (through
which 310 fossil fuel vehicles were added in FY24),
our pioneering EV fleet plan still aims to transition
80% of the fleet to EVs by the end of FY25,
supporting the Climate Group’s EV100 initiative.
66%
of our fleet are EVs
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Annual Report and Accounts 2024
Our environment and social value framework
continued
We are also committed to using 100% renewable
energy in our offices, combined with strategic
energy management efforts, to reduce carbon
emissions and drive energy efficiency. We
procure 100% of our power from renewable
sources, backed by Renewable Energy Guarantee
of Origin (REGO) certificates for all Mitie-
controlled premises.
Additionally, since 2020 we have been proud
members of RE100, the Climate Group’s global
initiative for businesses striving for 100%
renewable electricity.
We have successfully rolled out our ISO 50001
Energy Management System across the entire
Group to incorporate our regional hub offices
and fleet, and we aim to double our energy
productivity through the Climate Group’s
EP100 initiative.
Mitie is one of a select few organisations,
and the first in our industry, to hold all three
accreditations (RE100, EV100 and EP100).
Finally, FY24 is the second year we have reported
our Scope 3 emissions from our supply chain and
for commuting across the organisation, in line
with our verified science-based targets.
Scope 3 global emissions reduced by 9% to
273,336 tonnes CO
2
e, reflecting reductions in
our suppliers’ own carbon emissions.
See page 74 for our absolute emissions data.
Waste reduction and circular
economy initiatives
Our waste reduction initiatives have resulted in
zero waste to landfill across the Group since July
2022. Through initiatives such as Bin the Bag
TM
,
waste segregation and uniform reuse initiatives,
we continue to minimise waste and focus on
eliminating single-use products. Additionally,
our deployment of biotech cleaning solutions
contributes to reducing the environmental impact
of chemical agents.
The recent strategic acquisitions have increased
the overall scale of our built estate and
resulted in an increase in total waste production
to 398 tonnes in FY24 (FY23: 306 tonnes).
Our average recycling rate reduced to 53% of
overall waste generated (FY23: 72%), although
it only dropped slightly in absolute terms to
210 tonnes recycled (FY23: 222 tonnes).
Our commitment to a circular economy drives
us to make more sustainable choices in the
management of our operations. Uniforms
are a significant purchase for Mitie. We are
exploring sustainable reuse laundry solutions,
incorporating social value through various trials
with the aim of extending the life of garments
and minimising waste.
Priorities for FY25
In FY25, we will continue to advance our
sustainability credentials with actions
throughout our value chain:
• Drive sustainability and promote social
value across our supply chain to elevate
standards and align with our science-
based target to address Scope 3
emissions
• Continue to transition our fleet, targeting
80% EVs within our total fleet
• Reduce energy consumption through
the expansion of our ISO 50001 Energy
Management System, while also working
towards eradicating fossil fuels from
our operations
• Reduce waste streams and integrate
circular economy principles into our
operations, with an emphasis on
materials reuse
• Enhance the environmental net gain
across our buildings and operational
domains
• Adopt verified social and nature-based
carbon offsetting solutions as part of
our commitment to achieving Net Zero
emissions
Edie award winners
Following our success at the 2023 Edie awards
(the UK’s largest sustainable business awards
scheme), winning Net Zero Strategy of the
Year for our Plan Zero initiative, we won
Transport/Fleet Management Project of the
Year in 2024. This was awarded for our
ambitious EV transition initiative, which targets
fleet emissions reduction and aligns with our
ambitious Net Zero targets.
The judge commented: “Mitie has made hugely
impressive progress against tackling one of the
most material areas of sustainability impact
for its business, in pursuit of its science-based
Net Zero goals. Structured engagement with
vehicle manufacturers, to ensure their designs
meet the company’s specialist needs, is
helping to drive forward transformation
across the industry.”
Additionally, we are collaborating with our
catering partners to introduce reusable cups
across key sites in Manchester, Birmingham and
Rutherglen. Embracing initiatives such as No
Disposable Cups Day in October, we eliminated
single-use cups from cafés at these locations,
preventing 56,000 paper cups being disposed
of annually and saving 5.6 tonnes of CO
2
e and
1.2 tonnes of waste each year.
Enhancing building efficiency
and customer solutions
Decarbonising heating systems and increasing
energy efficiency within our built estate
remain pivotal to achieving our Net Zero
goals. Additionally, through Plan Zero –
Decarbonisation Delivered
®
, we offer
comprehensive end-to-end sustainable
decarbonisation solutions to our customers,
helping them to achieve their own Net Zero
ambitions and extending our positive
environmental impact.
EnvironmentEnvironment
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Strategic report Governance Financial statements
Environment
TCFD
Task Force on Climate-related Financial Disclosures (TCFD)
Compliance statement
Under the FCA’s Listing Rules, our reporting is compliant with the four TCFD recommendations and 11 recommended disclosures as set out in Figure 4 of
Section C of the TCFD report ‘Recommendations of the Task Force on Climate-related Financial Disclosures’. During FY24, the Group has begun to transition
towards the adoption of the International Sustainability Standards Board (ISSB) standards, IFRS S1 and S2, and where possible has included information to align
with any additional reporting requirements. A summary of our response to the TCFD recommendations is set out below.
TCFD summary
TCFD recommendation Recommended disclosures
Compliance position
Page referenceFY22 FY23 FY24
Governance
Disclose the organisation’s
governance around climate-related
risks and opportunities.
A. Describe the Board’s oversight of climate-related risks
and opportunities.
Pages 64 to 66
B. Describe management’s role in assessing and managing
climate-related risks and opportunities.
Pages 64 to 66
Strategy
Disclose the actual and potential
impacts of climate-related risks and
opportunities on the organisation’s
businesses, strategy and financial
planning where such information
is material.
A. Describe the climate-related risks and opportunities the
organisation has identified over the short, medium and
long term.
Pages 67
B. Describe the impact of climate-related risks and
opportunities on the organisation’s businesses, strategy
and financial planning.
Pages 68 to 70
C. Describe the resilience of the organisation’s strategy, taking
into consideration different climate-related scenarios,
including a 2°C or lower scenario.
Page 68 to 69
Risk management
Disclose how the organisation
identifies, assesses and manages
climate-related risks.
A. Describe the organisation’s processes for identifying and
assessing climate-related risks.
Page 67
B. Describe the organisation’s processes for managing
climate-related risks.
Page 67
C. Describe how the processes for identifying, assessing and
managing climate-related risks are integrated into the
organisation’s overall risk management.
Page 67
Metrics and targets
Disclose the metrics and targets
used to assess and manage relevant
climate-related risks and opportunities
where such information is material.
A. Disclose the metrics used by the organisation to assess
climate-related risks and opportunities in line with its
strategy and risk management process.
Page 70
B. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3
greenhouse gas (GHG) emissions and the related risks.
Pages 70 to 75
C. Describe the targets used by the organisation to manage
climate-related risks and opportunities and performance
against targets.
Pages 70 to 75
Disclosure consistent with the recommended disclosure.
Disclosure consistent with the recommended disclosure, further improvement opportunities planned.
Disclosure not consistent with the recommended disclosure.
64
Mitie Group plc
Annual Report and Accounts 2024
Environment
TCFD
Our environment and social value framework
continued
Governance
This section describes the governance
arrangements that are embedded across Mitie to
ensure climate-related risks and opportunities are
correctly assessed and managed.
Mitie has a formal governance structure in
place to ensure all climate-related risks and
opportunities are correctly assessed and
managed. Overall responsibility for this resides
with the Board, which is responsible for the
strategic direction of the business, setting targets
and the prioritisation of material aspects affecting
the Group.
The responsibilities of the Chief Executive (CEO)
include the successful implementation of the
Group’s strategy, including actions in relation to
climate change. The CEO is assisted by members
of senior management in relation to climate-
related matters as follows:
• The Chief Financial Officer (CFO) is
responsible for monitoring the effective
application of the Group’s control framework,
which provides assurance for Mitie’s financial
information, carbon emissions and climate-
related disclosures
• The Chief Legal Officer, in his capacity as
Mitie’s Chief Risk Officer is responsible for
the provision of the Group’s enterprise risk
management framework, which provides
the basis for how the Group manages
all risks, including climate-related risks
and opportunities
• The Group Sustainability and Social Value
Director is responsible for ESG, overseeing
the implementation of the ESG strategy from
an environmental perspective
• The Chief People Officer is responsible for the
implementation of ESG strategy from a social
value perspective
• The Managing Directors of the Group’s
Energy, Waste and Landscapes businesses
support Mitie through the development of
decarbonisation opportunities in support
of Mitie’s Plan Zero initiative. Additionally,
they are responsible for Plan Zero
Decarbonisation Delivered
In addition to the above, several committees exist
across the Group and play an important part in
the management of Mitie’s climate-related risks
and opportunities.
The diagram on page 66 and table on pages 65
and 66 detail the different committee roles and
responsibilities for the management of climate-
related risks and opportunities, along with
information on specific climate-related decisions
taken during the year.
Climate targets are built into executive
remuneration bonuses – in FY22, Mitie
introduced ESG targets as performance
measures for 15% of the Long Term Incentive
Plan (LTIP) awards. The targets for the LTIP
awards are disclosed in the Directors’
remuneration report on pages 135 and 136.
During FY24, we have been developing
climate-related training aimed specifically at
the Board and our executive teams, which
will be rolled out in FY25.
Our TCFD journey to date
FY19
• Launched Plan
Zero initiative
and set stretching
net zero targets
(2025 – Scope 1
and 2 and 2035 –
Scope 3)
• Created
governance
structures
FY20
• Signatories of all
three Climate
Group initiatives
RE100, EV100
and EP100
• Achieved 20%
small vehicle
EV transition
• Published
first TCFD
FY21
• Committed to
a science-based
target
• Expanded
our TCFD,
incorporating
risks and
opportunities
• Achieved 15%
EV transition
FY22
• Achieved
ISO 50001:2018
in Mitie Energy
• Enhanced our
TCFD further,
by incorporating
scenario analysis
• Achieved 30%
EV transition
FY23
• Received
validation for
science-based
targets
• Completed first
full year carbon
reporting across
the Group, both
UK and overseas
• Achieved 45%
EV transition
FY24
• Achieved CDP
A List for climate
submission
• Achieved
ISO 50001:2018
across the Group
• TCFD fully
established for
all metrics
• Achieved 66%
EV transition
TCFD continual improvement – FY24 progress
In last year’s report, we identified four areas where additional measures could be taken to enhance our TCFD reporting. The table below illustrates these
areas and the actions undertaken during FY24 to drive continual improvement.
Action required: Update:
Roll out both preventative and improvement measures in response
to the findings from our FY23 scenario analysis focused on extreme
weather events.
Information regarding the measures implemented in FY24 can be found on
pages 68 to 69.
Extend our scenario analysis to focus on the impact of transition risks. Information regarding the measures implemented in FY24 can be found on
page 69.
Extend our financial framework to include a modelling assessment of
our material climate-related opportunities.
Information regarding the measures implemented in FY24 can be found on
page 69 to 70.
Review the inclusion of internal and external carbon prices into our
metrics framework.
The introduction of a carbon pricing strategy remains under review.
65
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Mitie governance body
and Chair Frequency
Climate-related roles
and responsibilities Decisions taken in FY24 Focus areas FY25
Mitie Group plc
Board
Chairman
• Bi-monthly (at least six
meetings a year)
• ESG is a standing agenda
item. Information is
disseminated to the Board
via the ESG Committee,
including climate-related
updates
• Maintains oversight of
climate-related risks and
opportunities
• Sets ESG targets, including
climate-related targets
• Monitors progress against
climate-related goals and targets
• Commissioned
development of low-carbon
transition plan
• Reviewed and approved
TCFD and principal risks
and uncertainties
• Review and integration
of double materiality
assessment results into
existing business strategy
Environment, Social
and Governance
(ESG) Committee
Non-Executive
Director
• Bi-monthly (six meetings a
year) to align with input
into Board meetings
• Climate-related matters
are fed into the ESG
Committee via several
channels, including the Plan
Zero Steering Group,
which reports directly to
the committee
• Drives the ESG agenda on
behalf of the Group
• Ensures that the Group
conducts its business in a
commercially sensitive way to
achieve maximum positive
impact on the communities,
people and the environment
which it works within
• Formal reporting of climate-
related risks and opportunities
• Oversight of capital expenditure
relating to ESG
• Engages stakeholders to
understand expectations and
concerns regarding climate
change and communicates the
Group’s efforts to address them
• Adoption of
decarbonisation agenda
for Mitie’s estate and
energy consumption
• Engagement improvements
with supply chain to
ensure alignment with the
Group’s science-based
target approach
• Ongoing review of Net
Zero transition plan and
incorporation of carbon
reduction initiatives
• Review of carbon credits
governance framework
• Ongoing review against
short term FY25 target
Mitie Group
Executive
Chief Executive
• Weekly
• Climate-related matters
are discussed as required
– subject matter
dependent, updates will
be for information only or
involve robust discussion
• Implementation and delivery
of ESG targets
• Ongoing review of Plan Zero
• Ongoing review of growth
strategy to ensure continual
alignment with decarbonisation
agenda
• Ongoing review of
operational delivery to
ensure alignment with
decarbonisation agenda
• Ongoing review of
growth strategy and
the market with focus
on decarbonisation
opportunities
Audit Committee
Non-Executive
Director
• Climate-related matters
are discussed twice yearly
as part of the principal risk
and uncertainties process
(annual and half-yearly
review). Information is
disseminated to the
Audit Committee via
the Risk Committee
• Reviews Annual Report and
Accounts (ARA), including
TCFD, and advises Board on
whether it is fair, balanced and
understandable and provides
the necessary information to
shareholders to assess the
Group’s position and
performance, business
model and strategy
• Monitors impact of climate
change on the Group’s strategy,
operations and financial
performance, and engages with
management to address any
material risks and opportunities
• Evaluation of TCFD as part
of controls framework
• Provision of risk assurance
against the climate change
and social value principal
risk and climate-related
risks and opportunities as
reported in the Group’s
annual TCFD
• Ongoing evaluation of
TCFD as part of internal
controls framework
Risk Committee
Chief Legal Officer
• Quarterly
• Climate-related matters
are fed into the Risk
Committee via several
channels, including the
Group Head of ERM and
Group Sustainability and
Social Value Director
• Responsible for overseeing
the Group’s approach to risk
management, including
ongoing review of principal
and emerging risks
• Ensures Group is adequately
prepared to manage risks
associated with climate change
• Management of outputs
from climate scenario
analysis to wider business,
focusing on maintaining
business resilience
• Management of outputs
from annual risk maturity
assessment, which includes
climate-related responses
• Development of key risk
indicators for principal
risks. including climate
change and social impact
• Management of outputs
from FY25 risk maturity
assessment, including
climate-related responses
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Mitie Group plc
Annual Report and Accounts 2024
Our environment and social value framework
continued
Environment
TCFD
Mitie governance body
and Chair Frequency
Climate-related roles
and responsibilities Decisions taken in FY24 Focus areas FY25
Nomination
Committee
Chairman
• Two planned meetings
as standard
• To evaluate and make
recommendations regarding
the composition, diversity,
experience, knowledge, skills
and independence of the Board
and its Committees
• Ongoing review of Board
level skills and experience
• Broadening Board
awareness of climate
related maters through
provision of IEMA
accredited training
Remuneration
Committee
Non-Executive
Director
• Three planned meetings
as standard
• Agrees climate-related KPIs that
apply to executive remuneration
incentive plans
• Analysis of out-turns for the
maturity of LTIP awards and
Annual Bonus Plan
• Ongoing review of targets
for FY25 awards
Plan Zero
Steering Group
Group Director
for Sustainability &
Social Value
Repurposed during
FY24 to assume
responsibilities of TCFD
Working Group.
• Quarterly
• TCFD and climate-related
risks and opportunities are
standing agenda items
• Responsibility for preparing and
responding to TCFD disclosures
• Reviews and mitigates identified
climate-related risks and realises
climate-related opportunities
• Initial review and approval of
climate change risk assessment
document ahead of submission
to ESG Committee
• Oversees and directs the Plan
Zero Working Group
• Ongoing TCFD
enhancements
• Improved engagement with
supply chain to influence
uptake of environmental
initiatives that work towards
a 1.5ºC trajectory
• Continued advancement of
a learning and development
programme accessible to all
Mitie colleagues, particularly
those in frontline operations
• Ongoing review of
regulatory requirements
• Development of scenario
analysis
• Development of enhanced
carbon credit governance
framework
Plan Zero
Working Group
Environmental and
Social Value Manager
For FY25, this
working group will be
repurposed to cover
the wider ESG agenda,
including environment,
labour and human
rights, business ethics
and sustainable
procurement.
• Monthly
• Reports into Plan Zero
Steering Group
• Delivers Plan Zero solutions
and opportunities to
Mitie’s customers
• Development of strategy to
address plastics reduction
– focus to be on what can
be eliminated across all
business areas
• Sustainable procurement
and reporting
• Development of
biodiversity strategy
• Completion of ISO
surveillance audits
Mitie Group plc Board
Mitie Group Executive (MGX)
Mitie Business Units, Functions, Accounts, Projects
ESG Committee Remuneration Committee Nomination CommitteeAudit Committee
Risk CommitteePlan Zero Steering Group
Plan Zero Working Group
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Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Risk management
This section outlines the process Mitie utilises to
identify, evaluate and manage climate-related risks
and opportunities.
Climate-related risks and opportunities are
addressed through our enterprise risk
management framework. Climate change and
social value are considered as a principal risk, as
referenced on page 82. This key risk is examined
quarterly and undergoes a comprehensive
assessment each year.
The climate change and social value risk is
supported by numerous climate-related risks
and opportunities that are documented on our
climate change risk assessment, employing the
Group’s Risk Safe platform. As at 31 March 2024,
14 climate-related risks and opportunities were
identified. Pages 69 and 70 present details on
those deemed to have a potential ‘material’
impact. Besides the climate change risk
assessment, account-level climate-related risk
information is also gathered and managed in
partnership with clients through account-level
risk registers, all accessible on Risk Safe.
All risk data is assessed for impact and likelihood,
with the residual score determining one of four
risk ratings, ranging from manageable to severe.
Mitie’s risk management structure aims to ensure
a consistent method for effectively managing risks
across the Group.
Every climate-related risk and opportunity has a
designated owner responsible for establishing and
executing appropriate management strategies,
with guidance and advice from the Risk and
Sustainability teams. The table below provides
a holistic view of all climate-related risks and
opportunities. Pages 65 and 66 provide more
information on the different committee roles,
responsibilities and oversight in relation to
climate-related risk management.
Risk/opportunity description: Risk type Time horizon
1. Extreme weather events Physical Short-medium term
2. Increasing summer temperatures Physical Medium-long term
3. Decarbonising supply chain Transition Short-medium term
4. Switching from fossil fuels to low carbon alternatives for fleet operations Opportunity Medium-long term
5. Changes in customer behaviours resulting in lost opportunities Transition Medium-long term
6. Increases in operating costs relating to policy decisions to reduce GHG emissions Transition Medium-long term
7. Access to new markets Opportunity Medium-long term
8. Investor confidence on climate change management Transition Medium-long term
9. Minimise resource use through a circular economy embedded into our business supply chain and operations Opportunity Medium-long term
10. Encourage agile and flexible working through business processes Opportunity Short-medium term
11. Development/expansion of low emission services Opportunity Medium-long term
12. Procurement of verified and high-quality carbon credits Transition Short-medium term
13. Low emission and energy efficiency strategy from Mitie estate Opportunity Short-medium term
14. Potential for litigation if Mitie does not adequately consider or respond to the impacts of climate change Liability Medium-long term
Throughout FY24, we continued to enhance
awareness and understanding of climate-related
risks and opportunities through various means,
including the roll-out of our Action Now
campaign providing education and awareness to
all Mitie colleagues on environmental issues, the
launch of our Science of Service podcast and a
carbon disclosure summit hosted at the Shard.
Further information on our enterprise risk
management framework can be found on
pages 78 to 88.
In FY24, ESG was integrated into our internal
controls independent testing programme. This is
crucial because the adoption of ESG principles
assists Mitie in mitigating potential operational,
financial and reputational risks while fostering
long-term sustainability and value creation,
ultimately leading to enhanced environmental,
social and governance outcomes. To date,
our focus has centred on governance
oversight processes.
No testing exceptions were observed during
the year; however, this exercise has uncovered
several opportunities for improvement to
further strengthen our processes. The testing
programme we have introduced in FY24 will
remain ongoing throughout FY25.
68
Mitie Group plc
Annual Report and Accounts 2024
Our environment and social value framework
continued
Environment
TCFD
Strategy
This section describes the actual and potential
impacts of climate-related risks and opportunities
on the Group’s strategy and financial planning.
Mitie has committed to the delivery of Plan Zero.
However, the Group acknowledges that there
are external variables which could impact the
achievement of the Paris aspiration (alignment
as close to 1.5ºC as possible). As a result, Mitie
continues to proactively monitor its risks and
opportunities to ensure it is well placed to adapt
to the changing external environment as more
information becomes available, to minimise any
potential damage to the business.
During FY24, the Group continued to monitor
the latest risks and opportunities identified as
having a potential ‘material’ impact. This means
that the risk or opportunity has reached a defined
threshold at which the Group considers it to be
of significant interest to investors and other
stakeholders.
To assess the potential impact that climate-related
risks and opportunities pose to the Group’s
strategy, and to aid financial planning, during
FY24 Mitie enhanced its climate-related financial
modelling framework – see case study titled risk
quantification project.
Our financial assessment builds on our base
five-year cash flow forecast model which adopts
our strategic, budgeting and business planning
cycles, with a timeline relevant to the duration
of the Group’s existing contracts.
The climate modelling framework incorporates
three-time horizons, namely short (one to three
years), medium (three to ten years) and long
(10–15 years). This approach has been adopted
to ensure alignment with the Group’s enterprise
risk management strategy.
Details of the completed financial assessments
have been incorporated into the TCFD and
underpinned by assumptions.
The key for the financial assessment is as follows:
• Low impact = minimal material impact on
EBIT (<5%)
• Medium impact = significant material impact
on EBIT (5% – 10%)
• High impact = critical material impact on
EB IT (>10%)
Scenario analysis: improving our understanding
of our climate-related risk profile
Mitie recognises the substantial threat posed by
failing to plan for and address climate-related risks
to the execution of its strategy. During FY24,
we continued to build on the outputs from the
FY23 scenario analysis, which highlighted a
growing threat from extreme weather events
resulting from climate change.
Much of Mitie’s strategy depends on the
availability and accessibility of its employees,
especially frontline staff, as well as its supply chain
and strategic partners. Additionally, maintaining
the availability of assets across customer and Mitie
estates is essential. Unusual weather events can
jeopardise operational and financial performance.
Prolonged abnormal weather conditions may
result in financial strain and business collapse.
As climate change escalates the frequency and
severity of atypical weather patterns, their
importance should not be underestimated
and must be closely scrutinised.
As reported in the FY23 Annual Report and
Accounts, we collaborated with Marsh to
conduct a scenario analysis concentrating on the
physical risks associated with climate change.
This analysis aimed to improve our understanding
of extreme weather events as well as the
probability of long-term critical asset damage
and failure. The scenario analysis encompassed
all major climate-induced physical damage
threats under two representative concentration
pathways (RCPs): RCP 2.6, a best-case scenario,
limiting the temperature increase to below 2°C,
and RCP 8.5, a worst-case scenario where
emissions continue to rise throughout the
21st century, reaching around 3°C.
The assessment covered 500 sites, comprising the
Mitie estate and locations occupied by key supply
chain members, strategic partners and selected
key accounts, intending to identify assets at the
highest risk from climate-related hazards. The
results indicated that Mitie’s portfolio is generally
low risk, with 87% of assets classified as having
a medium or lower risk score. Medium- or
high-risk sites were predominantly at risk of flood
exposure. Following the initial analysis, an in-depth
examination of 95 sites of the 500 was carried
out. These 95 sites were chosen based on their
value and whether they had been identified with
high and/or very high-risk scores.
During this second phase, data was overlaid with
seven distinct climate-related hazards for the
two RCPs, across three separate timeframes
(2020, 2050, and 2100). The findings at this stage
revealed that sea-level rise is anticipated to
become the primary area of increased risk with
ten sites at high or extreme risk for RCP 2.6 by
2050 and 28 sites at extreme risk for RCP 2.6 by
2100. Additionally, it underscored that flooding
remains a persistently high risk for over 20 sites
on the RCP 8.5 pathway.
Case study:
Risk quantification project
During this reporting period, Mitie
collaborated with Marsh (insurance broker
and risk advisor), to create a sustainable
risk quantification framework that would
accommodate both principal risks and
those related to climate, as well as potential
opportunities. The risk model created during
this joint project utilised Mitie’s five-year cash
flow model as the base, with the impact of
each of the risks quantified and measured
against the base to determine the profit and
loss and cash flow impact.
The endeavour spanned from August 2023
to February 2024 and involved a series of
interviews to identify and validate crucial
assumptions for the key risk scenarios.
Employing a deterministic method, all risks
were modelled around three scenarios,
namely worst case, most likely and best case.
For the TCFD, we have provided impact
assessments related to the most likely
scenario as shown on pages 69 and 70, while
additional insights into worst- and best-case
scenarios can be found in our ESG report
which will be released in the summer.
Mitie plans to continue its partnership with
Marsh during FY25 to future-proof the
model, ensuring that results and assumptions
stay relevant and that engagement with
suitable subject matter experts and risk
owners is maintained. Furthermore, the
project will also consider the two new
principal risks mentioned on page 88, as
well as any new or emerging climate-related
risks and opportunities, which may present
themselves moving forward.
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Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Table 1: Macro-level climate-related risks and opportunities, including current mitigation measures, potential financial impact
and latest working assumptions
Risk / opportunity
description Impact Strategic response Financial assessment and assumptions
1. Extreme weather
events
Physical risk
Short-medium term
Increased costs owing to damage to
assets.
Impacts felt universally – Mitie (UK and
overseas), customers and subcontracting
and strategic partners affected.
• Enhanced H&S standards and
processes
• ISO 22301 certified
• Planned preventative
maintenance schedules aligned
to seasonal changes
• Estates strategy in place and
continually reviewed
• Insurance coverage
• Ongoing scenario testing
Short-term impact assessment: Low impact
Medium-term impact assessment: Low impact
Long-term impact assessment: Low impact
Current assumptions based on a most likely
scenario: The modelling assumes that around four
extreme weather events occur annually. It also
incorporates the NATHAN approach which is
a global assessment of natural hazard risks and
impacts in order to help calculate the financial
repercussions of severe weather incidents on
Mitie’s asset portfolio.
2. Increasing
summer
temperatures
Physical risk
Medium-long term
Increased costs resulting from
absenteeism and reduced productivity.
Impacts felt universally – Mitie (UK and
overseas), customers and subcontracting
and strategic partners affected.
• Occupational health strategy
embedded
• Ongoing sickness monitoring
• Health surveillance and
monitoring framework
• Seasonal alerts reminding
colleagues of risks and associated
controls to be followed
• Planned preventative
maintenance schedules aligned
to seasonal changes
Short-term impact assessment: Low impact
Medium-term impact assessment: Low impact
Long-term impact assessment: Low impact
Current assumptions based on a most likely
scenario: The modelling is based on costs related
to heat-related sickness experienced by frontline
staff and the productivity costs incurred by
both back-office and frontline staff at Mitie due
to absences.
3. Decarbonising
supply chain
Transition risk
Short-medium term
Increased costs arising from the
purchase of carbon offsets in order
to meet emissions targets.
• Procurement leads identified
• Ongoing engagement with
supply chain
Short-term impact assessment: Low impact
Medium-term impact assessment: Low impact
Long-term impact assessment: Low impact
Current assumptions based on a most likely
scenario: The modelling assumes that the purchase
of carbon credits will be required to achieve Mitie’s
Scope 3 net emissions objective, resulting in an
increase in Group expenditure.
Scope: Risks being modelled in FY25: Current measures in place to manage
Paper:
Globally sourced raw material
used for washroom products
such as hand towels and
toilet paper.
Transitional risks – including decarbonisation of supply chain and
regulatory compliance.
• Working with suppliers on net zero journey and
future development of sustainable products
• Ongoing review of regulatory landscape
Physical risks – extreme weather events, acute and chronic,
which may impact on production.
• Ongoing review of extreme weather events
• Ongoing review of preferred suppliers and
product requirements to minimise disruption in
the event of a worst case scenario
Opportunity risks – low emission and energy efficiency strategy
for Mitie’s estate.
• Review of paper towels vs hand driers across the
estate to establish the most efficient method
In FY24, we focused on the outcomes of these
findings and implemented a range of initiatives to
tackle the identified associated risks. This involved
working closely alongside our strategic partners
in India to enhance our business resilience
testing and develop specialised training for our
operational teams, increasing their understanding
of the threats posed by extreme weather
conditions. For example, we created a podcast
during FY24, titled ‘Braving the Storm:
Preparations for Weathering Climate Extremes’,
which was showcased at our inaugural Risk and
Resilience Week, held in May of this year.
Additionally, our Business Resilience e-learning
training course includes a climate-related extreme
weather exercise that must be completed as a
requirement of the course.
In FY24, we refined our approach to climate-
related scenario analysis, broadening the scope of
our work to encompass a wider variety of risks,
beyond just physical factors. In collaboration with
our Procurement and Supply Chain team, the
Group Risk and Sustainability teams began to
investigate the potential impacts of climate change
on Mitie’s ability to obtain essential materials, such
as paper. Due to Mitie’s reliance on paper
washroom products such as hand towels and
toilet paper, paper has become an initial focus
area. The following outlines our current progress
in this assessment and the risks being modelled
in FY25. Our ESG report 2024 highlights the
projects we have launched with our supply chain
partners to help manage any risk exposure.
Mitie’s risk management structure aims to ensure
a consistent method for effectively managing risks.
70
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Annual Report and Accounts 2024
Our environment and social value framework
continued
Environment
TCFD
Metrics and targets
This section describes the metrics and targets
used by Mitie to assess and manage relevant
climate-related risks and opportunities.
The Group has established metrics and targets
that guide how we do business, including how
we operate and how we serve our customers.
These include ESG targets designed to help
Mitie become more environmentally and
socially sustainable.
Our climate-related metric categories are
detailed in the table below. This is followed by our
greenhouse gas (GHG) reporting methodology
statement for FY24, which provides further
context for our emissions metrics and targets
which can be found on page 71.
Category Sub-category Unit measurement Description of metric
FY24 risks and opportunities
references
GHG emissions Emission level tCO
2
e Total emissions 1,2,3,4,5
Intensity tCO
2
e per £m
revenue
Emissions intensity 1,2,3,4,5
Carbon credits Plan Zero £ Amount invested to support obtainment of Plan
Zero targets
3,4
Energy/fuel Energy usage kWh Total energy consumption 1,2,3,4,5
Transition to
greener fleet
% Total percentage of EV fleet 1,3,4,5
Waste Recycled Tonnes Total waste recycled 3,5
Risk adaptation
and mitigation
R&D £ Amount invested in developing
low-carbon products and services
3,4,5
CapEx £ Amount invested in deployment of low-carbon
technology, energy and resiliency capabilities
3,4,5
Science Based Target
initiative (SBTi)
Acquisitions % Total percentage of acquisitions with agreed
targets in place
1,2,3,4,5
Supply chain % Total percentage of supply chain with agreed
targets in place
3,5
ISO management
system
140 01 % Total percentage of business certified 1,3,4,5
50001 % Total percentage of business certified 2,3,4,5
Risk / opportunity
description Impact Strategic response Financial assessment and assumptions
4. Switching from
fossil fuels to
low-carbon
alternatives for fleet
operations
Opportunity
Medium-long term
Opportunities felt predominately in Mitie
operations (Technical Services, Business
Services, CG&D and Communities)
(UK and overseas).
• Plan Zero commitment – 85%
EV fleet by the end of 2025
• Ongoing review of EV transition
• Deployment of charging points at
Mitie and customer sites, as well
as colleagues’ homes
Short-term impact assessment: Low impact
Medium-term impact assessment: Low impact
Long-term impact assessment: Low impact
Current assumptions based on a most likely
scenario: The modelling assumes that by FY35
the Group’s fleet will consist entirely of EVs. The
associated leasing expenses are expected to rise
by 6% per year, with fuel costs determined by
average annual mileage and cost per mile. As the
Group shifts entirely to EVs, charging expenses
are estimated based on average annual mileage.
5. Changes in
customer behaviours
resulting in lost
opportunities
Transition risk
Medium-long term
Revenue reduction if Mitie cannot keep
up with demand for the services.
Impacts felt universally across the Group
(UK and overseas).
• Ongoing review of customer
behaviours via ESG governance
framework
• Ongoing review and
development of customer
propositions
• Feedback gathered internally
via various channels
Short-term impact assessment: Low impact
Medium-term impact assessment: Low impact
Long-term impact assessment: Low impact
Current assumptions based on a most likely
scenario: The modelling assumes that Mitie is able
to grow its decarbonisation business at the same
annual growth rate as its markets.
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Strategic report Governance Financial statements
GHG reporting methodology
statement for FY24
Reporting period
Emissions are reported against the accounting
year covering the period from 1 April 2023 to
31 March 2024.
Reporting boundary
Financial control authority – Mitie reports any
emissions from its operations for which it can
directly influence financial and operational policies
to gain economic benefit.
Greenhouse gases
All GHG emissions are reported in tonnes of
carbon dioxide equivalent (tCO
2
e) to account
for all six of the Kyoto Protocol GHGs.
Emissions factors
Mitie has applied the UK Government’s GHG
reporting conversion factors for 2023.
Science-based target validation
Mitie has validated science-based near- and
long-term targets against the SBTi Net Zero
criteria and criteria (version 5).
Baseline year and carbon targets
A new baseline was introduced for FY22 in line
with our Energy Review Methodology procedure.
Our carbon targets are shown in the table below.
Intensity ratio
Mitie uses tCO
2
e/£m revenue as its intensity
ratio to compare its emissions over time as this
normalises for changes in the scale of Mitie’s
business activities.
Exclusions
Mitie does not report fugitive emissions
(refrigerant leakage) from refrigeration and air-
conditioning systems in leased properties or fleet.
This is due to the difficulty in obtaining centralised
data on refrigerant top-ups and owing to the
landlords of many of our leasehold buildings
managing the HVAC systems. Given the size
and types of emission sources listed by Mitie,
fugitive emissions are expected to be a very small
proportion of total emissions and are therefore
considered immaterial.
Mitie carbon targets (tCO
2
e) FY22 baseline FY23 FY24 FY25 FY26
Scope 1 and 2 20,596 20,300 16,90 0 12,775 8,400
Scope 3 332,035 315,433 296,507 275,752 253,692
Tot al 352 ,631 335,733 313,407 288,527 262,092
Note: Carbon credits have been included from FY24 onwards.
Science based carbon targets (tCO
2
e) FY22 baseline FY23 FY24 FY25 FY26
SBTi Scope 1 and 2 20,596 19,558 18,520 17,482 16,444
SBTi Scope 3 332,035 317,085 302,135 287,185 272,235
SBTi Total 352 ,631 336,643 320,655 304,667 288,679
Note: Carbon credits have been included from FY24 onwards.
FY24 – Carbon emissions breakdown
FY24 emissions
(tCO
2
e) %
Electricity 1,042 0%
Gas 156 0%
Water 5 0%
Transport/travel 32,595 11%
Waste 7 0%
Commuting/working from home 45,549 16%
Supply chain 215,353 73%
Tot al
1
294,707 100%
Mitie Scope 1 and 2 (UK and overseas) 21,371
Mitie Scope 3 (UK and overseas) 273,336
Tot al
1
294,707
1. This total is excluding the purchase of 4,500 verified carbon credits.
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Our environment and social value framework
continued
Environment
TCFD
Scope of emissions
Scope 1 – Direct emissions
On-site fuel combustion
• Gas directly purchased for heating or
generation across leased property
managed by Mitie
Company vehicles
• Fuel purchased for fleet vehicles
Fugitive emissions
• Refrigerant leaks from air-conditioning
(RAC) equipment in leased assets and
fleet vehicles
1
Scope 2 – Indirect emissions
Purchased electricity
• Electricity directly purchased across leased
property and EVs managed by Mitie
Scope 3 – Other indirect emissions
Category 1 – Purchased goods and services
• Purchased goods and services from
supply chain
Category 3 – Fuel and energy related
activities
• Electricity transmission and distribution
(T&D) losses
• Upstream emissions associated with the
extraction of purchased fuels and gas
• Gas and electricity recharges across leased
property managed by the landlord
Category 4 – Upstream transportation
and distribution
• Transportation of goods
Category 5 – Waste
• Waste generation across leased property
Category 5 – Water
• Water usage across leased property
Category 6 – Business travel
• Expensed air, road and rail travel
(including hotel stays)
Category 7 – Employee commuting
• Commuting (all forms of transport)
• Working from home
1. Fugitive emissions are not reported as outlined in the exclusions statement.
Process
Mitie follows the reporting approach set out in
the UK Government’s Environmental Reporting
Guidance (2019 version) to ensure that reporting
standards are robust and transparent.
For most of its major emissions sources,
Mitie uses primary data from AMR meter
readings, utility bills, service charge data and
expensed claims.
Emissions data is collated centrally by Mitie Energy
on a quarterly basis and then restated at the end
of the year to reflect any changes or to replace
any estimated data with actual data (where
available). Emissions figures are verified by the
ESG team, who have overall responsibility for
ensuring the calculations and methodology
are correct.
Mitie obtained independent verification on
the accuracy of selected information included
in Mitie’s FY24 GHG emissions and water
consumption datasets, in accordance with
(1) ISO 14064-1: 2018 Specification with guidance
at the organization level for quantification and
reporting of greenhouse gas emissions and
removals, and (2) Global Reporting Initiative’s,
G4 Sustainability Reporting Guidelines.
Scope 1 and 2
Gas and
electricity
consumption
Information is populated from automatic meter readings (AMRs), invoiced data, service charge data and estimates. AMR data has priority,
followed by supplier or service charge data. If none of this is available, then an estimate will be generated based on all data for other sites.
This is used to calculate an average kWh/m
2
for the Mitie estate, and the estimate is this average multiplied by the floor area for the site in
question. For sites where, in addition to a direct supply, there is also a service charge for energy use within the communal areas, the figures
are added together.
For sites where invoiced data is only available for a partial period, the data has been apportioned based on the average kWh/day for
each site, based on the billing data that is held. Unless advised otherwise by property, sites are assumed to have all supplies in place.
This information is taken from the Mitie Property Master Site List, which is updated in real time. Data is obtained from the data
collector for HH/AMR data, the SR180 export from Optima for invoiced data and directly from the landlords for service charge data.
Where leased building utility data is unavailable, estimations are made using an anticipated energy use per square metre. This is calculated
using a combination of half hourly meters and actual billing data received across the estate. For sites where invoice data is only available
for a partial period, the available data is apportioned using an average kWh/day figure based on known utility data from other sites.
Company
vehicles
Data is provided by Mitie’s fuel card provider, and users then submit their monthly business and personal mileage via our Fleet
Data Platform.
As personal mileage must not be included within the report, we have undertaken a check of the data, comparing total business miles and
total personal miles, and agreeing that the percentage split is 77% of consumption for business purposes. Within the raw datasets is the
100% figure, and this split is then calculated within the Consumption and Environmental tabs. This ensures that the raw data within the
report matches the files received from the Fleet team.
Data sources
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Annual Report and Accounts 2024
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Scope 3
Purchased goods
and services
Supplier spend data is based on paid invoices for FY23 and the primary Coupa (digital supplier portal) categories were used to determine
the supplier’s principal activity. Suppliers representing 60% of overall category spend falling into Scope 3 were identified and a hybrid
approach using analysis of publicly available data (revenue and carbon) in conjunction with the EEIO spend based model was used to
calculate emissions through applying Mitie’s spend with each supplier as a percentage of its turnover. Publicly reported data was collected
and sourced from Companies House (a UK Government website) and/or the supplier’s own website. The Scope 3 emissions figures for
this 60% of category spend are extrapolated to 100% to provide the final reported figure.
Upstream
transportation
and distribution
Emissions calculated for the delivery and transportation of goods to Mitie-run facilities, including our own estate and customer
contract premises.
Fuel and energy
related activities
Scope 1 and 2 data is used and DEFRA emissions factors for Scope 3 are then applied. Landlord recharge data is calculated from service
charge bills or estimated from an anticipated energy use per square metre. This is calculated using actual billing data received.
Waste Waste data is collated by our waste management provider.
This data is obtained from a detailed set of scenarios to ensure that we capture not only the material that Mitie Waste and Environment
(MWE) collects but also more detailed information on landlord sites. The data we have is therefore split into four scenarios:
1. Sites where MWE provides all the services (general waste, dry mixed recycling, confidential paper and food) and we therefore have a
complete picture of the waste types/volumes and headcount. This data is used as the basis for the other scenarios as it shows all waste
streams, and we can then apportion the waste stream by type by headcount. This can then be used for landlord sites.
2. Sites where MWE provides some of the services and some are provided by the landlord. For example, we provide confidential paper,
but the landlord provides general waste, dry mixed recycling and food. For these sites we use the actual data from the services we
provide and then we do an apportionment for the services we do not cover based upon the kg/person we have for the sites in
scenario 1.
3. Sites which have all the services provided by the landlord, but we know which waste streams they collect. The data for these sites is
based upon the headcount for those buildings and the data from scenario 1 so we make an apportionment based upon this (similar to
scenario 2).
4. Sites which have all the services provided by the landlord, but we do not know which waste streams they collect. For this set of sites,
we use a general waste figure only and report this as landfill. There has been communication with all landlords for new sites to ascertain
what services are provided and if the waste is landfill or energy from waste. After this has been provided, we will then be able to move
these sites into scenario 3.
Water Utility bills are verified through our internal bureau service within Mitie Energy. Any billing data is cross referenced against meter-read data
where available. Service charge bills are used for buildings where the landlord recharges utilities.
Business travel Business travel (air, rail and hotel stays) is provided by our corporate travel provider in a report from its dashboard.
Employee
commuting
A commuting survey is undertaken annually to establish commuting patterns and incorporates working from home emissions.
FY24 position
At Mitie, we see the climate emergency as a
business-critical issue that needs to be addressed
within our operations.
Four years ago, we launched our industry-leading
Plan Zero commitment to set a clear pathway on
how we will decarbonise our business and reach
Net Zero carbon emissions by 2025 (Scope 1
and2).
This focuses on three key areas:
• Eliminate carbon emission from power
and transport
• Eradicate non-sustainable waste
• Enhance inefficient buildings to meet the
highest environmental standards
We received confirmation that we had achieved
validated near- and long-term science-based
targets from the Science Based Targets initiative.
These targets cover Scope 1, 2 and 3.
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Annual Report and Accounts 2024
Our environment and social value framework
continued
Environment
TCFD
The table above highlights that Mitie’s absolute
emissions, excluding carbon credits have
decreased by 9% and emissions intensity has
decreased by 14%. Mitie is seeing a 25% decrease
in carbon emissions from gas consumption for
heating and a 17% increase in emissions from
electricity consumption for our built estate and
EV charging. We attribute these changes to our
decarbonisation programme to remove fossil
fuelled heating systems and replace them with
low-carbon heat pumps. It is further noted that
Mitie has increased its carbon inventory with
some significant acquisitions over this period.
In line with our expectations, we continue to see
a steady increase in electricity consumption and
carbon emissions for our EV as we transition
further to an all-electric fleet. Mitie has increased
the EVs in service since last year by 1,871 and had
5,065 in operation (66% of the fleet) as at 31
March 2024 and this initiative will continue to
eliminate our Scope 1 emissions from diesel. Our
total fleet has increased by 310 vehicles following
recent acquisitions and contract wins.
During FY24, Mitie continued to record our full
Scope 3 emissions from our supply chain and
commuting figures for the whole organisation
in line with our validated science-based targets.
We have seen a reduction in supply chain
emissions despite an increase in supplier spend
by over £300m.
Absolute emissions
Emissions FY23 FY24
Change from
previous year
% change from
previous year
UK only Total Scope 1 (tCO
2
e) 19,225 18,265 –960 –5%
Emissions from fuel combustion across our fleet 19,177 18,229 –948 –5%
Emissions from fuel combustion in our occupied buildings 48 36 –12 –25%
Overseas Total Scope 1 (tCO
2
e) 1,305 873 –432 –33%
Emissions from fuel combustion across our fleet 1,305 873 –432 –33%
UK & overseas Total Scope 1 (tCO
2
e) 20,530 19,138 –1,392 –7%
UK only Total Scope 2 (tCO
2
e) 1,890 2,228 338 18%
Emissions from the purchase of electricity across occupied buildings
(location based) 433 430 –3 –1%
Emissions from electricity combustion across our EV fleet 1,457 1,798 341 23%
Overseas Total Scope 2 (tCO
2
e) 19 5 –14 –74%
Emissions from the purchase of electricity across occupied buildings
(location based) 19 5 –14 –74%
UK & overseas Total Scope 2 (tCO
2
e) 1,909 2,233 324 17%
UK only Total Scope 1 and 2 (location based) 21,115 20,493 –622 –3%
Total Scope 1 and 2 (market based) 20,682 20,063 –619 –3%
Overseas Total Scope 1 and 2 (location based) 1,324 878 –446 –34%
Total Scope 1 and 2 (market based) 1,324 878 –446 –34%
UK and overseas Total Scope 1 and 2 (location based) 22,439 21,371 –1,068 –5%
Total Scope 1 and 2 (market based) 22,006 20,941 –1,065 –5%
Purchased verified emissions reduction carbon credits (VER) –4,500
Total Scope 1 and 2 (location based) incl. VER 16,871
Intensity – emissions ratio
UK only tCO
2
e/£m revenue (Scope 1 and 2) 5.21 4.55 –0.66 –13%
UK and overseas tCO
2
e/£m revenue (Scope 1 and 2) 5.54 4.75 –0.79 –14%
tCO
2
e/£m revenue (Scope 1 and 2) incl. VER 3.75
UK only Total Scope 3 (tCO
2
e) 298,950 268,668 –30,282 –10%
Mitie generated Scope 3 52,932 53,315 383 1%
Supply chain emissions 246,018 215, 353 –30,665 –12%
Overseas Total Scope 3 (tCO
2
e) 1,164 4,668 3,504 301%
Mitie generated Scope 3 1,164 4,668 3,504 301%
UK and overseas Total Scope 3 (tCO
2
e) 30 0 ,114 273,336 –26,778 –9%
UK and overseas Total Scope 1, 2 and 3 (tCO
2
e) 322,553 294,707 –27,8 46 –9%
Total Scope 1, 2 and 3 (tCO
2
e) incl. VER 322,553 290,207 –32,346 –10%
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Annual Report and Accounts 2024
Strategic report Governance Financial statements
Environmental data
The below table provides further details on our UK environmental performance:
FY23 FY24
Change from
previous year
% change from
previous year
Electricity consumed across occupied buildings (kWh) 4,931,269 4,790,022 –141,247 –3%
Gas consumed across occupied buildings (kWh) 1,668,849 817,131 –851,718 – 51%
Fuel used by vehicles for business travel (kWh) 80,238,049 76,605,383 –3,632,666 –5%
Electricity used by EV vehicles for business travel (kWh) 7,331,647 8,684,230 1,352,583 18%
Total organisational energy consumption (kWh) 94,169,814 90,896,766 –3,273,048 –3%
Water consumed across occupied buildings (m
3
) 16,392 27,941 11, 5 4 9 70%
Total waste generated across occupied buildings (tonnes) 306 398 92 30%
Total waste to landfill (tonnes) 2 0 –2 –100%
Energy from waste (tonnes) 82 188 106 129%
Total waste recycled (tonnes) 222 210 –12 –5%
Recycling rate 72% 53% –19ppt
Shor t Te rm
2025
• Net Zero for Scope 1 and 2
direct operational emissions
• Zero waste to landfill
• 85% EV transition
1
Medium Term
2030
• 80% Net Zero for Scope 3 indirect
emissions
• 60% Suppliers by category spend to have
science-based targets
• 90% EV transition
Long Term
2035
• Net Zero for Scope 3 indirect
emissions
• 100% EV transition
Our climate transition plan targets
Our climate transition plan
Our climate transition plan outlines our high-level
ambitions to mitigate, manage, and respond to
climate change while seizing opportunities in the
transition to a low greenhouse gas (GHG) and
climate-resilient economy. The plan includes
GHG reduction targets with short-, medium-,
and long-term actions to achieve our strategic
goals. We have established governance and
accountability mechanisms to support the plan’s
implementation, along with robust periodic
reporting. Additionally, the plan addresses
material risks and leverages opportunities for
the natural environment and stakeholders,
including our frontline colleagues, supply chains,
communities, and customers.
Strategy to achieve our targets
• Eliminating Scope 1 emissions (Fossil fuels)
from our operations (where technology
allows)
• Drive down energy consumption and adopt
natural renewable sources for Scope 2
electricity emissions
• Measure, report and influence Scope 3
emissions throughout the value chain
• Source credible and verified carbon credits
for both social and nature-based projects
Operational transition
Our Plan Zero initiative incorporates a
decarbonisation strategy that targets our material
carbon emissions through various levers.
Our extensive fleet of >7,700 vehicles is our
primary source of direct operational carbon
emissions (>90%) and since 2019, we have been
transitioning our vehicles to a full battery electric
solution and have over 5,000 (66%) in operation.
We have 16 fully decarbonised offices in our
estate and are continuing to invest in further
built environment carbon emission reductions.
We procure green energy and have been
implementing a programme of decarbonising the
heating systems through replacement of existing
gas boilers with low carbon heat pumps. To assist
in our EV transition, we are significantly increasing
EV charging infrastructure across our built estate.
Opportunities
Our in-house Sustainability Consultancy
positions Mitie as a leader in carbon reduction,
accelerating our journey to net-zero and
supporting our customers. Mitie Plan Zero
Decarbonisation, Delivered™ offers end-to-end
decarbonisation services for customers, suppliers,
and the industry.
Value chain
We actively engage with our strategic and
preferred suppliers to encourage them to
improve data quality, measure environmental
performance, publicly disclose carbon emissions,
and set their own science-based targets. We
encourage SMEs and smaller suppliers to engage
with the decarbonisation agenda, measure
carbon emissions and set net zero targets.
Reporting and disclosure
Mitie will issue its ESG Report 2024 in the
summer on its website. The website also includes
our progress against carbon reduction targets.
More information on our climate transition plan
is available within our ESG Report 2024.
TCFD continual improvement – actions we will take in FY25
During FY25, Mitie will:
• Roll out Board and MGX climate-related training
• Review carbon credits governance framework to ensure continual alignment with evolving landscape
1. 85% is based on completion by 31 December 2025. For FY25, the Group target will achieve 80% EV transition.
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Annual Report and Accounts 2024
Our environment and social value framework
continued
Overview
As the leader in our industry with over 3,000
customers, Mitie has a vast footprint across the
UK’s built environment and plays a pivotal role in
many communities.
We are committed to delivering outstanding
service while maximising social value. This
approach is recognised by our customers,
delivers favourable outcomes throughout our
organisation and for the communities in which
we operate and catalyses positive change for a
brighter tomorrow.
We embrace the Government’s Social Value
Model as an integral part of our corporate ethos.
This is particularly important in fulfilling our
obligations in respect of public sector contracts.
Mitie Foundation
The Mitie Foundation was established as an
independent charity, wholly funded by the Mitie
Group, in 2013. The Foundation is committed to
supporting marginalised groups, including the
long-term unemployed, individuals with learning
difficulties and disabilities, ex-offenders, prison
leavers, young people and veterans.
The Foundation operates under the belief that
everyone deserves equal opportunities for
independence and meaningful employment.
During FY24, the Foundation continued to
advance its flagship Ready2Work programme
and proudly introduced the Ready2Work Military
initiative. As at 31 March 2024, Mitie had 765
(FY23: 463) service leavers and veterans, and is a
member of the Government’s Defence Employer
Recognition Scheme with a Gold Covenant.
As part of our Gold Covenant, the Foundation
contributes to the organisation of Career
Transition Partnership events, while also working
closely with Forces Employment Charity, Walking
With The Wounded and The Poppy Factory.
Overall, we have successfully recruited 418
individuals through the Mitie Foundation from
our 42 referral partners, and provided
comprehensive support services such as CV
writing assistance, mock interviews and guidance
on effective job search strategies.
The Foundation recently introduced supported
internships in collaboration with Mencap and
DFN Project SEARCH, with the new initiative
being piloted within our contracts with Lloyds
Banking Group and NHS Tunbridge Wells.
The internship consists of a 12-month (480 hours)
work placement within a working environment
with a dedicated mentor for those aged 18–25
who have a learning difficulty or disability. All
individuals are thriving and developing the skills
required to enter the workforce.
Giving back to the community
Mitie has a significant five-year pledge to
support communities through volunteering
for good causes.
In FY24, we delivered 24,626 hours, a 28%
increase on the prior year (FY23: 19,298).
Every salaried member of staff is encouraged
to undertake one day of volunteering during
their working hours. Volunteering events have
included the Poppy Appeal, Macmillan coffee
mornings, NSPCC and Career Ready Plus.
Community
Making a positive
difference, wherever
we operate.
Priorities for FY25
• Deliver our flagship Ready2Work
programmes nationally across
the business
• Support ex-offenders in rehabilitation
and finding job opportunities within Mitie
• Pilot and roll out prison workshops
• Support our referral partners and their
customers with employment at Mitie
• Continue to educate our colleagues in the
delivery of Foundation initiatives
• Continue to support those facing barriers
to securing employment
• Deliver our volunteering hours target to
ensure we make a maximum impact on
our communities
£110,000
donated to good causes
418
employees recruited through
the Mitie Foundation
24,626
hours volunteering delivered
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Annual Report and Accounts 2024
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+40%
of spend through SMEs
80,000
users during FY24 used our supplier
platform, Mitiesuppliers.com
Overview
In FY24, we completed a three-year supply chain
transformation programme, which included the
following initiatives:
• Deploying the Coupa digital supplier platform
(Technical Services and Projects to be
completed in FY25)
• Introducing comprehensive new Group
Procurement and Purchasing Card Policies
• Completing a recruitment programme to build
breadth and depth across all Category
Sourcing teams
• Developing a robust suite of reporting
dashboards to provide valuable insights across
the supply chain
As a result of these initiatives, we have:
• Reduced the supplier base by almost 50% to
c.8,000 suppliers
• Delivered benefits to the Group exceeding
£160m, while effectively managing periods of
supply chain disruption and high inflation
During the year, we set up a new Procurement
Centre of Excellence to oversee procurement
systems management, governance, risk and
compliance, and client bid and mobilisation
support.
We launched a new Preferred Supplier List (PSL)
optimisation initiative, focused on minimising cost
and risk across the supply chains deployed on
behalf of Mitie’s growing customer base, and
ensuring that we continue to effectively leverage
our scale.
To support this initiative, we have revised
and re-launched the Supplier Management
Programme that all Preferred Suppliers will be
inducted onto over the coming year, focusing
on areas such as collaboration, operational
performance, ESG and Quality, Health, Safety
and Environment (QHSE).
Our digital procurement strategy
The implementation of Coupa makes it easier
for our suppliers to engage with us, and delivers
efficiency savings and enhanced data to our
teams. We have further enhanced and optimised
our management information reporting, to
highlight opportunities, provide insights and drive
future value. This enables our teams to identify
risks, trends and opportunities, and track and
report tangible progress against targets.
We have also continued to drive improvements
in the supplier journey, from tender through to
onboarding and ensuring supplier compliance,
helping to reduce our exposure to high-risk
subcontractors. We work closely with Alcumus
SafeContractor, the UK’s largest Safety Schemes
in Procurement provider, enhancing our
reporting to include ESG and support suppliers to
achieve accreditation and improve compliance.
Responsible supply chain
A responsible supply
chain that is engaged in
the creation of positive
social impacts across all
areas of the business.
Supply chain sustainability
We aim to make it easy for suppliers to
collaborate with us. We do this by providing our
suppliers with all of the information, guidance and
support they need via Mitiesuppliers.com.
We are proud of the diversity across our
supply chain and continue to engage with
Social Enterprise UK (SEUK), Minority Supplier
Development UK (MSDUK) and the Supply
Chain Sustainability School to identify additional
opportunities to progress our sustainability and
social value goals.
During FY24, we hosted a ‘Buy Social’ quarterly
partner meeting in The Shard, sponsored the
Technology & Innovation award at the Social
Enterprise of the Year Awards and identified
opportunities for further collaborations with
suppliers and partners.
We have also continued to develop our supply
chain carbon emissions reporting, making it easier
for every supplier to provide simple emissions
data and helping to identify opportunities to work
with our suppliers on carbon reduction plans. We
have invited more suppliers than ever before to
participate in our annual Carbon Questionnaire
and we continue to work with the Supply Chain
Sustainability School to jointly deliver further
support and training.
Priorities for FY25
We will continue standardising, simplifying
and optimising our supply chain, with a focus
on the following areas:
• Operating model – ensuring the
Procurement function remains aligned to
the needs of the business
• Controls and processes – Coupa roll-out
to Technical Services and Projects, and
wider optimisation by evaluating
opportunities to apply AI
• Supplier relationships – driving value and
re-engineering supply chain solutions
• Preferred Supplier base – ensuring the
supply chain deployed is the right
structure to support the customer
+£3m
of spend through VCSEs
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Mitie Group plc
Annual Report and Accounts 2024
Principal risks and uncertainties
Effective risk management
Our risk management approach
During FY24, the Group made significant
progress in its risk management approach.
Notable enhancements to our Enterprise Risk
Management (ERM) framework during this
reporting period include:
• Implementing a new annual risk management
maturity assessment that enables us to gauge
risk performance, proactively detect gaps
and areas needing improvement, encourage
ongoing enhancement and strengthen our
risk culture
• Developing a new risk quantification modelling
framework (additional details can be found on
page 68
• Undertaking and successfully completing a
third-party evaluation by BSI concerning
our adherence to ISO 31000:2018, which
demonstrates that Mitie is functioning in
accordance with the ISO requirements
• Embracing and incorporating annual Risk &
Resilience Weeks into our operations
Mitie’s risk management process is
straightforward and in line with the Group’s
operating model. Each business area is
accountable for the consistent management of
existing and emerging risks, considering both
threats and opportunities. The following aspects
are relevant to the compilation of the Group’s
principal risks and uncertainties:
• The Board is responsible for explicitly
determining Mitie’s risk appetite, monitoring
the amount of risk taken and ensuring that
activities undertaken to achieve strategic
objectives align with this appetite
• A level of risk appetite is set for all principal
risks, which helps determine the actions and
resources needed for mitigation
• The Risk Committee, chaired by the Chief
Risk Officer (Mitie’s Chief Legal Officer) and
comprising the Managing Directors of the each
of the divisions, the heads of all functions, and
relevant subject matter experts, is responsible
for overseeing the implementation of the
Group’s Enterprise Risk Management (ERM)
framework from an operational perspective,
consistent with Mitie’s risk appetite
• Mitie’s risk management structure aims to
ensure a uniform approach to identifying,
assessing, monitoring and effectively
mitigating risks across the business. All risks
are reported based on criteria that consider
potential likelihood and consequences if a
risk materialises
• Each business unit, function, project, and
account maintain a comprehensive risk
register using Risk Safe (Mitie’s automated risk
management platform), which includes risk
controls and mitigation measures approved
by respective leadership teams
• Mitie has an automated risk treatment
mechanism in place to properly manage risks
when a residual risk score is identified as
exceeding specified thresholds in terms of
tolerance and/or risk appetite
• Risk registers are automated and continuously
reviewed by management
• The Insurance team plays a crucial role in
evaluating key exposures and ensuring suitable
risk transfer for insurable risks
• Risk management is proactively approached
using Mitie’s Intelligence Hub to assess threats
and identify potential problems
• Mitie constantly monitors its internal and
external environments to ensure timely
identification and appropriate response to
new or emerging risks
• Mitie actively promotes and supports a learning
culture concerning risk management to
continuously enhance its ERM framework,
remain resilient, and adapt to the ever-changing
external environment
• The Group holds ISO 22301 certification and
operates in accordance with ISO 31000, which
was externally verified in FY24
• Principal risks undergo a thorough biannual
review (for half-year and full-year financial
reporting), with quarterly updates submitted
to the Risk Committee for consideration.
The Board and Audit Committee actively
participate throughout the process and
provide challenges. The Board signs off on all
outputs from this review. Principal risks can be
found on pages 82 to 88
• In evaluating Mitie’s long-term viability, the
emerging and principal risks facing the Group
are considered. The viability statement can be
found on page 90
During FY24, the risk landscape
continued to undergo significant
transformation, driven primarily by
heightened geopolitical tensions and
rapid advancements in technology.
These factors have combined,
placing an unprecedented level
of pressure on all businesses to
not only manage risks effectively
but also to proactively build
resilience. In this constantly evolving
environment, it has become
imperative for Mitie to adopt
agile risk management strategies
and foster a culture of resilience,
ensuring we are well equipped to
tackle emergent challenges and
seize potential opportunities.
Peter Dickinson
Chief Legal Officer
Mitie’s Chief Risk Officer and
Risk Committee Chair
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Annual Report and Accounts 2024
Strategic report Governance Financial statements
Internal reporting
Internal
reporting
External
reporting
External reporting
Group-level risks
Collection of risks which could
affect the performance, future
prospects or reputation of
the Group and are subject to
ongoing reviews
Complementary framework in
place for the management and
ongoing review of principal risks
and uncertainties as agreed by the
Mitie Board
Risk appetite and associated
parameters established for all risks
and subject to ongoing review
Principal risks anduncertainties
Condensed version of principal
risks and uncertainties, which
has been reviewed and
approved by the Mitie Board
and Audit Committee
New and emerging risks
Ongoing review of internal and
external environment encapsulating
new risks in known context, known
risks in new context and new risks
in new context
Account-level risks
Identify, evaluate and mitigate
operational risks recorded in
risk register
Report on current and
emerging risks
Business unit, function
and project risks
Identify, evaluate and mitigate risks
recorded in risk register
Report on current and
emerging risks
RC
AC
PL
AC
AC
PL
BUL
AC
MB
AL
BUL
MB
MB
BUL
RC
RC
RCIH
RT
RT
RT
AL
ALPLBFL
RT
MGX
BFL
MGX
MGX
BFL
IH
Contributors key:
Mitie Board Mitie Group
Executive
Audit
Committee
Risk Team Risk
Committee
Intelligence
Hub
Business Unit
Leadership
Team
Business
Function
Leadership
Team
Project
Leadership
Team
Account
Leadership
Team
Top down
Bottom up
Our risk management framework
80
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Annual Report and Accounts 2024
Principal risks and uncertainties
continued
Our risk appetite framework
Mitie has a risk appetite framework, which formalises the Group’s risk appetite, tolerance limits and governance oversight processes to ensure that risks across
the Group are managed within acceptable limits.
Mitie considers its risk appetite in relation to its principal risks under three categories as set out below:
Risk appetite Description Latest principal risks position
Averse
The approach adopted seeks to minimise the risk. Mitigation
costs are accepted and there is an appreciation that these might
exceed expected losses.
• Cyber security and data management
• Health, safety and environment
• Regulatory
• Reputational damage
Cautious
The approach adopted is balanced. Mitigation actions are
proportionate and based on cost-effectiveness.
• Economic and political uncertainties
• Climate change and social impact
• Funding
• Business resilience
• Employees
• Third-party management
• Change management
Eager
The approach adopted is tilted towards taking greater risks to
achieve business objectives. There is an appreciation that there
will be higher exposure and volatility in returns.
• Competitive advantage
• Growth through acquisitions
• Adoption of new and emerging technologies
Time horizons and risk velocity
Mitie considers three distinct timeframes – short (one to three years), medium (three to ten years) and long (10–15 years) – to project when a risk might
possibly materialise, based on information accessible at any given instance. In FY24, we have also incorporated risk velocity, which pertains to the rate at which
a risk manifests and results in adverse consequences for the business, impacting the Group’s operations, reputation and financial stability. Comprehending risk
velocity is crucial as it enables us to develop and execute appropriate mitigation measures promptly, thereby improving management of and response to any
potential threats:
Risk Time horizon Risk velocity
Economic and political uncertainties Short to medium Months
Climate change and social impact Medium to long Year s
Cyber security and data management Short to medium Hours
Health, safety and environment Short to medium Days
Funding Short Months
Regulatory Short to medium Days
Competitive advantage Short to medium Months
Business resilience Short to medium Days
Employees Short to medium Months
Third-party management Short to medium Weeks
Growth through acquisitions Short to medium Years
Change management Short to medium Year s
Adoption of new and emerging technologies Medium to long Months
Reputational damage Short to medium Hours
81
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Strategic report Governance Financial statements
Emerging risks
In addition to examining the risks that Mitie
currently faces, we also consider emerging risks
in both our internal and external environments
to maintain operational resilience and ensure
that our future strategic planning remains
uncompromised. Current emerging risks under
observation include:
• The consequences of the forthcoming
general election
• The escalation in retail crime
• The rapid progression and associated potential
reliance on artificial intelligence (AI)
• The growing prevalence of misinformation and
disinformation, along with the potential damage
to reputation
• The implications of regulatory alterations,
particularly in relation to UK corporate
governance and employment law
Changes to our risk profile
In FY24, the Group continued to operate
against a backdrop of uncertainty, with both
macroeconomic and geopolitical uncertainties
posing the greatest challenges.
During Q4, the Group undertook a thorough
review of the current operating environment,
focusing on several scenarios, including:
• New risks that have emerged in the external
environment but are associated with the
Group’s existing strategy;
• Existing risks that are already known to the
Group but have developed; and
• Risks that were not previously faced by the
Group, because the risks are associated with
changed core processes.
As a result of this review, two new principal risks
have been identified, namely adoption of new and
emerging technologies and reputational damage.
Changes to the existing principal risks were
captured as detailed in the table below.
Principal risk Movement in risk exposure
• Economic and political uncertainties Elevated net risk exposure due to an unstable external environment – the hazards stemming from
economic and political uncertainties have intensified as a result of persistent inflationary issues, escalating
geopolitical tensions and disputes, and government instability
• Cyber security and data management Elevated net risk exposure due to an unstable external environment – the threat of a cyber-attack has
increased as the use of ransomware as a service is increasing, new variants of malware are also being seen
and there is an increase in sophisticated phishing
• Business resilience Elevated net risk exposure due to an unstable external environment
82
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Principal risks and uncertainties
continued
1
2
Controls and mitigation:
• Mix of long-term contract portfolio in both the public and
private sectors
• Continual development of new and innovative solutions
• Focus on higher-margin growth opportunities
• Regular reviews of the sales pipeline
• Increasing spread of customer base, reducing reliance on
individual customers
• Strategic account management programme
• Dedicated Finance, Risk and Intelligence Hub specialists
scanning environment
• Utilising contract mechanisms to recharge cost increases
• Coupa, Mitie’s digital supplier platform (DSP), providing greater
visibility of and ability to manage supply chain
• Leveraging buying power to help mitigate the increase in cost of
goods and services
Future plans:
• Ongoing review of external landscape utilising Mitie channels
(i.e. Intelligence Hub)
• Ongoing review of market conditions
Controls and mitigation:
• Plan Zero
• ESG Committee
• Environmental Management System ISO 14001 and Energy
Management System ISO 50001
• Climate change risk assessment maintained and approved by the
ESGCommittee
• Key policies and associated operating procedures in place
• Use of in-house subject-matter experts specialising in an array of
topics, including energy, waste, biodiversity, procurement and fleet
• ISO 22301 – regular testing of crisis management and business
continuity plans
• Winter and summer preparedness planning at account level
• Ongoing reviews of Planned Preventative Maintenance (PPM)
lifecycles
• Continuous horizon scanning via the Group’s Intelligence Hub, with
regular alerts to teams on potential threats and significant events
• Insurance cover in place to cover property damage and business
interruption
• Targets in place for Mitie’s social value framework pillars
• The Mitie Foundation – Giving Back, Mitie’s employee volunteering
programme
• Active apprenticeship scheme across the Group, training Mitie
colleagues to enhance operational delivery and address skills gaps
Future plans:
• Continuation of scenario analysis as detailed on pages 68 to 69
• Roll out Board and MGX level climate-related training
• Ongoing review of extreme weather conditions
Description and impact:
An inability to quickly identify and effectively respond to the risks
posed from either geopolitical or macroeconomic matters could
adversely impact Mitie. A sudden change in market conditions, such
as an economic slowdown or significant political uncertainty, either
nationally or globally, could have a negative impact on the demand
for the Group’s services.
Description and impact:
An inability to quickly identify and effectively respond to the challenges
posed by climate change could hinder the Group’s transition to a
lower-carbon business, result in significant business interruption and/or
compromise new opportunities for growth. Furthermore, a failure to
appropriately consider the environmental and social impact of Mitie’s
business and its activities may create a negative perception with
employees, customers, investors, government and the general public.
This could lead to failures in securing and/or retaining contracts and
sources of funding, as well as impacting negatively on Mitie’s reputation.
Economic and political uncertainties
(Strategic risk)
Climate change and social impact
(Strategic risk)
Responsibility:
Mitie Group
Executive
Risk appetite:
Cautious
Change in year:
Increased
Responsibility:
Chief Legal Officer
(Lead) supported by
Mitie Group
Executive
Risk appetite:
Cautious
Change in year:
No change
Time horizon:
Medium to long
Risk velocity:
Year s
Strategic pillars that would be impacted if risk was to materialise:
Time horizon:
Short to medium
Risk velocity:
Months
Strategic pillars that would be impacted if risk was to materialise:
Operating margin
progression
Accelerating
growth
Accelerating
growth
Cash
generation
83
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Strategic report Governance Financial statements
3 4
Controls and mitigation:
• Continued alignment with Cyber Essentials Plus requirements, and
ISO 27001 certified Information Security Management System in place
• Internal processes and controls for all systems changes to ensure cyber
best practice and compliance with data protection laws and regulations
• Dedicated information security team and data privacy officers in place
• Assured cyber incident response company (level 1) engaged and on
retainer with a one-hour response time
• Outsourcing of routine IT operations to a highly skilled partner
organisation, Wipro, to improve IT resilience and controls. Includes
24/7 service, providing Mitie with an enhanced level of information
• Security monitoring and alerting. The 24/7 Cyber Defence Centre
service provided by Wipro actively monitors all alerts and incidents
raised by the various security tools
• Microsoft and Wipro cyber toolsets and proactive monitoring and
management of cyber-threats
• Clear strategy to utilise leading-edge cloud technology, delivering
disaster recovery and business continuity improvements
• Crisis management and business continuity testing focused on
cyber-attacks, a series of exercises aimed at ensuring that downtime
is minimised and customer trust is maintained
• Regular communications to employees to highlight IT risks and
expected behaviours
• Cyber security training
• Cyber insurance policy
• MGX Playbook for the management of a cyber-attack
• Security assessments by a leading firm of cyber security experts,
including a phased threat assessment and stress test on the
Mitie network
Future plans:
• Ongoing review of external landscape utilising Mitie channels
(i.e. Intelligence Hub)
• Delivery of enhanced screening with focus on Mitie supply chain
• Rollout of data loss prevention tools with mandatory document
classification
• Automated web application security testing
Controls and mitigation:
• A comprehensive HSE strategy in place and under continual review
for effectiveness
• Major cultural HSE programme, LiveSafe, continuing, with clear rules,
engagement and training for staff
• Regular training and communication delivered throughout the
Group, in accordance with the LiveSafe principles. LiveSafe eLearning
training programme sets out HSE expectations, including ‘stop the
job’ supported by key safety message from the Chief Executive,
Phil Bentley
• H&S management system certified to ISO 45001 and environmental
system to ISO 14001
• Fully integrated incident recording, monitoring and reporting system
• Regular HSE reviews conducted at Group and business unit level
• Clear and standardised KPIs to monitor progress and improvements
• Risk based audit programme embedded
• Themes and root causes monitored from the results of audits to
target specific actions, including training
• HSE function ‘Plan Zero champions’ as part of the Plan Zero
programme to promote strategy and good practice in environmental
management
• Health and wellbeing framework integrated into the business
• Insurance cover in place to cover employers’ liability, public liability
and motor fleet insurance
• Focused zero harm weeks concentrating on pertinent subjects to
further strengthen Mitie’s HSE culture
• Ongoing review of HSE team, ensuring maintenance of competencies
and correct provision of support and guidance across the Group
Future plans:
• Review of safety culture strategy and LiveSafe programme
• Ongoing review of technology led health and safety digital solutions
• Delivery of enhanced wellbeing initiatives and interventions
• Focus on risk related improvements and programmes
Description and impact:
In the normal course of business, Mitie collects, processes and retains
sensitive and confidential information about its customers, employees
and operations. Hacking, phishing attacks, ransomware, insider
threats, physical breaches or other actions may cause this confidential
information to be lost or misused. Any data loss could affect customer
delivery operations and may result in a major data breach, leading to
fines, remediation costs and reputational damage.
Description and impact:
Failure to maintain appropriately high standards in health, safety and
environmental management may result in catastrophic events, harm to
employees, client staff or members of the public, consequential fines,
prosecution and reputational damage.
Cyber security and data management
(Technological risk)
Health, safety and environment
(Regulatory risk)
Responsibility:
Chief Technology
and Information
Officer (Lead)
supported by Mitie
Group Executive
Risk appetite:
Averse
Change in year:
Increased
Responsibility:
Chief Legal Officer
(Lead) supported by
Mitie Group
Executive
Risk appetite:
Averse
Change in year:
No change
Strategic pillars that would be impacted if risk was to materialise:
Time horizon:
Short to medium
Risk velocity:
Hours
Strategic pillars that would be impacted if risk was to materialise:
Time horizon:
Short to medium
Risk velocity:
Days
Accelerating
growth
Accelerating
growth
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Annual Report and Accounts 2024
Principal risks and uncertainties
continued
5
6
Controls and mitigation:
• Maintenance of strong banking, debt and equity relationships
• Regular forecasting of cash flow and net debt
• Thorough focus on working capital cycles with a clear set of KPIs
• Clear policy on provisions
• Strong focus on and monitoring of cash collection
• Regular reviews of payment terms with customers and supply chain
• Focus on working capital processes to reduce cycle times and
average daily net debt
• Resources allocated to drive cash performance and predictability
• Regular review of capital allocation policy to ensure plans are
affordable and the Group remains within required covenant and
rating agency parameters
Future plans:
• Continue to work with a range of financial institutions to ensure that
affordable finance sources can be accessed
• Ongoing review of market conditions
Controls and mitigation:
• Specialist legal and HSE expertise aligned to business units
• Code of conduct for all employees
• Independent whistleblowing system available to all employees to
report any concerns
• Group-wide policies updated for changes to laws and regulations and
maintained in the online information management system (IMS)
• Regular and thorough internal and external regulatory audits
• Training and awareness materials communicated to employees via
Mitie’s digital learning hub and monitoring of completion performed,
especially for mandatory courses
• Regular monitoring of legal and regulatory changes by Group
functions, including Company Secretariat, Legal and HSE
• Financial governance and controls in place
• Commercial governance and controls in place
• Establishment of Internal Control Declaration framework ongoing to
align with future corporate governance requirements
Future plans:
• Ongoing review of employment legislation
• Ongoing review of FRC corporate governance changes
Description and impact:
Inability to maintain access to and renew suitable sources of funding due
to a perceived risk in Mitie’s business and/or the sector may impact the
Group’s ability to maintain profitable business performance.
Description and impact:
Failure to comply with applicable laws and regulations may lead to fines,
prosecution and damage to Mitie’s reputation.
Funding
(Financial risk)
Regulatory
(Regulatory risk)
Responsibility:
Chief Financial
Officer (Lead)
supported by Mitie
Group Executive
Risk appetite:
Cautious
Change in year:
No change
Responsibility:
Chief Legal Officer
(Lead) supported by
Mitie Group
Executive
Risk appetite:
Averse
Change in year:
No change
Strategic pillars that would be impacted if risk was to materialise:
Time horizon:
Short
Risk velocity:
Months
Strategic pillars that would be impacted if risk was to materialise:
Time horizon:
Short to medium
Risk velocity:
Days
Operating margin
progression
Accelerating
growth
Accelerating
growth
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7 8
Controls and mitigation:
• Bid Committee approval for complex bids
• Robust risk assessment of bids – Commercial, Legal and Operational
• Detailed contracting guidelines in place
• Clear delegated authorities register
• Strategic account management programme
• KPI/service level agreement formal reviews with customers
• Sales and customer relationship management (CRM) teams focused
on developing pipeline across all major sectors
• Improved CRM capabilities with active relationship management
• Focus on customer satisfaction (Net Promoter Score and soliciting
feedback)
• Review of any loss-making contracts to ensure learnings are
identified and applied to future bids
• Sales and pipeline management information to track and measure
growth, wins and losses
• Win/loss debriefing process to take learnings for future bidding
activities
• Focus on high-margin opportunities with growth potential, for
example technology-led solutions
• Development of new and innovative service offerings
• Sales Academy
Future plans:
• Continue to target emerging markets
• Continue to engage with opportunities that have scope for
innovative solutions
Controls and mitigation:
• Key policies and associated operating procedures in place
• Dedicated specialist teams, including Risk, Information Systems,
Finance, Occupational Health, Supply Chain and Intelligence Hub
• Maintained and updated crisis and business continuity plans for key
activities across all Mitie operations, including key service providers
• Disaster recovery framework embedded and managed
• Stringent governance controls, including oversight from Risk
Committee, with regular reporting to the Audit Committee and
the Board
• Close monitoring of supply chain to ensure continuity of critical
supplies
• Internal and external compliance audits
• Certified to ISO 22301:2019 and operating in accordance with
ISO 31000:2018, which is subject to annual external validation
• Regular Mitie Group Executive testing of crisis management and
business continuity scenarios
• Continuous horizon scanning via the Intelligence Hub, with regular
alerts to teams on potential threats and significant events
• Critical Engineering and Technical Assurance (CETA) programme
to help manage high-risk contracts
• Insurance cover in place to cover business interruption
• Agile working framework embedded
• Themes and root causes monitored from the results of audits to
target specific actions
• Digital supplier platform (DSP) supports the efficiency of Mitie
supply chain processes (supplier onboarding/supplier health,
Contract Lifecycle Management, Sourcing and Purchase to Pay)
Future plans:
• Roll-out of inaugural Risk & Resilience Week
• Completion of annual ISO 22301 surveillance audits
• Ongoing testing of business continuity and disaster recovery plans
Description and impact:
A failure to preserve our competitive edge or capitalise on
opportunities might result in the loss of key customers, excessive
dependence on a specific sector or the inability to generate financially
sound bids with a measured approach to risk. This could have a
significant effect on Mitie’s financial performance and reputation.
Description and impact:
An inability to effectively respond to global events, such as a pandemic
or supply chain disruption and/or a catastrophic event at a key business
location, could result in significant business interruption. The effect on
employees, customers and the supply chain could result in severe
consequences for the financial health and reputation of Mitie’s business.
Competitive advantage
(Strategic risk)
Business resilience
(Strategic risk)
Responsibility:
Mitie Group
Executive
Risk appetite:
Eager
Change in year:
No change
Responsibility:
Mitie Group
Executive
Risk appetite:
Cautious
Change in year:
Increased
Strategic pillars that would be impacted if risk was to materialise:
Time horizon:
Short to medium
Risk velocity:
Months
Strategic pillars that would be impacted if risk was to materialise:
Time horizon:
Short to medium
Risk velocity:
Days
Operating margin
progression
Operating margin
progression
Accelerating
growth
Accelerating
growth
Cash
generation
Cash
generation
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Annual Report and Accounts 2024
Principal risks and uncertainties
continued
9
10
Controls and mitigation:
• Consistent HR resourcing process and system across the Group
• Process in place for online training and development, with access to
online learning for all colleagues
• Consistent process to manage both temporary and permanent
recruitment
• Training and development programmes for senior leadership
• Developed talent identification, management and development
framework
• Performance management framework
• HR business partners aligned with business units
• Induction programme, mandatory for new starters
• Regular communications from leadership team – including Mitie
Group Executive country-wide roadshows
• Specific plans developed to address results of employee survey
• Competitive remuneration, terms and conditions
• Regular employee offers
• Succession plans in place for critical roles, especially for senior
leadership
• Attraction strategy developed and deployed
• Enhanced benefits such as free shares, life assurance, virtual GP and
a salary advance scheme
• Careers website
• Employee Value Proposition (EVP)
• Career band framework
Future plans:
• Ongoing review of labour markets
• Ongoing review of employment legislation, with specific focus on
TUPE requirements
• Ongoing review of EVP
Controls and mitigation:
• Key policies and associated operating procedures, including Supplier
Management Programme
• Dedicated Procurement and Commercial teams
• Centre of Excellence and dedicated Risk & Compliance team
embedded within Procurement and Supply Chain
• ‘Mitie First’ approach adopted
• Optimisation of preferred suppliers framework
• Rigorous onboarding framework integrated into business utilising
the DSP
• Defined service level agreements and KPIs
• Ongoing spending review
• Dedicated risk management and assurance procedures (including
targeted HSE assurance programme and internal audit) to ensure
internal controls are operating effectively
• Ongoing review of third-party business continuity arrangements with
regular reporting to Group Risk
• DSP facilitating supplier health and risk checks (including insolvency
risk) as well as invoice processing
• Procurement and Supply Chain (PSC) Insights
Future plans:
• Ongoing review of external landscape utilising Mitie channels
(i.e. Intelligence Hub)
• Ongoing review of market conditions
• Continued enhancement of processes relating to the DSP
• Ongoing supplier review focused on HSE accreditations and
insurance coverage
Description and impact:
Inability to recruit, retain and reward suitably talented employees, as
well as failure to implement appropriate development plans and simple,
consistent processes across the business and cultivate a ‘One Mitie’
culture, could result in employees being disengaged and negatively
impact the Group’s operational and financial performance.
Description and impact:
An inability to successfully manage strategic third-party relationships
or a failure involving a third-party partner could impact Mitie’s ability
to deliver, resulting in financial losses owing to fines and in some
circumstances significant reputational damage.
Employees
(People risk)
Third-party management
(Operational risk)
Responsibility:
Chief People Officer
(Lead) supported by
Mitie Group
Executive
Risk appetite:
Cautious
Change in year:
No change
Responsibility:
Chief Procurement
Officer (Lead)
supported by Mitie
Group Executive
Risk appetite:
Cautious
Change in year:
No change
Strategic pillars that would be impacted if risk was to materialise:
Time horizon:
Short to medium
Risk velocity:
Months
Strategic pillars that would be impacted if risk was to materialise:
Time horizon:
Short to medium
Risk velocity:
Weeks
Operating margin
progression
Accelerating
growth
Accelerating
growth
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Strategic report Governance Financial statements
11
Controls and mitigation:
• Central acquisition function reporting into Group Legal
• Standardised governance framework, including risk management
• Specialist legal and financial professionals
• Ongoing review of market conditions and value for stakeholders
• Rigorous due diligence and risk management processes
• Training and awareness
• Financial governance and controls
• Assessment of new acquisitions against Mitie’s internal control
framework and alignment with ESG strategy
Future plans:
• Continued focus on growth strategy, ensuring healthy balance
between short-term value and long-term return is maintained
• Ongoing enhancements to acquisition evaluation process
• Ongoing review of market conditions
Description and impact:
An important part of Mitie’s growth is generated through acquisitions.
Market conditions might mean the ability to secure such opportunities
for future growth which are favourable to Mitie in respect of price and
terms and conditions may not always be available.
Growth through acquisitions
(Strategic risk)
Responsibility:
Mitie Group
Executive
Risk appetite:
Eager
Change in year:
No change
Strategic pillars that would be impacted if risk was to materialise:
Time horizon:
Short to medium
Risk velocity:
Year s
12
Controls and mitigation:
• Executive sponsorship
• Deliverables agreed in advance by the Board and Mitie Group
Executive
• Centralised Project Management Office function
• Subject-matter experts appointed early on with agreed roles and
responsibilities
• Standardised programme governance framework, including risk
management
• Contract management controls embedded for third-party support
• Regular auditing with periodic reporting on key business activities to
the Audit Committee
Future plans:
• Ongoing enhancements to change management controls
Description and impact:
Fundamental to Mitie’s growth strategy is the ability to successfully
undertake transformation projects and ensure all aspects of change
management are correctly integrated. A failure to successfully manage
the aggregated impact of simultaneously delivering transformation
programmes could impact the delivery of planned business benefits.
Change management
(Operational risk)
Responsibility:
Mitie Group
Executive
Risk appetite:
Cautious
Change in year:
No change
Strategic pillars that would be impacted if risk was to materialise:
Time horizon:
Short to medium
Risk velocity:
Year s
Operating margin
progression
Accelerating
growth
Operating margin
progression
Accelerating
growth
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Annual Report and Accounts 2024
Principal risks and uncertainties
continued
13 14
Controls and mitigation:
• MGX Objectives, Goals, Strategies and Plans (OGSPs) on AI,
data and customer facing technology in the course of finalisation
• Mitie Responsible and Ethical Use of Artificial Intelligence Policy
• AI Executive Oversight Committee
• AI Ethics Board
• Dedicated AI risk register
Future plans:
• Ongoing review of external landscape utilising Mitie channels
(i.e. Intelligence Hub)
• Ongoing review of technology developments
• Continued enhancement of processes relating to AI
Controls and mitigation:
• Weekly MGX meetings
• Proactive media outreach to ensure validity of reports, including
correction methods via ongoing media campaigns
• Proactive monitoring of social media platforms
• Designated media liaisons
• Proactive engagement with key external stakeholders
• Daily media alerts
• Enhanced targeted monitoring on groups identified as posing an
increased risk
• Designated Corporate Affairs and Legal support
Future plans:
• Ongoing review of external landscape utilising Mitie channels
(i.e. Intelligence Hub)
• Ongoing testing of business continuity plans
Description and impact:
A failure to capitalise on new and emerging technologies, along with
an inability to implement vital infrastructure and systems, could have a
detrimental impact on the Group’s long-term growth and profitability.
Description and impact:
Mitie’s participation in politically sensitive activities, such as the provision
of immigration removal services, draws media scrutiny and amplifies
the risks associated with misinformation and disinformation, particularly
in instances of perceived operational shortcomings. The combination
of Mitie’s involvement and inaccuracies in external reporting could
considerably damage the Group’s reputation, resulting in the loss of
customers’ trust, financial setbacks and long-term challenges to Mitie’s
stability, delivery and growth.
Adoption of new and emerging technologies
(Strategic risk)
Reputational damage
(Strategic risk)
Responsibility:
Mitie Executive
Risk appetite:
Eager
Change in year:
New
Responsibility:
Mitie Executive
Risk appetite:
Averse
Change in year:
New
Strategic pillars that would be impacted if risk was to materialise:
Strategic pillars that would be impacted if risk was to materialise:
Time horizon:
Medium to long
Risk velocity:
Months
Time horizon:
Short to medium
Risk velocity:
Hours
Operating margin
progression
Operating margin
progression
Accelerating
growth
Accelerating
growth
89
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Non-financial and sustainability information statement
We continually look for ways to make Mitie a responsible business and we actively engage with stakeholders to improve the Group’s impact.
As detailed further on pages 54 to 77, Mitie has 14 social value and responsible business targets as part of its Social Value Framework. Progress towards these
targets is published monthly in Mitie’s ESG Dashboard, which is available at www.mitie.com/esg. Mitie achieved 13 of its social value targets for FY24.
Mitie’s leadership position continues to be maintained across ESG as shown in Mitie’s ratings from major ESG agencies during FY24.
We use a variety of tools to track and measure our performance against strategic objectives. Our business model encompasses the non-financial value created
for our stakeholders from our resources, human capital, expertise and relationships. Through our business model, we deliver value for our employees,
suppliers, communities, shareholders and customers. Our business model can be found on pages 36 and 37 and our principal risks on pages 82 to 88.
Climate-related financial disclosures as defined in section 414CB(2a) Companies Act 2006 can be found in the TCFD section, which begins on page 63.
The non-financial and sustainability reporting requirements outlined in sections 414CA and 414CB of the Companies Act 2006 are addressed in the table
below, which includes cross-references to other sections of the Annual Report. The policies listed in the table are reviewed periodically.
Reporting requirement Relevant policies and approach
1
Outcomes Annual Report page reference
Environmental
matters
Environmental policy statement: Mitie recognises that in its day-to-day
operations it will inevitably impact on the environment in several ways and
is committed to reducing that impact through continual improvement in its
environmental and sustainability performance. Mitie’s environmental policy
statement sets out how this is achieved as well as all the environmental
aspects and impacts specific to Mitie’s service delivery. It also explains Mitie’s
Plan Zero commitments.
66% of Mitie’s fleet has
been transitioned to
electric vehicles.
Mitie has validated
near- and long-term
science-based targets.
Chief Executive’s review pages 26
to 31
Environment pages 61 to 75
ESG Committee report pages
123 to 125
Principal risk 2: Climate change
and social impact
Employees People policy: Mitie recognises that to attract and keep exceptional
colleagues we must make Mitie a ‘Great Place to Work’. This is Mitie’s
number one aim as a business, because Mitie is nothing without its people.
This policy supports Mitie’s commitment to providing a rewarding, fair and
sustainable working environment for its people.
Equality diversity and inclusion policy: People are what makes Mitie great.
This policy sets out how Mitie upholds inclusion in the workplace and the
approach is based on three key principles: Inclusion, Equality and Diversity.
Mitie’s success is built on its ability to embrace diversity – and we believe
that everyone should be able to bring their true selves to work and feel
valued for their contributions.
Health, safety and wellbeing policy: This policy statement sets out Mitie’s
commitment to achieving the highest health, safety and wellbeing standards
and performance for the benefit of our employees, contractors, client staff
and members of the public.
Employee Handbook: Mitie’s Employee Handbook sets out Mitie’s Vision
and Values and applies to all colleagues.
Employee engagement
is at 63%.
Mitie recognised as a
Top 50 UK Employer
and an Inclusive Top
50 UK Employer.
Chief Executive’s review pages 26
to 31
Stakeholder engagement pages 38
to 41
People pages 56 to 60
Principal risk 4: Health, safety
and environment
Principal risk 9: Employees
Social matters Sustainability and social value policy: Mitie believes in the value of sustainable
actions and social equality. It commits to developing skills, creating quality
jobs and supporting our people to contribute to the communities we serve.
This policy sets out how Mitie manages its approach to be a sustainable,
energy efficient, environmentally and socially responsible business.
Donations and gifts
in kind to the Mitie
Foundation of £0.2m.
Chief Executive’s review pages 26
to 31
Community page 76
Principal risk 2: Climate change
and social impact
Human rights Mitie’s equality, diversity and inclusion policy sets the base for what our
colleagues should expect and what it must do to uphold its culture. Mitie’s
Employee Handbook and ethical business practice policy not only ensure
that Mitie conducts operations with honesty, integrity and openness but
also supports its approach to governance and corporate responsibility.
Mitie publishes a
Modern Slavery
Statement each year,
which is available at
www.mitie.com
Stakeholder engagement pages 38
to 41
Principal risk 6: Regulatory
Principal risk 9: Employees
Principal risk 10: Third-party
management
Principal risk 14: Reputational
damage
Anti-bribery and
anti-corruption
Ethical business practice policy: Mitie has a duty to act responsibly and to
show the highest levels of ethical and moral stewardship. This policy sets
out Mitie’s ethical business practices and includes information on Mitie’s
zero tolerance approach to bribery and corruption.
E-learning module
available for
employees through
the process repository
(BMS) and Learning
Hub.
People pages 56 to 60
Culture at Mitie pages 103 to 106
Principal risk 6: Regulatory
Principal risk 10: Third-party
management
Principal risk 14: Reputational
damage
Non-financial KPIs Details of Mitie’s non-financial KPIs can be found on pages 34 and 35.
1. Policies, statements and codes are available at www.mitie.com.
90
Mitie Group plc
Annual Report and Accounts 2024
Viability statement
Scenario Principal risks
1 Inability to refinance
Assumptions
Cashflow: Repay £30m USPP tranche in December 2024 (H2 FY25)
without replacement
5
2 Demand/operational shock
Assumptions
Revenue: 5% year-on-year revenue reduction across assessment
period
Costs: £40m one-off cost in FY25 (or equivalent amount of savings
not being realised)
3,4,6,7,8,13,14
3 Inflation/employee/supply chain disruption
Assumptions
Margin: 2% gross margin erosion across assessment period
1,2,9,10,12
4 Reverse stress test n/a
The UK Corporate Governance Code requires
the Board to explain how it has assessed the
prospects of the Group and state whether it
has a reasonable expectation that the Group
can continue to operate and meet its liabilities,
taking into account its current position and
principal risks.
The Group’s principal markets and strategy are
described in detail in the FY24 Strategic report
(pages 4 to 90).
In addition to the principal risks and uncertainties
as described in the FY24 Strategic report (pages
78 to 88), the key factors affecting the Group’s
prospects are as follows:
• Mitie is the leading UK facilities management
business with 13% of the market;
• The outsourcing market is relatively insensitive
to economic cycles;
• We have a clear vision for our technology-
centric growth strategy;
• We are making good progress in our
transformation programmes; and
• We have a diverse portfolio of blue-chip
and public sector clients, the largest of which
constitutes <5% of revenue.
The Directors believe that a three-year period
is appropriate for the viability assessment as it is
supported by Mitie’s strategic, budgeting and
business planning cycles and is relevant to the
duration of the Group’s existing contracts with
customers which is typically around three years.
It therefore represents a timeframe over which
the Directors believe they can reasonably
forecast the Group’s performance.
In making this statement, the Directors have
carried out a robust assessment of the emerging
and principal risks facing the Group, including
those that would threaten its business model,
future performance, solvency or liquidity. This
includes the availability and effectiveness of
mitigating actions that could realistically be taken
to avoid or reduce the impact or occurrence
of the underlying risks. In considering the likely
effectiveness of such actions, the conclusions of
the Board’s regular monitoring and review of
risk management and internal control systems,
as described on pages 117 to 119, are considered.
Base case forecasts for viability purposes have
been made using reasonable assumptions:
• Single digit revenue growth and modest margin
growth beyond FY24;
• Working capital movements expected to be
broadly neutral by FY26;
• Future dividends in line with current policy;
• Share buyback programme continuing in FY25;
• Settlement of existing provisions according to
management’s best estimates;
• Funding costs for ongoing transformation
activities; and
• No significant changes to the Group structure.
The resulting financial model assesses the ability
of the Group to remain within the financial
covenants and liquidity headroom of its existing
committed facilities.
The Group’s principal debt financing
arrangements as at 31 March 2024 were a £250m
revolving credit facility maturing in October 2027,
which was undrawn as at 31 March 2024, and
£150m of US private placement (USPP) notes.
These financing arrangements are subject to
certain financial covenants which are tested every
six months on a rolling 12-month basis, as set out
in the Finance review on page 53.
In September 2023, the revolving credit facility
was increased from £150m to £250m and its
maturity date was extended to October 2027,
on the same terms, with a further one year
extension option at the mutual agreement of
all parties.
Of the USPP notes, £120.0m were issued in
December 2022, split equally between 8-,
10- and 12-year maturities, and with an average
coupon of 2.94%. The base case forecasts assume
that the remaining £30.0m of USPP notes, which
are due to mature in December 2024, will be
replaced at higher interest rates (c.6%).
A range of scenarios that encompass the
principal risks were applied to the base case and
are set out in the table below. The analysis also
considered reverse stress test scenarios to
understand the reduction required to cause
a breach of financial covenants.
In each of scenarios 1 to 3, the Group was able
to continue operating within the debt covenants
and liquidity headroom of its existing committed
facilities. The conclusion from the reverse stress
tests is that the likelihood of the reverse stress
scenarios arising was remote and therefore the
scenarios do not represent a realistic threat
to the viability of the Group. In reaching the
conclusion of remote, the Directors considered
the following:
• All stress test scenarios would require a very
severe deterioration compared to the base
case forecasts. Revenue is considered to be
the key risk, as this is less within the control of
management. Revenue would need to decline
by approximately 39% (assuming the gross
margin was maintained) in the 12 months to
September 2026 compared to the base case,
which is considered to be very severe given the
high proportion of Mitie’s revenue that is fixed
in nature and the fact that in a Covid-hit year,
Mitie’s revenue excluding Interserve declined
by only 1.6% in the year ended 31 March 2021.
• In the event that results started to trend
significantly below those included in the Group
cash flow model, additional mitigation actions
within the Group’s control have been identified
that would be implemented, which are not
factored into the scenario analysis or reverse
stress test results. These include the short-
term scaling down of capital expenditure,
overhead efficiency/reduction measures
including cancellation of discretionary bonuses
and reduced discretionary spend, asset
disposals and reductions in cash distributions
and share buybacks.
Based on this assessment, the Directors have
concluded that there is a reasonable expectation
that the Group will be able to continue in
operation and meet its liabilities as they fall due
over the three-year period to 31 March 2027.
The Strategic report on pages 4 to 90 of
Mitie Group plc, company registration
number SC019230, was approved by the
Board of Directors and authorised for issue
on 5June 2024.
It was signed on its behalf by
Phil Bentley
Chief Executive Officer
Simon Kirkpatrick
Chief Financial Officer
Strategic report Governance Financial statements
91
Mitie Group plc
Annual Report and Accounts 2024
92 Chairman’s introduction to governance and the Board
93 Board of Directors
96 Board leadership and Company purpose
98 Division of responsibilities
100 Board activities: stakeholder engagement
101 Strategy and the Boardroom
103 Culture at Mitie
107 Board effectiveness and evaluation
110 Nomination Committee report
114 Audit Committee report
123 Environment, Social & Governance (ESG) Committee report
126 Directors’ remuneration report
149 Directors’ report
152 Statement of Directors’ responsibilities
Board leadership and Company purpose
A. Board effectiveness 107
B. Purpose, values, strategy and culture 96 to 106
C. Board decision-making 101
D. Engagement with stakeholders 100
E. Oversight of workplace policies and practices 103
Division of responsibilities
F. Role of the Chair 98
G. Independence and division of responsibilities 98
H. External commitments and conflicts of interest 111
I. Board resources 97
Composition, succession and evaluation
J. Appointments to the Board and succession planning 111
K. Board composition and length of tenure 111
L. Board and individual evaluation 107
Audit, risk and internal control
M. Financial reporting 114
External audit and internal audit – independence
and effectiveness 120 and 121
N. Fair, balanced and understandable assessment 12 2
O. Risk management and internal controls 117
Remuneration
P. Remuneration philosophy 126
Q. Remuneration policy 143
R. Annual report on remuneration 132
Governance
UK Corporate Governance Code and statement of compliance
Mitie applied all the principles and complied with all the relevant provisions of the UK Corporate Governance Code 2018 (the Code) during FY24.
Details of how Mitie has applied the principles (A to R below) set out in the Code and how governance operates at Mitie have been summarised
throughout this Annual Report and are set out on the pages indicated in the table below. A copy of the Code can be found on the Financial Reporting
Council’s website at www.frc.org.uk.
The Board acknowledges the release of the UK Corporate Governance Code 2024 (the 2024 Code) in January 2024. Mitie will report on compliance
with the 2024 Code from 1 April 2025, except for Provision 29, which will apply to the Company from 1 April 2026.
Strategic report Governance Financial statements
92
Mitie Group plc
Annual Report and Accounts 2024
Chairman’s introduction to governance
and the Board
• Approved the Group’s budget for FY24;
• Considered and approved the
implementation of a further £50m buyback
programme for FY24;
• Considered feedback following the various
Employee Voice listening sessions held with
frontline colleagues as part of the Board’s
workforce engagement activities;
• Considered and approved several important
strategic acquisitions, in line with Mitie’s
mergers and acquisitions (M&A) strategy;
• Balanced business performance and
shareholder interests in relation to FY24
capital allocations;
• Agreed to seek approval from the Trustee
of the Mitie Group plc Pension Scheme to
reduce the annual deficit repair contributions
under the Scheme; and
• Reviewed the capital allocation policy for
FY25.
Board composition
The Nomination Committee continues to
lead the process for Board appointments and
ensures that plans are in place for orderly Board
and senior management succession.
We feel passionately that the composition of
the Board should reflect wider society and
comprise a diverse range of skills and experience
in order to promote strong governance. In
February 2024, we welcomed Penny James as
a new independent Non-Executive Director
and appointed her as a member of the Audit
Committee and Nomination Committee.
Penny will be appointed Chair of the Audit
Committee when Mary Reilly steps down from
that position following completion of the FY25
Annual Report and Accounts of the Company.
Penny brings extensive financial services
experience with strong leadership skills, financial
and risk expertise.
The Board considered whether the balance
in its members’ skills and experience is
appropriate both from an overall Board
composition perspective and based on individual
contribution. The biographies of the current
members of the Board and the Chief Legal
Officer & Company Secretary are set out on
pages 93 to 95.
Board evaluation
During the year, the Board engaged Ceradas,
an independent company, to perform a board
effectiveness review. Outcomes and actions
from the review are detailed in the Governance
report on pages 107 to 108. Ceradas does not
have any other connection with the Company
or any individual Director.
Stakeholder engagement
Effective engagement enables the Board to
ensure that stakeholder interests are considered
when making strategic decisions. The Board’s
stakeholder map has been reviewed and
updated to include specific actions taken in
response to feedback received.
The stakeholder map has supported the
Board’s inclusion of the required Section
172(1) statement within this Annual Report.
This statement focuses on key decisions
made by the Board during FY24 and the
Board’s consideration of their impact on key
stakeholders. The Section 172(1) statement
can be found on pages 42 to 44.
Jennifer Duvalier continues to act as the
Company’s designated Non-Executive Director
responsible for oversight of the Board’s
engagement with the workforce. All Non-
Executive Directors in post throughout the
period have participated in employee listening
sessions during FY24, thereby maintaining
communication channels with the workforce
and ensuring that the views of those on the
frontline are heard and understood. Notes from
workforce engagement sessions were made
available to the Board via an electronic Board
portal. The Non-Executive Directors provided
the Board with an update at each Board meeting
so that employee views were regularly voiced at
Board level and could be incorporated into the
Board’s decision-making process. Further detail
on Jennifer’s role and activities is included on
pages 104 to 106.
Annual General Meeting (AGM)
The AGM is an important event in the
Company’s corporate calendar, providing an
opportunity to engage with shareholders.
Shareholders will be able to attend the
meeting in person to vote and ask questions
or view the meeting via a live webcast.
Shareholders can also ask questions via
email to investorrelations@mitie.com.
Instructions on how to register and join the
webcast are set out in the Notice of AGM.
Derek Mapp
Chairman
As Chairman, one of my key roles is to ensure
that the Board and Mitie continue to have high
standards of corporate governance while, at
the same time, establishing and continually
developing the right controls to provide the
Board with the appropriate level of oversight
and assurance. By having a sound corporate
governance framework, the Board can ensure
effective and efficient decision-making, and
the right balance of knowledge, diversity, skills,
experience and challenge to monitor and
manage the risks faced by Mitie.
Board’s focus during the year
During FY24, the Board has prioritised agreeing
Mitie’s new Facilities Transformation Three-Year
Plan (FY25 – FY27), focussing on Key Account
growth, Projects upsell and infill M&A as well as
continuing to reduce Mitie’s cost base through
innovation and margin enhancement initiatives.
During FY24, the Board received updates on
financial and operational performance and:
• Considered and approved Mitie’s new
Facilities Transformation Three-Year Plan
(FY25 – FY27);
Effective corporate governance
is essential to the way the Board
encourages entrepreneurial and
responsible management. This
supports the creation of long-
term, sustainable value and Mitie’s
contribution to wider society.
Derek Mapp
Chairman
93
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Board of Directors
Derek Mapp
Non-Executive Chairman
Date of appointment to the Board
9 May 2017
Other current appointments
Derek is Non-Executive Chair of the Board
of Eurocell plc and Chair of its Nomination
Committee. Derek is also Chair and a Director
of Woodall Group Limited and Legatum
Capital Limited (both private companies) and
has several other private business interests in
hospitality in Cornwall and Derbyshire.
Past roles
Derek was Chair of Informa plc from March
2008 to June 2021. He was also Chair of
Huntsworth plc from December 2014 to
March 2019. Previously he was Chief Executive
Officer of Tom Cobleigh plc and Executive
Chair of Leapfrog Day Nurseries Limited.
Prior to that, he was Chair of East Midlands
Development Agency, Sport England and
British Amateur Boxing Association Limited.
Skills and experience
• Experienced Chairman and entrepreneur
with exceptional leadership skills
• Extensive career in ownership, managerial,
operational and commercial roles in service
industries
• Wealth of commercial and exceptional
governance experience within various sectors
• Promotes robust debate and an open and
engaged culture
Phil Bentley
Chief Executive
Date of appointment to the Board
1 November 2016
Other current appointments
None
Past roles
Phil was Group Chief Executive Officer of Cable
& Wireless Communications plc from January
2014 until its sale to Liberty Global plc in May
2016. Prior to that, he was a member of the
Board of Centrica plc from 2000 to 2013, while
also Managing Director of British Gas from 2007
to 2013, Managing Director, Europe from 2004
to 2007 and Group Finance Director from 2000
to 2004. His prior non-executive directorships
include IMI plc from 2012 to 2014 and Kingfisher
plc from 2002 to 2010. His earlier career was in
international roles with BP and Diageo.
Skills and experience
• Executive and non-executive experience with
FTSE 100 companies for over 20 years
• Significant strategic and commercial
experience at both national and global levels
• Exceptional executive and leadership
experience across a number of sectors
• Extensive financial and investment community
experience
• Accountant by profession, with a master’s
degree from University of Oxford and an
MBA from INSEAD, Fontainebleau
Simon Kirkpatrick
Chief Financial Officer
Date of appointment to the Board
1 April 2021
Other current appointments
None
Past roles
Simon joined Mitie in July 2019 from Balfour
Beatty plc, where he held a number of senior
finance roles, including Finance Director for
Major Projects and Group Head of Financial
Planning & Analysis. He began his professional
career with Ernst & Young, where he was a
Director in the Energy practice.
Skills and experience
• Significant UK and international plc
experience
• Proven track record in transforming complex
contracting businesses
• Exceptional financial experience and extensive
strategic and commercial experience across a
number of sectors
• Chartered accountant, with a law degree
from University of Exeter
NC
AC NC RC
Audit Committee
member
Committee Chair
Nomination
Committee member
Remuneration
Committee member
ESG Committee
member
ESG
94
Mitie Group plc
Annual Report and Accounts 2024
Jennifer Duvalier
Independent Non-Executive
Director
Date of appointment to the Board
26 July 2017
Other current appointments
Jennifer is a Non-Executive
Director, Chair of the
Remuneration Committee and
a member of the Nomination
and Cyber Security Committees
of NCC Group plc, as well as
Senior Independent Director and
a member of the Audit and Risk,
Nomination and Remuneration
Committees of Trainline plc.
Additionally, Jennifer is a Director
of The Cranemere Group Limited,
where she is also Chair of the
Sustainability, People & Diversity
Committee, a member of the
Council of the Royal College of
Art, where she is also Chair of the
Remuneration Committee, and
a Trustee of Somerset House
(a registered UK charity).
Past roles
Jennifer was a Non-Executive
Director and Chair of the
Remuneration Committee of
Guardian Media Group plc from
May 2014 to April 2023. She
was Executive Vice President,
People for ARM Holdings plc, a
global technology business, from
September 2013 to March 2017
and was also an Executive
Committee member with
responsibility for its people and
internal communications activity.
Skills and experience
• Leadership development, talent
acquisition and management and
succession planning
• People strategy, organisation
development and change
management
• Employee engagement and
internal communications
• ESG centred activities
• Executive remuneration and
performance management
experience
• MA (Hons) in English and French
from University of Oxford
Chet Patel
Independent Non-Executive
Director
Date of appointment to the Board
1 April 2022
Other current appointments
With over 20 years’ commercial
experience at BT Group, Chet is
currently its Chief Commercial
Officer and Managing Director for
Commercial, Indirect, Partners and
the Americas.
Chet is also a Non-Executive
Advisor for Dentons and acts
as a mentor for tech start-up
organisations.
Past roles
Chet was a Non-Executive
Director at London First between
2013 and 2017. Chet was also a
non-executive member of the
London Enterprise Panel between
2013 and 2016.
Prior to joining BT Group in 2006,
Chet worked for Charles Schwab.
Skills and experience
• Commercial expertise in the B2B
service environment, promoting
growth and sales strategies
• Expertise in business technology,
cyber security, business
transformation, commercial
and marketing
• An MBA from Henley
Management College
• An honours degree in
Economics & Politics from
University of Leeds
Penny James
Independent Non-Executive
Director
Date of appointment to the Board
1 February 2024
Other current appointments
Penny is Senior Independent
Director of Hargreaves Lansdown
plc, as well as a member of its Risk
Committee and Nomination and
Governance Committee. Penny
is also a Non-Executive Director
of QBE Insurance Group Limited
and Co-Chair of the FTSE Women
Leaders Review.
Past roles
Penny was Chief Financial Officer
and later Chief Executive Officer
of Direct Line Insurance Group plc
to January 2023, having joined
its Board in November 2017. Prior
to this she was Director of Group
Finance at Prudential plc, followed
by the Group Chief Risk Officer
role. She had previously been
Group Chief Financial Officer at
Omega Insurance Holdings Limited
and Chief Financial Officer of
UK General Insurance at Zurich
Financial Services Ltd. Penny was a
Non-Executive Director of Admiral
Group plc from 2015 to 2017. She
was Chair of the Financial Conduct
Authority’s Practitioner Panel from
March 2022 to January 2023 and a
Board member of the Association
of British Insurers.
Skills and experience
• Extensive financial services
experience with strong
leadership and risk expertise
• Strategic mindset and experience
in business transformation
• Chartered accountant, with
a degree in Statistics from
University of Bath
Mary Reilly
Independent Non-Executive
Director
Date of appointment to the Board
1 September 2017
Other current appointments
Mary is Senior Independent
Director and Chair of the Audit
Committee of Essentra plc. Mary
is also a Non-Executive Director
of Cazoo Group Ltd. Additionally,
Mary is an Independent Non-
Executive Director of Gemfields
Group Limited and on the Board of
Mar Holdco S.a.r.l, a privately held
Luxembourg company. Her current
trusteeships include the PDSA
and Crown Agents International
Development.
Past roles
Mary was a Non-Executive
Director and Chair of the Audit
Committee of Travelzoo from
2013 to 2022 and a Non-Executive
Director and Chair of the Audit
Committee of Ferrexpo plc from
2015 to 2019. She was also a Non-
Executive Director and Chair of
the Audit & Risk Committee of
the UK Department for Transport
and of Crown Agents Limited
from 2013 to 2017. Prior to this,
she was a Non-Executive Director
of Cape plc from 2016 to 2017.
She has served as a Non-Executive
Director on several other Boards
since 2000. She was a partner in
Deloitte LLP (and predecessor
firms) for over 25 years.
Skills and experience
• Exceptional audit, risk
management and assurance
experience
• Accounting, finance and
international experience
• Chartered accountant, with
a degree in History from
University College London
AC NC
NCRC
Board of Directors
continued
ACAC RCNCNC
AC NC RC
Audit Committee
member
Committee Chair
Nomination
Committee member
Remuneration
Committee member
ESG Committee
member
ESG
95
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Salma Shah
Independent Non-Executive
Director
Date of appointment to the Board
1 April 2022
Other current appointments
Salma is founder of Kraken
Strategy, a communications and
policy consultancy.
Past roles
Salma was a Partner at Portland
Communications from 2021 to
February 2023 and Chief of Staff
to the Home Secretary from
2018 to 2019. Salma held special
advisor roles in several government
departments between 2014 and
2018, including the Ministry of
Housing, Communities & Local
Government, Department for
Business, Innovation & Skills, and
Department for Culture, Media &
Sport. Prior to this, Salma worked
for BBC News as a news and
political programmes producer
from 2012 to 2014.
Skills and experience
• Public sector expertise
• Extensive experience in
public policy, public affairs
and communications
• An honours degree in
Journalism & Politics from
University of Salford
RCESG
NC
Peter Dickinson
Chief Legal Officer & Company
Secretary
Date of appointment to the Board
6 March 2017
Other current appointments
None
Past roles
Peter was a partner at the global
law firm Mayer Brown International
LLP (and its predecessor firm)
between 1995 and 2017 and
played a leading role in developing
the firm’s Technology, Media and
Telecoms (TMT) practice.
Between 2005 and 2015, Peter
was the head of Mayer Brown’s
Corporate practice in London.
Between 2008 and 2015, Peter
was the co-head of Mayer Brown’s
global Corporate practice. From
2015 until March 2017, Peter
co-headed Mayer Brown’s global
Technology Transactions practice.
Skills and experience
• Substantial experience of
providing legal, regulatory and
commercial advice at Board level
• Significant experience advising
on corporate merger and
acquisition transactions, joint
ventures and other significant
commercial transactions,
including large-scale multi-
jurisdictional outsourcing
projects
• Qualified solicitor with an
LLB (Hons) law degree from
University of Southampton
Roger Yates
Senior Independent
Director
Date of appointment to the Board
1 March 2018
Other current appointments
Roger is Chair of The Biotech
Growth Trust plc and Pacific
Horizon Investment Trust plc.
He is also Senior Independent
Director and Chair of the
Remuneration Committee of
Jupiter Fund Management plc.
Past roles
Roger was Senior Independent
Director and Chair of the
Remuneration Committee of St
James’s Place plc until May 2023,
having served nine years on its
Board. Roger started his career
in asset management at GT
Management in 1981 and held
positions of increasing seniority at
Morgan Grenfell, LGT and Invesco.
He served as Chief Executive of
Henderson Group plc from 1999
to 2008 and as Chief Executive of
UniCredit’s asset management arm,
Pioneer Investments, from 2010 to
2012 and as Chairman from 2012
to 2017.
Roger’s non-executive roles have
included F&C Investments, IG
Group plc, Electra Private Equity plc
and JPMorgan Elect plc.
Skills and experience
• Substantial board experience
• Strong business track record
• Exceptional knowledge of
the finance and investment
community
• MA in Modern History from
Worcester College, University
of Oxford
AC
RC
NC
ESG
Gender diversity
as at 31 March 2024
Female 4
Male 5
Ethnicity diversity
as at 31 March 2024
British Asian 1
British Indian 1
White British 7
Director age range
as at 31 March 2024
31–40 1
41–50 1
51– 60 3
61–70 3
71–80 1
Director independence
as at 31 March 2024
Chairman 1
Executive 2
Independent 6
Director tenure
as at 31 March 2024
Less than
5 years 4
5–6 years 4
6–7 years 1
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Board leadership and Company purpose
Mitie Group plc Board
Mitie Group Executive (MGX)
Mitie business divisions
Nomination Committee
Purpose: to evaluate and make
recommendations regarding
the composition, diversity,
experience, knowledge, skills and
independence of the Board and
its Committees. Read more on
pages 110 to 113.
Audit Committee
Purpose: to monitor the integrity
of the Group’s financial reporting,
review the effectiveness of the
Group’s internal controls and
evaluate the performance of the
internal audit function and external
auditor. Read more on pages 114
to 122.
Remuneration Committee
Purpose: to determine and
review the Company’s
remuneration policy and
monitor its implementation.
Read more on pages 126 to 148.
ESG Committee
Purpose: to provide oversight
and governance for all of Mitie’s
Environmental, Social &
Governance initiatives, ensuring
they are aligned to Mitie’s Purpose,
Promises and Values. Read more
on pages 123 and 125.
The MGX, which includes senior members of management from each business unit and central Group functions, meets weekly to discuss and
implement the Group’s strategic objectives. The Board is updated on matters discussed at MGX meetings at Board meetings as part of the Chief
Executive’s regular update paper, and on an ad hoc basis as required.
Business Services, Technical Services, Central Government & Defence and Communities.
Director attendance
The Board and its Committees held scheduled meetings at which senior executives and advisers were invited to attend and to present on business
developments. The table below sets out attendance at the scheduled meetings in FY24. Attendance is expressed as the number of scheduled meetings
attended out of the number of such meetings possible or applicable for the Director to attend. In circumstances where a Director is unable to attend a
meeting, the Director receives papers in advance and has the opportunity to raise issues and provide feedback to the Chair in advance of the meeting.
Position Name Board
Nomination
Committee
Audit
Committee
Remuneration
Committee
ESG
Committee
Chairman Derek Mapp 6/6 2/2 – – –
Executive Directors Phil Bentley 6/6 – – – –
Simon Kirkpatrick 6/6 – – – –
Independent Non-
Executive Directors
Jennifer Duvalier
1
5/6 1/2 – 4 /5 –
Penny James
2
1/1 1/1 1/1 – –
Chet Patel
3
6/6 2/2 6/7 5/5 –
Mary Reilly 6/6 2/2 7/7 – –
Salma Shah 6/6 2/2 – 5/5 6/6
Roger Yates 6/6 2/2 7/7 5/5 –
1. Jennifer Duvalier was unable to attend the meetings in March 2024 due to illness.
2. Penny James was appointed to the Board, the Nomination Committee and the Audit Committee on 1 February 2024.
3. Chet Patel was unable to attend an Audit Committee meeting due to conflicting commitments.
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Strategic report Governance Financial statements
Governance framework
The Company’s formal governance framework
underpins the Group’s operations. In addition to
the four main Board Committees, the Company
has a Disclosure Committee, an informal Bid
Committee and a Risk Committee.
The Disclosure Committee is chaired by the
Chief Executive. Its members include the
Chairman, Chief Financial Officer, Chief Legal
Officer & Company Secretary and the Deputy
General Counsel. Its purpose is to assist and
inform decisions of the Board concerning the
identification of inside information and to
make recommendations about how and
when the Company should disclose that
information in accordance with the Company’s
disclosure policy.
The Bid Committee is chaired by the Chief
Executive. Its members include the Chief
Financial Officer, Chief Legal Officer & Company
Secretary and relevant members of Mitie’s
Group Executive (the MGX) and members of
the sales team. The Bid Committee met weekly
during FY24. Its purpose is to consider material
bid submissions and to determine whether such
bids meet the Group’s financial, commercial and
legal objectives.
The Risk Committee, chaired by the Chief
Risk Officer (Mitie’s Chief Legal Officer) and
comprising the Managing Directors of each of
the divisions, the heads of all functions, and
relevant subject matter experts, is responsible
for overseeing the implementation of the
Group’s Enterprise Risk Management (ERM)
framework from an operational perspective,
consistent with Mitie’s risk appetite.
Terms of Reference for the Company’s formal
Committees are available at www.mitie.com/
investors/corporate-governance.
Company purpose
As detailed on page 12 of the Strategic
report, the Company’s purpose is that our
expertise, care, technology, insight and
focus on sustainability create amazing work
environments, helping our customers to be
exceptional, every day.
Purpose of the Board
The purpose of the Board is to provide
leadership and direction to the Group’s
management within a framework of controls
which enable risk to be adequately assessed
and managed.
The Board is responsible and accountable to
shareholders for the sustainable long-term
success of the Company. Subject to UK company
law and the Company’s Articles of Association,
the Directors may exercise all the powers of the
Company, may delegate authority to
Committees and day-to-day management
and decision-making to individual Executive
Directors. The purpose of each of the four
main Board Committees is detailed in the
Committee reports, which begin on page 110.
Matters reserved for the Board
A schedule of key matters and responsibilities
that are to be dealt with exclusively by the
Board is maintained and regularly reviewed.
The schedule was last reviewed by the Board
in March 2024.
The key responsibilities of the Board include:
• Promoting the long-term sustainable success
of the Company, ensuring that workforce
policies and practice support the Company’s
long-term sustainable success and are
consistent with Mitie’s Values
• Approving the Group’s long-term objectives
and commercial strategy
• Establishing Mitie’s Purpose, Promises and
Values and satisfying itself that these are
aligned to the Group’s strategy
• Reviewing performance in light of the Group’s
strategy, objectives, business plans, budgets
and ESG targets
• Approving the annual budget
• Approving the half-yearly financial report and
Annual Report and Accounts in accordance
with legal and regulatory requirements
• Ensuring the Group’s compliance with
statutory and regulatory obligations
• Reviewing the effectiveness of the Group’s
risk and control processes
• Reviewing the Company’s capital allocation
policy and approving shareholder returns
through dividends and share buybacks
• Approving all material acquisitions and
disposals, and material contractual and other
operational matters
• Ensuring adequate succession planning for the
Board and senior management
• Undertaking a formal and rigorous review
annually of its own performance and that of
its Committees and individual Directors
• Making arrangements for dialogue with
shareholders, canvassing shareholder opinion
and engaging with shareholders in relation to
any shareholder resolution which is opposed
by more than 20% of the votes cast
Board meeting process
The Chairman is responsible for setting the
Board meeting agenda and for ensuring that
the style and tone of Boardroom discussions
promote effective decision-making and
constructive debate.
Each Board meeting agenda is produced in
consultation with the Chairman, using items
from a yearly meeting planner, actions arising
from previous meetings, project progress
updates and any relevant governance and
regulatory matters. Items may also be added
to the agenda at the request of a Board
member or in response to emerging issues.
Attention is given to timings for each agenda
item to ensure that adequate time is allocated
for effective discussion and debate.
To allow sufficient time for the Directors to
review Board meeting materials and seek any
clarification needed ahead of the meeting,
Board meeting materials are distributed to the
Directors no fewer than five clear calendar days
prior to the meeting via a secure electronic
Board portal.
Board paper guidelines and templates are
provided to authors of meeting materials to
maintain a consistently high standard.
An important element of Mitie’s culture is
that the Group operates as ‘One Mitie’ and
collaborates effectively across all business areas.
Mitie’s culture facilitates greater consistency in
processes and information control which, in
turn, facilitates the preparation of consistent,
high-quality and relevant Board meeting
materials. Authors of Board meeting materials
seek to appropriately consider the impact, views
and needs of key stakeholder groups, as well
as the likely consequences of decisions in the
long term, helping to aid Board discussions and
decision-making.
The Chairman ensures that all Directors feel
they can voice their opinion, be listened to and
contribute to the decision-making process.
Function heads and members of management
are invited to attend Board meetings to present
their items to the Board and answer questions.
Advice of the Company Secretary
All Directors have access to the advice of the
Company Secretary through various channels,
including the Chief Legal Officer & Company
Secretary’s Board report, which is presented at
every Board meeting, and a secure electronic
Board portal which is kept up to date with the
latest governance-related information and
guidance. The Chief Legal Officer & Company
Secretary and Company Secretariat team are
also available to the Directors on an ad hoc basis
as required. The Chief Legal Officer & Company
Secretary helps the Board ensure it has the
appropriate policies, processes, information,
time and resources it needs in order to function
effectively and efficiently.
The Board is responsible for the appointment
and, where applicable, removal of the
Company Secretary.
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Annual Report and Accounts 2024
Division of responsibilities
All Non-Executive Directors are considered
independent when assessed against the
circumstances set out in Provision 10 of
the Code. The Chairman was considered
independent against these circumstances
on appointment.
The Board continues to support separation of
the roles of Chairman and Chief Executive and
considers itself to have an appropriate balance
of Executive Directors and Independent
Non-Executive Directors. No one individual
or small group of individuals dominates Board
decision-making.
There is a clear division of responsibilities
between leadership of the Board and executive
management leadership of Mitie’s business. Key
responsibilities of the Board, its Committees
and its members are agreed by the Board and
documented in writing.
These responsibilities are summarised below.
Further detail is publicly available at www.mitie.
com/investors/corporate-governance where the
following documents are published:
• Matters reserved for the Board
• Terms of Reference for each Committee of
the Board
• Division of Responsibilities between the
Chairman and Chief Executive
Chairman
In his role as Chairman, Derek Mapp’s
responsibilities include:
• Leading and chairing the Board, Nomination
Committee and shareholder general meetings
• Ensuring overall effectiveness of the Board in
all aspects of its role
• Ensuring regularity and frequency of Board
meetings
• Setting Board agendas, taking into account the
issues and concerns of all Board members
• Ensuring appropriate delegation of authority
from the Board to executive management
• Demonstrating objective judgement
• Promoting a culture of openness and debate
• Ensuring that Directors receive accurate,
timely and clear information
• Managing the Board to ensure sufficient time
is allocated to promote healthy discussion and
open debate, supported by the right level and
quality of information to assist the Board in
reaching its decisions
• Facilitating the effective contribution of
Non-Executive Directors and encouraging
active engagement by all members of
the Board
• Ensuring constructive relations between the
Executive Directors and Non-Executive
Directors
• Holding meetings with the Non-Executive
Directors without the Executive Directors
present
• Ensuring that new Directors participate in a
full, formal and tailored induction programme
• Ensuring that the performance of the Board,
its Committees and individual Directors is
evaluated at least once a year and acting on
the results of such evaluation
• Maintaining sufficient contact with major
shareholders to understand their issues
and concerns
• Ensuring that the views of shareholders are
communicated to the Board
Senior Independent Director
In his role as Senior Independent Director,
Roger Yates’ responsibilities include:
• Acting as a sounding board for the Chairman
• Serving as an intermediary for other
Directors when necessary
• Conducting the Chairman’s annual
performance evaluation (without the
Chairman present)
• Leading the appointment process for any
new Chairman
• Acting as chairman of the Board in the
absence of the Chairman
• Being available as an alternative point of
contact for shareholders if they have
concerns which have not been resolved
through the normal channels, or for
which such contact is inappropriate in
the circumstances
Non-Executive Directors
The responsibilities of the Board’s Non-
Executive Directors include:
• Holding a primary role in appointing and
removing Executive Directors when
necessary
• Scrutinising and holding to account the
performance of management and individual
Executive Directors against agreed
performance objectives
• Exercising independent skill and judgement
• Constructively challenging proposals based
on relevant individual experience, knowledge
and skills
• Contributing to the formulation and
development of strategy and offering
specialist advice
1. Penny James was appointed on 1 February 2024.
Board composition
Chairman
Derek Mapp
Executive Directors
Phil Bentley
Simon Kirkpatrick
Senior Independent Director
Roger Yates
Independent Non-Executive Directors
Jennifer Duvalier
Penny James
1
Chet Patel
Mary Reilly
Salma Shah
Biographies of the current Directors,
pages 93 to 95
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Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
• Monitoring corporate reporting to ensure
integrity of financial information
• Overseeing the Group’s principal risks and
assurance in place relating to those risks,
including internal audit programmes
• Playing a key role in determining the
remuneration policy for the Chairman,
Executive Directors, Chief Legal Officer
& Company Secretary and the senior
executive team
• Holding a primary role in Board succession
planning
Executive Directors
Chief Executive
In his role as Chief Executive, Phil Bentley’s
responsibilities include:
• All aspects of the operation and management
of the Group within the authorities delegated
by the Board
• Developing Group objectives and strategy,
having regard to the Group’s responsibilities
to its shareholders, customers, employees
and other stakeholders
• The successful achievement of objectives and
execution of strategy following presentation
to, and approval by, the Board
• Recommending to the Board an annual
budget and long-term business plan and
ensuring their achievement following
Board approval
• Optimising the use and adequacy of the
Group’s resources
• Managing the Group’s risk profile, including
the health and safety performance of
the business
• Making recommendations to the
Remuneration Committee on remuneration
policy, executive remuneration and terms of
employment of the senior executive team
Chief Financial Officer
In his role as Chief Financial Officer, Simon
Kirkpatrick’s responsibilities include:
• Leading, directing and overseeing all aspects
of the finance and accounting functions of
the Group
• Evaluating, approving and advising on the
financial and commercial impact of material
contracts and transactions (including mergers
and acquisitions), technology investments,
long-range planning assumptions, investment
return metrics, risks and opportunities, and
the impact of changes in accounting standards
• Managing relationships with the external
auditor and key financial institutions
and advisors
• Ensuring effective internal controls are in
place and compliance with appropriate
accounting regulations for financial, regulatory
and tax reporting
• Leading, directing and overseeing the
Group’s Finance, Treasury, Tax and Internal
Audit functions
Chief Legal Officer & Company Secretary
In his role as Chief Legal Officer & Company
Secretary, Peter Dickinson’s responsibilities
include:
• Advising the Board on governance matters
and the Directors on their duties, including
on all aspects of the Group’s governance
framework and the application of its
delegated authorities
• Ensuring the Group’s compliance with
corporate legislation and the Company’s
Articles of Association
• Supporting the Board in ensuring it has the
policies, processes, information, time and
resources needed to function effectively
and efficiently
• Leading, directing and overseeing the
Group’s Legal, Company Secretarial, Pensions,
Property, Insurance, Health & Safety, Risk &
Compliance and Sustainability functions
• Chief Risk Officer, overseeing the
implementation of Mitie’s Enterprise Risk
Management (ERM) framework and chairing
the Risk Committee
• Managing the Group’s relationship with the
Cabinet Office
• Identifying and recommending to the Board
acquisitions and disposals
• Leading, directing and overseeing of the
Strategic Projects Office and the
implementation of any projects thereunder
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Annual Report and Accounts 2024
2023
2024
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Board activities: stakeholder engagement
• Chet conducted a virtual meeting with
colleagues based in the Falkland Islands
working across a range of roles
• Derek and Salma visited colleagues based in
Gibraltar working across a range of roles
• Derek hosted the annual Chairman’s
roadshow for investors over three days,
with Chet, Salma and Jennifer in attendance.
• Simon hosted calls with analysts following
Mitie’s Q3 trading update
• Mary and Salma visited colleagues at a
client’s site in Ware, Hertfordshire
• Jennifer hosted a colleague voice
session to discuss reward, benefits and
executive remuneration
• Salma attended an event hosted by
the gender equality network, Mitie
Women Can.
• Derek visited the Intelligent Security
Operations Centre (ISOC) in Northampton
to meet with colleagues
• Jennifer met with colleagues working on the
Scottish Government contract
• Jennifer attended an event hosted by Mitie’s
Proud To Be diversity network, which
promotes an inclusive workplace culture,
especially for LGBTQ+ colleagues
• Phil and Simon hosted an FY23 results
presentation in London, with investors,
analysts and banks in attendance
• Phil and Simon hosted a colleague Town
Hall event in London following publication
of the FY23 results. The event incorporated
a live stream from certain key Mitie
office hubs
• Roger visited Custom Solar’s office in
Derbyshire to meet with colleagues and
those working for Care & Custody in
Manston, Kent.
• 2023 Annual General Meeting held as a
hybrid meeting for shareholders, with
all Board members in attendance
• Simon hosted calls with analysts following
Mitie’s Q1 trading update
• Derek visited colleagues in London, working
across the Sainsbury’s contract in London
• Jenny and Phil attended the 2023 Mitie Stars
Awards presentation in London, which
recognises colleagues who go above and
beyond to demonstrate Mitie’s Values
• Chet met with colleagues in Spain
• Mary attended an event organised by Mitie’s
CHORD (culture, heritage, origin, race and
diversity) network, which aims to ensure an
inclusive working environment for people of
all ethnicities
• Phil and Simon hosted Mitie’s Capital
Markets Day 2023 together with the
other MGX members
• Chet visited colleagues working on
the Ministry of Defence contract in
Corsham, Wiltshire
• Jennifer and Salma attended an event
hosted by the Mitie Military network
• Phil and Simon hosted an H1 FY24 results
presentation in London, with investors,
analysts and banks in attendance
• Phil and Simon hosted a colleague Town
Hall event in London following publication
of the H1 FY24 results. All Mitie hub offices,
including Ireland and Spain, joined the event
electronically and a live stream was made
available to all colleagues
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Strategic report Governance Financial statements
Strategy and the Boardroom
Setting strategy
The Board reviews and agrees the strategy
for the Group on an annual basis and reviews
aspects of strategy at Board meetings during the
year. The Board’s annual strategy day for FY24
was held in September 2023. When debating
the Group’s strategy, the Board discussed a wide
range of matters, including, but not limited to:
• Target Operating Model
• Technology and innovation
• People and culture
• Sales and marketing
• Sustainability and decarbonisation
• Macro-trends
• Market forecasts and Mitie performance
• Growth plans
• Global facilities management market
• Competitor analysis
• Stakeholder sentiment and shareholder
returns
• Financial model
How governance contributes to the
delivery of strategy
Details of how opportunities and risks to the
future success of the business have been
considered and addressed can be found in the
Strategic report on pages 10 to 11, 63 to 70 and
78 to 88. Details of the sustainability of Mitie’s
business model can be found in the Strategic
report on pages 36 and 37. Mitie’s governance
framework underpins the delivery of strategy
and can be found on page 97. An overview
of the Group’s strategy can be found in the
Strategic report on pages 26 to 31.
How the Board considers the views
ofstakeholders
The Board acknowledges the importance of
forming and retaining sound relationships with
all stakeholder groups. Accordingly, the Board
periodically reviews and discusses the Group’s
key stakeholders along with the engagement
mechanisms in place to ensure that they support
effective, two-way communication. The Board
maintains a stakeholder map which is used to
support the Board’s reporting requirements
under Section 172(1) of the Companies Act
2006. Further detail on the Group’s stakeholder
engagement mechanisms can be found in the
Strategic report on pages 38 to 41. Mitie’s
Section 172(1) statement, detailing how
the Board has engaged with the Group’s
stakeholders and approached decisions made
during FY24, can be found in the Strategic
report on pages 42 to 44. Details of stakeholder
activities undertaken by the Board during FY24
can be found on page 100. Resources for
shareholders and other stakeholders can be
found at www.mitie.com/investors.
The Board is committed to ongoing and
proactive dialogue with shareholders. A full
programme of formal and informal events,
institutional investor meetings and presentations
is delivered throughout the year. This
engagement programme aims to ensure that
the performance, strategies and objectives of
the Group are clearly communicated to the
investment community and provides a forum for
institutional shareholders to address any issues.
Mitie engages proactively with the investment
community and sell-side analysts, and
accommodates requests for meetings and calls
with senior management from existing and
potential institutional investors. The programme
is led by the Executive Directors with support
from the Investor Relations function. The Board
is regularly kept informed of investor feedback,
stockbroker updates and detailed analyst
reports. The Chairman is responsible for
ensuring that the Board is made aware of any
issues or concerns of major shareholders.
The Chairman and Non-Executive Directors
are available to meet with shareholders upon
request and the Chairman conducts an annual
roadshow. Committee Chairs seek engagement
with shareholders on significant matters related
to their area of responsibility.
Boardroom discussions
The Board held six formal scheduled meetings
during FY24. Individual Director attendance at
meetings can be found on page 96.
In undertaking their duties, the Directors act in
a way they consider, in good faith, will be most
likely to promote the success of the Company
for its shareholders as a whole, having regard
also to other stakeholders. Further detail on
Boardroom discussions relating to certain key
Board decisions can be found in the Section
172(1) statement on pages 42 to 44.
Scheduled Board meetings focused on the main
themes as detailed below:
Strategy • Approving the Group’s strategic targets and monitoring the Group’s performance against them
• Approving strategic acquisitions
• Considering growth opportunities and conducting post-acquisition appraisal reviews
• Approving the Group’s budget
• Reviewing the progress of the Target Operating Model programme and approving revisions where necessary
• Approving the Group’s Facilities Transformation Three-Year Plan (FY25 - FY27)
Financial performance
and investor relations
• Recommending a final dividend of 2.2 pence for FY23 and declaring an interim dividend of 1.0 pence for FY24
• Approving the Group’s share buyback programme
• Setting financial plans, annual budgets and key performance indicators, and monitoring progress against them
• Approving financial results for publication
• Reviewing analyst research and consensus, alongside feedback from investor meetings
• Considering the appropriateness of potential excess capital distributions and distributable reserves
Governance • Receiving updates from the Board Committee Chairs
• Reviewing and updating the Matters Reserved for the Board, as well as approving each Board Committee’s Terms
of Reference
• Conducting the annual review of the effectiveness of the Board and Board Committees
• Receiving reports from the Chief Legal Officer & Company Secretary, which include updates on governance and
regulatory matters, whistleblowing and material litigation
• Reviewing and approving the Group’s reports on Task Force on Climate-related Financial Disclosures and Sustainability
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Annual Report and Accounts 2024
In FY24, the Board approved the Group’s Facilities Transformation Three-Year Plan (FY25 - FY27) which is expected to deliver accelerated growth
through three key pillars: strategic infill M&A; Projects upsell; and Key Accounts. Further information on the key pillars of the Three-Year Plan can be found
in the Strategic report on pages 24 and 25.
Examples of initial Board activity related to the new strategy can be found below.
Strategic infill M&A In FY24, the Board oversaw the completion of seven strategic acquisitions. Mitie’s position as a leader in the intelligence and
technology-led Fire & Security market has been enhanced by four acquisitions, including RHI Industrials (a leading installer
of high-tech security and access controls), and GBE Converge (a leading provider of fire, security and ICT solutions). The
Group also enhanced its Mechanical & Electrical (M&E) engineering capabilities through the acquisition of JCA Engineering,
which is a leading principal contractor for complex engineering projects, with a particular focus on data centres and other
critical environments. The Board also monitored the completion of the step plan acquisition of Landmarc, where the Group
obtained control of the business during FY24.
Projects upsell and
Key Accounts
In FY24, the Board approved growing the Group’s existing relationships with a leasing company and a catering supplier,
as well as overseeing management updates on Projects upsell and Key Accounts.
The Board will continue to receive regular updates on new business, retention and extension divisional opportunities,
as well as cross-selling strategies.
Strategy and the Boardroom
continued
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Strategic report Governance Financial statements
Culture at Mitie
Mitie is a people business, offering facilities
management services that are driven by Mitie
colleagues. Mitie’s vision is to be the destination
employer in the facilities management industry,
creating a ‘Great Place to Work’, and a truly
inclusive culture where our people are
supported to achieve their potential. Further
detail can be found in the People section on
pages 56 to 60.
All Directors lead by example and promote the
desired culture.
Alignment of remuneration and culture
Successful people and organisations are clear
about what they want to achieve, how they are
going to get there and their progress along the
way. The annual employee appraisal (MiReview)
process allows Mitie to set SMART objectives in
areas that really add value to the business, build
development plans that help colleagues achieve
their objectives and personal development goals,
and ensure pay reviews are carried out in a
transparent way, related directly to individual
performance.
Details on Mitie’s approach to investing in
and rewarding its workforce are set out on
pages 56 to 60 and Mitie’s Real Living Wage
commitment on page 58.
Ethics
Mitie is committed to: promoting equality,
diversity and inclusion; eliminating discrimination;
providing equality of opportunity; and
encouraging inclusivity among colleagues.
All colleagues are required to adhere to Mitie’s
key ethics and compliance policies, which include
the Employee Handbook, Ethical Business
Practice Policy, People Policy, and Equality,
Diversity & Inclusion Policy. Colleagues are
encouraged to report any behaviours that they
believe do not comply with the policies or do
not meet the standards of conduct expected
at Mitie. Channels for raising any such concerns
include Mitie’s independent whistleblowing
service, line managers, People Support, directly
with the Chief Executive via email to ‘Grill Phil’,
via email to the equality, diversity and inclusion
mailbox and through Mitie’s diversity networks.
Mitie’s award-winning inclusion learning and
development programme, Count Me In, helps
us create an environment where everyone feels
supported, included and able to bring their true
self to work. Count Me In continues to remain a
key core offering for our colleagues. Since 2022,
interactions with our Count Me In programme
have grown by 285% to 185,000 interactions
with the learning activities, equating to over
9,000 hours of focused learning across the
business. Further details on Mitie’s Count Me
In programme can be found on page 57 and
at www.mitiepeople.com/countmein.
Our commitment to fostering a truly inclusive
culture has been furthered this year by the
development of a new Leading with Respect
programme. This was developed for all people
managers in our business and builds on Count
Me In, our existing award-winning inclusion
programme. The Leading with Respect
programme provides real focus and clarity for
leaders at Mitie on how to lead respectfully and
encourages them to invest in building trusting
and respectful relationships with their team
members, by providing practical guidance on
how to create the right environment to have
inclusive conversations and showing that we
really care for our people.
Our people leaders go through a journey of
discovery whilst completing the Leading with
Respect programme. The content is carefully
crafted to provide laser focus to EDI, health
and wellbeing, safety and employee relations
matters, and empower our people managers
to effectively manage grievances, absences and
investigations with a colleague-focused lens.
Over 3,100 people managers have completed
the programme since it launched in September
2023, representing 69% of our target audience.
Inclusion Allies
Our Inclusion Allies programme is run in
partnership with Inclusive Employers and is
sponsored by the Managing Director of
Technical Services, a member of the MGX.
The programme has been designed to empower
colleagues across our business to act in allyship
for diverse groups, role model inclusion, break
down silos and help drive inclusion forward.
Allies undertake a four-week learning
programme designed to take colleagues on
a personal journey to allyship. They explore
privilege, circles of influence and the boundaries
of the role. They are given a framework and
techniques to challenge exclusion and have
challenging conversations.
150 colleagues at different levels from
across the organisation have completed the
programme and act as role models. They
embed EDI into everything they do and take
an active part in supporting initiatives and
running awareness campaigns.
Senior Women in Leadership
We are committed to support our people
to grow and advance their careers with us.
Our Senior Women in Leadership programme,
sponsored by the Chief People Officer, is
designed to enhance the skills, abilities,
expertise and experience of women at Mitie
to prepare them for our most senior roles.
This programme is underpinned by a Level 7
Leadership apprenticeship delivered in
collaboration with Corndel College London
and paired with 1:1 mentoring. We also make
sure that our performance reviews and talent
assessments are based on objective and
concrete criteria, lowering the chance for bias in
any of our selection and progression processes.
We have made positive steps towards a more
inclusive culture in the last year. More of our
colleagues who have disabilities or are LGBTQ+
have shared their personal data with us, with
an increase of about 1%. Our colleagues from
different racial backgrounds were the most
satisfied group in our 2023 engagement survey,
scoring 67%, while Mitie’s overall score was 57%.
How the Board assesses
and monitors culture
Mitie’s Values help define the behaviours of its
people and underpin its vision of The
Exceptional, Every Day. An important element
of Mitie’s culture is establishing a ‘One Mitie’ way
of operating across the business. The ‘One Mitie’
way leads to consistent, high-quality and relevant
information flows across the business. Mitie’s
colleague listening strategy, which is focused on
hearing from and acting on colleague feedback,
supports the adoption of a ‘One Mitie’ culture
which is inclusive and high performing. The
strategy includes colleague listening sessions
hosted by Board members and Mitie business
divisions in the UK and overseas, as well as the
annual colleague engagement survey, MyVoice
(formerly Upload). Members of the Board
attend regular Town Hall events with colleagues
at Mitie offices, as well as diversity network
events, and those hosted by the Mitie Military
network. Where virtual events are held, they
include the ability for colleagues to ask questions
of management via a chat box (anonymously,
if preferred).
These information flows, together with direct
engagement from each of Mitie’s business
divisions, are key to the Board’s oversight of
cultural matters. Mitie also measures several
non-financial KPIs, such as colleague turnover,
employee engagement and lost time injury
frequency rate, which allow trends and changes
to be identified and monitored.
Set out below are further examples of how the
Board monitors culture.
Culture at Mitie is underpinned by its purpose: Our expertise, care,
technology, insight and focus on sustainability create amazing work
environments, helping our customers to be exceptional, every day.
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Whistleblowing
Mitie has an independent whistleblowing service,
‘Speak Up’, to enable employees, customers,
suppliers and third parties to report any
concerns or wrongdoing anonymously, without
any fear of retaliation. Mitie’s whistleblowing
service platform, EthicsPoint, is managed by
an independent third-party service provider,
Navex Global. The service can be accessed via
a freephone hotline number and a web portal,
details of which are made available to employees
in multiple languages via workplace posters,
Mitie’s Employee Handbook intranet and
MitiePeople.com. The service can also be
accessed by customer and supplier personnel,
as well as members of the public, with details
being provided via www.mitie.com.
The whistleblowing service and related internal
procedures are structured to ensure that
all reports are reviewed and investigated
independently from the area of the business to
which they relate, thereby minimising the risk
of conflicts arising. All reports are copied to
and reviewed by a central Whistleblowing
Investigation Group, which includes the Deputy
General Counsel and senior members of the
Group’s Internal Audit function. This helps to
ensure transparency and enables any trends to
be identified and addressed.
An update on whistleblowing activity is provided
to the Board at every Board meeting and to
the MGX as appropriate. The update includes
details of incident reports received in the period
between Board meetings, as well as details
of ongoing and the outcomes of recently
completed investigations. The EthicsPoint
platform provides Mitie with the ability to
report by business division and by investigation
status/outcome, facilitating the Board’s ability to
effectively track the progress of investigations
and to monitor and address trends across
individual business units and the Group as
a whole.
Quality, Health, Safety and
Environment (QHSE)/LiveSafe
Mitie recognises that health, safety and wellbeing
play a pivotal role in achieving The Exceptional,
Every Day. Health, safety and wellbeing are also
key metrics in demonstrating that Mitie is a
responsible business and adds social value, which
helps Mitie to attract and retain employees
and clients.
We expect our colleagues to return from their
workday healthy, safe and well. This is achieved
by creating an environment where Mitie
colleagues feel able to bring their whole selves
to work, thereby improving health, safety
and wellbeing. Mitie’s aim for zero harm is
underpinned by Mitie’s Values and influenced
through Mitie’s LiveSafe programme.
Objectives
The objectives of Jennifer’s programme of
activities include:
• Ensuring that the Board hears from a wide
cross-section of Mitie colleagues both in the
UK and internationally
• Hearing from colleagues from a diverse
range of backgrounds, roles, contracts and
business units
• Ensuring Board and MGX involvement in key
diversity network events
• Creating opportunities to get involved in the
work of colleagues to better understand their
lived experience at work, subject to health
and safety rules
• Creating a cycle of feedback with the Board
to inform decision-making and people
strategy setting/deliverables, and ensure
colleagues hear what actions are taken from
these discussions
Board site visits
The Board is at the forefront of the journey to
make Mitie a ‘Great Place to Work’ and is keen
to understand the views of all employees and
the impact its decisions have on them. During
FY24, Mitie continued with its process in relation
to colleague listening sessions, with Jennifer
and other Board members hosting at least
one listening session with Mitie colleagues or
attending a Mitie diversity network event
each month. The wider Board will continue to
support Jennifer by attending listening sessions
and diversity network events during FY25.
The Board’s role in colleague engagement is
supported by Mitie’s Chief People Officer
and the Head of Communications. In
collaboration with the business division leads,
the Chief People Officer and the Head of
Communications evaluate Mitie’s annual
employee engagement survey data to
propose a range of site visits that ensure
effective reach to Mitie colleagues globally.
The programme facilitates proactive leadership,
leading to better trust and accountability in
all aspects of health, safety and wellbeing
management. In turn, this helps increase
performance and productivity, influence
ownership, improve customer service, reduce
absence, reduce accidents and increase creativity
and innovation, ultimately embedding a thriving
culture throughout the organisation.
In December 2023, the LiveSafe safety champion
network was launched. LiveSafe champions
are identified as the main point of contact for
routine QHSE matters, guiding and supporting
their line managers and colleagues. LiveSafe
champions follow a structured programme
that includes formal and informal development
opportunities, such as attending local QHSE
meetings and courses.
2023 annual employee
engagement survey
Mitie’s annual employee engagement surveys
provide feedback that can be acted upon by the
Board and management to improve colleagues’
experience of working at Mitie. The results of
the survey provide the Board with a Group-
wide snapshot of employee engagement
levels and how employees rate Mitie’s culture.
A timeline with details of how this information
reaches and is considered by the Board can be
found on page 60. Details of 2023 employee
engagement survey insights (You Said) and
actions taken (We Did) can be found on
page60.
Designated Non-Executive Director
for workforce engagement
Jennifer Duvalier is Mitie’s designated Non-
Executive Director responsible for oversight of
the Board’s engagement with Mitie colleagues.
Jennifer participates directly in employee
engagement initiatives and, along with other
Board members, has carried out a full
programme of activities in FY24. These include
colleague listening sessions, which ensure
that the Board hears directly from frontline
colleagues about what is working well at Mitie
and what can be improved. One of Jennifer’s
main roles is to encourage colleagues to share
their views so that she can champion their voice
in Board discussions.
Details of the activities undertaken by Jennifer
and other Non-Executive Directors during the
year can be found on page 100.
Why Jennifer?
Prior to joining the Board in 2017, Jennifer had
a long career in HR, working in several large,
people-driven companies going through
significant transformation. Jennifer brings this
wealth of experience to Mitie.
Culture at Mitie
continued
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The Head of Communications facilitates these
visits alongside the business unit and/or account
lead. While each visit varies in structure,
generally Board members receive a tour of
the site or receive an overview of it, hold a I:I
meeting with managers and then hold an
informal session with frontline colleagues
without managers present. No specific topics
for discussion are provided in advance, though
the site team is advised that the Board would
like to hear about their experiences of working
at Mitie, whether they have any challenges,
concerns or ideas for improvement, and the
things that they consider Mitie does well.
A summary of what Board members hear from
colleagues is shared with the whole Board ahead
of Board meetings and then discussed at such
meetings. Where specific matters are raised,
these are discussed with members of senior
management to ensure they are properly
considered and appropriately addressed.
Details of the Board’s engagement with
colleagues are shared through Mitie’s internal
communication channels – Minet (employee
intranet site) and mitiepeople.com.
Jennifer’s wider activities in relation to
colleague listening
The Board considers it important that
colleagues’ views are heard through several
mediums, including feedback from managers,
surveys, internal communications and digital
channels (such as Yammer), to develop an
inclusive, two-way and ‘One Mitie’ culture. As
well as site visits and colleague listening sessions,
Jennifer is involved in a range of other activities,
including leading remuneration listening sessions,
analysing feedback from Mitie’s annual employee
engagement survey and regular Pulse surveys,
spending time with the HR teams and
attending virtual Q&A events. She also invites
colleagues to contact her directly via her Mitie
email address.
Why the role of designated Non-Executive
Director for workforce engagement adds
value (over and above other employee
engagement mechanisms)
Through hosting colleague listening sessions,
Jennifer and the wider Board meet colleagues
across the business and listen to their views and
experiences to understand first-hand what they
value about Mitie and what they would like
to be different. The Board is also able to instil
confidence that colleagues’ views are being
heard at the highest level of the organisation.
In analysing the feedback received, the Board
can quickly identify any recurring concerns
across the business and provide assurance that
these will be managed effectively and efficiently.
Learnings and responses
Themes identified from the Board’s colleague
listening sessions during FY24 included:
• Expanding the electric vehicle car options for
field-based colleagues (to include EVs with
greater range) to increasing the number of
EV charging ports at certain offices
• Pay, benefits and recognition
• Facilities, technology and access to systems:
recognised as an area for improvement
• Communications: a desire for more effective
communication with colleagues across
business divisions
Jennifer at a colleague listening session.
Mitie’s employee engagement
initiatives are of great importance
to me and the Board. It is crucial for
us to hear directly from colleagues
on what they value about working
for Mitie and how we can improve
their working life.
Our People are at the heart of
our social value framework, and
I always feel energised when I
attend colleague listening sessions
about what is going well and the
great ideas from colleagues on
how to improve, which are then
given back to the Board and senior
management. I am proud that our
people agenda is always evolving.
Jennifer Duvalier
Designated Non-Executive Director
for workforce engagement
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Culture at Mitie
continued
Details of actions taken in response to feedback received are set out below.
Positive feedback Improvement areas Actions taken
Colleagues have provided positive feedback on
Mitie’s decarbonisation-focused contracts, which
are regarded as advantageous, particularly given
that many customers’ buying patterns have
changed in recent years as they aim to meet
their sustainability targets and obtain energy
security through solar.
It was suggested that management reconsider
its electric vehicle car offering for field-based
colleagues due to the miles used each week.
Some colleagues also mentioned that having
additional EV charging points at certain site
locations would improve its reputation.
Management and fleet specialists are assessing
more viable electric vehicle car options, and work
is underway to build more EV charging stations at
certain site locations.
Colleagues appreciated benefits such as Mitie’s
MiDeals platform, which provides discounts.
Mitie’s present benefits particularly the
all-employee share plans, have received
excellent feedback, resulting in increased
interest in and awareness of the Mitie
share price.
Mitie Stars (recognition programme),
particularly the Mitie Stars Awards, which
provide cash awards to winners, has received
positive feedback.
It was communicated that pay was not always
the determining factor in attracting and retaining
talent, nonetheless some colleagues highlighted
circumstances where the pay for certain
employees had not changed in several years
and could be reviewed. Colleagues suggested
pay band transparency in client-funded roles.
Colleagues also welcomed increases in base
salary for selected colleagues as part of Mitie’s
2022 Winter Support package, however
those who narrowly missed out expressed
disappointment.
There was some misunderstanding about
certain benefits available to Mitie colleagues
and how to access them.
Some colleagues would like greater flexibility in
terms of working hours and holiday allowances.
The Board is committed to continuously reviewing
if ad hoc additional help is required for certain
colleagues and encourages clients to sign up to the
Real Living Wage.
Management used a multi-channel approach to
promote the 2020 SAYE scheme’s success, such
as explaining how Mitie colleagues benefited
from the Company’s strong share price growth
during the H1 FY24 results Town Hall. The
approach resulted in a rise in applications, with
over 3,000 colleagues joining the 2023 SAYE
scheme. All employee share plan communications
now contain information on how to access the
share portal.
Management is considering employment
contract adjustments to align certain colleagues
more closely with professional services.
There was greater access to phones, laptops
and tablets than there had been previously.
Some colleagues proposed that management
monitor the state of specific buildings and put
pressure on the owners of those properties to
improve maintenance.
Colleagues highlighted concerns about
technologies that help managers and employees
manage their working hours, shifts, holidays, and
absences, as well as the overall IT infrastructure.
Management applied pressure on building owners
to better maintain them.
Work is underway to launch a Mitie colleague app,
which is intended to deal with the main system
issues concerning colleagues. The app’s overall
design has benefited from input from colleagues.
Communication with frontline colleagues has
increased, and they are eager to learn about
Phil Bentley and the MGX’s future ambitions
for Mitie.
Communications sent by Mitie do not always
reach frontline colleagues or colleagues who do
not have frequent access to IT.
Work is underway to launch a Mitie colleague app
with the aim of improving communication reach
and targeting.
Electric vehicles
Pay, benefits and recognition
Facilities, technology and access to systems
Communications
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Board effectiveness and evaluation
Board effectiveness
The performance of the Board is an essential
component of the Company’s success. The
Board undertakes a formal and rigorous
evaluation of its own performance and that of
the Board Committees, Chairman and individual
Directors annually. The evaluation considers
composition, diversity and how effectively
members work together to achieve objectives.
The evaluation provides an opportunity for the
Board to enhance its effectiveness and identify
any areas for improvement. All Directors fully
engage in the evaluation process and take
appropriate action if development needs are
identified. The evaluation is externally led every
three years and internally led in other years. In
years in which the evaluation is led internally, the
Chairman leads this for each of the Independent
Non-Executive Directors and Executive
Directors, and the Senior Independent Director
facilitates the evaluation of the Chairman.
During FY24, the board effectiveness review
was performed by Chris Stamp of the
independent business Ceradas, who has no
other connection with the Company or any
Director. Outcomes and actions from the
review are detailed below.
Date Action
October 2023 Scope and timetable for the external review:
• The scope of the review included the Board and its principal Committees. As part of the evaluation, 1:1 interviews
would be held with each Board member and the Chief Legal Officer & Company Secretary
• Interviews were planned to take place throughout November, ahead of the November Board and Committee meetings.
The external reviewer would be invited to attend the November meetings as an observer. A final report would be
prepared ahead of the January 2024 Board meeting and Nomination Committee meeting at which the outcomes would
be discussed
Appointment of preferred provider:
• Following a comprehensive review, including meeting a shortlist of different providers, the Chairman, Chief Executive
and Senior Independent Director recommended that the Board appoint Ceradas to carry out the review
• The decision to recommend Ceradas was made following detailed meetings with the shortlist of providers, considering
several factors, including, but not limited to: the Company’s size, stakeholder base, current lifecycle stage and recently
agreed Facilities Transformation Three-Year Plan (FY25 - FY27).
• It was determined that Ceradas’ pragmatic approach was most relevant and consequently the outcome of the review
would provide the most value to the Company and the Board
• Ceradas was provided access to all Board and Committee papers and minutes from the previous 12 months, as well as
the most recent internal effectiveness review, to enable a comprehensive review
Focus of the review:
• The focus of the review was agreed to include, but not be limited to: Strategy and business performance, culture,
stakeholders and sustainability, composition and succession planning, meetings and meeting materials, risk and controls
and professional development
• The evaluation was undertaken from the perspective of the Board and all the Board members were asked to comment
on the work of the Committees, irrespective of whether they were a member, as well as the individual contributions of
other Board members
November 2023 The interview process:
• Confidential interviews were conducted throughout November. Feedback about the performance of the Chairman
was shared separately with the Senior Independent Director to support the separate performance evaluation of
the Chairman
• The final report did not contain any comments that could have been directly attributed to any individual
Observing:
• A representative from Ceradas attended the Board and Committee meetings in November as an observer
December 2023 Final report:
• The final report was circulated to members of the Board in December. The report included a review summary,
together with recommendations and suggestions
January 2024 Review of the report:
• The Board discussed the recommendations and suggestions contained in the final report at the January 2024 Board
meeting and Nomination Committee meeting at which the Ceradas representative was present
March 2024 Actions:
• In line with the recommendations and suggestions in the final report, the Board agreed a list of actions at the Board
meeting in March 2024
Board effectiveness review process
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Recommendations Actions undertaken or planned Suggestions Actions undertaken or planned
Regular discussion about sales
growth: Consider whether sales
growth should become a
separate regular item for
reporting and Board discussion.
Sales growth has been added as a
separate, stand-alone item at regular
Board meetings.
Identify whether there are
any follow-up points from
the strategy discussions
that the Non-Executive
Directors (NEDs) would
like to be scheduled
for Board discussion
during 2024.
No specific follow-up points were
identified, but to be kept under review.
Settling the role of the ESG
Committee: Reappraise the
role, remit and membership
of the ESG Committee to
determine whether it should be
a forum for: (i) Board oversight
of all aspects of Mitie’s ESG
strategies; or (ii) coordination
of executive action.
New Terms of Reference for the ESG
Committee have been adopted and Salma
Shah is leading an ongoing consultation
exercise regarding the precise role of
the Committee.
Discuss and agree whether
there are any operational
KPIs which should be given
greater prominence in the
routine Board reports on
business performance.
No specific KPIs were identified.
To be kept under review. In addition,
the Board noted that it would like to
have greater visibility of the material
contracts which the Group proposes
to bid.
Optimising NED knowledge
transfer: Consider how the
NEDs due to step down from
the Board over the next year
or two could formally and/or
informally mentor newer
and new NEDs to maximise
the opportunities for
knowledge transfer.
A proposed ‘buddy’ programme will be
established, where existing NEDs are
matched with new NEDs, with the former
to share their experiences of working
with Mitie.
Consider how the Board’s
oversight of pre- and
post-merger activity
could become more
systematic to ensure
that learnings are captured
and M&A processes
adapted accordingly.
It was noted that detailed M&A and
Integration playbooks are in place, by
reference to which all transactions are
implemented. It was also noted that
3-monthly, 6-monthly and 12-monthly
formal reviews of the status of each
acquisition are reported upon (by
reference, inter alia, to the financial,
commercial and strategic goals
which formed the rationale for
the acquisition).
Broadening the discussion about
risk: Build time into the calendar
to allow the Board to: (i) better
understand the breadth of risks
across the divisions and how
they feed into the Group Risk
Matrix; and (ii) look more
expansively at the Group’s
risk horizons.
An overview of Mitie’s Enterprise Risk
Management programme was presented
to the Board. Regular risk updates are
provided at Board meetings.
Penny James will attend the Mitie Risk
Committee meeting in July 2024 to
share her experiences as the former
Chief Risk Officer at Prudential Plc.
Consider opportunities
for NEDs to be more
involved in Mitie’s
engagement with
government and/or
customers.
By giving the Board greater visibility of
the material contracts which the Group
proposes to bid, individual NEDs will
be able to highlight any relevant
contacts they may have with the
prospective customers.
Broadening the Board’s
engagement with the MGX:
Consider if there are
opportunities within the Board
programme for the NEDs to
meet more frequently with
members of the MGX.
Noting the regular attendance of MGX
members at the Board, it was not
considered necessary to introduce an
additional programme of NED / MGX
engagement, especially having regard to
the existing demands on the MGX.
The importance of succession planning
and the willingness of the Board to have
the opportunity to meet high-performing
Mitie colleagues, who might be promoted
to senior roles, were noted.
Consider whether more
information about the
whistleblowing service
procedures, cases and
associated management
responses could be
reported to the Board.
Management to refresh the
whistleblowing report, to provide
greater insights into the type of issues
being raised and provide additional
comfort regarding the effectiveness
of the whistleblowing procedures and
the application of Mitie’s Values in the
resolution of any matters raised.
Moving Health & Safety up
the agenda: Giving the Group
Health & Safety programme a
higher profile in the agenda by
making it an earlier, regular
stand-alone item (currently
included within the Chief
Legal Officer & Company
Secretary report).
Mitie appointed a new Group QHSE
Director in May 2024, who has been
tasked with a ‘refresh’ of the Group’s
HSE strategy and raising the profile of
HSE both at the Board, but also across
the business as a whole. The Board’s
aspiration is for Mitie to be seen as
‘world class’ from an HSE perspective.
Streamline the primary
Board and Committee
packs by creating a separate
folder on an electronic
Board portal for
supporting documents.
The Board is broadly happy with the
quality and format of the Board papers
and does not propose any changes.
It was agreed that consideration
should be given to incorporating a
‘click-through’ functionality within
reports, where additional details
could be provided to those Board
members who wish to access greater
detail in respect of certain matters.
Recommendations and suggestions from the external FY24 evaluation
Board effectiveness and evaluation
continued
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Progress made during FY24 on actions identified as part of the FY23 evaluation is set out below.
Outcomes/suggestions Actions undertaken or planned Progress made on actions during FY24
To focus on succession planning, to address gaps
in experience and skills following the death of
Baroness Couttie and as certain Independent
Non-Executive Directors are due to reach nine
years of service in FY27.
To be discussed by the Board at regular intervals
throughout the year.
Succession planning was discussed at the July
2023 and January 2024 Board meetings,
as well as the January 2024 and March 2024
Nomination Committee meetings.
To have a significant debate around what Mitie
FY25 – FY27 will look like.
Mitie’s next three-year strategic plan to be
debated and agreed at the Board strategy day
in September 2023.
In October 2023, Mitie announced a new
Facilities Transformation Three-Year Plan
(FY25 – FY27).
To hold more regular Independent
Non-Executive Directors only sessions.
To be scheduled at the end of each Board
meeting where possible.
Independent Non-Executive Director only
sessions have taken place regularly during the
year, usually following the main Board meeting.
To encourage Non-Executive Director
mentoring of MGX members.
Mentoring partnerships to be mapped by
appropriate skillset.
MGX members have an open dialogue with all
Non-Executive Directors to leverage relevant
knowledge, skills and expertise as appropriate.
Progress made on actions identified in prior year
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Nomination Committee report
As Chair of the Nomination Committee, I am
pleased to report on the work done by the
Committee during the year.
A key responsibility of the Committee is to
maintain plans for orderly Board succession,
and the Committee regularly receives and
reviews updates on the structure, size and
composition of the Board and its Committees,
to ensure critical skills and experience are
appropriately refreshed. We feel passionately
that the composition of the Board should reflect
wider society and comprise a diverse range
of skills and experience in order to promote
strong governance. In February 2024, we
welcomed Penny James as a new Independent
Non-Executive Director and appointed
her as a member of the Audit Committee
and Nomination Committee. Penny will be
appointed Chair of the Audit Committee when
Mary Reilly steps down from that position
following completion of the FY25 Annual
Report and Accounts of the Company.
During the year, the Board appointed
independent firm Ceradas to conduct an
external review of Board effectiveness. Further
information on the evaluation can be found on
page 107.
Succession planning was a key focus in the
year, with the Board reviewing plans on
Non-Executive Director succession planning,
contingency planning, and career development.
The Committee also reviewed the number
of external directorships held by each Non-
Executive Director, individual time commitments
and the Board Inclusion Policy.
Derek Mapp
Chair of the Nomination Committee
Nomination Committee members
At the date of this report and throughout
FY24, the Nomination Committee
comprised:
Chair
1
:
Derek Mapp
Committee members:
Jennifer Duvalier
Penny James (from 1 February 2024)
Chet Patel
Mary Reilly
Salma Shah
Roger Yates
All members of the Nomination
Committee are considered independent in
accordance with the Code.
Nomination Committee meetings
The Committee met twice during FY24.
The attendance of individual Committee
members can be found on page 96.
Key purpose of the Nomination
Committee
The Nomination Committee evaluates the
skills and characteristics required by the
Board and its Committees. In doing so, the
Committee considers the challenges and
opportunities facing the Group and the
expertise and diversity required for the
future. This ensures membership of the
Board and its Committees continues to
remain appropriate.
Key responsibilities of the
Nomination Committee
The key responsibilities of the Nomination
Committee include:
• Regularly reviewing the structure,
size and composition of the Board
• Ensuring plans are in place for an
orderly succession to Board and senior
management positions
• Considering the length of service of the
Board as a whole
• Identifying and nominating, for approval
by the Board, candidates to fill Board
vacancies as and when they arise
• Keeping under review the number of
external directorships held by each
Non-Executive Director
• Reviewing the results of the Board
evaluation process that relate to the
composition of the Board
• Keeping the Board Inclusion Policy
under review
The Nomination Committee’s Terms of
Reference are available at www.mitie.com/
investors/corporate-governance.
1. The Senior Independent Director chairs the
Committee in circumstances where it would be
inappropriate for the Chairman of the Board to chair
the Committee.
The Committee’s activities had
particular focus on succession
planning, to ensure Board members’
skills and experience continue to
align with Mitie’s strategy as we look
to bring in new talent over the next
three years.
Derek Mapp
Chair of the Nomination Committee
111
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Key activities during the year
Composition
As it does annually, the Nomination Committee
reviewed the composition and leadership of the
Board and each of its Committees during FY24.
The Nomination Committee is satisfied that
the Board’s composition and diversity has been
appropriate throughout the year, having regard
in particular to the integrity, skills, knowledge
and experience of its Directors and the size and
nature of the business. A skills matrix can be
found on page 113.
Succession planning
The Board recognises the importance of
succession planning and Board refreshment and
maintains succession plans for the Board and
senior management.
During FY24, the Nomination Committee
discussed succession planning at both its
meetings.
A majority of the Board has been in place
for over six years and the Committee has
spent considerable time in the year reviewing
and agreeing an appropriate timetable to
effectively manage succession planning and
the appointment of new talent, which will
inevitably take place over the next three
years. The Committee also considers tenure
when determining a Non-Executive Director’s
independence.
The Board considered the Board skills matrix in
the context of succession planning as a tool to
help identify composition needs for the future,
and to ensure that plans are proactive and not
just reactive in nature.
All appointments to the Board are subject to a
formal, rigorous and transparent appointment
process, and are based on merit and objective
criteria. The Committee engaged Sam Allen
Associates as the search firm involved with
the recruitment of Penny James. Sam Allen
Associates had no other connection with the
Company or any individual Director.
Individual Director contribution
The individual skills and experience of each
Director contribute to the overall effectiveness
of the Board in promoting the long-term
sustainable success of the Company. The skills
matrix on page 113 sets out how each Director’s
individual skills and experience contribute to the
balance required by the Board to review the
Group’s strategy and manage risk.
Further details of each Director’s skills and
experience are set out in their biographies on
pages 93 to 95.
Director external appointments and
time commitments
Directors are permitted to accept additional
external appointments but must seek
approval from the Chairman in advance. If a
Director holds significant additional external
appointments, the reasons for permitting
such appointments would be explained in
the Annual Report.
When considering the appointment of a new
Director, the Board reviews other demands
on the candidate’s time. Prior to appointment,
the candidate must disclose any significant
commitments and provide an indication of the
time involved.
The Nomination Committee reviewed the time
commitments of Non-Executive Directors to
ensure that there were no concerns regarding
overcommitment. This review considered
the number of appointments, their scope and
the size and type of company in which the
role is held, the views of major shareholders
and the latest published guidelines and
recommendations.
The Board remains confident that all Board
members continue to have sufficient time to
dedicate to their duties.
Re-election of Directors
In accordance with the Code and the Company’s
Articles of Association, all Directors are subject
to election or re-election by shareholders.
At the 2023 AGM, each Director in post at the
time stood for re-election and was re-appointed
by shareholders. At the 2024 AGM, all Directors
will stand for election or re-election.
The rules governing the appointment and
replacement of Directors are set out in the
Company’s Articles of Association, the Code,
the Companies Act 2006 and other related
regulations.
The terms of appointment for Non-Executive
Directors and service contracts for Executive
Directors are available for inspection at the
Company’s registered office and head office
and will be available at the 2024 AGM.
Conflicts of interest
The Board has a policy on the declaration
and management of Directors’ conflicts of
interests. Any potential situation or transactional
conflict must be reported as soon as possible
to the Chairman, Chief Executive and Chief
Legal Officer & Company Secretary. Where a
potential conflict is authorised under statutory
powers and powers granted under the
Company’s Articles of Association, such
conflict is kept under ongoing review.
Executive Directors are permitted to accept
external appointments, provided these do not
interfere with the Director’s ability to discharge
his/her duties effectively and permission is
sought from the Board. Executive Directors
are entitled to retain fees earned from any
external appointments. Neither Phil Bentley nor
Simon Kirkpatrick held any external positions
during FY24.
External positions held by the Chairman and
current Non-Executive Directors are detailed
in their biographies on pages 93 to 95.
Induction and training
On joining the Board, all Directors receive a
personally tailored induction which includes:
• Meetings with Executive Directors, the Chief
Legal Officer & Company Secretary and
other members of senior management
• An overview of the Group’s governance
policies, corporate structure and business
functions
• Details of risks and operating issues facing
the Group
• Visits (in person and/or virtually) to
divisional offices
• A briefing on key contracts
Penny James completed her induction in
spring 2024.
All Directors have access to Mitie’s Board
Handbook on an electronic Board portal,
which includes:
• Schedule of matters reserved for the Board
• Board Committees’ Terms of Reference
• The Company’s Articles of Association
• Guidance on Directors’ statutory duties
• An overview of the Group’s Directors’ and
officers’ liability insurance arrangements
• Delegated authorities register
• Share dealing procedures
• Corporate governance and regulatory
guidelines
• Key corporate documents and policies
The Board Handbook is subject to regular
review and was last updated in early 2024.
Briefing notes on changes in the regulatory
and governance environment are circulated to
Directors on an ad hoc basis. Online training on
regulatory and governance changes is also made
available to Directors. Visits (in person and/or
virtually) to different business sites and offices
are arranged for Directors to facilitate a deeper
understanding of the business.
112
Mitie Group plc
Annual Report and Accounts 2024
Nomination Committee report
continued
Diversity and inclusion
Mitie has a Board Inclusion Policy which
recognises the importance of the Board’s
membership reflecting diversity in its
broadest sense.
The policy also sets diversity objectives,
including:
• Ensuring the Board’s membership reflects
a combination of demographics, skills,
experience, race, age, gender, educational and
professional backgrounds which provides the
range of perspectives, insights and challenges
needed to support sound decision-making
and reflects the diverse workforce at Mitie
• Maintaining a balance so that a minimum of
40% of the Directors are women, provided
this remains consistent with the skills and
diversity requirements when searching for
a new appointment to the Board
• Ensuring at least one of the Chair, Chief
Executive, Chief Financial Officer or Senior
Independent Director is a woman, provided
this remains consistent with the skills and
diversity requirements when searching for
a new appointment to the Board
• Ensuring there is at least one Director from
a racially diverse background, provided this
remains consistent with the skills and diversity
requirements when searching for a new
appointment to the Board
• Supporting and monitoring progress against
Mitie’s equality, diversity and inclusion strategy
and goals
• Broadening Board members’ perspectives in
equality, diversity and inclusion by participating
in Mitie diversity network events, and sharing
learnings and insights
As at 31 March 2024 (the Company’s chosen
reference date), the Company did not meet the
target set out under LR 9.8.6R (9) of the Listing
Rules that at least one of the Chair, CEO, CFO
or SID is a woman. The individuals currently
performing these roles continue to demonstrate
the appropriate skills to support the long-term
strategic delivery of the Group, however, the
Nomination Committee will be mindful of the
requirements under this Listing Rule when
considering an orderly succession for these roles
as they arise under the Company’s ongoing
succession planning.
As at 31 March 2024, the Company met the
targets set out under LR 9.8.6R (9) of the Listing
Rules for one Director to be from an ethnic
minority background (the Board includes two
Directors from a minority ethnic background),
and for 40% of Board members to be women
(following the appointment of Penny James,
women represent 44.44% of the Board).
The information required under LR 9.8.6R
(10) is set out on page 113, for which purpose
executive management comprises members
of Mitie’s Group Executive (the MGX). For
the purpose of LR 9.8.6R (11), diversity data is
disclosed by individuals via Mitie’s People Hub
system at the point of onboarding. Where
‘prefer not to say’ is selected, colleagues
can choose to update this selection later in
employment. Data provision is proceeded
with clarity on how the data will be used.
Mitie’s Board Inclusion Policy, which is monitored
and reviewed by the Nomination Committee,
is available at www.mitie.com/investors/
corporate-governance.
A breakdown of the gender balance of the
senior leadership team can be found on page 57.
113
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Board and executive management diversity
at 31 March 2024
Gender
Number of
Board members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
Men 5 55.56% 4 8 80%
Women 4 44.44% – 2 20%
Not specified/prefer not to say – – – – –
Ethnic background
Number of
Board members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
White British or other White (including minority-white groups) 7 77.78% 4 9 90%
Mixed/Multiple Ethnic Groups – – – – –
Asian/Asian British 2 22.22% – 1 10%
Black/African/Caribbean/Black British – – – – –
Other ethnic group, including Arab – – – – –
Not specific/prefer not to say – – – – –
Board skills matrix
Skills/experience area Derek Mapp Phil Bentley
Simon
Kirkpatrick
Jennifer
Duvalier Penny James Chet Patel Mary Reilly Salma Shah Roger Yates
Leadership and
business operations Exceptional Exceptional ✔ ✔ Exceptional ✔ ✔ ✔
Strategy development ✔ Exceptional ✔ ✔ ✔ ✔ ✔ ✔
Corporate governance Exceptional ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔
Audit/risk management
and assurance ✔ Exceptional Exceptional ✔ Exceptional ✔
Remuneration/HR Exceptional ✔
Commercial ✔ Exceptional ✔ ✔ Exceptional Exceptional ✔ ✔
Technology/digital ✔ Exceptional
Finance Exceptional Exceptional Exceptional ✔ ✔ ✔
Investment community Exceptional ✔ ✔ Exceptional
Government/public
sector experience ✔ ✔ ✔ Exceptional
The collective skills and experience of individual Directors support the work of the Board and there is clear alignment between their respective
competencies and the Group’s strategy. Board discussions further benefit from the diversity of approach taken by each Director due to their individual
background, career development and training.
114
Mitie Group plc
Annual Report and Accounts 2024
Audit Committee report
Report from the Audit Committee
Chair
On behalf of the Board, I am pleased to present
the Audit Committee Report for the financial
year ended 31 March 2024 (FY24). During the
year, Penny James was appointed to the Audit
Committee in February 2024. I would like to
extend a warm welcome to Penny.
I would also like to thank my fellow Audit
Committee members, who bring insights from
their diverse experience, and other attendees
from the Group’s finance team, the Internal
Audit function and BDO LLP (BDO), the
Group’s external auditor, who have contributed
to open and robust Audit Committee
discussions during the year.
This report provides an insight into key areas
considered by the Audit Committee during the
year to discharge its responsibilities in relation to
financial reporting, risk management, internal
control, the Internal Audit function and
interactions with BDO.
The Group has acquired several strategically
important businesses during the year, where
integration activities have ensured robust
controls and processes while seeking to
preserve the entrepreneurial cultures that
have made them successful.
Mitie has also continued to focus on the
implementation of its transformation
programme, including the transition to a new
shared services partner for outsourced finance
activities, which was reflected in the nature
of some of the matters presented for
consideration at Audit Committee meetings
during the year.
Given the evolving environment, I have
continued to make a conscious effort to meet
senior finance staff, the Internal Audit team
and BDO’s senior staff, which has given me
an opportunity to gauge the extent of any
significant emerging issues and to monitor
developments.
During the year, BDO was subject to a review
by the Financial Reporting Council’s (FRC)
Audit Quality Review (AQR) team, as part of
the FRC’s ongoing process for listed businesses,
in respect of the audit for the year ended
31March 2023. I have had several discussions
with the FRC and BDO at various stages of the
review. The Audit Committee has discussed the
observations with BDO and is satisfied with
BDO’s response and commitment to address
the findings raised.
Audit Committee members
Chair:
Mary Reilly
Committee members:
Roger Yates
Chet Patel
Penny James
(appointed 1 February 2024)
Frequency of meetings
The Audit Committee met seven times
during FY24.
Key purpose of the Committee
The Audit Committee provides effective
governance of the appropriateness of
the Group’s financial reporting and the
performance of both the Internal Audit
function and the external auditor.
The Audit Committee also supports the
Board in meeting its responsibilities in
respect of overseeing the Group’s internal
control systems, business risk management
and related compliance activities.
The Audit Committee’s Terms of
Reference are available at www.mitie.com/
investors/corporate-governance.
Key responsibilities in relation
to financial reporting
The primary role of the Audit Committee
in relation to financial reporting is to review,
with both management and the external
auditor, the appropriateness of the
half-yearly financial report and the Annual
Report and Accounts, concentrating on,
among other matters:
• The consistency of, and any changes to,
significant accounting policies and
practices on a year-on-year basis;
• The clarity and completeness of
disclosures and the context in which
statements are made;
• The methods used to account for
significant or unusual transactions where
different approaches are possible; and
• Whether the Annual Report and
Accounts, taken as a whole, is fair,
balanced, and understandable and
provides the information necessary for
shareholders to assess the Group’s
position and performance, business
model and strategy.
To aid its review, the Audit Committee
considers reports from the Chief Financial
Officer on judgemental areas, and also
reports from the external auditor on the
outcomes of the half-year review and year
end audit.
The Group continued to transform
and grow in FY24 with several
strategic acquisitions, and further
enhancements have been made in
the internal controls environment
to ensure rigour around financial
reporting.
Mary Reilly
Chair of the Audit Committee
115
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
The Group has made good progress on
enhancing its internal controls framework to
ensure rigour around financial reporting as
the Group transforms and delivers growth,
including:
• The independent Internal Audit function
has been further strengthened in size and
experience, which is in line with Mitie’s
growing focus on further improving its control
environment in readiness for the corporate
governance reforms introduced by the FRC
in January 2024;
• An internal audit testing programme has
commenced to ensure key controls are
updated to reflect organisational changes
in a transformative and growth driven
environment, and to ensure these key
controls continue to function effectively;
• Proactive data-led reviews have been
undertaken to identify fraud risks and
strengthen preventative controls around
fraud, including mandatory training for
Mitie staff;
• For the acquired businesses, reviews of
balance sheets, accounting policies, processes
and controls as part of the acquisition
accounting and integration processes are
conducted; and
• Training has continued to be provided to
finance teams on a regular basis across the
year, as part of the Group’s continuous
professional development (CPD) programme.
In addition to fulfilling its normal programme of
activities during the year, the areas of focus for
the Audit Committee in relation to the FY24
financial statements have been:
• Reviewing the judgements made by
management in respect of acquisitions
accounting, including accounting treatment
for deferred consideration and employment-
linked earnouts, and challenging the
methodologies used for the valuation of
acquired intangible assets;
• Challenging management on the accounting
for the step acquisition of Landmarc, following
changes to the shareholder agreement as a
result of which the Group obtained control
of the business during FY24, to ensure that
the IFRS criteria for consolidation had been
appropriately met;
• Evaluating judgements made by management
related to provisions required on onerous
contracts and other contract specific
provisions, including assessing the adequacy
of the provisions and the appropriateness of
the related disclosures;
• Reviewing management’s approach to
determine whether the output or input
revenue recognition method should be
applied for measuring progress on projects
which were ongoing at year end;
• Assessing the classification of amounts
reported within Other Items and the
associated disclosure, by reviewing the
framework of controls operated by
management around this area, and challenging
the nature of the charges and credits classified
as Other Items. The focus was to ensure that
the result is beneficial for a reader of the
Annual Report and Accounts, by providing
meaningful insight into the underlying results
of the business;
• Challenging management’s judgements in
relation to impairment assessments for
the carrying value of goodwill, and the
recoverability of deferred tax assets in
relation to losses;
• Reviewing the appropriateness of recognition
of surpluses on defined benefit schemes as
assets on the Group balance sheet, based on
the Group’s unconditional right to a refund of
the surplus, including the Landmarc scheme;
• Assessing the appropriateness of controls
established to ensure the continued
completeness and accuracy of financial
reporting during the transition to a new
shared services partner for outsourced
finance activities, including use of the Internal
Audit function to provide assurance;
• Challenging the approach taken by
management to support the going concern
and viability statements set out on pages 168
and 90 respectively;
• Reviewing the distributable reserves position
of Mitie Group plc, to ensure shareholder
distributions are appropriately supported;
• Assessing the appropriateness of climate-
related disclosures and evaluations to ensure
that the Task Force on Climate-related
Financial Disclosures (TCFD) requirements
have been met;
• Reviewing and challenging the progress made
on key workstreams in readiness for the
corporate governance reforms introduced
by the FRC in January 2024; and
• Assessing key financial reporting judgements
made by management in the context of
applying the remuneration policy for
executive management as set out by the
Remuneration Committee.
Further detail regarding the Audit Committee
and its work can be found on pages 116 to 122.
In conclusion, the Audit Committee can provide
positive assurance to the Board that the Annual
Report and Accounts 2024, when taken as a
whole, is fair, balanced and understandable
and provides the information necessary for
shareholders to assess the Group’s position and
performance, business model and strategy. As
Chair of the Audit Committee, I will be available
at the 2024 AGM to answer any questions about
the work of the Audit Committee.
Mary Reilly
Chair of the Audit Committee
116
Mitie Group plc
Annual Report and Accounts 2024
Audit Committee report
continued
Significant issues considered by the
Audit Committee during the year
The Audit Committee gives attention to matters
it considers to be important by virtue of their
size, complexity, level of judgement required or
potential impact on the financial statements and
wider business model, and matters pertaining to
governance. Identification of the issues deemed
to be significant takes place following open, frank
and challenging discussion between the Audit
Committee members, with input from the
Chief Financial Officer, the external auditor,
the Director of Internal Audit, the Director of
Group Finance, the Group Financial Controller
and other relevant Mitie employees.
The Audit Committee considered the significant
matters set out below. Papers were presented
to the Audit Committee by management, setting
out the relevant facts, material accounting
estimates and the judgements associated with
each item. The external auditor provided papers
setting out its views on each area of judgement.
The Audit Committee discussed the papers
with management, challenged the underlying
assumptions and sought the views of the
external auditor on each matter. For each area
of judgement, the Audit Committee concurred
with the treatment adopted by management
and the related disclosure presented in the
Annual Report and Accounts.
Contract-specific provisions
During the year, management performed
reviews of contracts to assess whether any
contracts may be onerous over the remaining
term of the contract and, where this is the
case, the extent to which a provision
should be made for future forecast losses.
Management also conducted an assessment
of the adequacy of provisions related to
material contractual disputes.
Onerous contract provisions totalling £8.8m
have been recognised at 31 March 2024 (2023:
£10.5m). These primarily relate to a number
of loss-making contracts that were acquired
with the Interserve business, which are within
the Communities division. Management’s
assessments were made in the context of the
plans that have been developed and are being
implemented by divisional management to
improve the profitability of these contracts.
Management also presented papers, which
included a scenario analysis on ranges of
outcomes based on plausible assumptions,
to support the conclusion to not recognise
an onerous contract provision on a certain
contract which made a loss of £3.9m in the
year ended 31 March 2024 (2023: £8.4m)
with 17 years remaining on the contract.
Other contract-specific provisions, totalling
£40.4m, have been recognised at 31 March
2024 (2023: £38.8m), which primarily relate to
remedial and rectification costs required to
meet clients’ contract terms. Management’s
assessment included external expert opinions
obtained, where necessary, to assess the
adequacy of the provisions recognised.
The Audit Committee has reviewed the
assessments presented by management,
and taken into account the views expressed
by the external auditor, based on their
independent reviews of these contracts
and the related forecasts.
Revenue recognition
Due to the complexity and scale of many of
the Group’s contracts, revenue recognition
continues to be an area of focus for the Audit
Committee. The Audit Committee received
updates from management throughout the
year and also reviewed and discussed papers
presented by management on specific areas
of revenue recognition, where judgement
is required.
During the year, the Audit Committee reviewed
management’s assessment on accounting for
projects, where revenue is recognised over
time. This included challenge by the Audit
Committee on the approach to determine
whether the output or input revenue
recognition method should be applied for
measuring progress on projects which were
ongoing at year end.
Accounting for acquisitions
The Group continued to transform and grow
in FY24 with several strategic acquisitions,
including JCA Engineering, RHI Industrials, GBE
Converge and the step acquisition of Landmarc.
The Audit Committee reviewed management’s
assessments of accounting outcomes for
each acquisition and specifically challenged
management’s valuation techniques used to
determine intangible assets arising on acquisition.
The Audit Committee also challenged
management on the step acquisition of
Landmarc, where the Group obtained control
of the business during FY24, to ensure the IFRS
criteria for consolidation had been met.
Valuation of goodwill
The Group carries goodwill as an intangible
asset on its balance sheet in respect of
businesses it has acquired (see Note 11 to
the consolidated financial statements).
The Group considers the carrying value of all
goodwill on at least an annual basis, or when
an indicator of impairment has occurred. The
valuation and impairment review of goodwill is
assessed for each individual cash-generating unit
(CGU) and management considers the balance
sheet value of the goodwill compared with the
net present value of the post-tax cash flows that
are expected to be generated by that CGU.
The approach involves an estimation of the
future cash flows expected to be derived from
each CGU and the selection of appropriate
discount rates, which are then applied to the
cash flows to calculate a net present value.
The cash flow forecasts used in the review were
derived from the most recent strategic forecast.
Management concluded that there was no
impairment using either the latest forecast or
as a result of applying reasonable sensitivities to
key variables. The Audit Committee considered
papers prepared by management and challenged
the assumptions and methodology applied to
assess the carrying value of goodwill.
Use of Alternative Performance Measures
(APMs)
The Group’s performance measures continue to
include some measures which are not defined
or specified under IFRS. The Audit Committee
has considered presentation of these additional
measures in the context of the guidance issued
by the European Securities and Markets
Authority (ESMA) and the Financial Reporting
Council (FRC) in relation to the use of APMs,
challenge from the external auditor and the
requirement that such measures provide
meaningful insight for shareholders into the
results and financial position of the Group.
In particular, the Audit Committee challenged
the classification of certain costs and income
within Other Items, ensuring that there is a
robust framework of controls around the
assessment, and that the classification and
disclosure are appropriate, with the aim of
providing a reader of the Annual Report and
Accounts with a meaningful understanding of
the underlying results of the business. This
was achieved through the review by the Audit
Committee of detailed papers prepared by
management throughout the year, setting out
each category of Other Items, analysing the
charges and credits reported within each
category, ensuring consistency of treatment
and documenting the rationale as to why these
charges and credits were both incremental to
‘business as usual’ activities and directly related
to the category.
117
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
The Audit Committee challenged as to whether
any charges or credits had been rejected from
the Other Items category, based on the
framework of controls operated by Group
Finance around the reporting of Other Items.
Management confirmed that this had been the
case and that the divisions continued to engage
proactively with Group Finance to discuss
whether potential charges or credits would
qualify for reporting as Other Items.
The Audit Committee concurred with the
judgements made by management in respect
of the presentation of the APMs and noted in
particular that £17.9m of income has been
reported within Other Items, in addition to the
charges. Furthermore, the Audit Committee
concluded that clear and meaningful descriptions
have been provided for the APMs used, that the
relationship between these measures and the
equivalent IFRS measures is clearly explained,
that the IFRS measures are afforded equal
prominence to the APMs, and that the APMs
would enhance a reader’s understanding of
the financial performance and position of
the business.
A reconciliation of the APMs to the equivalent
IFRS measures is provided in the Appendix –
Alternative Performance Measures on pages
228 to 231.
Review of the Group’s going concern
and viability statements
The Audit Committee has reviewed the Group’s
assessment of going concern. The Audit
Committee also reviewed the Group’s viability
assessment over a period of three years to
31March 2027, which considered a range of
scenarios that were based on the potential
financial impact of the Group’s principal risks
and uncertainties as set out on pages 78 to 88.
After due consideration, the Audit Committee
concluded that the assumptions used in both
these assessments were appropriate and
reflected the Group’s principal risks and
uncertainties. The Audit Committee also
reviewed the Group’s reverse stress test and
challenged management as to the likelihood of
any such scenario occurring, to assess whether
it was reasonable to assume that the likelihood
of any such scenario was remote. Factors that
were considered included the current trading
performance compared with the base case
and further mitigation actions available
to management.
Based on the Group’s forecasts for the going
concern assessment period, and the Audit
Committee’s recommendation, the Board is
satisfied that the Group will be able to operate
within the level of its facilities for a period of no
less than 12 months from the date of approval of
the FY24 consolidated financial statements. For
this reason, the Board considered it appropriate
for the Group to adopt the going concern basis
in preparing its consolidated financial statements.
Further details of the going concern assessment
are set out in Note 1 to the financial statements
on page 168.
In accordance with the Code, the Directors
have assessed the viability of the Group over the
three-year period to 31 March 2027. Based on
this assessment, the Directors have concluded
that there is a reasonable expectation that the
Group will be able to continue in operation
and meet its liabilities as they fall due over the
three-year period to 31 March 2027. The more
detailed assessment of the Group’s long-term
viability is set out in the viability statement on
page 90.
Transition of outsourced shared
services provider
During the year, as part of the Target Operating
Model (TOM) programme, the Group
successfully transitioned its outsourced finance
activities to a new shared services partner, which
included the ‘Record-to-report’, ‘Procure-to-
pay’ and ‘Order-to-cash’ processes. Management
presented numerous updates to the Audit
Committee during the transition process to
ensure robustness of financial reporting during
and after the transition and an appropriate
internal control environment is maintained.
The Audit Committee also engaged the
Internal Audit function to provide independent
assurance to ensure the transition process
was adequately managed and challenged the
transition process where required.
In addition, the Audit Committee also
challenged management and BDO to ensure
that the external audit process was
appropriately modified to ensure audit testing
was completed effectively, taking into account
the phases of the transition during the year.
Climate reporting
The Audit Committee reviewed the climate-
related disclosures across governance, strategy,
risk management and metrics and targets
and concurred with management that all
11 TCFD disclosure requirements have been
complied with.
The Audit Committee challenged management
on the impact of climate risks on financial results,
in particular relating to asset impairments.
Following this review, the Audit Committee
concurred with management that there were
no material financial statement impacts for FY24
in respect of these matters.
Other material accounting
estimates and judgements
Management has continued to operate an
established, structured process for the
identification of material accounting judgements
made, which are assessed at both a divisional
and Group level, in arriving at the results. The
judgements with a significant actual or potential
impact on the Group’s results are presented to
the Audit Committee for consideration.
In addition to the matters outlined above,
the Audit Committee considered papers
prepared by management in respect of the
following matters:
• Assumptions used for pensions actuarial
valuations for accounting purposes;
• Key assumptions around tax, including
recoverability of deferred tax assets; and
• Distributable reserves assessments prior to
distributions to shareholders and review of
interim accounts for the eight months ended
30 November 2023 prepared for Mitie
Group plc.
Risk management and internal controls
The Board is responsible for maintaining and
monitoring sound risk management and internal
control systems. The Audit Committee supports
the Board in this respect by monitoring the
effectiveness of the overall risk management
process and the system of internal controls.
The Audit Committee considers emerging
risks with management as part of the risk
management update it receives and reviews the
risk management framework and outcomes
to support the Group’s going concern and
viability statements.
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The Audit Committee also keeps under review
the adequacy and effectiveness of the Group’s
internal financial controls and internal control
and risk management systems established to
identify, assess, manage and monitor financial
risks. The Audit Committee also advises the
Board on such risks and how these are tracked,
managed, mitigated and reported.
Risk management approach
The approach to risk management is regularly
reviewed by the Audit Committee, the Board
and the Mitie Group Executive (MGX) and
continues to evolve in line with the business
structure and risk profile. The Board
understands that effective risk management
and a sound system of internal control are
essential to the achievement of the Group’s
strategy and supporting objectives.
The Risk Committee, chaired by the Chief
Risk Officer (Mitie’s Chief Legal Officer) and
comprising the Managing Directors of each of
the divisions, the heads of all functions, and
relevant subject matter experts, focuses on
the risk management framework to increase
understanding of the nature of the risks faced
by the Group and the actions and controls in
place to mitigate them.
The Group continues to review and improve
its approach to governance, risk management
and internal controls and, during FY24, the
Group made significant progress in its risk
management approach. Notable enhancements
to the Group’s Enterprise Risk Management
(ERM) framework during FY24 include the
development of a new risk quantification
modelling framework, completion of a
third-party assessment for ISO 31000:2018
and the establishment of a structure for
incorporating annual Risk and Resilience Weeks,
which aids in fostering a heightened risk-aware
mentality and a more resilient workforce.
The Risk Committee met four times in FY24
and continues to oversee the risk assessment
processes across the Group. This allows better
coordination for the reporting of risks to the
MGX, the Audit Committee and the Board.
Details related to the Group’s principal risks and
uncertainties and risk profile can be found on
pages 78 to 88.
The Board considers the nature and extent of
significant risks in setting the Group’s strategy.
The Group’s Delegated Authority Register
(DAR), which sets out the accountabilities and
authority to take decisions on specific matters
within defined financial limits and authority limits
and are aligned at divisional level. This approach
helps to clearly disseminate the appetite of
the Board to key risks. This structure ensures
a consistent approach to acceptance and
management of risk across the business and
provides the Board with greater visibility of
how effectively risks are being managed.
Risk culture
It is recognised that the risk management
culture within the business is as important
as an effective risk management framework.
In support of this, the ‘One Mitie’ Vision and
Values have an important role to play. As well
as helping to achieve common ways of working
and clarity of approach for customers and
employees, they also help set out, together with
the Employee Handbook and ethical business
conduct policies, the framework upon which
Mitie’s risk culture is built. Emphasis is placed on
the importance of embedding risk management
into all key decisions, such that opportunities to
grow the Group are balanced with effective risk
management decision-making. This means that
opportunities may continue to be exploited,
provided risks have been properly identified
and the appropriate controls and mitigation
plans established, or, in some cases, potential
opportunities are declined if they sit outside
the Group’s risk appetite.
The Employee Handbook sets out the expected
behaviours for all employees and supply chain
partners and establishes zero tolerance in
specific areas as part of an established ethical
business framework. The Group continues
to review and reaffirm its ethical business
practice policies with employees and supply
chain partners to ensure awareness of the
‘One-Mitie’ vision, values and expected
behaviours is maintained.
Risk management process
The Audit Committee monitors the
effectiveness of the overall risk management
process. The Group’s risk management
framework provides a flexible and adaptable
approach to the identification of risk across all
areas of the business, to meet the demands of
the dynamic and fast evolving environment
in which the Group operates. Ultimate
responsibility for risk management lies with the
Board, delegated to the Chief Executive Officer,
who further delegates it to the Chief Legal
Officer (in capacity as Chief Risk Officer) and
the MGX, with accountability and responsibility
assigned to specific risk owners.
The Group’s risk profile is reviewed by the
Chief Executive Officer, Chief Financial Officer
and Chief Legal Officer in advance of formal
review and approval by the Board. All risks
across the business are captured on the
Group’s automated risk management platform
(Risk Safe) and are subject to regular reviews.
Risk identification and assessment
The Board carries out robust assessments of the
Group’s principal risks, including emerging risks.
In doing so, the Board takes both internal and
external perspectives into account to ensure
the risk identification process is thorough. The
internal perspective takes into account factors
such as the changing and developing business
profile, operational processes, technology and
people, while the external perspective includes
the economic environment, political factors and
sector and geographical risks. During FY24, the
Risk Committee regularly reviewed the impact
on the business of the risks associated with the
changing external environment through horizon
scanning. Changes to the risk profile were then
reported to the Audit Committee, the MGX
and the Board for their consideration. Employing
both top-down and bottom-up approaches
ensures the systematic identification of
significant risks to the business. Once identified,
risks are assessed using standard impact and
likelihood ratings to quantify the risk to the
achievement of business objectives.
Risk assessments are based on a ‘5x5’ scale
ranging from minimal to catastrophic, with
any risks falling into the Group’s upper limits
having mandatory mitigation plans with the
expectation that these risks are managed down
to acceptable levels.
Risk mitigation
Each identified risk has a defined control
owner who is responsible for developing and
implementing a risk mitigation plan. As part of
the risk review process, each action and control
is required to be reviewed and formally assessed
for its effectiveness in mitigating risk. The Risk
Committee provides oversight of the risk
processes and monitors risk mitigation actions.
In addition, second line assurance activities occur
across the business, the terms of reference for
which are aligned with the objectives of the
Risk Committee. Reviews of business area risks
and the progress of associated mitigation plans
are undertaken.
Assessment of the effectiveness of the control
environment is undertaken at both business
and Group level, led by the Director of Internal
Audit. The Audit Committee formally reviews
performance throughout the year and advises
on the effectiveness of the risk management
system in place.
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Risk monitoring and review
Risk registers are reviewed regularly throughout
the year. Principal risks to the business and
associated mitigation plans are reviewed by the
Risk Committee and then presented to the
Board, and are monitored on an ongoing basis.
In doing so, the Board considers the level of
exposure for each risk against an agreed
appetite to the level of risk.
The risk management framework is designed
to manage, rather than eliminate, the risk of
failing to achieve the objectives and strategy
of the Group and can therefore only provide
reasonable, and not absolute, assurance against
material risk and loss. Details of the principal
risks of the Group are set out on pages 78 to 88.
It should be noted that other risks are identified
as part of the risk management process, but
these are not considered to have a material
impact on the Group’s overall ability to achieve
its business objectives.
The Audit Committee confirms that this risk
management process was in place during
FY24 and remains in place up to the date of
approval of the Annual Report and Accounts.
The process is continuing to evolve and will be
subject to review and improvement.
Internal controls
The Board is accountable for maintaining an
effective system of internal controls across
Mitie. The Board discharges this responsibility
through the Audit Committee, which provides
independent assessment and oversight of the
financial reporting processes and related internal
controls, risk management and compliance.
Management is responsible for maintaining
a robust system of internal controls. The
independent Internal Audit function within the
Group comprises three distinct yet interlinked
teams: Internal Audit, Internal Controls, and
Investigations. During FY24, the Internal
Controls team was further strengthened in size
and experience. The Internal Audit function acts
as the intermediary between the business and
BDO on controls related matters, and ensures
appropriate recommendations are implemented
in a timely manner.
The Group’s internal control framework has
been strengthened over recent years and, to
ensure consistency with best practice, has been
devised in accordance with the Committee of
Sponsoring Organizations (COSO) framework.
The framework encompasses financial
reporting, including fraud, operational and
compliance related controls, and incorporates a
maturity model that enables assessment of the
Group’s performance and culture of compliance.
Another key aspect of the Group’s controls
governance model is the Group’s Integrated
Management System (IMS), which is a repository
for Mitie’s policies and procedures, to ensure
management’s directives are applied. The
Internal Controls team provides the necessary
input to ensure adherence to policies and
procedures when further developing or
modifying controls.
In readiness for compliance with the changes
to the UK Corporate Governance Code (the
Code), the Group introduced a programme
of independent testing of internal controls.
In previous years, the Group has relied on
self-assessment to determine the effectiveness
of the Group’s controls, and this is a major
enhancement to ensure compliance with the
updated Code, as it provides the mechanism
to validate assurance over Mitie’s internal
control framework.
The Audit Committee has reviewed, challenged
and approved the testing approach over key
controls which has undergone a successful
pilot programme and is now being rolled out
across business units and functional areas. In
formulating testing of internal controls, data has
been utilised effectively to enable informed data-
driven decisions, which has resulted in a more
robust and comprehensive approach to testing.
The independent test results have led to a
decrease in the self-assessed maturity ratings;
however, these are still in line with the Group’s
target maturity rating which is reviewed by
the Audit Committee. This exercise has been
successful in identifying gaps and improvement
opportunities, enabling collaboration between
the Internal Controls and Finance teams
across the Group in creating practical
improvement plans.
In addition, targeted deeper-dive activities have
resulted in spot-check audits and observation
reports. Results and findings are discussed in
detail with respective business owners, and
remediation plans are established adopting
a collaborative approach. All remediation
measures have clear business ownership,
ensuring appropriate oversight. These actions
are not considered closed until the Internal
Controls team has reviewed and verified the
adequacy of the provided evidence, thereby
maintaining a high standard of accountability
and transparency within the organisation.
There has been good engagement from
senior stakeholders on internal controls and,
considering its importance for compliance
with the updated Code, the Audit Committee
reviews and challenges testing results and
progress against remediation plans regularly,
ensuring preparedness for regulatory scrutiny.
The programme of internal control works
currently being undertaken by the Group is not
solely focused on compliance with the Code and
extends to improve, streamline and standardise
the Group’s processes. Effectiveness of internal
controls is embedded within the objectives for
the Chief Financial Officer and senior finance
individuals, to ensure appropriate focus on
improvement of internal controls.
During FY24, the Group placed a particular
emphasis on IT General Controls (ITGC) and
Environmental, Social and Governance (ESG)
controls testing, recognising their importance
in the overall success and sustainability of the
business. By concentrating on ITGC, the Group
aims to maintain robust, reliable and secure
technology infrastructure and systems, to
ensure the resilience and efficiency of its
operations. The ESG controls testing serves
as an essential aspect of Mitie’s approach to
responsible business practices, addressing key
metrics and performance indicators related to
its environmental impact, social responsibility
and corporate governance.
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continued
Assurance
In accordance with the Code, the Audit
Committee performs an evaluation of the
effectiveness of internal controls across the
Group on an annual basis, covering all material
controls, including financial, operational and
compliance controls. Previously, along with
findings from the audit and assurance tasks
conducted by the Internal Audit team, this has
been based on the self-assessed control ratings
by Mitie divisions. During FY24, the independent
testing results informed the basis of this
evaluation, enabling the Audit Committee
to make better informed decisions about
resource allocation, risk mitigation strategies
and operational guidance.
In addition, the Director of Internal Audit
provided regular updates to the Audit
Committee during the year and provided
visibility over the progress made against control
remediation and gap analysis activity. Board
members meet privately with the Director of
Internal Audit for detailed discussion and to
provide robust challenge where required.
Features of the internal control and risk
management frameworks which ensure
accuracy and reliability of financial
reporting comprise:
• A culture that promotes good governance,
integrity, transparency, fairness and
accountability;
• The implementation of Group-wide policies
and procedures that foster consistency across
the business;
• Clearly defined responsibilities, allocated in
accordance with the Group’s delegated
authority register;
• A defined and agreed approach and tolerance
for handling risks and opportunities that the
business encounters; and
• The recognition and documentation of key
internal controls, along with the clear
assignment of responsibility for their efficient
operation, tracking and reporting.
The focus for independent testing in FY24 was
a ‘bottom up’ approach, focusing on Mitie’s
business-critical processes that feed into financial
reporting, operations and compliance. The
Internal Audit function have also begun a ‘top
down’ approach, linking the Group’s principal
risks with the various assurance activities relied
on to ensure completeness and accuracy of the
day-to-day business operations. This layered
approach will widen the scope of independent
testing in future years, demonstrating top to
bottom risk and control assurance and enabling
the Group to improve the maturity ratings
across the entire control environment.
Senior Accounting Officer update
The Chief Financial Officer presented a paper
to the Audit Committee detailing the processes
in place to ensure that the relevant controls
had operated effectively during FY24, thereby
supporting signature of the Senior Accounting
Officer certificate. The Audit Committee
considered this paper and was satisfied with
the approach taken by management.
Internal audit
The Director of Internal Audit at Mitie has
continued to strengthen the independent
Internal Audit function by providing a range of
services covering various types of assurance
activities, including controls testing. The Internal
Audit function engaged with key stakeholders
across the Group to gain business insight, which
has been used to develop an internal audit
strategy for the next three years.
The authority and responsibilities of the Internal
Audit function are defined in its charter, which
is reviewed regularly by the Audit Committee.
Reporting directly to the Audit Committee
(administratively to the Chief Financial Officer)
allows the Internal Audit function to achieve
objectivity and offers independence from those
activities being audited.
The work of the Internal Audit function helps
to provide assurance over the effectiveness
of the Group’s governance, risk management
and internal control frameworks. The Audit
Committee Chair assesses the Internal Audit
function’s performance against internal audit
objectives and oversees the appointment and
removal of the Director of Internal Audit. The
Audit Committee reviews and approves the
annual internal audit plan and all amendments to
it are communicated to the Audit Committee
through periodic update reports.
The annual internal audit plan has been created
following discussion with the Board members
and wider Mitie leadership teams, including the
Executive Committee, Risk Committee and
finance leadership team, and after careful
consideration of the key developments and risks
in the Group and the updated UK Corporate
Governance Code and other regulatory
changes. The audits are aligned to the Principal
Risks and the Group’s three-year plan, and the
annual internal audit plan has been mapped
against Gartner’s ‘audit hot spots dashboard’
and other industry insights.
An audit report is produced to present the
findings of each internal audit and any remedial
action plans developed by management in
response, which are tracked to completion by
the Internal Audit team and presented to the
Audit Committee. Throughout FY24, in
response to ever-changing stakeholder needs,
improved formats of reporting were used,
including an ‘audit on a page’ concept of
one-page spot-check audits, designed to offer
rapid assurance over specific risk areas, in
addition to comprehensive reports and ongoing
assurance memorandums over in-flight projects
and technology solutions.
All internal audit reports issued during the year
are made accessible to the members of the
Audit Committee and BDO. In order to provide
an independent perspective on the Group’s
internal financial control systems, the Audit
Committee also receives a regular report on
internal audits completed in the period and
reports from BDO arising from its audit work.
The internal audit plan for FY24 was presented
to and approved by the Audit Committee in
March 2023, and was kept under continual
review throughout the year. The plan was
approved and delivered accordingly.
The key areas of focus in the FY24 internal audit
plan included:
• A review of the control effectiveness of key
operational systems (CAFM);
• A review of the control environment around
the transition of outsourced finance activities
to a new shared services partner;
• A review of user access controls across
systems and applications;
• Assessment of the risks, controls and
reporting within the bidding process;
• Ongoing assurance over process and controls
workstream related to the Target Operating
Model (TOM) programme;
• Inflight review of the MyMitie application and
assessment of vendor selection and
procurement process; and
• Review of the occupational health assessment
process.
Regular updates were provided to the Audit
Committee throughout FY24 by the Director of
Internal Audit. These covered the results of the
audit work undertaken and developments in the
internal control environment, highlighting areas
where improvements in risk, governance and
control processes were required. In addition,
progress on the review, improvement and
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documentation of the key internal controls
across the business, including internal controls
over financial reporting, was presented to the
Audit Committee regularly. As described
previously, this will help ensure compliance with
the updated Code on reporting of internal
controls and raise awareness of the importance
of internal controls in the business.
Through the updates from the Director of
Internal Audit, the Audit Committee also
monitored the progress by management in
completing actions to address the findings from
internal audit reports. The vast majority of
actions continue to be closed by the agreed
completion date. This remains an important area
for the Audit Committee, and management is
required to provide an explanation if planned
completion dates are not met.
Review of whistleblowing processes
The Investigations team supports the
whistleblowing and investigations process by
providing dedicated resource and expertise for
fraud investigations. In FY24, the Group
continued to operate its independent
whistleblowing service via the ‘EthicsPoint’
service, as well as receiving whistleblowing
concerns through the Chief Executive Officer’s
direct channel entitled ‘Grill Phil’, and various
other means.
Investigations of all natures are taken
seriously by management and the Board, and
documented reports for each investigation are
created and approved via a formalised process.
Improvement actions recommended by the
Investigations team are tracked to completion.
An update on whistleblowing activity is
provided at each Audit Committee and at
every Board meeting.
Allegations of fraud
In instances where allegations of fraud have
been reported, these are investigated as a
matter of priority by the Investigations team and
reported to the Audit Committee. The related
reports summarising the issues, conclusions and
recommendations were reviewed and discussed
by the Audit Committee. The Audit Committee
then monitored the implementation of any
required actions, aimed at preventing future
occurrence of similar issues and enhancing
internal processes and controls.
The Investigations team also regularly delivers
fraud awareness sessions across the business
and conducts proactive reviews to identify fraud
trends using data analytics.
External audit
The Audit Committee is committed to ensuring
the independence, effectiveness and objectivity
of the external auditor, and reviews the
performance of the external auditor in respect
of audit-related services and non-audit services
every year.
Appointment and re-appointment of the
external auditor
The Group undertook a competitive external
audit tendering process in 2017 and BDO LLP
(BDO) was selected as the Company’s external
auditor with effect from 19 September 2017.
BDO has continued to provide external audit
services to the Group. Greg Watts was the lead
partner for BDO on the Group audit for FY24,
which was his second year on the Group audit.
For FY24, Peter Latham and Richard Bedlow
took over as lead auditors for BDO on the
divisional audits for Technical Services and
Central Government & Defence respectively,
with appropriate transition processes adopted
by BDO.
During the year, it was noted that a Board
member’s child had joined BDO as a trainee.
The Audit Committee reviewed the matter
with BDO and it was confirmed that the
individual is not part of the Group’s audit team
and is not in a managerial position over any
individuals in that team. In addition, appropriate
safeguards have been embedded by BDO to
ensure the continued independence of the
external auditor.
The Audit Committee considers annually the
need to tender the audit for audit quality or
independence reasons. There are no contractual
obligations in place that restrict the Group’s
choice of statutory auditor.
The Audit Committee confirms that the
Group is in compliance with the Statutory
Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive
Tender Processes and Audit Committee
Responsibilities) Order 2014.
External auditor effectiveness
The Audit Committee monitored the conduct
and effectiveness of the external auditor
through its assessment of:
• The experience, expertise and perceptiveness
of the auditor;
• The planning and execution of the agreed
audit plan and quality of reports from the
auditor; and
• The conduct of the auditor, including the
Audit Committee’s experience of interaction
with the auditor.
In addition to receiving written reports from
the external auditor and from management,
the Audit Committee also conducted private
meetings with the external auditor and
separately with management. These meetings
provided the opportunity for open discussion
and feedback on the audit process, the
responsiveness of management and the
effectiveness of both the internal and external
audit teams.
Meetings with the external auditor included
challenge from the Audit Committee around
the audit process and opportunities to place
more reliance on controls as part of the audit
approach.
During the year, BDO was subject to a review
by the FRC’s Audit Quality Review (AQR)
team, as part of its ongoing process for listed
businesses, in respect of Mitie’s audit for the
year ended 31 March 2023. The Audit
Committee Chair had several discussions with
the FRC and BDO at various stages of the
review. The Audit Committee Chair shared
the AQR Inspection Report with the Audit
Committee, and also discussed the findings
directly with the lead partner for BDO.
The Audit Committee noted the scope of the
review, the key findings raised, together with
BDO’s proposed plan to address the findings.
The Audit Committee was satisfied with
BDO’s response and commitment to address
the findings raised. The BDO plan was
implemented as part of the audit for the year
ended 31 March 2024.
Non-audit services provided by the
external auditor
The Group has a non-audit services policy,
approved by the Audit Committee, that ensures
the external auditor remains independent
and objective throughout the provision of
its independent audit services and when
formulating its audit opinion. This non-audit
services policy is underpinned by principles that
ensure that the external auditor does not:
• Audit its own work;
• Make management decisions for the Group;
• Create a conflict of interest; or
• Find itself in the role of advocate for
the Group.
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The Group non-audit services policy reflects
the requirements of the FRC’s Revised Ethical
Standard 2019, which limits the types of
non-audit services that external auditors can
provide. Under the requirements, permitted
services are largely those required by law or
regulation, loan covenant reporting, other
assurance services closely related to the audit or
annual report and reporting accountant services.
The Audit Committee confirms that the Group
non-audit services policy is consistent with the
FRC’s Revised Ethical Standard 2019.
Under this policy, prior to the appointment of
the external auditor to provide any permitted
non-audit services, approval must be obtained
from the Chair of the Audit Committee.
A report of all non-audit services performed by
the external auditor during FY24, irrespective of
value, was submitted to the Audit Committee.
A summary of the fees paid to the external
auditor for FY24 is set out in Note 5 to the
consolidated financial statements. Fees for other
audit-related services of £230,000 related to the
review of the half-yearly financial report and no
other non-audit services were provided by BDO
for FY24. The Audit Committee considered
reports from both management and the
external auditor, which included monitoring of
fees for permitted non-audit services compared
with the FRC fee cap, none of which raised
concerns about external auditor independence.
Fair, balanced and understandable
In accordance with Provision 27 of the Code,
the Directors confirm that they consider the
Annual Report and Accounts, taken as a whole,
to be fair, balanced and understandable and
that it provides the information necessary for
shareholders to assess the Group’s position,
performance, business model and strategy.
When arriving at this position, the Board
was assisted by various processes, including
the following:
• The Annual Report and Accounts was
drafted by senior management with overall
coordination by Group Finance to ensure
consistency across the relevant sections;
• A review was undertaken to assess the
consistency of the Annual Report and
Accounts with internally reported information
and investor communications, and to assess
the balance between reported measures and
alternative performance measures;
• Reviews of drafts of the Annual Report and
Accounts were undertaken by the Executive
Directors, Chief Legal Officer & Company
Secretary, other senior management and
external advisors; and
• The final draft was reviewed by the Audit
Committee prior to consideration by
the Board.
Details of the basis on which the Company
generates and preserves value over the
long-term and the strategy for delivering the
Company’s objectives are set out in the Strategic
report. An explanation by the Directors of their
responsibility for preparing the Annual Report
and Accounts can be found on page 152.
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Environment, Social & Governance (ESG)
Committee report
Report from the ESG Committee chair
This report highlights the ESG Committee’s
key activities and achievements during FY24
and enhanced governance involvement in
relation to increasing regulatory requirements.
Highlights of Mitie’s ESG activities and outputs
are set out in pages 54 to 77 of this Annual
Report and further information is also available
at www.mitie.com/esg.
As detailed over the following pages, in FY24 the
Committee focused on areas such as:
• Completing an updated double materiality
assessment, ensuring compliance with the
Corporate Sustainability Reporting Directive;
• Enhancing the quality of our reporting both
internally and externally to ESG rating
agencies and other disclosure organisations;
• Updating Mitie’s Supplier Code of Conduct to
include enhanced environmental and social
value requirements;
• Enhancing our Modern Slavery procedures
and the Group’s Modern Slavery statement;
• Reviewing Mitie’s long-term ESG targets;
• Supporting the creation and expansion of
trailblazer apprenticeship schemes, with the
aim of closing future skills gaps;
• Supporting the launch of Mitie’s first Level 7
Leadership cohort for senior women in
conjunction with Corndel;
• Guiding our Apprenticeship Levy
lobbying activity;
• Enhancing environmental training to
ensure Board and senior leadership
ESG competence;
• Improving metrics around business ethics
reporting, incorporating environment,
labour standards and human rights;
• Developing an ESG scorecard to understand
our suppliers’ ESG performance and help
identify opportunities for collaboration; and
• Supporting the implementation of Mitie’s
M&A strategy, with its focus on acquiring
businesses that can enhance our
decarbonisation project delivery capabilities.
Mitie’s ESG leadership position has continued
to receive external recognition through
both accreditations and awards, including
the following:
• Edie awards 2024 – Transport/Fleet
Management Project of the Year
• Top Employers Institute 2024 – Top Employer
United Kingdom
• Inclusive Companies 2023 – Inclusive Top 50
UK Employer
• National Apprenticeship Service 2023 –
Top 100 Apprenticeship Employer
• EMA Energy Management Awards 2023 –
Net Zero Strategy of the Year
ESG Committee members
At the date of this report and throughout
FY24, the ESG Committee comprised:
Chair:
Salma Shah
Committee members:
Peter Dickinson, Chief Legal Officer &
Company Secretary
Jasmine Hudson, Chief People Officer
Claire Lovegrove, Head of External
Communications
Jason Roberts, Group Director for
Sustainability & Social Value
Danny Spencer, Managing Director of
Care & Custody
Jason Towse, Managing Director of
Business Services
Simon Venn, Managing Director
of Technical Services & Chief
Government Officer
ESG Committee meetings
The ESG Committee met six times
during FY24.
Key purpose of the
ESGCommittee
The purpose of the ESG Committee is to
provide oversight and governance for all
of Mitie’s ESG initiatives, ensuring they
are aligned to Mitie’s Purpose, Promises
and Values.
Key responsibilities of the
ESGCommittee
To benefit Mitie’s customers, employees,
shareholders and other key stakeholders,
the key responsibilities of the ESG
Committee include:
• To prepare the ESG strategy of the
Group on an annual basis, and submit
it to the Mitie Board for final approval
and adoption
• To promote, oversee and monitor
the implementation of the Group’s
ESG strategy
• To seek to ensure that the Group
conducts its business in a responsible
way with the aim of achieving positive
impact on the communities, people and
the environment in which it works, and
which is consistent with its ESG strategy
The ESG Committee Terms of Reference
are available at www.mitie.com/investors/
corporate-governance.
As Chair of the ESG Committee,
I am delighted to present the
Committee’s report for the year
ended 31 March 2024. This report
outlines our key activities and
accomplishments over the past
year, alongside our strengthened
governance in response to growing
regulatory demands.
Salma Shah
Chair of the ESG Committee
124
Mitie Group plc
Annual Report and Accounts 2024
Environment, Social & Governance (ESG) Committee report
continued
Task Force on Climate-Related
Financial Disclosures (TCFD)
Board oversight of climate-related risks
and opportunities
Both the Board and the ESG Committee
have oversight of climate-related risks
and opportunities.
At each Board meeting, the Chair of the
Committee provides an update which includes
an overview of any Committee meeting and
any recommendations from the Committee
requiring approval by the Board.
All members of the Board have access to ESG
Committee meeting papers via an electronic
Board portal.
Management’s role in assessing and managing
climate-related risks and opportunities
Due to the action-oriented nature of the
Committee, a significant proportion of its
membership comprises members of the MGX
and senior management.
As set out on pages 64 to 66, a governance
framework comprising the Plan Zero
Working Group, Plan Zero Steering Group,
the Committee, and the Board, ensures that
climate-related risks and opportunities are
appropriately assessed and managed at Mitie.
Mitie’s climate change risk assessment (TCFD
risks and opportunities) is maintained by Jason
Roberts, Group Director for Sustainability &
Social Value, who is a member of the
Committee and Chair of the Plan Zero
Steering Group. Senior members of the Finance
team distribute the document to all business
areas for them to review business and
operation-specific risks and opportunities.
Governance framework
Board
The Board has overall responsibility for
sustainability, environmental and climate-related
matters, including TCFD risks and opportunities.
The Board reviews climate-related risks and
opportunities as part of its principal risks and
business strategy considerations.
ESG Committee
The Committee has oversight for social value,
sustainability, environmental and climate-related
matters, including TCFD risks and opportunities.
The Committee reviews and approves Mitie’s
climate change risk assessment (TCFD risks and
opportunities) following its approval by the Plan
Zero Steering Group.
The Committee receives regular updates
on outputs from Plan Zero Steering
Group meetings.
Plan Zero Steering Group
The Plan Zero Steering Group meets
quarterly in line with Risk Committee meetings,
and reports to the Committee. This group
comprises representatives from Finance,
Risk, Legal, ESG and Investor Relations.
Its key responsibilities include:
• Overseeing and directing the Plan Zero
Working Group
• Reviewing and mitigating identified climate-
related risks
• Realising climate-related opportunities
• Reviewing and approving Mitie’s climate
change risk assessment (TCFD risks
and opportunities)
Plan Zero Working Group
The Plan Zero Working Group meets monthly
to explore Environment, Business Ethics,
Sustainable Procurement and Labour and
Human Rights, and reports to the Plan Zero
Steering Group. Its members include
representation from ESG, Procurement,
Property, Fleet, Waste, HR, Ecology, and Legal.
Its key responsibilities include:
• Identifying and delivering actions to achieve
the objectives of Mitie’s Plan Zero initiative
• Driving down energy consumption and
associated carbon emissions
• Transitioning to a circular economy and
improving biodiversity
• Improving Mitie’s processes around labour,
human rights and business ethics
• Engaging our supply chain and
embedding sustainability within our
procurement processes
• Improving the accuracy of supply chain
emissions data
• Taking action in response to feedback from
ESG rating agencies, and other disclosure
organisations, such as CDP and EcoVadis
Key activities during the year
Materiality assessment
The Committee identified that due to Mitie’s
business operations in the EU, it falls into the
scope of the Corporate Sustainability Reporting
Directive (CSRD) framework regulations, which
require the completion of a double materiality
assessment. The Committee collaborated
with the ESG team to identify an external
organisation to complete this assessment,
and which stakeholders to involve. Surveys
and interviews with Mitie’s stakeholders will
provide results that will be fed into Mitie’s
FY25 strategies across the business.
• Construction News Specialists Awards
2023 – Project of the Year by a Specialist
Contractor (subcontract from £2m to £5m)
• ESG Investing’s Corporate ESG Awards 2023
– Best Company for Carbon Transition
• Ministry of Defence’s Employer Recognition
Scheme from 2020 – Gold award holder
• HR Excellence Awards 2023 – Best Early
Careers Strategy
• ProShare Awards 2023 – Best Overall
Performance in Fostering Employee Share
Ownership (50,000+ employees)
• B2B Marketing Awards 2023 – Silver
Award for Best Use of Customer Insight
for Decarbonisation, Delivered™
Areas of focus for the Committee in FY25 are
expected to include:
• Embedding Mitie’s materiality assessment
results into strategies across the business
• Supporting the social mobility of
underrepresented groups
• Deploying Mitie’s social value delivery
programme across a wide range of
client accounts
• Incorporating further circular economy and
reuse initiatives into internal operations
• Expanding our internal deployment of
nature-based initiatives to improve
biodiversity within the Mitie estate
• Monitoring Mitie’s performance against its
FY25 social value targets and intervening
if required to ensure their fulfilment
• Ensuring successful utilisation of our supplier
ESG scorecard and upskilling procurement
teams on its application and purpose, aiming
to identify opportunities to accelerate our
suppliers’ Net Zero journeys and reduce
Mitie’s Scope 3 emissions
• Enhancing colleagues’ knowledge and
awareness of sustainability
Salma Shah
Chair of the ESG Committee
125
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Supplier ESG scorecard
The Committee worked to develop a
mechanism to enable Mitie’s supply chain’s ESG
performance to be measured, by implementing
an ESG scorecard. The Committee collaborated
with the ESG team to ensure this process aligns
to and covers areas included in other reporting
requirements such as CDP and EcoVadis.
The Committee identified the potential for
this engagement to identify opportunities for
collaboration and enhancement of Mitie’s
decarbonisation delivery. This scorecard will
enable Mitie to rank its suppliers in terms of
ESG and directly support our related science-
based targets.
Enhanced reporting
The Committee continued to look for ways to
improve Mitie’s ESG scores with ESG rating
agencies, accrediting bodies and sustainability
indices in FY24. The Committee reviewed
responses to disclosure questionnaires
and identified areas for improvement.
The Committee also initiated engagement
conversations with these organisations where
needed. As a result of these engagement
activities, Mitie secured a place on the
CDP’s Climate Change A List, one of only
362 companies worldwide to achieve this (top
2%), and within the Supplier Engagement rating,
putting Mitie amongst the 7% of companies in
our activity group to receive this scoring.
ESG Report 2024
The Committee reviewed Mitie’s ESG Report
2024 and the Board’s feedback on the report.
This report outlines the progress made across
all areas of Mitie’s ESG strategy and shares key
achievements for each of the five pillars of
Mitie’s social value framework: environment,
responsible supply chain, people, community,
and innovation. The report is available to
download at www.mitie.com/esg/.
Support for apprenticeships
The Committee kept Mitie’s Apprenticeship
Levy strategy under review and discussed ways
to increase Mitie’s utilisation rate and gifting. As
part of these discussions, the Committee made
the decision that Mitie should join The 5% Club,
an organisation committed to providing earn
and learn opportunities. The Committee
identified obstacles that were limiting Mitie’s
ability to maximise Apprenticeship Levy spend,
including a gap in programmes for colleagues in
certain job roles, so therefore supported the
launch of the Level 2 Professional Security
Operative trailblazer apprenticeship and
Mitie’s first Level 7 Leadership cohort for
senior women in conjunction with Corndel.
Giving Back
The Committee was regularly updated on
Mitie’s ‘Giving Back’ initiative, which encourages
eligible colleagues to use their annual
volunteering day to support good causes in the
local community. The Committee discussed
the effectiveness of Mitie’s volunteer recording
platform, along with colleague eligibility
criteria, with aims to maximise accessibility and
engagement. A total of 24,626 volunteer hours
were recorded during FY24, 1,920 over target.
Performance against targets
The Committee reviewed performance
against its FY24 ESG targets at every meeting.
At times during the year when a particular
target was tracking behind schedule, the
Committee discussed the reasons why and
identified ways to address the shortfall. For
example, Committee members promoted
the importance and requirement of electric
vehicle (EV) uptake amongst their teams to
ensure Mitie’s EV target was achieved with
minimal pushback through ensuring awareness
of purpose and application. Mitie achieved 13
of its 14 FY24 ESG targets.
Mitie Foundation
The Committee was regularly updated on the
activities of the Mitie Foundation. During FY24,
the Mitie Foundation continued to support
individuals with perceived barriers to
employment, such as the long-term unemployed,
those with disabilities or learning difficulties,
veterans, ex-offenders and young people.
A total of 418 Mitie Foundation candidates
were recruited into the Mitie business in FY24.
Further detail of the activities of the Mitie
Foundation can be found on page 76 and at
www.mitie.com/mitie-foundation.
Directors’ remuneration report
126
Mitie Group plc
Annual Report and Accounts 2024
Statement from the Remuneration Committee Chair
On behalf of the Board, I am pleased to present
the Directors’ remuneration report for the year
ended 31 March 2024.
The report is split into three main parts:
• Executive remuneration at a glance.
This sets out a summary of our policy,
remuneration outcomes for this year and
how we intend to operate our policy for
next year
• The Annual Report on Remuneration.
This provides more detail on the above,
as well as setting out other remuneration-
related disclosures
• The remuneration policy. Our existing policy
has been in place since it was approved by
shareholders at the 2021 AGM. In accordance
with the normal three-year cycle, we are
presenting a new policy for approval at the
2024 AGM. The policy review and the main
changes are summarised below
Business performance and context
Mitie has delivered a strong financial
performance in FY24. Revenue and operating
profit before other items reached record levels
and were up 11% and 30% on the prior year,
respectively. There has been strong free cash
flow generation of £158m and ROIC has
significantly exceeded our target at 26.4%.
EPS growth has been 29% on prior year.
Performance over the last three years has also
been strong with all key financial targets met or
significantly exceeded. Mitie’s total shareholder
return performance over that period has been
in the top 10 in the FTSE 250 and our market
capitalisation has grown from c.£400m at the
time of the Interserve acquisition in November
2020 to c.£1.6bn, a fourfold increase. Over
the same period, we have made significant
investments in developing a sector-leading
reward package for all of our colleagues and
they have benefited from: free share awards;
matching share awards under the Share
Incentive Plan; £10m Winter Support package
during the cost of living crisis; and a SAYE share
option maturity in December 2023 where the
average gains were c.£14,000 as a result of
significant share price appreciation and the 20%
discount price.
Supporting our colleagues
Mitie is a people business; our exceptional
colleagues are integral to the Group’s success.
During FY24, we ran national roadshows to
promote the awareness of benefits, as well as
Mitie’s award-winning learning and development
offering. We made our fourth free share
award to our colleagues; with those earning
the least receiving the most shares in line with
previous awards.
Remuneration Committee
members
At the date of this report and
throughout FY24, the Remuneration
Committee comprised:
Chair:
Jennifer Duvalier
Committee members:
Chet Patel
Salma Shah
Roger Yates
Remuneration Committee
meetings
The Remuneration Committee met four
times during FY24.
Key purpose of the
Remuneration Committee
The purpose of the Remuneration
Committee is to develop and oversee
remuneration policies and practices that
support Mitie’s strategy and promote
long-term sustainable success.
Key responsibilities of the
Remuneration Committee
The Committee has responsibility for
determining the remuneration of Mitie’s
Executive Directors and the Chairman,
taking into account the need to ensure
Executive Directors are properly
incentivised to perform in the interests
of the Company and its shareholders.
The Committee is also responsible for
setting the remuneration for other senior
executives, including the Mitie Group
Executive (MGX). The Committee also
reviews workforce remuneration and
related policies and takes these into
account when setting the policy for
Executive Directors.
The Committee regularly consults with the
CEO and key HR executives on various
matters relating to the appropriateness
of rewards for the Executive Directors.
However, the CEO and other Executive
Directors are not present when matters
relating directly to their own remuneration
are determined.
This is also the case for other executives
attending Committee meetings. The
Company Secretary attended the meetings
as Secretary to the Committee. The CEO
and HR executives attended the meetings
by invitation only.
The Remuneration Committee‘s Terms of
Reference are available at www.mitie.com/
investors/corporate-governance.
As we embark on FY25, it is also
the start of Mitie’s new Three-Year
Plan, and the Remuneration
Committee has reviewed the
remuneration policy to ensure it
continues to support the Group’s
strategy and promotes the
long-term sustainable success
of Mitie.
Jennifer Duvalier
Chair of the Remuneration Committee
127
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
For our hourly paid colleagues, we increased
pay in line with the National Living Wage or
Real Living Wage increases. In practice, this
means that a considerable number of our
people received increases of around 10%.
For our salaried colleagues, the overall pay
budget increase for 2024 was set at 3%,
balancing Group affordability with talent
market pressures.
Remuneration review and new policy
In accordance with the regulations, Mitie is
required to submit the remuneration policy for
approval by shareholders at the 2024 AGM.
Over the last year, the Committee undertook a
review of our policy to ensure that it supports
the delivery of the next phase of our strategy,
promotes long-term sustainable success and
is aligned with our purpose. As part of our
review of the policy, we consulted with major
shareholders. We have taken into account the
feedback we received and incorporated it into
the development of the new policy.
Following our review, we concluded that our
existing policy was generally aligned with
Mitie’s underlying purpose and values.
However, taking into account a number
of factors, the Committee identified an
opportunity to make two key changes to
the new remuneration policy:
• Annual bonus. Increase in maximum annual
bonus opportunity under the Policy to 200%
of salary for Executive Directors. Our
intention is that for FY25, this would be
implemented as 200% of salary for the CEO
(up from FY24: 160%) and up to 175% of
salary for the CFO (up from FY24: 135%).
The current bonus opportunities have been
in place since the CEO’s appointment in 2016,
when Mitie was a FTSE SmallCap company.
Mitie is now established comfortably within
the FTSE 250 with a market capitalisation
of c.£1.6bn. We consider this a relatively
modest and appropriate increase in the
package in that context, to ensure ongoing
market competitiveness
• Introduction of the CEO reward plan.
This is a plan operating exclusively for
Phil Bentley, our CEO, to lead Mitie through
the new Facilities Transformation Three-Year
Plan (FY25 - FY27). This will involve an
amendment to our usual LTIP framework
for the CEO and is described in more
detail below
Further detail on the changes to the policy are
provided in the Executive remuneration at a
glance section on pages 129 and 130. The new
policy is set out in full in our policy report on
pages 143 to 148.
CEO reward plan
The Committee is proposing the introduction
of the CEO reward plan, designed to incentivise
Phil to defer his retirement and reward his
commitment to the new Three-Year Plan.
• We are proposing to grant Phil an LTIP award
of 600% of salary in 2024 (i.e. in respect of
FY25) to motivate and retain him over the
next three years. At the same time, we would
commit to no further LTIP grants for Phil for
FY26 and FY27. The Committee will set
appropriate and stretching three-year targets
We believe this to be the right course of action
to retain and motivate Phil to deliver superior
shareholder returns, taking into account the
following factors:
• There will be no increase to his salary of
£900,000 for at least the next three years,
to 1 April 2027. This means that Phil’s salary
will have remained the same since his
appointment in 2016, through to 2027.
Indeed, since appointment, Phil’s fixed pay has
decreased, following the reduction of his cash
allowance in lieu of a pension contribution
from 20% to 3% of salary (a reduction of
£153,000 per annum)
• For FY23, the Committee exercised negative
discretion on the LTIP (reduction of 10%
in recognition of shareholder views on
potential windfall gains) and the annual bonus
(reduction of 20% in the round). During FY17
to FY20 inclusive, three out of four bonuses
for the CEO were waived entirely, overriding
formulaic outcomes. During the Covid
pandemic, Phil Bentley volunteered a 30%
reduction in his salary for a five-month period
• In addition, the Committee has always taken
a responsible and measured approach to
executive pay and as noted above there have
been multiple instances of negative discretion
being applied. The Committee has also always
been mindful of corporate governance
developments and shareholder sentiment
in introducing new features (e.g. increased
deferral, LTIP holding periods, recovery
provisions, pension alignment and post-
employment shareholding guidelines)
• Finally, we note also that Phil as CEO has
been very strongly aligned with shareholder
value creation, having voluntarily purchased
shares worth 400% of salary in November
2016 – and has not sold any shares since
appointment, whether purchased himself or
delivered through Mitie plans, and indeed has
self-funded tax on any awards. In aggregate
therefore he now holds 13 million shares,
vastly in excess of his shareholding guideline
of 200% of salary
Remuneration decisions and outcomes
in respect of FY24
Salary
The CEO’s salary of £900,000 has been
unchanged since his appointment in 2016.
As in previous years the Committee has
decided to not implement any salary increase
for Phil Bentley.
The Committee determined that Simon
Kirkpatrick’s salary should be increased by 3%;
which is in line with the pay review budget for
salaried colleagues, and less than hourly paid
colleagues who received an increase in line
with the National Living Wage or Real Living
Wage increases.
FY24 bonus
The annual bonus for FY24 was based on profit,
revenue and strategic/individual performance.
At the end of the year, the Committee assessed
performance against the targets and was
mindful of the latest shareholder guidance and
market sentiment. As such, the Committee gave
careful consideration to the year’s context,
taking into account the experience of colleagues,
stakeholders and shareholders.
FY24 was a good year of Group performance.
Operating profit of £206.3m1 was between
target and maximum, revenue of £4,511m
exceeded the maximum and free cash flow of
£157.6m exceeded the maximum. Assessment
of strategic and individual performance was such
that 96 .9% and 98.9% of the maximum overall
bonus was determined for the CEO and CFO
on a formulaic basis.
The Committee determined that the
formulaic out-turns were appropriate, prior
to the application of negative discretion
discussed below.
2021 LTIP
The Committee assessed the outcome of the
September 2021 Long Term Incentive Plan
(LTIP) award against three performance
measures: Earnings Per Share (EPS) growth,
cash conversion and ESG targets.
Following a review of performance against
targets, the Committee determined that the
formulaic out-turn, prior to the application of
negative discretion discussed below, was that
97.5% of the award would vest in September
2024. Performance against targets and discussion
of the negative discretion applied to this award
are described in more detail on pages 136 and
137 in the Annual Report on Remuneration.
1. Operating profit before other items, which (for the
purpose of the ABP performance measure) has been
adjusted to exclude the profit uplift associated with the
discretionary reduction of 7.5% applied to all incentive
outcomes, as explained on page 128.
Directors’ remuneration report
128
Mitie Group plc
Annual Report and Accounts 2024
Statement from the Remuneration Committee Chair
continued
2021 EDP
The Committee assessed the outcome of the
July 2021 Enhanced Delivery Plan (EDP) award
against two performance measures: Return
on Invested Capital (ROIC) and exceptional
cost-saving synergies and cross-selling
revenue targets.
The EDP was a one-off plan developed at the
time of Mitie’s acquisition of Interserve in late
2020 and implemented in 2021. This was a
period of extreme turbulence in the UK due
to the Covid crisis. Launching the takeover of
Interserve in these circumstances was bold
and represented a huge opportunity but also
came with significant risk for shareholders and
colleagues. The EDP was designed to both retain
our talented senior management team and to
focus them on delivering a successful acquisition,
through the use of ROIC and synergies as
performance criteria. All the targets set by the
Committee were very stretching and required
management to perform exceptionally well to
meet them. In all cases those targets have been
met. ROIC of 26.3%
1
is above the range set of
20.5% to 24.5%, cost synergies of £56m per
annum are at the top of the range set of £35m
to £56m and revenue synergies totalling £115m
are above the range set of £50m to £100m.
Following a review of performance against
targets, the Committee determined that the
formulaic out-turn, prior to the application of
negative discretion discussed below, was that
100% of the award would vest in July 2024.
Performance against targets and discussion of
the negative discretion applied to this award
are described in more detail on page 137 in the
Annual Report on Remuneration.
Incentive outcomes
As noted above, the Committee challenged
itself to ensure that bonus, LTIP and EDP
outcomes were appropriate in the round. As is
usual, as part of this assessment, the Committee
took into account the wider performance of the
Group, the context of both the shareholder
and employee experience and a number of
non-recurring items through the period. In doing
so, it determined that, while the formulaic
out-turns under the ABP, LTIP and EDP were
justified, a discretionary reduction of 7.5% to
all incentive outcomes for all participants
(including Executive Directors) was appropriate.
This resulted in the following final out-turns as a
percentage of the maximum: 89.6% and 91.5%
for the CEO and CFO under the ABP; 90.2%
under the LTIP; and 92.5% under the EDP.
Incentives approach for FY25
For FY25, the Committee is intending to
operate the annual bonus and LTIP using the
same broad framework that was used for FY24
with some changes of emphasis in the mix of
measures used and incentive opportunity:
• Phil Bentley’s maximum bonus opportunity
will be increased to 200% of salary. As stated
in the ‘CEO reward plan’ section above, Phil
will receive a one-off LTIP award of 600% of
salary in FY25
• Simon Kirkpatrick’s maximum bonus
opportunity will be increased from 135% to
175% of salary. Simon’s LTIP opportunity will
be unchanged at 175% of salary
• The annual bonus will continue to be based
on financial and strategic targets, with no
less than 70% based on financial measures.
The mix for FY25 will be: revenue (27.5%),
profit (27.5%), free cash flow (25%),
individual objectives (10%) and other
strategic targets (10%)
• The LTIP measures will be: EPS (33.3%),
ROIC (33.3%) and revenue growth (33.3%).
The Committee will also have reference to
leverage (average debt/EBITDA) and ESG
underpins such that if leverage and/or
progress against the firm’s ESG strategy is
poor, there is specific discretion to allow the
award to be reduced accordingly, including
to nil. For the avoidance of doubt, as part of
its assessment of the appropriate vesting
amount, the Committee will take into
account all relevant factors relating to
performance against the underpins, as well
as the wider performance of the Group
and the context of both the shareholder
and employee experience
The change in the mix of measures relative to
the approach for FY24 represents an increased
focus on growth, with the previous cash
conversion and ESG measures being replaced
with ROIC and revenue growth. Revenue
growth reflects the health of the order book,
the ability to upsell and cross-sell, and contract
win and retention rates, alongside Mitie’s
broader reputation in the sector. ROIC
continues to be a key measure and provides an
important counterbalance to revenue growth
and EPS, as it measures how efficiently Mitie
utilises its invested capital to generate profits.
Cash conversion and ESG targets remain as
performance measures for the 2023 LTIP
awards, for which the performance period
ends on 31 March 2026. The inclusion of the
leverage and ESG underpins for the 2024 LTIP
awards for which the performance period
ends on 31March 2027 reflects the continuing
importance of cash and ESG performance
notwithstanding their replacement as
performance measures.
Engaging with the workforce
The Mitie Board values the views of our
colleagues and has multiple engagement
routes. In addition to my role as the Chair of
the Remuneration Committee, I act as the
designated Non-Executive Director responsible
for oversight of the Board’s engagement with
the workforce. In this role, I regularly engage
with the workforce on a broad range of topics,
including reward and benefits. In addition, we
undertake an annual engagement survey in
order to better understand the views of a wider
range of employees. The engagement survey
includes a range of specific questions on pay
practices and presents an opportunity for the
workforce to ask its own questions about
employee or executive reward.
Through the feedback from the engagement
survey, supplemented with my findings from
regular direct engagement with the workforce,
the voice of Mitie employees is heard at
Remuneration Committee meetings. This
enables the Remuneration Committee to take
into account the views of employees when
considering executive remuneration and the
pay and employment conditions throughout
the wider workforce.
I attended a listening session with frontline
colleagues specifically focused on reward and
executive remuneration. Colleagues fed back
on their benefits package, noting their thanks
for the ongoing free share awards. Colleagues
were interested in understanding the Executive
Directors’ incentive arrangements and were
reassured to hear about the Board’s rigour
and fairness for the consideration of reward
for executives in relation to that of the
wider workforce.
Conclusion
During the year, we consulted extensively with
shareholders in respect of the proposed changes
to the remuneration policy outlined above.
The Committee greatly values the views of
shareholders and I would like to take this
opportunity to thank shareholders for their
input and feedback. At the 2024 AGM, we
will be seeking approval for the Directors’
remuneration report (advisory vote) and the
remuneration policy (binding vote). I welcome
your views and feedback on the report.
Jennifer Duvalier
Chair of the Remuneration Committee
jennifer.duvalier@mitie.com
1. For the purpose of the EDP performance measure,
ROIC includes adjustments agreed by the Committee,
having regard to the detailed rules approved by
shareholders.
129
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Strategic report Governance Financial statements
Executive remuneration at a glance
How we intend to operate our policy for FY25
The following table provides an overview of our remuneration policy and summarises the approach for remuneration arrangements for Executive
Directors for FY24 under the current policy approved by shareholders at the 2021 AGM, alongside how the Committee intends to apply for FY25 the
policy which it has proposed for shareholder approval at the 2024 AGM.
At a glance Overview of policy FY24 FY25
Base salary Salaries are generally reviewed annually,
effective from 1 April. The review may be
influenced by:
• The individual’s role, experience and
performance
• Business performance and the wider market
and economic conditions
• The range of increases across the Group
• An external comparator group comprising
sector comparators and size adjusted
comparator organisations
CEO: £900,000
CFO: £400,000
CEO: £900,000 (no increase)
CFO: £412,000 (+3%, in line with the
rate for salaried colleagues)
Benefits The Group provides a range of benefits which
may include a company car/car allowance,
private fuel, private health insurance, life
assurance and annual leave.
Benefits are reviewed periodically against
market and new benefits may be added
and/or amended as required to support the
attraction and retention of key talent.
Benefits for FY24 include private
medical cover, car allowance/car
and financial/tax planning advice.
No changes to benefits are planned
for FY25.
Pension Executive Directors are eligible to participate
in the defined contribution pension scheme
or to receive a cash allowance in lieu of a
pension contribution.
3% of base salary (in line with
the workforce)
3% of base salary (in line with
the workforce)
Maximum bonus
opportunity
Maximum bonus opportunity is 200% of
base salary.
CEO: 160% of base salary
CFO: 135% of base salary
CEO: 200% of base salary
CFO: 175% of base salary
Bonus deferral 50% of the bonus is normally deferred into
shares which vest after a minimum of two
years (subject to continued employment).
50% of bonus deferred into shares
which vest after at least two years
50% of bonus deferred into shares
which vest after at least two years
Bonus performance
measures – mix
Measures and targets are set annually and
payout levels are determined by the
Committee after the year end based on
performance against those targets.
80% financial, 20% strategic At least 70% financial
Bonus performance
measures – metrics
Bonuses are based on stretching financial and
strategic objectives assessed by the Committee
at the end of the year, with the underlying aim
of encouraging and rewarding the generation
of sustainable returns to shareholders.
Revenue (27.5%)
Profi t (27.5%)
Free cash flow (25%)
Individual (10%)
Other strategic (10%)
Revenue (27.5%)
Profi t (27.5%)
Free cash flow (25%)
Individual (10%)
Other strategic (10%)
Maximum LTIP
opportunity (CFO
only for FY25)1
Awards may be made up to a maximum level
of 200% of base salary.
CFO: 175% of base salary CFO: 175% of base salary
CEO reward plan
(Phil Bentley only)
The CEO reward plan will operate as follows for Phil Bentley only:
• The CEO’s salary will remain fixed at £900,000 over the next three years
• A one-off LTIP award of 600% of base salary will be made in FY25. No LTIP awards will be made in FY26 and FY27
• All other aspects of the remuneration policy will continue to apply as normal for Phil Bentley apart from the ‘Maximum
LTIP opportunity’, which will operate as summarised in the ‘CEO reward plan’
• The bonus and LTIP measures, bonus deferral, LTIP time horizon, share ownership requirements and malus and clawback
provisions under the remuneration policy will apply to Phil Bentley
1. Maximum LTIP opportunity in FY25 of 200% of base salary is the maximum applicable for a new CEO under the remuneration policy. See ‘CEO reward plan’ section for the proposed
application of the LTIP under the new remuneration policy for Phil Bentley.
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Mitie Group plc
Annual Report and Accounts 2024
At a glance Overview of policy FY24 FY25
LTIP performance
measures
Performance over at least three financial years
is measured against stretching objectives which
have the underlying aim of encouraging and
rewarding the generation of sustainable returns
to shareholders.
Adjusted EPS (50%)
Cash conversion (35%)
ESG (15%)
EPS (33.3%)
ROIC (33.3%)
Revenue growth (33.3%)
LTIP holding period
of two years after
vest
Awards will normally be subject to an additional
holding period of at least two years.
Shares released after at least five
years (vesting after three years
plus two-year holding period)
Shares released after at least five
years (vesting after three years
plus two-year holding period)
Share ownership
requirements
Executive Directors are required, over time, to build and maintain a minimum shareholding in the Company worth 200% of
base salary.
Executive Directors will be expected to maintain their shareholding at 100% of their ownership requirement for one year
post departure, reducing to 50% for the second year post departure, or in either case the actual shareholding on departure
if lower.
Malus and clawback
provisions
Recovery provisions (malus and clawback) have applied to incentives for a number of years. Further details on the recovery
provisions, including the circumstances and timeframe for which they can be applied, are set out in the remuneration policy.
The table below reports a single figure of total remuneration for each of the Executive Directors for the financial year ended 31 March 2024 and their
comparative figures for the financial year ended 31 March 2023.
Further information on the above is provided in the Annual Report on Remuneration.
Single figure for FY24
Phil Bentley
2024
Salary £900,000
Benefits £45,095
Pensions £27,0 0 0
Bonus £1,291,624
LTIP £2,909,731
One-off EDP £9,549,889
Tot al £14,723,339
Simon Kirkpatrick
2024
Salary £400,000
Benefits £4,032
Pensions £12,0 00
Bonus £494,349
LTIP £848,671
One-off EDP £1,508,749
Tot al £3, 267,801
2023
Salary £900,000
Benefits £41,662
Pensions £141,750
Bonus £838,181
LTIP £4,893,255
Tot al £6,814,848
2023
Salary £378,000
Benefits £3,499
Pensions £11, 3 4 0
Bonus £295,857
LTIP £744,806
Tot al £1,433,502
Executive remuneration at a glance
continued
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Strategic report Governance Financial statements
Summary of remuneration policy
Excluding the one-off awards made under the Enhanced Delivery Plan (EDP) in FY22, the standard remuneration approach for the Executive
Directors comprises the following elements:
Executive incentives and link to strategy
The following table sets out how the intended measures across the incentive plans for FY25 support the Group’s strategy and KPIs:
Sustained and renewed
profit growth Quality client base
Strong cash-generative
business Strategic targets
Annual bonus
27.5% profi t 27.5% revenue 25% free cash flow 20% strategic objectives
(inc. ESG)
LTIP1
33.3% EPS 33.3% revenue 33.3% ROIC
EDP (2021 award)
25% synergies 75% ROIC
1. Under the LTIP 2024, the Committee will also have reference to leverage (average debt/EBITDA) and ESG underpins such that if leverage and/or progress against the firm’s ESG
strategy is poor, there is specific discretion to allow the award to be reduced accordingly, including to nil.
Note: details of the FY25 annual bonus targets will be disclosed in the FY25 remuneration report.
UK Corporate Governance Code: Provision 40
The following table sets out how the remuneration policy addresses the factors set out in the UK Corporate Governance Code:
Clarity The Committee considers that Mitie’s remuneration structures are transparent and welcomes open and frequent
dialogue with shareholders on its approach to remuneration. Major shareholders have been consulted on the
Committee’s approach to remuneration, including the changes to the remuneration policy which is subject to approval
by shareholders at the 2024 AGM.
Simplicity The remuneration policy is designed to be comprehensive without becoming overcomplicated and to encourage
Executive Directors to concentrate on the profitable growth of the business. When developing the remuneration
arrangements, the Committee was conscious of ensuring the overarching structure remained simple and easy to
understand for both shareholders and participants.
Risk The Committee considers that the structures of the incentive arrangements do not encourage inappropriate
risk-taking. The following best-practice measures are in place to minimise risks:
• Deferral under the Annual Bonus Plan, the LTIP holding period, the EDP holding period and the shareholding
requirement, including post cessation, provide a clear link to the ongoing performance of Mitie’s business and the
experience of shareholders
• The Committee has discretion to adjust the formulaic outcomes if it considers that they are not reflective of the
underlying performance of Mitie or the individual
• Malus and clawback provisions apply to the Annual Bonus Plan, LTIP and EDP
Predictability One of the Committee’s principles is that the majority of reward opportunity for Executive Directors should be
provided through performance-related incentives linked to the Group’s strategic goals and taking account of the
Group’s attitude to risk; reward under these incentives is linked to both individual and Group performance. Page 146
sets out four illustrations of the application of the remuneration policy, including the potential opportunity levels
resulting from threshold, target and maximum performance under the Annual Bonus Plan and LTIP.
Proportionality Performance measures and target ranges under the Annual Bonus Plan and LTIP are designed to be sufficiently
stretching in order to ensure out-turns are fully aligned with Mitie’s performance.
As above, the Committee has discretion to override formulaic outcomes in order to ensure performance is reflective
of Mitie’s underlying performance.
Alignment to culture The Committee believes in an approach to executive pay which is commensurate with value creation for shareholders.
The remuneration policy and the Company’s incentive schemes have been designed to drive appropriate behaviours
consistent with Mitie’s purpose, values and strategy.
Base salary LTIPAnnual bonusPensionBenefits
+ + + + = Total
Fixed
Variable
Directors’ remuneration report
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Mitie Group plc
Annual Report and Accounts 2024
Executive Director remuneration (subject to audit)
The table below reports a single figure of total remuneration for each of the Executive Directors for FY24 and their comparative figures for FY23:
Year Salary Benefits
1
Pension
2
Total fixed pay Annual bonus
3
LTIP
4
EDP
5
Total
variable pay Total
Phil
Bentley
2024 £900,000 £45,095 £27,000 £972,095 £1,291,624 £2,909,731 £9,549,889 £13,751,244 £14,723,339
2023 £900,000 £41,662 £141,750 £1,083,412 £838,181 £4,893,255 – £5,731,436 £6,814,848
Simon
Kirkpatrick
2024 £400,000 £4,032 £12,000 £416,032 £494,349 £848,671 £1,508,749 £2,851,769 £3,267,801
2023 £378,000 £3,499 £11, 3 4 0 £392,839 £295,857 £744,806 – £1,040,663 £1,433,502
1. Benefits are calculated in terms of UK taxable values and relate to the cost of private medical cover, car allowance and financial/tax planning advice. Simon Kirkpatrick’s benefits include
the use of an electric car. Phil Bentley’s benefits include the matching shares element from his SIP purchases based on the share price upon purchase.
2. The pension benefit disclosed above comprises cash allowances in lieu of pension contributions. For Phil Bentley, this is 20% of base salary to 31 December 2022 and 3% of base salary
thereafter. For Simon Kirkpatrick, this is 3% of base salary.
3. Annual bonus payable in respect of the financial year includes any deferred element at face value at the date of award. Further information about how the level of the award for FY24
was determined is provided on pages 133 and 134.
4. The LTIP figures disclosed for FY24 are in respect of the 2021 LTIP awards and have been valued, in line with the regulations, using the average share price of the last three months
of FY24 (102.74p) and include dividend equivalents accrued over the vesting period. The share price at grant (using the average closing middle market price for the last five trading
days prior to the start of the financial year on 1 April 2021) was 60.5p and 39.0% of the LTIP amounts included in the table above are attributable to share price appreciation.
Further information about how the level of vesting (90.2%) was determined is provided on pages 136 and 137. The LTIP figure disclosed for Simon Kirkpatrick for FY23 includes a
2020 CSP award granted before he became a Director. It vested on 1 December 2022 and the valuation was based on the closing share price on the date of vesting of 75.4p and
includes dividend equivalents accrued over the vesting period. The share price at grant was 38.1p and 48.3% of the CSP amount included in the table is attributable to share price
appreciation. The personal performance conditions of the CSP 2020 were fulfilled. The LTIP figures disclosed for FY23 include the 2020 LTIP for which the figures included in the
FY23 remuneration table have been adjusted to reflect the actual valuation based on the closing share price on the date of vesting, which was 98.3p, and include dividend equivalents
accrued until the vesting dates.
5. The EDP figures disclosed for FY24 are in respect of the 2021 EDP awards and have been valued, in line with the regulations, using the average share price of the last three months
of FY24 (102.74p) and include dividend equivalents accrued over the vesting period. The share price at grant (using the average closing middle market price for the last five trading
days prior to the start of the financial year on 1 April 2021) was 60.5p and 39.0% of the EDP amounts included in the table above are attributable to share price appreciation.
Further information about how the level of vesting (92.5%) was determined is provided on page 137.
Non-Executive Director remuneration (subject to audit)
The fees for the Non-Executive Directors for FY24 and their comparative figures for FY23 are set out below:
2024
1
£’000
2023
1
£’000
Derek Mapp
2
247 225
Jennifer Duvalier 67 67
Penny James
3
9 –
Chet Patel 52 52
Mary Reilly 62 62
Salma Shah 62 54
Roger Yates 61 61
Former Director – 43
Tot al 560 564
1. All amounts were paid in cash and no other UK taxable benefits were received in either year.
2. Derek Mapp’s fee increased to £270,000 with effect from 1 October 2023.
3. Penny James joined the Board on 1 February 2024.
Base salary and benefits
For salaried colleagues, the overall pay budget increase for 2024 was set at 3%, balancing Group affordability with talent market pressures.
The CEO’s salary of £900,000 has been unchanged since his appointment in 2016. As in previous years, the Committee decided to not implement any
salary increase for Phil Bentley. As discussed in the Chair’s letter, his salary will remain frozen for at least the next three years, to 1 April 2027.
The Committee determined that it was appropriate to increase the CFO’s salary from £400,000 to £412,000 (+3%) from 1 April 2024. This increase of 3%
is in line with the pay review budget for salaried colleagues, and less than hourly paid colleagues, who received an increase in line with the National Living
Wage or Real Living Wage.
Annual Report on Remuneration
133
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Annual Report and Accounts 2024
Strategic report Governance Financial statements
Non-Executive Director fees
Fees are reviewed on a periodic basis and at least every three years. Fees for the Non-Executive Directors were reviewed in 2022, and resulted in
increases for the Senior Independent Director, and those chairing a Committee. Fees for the Chairman were reviewed in 2022 but remained unchanged,
having not increased since his appointment in 2017. Following a market review in 2023, it was determined that from 1 October 2023 fees for the Chairman
would be increased from £225k per annum to £270k per annum, with all other fees remaining unchanged. Non-Executive Director fees are summarised
in the table below:
From
1 April 2024
1
£’000
From
1 April 2023
£’000
Chairman fees
2
270 225
Non-Executive Director core fees
3
52 52
Additional fees:
Senior Independent Director 9 9
Chair of a Committee 10 10
Designated Non-Executive Director for workforce engagement 5 5
1. The core fees of £52,000 per annum paid to each Non-Executive Director (including the Chairman) would ordinarily total £364,000 for FY25. Total fees including additional duties
would ordinarily amount to £626,000 for FY25 (£560,000 actual for FY24).
2. The Chairman’s fee is inclusive of the Non-Executive Director core fee and no additional fees are paid to the Chairman where he is chairman or a member of other Committees.
3. For Non-Executive Directors, individual fees comprise the core fee and additional supplemental fees for the Senior Independent Director, for chairing Committees; and for the
designated Non-Executive Director for workforce engagement, to reflect the greater responsibility and time commitment required.
Annual Bonus Plan (ABP) FY24
Awards in respect of FY24 were considered under the ABP. Phil Bentley was eligible for a maximum bonus opportunity of 160% of base salary.
Simon Kirkpatrick was eligible for a maximum bonus opportunity of 135% of base salary.
The awards were structured by reference to performance against a blend of financial (80% of the bonus opportunity) and strategic targets (the remaining
20%). At the threshold level of performance for financial targets, 25% of the maximum bonus opportunity is due, with 50% of the maximum bonus
opportunity due at the target level and 100% at the maximum level. Between these points, the out-turn is determined on a linear sliding scale basis.
The table below shows actual performance and the corresponding out-turns for each measure on a formulaic basis. The Committee then used its
discretion to apply a reduction of 7.5% to formulaic out-turn. This resulted in bonuses for the CEO and CFO of 89.6% and 91.5% of the maximum.
The following tables set out performance against the financial, strategic and individual measures and targets.
Performance measure Weighting Performance range Performance
Formulaic out-turn
(% of bonus opportunity)
Operating profit
1
27.5% of the award £170.0m threshold
£188.9m target
£207. 8m max imum
£206.3m 26.4% out of 27.5%
Revenue
2
27.5% of the award £3,991m threshold
£4,201m target
£4 ,411m m a x i m u m
£4 , 511m 27.5% out of 27.5%
Free cash flow 25% of the award £70.8m threshold
£95.8m target
£120.8m maximum
£157.6m 25% out of 25%
Other strategic targets –
CEO and CFO
10% of the award The Committee considered performance against the strategic objectives
set out below and determined that the out-turn was 90% of the maximum
for the CEO and 100% of the maximum for the CFO.
9% out of 10% for CEO
10% out of 10% for CFO
Individual objectives –
CEO and CFO
10% of the award The Committee considered performance against the individual objectives
set out below and determined that the out-turn was 90% of the maximum
for the CEO and 100% of the maximum for the CFO.
9% out of 10% for CEO
10% out of 10% for CFO
Total formulaic out-turn 96.9% of max. for CEO
98.9% of max. for CFO
Application of
Committee discretion
As noted in the Committee Chair’s statement the Committee determined that, although the formulaic bonus out-turn was
justified, a discretionary reduction of 7.5% to the incentive out-turn for all participants was appropriate.
Annual bonus out-turn 89.6% of max. for CEO
91.5% of max. for CFO
1. Operating profit before other items which (for the purpose of the ABP performance measure) has been adjusted to exclude the profit uplift associated with the discretionary
reduction of 7.5% applied to all incentive outcomes, as explained on page 128.
2. Revenue including share of joint ventures and associates.
Directors’ remuneration report
134
Mitie Group plc
Annual Report and Accounts 2024
Annual Report on Remuneration
continued
Performance against the strategic targets and individual objectives set for Phil Bentley and Simon Kirkpatrick were as follows:
Phil Bentley (CEO)
Strategic targets
Strategy • Developed and communicated a new Facilities Transformation Three-Year Plan, based on delivering
high single digit revenue growth.
• Delivered seven strategic acquisitions to support new capabilities.
• Developed industry-leading relationship with Wipro, achieving savings of over £11m p.a.
• Won major accounts (e.g. EY and Germany DIO) retained others (e.g. Sainsbury’s, LBG and
Amazon) but lost DEFRA and partially lost Rolls Royce.
Individual objectives
Colleagues • Championed Equality, Diversity & Inclusion (ED&I). Mitie was recognised as Leading EDI Employer
for the second year. 32% of Mitie senior leadership team is now female.
• Developed and implemented retention plan for new three-year plan to include high potential talent
as well as senior management.
Stakeholders • New investors interest secured in the US and Europe following a successful Capital Markets Day.
• Successful outreach programme to Labour party and Trade Unions (Unite, Unison, TUC) and
improved access to civil servants in DWP, Home Office, Cabinet Office, MoJ and MoD.
Environment • Ensured ‘Glide Path’ to Net Zero 2025 is in place and achievable.
• Science-based targets in place. 5,000th EV on road but requires some carbon credits to offset
fossil-fuel heavy goods vehicles.
Simon Kirkpatrick (CFO)
Strategic targets
Strategy • Delivered in-year savings from margin enhancement initiatives of c.£40m, and drove structural
simplification of the Group, reducing legal entities by half.
• Identified and delivered cash improvements of more than £25m, through working capital process
improvements, as well as alignment of the Mitie and ISV tax groups.
• Increased stakeholder engagement through site visits, European and US roadshows, Capital Markets
Day, and conferences.
• Consolidated transactional banking under one provider, reducing fees by 20%, and facilitating cash
pooling to increase interest income by c.£1.5m.
• Developed new capital allocation policy, including a new ‘anti-dilution’ policy for share purchases,
and Group distributable reserves project to support shareholder distributions.
Individual objectives
Finance function • Implemented process efficiencies and cost reductions to reduce the cost of the Finance function
by 20%.
• Improved efficiency and straight through processing of Mitie Finance shared services, alongside
ongoing centralisation and the transfer of almost c.200 roles to Wipro.
• Successful finance engagement programme through period of change; engagement increased
by 14ppts.
Financial control
• Good progress with new Mitie controls reporting framework, ahead of FRC requirement for
controls self assessment for UK plcs.
• Successful roll out of Mitie systems and processes into new acquisitions in order to drive
improvements and efficiencies.
The bonus out-turn is therefore as follows:
Total bonus payable
% of maximum
Total bonus
£’000
Cash
£’000
Deferred shares
£’000
Phil Bentley 89.6% of maximum 1,292 646 646
Simon Kirkpatrick 91.5% of maximum 494 247 247
135
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Annual Bonus Plan FY25
Subject to shareholder approval of the remuneration policy at the 2024 AGM, the maximum bonus opportunity for FY25 for Phil Bentley and Simon
Kirkpatrick will be 200% and 175% of base salary respectively. Their awards will be payable by reference to performance against a blend of financial
(at least 70% of the bonus opportunity) and strategic targets (the remainder).
However, if none of the financial targets have been achieved, no bonus will be payable by reference only to the strategic targets. 50% of any bonus
entitlement will be deferred into shares for two years.
The mix of measures for FY25 will be: revenue (27.5%), profit (27.5%), free cash flow (25%), individual objectives (10%) and other strategic targets (10%).
The mix of measures is unchanged from FY24.
Details of the targets set will be disclosed in the FY25 remuneration report.
LTIP awards granted in 2023 (subject to audit)
On 29 June 2023, the following conditional LTIP awards were granted to the Executive Directors:
Award Type
Number
of shares
1
Face value
(£’000)
% of base
salary
Performance
conditions
Performance
period
% vesting at
threshold
Phil Bentley Performance LTIP
June 23
Nil-cost
options
2,224,969 £1,800,000 200% Performance
conditions are
set out in the
table below
Three financial
years ending
31 March 2026
25%
Simon Kirkpatrick Performance LTIP
June 23
Nil-cost
options
865,265 £700,000 175% Performance
conditions are
set out in the
table below
Three financial
years ending
31 March 2026
25%
1. Number of shares was calculated based on the average closing middle market price of 80.9p for the five trading days prior to the start of the financial year on 1 April 2023.
The LTIP awards granted on 29 June 2023 are subject to three performance measures: adjusted EPS, cash conversion and ESG targets. These awards will
vest in June 2026 conditional on performance in respect of the period of three years ending 31 March 2026 against the following measures:
Performance measure Weighting Performance range Vesting of portion of the award
Earnings Per Share (EPS) 50% of the award Threshold = 9.9p
Target = 10.9p
Maximum = 12.0p
25%
70%
100%
Cash conversion 35% of the award Threshold = 70%
Target = 80%
Maximum = 90%
25%
70%
100%
Environment, Social
and Governance
(ESG) targets
15% of the award • Greenhouse gas emissions: (a) revenue intensity of Scope 1 and 2 emissions reduced by 4%; and
(b) 5% p.a. reduction in Scope 3 emissions
• Fleet zero carbon: 100% of Mitie’s total fleet zero tailpipe emissions (where such vehicles exist)
• Employee engagement: improve employee engagement by 4ppt
• Customer engagement: improve NPS by 4
• Diversity: increase gender and ethnic diversity among senior leaders
The Committee will also have reference to a Return on invested capital (ROIC) underpin such that if ROIC performance is poor, there is specific discretion
to allow the award to be reduced accordingly, including to nil.
Notwithstanding the above, the Committee still has full discretion to determine the performance measures and how the performance ranges applicable to
the award are applied, including discretion to adjust them in the event of changes in IFRS accounting standards, while ensuring that they are not materially
easier or harder to satisfy than the original performance measures and ranges.
Directors’ remuneration report
136
Mitie Group plc
Annual Report and Accounts 2024
Annual Report on Remuneration
continued
LTIP 2024
Phil Bentley and Simon Kirkpatrick will be granted LTIP awards in 2024, following the AGM, at 600% and 175% of base salary respectively. The awards will
vest in 2027 conditional on performance in respect of the period of three years ending 31 March 2027 against the following measures:
Performance measure Weighting Performance range Vesting of portion of the award
EPS 33.3% of the award Threshold = 12.3p
Target = 13.7p
Maximum = 15.0p
25%
70%
100%
ROIC 33.3% of the award Threshold = 22.0%
Target = 24.0%
Maximum = 26.0%
25%
70%
100%
Revenue growth 33.3% of the award Threshold = £5,200m
Target = £5,600m
Maximum = £6,000m
25%
70%
100%
The Committee will also have reference to leverage (average debt/EBITDA) and ESG underpins such that if leverage and/or progress against the firm’s
ESG strategy is poor, there is specific discretion to allow the award to be reduced accordingly, including to nil.
The change in the mix of measures relative to the approach for FY24 represents an increased focus on growth, with the previous cash conversion and
ESG strategy measures being replaced with ROIC and revenue growth. Revenue growth reflects the health of the order book, the ability to upsell and
cross-sell, and our contract win and retention rates, alongside Mitie’s broader reputation in the sector. ROIC continues to be a key measure and provides
an important counterbalance to revenue growth and EPS, as it measures how efficiently Mitie utilises its invested capital to generate profits.
Nevertheless, cash conversion still remains key and is a performance measure for the 2023 LTIP award, for which the performance period ends on
31March 2026. ESG also remains key and is a performance measure for the 2022 and 2023 LTIP awards, for which the performance periods end on
31March 2025 and 31 March 2026 respectively. As noted, ESG will be an underpin for the 2024 LTIP award, for which the performance period ends on
31March 2027.
Notwithstanding the above, the Committee still has full discretion to ensure that the level of any vesting out-turn is appropriate based on the overall
performance of the Group and the shareholder and employee experience. Awards are also subject to an additional post-vesting holding period of at
least two years.
Details of September 2021 LTIP award vesting in FY25
The performance period for the September 2021 LTIP awards (in FY22) ended on 31 March 2024 (FY24). The Committee assessed performance against
three performance measures:
Performance measure Weighting Performance range Vesting of portion of the award Mitie performance Vesting (% of max)
EPS growth1 50% of the award Threshold = 6.9p
Target = 7.4p
Maximum = 7.8p
25%
70%
100%
11. 2 p 100%
Cash conversion 35% of the award Threshold = 80% p.a.
Target = 85% p.a.
Maximum = 90% p.a.
25%
70%
100%
106% p.a. 100%
ESG targets 15% of the award • Greenhouse gas emission reduction: 60% reduction in Scope 1
and 2 net emissions versus a FY20 baseline
• Fleet zero carbon: 65% of Mitie’s total fleet is zero
tailpipe emissions
• Employee engagement: improve employee engagement by 6ppt
• Customer engagement: improve net promoter score (NPS)
by 6ppt
• Gender diversity: increase percentage of women in the senior
leadership team and their direct reports to 30%
• Ethnic diversity: increase percentage of BAME colleagues holding
senior leadership roles to 10%
5 out of 6
achieved
83.3%
1. Earnings per share before other items, which (for the purpose of the LTIP performance measure) has been adjusted to exclude the profit uplift associated with the discretionary
reduction of 7.5% applied to all incentive outcomes, as explained on page 128, and also to exclude the benefit of the share buyback on the weighted average number of shares used
in the calculation.
This results in 97.5% vesting of the 2021 LTIP awards on a formulaic basis. However, as noted in the Committee Chair’s statement the Committee
determined that, although the formulaic LTIP out-turn was justified, a discretionary reduction of 7.5% to the incentive out-turn for all participants was
appropriate, resulting in an overall vesting level of 90.2% of maximum.
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As is usual, as part of its assessment, the Committee also took into account the wider performance of the Group and the context of both the shareholder
and employee experience. In doing so, it determined that this adjusted out-turn of 90.2% of the maximum was appropriate and no further discretion was
applied.
The September 2021 LTIP awards will vest in September 2024 and LTIP awards granted to Executive Directors are subject to a two-year post-vesting
holding period. Furthermore, in-employment and post-employment shareholding guidelines also ensure that the true value delivered to Executive
Directors will be established only in the years ahead and not at 2024 share prices.
Details of July 2021 EDP award vesting in FY25
The performance period for the July 2021 EDP awards (in FY22) ended on 31 March 2024 (FY24). The Committee assessed performance against two
performance measures:
Performance measure Weighting Threshold (1x multiplier) Maximum (4x multiplier) Mitie performance Vesting (% of max)
Return on invested
capital (ROIC)
1
75% of the award 20.5%
This is 1,140 bps above Mitie’s
WACC at 31 March 2021
of 9.1%.
24.5%
This is 400 bps above the
threshold level.
26.3% 100%
Synergies split as
cost-saving synergies
(85%) and cross-selling
revenues (15%)
25% of the award Cost-saving synergies of £35m,
in line with the enhanced
synergies set out in the
November 2020 acquisition
announcement.
Cross-selling revenues into the
Interserve customer base of
£50m (measured as revenue
from services not currently
provided by Interserve to
its customers).
Cost-saving synergies of £56m,
representing over-performance
of 60% against the £35m
threshold (Interserve total
overheads are c.£80m).
Cross-selling revenues into
the Interserve customer base
of £100m.
Cost-saving
synergies
of £56m
Cross-selling
revenues into
the Interserve
customer base
o f £115 m .
100%
For performance between threshold and maximum the proportion
of awards vesting is determined on a linear sliding scale basis.
1. For the purpose of the EDP performance measure, ROIC includes adjustments agreed by the Committee, having regard to the detailed rules approved by shareholders.
The EDP was a one-off plan developed at the time of Mitie’s acquisition of Interserve in late 2020 and implemented in 2021. This was a period of extreme
turbulence in the UK due to the Covid crisis. Launching the takeover of Interserve in these circumstances was bold and represented a huge opportunity
but also came with significant risk for shareholders and colleagues. The EDP was designed to both retain our talented senior management team and
to focus them on delivering a successful acquisition, through the use of ROIC and synergies as performance criteria. In all cases the targets set by the
Committee were very stretching and required management to perform exceptionally well to meet them. In all cases those targets have been met.
ROIC of 26.3% is above the range set of 20.5% to 24.5%, cost synergies of £56m per annum are at the top of the range set of £35m to £56m and
revenue synergies totalling £115m are above the range set of £50m to £100m.
The plan incorporated several best practice features to ensure that executives were aligned with shareholders, including the following:
• Award cap: The maximum share price growth delivered at vesting cannot exceed 200% growth in the face value of the award at grant
• Holding period: To provide additional alignment with shareholders, awards to Executive Directors were subject to a two-year post-vesting holding
period so that the total time horizon is five years
• Share price underpin: The vesting of awards was subject to an absolute share price underpin. The awards were granted shortly after the approval of the
EDP by shareholders at the 2021 AGM, with the number of shares under award determined using the average closing share price for the five dealing
days prior to the start of the financial year on 1 April 2021 (being 60.5p), to provide direct alignment with the performance period. If the average closing
share price for the five days prior to 31 March 2024 did not exceed 60.5p, awards would lapse in full
• Net debt underpin: The vesting of awards was subject to a net debt underpin such that the average daily net debt for FY24 must not exceed 1x EBITDA
when determining whether remuneration outcomes under the EDP remain appropriate
Following their assessment of performance, taking the above underpins into account, the Committee determined that the formulaic out-turn for the
July 2021 EDP awards was 100% of maximum. However, as noted in the Committee Chair’s statement the Committee determined that, although the
formulaic out-turn was justified, a discretionary reduction of 7.5% to the incentive out-turn for all participants was appropriate resulting in an overall vesting
level of 92.5% of maximum.
The July 2021 EDP awards will vest in July 2024 and EDP awards granted to Executive Directors are subject to a two-year post-vesting holding period.
Furthermore, in-employment and post-employment shareholding guidelines also ensure that the true value delivered to Executive Directors will be
established only in the years ahead and not at 2024 share prices. Note that the EDP awards were granted using the average closing share price for the
five dealing days prior to 1 April 2021 (being 60.5p), whereas the share price when shareholders approved the Interserve acquisition was 39.95p and
therefore there had already been a c.50% increase for shareholders prior to the EDP awards being made.
Directors’ remuneration report
138
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Annual Report and Accounts 2024
Annual Report on Remuneration
continued
Loss of office payments (subject to audit)
There have been no loss of office payments to past Directors during FY24.
Payments to past Directors (subject to audit)
There have been no payments to past Directors during FY24 that relate to their period as a Director.
Percentage change in remuneration of Directors and employees
The table below sets out the change in remuneration of the Directors who served on the Board and Mitie’s UK employees, which is considered the most
appropriate group for comparison purposes.
FY20/FY21 FY21/FY22 FY22/FY23 FY23/FY24
Salary
2
Benefits
3
Bonus Salary
2
Benefits
3
Bonus Salary
2
Benefits
3
Bonus Salary
2
Benefits
3
Bonus
Average pay based on
Mitie’s UK employees
1
2.5% (20.8)% (23.9)% 4.1% 5.7% 99.4% 8.1% (0.5)% 130.6% 5.7% (0.5)% (5.8)%
Executive Directors
Phil Bentley (12. 5)% (25.0)% N/A
4
14.3% 10.1% 20.9% 0% 83.5% (38.7)% 0% 8.2% 54.1%
Simon Kirkpatrick
5
N/A N/A N/A N/A N/A N/A 8.0% (49.6)% (31.6)% 5.8% 15.2% 67.1%
Non-Executive
Directors
Derek Mapp (12.5)% – – 14.3% – – 0% – – 10.0% – –
Jennifer Duvalier (12. 5)% – – 14.3% – – 11.7 % – – 0% – –
Mary Reilly (12. 5)% – – 14.3% – – 3.3% – – 0% – –
Roger Yates (12.5)% – – 14.3% – – 3.4% – – 0% – –
Chet Patel
6
N/A N/A N/A N/A N/A N/A N/A N/A N/A 0% – –
Salma Shah
6
N/A N/A N/A N/A N/A N/A N/A N/A N/A 15.1% – –
Penny James
7
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
1. The average UK employee figures reflect the changes in average annual pay for UK employees employed throughout FY23 and FY24 for FY23/24, throughout FY22 and FY23 for
FY22/23, throughout FY21 and FY22 for FY21/22 and throughout FY20 and FY21 for FY20/21. Employees who were on furlough during the relevant period have been excluded for
the purposes of this analysis.
2. The increases in salary for Directors for FY22 compared with FY21 following the reductions in salary for FY21 compared with FY20 arose from the Non-Executive Directors and
Phil Bentley volunteering 30% reductions in their fees/salaries respectively for five months from 1 April 2020 as part of Mitie’s actions to mitigate the impact of Covid.
3. Includes taxable benefits such as car/car allowance, private medical benefit and private fuel. The increase of the benefit in kind tax on electric vehicles has impacted the benefits in
FY22 and FY23. The car allowance for Phil Bentley has impacted the benefits in FY23, and the move from car allowance to electric vehicle for Simon Kirkpatrick has impacted his
benefits figure. Also includes Phil Bentley’s matching shares element from his Share Incentive Plan (SIP) purchases for January 2022 onwards based on the share price upon purchase.
4. Phil Bentley’s FY20 bonus was £nil as he waived it.
5. Simon Kirkpatrick was appointed to the Board on 1 April 2021 and therefore there are no appropriate prior year comparatives in terms of Director remuneration for FY21 or FY22.
6. Chet Patel and Salma Shah joined the Board on 1 April 2022 and therefore there are no prior year comparatives for FY21, FY22 or FY23.
7. Penny James joined the Board on 1 February 2024 and therefore there are no prior year comparatives. In next year’s report, it will be possible to show a FY24/FY25 change in
her remuneration.
CEO pay ratio
The table below sets out the CEO pay ratio in respect of FY24. CEO pay ratio data for previous financial years is provided for reference.
Year Method 25th percentile pay ratio Median pay ratio 75th percentile pay ratio
FY24 Option B 628:1 575:1 513:1
FY23
1
Option B 316:1 289:1 240:1
FY22 Option B 191:1 163:1 142:1
FY21 Option B 151:1 129:1 116 :1
FY20 Option B 154:1 139:1 108:1
1. The FY23 single figure has been updated as a result of reflecting the actual valuation on the closing share price on the first date of vesting of the LTIP award.
The pay ratios set out above were calculated using the Group’s FY24 gender pay data based on employees as at 5 April 2023 under method B. Method B
was selected because it made use of robust, readily available data and did not require additional analysis into the 64,000 UK employees employed by
the Group. Total pay was calculated for a sample of employees at each quartile in order to ensure that the three identified employees were suitably
representative of their quartile. A full-time equivalent total pay figure was calculated for each identified employee using the single figure methodology.
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Strategic report Governance Financial statements
In-line with the Committee’s principles, the majority of the CEO’s reward opportunity is provided through performance-related incentives linked to the
Group’s strategic goals. As a result the CEO’s single figure and the pay ratios increase with improved Group performance. The CEO pay ratios for FY24
have increased compared to FY23. This is primarily due to the vesting of the one-off EDP share plan which vested at 92.5% of maximum following the
Group’s exceptional performance over the last three years. Further details of performance context for the year are provided on page 137. As a Real Living
Wage service provider, Mitie continues to increase pay levels among its various contracts and to invest in competitive pay for all employees. Given that
Mitie’s workforce profile is made up of predominantly frontline customer-facing roles, the employees at each quartile used to compare Mitie’s CEO’s
remuneration all operate within a frontline role. The Committee is comfortable that the pay ratios are consistent with the pay, reward and progression
policies at Mitie.
The following table sets out the base salary and total pay figures for the employees identified at each quartile.
Year Element of pay 25th percentile employee Median employee 75th percentile employee
FY24
Base salary (FTE) £20,379 £22 , 211 £27,743
Total pay (FTE) £23,452 £25,622 £28,680
Relative spend on pay
The table below shows the total cost of remuneration in the Group, compared with dividends distributed.
Year ended
31 March 2024
£m
Year ended
31 March 2023
£m Change
Aggregate employee remuneration 2,168 1,996 8.6%
Equity dividends 41.5 28.9 43.6%
Assessing pay and performance
The table below provides a summary of the Chief Executive Officer’s single figure remuneration over the past 10 years, as well as the payout and vesting
levels of variable pay plans in relation to the maximum opportunity. The chart below shows the historical Total Shareholder Return (TSR) performance
over the same period, with Mitie’s TSR restated for the bonus element of the 2020 rights issue. Three indices (FTSE 250, FTSE 350 Support Services and
FTSE 350) have been chosen as they are widely recognised and Mitie has been a member of these indices during the period.
0
50
100
150
200
250
TSR (Rebased to 100)
March 14
Mitie
March 15 March 16 March 17 March 18 March 19 March 20 March 21 March 22 March 23 March 24
FTSE 250 FTSE 350 Support Services FTSE 350
FY15 F Y16
FY17
Ruby
McGregor-
Smith
1
FY17
Phil
Bentley
1
FY18 F Y19 FY20 FY21 FY22 FY23 FY24
Single figure
remuneration £1,525,824 £2,448,161 £530,628 £479,073 £1,102,549 £2,248,948 £2,029,856 £2,891,623 £3,908,161 £6,814,848
3
£14,723,339
Annual bonus element
(actual as a % of max) 50% 73% 0% waived waived 79% waived 78.6% 95% 58.2% 89.6%
Long-term incentives
element (actual vesting
as a % of max) 25% 69.5% 0% N/A N/A N/A 79.7%
2
50% 100% 90% 91.9%4
1. Ruby McGregor-Smith stepped down as Chief Executive Officer on 12 December 2016. Phil Bentley joined the Board on 1 November 2016 and assumed the position of Chief
Executive Officer on 12 December 2016. The figures above include Phil Bentley’s remuneration from 1 November 2016.
2. This figure includes two LTIP awards that vested based on performance to 31 March 2020 at 100% and 53% respectively.
3. The single remuneration figure for FY23 has been adjusted from the figure published in the FY23 remuneration table to reflect the actual valuation of Phil Bentley’s 2020 LTIP award
based on the closing share price on the date of vesting, being 98.3p.
4. This figure includes the one-off EDP award and the LTIP award that vested based on performance to 31 March 2024 at 92.5% and 90.2% respectively.
Directors’ remuneration report
140
Mitie Group plc
Annual Report and Accounts 2024
Annual Report on Remuneration
continued
Share ownership (subject to audit)
Number of shares
owned as at
31 March 2024
1
Value of
target holding
Target
shareholding
2
Percentage of
salary held as at
31 March 2024
Percentage of target
achieved as at
31 March 2024
Compliance with
share ownership
guidelines
Phil Bentley 13,221,419 £1,800,000 2,224,969 1,188% 594% Achieved
Simon Kirkpatrick 537,392 £800,000 988,875 109% 54% Not achieved
but compliant
3
1. Includes shares owned by connected persons.
2. Target shareholding has been calculated using the average closing share price for the five business days prior to the end of FY23 (80.9p).
3. Simon Kirkpatrick was appointed to the Board on 1 April 2021.
Directors’ outstanding share interests (subject to audit)
The following tables (“Directors’ interests granted under the share schemes” and “Director’s share ownership”) provide the outstanding share interests
for the Executive Directors:
Directors’ interests granted under the share schemes
Year of grant
Options
outstanding as
at 31 March
2023
10
Granted
in year
Lapsed
in year
Exercised
in year
Options
outstanding
as at
31 March
2024
11
Exercise
price
Earliest
normal
exercise
date
Phil Bentley Aug 2018 LTIP
1
1,141,535 – – (1,141, 535) – Nil-cost Aug 2021
8
June 2019 LTIP
2
2,275,608 – – – 2,275,608 Nil-cost June 2022
8
Aug 2020 LTIP
3
5,278,592 – (527,860) – 4,750,732 Nil-cost Aug 2023
8
Sep 2021 LTIP
4
2,975,206 – – – 2,975,206 Nil-cost Sep 2024
8
July 2021 EDP
5
9,520,661 – – – 9,520,661 Nil-cost July 2024
8
June 2021 Deferred Bonus Plan (DBP)
13
769,514 – – (769,514) – Nil-cost June 2023
Nov 2021 Save As You Earn (SAYE) 35,714 – – – 35,714 50.40p Feb 2025
June 2022 LTIP
6
3,266,787 – – – 3,266,787 Nil-cost June 2025
8
June 2022 DBP
12
1,105,008 – – – 1,105,008 Nil-cost June 2024
June 2023 LTIP
7
– 2,224,969 – – 2,224,969 Nil-cost June 2026
8
June 2023 DBP
13
– 440,220 – – 440,220 Nil-cost June 2025
Simon Kirkpatrick Aug 2020 LTIP
3
322,580 – (32,258) (290,322) – Nil-cost Aug 2023
Sep 2021 LTIP
4
867,768 – – – 867,768 Nil-cost Sep 2024
8
July 2021 EDP
5
1,50 4,132 – – – 1,504,132 Nil-cost July 2024
8
Sep 2020 SAYE 46,187 – – – 46,187 27.28p Dec 2023
June 2022 LTIP
6
1,029,038 – – – 1,029,038 Nil-cost June 2025
8
June 2022 DBP
12
349,151 – – – 349,151 Nil-cost June 2024
June 2023 LTIP
7
– 865,265 – – 865,265 Nil-cost June 2026
8
June 2023 DBP
13
– 155,386 – – 155,386 Nil-cost June 2025
1. The performance criteria applicable to the 2018 LTIP awards were disclosed on page 110 of the FY21 remuneration report.
2. The performance criteria applicable to the 2019 LTIP awards were disclosed on page 125 of the FY22 remuneration report.
3. The performance criteria applicable to the 2020 LTIP awards were disclosed on pages 108 and 109 of the FY21 remuneration report.
4. The performance criteria applicable to the 2021 LTIP awards were disclosed on page 123 of the FY22 remuneration report.
5. The performance criteria applicable to the 2021 EDP awards were disclosed on page 124 of the FY22 remuneration report.
6. The performance criteria applicable to the 2022 LTIP awards were disclosed on page 124 of the FY23 remuneration report.
7. The performance criteria applicable to the 2023 LTIP awards are disclosed on page 135 of this FY24 remuneration report.
8. Awards are subject to an additional two-year holding period.
9. For all awards prior to August 2020, the number of options has been adjusted for the bonus element of the 2020 Rights Issue (x1.93426825).
10. The closing market price of the Company’s shares as at 31 March 2024 was 105p. The highest and lowest closing market prices during FY24 were 107.2p and 78.8p respectively.
11. The Deferred Bonus Plan award on 17 June 2021 represents the deferral of 50% of the bonus awarded for FY21, with the number of shares based on the closing middle market price
of 73.5p for the day before the date of grant.
12. The Deferred Bonus Plan award on 16 June 2022 represents the deferral of 50% of the bonus awarded for FY22, with the number of shares based on the lowest closing middle
market price for the five trading days before the date of grant (61.9p).
13. The Deferred Bonus Plan award on 16 June 2023 represents the deferral of 50% of the bonus awarded for FY23, with the number of shares based on the lowest closing middle
market price for the five trading days before the date of grant (95.2p).
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Annual Report and Accounts 2024
Strategic report Governance Financial statements
Directors’ share ownership
Number of
ordinary shares
beneficially
owned as at
31 March 2024
(or date of
cessation if
earlier)
1
Number of
ordinary shares
beneficially
owned as at
31 March 2023
(or date of
cessation if
earlier)
Executive Directors
Phil Bentley 13,221,419 10,930,500
Simon Kirkpatrick 537,392 383,932
Non-Executive Directors
Derek Mapp 653,189 616,935
Jennifer Duvalier 95,665 93,308
Penny James
2
0 –
Chet Patel 72,083 15,818
Mary Reilly 117, 039 107,948
Salma Shah 14,738 5,648
Roger Yates 160,000 160,000
1. The number of shares beneficially owned since 31 March 2024 has changed due to planned purchases that took place on 2 April 2024 for Non-Executive Directors. The revised figures
are as follows: Derek Mapp – 662,342 shares, Mary Reilly – 119,003 shares, and Salma Shah – 17,340 shares. In addition, Simon Kirkpatrick exercised his 2020 SAYE share options on
15April 2024 increasing his shareholding to 583,579 shares and Phil Bentley made two SIP transactions, one on 16 April 2024 where an additional 189 shares were acquired and one
on 14 May 2024 where 187 shares were acquired.
2. Penny James joined the Board on 1 February 2024.
There have been no changes, other than those in Note 1 above, between 1 April 2024 and 4 June 2024, the last practicable date prior to the date of
this report.
Share dilution
The Company manages dilution rates within the standard guidelines of 10% of issued ordinary share capital in respect of all employee schemes and 5% in
respect of discretionary schemes. In calculating compliance with these guidelines, the Company allocates available headroom on a 10-year flat-line basis,
making adjustments for projected lapse rates and projected increases in issued share capital.
LTIP, EDP and deferred bonus awards are satisfied through the market purchase of shares held by the Mitie Group plc Employee Benefit Trust. The
potential dilution of the Company’s issued share capital is set out below in respect of all awards granted in the last 10 years under the Company’s
equity-based incentive schemes which are being satisfied through the allotment of new shares or treasury shares.
Share dilution at 31 March 2024 Dilution
All share plans (maximum 10%) 6.0%
Discretionary share plans (maximum 5%) 0.5%
Directors’ remuneration report
142
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Annual Report and Accounts 2024
Shareholder voting
Mitie remains committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. Where there are substantial votes against
resolutions in relation to Directors’ remuneration, the Group seeks to understand the reasons for any such vote, and will detail here any actions in
response to it.
A resolution to approve the Directors’ remuneration policy as set out in the Annual Report and Accounts 2021 was passed at the Company’s 2021 AGM.
At the Company’s 2023 AGM, a resolution was passed to approve the 2023 Directors’ remuneration report. The results of the votes on these resolutions
were as follows:
Number of votes Votes in favour Votes against Withheld1
2021 Directors’ remuneration policy – 2021 AGM 835.7m 356.9m 1.4m
70.1% 29.9%
2023 Directors’ remuneration report – 2023 AGM 1,005.5m 19.6m 0.0m
98.09% 1.91%
1. Votes withheld are not counted in the calculation of the proportion of votes for or against a resolution.
The Board notes that, although the resolution to approve the Directors’ remuneration policy was passed by a majority of shareholders, a significant
minority of shareholders voted against the resolution. The Company undertook extensive consultation with major shareholders prior to the 2021 AGM
regarding remuneration matters and some changes were made to the final EDP to reflect shareholder feedback. The Board has a clear understanding of
the reasons why a minority of shareholders were not supportive of the EDP.
Remuneration Committee and its advisors
The Remuneration Committee seeks and considers advice from independent remuneration advisors where appropriate.
Deloitte LLP have acted as independent remuneration advisors to Mitie since September 2017. The advisors attended Committee meetings and provided
advice and analysis of executive remuneration. During their tenure, the advisors have provided no other services to the Company (save in relation to
services connected to executive remuneration and share plans) and have also complied with the Code of Conduct for Remuneration Consultants. The
advisors’ total cost of advice to the Committee for the year was £57,600 (such fees being charged in accordance with their standard terms of business).
The Committee specifically considered the position of the advisors and was satisfied that the advice the Committee received from them was objective and
independent, given that they provided no other services to the Company.
Annual Report on Remuneration
continued
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Strategic report Governance Financial statements
Decision-making process and changes to the policy
The following tables and accompanying notes in this section of the report set out the remuneration policy for Executive Directors and Non-Executive
Directors. The policy is intended to apply, subject to approval by shareholders, for three years from the 2024 AGM.
Following a considered decision-making process, changes have been made to the policy approved by shareholders at the 2021 AGM, as detailed in the
Statement from the Remuneration Committee Chair on pages 126 to 128. These include the increase in maximum annual bonus opportunity allowable
under the new policy to 200% of salary for all Executive Directors, and (for 2024 only) an LTIP award of 600% for the Chief Executive, Phil Bentley.
As part of its review, the Committee consulted with Mitie’s major shareholders and took into account their views when considering changes to the policy.
In addition, the Committee considered the input of its independent advisors (Deloitte LLP) and the Mitie Group Executive (MGX) (while ensuring conflicts
of interest were appropriately mitigated).
The policy
The key elements of the policy, to be approved at the 2024 AGM, are set out below.
Purpose and link to strategy Operation Opportunity Performance metrics
Base salary
Set at levels to attract and retain
individuals of the calibre required
to drive the vision and direction
of Mitie.
Salaries are generally reviewed
annually, effective from 1 April.
The review may be influenced by:
• The individual’s role, experience
and performance;
• Business performance and the
wider market and economic
conditions;
• The range of increases across
the Group; and
• An external comparator group
comprising sector comparators
and size adjusted comparator
organisations.
Base salary increases will normally
be in line with the average increase
for salaried non-contract UK
employees whose salaries Mitie
determines, although on occasion
other specific circumstances such
as changes of responsibilities,
progression in role, experience or
a significant increase in the scale of
the role and/or size, value and/or
complexity of the Group may also
be taken into consideration.
N/A
Benefits
To aid retention and be competitive
within the marketplace.
The Group provides a range of
benefits which may include a
company car/car allowance, private
fuel, private health insurance, life
assurance and annual leave.
Benefits are reviewed periodically
against market and new benefits
may be added and/or amended as
required to support the attraction
and retention of key talent.
Additional benefits may be awarded
in certain recruitment circumstances
which may include relocation
expenses and housing allowance.
Other benefits may be offered if
considered appropriate and
reasonable by the Committee.
Benefits are set at a level which the
Committee considers:
• Is appropriately positioned against
comparable roles in companies of
a similar size and complexity in the
relevant market; and
• Provides a sufficient level of
benefit based on the role
and individual circumstances
(e.g. relocation).
The Committee retains discretion to
approve a higher cost than currently
incurred where factors outside the
Company’s control have changed
materially (e.g. medical inflation)
or in exceptional circumstances
(e.g. relocation).
N/A
All Employee Share Schemes
To provide opportunities for the
Directors to voluntarily invest in
the Company on the same terms
as other employees.
Executive Directors are eligible to
participate in any all-employee
share plan operated by the
Company, in line with prevailing
HMRC guidelines (where relevant),
on a basis consistent with other
eligible employees.
N/A N/A
Pension
To aid retention and provide
competitive retirement benefits.
Executive Directors are eligible
to participate in the defined
contribution pension scheme or
to receive a cash allowance in lieu
of a pension contribution.
The maximum pension contribution
or cash allowance for any incumbent
or newly appointed Executive
Director will be aligned with the rate
available to the wider workforce.
N/A
Directors’ remuneration policy report
Directors’ remuneration report
144
Mitie Group plc
Annual Report and Accounts 2024
Directors’ remuneration policy report
continued
Purpose and link to strategy Operation Opportunity Performance metrics
Annual Bonus Plan (ABP)
To incentivise and recognise
execution of the Company’s
strategy on an annual basis.
Rewards the achievement of annual
financial and strategic goals.
Deferral provides alignment with
shareholder interests.
Measures and targets are set
annually and payout levels are
determined by the Committee
after the year end based on
performance against those targets.
The Committee may, in exceptional
circumstances, amend the bonus
payout should this not, in the
view of the Committee, reflect
overall business performance or
individual contribution.
50% of the bonus is normally
deferred into shares which vest
after a minimum of two years
(subject to continued employment).
Dividend equivalents are paid in cash
on deferred shares which vest.
Malus and clawback provisions apply
as detailed on page 145.
Maximum bonus opportunity is
200% of salary for any Executive
Director.
Bonuses are based on stretching
financial and strategic objectives
assessed by the Committee at the
end of the year, with the underlying
aim of encouraging and rewarding
the generation of sustainable returns
to shareholders.
The Committee has discretion to
determine the appropriate weightings
each year depending on business
priorities. The financial measures will
represent the majority of the bonus,
with any strategic objectives
representing the balance.
These elements are measured
and calculated independently of
each other.
For the financial element, no more
than 25% of maximum is normally
payable for threshold performance.
Long Term Incentive Plan (LTIP)
To motivate and incentivise
delivery of sustained performance
and provide alignment with
shareholder interests.
Annual awards (in the form of
nil-cost options, conditional share
awards or cash settlements) are
made, with vesting dependent upon
the achievement of performance
conditions over three years.
Award levels and the framework for
determining vesting are reviewed
annually to ensure they continue to
support the Group’s strategy.
The Committee has discretion to
decide whether, and to what extent,
targets have been met, and, if an
exceptional event occurs that causes
the Committee to consider that the
targets are no longer appropriate,
the Committee may adjust them.
Awards will normally be subject to
an additional holding period of at
least two years.
Dividend equivalents may be paid
on shares that vest.
Malus and clawback provisions apply
as detailed on page 145.
For FY25 only:
• The maximum level of the
FY25 LTIP award for the Chief
Executive, Phil Bentley, will be
600% of salary; and
• Awards may be made up to
a maximum level of 200%
of base salary for any other
Executive Director.
For the remaining duration of the
policy (FY26 to FY27):
• The Chief Executive, Phil Bentley,
will not be granted an LTIP award
in FY26 or FY27; and
• Annual awards may be made
up to a maximum level of
200% of base salary for any
other Executive Director.
Performance over at least three
financial years is measured against
stretching objectives assessed by
the Committee at the end of the
performance period, with the
underlying aim of encouraging
and rewarding the generation of
sustainable returns to shareholders.
The Committee has discretion
to determine the appropriate
weightings each year depending
on business priorities.
Vesting under the LTIP depends on
the achievement of performance
conditions. Awards attributable to
each performance condition vest at
25% on achievement of the minimum
performance threshold, rising to
100% for achievement of a defined
upper performance level. These
elements are measured and calculated
independently of each other.
Share ownership
To ensure alignment of interests
between Executive Directors
and shareholders.
Executive Directors are required,
over time, to build and maintain
a minimum shareholding in
the Company worth 200% of
base salary.
Executive Directors are required
to retain half of the post-tax shares
vesting under the LTIP and other
share schemes until the guideline
is met.
Executive Directors are normally
expected to maintain a shareholding
for two years following stepping
down from the Board, as described
on page 130.
N/A N/A
145
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Purpose and link to strategy Operation Opportunity Performance metrics
Chairman and Non-Executive
Director fees
To attract and retain high-calibre
individuals.
Non-Executive Directors do not
participate in any incentive schemes.
Fees are normally reviewed every
three years.
The fee structure is as follows:
• The Chairman is paid an
all-inclusive single fee for all Board
responsibilities;
• The Non-Executive Directors are
paid a basic fee, plus additional
fees for further responsibilities,
such as the chairing of Board
Committees;
• Fees are currently paid in cash,
but the Company may choose
to provide some of the fees in
shares; and
• Benefits, including expenses,
can be provided if considered
necessary on a case-by-case basis.
Fees are set at a level which:
• Reflects the commitment and
contribution that is expected
from the Chairman and the
Non-Executive Directors; and
• Is appropriately positioned against
comparator roles in companies of
a similar size and complexity in the
relevant market.
Actual fees are disclosed in the
Directors’ remuneration report
for the relevant financial year.
Aggregate fees/value of benefits are
capped at the amount set out in the
Company’s Articles of Association.
N/A
Malus and clawback provisions
The malus and clawback provisions under the ABP, the LTIP and the EDP may be operated if it comes to light within two years from vesting that
information used to determine performance was materially inaccurate and resulted in a material overstatement of an award or in the event of any
act/omission by an individual that would give grounds for summary dismissal (with no time limit). The period of operation of these malus and clawback
provisions has been chosen to align with the Company’s long-term business strategy and performance goals, while also ensuring that any potential
misconduct or poor performance can be appropriately addressed and remedied within a reasonable timeframe. For the avoidance of doubt, the
clawback provisions apply to any cash payments made and/or any shares into which bonus is deferred in relation to the ABP and LTIP awards made
after the 2024 AGM.
Clawback provisions are such that:
• Cash payment in relation to the ABP can be reclaimed for a period of up to two years after payment; and
• Vested share awards under the deferred element of the ABP, the LTIP and the EDP can be reclaimed for a period of up to two years after vesting
(effected through the operation of malus provisions during the holding period).
Malus and clawback will apply in four main circumstances:
• Misstatement of results or an error in the calculation of performance;
• Misconduct;
• Reputational damage; or
• Failure of risk management or control.
Discretions retained in operating the incentive plans
The Committee will operate the ABP and LTIP according to their respective rules and the above policy table. The Committee retains discretion, consistent
with market practice, in a number of respects, in relation to the operation and administration of these plans.
These discretions include, but are not limited to, the following:
• The selection of participants;
• The timing of grant of an award/bonus opportunity;
• The size of an award/bonus opportunity subject to the maximum limits set out in the policy table;
• The determination of performance against targets and resultant vesting/bonus payouts;
• Discretion required when dealing with a change of control or restructuring of the Group;
• Determination of the treatment of leavers based on the rules of the plan and the appropriate treatment chosen;
• Adjustments required in certain circumstances (e.g. rights issues, corporate restructuring events and special dividends); and
• The annual review of performance measures, weightings and targets.
In relation to the ABP and the LTIP, the Committee retains the ability to adjust the targets and/or set different measures if events occur (e.g. material
acquisition and/or divestment of a Group business) which cause it to determine that the conditions are no longer appropriate and the amendment is
required so that the conditions achieve their original purpose and are not materially less difficult to satisfy. Any use of these discretions would, where
relevant, be explained in the Directors’ remuneration report and may, where appropriate and practicable, be the subject of consultation with the
Company’s major shareholders.
Directors’ remuneration report
146
Mitie Group plc
Annual Report and Accounts 2024
Directors’ remuneration policy report
continued
Legacy commitments
The Committee reserves the right to make any remuneration payments and payments for loss of office (including exercising any discretions available to it
in connection with such payments) notwithstanding that they are not in line with the policy set out in this report where the terms of the payment were
agreed: (i) before the date Mitie’s first shareholder-approved Directors’ remuneration policy came into effect; (ii) before the policy set out in this report
comes into effect, provided that the terms of the payment were consistent with the shareholder-approved Directors’ remuneration policy in force at the
time they were agreed or were otherwise approved by shareholders; or (iii) at a time when the relevant individual was not a Director (or other person
to whom this policy applies) and, in the opinion of the Committee, the payment was not in consideration for the individual becoming a Director (or other
person to whom this policy applies). For these purposes, ‘payments’ includes the Committee satisfying awards of variable remuneration and, in relation to
an award over shares, the terms of the payment are ‘agreed’ at the time the award is granted. This policy applies equally to any individual who is required to
be treated as a Director under the applicable regulations.
Remuneration scenarios for Executive Directors
Under the Company’s policy, a significant proportion of remuneration is linked to performance. The charts below show how much the Executive
Directors could earn under Mitie’s remuneration policy (as detailed above) under different performance scenarios. The following assumptions have been
made:
• minimum performance (below threshold) – fixed pay only, comprising base salary effective as at 1 April 2024 and the full year effect of ongoing benefits
and cash allowances in lieu of pension contributions;
• on-target performance – fixed pay plus an on-target bonus of 50% of the maximum bonus and a threshold vesting of 25% of the maximum possible
LTIP award vesting;
• maximum performance – fixed pay plus maximum bonus for FY25 of 200% of base salary for the Chief Executive and 175% for the Chief Financial
Officer (structured 70% financial targets and 30% strategic/other) and maximum LTIP awards of 600% of base salary for the Chief Executive and 175%
for the Chief Financial Officer; and
• maximum performance with share price appreciation – as per maximum performance with illustrative share price appreciation of 50% on the
LTIP element.
The scenarios do not include dividend assumptions.
Phil Bentley Simon Kirkpatrick
0
Fixed
Minimum
On-target
Maximum
Maximum with
share price
appreciation
£’000
2,000
972
972 900 1,350
972 1,800 5,400
972 1,800 8,100
4,000 6,000 8,000 10,000 12,000 0
Minimum
On-target
Maximum
Maximum with
share price
appreciation
£’000 500
428
428 361 180
428 721 721
428 721 1,082
1,000 1,500 2,000 2,500
Bonus LTIP
Composition of package (%) Fixed Bonus LTIP
Minimum 100% – –
On-target 30% 28% 42%
Maximum 12% 22% 66%
Maximum with share
price appreciation 9% 17% 74%
Value of package (£’000) Fixed Bonus LT IP Total
Minimum 972 – – 972
On-target 972 900 1,350 3,222
Maximum 972 1,800 5,400 8,172
Maximum with share price
appreciation 972 1,800 8,100 10,872
Composition of package (%) Fixed Bonus LTIP
Minimum 100% – –
On-target 44% 37% 19%
Maximum 22% 39% 39%
Maximum with share
price appreciation 19% 32% 49%
Value of package (£’000) Fixed Bonus LT IP Total
Minimum 428 – – 428
On-target 428 361 180 969
Maximum 428 721 721 1,870
Maximum with share price
appreciation 428 721 1,082 2 ,231
147
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Executive Directors’ service contracts
All Executive Directors are appointed on rolling service contracts but are subject to annual re-election at the AGM in accordance with the Code.
Under the service contracts, the Company is required to give 12 months’ notice of termination of employment. Phil Bentley and Simon Kirkpatrick are
required to give 12 months’ notice.
For Executive Directors, if notice is served by either party, the Executive Director can continue to receive base salary, benefits and pension cash allowance
for the duration of their notice period, during which time the Company may require the individual to continue to fulfil their current duties or may assign a
period of garden leave.
The Company has the right to make a payment in lieu of notice equivalent in value up to 12 months’ base salary payable either in monthly instalments or as
a lump sum. The Company may also pay for any benefits, pension contributions or cash allowances for which the individual would have been eligible until
the date of cessation had full notice been given.
The Executive Directors’ service contracts are available for inspection at Mitie’s registered office, Mitie’s head office and at the 2024 AGM. There are no
other provisions for compensation on termination of employment set out within the contracts of the Executive Directors.
For any newly appointed Executive Directors, notice periods will not exceed 12 months, save in exceptional circumstances; should a notice period longer
than 12 months be necessary, the Committee would expect this to reduce to 12 months over time.
The effective dates of the service contracts of the current Executive Directors are set out below:
Date of agreement
Phil Bentley 9 October 2016
Simon Kirkpatrick 1 April 2021
External appointments
The Board recognises that the appointment of Executive Directors to non-executive positions at other companies can be beneficial for both the individual
director and the Group through the broadening of their experience and knowledge, and individuals are entitled to retain any fees earned in respect of
these appointments.
Non-Executive Directors’ remuneration and appointment terms
The Chairman and Non-Executive Directors receive an annual fee which is paid in monthly instalments. The Chairman’s fee is set by the Remuneration
Committee and the fees for the Non-Executive Directors are approved by the Board, on the recommendation of the Chairman and the Chief Executive.
The Non-Executive Directors are paid a basic fee with an additional fee for the Senior Independent Director, for chairing a Committee, and for being the
Designated Non-Executive Director responsible for oversight of the Board’s engagement with the workforce, together with expenses incurred in carrying
out their duties on behalf of the Company. Non-Executive Directors are not eligible to participate in any of the Company’s share schemes, the ABP or the
pension scheme. They do not receive any ancillary benefits.
The terms of appointment of the Non-Executive Directors are available for inspection at Mitie’s registered office, Mitie’s head office and at the 2024 AGM.
The Non-Executive Directors are engaged for an initial term of three years which is terminable on three months’ notice and thereafter on a rolling term.
They are also subject to annual re-election at the AGM in accordance with the Code.
Non-Executive Directors’ engagement terms
The engagement terms of the current Non-Executive Directors are set out below:
Additional duties Date of commencement Initial contract term Notice period
Derek Mapp Chairman; Chair of the Nomination Committee 9 May 2017 3 years 3 months
Roger Yates
Senior Independent Director 1 March 2018 3 years
3 months
Jennifer Duvalier Chair of the Remuneration Committee 26 July 2017 3 years
3 months
Mary Reilly Chair of the Audit Committee 1 September 2017 3 years 3 months
Chet Patel 1 April 2022 3 years 3 months
Salma Shah Chair of the ESG Committee 1 April 2022 3 years 3 months
Penny James 1 February 2024 3 years 3 months
How the executive pay policy differs from that for other Mitie employees
The remuneration policy for the Executive Directors is significantly more heavily weighted towards variable pay than for other employees, ensuring that
the greater part of their pay is conditional on the successful delivery of the Group’s business strategy. This helps create a clear link between the value
created for shareholders and the remuneration received by the Directors. Awards under the LTIP are limited to those in the most senior leadership roles.
For employees below this level, variable pay may consist of share-based awards and annual bonus (both of which will be based on role). UK-based
employees have the opportunity to participate in the SAYE and SIP share schemes and become shareholders in Mitie. Since summer 2021, the offering of
the SIP share scheme has been enhanced to provide employees with a greater incentive to invest in Mitie shares, and free shares have been awarded to
UK-based employees. Mitie offers a cash-based alternative for free shares to employees in other countries.
Directors’ remuneration report
148
Mitie Group plc
Annual Report and Accounts 2024
Directors’ remuneration policy report
continued
How employment conditions elsewhere in the Group are taken into account
The Committee is responsible for overseeing the remuneration policy for the Group as a whole and is mindful of pay and employment conditions in the
wider workforce within the Group and externally when determining executive remuneration. When considering base salary increases, benefits and
pension provision, the Committee reviews overall levels and increases offered to employees across the Group. The Committee also reviews information
with regard to share awards made to other senior management of the Group, noting that: (i) all UK-based employees can participate in the SAYE and SIP
share schemes; and (ii) participation in the LTIP is limited to a selection of senior executives.
How shareholder views are taken into account
The Committee is committed to a continuing discussion with major shareholders and obtains their views when any significant changes to remuneration
arrangements are being proposed. The Committee has undertaken an extensive two-stage consultation process to discuss the proposed changes to the
remuneration policy, including the changes to Phil Bentley’s incentive arrangements. Initially the Committee discussed the proposals with the Company’s
largest shareholders and, after refining them taking into account the feedback from this initial consultation, returned to a larger group of shareholders to
obtain a wider range of views. The Committee was pleased that shareholders were broadly supportive of the proposals.
Policy on loss of office
The rules of the ABP and LTIP set out what happens to awards if a participant ceases to be an employee or Director of Mitie before the end of a vesting
period, with the relevant service contracts also determining the general treatment of Executive Directors on cessation.
Regarding the ABP, in the event that the participant ceases to be an eligible employee before the date the bonus is paid or is subject to notice of
termination of employment on the bonus date, all entitlement to the bonus in respect of that financial year would be forfeited, unless the Committee in its
absolute discretion determines otherwise. Deferred shares would vest in full on the date of cessation for ‘good leaver’ reasons, but otherwise the shares
lapse on cessation of employment.
Generally, any outstanding LTIP awards would lapse on cessation of employment, except in certain circumstances. Specifically, if the participant ceases to
be an employee or Director of Mitie as a result of death, injury, disability, retirement, the sale of the business in which the individual works or any other
reason at the discretion of the Committee, then they would be treated as a ‘good leaver’ under the LTIP rules, in which case awards subsist subject to any
performance conditions and any applicable holding period and, if the Committee determines, a pro rata reduction. A good leaver has a 12-month period
following the cessation of employment, or the end of the holding period if applicable, in which to exercise their vested awards.
In addition, and consistent with market practice, in the event of termination of an Executive Director’s employment, the Company may settle any claims
that may arise and pay a contribution towards the individual’s legal fees and fees for outplacement services as part of a negotiated settlement. Any such
fees would be disclosed as part of the detail of termination arrangements. Should it become necessary to make additional payments in respect of such
professional fees that were not ascertained at the time of reporting, the Company may do so up to a level of a further £10,000. For the avoidance of
doubt, the policy does not include an explicit cap on the cost of termination payments.
Policy on the recruitment of a new Director
For a new hire, the Committee will typically align the Executive Director’s remuneration package to the above remuneration policy. However, where
appropriate, the Committee retains discretion to make decisions outside of policy to facilitate hiring key talent as set out below.
Base salary will be set based on the individual’s role and experience, with consideration given to internal equity.
Benefits will be provided in line with those offered to other employees at a similar level, with relocation expenses/arrangements provided if necessary.
Individuals will be given a choice of either participation in a defined contribution pension scheme or a cash allowance in lieu of pension, with a maximum
pension contribution or cash allowance set in line with the rate available to the wider workforce.
The maximum level of variable pay that may be offered on an ongoing basis and the structure of remuneration will be in accordance with the approved
policy detailed above (i.e. for any Executive Director an aggregate maximum of 400% of base salary – 200% annual bonus and up to 200% for LTIP
awards). This limit does not include the value of buyout arrangements.
The above policy applies to both internal promotions to the Board and external hires. For external hires, if it is necessary to buy out existing incentive pay
or benefit arrangements (which would be forfeited on leaving their previous employer), this would be provided taking into consideration relevant factors
such as the commercial value of the amount forfeited from the previous employer, the performance conditions (i.e. the likelihood of achieving those) and
timing (i.e. where the award is in the vesting cycle). Buyout awards, if used, would be granted under Mitie’s existing share plans, although, if necessary,
additional buyout awards may be made on more bespoke terms regarding matters such as vesting and performance conditions as permitted under Listing
Rule 9.4.2.
In the case of an internal promotion to the Board, any outstanding variable pay awarded in relation to the individual’s previous role will be allowed to pay
out according to its terms of grant.
On appointment of a new Chairman or Non-Executive Director, his or her fee will be set taking into account the existing fee structure.
Mitigation of conflicts of interest
The CEO and other Executive Directors are not present at the relevant sections of the Committee when matters relating directly to their own
remuneration are determined. This is also the case for other executives attending Committee meetings.
149
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
The Directors present their Annual Report, together with the audited financial statements of the
Company and the Group, for the year ended 31 March 2024 as required by the Companies Act 2006.
The corporate governance statement required under the FCA’s Disclosure Guidance and
Transparency Rule 7.2 requires a corporate governance statement in the Directors’ report to
include certain information. You can find information that fulfils these requirements in this Directors’
report, the corporate governance report, the Board Committee reports and the Directors’
remuneration report.
The Directors’ report required under the Companies Act 2006 comprises the corporate governance
statement on pages 91 to 113. The corporate governance statement fulfils the requirement under
Disclosure Guidance and Transparency Rules of the Financial Conduct Authority (DTR) 7.2.1. For the
purposes of DTR 4.1.8R, the management report for the year ended 31 March 2024 comprises the
Strategic report and this Directors’ report.
Cross-references
Employee engagement Details of how Mitie encourages employee involvement can be found in
the Strategic report on pages 56 to 60.
Equality, diversity and
inclusion (including
employment of
disabled persons)
Details of Mitie’s commitment to equality, diversity and inclusion,
including in relation to the employment of disabled persons, can be
found on pages 56 to 60.
Business relationships Details of how the Directors have had regard to the need to foster
Mitie’s business relationships with suppliers, customers and others,
and the effect of this on the principal decisions taken by the Company
during the year, can be found in the Strategic report on pages 42 to 44.
Important events
since FY 2023
Details of important events affecting the Group which have taken place
since 31 March 2023, can be found on pages 26 to 31.
Greenhouse gas emissions,
energy consumption
and efficiency
Details of greenhouse gas emissions, energy consumption and efficiency
can be found in the Strategic report on pages 61 to 75.
Environmental data Environmental data can be found in the Strategic report on pages70
to 75.
The information required to be disclosed by Listing Rule 9.8.4 can be found in the following locations:
Details of any long-term incentive schemes Directors’ remuneration report on pages 126
to 148 and Note 30 to the consolidated
financial statements.
Details of any arrangements under which
a Director has waived or agreed to waive
any emoluments or future emoluments
Directors’ remuneration report on pages
126 to 148.
Shareholder waiver of dividends and
future dividends
Directors’ report on page 149.
No shareholder is considered a controlling shareholder as defined in the Financial Conduct
Authority Handbook.
The remaining disclosures required by Listing Rule 9.8.4 are not applicable to the Company.
Principal Group activities
The Company is the holding company of the
Group and its principal activity is to provide
management services to the Group. The
Group’s activities are focused on the provision
of strategic outsourcing services, further
details of which can be found on page 12 of
the Strategic report.
The Company does not have any branches
registered overseas, but certain subsidiaries
of the Company have registrations/branches
across the United Kingdom, Republic of Ireland,
Guernsey, Jersey, Italy, Isle of Man, Ascension
Island, Austria, Belgium, Cyprus, Czech Republic,
Denmark, Falkland Islands, Finland, France,
Germany, Ghana, Gibraltar, Hungary, Kenya,
Luxembourg, the Netherlands, Nigeria, Oman,
Poland, Saudi Arabia, Slovakia, Spain, Switzerland
and the United Arab Emirates. Details of the
Company’s subsidiaries are set out in Note 35
to the consolidated financial statements.
Given the nature of its activities, no material
research and development work is carried out
by the Group.
The Board’s view on the likely future
development of the Group is set out in the
Strategic report on pages 26 to 31.
Financial results
A detailed commentary on the operational and
financial results of the Group for the year is
contained within the Strategic report, including
the Finance review on pages 49 to 53.
The Group’s profit before tax for the year
ended 31 March 2024 was £156.3m (2023:
£105.5m).
Dividends
An interim dividend of 1.0p per Ordinary
Share (2023: 0.7p) with a total value of £12.9m
(2023: £9.4m) was paid to shareholders on
31January 2024.
The Directors recommend a final dividend of
3.0p per Ordinary Share (2023: 2.2p) with a
total value of £38.3m (2023: £28.7m) based
upon the number of shares in issue (excluding
treasury shares and shares held by the Employee
Benefit Trust) as at 4 June 2024. Subject to
approval at the 2024 AGM, the final dividend
will be paid on 5 August 2024 to shareholders
on the register as at close of business on
21 June 2024.
Total dividends per Ordinary Share for the year
ended 31 March 2024 will be 4.0p (2023: 2.9p).
As at 31 March 2024, the Company had
distributable reserves of £186.3m (2023:
£116 . 5 m) .
Mitie operates a Dividend Re-Investment Plan
(DRIP) which allows shareholders to use their
cash dividend to purchase additional Ordinary
Shares. Further details on the operation of the
DRIP and how to apply are available from Mitie’s
Registrar, Link Group.
The Trustees of the Company’s Employee
Benefit Trust agreed to waive dividends
payable on Ordinary Shares held by the Trust
in respect of the year ended 31 March 2024.
In accordance with Section 726 of the
Companies Act 2006, no dividends are paid
on Ordinary Shares held in treasury.
Directors
The names of all persons who served as
Directors of the Company at any time during
FY24 are set out on page 98. Full biographical
details of the current Directors, including
Committee membership and external
appointments, are set out on pages 93 to 95.
Director independence
The Board considered the independence of
all Non-Executive Directors during FY24
and determined that, as at 31 March 2024,
all Non-Executive Directors continued to
be independent in mind and judgement, and
free from any material relationship that could
interfere with their ability to discharge their
duties effectively.
Directors’ report
150
Mitie Group plc
Annual Report and Accounts 2024
Directors’ report
continued
Indemnification of Directors
and insurance
The Directors and the Company Secretary
benefit from an indemnity provision under the
Company’s Articles of Association (the Articles).
Additionally, all Directors and the Chief Legal
Officer & Company Secretary have been
granted a qualifying third-party indemnity
provision (as defined by Section 234 of the
Companies Act 2006) which has been in force
throughout FY24 and remains in force as at the
date of this report.
Certain employees who are directors of a
subsidiary of the Company have also been
granted a qualifying third-party indemnity
provision which has been in force throughout
FY24 and remains in force as at the date of
this report.
The Group maintains Directors’ and Officers’
liability insurance, which provides appropriate
cover for any legal action brought against the
Group’s directors and/or officers. The Group
also maintains Pension Trustees’ liability
insurance, which provides cover in respect
of legal action brought against the trustees of
Mitie’s pension schemes.
Share capital
The Group is financed through equity share
capital and debt instruments. Details of the
Company’s share capital are given in Note 27
to the consolidated financial statements.
Details of the Group’s debt instruments are set
out in Note 23 to the consolidated financial
statements. Throughout FY24, the Company’s
issued share capital was publicly listed on the
London Stock Exchange and it remains so as at
the date of this report.
Financial instruments
The Group’s financial instruments include bank
borrowing facilities, lease liabilities, overdrafts
and US private placement loan notes.
The principal objective of these instruments
is to raise funds for general corporate purposes
and to manage financial risk. Further details of
these instruments are given in Note 24 to the
consolidated financial statements.
The Company has a single class of shares divided
into ordinary shares of 2.5 pence each (Ordinary
Shares). The holders of Ordinary Shares are
entitled to one vote each per share at general
meetings and have no right to any fixed income.
In accordance with the Articles, holders of
Ordinary Shares are entitled to participate in
any dividends pro rata to their holding. The
Board may propose and pay interim dividends
and recommend a final dividend to shareholders
for approval at an AGM. A final dividend may
be declared by the shareholders at an AGM
by ordinary resolution, but such dividend
cannot exceed the amount recommended
by the Board.
Restrictions on the transfer of shares
The Company is not aware of any agreements
between holders of its securities which may
result in restrictions on the transfer of securities
or voting rights. No person has any special rights
of control over the Company’s share capital.
There are no specific restrictions on the size of
any shareholding or on the transfer of shares,
which are both governed by the provisions of
the Articles.
Under Mitie’s Rules on Share Dealing, persons
with access to certain confidential Company
information or inside information are required
to follow a clearance to deal procedure and may
be restricted from dealing in the Company’s
shares. Persons subject to these requirements
are notified individually and appropriately
informed of the rules.
Significant interests in the Company’s
share capital
As at 31 March 2024, insofar as it is known to
the Company by virtue of notifications made
pursuant to the Companies Act 2006 and/or
Chapter 5 of the Disclosure Guidance and
Transparency Rules or otherwise, the following
persons were, directly or indirectly, interested
(within the meaning of the Companies Act
2006) in 3% or more of the Company’s issued
share capital (being the threshold for notification
that applies to shareholders pursuant to
Chapter 5 of the Disclosure Guidance and
Transparency Rules):
Number of
Ordinary Shares % of voting rights
Silchester International Investors LLP 142,309,190 10.65%
Fidelity International Limited 109,622,185 8.21%
Alchemy Special Opportunities LLP 71,039,339 5.32%
JPMorgan Asset Management 70,198,880 5.26%
BlackRock Inc 69,920,280 5.23%
Oasis Management Company 67,110 , 5 7 7 5.02%
The Vanguard Group 63,717,659 4.77%
Fidelity Management & Research 62,773,375 4.70%
Apex Financial Services (Trust Company) Limited 47,721,982 3.57%
Heronbridge Investment Management 47,712,461 3.57%
Schroder Investment Management 41,805,795 3.13%
Changes that have been notified to the Company pursuant to Chapter 5 of the Disclosure Guidance and Transparency Rules between 31 March 2024 and
4 June 2024, the latest practicable date prior to the date of this report, are set out below.
Number of
Ordinary Shares % of voting rights
Silchester International Investors LLP 133,493,114 9.997%
Alchemy Special Opportunities LLP 31,039,339 2.33%
JPMorgan Asset Management 75,474,757 5.66%
Apex Financial Services (Trust Company) Limited 55,466,846 4.16%
Directors’ interests in the Company’s share capital are set out in the Directors’ remuneration report on page 141.
151
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
2024 Annual General Meeting
Mitie’s 2024 AGM will be held on 23 July 2024
at 11.30am at Level 12, The Shard, 32 London
Bridge Street, London SE1 9SG and will be
viewable via a webcast.
The Board recognises that the AGM is an
important event in the Company’s corporate
calendar, providing an opportunity to engage
with shareholders. Shareholders will be able to
attend the meeting in person to vote and ask
questions or view the meeting via a live webcast.
Shareholders can also ask questions via email to
investorrelations@mitie.com. Instructions on
how to register and join the webcast are set out
in the Notice of AGM.
The Board also encourages shareholders to
appoint the Chairman of the AGM as their
proxy and provide voting instructions in advance
of the meeting in accordance with the
instructions set out in the Notice of AGM.
Powers of the Company to issue or
buy back its own shares
At the AGM held on 25 July 2023, the
Company’s shareholders authorised:
• The Directors to allot Ordinary Shares
up to an aggregate nominal amount of
£3,388,970.68, equating to 10% of the issued
share capital of the Company (excluding
treasury shares) as at 6 June 2023
• The Company to make market purchases of
its own shares up to a total of 135,558,827
Ordinary Shares, equating to 10% of the
issued share capital of the Company
(excluding treasury shares) as at 6 June 2023
• These authorities will expire on the earlier
date of 30 September 2024 and the
conclusion of the 2024 AGM. A renewal of
these authorities will be put to shareholders
at the 2024 AGM. Further details are included
in the notes to the Notice of AGM
During FY24, the Company utilised the above
authorities to:
• Allot 545,661 new Ordinary Shares with an
aggregate nominal value of £13,641.53 in
connection with the exercise of options
by employees participating in the Mitie
Group plc 2011 SAYE scheme for aggregate
consideration of £177,810
• Undertake market purchases in relation to
the share buyback programme announced on
18 April 2023 of 40,293,871 Ordinary Shares
(representing 3.01% of the issued share capital
of the Company (including treasury shares) as
at 31 March 2024). The aggregate nominal
value of the shares purchased was £1,007,347
and the total aggregate amount paid was
£40,742,405 (excluding expenses). Of these
shares, 17,479,835 were transferred into
treasury and 22,814,036 were cancelled
During FY24, the Company utilised the
authorities granted at the AGM held on 26 July
2022 to:
• Allot 634,357 new Ordinary Shares with
an aggregate nominal value of £15,859 in
connection with the exercise of options by
employees participating in the Mitie Group plc
2011 SAYE scheme for aggregate
consideration of £360,326
• Undertake market purchases in relation to
the share buyback programme announced on
18 April 2023 of 18,310,305 Ordinary Shares
(representing 1.37% of the issued share capital
of the Company (including treasury shares)
as at 31 March 2024). The aggregate nominal
value of the shares purchased was £457,758
and the total aggregate amount paid was
£17,257,592 (excluding expenses). Of these
shares, 14,997,647 were transferred into
treasury and 3,312,658 were cancelled
During FY24, the Employee Benefit Trust
acquired 21.3m Ordinary Shares (including the
2.2m shares committed to during FY23) through
market purchases (2023: 47.9m shares) and
distributed 24.5m shares to satisfy awards under
Mitie Group plc’s Long Term Incentive Plan,
Deferred Bonus Plan, Conditional Share Plan
and to the SIP Trust.
The total number of Ordinary Shares held by
the Company in treasury as at 31 March 2024
was 5,125,595, representing 0.38% of the issued
share capital of the Company (2023: 2,353,
representing 0.0002% of the issued share capital
of the Company). During FY24, 27,354,240
shares were distributed from treasury in
connection with the exercise of options for
aggregate consideration of £7,473,652 by
employees participating in the Mitie Group plc
2011 SAYE scheme.
Exercisable awards under the Mitie Group plc
2011 Executive Share Option scheme were
underwater during FY24 and no awards
were exercised.
Articles of Association
Amendments to the Articles must be approved
by at least 75% of those voting in person or by
proxy at a general meeting of the Company.
The Articles are available at www.mitie.com/
investors/corporate-governance.
Significant agreements – change
of control
There are a number of agreements with
provisions that take effect, alter or terminate
upon a change of control of the Company
(including following a takeover bid), such as
bank facility agreements and other financial
arrangements and employee share scheme
rules. None of these are considered to be
significant in terms of their likely impact on the
normal course of business of the Group. The
Directors are not aware of any agreements
between the Company and its Directors or
employees that provide for compensation for
loss of office or employment that occurs solely
because of a change of control.
Disclosure of information to
the auditor
Each Director in office as at the date of this
Directors’ report confirms that:
• So far as he/she is aware, there is no relevant
audit information of which the Company’s
auditor is unaware
• He/she has taken all the steps that he/she
ought to have taken as a Director to make
himself/herself aware of any relevant
audit information and to establish that
the Company’s auditor is aware of
that information
This confirmation is given and should be
interpreted in accordance with Section 418
of the Companies Act 2006.
Post balance sheet events
Details of post balance sheet events can
be found in Note 34 to the consolidated
financial statements.
By order of the Board
Peter Dickinson
Chief Legal Officer & Company Secretary
5 June 2024
152
Mitie Group plc
Annual Report and Accounts 2024
The Directors are responsible for preparing
the Annual Report and financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to
prepare financial statements for each financial
year. Under that law, the Directors are required
to prepare the Group financial statements in
accordance with UK-adopted International
Accounting Standards and applicable law and
have elected to prepare the Company financial
statements in accordance with UK Accounting
Standards and applicable law, including
Financial Reporting Standard 101 Reduced
Disclosure Framework.
Under company law, the Directors must not
approve the financial statements unless they are
satisfied that these give a true and fair view of
the state of affairs of the Group and Company
and of the Group’s profit or loss for the period.
In preparing these financial statements, the
Directors are required to:
• Select suitable accounting policies and apply
them consistently
• Make judgements and accounting estimates
that are reasonable, relevant, reliable
and prudent
• For the Group financial statements, state
whether they have been prepared in
accordance with UK-adopted International
Accounting Standards, subject to any material
departures disclosed and explained in the
financial statements
• For the Company financial statements, state
whether applicable UK Accounting Standards
have been followed, subject to any material
departures disclosed and explained in the
financial statements
• Prepare the financial statements on a going
concern basis unless it is inappropriate to
presume that the Group or Company will
continue in business
• Prepare a Directors’ report, Strategic
report and Directors’ remuneration report
which comply with the requirements of the
Companies Act 2006
The Directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the Company’s transactions
and disclose with reasonable accuracy at any
time the financial position of the Company
and enable them to ensure that its financial
statements comply with the Companies Act
2006. They are also responsible for safeguarding
the assets of the Group and for taking
reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for ensuring that
the Annual Report and Accounts, taken as a
whole, is fair, balanced and understandable
and provides the information necessary for
shareholders to assess the Group’s position and
performance, business model and strategy.
Directors’ responsibilities pursuant
to DTR4.1.12
The Directors confirm that to the best of
their knowledge:
• The Group financial statements, prepared
in accordance with the applicable set of
accounting standards, give a true and fair
view of the assets, liabilities, financial position
and profit or loss of the Company and the
undertakings included in the consolidation
taken as a whole
• The management 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
Website publication
The Directors are responsible for ensuring that
the Annual Report and the financial statements
are made available on a website. Financial
statements are published on the Company’s
website in accordance with legislation in the UK
governing the preparation and dissemination
of financial statements, which may vary
from legislation in other jurisdictions. The
maintenance and integrity of the Company’s
website is the responsibility of the Directors.
The Directors’ responsibility also extends to
the ongoing integrity of the financial statements
contained therein.
By order of the Board
Phil Bentley
Chief Executive
5 June 2024
Simon Kirkpatrick
Chief Financial Officer
5 June 2024
Statement of Directors’ responsibilities
in respect of the Annual Report, remuneration report and financial statements
154 Independent auditor’s report to the members of
Mitie Group plc
161 Consolidated incomestatement
162 Consolidated statement of comprehensive income
163 Consolidated statement of financial position
165 Consolidated statement of changes in equity
166 Consolidated statement of cash flows
168 Notes to the consolidated financial statements
222 Company statement of financial position
223 Company statement of changes in equity
224 Notes to the Company financial statements
228 Appendix – Alternative Performance Measures
Financial statements
Strategic report Governance Financial statements
153
Mitie Group plc
Annual Report and Accounts 2024
154
Mitie Group plc
Annual Report and Accounts 2024
Independent auditor’s report to the members of
Mitie Group plc
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair
view of the state of the Group’s and of the
Parent Company’s affairs as at 31 March 2024
and of the Group’s profit for the year then
ended;
• the Group financial statements have been
properly prepared in accordance with
UK-adopted international accounting
standards;
• the Parent Company financial statements
have been properly prepared in accordance
with United Kingdom Generally Accepted
Accounting Practice; and
• the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of
Mitie Group plc (the ‘Parent Company’) and
its subsidiaries (the ‘Group’) for the year
ended 31March 2024 which comprise
the Consolidated Income Statement, the
Consolidated Statement of Comprehensive
Income, the Consolidated Statement of
Financial Position, the Consolidated Statement of
Changes in Equity, the Consolidated Statement
of Cash Flows and notes to the consolidated
financial statements, including a summary of
material accounting policies. The financial
reporting framework that has been applied in
their preparation is applicable law and UK-
adopted international accounting standards.
The Parent Company financial statements
comprise the Company Statement of Financial
Position, the Company Statement of Changes
in Equity and notes to the Company financial
statements, including a summary of material
accounting policies. The financial reporting
framework applied in their preparation is
applicable law and FRS 101 ‘Reduced
Disclosure Framework’ (United Kingdom
Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities
under those standards are further described
in the Auditor’s responsibilities for the audit of
the financial statements section of our report.
We believe that the audit evidence we have
obtained is sufficient and appropriate to provide
a basis for our opinion. Our audit opinion is
consistent with the additional report to the
Audit Committee.
Independence
Following the recommendation of the Audit
Committee, we were appointed by the Board
of Directors on 19 September 2017 to audit
the financial statements for the year ended
31March 2018 and subsequent financial periods.
The period of total uninterrupted engagement
including retenders and reappointments is seven
years, covering the years ended 31 March 2018
to 31 March 2024. We remain independent
of the Group and the Parent Company in
accordance with the ethical requirements
that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical
Standard as applied to listed public interest
entities, and we have fulfilled our other ethical
responsibilities in accordance with these
requirements. The non-audit services prohibited
by that standard were not provided to the
Group or the Parent Company.
Conclusions relating to going concern
In auditing the financial statements, we have
concluded that the Directors’ use of the going
concern basis of accounting in the preparation
of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of
the Group’s and the Parent Company’s ability
to continue to adopt the going concern basis
of accounting included:
• We considered the principal risks identified
by the Directors that are associated with the
Group’s customers, suppliers and workforce.
We assessed these against our own views of
the risks based on our understanding of the
business and the business’ performance in the
year ended 31 March 2024;
• We obtained the Directors’ cash flow
forecasts covering the period to 30
September 2025 and challenged the key
assumptions in respect of revenue growth,
gross profit margins and cash generation
with reference to our knowledge of the
business, its historical performance and
results. We evaluated whether the Directors
had considered appropriate risks and
uncertainties in the preparation of the cash
flow forecasts based on our assessment of
the risks and issues relating to the business;
• We tested the integrity of the forecast
model and assessed its consistency with
approved budgets;
• We obtained and critically reviewed the
Directors’ reverse stress test analysis,
performed to determine the point at which:
– A downturn in revenues; or
– A deterioration in gross margin; or
– An increase in costs; or
– A downturn in cash generation due to
working capital outflows and one-off
significant liabilities
would result in a covenant breach or liquidity
shortfall and without further mitigation
would potentially impact the going concern of
the business. Our consideration included an
assessment of whether the reverse stress test
analysis appropriately considered the key risks
and issues to which the models were sensitive,
and we challenged the nature and feasibility of
the mitigating actions available to the business
identified by the Directors;
• We challenged the Directors’ conclusion that
the likelihood of the downside sensitivities
required for either a covenant breach or
liquidity shortfall was remote by reference
to our knowledge of the business, and the
wider environment in which it operates.
This included an assessment of reverse
stress test sensitivities and current
trading performance;
• We obtained the extension agreement in
respect of the Revolving Credit Facility utilised
by the Group during the year to confirm its
terms and covenants;
• We assessed covenants at year end, to check
that the Group was compliant under the
terms of the financing agreements;
• We evaluated forecast covenant compliance
and headroom calculations with reference to
the covenants stated in the relevant financing
agreements; and
• We reviewed the adequacy and completeness
of disclosures in the financial statements in
respect of going concern in line with the
Directors’ going concern assessment.
Based on the work we have performed, we
have not identified any material uncertainties
relating to events or conditions that, individually
or collectively, may cast significant doubt on the
Group’s and the Parent Company’s ability to
continue as a going concern for a period of at
least twelve months from when the financial
statements are authorised for issue.
In relation to the Parent Company’s reporting
on how it has applied the UK Corporate
Governance Code, we have nothing material
to add or draw attention to in relation to the
Directors’ statement in the financial statements
about whether the Directors considered it
appropriate to adopt the going concern basis
of accounting.
Our responsibilities and the responsibilities of
the Directors with respect to going concern are
described in the relevant sections of this report.
155
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Overview
Coverage
1
100% (2023: 90%) of Group revenue
97% (2023: 93%) of Group total assets
Key Audit Matters (“KAMs”) 1) Appropriateness of revenue recognition – consistent with prior year
2) Contract specific provisions – consistent with prior year
3) Accounting for the acquisition of Landmarc Support Services Limited (“Landmarc”) – new key audit matter
in the current year
The prior year KAMs also included Onerous contract provisions. Whilst the Group continues to recognise a
provision for onerous contracts, this is not considered a KAM in the current year due to the reduced quantum
of provision required and the reduced audit risk over its completeness.
Materiality Group financial statements as a whole
£8.6m (2023: £6.3m) based on 5% (2023: 5%) of profit before tax and non-recurring Other Items.
1. These are areas which have been subject to a full scope audit by the group engagement team and specified audit procedures performed by the group engagement team and the
component auditor teams.
An overview of the scope of ouraudit
Our Group audit was scoped by obtaining
an understanding of the Group and its
environment, including the Group’s system
of internal control, and assessing the risks
of material misstatement in the financial
statements. We also addressed the risk of
management override of internal controls,
including assessing whether there was evidence
of bias by the Directors that may have
represented a risk of material misstatement.
The group operates through a number of legal
entities, which form reporting components,
consistent with the segmental analysis disclosed
in Note 3 to the financial statements. Technical
Services, Business Services, Central Government
and Defence, Communities and the Parent
Company were considered to be significant
components subject to full scope audits.
The Corporate Centre segment was considered
to be a non-significant component, where we
performed specific audit procedures on discrete
financial statement areas to obtain sufficient
coverage over the Group financial statements.
The financial information of the remaining
non-significant components was subject to
analytical review procedures.
BDO LLP, through either the Group audit team
or component audit teams, completed all full
scope audits, specific procedures and analytical
review procedures.
Our involvement with component auditors
For the work performed by component
auditors, the Group audit team determined the
level of involvement needed in order to be able
to conclude whether sufficient appropriate audit
evidence has been obtained as a basis for our
opinion on the Group financial statements as
a whole.
Our involvement with component auditors
included the following:
• Issue of group reporting instructions, which
included the significant areas to be covered
by their audit (including all significant risks
identified by the Group audit team),
materiality levels, and required procedures
relating to irregularities and fraud. The
instructions also set out the information
required to be reported to the Group
audit team;
• Regular communication with the component
auditors throughout the planning, execution
and completion stages of the audit;
• Members of the group audit team attended
the key meetings and had detailed discussions
with the component auditors and component
Management throughout the audit process in
respect of significant risk areas;
• Regular meetings were held between the
Group and component audit teams which
allowed for constant communication
throughout the audit, ensuring that areas of
interest for the Group audit were flagged in
a timely manner; and
• Review of component auditors’ working
papers by senior members of the Group
audit team, with additional challenge and
specific work requests to ensure alignment
with conclusions drawn.
Climate change
Our work on the assessment of potential
impacts on climate-related risks on the Group’s
operations and financial statements included:
• Enquiries and challenge of Management to
understand the actions they have taken
to identify climate-related risks and their
potential impacts on the financial statements
and adequately disclose climate-related risks
within the annual report;
• Our own qualitative risk assessment taking
into consideration the sector in which the
Group operates and how climate change
affects this particular sector; and
• Review of the minutes of Board and Audit
Committee meeting and other papers
related to climate change and performed a
risk assessment as to how the impact of the
Group’s commitment as set out on page 61
may affect the financial statements and
our audit.
We challenged the extent to which climate-
related considerations, including the expected
cash flows from the initiatives and commitments
have been reflected, where appropriate, in
the Directors’ going concern assessment and
viability assessment.
We also assessed the consistency of
Management’s disclosures included as
‘Statutory Other Information’ on page 63
within the financial statements and with our
knowledge obtained from the audit.
Based on our risk assessment procedures,
we did not identify there to be any Key
Audit Matters materially impacted by
climate-related risks.
156
Mitie Group plc
Annual Report and Accounts 2024
Independent auditor’s report to the members of Mitie Group plc
continued
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had
the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Key audit matter How the scope of our audit addressed the key audit matter
Appropriateness of
revenue recognition
The accounting policies
and critical judgments
applied are disclosed
in Notes1 and 2.
Accounting for new and modified
contracts under IFRS 15 Revenue
from Contracts with Customers can
be complex and may be incorrectly
applied, resulting in inappropriate
recognition or measurement
of revenue.
The Group has material levels of
accrued income for which there
is a risk that cut-off has not been
correctly applied and that revenue
has not been appropriately
recognised in respect of
accrued income.
The Group undertakes contracts
for specific projects where
contractual obligations span more
than one financial period. There is
a risk that revenue is incorrectly
recognised due to inaccurate
measurement of performance to
date and uncertainties that depend
on the outcome of future events.
We completed the following audit procedures in relation to revenue recognition:
• Tested a sample of new and modified contracts in the year by evaluating management’s
IFRS 15 Revenue from Contracts with Customers contract assessments, testing details to
contracts and assessing whether the related revenue recognition was in accordance
with the requirements of the applicable accounting standard.
• Tested a sample of accrued income balances at year end to supporting documentation
to confirm whether the revenue has been recognised in the appropriate period,
with procedures including; verifying contractual terms, agreeing to proof and timing
of service delivery, confirming customer acceptance and subsequent invoicing, and
reviewing relevant customer correspondence regarding the specific accrued income
balances. We also tested journals recorded within revenue, selected using specific risk
criteria, to appropriate supporting evidence.
• For contracts where revenue is recognised over time, we critically assessed the
appropriateness of the methodology applied by Management to recognise income over
time using either the input or output method. We tested the accuracy of the revenue
recognised by evaluating Management’s process for capturing costs incurred to date
and forecast costs to complete, for contracts where income is recognised using the
input method. For contracts where income is recognised using the output method,
we evaluated that revenue is consistent with assessments of work completed to date.
Key observations:
We found that new and modified contracts were being accounted for in accordance
with the requirements of the applicable accounting standard and the recognition and
measurement of the related revenue in the year was appropriate.
We are satisfied that revenue was recognised in the appropriate period in respect of
accrued income.
We are satisfied that revenue recognised in relation to projects is accurate.
Contract specific
provisions
The accounting policies
and key sources of
estimation uncertainty
applied are disclosed
in Notes1 and 2.
Provisions are disclosed
in Note20.
Material contract provisions are
recognised within the Communities
component. Significant judgment is
required to determine the extent of
the Group’s liability and estimation
is involved in determining the costs
likely to be incurred to resolve
these claims.
In respect of this matter, the
disclosure provided and the
estimated range of possible
outcomes given, are key areas
of Management judgement
and estimation. Due to this,
we considered contract specific
provisions to be a key audit matter.
We completed the following audit procedures in relation to the contract specific
provisions within the Communities component:
• Obtained an understanding of each matter through discussion with senior finance and
non-finance Management, the Group’s internal legal counsel and external legal counsel
where applicable.
• Reviewed relevant communications with third parties and Managements’ experts.
• Critically evaluated the capabilities, competence, and objectivity of Management’s
external experts.
• Critically evaluated assessments prepared by Management in respect of claims, and
challenged the key assumptions used within them.
• Developed independent ranges and point estimates for each material provision to
consider the individual and aggregate differences between those and Management’s
positions.
• Reviewed the adequacy of the Group’s disclosures in respect of claims provisions and
their compliance with the requirements of IAS 37 Provisions, Contingent Liabilities and
Contingent Assets.
Key observations:
We found that the judgements and estimates made by Management in assessing the
contract specific provisions are appropriate and the amounts recorded by Management
are reasonable.
Furthermore, we consider the disclosures around these matters to be appropriate.
157
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Key audit matter How the scope of our audit addressed the key audit matter
Accounting for
the acquisition
of Landmarc
The accounting policies
and critical judgments
applied are disclosed
in Notes 1 and 2.
Acquisitions are
disclosed in note 29.
The Group has historically
accounted for Landmarc as a joint
venture. On 16 November 2023,
the Group applied acquisition
accounting to Landmarc following
amendments to the terms of the
Shareholder Agreement (“SHA”)
with its joint venture partner.
Management exercised significant
judgement in the assessment of
control of Landmarc at the
acquisition date.
This transaction was accounted for
as a step acquisition with no cash or
share consideration.
The accounting for the acquisition
balance sheet at 16 November 2023
and the subsequent Purchase Price
Allocation (“PPA”) assessment,
including the fair value of
consideration, identification and
valuation of intangible assets at
acquisition date and subsequent
residual goodwill, and recognition
of non-controlling interest (“NCI”)
arising on acquisition, is complex and
involves estimation. Management
engaged an external expert to
undertake the PPA assessment.
Therefore, this is considered a key
audit matter.
We completed the following audit procedures in relation to the accounting for the
acquisition of Landmarc:
• Obtained an understanding of the transaction and critically reviewed the amendments
to the SHA to evaluate the appropriateness of Management’s conclusion of control
over Landmarc.
• Evaluated the accounting treatment applied including the calculation of fair value of
consideration and recognition of NCI on acquisition, in accordance with the
requirements of IFRS 3 Business Combinations.
• Critically evaluated the capabilities, competence and objectivity of Management’s
external valuation expert engaged for the PPA assessment.
• Evaluated and concluded on the appropriateness of the external valuation expert’s
conclusions by comparing them to our knowledge of the industry.
• Engaged with our own internal valuation experts to challenge and critically evaluate the
PPA assessment completed by the external expert, including the fair value assessment
of Landmarc at acquisition date and the identification of amounts related to customer
relationships and other intangibles.
• Tested the cash flow forecasts, including challenge and corroboration of inputs
and assumptions used to assess the fair value of the consideration and fair value of
the intangible assets acquired, by comparing to actual and historical results and
reasonableness of underlying information used.
• Challenged Management’s assessment of the fair value of the assets acquired and
tested a sample of balances held at the acquisition date.
• Reviewed the adequacy of the Group’s disclosures in respect of the business
combination and their compliance with the requirements of IFRS 3 Business
Combinations.
Key observations:
We found that the judgements and estimates made by Management in accounting for the
Landmarc acquisition are reasonable.
Furthermore, we consider the disclosures around this matter to be appropriate.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be
the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance
materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as
we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the
financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
Group Parent Company
2024
£m
2023
£m
2024
£m
2023
£m
Materiality 8.6 6.3 6.0 4.4
Basis for determining
materiality
5% of recurring profit before tax and non-recurring
Other Items
70% of Group materiality
Rationale for the
benchmark applied
We consider this to be the most appropriate threshold
since this removes the impact of certain one-off items on
the profit of the Group.
The Parent Company does not trade and materiality was
set at a percentage of Group materiality.
Performance materiality 6.0 4.4 4.2 3.0
Basis for determining
performance materiality
70% of materiality
Rationale for the
percentage applied for
performance materiality
The level of performance materiality was set after considering a number of factors including significant transactions in the
year, the expected value of known and likely misstatements, and Management’s attitude towards proposed adjustments.
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Independent auditor’s report to the members of Mitie Group plc
continued
Component materiality
For the purposes of our Group audit opinion, we set materiality for each significant component of the Group, apart from the Parent Company whose
materiality is set out above, based on a percentage of between 15% and 77% (2023: 12% and 78%) of Group materiality dependent on the size and our
assessment of the risk of material misstatement of that component. Component materiality ranged from £1.2m to £6.6m (2023: £0.75m to £4.9m). In the
audit of each component, we further applied performance materiality levels of 70% (2023: 70%) of the component materiality to our testing to ensure that
the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £430k (2023: £315k). We also agreed to
report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the annual report other than the
financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Parent Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is
materially consistent with the financial statements or our knowledge obtained during the audit.
Going concern and longer-term
viability
• The Directors’ statement with regards to the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on page 152; and
• The Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment
covers and why the period is appropriate set out on page 90.
Other Code provisions • The Directors’ statement on fair, balanced and understandable set out on page 122;
• The Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set
out on page 90;
• The section of the annual report that describes the review of effectiveness of risk management and internal
control systems set out on page 118-119; and
• The section describing the work of the Audit Committee set out on page 114.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and
ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment
obtained in the course of the audit, we have not identified material misstatements in the Strategic report or
the Directors’ report.
Directors’ remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Matters on which we are required to
report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit
have not been received from branches not visited by us; or
• the Parent Company financial statements and the part of the Directors’ remuneration report to be audited
are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
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Strategic report Governance Financial statements
Responsibilities of Directors
As explained more fully in the statement of
Directors’ responsibilities, the Directors are
responsible for the preparation of the financial
statements and for being satisfied that they give
a true and fair view, and for such internal control
as the Directors determine is necessary to
enable the preparation of financial statements
that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the
Directors are responsible for assessing the
Group’s and the Parent Company’s ability to
continue as a going concern, disclosing, as
applicable, matters related to going concern
and using the going concern basis of accounting
unless the Directors either intend to liquidate
the Group or the Parent Company or to cease
operations, or have no realistic alternative but
to do so.
Auditor’s responsibilities for the audit
of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from material
misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will
always detect a material misstatement when it
exists. Misstatements can arise from fraud or
error and are considered material if, individually
or in the aggregate, they could reasonably
be expected to influence the economic
decisions of users taken on the basis of these
financial statements.
Extent to which the audit was capable of
detecting irregularities, including fraud
Irregularities, including fraud, are instances of
non-compliance with laws and regulations.
We design procedures in line with our
responsibilities, outlined above, to detect
material misstatements in respect of
irregularities, including fraud. The extent to
which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
• Our understanding of the Group and the
industry in which it operates;
• Discussion with Management, the Audit
Committee, the Company Secretary and
in-house legal counsel; and
• Obtaining and understanding of the Group’s
policies and procedures regarding compliance
with laws and regulations
we considered the significant laws and
regulations to be the Companies Act 2006,
the UK Listing Rules, the applicable accounting
standards, the Bribery Act 2010 and tax
legislation.
The Group is also subject to laws and regulations
where the consequence of non-compliance
could have a material effect on the amount or
disclosures in the financial statements, for
example through the imposition of fines or
litigations. We identified such laws and
regulations to be the health and safety
legislation and employment laws.
Our procedures in respect of the above
included:
• Review of minutes of Board and Audit
Committee meetings, and internal audit
reports to identify any instances of non-
compliance with laws and regulations;
• Review of correspondence with regulatory
and tax authorities for any instances of
non-compliance with laws and regulations;
• Review of financial statement disclosures and
agreeing to supporting documentation;
• Involvement of tax specialists in the audit; and
• Review of legal expenditure accounts to
understand the nature of expenditure
incurred.
Fraud
We assessed the susceptibility of the financial
statements to material misstatement, including
fraud. Our risk assessment procedures included:
• Enquiry with Management, the Audit
Committee, in-house legal counsel and
internal audit regarding any known or
suspected instances of fraud;
• Obtaining an understanding of the Group’s
policies and procedures relating to:
– Detecting and responding to the risks of
fraud; and
– Internal controls established to mitigate
risks related to fraud.
• Review of minutes of Board and Audit
Committee meetings for any known or
suspected instances of fraud;
• Discussion amongst the engagement team as
to how and where fraud might occur in the
financial statements;
• Involvement of forensics specialists in
the audit during engagement team
fraud discussions;
• Performing analytical procedures to identify
any unusual or unexpected relationships that
may indicate risks of material misstatement
due to fraud; and
• Considering remuneration incentive schemes,
including the Enhanced Delivery Plan, and
performance targets, and the related financial
statement areas impacted by these.
Based on our risk assessment, we considered
the areas most susceptible to fraud to be
management override of controls through
inappropriate journal entries, accrued income
cut-off, costs to complete estimates in projects
revenue where the input method of revenue
recognition is being used, and bias in key
estimates and judgements.
Our procedures in respect of the above
included:
• Testing a sample of journal entries throughout
the year, which met a defined risk criteria,
by agreeing to supporting documentation;
• Testing a sample of accrued income for
correct cut-off (refer to revenue recognition
KAM);
• Testing a sample of contracts for accuracy of
estimation where revenue is recognised over
time (refer to revenue recognition KAM); and
• Assessing significant estimates made by
Management for bias (refer to contract
specific provisions and accounting for the
acquisition of Landmarc KAMs).
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Independent auditor’s report to the members of Mitie Group plc
continued
We also communicated relevant identified
laws and regulations and potential fraud risks
to all engagement team members, including
component engagement teams, who were
all deemed to have appropriate competence
and capabilities and remained alert to any
indications of fraud or non-compliance with
laws and regulations throughout the audit.
For component engagement teams, we also
reviewed the result of their work performed
in this regard.
Our audit procedures were designed to
respond to risks of material misstatement in the
financial statements, recognising that the risk of
not detecting a material misstatement due to
fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery,
misrepresentations or through collusion.
There are inherent limitations in the audit
procedures performed and the further
removed non-compliance with laws and
regulations is from the events and transactions
reflected in the financial statements, the less
likely we are to become aware of it.
A further description of our responsibilities
is available on the Financial Reporting
Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description
forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent
Company’s members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so
that we might state to the Parent Company’s
members those matters we are required to
state to them in an auditor’s report and for
no other purpose. To the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the Parent
Company and the Parent Company’s members
as a body, for our audit work, for this report, or
for the opinions we have formed.
Greg Watts (Senior Statutory Auditor)
For and on behalf of BDO LLP,
Statutory Auditor
London, UK
5 June 2024
BDO LLP is a limited liability partnership
registered in England and Wales (with
registered number OC305127).
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Strategic report Governance Financial statements
2024 | 2023 | ||||||
| Before | Other | Before | Other | ||||
| Other items | items 1 | Total | Other items | items 1 | Total | ||
| Notes | £m | £m | £m | £m | £m | £m | |
Revenue including share of joint ventures and associates | 3 | ||||||
Less: share of revenue of joint ventures and associates 2 | 14 | ( | ( | ( | ( | ||
Group revenue | 3 | ||||||
Cost of sales | ( | ( | ( | ( | |||
Gross profit | |||||||
Administrative expenses | ( | ( | ( | ( | ( | ( | |
Other income | |||||||
Share of profit of joint ventures and associates 2 | 14 | ||||||
Operating profit/(loss) 3 | 3, 5 | ( | ( | ||||
Finance income | 7 | ||||||
Finance costs | 7 | ( | ( | ( | ( | ||
Net finance costs | ( | ( | ( | ( | |||
Profit/(loss) before tax | ( | ( | |||||
Tax | 8 | ( | ( | ( | ( | ||
Profit/(loss) after tax | ( | ( | |||||
| Attributable to: | |||||||
Equity holders of the parent | ( | ( | |||||
Non-controlling interests | 36 | ( | |||||
Profit/(loss) for the year | ( | ( | |||||
| Earnings per share (EPS) attributable to owners of the parent | |||||||
Basic | 10 | ||||||
Diluted | 10 |
Notes:
1. Other items are as described in Note 4.
2. The Group obtained control of Landmarc Support Services Limited (Landmarc) on 16 November 2023, and since that date Landmarc’s financial results have been consolidated as
a subsidiary of Mitie (see Note 29). Prior to 16 November 2023, Landmarc was accounted for as a joint venture of Mitie (see Note 14).
3. Including net impairment losses on trade receivables, accrued income and other receivables of £2 .6 m (2023: £5. 3 m) (see Note 24).
Consolidated income statement
For the year ended 31 March 2024
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Annual Report and Accounts 2024
Consolidated statement of comprehensive income
For the year ended 31 March 2024
| 2024 | 2023 | ||
| Notes | £m | £m | |
Profit for the year | |||
| Items that will not be reclassified to profit or loss in subsequent years | |||
Remeasurement of net defined benefit pension liabilities | 31 | ( | ( |
Share of other comprehensive expense of joint ventures | 14 | ( | ( |
Tax credit relating to items that will not be reclassified to profit or loss in subsequent years | 8 | ||
( | ( | ||
| Items that may be reclassified to profit or loss in subsequent years | |||
Exchange differences on translation of foreign operations | ( | ||
Net losses on cash flow hedges taken to equity | ( | ||
Tax credit relating to items that may be reclassified to profit or loss in subsequent years | 8 | ||
( | |||
Other comprehensive (expense)/income for the year | ( | ||
Total comprehensive income for the year | |||
| Attributable to: | |||
Equity holders of the parent | |||
Non-controlling interests | |||
Total comprehensive income for the year |
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Strategic report Governance Financial statements
| 2024 | 2023 | ||
| Notes | £m | £m | |
| Non-current assets | |||
Goodwill | 11 | ||
Other intangible assets | 12 | ||
Property, plant and equipment | 13 | ||
Interests in joint ventures and associates | 14 | ||
Trade and other receivables | 15 | ||
Contract assets | 16 | ||
Retirement benefit assets | 31 | ||
Deferred tax assets | 21 | ||
Total non-current assets | |||
| Current assets | |||
Inventories | 17 | ||
Trade and other receivables | 15 | ||
Contract assets | 16 | ||
Current tax receivable | |||
Cash and cash equivalents | 22 | ||
Total current assets | |||
Total assets | |||
| Current liabilities | |||
Trade and other payables | 18 | ( | ( |
Deferred income | 19 | ( | ( |
Current tax payable | ( | ( | |
Financing liabilities | 23 | ( | ( |
Provisions | 20 | ( | ( |
Total current liabilities | ( | ( | |
Net current liabilities | ( | ( | |
| Non-current liabilities | |||
Trade and other payables | 18 | ( | ( |
Deferred income | 19 | ( | ( |
Financing liabilities | 23 | ( | ( |
Provisions | 20 | ( | ( |
Retirement benefit liabilities | 31 | ( | ( |
Total non-current liabilities | ( | ( | |
Total liabilities | ( | ( | |
Net assets |
Consolidated statement of financial position
As at 31 March 2024
164
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Annual Report and Accounts 2024
Consolidated statement of financial position continued
As at 31 March 2024
| 2024 | 2023 | ||
| Notes | £m | £m | |
| Equity | |||
Share capital | 27 | ||
Share premium | 27 | ||
Merger reserve | 28 | ||
Own shares reserve | 28 | ( | ( |
Share-based payments reserve | 28 | ||
Capital redemption reserve | 28 | ||
Hedging and translation reserve | 28 | ( | ( |
Retained profits | |||
Equity attributable to owners of the parent | |||
Non-controlling interests | 36 | ||
Tot al equity |
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Annual Report and Accounts 2024
Strategic report Governance Financial statements
| Share- | Hedging | Total | |||||||||
| Own | based | Capital | and | Retained | attributable | Non- | |||||
| Share | Share | Merger | shares | payments | redemption | translation | profits/ | to owners | controlling | Total | |
| capital | premium | reserve 1 | reserve | reserve | reserve | reserve | (losses) | of parent | interests | equity | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
At 1 April 2022 | ( | ( | ( | ||||||||
Profit for the year | |||||||||||
Other comprehensive income/(expense) | ( | ||||||||||
Total comprehensive income | |||||||||||
| Transactions with owners | |||||||||||
Dividends paid | ( | ( | ( | ||||||||
Purchase of own shares 2 | ( | ( | ( | ||||||||
Realisation of merger reserve | ( | ||||||||||
Share buybacks 3 | ( | ( | ( | ( | |||||||
Share-based payments | ( | ||||||||||
Tax on share-based payments | |||||||||||
Total transactions with owners | ( | ( | ( | ( | ( | ||||||
At 31 March 2023 | ( | ( | |||||||||
At 1 April 2023 | ( | ( | |||||||||
Profit for the year | |||||||||||
Other comprehensive (expense)/income | ( | ( | ( | ( | |||||||
Total comprehensive (expense)/income | ( | ||||||||||
| Transactions with owners | |||||||||||
Dividends paid | ( | ( | ( | ||||||||
Purchase of own shares 2 | ( | ( | ( | ||||||||
Share buybacks 3 | ( | ( | ( | ( | ( | ||||||
Share-based payments 4 | ( | ||||||||||
Tax on share-based payments | |||||||||||
| Non-controlling interest arising | |||||||||||
on acquisition 5 | |||||||||||
Non-controlling interest dividends | ( | ( | |||||||||
Total transactions with owners | ( | ( | ( | ( | ( | ||||||
At 31 March 2024 | ( | ( |
Notes:
1. The merger reserve represents amounts relating to premiums arising on shares issued subject to the provisions of Section 612 of the Companies Act 2006.
2. The Employee Benefit Trust acquired 19.1m (2023: 50.1m) ordinary shares through market purchases for a consideration together with associated fees and stamp duty of £18 .9 m
(2023: £3 7 .3 m) and the Share Incentive Plan Trust acquired 0.6m (2023: 0.6m) shares for a consideration of £0.7 m (2023: £0.4 m).
3. The share buybacks resulted in the purchase of 58.6m ordinary shares (2023: 68.8m), of which 26.1m (2023: 68.8m) have subsequently been cancelled and 32.5m (2023: nil) were
bought into Treasury. See Notes 27 and 28.
4. Includes £0. 5 m and £7 .5 m of cash receipts in respect of new shares and treasury shares respectively, which were issued on exercise of Save As You Earn share options. See Notes 27
and 28.
5. The Group obtained control of Landmarc on 16 November 2023, resulting in recognition of non-controlling interest of £18.3 m at that date. See Note 29.
Consolidated statement of changes in equity
For the year ended 31 March 2024
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Annual Report and Accounts 2024
Consolidated statement of cash flows
For the year ended 31 March 2024
| 2024 | 2023 | ||
| Notes | £m | £m | |
Operating profit before Other items | 3 | ||
Other items | 4 | ( | ( |
Operating profit | |||
| Adjustments for: | |||
Share-based payments expense | 30 | ||
Defined benefit pension expense | 31 | ||
Defined benefit pension contributions | 31 | ( | ( |
Fair value gain on acquisition of Landmarc | 4 | ( | |
Depreciation of property, plant and equipment | 13, 25 | ||
Amortisation of other intangible assets | 12 | ||
Share of profit of joint ventures and associates | 14 | ( | ( |
Amortisation of contract assets | 16 | ||
Impairment of non-current assets | 12, 25 | ||
Loss on disposal of property, plant and equipment | |||
Operating cash flows before movements in working capital | |||
Increase in inventories | ( | ( | |
Decrease/(increase) in receivables | ( | ||
Increase in contract assets | ( | ||
Decrease in deferred income | ( | ||
(Decrease)/increase in payables | ( | ||
Decrease in provisions | ( | ( | |
Cash generated from operations | |||
Income taxes paid | ( | ( | |
Interest paid | ( | ( | |
Net cash generated from operating activities | |||
| Investing activities | |||
Acquisition of businesses, net of cash acquired 1 | 29 | ( | ( |
Interserve completion accounts settlement | |||
Interest received | |||
Purchase of property, plant and equipment | 13 | ( | ( |
Dividends received from joint ventures and associates | 14 | ||
Purchase of other intangible assets | 12 | ( | ( |
Disposal of property, plant and equipment | |||
Net cash used in investing activities | ( | ( |
Note:
1. Acquisition of businesses is net of cash acquired of £53.6 m (2023: £2.0 m). See Note 29.
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Strategic report Governance Financial statements
| 2024 | 2023 | ||
| Notes | £m | £m | |
| Financing activities | |||
Purchase of own shares | 28 | ( | ( |
Shares bought back | 27, 28 | ( | ( |
Capital element of lease rentals | 25 | ( | ( |
Lease incentives received | |||
Proceeds from new private placement notes | 23 | ||
Repayment of private placement notes | 23 | ( | |
Settlement of derivative financial instruments | |||
Repayment of bank loans | ( | ( | |
Payment of arrangement fees | ( | ( | |
Proceeds received on settlement of share-based payment transactions | 27, 28 | ||
Equity dividends paid | 9 | ( | ( |
Dividends paid to non-controlling interest | 36 | ( | |
Net cash used in financing activities | ( | ( | |
Net decrease in cash and cash equivalents | ( | ( | |
Net cash and cash equivalents at beginning of the year | |||
Effect of foreign exchange rate changes | ( | ||
Net cash and cash equivalents at end of the year | 22 |
Consolidated statement of cash flows continued
For the year ended 31 March 2024
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Annual Report and Accounts 2024
Notes to the consolidated financial statements
For the year ended 31 March 2024
1. Basis of preparation and material accounting policies
(a) Basis of preparation
The Group’s consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments which are required
to be measured at fair value.
Going concern
The consolidated financial statements for the year ended 31 March 2024 have been prepared on a going concern basis. In adopting the going concern basis,
the Directors have considered the Group’s business activities as set out on pages 4 to 77 of the Annual Report and Accounts 2024 and the principal risks
and uncertainties as set out on pages 78 to 88 and the viability statement on page 90 of the same.
The Directors have carried out an assessment of the Group’s ability to continue as a going concern for the period of at least 12 months from the date of
approval of the consolidated financial statements (the Going Concern Assessment Period). This assessment was based on the latest medium-term cash
forecasts from the Group’s cash flow model (the Base Case Forecasts), which is based on the Board approved budget. These Base Case Forecasts indicate
that the debt facilities currently in place are adequate to support the Group over the Going Concern Assessment Period.
The Group’s principal debt financing arrangements as at 31 March 2024 were a £250m revolving credit facility maturing in October 2027, which was
undrawn as at 31 March 2024, and £150m of US private placement (USPP) notes. These financing arrangements are subject to certain financial covenants
which are tested every six months on a rolling 12-month basis, as set out in the Finance review on page 53.
In September 2023, the revolving credit facility was increased from £150m to £250m and its maturity date was extended to October 2027, on the same
terms, with a further one year extension option at the mutual agreement of all parties.
Of the USPP notes, £120.0m were issued in December 2022, split equally between 8, 10 and 12 year maturities, and with an average coupon of 2.94%.
The Base Case Forecasts assume that the remaining £30.0m of USPP notes, which are due to mature in December 2024, will be replaced at higher interest
rates (c.6%).
Mitie currently operates within the terms of its agreements with its lenders, with consolidated net cash (i.e. net cash adjusted for covenant purposes,
primarily by the exclusion of lease liabilities) of £90.7m at 31 March 2024. The Base Case Forecasts indicate that the Group will continue to operate within
these terms and that the headroom provided by the Group’s debt facilities currently in place is adequate to support the Group over the Going Concern
Assessment Period.
The Directors have also completed a reverse stress test using the Group cash flow model to assess the point at which the financial covenants, or facility
headroom, would be breached. The sensitivities considered have been chosen after considering the Group’s principal risks and uncertainties.
The primary financial risks related to adverse changes in the economic environment and/or a deterioration in commercial or operational conditions are
listed below. These risks have been considered in the context of any further UK budgetary changes, global political uncertainties as well as an inflationary
and potential recessionary economic environment:
• A downturn in revenues: this reflects the risks of not being able to deliver services to existing customers, or contracts being terminated or not renewed;
• A deterioration of gross margin: this reflects the risks of contracts being renegotiated at lower margins, or planned cost savings not being delivered;
• An increase in costs: this reflects the risks of a shortfall in planned overhead cost savings, including the margin enhancement initiatives not being
delivered, or other cost increases, such as sustained higher cost inflation; and
• A downturn in cash generation: this reflects the risks of customers delaying payments due to liquidity constraints, the removal of ancillary debt facilities
or any substantial one-off settlements related to commercial issues.
As a result of completing this assessment, the Directors concluded that the likelihood of the reverse stress scenarios arising was remote. In reaching the
conclusion of remote, the Directors considered the following:
• All stress test scenarios would require a very severe deterioration compared to the Base Case Forecasts. Revenue is considered to be the key risk, as
this is less within the control of management. Revenue would need to decline by approximately 39% in the 12 months to 30 September 2026 compared
to the Base Case Forecasts, which is considered to be very severe given the high proportion of Mitie’s revenue that is fixed in nature and the fact that
even in a Covid-hit year, Mitie’s revenue excluding Interserve declined by only 1.6% in the year ended 31 March 2021; and
• In the event that results started to trend significantly below those included in the Base Case Forecasts, additional mitigation actions within the Group’s
control have been identified that would be implemented, which are not factored into the stress test scenarios. These include the short-term scaling
down of capital expenditure, overhead efficiency/reduction measures including cancellation of discretionary bonuses and reduced discretionary spend,
asset disposals and reductions in cash distributions and share buybacks.
Based on these assessments, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for
a period of no less than 12 months from the date of approval of these consolidated financial statements. In addition, the Directors have concluded that the
likelihood of the reverse stress scenarios arising is remote and therefore no material uncertainty exists.
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Strategic report Governance Financial statements
1. Basis of preparation and material accounting policies continued
Accounting standards that are not yet mandatory and have not been applied by the Group
At the date of authorisation of these consolidated financial statements, the Group has not applied the following revised IFRS Accounting Standards that
have been issued but are not yet effective, none of which are expected to have a material effect on the Group other than presentational changes required
under IFRS 18 Presentation and Disclosure in Financial Statements, the impact of which is still being assessed:
• Amendments to IFRS 16 Leases – Lease Liability in a Sale-and-Leaseback
• Amendments to IAS 1 Presentation of Financial Statements – Classification of Liabilities as Current or Non-current
• Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments – Supplier Finance Arrangements
• Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability
• IFRS 18 – Presentation and Disclosure in Financial Statements
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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1. Basis of preparation and material accounting policies continued
Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control have the right to the assets, and obligations for the liabilities, relating
to the arrangement, or other facts and circumstances indicate that is the case. The Group’s share of the results, assets and liabilities of contracts carried
out in joint operations with another party are included under each relevant heading in the consolidated income statement and consolidated statement of
financial position.
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1. Basis of preparation and material accounting policies continued
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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1. Basis of preparation and material accounting policies continued
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1. Basis of preparation and material accounting policies continued
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
1. Basis of preparation and material accounting policies continued
The Group measures the lease liability for acquired leases at the present value of the remaining lease payments discounted using an appropriate discount
rate. As required by IFRS 3 Business Combinations, the Group treats acquired leases as new leases, thereby recording the right-of-use asset as equal to the
lease liability.
Acquisition related liabilities or employment-linked earnouts are the estimated amounts payable to previous owners. The estimated future payments
that are accrued over the period the sellers are required to remain with the business are accounted for as remuneration for post-acquisition services
and recognised within the consolidated income statement and classified as Other items. The amounts not linked to employment are considered to be
contingent consideration and estimated and recognised at acquisition at their discounted fair value, with the unwind of the discount recorded as part of
finance costs.
Customer contracts and relationships | 5 –15 years |
Brands, software and development expenditure | 3–10 years |
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1. Basis of preparation and material accounting policies continued
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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1. Basis of preparation and material accounting policies continued
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1. Basis of preparation and material accounting policies continued
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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2. Critical accounting judgements and key sources of estimation uncertainty
The preparation of consolidated financial statements under IFRS requires management to make judgements, estimates and assumptions that affect
amounts recognised for assets and liabilities at the reporting date and the amounts of revenue and expenses incurred during the reporting period.
Actual results may differ from these judgements, estimates and assumptions.
Critical judgements in applying the Group’s accounting policies
The following are the critical judgements, made by management in the process of applying the Group’s accounting policies, that have the most significant
effect on the amounts recognised in the Group’s consolidated financial statements.
Revenue recognition
The Group’s revenue recognition policies which are set out under Revenue recognition in Note 1, are central to how the Group measures the work it has
performed in each financial year.
Some of the Group’s contracts, including PFI contracts, contain variable consideration where management assesses the extent to which revenue is
recognised. For certain contracts, key judgements were made on whether it is considered highly probable that a significant reversal of revenue will not
occur when the associated uncertainty with the variable consideration is subsequently resolved.
Profit before Other items
Other items are items of financial performance which management believes should be separately identified on the face of the consolidated income
statement to assist in understanding the underlying financial performance achieved by the Group. Determining whether an item should be classified within
Other items requires judgement as to whether an item is or is not part of the underlying performance of the Group. Refer to Note 1, which details the
Group’s accounting policy for Other items.
Other items after tax of £32.0m were charged (2023: £36.9m) to the consolidated income statement for the year ended 31 March 2024. Included within
the net charge were fixed-term staff costs in respect of the implementation of the digital supplier platform of £2.8m which, in management’s judgement,
is a material programme delivering a step change in the Group’s supply chain management capabilities and therefore meets the Group’s definition to be
categorised as Other items. A complete analysis of the amounts included in Other items is detailed in Note 4.
IFRS 16 – Determining the lease term of contracts with renewal and termination options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is
reasonably certain to be exercised, or any period covered by an option to terminate the lease if it is reasonably certain not to be exercised.
The Group has several lease contracts that include extension and termination options. Management applies judgement in evaluating whether it is
reasonably certain the option to renew or terminate the lease will be exercised or not. That is, it considers all relevant factors that create an economic
incentive for the Group to exercise either the renewal or termination option. After the commencement date, the Group reassesses the lease term if
there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew
or to terminate the lease.
Landmarc joint venture
The Group holds 51% of the equity shares in Landmarc Support Services Limited (Landmarc). The remaining 49% of the equity shares in Landmarc
are held by a single third-party. As at 31 March 2023, management considered Landmarc to be a joint venture despite the Group having a majority
shareholding. This is because, under the terms of the shareholders’ agreement prevalent at that date, joint agreement was required with the other party to
pass resolutions for all significant activities. Accordingly, the Group did not control Landmarc and did not recognise it as a subsidiary as at 31 March 2023.
On 16 November 2023, the shareholders’ agreement was amended. Management’s judgement is that the revisions made to the shareholders’ agreement
resulted in the Group obtaining control of Landmarc, and therefore Landmarc has been consolidated as a subsidiary of the Group from that date.
Further details are included in Note 29.
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2. Critical accounting judgements and key sources of estimation uncertainty continued
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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2024 | 2023 (restated) 1 | |||||
| Operating | ||||||
| Operating profit/ | Operating | profit/(loss) | Operating | |||
| (loss) before | margin before | before | margin before | |||
Revenue 2 | Other items 3 | Other items 3 | Revenue 2 | Other items 3 | Other items 3 | |
| £m | £m | % | £m | £m | % | |
Business Services | 1,489.7 | 97.0 | 6.5 | 1,413.8 | 92.3 | 6.5 |
Technical Services | 1,326.5 | 44.3 | 3.3 | 1,154.1 | 34.1 | 3.0 |
Central Government & Defence (CG&D) | 937.7 | 80.4 | 8.6 | 828.3 | 59.8 | 7.2 |
Communities | 756.8 | 39.1 | 5.2 | 658.9 | 31.4 | 4.8 |
Corporate Centre | – | (50.6) | – | – | (55.5) | – |
Total Group | 4,510.7 | 210.2 | 4.7 | 4,055.1 | 162.1 | 4.0 |
| 2024 | 2023 | |
| £m | £m | |
Operating profit before Other items | 210.2 | 162.1 |
Other items 1 | (44.5) | (45.1) |
Net finance costs | (9.4) | (11. 5 ) |
Profit before tax | 156.3 | 105.5 |
2024 | 2023 | |||||
| Operating | Operating | Operating | Operating | |||
| profit before | margin before | profit before | margin before | |||
Revenue 1 | Other items 2 | Other items 2 | Revenue 1 | Other items 2 | Other items 2 | |
| £m | £m | % | £m | £m | % | |
United Kingdom | 4,336.9 | 200.1 | 4.6 | 3,895.2 | 153.9 | 4.0 |
Other countries | 173.8 | 10.1 | 5.8 | 159.9 | 8.2 | 5.1 |
Tot al | 4,510.7 | 210.2 | 4.7 | 4,055.1 | 162.1 | 4.0 |
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3. Business segment information continued
| 2024 | 2023 | |
| £m | £m | |
United Kingdom | 846.3 | 732.5 |
Other countries | 25.0 | 16.0 |
Tot al | 871. 3 | 748.5 |
2024 | 2023 (restated) 1 | |||||||
| Depreciation | Amortisation | Depreciation | Amortisation | |||||
| of property, | of other | Amortisation | of property, | of other | Amortisation | |||
| plant and | intangible | of contract | Other | plant and | intangible | of contract | Other | |
| equipment | assets | assets | items 2 | equipment | assets | assets | items 2 | |
| £m | £m | £m | £m | £m | £m | £m | £m | |
Business Services | 4.9 | 0.1 | 0.2 | 3.3 | 3.9 | – | – | 1.5 |
Technical Services | 1.5 | 0.2 | 0.4 | 10.2 | 1.3 | 0.6 | 0.3 | 10.8 |
CG&D | 0.8 | – | – | (17.9) | 0.4 | – | – | (0.8) |
Communities | 1.2 | – | 0.8 | 1.3 | 1.3 | – | 1.0 | 0.4 |
Corporate Centre | 39.8 | 32.7 | – | 47.6 | 36.2 | 28.6 | – | 33.2 |
Tot al | 48.2 | 33.0 | 1.4 | 44.5 | 43.1 | 29.2 | 1.3 | 45.1 |
2024 | 2023 (restated) 2 | |||||
Sector 1 | Sector 1 | |||||
| Government | Non-government | Total | Government | Non-government | Total | |
| £m | £m | £m | £m | £m | £m | |
Business Services | 418.1 | 1,071.6 | 1,489.7 | 457.1 | 956.7 | 1,413. 8 |
Technical Services | 274.7 | 1,051.8 | 1,326.5 | 262.4 | 891.7 | 1,154.1 |
CG&D | 937.7 | – | 937.7 | 828.3 | – | 828.3 |
Communities | 754.9 | 1.9 | 756.8 | 656.6 | 2.3 | 658.9 |
| Total Group including joint ventures | ||||||
and associates | 2,385.4 | 2,125.3 | 4,510.7 | 2,204.4 | 1,850.7 | 4,055.1 |
Less: Joint ventures and associates 3 | (65.5) | – | (65.5) | (110.1) | – | (110.1) |
| Total Group excluding joint ventures | ||||||
and associates | 2,319.9 | 2 ,125.3 | 4,445.2 | 2,094.3 | 1,850.7 | 3,945.0 |
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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3. Business segment information continued
2024 | 2023 (restated) 1 | |||||
| Total secured | Total secured | |||||
| Less than 1 year | More than 1 year | revenue | Less than 1 year | More than 1 year | revenue | |
| £m | £m | £m | £m | £m | £m | |
Business Services | 831.0 | 1,315.5 | 2,146.5 | 623.4 | 853.2 | 1,476.6 |
Technical Services | 469.0 | 659.6 | 1,128.6 | 482.6 | 678.0 | 1,160.6 |
CG&D 2 | 415.5 | 1,468.3 | 1,883.8 | 503.8 | 1,263.3 | 1,767.1 |
Communities 2 | 504.1 | 2,838.2 | 3,342.3 | 37 7.5 | 2,687. 5 | 3,065.0 |
Total Group | 2,219.6 | 6,281.6 | 8,501.2 | 1,987. 3 | 5,482.0 | 7,469. 3 |
4. Other items
Other items are items of financial performance which management believes should be separately identified on the face of the consolidated income
statement to assist in understanding the underlying financial performance achieved by the Group.
The Group separately reports impairment of goodwill, impairment and amortisation of acquisition related intangible assets, acquisition and disposal
related costs, charges with respect to employment-linked earnouts, fair value gain on acquisitions, gain or loss on business disposals, cost of restructuring
programmes and other exceptional items as Other items, together with their related tax effect.
| 2024 | |||||
| Acquisition | Fair value gain | Other | |||
| Restructure | and disposal | on acquisition | exceptional | ||
| costs | related costs | of Landmarc | items | Total | |
| £m | £m | £m | £m | £m | |
Other items before tax | (20.4) | (38.3) | 17.9 | (3.7) | (44.5) |
Tax | 5.1 | 6.5 | – | 0.9 | 12.5 |
Other items after tax | (15.3) | (31.8) | 17.9 | (2.8) | (32.0) |
| 2023 | ||||
| Acquisition | Other | |||
| Restructure | and disposal | exceptional | ||
| costs | related costs | items | Total | |
| £m | £m | £m | £m | |
Other items before tax | (16.6) | (25.1) | (3.4) | (45.1) |
Tax | 3.2 | 4.4 | 0.6 | 8.2 |
Other items after tax | (13.4) | (20.7) | (2.8) | (36.9) |
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4. Other items continued
Restructure costs
The Group has been undertaking a major transformation programme involving the restructuring of operations to reposition the business for its next
phase of growth. Material transformation programmes are included as Other items where initiatives are considered to be non-recurring in nature and are
not considered to be normal operating costs of the business. The costs are analysed below:
| 2024 | 2023 | |
| Total Group | £m | £m |
| Group transformation programme: | ||
Target Operating Model 1 | (20.4) | (7.9) |
Project Forté 2 | – | (8.7) |
Restructure costs | (20.4) | (16 .6) |
Tax | 5.1 | 3.2 |
Restructure costs net of taxation | (15.3) | (13.4) |
Notes:
1. The Target Operating Model is the Group’s transformation programme and includes the further outsourcing of back-office functions, consolidating systems and processes, and
optimising the organisation structure. Since its launch in the year ended 31 March 2022, cumulative costs of £28.6m have been recognised within the consolidated income statement
and classified as Other items, all of which were cash costs. The programme is expected to complete by 31 March 2025.
2. Project Forté was launched in 2019, primarily focusing on re-engineering the Technical Services business to modernise and optimise workflow processes. The project was completed
in the year ended 31 March 2023.
The costs associated with the Group transformation programme include £5.7m of external consultancy costs (2023: £6.9m), fixed-term staff costs of
£7.1m (2023: £6.9m) to manage and implement changes, redundancy costs of £4.5m (2023: £2.1m), dual-run licence costs in relation to decommissioned
operating systems of £2.6m (2023: £0.7m) and certain property exit costs of £0.5m (2023: £nil).
Acquisition and disposal related costs
| 2024 | 2023 | |
| £m | £m | |
Amortisation of acquisition related intangible assets | (24.8) | (21.4) |
Employment-linked earnout charges 1 | (9.5) | (0.2) |
Transaction costs 2 | (2.9) | (1.7) |
Other acquisition related (costs)/income 3 | (1.1) | 3.7 |
Integration costs | – | (5.5) |
Acquisition and disposal costs | (38.3) | (25.1) |
Tax | 6.5 | 4.4 |
Acquisition and disposal costs net of taxation | (31.8) | (20.7) |
Notes:
1. Comprises amounts payable to former owners of acquired businesses where a condition of receiving the payment is the continued employment of the individual receiving the
payment. These payments are accrued over the period that the related employment services are received up until the point at which the consideration becomes payable.
2. Comprises professional fees of £3.1m (2023: £1.7m) and staff related integration costs of £0.4m (2023: £nil), offset by professional fee accrual releases of £0.6m for completed
acquisitions where the Group expects no further costs (2023: £nil).
3. Amounts for the year ended 31 March 2024 include a provision charge of £9.0m in respect of a certain PFI contract, offset by release of other contract specific provisions of £7.9m.
See Note 20. These adjustments relate to provisions that were recognised on the acquisition of Interserve and were originally recognised against goodwill. Amounts for the year
ended 31 March 2023 include a provision release of £1.2m for a certain pension scheme, £0.7m release of an employer liability insurance provision created on the acquisition of
| Interserve, £0.9m professional fee accruals release and derecognition of a £0.9m pre-acquisition contractual liability originally recognised against goodwill. | |
| Other exceptional items | |
| Other exceptional items of £3.7m (2023: £3.4m) relate to the implementation of a new digital supplier platform, resulting in a step change in the |
Group’s supply chain management capabilities. These comprise fixed-term staff costs of £2.8m (2023: £2.4m) and third-party implementation costs of
£0.9m (2023: £1.0m). This implementation, which is transformational in nature, is expected to be completed during the year ending 31 March 2025.
Cumulative cash costs of £11.5m have been recognised within the consolidated income statement and classified as Other items since its launch in 2022.
Fair value gain on Landmarc acquisition
The Group obtained control of Landmarc on 16 November 2023, and since that date Landmarc’s financial results have been consolidated as a subsidiary.
See Note 29. Prior to 16 November 2023, Landmarc was accounted for as a joint venture of the Group. See Note 14.
In accordance with IFRS 3 Business Combinations, the Group fair valued its investment in the joint venture as at 16 November 2023. This resulted in a fair
value gain of £17.9m, being the difference between the fair value of the Group’s joint venture interest of £23.7m and its carrying value of £5.8m as at the
acquisition date. The gain has been recognised as Other items, as it is material and non-recurring in nature. See Note 29 for further details.
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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| 2024 | 2023 | |
| Total Group | £m | £m |
Depreciation of property, plant and equipment (Notes 13 and 25) | 48.2 | 43.1 |
Amortisation of other intangible assets (Note 12) | 33.0 | 29.2 |
Amortisation of contract assets (Note 16) | 1.4 | 1.3 |
Impairment of other intangible assets (Note 12) | 0.1 | – |
Impairment of right-of-use assets (Note 25) | – | 0.2 |
Loss on disposal of property, plant and equipment | 0.1 | 0.1 |
Impairment loss recognised on trade and other receivables (Note 24) | 2.6 | 5.3 |
| A detailed analysis of auditor’s remuneration is provided below: |
| 2024 | 2023 | |
| £’000 | £’000 | |
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts | 323 | 299 |
Fees payable to the Company’s auditor and its associates for the audit of the Company’s subsidiaries pursuant to legislation – current year | 4,041 | 3,475 |
Total audit fees – current year | 4,364 | 3,774 |
Fees payable to the Company’s auditor and its associates for the audit of the Company’s subsidiaries pursuant to legislation – prior year | – | 563 |
Total audit fees | 4,364 | 4,337 |
Audit-related assurance services to the Group (interim review) | 230 | 195 |
Other assurance services | – | 11 |
Total non-audit fees | 230 | 206 |
Tot al | 4,594 | 4,543 |
6. Employees
The average number of people employed during the financial year was:
| 2023 | ||
Number of people | 2024 | (restated) 1 |
Business Services | 37,722 | 35,880 |
Technical Services | 9,803 | 9,540 |
CG&D | 6,247 | 5,452 |
Communities | 11,0 52 | 10,315 |
Corporate Centre | 156 | 133 |
Total Group | 64,980 | 61,320 |
Note:
1. The comparatives for the year ended 31 March 2023 have been restated for the change in composition of reportable segments.
The total employment costs, including Directors, were:
| 2024 | 2023 | |
| £m | £m | |
Wages and salaries | 1,926.9 | 1,776.0 |
Social security costs | 177.5 | 163. 5 |
Other pension costs | 43.2 | 39.1 |
Share-based payments (Note 30) | 20.3 | 17.3 |
Tot al | 2,167.9 | 1,995.9 |
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6. Employees continued
Executive and Non-Executive Directors’ aggregate emoluments are shown below:
| 2024 | 2023 | |
| £m | £m | |
Short-term benefits | 3.6 | 3.0 |
Pension and other employment benefits | 0.1 | 0.2 |
Share-based payments | 5.5 | 5.6 |
Tot al | 9.2 | 8.8 |
| 2024 | 2023 | |
| Finance costs | £m | £m |
Interest on bank loans | 1.8 | 2.2 |
Interest on private placement loan notes | 4.8 | 5.9 |
Bank fees | 1.4 | 1.1 |
Interest on lease liabilities (Note 25) | 5.6 | 4.2 |
Unwinding of discounts on provisions | – | 0.2 |
Net interest on defined benefit pension scheme assets and liabilities (Note 31) | – | 0.1 |
Tot al | 13.6 | 13.7 |
| 2024 | 2023 | |
| Finance income | £m | £m |
Bank interest | 3.7 | 2.2 |
Net interest on defined benefit pension scheme assets and liabilities (Note 31) | 0.5 | – |
Tot al | 4.2 | 2.2 |
8. Ta x
| 2024 | 2023 | |
| Total Group | £m | £m |
Current tax | 22.1 | 19.2 |
Deferred tax (Note 21) | 3.3 | (4.8) |
Tax charge for the year | 25.4 | 14.4 |
Corporation tax is calculated at 25% (2023: 19%) of the estimated taxable profit for the year. A reconciliation of the tax charge to the elements of profit
before tax per the consolidated income statement is as follows:
2024 | 2023 | |||||
| Before | Before | |||||
| Other items | Other items 1 | Total | Other items | Other items 1 | Total | |
| Total Group | £m | £m | £m | £m | £m | £m |
Profit/(loss) before tax | 200.8 | (44.5) | 156.3 | 150.6 | (45.1) | 105.5 |
Tax at UK rate of 25% (2023: 19%) | 50.2 | (11.1) | 39.1 | 28.6 | (8.5) | 20.1 |
| Reconciling tax charges for: | ||||||
Non-taxable items | (1.0) | (1.1) | (2.1) | (0.8) | 0.3 | (0.5) |
Impact of equity accounted investments | (1.6) | – | (1.6) | (1.6) | – | (1.6) |
Credit for losses not previously recognised | (8.8) | – | (8.8) | (5.3) | – | (5.3) |
Overseas tax rates | (1.3) | – | (1.3) | (0.3) | – | (0.3) |
Prior year adjustments | 0.4 | (0.3) | 0.1 | 2.0 | – | 2.0 |
Tax charge/(credit) for the year | 37.9 | (12.5) | 25.4 | 22.6 | (8.2) | 14.4 |
Effective tax rate for the year | 18.9% | 28.1% | 16.3% | 15.0% | 18.2% | 13.6% |
Note:
1. Other items are as described in Note 4.
In addition to the amounts charged to the consolidated income statement: (i) a £3.6m credit for current tax (2023: £1.1m) relating to remeasurements of
retirement benefit liabilities has been recognised within the consolidated statement of comprehensive income; (ii) a £0.1m credit for current tax (2023:
£nil) relating to hedged items has been recognised within the consolidated statement of comprehensive income; and (iii) a £7.3m credit for current tax
(2023: £1.1m) and a £3.4m credit for deferred tax (2023: £4.9m) relating to share options have been recognised directly within equity.
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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8. Tax continued
In the year ended 31 March 2023, a credit for deferred tax of £1.5m relating to remeasurements of net defined benefit pensions liabilities was also
recognised within other comprehensive income.
Impact of Pillar Two legislation
Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Group operates. The legislation will be effective for the
Group’s financial year beginning 1 April 2024. The Group is in scope of the enacted or substantively enacted legislation and has performed an assessment
of the Group’s potential exposure to Pillar Two income taxes.
The assessment of the potential exposure to Pillar Two income taxes is based on the most recent tax filings, country-by-country reporting and financial
statements for the constituent entities in the Group. Based on the assessment, the Pillar Two effective tax rates in most of the jurisdictions in which the
Group operates are above 15%. However, there are a limited number of jurisdictions where the transitional safe harbour relief does not apply and the
Pillar Two effective tax rate is close to 15%. The Group does not expect a material exposure to Pillar Two income taxes in those jurisdictions.
9. Dividends
| 2024 | 2024 | 2023 | 2023 | |
| Pence per share | £m | Pence per share | £m | |
| Amounts recognised as distributions in the year: | ||||
Final dividend for the prior year | 2.2 | 28.6 | 1.4 | 19.5 |
Interim dividend for the current year | 1.0 | 12 .9 | 0.7 | 9.4 |
41.5 | 28.9 | |||
Proposed final dividend for the year ended 31 March | 2.2 | 28.7 |
the final dividend for the year ended 31 March 2024 will be paid on 5 August 2024 to holders on the register on 21 June 2024. The ordinary shares will
be quoted ex-dividend on 20 June 2024.
10. Earnings per share
The calculation of the basic and diluted earnings per share (EPS) is based on the following data:
| 2024 | 2023 | |
| £m | £m | |
Net profit before Other items attributable to owners of the parent | 157.8 | 128.0 |
Other items net of tax attributable to owners of the parent 1 | (31.5) | (36.9) |
Net profit attributable to owners of the parent | 126.3 | 91.1 |
Note:
1. Other items are as described in Note 4.
| 2024 | 2023 | |
| Number of shares | million | million |
Weighted average number of ordinary shares for the purpose of basic EPS 1 | 1,282.9 | 1,348.4 |
Effect of dilutive potential ordinary shares 2 | 108.9 | 132 .9 |
Weighted average number of ordinary shares for the purpose of diluted EPS 1,2 | 1, 391.8 | 1,481.3 |
Notes:
1. The weighted average number of ordinary shares in issue during the year excludes those accounted for in the Own shares reserve.
2. The dilutive potential ordinary shares relate to instruments that could potentially dilute basic earnings per share in the future, such as share-based payments. The diluted earnings
per share uses the weighted average number of shares adjusted for potentially dilutive ordinary shares, unless it has the effect of increasing the earnings per share.
| 2024 | 2023 | |
| Pence per share | Pence per share | |
Basic earnings before Other items 1 | 12.3 | 9.5 |
Basic earnings | 9.8 | 6.8 |
Diluted earnings before Other items 1 | 11. 3 | 8.6 |
Diluted earnings | 9.1 | 6.2 |
Note:
1. Other items are as described in Note 4.
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| £m | |
| Cost | |
At 1 April 2022 | 333.8 |
Arising on business combinations | 11. 0 |
At 31 March 2023 | 344.8 |
Arising on business combinations 1 | 49.4 |
At 31 March 2024 | 394.2 |
| Accumulated impairment losses | |
At 1 April 2022, 31 March 2023 and 31 March 2024 | 32.5 |
| Net book value | |
At 31 March 2024 | 361.7 |
At 31 March 2023 | 312.3 |
| Goodwill | |||
| Pre-tax | Goodwill | 2023 | |
| discount rate | 2024 | (restated) 1 | |
| % | £m | £m | |
Business Services | 10.6 | 138.1 | 111. 8 |
Technical Services | 10.6 | 133.0 | 116 . 8 |
Communities | 10.7 | 81.0 | 81.0 |
CG&D | 10.7 | 7.4 | 2.7 |
Spain | 11.0 | 2.2 | – |
Tot al | 361.7 | 312. 3 |
| Pre-tax | Goodwill | |
| discount rate | 2023 | |
| % | £m | |
Business Services | 14.7 | 105.1 |
Technical Services | 12. 3 | 116 . 8 |
Communities | 13. 8 | 81.0 |
CG&D | 13. 2 | 2.7 |
Landscapes | 12.8 | 6.7 |
Tot al | 312.3 |
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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11. Goodwill continued
| Acquisition related | |||||
| Customer | Total | Software and | |||
| contracts and | acquisition | development | |||
| relationships | Other | related | expenditure | Total | |
| £m | £m | £m | £m | £m | |
| Cost or valuation | |||||
At 1 April 2022 | 329.5 | 10.9 | 340.4 | 76.8 | 417.2 |
Additions | – | – | – | 14.3 | 14. 3 |
Arising on business combinations | 8.7 | – | 8.7 | – | 8.7 |
Disposals | – | – | – | (0.3) | (0.3) |
At 31 March 2023 | 338.2 | 10.9 | 349.1 | 90.8 | 439.9 |
Additions | – | – | – | 8.4 | 8.4 |
Arising on business combinations | 53.7 | 1.2 | 54.9 | 0.6 | 55.5 |
Disposals | (82.9) | (9.8) | (92.7) | (0.1) | (92.8) |
At 31 March 2024 | 309.0 | 2.3 | 311. 3 | 99.7 | 411. 0 |
| Amortisation and impairment | |||||
At 1 April 2022 | 113 .9 | 10.7 | 124.6 | 33.7 | 158.3 |
Charge for the year | 21. 3 | 0.1 | 21.4 | 7.8 | 29.2 |
Disposals | – | – | – | (0.3) | (0.3) |
Effect of movements in exchange rates | – | – | – | 0.1 | 0.1 |
At 31 March 2023 | 135.2 | 10.8 | 146.0 | 41.3 | 187.3 |
Charge for the year | 24.6 | 0.2 | 24.8 | 8.2 | 33.0 |
Disposals | (82.9) | (9.8) | (92.7) | (0.1) | (92.8) |
Impairments | – | – | – | 0.1 | 0.1 |
At 31 March 2024 | 76.9 | 1.2 | 78.1 | 49.5 | 127.6 |
| Net book value | |||||
At 31 March 2024 | 232.1 | 1.1 | 233.2 | 50.2 | 283.4 |
At 31 March 2023 | 203.0 | 0.1 | 203.1 | 49.5 | 252.6 |
189
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13. Property, plant and equipment
Property, plant and equipment comprise owned and leased assets.
| 2024 | 2023 | |
| £m | £m | |
Owned property, plant and equipment | 39.2 | 33.1 |
Right-of-use assets (Note 25) | 165.5 | 123.8 |
Tot al | 204.7 | 156.9 |
The table below relates to owned property, plant and equipment.
| Land and buildings | Plant and vehicles | Total | |
| £m | £m | £m | |
| Cost or valuation | |||
At 1 April 2022 | 9.0 | 58.2 | 67.2 |
Additions | – | 10.9 | 10.9 |
Disposals | (0.4) | (3.9) | (4.3) |
Arising on business combinations | – | 1.2 | 1.2 |
Effect of movements in exchange rates | – | 0.4 | 0.4 |
At 31 March 2023 | 8.6 | 66.8 | 75.4 |
Additions | 0.7 | 10.8 | 11. 5 |
Disposals | – | (8.0) | (8.0) |
Arising on business combinations | 0.7 | 5.0 | 5.7 |
Effect of movements in exchange rates | – | (0.4) | (0.4) |
At 31 March 2024 | 10.0 | 74.2 | 84.2 |
| Accumulated depreciation and impairment | |||
At 1 April 2022 | 6.3 | 31.0 | 37. 3 |
Charge for the year | 0.6 | 8.1 | 8.7 |
Disposals | (0.4) | (3.7) | (4.1) |
Effect of movements in exchange rates | – | 0.4 | 0.4 |
At 31 March 2023 | 6.5 | 35.8 | 42.3 |
Charge for the year | 0.7 | 9.8 | 10.5 |
Disposals | – | (7.7) | (7.7) |
Effect of movements in exchange rates | – | (0.1) | (0.1) |
At 31 March 2024 | 7.2 | 37.8 | 45.0 |
| Net book value | |||
At 31 March 2024 | 2.8 | 36.4 | 39.2 |
At 31 March 2023 | 2.1 | 31.0 | 33.1 |
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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| 2024 | 2023 | |||
Ownership % | Nature of relationship | £m | £m | |
Landmarc | 51 | Joint venture until | – | 7.9 |
| 16 November 2023 | ||||
Sussex | 35 | Associate | 0.9 | 0.6 |
Other | Joint ventures | – | 0.3 | |
At 31 March | 0.9 | 8.8 |
2024 | 2023 | ||||
| Group share | Group share | ||||
| of joint ventures | of joint ventures | ||||
Landmarc 1 | Sussex 1 | Other 1 | and associates | and associates | |
| £m | £m | £m | £m | £m | |
At 1 April | 7.9 | 0.6 | 0.3 | 8.8 | 11. 9 |
Share of profit before Other Items | 4.6 | 1.8 | – | 6.4 | 8.3 |
Share of other comprehensive expense | (0.1) | – | – | (0.1) | (2.4) |
Dividends | (6.9) | (1.5) | – | (8.4) | (9.0) |
De-recognised on obtaining control 2 | (5.5) | – | (0.3) | (5.8) | – |
At 31 March | – | 0.9 | – | 0.9 | 8.8 |
2024 | 2023 | ||||||
Landmarc 1 | Sussex | Total | Landmarc | Sussex | Other | Total | |
| £m | £m | £m | £m | £m | £m | £m | |
Revenue (100%) | 108.8 | 28.6 | 137.4 | 196. 5 | 28.4 | – | 224.9 |
| Group’s share of revenue of joint ventures | |||||||
and associates | 55.5 | 10.0 | 65.5 | 100.2 | 9.9 | – | 110 .1 |
Depreciation and amortisation | (0.7) | – | (0.7) | (1.4) | – | – | (1.4) |
Operating profit/(loss) | 10.9 | 4.5 | 15.4 | 18.8 | 3.0 | (0.9) | 20.9 |
Finance income | 0.2 | – | 0.2 | 0.3 | – | – | 0.3 |
Tax (expense)/credit | (2.1) | 0.5 | (1.6) | (3.6) | (0.6) | – | (4.2) |
Profit/(loss) for the year | 9.0 | 5.0 | 14.0 | 15. 5 | 2.4 | (0.9) | 17.0 |
Other comprehensive expense | (0.2) | – | (0.2) | (4.7) | – | – | (4.7) |
Total comprehensive income/(expense) (100%) | 8.8 | 5.0 | 13.8 | 10.8 | 2.4 | (0.9) | 12. 3 |
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14. Interests in joint ventures and associates continued
2024 | 2023 | ||||||
| Sussex | Other | Total | Landmarc | Sussex | Other | Total | |
| £m | £m | £m | £m | £m | £m | £m | |
Non-current assets | – | – | – | 5.8 | – | – | 5.8 |
Current assets | 7.9 | 0.8 | 8.7 | 52.6 | 9.9 | 1.3 | 63.8 |
Current liabilities | (5.4) | (0.8) | (6.2) | (43.0) | (8.3) | (0.8) | (52.1) |
Net assets (100%) | 2.5 | – | 2.5 | 15.4 | 1.6 | 0.5 | 17. 5 |
Group’s share of net assets | 0.9 | – | 0.9 | 7.9 | 0.6 | 0.3 | 8.8 |
| The above includes the following: | |||||||
Cash and cash equivalents (100%) | 0.5 | 0.8 | 1.3 | 35.4 | 5.3 | 1.3 | 42.0 |
| The Group is not aware of any material commitments in respect of its interests in joint ventures and associates. There are no significant restrictions on the |
| 2024 | 2023 | |
| £m | £m | |
Trade receivables | 411. 5 | 450.8 |
Accrued income | 302.7 | 278.9 |
Prepayments | 50.5 | 40.2 |
Other receivables | 31.4 | 40.4 |
Tot al | 796.1 | 810.3 |
Included in current assets | 775.1 | 786.8 |
Included in non-current assets | 21.0 | 23.5 |
Tot al | 796.1 810.3 |
| Pre-contract | Contract | ||
| costs | fulfilment costs | Total | |
| £m | £m | £m | |
At 1 April 2022 | 0.7 | 2.5 | 3.2 |
| Amortisation | (0.1) | (1.2) | (1.3) |
At 31 March 2023 | 0.6 | 1.3 | 1.9 |
Additions | – | 1.0 | 1.0 |
Amortisation | (0.4) | (1.0) | (1.4) |
At 31 March 2024 | 0.2 | 1.3 | 1.5 |
Included in current assets | 0.1 | 0.9 | 1.0 |
Included in non-current assets | 0.1 | 0.4 | 0.5 |
Tot al | 0.2 | 1.3 | 1.5 |
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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17. Inventories
| 2024 | 2023 | |
| £m | £m | |
Materials and total | 14.7 | 13. 5 |
| 2024 | 2023 | |
| £m | £m | |
Trade payables | 171.6 | 230.5 |
Other taxes and social security | 156.1 | 123.0 |
Other payables | 42.9 | 22.7 |
Accruals | 534.5 | 525.6 |
Tot al | 905.1 | 901.8 |
Included in current liabilities | 892.4 | 899. 5 |
Included in non-current liabilities | 12.7 | 2.3 |
Tot al | 905.1 | 901.8 |
| 2024 | 2023 | |
| £m | £m | |
At 1 April | 103.1 | 116 .1 |
Revenue recognised that was included in the deferred income balance at the beginning of the year | (65.4) | (83.7) |
Increase due to cash received, excluding amounts recognised as revenue during the year | 65.4 | 68.3 |
Arising on business combinations | 4.2 | 2.4 |
At 31 March | 107.3 | 103.1 |
Included within current liabilities | 91.8 | 83.3 |
Included within non-current liabilities | 15.5 | 19.8 |
Tot al | 107.3 | 103.1 |
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Strategic report Governance Financial statements
| Contract | Insurance | ||||||
| specific costs | reserve | Pension | Dilapidations | Restructuring | Other | Total | |
| £m | £m | £m | £m | £m | £m | £m | |
At 1 April 2023 | 49.3 | 26.2 | 21.7 | 8.0 | 2.5 | 3.7 | 111.4 |
Additional provisions | 18.9 | 9.4 | – | 0.3 | 2.1 | 0.9 | 31.6 |
Released to the consolidated income statement | (11. 3) | – | – | (0.2) | – | (0.4) | (11.9) |
Arising on business combinations | 2.7 | – | – | 0.1 | – | 0.9 | 3.7 |
Utilised | (10.4) | (8.4) | – | – | (2.2) | (0.6) | (21.6) |
At 31 March 2024 | 49.2 | 27. 2 | 21.7 | 8.2 | 2.4 | 4.5 | 113 . 2 |
Included in current liabilities | 27.8 | 9.5 | 21.7 | 1.0 | 2.4 | 4.1 | 66.5 |
Included in non-current liabilities | 21.4 | 17.7 | – | 7.2 | – | 0.4 | 46.7 |
Tot al | 49.2 | 27.2 | 21.7 | 8.2 | 2.4 | 4.5 | 113 .2 |
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
194
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| Accelerated | Retirement | Intangible | Short-term | ||||
| capital | benefit | assets | Share | timing | |||
| Losses | allowances | liabilities | acquired | options | differences | Total 1 | |
| Assets/(liabilities) | £m | £m | £m | £m | £m | £m | £m |
At 1 April 2022 | 34.1 | 13. 5 | 2.6 | (52.7) | 6.5 | 7.1 | 11.1 |
Arising on business combinations | – | (0.2) | – | (2.1) | – | 0.4 | (1.9) |
Credit/(charge) to consolidated income statement | 5.5 | (3.7) | (3.6) | 4.1 | 0.6 | 1.9 | 4.8 |
Credit to equity and other comprehensive income | – | – | 1.5 | – | 4.9 | – | 6.4 |
At 31 March 2023 | 39.6 | 9.6 | 0.5 | (50.7) | 12.0 | 9.4 | 20.4 |
Arising on business combinations | 1.1 | – | – | (13.7 ) | – | – | (12.6) |
(Charge)/credit to consolidated income statement | (9.9) | (2.0) | 0.7 | 6.2 | 1.2 | 0.5 | (3.3) |
Credit to equity and other comprehensive income | – | – | – | – | 3.4 | – | 3.4 |
At 31 March 2024 | 30.8 | 7.6 | 1.2 | (58.2) | 16.6 | 9.9 | 7.9 |
22. Cash and cash equivalents
| 2024 | 2023 | |
| £m | £m | |
Cash and cash equivalents | 244.9 | 248.3 |
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 Group
operates cash-pooling arrangements with certain banks for cash management purposes.
| 2024 | 2023 | |
| £m | £m | |
Bank loans – under committed facilities | – | 8.4 |
Private placement notes | 150.0 | 150.0 |
Lease liabilities (Note 25) | 174.0 | 129.4 |
Loan arrangement fees | (2.5) | (1.8) |
Tot al | 321.5 | 286.0 |
Included in current liabilities | 73.8 | 32.0 |
Included in non-current liabilities | 247.7 | 254.0 |
Tot al | 321.5 | 286.0 |
195
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Strategic report Governance Financial statements
23. Financing liabilities continued
| 2024 | 2023 | |
| % | % | |
Bank loans | 4.9 | 2.9 |
Private placement notes | 3.2 | 3.9 |
Tranche | Maturity date | Amount | Interest terms |
12 year | 16 December 2024 | £30.0m | £ fixed at 4.04% |
8 year | 16 December 2030 | £40.0m | £ fixed at 2.84% |
10 year | 16 December 2032 | £40.0m | £ fixed at 2.97% |
12 year | 16 December 2034 | £40.0m | £ fixed at 3.00% |
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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24. Financial instruments continued
| 2024 | 2023 | |
| £m | £m | |
| Held at amortised cost | ||
Cash and cash equivalents (Note 22) | 244.9 | 248.3 |
Trade receivables (Note 15) | 411. 5 | 450.8 |
Accrued income (Note 15) | 302.7 | 278.9 |
Other receivables (Note 15) | 30.5 | 39.4 |
Financing liabilities (Note 23) | (321.5) | (286.0) |
Trade payables (Note 18) | (171.6) | (230.5) |
Other payables (Note 18) | (42.7) | (22.2) |
Accruals (Note 18) | (534.5) | (525.6) |
| Held at fair value through profit and loss (FVTPL) | ||
Other payables (Note 18) | (0.2) | (0.5) |
| Held at fair value through other comprehensive income (FVTOCI) | ||
Other receivables (Note 15) | 0.9 | 1.0 |
| 2024 | 2023 | ||||||
| £m | £m | ||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||
Financial assets held at fair value through other comprehensive income | |||||||
Other receivables (Note 31) | – | 0.9 | – | – | 1.0 | – | |
Assets measured at fair value | – | 0.9 | – | – | 1.0 | – | |
Financial liabilities held at fair value through profit and loss | |||||||
Other payables (Note 29) | – | – | (0.2) | – | – | (0.5) | |
Liabilities measured at fair value | – | – | (0.2) | – | – | (0.5) |
197
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Strategic report Governance Financial statements
24. Financial instruments continued
| Within | Between one | After | ||
| one year | and five years | five years | Total | |
| Financial liabilities at 31 March 2024 | £m | £m | £m | £m |
Trade payables | 171.6 | – | – | 171.6 |
Other payables | 30.2 | 12 .7 | – | 42.9 |
Accruals | 534.5 | – | – | 534.5 |
Financing liabilities | 87.3 | 141.7 | 150.8 | 379.8 |
Financial liabilities | 823.6 | 154.4 | 150.8 | 1,128.8 |
| Within | Between one | After | ||
| one year | and five years | five years | Total | |
| Financial liabilities at 31 March 2023 | £m | £m | £m | £m |
Trade payables | 230.5 | – | – | 230.5 |
Other payables | 20.4 | 2.3 | – | 22.7 |
Accruals | 525.6 | – | – | 525.6 |
Financing liabilities | 50.2 | 134.6 | 155.3 | 340.1 |
Financial liabilities | 826.7 | 136.9 | 155.3 | 1,118 .9 |
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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24. Financial instruments continued
2024 | 2023 | |||||
| Gross carrying | Net carrying | Gross carrying | Net carrying | |||
| amount | Loss allowance | amount | amount | Loss allowance | amount | |
| Trade receivables | £m | £m | £m | £m | £m | £m |
Current (not overdue) | 370.8 | (1.2) | 369.6 | 420.5 | (2.4) | 418.1 |
1-30 days overdue | 28.4 | (0.1) | 28.3 | 25.4 | (0.2) | 25.2 |
31-60 days overdue | 5.6 | (0.1) | 5.5 | 5.4 | (0.1) | 5.3 |
61-90 days overdue | 6.6 | (0.1) | 6.5 | 2.0 | (0.1) | 1.9 |
More than 90 days overdue | 10.4 | (8.8) | 1.6 | 10.8 | (10. 5) | 0.3 |
Tot al | 421.8 | (10.3) | 411. 5 | 464.1 | (13.3) | 450.8 |
2024 | 2023 | |||||
| Gross carrying | Net carrying | Gross carrying | Net carrying | |||
| amount | Loss allowance | amount | amount | Loss allowance | amount | |
| Accrued income | £m | £m | £m | £m | £m | £m |
1-30 days overdue | 241.6 | (1.1) | 240.5 | 225.4 | (3.1) | 222.3 |
31-60 days overdue | 23.1 | (0.2) | 22.9 | 22.5 | (0.2) | 22.3 |
61-90 days overdue | 13.1 | (0.2) | 12.9 | 11.4 | (0.2) | 11. 2 |
More than 90 days overdue | 39.0 | (12.6) | 26.4 | 31.2 | (8.1) | 23.1 |
Tot al | 316.8 | (14.1) | 302.7 | 290.5 | (11. 6 ) | 278.9 |
2024 | 2023 | |||||||
| Trade | Accrued | Other | Trade | Accrued | Other | |||
| receivables | income | receivables | Total | receivables | income | receivables | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | |
At 1 April | 13.3 | 11. 6 | 6.2 | 31.1 | 11.9 | 10.1 | 3.7 | 25.7 |
Net (reversal) of impairment losses/impairment | (2.3) | 2.5 | 2.4 | 2.6 | 1.3 | 1.5 | 2.5 | 5.3 |
Utilised | (0.7) | – | – | (0.7) | – | – | – | – |
Acquisition of businesses | – | – | – | – | 0.1 | – | – | 0.1 |
At 31 March | 10.3 | 14.1 | 8.6 | 33.0 | 13.3 | 11. 6 | 6.2 | 31.1 |
199
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Strategic report Governance Financial statements
25. Leases
| Properties | Plant and vehicles | Total | |
| Right-of-use assets | £m | £m | £m |
At 1 April 2022 | 42.3 | 71.7 | 114.0 |
Additions | 1.0 | 40.7 | 41.7 |
Arising on business combinations | 0.6 | 0.1 | 0.7 |
Impairment | (0.2) | – | (0.2) |
Modifications to lease terms and disposals | 0.5 | 1.5 | 2.0 |
Depreciation | (6.3) | (28.1) | (34.4) |
At 31 March 2023 | 37.9 | 85.9 | 123.8 |
Additions | 2.0 | 76.1 | 78.1 |
Arising on business combinations | 2.6 | 2.6 | 5.2 |
Modifications to lease terms and disposals | 0.1 | (3.8) | (3.7) |
Depreciation | (7.4) | (30.3) | (37.7) |
Effect of movement in exchange rates | – | (0.2) | (0.2) |
At 31 March 2024 | 35.2 | 130.3 | 165.5 |
Lease liabilities
| 2024 | 2023 | |
| £m | £m | |
At 1 April | 129.4 | 122. 5 |
Additions | 80.2 | 42.0 |
Arising on business combinations | 5.1 | 0.5 |
Modifications to lease terms and disposals | 0.3 | (1.1) |
Interest expense related to lease liabilities | 5.6 | 4.2 |
Repayment of lease liabilities (including interest) | (46.6) | (38.7) |
At 31 March | 174.0 | 129.4 |
Included in current financing liabilities | 44.4 | 32.0 |
Included in non-current financing liabilities | 129.6 | 97.4 |
Tot al | 174.0 | 129.4 |
| 2024 | 2023 | |
| Maturity analysis – contractual undiscounted cash flows | £m | £m |
Less than one year | 50.8 | 36.1 |
One to five years | 124.1 | 87.0 |
More than five years | 16.6 | 18.4 |
Total undiscounted lease liabilities | 191.5 | 141.5 |
| 2024 | 2023 | |
| Amounts recognised in the consolidated income statement | £m | £m |
Depreciation of right-of-use assets | (37.7) | (34.4) |
Short-term lease expense | (0.4) | (0.1) |
Operating profit impact | (38.1) | (34.5) |
Interest on lease liabilities | (5.6) | (4.2) |
Profit before tax impact | (43.7) | (38.7) |
| 2024 | 2023 | |
| Amounts recognised in the consolidated statement of cash flows | £m | £m |
Total cash outflow for capitalised leases 1 | 46.6 | 38.7 |
Note:
1. Includes capital element of lease rental payments of £41.0m (2023: £34.5m) and interest payments of £5.6m (2023: £4.2m).
As set out in the Task Force on Climate-related Financial Disclosures (TCFD) disclosures, the Group is in the process of transitioning to an all-electric
fleet in response to climate change. While the fleet utilising fossil fuels will be phased out, existing vehicle leases are generally held for the full lease term.
There is therefore no significant impact on the useful economic life of the current leased vehicles as a result of climate change commitments.
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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26. Analysis of net debt
| 2024 | 2023 | |
| £m | £m | |
Cash and cash equivalents (Note 22) | 244.9 | 248.3 |
Adjusted for: restricted cash (Note 22) | (4.2) | (6.4) |
Bank loans (Note 23) | – | (8.4) |
Private placement notes (Note 23) | (150.0) | (150.0) |
Loan arrangement fees (Note 23) | 2.5 | 1.8 |
Net cash before lease obligations | 93.2 | 85.3 |
Lease liabilities (Note 25) | (174.0) | (129.4) |
Net debt | (80.8) | (44.1) |
| 2024 | 2023 | |
| Reconciliation of net cash flow to movements in net debt | £m | £m |
Net decrease in cash and cash equivalents | (2.9) | (97.9) |
Decrease in restricted cash and cash held on trust 1 | 2.2 | 31.1 |
Net decrease in unrestricted cash and cash equivalents | (0.7) | (66.8) |
| Cash drivers | ||
Proceeds from new private placement notes | – | (120.0) |
Private placement notes repaid | – | 150.8 |
Settlement of derivative financial instruments | – | (29.2) |
Repayment of bank loans | 8.4 | 4.1 |
Payment of arrangement fees | 1.2 | 0.5 |
Capital element of lease rentals | 41.0 | 34.5 |
| Non-cash drivers | ||
Non-cash movement associated with bank loans | (0.4) | (0.4) |
Non-cash movement associated with private placement notes | (0.1) | (0.3) |
Non-cash movement in lease liabilities | (85.6) | (41.4) |
Effect of foreign exchange rate changes | (0.5) | 1.0 |
Increase in net debt during the year | (36.7) | (67. 2) |
Opening net (debt)/cash | (44.1) | 26.7 |
Debt acquired as part of business combinations | – | (3.6) |
Closing net debt | (80.8) | (4 4.1) |
Note:
1. Includes decrease in restricted cash of £2.2m (2023: £11.1m). Amounts for the year ended 31 March 2023, a decrease of £20.0m in respect of the cash that was held across the
Group’s bank accounts at 31 March 2022 was also included in respect of the customer invoice discounting (CID) facility where cash collected from the Group’s customers was held
on trust for the CID facility provider and was subsequently remitted to the CID facility provider by 5 April 2022.
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Ordinary shares | Share capital | Share premium | ||||
| 2024 | 2023 | |||||
| Number | Number | 2024 | 2023 | 2024 | 2023 | |
| million | million | £m | £m | £m | £m | |
At 1 April | 1,365.3 | 1,432.5 | 34.0 | 35.7 | 131.5 | 130.6 |
Issue of shares | 1.2 | 1.6 | – | – | 0.5 | 0.9 |
Shares cancelled | (26.1) | (68.8) | (0.7) | (1.7) | – | – |
At 31 March | 1,340.4 | 1,365.3 | 33.3 | 34.0 | 132.0 | 131.5 |
| 2024 | 2023 | |
| £m | £m | |
Share-based payment expense (Note 30) | 20.3 | 17.3 |
Cash received from the exercise of SAYE scheme options | 8.0 | 1.6 |
Dividend equivalents (Note 30) | (2.8) | (2.2) |
At 31 March | 25.5 | 16.7 |
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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28. Reserves continued
29. Acquisitions
Current year acquisitions
Linx International
On 5 April 2023, the Group completed the acquisition of the entire issued share capital of Linx International Group Limited (Linx International) for cash
consideration of £1.1m. Linx International is a leading provider of security consultancy and technical and management training services.
Linx International contributed £3.6m of revenue and £0.8m of operating profit before Other items to the Group’s results during the year ended
31 March 2024. Goodwill on the acquisition of Linx International represents the premium associated with acquiring the operations which are considered
to strengthen Mitie’s intelligence-led security and risk management offering.
The Group’s final assessment of the fair values of the assets and liabilities recognised as a result of the acquisition has been based on the total fair value of
the consideration. The purchase price allocation is as follows:
| Fair value | |||
| Book value | adjustments | Fair value | |
| £m | £m | £m | |
Customer contracts and relationships | – | 0.3 | 0.3 |
Other intangible assets | 0.3 | – | 0.3 |
Trade and other receivables | 0.1 | – | 0.1 |
Cash and cash equivalents | 0.2 | – | 0.2 |
Trade and other payables | (0.2) | – | (0.2) |
Current tax liabilities | (0.1) | – | (0.1) |
Deferred tax liabilities | – | (0.1) | (0.1) |
Net identifiable assets acquired | 0.3 | 0.2 | 0.5 |
Goodwill | 0.6 | ||
Total cash consideration | 1.1 |
The estimated fair value of trade and other receivables was £0.1m, which approximated the gross contractual amount.
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29. Acquisitions continued
RHI Industrials
On 2 May 2023, the Group completed the acquisition of the entire issued share capital of RHI Industrials Limited (RHI Industrials), a specialist designer,
manufacturer and installer of security systems and solutions, as well as earthing services and all associated civil engineering works. The transaction
consideration was £20.2m, comprised of initial cash consideration of £19.1m and contingent consideration of £1.1m, which was paid in January 2024.
RHI Industrials contributed £17.0m of revenue and £1.2m of operating profit before Other items to the Group’s results during the year ended
31 March 2024.
Goodwill on the acquisition of RHI Industrials represents the premium associated with acquiring the operations which are considered to strengthen the
Group’s existing fire and security system capabilities.
The Group’s final assessment of the fair values of the assets and liabilities recognised as a result of the acquisition has been based on the total fair value of
the consideration. The purchase price allocation is as follows:
| Fair value | Provisional | ||
| Book value | adjustments | fair value | |
| £m | £m | £m | |
Customer contracts and relationships | – | 3.4 | 3.4 |
Property, plant and equipment | 0.2 | – | 0.2 |
Right-of-use assets | 0.7 | 0.4 | 1.1 |
Inventories | 0.2 | – | 0.2 |
Trade and other receivables | 4.5 | – | 4.5 |
Cash and cash equivalents | 1.4 | – | 1.4 |
Trade and other payables | (2.8) | – | (2.8) |
Lease liabilities | (0.7) | (0.3) | (1.0) |
Deferred tax liabilities | (0.1) | (0.9) | (1.0) |
Net identifiable assets acquired | 3.4 | 2.6 | 6.0 |
Goodwill | 14.2 | ||
Total cash consideration | 20.2 | ||
Initial cash consideration | 19.1 | ||
Contingent consideration | 1.1 | ||
Total consideration | 20.2 |
The estimated fair value of trade and other receivables was £4.5m, which approximated the gross contractual amount.
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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29. Acquisitions continued
JCA Engineering
On 3 September 2023, the Group completed the acquisition of the entire issued share capital of JCA Head Co Limited (JCA Engineering), a leading
critical environment project designer and principal contractor for mechanical and electrical works, asset upgrades and replacements, and office fitouts.
The transaction consideration comprises cash consideration of £45.0m.
Amounts up to a maximum of £10.5m payable to the former owners of the business have been accounted for as remuneration for post acquisition
employment services because a condition of receiving the payment is the individuals’ continued employment within the Mitie Group. These amounts are
payable based on three performance periods for the years ending 31 March 2024, 2025 and 2026 up to a maximum of £10.5m in total. These payments
are accrued over the period that the related employment services are received, up until the point at which the consideration becomes payable. As at
31 March 2024, £4.8m was included in other payables relating to these transactions and the expense has been included in administrative expenses and
classified as Other items within the consolidated income statement.
JCA Engineering contributed £66.9m of revenue and £4.7m of operating profit before Other items to the Group’s results during the year ended
31 March 2024.
Goodwill on the acquisition of JCA Engineering represents the premium associated with taking over the operations, which are considered to strengthen
the Group’s critical environment capabilities.
The Group’s provisional assessment of the fair values of the assets and liabilities recognised as a result of the acquisition has been based on the total fair
value of the consideration. Management continues to seek further information to complete accounting on the business combination within the 12-month
measurement period. The provisional purchase price allocation is as follows:
| Fair value | Provisional | ||
| Book value | adjustments | fair value | |
| £m | £m | £m | |
Customer contracts and relationships | – | 15.3 | 15.3 |
Brand | – | 0.4 | 0.4 |
Property, plant and equipment | 0.1 | – | 0.1 |
Right-of-use assets | – | 0.4 | 0.4 |
Deferred tax assets | 1.1 | – | 1.1 |
Current tax assets | 1.8 | – | 1.8 |
Trade and other receivables | 11. 7 | – | 11.7 |
Cash and cash equivalents | 19.2 | – | 19.2 |
Trade and other payables | (12. 8) | – | (12.8) |
Deferred income | (3.3) | – | (3.3) |
Provisions | (0.1) | – | (0.1) |
Lease liabilities | – | (0.4) | (0.4) |
Current tax liabilities | (0.7) | – | (0.7) |
Deferred tax liabilities | – | (3.9) | (3.9) |
Net identifiable assets acquired | 17.0 | 11. 8 | 28.8 |
Goodwill | 16.2 | ||
Total cash consideration | 45.0 |
The fair value of acquired trade and other receivables is £11.7m. The gross contractual amount for trade and other receivables due is £11.8m, with a loss
allowance of £0.1m recognised on acquisition.
Biservicus
On 7 September 2023, the Group completed the acquisition of the entire issued share capital of Biservicus Sistemas De Seguridad S.A. (Biservicus),
a security business in Spain specialising in the installation, maintenance, surveillance and operation of fire, security, and alarm systems. The transaction
consideration comprises an initial cash consideration equivalent to £2.7m and contingent consideration with a fair value of £0.2m, which is also the
maximum contingent consideration payable.
Biservicus contributed £4.1m of revenue and £0.4m of operating profit before Other items to the Group’s results during the year ended 31 March 2024.
Goodwill on the acquisition of Biservicus represents the premium associated with taking over the operations, which are considered to strengthen the
Group’s existing fire and security system capabilities.
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29. Acquisitions continued
The Group’s provisional assessment of the fair values of the assets and liabilities recognised as a result of the acquisition has been based on the total fair
value of the consideration. Management continues to seek further information to complete accounting on the business combination within the 12-month
measurement period. The provisional purchase price allocation is as follows:
| Fair value | Provisional | ||
| Book value | adjustments | fair value | |
| £m | £m | £m | |
Customer contracts and relationships | – | 0.1 | 0.1 |
Other intangible assets | 0.1 | – | 0.1 |
Property, plant and equipment | 0.5 | – | 0.5 |
Inventories | 0.1 | – | 0.1 |
Trade and other receivables | 0.7 | – | 0.7 |
Cash and cash equivalents | 0.2 | – | 0.2 |
Trade and other payables | (0.7) | – | (0.7) |
Deferred income | (0.3) | – | (0.3) |
Net identifiable assets acquired | 0.6 | 0.1 | 0.7 |
Goodwill | 2.2 | ||
Total cash consideration | 2.9 | ||
Initial cash consideration | 2.7 | ||
Contingent consideration | 0.2 | ||
Total consideration | 2.9 |
The estimated fair value of trade and other receivables is £0.7m, which approximates the gross contractual amount.
Cliniwaste
On 9 October 2023, the Group acquired Cliniwaste Holdings Limited (Cliniwaste) for cash consideration of £1.0m. Cliniwaste specialises in treating
plastic waste generated by the NHS and pharmaceutical manufacturers, turning it into a reusable resource. The transaction consideration comprised
cash consideration of £1.0m.
Cliniwaste contributed £2.0m of revenue and £0.3m of operating loss before Other items to the Group’s results during the year ended 31 March 2024.
Goodwill on the acquisition of Cliniwaste represents the premium associated with taking over the operations, which are considered to strengthen the
Group’s ability to provide sustainable waste management solutions to its clients, particularly in the healthcare and pharmaceutical sectors.
The Group’s provisional assessment of the fair values of the assets and liabilities recognised as a result of the acquisition has been based on the total fair
value of the consideration. Management continues to seek further information to complete accounting on the business combination within the 12-month
measurement period. The provisional purchase price allocation is as follows:
| Fair value | Provisional | ||
| Book value | adjustments | fair value | |
| £m | £m | £m | |
Other intangible assets | 0.2 | – | 0.2 |
Property, plant and equipment | 1.5 | – | 1.5 |
Right-of-use assets | – | 2.0 | 2.0 |
Trade and other receivables | 1.0 | – | 1.0 |
Cash and cash equivalents | 0.6 | – | 0.6 |
Trade and other payables | (3.8) | (0.3) | (4.1) |
Provisions | – | (0.9) | (0.9) |
Lease liabilities | – | (2.0) | (2.0) |
Current tax liabilities | (0.2) | – | (0.2) |
Deferred tax liabilities | (0.6) | – | (0.6) |
Net identifiable liabilities acquired | (1.3) | (1.2) | (2.5) |
Goodwill | 3.5 | ||
Total cash consideration | 1.0 |
The estimated fair value of trade and other receivables was £1.0m, which approximated the gross contractual amount.
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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29. Acquisitions continued
GBE
On 1 November 2023, the Group completed the acquisition of GBE Converge Group Ltd (GBE), a leading independent provider of fire, security and
information and communications technology (ICT) solutions. The transaction consideration comprised cash consideration of £17.6m.
Amounts up to a maximum of £7.0m payable to the former owners of the business have been treated as remuneration for post acquisition employment
services because a condition of receiving the payment is the individuals’ continued employment within the Mitie Group. These amounts are payable based
on three performance periods for the years ending 31 October 2024, 2025 and 2026 up to a maximum of £7.0m in total. These payments are accrued
over the period that the related employment services are received up until the point at which the consideration becomes payable. As at 31 March 2024,
£1.4m was included in other payables relating to these transactions, and the expense has been included in administrative expenses and classified as
Other items within the consolidated income statement.
GBE contributed £19.3m of revenue and £0.2m of operating loss before Other items to the Group’s results during the year ended 31 March 2024.
Goodwill on the acquisition of GBE represents the premium associated with taking over the operations, which are considered to strengthen the Group’s
existing fire, security and information system capabilities.
The Group’s provisional assessment of the fair values of the assets and liabilities recognised as a result of the acquisition has been based on the total fair
value of the consideration. Management continues to seek further information to complete accounting on the business combination within the 12-month
measurement period. The provisional purchase price allocation is as follows:
| Fair value | Provisional | ||
| Book value | adjustments | fair value | |
| £m | £m | £m | |
Customer contracts and relationships | – | 2.7 | 2.7 |
Brand | – | 0.1 | 0.1 |
Property, plant and equipment | 0.3 | – | 0.3 |
Right-of-use assets | – | 0.4 | 0.4 |
Inventories | 0.5 | – | 0.5 |
Trade and other receivables | 16.9 | – | 16.9 |
Cash and cash equivalents | 0.4 | – | 0.4 |
Trade and other payables | (9.4) | – | (9.4) |
Provisions | (1.0) | – | (1.0) |
Deferred income | (0.2) | – | (0.2) |
Lease liabilities | – | (0.4) | (0.4) |
Deferred tax liabilities | – | (0.7) | (0.7) |
Net identifiable assets acquired | 7. 5 | 2.1 | 9.6 |
Goodwill | 8.0 | ||
Total cash consideration | 17.6 |
The fair value of acquired trade and other receivables is £16.9m. The gross contractual amount for trade and other receivables due is £17.6m, with a loss
allowance of £0.7m recognised.
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29. Acquisitions continued
Landmarc
The Group holds 51% of the equity shares in Landmarc Support Services Limited (Landmarc). The remaining 49% of the equity shares in Landmarc are
held by a single third party (the joint venture partner). Prior to 16 November 2023, management considered Landmarc to be a joint venture despite the
Group having majority shareholding. This was because, under the terms of the shareholders’ agreement prevalent prior to that date, joint agreement was
required with the other party to pass resolutions for all significant activities.
On 10 October 2023, the Group entered into an agreement with the joint venture partner to amend the Landmarc shareholders’ agreement. The change
of control in relation to Landmarc required a mandatory notification under the UK National Security and Investment Act 2021 due to Landmarc’s business
of providing services for the management and operation of the UK Defence Training Estate. Clearance was granted on 16 November 2023 at which point
the amendments to the shareholders’ agreement became effective. From that date onwards Landmarc has been consolidated as a subsidiary of the Group.
No cash was transferred to achieve control and the deemed consideration for the purpose of acquisition accounting is the fair value of the Group’s
previously held interest in Landmarc at the date of obtaining control. The fair value has been determined with the assistance of third-party valuation
specialists by discounting the future cash flows expected to be generated by Landmarc at a discount rate to reflect the risks associated with the cash
flows. The determined fair value of the Group’s 51% interest in Landmarc was £23.7m which was £17.9m greater than the £5.8m carrying amount of
the investment at the date of obtaining control. This £17.9m fair value gain has been included in other income and classified as Other items within the
consolidated income statement (see Note 4).
The provisional fair values of assets and liabilities acquired are as follows:
| Fair value | Provisional | ||
| Book value | adjustments | fair value | |
| £m | £m | £m | |
Customer contracts and relationships | – | 31.9 | 31.9 |
Brand | – | 0.7 | 0.7 |
Property, plant and equipment | 3.1 | – | 3.1 |
Right-of-use assets | – | 1.3 | 1.3 |
Retirement benefit asset | 2.8 | – | 2.8 |
Deferred tax assets | 0.7 | – | 0.7 |
Trade and other receivables | 22.0 | – | 22.0 |
Cash and cash equivalents | 31.6 | – | 31.6 |
Trade and other payables | (45.0) | – | (45.0) |
Provisions | (1.7) | – | (1.7) |
Deferred income | (0.4) | – | (0.4) |
Lease liabilities | – | (1.3) | (1.3) |
Current tax liabilities | (0.3) | – | (0.3) |
Deferred tax liabilities | – | (8.1) | (8.1) |
Net identifiable assets acquired | 12.8 | 24.5 | 37.3 |
Non-controlling interest 1 | (18.3) | ||
Goodwill | 4.7 | ||
Deemed consideration (fair value of previously held investment) | 23.7 |
Note:
1. The Group has opted to recognise the non-controlling interest in Landmarc at its proportionate share of the acquired identifiable net assets.
As a subsidiary, Landmarc contributed £78.8m of revenue and £13.5m of operating profit before Other items to the Group’s results during the year ended
31 March 2024.
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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29. Acquisitions continued
Revenue and operating profit from acquisitions
Five of the seven acquisitions made during the period have been integrated into the Business Services division (Linx International, RHI Industrials, Biservicus,
Cliniwaste and GBE). JCA Engineering has been integrated into the Technical Services division, and Landmarc has been integrated into the CG&D division.
The acquired entities from the date of obtaining control for the year ended 31 March 2024, contributed £191.7m of revenue and £20.1m of operating
profit before Other items to the Group’s results.
Based on estimates made of the full year impact if all acquisitions had been completed on 1 April 2023, Group revenue for the year would have increased
by approximately £268.9m and operating profit before Other items would have increased by £9.5m, resulting in total Group revenue of £4,714.1m and
total Group operating profit before Other items of £219.7m.
Cash flows on acquisitions
| 2024 | 2023 | |
| £m | £m | |
Cash consideration | 87.6 | 18.6 |
Less: cash balance acquired | (53.6) | (2.0) |
Net outflow of cash – investing activities | 34.0 | 16.6 |
G2 Energy Limited asset purchase
On 28 July 2023, Mitie acquired a portfolio of assets from the liquidators of G2 Energy Limited for cash consideration of £0.6m. The purchase enhances
Mitie’s high voltage electrical and civil engineering capabilities. This has been accounted for as an asset purchase.
30. Share-based payments
The Group has seven equity-settled share schemes. The Group also has awarded performance-related bonuses for Executive Directors which are
deferred in conditional shares under the Mitie Group plc 2010 Deferred Bonus Plan (DBP) and are accounted for as a share-based payment charge.
The Mitie Group plc Long Term Incentive Plan (LTIP)
The conditional awards of shares or rights to acquire shares (the awards) are offered to a small number of key senior management personnel. Where
offered as options, the exercise price is £nil. The vesting period is generally three years, although some awards 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 that are based on movements
in a range of non-market measures over a three-year period.
Retention Share Plan (RSP)
The RSP was introduced in the year ended 31 March 2022. The conditional awards of shares or rights to acquire shares (the awards) are offered to a
small number of key senior management personnel. Where offered as options, the exercise price is £nil. The vesting period is 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.
There are no performance conditions attached to these awards.
The Enhanced Delivery Plan (EDP)
The EDP was introduced in the year ended 31 March 2021. The conditional awards of shares or the rights to acquire shares (the awards) are offered to a
small number of key senior management personnel. Where offered as options, the exercise price is £nil. The vesting period is three years, and awards are
subject to a holding period of two additional years. If the awards remain unexercised after a period of twelve months from the date of vesting (but subject
to the additional holding period), 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 that are based on movements in non-market measures over a three-year period.
The Conditional Share Plan (CSP)
The conditional awards of shares or the rights to acquire shares (the awards) are offered to a small number of key senior management personnel.
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.
The Mitie Group plc Executive Share Option Scheme (ESOS)
The ESOS exercise price is equal to the average market value of the shares on the business day preceding grant or, in case the Remuneration Committee
decides, the average market value of shares over a number of preceding business days (not to exceed 20 days). 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. No awards have been made under the ESOS since 29 June 2015.
The Mitie Group plc Save As You Earn scheme (SAYE)
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. An equivalent scheme is open to eligible Ireland-resident employees.
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30. Share-based payments continued
The Share Incentive Plan (SIP)
The SIP is open to eligible employees resident in the UK. 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. Since October 2021, one conditional matching share has been awarded for every
two partnership shares purchased and has a holding period of three years. Matching shares are funded by way of market purchases. The Group also, from
time to time, launches free share schemes under which all employees receive an allocation of shares at nil cost to the employee. The free shares have a
holding period of three years.
Details of the awards and share options outstanding are as follows:
2024 | 2023 | 2024 | 2023 | |||
| Number of | Number of | Weighted | Weighted | |||
| conditional | conditional | Number of | average | Number of | average | |
| share awards | share awards | share options | exercise price | share options | exercise price | |
| (million) | (million) | (million) | (p) | (million) | (p) | |
Outstanding at 1 April | 92.9 | 107. 5 | 69.8 | 63 | 68.0 | 55 |
Granted during the year | 13.6 | 16.2 | 25.2 | 63 | 18.4 | 69 |
Lapsed during the year | (6.3) | (11.4 ) | (7.7) | 55 | (13.0) | 66 |
Exercised during the year | (17.0) | (19.4) | (29.0) | 28 | (3.6) | 65 |
Outstanding at 31 March | 83.2 | 92.9 | 58.3 | 46 | 69.8 | 63 |
Exercisable at the end of the year | 4.0 | 28 | 7. 3 | 142 |
The Group recognised the following expenses related to share-based payments:
| 2024 | 2023 | |
| £m | £m | |
Discretionary share plans | 14.4 | 13.4 |
Non-discretionary share plans | 5.9 | 3.9 |
20.3 | 17.3 |
The share-based payment related expense charged to the consolidated income statement for the year is £20.3m (2023: £17.3m) and represents share-
based payment transactions relating to discretionary and non-discretionary share plans.
In the year ended 31 March 2024, £2.8m of dividend equivalents have been accrued in relation to outstanding share awards (2023: £2.2m). Dividend
equivalents accrued under the share option schemes are forfeitable and are payable after the vesting date when the share awards are exercised.
The weighted average share price at the date of exercise for share awards and share options exercised during the year was 95p (2023: 73p). The
conditional share awards and share options outstanding at 31 March 2024 had exercise prices (other than nil in the case of the LTIP, CSP, EDP, DBP and
the matching shares under the SIP) ranging from 27p to 128p (2023: 26p to 131p) and a weighted average remaining contractual life of 1.9 years (2023:
3.1 years). In the year ended 31 March 2024, 34.6m options were granted in respect of the SAYE, LTIP, CSP, RSP and DBP schemes and awards of matching
shares and 4.2m free shares were made under the SIP. The aggregate of the estimated fair values of those options granted and awards made was £26.5m
(2023: £15.7m).
The fair value of options is measured by use of the Black-Scholes model.
The inputs into the Black-Scholes model are as follows:
2024 | 2023 | |
Share price (p) | 34 –103 | 34 –151 |
Exercise price (p) | 0–78 | 0 –134 |
Expected volatility (%) | 30–47 | 25–43 |
Expected life (years) | 3 | 3 |
Risk-free rate (%) | (0.7)–4.2 | (0.7)–3.3 |
Expected dividends (%) | 0.0–3.1 | 0.0–2.7 |
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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31. Retirement benefit schemes
The Group operates a number of pension arrangements for employees:
• Defined contribution schemes for the majority of its employees; and
• Defined benefit schemes which include the Group scheme, the Landmarc scheme and other smaller schemes.
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31. Retirement benefit schemes continued
| Landmarc | |||||||
Group section | Interserve section | scheme | Other schemes | ||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2024 | 2023 | |
| % | % | % | % | % | % | % | |
| Key assumptions used for IAS 19 valuation: | |||||||
Discount rate | 4.84 | 4.75 | 4.80 | 4.80 | 4.80 | 4.80 | 4.80 |
Expected rate of pensionable pay increases | 2.63 | 3.25 | 2.80 | 3.40 | 3.30 | 2.80 | 3.40 |
Retail price inflation | 3.26 | 3.25 | 3.20 | 3.40 | 3.30 | 3.20 | 3.40 |
Consumer price inflation | 2.63 | 2.50 | 2.80 | 2.90 | 2.70 | 2.80 | 2.90 |
Future pension increases | 2.63 | 3.25 | 2.80 | 3.40 | 3.30 | 3.20 | 3.40 |
Group section | Interserve section | Landmarc scheme | |||
| 2024 | 2023 | 2024 | 2023 | 2024 | |
| Years | Year s | Years | Year s | Years | |
| Post retirement life expectancy: | |||||
Current pensioners at 65 – male | 87.1 | 87. 5 | 85.7 | 86.0 | 84.9 |
Current pensioners at 65 – female | 88.6 | 88.9 | 88.3 | 88.6 | 88.6 |
Future pensioners at 65 – male | 88.1 | 88.5 | 86.6 | 87.0 | 86.1 |
Future pensioners at 65 – female | 89.1 | 90.1 | 89.4 | 89.7 | 89.7 |
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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31. Retirement benefit schemes continued
| Impact on defined benefit obligations | |||
| (Decrease)/ | (Decrease)/ | ||
| increase in | increase in | ||
| Change in | obligations | obligations | |
| assumption | % | £m | |
Increase in discount rate | 0.25% | (3.7) | (10.0) |
Increase in retail price inflation 1 | 0.25% | 2.6 | 7.0 |
Increase in consumer price inflation (excluding pay) | 0.25% | 1.5 | 3.9 |
Increase in life expectancy | 1 year | 3.7 | 10.0 |
2024 | 2023 | ||||||||
| Group | Interserve | Landmarc | Other | Group | Interserve | Other | |||
| section | section | scheme | schemes | Total | section | section | schemes | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Current service cost | (0.1) | (0.5) | – | (0.9) | (1.5) | (0.2) | (0.8) | (1.5) | (2.5) |
| Past service cost (including | |||||||||
curtailments) | – | – | – | (0.3) | (0.3) | – | – | – | – |
Total administration expense | (1.1) | – | (0.1) | (0.1) | (1.3) | (0.9) | – | – | (0.9) |
| Amounts recognised in operating | |||||||||
profit | (1.2) | (0.5) | (0.1) | (1.3) | (3.1) | (1.1) | (0.8) | (1.5) | (3.4) |
Net interest income/(cost) | 0.3 | 0.2 | 0.1 | (0.1) | 0.5 | – | 0.1 | (0.2) | (0.1) |
| Amounts recognised in profit | |||||||||
before tax | (0.9) | (0.3) | – | (1.4) | (2.6) | (1.1) | (0.7) | (1.7 ) | (3.5) |
2024 | 2023 | ||||||||
| Group | Interserve | Landmarc | Other | Group | Interserve | Other | |||
| section | section | scheme | schemes | Total | section | section | schemes | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | |
| Actuarial gains/(losses) arising due | |||||||||
to changes in financial assumptions | 2.2 | 0.2 | (3.0) | 2.6 | 2.0 | 79.5 | 11.1 | 22.8 | 113.4 |
Actuarial (losses)/gains arising from liability experience | (8.0) | – | 0.4 | 0.5 | (7.1) | (12.4) | (1.6) | 1.1 | (12 .9) |
Actuarial (losses)/gains due to changes in demographic assumptions | (0.5) | 0.3 | 0.6 | – | 0.4 | 1.2 | 0.2 | 0.7 | 2.1 |
Movement in asset ceiling, excluding interest | – | – | – | (6.0) | (6.0) | – | – | (8.7) | (8.7) |
Return on scheme assets, excluding interest income | (7.9) | (1.7) | 2.2 | 4.0 | (3.4) | (74.1) | (9.8) | (11.1) | (95.0) |
Return on reimbursement asset 1 | – | – | – | (0.1) | (0.1) | – | – | 0.2 | 0.2 |
Amounts recognised in consolidated statement of comprehensive income | (14.2) | (1.2) | 0.2 | 1.0 | (14.2) | (5.8) | (0.1) | 5.0 | (0.9) |
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31. Retirement benefit schemes continued
2024 | 2023 | ||||||||
| Group | Interserve | Landmarc | Other | Group | Interserve | Other | |||
| section | section | scheme | schemes | Total | section | section | schemes | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Fair value of scheme assets | 174.8 | 24.4 | 41.1 | 80.0 | 320.3 | 170.3 | 24.2 | 77.1 | 271.6 |
| Present value of defined | |||||||||
benefit obligations 1 | (177.4) | (23.2) | (38.1) | (58.1) | (296.8) | (169.6) | (22.5) | (62.2) | (254.3) |
| (Deficit)/surplus without | |||||||||
restriction 2 | (2.6) | 1.2 | 3.0 | 21.9 | 23.5 | 0.7 | 1.7 | 14.9 | 17. 3 |
Asset ceiling | – | – | – | (24.3) | (24.3) | – | – | (17. 5) | (17.5) |
Net pension (liability)/asset | (2.6) | 1.2 | 3.0 | (2.4) | (0.8) | 0.7 | 1.7 | (2.6) | (0.2) |
2024 | 2023 | ||||||||
| Group | Interserve | Landmarc | Other | Group | Interserve | Other | |||
| section | section | scheme | schemes | Total | section | section | schemes | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | |
At 1 April | 169.6 | 22.5 | – | 62.2 | 254.3 | 238.3 | 31.0 | 84.7 | 354.0 |
Arising on business combination | – | – | 36.3 | – | 36.3 | – | – | – | – |
Current service cost | 0.1 | 0.5 | – | 0.9 | 1.5 | 0.2 | 0.8 | 1.5 | 2.5 |
Interest cost | 7.9 | 1.1 | 0.7 | 2.7 | 12.4 | 6.4 | 0.9 | 2.2 | 9.5 |
| Contributions from scheme | |||||||||
members | – | 0.1 | – | 0.2 | 0.3 | – | 0.1 | 0.2 | 0.3 |
| Actuarial (gains)/losses arising due | |||||||||
to changes in financial assumptions | (2.2) | (0.2) | 3.0 | (2.6) | (2.0) | (79.5) | (11.1) | (22.8) | (113 .4 ) |
| Actuarial losses/(gains) arising | |||||||||
from experience | 8.0 | – | (0.4) | (0.5) | 7.1 | 12.4 | 1.6 | (1.1) | 12.9 |
Actuarial losses/(gains) due to changes in demographic assumptions | 0.5 | (0.3) | (0.6) | – | (0.4) | (1.2) | (0.2) | (0.7) | (2.1) |
Benefits paid | (6.5) | (0.5) | (0.9) | (1.4) | (9.3) | ( 7.0) | (0.6) | (1.6) | (9.2) |
Past service cost | – | – | – | (1.4) | (1.4) | – | – | – | – |
Contract transfer | – | – | – | (2.0) | (2.0) | – | – | – | – |
Settlement gain | – | – | – | – | – | – | – | (0.2) | (0.2) |
At 31 March | 177.4 | 23.2 | 38.1 | 58.1 | 296.8 | 169.6 | 22.5 | 62.2 | 254.3 |
2024 | 2023 | ||||
| Group | Interserve | Landmarc | Group | Interserve | |
| section | section | scheme | section | section | |
| £m | £m | £m | £m | £m | |
Active | 1.8 | 20.3 | – | 3.1 | 19.7 |
Deferred | 102.9 | 1.7 | 12.2 | 86.8 | 1.6 |
Pensioners | 72.7 | 1.2 | 25.9 | 79.7 | 1.2 |
At 31 March | 177.4 | 23.2 | 38.1 | 169.6 | 22.5 |
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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31. Retirement benefit schemes continued
2024 | 2023 | ||||||||
| Group | Interserve | Landmarc | Other | Group | Interserve | Other | |||
| section | section | scheme | schemes | Total | section | section | schemes | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | |
At 1 April | 170.3 | 24.2 | – | 77.2 | 271.7 | 231.0 | 32.6 | 87. 0 | 350.6 |
Arising on acquisition | – | – | 39.1 | – | 39.1 | ||||
Interest income | 8.2 | 1.3 | 0.8 | 3.4 | 13.7 | 6.4 | 1.0 | 2.0 | 9.4 |
Actuarial gains/(losses) on assets | (7.9) | (1.7) | 2.2 | 4.0 | (3.4) | (74.1) | (9.8) | (11.1) | (95.0) |
Contributions from the sponsoring companies 1 | 11. 8 | 1.0 | – | 0.4 | 13.2 | 14.9 | 0.9 | 0.7 | 16. 5 |
| Contributions from scheme | |||||||||
members | – | 0.1 | – | 0.2 | 0.3 | – | – | 0.1 | 0.1 |
Expenses paid | (1.1) | – | (0.1) | (0.1) | (1.3) | (0.9) | – | – | (0.9) |
Benefits paid | (6.5) | (0.5) | (0.9) | (1.4) | (9.3) | ( 7.0) | (0.5) | (1.6) | (9.1) |
Past service cost | – | – | – | (1.7) | (1.7) | – | – | – | – |
Contract transfer | – | – | – | (2.0) | (2.0) | – | – | – | – |
At 31 March | 174.8 | 24.4 | 41.1 | 80.0 | 320.3 | 170.3 | 24.2 | 77.1 | 271.6 |
| 2024 | 2023 | |
| £m | £m | |
At 1 April | 17. 5 | 8.7 |
Interest cost on asset ceiling | 0.8 | 0.1 |
Change in asset ceiling excluding interest | 6.0 | 8.7 |
At 31 March | 24.3 | 17.5 |
2024 | 2023 | ||||||||
| Group | Interserve | Landmarc | Other | Group | Interserve | Other | |||
| section | section | scheme | schemes | Total | section | section | schemes | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Equities | 28.3 | – | – | 42.8 | 71.1 | 28.3 | 3.6 | 48.1 | 80.0 |
Government bonds | 70.7 | 10.6 | – | 4.0 | 85.3 | 67.9 | 10.5 | 1.7 | 80.1 |
Corporate bonds | 53.0 | 6.0 | – | 14.1 | 73.1 | 50.5 | 2.6 | 9.8 | 62.9 |
Property | 2.3 | – | – | 11. 8 | 14.1 | 3.4 | 1.8 | 10.6 | 15.8 |
Diversified growth fund | 8.6 | 7.8 | – | 1.5 | 17.9 | 9.5 | 5.1 | 1.5 | 16.1 |
Cash | 11.2 | – | 1.9 | 4.7 | 17.8 | 10.7 | 0.6 | 5.4 | 16.7 |
Insurance policies | – | – | 39.2 | 1.1 | 40.3 | – | – | – | – |
Commodities | 0.7 | – | – | – | 0.7 | – | – | – | – |
Total fair value of assets | 174.8 | 24.4 | 41.1 | 80.0 | 320.3 | 170.3 | 24.2 | 7 7.1 | 271.6 |
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Strategic report Governance Financial statements
31. Retirement benefit schemes continued
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 24% of its assets 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 consolidated statement of financial position. Equities and | |
| DGFs are considered to offer the best returns over the long term with an acceptable level of risk and hence the scheme holds a | |
| significant proportion of these types of assets. However, the scheme’s assets are well-diversified by investing in a range of asset | |
| classes, including property, government bonds and corporate bonds. The Group scheme holds 8% of its assets in DGFs which | |
| seek to maintain high levels of return while 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 Group 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 Group scheme’s 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. |
| Group scheme | |
Date of latest funding valuation | 31 March 2023 |
Assets at valuation date | £170.1m |
Funding liabilities at valuation date | £189.5m |
Deficit at valuation date | £19.4m |
| Group scheme | |
Active members – by number | 14 |
Active members – by proportion of funding liability | 1.2% |
Total pensionable salary roll p.a. | £0.4m |
Deferred members – by number | 696 |
Deferred members – by proportion of funding liability | 57.9% |
Total deferred pensions p.a. | £4.5m |
Pensioner members – by number | 852 |
Pensioner members – by proportion of funding liability | 40.8% |
Total pensions in payment p.a. | £4.5m |
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
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| 2024 | 2023 | |
| £m | £m | |
Short-term employment benefits | 5.8 | 3.7 |
Post-employment benefits | 0.3 | 1.1 |
Share-based payments | 5.3 | 4.6 |
At 31 March | 11.4 | 9.4 |
34. Events after the reporting period
On 15 April 2024, the Group announced its intention to undertake a £50m share buyback programme over the next 12 months.
217
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Strategic report Governance Financial statements
| Aggregate % | ||
of share class | Share class | |
| United Kingdom | ||
| 35 Duchess Road, Rutherglen, Glasgow, Scotland, G73 1AU, United Kingdom | ||
Cliniwaste Health South Limited | 100 | Ordinary |
Cliniwaste Holdings Limited 1 (registration number SC699950) | 100 | Ordinary |
P2ML Ltd 1 (registration number SC299864) | 100 | Ordinary |
| Level 12, The Shard, 32 London Bridge Street, London, SE1 9SG, United Kingdom | ||
8point8 Support Limited 1 (registration number 07370013) | 100 | Ordinary (all classes) |
8point8 Training Limited 1 (registration number 10064042) | 100 | Ordinary |
Arc Training International Limited 2 | 100 | Ordinary |
Bateman’s Cleaning Services Limited 2 | 100 | Ordinary |
Bespoke Power Solutions Global Ltd 2 | 100 | Ordinary |
Biotecture Limited 1 (registration number 06297364) | 100 | Ordinary |
Broadreach Group Limited 2 | 100 | Ordinary |
Building & Property Trustees Ltd 2 | 100 | Ordinary |
Care & Custody (Health) Limited 1 (registration number 05881801) | 100 | Ordinary |
Converge Technology Ltd | 100 | Ordinary (all classes) |
CTI Power Limited 2 | 100 | Ordinary |
Custom Solar Ltd 1 (registration number 07886213) | 100 | Ordinary (all classes) |
Esoteric Limited 1 (registration number 04441008) | 100 | Ordinary |
First Security Group Limited 2 | 100 | Ordinary (all classes) |
G.B. Electronics Limited | 100 | Ordinary |
GBE Converge Group Ltd | 100 | Ordinary (all classes) |
Global Aware International Ltd 1 (registration number 06753723) | 100 | Ordinary |
Insitu Cleaning Company Limited 1 (registration number 01623889) | 100 | Ordinary |
J C A Engineering Ltd | 100 | Ordinary |
Jabez Holdings Limited 1 (registration number 05129988) | 100 | Ordinary |
JCA Head Co Limited 1 (registration number 09828272) | 100 | Ordinary (all classes) |
JCA HQ Group Holdings Ltd. 1 (registration number 07251790) | 100 | Ordinary |
Knightsbridge Guarding Holdings Limited 2 | 100 | Ordinary (all classes) |
Landmarc Support Services Limited | 100 3 | Ordinary-A |
Linx International Group Limited 1 (registration number 02057133) | 100 | Ordinary |
Maclellan Group Limited 2 | 100 | Ordinary |
Maclellan International Limited 1 (registration number 03688689) | 100 | Ordinary |
MacLellan Limited 2 | 100 | Ordinary |
Maclellan Management Services Limited 2 | 100 | Ordinary |
Mitie (Defence) Limited | 100 | Ordinary |
Mitie (Facilities Services) Limited 1 (registration number 00725583) | 100 | Ordinary |
Mitie (Facilities Services-Slough) Limited 2 | 100 | Ordinary, deferred |
Mitie Aviation Security Limited 4 | 100 | Ordinary |
Mitie Built Environment Limited 2 | 100 | Ordinary, preferred |
Mitie Care and Custody Limited 4 | 100 | Ordinary (all classes) |
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
218
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| Aggregate % | ||
of share class | Share class | |
Mitie Cleaning & Environmental Services Limited | 100 | Ordinary |
Mitie Cleaning Services Limited 2 | 100 | Ordinary (all classes) |
Mitie Company Secretarial Services Limited 5 | 100 | Ordinary |
Mitie Dormant (No.1) Limited 2 | 100 | Ordinary (all classes) |
Mitie Environmental Services Limited | 100 | Ordinary |
Mitie FM Limited | 100 | Ordinary |
Mitie FS (UK) Limited | 100 | Ordinary |
Mitie Group Pension Scheme Trustee Company Limited 5 | 100 | Ordinary |
Mitie Holdings Limited 2 | 100 | Ordinary |
Mitie Infrastructure Limited 2,6 | 100 | Ordinary (all classes) |
Mitie Integrated Services Limited | 100 | Ordinary |
Mitie International Limited 2 | 100 | Ordinary |
Mitie Investments Limited 2 | 100 | Ordinary |
Mitie Landscapes Limited | 100 | Ordinary (all classes) |
Mitie Limited | 100 | Ordinary |
Mitie Managed Services Limited 2 | 100 | Ordinary, deferred |
Mitie PFI Limited | 100 | Ordinary (all classes) |
Mitie Property Services (UK) Limited 7 | 100 | Ordinary (all classes) |
Mitie Roofing Limited 7 | 100 | Ordinary |
Mitie Security (First) Limited | 100 | Ordinary, deferred |
| (all classes) | ||
Mitie Security (Knightsbridge) Limited | 100 | Ordinary |
Mitie Security Holdings Limited 2 | 100 | Ordinary (all classes) |
Mitie Security Limited | 100 | Ordinary |
Mitie Security Services Limited 2 | 100 | Ordinary |
Mitie Shared Services Limited | 100 | Ordinary |
35. Related undertakings continued
219
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Strategic report Governance Financial statements
| c/o Ov Visma Services Infocon Ab, Pormestarinrine 8, 00160 Helsinki, Finland | |||
Mitie Suomi Oy 2 | 100 | Ordinary | |
| France | |||
259 | Rue St Honore, 75001, Paris, France | ||
Mitie France SAS | 100 | Ordinary | |
| Germany | |||
| c/o Pinsent Masons Germany LLP, OTTOSTR. 21, 80333, Munich, Germany | |||
Mitie Deutschland GmbH | 100 | Ordinary | |
| Guernsey | |||
| c/o MPR Private Clients Limited, PO Box 119, Martello Court, Admiral Park, St Peter Port, GY1 3HB, |
35. Related undertakings continued
Notes to the consolidated financial statements continued
For the year ended 31 March 2024
220
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Annual Report and Accounts 2024
35. Related undertakings continued
221
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Strategic report Governance Financial statements
35. Related undertakings continued
36. Non-controlling interests
The Group has opted to recognise the non-controlling interest in Landmarc at its proportionate share of the acquired identifiable net assets.
| The summarised financial information disclosed below relates to the period from 16 November 2023 to 31 March 2024, during which period, | |
| Landmarc was a subsidiary of the Group. It represents the consolidated position of Landmarc and its subsidiaries that would be shown in its | |
| consolidated financial statements prepared in accordance with UK-adopted International Accounting Standards under Group accounting policies | |
| before intercompany eliminations. | |
| Summarised statement of total comprehensive income | 2024 |
| Landmarc | £m |
Revenue 1 | 93.2 |
Profit for the financial period before Other items | 10.4 |
Other items | (1.0) |
Profit for the period | 9.4 |
Other comprehensive income | 0.2 |
Total comprehensive income | 9.6 |
Profit attributable to non-controlling interests after Other items | 4.6 |
Total comprehensive income attributable to non-controlling interest | 4.7 |
Dividends paid to non-controlling interests | 2.5 |
| Note: | |
| 1. Includes £14.4m of intercompany revenue at nil margin which has been eliminated on consolidation. | |
| Summarised statement of financial position as at 31 March 2024 |
Landmarc
2024
£m
Non-current assets 37.9
Current assets 56.9
Total assets 94.8
Current liabilities (45.2)
Non-current liabilities (7.8)
Total liabilities (53.0)
Net assets 41.8
Equity shareholders’ funds 21.3
Non-controlling interests 20.5
Tot al equity 41.8
Summarised statement of cash flows
Landmarc
2024
£m
Net increase in cash and cash equivalents 7.3
222
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Company statement of financial position
As at 31 March 2024
Notes
2024
£m
2023
£m
Non-current assets
Investments in subsidiaries 4 652.5 639.3
Other receivables 5 0.2 0.3
Deferred tax assets 6 9.4 5.6
Total non-current assets 662.1 645.2
Current assets
Trade and other receivables 5 195.7 87.7
Current tax receivable 7 36.5 21.1
Cash and cash equivalents 0.5 1.1
Total current assets 232.7 109.9
Total assets 894.8 755.1
Current liabilities
Trade and other payables 8 (99.3) (45.2)
Provisions 9 (5.4) (4. 5)
Total current liabilities (104.7) (49.7)
Net current assets 128.0 60.2
Non-current liabilities
Provisions 9 (10.1) (10.6)
Total non-current liabilities (10.1) (10.6)
Total liabilities (114 . 8) (60.3)
Net assets 780.0 694.8
Equity
Share capital 10 33.3 34.0
Share premium 10 132.0 131.5
Merger reserve 10 157.0 157.0
Own shares reserve 10 (69.8) (59.0)
Share-based payments reserve 10 42.1 33.7
Capital redemption reserve 10 3.3 2.6
Retained profits
1
10 482.1 395.0
Tot al equity 780.0 694.8
Note:
1. The profit for the year ended 31 March 2024 was £173.9m (2023: £6.7m loss).
The accompanying notes on pages 224 to 227 form an integral part of the financial statements.
The Company financial statements of Mitie Group plc, company registration number SC019230, were approved by the Board of Directors and authorised
for issue on 5 June 2024. They were signed on its behalf by:
Phil Bentley Simon Kirkpatrick
Chief Executive Officer Chief Financial Officer
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Strategic report Governance Financial statements
Company statement of changes in equity
For the year ended 31 March 2024
Share
capital
£m
Share
premium
£m
Merger
reserve
1
£m
Own shares
reserve
£m
Share-based
payments
reserve
£m
Capital
redemption
reserve
£m
Retained
profits/
(losses)
£m
Total
equity
£m
At 1 April 2022 35.7 130 . 6 358.6 (36.9) 27.5 0.9 283.9 800.3
Loss for the year – – – – – – (6.7) (6.7)
Total comprehensive expense – – – – – – (6.7) (6.7)
Transactions with owners
Dividends paid – – – – – – (28.9) (28.9)
Purchase of own shares
2
– – – (37.7) – – – (37.7)
Realisation of merger reserve – – (201.6) – – – 201.6 –
Share buybacks
3
(1.7) – – – – 1.7 (50.7) (50.7)
Share-based payments – 0.9 – 15.6 6.2 – (6.0) 16.7
Tax on share-based payments – – – – – – 1.8 1.8
Total transactions with owners (1.7) 0.9 (201.6) (22.1) 6.2 1.7 117. 8 (98.8)
At 31 March 2023 34.0 131. 5 157.0 (59.0) 33.7 2.6 395.0 694.8
At 1 April 2023 34.0 131.5 157.0 (59.0) 33.7 2.6 395.0 694.8
Profit for the year – – – – – – 173.9 173.9
Total comprehensive income – – – – – – 173.9 173.9
Transactions with owners
Dividends paid – – – – – – (41.5) (41.5)
Purchase of own shares
2
– – – (19.6) – – – (19.6)
Share buybacks
3
(0.7) – – (31.8) – 0.7 (26.6) (58.4)
Share-based payments
4
– 0.5 – 40.6 8.4 – (21.4) 28.1
Tax on share-based payments – – – – – – 2.7 2.7
Total transactions with owners (0.7) 0.5 – (10.8) 8.4 0.7 (86.8) (88.7)
At 31 March 2024 33.3 132.0 157.0 (69.8) 42.1 3.3 482.1 780.0
Notes:
1. The merger reserve represents amounts relating to premiums arising on shares issued subject to the provisions of Section 612 of the Companies Act 2006.
2. The Employee Benefit Trust acquired 19.1m (2023: 50.1m) ordinary shares through market purchases for a consideration together with associated fees and stamp duty of £18.9m
(2023: £37.3m) and the Share Incentive Plan Trust acquired 0.6m (2023: 0.6m) shares for a consideration of £0.7m (2023: £0.4m).
3. The share buybacks resulted in the purchase of 58.6m ordinary shares (2023: 68.8m), of which 26.1m (2023: 68.8m) have subsequently been cancelled and 32.5m (2023: nil) were
bought into Treasury. See Notes 27 and 28 of the consolidated financial statements.
4. Includes £0.5m and £7.5m of cash receipts in respect of new shares and treasury shares respectively, which were issued on exercise of Save As You Earn share options. See Notes 27
and 28 of the consolidated financial statements.
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Mitie Group plc
Annual Report and Accounts 2024
Notes to the Company financial statements
For the year ended 31 March 2024
1. Basis of preparation and material accounting policies
(a) Basis of preparation
Mitie Group plc (the Company) is a public company limited by shares, incorporated in the United Kingdom and registered in Scotland. It was incorporated
on 16 July 1936 under the Companies Act 1929. The Company’s registered office is at 35 Duchess Road, Rutherglen, Glasgow, G73 1AU. The Company’s
financial statements are presented in pounds sterling, which is the Company’s functional and presentational currency. All amounts have been rounded to
the nearest one hundred thousand pounds, unless otherwise indicated. The Group comprises the Company and all its subsidiaries.
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101). In preparing its
financial statements, the Company applies the recognition, measurement and disclosure requirements of UK-adopted International Accounting Standards,
but makes amendments where necessary in order to comply with the Companies Act 2006 and to take advantage of FRS 101 disclosure exemptions.
The Company’s financial statements have been prepared on the historical cost basis and on a going concern basis.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:
• a cash flow statement and related notes;
• the statement of compliance with UK-adopted International Accounting Standards;
• the effects of new but not yet effective UK-adopted International Accounting Standards;
• disclosures in respect of capital management;
• disclosures in respect of the compensation of Key Management Personnel; and
• disclosures in respect of related party transactions entered into between two or more members of a group, provided that any subsidiary which is a
party to the transaction is wholly owned by such a member.
As the consolidated financial statements include the equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in respect
of the following disclosures:
• IFRS 2 Share-based Payment in respect of Group settled share-based payments;
• certain disclosures required by IAS 12 Income Taxes; and
• certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial Instruments: Disclosures.
In accordance with Section 408(3) of the Companies Act 2006, the Company is exempt from the requirement to present its income statement.
There are no new and mandatorily effective standards in the year that could have a material impact on the financial statements.
(b) Material accounting policies
The material accounting policies and measurement bases adopted are the same as those disclosed in Note 1 of the consolidated financial statements
except as noted below, and have been applied consistently throughout the year and the preceding year, unless stated otherwise.
Investments
Investments in subsidiaries are shown at cost less any impairments. Investments in subsidiaries are reviewed on an ongoing basis for any indication of
impairment and, if any such indication exists, the investment’s recoverable amount is estimated. An impairment loss is recognised in the income statement
whenever the carrying value of an asset exceeds its recoverable amount.
Financial instruments
Intercompany loans are all assessed as being repayable on demand. The impairment assessment of receivables is in accordance with IFRS 9.
The Company enters into financial guarantee arrangements to guarantee the indebtedness of other companies within the Group. The financial guarantee
contracts are measured in accordance with IFRS 9.
Taxation
Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted at the
statement of financial position date.
Deferred tax is provided in full on temporary differences that result in an obligation at the statement of financial position date to pay more tax, or a right to
pay less tax, at a future date, at rates expected to apply when they crystallise based upon tax rates and legislation that have been enacted or substantively
enacted at the statement of financial position date. Temporary differences arise from the inclusion of items of income and expenditure in tax computations
in periods different from those in which they are included in the financial statements. Deferred tax is not provided on unremitted earnings of subsidiaries,
joint ventures and associates where there is no commitment to remit these earnings. Deferred tax assets are recognised to the extent that it is regarded as
more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.
Share-based payments
Details of the Company’s equity-settled share schemes are provided in Note 30 of the consolidated financial statements. The costs of options and
conditional awards over the Company’s shares granted to employees of the Company’s subsidiaries are accounted for as a capital contribution within
the carrying value of investments in subsidiaries.
225
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
1. Basis of preparation and material accounting policies continued
(c) Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements under FRS 101 requires management to make judgements, estimates and assumptions that affect amounts
recognised for assets and liabilities at the reporting date and the amounts of revenue and expenses incurred during the reporting period. Actual results
may differ from these judgements, estimates and assumptions.
There were no critical judgements that had significant effects on the amounts recognised in the financial statements and there were no key sources of
estimation uncertainty at the statement of financial position date that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities in the next financial year.
2. Staff numbers and costs
There were no persons employed by the Company (including Directors) during the years ended 31 March 2024 and 31 March 2023. Information about
the Directors’ remuneration has been disclosed in Note 6 of the consolidated financial statements.
3. Auditor’s remuneration
The auditor’s remuneration for audit services to the Company has been disclosed in Note 5 of the consolidated financial statements.
4. Investments in subsidiaries
£m
Cost
At 1 April 2022 711.2
Capital contribution with respect to share-based payments 10.6
At 31 March 2023 721.8
Capital contribution with respect to share-based payments 13.2
At 31 March 2024 735.0
Impairment
At 1 April 2022 71.1
Charge for the year 11.4
At 31 March 2023 82.5
At 31 March 2024 82.5
Net book value
At 31 March 2024 652.5
At 31 March 2023 639.3
Details of the Company’s subsidiary undertakings have been disclosed in Note 35 of the consolidated financial statements.
The carrying amount of the Company’s investments in subsidiary undertakings has been tested for impairment in accordance with IAS 36 Impairment of
Assets. The carrying amount was compared to the asset’s recoverable amount and assessed by reference to value-in-use if required. The value-in-use
has been calculated based upon a discounted cash flow methodology using the most recent forecasts prepared by management. These forecasts cover
the next five years with a terminal value using a long-term growth assumption of 2.0% (2023: 2.0%) and are consistent with those used for the Group’s
goodwill impairment assessment. The key assumptions for the value-in-use calculation are forecast revenue, direct costs, expectation of future changes
in the market and discount rates. The pre-tax discount rates used to assess the forecast cash flows, ranging from 10.2% to 10.9%, have been derived from
the Company’s post-tax weighted average cost of capital, which was 7.7% at 31 March 2024 (2023: 9.9%). These rates are reviewed annually by external
advisors and adjusted for the risks specific to the business being assessed and the market in which it operates.
As a result of this analysis, the Directors have determined that no impairment was required to the Company’s investments in subsidiary undertakings
(2023: £11.4m).
Reasonably possible changes to the key assumptions would not have resulted in an impairment in the Company’s investments in subsidiary undertakings
(2023: £nil).
Notes to the Company financial statements continued
For the year ended 31 March 2024
226
Mitie Group plc
Annual Report and Accounts 2024
5. Trade and other receivables
2024
£m
2023
£m
Amounts owed by subsidiaries 163.0 56.3
Prepayments 7.3 5.7
Other receivables
1
25.6 26.0
Tot al 195.9 88.0
Current 195.7 87.7
Non-current 0.2 0.3
Tot al 195.9 88.0
Note:
1. Includes £23.1m (2023: £25.9m) of VAT payments on account made on behalf of other Group entities and £0.6m VAT owed by tax authorities (2023: £1.9m owed to tax authorities).
Amounts owed by subsidiaries are generally repayable on demand. The Directors consider that the carrying amount of trade and other receivables
approximates their fair value.
6. Deferred tax assets
Accelerated
capital
allowances
£m
Share options
£m
Short-term
timing
differences
£m
Total
£m
At 1 April 2022 0.5 2.3 – 2.8
Credit to income statement – 1.4 – 1.4
Credit to equity – 1.4 – 1.4
At 31 March 2023 0.5 5.1 – 5.6
(Charge)/credit to income statement (0.1) 0.9 0.4 1.2
Credit to equity – 2.6 – 2.6
At 31 March 2024 0.4 8.6 0.4 9.4
7. Current tax receivable
As at 31 March 2024, the Company held a current tax receivable of £36.5m (2023: £21.1m), comprising amounts owed by subsidiaries in relation to
Group relief of £5.7m (2023: £3.4m), £29.1m (2023: £16.1m) of tax payments made on behalf of other Group entities and £1.7m owed by tax authorities
(2023: £1.6m).
8. Trade and other payables
2024
£m
2023
£m
Trade payables 1.4 4.4
Amounts owed to subsidiaries 73.9
11. 7
Other taxes and social security 5.8 3.9
Accruals 13.6 21.2
Other payables 4.6 4.0
Tot al 99.3 45.2
Amounts owed to subsidiaries are repayable on demand. The Directors consider that the carrying amount of trade and other payables approximates their
fair value. Included within amounts owed to subsidiaries above is £70.7m (2023: £nil) relating to interest-bearing loans at 5% per annum (2023: n/a).
227
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
9. Provisions
£m
At 1 April 2023 15.1
Additional provisions 7.0
Utilised (6.6)
At 31 March 2024 15.5
Current 5.4
Non-current 10.1
Tot al 15.5
Provisions were in respect of the insurance reserve. The Company retains a portion of the exposure in relation to insurance policies for employer liabilities
and motor and fleet liabilities, and a claim typically settles over five years. This includes a provision for claims incurred but not yet reported and is based on
information available at the statement of financial position date using advice from third-party actuarial experts.
10. Equity
Details of the Company’s share capital, share premium, merger reserve, own shares reserve, share-based payments reserve and capital redemption
reserve have been disclosed in Notes 27 and 28 of the consolidated financial statements. Retained profits comprise the earnings and losses of the
Company less amounts distributed to the Company’s shareholders.
11. Dividends
Dividends recognised have been disclosed in Note 9 of the consolidated financial statements.
12. Contingent liabilities
The Company and its subsidiaries have given guarantees and entered into counter-indemnities amounting to £34.5m (2023: £33.7m) in respect of
performance bonds and letter of credits relating to certain Group contracts.
As disclosed in Note 35 of the consolidated financial statements, certain subsidiaries have taken advantage of the audit exemption under Section 479A of
the Companies Act 2006 for the year ended 31 March 2024. A parent company guarantee has been provided for these companies under Section 479C
of the Companies Act 2006.
13. Share-based payments
The Company has certain equity-settled share schemes as described in Note 30 of the consolidated financial statements.
14. Related party transactions
Details of the related party transactions have been disclosed in Note 33 of the consolidated financial statements.
The Directors are remunerated for their services to the Group as a whole. No remuneration was paid to the Directors specifically in respect of their
services to the Company for the years ended 31 March 2024 or 31 March 2023. Detailed disclosures of Directors’ remuneration and share interests are
given in the Directors’ remuneration report on pages 126 to 148.
Under FRS 101, the Company is exempt from disclosing key management personnel compensation and transactions with other companies wholly owned
by the Group. The Company had no other related party transactions during the year ended 31 March 2024 (2023: £nil).
228
Mitie Group plc
Annual Report and Accounts 2024
Appendix – Alternative Performance Measures
The Group presents various Alternative Performance Measures (APMs) as management believes that these are useful for users of the consolidated
financial statements in helping to provide a balanced view of, and relevant information on, the Group’s financial performance.
In assessing its performance, the Group has adopted certain non-statutory measures which, unlike its statutory measures, cannot be derived directly from
its consolidated financial statements. The Group commonly uses the following measures to assess its performance:
Performance before Other items
The Group adjusts the statutory income statement for Other items which, in management’s judgement, need to be disclosed separately by virtue of their
nature, size and incidence in order for users of the consolidated financial statements to obtain a proper understanding of the financial information and the
underlying performance of the business.
These Other items include impairment of goodwill, impairment and amortisation of acquisition related intangible assets, acquisition and disposal related
costs, charges with respect to employment-linked earnouts, fair value gain on acquisitions, gain or loss on business disposals, cost of restructuring
programmes and other exceptional items. Further details of these Other items are provided in Note 4.
Operating profit
2024
£m
2023
£m
Operating profit Statutory measures 165.7 117.0
Adjust for: restructure costs Note 4 20.4 16 .6
Adjust for: acquisition and disposal related costs Note 4 38.3 25.1
Adjust for: other exceptional items Note 4 3.7 3.4
Adjust for: fair value gain on Landmarc acquisition Note 4 (17.9) –
Operating profit before Other items Performance measures 210.2 162.1
Reconciliations are provided below to show how the Group’s segmental reported results are adjusted to exclude Other items.
Operating profit/(loss)
2024 2023 (restated)
1
Reported
results
£m
Adjust for:
Other items
(Note 4)
£m
Performance
measures
£m
Reported
results
£m
Adjust for:
Other items
(Note 4)
£m
Performance
measures
£m
Business Services 93.7 3.3 97.0 90.8 1.5 92.3
Technical Services 34.1 10.2 44.3 23.3 10.8 34.1
CG&D 98.3 (17.9) 80.4 60.6 (0.8) 59.8
Communities 37.8 1.3 39.1 31.0 0.4 31.4
Corporate centre (98.2) 47.6 (50.6) (88.7) 33.2 (55.5)
Total Group 165.7 44.5 210.2 117. 0 45.1 162.1
1. The comparatives for the year ended 31 March 2023 have been restated for the change in composition of reportable segments (See Note 3).
In line with the Group’s measurement of profit from operations before Other items, the Group also presents its basic earnings per share before
Other items. The table below reconciles this to the statutory basic earnings per share.
Earnings per share
2024
pence
2023
pence
Statutory basic earnings per share Statutory measures 9.8 6.8
Adjust for: Other items per share 2.5
2.7
Basic earnings per share before Other items Performance measures 12.3 9.5
229
Mitie Group plc
Annual Report and Accounts 2024
Strategic report Governance Financial statements
Performance excluding Covid-related contracts
Reconciliations are provided below to show how the Group’s reported results are adjusted to exclude non-recurring short-term Covid-related contracts.
Revenue
2024
£m
2023
£m
Group revenue Statutory measures 4,445.2 3,945.0
Adjust for: share of revenue of joint ventures and associates 65.5 110 .1
Revenue including share of joint ventures and associates Performance measures 4,510.7 4,055.1
Adjust for: revenue from short-term Covid-related contracts
1
– (15.3)
Revenue excluding short-term Covid-related contracts Performance measures 4,510.7 4,039.8
Note:
1. In 2023, £14.7m was attributable to the Business Services segment.
Operating profit
2024
£m
2023
£m
Operating profit Statutory measures 165.7 117.0
Adjust for: Other items 44.5 45.1
Operating profit before Other items Performance measures 210.2 162.1
Adjust for: operating profit from short-term Covid-related contracts
1
– (7.1)
Operating profit excluding short-term Covid-related contracts Performance measures 210.2 155.0
Note:
1. In 2023: £7.0m was attributable to the Business Services segment.
Net debt and total financial obligations
Net debt is defined as the difference between total borrowings and cash and cash equivalents. It is a measure that provides additional information on the
Group’s financial position. Restricted cash which is subject to various constraints on the Group’s ability to utilise these balances, has been excluded from the
net debt measure.
Total financial obligations (TFO) are defined as the Group’s net debt and the net retirement benefit liabilities. TFO represents all debt-like financing items
the Group has made use of at the year end.
A reconciliation from reported figures is presented below:
Net debt
2024
£m
2023
£m
Cash and cash equivalents Statutory measures 244.9 248.3
Adjusted for: restricted cash and cash held on trust
1
Note 22 (4.2) (6.4)
Financing liabilities Note 23 (321.5) (286.0)
Net debt Performance measures (80.8) (4 4.1)
Net retirement benefit liabilities Note 31 (0.8) (0.2)
TFO Performance measures (81.6) (44.3)
Note:
1. Included within these amounts is restricted cash of £4.2m (2023: £6.4m).
The Group uses an average net debt measure as this reflects its financing requirements throughout the period. The Group calculates its average net debt
based on the daily closing figures, including its foreign currency bank loans translated at the closing exchange rate for the previous month end. This measure
showed average daily net debt of £160.7m for the year ended 31 March 2024, compared with £84.3m for the year ended 31 March 2023.
230
Mitie Group plc
Annual Report and Accounts 2024
Appendix – Alternative Performance Measures
continued
Free cash flow
Free cash flow is a measure representing the cash that the Group generates after accounting for cash flows to support operations and maintain its capital
assets. It is a measure that provides additional information on the Group’s financial performance as it highlights the cash that is available to the Group after
operating and capital expenditure requirements are met. The table below reconciles net cash generated from operating activities to free cash inflow.
Free cash flow
2024
£m
2023
£m
Net cash generated from operating activities Statutory measures 197.7 83.0
Add: net decrease in restricted cash and cash held on trust Note 22 2.2 31.1
Interest received 3.6 2.2
Dividends received from joint ventures and associates Note 14 8.4 9.0
Employment-linked earnouts 0.7 –
Purchase of property, plant and equipment Note 13 (11. 5) (10.9)
Purchase of other intangible assets Note 12 (8.4) (14.3)
Disposal of property, plant and equipment 0.2 0.1
Lease incentives received 5.7 –
Capital element of lease rentals paid Note 25 (41.0) (34.5)
Free cash inflow Performance measures 157.6 65.7
Earnings before interest, tax, depreciation and amortisation
Earnings before interest, tax, depreciation and amortisation (EBITDA) is a measure of the Group’s profitability. EBITDA is measured as profit/(loss) before
tax excluding the impact of net finance costs, Other items, depreciation of property, plant and equipment, amortisation and impairment of non-current
assets and amortisation of contract assets.
EBITDA
2024
£m
2023
£m
Profit before tax Statutory measures 156.3 105.5
Add: net finance costs Note 7 9.4 11. 5
Operating profit 165.7 117. 0
Add: Other items Note 4 44.5 45.1
Operating profit before Other items 210.2 162.1
Add:
Depreciation of property, plant and equipment Note 13, 25 48.2 43.1
Amortisation of non-current assets
1
Note 12 8.2 7.8
Amortisation of contract assets Note 16 1.4 1.3
Impairment of non-current assets
1
Note 12, 25 0.1 0.2
EBITDA Performance measures 268.1 214.5
Note:
1. Excludes amounts classified in the consolidated income statement as Other items.
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Annual Report and Accounts 2024
Strategic report Governance Financial statements
Return on invested capital
Return on invested capital (ROIC) is a measure of how efficiently the Group utilises its invested capital to generate profits. The table below reconciles the
Group’s net assets to invested capital and summarises how the ROIC is derived.
2024
£m
2023
£m
Net assets Statutory measures 473.7 421.7
Add:
Non-current liabilities 327.6 335.9
Current provisions Note 20 66.5 54.2
Current private placement notes Note 23 30.0 –
Deduct:
Non-current deferred tax assets Note 21 (7.9) (20.4)
Cash and cash equivalents Note 22 (244.9) (248.3)
Invested capital Performance measures 645.0 543.1
Operating profit before Other items 210.2 162.1
Tax
1
(39.7) (24.3)
Operating profit before Other items after tax
1
170.5 137.8
ROIC %
2
Performance measures 26.4% 25.4%
Notes:
1. Tax charge has been calculated at the effective tax rate for the year on pre-tax profits before Other items of 18.9% (2023: 15.0%).
2. The ROIC metric used for the purposes of the Enhanced Delivery Plan (EDP) requires further adjustments under the detailed rules agreed with shareholders.
232
Mitie Group plc
Annual Report and Accounts 2024
Overview
Interim results for H1 FY25 21 November 2024
Dividends
FY24 interim dividend (1.0p paid) 31 January 2024
FY24 final dividend (3.0p proposed)
Ex-dividend date 20 June 2024
Record date 21 June 2024
Last date for receipt/revocation of Dividend
Reinvestment Plan (DRIP) mandate 8 July 2024
Payment date 5 August 2024
Annual General Meeting
2024 Annual General Meeting 23 July 2024
Registered office
Mitie Group plc
35 Duchess Road
Rutherglen
Glasgow
G73 1AU
Telephone: 0117 322 1322
Email: info@mitie.com
Website: www.mitie.com
Registered in Scotland under company number: SC019230
Registrars
Link Group
Central Square
29 Wellington Street
Leeds LS1 4DL
Telephone: 0371 664 0300
*
+44 (0) 371 664 0300 (international)
*
Calls are charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable international rate.
Lines are open 9.00am – 5.30pm, Monday to Friday excluding public holidays in
England and Wales.
Mitie online share portal
Mitie has a portal where shareholders can register and can then login to:
• Access information on shareholdings and movements;
• Update address details;
• View dividend payments received and register bank mandate
instructions;
• Sell Mitie shares;
• Complete an online proxy voting form; and
• Register for e-communications allowing Mitie to notify shareholders by
email that certain documents are available to view on its website. This
will further reduce Mitie’s carbon footprint as well as reduce costs.
If you wish to register, please sign up at: www.mitie-shares.com.
Corporate website
This report can be downloaded in PDF from the Mitie website, which also
contains additional general information about Mitie.
Please visit www.mitie.com.
Shareholder information
More information
Visit our corporate website:
www.mitie.com/investors
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@mitie
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www.linkedin.com/company/mitie/
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Mitie Group plc
Registered Office
35 Duchess Road
Rutherglen
Glasgow
G73 1AU
UK
Head Office
The Shard
Level 12
32 London Bridge Street
London
SE1 9SG
UK
T: +44 (0) 330 678 0710
E: info@mitie.com
Registration number: SC019230
Mitie Group plc Annual Report and Accounts 2024
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