Mitie Group plc Annual Report and Accounts 2023
Creating the workplaces
of tomorrow, today
Annual Report and Accounts
2023
The Exceptional, Every Day
We are the UK’s leading facilities management company. Our expertise,
care, technology, insight and focus on sustainability create amazing work
environments, helping our customers to be exceptional, every day.
Strategic report
01 Financial and non-financial highlights
02 At a glance
04 Our customers
06 Chairman’s statement
Find out more on page 08
Creating a ‘Great Place to Work’
10 Reasons to invest
12 Chief Executive’s strategic review
Creating value for customers
through ‘Science of Service
®
’
Find out more on page 18
20 Key performance indicators
Committed to
‘Decarbonisation Delivered’
Find out more on page 24
26 Our market drivers
30 Our business model
32 Stakeholder engagement
35 Section 172 statement
37 Our environment and social value
framework
38 People
43 Environment
47 TCFD
58 Community
59 Responsible supply chain
60 Operating review
60 Business Services
62 Technical Services
64 Central Government & Defence
66 Communities
67 Specialist Services
68 Finance review
73 Principal risks and uncertainties
83 Non-financial information statement
84 Viability statement
Governance
86 Chairman’s introduction to governance
and the Board
87 Board of Directors
90 Board leadership and Company purpose
92 Division of responsibilities
94 Board activities: stakeholder engagement
96 Strategy and the Boardroom
99 Culture at Mitie
103 Board effectiveness and evaluation
104 Nomination Committee report
108 Audit Committee report
116 Directors’ remuneration report
131 Environment, Social & Governance (ESG)
Committee report
133 Directors’ report
136 Statement of Directors’ responsibilities
Financial statements
138 Independent auditor’s report to the
members of Mitie Group plc
145 Consolidated incomestatement
146 Consolidated statement of
comprehensive income
147 Consolidated balance sheet
149 Consolidated statement of changes
in equity
150 Consolidated statement of cash flows
152 Notes to the consolidated
financial statements
206 Company balance sheet
207 Company statement of changes
in equity
208 Notes to the Company
financial statements
212 Appendix – Alternative
Performance Measures
216 Shareholder information
A record year
Mitie has delivered a good financial performance and made further progress
against its strategic priorities in FY23. Thanks to the hard work of our
64,000 colleagues, the Group has achieved a record level of revenue, grown
earnings and continued to focus on delivering shareholder returns.
Revenue, including
share of joint ventures
and associates
1
£4,055m
+1. 5%
FY22: £3,997m
Employee engagement
57%
+7ppt
FY22: 50%
Females in senior
leadership team
28%
+4ppt
FY22: 24%
Basic earnings per share
before other items
1,2
9.5p
+3.3%
FY22: 9.2p
Dividend per share
2.9p
+61.1%
FY22: 1.8p
Operating profit
before other items
1,2,3
£162m
-2.9%
FY22: £167m
Net Promoter Score
+42
+3pt
FY22: +39
Carbon emissions
4
(tonnes CO
2
e)
21,115
+2.5%
FY22: 20,596
Average daily net debt
£84m
+£59m
FY22: £25m
Free cash flow
£66m
-£81m
FY22: £147m
Group revenue
1
£3,945m
+1.1%
FY22: £3,903m
Operating profit
1,3
£117m
+62.3%
FY22: £72m
Financial
Non-Financial
Details of our full KPIs on pages 20 to 23
1. From continuing operations.
2. Other items are as described in Note 4 to the consolidated financialstatements.
3. Operating profit includes share of profit after tax from joint ventures and associates.
4. Scope 1 and 2 UK only emissions.
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 212 to 215.
KPI
KPI KPI
KPI
KPI
KPI
KPI
KPIKPI KPI
Strategic report Governance Financial statements
01
Mitie Group plc
Annual Report and Accounts 2023
Cleaning & Hygiene
Mitie is the largest provider of cleaning and
hygiene services in the UK, with 15,000
highly trained colleagues, focusing on quality,
excellence and technology-led innovation.
Security
Mitie is the largest intelligence and
technology-led security provider in the
UK, employing 16,000 colleagues. We offer
integrated, risk-based security solutions such
as lone worker protection, guarding, fire and
security systems, and mobile security.
Technical Services
Mitie is the UK’s largest provider of ‘hard
services’ and technology-enabled solutions.
Our Technical Services division employs
9,800 colleagues, including 1,000 locally based
mobile specialist engineers across the UK.
At a glance
Total order book
£9.7bn
Pipeline
£14.7bn
Customer type FY23
Revenue including share of
joint ventures and associates
%
Government 54
Non-government 46
Total order book £m
Including share of joint ventures
and associates
£m
1 year 2,771
1–2 years 1,897
>2 years 5,022
Find out more on page 27
02
Mitie Group plc
Annual Report and Accounts 2023
Our core services
Mitie holds leading positions in each of its core services
Our vision
The Exceptional, Every Day
Our purpose
Our expertise, care, technology, insight and
focus on sustainability create amazing work
environments, helping our customers to be
exceptional, every day.
What we do
Mitie is the UK’s leading facilities management
company. We offer a range of services to the
public and private sectors, including engineering,
energy, security, cleaning, custody, landscaping
and waste management. We take care of our
customers’ people and buildings, and we are
transforming facilities management to be more
flexible, safe, sustainable and attractive to all.
We are differentiated by our cloud-based
proprietary technology.
Communities
A leading provider of mainly integrated facilities management
services to public sector customers, with a focus
on community environments in healthcare, schools and
universities, emergency services and local authorities.
Cleaning & Hygiene Security
Portering Engineering services Decarbonisation
Technical Services
We provide the full range of key technology-backed
engineering, maintenance, repair and mechanical and electrical
systems project activities, energy, carbon and water
management services, air-conditioning/disinfection solutions
and digital workplace services.
Engineering services Projects Decarbonisation
Specialist Services
Care & Custody
We provide high-quality, critical public services in immigration,
criminal justice and secure healthcare.
Landscapes
A leading provider of landscaping services, focused on both
horticultural and winter services.
Waste Management
A leading national waste management business providing
innovative waste reduction and treatment solutions.
Spain
We provide a wide range of facilities management services to
customers in Spain, including cleaning, passenger assistance,
customer support and information, and management of
luggage trolleys.
Business Services
We keep some of the UK’s biggest companies, across a diverse
range of sectors (including financial and professional services,
manufacturing, telecoms, retail and transport), clean, safe and
secure.
Cleaning & Hygiene Security Office services
Central Government & Defence
A leading provider of facilities management services to UK
Government departments, as well as the Ministry of Defence
in the UK and deployments overseas.
Cleaning & Hygiene Security
Office services Engineering services
Decarbonisation
Find out more on page 60
Find out more on page 64
Find out more on page 66
Find out more on page 62
Find out more on page 67
03
Mitie Group plc
Annual Report and Accounts 2023
Strategic report Governance Financial statements
We deliver the exceptional, every day through our five business divisions
Revenue FY23
£1,172m
29%
Revenue FY23
£828m
20%
Revenue FY23
£490m
12%
Revenue FY23
£1,154m
29%
Revenue FY23
£411m
10%
Retail, logistics and shopping centres
Corporate and iconic buildings
Our customers
04
Mitie Group plc
Annual Report and Accounts 2023
A loyal and diverse
blue-chip customer base
Our customers
Transport and aviation
Public sector and critical security environments
Manufacturing
05
Mitie Group plc
Annual Report and Accounts 2023
Strategic report Governance Financial statements
06
Mitie Group plc
Annual Report and Accounts 2023
Chairman’s statement
Moving from strength to strength
We have also been pursuing opportunities for
growth in the decarbonisation sector, through
our in-house capabilities and strategic acquisitions.
Having made significant progress with our own
Net Zero ambitions, we are using our expertise
and technology to help our customers to advance
their own sustainability agendas. Our work in this
area over the past year has ranged from installing
sensors in our customers’ buildings in order to
monitor occupancy and utilisation, to installing
solar photovoltaic (PV) panels and ‘living walls’.
The year has not been without its challenges,
given the ongoing war in Ukraine and wider
macroeconomic uncertainties. We have
therefore had to work harder, not only to replace
the significant revenue streams from short-term
Covid work in the prior year, but to manage
inflationary pressures. We have also continued
to focus on cost-efficiencies and delivering
above-expectation synergies from the integration
of Interserve, which we acquired with your
support in November 2020.
Thanks to the hard work of our exceptional
Mitie colleagues, I am delighted to report to you
that we have achieved a new record this year,
with revenue exceeding £4bn for the first time
(FY22: £3,997m). We have also increased basic
earnings per share before other items by 3.3%
to 9.5p (FY22: 9.2p).
It is a privilege to work alongside such talented
individuals, at Board level and across the whole
organisation. Over the coming year I will continue
to support and challenge the executive leadership
team to drive greater performance, cash
generation and returns for our shareholders as
the business moves from strength to strength.
‘One Mitie’
All of our 64,000 colleagues have contributed to
our progress this year, and I would like to extend
my heartfelt thanks to everyone at Mitie for their
hard work – we simply would not be where we
are today without them.
We strive to attract and retain talented
colleagues. Mitie’s core values define the
behaviours of our people and underpin our
vision to deliver The Exceptional, Every Day.
An important element of our culture has been
to establish a ‘One Mitie’ way of operating across
the business, because we know this leads to
consistent, high-quality information flows and
better service delivery to our customers.
Our culture is collaborative and supportive, and
it continues to evolve as we embrace new ways
of working. We recognise that the cost-of-living
crisis has made life very difficult for many people,
especially our colleagues on the frontline. To help
ease those financial pressures, we implemented
a £10 million Winter Support package during
the ye a r.
Thanks to the hard work of our exceptional
Mitie colleagues, I am delighted to report to
you that we have delivered a record level of
revenue and grown earnings. It is a privilege
to work alongside such talented individuals,
at Board level and across the whole
organisation.
Derek Mapp
Chairman
Annual General Meeting
Mitie intends to hold its Annual General
Meeting (AGM) on 25 July 2023 at Level 12,
The Shard, 32 London Bridge Street,
London, SE1 9SG. This is an important event
in our corporate calendar, providing an
opportunity for our Board to engage with
shareholders. Shareholders will be able to
attend the meeting in person, 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.
Dear Mitie Shareholder
When I wrote to you last year, we were
re-establishing our ‘normal’ everyday lives, both
in the workplace and at home, following the
pandemic. Of course, the legacy of prolonged
periods of disruption is that much has moved on
and facilities management is no exception. Indeed,
many of us have permanently adopted new
hybrid ways of working and that has challenged
employers to re-assess how they utilise their
workspaces and attract and retain talent.
Your company has been at the forefront of
advances in property technology (‘prop tech’),
having made significant investments over the
past five years to develop a leading cloud-based
technology platforms.
Our ‘Science of Service’ approach means that
we are well-positioned to support our new and
existing customers with innovative solutions,
to create safe, clean, sustainable and efficient
workspaces that promote wellbeing and
collaborative working.
Strategic report Governance Financial statements
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Mitie Group plc
Annual Report and Accounts 2023
We have also continued to develop market-
leading benefits for our colleagues, ranging from
our employee discounts portal, ‘Mideals’, to life
insurance for all colleagues and participation in
our share incentive scheme. You can read more
about this on page 40.
Supporting communities and
the environment
Through the work we do, we make a positive
difference to the lives of millions of people, and
we take that responsibility very seriously. Climate
action and job creation, and the creation of social
value, lie at the heart of our agenda.
We aim to support communities through our
significant investment in diversity and inclusion
projects, such as the Mitie Foundation, which
has continued to break down barriers to
employment through the delivery of its
Ready2Work Military programme and its
new Beyond Bars programme.
We have a well-developed Equality, Diversity &
Inclusion (ED&I) strategy, and I am delighted that
Mitie has been named as one of the UK’s top 50
most inclusive employers in 2022/23, for the fifth
year running.
Having worked throughout the year to develop
our carbon reduction plan, we also received
validation from the prestigious Science Based
Targets initiative (SBTi) in April 2023. We have
set ambitious targets to be Net Zero carbon for
our operations by 2025, and to decarbonise our
supply chain by 2035, ahead of the SBTi validated
target of 2046. Our fleet of 3,200 fully electric
vehicles, one of the largest in the UK, is a good
example of our commitment to a cleaner
environment. For more details on Mitie’s ESG
strategy, targets and achievements see pages 37
to 59.
Our strategy
We have made further progress against our
strategic priorities this year: accelerating
growth, enhancing margins and generating cash,
underpinned by our ‘capability enablers’ –
Science of Service, Great Place to Work and
Decarbonisation Delivered. You can read more
in the Chief Executive’s strategic review on
pages 12 to 17.
As part of our strategy to accelerate growth, we
completed three bolt-on acquisitions during the
year, including Custom Solar, which enhances our
decarbonisation offering to our customers, and
8Point8 and P2ML, which deliver greater scale
and capability to Mitie Telecoms. Since the year
end, we have completed two further acquisitions,
Linx International Group and R H Irving
Industrials, both of which enhance our intelligence
and technology-led fire and security offering.
We have a number of margin enhancement
initiatives that are underway or were completed
during the year, including the implementation of
Coupa, our digital supplier platform, and Forté,
the digital platform to automate scheduling in
Technical Services. We expect these initiatives to
deliver further meaningful benefits to profitability
in FY24.
Board composition
It was with great sadness that we announced
the death of Baroness Philippa Couttie in
December 2022. Philippa joined the Board of
Mitie in November 2017 as a Non-Executive
Director and served on the Audit and
Nomination Committees. She made an
enormous contribution with her enthusiasm and
expertise and will be remembered for helping
to establish Mitie as the ESG leader in the FM
industry. Philippa was the first Chair of our ESG
Committee and was also a Trustee and Chair of
the Mitie Foundation. She is greatly missed.
We feel passionately that the composition of our
Board should reflect wider society and comprise
a diverse range of skills and experience in order
to promote strong governance. In April 2022,
we welcomed Chet Patel and Salma Shah as new
Non-Executive Directors. Chet and Salma both
joined the Remuneration Committee, with Chet
also joining the Audit Committee. Salma also
joined the ESG Committee and was subsequently
appointed as its Chair in January 2023. In March
2023, Chet and Salma joined the Nomination
Committee. Chet has extensive experience in the
B2B service environment, promoting sales and
growth strategies, while Salma brings a wealth of
public sector expertise.
Stakeholder engagement
It is the Board’s duty to understand the needs
of all of our stakeholders, and to act on their
feedback. This year, the Board has engaged
extensively with Mitie’s different stakeholder
groups, with a particular focus on our colleagues.
A high proportion of our colleagues work for
us on the frontline, and we never stop learning
how to improve our two-way communications.
Our colleague listening strategy is focused on
hearing from and acting on colleague feedback
and, this year, we have refreshed the Board’s
approach. Jennifer Duvalier, our Non-Executive
Director responsible for workforce engagement,
has undertaken a full programme of in-person
and virtual employee listening sessions, in which
other Board members participated.
Our Board members also attend the many ED&I
events run with our diversity networks across
Mitie, and the Board has travelled extensively
around the UK to meet colleagues over the past
year. This culminated in our flagship annual
‘Team Talk Live’ employee engagement festival
in February 2023. Mitie’s annual employee
engagement survey, Upload, indicated that our
colleagues feel more engaged than ever. Further
details about Jennifer’s role and the Upload
survey are on pages 100 and 42, respectively.
Finally, I have also welcomed the opportunity,
alongside my fellow Board members, to meet
with Mitie’s major shareholders once again this
year to discuss governance and related matters
during our annual Chairman’s roadshow. See page
32 for details of our stakeholder engagement.
Capital allocation
Your business has delivered a record
performance during the year and has a robust
financial position. With a focus on maximising
shareholder returns, our capital allocation plans
prioritise investment in strategic high growth, high
margin bolt-on acquisitions, dividend progression
towards our 30%–40% target ratio and the
return of surplus cash to shareholders via share
buybacks; underpinned by a maximum leverage
of 1x (average net debt/EBITDA). The Board has
also taken the decision to purchase shares for
all employee incentive schemes (FY23: £38m),
to eliminate the otherwise dilutive effect to
shareholders of issuing new shares to fulfil
the schemes.
The Board is recommending a final dividend of
2.2p per share which, when added to the 0.7p
dividend paid in respect of the first six months
of the year, takes the total dividend for FY23 to
2.9p per share, a 61% increase on the prior year
(FY22: 1.8p). This represents a payout ratio of
30% (FY22: 20%). The final dividend will be paid
on 4 August 2023.
Consistent with our capital allocation strategy,
and reflecting the strength of our balance sheet,
the Board announced a new £50m share buyback
programme in April 2023, following on from an
initial £50m programme completed in FY23.
In closing, this is my sixth year as Chair of your
company. I am incredibly proud of the journey
we have been on together, and the significant
progress achieved over the past year. I would like
to thank my Board members for their ongoing
support and commitment, as well as all our
shareholders, customers, clients, colleagues
and partners, for all they do to make Mitie the
company it is today.
Derek Mapp
Chairman
08
Mitie Group plc
Annual Report and Accounts 2023
Creating a
‘Great Place to Work’
Mitie is a place of opportunity, where all our people can flourish and
grow, and where achievements are recognised. We offer market-leading
benefits and reward people for a job well done. In FY23, Mitie was again
recognised as a UK Top Employer for the fifth year running – showcasing
our dedication to creating a ‘Great Place to Work’.
Find out more on pages 38 to 42
Shani’s story
08
Mitie Group plc
Annual Report and Accounts 2023
Scan me!
Watch Shani’s story
C
A
P
A
B
I
L
I
T
Y
E
N
A
B
L
E
R
I knew I wanted to change careers, but as a
mum of six, I had to find something that gave me
the balance I needed. When my youngest child
started school, it was the ideal opportunity to
find something I wanted to do. In my new role
Iliaise with suppliers, am responsible for health
and safety within the stores and work closely
with the engineers to identify the relevant parts
needed to complete a job.
I would recommend the apprenticeship path.
It’s not just for young people, and it’s an amazing
way to build on your skills and drive your
career forward.
The thing that makes me most proud working
for Mitie is the inclusion, the diversity and the
opportunities for career development.
Having completed her Level 2 Facility Services
apprenticeship, Shani is now successfully using her
skills and passion for engineering to keep hospitals
running smoothly in her role as an Apprentice
Stores Person.
I would recommend the
apprenticeship path. It’s not
just for young people, and it’s
an amazing way to build on
your skills and drive your
career forward.
Strategic report Governance Financial statements
09
Mitie Group plc
Annual Report and Accounts 2023
Strategic report Governance Financial statements
After I’d had my daughter, I was keen to find a
role that would give me the flexibility I needed
to work around nursery and childcare. I was also
keen to work in an office environment where
I could indulge my passion – numbers! My role at
Mitie is very varied – no two days are the same.
I get involved with a lot of finance work, payroll
and quotes. I’ve learned so much since I’ve
been here.
I work part-time, four days a week. There’s a
culture of flexibility and trust within my team.
Iknow that if I need to take some time away –
perhaps for childcare or if I have an emergency
at home – my manager understands – as long
as Imake the time up and I get my job done,
it’s noproblem.
I’m proud to work for Mitie – it’s such a
well-recognised brand.
I started as a security officer and was quickly
asked to act as a relief supervisor. I was often
asked to go to various sites that were
experiencing issues and act as a troubleshooter.
This led to a permanent supervisor position.
I knew that I wanted to progress within the
organisation and took the opportunity to
complete a Level 3 Management Apprenticeship.
It was tough, juggling studying with full-time work.
Due to the pandemic, it also took longer than
planned to complete the course – but I got there!
As challenging as it was, I learned so many skills
that I was able to take back to the workplace,
including better communication with our
customers and better management of my team.
Beth’s story
Elvedin’s story
I was recently ‘Employee of the
Month’ – what I valued was the
recognition of the additional
work I had put in. It made me
feel that the role Iperform
is important.
09
Mitie Group plc
Annual Report and Accounts 2023
Scan me!
Watch Elvedin’s story
Scan me!
Watch Beth’s story
My manager coached and trained
me in the practical skills I needed
to work in management. This
year, I started my current role
of Operations Manager. I can’t
believe how far I’ve come!
10
Mitie Group plc
Annual Report and Accounts 2023
Scale, diversification and
market leadership
The UK’s leading facilities management company with a
market share of 10%, almost twice the size of our next
largest competitor
Operating in a highly fragmented market with many
smaller peers, creating opportunities for consolidation
Market leader across our core businesses of
Cleaning & Hygiene, Security and Technical Services
Sector expertise across central government, defence,
retail, manufacturing, transport and logistics
Long-term relationships with a diversified, blue-chip
customer base
Differentiated technology offering
Unique cloud-based proprietary technology differentiates our
customer offering and drives adoption, loyalty and retention
Customers get real-time visibility of workstreams on
their sites, automated service requests and asset
performance reports
+42 NPS
Customer
satisfaction score
10
Mitie Group plc
Annual Report and Accounts 2023
Seven compelling
reasons to invest
Mitie is the UK’s leading facilities management company with a market
share almost twice the size of our next largest competitor, operating in a
highly fragmented market. We have a loyal blue-chip customer base across
the public and private sectors, and a diverse service offering differentiated
by our cloud-based, proprietary technology.
Our margin-accretive growth strategy is focused on delivering mid-to-
high single digit revenue growth; driving the operating margin towards
4.5%–5.5%; generating sustainable free cash flow; and achieving a return
on invested capital (ROIC) in excess of 20% in the medium term.
1
2
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Mitie Group plc
Annual Report and Accounts 2023
Sustainable revenue growth
Targeting mid-to-high single digit revenue growth
(ahead of low-single digit market growth)
Proven track record in winning and retaining contracts
and increasing our market share
Transitioning towards higher-growth, higher-margin
activities through bolt-on acquisitions in the telecoms,
decarbonisation and security technology sectors
Driving margin expansion
Targeting an operating margin of 4.5%–5.5%
Delivering cost synergies and improved margins from
acquisitions
Operational excellence initiatives driving enhanced
contract profitability
Transforming our strategic supply chain management
Creating a lean overhead structure
Cash generation and robust
balance sheet
Attractive free cash flow and low covenant leverage
BBB investment grade credit rating
Long-term funding at competitive rates, with a balanced
maturity profile
Making a positive and lasting
impact on society
Industry-leading, ambitious targets set across all areas
of environment, social and governance (ESG)
Creating a ‘Great Place to Work’ and prioritising the
wellbeing of our people
Developing a skilled workforce that can deliver meaningful
employment opportunities
Enhancing returns
Targeting a ROIC >20% over the medium term
Progressing towards a dividend payout ratio of 30%–40%
Purchasing shares for all employee incentive schemes to
eliminate the dilutive effect of new share issuance
Active share buyback programme
Bolt-on acquisitions to drive future earnings growth
2025 NET ZERO
carbon target
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Mitie Group plc
Annual Report and Accounts 2023
Strategic report Governance Financial statements
3
4
5
6
7
>90%
contract retention rate
combined with continued
growth of existing contracts
12
Mitie Group plc
Annual Report and Accounts 2023
Chief Executive’s strategic review
A record year and continued strategic progress
Overview
Mitie’s journey over the past six years has been
transformative. The first few years focused on
improving customer service, increasing employee
engagement, divesting non-core assets and
strengthening the balance sheet. Once achieved,
these were the foundations for the second
phase of our strategy to build scale and drive
operational leverage from the Interserve
acquisition in 2020. Our strategic focus since
then has been on delivering returns.
We are now the largest facilities management
business in the UK, and our unrelenting ambition
is to drive the business to reach its full potential,
not just financially but also through its positive
contribution to the environment and society.
Despite the challenging macroeconomic
environment, we have made significant progress
against our strategic priorities this year, delivering
a record level of revenue and growth in earnings
per share, and continuing to strengthen our
ESG credentials. We have a strong platform for
future growth, and we are well-positioned to
benefit from the opportunities that lie ahead for
the business.
Delivering on our
strategic priorities
We have continued to make progress this year
against each of the strategic pillars we set out in
June 2021: Grow Mitie, Enhance Margins and
Generate Cash, underpinned by our three
Capability Enablers – ‘Science of Service’, ‘Great
Place to Work’ and ‘Decarbonisation Delivered’.
Our strategy targets mid-to-high single digit
revenue growth, an operating margin before
other items of 4.5%–5.5%, sustainable free cash
flow and a return on invested capital (ROIC) in
excess of 20% over the medium term. We will
continue building our technology-led offering
across our three core business areas of Cleaning
& Hygiene, Security and Technical Services,
where we already hold market-leading positions,
alongside complementary services such as
Landscapes, Waste and Care & Custody. We are
also expanding our presence in the high-growth
areas of decarbonisation, security technology
and telecoms infrastructure, both through our
in-house capabilities and our acquisitions strategy.
Mitie’s three capability enablers are our
differentiators, giving us a competitive edge to win
new business, cross-sell our services and continue
to build strong, long-term relationships with
blue-chip customers across the public and private
sectors. We aspire to be a trusted partner to
every single one of our customers, and our
talented colleagues are our ambassadors. That is
why we strive to ensure our 64,000-strong team
has the skills, expertise and resources to deliver
The Exceptional, Every Day.
Mitie’s performance in FY23 has surpassed the
Board’s expectations. The business has been
transformed over the last six years, and we
have made further significant progress this year
against each of our strategic pillars. We are
now the largest facilities management business
in the UK, and our unrelenting ambition is to
drive the business to reach its full potential,
not just financially but also through its positive
contribution to the environment and society.
Phil Bentley
Chief Executive Officer
Strategic report Governance Financial statements
13
Mitie Group plc
Annual Report and Accounts 2023
Grow
Mitie
Capability
Enablers
Generate
Cash
Our strategic
pillars
Enhance
Margins
Environment
Innovation
Responsible
supply chain
Community
People
Our social
value framework
Find out more about our social value framework on pages 37 to 59
Grow Mitie
Our priority is to grow Mitie, both organically
and through targeted ‘bolt-on’ acquisitions
focused on the higher-growth, higher-margin
sectors of decarbonisation, security technology
and telecoms infrastructure.
During FY23, we were awarded new contract
wins of £1.9bn TCV (FY22: £2.1bn). This included
contracts with Dublin Airport, the Department
for Work and Pensions (DWP), Hammerson, the
Home Office, Lloyds Banking Group, National
Air Traffic Services (NATS) and National Grid.
Following a full and extensive re-tender process,
we were retained as the strategic partner to the
Ministry of Defence (MOD) for its overseas
military base in Cyprus and the Landmarc
‘Training Estates’ contract. In total, £2.4bn TCV
of contracts were renewed or extended in
FY23 (FY22: £1.7bn), including with Deloitte,
the DWP, the MOD, Sainsbury’s, Manchester
Airport Group and Vodafone. Our renewal rate
was again over 90%, which is testament to the
strength of our customer relationships, quality
of service and competitiveness on pricing.
For any new or re-tendered contract, we have
robust internal bidding processes in place,
including the review of all contracts valued at
more than £3m by our Bid Committee,
comprising members of the executive leadership
team. We are continually improving our approach
to ensure our capabilities and the competitive
cost-to-serve afforded by our scale are reflected
in our bids.
We also continue to leverage our expertise
by cross-selling services and insourcing work
formerly contracted out to third parties,
wherever opportunities are identified. In FY23,
£43.5m of cross-selling revenue from projects
was delivered by Technical Services (including a
number of decarbonisation projects), and by
Waste, Landscapes and Security.
Mitie’s projects business brings together around
2,300 colleagues in our project delivery teams,
predominantly across Technical Services and
Central Government & Defence, and contributed
£0.8bn to FY23 Group revenue, an 18% increase
compared with the prior year. Our projects
capabilities extend across all aspects of workplace
effectiveness, including mechanical and electrical
packages, fire and security hardware, and energy
decarbonisation. There are significant growth
opportunities in this area, given the wider trend
towards employers wanting to create inspirational
workplaces post Covid, and the regulatory
requirements for buildings to meet energy
efficiency standards. The projects business
includes Mitie Telecoms and our decarbonisation
offering, as described below.
During FY22 and FY23, we completed seven
strategic bolt-on acquisitions, including three
businesses at a total cost of £20m (P2ML, 8point8
and Custom Solar) in FY23. We have completed
two further acquisitions since the year end, Linx
International Group and R H Irving Industrials,
for a total consideration of £21m, both of which
strengthen our capabilities in the intelligence and
technology-led security market.
The acquisitions of P2ML and 8point8 in H1 FY23
were combined with DAEL Telecoms (acquired
in FY22) to create Mitie Telecoms, one of the
UK’s largest telecoms infrastructure businesses,
which is benefiting from the roll-out of 5G and
the decommissioning of Huawei assets. Our
services include both infrastructure projects
and network coverage for special events, such
as music festivals. During the year, we partnered
with Cellnex, Digital Mobile Spectrum Limited
(DMSL) and H3G, and extended relationships
with BT, Vodafone and VMO2, such that we
are now working with all of the mobile
network operators.
We are also focused on building on our Plan Zero
offering (Mitie’s own Net Zero commitment) to
deliver decarbonisation for our customers.
The acquisitions of Custom Solar in H1 FY23
and Rock Power Connections (acquired in FY22)
have facilitated the rapid expansion of our
capabilities in this area. We have been awarded
contracts from existing Mitie customers, including
ABP, the DWP and Amazon, for electric vehicle
(EV) charging infrastructure and solar panels.
The FY22 and FY23 acquisitions contributed
£98m to Group revenue in FY23 and
approximately 2ppt of our underlying growth
(excluding Covid work). While these bolt-on
acquisitions will deliver future growth for the
Group, they have required investment during the
year to win new contracts and are therefore only
expected to contribute to Group profitability
from FY24.
14
Mitie Group plc
Annual Report and Accounts 2023
Enhance Margins
We are targeting an operating profit margin,
before other items, of 4.5%–5.5% in the medium
term. This will be achieved through growth in
the higher margin projects business, as well as
our ongoing package of savings and efficiencies,
from delivering the Interserve synergies, driving
operational excellence, rolling out Coupa (our
digital supplier platform), implementing Forté
(the digital platform to automate scheduling in
Technical Services) and undertaking overhead
cost savings.
Notwithstanding inflationary headwinds, we
achieved an operating margin of 4.0% in FY23
(3.8%, excluding Covid work), reflecting an
increase of 1.7ppt over the two-year period
since acquiring Interserve (which operated on
a margin around 1.0ppt below that of Mitie).
In FY23, we have delivered an incremental £41m
of savings through our margin enhancement
initiatives. These cost-saving initiatives materially
exceeded the cost of the Winter Support
package (£8m), the relatively limited inflationary
increases that we were unable to pass on to
customers (£7m), and the delay in achieving the
full benefits from Forté (£4m).
A significant proportion of these savings has
come from Interserve cost synergies. In FY23,
we delivered an incremental £21m of synergies,
driven by further reductions in headcount
and procurement savings. In aggregate, since
December 2020, we now expect to deliver total
synergies of £55m (previous guidance £50m),
significantly ahead of our initial expectation of
£30m at the time of acquisition.
Our operational excellence initiatives delivered
an incremental £7m of savings in FY23, largely
from the portfolio of former Interserve contracts
where efficiencies are being delivered from the
roll-out of our workforce management system
(Workplace+), reduced agency cleaning hours
and harmonising processes for mobile technicians.
We have continued to digitalise, rationalise and
simplify our third-party supplier base. In FY23,
we saved an incremental £7m from the roll-out
of Coupa to Business Services, Communities,
Landscapes, Care & Custody and the Corporate
Centre, which together account for 60% of our
total third-party spend. We have also reduced
our supplier base, from 12,000 to 8,300 suppliers,
and we remain on track to meet our target of
6,000 suppliers in FY24.
Forté went live in the first half of the year. After
an initial period of stabilisation, which resulted in
some short-term operational challenges, service
level performance has returned to ‘pre-Forté’
levels, and is improving daily. The delay in getting
the system to full capacity held back the
cumulative benefit from Forté savings to £9m
in FY23, although we expect to meet our full
planned savings run rate of £15m in FY24, as
previously communicated.
We are also continuing to make progress with
the handful of under-performing contracts in
Communities which we acquired with Interserve.
Six of the contracts showed improved
performance during the year, with two contracts
now contributing to Group profitability. One
contract remains particularly challenging and only
showed a marginal improvement in performance
(£8.4m loss in FY23 compared to £8.7m in the
prior year). The majority of the remaining
under-performing contracts will be at, or close to,
break even by the end of FY24, with the final
contract expected to achieve profitability in
FY26, after productivity improvements and
re-sets to pricing.
During the second half of the year, we expanded
our suite of margin enhancement initiatives. This
phase of the programme addresses our Target
Operating Model and includes the outsourcing of
further HR and Payroll, Finance and IT functions,
consolidation of systems and processes, and
optimisation of our organisational structure. The
Target Operating Model initiatives delivered £6m
of savings in FY23 and are expected to deliver a
further £20m of savings in FY24.
The costs to deliver the margin enhancement
initiatives outlined above are reflected in ‘cash
other items’ of £24m in FY23 (FY22: £27m),
which include £8m of costs associated with the
Target Operating Model (for redundancies,
systems testing, project resources, and
dual running).
Chief Executive’s strategic review
continued
Expanding our presence in high-growth markets through in-house expertise and strategic acquisitions
Decarbonisation
Growth driven by sustainability strategies,
including demand for renewable energy
and EV charging infrastructure
Custom Solar acquired in FY23
12,000 kW of EV charging installed
140,000 m
2
of solar panels delivered
Accelerate growth: £70m invested in high growth ‘gazelles’
• Acquisitions have created a leader in telecoms infrastructure
• Growth driven by decommissioning of Huawei assets and 5G rollout
• Awarded significant portion of Shared Rural Network programme
• Working with all major network providers (e.g. O2, BT, 3, Vodafone)
• £70m projects pipeline
• £76m revenue (+250% YoY)
Mitie Telecoms
Decarbonisation
Security technology
• UK’s leading intelligence and tech-led security provider
• Mitie Intelligent Security created through acquisition of Esoteric
• Growth driven by demand for data-driven insights and risk-based
security solutions across retail, FS, transport and aviation sectors
• £77m revenue (+3% YoY)
• R H Irving and Linx International acquired post-year end for £20m
• Growth driven by sustainability strategies, including demand for renewable
energy and infrastructure to meet government EV targets
• 12,000 kWs of EV charging installed over 56 sites
• 140,000 m2 of solar panels delivered
• £70m order book
• £145m revenue (+65% YoY)
0
20
40
60
80
FY21 FY22 FY23
£m
0
20
40
60
80
FY20 FY21 FY22 FY23
£m
0
30
60
90
120
150
FY21 FY22 FY23
£m
8
Security technology
Growth driven by demand for data-driven
insights and risk-based security solutions
R H Irving Industrials and Linx International
acquired post year end
Well placed to support customers preparing
to meet the requirements of Martyn’s Law
Telecoms infrastructure
Growth driven by the decommissioning of
Huawei assets and roll out of 5G
P2ML and 8point8 acquired in FY23
Awarded significant portion of Government’s
Shared Rural Network programme
Working with all major network providers
Accelerate growth: £70m invested in high growth ‘gazelles’
• Acquisitions have created a leader in telecoms infrastructure
• Growth driven by decommissioning of Huawei assets and 5G rollout
• Awarded significant portion of Shared Rural Network programme
• Working with all major network providers (e.g. O2, BT, 3, Vodafone)
• £70m projects pipeline
• £76m revenue (+250% YoY)
Mitie Telecoms
Decarbonisation
Security technology
• UK’s leading intelligence and tech-led security provider
• Mitie Intelligent Security created through acquisition of Esoteric
• Growth driven by demand for data-driven insights and risk-based
security solutions across retail, FS, transport and aviation sectors
• £77m revenue (+3% YoY)
• R H Irving and Linx International acquired post-year end for £20m
• Growth driven by sustainability strategies, including demand for renewable
energy and infrastructure to meet government EV targets
• 12,000 kWs of EV charging installed over 56 sites
• 140,000 m2 of solar panels delivered
• £70m order book
• £145m revenue (+65% YoY)
0
20
40
60
80
FY21 FY22 FY23
£m
0
20
40
60
80
FY20 FY21 FY22 FY23
£m
0
30
60
90
120
150
FY21 FY22 FY23
£m
8
Accelerate growth: £70m invested in high growth ‘gazelles’
• Acquisitions have created a leader in telecoms infrastructure
• Growth driven by decommissioning of Huawei assets and 5G rollout
• Awarded significant portion of Shared Rural Network programme
• Working with all major network providers (e.g. O2, BT, 3, Vodafone)
• £70m projects pipeline
• £76m revenue (+250% YoY)
Mitie Telecoms
Decarbonisation
Security technology
• UK’s leading intelligence and tech-led security provider
• Mitie Intelligent Security created through acquisition of Esoteric
• Growth driven by demand for data-driven insights and risk-based
security solutions across retail, FS, transport and aviation sectors
• £77m revenue (+3% YoY)
• R H Irving and Linx International acquired post-year end for £20m
• Growth driven by sustainability strategies, including demand for renewable
energy and infrastructure to meet government EV targets
• 12,000 kWs of EV charging installed over 56 sites
• 140,000 m2 of solar panels delivered
• £70m order book
• £145m revenue (+65% YoY)
0
20
40
60
80
FY21 FY22 FY23
£m
0
20
40
60
80
FY20 FY21 FY22 FY23
£m
0
30
60
90
120
150
FY21 FY22 FY23
£m
8
Strategic report Governance Financial statements
15
Mitie Group plc
Annual Report and Accounts 2023
Labour and third-party cost inflation totalled
£170m. Approximately £163m of these rising
costs were recovered from our customer base
via contract re-pricing.
Generate Cash
Our ability to translate revenue into earnings
growth and free cash flow is integral to the
success of our strategy, including our ability
to reinvest for future growth and increase
shareholder returns while maintaining a robust
balance sheet position.
During FY23, we generated a free cash inflow of
£66m, compared with £147m in the prior year.
This reduction reflects the £45m impact from
the decision to terminate the invoice discounting
facility and a higher working capital outflow
arising from replacing Covid-related contracts
on 30-day payment terms with revenue on
longer payment terms.
Our performance during the year, combined
with our forecast future cash flows, provides
confidence in the delivery of our capital allocation
policy. This sets out a proactive but disciplined
use of resources to pursue bolt-on acquisition
opportunities, return cash to shareholders via
share buybacks and dividends, and purchase
shares for our employee incentive schemes to
eliminate the otherwise dilutive effect of issuing
new shares to fulfil vesting awards.
In FY23, we invested £20m in acquisitions in
the telecoms and decarbonisation sectors and
returned £117m to shareholders via dividends
paid (FY22 final and FY23 interim dividends),
share buybacks and the purchase of 50m shares
at a total cost of £38m for employee incentive
schemes. Our leverage of 0.4x average net debt/
EBITDA gives us significant headroom within
which to maintain our capital allocation activities.
Capability Enablers
Our strategic pillars of growth, margin
enhancement and cash generation are
underpinned by three capability enablers: the
Science of Service; creating a ‘Great Place to
Work’; and Decarbonisation Delivered.
The Science of Service
Over the past five years, we have made
substantial investments to develop leading
cloud-based platforms for facilities management.
Our ‘Science of Service’ approach allows us to
put cutting-edge technology at the forefront of all
our services, providing customers with innovative
solutions to create safe, clean, sustainable and
energy efficient spaces. This technology sets Mitie
apart from its competitors and creates a strong
platform from which to win and retain customers,
and to be recognised as a trusted partner for
their businesses.
Forté is our industry-leading digital platform to
automate workflow in Technical Services. Forté
incorporates a suite of Connected Workspace
products, including ESME (our AI-driven chatbot),
Aria (our workplace app) and MOZAIC (our AI/
Machine Learning analytics suite), which are
revolutionising the way our people work by
enabling our customers and their employees
to seamlessly connect to workplace services.
They have been adopted by 40 customers to
date, with over 14,000 registered users reporting
and tracking workflow across their estates.
We have developed an application, combining
virtual reality and the Internet of Things, which
enables our remote and on-site engineers to
collaborate through our Connected Engineer
headset. This aims to improve fault detection
and diagnosis, deliver cost savings on planned
maintenance activities and improve the overall
customer experience. We have also been
expanding our use of Machine Learning models
to provide holistic digital solutions to support
our customers with their workplace and
decarbonisation strategies, using software such
as Building Management Systems (BMS) and
Building Information Modelling (BIM).
£2.4bn TCV new contract renewals and extensions
1
0.0
0.5
1.0
1.5
2.0
2.5
FY23FY22FY21FY20
£bn
£1.9bn TCV new contract wins
1
0.0
0.5
1.0
1.5
2.0
2.5
FY23FY22FY21FY20
FDIS
1. Includes secured variable and project work
£bn
16
Mitie Group plc
Annual Report and Accounts 2023
We have introduced some of these technologies
to customers such as the BBC and Deloitte,
where a ‘partnership technology roadmap’ has
been integral both to securing recent contract
extensions and to deploying our workplace
consultancy services. We have also grown our
Connected Branches service for Lloyds Banking
Group, with 460 branches having been fitted
with our remote connectivity products to
reduce energy consumption, and a further 100 in
progress. In the public sector, customers such as
Sellafield, the Department for Transport (DfT),
the DWP and Ofcom are implementing our
technology to improve the workplace experience
for their employees and increase productivity.
Mitie operates the UK’s leading intelligence and
technology-led security business, identifying
and assessing threats through its intelligence
network and dedicated Intelligence Hub in
Northampton. This technology provides
significant advantages in winning, transforming
and retaining contracts across multiple sectors,
including the retail, financial services, and
transport and aviation sectors.
Furthermore, Mitie is at the forefront of the
acceleration of technology within the cleaning
and hygiene sector. In early 2022, we opened
the Cleaning and Hygiene Centre of Excellence
(CHCoE) in Birmingham to showcase our
tech-enabled solutions to existing and potential
customers. Our robotic cleaners deliver a
consistent level of cleaning, day and night, while
reducing the use of water and electricity by
identifying the most efficient route around a
building. They are commonplace in high-traffic
environments such as railway stations, and in
NHS settings, and can be combined with footfall
monitors to create a ‘demand-led’ pattern of
cleaning activity. We have also developed leading
technology to improve the air quality in a range
of settings, including offices and transport hubs,
using UVC air disinfection systems.
Creating a ‘Great Place to Work’
Our ambition is to be the destination ‘employer
of choice’ in the facilities management industry.
We will achieve this by creating a ‘Great Place to
Work’, empowering our 64,000 colleagues by
developing their skills, providing meaningful career
opportunities and ensuring that they are suitably
recognised and rewarded for their contribution.
This, in turn, enables us to continue delivering
outstanding customer service.
We are an industry leader in the provision of
benefits to our frontline colleagues. During the
year we launched a £10m Winter Support
package of new benefits to help our colleagues
through the cost-of-living crisis, including one-off
bonuses, the removal of fees for using salary
finance, retail discounts and additional free shares.
We have also expanded our ‘Choices’ platform
to our hourly-paid colleagues, so that they can
take advantage of discounts on everyday products
and services.
The positive steps that we have taken to create a
‘Great Place to Work’ have been reflected in the
results of our latest annual employee engagement
survey. Some 84% of our full-time employees
participated (54% of all colleagues), our highest
participation rate to date. Our overall Mitie
engagement score rose to a record level of 57%
of colleagues ‘fully engaged’, a 7ppt increase on
last year’s score, and a 24ppt increase since we
introduced an annual survey in 2018.
Decarbonisation Delivered
The third enabler to our strategy is to support
an increasing number of public and private
sector clients to define and deliver their own
Net Zero strategies through our growing
decarbonisation capabilities.
During H1 FY23, we completed the acquisition
of Custom Solar, which specialises in solar
photovoltaic panel installation, further
strengthening our suite of decarbonisation
services. This complements our FY22 acquisitions
of Rock Power Connections, which delivers
high-voltage power connections (including for
electric vehicles), and Biotecture, which installs
living walls for interior and exterior urban spaces.
Our decarbonisation business revenue increased
by 65% to £145m (FY22: £88m), through
cross-selling these capabilities to existing
customers. Rock is now working with five of
the UK’s leading sustainable energy providers,
including Gridserve and Roadchef, to install fast
EV charging points in a variety of settings,
Chief Executive’s strategic review
continued
Capability Enablers: Business momentum underpinned by our technology, our focus on
sustainability and our colleagues
Science of Service
®
Decarbonisation Delivered
TM
14k
Connected Workplace users
across 40 customers
3,200
EVs in operation
(one of the largest UK fleets)
CHCoE and Merlin for Cleaning launched
Forté launched
18,000 sensors remotely monitoring
customer sites
‘Partnership technology roadmaps’
introduced for customers
Energy optimisation programme
implemented across Mitie’s estate
2,800 EV charge points installed
Net Zero targets validated by SBTi
2023 ‘Net Zero Carbon Strategy’ (edie)
2023 ‘Solar Project of Year’ (GivEnergy)
Find out more on page 18 Find out more on page 24
Great Place to Work
57%
employee engagement
(+7ppt YoY )
New Employee Value Proposition (EVP)
Industry leading benefits package
£10m Winter Support package
Find out more on page 8
MyVoice MySlice MyStory
MyCareer
MyAchievement
MyWellbeing MyCommunity
Strategic report Governance Financial statements
17
Mitie Group plc
Annual Report and Accounts 2023
including motorway service stations, petrol
stations and destination hubs such as garden
and shopping centres. In addition, we continue
to develop heat decarbonisation plans for five
central government bodies across over 100
buildings, and to provide other services, such as
LED lighting installation and energy consumption
management, for our customers.
Financial highlights
Our financial results for the year ended 31 March
2023 are encouraging and we have made further
progress against each of our strategic priorities.
We entered the year with the challenge of
replacing almost £450m of short-term and
higher-margin Covid-related contract revenue.
Thanks to the hard work of our 64,000
colleagues and our technology-led approach,
we have achieved this, and more.
Group revenue
Group revenue, including share of joint ventures
and associates, from continuing operations of
£4,055m was 1.5% better than the prior year
(FY22: £3,997m), even after the completion
of short-term Covid work (FY22: £448m),
representing our highest ever revenue. Excluding
the Covid-related contracts, underlying revenue
growth was 14%. This increase is broadly
attributable to organic growth of 7% (including
net contract wins and losses, contract growth
and projects), contract re-pricing of 5% and
acquisitions of 2%.
Profitability
Basic earnings per share before other items grew
by 3.3% to 9.5p (FY22: 9.2p). EPS benefited from
the refinancing of debt instruments and share
buybacks, which more than offset the small
reduction in operating profit before other items
to £162m compared with the prior year (FY22:
£167m) due to the completion of the higher
margin Covid work. Basic earnings per share
after other items more than tripled to 6.8p
(FY22: 2.2p), reflecting a £60m reduction in
Other items after tax to £37m (FY22: £97m).
Financial position
We generated £117m of cash from operations
(FY22: £264m), leading to £66m of free cash
flow (FY22: £147m) in FY23, which helped us to
maintain a strong balance sheet with leverage
(average net debt/EBITDA) of only 0.4x.
Our average net debt was £84m (FY22: £25m),
reflecting the implementation of the capital
allocation policy announced last year and our
decision to terminate the customer invoice
discounting facility. Closing net debt at 31 March
2023 increased to £44m (FY22: £27m net cash).
Capital allocation
Mitie is cash generative and has a strong, stable
and flexible balance sheet to support future
growth and increased returns to shareholders.
The Group has made a number of targeted
bolt-on acquisitions over the last two years,
focused on the higher-growth, higher-margin
sectors of decarbonisation, security technology
and telecoms infrastructure. The Board believes
that value-accretive acquisitions represent an
increasingly important route through which Mitie
can accelerate growth and build on its earnings
and cash generation platform for the future.
Having reinstated the dividend last year, post
Covid, the Board’s intention has been to increase
the dividend payout ratio to 30%–40%, and
thereafter deliver dividend growth in line with
earnings growth. In light of the Group’s robust
financial position and continued progress against
its strategy, the Board is therefore recommending
a final dividend of 2.2p per share which, when
added to the dividend paid in respect of the first
six months of the year, takes the total dividend
for FY23 to 2.9p per share (FY22: 1.8p). This
represents a payout ratio of 30% (FY22: 20%
payout). The final dividend will be paid on
4 August 2023.
In April 2023, the Board announced its decision to
purchase shares to satisfy all employee incentive
schemes, eliminating the otherwise dilutive effect
of issuing new shares to fulfil vesting awards.
The majority of our share schemes are satisfied
through the Company’s Employee Benefit Trust
(EBT), while Save As You Earn (SAYE) schemes
are satisfied through treasury shares, in order
to mitigate unnecessary stamp duty costs for
the employee.
Consistent with this approach, 50m shares were
purchased through the EBT, including 4m shares
for our employee Winter Support package, at
a total cost of £38m in FY23. We expect share
purchases through the EBT to reduce significantly
to c.15m shares in FY24 and FY25, as specific
incentives put in place in respect of the Interserve
acquisition mature.
The Board also announced in April 2023 a new
£50m share buyback programme for FY24,
following on from the initial £50m programme
executed in the first half of FY23. The first £25m
tranche of the new programme is underway and
includes the purchase of 15m shares to be held
in treasury for our 2020 SAYE scheme, which
vests in December 2023. The remaining shares
purchased from the first tranche will be cancelled.
The timing of the second tranche of the new
programme will be dependent on M&A
opportunities and will include the additional
15m shares required for the vesting of the 2020
SAYE scheme (30m shares in total), with all
remaining shares being cancelled.
Outlook
FY24 has started positively. Since the start of the
year, we have won and extended a number of
significant new contracts and we have a healthy
pipeline of new opportunities, combined with
the full year benefit from major contracts won
and extended in the final months of FY23.
We will continue our disciplined approach to
bidding for contracts, even if it is challenging to
maintain renewal rates at the current level, and
we will continue to seek growth opportunities,
both organically and through strategic bolt-on
acquisitions in the decarbonisation, security
technology and telecoms infrastructure sectors.
We have already completed two acquisitions in
FY24, both of which strengthen our capabilities
as the UK’s leading intelligence and technology-led
security provider.
We also expect to deliver further progress in
FY24 on our ongoing programme of margin
enhancement initiatives, including increased
synergies from the Interserve acquisition, and
efficiencies across our labour, third-party and
overhead cost base, which will more than offset
inflationary headwinds.
This positive momentum carried forward into
the new financial year gives the Board confidence
in meeting its growth expectations for FY24.
Mitie is cash generative and has a strong, stable
and flexible balance sheet to support future
growth opportunities and increased returns
to shareholders.
FY24 has started positively.
Since the start of the year,
we have won and extended
a number of significant new
contracts and we have a
healthy pipeline of new
opportunities, combined
with the full year benefit
from major contracts won
and extended in the final
months of FY23.
Phil Bentley
Chief Executive Officer
18
Mitie Group plc
Annual Report and Accounts 2023
18
Mitie Group plc
Annual Report and Accounts 2023
Creating value for customers through
Science of Service
®
Mitie’s Science of Service
®
approach consolidates our position as the UK’s leading
facilities management company. It combines industry-leading innovation with
data-driven insight to deliver real and lasting impact for our customers. Powered
by technology, driven by data and made exceptional by people, Mitie’s services
benefit customers, enhance lives and contribute to a more sustainable future.
Find out more on pages 15 and 16
Following the pandemic, a major railway company
wanted an air disinfection system to reduce the
spread of airborne bacteria and viruses in
high-traffic areas, such as public toilets. Mitie
partnered with Luxibel, a global provider of UVC
air disinfection systems, to provide cutting-edge
air-cleansing technology. The units use the power
of UVC light, which is scientifically proven to kill
99.999% of airborne pathogens. Our Connected
Workspace team installed Luxibel units in
13stations across the UK. Our customer sees
the presence of the units as an essential part of
providing reassurance and confidence, to both the
public and colleagues, that it has modern, highly
effective health and safety measures in place.
With the increase in hybrid working, a
government department wanted to optimise
its workspace for its diverse workforce –
making sure it was doing everything to attract
and retain the very best talent.
Using Sphere, our workplace effectiveness app,
we analysed data collated from employees on
three aspects of their workspace: physical,
sensory and emotional. Our data findings allowed
our specialists to understand how the existing
office design negatively impacted employee
productivity, wellbeing and attitudes to the
work environment. Our workplace design team
identified and implemented solutions, including
better-designed collaborative spaces and
environmental sensors to monitor and control
comfort levels, improving the employee
experience for our customer.
Managing risk and
maximising productivity
Enhancing workspaces
and customer experiences
13
major UK railway stations
now have high-tech UVC air
disinfection units installed
by Mitie
350+
government department employees
surveyed on their workplace
experience using Sphere
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Strategic report Governance Financial statements
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Mitie Group plc
Annual Report and Accounts 2023
Mitie supports 40 NHS trusts, providing a
portfolio of specialist services, including advanced
cleaning solutions, with a strong focus on patient
safety and comfort. We play a crucial role in
creating a positive healthcare experience.
We use advanced technology to monitor and
deliver effective cleaning, freeing our colleagues
to concentrate on high-traffic touchpoints
in harder-to-reach areas. Our robots are
increasingly common across our NHS sites,
making sure floors are hygienic and clean, while
handheld devices facilitate intelligent and efficient
job allocation, with the nearest cleaner alerted to
areas needing attention. Cleaning alerts are also
triggered by footfall monitors, which register the
busiest locations throughout the day.
One of our real estate customers wanted a
modern, tech-enabled service across its
properties in Central London.
We delivered a joined-up security service, using
our world-class remote security monitoring and
analysis to support our highly trained frontline
security officers. This enabled us to provide
risk- and intelligence-based protection, and made
it simpler to provide information to the police.
All systems are now centrally managed at our
dedicated Intelligence Hub, enabling us to allocate
resources based on real-time data on the risks
and threats affecting the customer’s business.
This resulted in a reduction in the number of
incidents and improved response times.
Our Plan Zero team helped a telecoms company
to reduce its carbon emissions. Our customer
was already investing in solar- and wind-powered
base stations, sustainable end-user devices and
energy-efficient data centres, but wanted our
expertise to meet its sustainability ambitions
more quickly.
We audited 90 of our customer’s buildings to
determine energy usage and efficiency. We
optimised the lighting, heating and air conditioning
to operate at the highest energy efficiency rating
and installed remote sensors to monitor and
control office and data centre temperatures.
As a result, we achieved £10m of energy cost
savings for our customer and improved comfort
levels for their staff.
Creating healthier and
more hygienic spaces
Protecting people,
property and assets
Accelerating the
path to Net Zero
£10m
energy cost savings we achieved
for a customer
24/7
protection provided by
Mitie’s technology-backed
security solutions
160m m
2
hospital space we clean
every year
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Mitie Group plc
Annual Report and Accounts 2023
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, balancing the interests of all
stakeholders, including our shareholders,
customers, colleagues and local communities.
In FY23, the Group successfully replaced all
of the prior year’s revenue from short-term
Covid work, to deliver revenue and basic EPS
before other items growth of 1.5% and 3.3%,
respectively. The small reduction in operating
profit before other items compared with the
prior year reflects the higher-margin, flexible
nature of Covid work. Excluding Covid work,
underlying revenue increased by 14% and
operating profit before other items increased by
44%. The FY22 comparator includes the first full
year of Interserve (acquired November 2020).
A detailed review of performance can be found
in the Chief Executive’s strategic review and the
Finance review.
Key performance indicators
Monitoring our progress
Operating profit (£m) and margin (%)
before other items
From continuing operations
4.0%
Operating margin
FY22 4.2%
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 project work, improving
operational efficiencies, and reducing our cost base. Mitie’s target is to achieve an
operating margin of 4.5%–5.5% over the medium term.
A reconciliation of operating profit before other items from continuing operations to
the equivalent statutory measure is provided in Appendix – Alternative Performance
Measures on pages 212 to 215.
Our achievement
Operating profit before other items reduced by 2.9%, and the operating margin
decreased by 0.2ppt due to the completion of higher-margin Covid work. Excluding
the contribution from Covid work, operating profit before other items increased
by 44% to £155m and the operating profit margin improved by 0.8ppt to 3.8%
compared with the prior year, benefiting from revenue growth and margin
enhancement initiatives.
Find out more on page 69
Basic EPS before other items (p)
From continuing operations
Dividend per share (p) and
payout ratio (%)
From continuing operations
3.3%
increase from
previous year
61.1%
increase from
previous year
Description
Basic earnings per share (EPS) before other items represents our profit after tax from
continuing operations, 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 improve EPS 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 212 to 215. EPS
for FY20 and FY19 has been restated for the bonus element of the 2020 Rights Issue.
Our achievement
Basic EPS before other items increased by 3.3% to 9.5p, benefiting from the
re-financing of debt instruments and share buybacks, which more than offset the
small reduction in operating profit before other items compared to the prior year.
Find out more on page 70
Description
Dividend per share (DPS) represents the amount of our profit after tax and before
other items from continuing operations 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 this profit that is paid out as
dividends. We are targeting a payout ratio of 30%–40% over the medium term,
with dividends growing in line with earnings growth thereafter.
DPS for FY20 and FY19 has been restated for the bonus element of the 2020
Rights Issue.
Our achievement
DPS increased by 61.1% to 2.9p, reflecting a payout ratio of 30%. This increase in the
payout ratio reinforces our confidence in continuing to deliver against our strategic
priorities, including the ability to generate sustainable free cash flow from which to
pay dividends.
Find out more on page 7
Financial
Revenue (£m)
From continuing operations, including share of
joint ventures and associates
1.5%
increase from
previous year
Description
Revenue growth from continuing operations 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. Mitie’s target is to achieve mid-to-high single
digit revenue growth annually over the medium term.
Our achievement
Revenue including share of joint ventures and associates of £4,055m, a new record
for the Group, reflects 1.5% growth, having successfully replaced all short-term
Covid-related contract revenue from the prior year. This was achieved through
contract wins, extensions and renewals, growth in projects work, contract re-pricing
and the contribution from acquisitions. Excluding the £15m of Covid work in FY23
(FY22: £448m), underlying revenue increased by 14%.
Find out more on page 68
FY22
FY20
FY21
FY19
£3,997m
£2,103m
£2,529m
£2,017m
FY23 £4,055m
FY22
FY20
FY21
FY19
9.2p
7.3p
3.1p
7.6p
FY23 9.5p
FY22
FY20
FY21
FY19
20%
10%
0%
28%
FY23 30%
2.9p
1.8p
0.7p
2.1p
0p
FY22
FY20
FY21
FY19
4.2%
3.7%
2.3%
3.6%
FY23 4.0%
£162.1m
£166.9m
£58.8m
£78.1m
£73.1m
Strategic report Governance Financial statements
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Mitie Group plc
Annual Report and Accounts 2023
Free cash flow (£m)
£80.9m
reduction 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. Mitie’s target is to
deliver sustainable free cash flow.
A reconciliation of free cash flow to the equivalent statutory measure is provided in
Appendix – Alternative Performance Measures on pages 212 to 215. Free cash flow
in FY22 has been restated to exclude the purchase of own shares (FY22: £13.8m).
Our achievement
Free cash flow of £65.7m is £80.9m below the prior year. Within this cash inflow there
was a cash outflow from working capital of £38.8m, largely as a result of the decision
to terminate the invoice discounting facility, investments required to support the
growth of the projects businesses and the completion of the Covid contracts, which
were on more favourable payment terms than the contracts that have replaced them.
Find out more on page 71
Financial
Grow Mitie Generate cashMargin enhancement Capability enablers
Linked to remuneration
Return on invested capital (%)
From continuing operations (ROIC)
4.5ppt
reduction from
previous year
Description
Return on invested capital (ROIC) is calculated as operating profit before other items
and after tax from continuing operations divided by invested capital. It is a measure of
how efficiently the Group utilises its invested capital to generate profits.
The ROIC calculation and a reconciliation of the Group’s net assets to invested capital
are provided in Appendix – Alternative Performance Measures on pages 212 to 215.
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 25.4% remains above our target of ‘greater than 20%’. The 4.5ppt reduction
from the prior year is due to a combination of the completion of higher margin Covid
work, the higher effective tax rate, the investment in businesses acquired in FY23 and
the decision to terminate the invoice discounting facility.
Find out more on page 70
Linked to our strategic pillars
FY22
FY20
FY21
FY19
29.9%
22.3%
8.2%
25.0%
FY23 25.4%
FY22
FY20
FY21
FY19
£(24.5)m
£30.9m
£30.5m
FY23
£146.6m
£65.7m
Total order book (£m)
Including retentions and new wins
2.2%
increase from
previous year
Description
Total order book includes secured fixed-term contract work, variable work (including
estimated unsecured work) and project 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 in the total order book in the medium term.
See Note 3 to the consolidated financial statements for analysis of the secured order
book. The secured order book excludes variable and project work.
Our achievement
The total order book increased by 2.2% to £9.7bn, driven by new wins, extensions and
renewals, primarily across the Business Services, Central Government & Defence and
Technical Services divisions.
Find out more on page 2
FY22
FY21
£9,481m
£9,285m
FY23 £9,690m
Average daily net debt (£m) and
leverage ratio (x)
£59.6m
increase from
previous year
Description
Average daily net debt reflects how much we owe our debt providers, and how well
we have managed our debt over the course of the year. The leverage ratio is calculated
as average daily net debt divided by EBITDA before other items from continuing
operations. We aim to maintain a leverage ratio of no greater than 1x, through cash
generation, working capital discipline and appropriate capital allocation.
Comparative data is not presented for FY19 as the financials for this year were
prepared on a pre-IFRS 16 basis.
Our achievement
Average daily net debt of £84.3m increased by £59.6m compared with the prior year,
reflecting planned capital allocation activities (including share buybacks, acquisitions,
dividends paid and share purchases for employee incentive schemes), the decision
to terminate the invoice discounting facility and the outflow of cash from working
capital movements.
Find out more on page 71
FY22
FY21
0.1x
0 .5x
FY20
2.7x
FY23 0.4x
£84.3m
£24.7m
£47.1m
£327.6m
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Mitie Group plc
Annual Report and Accounts 2023
Key performance indicators
continued
Lost time injury frequency rate
Per million hours worked
0.3
increase 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 overriding 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 remain broadly
in line with the prior year.
Find out more on page 40
Employee engagement (%)
7ppt
increase from
previous year
Description
The Group’s success is underpinned by the way Mitie leads and engages with its
people. The employee engagement (Upload) 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 around
the UK to engage with all employees, including our frontline colleagues.
Our achievement
The most recent annual Upload survey took place in April 2023. The participation rate
increased by 7ppt to 54% of colleagues (84% of those working more than 35 hours per
week), compared with the prior year. The overall employee engagement score rose by
7ppt to a record high of 57% of colleagues ‘fully engaged’ in the year.
Find out more on page 42
Employee turnover
Females in senior leadership team (%)
–
No change 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 remained unchanged at 19%, which is broadly in line with
pre-Covid levels. We provide our colleagues with a comprehensive industry-leading
benefits package, including virtual GP access for all colleagues and those in their
household, and life assurance for all colleagues. We also launched a Winter Support
package in November 2022 to help our colleagues through the cost-of-living crisis.
Find out more on page 33
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
28% this year. 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 38
Non-Financial
FY22
FY20
FY21
FY19
19%
16%
12%
20%
FY23 19%
FY22
FY21
24%
21%
FY20
18%
FY23 28%
FY22
FY20
FY21
FY19
3.55
3.9 4
2.85
6.08
FY23 3.87
FY22
FY20
FY21
FY19
50%
46%
55%
45%
FY23 57%
Grow Mitie Generate cashMargin enhancement Capability enablers
Linked to remunerationLinked to our strategic pillars
Strategic report Governance Financial statements
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Mitie Group plc
Annual Report and Accounts 2023
Net Promoter Score (index)
Rebased to include Interserve
3pt
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 is +42, an improvement of 3pt compared with the prior
year. Supplementary to the main NPS question, we ask a number of questions to
understand how our customers feel about partnering with Mitie. While all of the
scores improved year-on-year, the largest increases recognise the innovation and
technology we are bringing to our customers. The broader improvement in all
scores supports the overall increase in NPS. The FY23 survey captured feedback
from 1,044 customers.
Find out more on page 32
Carbon emissions (Scope 1 & 2)
(tonnes CO
2
e)
Description
In February 2020, Mitie set an ambitious, industry-leading pledge to reach Net Zero
operational carbon emissions by the end of 2025, a full 25 years ahead of the UK
Government’s 2050 target. Mitie will eliminate carbon 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
Science Based Targets initiative for its ambitious Net Zero targets.
Mitie has reported global emissions data for the first time this year and will report on
a global basis from FY24 onwards. UK emissions data is externally verified.
Our achievement
Mitie’s Scope 1 and 2 UK carbon emissions increased by 2.5% in FY23, although our
emissions intensity decreased by 1%. The increase in total emissions reflects an
increase in gas and electricity usage across our built estate as our building occupancy
levels continue to increase post Covid. Mitie has 3,200 electric vehicles on the road
(one of the largest EV fleets in the UK) and has installed 2,800 EV charge points across
our estate, employee homes and client sites. All of the electricity that Mitie buys for its
operated sites is 100% renewable.
Find out more on page 54
Non-Financial
FY22
FY20
FY21
20,596
27,072
FY19
28,912
19,205
FY23
21,115
FY22
+39
FY21
+24
FY23
+42
2.5%
increase from
previous year
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Mitie Group plc
Annual Report and Accounts 2023
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Mitie Group plc
Annual Report and Accounts 2023
Committed to
Decarbonisation Delivered
Plan Zero – Decarbonisation Delivered
®
is our expert in-house
sustainability consultancy, which supports our customers’ journey in carbon
reduction and advises on low-carbon technologies, workplace strategy,
wellbeing and environmental performance. Over the past decade, Mitie
has helped customers to eliminate over 353,000 tonnes of carbon from
their operations.
Find out more on page 45
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Pioneering solar PV
Portsmouth International Port (PIP), a major UK
port, has been increasing its use of renewable
energy, and is pioneering a solar carport with
rooftop and battery storage solutions.
Mitie’s solar team worked with PIP to develop a
solar PV system for its carport canopy. With the
canopy, high-voltage infrastructure upgrades,
and a 1MWh battery storage system, PIP will
generate more than 1.1m kWh of energy
per year, reducing annual carbon emissions
by 204 tonnes.
Mitie sparks up EV
infrastructure for
the DWP
Mitie is supporting the Department for Work
and Pensions (DWP) on its decarbonisation
journey to reach its Net Zero targets. As part
of our five-year relationship, we have been
working closely with the DWP’s sustainability
team on areas including waste, biodiversity and
solar power.
We are also helping the DWP achieve a fully
electric vehicle (EV) fleet by 2030. The contract
covers the design, installation and maintenance of
EV charging points. A total of 250 EV charging
points will be delivered across more than 120 job
centres, with many more in the pipeline.
250
EV charging points
for the DWP
120
of their sites covered
I’m delighted we’ve met our
target to begin generating clean
energy at the port by the end
of 2022.
Cllr Kimberly Barrett, Cabinet Member
for Climate Change and Environment,
Portsmouth City Council
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Annual Report and Accounts 2023
Navigating the path to
Net Zero
Mitie regularly hosts industry and customer-
focused events covering a range of topics and
areas of expertise. In February 2023, industry
leaders, public and private sector customers,
and Mitie’s in-house experts gathered at
The Shard for a Net Zero Navigator
breakfast briefing.
Participants at this thought-leadership event
discussed the challenges that organisations
face as they strive to meet ESG requirements
and work towards achieving their own
decarbonisation targets, and explored how
they can successfully navigate the path to
Net Zero. The event also provided the
opportunity for participants to network
and share ideas in an informal setting.
Framework appointment
yields £1bn opportunity
Mitie’s mission to decarbonise Britain was
boosted by our appointment as a supplier on
the Carbon and Energy Fund (CEF) National
Framework Agreement for the provision of
Carbon and Energy Infrastructure Upgrade
Services in August 2022.
The CEF was created to help the NHS and
other public sector organisations upgrade energy
systems and enables approved suppliers to bid for
work worth up to £1bn in value. As a framework
supplier, Mitie can use its expertise to support
the NHS and other public sector organisations
in reaching Net Zero carbon by 2040.
Mitie offers integrated
solar power solutions
In 2022, Mitie acquired Custom Solar, a solar
power solutions company specialising in the
development, design, installation and maintenance
of solar power systems for public and private
sector customers.
UK solar power generation is targeted to reach
40GW in 2030, up from 14GW today. We aim
to fill a gap in the market for integrated solar
solutions, building on our expertise in upgrading
electrical infrastructure and providing grid
connections to support the UK’s decarbonisation
agenda. Custom Solar’s design and installation
expertise, combined with Mitie’s industry-leading
project management and mobile engineering
offering, supports Mitie’s ambition to be a leading
provider of end-to-end green energy solutions.
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Mitie Group plc
Annual Report and Accounts 2023
Our market drivers
A competitive and changing landscape
Overview
The UK facilities management (FM) market is
the largest in Europe, accounting for 3% of
domestic GDP, and one of the most developed,
dynamic and mature in the world. Outsourced
FM (including single and bundled services and
integrated facilities management) accounts
for almost half of the total FM market, valued
at c.£70bn, and is forecast to grow at
3.4% per annum between 2022 and 2027.
We continue to see rapid advancements in
FM, driven by technology innovations, new
business models, emerging value propositions,
sustainability and creative service offerings.
The sector has rebounded from the impact of
the pandemic, although the recovery rate has
varied by service line. The engineering, repairs
and maintenance, and workplace services sectors
have recovered strongly as employers have
prioritised hygiene and security to create safe
environments and look for ways to draw their
employees back to the office.
Indeed, for many businesses, the current
environment is difficult to navigate: they
are contending with challenging Net Zero
commitments, an increasingly mobile hybrid
workforce and outdated workplaces that are no
longer fit for purpose. This is creating significant
opportunities for FM providers to differentiate
their proposition and offer innovative solutions.
Simultaneously, however, inflationary pressures
and the challenging macroeconomic backdrop,
alongside increased competition for labour in a
tight market, has put FM providers under greater
pressure to attract and retain talent and compete
on price.
Competitive landscape
The UK FM market is highly fragmented. Mitie’s
market share of 10.1% is almost twice that of its
next largest peer, while the top 10 participants,
including Mitie, account for around 40% of
the market.
The large number of smaller participants, in a
market where customer needs and expectations
are changing and competition is strong, is driving
momentum for consolidation and strategic
partnerships to scale up, diversify and offset
pricing pressures.
Consequently, there has been an increase in
M&A activity across the sector. Mitie has been
active in the market, having completed a number
of bolt-on acquisitions, with a strategic focus on
the telecoms, decarbonisation and security
technology sectors over the past two years.
As the competitive landscape continues to
evolve, many FM operators are shifting to a
customer-centric, service-based model, and the
leaders, with the scale and resources to do so,
are taking this one step further and transitioning
to a digital-first, technology-backed model. Those
with innovative technology, such as workplace
applications, and ESG propositions, coupled with
long-term relationships, high retention rates and
the ability to grow existing contract revenues,
are well-positioned in the current environment.
It is anticipated that the industry will continue to
move towards integrated facilities management,
offering customers a holistic, ‘full service’
solution for their buildings and assets,
alongside sophisticated advisory services.
A digital-first approach
The future for FM is technology-led. This
digital transformation creates the potential to
significantly improve building performance and
the productivity and wellbeing of the people that
work within them. As customer priorities evolve,
artificial intelligence (AI), virtual reality, robotics,
‘the Internet of Things’ and predictive analytics
are becoming more sought after in FM.
Mitie is a market leader in this area, having
invested in recent years to develop leading
cloud-based platforms, and put technology and
data at the front and centre of all our services.
Connecting workplaces to our platforms allows
for data analytics, improved asset performance,
and energy use and cost-efficiencies.
Our customers can monitor their assets in ‘real
time’ and raise requests via our comprehensive
suite of dashboards and apps. Read more about
our ‘Science of Service’ approach on page 18.
The areas we anticipate will benefit the most
from digital transformation over the coming
years include workplace optimisation and
sustainability, security/access control, and
mechanical and electrical installation,
replacement and maintenance.
Decarbonisation leads the agenda
We see decarbonisation as a ‘macro-trend’ and a
key enabler to our strategy. Alongside Mitie’s own
ambitious Net Zero targets, we are building the
capability to help our public and private sector
customers to define and deliver their own Net
Zero strategies. Cutting carbon emissions is one
of the biggest challenges for businesses today,
and many organisations are reviewing their
entire asset portfolio. This challenge becomes
more complex as buildings age and need to
be retrospectively fitted with the materials,
systems and technology to meet modern
energy-efficiency standards. We estimate this
market opportunity to be c.£5bn. Read more
about ‘Decarbonisation Delivered’ on page 24.
Evolving working habits
The workplace revolution is changing the scope
of FM. Many businesses are now faced with
the challenge of providing comfortable and
collaborative workplaces for a hybrid workforce,
meaning that occupancy rates can vary
dramatically throughout the week and
investment is needed to improve existing
layouts and amenities.
Mitie is a trusted partner to a wide range of
customers, and we work closely with them
to create comfortable, clean and modern
working environments for their employees.
Our technology is used to monitor building
occupancy and manage energy efficiency, for
example by closing off areas or floors that are
not required on low-occupancy days.
Market concentration
Consolidated
Market dominated by
1–5 major players
Fragmented
Highly competitive market
without dominant players
UK FM market
The future for FM is technology-led, and Mitie is
at the forefront of this evolution in the industry’s
service offerings to its customers.
Hybrid working, and an increased focus on
employee health and wellbeing, is challenging
employers to create modern, innovative
sustainable workspaces.
Strategic report Governance Financial statements
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Annual Report and Accounts 2023
Mitie is a leading facilities management provider across its three core service lines
Cleaning & Hygiene
Mitie is the largest provider of cleaning and
hygiene services in the UK, with 15,000 highly
trained colleagues, focusing on quality, excellence
and technology-led innovation.
Security
Mitie is the largest intelligence and technology-
led security provider in the UK, employing
16,000 colleagues. We offer integrated, risk-
based security solutions, such as lone worker
protection, guarding, fire and security systems,
and mobile security.
Technical Services
Mitie is the UK’s largest provider of ‘hard services’
and technology-enabled solutions. Our Technical
Services division employs 9,800 colleagues,
including 1,000 locally based mobile specialist
engineers across the UK.
• We provide cleaning services to a vast range
of customers across the country, including
hospitals, schools, food manufacturers and
large retailers
• While some businesses are scaling back
additional cleaning services post Covid,
there is an increased focus on service quality,
assurance and sustainability
• The sectors where we expect to see the
highest levels of demand include healthcare,
education, industrial facilities and food retailing
• We deploy the latest innovations and deliver
the best possible value to our customers
• Innovative robotic solutions, UVC disinfection
systems and antimicrobial surface protectants
are just some of the ways our advanced
technology is taking cleaning to the next level
• We continue to focus on reducing the
environmental impact of cleaning, using
advanced technologies and products to
meet or exceed industry standards
• Our Cleaning Centre of Excellence in
Birmingham showcases our capabilities, the
excellence of our people and processes,
and our commitment to innovation
• We are a market leader in security for retail,
critical security environments (including critical
national infrastructure), the public sector,
transport and logistics, and corporate and
iconic buildings
• Companies are increasingly embracing
modern, digital solutions, and making strategic
security decisions based on intelligence and
risks to their business
• Mitie is a leader in digitally enabled remote
monitoring and remote guarding, helping to
generate cost-efficiencies for our customers
alongside a more agile response to incidents
• We offer risk analytics, curated intelligence
and real-time CCTV interrogation, backed by
our Intelligence Security Operations Centre
(ISOC) in Northampton
• Through our industry-leading Intelligence Hub,
we provide insights that empower security
teams to make more informed decisions,
supported by our network of over 200
experts across the country
• Our focus for future growth in the security
market is for intelligent security and
market analytics, which we see as having
significant potential
• Mitie is a leading supplier of technical services
and delivers projects to a wide range of
predominantly private sector customers,
including financial services and retail
• We have extensive knowledge and experience
of maintaining buildings and assets
• Our engineers provide services, from mobile
and site-based maintenance, to mechanical
and electrical maintenance and repair, and
remote monitoring
• Technical Services is benefiting from increased
activity in all areas of decarbonisation, including
solar power, LED roll-outs, air source heat
pump installation and EV charging projects
• We are also leveraging our strategic
acquisitions and in-house expertise to gain
market share in the high-growth telecoms
infrastructure sector
• Technical Services is at the forefront of our
‘Science of Service’ ambitions, using our
leading-edge technology platform to set
Mitie apart from its competitors
• Connected Workspace is a critical component
of our proposition for new wins and contract
expansion with existing customers as they
adapt to new, hybrid ways of working
• Our goal is to maximise employee wellbeing,
enhance estate intelligence and provide smart
decarbonisation and green energy solutions for
our customers
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Annual Report and Accounts 2023
Our market drivers
continued
Waste
Mitie has over 30 years’ experience providing
recycling and waste removal services. We work
with our customers to increase recycle rates
and prevent waste through best practice waste
treatment and recovery services.
Landscapes
Mitie is one of the largest providers of
outsourced landscaping services, primarily to
the commercial and public sectors, in the UK.
We have an award-winning network of 900 staff
working on 6,000 sites across the country.
Care & Custody
Mitie is a leading provider of forensic health
and custody detention services, and works as
a strategic partner to the UK Government.
Spain
Mitie Spain is a leading provider of cleaning and
ancillary services in the region, to both public and
private sector clients in sectors such as transport
and aviation, retail and healthcare.
Alongside our core service we offer the following complementary services to our customers
• Businesses are increasingly focusing on
eliminating waste at every stage, from raw
material handling to the point of sale, to
maximise efficiency and profitability and
improve their environmental credentials
• Recycling of plastics is becoming a greater
priority for businesses
• Local authorities are being called on to lead the
energy, climate response and circular economy
agenda: from separate food waste collection
to deposit return schemes, and waste disposal
enforcement and innovation
• By working in partnership with our public and
private sector customers, we typically achieve
recycle rates in excess of 90% for them within
12 months
• We aim to be the leading waste management
and consultancy organisation, providing our
customers with carbon-neutral waste solutions
• Our priority areas include water (i.e. effluent
treatment, water supply, and infrastructure
repair and maintenance), electric vehicle
battery recycling, clinical waste disposal and
treating customer waste on-site using mini
recycling facilities
• The UK outsourced landscaping market,
including cleaning and winter services, is
estimated to be worth over £550m, and is
growing at a rate of 3.5% per annum
• This is in part being driven by an increased
focus on biodiversity, as companies and
public sector bodies seek to improve their
sustainability credentials and prepare for
legislative changes
• Employee wellbeing has moved up the
agenda, with indoor and outdoor clean,
safe, green spaces being sought by building
owners and occupiers
• Mitie’s ambition is to be the UK’s greenest
commercial landscaping provider, and we
are well-positioned to benefit from these
emerging trends
• Our tailored horticultural and landscaping
services include grounds maintenance,
landscaping, gritting and snow clearance,
and internal planting
• The acquisition of Biotecture in FY22 is part
of our commitment to reach Net Zero
carbon emissions by 2025, and to help
deliver decarbonisation for our customers
• Our Landscapes team focuses on work for
customers in core sectors that deliver strong
margins and opportunities for upselling
profitable contracts
• There are also opportunities to ‘insource’
landscaping works that are currently being
completed by a third-party supplier on various
contracts across Mitie
• Our Care & Custody services are focused on
the three key areas of immigration, justice and
secure care sectors
• Mitie is a leading provider of forensic health
and custody detention services across
20police forces, delivering over 240,000
medical interventions per annum
• We operate over 50% of the detention
immigration estate as a strategic partner to
the UK Home Office
• We deliver prison facilities management
services for the Ministry of Justice
• We see non-emergency patient transport
services in the health sector as an opportunity
for new services, leveraging the experience we
have in logistics and healthcare delivery
• The facilities market in Spain is worth an
estimated £14bn, with services provided
largely by a few large players and many local
or regional companies
• We are a leading provider of cleaning and
ancillary services in transport and aviation (to
customers such as Aena), retail and healthcare
• Mitie Spain has 5,900 colleagues working across
mainland Spain, the Canary Islands and the
Balearic Islands
• Consistent with the wider Group, Mitie
Spain offers opportunities to colleagues
with disabilities. It currently employs
around 1,300 colleagues with disabilities
in frontline roles
• We aim to expand our offering beyond our
heritage of cleaning services to also include
intelligent security, taking advantage of the
leading position we have developed in this
market in the UK
Strategic report Governance Financial statements
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Annual Report and Accounts 2023
Central Government
Mitie employs 4,200 colleagues, working across
30 government departments and agencies at
3,000 locations in the UK and overseas. Central
Government contracts are fulfilled by our CG&D
division.
Defence
Mitie employs 1,400 colleagues servicing 13
defence contracts, mainly with the MOD in the
UK and overseas. Defence contracts are fulfilled
by our CG&D division.
Healthcare
Working with over 40 NHS trusts, we are one
of the leading providers to the healthcare sector.
Our services include mechanical and engineering,
catering, cleaning and portering.
Education
We offer specialist energy, projects and
maintenance services to support multi-academy
trusts (MATs) and local authority school estates,
colleges and universities.
Public sector overview
• The UK has one of the strongest markets
for public sector outsourcing, with growth
between 2022 and 2027 expected to slightly
exceed that of the private sector
• The Government has set out its 2030 vision for
public sector FM, which focuses on enhancing
lives, enabling success and ensuring value
• As well as traditional FM services, Mitie is well
placed to pursue higher-margin opportunities,
including decarbonisation initiatives, workspace
monitoring and service automation
• The Government has committed to ambitious
carbon reduction targets and is therefore
expected to embrace innovative new
approaches to the use and maintenance of its
estate and assets over the coming years
• Within local government, where Mitie has a
small but growing presence, almost all local
authorities have declared a climate emergency,
creating a significant opportunity to deliver our
technical, project and decarbonisation services
• Mitie remains a trusted partner for our core
services in these highly regulated environments,
where the expectation is for outstanding levels
of service to ensure the smooth running of
critical government operations
• The MOD has 132,000 built assets across
more than 1,000 global locations, the majority
of which are in the UK
• Around one third of the UK estate requires
modernisation and the MOD has secured
additional funding to deliver a cost-effective,
modern and capability-aligned estate
• Simultaneously, the Russian invasion of Ukraine
has contributed to the UK’s decision to boost
defence spending to 2.5% of GDP by 2030
• Overseas ‘hubs’ will also drive demand
for security, telecoms infrastructure and
smart buildings
• Mitie is one of the few providers with the
operational experience, technical capabilities
and relationships to work with the MOD’s
Defence Infrastructure Organisation (DIO)
• We have recently been awarded Future
Defence Infrastructure Services (FDIS) and the
US Visiting Forces contracts with the DIO, as
well as contracts for Gibraltar and Cyprus
• We are also supporting the defence sector’s
decarbonisation agenda, working across the
MOD and FDIS estates to incorporate
low-carbon features, such as building
energy monitoring systems, heat pumps
and solar power
• The UK healthcare sector is valued at
£5.7bn and is expected to grow by over
2.5% per annum between 2022 and 2027
• Sector trends include:
– the merging of trusts to create larger
organisations that cover acute and
mental health;
– an increased focus on sustainability and
carbon reduction; and
– the use of technology to improve patient
care and deliver productivity improvements
• Mitie is already well established in the sector
and we see significant opportunities for
growth, by partnering with existing and new
customers to deliver decarbonisation projects
and deploying our leading technology
• The English school system is changing.
The Government has set a target for all
22,000 schools to become MATs by 2030,
with approximately 50% having been
transitioned to date
• As MATs grow in both number and size, their
procurement behaviours will change as they
seek economies of scale, for example by
consolidating their providers of FM services
• The Government’s Net Zero targets will also
drive a significant decarbonisation investment
programme for school buildings
• Mitie works with more than 200 schools and
MATs, and we have significant experience and
strong relationships in the sector
• We are well placed to help shape and
develop the FM market for MATS, given our
demonstrated ability to provide bundled hard
services and deliver system optimisation and
decarbonisation services
Mitie is a trusted partner and leading provider of outsourced services to the public sector, including the Ministry of Defence (MOD), Ministry of Justice (MOJ)
and Department for Work and Pensions (DWP), which accounts for 54% of our revenue. We see growth opportunities across the key areas of Central
Government, Defence, Healthcare and Education.
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Mitie Group plc
Annual Report and Accounts 2023
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 page 38
Our technology
Our proprietary market-leading intelligent cloud-based technology
platform brings actionable data insights into the heart of our thinking
to add value to our processes and interactions, creating compelling
and frictionless experiences for our colleagues and customers that
in turn drive adoption, loyalty and retention.
See page 15
Our expertise
We are a partner trusted for market-leading service and for putting
our customers at the heart of our business. We apply our expertise
to improve efficiency, provide innovative technology-led solutions and
make a valuable, measurable difference.
See page 15
Our scale and reach
We are a UK market leader across cleaning and hygiene, security and
technical services, with sector leadership across central government
defence, retail, manufacturing, transport and logistics. The scale of
our operations allows us to self-deliver most services, including some
specialist services. Our nationwide reach allows us to service large
customers with a presence all over the UK.
See page 26
Our strategy
Our strategy is focused on margin-accretive growth. We will continue
to build our core business and maintain our position as one of the
UK’s leading facilities management companies. Our growth will be
accelerated through the ‘Science of Service’ as we increasingly
leverage our world-class, intelligent cloud-based platform and
decarbonisation and ESG credentials to deliver higher returns
for all our stakeholders.
See page 12
Our commitment to society
Our vision is to make a lasting 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 work.
See page 37
Our financial position
We have a strong balance sheet and low leverage with an investment
grade credit rating. We are focused on generating sustainable free
cash flow, which enables us to invest in delivering higher returns and
improved outcomes for all our stakeholders.
See page 70
We deliver exceptional service, every day. We provide our
customers with integrated FM, bundled or single line services,
backed by proprietary intelligent technology to improve efficiencies
across services and sectors where we are a market leader.
Our customers expect us to deliver exceptional working environments which are welcoming, efficiently
operated and safe. Buildings and workspaces are about the people within them, the progress they
enable, the environment that surrounds them and the communities they serve. Our business is focused
on how we make things better for our customers, their people, our people and the world we live in.
Our business model
Creating value for stakeholders
What we doOur resources and capabilities
Cleaning & Hygiene
Delivering ‘assured’ cleaning to
provide a safe working environment
for our customers’ employees.
Our focus is on specialist cleaning
(anti-virus), technical cleaning
(robotics, UVC) and general
cleaning across offices, buildings,
transport and logistics hubs, and
high-security environments.
Decarbonisation
Plan Zero – Decarbonisation
Delivered is our unique end-to-end
decarbonisation solution supporting
customers to set and deliver their
own plans to reach Net Zero,
reducing carbon emissions and cost.
Landscapes
Providing horticultural and winter
services to private and public
sector organisations, together with
solutions to enhance biodiversity
and provide sustainable, low-carbon
services as an integral part of
Mitie’s Plan Zero programme,
including consultancy, rewilding
and living walls.
Waste
Providing sustainable waste
solutions with an innovative focus
on waste elimination, reduction,
recycling and decarbonisation in
support of the circular economy.
Care & Custody
Providing high-quality, critical public
services in immigration, criminal
justice and secure healthcare.
Security
Focusing on intelligent technology-
led monitoring solutions alongside
manned guarding, together with fire
and security systems installations.
Technical Services
Including the full range of
technology-backed engineering,
maintenance, repair and mechanical
& engineering project activities,
air-conditioning and disinfection
solutions, telecoms and energy
services. Our expertise includes
the provision of remote asset
monitoring and digital workplace
solutions.
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Annual Report and Accounts 2023
We are a trusted partner for our customers,
helping them create exceptional workplaces.
See page 32
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 33
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 33
Diligence, innovation and design
We start by engaging with a new or existing
customer to understand their needs or any
changes to 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, collating
and analysing data gathered from our data
lake, we continually collate information on
customers’ buildings and assets and the
wellbeing of their employees to drive greater
value and continuous improvement.
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 34
Mitie is a significant contributor of
revenues to the UK Exchequer, including
UK corporation tax and employer’s
National Insurance contributions.
See page 34
Creating value through our growth and
margin enhancement strategy, while
delivering sustainable free cash flow,
will deliver higher returns.
See page 32
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
+42
Employee
engagement
57%
Supplier NPS
+14
MSCI rating
AA
ROIC
25.4%
Taxes paid
£850m
How we do it The value we create
Government
Communities and environment
Suppliers
Colleagues
Customers
Equity shareholders and
debt holders
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Annual Report and Accounts 2023
Stakeholder engagement
Playing a crucial part in our strategy
Equity shareholders and debt holders
Our equity shareholders range from global institutions to small private
investors, including all our frontline colleagues to whom we have gifted
shares. We also have international debt holders.
Customers
Our large, diverse, blue-chip customer base across private and public sectors
ranges from critical government infrastructure accounts to manufacturing,
healthcare, retailers, professional services, transport and logistics organisations.
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.
Why we engage
To grow profitably and sustainably, we need a strong, loyal customer base
that will increase their spend over time and recommend Mitie. Customer
engagement helps us develop and strengthen our relationships, improving
the customer experience.
How the Group engages
• Annual Report and financial statements
• AGM (hybrid to maximise shareholder participation)
• Corporate website, including investor relations section
• Results presentations and post-results engagement (roadshows)
• Capital market events and site visits
• Stock Exchange announcements and press releases
• Ad hoc analyst and investor interactions
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
• Annual Chairman’s roadshow (also attended by NEDs)
• Ad hoc investor engagement with the Chair and NEDs
• Board consideration of, and responses to, investor feedback and queries
• Standing agenda item Investor Relations Board report
How the Board engages and is kept informed
• Customer experience survey results
• Regular Board updates on customer views
• Account health and performance reviews
Key issues
• Financial performance, including growth in revenue and profit
• Free cash flow generation and balance sheet strength
• Capital allocation, including M&A opportunities, dividends, share buybacks
• Remuneration policy and executive remuneration
• Governance and transparency
• Sustainability (ESG) performance
• Our approach to our people and how it defines our culture
Key issues
• Technology and innovation
• Health, safety and sustainability
• Quality assurance and insights
• Economic outlook, i.e. inflationary rises, Brexit, cost of living
• Regulatory compliance, governance and transparency
• Decarbonisation
• Energy security
Actions taken in FY23
• 70 1:1 meetings with shareholders and potential investors
• Two formal results presentations with Q&A sessions
• Investor and analyst site visits
• Ongoing engagement with our revolving credit facility providers and
private placement noteholders
• Closure of the customer invoice discounting facility
Actions taken in FY23
• Annual customer experience programme measuring 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 bi-annual 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) Measurement (link to KPI)
• Customer experience score
(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
• Revenue
• Operating profit and margin
• EPS
• Dividend
• ROIC
• Total order book
• Free cash flow
• Average net debt and leverage
• Carbon emissions
• Employee engagement
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Mitie Group plc
Annual Report and Accounts 2023
Suppliers
Mitie has a diverse and wide-ranging supply chain. We spend over £1.5bn
per annum with British suppliers and actively promote SMEs, VCSEs and
diverse-owned businesses.
Colleagues
Mitie’s 64,000 exceptional and diverse colleagues work around the clock,
caring and supporting each other, our customers, the planet and the
communities we serve.
Why we engage
Our 8,300 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.
Why we engage
At Mitie we aim to become the employer of choice within the FM sector.
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
• Biennial supplier NPS survey of top 250 suppliers
• Supplier Management Framework (SMF) oversees 1:1 supplier
engagement with around 200 strategic partners
• Communications through various channels, including email and letter and
Coupa (our digital supplier platform)
• Ensure all suppliers adhere to our Procurement Policy
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, Mitie Stars
• Global company updates, CEO global updates, podcasts and videos
• Annual performance reviews, and learning and development training
• Career development through MyCareer
• Confidential whistleblowing service
How the Board engages and is kept informed
• Chief Procurement Officer updates are provided at Board meetings
• A report is issued by the CEO 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
How the Board engages and is kept informed
• Mitie colleague listening strategy, engaging with and responding to
feedback from colleagues
• Direct access to the CEO via ‘Grill Phil’, his interactive feedback channel
• Colleague listening sessions led by Jennifer Duvalier, the designated NED
for workforce engagement, and the business division leaders
Key issues
• Economic outlook, i.e. inflationary rises, Brexit, cost of living
• 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
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
Actions taken in FY23
• Launched www.mitiesuppliers.com, a new platform through which
suppliers can access key information
• Introduced regular communications with all suppliers on MiNet, including
Supply Chain Insights
• Joined Minority Supplier Development UK as a corporate member
• Regular meetings with SMF strategic suppliers
• Savings-focused discussions to mitigate the impact of inflation increases
Actions taken in FY23
• Launched MyMitie, our Employee Value Proposition campaign
• Implemented £10m Winter Support package
• Introduced global Town Halls to discuss our strategy and financial results
• Launched podcasts, hosted by senior leadership, for frontline colleagues
• Launched ‘Science of Service’ campaign
• Launched My Mitie Week, supported by the first in-person Team Talk Live
since 2020
• Launched and hosted 24 equality, diversity and inclusion events
• Launched MyCareer, a new career toolkit and career banding framework
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,
women-owned)
Measurement (link to KPI)
• Females in senior leadership
• Racial diversity in senior leadership
• Employee turnover
• Lost time injury frequency rate
• Number of apprentices
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Annual Report and Accounts 2023
Stakeholder engagement
continued
Communities
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.
Government
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
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.
Why we engage
The 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
• 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 Group engages
• Responses to government consultations
• Participation in industry bodies
• Conferences and speaking opportunities
• Annual Report and financial statements
• Attendance at events with Parliamentary stakeholders
• Letters and meetings with policymakers to share relevant updates
• Engagement with sector-specific All-Party Parliamentary Groups (APPGs)
How the Board engages and is kept informed
• Mitie’s ESG Committee is chaired by a NED
• The ESG Committee oversees new initiatives and 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
How the Board engages and is kept informed
• Regular updates in bi-monthly Board papers
• Material issues discussed at Board meetings
Key issues
• Jobs and investment
• Local operational and environmental impact
• ESG performance
• Rising cost of living
Key issues
• Mitie’s financial performance
• Major business updates
• Mitie’s ESG performance against its published targets
• 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 FY23
• 19,298 volunteering hours delivered
• Mitie held a military event in November 2022, highlighting the following
achievements:
– Mitie being the first sponsor of ‘Polar Preet’
– Mitie sponsoring and promoting the Army Rugby Union
– Giving Back – working on the Poppy Appeal, and health and wellbeing
initiatives such as Movember and Coppafeel
Measurement (link to KPI)
• Carbon emissions
• Volunteer hours
• Community investment
Measurement (link to KPI)
• Customer satisfaction score (customer NPS)
• Satisfaction ratings for individual contract performance
• Meetings with policymakers
• Evidence submissions and engagements related to policy amendments
Actions taken in FY23
• Regular executive meetings with Cabinet Office (CO) and CO Director
for Markets and Suppliers
• Presented at One Government Day, attended by government customers
• Annual, quarterly and monthly Partnership Executive Meetings (PEM)
• 20+ meetings and events with senior government stakeholders
• Hosted panel session at the Conservative Party Conference on the
Apprenticeship Levy
• Through our public affairs consultancy we seek to foster senior
stakeholder relationships and lobby across the public sector and across
the political spectrum
Strategic report Governance Financial statements
35
Mitie Group plc
Annual Report and Accounts 2023
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
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 FY23 and
the outcomes of that engagement are set out on
pages 32 to 34. Engagement activities specifically
carried out by the Board collectively and
individually can be found on pages 94 and 95.
The Board made some key 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.
Acquisition of Custom Solar
Mitie acquired Custom Solar, a solar power
solutions company specialising in the
development, design, installation and maintenance
of solar power systems for public and private
sector customers, on 30 June 2022. When
considering the proposal to acquire Custom Solar
during FY23, the Board considered the strategic
benefits to stakeholders of the transactions.
Employees
• 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.
Customers and suppliers
• 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 customer experience; and
• Risk of renegotiation or early termination of
customer contracts.
Shareholders
• 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 new
businesses.
Community and environment
• Impact on our social value agenda and Plan
Zero targets and milestones.
Actions taken approved by the Board
• Consideration of detailed Board papers
prepared and presented by divisional
management and a comprehensive due
diligence process;
• Consideration of the proposed acquisition in
the context of Mitie’s strategy, acknowledging
that the acquisition of Custom Solar, with its
innovative solar solutions, would support
Mitie in providing market-leading energy
optimisation capabilities; and
• Discussion and decision on the structure and
timings 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 acquisition
of Custom Solar. The acquired business, which
was integrated into the Technical Services division,
is performing in line with expectations.
Share buyback programme
In June 2022, Mitie commenced a share buyback
programme in respect of its ordinary shares of
2.5p each up to a maximum consideration of
£50m. The shares purchased were cancelled.
When considering the proposal, the Board
considered the refinancing in the first half of
FY22 and cash flow generated during the year,
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.
Shareholders
• 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.
Debt holders and rating agency
• Ability to stay well within financial covenant
ratios and maintain financing headroom,
ensuring RCF banks and private placement
noteholders are not disadvantaged.
Pension scheme
• Ensuring the Mitie Group pension scheme
was not being unfairly treated as a result of
implementing the buyback programme.
Employees, customers and suppliers
• Launch of buyback programme sends a
positive signal that the Company is doing
well and has a strong balance sheet.
36
Mitie Group plc
Annual Report and Accounts 2023
Section 172 statement
continued
Actions taken approved 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;
• Detailed discussions on the rationale for
a buyback programme, including the
quantum and methodology, governance
and affordability; and
• Alternative approaches were considered,
including a buyback programme, a tender
offer, or a combination of both. Factors
discussed in the decision-making included
relative costs and expenses and the different
timeframes involved.
Outcome and impact of the decision
Mitie’s shareholders have supported Mitie in
significantly strengthening its financial position
and acquiring Interserve via the 2020 rights issue.
The Board also suspended Mitie’s final dividend
for FY20, only reintroducing it at the half year
FY22 (due to the uncertainty arising out of the
Covid pandemic) with a modest interim dividend
per share.
Strong financial performance, low leverage and
liquidity position enabled the Board to reward
shareholders by returning to more normalised
dividends and returning £50m to shareholders
via the share buyback programme. The Company
has since announced a further £50m buyback
programme for FY24 as part of the capital
allocation policy.
Winter Support package
In November 2022, Mitie launched a £10m
Winter Support package of new benefits that
were specifically targeted at assisting with the
current cost-of-living crisis, such as one-off
bonuses, the removal of fees for using salary
finance, retail discounts and additional free shares.
We have also expanded our ‘Choices’ platform
to our hourly-paid colleagues, so they can take
advantage of discounts on everyday products
and services.
Employees
• To provide as much support as possible to our
front line colleagues while remaining affordable
for Mitie; and
• Consideration as to the salary cut-off point
for support, acknowledging colleagues hit the
hardest by cost-of-living increases are those
working on the front line.
Shareholders
• Consider the financial impact when
determining the final package of support for
colleagues, discounting some proposals, such as
funding early Real Living Wage and National
Living Wage increases due to unaffordability;
and
• The free shares offered as part of the Winter
Support package were already in issue so
non-dilutive to current shareholders.
Communities
• Considering the combination and timing
of the elements of the Winter Support
package to ensure a positive impact on the
community as well as the individual; for
example, a cash deposit into MiDeals
accounts in December could be used to
support Christmas shopping spend.
Actions taken approved by the Board
• Consideration of detailed Board papers
presented by Mitie’s Chief People Officer
which included a wide range of potential
initiatives for the Winter Support package,
and reasons why some of them would not
be taken forward due to cost, complexity
or statutory restrictions; and
• While recognising that a large proportion of
Mitie colleagues would be feeling the effects of
the cost-of-living crisis and that, during Covid,
management applied a reduction of salary of
between 10% and 30% for employees earning
more than £40,000 per year, affordability
was a key barrier and determinant behind
the Board’s decision to limit the availability
of several elements of the Winter Support
package to those colleagues earning up to
£30,000 per year.
Outcome and impact of the decision
The Winter Support package was launched in
November and released in phases across five
months. Feedback received following the launch
was extremely positive, with an uplift identified
in key people metrics such as access to Mitie’s
‘Celebration Hub’ benefits platform, LinkedIn
interaction and visitors to Mitie’s career site.
Purchase of shares for
employee incentive schemes
In FY23, 50m shares were purchased through the
Employee Benefit Trust, including c.4m shares for
the employee Winter Support package, at a total
cost of £38m.
Shareholders
• Commitment to eliminate the otherwise
dilutive effect to shareholders of issuing new
shares in connection with Mitie’s employee
share schemes; and
• Impact on other elements that make up the
capital allocation policy, such as M&A, dividends
and share buybacks.
Debt holders and rating agency
• Ability to stay well within financial covenant
ratios and maintain financing headroom,
ensuring RCF banks and Private Placement
noteholders are not disadvantaged.
Employees
• Save As You Earn schemes to be satisfied
through Treasury shares, to mitigate
unnecessary stamp duty costs for the
employee.
Actions taken approved by the Board
• Acknowledgement and consideration of
shareholder feedback received following the
H1 FY23 results presentation that shares
would preferably be purchased in the market
to satisfy share incentive plans, rather than new
shares being issued; and
• Consideration of detailed Board papers
prepared and presented by management on
proposed share plan funding, including cash
cost and affordability, level of distributable
reserves, mechanics, execution and timing
of such purchases.
Outcome and impact of the decision
The 50m shares purchased in FY23 included a
‘catch up’ for schemes that have already been
running for two or three years and, as a result,
the amount required to be purchased in FY24
will reduce significantly to c.20m shares. Share
purchases in FY25 are expected to be lower
again, as specific incentives put in place in respect
of the Interserve acquisition mature in FY24.
In April 2023, it was announced that shares would
be purchased for all employee incentive schemes.
Key decisions in the year
Strategic report Governance Financial statements
37
Mitie Group plc
Annual Report and Accounts 2023
Our environment and social value framework
Enhancing lives and assuring a better,
more sustainable future
Making a positive contribution
Mitie’s reach is considerable: our 64,000
colleagues, many of whom work on the frontline
and have their own families to look after, deliver
services to a diverse range of more than 3,000
customers across the public and private sectors.
As such, we have the ability to positively
influence the lives of millions of people in the
UK and overseas, and we take this responsibility
very seriously.
Climate action and job creation are at the core
of our philosophy. We want to develop a
skilled workforce that can deliver meaningful
employment while creating opportunities within
local communities. Our operations must consider
the environment throughout the whole value
chain and ensure we take positive steps to
reverse the effects of climate change. As an
ESG leader, we can also help our clients to
achieve their own sustainability goals.
Our social value framework
Aligned with the UN Sustainable Development
Goals (SDGs) and the Government’s Social
Value Model, Mitie’s social value framework
is our platform for sustainability and social
value throughout our value chain.
The SDGs shape our social value framework,
comprising five pillars; environment, people,
community, responsible supply chain and
innovation, which each have specific objectives
and targets.
Our industry-leading approach
We are committed to our ambitious Plan Zero
targets, to reach Net Zero for our operations by
2025 – 25 years ahead of the UK Government’s
2050 target. We received validation from the
Science Based Targets initiative (SBTi) for our
near-term, long-term and Net Zero targets in line
with a 1.5ºC trajectory.
We also have 13 social value and responsible
business targets which are tracked and reviewed
by the 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.
We achieved 11 of our 13 social value targets
in FY23, with female representation on the
senior leadership team and carbon emissions
requiring increased attention in FY24. This focus,
together with our technology-led approach to
innovation, positions Mitie as a leading facilities
management company, and ‘among the top 5%
most sustainable businesses in the world’, based
on our Sustainalytics ‘low risk’ score.
Climate action and job creation
are at the core of our philosophy.
We are continually enhancing
our ESG credentials through a
comprehensive strategy, which sets
out ambitious targets and goals
and is underpinned by robust
governance practices, to ensure
that we remain a leader in the
creation of social value and the
protection of the environment.
Jason Roberts
Group Director for Sustainability
& Social Value
Innovation
Innovation is embedded within all our pillars,
to ensure Mitie remains at the forefront of
technology and processes, through our
Science of Service offering.
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. At Mitie, we believe it is key for all
our people to understand the consequences
of 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.
Responsible
supply chain
Community
People
Environment
Innovation
Our social
value framework
Find out more
on page 38
Find out more
on page 43
Find out more
on page 58
Find out more
on page 59
38
Mitie Group plc
Annual Report and Accounts 2023
Our environment and social value framework
continued
People
People
Our 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 full potential.
Making Mitie a
‘destination employer’
Our vision is to be the destination employer in
the facilities management industry and to achieve
that we are committed to making Mitie a ‘Great
Place to Work’. We get the best out of our
people because we show that we care about
them and we put wellbeing and career
development at the heart of our business,
ensuring that our people work in an inclusive and
supportive environment. This approach aims to
inspire confidence and enables our people to be
their very best: for themselves, for Mitie and for
our customers.
We have made good progress in delivering our
people strategy in FY23, and we have been
recognised as a Top Employer for the fifth year
in a row.
Everyone who wears our logo is part of
something much bigger – together, our work
makes a positive difference to millions of lives,
each day, every day. During FY23, we developed
a campaign to define the essence of Mitie – what
we stand for. The overwhelming messages from
our focus groups were the sense of support and
unity our culture engenders, and that our people
feel heard, recognised and valued. This is key to
our profitable growth and value creation for
all stakeholders.
Together We Are Mitie
Our approach to colleague engagement
includes everyone to ensure their wellbeing.
This isn’t just about the services or benefits
we offer our colleagues – engagement lies at
the core of everything we do. We are invested
in continuing to develop an inclusive, diverse
organisation, engaging more employees than
ever before. ‘Together We Are Mitie’ has
been a central part of engaging our colleagues
in FY23; it is a campaign that encompasses why
our people are proud and motivated to work
at Mitie – from the sense of pride and purpose
our teams feel, to our culture and capabilities.
Through the campaign, we aimed to bring to
life what it is like to be part of Mitie through
our colleagues’ inspirational stories.
Find out more on pages 8 and 9
Equality, diversity and inclusion
(ED&I)
Leading from the top
ED&I is an integral part of how we work at
Mitie. We aim to represent the diversity of the
communities and customers we serve, from
the frontline to the Boardroom, in a working
environment that includes everyone. A diverse
team brings a range of experiences, perspectives
and skills to the workplace, leading to more
creative and innovative solutions, a vibrant,
inclusive culture and business growth. Our ED&I
approach is governed and supported from the
top but driven by our diversity networks and
our head of ED&I, who has developed an ED&I
strategy across the business. This is a key to our
goal of creating a ‘Great Place to Work’.
Mitie is committed to improving the
representation of females and all racially diverse
groups. Our diversity networks support the
career progression of diverse talent, ensuring
representation at all levels within Mitie, with a
particular focus on senior representation to close
the pay gaps. We have set the following goals:
• Increase % of women in the senior leadership
team (SLT) to 35% by 2023 and 40% by 2025;
• Increase % of racially diverse colleagues on the
SLT to 10% by 2023 and 20% by 2025; and
• 5% of colleagues to be on, or have completed,
an apprenticeship scheme.
At 31 March 2023, we achieved our target of
10% racially diverse representation on the SLT
(FY22: 8%). Female representation increased
to 28% of the SLT (FY22: 24%), but was below
our 35% target. We will continue to focus on
supporting the career progression of women
at Mitie and increasing their representation on
the SLT to achieve our target of 40% by 2025.
Our diversity data reporting framework allows
us to look at progress against our goals, broken
down by business area. We encourage our
colleagues to disclose diversity data such as on
gender, race, disability and sexual orientation.
This data helps us to better understand the
demographic of our workforce, so we can
make sure we provide the right levels of
support and development.
We promote inclusive behaviours and decision-
making every day, making sure our leaders are
equipped to do so and are transparent in
everything they do. We have now embedded
the final stage of our award-winning ED&I
programme, Count Me In, designed for all
colleagues at all levels to drive inclusion and create
long-term sustainable change through continuous
learning activities. More than 18,000 colleagues
have engaged with the Count Me In learning.
MyVoice enables our colleagues to have a positive
impact by ensuring their opinions and feedback
are heard. As part of this, we have grievance and
whistleblowing procedures, which are widely
available to colleagues on our intranet, through
Strategic report Governance Financial statements
39
Mitie Group plc
Annual Report and Accounts 2023
People Hub and by calling the People Support
team. Colleagues are encouraged to speak up,
are given the option to call an independent
third-party service 24/7 to whistleblow and can
remain anonymous. Our grievance procedure
also encourages colleagues to raise formal
grievances if they have been unable to resolve
complaints informally, and gives full details of how
they can do this either via their line management
or direct to HR through People Support.
Colleagues can also report discrimination to
their line managers, diversity networks, Head of
ED&I and directly to our CEO using a channel
called ‘Grill Phil’, which gives our colleagues the
opportunity to engage directly with the CEO.
Diversity networks
Through a focus on increased governance and
accountability, visibility and purpose, participation
in our six diversity networks has strengthened in
FY23, with an increase in attendance at network
events from 50 to 500 people. This reflects the
raised profile of the networks within Mitie and
our work to align the networks and bring them
together at different events.
As a Steering Committee member
of the Proud to Be network,
I am convinced this new spirit of
cooperation among our different
networks will benefit all Mitie
employees, leading to a workforce
that embodies We are One Mitie
which is one of our core values.
Carsten Thiel
LBI Security Operations Manager
Business Services
Each diversity network is sponsored by an
Executive Committee member. In FY23, we
restructured our networks governance: each one
now has a lead, and two deputy leads, tenured for
18 months, who set the strategy and action plan
for the network with the Executive Committee
sponsor, ensuring it is aligned to the ED&I strategy.
Gender pay
At 5 April 2022, Mitie’s median gender pay gap
was 6.8% (2021: 5.4%), which continues to
compare favourably with the UK national pay
gap of 14.9%. Mitie’s mean gender pay gap was
12.0% (2021: 8.6%).
A key contributor to our pay gap is the imbalance
of men and women at various levels: at 5 April
2022, we had 62% males and 38% females, and
fewer females in senior roles. To address this
imbalance, we continue to raise awareness of
gender equality issues and topics, and we support
colleague development through different
programmes. We regularly review our family-
friendly policies and we have developed inclusive
recruitment principles for our senior hires.
Ethnicity pay
We voluntarily publish ethnicity pay gap data
in addition to our statutory gender pay gap
reporting. Mitie’s median ethnicity pay gap at
5 April 2022 was 1.1% (2021: 2.8%). Our target is
for 20% racial diversity on the senior leadership
team by 2025.
Mitie’s ambition is to increase the number of pay
gaps we report, to include disability and LGBTQ+.
Health and wellbeing
Employee wellbeing extends beyond simply being
just a set of services we offer. We take a holistic
approach to integrating health and wellbeing into
all aspects of our operations. We are focused on
preventing occupational ill health, and proactively
managing and optimising health and wellbeing.
The networks comprise CHORD (culture,
heritage, origin, race and diversity), Enable
(disability), Mitie Women Can (gender equality),
Mitie Military (veterans and reservists), Proud to
Be (sexual orientation), and Parents and Carers.
The purpose of our diversity networks is to
raise awareness and understanding, build and
grow ‘allyship’ and provide a safe place for our
people by providing psychological safety, and
to be a critical friend within the organisation.
They also support the career progression of
our diverse talent.
Supporting colleagues
with disabilities
We have colleagues with a wide range of
disabilities. Disability History Month in
December, supported by our Enable network,
was an important step to ensure everyone is
aware of the support available to them at
Mitie, how to access services and how to start
conversations with colleagues and managers.
During the month, we had c 750 unique
engagements and c 500 people attended our
live events, which were also broadcast online.
We have identified areas for improvement to
support our FY24 objectives, including data
capture for disability status, accessibility of
Mitie offices and awareness of existing tools
for those with disabilities (specifically managers
looking to support their teams). We also
set up an accessibility training session with
Microsoft to showcase the features available
across their products.
We hope to encourage more colleagues to
talk about their disabilities and to disclose their
disability status, and we will continue to ensure
that our disabled community is heard. By giving
everyone the tools and information they need,
we hope to improve life at Mitie for everyone.
I have just sat in on your event
and thought it was fantastic.
Jackie S
Care & Custody
I joined the Microsoft accessibility
training yesterday and found it
was a fantastic opportunity to
learn on the subject for my own
benefit, as well as the benefit of
the team. I can now assist them
with making changes without help
from IT.
Gary G
Technical Services
Gender breakdown
At 31 March 2023 Male Female Tot al % Male % Female
Board 5 3 8 62% 38%
Senior leadership team 52 20 72 72% 28%
Employees 38,212 26,104 64,316 59% 41%
40
Mitie Group plc
Annual Report and Accounts 2023
Our environment and social value framework
continued
People
We want to create a learning
culture to enhance the performance
of our people and our business.
Kate Large
Director of Learning and Development
‘MyWellbeing’ is our wellbeing network for our
colleagues and includes a range of contacts,
support and information, including access to
mental health first aiders and our diversity
networks, self-help guides on personal safety,
our 24/7 virtual GP service and our employee
assistance programme.
Employee mental health has been a key priority
during FY23. We have increased awareness and
reduced stigma around mental health through
campaigns and training such as Mental Health
Awareness Week, and equipped managers with
the skills and understanding of the role they play
in employee wellbeing. Through our wellbeing
events and working collaboratively with our
diversity networks, we have also raised difficult
health and wellbeing issues such as cancer, stress
and menopause. In FY23, we increased the
support and knowledge that we provide to
our 250 mental health first aiders.
Health and safety
Our overriding objective is to make Mitie the
safest place to work, where health, wellbeing
and our environment are valued. We care for
everyone’s health and wellbeing, and our vision is
to create a culture that promotes safe working,
ensuring that our colleagues get home safe and
well every day. Lost time injury frequency rate is
one of our KPIs (see page 22).
Reward and recognition
We offer a broad range of rewards and benefits
for our people under the ‘MySlice’ banner,
which offers flexibility for our colleagues to find
benefits to suit their needs. Our benefits cover
health, life insurance and lifestyle products.
Rewards include free shares, access to all-
employee share schemes, virtual GP for all and
incentive plans. We offer enhanced maternity pay
to all employees eligible for statutory maternity
pay (SMP), offering 10weeks’ pay at full pay and a
return-to-work bonus of two weeks’ pay (at
returning rate of pay) after completing one
month’s service upon return. We also offer life
assurance to all colleagues, with a minimum
£10,000 payout or 1x salary. We continue to
develop benefits to match the needs of our
people, and in FY23 we introduced a pre-
employment health check and enhanced our
existing schemes such as cycle-to-work and gym
membership and extended our flexible benefits
offering to all hourly paid colleagues. In FY24,
we will continue to improve our benefits offering
to lead the industry.
To help those most in need during the cost-of-
living crisis, we launched our Winter Support
package in November 2022. We also created
the cost-of-living hub on Celebration Hub,
making it easier for colleagues to access all our
deals and discounts.
Our annual award scheme, Mitie Stars, is
dedicated to recognising the teams and
individuals that go above and beyond for
customers or colleagues.
18,000+
colleagues received a Mitie Stars
award in FY23
£400,000
total savings for our colleagues
on MiDeals
Our Winter Support package
was designed to help our
colleagues with the rising cost of
living. Through a combination of
e-vouchers, a one-off bonus, free
shares, a new bikes-for-work
scheme and removing the fee to
draw down salary advances, it
helped 40,000 of our lowest-paid
colleagues across the business.
Jasmine Hudson
Chief People Officer
Helping our colleagues
in the cost-of-living crisis
To help those colleagues most in need during
the cost-of-living crisis, we launched our £10m
Winter Support package in November 2022.
The package was aimed at colleagues who
earn up to £30,000. It included a cash bonus
of up to £125; a £50 e-voucher for colleagues
to spend at more than 100 retailers, including
Boots, Asda, Tesco and Argos; and a new
£1,000 net pay cycle-to-work scheme (making
it more accessible to lower paid colleagues).
We also gifted free shares for the third year
running, giving more to those that earn the
least, and waived the fee usually charged for
salary advances.
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
to our colleagues. Being a recognised service
provider means that we work with our clients,
building case studies as to the value of the real
living wage, and encourage new and current
clients to sign up to the Real Living Wage where
they can.
Recruitment, learning
and development
Recruiting from a diverse pool of talent
While we will always recruit on merit, we strive
to attract a diverse range of applicants to ensure
we represent our customers. Within eArcu, our
recruitment platform, we have an augmented
writing tool to support hiring managers with the
writing of inclusive job adverts. We have also
implemented blind hiring and ensure balanced
shortlists for senior hires.
We use a range of platforms to advertise our
roles and attract diverse candidates: Vercida, The
Mitie Foundation, Black Young Professionals and
Mitie’s Careers Page. We advertise through our
diversity networks, and we remain committed
to our guaranteed interview scheme under
Disability Confident, ensuring we provide
reasonable adjustments when required.
Learning throughout Mitie
Developing talent is important to us because this
is how our colleagues can realise their potential
and aspirations throughout their career at Mitie.
In FY23, we launched a new digital learning
programme, ‘We Are Mitie’, for everyone
across Mitie, to ensure we continue to deliver
exceptional service to our customers and apply
the same principles when interacting with each
other. It aims to empower our people to bring
their true self to work and help them to recognise
the part they play in Mitie’s success.
£10m
Winter Support package to
support colleagues with the
cost-of-living crisis
Strategic report Governance Financial statements
41
Mitie Group plc
Annual Report and Accounts 2023
Our people managers are fundamental to
Mitie’s success. During FY23, we have evolved
our development training to ensure that they
can thrive and are engaged, motivated and
empowered. Our new People Manager Hub
provides personal development and operational
skills learning content, tools and resources, so we
are not overloading our managers and can free
up their time, helping them to manage their
reports better.
‘Leading Together’ is our new people manager
development programme, available to all existing
and aspiring people managers. It is a phased
learning journey, completed over a four-month
period, equipping our managers to lead the
‘Mitie way’. It features digital learning content
and practical activities to practise new skills on
the job, with a learning buddy to support them.
Our ‘Career Pathways’ programme offers
colleagues transparent opportunities to develop
and progress their careers in a fulfilling way, to
understand how they can develop against specific
skills and what learning resources are available
to support them. Our colleagues can also
explore potential career journeys by honing or
transferring their skills, moving both vertically
and laterally at Mitie.
In FY23, we also launched ‘MyCareer Journey’ –
a toolkit to help our colleagues explore how
they can thrive in their role and beyond: from
progressing in their current field, to taking a leap
sideways to try a new role in a different part
of Mitie.
Our apprenticeship offer
In FY23, we supported a record 1,100 apprentices
to gain valuable technical, professional and
managerial skills and qualifications, to improve
their social mobility and to support our
business growth.
We are trying to access a more diverse group
of external candidates to meet our resourcing
needs, while supporting the UK economic
recovery. We offer more than 70 sustainable
apprenticeship programmes and promote these
through Group and local channels. We exceeded
our target to support 3.5% of eligible people to
have taken part in an apprenticeship programme
(FY23: 3.8%).
We will continue to grow our apprenticeship
programmes by supporting the development of
a future talent pipeline and to increase the use
of our Apprenticeship Levy funds. Together with
external networks, including the Business Services
Association Apprenticeship and Skills Group,
and the All-Party Parliamentary Group on
Apprenticeships, we are lobbying to remove
unnecessary barriers to learning, enabling
businesses to repurpose and optimise levy
funds and to offer more broad and inclusive
apprenticeship-based programmes.
Priorities for FY24
Our people agenda is always evolving, and we
have more to do to become a consistently
‘Great Place to Work’, and the destination
employer in the facilities management industry.
Looking ahead, we will focus on:
• Embedding our skills agenda to support more
apprentices – as well as driving through new
apprenticeship standards for future skills;
• Investing in upskilling our teams to proactively
support our ED&I strategy through allyship;
• Deploying a cultural change programme to
continue to evolve and improve engagement
and wellbeing;
• Continuing to improve our benefits offering
to lead the industry; and
• Increasing our focus on disability – both
visible and invisible – creating an inclusive
environment that accommodates the needs
of all colleagues.
The greatest thing about this
apprenticeship is that, at the end
of it, I’ll get an industry-recognised
qualification. I’d recommend this
apprenticeship to anyone – the
team is really supportive and Mitie
really does invest in your future.
Sometimes I need to pray at work,
and my managers make time for
me so that I can.
Imran
Electrical apprentice at Mitie
Building skills for the future
Imran is an electrical apprentice for Mitie,
based at University College London Hospital.
He enjoys the variety of his role and the
opportunity to work on different projects.
He was encouraged to join Mitie as an
apprentice thanks to the opportunities for
career progression we offer.
Scan me!
See Imran’s Electrical
Apprentice journey at Mitie
The Government allows all Apprenticeship
Levy-paying employers to gift a maximum of 25%
of their previous year’s contributed levy funds
to other organisations. This provides us with an
opportunity to determine how to make the best
use of our Apprenticeship Levy funding and to
support our ESG agenda. It enables us to gift
funds in the most valuable way, linked to our
social values objectives.
In FY23, we continued to gift levy funds to
17 organisations, supporting up to 64 external
apprentices. We have pledged £1.7m funding over
the duration of the learners’ full programmes.
Funds were gifted across a range of organisations,
including charities, the public sector and SMEs in
the engineering and construction sector (enabling
them to take on new technical apprentices in
electrical, plumbing and carpentry).
42
Mitie Group plc
Annual Report and Accounts 2023
Our environment and social value framework
continued
Upload survey
Upload survey insights and actions taken
Upload survey insights (You Said) Action taken (We Did)
Pay, reward and recognition
• Determine the right benefits
for our frontline colleagues,
acknowledging the impact of
inflation and rising cost of living
• Develop Mitie Stars
• Launched £10m Winter Support package to support lowest-paid colleagues in November 2022
• Raised awareness of extensive benefits Mitie offers through a new Employee Value Proposition campaign, MyMitie
• Revamped Mitie Stars process, including to streamline the judging of entries to reduce time from action to formal
recognition award
Autonomy, empowerment
and collaboration
• Ensure colleagues are listened to
and given a voice, and develop
team collaboration
• Ensured Board members attend all ED&I Tier 1 events
• Increased number of Board colleague listening sessions to expand reach across the business
• Launched communications and engagement ‘blueprint’, leading to regular colleague listening sessions and people
manager meet-ups
• Regular all-colleague communication on Mitie’s strategy, operational changes and colleague experience
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
• Undertook improvements to our processes and systems, including: access to the IT service desk; a new chat virtual
assistant; and updating technology in Mitie meeting rooms. We have reduced major IT incidents by 52% compared
with F Y21
Senior leadership
• Improve the communication of our
long-term strategy internally
• Build visibility of senior leaders
• Refreshed colleague voice listening sessions across Mitie, with increased Board, MGX and MLT senior leadership
focus and visibility
• Team Talk Live held in February 2023 included CEO Phil Bentley and the MGX, who toured the UK over five days
and updated colleagues on Mitie’s strategy and our new Employee Value Proposition, MyMitie
• Ran 16 virtual live events, on topics ranging from apprenticeships to workplaces of the future
People managers
• Continue to provide training
and develop the skills of middle
management to support their
career progression
• Ran colleague listening sessions
• Conducted people manager survey to inform our FY24 strategy. Findings included a need to engage more
effectively, given time pressures on managers
• As a consequence of the feedback from this survey, we developed and launched the Leading Together programme
and the People Manager Hub. See page 41
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
Mitie’s annual colleague engagement survey provides feedback that management acts upon to improve the working experience at Mitie. The results of the
Upload survey also provide the Board with a Group-wide snapshot of how our colleagues rate Mitie’s culture and engagement.
The most recent Upload survey took place in April 2023, with the employee engagement score rising by 7ppt to a record 57%. The results from the prior year
survey are detailed below, alongside the actions taken during FY23 in response to feedback from our colleagues. We will continue to address the matters
raised from the most recent survey during FY24.
Date Action
April – May 2022 Launched in April 2022, the Upload engagement survey was translated into multiple different languages and
completed via several mediums to maximise participation. We also ran a campaign to drive colleague participation,
including details of resulting actions from the 2021 survey. 47% of colleagues took part in Upload (2021: 40%).
June 2022 Survey results were presented at the June 2022 Board meeting with clear areas of focus (see table below for details).
In 2022, our overall employee engagement score was 50% (2021: 55%). See our KPIs on page 20.
July 2022 – February 2023 Established next steps to address matters raised and communicated initiatives to colleagues throughout 2022.
We provided each functional leader and strategic account manager (SAM) with access to an action planning tool and
colleague engagement guidance. We also introduced a new cadence of monthly calls, hosted by senior management,
together with an Upload executive sponsor, to ensure a continuous focus on employee engagement and an open
dialogue with SAMs to drive best practice engagement.
Strategic report Governance Financial statements
43
Mitie Group plc
Annual Report and Accounts 2023
Environment
As a responsible business, with
creating social value at our core, our
operations consider the environment
throughout the whole value chain,
ensuring we take positive steps to
mitigate the effects of climate change
and leave future generations a more
sustainable world.
Our Plan Zero
Our ambitious Plan Zero initiative to achieve Net
Zero direct operational carbon emissions by the
end of 2025, and non-operational emissions by
the end of 2035, is industry leading.
Our transition to electric vehicles (EVs) gives us
one of the largest EV fleets in the UK, and is key
to removing fossil fuels from our operations.
We are optimising the energy efficiency of our
built estate by reducing energy consumption and
replacing gas boilers with low-carbon heat pumps,
and we are developing initiatives that embrace
the circular economy and biodiversity through
Mitie Waste and Landscapes.
In April 2023, we received validation from the
Science Based Targets initiative (SBTi) following a
robust assessment process. We have joined over
2,000 companies that are committed to reducing
their carbon impact, although we are one of only
219 SBTi participants with targets across all three
categories (near-term, long-term and Net Zero).
After reaching Net Zero, we will strive further
to achieve absolute zero, as we recognise the
importance of making continuous ongoing
improvements to reduce our carbon emissions.
Expanding our carbon reporting
Our environmental metrics and targets, and
emissions data, are detailed on pages 54 to 57.
In our FY23 reporting, we have included the
supply chain segment of our Scope 3 emissions
for both FY22 and FY23, and increased
commuting and working from home figures to
cover all colleagues for FY23, resulting in a
significant increase on previously reported figures.
We have also reported overseas Scope 1 and 2
emissions data for the first time.
As such, we have reviewed our carbon targets to
ensure they are aligned with the expanded scope
of our reporting and are sufficiently stretching.
We have introduced a new baselined target for
Scope 3 emissions and, moving forward, we will
have two separate carbon targets to support our
Net Zero commitments for Scope 1 and 2 by
2025, and Scope 3 by 2035.
Scope 1 and 2 emissions
Mitie reported Scope 1 and 2 emissions for the
UK and overseas of 22,439 tonnes CO
2
e in FY23.
This included UK emissions of 21,115
1
tonnes CO
2
e,
a 3% increase from the prior year and above our
UK target of 20,300 tonnes CO
2
e.
The increase in UK emissions reflects a 7%
increase in gas consumption (kWh) for heating
and 10% increase in electricity consumption
(kWh) for our built estate as building occupancy
levels continue to rise following the pandemic.
Mitie has also increased its carbon inventory
through the three acquisitions completed during
the year. Although our absolute emissions
increased, our emissions intensity decreased
by 1% compared to the prior year.
We continue to see an increase in electricity
emissions for our EV fleet as we transition to an
all-electric fleet. Mitie increased the number of
EVs in service by 977 during the year and had
3,194 EVs in operation (45% of the fleet) at
31 March 2023. This initiative will reduce our
Scope 1 emissions from fossil fuels. The recent
acquisitions added 384 vehicles to our fleet.
Scope 3 emissions
In FY23, we reported Scope 3 emissions of
300,114 tonnes CO
2
e, below our target of
315,433tonnes CO
2
e.
We are developing a stronger relationship
between our procurement team and our
suppliers and subcontractors, to embed
sustainability throughout our supply chain. Our
procurement team has undergone significant
transformational change over the past few years.
It is now a key strategic function at Mitie, and will
lead on our Scope 3 Net Zero target for 2035.
(See our responsible supply chain on page 59).
Our partnership with the Supply Chain
Sustainability School gives us a platform to engage
directly with our suppliers on sustainability,
resource use and social value, and provides the
tools to collate and report carbon emissions.
Ourprocurement team is also addressing
improvements to carbon emissions in business
travel, highlighting areas of inefficiency and
creating greater governance around travel
requirements.
Carbon reduction targets and strategy
To achieve Net Zero carbon emissions before
the Government’s target of 2050, our carbon
reduction targets are:
• Net Zero carbon by the end of 2025
(Scope 1 and 2)
• Net Zero carbon by the end of 2035 (Scope 3)
• Eliminate Scope 1 emissions (fossil fuels) from
our operations by 2025, drive down energy
consumption and adopt natural renewable
sources for Scope 2 electricity
• Continually measure, report and influence
Scope 3 emissions throughout the value chain
1. Independently verified by Optera in accordance with
(1)ISO 14064+1 Specification with guidance at the
organisation level for quantification and reporting of
greenhouse gas emissions and removals, and (2) Global
Reporting Initiative’s (GRI), G4 Sustainability Reporting
Guidelines, with a certificate received on 11 May 2023.
EnvironmentEnvironment
44
Mitie Group plc
Annual Report and Accounts 2023
Our environment and social value framework
continued
Environment
Our environment and social value framework
continued
Environment
Eliminating carbon from power
and transport
Pioneering in EV fleets
Our largest carbon emissions relate to our vehicle
fleet, accounting for 98% of our total Scope 1 and
2 emissions. Our path to Net Zero will largely be
achieved through transitioning 85% of our fleet to
EVs by the end of 2025. We were the first major
UK facilities management provider to launch an
EV fleet and we have one of the largest EV fleets
in the UK.
At 31 March 2023, Mitie had 3,194 EVs (45%
of the fleet, including commercial vehicles) in
operation (FY22: 33%). Our next challenge is
to convert 65% of our fleet to EVs by the end
of FY24, and 85% by the end of 2025. We are
replacing our vehicles with newer, more efficient
EVs, and ensuring that all commercial vehicles
are installed with speed limiters, telematics and
AI dashcams to improve driver behaviour.
We have installed more than 2,800 EV charging
points across the Mitie estate, employee homes
and customer sites. Across the EV charging
points we have installed, our EV charging
payment solution enables direct payment for
EVs across our estate, our colleagues’ homes
and customers’ sites.
Mitie is a signatory to EV100, The Climate Group’s
initiative to commit organisations to transitioning
to an EV fleet by 2030.
100% renewable sources of energy
Mitie is committed to using renewable energy in
its offices. We purchase 100% of power backed
by Renewable Energy Guarantee of Origin
certificates for Mitie-controlled offices. We are
also a member of RE100, The Climate Group’s
global corporate renewable energy initiative for
businesses to achieve 100% renewable electricity,
and achieved this in 2020.
Energy prices for commercial organisations rose
by up to 700% in FY23, impacting Mitie and
many of our customers. Energy efficiency is a high
strategic priority and, following the successful
recertification of Mitie Energy to the ISO 50001
Energy Management Standard, we are deploying
our energy management system across the
Eliminate carbon emissions from power
and transport
Convert the Group’s fleet to zero
emissions and power the Group’s EV
charge points with green energy
Decarbonise the Group’s fossil-fuelled
heating systems and use 100% renewable
energy for our built estate
Increase the Group’s use of technology
to reduce work travel to a minimum.
Where travel is necessary, Mitie will choose
low-carbon methods
Eradicate non-sustainable waste
Eliminate single-use materials by embracing
the circular economy, suchasthrough a
closed-loop paper recycling system
Reduce the Group’s use of natural
resources, with only items which fit
theGroup’s circular economy approach
allowed on site
Use natural, non-toxic and biodegradable
cleaning products, and champion the use of
new innovations wherever possible, such as
microfibre and surface coatings
Enhance inefficient buildings to meet
the highest environmental standards
Always choose new corporate offices with at
least an ‘Excellent’ BREEAM rating and only
re-sign leases on offices with an A EPC rating
Enhance energy optimisation and use the
Group’s smart building technology to
achieve maximum energy efficiency at
all Group sites
Improve biodiversity at all Group sites using
initiatives that help ecosystems flourish, such
as choosing plants which attract wildlife or
establishing bug hotels
3,194
Electric vehicles
Strategic report Governance Financial statements
45
Mitie Group plc
Annual Report and Accounts 2023
Plan Zero –
Decarbonisation Delivered
®
Not only are we working hard to reduce our
own environmental impact, we also offer our
customers end-to-end sustainability solutions
through Plan Zero – Decarbonisation
Delivered
®
. Our expert in-house sustainability
consultancy supports our customers’ journey
in carbon reduction and advises on low-
carbon technologies, workplace strategies,
wellbeing and environmental performance.
Our Landscapes division has dedicated
resource in biodiversity assessments and
carbon sequestration projects, such as living
walls and green roof installations.
Our Waste division has introduced carbon
reporting into client data, and can provide
carbon reduction strategies using specialists
from within the team.
Group to incorporate our regional hub offices in
the UK and Ireland and our entire fleet. This will
drive continuous improvement to reduce energy
use throughout Mitie, inform senior management
of progress and engage our colleagues.
Our expert team at Custom Solar, our solar
panel business, analysed the viability of installing
photovoltaic systems at our hub sites, and
identified cost savings of up to £33,000 in the
first year of operation. This will help to manage
energy costs, increases the resilience of our
energy supply and provides further sources of
green energy to our buildings and EV charging
infrastructure.
We are committed to doubling our energy
productivity through The Climate Group’s
EP100 initiative. Mitie is one of only a handful
of organisations to hold all three accreditations
(RE100, EV100 and EP100) and the first FM
organisation to do so.
Eradicating non-sustainable waste
Our waste reduction plans and improvements
to recycling rates continue, resulting in zero
waste to landfill since July 2022. As shown in
the environmental data table on page 57,
waste produced by Mitie decreased by 17%
to 306 tonnes in FY23, due to improvements
with landlord partners to provide internal
infrastructure that enhances waste reduction in
line with the principles of circularity. The recycling
rate was 72% on average, achieved through
better on-site source segregation of waste
from recycling coupled with an external suite of
services to include confidential paper and food.
Mitie Waste has updated its reporting to
include scenarios based on both Mitie’s waste
management services, as well as material streams
segregated at source into four categories. We
continue to remove all single-use plastic items
from our operations and have a particular focus
on removing plastic from packaging. In FY23, we
continued to deploy our award-winning Bin the
Bag
TM
initiative across the Mitie estate (to reduce
single-use plastic bin liners) with several customer
trials. We have carried out a right-sizing exercise
for bins across our estate to improve our
recycling rates, reviewing bin sizes and quantity,
and adapting them according to waste streams.
We are working with our landlord partners to
introduce a food waste service and to install Bin
the Bag
TM
at another 11 smaller sites, which will
improve recycling and reduce overall general
waste produced. We are actively working with
our catering partners to deploy reusable cups at
our Manchester and Birmingham sites to reduce
the total volume of material generated.
By deploying biotech cleaning solutions across
our estate, we aim to remove chemical cleaning
agents from our operations, using microbes and
enzymes. As a concentrated product in recycled
packaging, this is also removing significant carbon
in production and transportation.
Scan me!
To find out more about Plan
Zero – Decarbonisation
Delivered
®
46
Mitie Group plc
Annual Report and Accounts 2023
Our environment and social value framework
continued
Priorities for FY24
In FY24, we are focusing on genuine progress
in sustainability, especially as our Net Zero
science-based target requires action across
our supply chain. We will continue to pilot
new systems to improve sustainability across
our business:
• Drive sustainability and social value through
our supply chain to improve labour standards
and align to our science-based target to tackle
our Scope 3 emissions
• Deliver sustainability awareness and knowledge
training to our frontline colleagues through
our ‘Action Now – Transforming Tomorrow
Together’ campaign and make every job a
‘sustainable job’
• Continue to drive fleet strategy to deploy 65%
of our total fleet with EVs
• Drive down energy consumption through our
ISO 50001 Energy Management System, and
decarbonise our built estate and remove fossil
fuels from our operations
• Reduce waste streams and incorporate circular
economy thinking into our operations, focusing
on reducing plastic
• Increase the environmental net gain
throughout our property portfolio and
operations
• Commit to using verified nature-based
solutions and develop our absolute zero plan
Enhance inefficient buildings
to meet the highest
environmental standards
Decarbonising heating systems and increasing
energy efficiency within Mitie’s built estate is
crucial to achieving Net Zero Scope 1 and 2
operational emissions by 2025. In FY23, our
building energy usage increased compared
with FY22 as colleagues continued to return
to the workplace following the pandemic. Our
Property team has developed a new strategy
to incorporate energy efficiency and carbon
reduction across our portfolio: deploying capital
projects (LED and low-carbon heat pumps),
and solar PV and EV charging infrastructure, in
conjunction with downsizing and consolidating
our built estate.
Looking forward, all new corporate buildings that
Mitie occupies will aim for an Excellent BREEAM
rating. During FY24, we will work with landlords
(of sites for which they procure energy) to
encourage green energy procurement, or to
transfer this procurement to Mitie. We are
helping our landlords to engage in carbon
reduction projects, such as adding solar panels,
replacing gas-fired boilers with heat pumps and
procuring other green energy solutions.
As part of Mitie’s initiative to reconnect people
with nature, Biotecture, our living wall specialist,
installed a simple living wall system designed
with ease of installation, planting, watering and
after-care, at Mitie’s Headquarters at The Shard,
London. Using plants to soften and enrich
previously hard, bare vertical surfaces, living
walls bring many benefits to our people and the
environment, cleaning the air, improving health
and wellbeing, and enhancing biodiversity.
We have also installed three plug-and-play farm
stands – a highly productive indoor farm that
produces fresh produce all year round. We aim
to create an experience centred on engagement,
wellbeing and sustainability, and an improved
office working environment, including air quality.
Edie award winners
Our Plan Zero Strategy won an Edie! It
scooped Net-Zero Carbon Strategy of the
Year in the world’s largest sustainable business
awards scheme – formerly known as the
Sustainability Leaders Awards.
Plan Zero is our sustainability strategy. We
have pledged that we will reach Net Zero
Scope 1 and 2 carbon emissions by 2025, by
eliminating carbon emissions from power and
transport; eradicating non-sustainable waste;
and enhancing inefficient buildings to meet
the highest environmental standards.
The judges highlighted ‘the impact this plan
has on broader society and other businesses,
including peers within the industry’. They
praised how it supports organisations on their
journey to reduce carbon and greenhouse gas
emissions from buildings, operations and the
supply chain.
Environment
Strategic report Governance Financial statements
47
Mitie Group plc
Annual Report and Accounts 2023
Task Force on Climate-related Financial Disclosures (TCFD)
The Group’s approach to TCFD reporting continues to evolve, and this year has been no exception. Mitie is a strong advocate of TCFD reporting, recognising
its potential to create a positive impact in the fight against climate change, especially as the disclosure of information regarding the financial implications can help
redirect investments towards more sustainable and resilient solutions.
Compliance statement
This section of the Annual Report provides our full TCFD disclosure consistent with all TCFD recommendations and recommended disclosures as set out
in the ‘TCFD - Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures’ published in October 2021 by the TCFD.
This disclosure is also in accordance with FCA Listing Rules requirements.
TCFD summary
A summary table aligned to the TCFD requirements has been provided to help signpost where compliance has been demonstrated. Mitie recognises that
the TCFD is not a static framework and every year as more becomes known about the evolving climate change landscape the need to ensure the right
improvements are driven at the right time is paramount. As a result, we have updated our compliance key to highlight where we will be driving improvements
during the next financial year. Information on the specific actions we will take is detailed in the section titled ‘actions we will take in FY24’ on page 57.
TCFD recommendation Recommended disclosures
Compliance position
Page referenceFY22 FY23
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 48 to 50
B. Describe management’s role in assessing and managing
climate-related risks and opportunities.
Pages 48 to 50
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 52 to 53
B. Describe the impact of climate-related risks and
opportunities on the organisation’s businesses, strategy
and financial planning.
Pages 52 to 53
C. Describe the resilience of the organisation’s strategy, taking
into consideration different climate-related scenarios,
including a 2°C or lower scenario.
Page 53
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 51
B. Describe the organisation’s processes for managing
climate-related risks.
Page 51
C. Describe how the processes for identifying, assessing and
managing climate-related risks are integrated into the
organisation’s overall risk management.
Page 51
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 54
B. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3
greenhouse gas (GHG) emissions and the related risks.
Pages 54 to 57
C. Describe the targets used by the organisation to manage
climate-related risks and opportunities and performance
against targets.
Pages 54 to 57
Disclosure consistent with the recommended disclosure.
Disclosure consistent with the recommended disclosure, further improvement opportunities planned.
Disclosure not consistent with the recommended disclosure.
48
Mitie Group plc
Annual Report and Accounts 2023
Mitie’s progress during FY23
In last year’s report, Mitie highlighted three TCFD recommended disclosures with which it did not comply. The following table details what these were
and the actions that have been taken during FY23 to address them:
TCFD recommendation Action required Update
Strategy
Recommendation B: Describe the impact of
climate-related risks and opportunities on
the organisation’s businesses, strategy and
financial planning.
Publish the financial framework detailing how
the impacts of the climate-related risks and
opportunities are assessed and quantified.
During FY23, the Group enhanced its financial
modelling framework for the assessment of
climate-related risks. Details on the methodology
adopted and outputs from the modelling to date
can be found on page 52.
Strategy
Recommendation C: Describe the resilience
of the organisation’s strategy, taking into
consideration different climate-related scenarios,
including a 2°C or lower scenario.
Conduct scenario analysis. During FY23, the Group undertook scenario
analysis on the physical impact of climate-related
risks. The summary outputs from this project are
detailed on page 53.
Metrics and targets
Recommendation B: Disclose Scope 1, Scope 2
and, if appropriate, Scope 3 greenhouse gas
(GHG) emissions and the related risks.
Include Scope 1 and Scope 2 emissions outside
the UK as well as the full collection of Scope 3
emissions in the Annual Report and Accounts
(ARA).
During FY23, the Group expanded its reporting
to include overseas. This is detailed on page 56.
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 Chief Executive Officer’s (CEO)
responsibilities 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 of Staff and General Counsel 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
all elements of the strategy, reporting
and innovation
• The Energy, Waste and Landscapes Directors
are responsible for Plan Zero. They are
responsible for supporting both Mitie and
our customers through the development of
decarbonisation opportunities
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 below and table on pages 48 to 50
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 as well as key focus areas
for FY24. The table also provides insight on how
climate-related issues are considered, including
but not limited to reviewing/guiding strategy,
risk management, capital expenditure and any
growth-related activities.
Climate targets are built into executive
remuneration and wider 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 124 and 125.
Mitie Group plc Board
Mitie Group Executive (MGX)
Mitie Business Units, Functions, Accounts, Projects
ESG Committee Remuneration Committee Audit Committee
Risk CommitteeTCFD Working GroupPlan Zero Steering Group
Plan Zero Working Group
Our environment and social value framework
continued
Environment
TCFD
Strategic report Governance Financial statements
49
Mitie Group plc
Annual Report and Accounts 2023
Mitie governance body Chair Frequency
Climate-related role
and responsibilities Decisions taken in FY23 Focus areas FY24
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.
Reviewed and approved
TCFD and principal risks
and uncertainties.
• Development of
a low-carbon
transition plan
Environment,
Social &
Governance
Committee
Previously known
as Social Value &
Responsible Business
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
into 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.
ESG strategy updates.
Adoption of a
science-based target for
Scope 3 emissions.
Roll-out of ISO 50001
across the Group to
tackle energy efficiency.
• Decarbonisation of
Mitie’s estate and
energy consumption
• Engagement
improvements with
supply chain to ensure
alignment with the
Group’s science-based
target approach
Mitie Group
Executive
Chief Executive
Officer
• 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.
Introduction of Plan
Zero – Decarbonisation
Delivered.
• Ongoing review of
operational delivery
to ensure alignment
with decarbonisation
agenda
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 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
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.
Review of TCFD and
principal risks and
uncertainties to ensure
risks and opportunities
are accurately reflected
in Mitie’s ARA and other
public disclosures.
• Evaluation of TCFD
as part of controls
framework
• Provision of risk
assurance against
climate-related
principal risk and
climate-related risks
and opportunities
as reported in the
Group’s annual
TCFD disclosure
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Annual Report and Accounts 2023
Mitie governance body Chair Frequency
Climate-related role
and responsibilities Decisions taken in FY23 Focus areas FY24
Risk Committee Chief of Staff and
General Counsel
• 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.
Annual review of
climate-related principal
risk ahead of submission
to the Board.
Review and approval
of FY23 TCFD
scenario analysis.
• Management of
outputs from climate
scenario analysis to
wider business,
focusing on maintaining
business resilience
• Management of
outputs from annual
risk maturity survey,
which includes
climate-related
responses
Remuneration
Committee
Non-Executive
Director
• Three planned meetings
as standard
Agrees climate-related KPIs
that apply to executive
remuneration and wider
bonus plans.
Review of ESG targets
and deliverables to
support setting of
remuneration for Mitie
Group Executive
(MGX) members.
• Ongoing review of ESG
targets and deliverables
Plan Zero
Steering Group
Group Sustainability
and Social Value
Director
• Quarterly
• TCFD and climate-related
risks and opportunities
are standing agenda items
Delivers Plan Zero solutions
and opportunities to
Mitie’s customers.
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.
Transitioning Mitie
Energy’s ISO 50001
energy management
system across the
Group incorporating
all fleet vehicles and
seven Mitie sites.
• 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
Plan Zero
Working Group
Environmental
and Social Value
Manager
• Monthly
• Reports into Plan Zero
Steering Group
Delivers Plan Zero solutions
and opportunities to
Mitie’s customers.
Development of
strategy to address
specialist vehicles not
ready for EV transition.
• Development of
strategy to address
plastics reduction –
focus to be on what
can be eliminated
across all business areas
TCFD Working
Group
Group Sustainability
and Social Value
Director supported
by Group Finance
and Group Head
of ERM
• Meetings are held, as
required.
• Reports into Chief of Staff
and General Counsel.
• Note: from FY24, the TCFD
Working Group will merge
with the Plan Zero Steering
Group and meet on a
quarterly basis
Responsibility for
preparing and responding
to TCFD disclosures.
End-to-end
management of TCFD
compilation, including
engagement with
internal and external
key stakeholders.
• Ongoing TCFD
enhancements
Our environment and social value framework
continued
Environment
TCFD
Strategic report Governance Financial statements
51
Mitie Group plc
Annual Report and Accounts 2023
Mitie’s risk management structure is designed to
ensure a consistent approach to the effective
management of risks across the business.
All climate-related risks and opportunities have an
assigned owner who is responsible for defining
and implementing appropriate management
strategies with support and advice provided by
the Risk and Sustainability teams.
The Group has access to a holistic view of all
climate-related risks and opportunities –
examples of the suite of management reports
available to the Group for support with the
management of climate-related risks and
opportunities are shown in the illustrations below.
Throughout FY23, we continued to build
awareness and knowledge of climate-related risks
and opportunities through a variety of means,
including hosting environmental conferences,
quarterly Nature Recovery Forum webinars,
briefings on decarbonisation delivered and
fleet roadshows.
More information on our risk management
framework can be found on pages 73 to 82.
Process overview for the management and assessment of climate-related risks and opportunities
Annual review of
climate-related principal
risk completed in January
at Q4 Risk Committee –
internal and external
climate-related context
established.
New climate-related risks
and opportunities
identified as a result of
latest financial modelling
exercise uploaded onto
Risk Safe.
Ongoing review of
climate-related risks
and opportunities.
Modelling to understand
impact (if any) on strategy
completed. Results
reported upwards in line
with Mitie’s governance
framework.
Climate-related risks and
opportunities captured
on Risk Safe – input from
across the Group
throughout the fiscal year.
Sustainability Group Risk Group Finance
Review of outputs from
focus groups and key
assumptions undertaken.
Focus groups are
established for the review
of climate-related risks
and opportunities ranked
as severe or significant.
Risk management
This section describes how Mitie identifies,
assesses and manages climate-related risks
and opportunities.
The management of climate-related risks and
opportunities is integrated into our enterprise
risk management framework.
The Group considers climate change and
social value as a principal risk page 77 refers.
The principal risk is assessed quarterly and
subject to a thorough assessment annually.
The principal risk is underpinned by a series of
climate-related risks and opportunities which are
monitored via the climate change risk assessment,
using the Group’s Risk Safe platform. As at
31March 2023, there were 17 climate-related
risks and opportunities. Pages 52 and 53 provides
information on those which have been assessed
as having a potential ‘material’ impact.
In addition to the climate change risk assessment,
climate-related risk information is also captured
at an account level and managed in collaboration
with customers via account-level risk registers,
which are all available on Risk Safe.
All risk information is evaluated for impact and
likelihood, with the residual score determining
one of four risk rating definitions, ranging from
manageable to severe.
The diagram below provides information on
the process we adopt for the management
and assessment of climate-related risks
and opportunities.
52
Mitie Group plc
Annual Report and Accounts 2023
Our environment and social value framework
continued
Table 1: Macro-level climate-related risks, including current mitigation measures, potential financial impact and latest working assumptions
Risk description Impact Strategic response Financial assessment and assumptions
1. Extreme weather
events
Physical risk
Medium-term
Reduced revenue as a result
of disruption to operations.
Increased costs owing to
damage to assets.
Impacts felt universally – Mitie
(UK and overseas), customers
and subcontracting and
strategic partners affected.
Note: please refer to our
scenario analysis on page 53
to understand the work we
have completed on this risk to
enhance our knowledge of the
impact further.
• 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 worst case scenario:
On average, four notable climate events occur annually, albeit not all
impact the UK in their entirety, and if climate change worsens, the average
number is assumed to increase gradually.
Mitie’s fleet will be most impacted by an extreme weather event.
There will be an annual increase in Mitie’s fleet maintenance costs over
the period, increasing gradually over the long term as extreme weather
events increase in frequency and severity.
A gradual increase in insurance premiums is expected.
The impact of an extreme weather event will assume similar
characteristics to those that have been experienced between 2018
and 2022.
2. Increases in
pricing of
greenhouse gas
(GHG) emissions
Transition risk
Short to
medium-term
Considerable costs to
operating budget. The
biggest risk relates to the
management of Mitie’s fleet
and potential rises in taxation
on fossil fuels (diesel).
Impacts felt predominantly in
Mitie operations (Technical
Services, Business Services,
Communities, and Central
Government & Defence
(UK and overseas)) and
across estates management.
• Implementation of
Plan Zero
• Ongoing financial review
of GHG-related costs
• Phasing out of diesel
fleet
Short-term impact assessment: Low impact
Medium-term impact assessment: Low impact
Long-term impact assessment: High impact
Current assumptions based on a worst case scenario:
Mitie’s fleet base (mix of EV and diesel) will remain ‘as is’.
There will be an annual increase in costs associated with leasing vehicles in
line with target inflation of 2%.
Fuel costs are based on an average annual mileage and costs per mile,
with the cost of diesel rising faster and more significantly compared with
EV charging costs over the medium and long term.
Installation processes will remain constant – it has been assumed every
EV will have a home charger.
3. Changes in
customer behaviours
resulting in lost
opportunities
Transition risk
Medium to
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
Accurately measuring customer behaviours towards climate-related
products requires reliable data to make projections and forecasts.
Unfortunately, there is limited data available regarding how customers
are likely to respond to changes in climate-related offerings. Furthermore,
customer behaviour is difficult to predict and can be influenced by various
factors, such as marketing campaigns, economic conditions and social
trends. Competitor reactions might also impact changes in customer
behaviour, which is a complex issue that requires making assumptions
that may not always be correct. Due to these complexities, the Group
has not conducted a financial assessment for this risk.
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 delivery.
During FY23, the Group identified three risks
(Table 1) and three opportunities (Table 2)
as having a potential ‘material’ impact.
This means that the risk or opportunity has
reached a defined financial threshold at which the
Group considers it to be of significant interest to
investors and other stakeholders. This assessment
remains under constant review to ensure that we
remain relevant in what we measure and publicly
report.
To assess the potential impact that climate-related
risks and opportunities pose to the Group’s
strategy, and to aid financial planning, during FY23
Mitie enhanced its climate-related financial
modelling framework.
The 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 as detailed in
Table 1.
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
EBIT (>10% )
Environment
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Strategic report Governance Financial statements
53
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Annual Report and Accounts 2023
Table 2: Macro-level climate-related opportunities, including strategic response
Opportunity description Impact Strategic response
1. Development of low-
emission and energy-efficiency
strategy for Mitie estate
Medium to long-term
Opportunities felt most in estates
management (UK only).
• Carbon Conscious Premises Selection (CCPS) Guide in place detailing minimum
standards in respect of new spaces added to Mitie estate
• CCPS checklist developed for use by managing agents to screen all new
acquisitions
• Ongoing estates review of new climate-related projects
• Governance framework for monitoring compliance in place
2. Encouraging agile and
flexible working through
business processes
Short to medium-term
Opportunities felt universally across
the Group (UK and overseas).
• Agile working procedures embedded
• Ongoing stress testing of remote working to ensure adequate coverage
3. Switching from fossil fuels
to low-carbon alternatives
for fleet operations
Short to medium-term
Opportunities felt predominantly in
Mitie operations (Technical Services,
Business Services, Communities, and
Central Government & Defence
(UK and overseas)).
• Plan Zero commitment – 85% EV fleet by the end of 2025
• Ongoing review of EV transition
• Deployment of EV charging points at Mitie and customer sites, as well as
colleagues’ homes
Our approach to scenario analysis in FY23 – improving our understanding of Risk 1, extreme weather events
Remaining resilient is essential to a company’s success. During FY23, Mitie actively pursued certification to the gold standard in business continuity
management, ISO 22301:2019, demonstrating that it has a stringent framework in place to prevent, prepare for, respond to and recover from disruptive
events, both planned and unexpected – more information on this certification is available on page 76.
Mitie recognises that a failure to plan for and mitigate against climate-related risks poses a significant threat to the delivery of its strategy. One such risk is
the threat posed from the physical elements of climate change, specifically extreme weather events.
The ability to deliver a significant proportion of Mitie’s strategy relies on the accessibility of colleagues (particularly those on the frontline), supply chain and
strategic partners. There is also a need to ensure the availability of assets across both customer and Mitie estates. Abnormal weather events present risks
and disrupt operating and financial performance. When abnormal weather conditions occur over a protracted period, they can lead to financial distress
and business failure. With climate change, the frequency and the intensity of abnormal weather patterns has dramatically increased, and while they may
not have seemed material 10-plus years ago, they must now be monitored closely.
During FY23, Mitie worked in partnership with Marsh (insurance broker and risk advisor) to complete a scenario analysis focused on the physical risks
attached to climate change to help us better understand the impact of extreme weather events as well as the long-term critical asset damage and failure
probability. As a result of this work, the Group now has an indication of how physical natural catastrophe damages at Mitie locations are expected to
evolve over time under multiple climate change scenarios; additionally, specific ‘hot spot’ sites have been identified to support mitigation planning.
The scenario analysis covered all major climate-induced physical damage threats under two representative concentration pathways (RCPs), namely
RCP2.6, which is a best-case scenario that limits a temperature rise to below 2°C, and RCP 8.5, which is a worst-case scenario based on emissions
continuing to rise throughout the 21st century to around 3°C. Focusing on 500 sites, including the Mitie estate and sites occupied by key supply chain,
strategic partners and selected key accounts, the assessment sought to identify assets most at risk from climate perils. The outcome from this showed
that Mitie’s portfolio is generally low risk, with 87% of assets being identified with a medium risk score or lower. Where sites were identified with a
medium or high risk, these were typically most at risk of flood exposure.
Once the initial analysis was completed, the second phase involved a deep-dive analysis consisting of 95 sites from the initial 500. The 95 sites were
selected based on their value and if they had been identified as having a high and/or very high risk score. As part of the second phase, the data was
overlaid with seven different climate-related perils for the two RCPs, across three different timelines (2020, 2050 and 2100). The outputs at this stage
identified that sea-level rise is expected to become the main area of increased risk from 2050 onwards, with 10 sites at high or extreme risks for
RCP 2.6, and 28 sites at extreme risks for RCP 2.6 by 2100. It was also highlighted that flooding remains a consistently high risk for over 20 sites on
the RCP 8.5 pathway.
Using the results, the Group will be analysing the outputs further to establish an action plan for addressing the identified risks and managing next steps.
Anupdate on our progress will be made available in next year’s TCFD.
54
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Annual Report and Accounts 2023
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 targets designed to help Mitie become
more environmentally and socially sustainable.
Our climate-related metric categories are
detailed in the below table. This is followed by our
Greenhouse Gas (GHG) reporting methodology
statement for FY23, which provides further
context for the metrics and targets reported
during this reporting period.
Category Sub-category Unit measurement Description of metric FY23 risks and opportunities references
GHG emissions Emission level tCO
2
e Total emissions Risk: 1, 2, 3
Opportunity: 1, 2, 3
Energy/fuel Energy usage kWh Total energy consumption Risk: 1, 2, 3
Opportunity: 1, 2, 3
Transition to
greener fleet
% Total percentage of EV fleet Risk: 2, 3
Opportunity: 3
Waste Recycled Tonnes Total waste recycled Risk: 2, 3
Opportunity: 1
Risk adaptation
and mitigation
R&D £ Amount invested in developing
low-carbon products and services
Risk: 1, 2, 3
Opportunity: 1, 2, 3
CapEx £ Amount invested in deployment of low-carbon
technology, energy and resiliency capabilities
Risk: 1, 2, 3
Opportunity: 1, 2, 3
Our environment and social value framework
continued
Carbon targets (tCO
2
e)
FY22
New baseline
1
FY23 FY24 FY25 FY26
Scope 1 & 2 20,596 20,300 16,900 12,775 8,400
Scope 3 332,035 315,433
296,507 275,752 253,692
Total 352,631
335,733 313,407 288,527
262,092
1. The baseline for Scope 1 & 2 emissions remains the same for FY22 and FY23, reflecting the UK only targets. From FY24 onwards, the targets have been updated to include both UK and
overseas reporting.
FY23 – Carbon emissions breakdown
Emissions
(tCO
2
e) %
Electricity 1,067 0.3
Gas 360 0.1
Water 2 0
Transpor t /Travel 28,602 8.9
Waste 6 0
Commuting/Working from home 46,498 14.4
Emissions
(tCO
2
e) %
Supply Chain 246,018 76.3
Total 322,553
Mitie Scope 1 and 2 (UK and overseas) 22,439
Mitie Scope 3 (UK and overseas) 300,114
Total 322,553
GHG reporting methodology
statement for FY23
Reporting period
Emissions are reported against accounting
year covering the period 1 April 2022 to
31 March 2023.
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 2022.
Science-based target validation
Mitie has validated science-based targets.
Baseline year
Mitie’s baseline was set at FY20 when the Plan
Zero Strategy was launched. However, in FY23
we are reporting our full Scope 3 inventory,
including our supply chain for the first time.
Therefore, FY22 has been introduced as a new
baseline in line with our policy. Our new 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 it
normalises for changes in the scale of Mitie’s
business activities.
Inclusions
For FY23, we have included supply chain
emissions, increased commuting and working
from home figures to cover all colleagues.
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 many
of our buildings being out of scope as landlords
manage 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.
Environment
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Strategic report Governance Financial statements
55
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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
Purchased goods and services
• Purchased goods and services from supply
chain
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
Upstream transportation and distribution
• Transportation of goods
Waste
• Waste generation across leased property
Water
• Water usage across leased property
Business travel
• Expensed air, road and rail travel
(including hotel stays)
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 automatic 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
Sustainability 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 FY23 GHG UK emissions and water
consumption datasets, in accordance with (1)
ISO4064-1 Specification with guidance at the
organisation level for quantification and reporting
of GHG emissions and removals, and (2) Global
Reporting Initiative’s (GRI), G4 Sustainability
Reporting Guidelines.
Scope 1 and 2
Gas and electricity
consumption
Information is populated from automatic meter readings (AMR), 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.
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.
Scope 3
Purchased goods and services These emissions are calculated from 60% of our supply chain category spend, which comprises around 370 suppliers.
The remaining 40% is extrapolated. Mitie engages directly with our supply chain to obtain carbon emissions or consumption
data to apply to their carbon inventory. This is the first year Mitie has reported against this category.
Business travel Business travel (Air, Rail and Hotel Stays) is provided by our Corporate Travel Provider in a report from their dashboard.
Upstream transportation
and distribution
Emissions calculated from 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.
Data sources
56
Mitie Group plc
Annual Report and Accounts 2023
Our environment and social value framework
continued
Estimations
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. Waste data is estimated
using an average waste per desk figure based on
actual data we receive.
FY23 position
At Mitie, we see the climate emergency as a
business-critical issue that needs to be addressed
within our operations.
Three 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 and 2).
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.
Absolute emissions
Emissions FY22 FY23
Change from
previous year
% change from
previous year
UK only Total Scope 1 (tCO
2
e) 19,414 19,225 -189 -1%
Emissions from fuel combustion across our fleet 19,371 19,177 -194 -1%
Emissions from fuel combustion in our occupied buildings 43 48 5 12%
Overseas Total Scope 1 (tCO
2
e) – 1,305 – –
Emissions from fuel combustion across our fleet – 1,305 – –
UK & overseas Total Scope 1 (tCO
2
e) 19,414 20,530 1,116 6%
UK only Total Scope 2 (tCO
2
e) 1,182 1,890 708 60%
Emissions from the purchase of electricity across occupied buildings
(location based) 307 433 126 41%
Emissions from electricity combustion across our EV fleet 875 1,457 582 67%
Overseas Total Scope 2 (tCO
2
e) – 19 – –
Emissions from the purchase of electricity across occupied buildings
(location based) – 19 – –
UK & overseas Total Scope 2 (tCO
2
e) 1,182 1,909 727 62%
UK only Total Scope 1 & 2 (location based) 20,596 21,115 519 3%
Total Scope 1 & 2 (market based) 20,289 20,682 393 2%
Overseas Total Scope 1 & 2 (location based) – 1,324 – –
Total Scope 1 & 2 (market based) – 1,324 – –
UK & overseas Total Scope 1 & 2 (location based) 20,596 22,439 1,843 9%
Total Scope 1 & 2 (market based) 20,289 22,006 1,717 8%
Intensity – emissions ratio
UK only tCO
2
e/£m revenue (Scope 1 & 2) 5.28 5.21 -0.07 -1%
UK & overseas
tCO
2
e/£m revenue (Scope 1 & 2) 5.28 5.54
0.26 5%
UK only Total Scope 3 (tCO
2
e) 274,007 298,950 24,943 9%
Mitie generated Scope 3 7,936 52,932 44,996 567%
Supply chain emissions 266,071 246,018 -20,053 -8%
Overseas Total Scope 3 (tCO
2
e) – 1,164 – –
Mitie generated Scope 3 – 1,164 – –
UK & overseas Total Scope 3 (tCO
2
e) 274,007
1
300,114 26,107 10%
UK & overseas Total Scope 1, 2 & 3 (tCO
2
e) 294,603 322,553 27,950 9%
Environment
TCFD
1. During FY23 we retrospectively obtained Scope 3 data for FY22 as part of the work completed for the SBTi. This activity was completed after publication of the FY22 annual report.
Strategic report Governance Financial statements
57
Mitie Group plc
Annual Report and Accounts 2023
Like-for-like analysis highlights that Mitie’s Scope 1
and 2 UK emissions have increased by 3%,
however emissions intensity has decreased by
1%. Mitie had a 7% increase in gas consumption
for heating and 10% increase in electricity
consumption for our built estate as shown in the
table below. These are attributed to progress
towards fuller occupancy as increasing numbers
of colleagues return to the workplace following
the pandemic. It is further noted that Mitie has
increased its carbon inventory with some
significant acquisitions over this period.
We continue to see a significant increase in
electricity emissions for our electric vehicle (EV)
fleet as we transition further to an all-electric
fleet. Mitie has increased the EVs in service
during the year by 977 and as at 31 March 2023
had 3,194 EVs in operation (45% of the fleet)
and this initiative will continue to reduce our
Scope 1 emissions from fossil fuels. Our total
fleet has increased by 384 vehicles as a result
of acquisitions.
For our FY23 reporting we have included the
supply chain segment of our Scope 3 emissions
for both FY22 and FY23, and commuting and
working from home figures to cover all colleagues
for FY23, resulting in a significant increase to
previously reported figures.
Environmental data
The below table provides further details on our UK environmental performance:
FY22 FY23
Change from
previous year
% change from
previous year
Electricity consumed across occupied buildings (kWh) 4,502,916 4,931,269 428,353 10%
Gas consumed across occupied buildings (kWh) 1,554,794 1,668,849 114,055 7%
Fuel used by vehicles for business travel (kWh) 82,848,214 80,238,049 -2,610,165 -3%
Electricity used by EV vehicles for business travel (kWh) 4,122,667 7,331,647 3,208,980 78%
Total organisational energy consumption (kWh) 93,028,591 94,169,814 1,151,223 1%
Water consumed across occupied buildings (m
3
) 4,396 16,392 11,996 273%
Total waste generated across occupied buildings (tonnes) 368 306 -62 -17%
Total waste to landfill (tonnes) 19 2 -17 -88%
Energy from waste (tonnes) 135 82 -53 -39%
Total waste recycled (tonnes) 214 222 8 4%
Recycling rate 58% 72% 14ppt
Environmental targets
FY23 FY24 FY25
CO
2
emissions (tonnes) – Scope 1 & 2
1
22,439 16,900 12,775
Of which: UK 21,115 – –
Of which: Overseas 1,324 – –
CO
2
emissions (tonnes) – Scope 3 300,114 296,507 275,752
% of fleet zero carbon 45 65 85
2
Waste to landfill (tonnes) 2 50 0
1. In FY22, we reported that our FY23 target for Scope 1 & 2 emissions was 20,300 tCO
2
e. This target represented UK emissions only. For ease of reference, we have provided the
breakdown of our FY23 actual Scope 1 & 2 emissions for the UK and overseas. From FY24, we will be using our rebaselined carbon emissions targets as detailed on page 54, which
incorporates the UK and overseas.
2. 85% is based on completion by 31 December 2025 as detailed on page 44.
TCFD continual improvement – actions we will take in FY24
During FY24, Mitie will:
• Roll out both preventative and improvement measures in response to the findings from our FY23 scenario analysis focused on extreme weather events
• Extend our scenario analysis to focus on the impact of transition risks
• Extend our financial framework to include a modelling assessment of our material climate-related opportunities
• Review the inclusion of internal and external carbon prices into our metrics framework
Actual Target
58
Mitie Group plc
Annual Report and Accounts 2023
Our environment and social value framework
continued
Overview
As the UK’s largest facilities management
company, Mitie is at the forefront of many
communities. We strive to deliver the
exceptional, every day, and to deliver social
value through our own operations and for our
customers. We continue to integrate the
Government’s Social Value Model throughout
our business, including for public sector contracts,
for which it is a requirement.
Delivering high levels of social value to our
customers is a key differentiator and delivers
positive results across the business, while
positively impacting the communities in which we
operate and driving change for a better future.
Mitie Foundation
The Mitie Foundation is an independent charity
established in 2013, and wholly funded by the
Mitie Group. It supports young people and those
who face barriers to work: whether through
long-term unemployment, having a disability,
having learning difficulties or being ex-service
personnel or ex-offenders. The Mitie Foundation
educates our colleagues to support these
individuals and understand their diverse needs
and requirements.
In FY23, we continued to deliver our flagship
Ready2Work programme through The Mitie
Foundation, we launched our Ready2Work
Military programme and we are piloting the
Beyond Bars programme. Mitie is on the Prison
Operator Service Framework and delivers a
range of FM services at HMP Brixton and HMP
& YOI Isis in London, which have a combined
capacity of approximately 1,400 prisoners. Our
Beyond Bars programme is being trialled in HMP
Brixton: an eight-week programme that supports
ex-offenders to ensure they are ‘employment
ready’ before leaving the prison. From speaking
with ex-offenders in HMP Brixton, we know they
want this support. We will support individuals
with skills such as managing work expectations
and sourcing job opportunities within Mitie.
In FY23, we have recruited 347 individuals
through the Mitie Foundation, while also offering
support with CV writing, mock interviews and
guidance on effective job searching.
Giving back to the community
Mitie has a significant five-year pledge to support
communities through volunteering for good
causes. In FY23, we committed to 16,320 hours,
an increase on last year’s 14,650 hours. Every
salaried member of staff is entitled to one day’s
volunteering, conducted in work time. Over
FY23, volunteering events have included the
Poppy Appeal, FareShare, NSPCC and Career
Ready Plus.
In FY23, £325,290 was donated to good causes
by Mitie. This included a one-off corporate
donation of items to Ukrainian refugees with
a value of £154,575. The Scotland team raised
£46,177 at their annual charity ball for the British
Heart Foundation & Prostate Cancer UK. The
remaining £124,538 was raised by colleagues
delivering local fundraising events, benefiting
national charities like Macmillan Cancer Support
and local good causes.
Opportunities for
ex-military personnel
In 2022, we launched our new Ready2Work
Military programme to support those leaving the
military with three to six months left of service,
by giving them the opportunity to experience
working in the facilities management sector and
get to know Mitie. The transition for ex-military
personnel to corporate life can be daunting
and we want to minimise that stress. We offer
participants placements in a field of their choice,
and buddy them up with a veteran within Mitie.
We aim to ensure a smooth transition into the
business and believe that giving a detailed insight
into Mitie will give everyone a chance to ask
questions, be sure of their role and get used to
familiar surroundings. At 31 March 2023, Mitie
had 463 veterans, up from 261 in FY22. We
continue to support reservists employed at Mitie
with an extra 10 days’ paid leave.
Community
Making a positive difference,
wherever we operate.
Priorities for FY24
• Deliver our flagship Ready2Work programmes
nationally across the business
• Support ex-offenders in rehabilitation and job
opportunities within Mitie. Pilot and roll out
Beyond Bars programme in HMP Brixton
alongside Care & Custody
• Support our referral partners and their
customers with employment at Mitie
• Continue to educate our colleagues in
order to support those facing barriers to
securing employment
• Deliver our volunteering hours to ensure we
make a maximum impact on our communities
£325,290
donated to good causes
347
employees recruited in FY23
through the Mitie Foundation
Committed to delivering
16,320
hours volunteering
Strategic report Governance Financial statements
59
Mitie Group plc
Annual Report and Accounts 2023
Overview
Our supply chain transformation programme
aims to make our supply chain operations more
efficient, sustainable and resilient. Building on our
initial progress, in FY23 we have continued to
focus on third-party supplier engagement, cost-
efficiencies, implementing new technology and
enhancing sustainability across our supply chain.
One of the challenges we have faced has been to
minimise the effects of inflationary cost pressures
and resource shortages on our supply chain. We
have taken action through a range of initiatives:
from product switches and bulk purchases, to
increasing our use of market and industry
benchmarks for effective decision-making.
In FY23, we rolled out a new Group Procurement
Policy, evolving our approach to governance
and enhancing our procedures, and we have
strengthened the team with junior and senior
buyers across the key categories of expenditure.
Diversity is embedded in our supply chain, and we
are focused on equal opportunities for small and
medium-sized enterprises (SMEs) and voluntary
community and social enterprises (VCSEs). We
actively work with Social Enterprise UK (SEUK)
and Minority Supplier Development UK (MSDUK)
to identify these suppliers for inclusion when we
tender new requirements.
Our initiatives aim to level the playing field between
small and large suppliers by regionalising tenders
with smaller contract values that are more suitable
for SMEs, advertising new opportunities, and
offering training on how to complete bid responses
to encourage more SMEs to enter Mitie’s supply
chain. The effectiveness of our inclusive approach
is evidenced by the high percentage of diverse
supplier spend across Mitie.
Our digital procurement strategy
We continue to focus on acquiring, managing and
extracting value from data to further inform our
procurement strategy, with the roll-out of Coupa,
our digital supplier platform, enhancing the depth
of data available to our teams.
We have developed processes to mine the data
more deeply and inform us where we can drive
future improvements All data is now fed into a
‘data lake’ and optimised using advanced software.
Analysis provides valuable insights for our
teams, helping us identify trends, spot potential
opportunities, and track and report tangible
progress against targets.
Coupa has also allowed us to refine the way
we tender, with all new suppliers being required
to reach a minimum standard to complete
onboarding. We monitor supplier health
information, helping to reduce our exposure to
high-risk subcontractors, such as those with
financial instability or compliance issues. We have
consolidated our supplier base (from 12,000 to
8,300), and remain on track to achieve our target
of 6,000 in FY24.
Responsible supply chain
We continue to make good progress
along our three-year transformation
roadmap.
Priorities for FY24
We will continue to leverage our scale in the
facilities management market
• Continue to strengthen our Procurement
teams by recruiting additional members
where required
• Create a new centre of excellence, bringing
together our Procurement Operations and
Procurement Performance teams,
underpinned by four core pillars of
responsibility:
– benefit management, spend analytics
and reporting
– client bid, mobilisation and acquisition
support
– governance, risk and compliance and
– procurement systems and communication
channel management
• Improve our supplier Net Promoter Score
– the next survey will be conducted in FY24
+40%
of spend through SMEs
5,000
users per month on our supplier
platform, mitiesuppliers.com
+£1m
of spend through VCSEs
Enhancing sustainability
across the supply chain
Mitiesuppliers.com provides our suppliers with
easy access to all information they need to know
when working with us, including our Supplier
Social Value Policy.
Our new carbon emissions questionnaire is
designed to make it easy for every supplier to
provide emissions data related to Mitie, alongside
details of any offsetting and carbon reduction
plans. The data has enabled us to map emissions
by category and geographical area, and identify
low-spend, high-polluting suppliers – signposting
opportunities for improvement.
Through collaboration with the Supply Chain
Sustainability School, we have streamlined our
data-capture process to improve accuracy. All
category and sourcing teams are trained and kept
informed about the emissions profile within their
respective categories to support their work to
reduce supplier emissions. For more information
about carbon emissions across our business and
supply chain, see pages 54 to 57.
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Mitie Group plc
Annual Report and Accounts 2023
Operating review
Our divisional performance
Business Services
Business Services delivers Intelligent Security, Cleaning and Hygiene Services, and Office
Services. During the pandemic, Business Services was also primarily responsible for the
delivery of Mitie’s short-term Covid-related contracts. These contracts completed early
in FY23.
Performance highlights
Performance highlights
Revenue reduced by 23% to £1,172m (FY22:
£1,522m), largely due to the completion of
Covid work
Excluding £15m of revenue from Covid work
in FY23 (FY22: £429m), revenue increased by
6% largely driven by contract re-pricing plus
contributions from variable and project works
Operating profit before other items reduced
by 37% to £68m (FY22: £108m). Excluding the
£7m contribution from Covid work in FY23
(FY22: £60m), operating profit increased by
26%, and the operating margin increased
by 0.8ppt to 5.2%, driven by margin
enhancement initiatives
£1.0bn TCV of new, renewed or extended
contracts, including for Eurostar, Hammerson,
Home Office, National Grid, NATS and
Sainsbury’s
Four significant contracts mobilised in early
FY23 for BAE Systems, Hammerson, John
Lewis & Partners, and Poundland, worth
£33m of annualised revenue and TCV of
up to £120m
Awards include: British Security Awards 2023
– Service to the Customer and Best Team;
Metsä Sustainability Awards 2023 – Team
Sustainability Excellence and Social Value
Impact; Cleaning Excellence Awards 2022 –
Cleaning & Hygiene Team of the Year;
Fire and Security Matters Awards 2022 –
Security Guarding Company of the Year
and Security Team of the Year
Operational performance
Business Services delivered an encouraging
performance, with the continuation of the
Afghan Relocations and Assistance contract,
increased variable and project work, and contract
re-pricing, alongside the delivery of margin
enhancement initiatives, partially offsetting the
completion of higher margin short-term Covid
work that had benefited the prior year and a
reduction in scope of the Brexit security contract
at UK ports. Excluding Covid work, revenue,
operating profit before other items and the
operating margin were all better than last year.
The division secured £1.0bn TCV of new contract
wins, renewals and extensions, including wins for
Hammerson, the Home Office, John Lewis &
Partners, National Grid, NATS and Poundland.
The largest extension was for three years with
Sainsbury’s, while other renewals and extensions
included Eurostar, Hammerson and Manchester
Airport Group.
Margin enhancement initiatives implemented
during the year were a key driver of growth in
underlying operating profit and the operating
margin. The initiatives primarily focused on
operational excellence, the roll-out of the Coupa
digital supplier platform and leveraging the
Workplace+ workforce management app to
optimise workforce productivity and workflows
across the division’s core services.
(23)%
Revenue growth
(37)%
Operating profit before
other items growth
£1.0bn
FY23 new contract wins,
renewals and extensions
Business Services, £m FY23 FY22 Change
Revenue 1,172 1,522 (23)%
Security 782 1,127 (31)%
Cleaning 390 395 (1)%
Operating profit before other items 68 108 (37)%
Operating profit margin before otheritems 5.8% 7.1% (1.3)ppt
Total order book £1.5bn £1.7bn (12)%
Number of employees 31,148 38,092 (18)%
Technology continues to drive change across
the industry and Mitie is a leader in this area.
In Business Services, the ‘Merlin Protect 24/7’
platform (business intelligence software for
security incident management) is being developed
into a leading ‘Merlin for Cleaning’ version to
monitor and track responses to reactive tasks
such as spillages. Trials were carried out across
several clients, including Amazon, Co-op,
Deloitte and Standard Life, with results showing
notable productivity improvements in frontline
cleaning operations.
The division also operates the UK’s leading
intelligence and technology-led security business,
including Mitie Intelligence Services (MIS).
MIS identifies and assesses threats through its
intelligence network and dedicated Intelligence
Hub, and provides significant advantages in
winning, transforming and retaining contracts
across multiple sectors, including the retail,
financial services, and transport and aviation
sectors. MIS is well-positioned to work with
customers when ‘Martyn’s Law’ (formerly the
Protect Duty) comes into effect, setting out
requirements for venues and other organisations
to ensure public safety.
Since the year end, we have continued to build
the division’s capabilities in intelligence and
technology-led security through the acquisitions
of Linx International Group and R H Irving
Industrials, for a total consideration of £21m.
These businesses bring a range of complementary
services and security infrastructure technology
to Mitie and will enhance the division’s ability
to provide comprehensive support, including
training, to our customers as they prepare to
meet the requirements of Martyn’s Law.
Strategic report Governance Financial statements
61
Mitie Group plc
Annual Report and Accounts 2023
Retaining a long-term customer
through our tech and expertise
Mitie has worked at Springfields, a nuclear fuel
production installation in Salwick, Lancashire,
since 2013. The site is run by Springfield Fuels
Limited, under the management of Westinghouse
Electric UK Limited, and produces energy fuel
products for the UK’s nuclear power stations
and international customers. Around a third of
the UK’s low-carbon electricity comes from fuel
manufactured at Springfields.
Our initial remit was for the provision of a
Security Guard Force, replacing the service
that had been provided by the Civil Nuclear
Constabulary. In 2018, we took over the
Emergency Central Command facility on-site
that had been manned by in-house fire fighters
and involves the monitoring of complex alarms
and ensuring emergencies are rapidly escalated.
During the pandemic, we worked with the
customer to transition its in-house firefighting
provision to Mitie. This involved a six-month
mobilisation programme to ensure our
security cleared fire fighters were trained
to the highest standard.
Staying on track with Eurostar
Mitie has been providing services to Eurostar, the
high-speed passenger rail service, for more than
14 years. This includes passenger security for
arrivals and departures, train searches, manning
e-gates, CCTV monitoring and access control
to restricted areas. Following a competitive
re-tender process during the year, Mitie was
awarded an extension to its security contract
with Eurostar with a TCV of £40m for an
additional three years, with the option to
extend for a further two years thereafter.
Our long-standing relationship, expertise and
technology were integral to securing the contract
extension. Mitie will be bringing its industry-
leading technology and intelligence capabilities to
Eurostar, including dedicated transport sector
security analysis and updates, via its Intelligence
Security Operations Centre (ISOC) in
Northampton. The new contract will enable
us to leverage our technology and expertise
to enhance the customer experience and
help reduce Eurostar’s ‘cost per passenger’.
Furthermore, with a large number of our
security officers having worked on the contract
since it commenced, the team are experienced
in supporting the smooth running of Eurostar’s
services and creating a safe environment for
the millions of passengers travelling on its trains
eachyear.
We use our Merlin Protect 24/7 system for both
the security and firefighting teams across the site,
providing access to real-time insights and trend
analysis. This enables the teams to quickly identify
operational issues, record and report hazardous
incidents, easily locate fire access points, and
seamlessly share key intelligence with colleagues.
During the year, we secured a five-year contract
extension with a TCV of £18m, and we were
subsequently awarded an additional contract for
the provision of soft services after the year end.
Springfield has scored Mitie 10 (the maximum
score) on the Net Promoter Score for the last
three consecutive years.
62
Mitie Group plc
Annual Report and Accounts 2023
Technical Services
Technical Services is a leading supplier of technical engineering services and delivers
projects to a range of predominantly private sector customers. Through a series of
strategic acquisitions, the division is also focusing on the high growth areas of telecoms
infrastructure and innovative decarbonisation solutions.
Performance highlights
Performance highlights
Revenue increased by 19% to £1,154m (FY22:
£973m), benefiting from acquisitions, contract
wins, renewals and extensions, contract
re-pricing and a full year of revenue from
significant wins in the prior year, in addition to
the steady recovery of the projects business
post Covid
Operating profit before other items increased
to £34m (FY22: £30m), primarily driven by
the uplift in revenue and margin enhancement
initiatives more than offsetting inflationary
cost increases and the impact of short-term
operational inefficiencies from Forté
The creation of one of the UK’s largest
telecoms support services companies, following
the acquisitions of P2ML and 8point8 in FY23,
combined with DAEL Telecoms (acquired
in FY22)
Decarbonisation offering strengthened in FY23
through the acquisition of Custom Solar, a
specialist in the design and installation of solar
photovoltaic (PV) panels
Awards include: Commercial Solar Project of
the Year (Custom Solar); Computing News
Digital Technology Leaders Awards 2022 –
Best Large Enterprise Digital Project (Aria);
Edie Awards – Net-Zero Carbon Strategy
of the Year Award (Mitie Plan Zero); RoSPA
Gold Award for health and safety performance
(Magnox contract); Facilities Management
Awards 2023 – Total FM Provider of the Year
(Mitie Ireland)
19%
Revenue growth
14%
Operating profit before
other items growth
£1.0bn
FY23 new contract wins,
renewals and extensions
Operating review
continued
Technical Services, £m FY22 F Y21 Change
Revenue 1,154 973 19%
Maintenance 1,000 849 18%
Projects 154 124 24%
Operating profit before other items 34 30 14%
Operating profit margin before other items 3.0% 3.1% (0.1)ppt
Total order book £1.6bn £1.7bn (6)%
Number of employees 9,841 9,029 9%
Operational performance
Technical Services continued to benefit from a
steady recovery in projects and variable works,
increased demand from customers for its
technology-led solutions and growth in the
telecoms infrastructure and decarbonisation
businesses. This, combined with contract wins
(which more than offset two notable losses),
renewals and extensions, contract re-pricing
and a full year of revenue from significant prior
year wins (including BAE Systems and Legal &
General), contributed to a 19% increase in
revenue to £1,154m.
The operating margin remained broadly flat at
3.0%, due to the benefits of the good underlying
performance and margin enhancement initiatives
being offset by the impact of inflation, short-term
operational challenges following the going live in
H1 of Forté (the digital platform to automate
scheduling in Technical Services) and the initial
investment in recently acquired businesses.
During the year, the division won, renewed or
extended £1.0bn TCV of contracts, including
wins with GSK, NATS, National Grid and Sky,
and renewals or extensions with Deloitte,
E.ON and Vodafone.
Technical Services is at the forefront of Mitie’s
‘Science of Service’ ambitions, using its leading-
edge technology platforms to optimise employee
wellbeing, enhance estate intelligence and
provide smart decarbonisation and green energy
solutions. Mitie’s Connected Workspace suite
of products has been pivotal to the division’s
new wins and scope expansions with existing
customers, as they adapt to new, hybrid ways of
working. There are more than 18,000 sensors
remotely monitoring occupancy and utilisation
across several new accounts, including the BBC.
The Aria workplace app has been adopted
by 40 customers to date, with over 14,000
registered users reporting and tracking
workflow across their estates.
Reactive tasks are increasingly being logged
in Chatbot ESME. In addition, assets such as
heating, ventilation and cooling systems are
managed remotely through Mitie’s Technical
Services Operations Centre (TSOC) in
Manchester, delivering both operational
efficiencies as well as energy savings for
customers (16% energy reduction, on
average, through digital maintenance).
After an initial period of stabilisation for Forté,
service level performance is now at ‘pre-Forté’
levels and is improving daily. The delay in getting
the system to full capacity held back the
cumulative benefit from Forté savings to £9m in
FY23. The full planned savings run rate of £15m
is expected to be achieved in FY24, as previously
communicated. The division also implemented a
number of overhead cost savings and operational
excellence margin enhancement initiatives during
the year, as part of the wider Group programme.
The acquisitions of P2ML (April 2022) and
8point8 (May 2022) were combined with DAEL
Telecoms (acquired in August 2021) to create
Mitie Telecoms, one of the UK’s largest telecoms
infrastructure businesses. Mitie Telecoms’ services
include both infrastructure projects and network
coverage for special events, such as music festivals
and the funeral of HM Queen Elizabeth II in
September 2022. During the year, Mitie Telecoms
partnered with Cellnex, Digital Mobile Spectrum
Limited and H3G, and extended its relationships
with Vodafone and VMO2, so is now working
with all the mobile network operators. The
business contributed £76m of revenue in FY23
(FY22: £31m) and is well-positioned to benefit
from the ongoing roll-out of 5G across the UK
and the decommissioning of Huawei assets.
Technical Services is also capitalising on increased
demand for decarbonisation services, including
solar power, LED roll-outs, air source heat pump
installation and electric vehicle charging projects.
The decarbonisation business has grown from
£88m of revenue in FY22 to £145m in FY23,
driven by the acquisitions of Custom Solar
(June 2022) and Rock Power Connections
(November 2021).
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Mitie Group plc
Annual Report and Accounts 2023
Creating a leading provider
of telecoms infrastructure...
Through the recent acquisitions of P2ML, 8Point8
and DAEL, we have created Mitie Telecoms, one of
the UK’s leading telecoms infrastructure businesses.
Fast, reliable telecoms systems are essential to
maintain our national critical infrastructure. From
site acquisition to mast design and construction,
and equipment maintenance, we deliver telecoms
infrastructure solutions.
Our customers include the MOD, and the
emergency and security services. We are also
proud to serve all of the UK’s major network
operators, including Vodafone, H3G, BT and
VMO2, to decommission Huawei assets and
mobilise new 5G infrastructure across the UK.
We have been awarded a significant portion
of the Government’s Shared Rural Network
initiative for two of the four mobile operators.
This is a high-profile government-funded
programme to support the delivery of mobile
coverage and gigabit capable broadband across
the UK. We also won contracts with H3G and
Cellnex during the year to provide services
including events coverage and infrastructure
upgrades. Additionally, we have been awarded a
trial project to deliver BT/EE’s first permanent
integrated renewable energy telecoms site.
...and providing network
coverage for major events
Mitie Telecoms provides secure network
coverage to high-profile events across the
UK, from international sports events such
as Wimbledon to music festivals such as
Glastonbury, Leeds and Reading.
In September 2022, we also delivered increased
network capacity across London to support
coverage during the funeral of HM Queen
Elizabeth II, working alongside our colleagues in
CG&D who provided extensive extra security
for the event.
At each event we provide a fully managed
service to deploy and build temporary telecoms
infrastructure. We ensure attendees remain
connected and the emergency services can
communicate securely and safely. In FY23, we
delivered special events mobile coverage projects
for all four network operators – an industry first.
64
Mitie Group plc
Annual Report and Accounts 2023
Operating review
continued
Central Government & Defence (CG&D)
The CG&D division provides facilities management services across central government
and defence contracts. CG&D operates across 21 contracts and 28 government
departments and agencies, at over 3,000 locations across the UK and overseas.
Performance highlights
Performance highlights
Revenue increased by 24% to £828m
(FY22: £669m), benefiting from strong
growth in projects and variable work, contract
re-pricing, scope increases and a full year of
the Future Defence Infrastructure Services
(FDIS) contract
Operating profit before other items increased
by 56% to £60m (FY22: £38m), and the
operating margin increased by 1.5ppt to 7.2%
New wins of £0.3bn TCV, including for the
Ministry of Defence (MOD) overseas
military base in Gibraltar and United States
Visiting Forces
Significant renewals or extensions of £1.4bn
TCV (100% retention rate), including for the
MOD’s overseas military bases in Cyprus and
the South Atlantic Islands and the Landmarc
‘Training Estate’, the Department for Transport
(DfT) and the Department for Work and
Pensions (DWP)
Projects included decarbonisation work across
MOD/FDIS sites and ‘back to work’ initiatives
for the DWP
Awards include: MOD Heritage Award
for refurbishment of Gibraltar Tower,
recognising the work of Mitie and the Defence
Infrastructure Organisation (DIO); Gold
recognition by the RoSPA for the Ascension
Island team
CG&D, £m FY23 FY22 Change
Revenue including share of joint ventures and associates 828 669 24%
Central Government 439 379 16%
Defence 389 290 34%
Operating profit before other items 60 38 56%
Operating profit margin before other items 7.2% 5.7% 1.5ppt
Total order book £2.4bn £1.6bn 50%
Number of employees 5,576 5,578 –
24%
Revenue growth
56%
Operating profit before
other items growth
£1.7bn
FY23 new contract wins,
renewals and extensions
Operational performance
CG&D had a strong year, driven by growth in
higher-margin projects work across the division
(including for the MOD, FDIS, DIO and through
Landmarc for the UK Defence Training Estate),
contract re-pricing, scope increases and a full year
of the FDIS contract, which started to mobilise in
December 2021. As a result, divisional revenue
increased by 24% to £828m.
Operating profit before other items increased by
56% to £60m and the operating margin improved
by 1.5ppt to 7.2%, reflecting margin enhancement
initiatives and revenue related to services
disrupted by the pandemic.
In total, CG&D secured £1.7bn of new contract
wins, renewals and extensions in FY23. The
division was awarded and mobilised new
contracts for the MOD’s overseas military
base in Gibraltar, and to support United States
Visiting Forces. CG&D has also been retained as
strategic partner to the MOD for its overseas
military bases in Cyprus and the South Atlantic
Islands, and through Landmarc for the UK
Defence Training Estate contract. Other
significant contract extensions included those
for the DfT and DWP.
Projects and scope increases included work
for the DWP where CG&D has continued to
implement ‘back to work’ wellbeing initiatives,
and decarbonisation work to assist the UK
Government to achieve its 2050 Net Zero target.
The latter includes the refurbishment of the
accommodation blocks across the MOD and
FDIS estates to incorporate low-carbon features,
such as building energy monitoring systems, heat
pumps, solar power, thermal insulation and other
smart features to reduce energy consumption
and automate processes.
CG&D played an important role in the delivery of
support for the funeral of HM Queen Elizabeth II
in September 2022 across Whitehall and
Westminster, including the provision of extensive
extra security and providing the facilities
management for rehearsals (across several
defence training sites) and for the ceremony.
Mitie’s technology is a key differentiator, and
the division has continued to focus on the
deployment of the secure asset management
system across the defence contracts with
benefits such as MyJobs, the fully mobile
workflow application, 3D building scanning
capability and construction management
software, Asite, which has Building Information
Modelling (BIM) capability.
The ‘Mitie First’ strategy, which is focused on
insourcing services formerly provided by third
parties, resulted in an additional £20m of
cross-selling revenue synergies in FY23.
CG&D implemented operational excellence
initiatives during the year across eight of its
largest contracts. These initiatives are focused on
improving the work order scheduling process,
which has led to improved utilisation of mobile
engineers and an increase in the proportion
of work being self-delivered. In addition, the
implementation of the Workplace+ workforce
management app has enabled more effective
scheduling of shift work.
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65
Mitie Group plc
Annual Report and Accounts 2023
Refurbishment of the
Falkland Islands runway
In June 2022, we were awarded a £7m project
by the DIO to extend the lifespan of the runways
and taxiways at the Mount Pleasant Complex
(MPC) airfield in the Falkland Islands.
Our work included repainting runway and
taxiway markings, replacing airfield signage and
coating the runway asphalt with a protective layer
of bitumen to extend its life.
The project needed to be carefully planned,
with the resurfacing works being carried out at
night to avoid disruption. This was particularly
important as MPC is used for airbridge flights
to and from the UK, and flights connecting
East Falkland Island to its outlying islands and
South America.
Award-winning restoration work
The Tower in Gibraltar is an iconic building
within His Majesty’s Naval Base, which from the
time of its construction in 1905 served as the
headquarters for the Royal Navy in Gibraltar.
Having been in decline over a number of years, a
design for the full refurbishment of the building
was commissioned by our customer, the DIO.
Our works included cleaning limestone-faced
walls, refurbishing offices, electrical re-wiring,
IT installation, replacing ceilings and floor
coverings, implementing sustainability measures
and making facilities on the ground floor
wheelchair-accessible.
The newly refurbished building was officially
re-opened by His Excellency, The Governor of
Gibraltar, in 2022 and has since received the
prestigious Heritage Award from the MOD.
The DIO also awarded a Silver Otter Trophy and
the Sustainable Business Award for conservation
and sustainability efforts for this project.
We are very pleased to have
completed this important work at
MPC two weeks ahead of schedule
and within budget. As with many
large infrastructure projects in the
Falkland Islands, we had to transport
the necessary equipment by air or
container ship, which makes the
project more complicated than it
would be in the UK.
Robert Handford
DIO Project Manager
Leveraging our long-standing
relationship with the MOD/DIO
CG&D has continued to strengthen its long-
standing relationship with the MOD and DIO,
spanning more than two decades, having been
awarded a number of significant contract wins
and extensions in FY23.
The division’s two largest awards were for the
MOD’s overseas military base in Cyprus (TCV
of up to £643m), where we have been retained
following a full and extensive re-tender process,
and through the Landmarc joint venture for the
UK Defence Training Estates contract (TCV of up
to £552m for our share). Both contracts have
been renewed for seven years with a three-year
extension option and provide opportunities to
deliver important projects, including work to
decarbonise the MOD’s built estate, in addition to
the broad range of core facilities management
services. Other key defence wins and extensions
include those for UK military bases in the
Ascension Islands, the Falkland Islands and
Gibraltar, alongside RAF Mildenhall in the UK.
In total, Mitie has around 2,700 highly trained
colleagues working across MoD/DIO contracts.
Their work ensures that the UK Armed
Forces have secure and safe places to live,
train and deploy on operations, both in the
UK and overseas.
66
Mitie Group plc
Annual Report and Accounts 2023
Operating review
continued
Communities
The Communities division delivers sustainable outcomes as a trusted partner to
the public sector, across Healthcare, Education and Campus & Critical Services.
The division operates over 100 PFI and traditional commercial contracts.
Performance highlights
Performance highlights
Revenue increased by 7% to £490m (FY22:
£460m), benefiting from contract re-pricing
and increased lifecycle and projects work
across Healthcare and Education
Operating profit before other items increased
by 7% to £21m (FY22: £20m)
Communities secured a place on two
significant procurement frameworks: London
Procurement Partnership (a four-year NHS
framework) and Everything FM (an education
framework), which are valued at up to £5.8bn
and £300m respectively
Good pipeline progression in the Local
Government and Healthcare markets and
successful mobilisation of the contract with
Kingston Council
7%
Revenue growth
7%
Operating profit before
other items growth
£0.2bn
FY23 new contract wins,
renewals and extensions
Communities, £m FY23 FY22 Change
Revenue including share of joint ventures and associates 490 460 7%
Healthcare 250 225 11%
Education 145 129 12%
Campus & Critical 95 106 (10)%
Operating profit before other items 21 20 7%
Operating profit margin before other items 4.3% 4.3% –
Total order book £3.4bn £3.7bn (8)%
Number of employees 7,802 8,513 (8)%
Operational performance
The Communities division delivered an
encouraging performance during the year, with
revenue and operating profit both 7% ahead
of the prior year and the operating margin
maintained at 4.3%. The division secured £0.2bn
TCV of contract wins and extensions including
a new contract with Kingston Council and
contract extensions with Poole Hospital and
West Herts Hospital.
Projects work included the installation of LED
lighting in one of the major London hospitals,
and the delivery of improvement programmes
over the summer holiday period across six large
schools. The 10% reduction in Campus & Critical
revenue reflected two contract losses, of which
one was insourced, and the other Mitie declined
to re-bid.
The Computer Aided Facility Management
(CAFM) upgrade programme across Healthcare
was successfully completed by the year end,
having been rolled out across 24 sites. This
included the introduction of a new payment
mechanism model at one hospital trust.
Technical operational performance has
strengthened materially as a result, with
maintenance completion above 96%. In
healthcare environments, Mitie’s Merlin for
Cleaning application has been piloted to improve
soft services productivity and innovation.
Several other operational excellence margin
enhancement initiatives were implemented
during FY23, including helpdesk upgrades in
Education, and the roll-out of the Coupa digital
supplier platform.
The division is also continuing to make progress
in turning around the handful of under-
performing contracts which were acquired with
Interserve. Six of the contracts showed improved
performance during the year, with two contracts
now contributing to Group profitability. One
contract remains particularly challenging and only
showed a marginal improvement in performance
(£8.4m loss in FY23 compared with £8.7m in
the prior year). The majority of the remaining
under-performing contracts will be at, or close
to, break even by the end of FY24, with the
final contract expected to achieve profitability
in FY26, after productivity improvements and
re-sets to pricing.
Reforesting Essex
After successfully planting 1,600 trees on Canvey
Island in 2022, colleagues from across Mitie,
together with our customer Essex County
Council (ECC) and local SMEs, joined forces
and planted a further 6,000 trees over a week
in January 2023 in Basildon.
Over 100 volunteers contributed to this
community project, planting a variety of tree
species that will help to improve local air quality
through absorbing carbon as the trees mature.
The trees, which include oak, aspen, alder,
hornbeam, hawthorn, goat willow, field maple,
crab apple, rowan, bird cherry, wild cherry, silver
birch and dogwood, will also provide habitats for
wildlife, encouraging biodiversity in the area, and
helping to maintain a healthy ecosystem. This also
provided an opportunity for the community to
work together and build relationships.
Strategic report Governance Financial statements
67
Mitie Group plc
Annual Report and Accounts 2023
Specialist Services
The Specialist Services division encompasses Care & Custody, Landscapes, Spain and
Waste. From FY24, Landscapes, Spain and Waste will be moved into the Business
Services division and Care & Custody will be moved into the Communities division.
Performance highlights
Performance highlights
Revenue increased by 10% to £411m (FY22:
£373m) and operating profit before other
items increased by 7% to £35m (FY22: £33m)
Care & Custody revenue increased by 24% to
£169m, driven by contract wins, extensions and
renewals, alongside additional project work in
escorting services
Landscapes revenue increased by 20% to
£66m, largely reflecting a full year of revenue
from the FDIS contract and the acquisition of
Biotecture, the living walls specialist (acquired in
January 2022)
Spain revenue reduced by 3% to £102m, mainly
as a result of the significant reduction in Covid
work at airports
Waste revenue reduced by 4% to £74m due
largely to the closure of NHS Covid Test &
Trace sites
Awards include: Seven Green Apple awards
(Waste), Three Green Apple awards
(Landscapes), BALI National Landscape Award
2022 (Landscapes)
10%
Revenue growth
7%
Operating profit before
other items growth
Specialist Services, £m FY23 FY22 Change
Revenue 411 373 10%
Care & Custody 169 136 24%
Landscapes 66 55 20%
Spain 102 105 (3)%
Waste 74 77 (4)%
Operating profit before other items 35 33 7%
Operating profit margin before other items 8.5% 8.7% (0.2)ppt
Total order book £0.8bn £0.8bn –
Number of employees 9,808 10,118 (3)%
Operational performance
Care & Custody revenue was 24% ahead of the
prior year, mainly due to a full year of revenue
from the Dungavel and Derwentside Immigration
Removal Centre contracts, alongside additional
escorting services project work, primarily at
Manston. Within Police Services, contracts
with Cleveland, Greater Manchester and
Nottinghamshire Police were renewed during
the year, while extensions were secured for
Cheshire, Northumbria, South Wales and West
Mercia Police. New contracts were awarded for
Lincolnshire, Derbyshire and South West Police
consortium. Mitie is a leading provider of forensic
health and custodial support services for the UK’s
police forces.
Landscapes revenue was 20% ahead of the prior
year, primarily driven by a full year of revenue
from FDIS and Biotecture. In FY23, Landscapes
won £35m TCV of new and additional work,
including contracts with Busy Bee, Kew Green
Hotels, Lidl, NATS and Savills. Renewals and
scope changes in the year totalled £6m TCV
and included BNP Paribas, Deloitte, E.ON,
The Church of Jesus Christ of Latter-day Saints,
NHS Property Services, Vodafone and Morrisons.
Biotecture performed well during the year and
won the BALI National Landscape Award 2022
for the exterior living wall installation at Canary
Wharf, which includes over 25,000 plants in
750m
2
of walls around the site, as well as three
Green Apple awards, including one for its
sustainability credentials for work on the
Landscapes office in Hampshire.
Spain revenue reduced by 3%, due to new
contract wins being offset by a reduction in
short-term Covid work at numerous airports.
New contract wins included those with EMT
Madrid (public bus transport), Ajuntament de
Cornellà de Llobregat (municipal governing body)
and EYSA (mobility services).
Waste revenue reduced by 4% largely due to
the closure of NHS Covid Test & Trace sites.
This reduction in revenue was partially offset by
the recovery of contracts impacted by previous
lockdowns, and new contract wins, including
with Hammerson and Covent Garden Market
Authority. Waste has also been successful in
extending its contract with a major global
FMCG manufacturer for a further two years,
and securing retenders with Hull and East Yorks
Hospitals, JLL and Manchester Airport Group.
Reconnecting people with nature
through our living walls
Mitie Biotecture is one of the largest living wall
specialists in the UK, having installed more
than 50 living walls last year. This included the
installation of the UK’s highest wall on the
75th floor of Landmark Pinnacle for a real
estate developer.
Fulfilling our customer’s vision to showcase the
city’s exceptional skyline, the space was designed
as a pair of landscaped external roof terraces
providing spectacular panoramic views.
The walls use Biotecture’s patented hydroponic
living wall system, including integrated irrigation
which is being remotely monitored from our
offices. Over 6,500 plants across 25 species were
selected by our team to suit the local climate and
provide bursts of seasonal colours.
68
Mitie Group plc
Annual Report and Accounts 2023
Alternative Performance
Measures
The Group presents its results as those of
continuing operations, 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
impairment of goodwill, cost of restructuring
programmes, acquisition and disposal related costs
(including the impairment and 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 from continuing
operations is set out below:
Continuing operations,
£m unless otherwise specified FY23 FY22
Revenue including share of
joint ventures and associates 4,055.1 3,996.8
Group revenue 3,945.0 3,903.3
Operating profit before
other items 162.1 166.9
Other items (45.1) (94.8)
Operating profit 117.0 72.1
Net finance costs (11.5) (19.8)
Profit before tax 105.5 52.3
Tax (14.4) (21.0)
Profit after tax 91.1 31.3
Basic earnings per share
before other items 9.5p 9.2p
Basic earnings per share 6.8p 2.2p
Revenue
Revenue from continuing operations for FY23 of
£4,055.1m, including share of revenue from joint
ventures and associates, has increased by £58m
compared with the prior year.
Excluding revenue from short term, Covid-related
contracts of £15m (FY22: £448m), revenue from
continuing operations has grown by £491m (+14%)
in FY23. This growth has been driven by new
contract wins (including the large FDIS contract in
CG&D, and the BAE Systems contract in Technical
Services and Business Services), growth in projects
work (in particular in CG&D), revenue from recent
acquisitions (DAEL, P2ML, 8point8, Rock, Custom
Solar, Biotecture and Esoteric), and the impact of
inflationary price increases. The impact of inflation
on revenue was approximately £163m in FY23.
Finance review
A strong financial performance
Mitie has delivered a strong financial
performance, boosted by margin
enhancement initiatives, generated
a good level of free cash flow and
maintained a robust balance sheet.
Simon Kirkpatrick
Chief Financial Officer
Strategic report Governance Financial statements
69
Mitie Group plc
Annual Report and Accounts 2023
Operating profit
Operating profit from continuing operations
before other items was £162.1m (FY22: £166.9m),
a reduction of £4.8m, which arose primarily as a
result of the reduction in contribution from the
short term, Covid-related contracts.
Excluding the contribution from Covid work
of £7m (FY22: £60m), operating profit before
other items increased by £48m (+44%) in FY23,
largely driven by margin enhancement initiative
savings of £41m, projects work and contract wins
and extensions.
All divisions contributed positively to this 44%
profit improvement. CG&D made the greatest
contribution (£21.4m) as a result of new wins,
pricing, and increased projects work, with
other notable increases in: Business Services
(£12.6m) from wins, projects work and margin
enhancement initiatives; Technical Services
(£4.6m) from the post-Covid recovery in
variable works; and Corporate Centre (£4.1m)
as a result of the ongoing delivery of margin
enhancement initiatives.
Inflation had a negative impact on operating profit
of approximately £7m in FY23, representing a
96% recovery of the £170m of cost inflation
experienced in the year. This recovery is better
than expected due to the strong contractual
protections in place, and good customer
relationships. There were also net reductions in
operating profit in the year from Project Forté
(£1.9m), which is now complete, and from the
Winter Support package (£7.9m).
After accounting for £45.1m of net charges in
other items (FY22: £94.8m), operating profit
from continuing operations was £117.0m (FY22:
£72.1m), a year on year improvement of 62%.
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. Corporate overhead costs have
reduced significantly, by 10% to £55.5m in
FY23 (FY22: £61.4m), mainly as a result of
cost-efficiencies delivered from the margin
enhancement initiatives.
Other items
£m FY23 FY22
Workflow optimisation
(Project Forté) (8.7) (10.2)
Target Operating Model (7.9) (0.3)
Property transformation – (0.4)
Restructuring (16.6) (10.9)
Interserve acquisition related
income/(costs) 3.7 (2.4)
Interserve integration costs (5.5) (16.2)
Interserve settlement of
contractual disputes – 9.8
Interserve completion
accounts adjustment to
consideration – (45.6)
Interserve amortisation
of acquisition related
intangible assets (16.7) (19.1)
Interserve related
other items (18.5) (73.5)
Amortisation of non-
Interserve acquisition
related intangible assets (4.7) (2.8)
Digital supplier platform (3.4) (4.4)
Other acquisition
related costs (1.9) (3.2)
Other exceptional items (10.0) (10.4)
Total other items from
continuing operations
before tax (45.1) (94.8)
Gain on disposal of Document
Management business – 16.0
Other items related to
discontinued operations – 1.0
Total other items before tax (45.1) (77.8)
Tax 8.2 (2.0)
Total other items after tax (36.9) (79.8)
Other items have reduced significantly in FY23,
largely due to the conclusion of the Interserve
integration and completion accounts process.
This reduction has been partially offset by
costs associated with the Group’s margin
enhancement initiatives.
Project Forté was completed in FY23, and
therefore no further other items costs will
be incurred. The Target Operating Model
programme is the next phase of the Group’s
transformation, and includes the further
outsourcing of back office functions, consolidating
systems and processes, and optimising the
organisation structure. This programme has
contributed £6m to cost savings in FY23 and,
combined with further investment, is expected
to drive £20m of additional savings in FY24.
The £3.7m Interserve acquisition related income
for FY23 relates to the release of provisions
established on the opening balance sheet for
contract specific matters, which are no longer
required because the matters have since
been resolved.
Net finance costs
Net finance costs from continuing operations
improved (decreased) by 42% to £11.5m (FY22:
£19.8m). The decrease was driven by the benefit
of the improved terms negotiated as part of
the refinancing of the Revolving Credit Facility
(RCF) (signed in October 2021), and US Private
Placement (USPP) notes (from December 2022
onwards), together with amendment fees from
the June 2020 refinancing (during Covid)
becoming fully amortised and the termination of
the Group’s customer invoice discounting facility.
Finance income also improved due to increased
interest rates on deposited funds.
Tax
The tax charge for the year for continuing
operations was £14.4m (FY22: £21.0m),
comprising a tax charge on operating profit
before other items of £22.6m (FY22: £19.0m)
and a tax credit for other items of £8.2m
(FY22: tax charge of £2.0m). The tax charge on
continuing operations represents an effective tax
rate of 13.6% (FY22: 40.2%), which includes an
effective tax rate before other items of 15.0%
(FY22: 12.9% ).
The effective tax rate before other items for
FY23 includes the benefit of a tax credit of £5.3m
which primarily results from the recognition, in
accordance with the Group’s accounting policy,
of deferred tax assets related to losses acquired
with the Interserve business. Excluding the impact
of this tax credit, the effective tax rate before
other items would be 18.5%.
70
Mitie Group plc
Annual Report and Accounts 2023
Finance review
continued
The lower effective tax rate before other items
for FY22 reflected the increase in the rate of UK
corporation tax from 19% to 25%, with effect
from 1 April 2023, which was substantively
enacted during FY22. This resulted in a £9.0m
tax credit for FY22 related to the revaluation of
deferred tax assets, which reduced the effective
tax rate before other items by c.6ppt.
The tax credit for other items for FY23 of £8.2m
represents an effective tax rate of 18.2%, which
is slightly lower than the standard tax rate due to
the non-tax deductible nature of certain other
items charges. The equivalent charge for FY22 of
£2.0m comprised a tax credit of £6.1m related
to other items before tax, and a tax charge of
£8.1m in respect of the revaluation of deferred
tax liabilities related to acquired intangible assets,
resulting from the UK corporation tax rate
change enacted in FY22.
Mitie is a significant contributor of revenues to
the UK Exchequer, paying £850.1m of taxes in
the year (FY22: £864.3m). Of this total, £158.5m
(FY22: £148.0m) relates to taxes borne by Mitie
(principally UK corporation tax and employer’s
National Insurance contributions) and £691.6m
(FY22: £716.3m) relates to taxes collected by
Mitie on behalf of the UK Exchequer (principally
VAT, income tax under PAYE and employees’
National Insurance contributions).
The Group paid corporation tax of £19.8m
in the year (FY22: £16.2m), of which £14.0m
(FY22: £14.1m) was paid in the UK and £5.8m
(FY22: £2.1m) overseas.
Joint ventures and associates
Operating profit for FY23 includes Mitie’s share
of the results of joint ventures and associates
that were acquired as part of the Interserve
transaction, net of tax, of £8.3m (FY22: £4.2m).
Earnings per share
Basic earnings per share before other items
from continuing operations increased to 9.5p
(FY22: 9.2p). This is as a result of the lower net
finance costs and reduced number of shares in
issue following the share buyback programme,
partially offset by the higher effective tax rate.
Basic earnings per share from continuing
operations was 6.8p (FY22: 2.2p), with the
significant improvement in FY23 reflecting the
factors outlined above, and the lower level of
other items in FY23.
Return on invested capital (ROIC)
Continuing operations,
£m unless otherwise specified FY23 FY22
Operating profit before
other items 162.1 166.9
Tax
1
(24.3) (21.5)
Operating profit before
other items after tax 137.8 145.4
Invested capital 543.1 486.6
ROIC % 25.4% 29.9%
1. Tax charge has been calculated at the effective tax rate
for the year on pre-tax profits before other items for
continuing operations of 15.0% (FY22: 12.9%)
ROIC (before other items, on continuing
operations) has decreased to 25.4% in FY23
(FY22: 29.9%), due to a combination of the
completion of the short term, higher margin
Covid work, the higher effective tax rate and
increased invested capital. The higher invested
capital relates to the investment in businesses
acquired in FY23, and the closure of the invoice
discounting facility.
Balance sheet
£m FY23 FY22
Goodwill and intangible assets 564.9 560.2
Property, plant and
equipment 156.9 143.9
Interests in joint ventures
and associates 8.8 11.9
Working capital balances (179.2) (239.2)
Provisions (111.4) (117.0)
Net (debt)/cash (44.1) 26.7
Net retirement
benefit liabilities (0.2) (12.2)
Deferred tax 20.4 11.1
Other net assets 5.6 40.4
Total net assets 421.7 425.8
The Group’s reported net assets of £421.7m
at 31March 2023 were broadly unchanged
compared with 31 March 2022.
Net debt increased to £44.1m (FY22: £26.7m
of net cash), as a result of the planned capital
allocation actions and working capital movements,
including the impact of the decision to terminate
the invoice discounting facility which increased
receivables by £45m, both of which are discussed
further below (under Cash flow and net debt).
Goodwill and intangible assets increased by
£4.7m as a result of acquisitions during the year
and investments in software, with the increase
partially offset by the amortisation of intangible
assets. Property, plant and equipment increased
by £13.0m due to the continued expansion of
the fleet of leased electric vehicles, as part
of the programme to achieve the Group’s
decarbonisation goals. Net retirement benefit
liabilities benefited from the increase in discount
rates related to movements in corporate bond
yields, which is explained further below.
The net deferred tax asset balance has increased,
primarily due to the recognition of deferred
tax assets related to losses acquired with the
Interserve business. Other net assets have reduced
as a result of the receipt of £6.0m in May 2022
in respect of the expert’s determination on the
Interserve acquisition completion accounts, and by
£31.1m as a result of movements of restricted cash,
and the remittance of cash held on trust for the
invoice discounting facility provider.
Change in accounting policy
During FY23, Mitie has adopted the amendment
to IAS 37 Onerous Contracts – Cost of Fulfilling a
Contract on 1 April 2022. The amendment clarifies
that for the purposes of an onerous contract
assessment, costs to fulfil a contract comprise both
direct costs that are specific to the contract but
also an allocation of shared direct costs that relate
to fulfilling the contract. This has resulted in a
change in accounting policy for onerous contract
assessments in FY23, as the Group had previously
(in common with many other companies) included
only direct costs that were specific to the contract
when determining whether a contract was
onerous. The change in accounting policy brings
the Group policy in line with the amendment
to IAS 37.
As a result of the revised accounting policy, certain
direct supervision and management costs have
been included in determining the costs of fulfilling a
contract, which has resulted in the recognition of
additional provisions of £1.1m for onerous costs
that existed at the start of the reporting period
(see Note 21 to the consolidated financial
statements). Under the amendment to IAS 37,
the changes apply prospectively and therefore the
Group has not restated comparative information.
Strategic report Governance Financial statements
71
Mitie Group plc
Annual Report and Accounts 2023
Provisions
Provisions at 31 March 2023 of £111.4m (FY22:
£117.0m) largely comprise contract specific costs of
£49.3m (FY22: £56.3m), the insurance reserve of
£26.2m (FY22: £26.0m), and pension provisions
of £21.7m (FY22: £23.7m), which mainly relate to
Section 75 pension liabilities. See Note 21 to the
consolidated financial statements for further details
on provisions.
Provisions have reduced by £5.6m in the year,
largely reflecting the utilisation of contract
specific provisions.
Retirement benefit schemes
Net retirement benefit liabilities have reduced to
£0.2m at 31 March 2023 (FY22: £12.2m), principally
due to an increase in discount rates related to
movements in corporate bond yields, combined
with Mitie’s contributions. This is partially offset by
an adverse performance of plan assets, driven by
the downturn in financial markets.
The net liabilities at 31 March 2023 include a net
accounting surplus of £2.4m (FY22: £1.6m) for
the main Group scheme, which now includes a
separate section for the main scheme acquired
with the Interserve business. There is also an
accounting surplus related to a joint venture
acquired with Interserve, Mitie’s £1.5m (FY22:
£3.8m) share of which is reported within
interest in joint ventures and associates on
the balance sheet.
The latest funding valuation of the Mitie Group
defined benefit scheme, as at 31 March 2020,
indicated an actuarial deficit of £92.1m. The Group
has agreed a deficit recovery plan with the trustees
totalling £93m over seven years, of which £35m
had been paid to 31 March 2023, including £14m
paid during FY23. An initial funding valuation as at
31 December 2020 for the main scheme acquired
with Interserve indicated an actuarial deficit
of £1.6m.
The next triennial valuation for the main Mitie
scheme will take place during FY24.
Cash flow and net debt
£m FY23 FY22
Operating profit before other
items (continuing operations) 162.1 166.9
Add back: depreciation,
amortisation and impairment 52.4 51.6
EBITDA before other items
(continuing operations) 214.5 218.5
Other movements
(including other items) (27.7) (14.6)
Operating cash flows
before movements in
working capital 186.8 203.9
Working capital movements
1
(38.8) 41.2
Capex and capital element of
lease payments (59.6) (69.1)
Interest payments (11.9) (17.2)
Tax payments (19.8) (16.2)
Dividends from joint ventures 9.0 4.0
Free cash inflow 65.7 146.6
Share buybacks (50.7) –
Market purchase of own
shares for the EBT (37.7) (13.8)
Acquisitions and disposals
2
(20.2) 5.0
Dividends paid (28.9) (5.7)
Lease liabilities and other 1.0 (18.7)
(Increase)/decrease in net
debt during the year (70.8) 113.4
Closing net (debt)/cash (44.1) 26.7
Average daily net (debt) (84.3) (24.7)
Leverage
3
(average daily
net debt/EBITDA before
other items) 0.4x 0.1x
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. Includes £3.6m of debt acquired with acquisitions
(FY22: £nil)
3. Leverage is calculated on a 12-month rolling basis, and
uses post-IFRS 16 net debt
The Group generated a free cash inflow of
£65.7m for FY23, which was a decrease of £80.9m
compared with FY22. Within this cash inflow
there was a cash outflow from working capital of
£38.8m, which was largely a result of the decision
to terminate the invoice discounting facility,
investments required to support the growth of
the projects businesses, and the completion of the
Covid contracts, which were on more favourable
payment terms than the contracts that have
replaced them.
Other movements of £27.7m included a cash
outflow from other items of £23.7m, which is
predominantly made up of the costs of completing
Project Forté, and the costs to achieve our margin
enhancement initiatives. Capex and the capital
element of lease payments of £59.6m were
£9.5m lower than FY22, driven by capex which
reduced following the completion of the Interserve
integration and Forté projects in FY23. Net
interest payments reduced by £5.3m as a result of
the refinancing actions implemented in FY22 and
FY23, whereas tax payments increased by £3.6m
largely due to overseas tax payments related to the
Interserve pre-acquisition period.
The planned £50m share buyback programme
was successfully completed in FY23, resulting in
the purchase and cancellation of 69m shares during
the year. A new £50m share buyback programme
was announced on 18 April 2023, and an initial
£25m tranche has already been launched, from
which 15m of the shares purchased will be held
in treasury and used towards the vesting of the
2020 SAYE share options. The remainder will
be cancelled.
In addition, £38m has been invested in the
acquisition of 50m of Mitie’s own shares for the
Employee Benefit Trust (EBT), to fulfil future
vesting of all employee share incentives schemes,
including 4m shares for the Winter Support
package. The decision to purchase shares for all
employee incentive schemes was made by the
Board in order to eliminate the otherwise dilutive
effect to shareholders of issuing new shares to fulfil
the schemes. The 50m shares purchased included
a ‘catch up’ for schemes that have already been
running for two or three years. We expect share
purchases through the EBT to reduce significantly
to c.15m shares in FY24 and FY25, as specific
incentives put in place in respect of the Interserve
acquisition mature.
The acquisitions of P2ML, 8point8 and Custom
Solar in FY23 resulted in an increase in net debt of
£20.2m, comprising the proceeds paid (of £18.6m)
adjusted for the cash and debt acquired with these
businesses (of £1.6m net debt).
The final FY22 dividend of £19.5m and interim
FY23 dividend of £9.4m resulted in a cash outflow
of £28.9m in FY23. The £5.7m of dividends paid
in FY22 is much lower than in FY23, as it included
only the FY22 interim dividend, and no final
dividend payment from FY21, because dividend
payments were only resumed in FY22 following
the Covid pandemic.
72
Mitie Group plc
Annual Report and Accounts 2023
Finance review
continued
Lease liabilities and other cash flows reduced by
£19.7m during the year, with the key drivers being
the receipt of £6.0m in May 2022 in respect of
the expert’s determination on the Interserve
acquisition completion accounts, and an £8.2m
reduction in the value of new leases entered into
during the year, compared with FY22 which
included a number of significant new and renewed
property leases.
Net debt
Average daily net debt of £84.3m for FY23 was
£60m higher than in FY22, due mainly to the
planned capital allocation activities, including
the share buyback programme (£50m), the
termination of the Group’s invoice discounting
facility (£45m), share purchases for the EBT (£38m),
dividends paid (£29m), and in-year acquisitions
(£20m). This resulted in a leverage ratio (average
daily net debt post IFRS 16 / EBITDA before other
items on continuing operations) of 0.4x for FY23
(F Y22: 0.1x).
The Group reported closing net debt of £44.1m as
at 31 March 2023 (FY22: net cash of £26.7m), again
reflecting the planned capital allocation activities
outlined above.
Total Financial Obligations (TFO)
£m FY23 FY22
Net (cash)/debt 44.1 (26.7)
Customer invoice discounting – 44.5
Net retirement benefit
liabilities 0.2 12.2
Total Financial Obligations
(TFO) 44.3 30.0
TFO at 31 March 2023 increased due to the net
debt movements outlined above (other than the
termination of the invoice discounting facility, which
has a nil net effect on TFO), partially offset by a
reduction in net retirement benefit liabilities.
Liquidity and covenants
As at 31 March 2023, the Group had £300.0m
of committed funding arrangements. These
comprised a £150.0m RCF, for which a one year
extension was signed in September 2022,
extending the maturity date to October 2026,
and £150.0m of USPP notes. In December 2022,
£121.5m of USPP notes matured and were
replaced by £120.0m of new notes, issued on
more favourable terms, with 8-12 year maturities.
The remaining £30.0m of USPP notes are due to
mature in December 2024.
On 29 July 2022, 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.
As at 31 March 2023, the Group was operating
well within these ratios at <0x covenant leverage
and 28.1x interest cover. A reconciliation of the
calculations is set out in the table below:
£m FY23 FY22
Operating profit before
other items
1
162.1 169.8
Add: depreciation,
amortisation and
impairment
1
52.4 51.8
Headline EBITDA
1
214.5 221.6
Add: covenant
adjustments
2
18.2 19.9
Leases adjustment
3
(38.6) (36.3)
Consolidated EBITDA (a) 194.1 205.2
Full-year effect of
acquisitions and disposals 0.5 (2.0)
Adjusted consolidated
EBITDA (b) 194.6 203.2
Net finance costs
1
11.5 19.7
Less: covenant
adjustments (0.4) (3.0)
Leases adjustment
4
(4.2) (4.0)
Consolidated net
finance costs (c) 6.9 12.7
Interest cover
(ratio of (a) to (c)) 28.1x 16.2x
Net debt/(cash) 44.1 (26.7)
Impact of hedge
accounting and
upfront fees 1.8 1.5
Leases adjustment
5
(129.4) (122.5)
Consolidated total
net (cash) (d) (83.5) (147.7)
Covenant leverage
(ratio of (d) to (b)) < 0x < 0x
1. Continuing and discontinued operations
2. Covenant adjustments to EBITDA relate to share-based
payments charges, and pension administration expenses
and past service costs
3. Leases adjustment for EBITDA relates to depreciation
charge for leased assets and interest charge for
lease liabilities
4. Leases adjustment for net finance costs relates to
interest charge for lease liabilities
5. Leases adjustment for net cash relates to lease liabilities
Strategic report Governance Financial statements
73
Mitie Group plc
Annual Report and Accounts 2023
Principal risks and uncertainties
Effective risk management
Our risk management approach
During FY23, Mitie’s approach to risk
management has continued to advance. The
most notable improvements to our enterprise
risk management (ERM) framework during this
reporting period were:
• The roll-out of two new eLearning training
packages designed by our in-house Learning
and Development and Risk teams. The courses
relate to the management of risk and business
resilience at Mitie and set the standard for
what is expected of all colleagues
• Securing ISO 22301 business continuity
certification, demonstrating that Mitie has
a stringent framework in place to prevent,
prepare for, respond to and recover from
disruptive events, both planned and
unexpected (more information is available
on page 76)
• The adoption and integration of our
automated risk management platform, Risk
Safe, across the Group. As at 31 March 2023,
we had 3.5k risks captured, across 450+
registers overseen by c.1k users. This captures
all risk information, including our climate-
related risks. During FY23, we received two
awards for our risk management software:
Risk Management App of the Year and Risk
Management Innovation of the Year.
• The introduction of our new annual risk
maturity assessment, which will be used to
monitor how Mitie is performing against
best practice.
Mitie’s risk management process is simple and
aligned with the Group’s operating model. Each
business area is responsible for the continual
management of existing and emerging risks, both
in the context of threats and opportunities.
The following points are pertinent to the
compilation of the Group’s principal risks
and uncertainties:
• The Board is responsible for clearly defining
the level of risk exposure Mitie is willing to
take, monitoring the amount of risk being
taken and ensuring that the activities
undertaken to achieve its strategic objectives
are commensurate with this appetite
• All principal risks have a level of appetite set,
which helps determine the actions and
resources required to mitigate them
• Mitie’s risk management structure is designed
to ensure a consistent approach to the
identification, assessment, monitoring and
effective mitigation of risks across the business.
All risks are reported against a set of criteria,
which consider the potential likelihood and
consequence should a risk be realised
• Each business unit, function, project and
account maintains a detailed risk register via
Risk Safe, which includes both risk controls
and mitigation measures, and is approved by
respective leadership teams
• Mitie has a rigorous risk treatment mechanism
in place to facilitate the correct management of
risks where a residual risk score is identified as
being over the stipulated thresholds in terms of
either tolerance and/or risk appetite
• Risk registers are automated and subject to
continual management reviews
• The Insurance team plays a pivotal role in
assessing key exposures and ensuring
appropriate risk transfer is in place for
insurable risks
• Risk management is approached in a proactive
manner making full use of Mitie’s Intelligence
Hub (iHub), which assists by assessing threats
and identifying potential issues
• Mitie’s internal and external environments
are continuously scanned and monitored to
ensure that any new or emerging risks are
identified in a timely manner and responded
to appropriately
• Mitie actively encourages and facilitates a
learning culture in respect of risk management
to ensure that the Group constantly improves
its ERM framework, remains resilient and
adapts to the continually evolving external
environment
• The Group operates in accordance with
ISO31000 and is certified to ISO22301
• Principal risks are subject to a thorough
review bi-annually (for the half-year and
full-year financial reporting), with quarterly
updates feeding into the Risk Committee
for consideration. The Board and Audit
Committee are actively engaged throughout
the process and provide challenge. All outputs
from this review are signed off by the Board.
The principal risks are shown on pages 77
to 82
• In assessing Mitie’s long-term viability,
consideration is given to the emerging and
principal risks facing the Group. The viability
statement is found on page84
The last year has witnessed more
investment go into the development
of our risk management
framework, to ensure that we
adopt a consistent approach to
managing risks across the Group,
enhance decision-making and
deliver our business objectives.
Peter Dickinson
Chief of Staff and General Counsel
Mitie’s Chief Risk Officer and
Risk Committee Chair
74
Mitie Group plc
Annual Report and Accounts 2023
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
Principal risks and uncertainties
continued
Our risk management framework
Strategic report Governance Financial statements
75
Mitie Group plc
Annual Report and Accounts 2023
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
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
Changes to our risk profile
In FY23, 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, or changed
circumstances have triggered the risk; 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, one new principal
risk has been introduced, namely change
management.
Changes to the existing principal risks were
captured as follows:
Principal risk Movement in risk exposure
• Economic and political uncertainties Increased net risk exposure owing to external challenges, such as ongoing threats posed by current
geopolitical affairs, escalating cost-of-living crisis and changing UK political landscape.
• Cyber security and data management Increased net risk exposure owing to ongoing threats posed by current geopolitical affairs, exploitation
of cost-of-living crisis and increased levels of financial hardship.
• Regulatory Increased net risk exposure owing to uncertainties concerning several known legislative changes.
• Business resilience Increased net risk exposure owing to external challenges, such as ongoing threats posed by current
geopolitical affairs, which is triggering shortages and impacting markets and intensifying the cost-of-
living crisis.
• Employees Increased net risk exposure owing to external challenges, such as reduced labour market, which has
triggered shortages of materials, impacted markets and intensified the cost-of-living crisis.
• Third-party management Increased net risk exposure owing to the same external challenges facing the Group also impacting supply
chain, potentially impacting access to goods and services.
76
Mitie Group plc
Annual Report and Accounts 2023
Principal risks and uncertainties
continued
Emerging risks
In addition to reviewing the risks that Mitie
currently faces, emerging risks in both our internal
and external environments are considered to
ensure the Group remains operationally resilient
and future strategic planning is not compromised.
Current emerging risks being monitored include:
• The impact of the next general election,
which must be triggered by early 2025.
• The evolving complexity and sophistication
of cyber-related attacks and ransomware
that could directly impact Mitie, customers or
third parties involved in Mitie operations.
• The continued potential for an insolvency
wave and the impact this could have on
customers and third parties involved in
Mitie operations.
• The impact of regulatory changes, in
particular those relating to UK corporate
governance and employment law.
Heatmap
The Group achieved ISO 22301 (business
continuity management systems) certification
during the reporting period. In July, Mitie was
subject to a pre-assessment, followed by a stage
one assessment in August, which was closely
followed by extensive stage two assessments.
The following Mitie business areas were audited
as part of the stage two process:
1. Central Government & Defence
2. Intelligence Hub
3. Care & Custody Dungavel IRC
4. MiTec
5. Heathrow account
6. Vodafone account
7. Procurement and Supply Chain
8. Mitie Waste
9. Dudley Hospital account
10. Telecommunications HQ
11. Cornerstone account
12. Technical Services Operations Centre
13. Internal Audit
14. Communications
15 . Q ua lity
16. Mitie Executive
17. Group Risk
18. Mitie’s estate
As part of this process, over 1,000 pieces of
evidence were collected and assessed across
the Group, incorporating a blended approach
(remote and site-based audits).
Further testing of business continuity plans and
external surveillance audits are scheduled for
FY24 to ensure colleagues continue to operate
and deliver specialist capabilities, services and
support throughout and beyond unexpected
disruptive events.
ISO 22301
Enhancing our resilience
5
2
1
1
3
5
8 11
9
2
4
6
7
10
9
4
7
8
3
10
6
11
CriticalMajorSignificant
Impact
ModerateMinor
Economic and political
uncertainties
(Strategic risk)
Cyber security and
data management
(Technological risk)
Funding
(Financial risk)
Business resilience
(Strategic risk)
Growth through
acquisitions
(Strategic risk)
Employees
(People risk)
Climate change and
social impact
(Strategic risk)
Health, safety
and environment
(Regulatory risk)
Regulatory
(Regulatory risk)
Competitive advantage
(Strategic risk)
Third-party
management
(Operational risk)
Likelihood
Almost certainLikelyPossibleUnlikelyRare
12
Change management
(Operational risk)
12
Strategic report Governance Financial statements
77
Mitie Group plc
Annual Report and Accounts 2023
Capability
enablers
Capability
enablers
Margin
enhancement
Grow
Mitie
Grow
Mitie
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 via
Connected Workspace
• 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 – continued implementation of three key pillars
(eliminating carbon emissions from power and transport,
eradicating non-sustainable waste and enhancing inefficient
buildings to meet the highest environmental standards)
• 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
• 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:
• Development of action plan for addressing the identified risks and
managing next steps in relation to our FY23 climate scenarios analysis
(see pages 52 and 53)
• Stress test transition-related climate risks
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)
Generate
cash
Responsibility:
Mitie Group
Executive
Risk appetite:
Cautious
Change in year:
Increased
Responsibility:
Chief of Staff and
General Counsel
(Lead) supported
by Mitie Group
Executive
Risk appetite:
Cautious
Change in year:
No change
Strategic pillars that would be impacted if risk was to become
an issue:
Strategic pillars that would be impacted if risk was to become
an issue:
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Annual Report and Accounts 2023
Principal risks and uncertainties
continued
Capability
enablers
Capability
enablers
Grow
Mitie
Grow
Mitie
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
• 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:
• Continued improvements related to ISO 27001 accreditation.
• Roll-out of Windows 11
• Attack Surface Reduction rule expansion and enhancement of
response to insider threat
Controls and mitigation:
• A comprehensive Quality, Health, Safety and Environment (QHSE)
strategy in place and under continual review for effectiveness
• Major cultural HS&E 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 HS&E 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 HS&E reviews conducted at Group and business unit level
• Clear and standardised KPIs to monitor progress and improvements
• Targeted QHSE procedural audit programme
• Themes and root causes monitored from the results of audits to
target specific actions, including training
• QHSE 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
• Covid risk assessment and technical compliance processes in place
and regularly reviewed
• UVC disinfection system and thermal imaging in place to mitigate
against spread of Covid
• 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 QHSE culture
• Ongoing review of QHSE team, ensuring maintenance of
competencies and correct provision of support and guidance
across the Group
Future plans:
• Ongoing review of any dependencies on supply chain to be
undertaken with a focus on driving improvements
• Roll-out of risk assessment enhancements using a new
technology platform
• Continued roll-out of ‘WeCare’ campaign
• Ongoing review of internal and external landscape
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:
Increase in year
owing to unsettled
external landscape
Responsibility:
Chief of Staff and
General Counsel
(Lead) supported
by Mitie Group
Executive
Risk appetite:
Averse
Change in year:
No change
Strategic pillars that would be impacted if risk was to become
an issue:
Strategic pillars that would be impacted if risk was to become
an issue:
Strategic report Governance Financial statements
79
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Annual Report and Accounts 2023
Capability
enablers
Margin
enhancement
Grow
Mitie
Grow
Mitie
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 net debt
Future plans:
• Continue to work with a range of financial institutions to ensure that
affordable finance sources can be assessed
• Ongoing review of market conditions
Controls and mitigation:
• Specialist legal and QHSE 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 QHSE
• Financial governance and controls in place
• Commercial governance and controls in place
• Establishment of Internal Control Declaration framework ongoing
to align with potential UK legislation requirements
Future plans:
• Development of opportunities relating to Martyn’s law (new
protect legislation)
• Ongoing review of employment legislation, with specific focus on
TUPE requirements
• Ongoing review of UK SOx (corporate governance) requirements
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:
Decrease in year
owing to more
favourable interest
rates being secured
as part of the most
recent refinancings
Responsibility:
Chief of Staff and
General Counsel
(Lead) supported
by Mitie Group
Executive
Risk appetite:
Averse
Change in year:
Increase in year
owing to unsettled
external landscape
Strategic pillars that would be impacted if risk was to become
an issue:
Strategic pillars that would be impacted if risk was to become
an issue:
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Annual Report and Accounts 2023
Principal risks and uncertainties
continued
Capability
enablers
Margin
enhancement
Margin
enhancement
Grow
Mitie
Grow
Mitie
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
• Chief Government & Strategy Officer coordinating all interfaces with
the Cabinet Office
• 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 Board
• Close monitoring of supply chain to ensure continuity of
critical supplies
• Internal and external compliance audits
• Certified to ISO 22301:2019 and working towards certificate of
conformance for ISO 31000:2018
• 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
• Colleagues can work from home without loss of any business-critical
systems/applications
• 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:
• Completion of ISO 22301 surveillance audits
• Ongoing testing of business continuity and disaster recovery plans
• Completion of cyber security enhancements and thorough review
of outputs from climate scenarios analysis
Description and impact:
A failure to maintain competitive advantage resulting in a loss in key
customers, an over-reliance on a particular sector or a failure to
produce bids which are financially viable could have a significant impact
on Mitie’s financial health 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)
Generate
cash
Generate
cash
Responsibility:
Mitie Group
Executive
Risk appetite:
Eager
Change in year:
No change
Responsibility:
Mitie Group
Executive
Risk appetite:
Cautious
Change in year:
Increase in year
owing to unsettled
external landscape
Strategic pillars that would be impacted if risk was to become
an issue:
Strategic pillars that would be impacted if risk was to become
an issue:
Strategic report Governance Financial statements
81
Mitie Group plc
Annual Report and Accounts 2023
Capability
enablers
Capability
enablers
Margin
enhancement
Grow
Mitie
Grow
Mitie
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
• Improved 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 Winter Support package, 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 Supply
Management Framework
• Dedicated Procurement and Commercial teams
• ‘Mitie First’ approach adopted
• Project Forté driven improvements under Supply Chain
Management workstream, including enhanced supplier audits,
improved invoicing capabilities, master service agreements and
job automation
• Rigorous onboarding framework integrated into business utilising the
digital supplier platform (DSP)
• Defined SLAs and KPIs
• Ongoing spending review
• Dedicated risk management and assurance procedures (including
targeted QHSE assurance programme and internal audit) to ensure
internal controls are operating effectively
• Ongoing review of third-party business continuity arrangements with
regular reporting to the Risk team
• 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 roll-out and enhancement of processes relating to
the DSP
• Ongoing supplier review focused on QHSE 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:
Failure to successfully manage strategic third-party relationships or a
catastrophic event and/or 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 reputation 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:
Increase in year
owing to unsettled
external landscape
Responsibility:
Chief Procurement
Officer (Lead)
supported by Mitie
Group Executive
Risk appetite:
Cautious
Change in year:
Increase in year
owing to unsettled
external landscape
Strategic pillars that would be impacted if risk was to become
an issue:
Strategic pillars that would be impacted if risk was to become
an issue:
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Mitie Group plc
Annual Report and Accounts 2023
Principal risks and uncertainties
continued
Capability
enablers
Margin
enhancement
Grow
Mitie
11
Controls and mitigation:
• 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 become
an issue:
Capability
enablers
Margin
enhancement
Grow
Mitie
12
Controls and mitigation:
• Executive sponsorship
• Deliverables agreed in advance by the 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:
New
Strategic pillars that would be impacted if risk was to become
an issue:
Strategic report Governance Financial statements
83
Mitie Group plc
Annual Report and Accounts 2023
Non-financial 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 37 to 59, Mitie has 13 industry-leading 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 met or exceeded 11 of its
social value targets for FY23.
Mitie’s leadership position continues to be maintained across ESG as shown in Mitie’s ratings from major ESG agencies during FY23.
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 30 and 31 and our principal risks on pages 73 to 82.
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.
45% of Mitie’s fleet has
been transferred to
electric vehicles.
Mitie has a validated
near- and long-term
science-based target.
Chief Executive’s strategic review
pages 12 to 17
Environment pages 43 to 57
TCFD pages 47 to 57
ESG Committee report pages
131 and 132
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 and competitiveness
is built on its ability to embrace diversity – and we believe that
everyone should feel valued for their contributions.
Health, safety and wellbeing policy: We are committed to delivering
great service to our customers in a manner which safeguards the
health, safety and wellbeing of our employees, contractors, client staff
and members of the public. This policy statement sets out Mitie’s
commitment to achieving the highest health, safety and wellbeing
standards and performance across the organisation.
Employee Handbook: Mitie’s Employee Handbook sets out Mitie’s
Vision and Values and applies to all colleagues.
Employee engagement
is at 57%.
Proud to be
recognised as one of
the UK’s most inclusive
employers and a Top
50 UK Employer.
Chief Executive’s strategic review
pages 12 to 17
Stakeholder engagement pages
32 to 34
People pages 38 to 42
Principal risk 4: Health, safety
and environment.
Principal risk 9: Employees.
Social matters Sustainability 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 Foundation
of £0.2m.
Chief Executive’s strategic review
pages 12 to 17
Community page 58
Principal risk 2: Climate change
and social impact.
Human rights Mitie’s Equality, Diversity and Inclusion Policy sets the base for
what our employees deserve and what it must do to uphold its
culture. Mitie’s Employee Handbook and Ethics 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
32 to 34
Principal risk 6: Regulatory
Principal risk 9: Employees.
Principal risk 10: Third-party
management.
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 38 to 42
Culture at Mitie pages 99 to 102
Principal risk 6: Regulatory.
Principal risk 10: Third-party
management.
Non-financial KPIs Details of Mitie’s non-financial KPIs can be found on pages 22 and 23.
1. Policies, statements and codes are available at www.mitie.com.
84
Mitie Group plc
Annual Report and Accounts 2023
Viability statement
Scenario Principal risks
1 Demand/operational shock
Assumptions
Revenue: 5% year-on-year revenue reduction across assessment
period
Costs: £40m one-off cost in FY24 (or equivalent amount of savings
not being realised)
3, 4, 6, 7, 8
2 Inflation/employee/supply chain disruption
Assumptions
Margin: 2% gross margin erosion across assessment period
1, 2, 9, 10, 12
3 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 FY23 Strategic report
(pages 1 to 84).
The key factors affecting the Group’s prospects
are:
• Mitie is the leading UK facilities management
business with c.10% 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 our 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 111 to 114 , are considered.
Base case projections for viability purposes have
been made using prudent assumptions:
• Modest revenue and margin growth beyond
FY23;
• Working capital movements expected to be
broadly neutral by FY25;
• Future dividends in line with current policy;
• Share buyback programme to be undertaken
in FY24;
• Settlement of existing provisions according to
management’s best estimates together with
funding costs for ongoing transformation
activities; and
• No changes to 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 are a £150m revolving credit facility
maturing in October 2026 (following the exercise
of an option to extend for a further year from
October 2025 which was approved by the
lenders in September 2022), of which £8.4m was
drawn as at 31 March 2023, and £150.0m 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.
Of the USPP notes, £120.0m were issued in
December 2022 under a delayed funding
agreement to avoid any overlap with the £121.5m
(being the repayment amount after taking
account of the cross-currency swaps) of notes
that matured in the same month. The new notes
are split equally between 8, 10 and 12-year
maturities, and were issued with an average
coupon of 2.94%, significantly below the coupon
of the maturing notes. The base case scenario
assumes that the remaining £30m of USPP notes,
which are due to mature in December 2024, will
not be replaced.
The Group closed its customer invoice
discounting facility during FY23, resulting in an
increase in Group debt that has been included in
the base case scenario.
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 a reverse stress test scenario to
understand the reduction required to cause
a breach of financial covenants.
In each of scenarios 1 and 2, the Group was
able to continue operating within the financial
covenants and liquidity headroom of its existing
committed facilities. The conclusion from the
reverse stress test is that the likelihood of the
reverse stress scenarios arising was remote and
therefore does 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 with the base
case scenario. Revenue is considered to be
the key risk, as this is less within the control of
management. Revenue would need to decline
by approximately 38% (assuming the gross
margin was maintained) in the year ending
31 March 2024 compared to the base case
scenario, 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 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 2026.
The Strategic report on pages 1 to 84 of
Mitie Group plc, company registration
number SC019230, was approved by the
Board of Directors and authorised for issue
on 7June 2023.
It was signed on its behalf by
Phil Bentley
Chief Executive Officer
Simon Kirkpatrick
Chief Financial Officer
Strategic report Governance Financial statements
85
Mitie Group plc
Annual Report and Accounts 2023
86 Chairman’s introduction to governance and the Board
87 Board of Directors
90 Board leadership and Company purpose
92 Division of responsibilities
94 Board activities: stakeholder engagement
96 Strategy and the Boardroom
99 Culture at Mitie
103 Board effectiveness and evaluation
104 Nomination Committee report
108 Audit Committee report
116 Directors’ remuneration report
131 Environment, Social & Governance (ESG) Committee report
133 Directors’ report
136 Statement of Directors’ responsibilities
Board leadership and Company purpose
A. Board effectiveness 103
B. Purpose, values, strategy and culture 90
C. Board decision-making 96
D. Engagement with stakeholders 94
E. Oversight of workplace policies and practices 99
Division of responsibilities
F. Role of the Chair 92
G. Independence and division of responsibilities 92
H. External commitments and conflicts of interest 106
I. Board resources 91
Composition, succession and evaluation
J. Appointments to the Board and succession planning 105
K. Board composition and length of tenure 105
L. Board and individual evaluation 103
Audit, risk and internal control
M. Financial reporting 108
External audit and internal audit – independence
and effectiveness 113
N. Fair, balanced and understandable assessment 115
O. Risk management and internal controls 111
Remuneration
P. Remuneration philosophy 116
Q. Remuneration policy 120
R. Annual Report on Remuneration 121
Governance
UK Corporate Governance Code and statement of compliance
Mitie applied all the principles and complied with all the relevant provisions of the 2018 UK Corporate Governance Code (the Code) during FY23, with
the exception of provision 38 (alignment of executive director pension contribution rates with those available to the workforce). Phil Bentley’s pension
benefit was fully aligned with the wider workforce from 1 January 2023, in line with the remuneration policy approved by shareholders in 2021 and as
required under provision 38 of the Code. Simon Kirkpatrick’s pension benefit was aligned with the wider workforce from the date of his appointment
to the Board on 1 April 2021. 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 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
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Chairman’s introduction to governance and the Board
• Approved the operating plan for the
financial year;
• Considered and approved the
implementation of a £50m buyback
programme;
• Considered feedback following the various
Employee Voice listening sessions held with
frontline colleagues as part of the Board’s
workforce engagement activities;
• Reviewed the capital allocation policy
for FY24;
• Considered and approved several important
strategic acquisitions and disposals, in line
with Mitie’s mergers and acquisitions (M&A)
strategy; and
• Balanced business performance and
shareholder interests.
The Board held one of its meetings during
the year at Mitie’s Birmingham T2 hub, which
included a tour of Mitie’s Cleaning & Hygiene
Centre of Excellence, followed by a Town Hall
meeting which provided Mitie colleagues with
an opportunity to meet all Board members and
ask questions.
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.
It was with great sadness that we announced
the death of Philippa Roe, Baroness Couttie,
in December 2022. Philippa joined the Board
of Mitie in November 2017 as a Non-
Executive Director and served on the Audit
and Nomination Committees. She made an
enormous contribution with her enthusiasm and
expertise and will be remembered for helping
to establish Mitie as the ESG leader in the
facilities management industry. Philippa was the
first Chair of the Board’s Environment, Social &
Governance (ESG) Committee, and was also a
Trustee and Chair of the Mitie Foundation. She
is greatly missed.
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 April 2022,
we welcomed Chet Patel and Salma Shah as
new Non-Executive Directors. Chet and Salma
both joined the Remuneration Committee,
with Chet also joining the Audit Committee.
Salma also joined the ESG Committee and was
subsequently appointed its Chair in January
2023. Chet and Salma joined the Nomination
Committee on 22 March 2023. Chet has
extensive experience in the B2B service
environment, promoting sales and growth
strategies, while Salma brings a wealth of public
sector 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 of Staff,
General Counsel & Company Secretary are set
out on pages 87 to 89.
Board evaluation
During the year, the Board performed an
internal evaluation of progress against the FY23
areas of focus and resulting actions, as well as
agreeing new areas of focus for FY24. Further
information on this evaluation can be found on
page 103.
Stakeholder engagement
Effective engagement enables the Board to
ensure that stakeholder interests are considered
when making strategic decisions. The Board
spent time in FY23 discussing its mechanisms
for engagement with key stakeholders, and the
issues that matter to those stakeholders. 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 FY23 and the
Board’s consideration of their impact on key
stakeholders. The Section 172(1) statement
can be found on pages 35 and 36.
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 have participated in
employee listening sessions during FY23, thereby
maintaining communication channels with the
workforce and ensuring that the views of those
on the front line are heard and understood. The
Non-Executive Directors provided the Board
with an update at each Board meeting so that
employee views are regularly voiced at Board
level and can be incorporated into the Board’s
decision-making process. Notes from workforce
engagement sessions are made available to the
Board via an electronic Board portal. Further
detail on Jennifer’s role and activities is included
on pages 100 to 102.
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
In what continues to be a challenging wider
macroeconomic landscape, the Board had a
busy year. Our focus during FY23 has been on
replacing revenue from the short-term Covid-
related contracts in the prior year, managing
inflationary pressures and continuing to reduce
Mitie’s cost base through innovation, margin
enhancing initiatives and the delivery of above-
expectation synergies from the integration of
Interserve Facilities Management (Interserve).
During FY23, the Board received updates on
financial and operational performance and:
Effective corporate
governance is fundamental
to the way the Board
encourages entrepreneurial
and responsible
management. This
supports the creation of
long-term, sustainable
value for shareholders and
stakeholders and Mitie’s
contribution to wider society.
Derek Mapp
Chairman
Strategic report Governance Financial statements
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Mitie Group plc
Annual Report and Accounts 2023
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 a Director of Woodall
Group Limited, a private company, and has
several other private business interests.
Past roles
Derek was Chair of Informa plc from March
2008 until his retirement on 3 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.
He continues to have business interests in
hospitality in Cornwall and Derbyshire.
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
88
Mitie Group plc
Annual Report and Accounts 2023
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
• Mentoring and coaching
• People strategy, organisation development
and change management
• Employee engagement and internal
communications
• Corporate social responsibility
• Executive remuneration and performance
management experience
• Executive team and Board effectiveness
• MA (Hons) in English and French from the
University of Oxford
Chet Patel
Independent Non-Executive Director
Date of appointment to the Board
1 April 2022
Other current appointments
With over 15 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 and business transformation
• An MBA from Henley Management College
• An honours degree in Economics & Politics
from University of Leeds
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 and a member of its Audit
Committee and Nominating and Corporate
Governance Committee. 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
AC
RC
NC
Strategic report Governance Financial statements
89
Mitie Group plc
Annual Report and Accounts 2023
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 and 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
Peter Dickinson
Chief of Staff, General Counsel
& Company Secretary
Date of appointment
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.
From 2015 until March 2017, Peter co-headed
Mayer Brown’s global Technology Transactions
practice. Between 2005 and 2015, Peter was
the head of Mayer Brown’s Corporate practice
in London and, in addition, between 2008 and
2015, Peter was the co-head of Mayer Brown’s
global Corporate 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 a degree in law 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. 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 18 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
RC NC
ESG
ESG
NC
AC
NC
RC
Audit Committee
member
Committee Chair
Nomination
Committee member
Remuneration
Committee member
ESG Committee
member
ESG
90
Mitie Group plc
Annual Report and Accounts 2023
Board leadership and Company purpose
Gender diversity
as at 31 March 2023
Board composition dashboard
Female 3
Male 5
Ethnicity diversity
as at 31 March 2023
British Asian 1
British Indian 1
White British 6
Director age range
as at 31 March 2023
31– 40 1
41–50 2
51– 60 1
61–70 3
71– 80 1
Director independence
as at 31 March 2023
Chairman 1
Executive 2
Independent 5
Director tenure
as at 31 March 2023
Less than 5 years 3
5–6 years 4
6–7 years 1
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 104 to 107.
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 108
t o 115.
Remuneration Committee
Purpose: to determine and
review the Company’s
remuneration policy and
monitor its implementation.
Read more on pages 116 to 130.
ESG Committee
Purpose: to provide oversight
and governance for all of Mitie’s
Environment, Social & Governance
initiatives, ensuring they are aligned
to Mitie’s Purpose, Promises and
Values. Read more on pages 131
and 132.
Members of the executive team, which includes senior members of management from each business unit and central Group functions, meet 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, Central Government & Defence, Communities, Technical Services and Specialist Services.
Strategic report Governance Financial statements
91
Mitie Group plc
Annual Report and Accounts 2023
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 and an informal
Bid Committee.
The Disclosure Committee is chaired by the
Chief Executive. Its members include the
Chairman, Chief Financial Officer, Chief of Staff,
General Counsel & 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 of Staff, General Counsel
& Company Secretary, Chief Government &
Strategy Officer and members of the sales
team. The Bid Committee met weekly during
FY23. Its purpose is to consider material bid
submissions and to determine whether such
bids meet the Group’s financial, commercial
and legal objectives.
Terms of Reference for the Company’s formal
Committees are available at www.mitie.com/
investors/corporate-governance.
Company purpose
As detailed on page 2 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 set out in more detail in
the Committee report.
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 January 2023.
The key responsibilities of the Board include:
• Promote 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
• Approve the Group’s long-term objectives
and commercial strategy
• Establish Mitie’s Purpose, Promises and Values
and satisfy itself that these are aligned to the
Group’s strategy
• Review performance in light of the Group’s
strategy, objectives, business plans, budgets
and ESG targets
• Approve the annual budget
• Approve the half-yearly financial report and
Annual Report
• Review the effectiveness of the Group’s risk
and control processes
• Review the Company’s capital allocation
policy and approve shareholder returns
through dividends and share buybacks
• Approve all material acquisitions and
disposals, and material contractual and
other operational matters
• Ensure adequate succession planning for the
Board and senior management
• Undertake a formal and rigorous review
annually of its own performance and that of
its Committees and individual Directors
• Make arrangements for dialogue with
shareholders, canvassing shareholder opinion
and engagement 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 prior 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.
To ensure that Board meeting materials are
of a consistent high standard, Board paper
guidelines and templates are issued to authors
of those materials.
An important element of Mitie’s culture is
that the Group operates as ‘One Mitie’ and
collaborates effectively across 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 of Staff, General Counsel &
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 of Staff, General
Counsel & Company Secretary and Company
Secretariat team are also available to the
Directors on an ad hoc basis as required. The
Chief of Staff, General Counsel & 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 2023
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:
• Lead and chair the Board, Nomination
Committee and shareholder general meetings
• Ensure overall effectiveness of the Board in all
aspects of its role
• Ensure regularity and frequency of Board
meetings
• Set Board agendas, taking into account the
issues and concerns of all Board members
• Ensure appropriate delegation of authority
from the Board to executive management
• Demonstrate objective judgement
• Promote a culture of openness and debate
• Ensure that Directors receive accurate, timely
and clear information
• Manage 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
• Facilitate the effective contribution of
Non-Executive Directors and encourage
active engagement by all members of
the Board
• Ensure constructive relations between the
Executive Directors and Non-Executive
Directors
• Hold meetings with the Non-Executive
Directors without the Executive Directors
present
• Ensure that new Directors participate in a full,
formal and tailored induction programme
• Ensure that the performance of the Board,
its Committees and individual Directors is
evaluated at least once a year and act on the
results of such evaluation
• Maintain sufficient contact with major
shareholders to understand their issues
and concerns
• Ensure that the views of shareholders are
communicated to the Board
Senior Independent Director
In his role as Senior Independent Director,
Roger Yates’ responsibilities include:
• Act as a sounding board for the Chairman
• Serve as an intermediary for other Directors
when necessary
• Conduct the Chairman’s annual performance
evaluation (without the Chairman present)
• Lead the appointment process for any
new Chairman
• Act as chairman of the Board in the absence
of the Chairman
• Be 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:
• Hold a primary role in appointing and
removing Executive Directors when
necessary
• Scrutinise and hold to account the
performance of management and individual
Executive Directors against agreed
performance objectives
• Exercise independent skill and judgement
• Constructively challenge proposals based on
relevant individual experience, knowledge
and skills
• Contribute to the formulation and
development of strategy and offer
specialist advice
• Monitor corporate reporting to ensure
integrity of financial information
• Oversee the Group’s principal risks and
assurance in place relating to those risks,
including internal audit programmes
• Play a key role in determining the
remuneration policy for the Chairman,
Executive Directors, Chief of Staff, General
Counsel & Company Secretary and the senior
executive team
• Hold a primary role in Board succession
planning
1. Baroness Couttie died on 12 December 2022.
Biographies of the current Directors can be
found on pages 87 to 89.
Board composition
Chairman
Derek Mapp
Executive Directors
Phil Bentley
Simon Kirkpatrick
Senior Independent Director
Roger Yates
Independent Non-Executive Directors
Baroness Couttie
1
Jennifer Duvalier
Chet Patel
Mary Reilly
Salma Shah
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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
• Develop Group objectives and strategy,
having regard to the Group’s responsibilities
to its shareholders, customers, employees
and other stakeholders
• Successful achievement of objectives and
execution of strategy following presentation
to, and approval by, the Board
• Recommend to the Board an annual budget
and long-term business plan and ensure their
achievement following Board approval
• Optimise the use and adequacy of the
Group’s resources
• Manage the Group’s risk profile, including the
health and safety performance of the business
• Make 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:
• Lead, direct and oversee all aspects of the
finance and accounting functions of the Group
• Evaluate, approve and advise 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
• Manage relationships with the external
auditor and key financial institutions
and advisors
• Ensure effective internal controls are in place
and compliance with appropriate accounting
regulations for financial, regulatory and
tax reporting
• Lead, direct and oversee the Group’s Finance,
Treasury, Tax and Internal Audit functions
Chief of Staff, General Counsel &
Company Secretary
In his role as Chief of Staff, General Counsel &
Company Secretary, Peter Dickinson’s
responsibilities include:
• Advise 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
• Ensure compliance with corporate legislation
and the Company’s Articles of Association
• Support the Board in ensuring it has the
policies, processes, information, time and
resources needed to function effectively
and efficiently
• Lead, direct and oversee the Group’s Legal,
Company Secretarial, Pensions, Property,
Insurance, Health & Safety, Risk & Compliance
and Sustainability functions
• Identify and recommend to the Board
acquisitions and disposals
• Drive projects relating to mergers and
acquisitions in line with authorities delegated
by the Board
• Lead, direct and oversee the implementation
of the Target Operating Model
transformation programme
• Lead, direct and oversee the Project
Management Office
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2022
Apr
May
Jun
Jul
Sept
Aug
Oct
Nov
Board activities: stakeholder engagement
• Derek and Jennifer attended the MLT Conference alongside the
Executive Directors and MGX
• Derek hosted the annual Chairman’s ESG roadshow for investors,
with the Chairs of the Committees in attendance. The roadshow
continued into May
• Phil hosted the Mayor of Greater Manchester, who officially
opened Mitie’s Technical Services Operations Centre (TSOC)
• Phil and Simon hosted an FY22 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 FY22 results. The event
incorporated a live stream from certain key Mitie office hubs.
Members of the MGX were present in each hub to watch the
event and facilitate questions from colleagues
• Jennifer hosted an Employee Voice session at BBC
Broadcasting House
• Derek and Phil hosted an event in Doncaster with new
colleagues from 8Point8
• Phil visited Custom Solar’s office in Derbyshire to meet
new colleagues
• Phil attended a Cabinet Office Strategic Supplier Annual Review
• 2022 Annual General Meeting held as a hybrid meeting for
shareholders, with all Board members in attendance
• Simon hosted an event with analysts following Mitie’s Q1
trading update
• Phil and Simon visited a client’s site
• Derek and Jennifer visited Mitie Telecoms in Tewkesbury
• Phil met with colleagues in Spain
• Phil participated in a Town Hall event at a client’s site
• Phil visited P2ML’s office in Glasgow to meet new colleagues
• Executive Directors hosted an offsite event for MGX
• Phil met with colleagues at Mitie’s office in Rutherglen
• Phil visited a client’s site
• Jennifer and Salma hosted an Employee Voice session with the
Department for Work and Pensions team in London
• Derek and Salma participated in a diversity network event for
colleagues hosted by Mitie Military
• Jennifer hosted an Employee Voice session with the Heathrow
Immigration Removal Centre team
• Mary and Roger hosted an Employee Voice session with the
Amazon team in Coventry
• Phil and Simon hosted an H1 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 H1 FY23 results. All Mitie hub
offices, including Glasgow, Ireland and Spain, joined the
event electronically and a live stream was made available
to all colleagues
• Simon attended an International Men’s Day event hosted by
Mitie Women Can
• Simon hosted an event with US Private Placement noteholders
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2022
2023
Dec
Jan
Feb
Mar
• Town Hall event for colleagues in Birmingham, with all Board
members in attendance
• Jennifer, Chet and Mary attended a virtual meeting with
managers in Mitie’s Central Government & Defence business
• Simon hosted a call with analysts in relation to Mitie’s Q3
trading update
• Derek and Mary hosted an Employee Voice session with the
Sellafield team in Cumbria
• Jennifer and Chet participated in an event for apprentices
• Executive Directors participated in Team Talk Live 2023
• Salma hosted an International Women’s Day panel discussion
event. The event was also attended by Jennifer and Simon
• Jennifer participated in a diversity network event for colleagues
hosted by Mitie Women Can
• Mary and Derek participated in a diversity network event for
colleagues hosted by Enable
• Jennifer and Mary hosted an Employee Voice session with the
Co-op team in Cambridgeshire
• Jennifer and Jasmine Hudson, Chief People Officer, hosted
an event for colleagues to discuss reward, benefits and
executive remuneration
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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 FY23
was held in September 2022. 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
• 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 26 to 29, 47 to 53 and
73 to 82. Details of the sustainability of Mitie’s
business model can be found in the Strategic
report on pages 30 and 31. Mitie’s governance
framework underpins the delivery of strategy
and can be found on page 91. An overview
of the Group’s strategy can be found in the
Strategic report on pages 12 to 19.
How the Board considers the views
of stakeholders
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 32 to 34. Mitie’s
Section 172(1) statement, detailing how
the Board has engaged with the Group’s
stakeholders and approached decisions made
during the year, can be found in the Strategic
report on pages 35 and 36. Details of
stakeholder activities undertaken by the
Board during FY23 can be found on
pages 94 and 95. 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
programme of shareholder engagement 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 team. The Board is
regularly kept informed of investor feedback,
stockbroker updates and detailed analyst
reports. A Board report is prepared by the
Investor Relations Director for every Board
meeting, as set out on page 98. The Chairman
is responsible for ensuring that the Board is
made aware of any issues or concerns of major
shareholders. The Chairman and Independent
Non-Executive Directors are available to
meet with shareholders upon request and the
Chairman conducts an annual ESG roadshow.
Committee Chairs seek engagement with
shareholders on significant matters related to
their area of responsibility.
Boardroom discussions
The Board held seven formal scheduled
meetings during FY23. Individual Director
attendance at meetings can be found on
page 98.
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 35 and 36.
Strategic pillar: accelerate growth
Acquisition of
Custom Solar
The Board debated and approved the acquisition of Custom Solar, which completed in June 2022. Custom Solar is a solar
power solutions company specialising in the development, design, installation and maintenance of solar power systems for
public and private sector clients. The acquisition aligned with the Group’s strategy to fill a gap in the market for truly integrated
solar solutions, building on its expertise in upgrading electrical infrastructure and providing grid connections to support the
UK’s decarbonisation agenda. Further detail can be found in the Section 172(1) statement on pages 35 and 36.
Acquisition of
8Point8
The Board approved the acquisition of 8Point8, which completed in May 2022, and was updated on the integration of the
business into the Group. 8Point8 is a leading provider of design and construction services in the UK, predominantly for mobile
telecoms tower infrastructure. The acquisition aligned with the Group’s strategy to be a leader in telecoms support services,
providing acquisition, design and construction services and maintenance to the mobile telecoms tower infrastructure sector.
The capabilities of 8Point8 provide Mitie with the opportunity to set the standard in health and safety for the industry, while
adding capacity to increase self-delivery of critical services.
Sales and pipeline Regular updates were provided to the Board on new business, retention and extension divisional opportunities. The Board
reviewed and discussed win rates and performance against targets for the Group and individual business units.
Cross-sell initiatives The Board was updated on cross-sell initiatives, such as opportunities to insource work which had been contracted out by
Interserve Facilities Management (Interserve) prior to acquisition of the business by Mitie.
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Strategic pillar: enhance margins
Target Operating
Model
The Board regularly reviewed progress towards implementation of the Target Operating Model and considered and approved
changes in approach where necessary.
Interserve
integration synergies
Regular updates on margin enhancing integration activities were delivered to the Board and discussed at Board meetings.
These included updates in relation to procurement savings from fleet and IT infrastructure.
Annual
operating plan
The Board reviewed and approved the Group’s annual operating plan for FY24 in March 2023.
Strategic pillar: generate cash
US Private
Placement
The Board was updated on the issuance of £120m of US Private Placement notes under the delayed funding arrangement
entered into in November 2021. The new notes were formally issued in December 2022, avoiding overlap with the existing
£121.5m of notes that matured in December 2022. The new notes were split equally between 8, 10 and 12-year maturities and
were issued at an average coupon of 2.94%, significantly below the previous coupon.
Share buyback The Board debated and approved the rationale, quantum and methodology for a FY23 share buyback programme
which returned £50m to shareholders. The programme commenced in June 2022 and completed in September 2022.
Further detail, including how the Board considered the views of stakeholders, can be found in the Section 172(1) statement
on pages 35 and 36.
Dividend The Board recommended a final dividend in respect of FY22 in June 2022 and approved an interim dividend in respect of
FY23 in November 2022. In doing so, the Board considered the Group’s cash generation, performance of the underlying
business, future affordability and the views of stakeholders. A final dividend of 1.4p per share for FY22 was paid to
shareholders in August 2022 and an interim dividend of 0.7p per share for FY23 was paid to shareholders in February 2023.
Capability enablers: ‘Great Place to Work’
Employee Value
Proposition
The Board was regularly updated on Mitie’s new Employee Value Proposition (EVP). The new EVP was launched in November
2022 with a campaign across social channels, job sites and Mitie’s own internal and external channels.
Winter Support
package
The Board discussed a package of support designed to help colleagues with the cost-of-living crisis. Mitie’s £10m Winter
Support package was communicated to colleagues in November 2022 and involved increasing awareness of existing benefits
and introducing new support initiatives for Mitie’s lowest earning colleagues. Further detail can be found in the Section 172(1)
statement on pages 35 and 36.
Employee
engagement
The Board received and discussed the results of the spring 2022 employee engagement survey, Upload, and identified areas
for improvement action to be taken in FY23. Further information can be found on page 42.
The Board was also updated on Mitie’s virtual engagement festival, Team Talk Live 2023, including employee feedback on the
event and engagement data.
Employee voice in
the Boardroom
Jennifer Duvalier is Mitie’s designated Non-Executive Director responsible for oversight of the Board’s engagement with
the workforce. Jennifer voiced what she heard and learned from frontline employees at employee listening sessions and
discussed key themes with the Board. After each employee event, Jennifer also shared a summary of specific items of
feedback with the Board. Further information on Jennifer’s activities in this role can be found on pages 100 to 102. Other
Non-Executive Directors also participated in employee listening sessions and/or other colleague events during FY23 as
detailed on pages 94 and 95.
Equality, diversity
and inclusion
The Board reviewed Mitie’s equality, diversity and inclusion strategy, and was regularly updated on Mitie’s bespoke conscious
inclusion programme, Count Me In, and activities undertaken throughout FY23 by Mitie’s diversity networks. Multiple diversity
network events were attended by one or more Non-Executive Directors during FY23, further details of which can be found
on pages 94 and 95. Following attendance at an event, Non-Executive Directors shared their experience and feedback with
the wider Board.
Capability enablers: Science of Service (Technology)
Project Forté The Board was regularly updated on Project Forté, the digital transformation and modernisation of the technology
infrastructure for Engineering Services, which is also one of Mitie’s margin enhancement initiatives.
Customer
technology journey
The Board was updated on the roll-out of Mitie’s award-winning, cutting-edge Connected Workspace technology across
customer contracts.
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Capability enablers: Decarbonisation Delivered
ESG strategy The Board reviewed and discussed Mitie’s ESG strategy at its September 2022 meeting. It was determined at the meeting that
a formal engagement plan to communicate Mitie’s ESG ambitions to key stakeholders should be developed.
Task Force on
Climate-related
Financial Disclosures
(TCFD)
The Board reviewed Mitie’s compliance with the Financial Stability Board’s TCFD requirements. Three areas were identified
for improvement during FY23 and steps to achieve them were agreed.
Standing agenda items:
Committee updates At every Board meeting a verbal update was provided by the Chair of each Board Committee. Updates included an overview
of any Committee meetings and any recommendations from the Committee requiring approval by the Board.
Chief Executive’s
update
At every Board meeting the Chief Executive presented a paper on topics such as:
• Business highlights
• Sales, pipeline and marketing
• Information systems and technology
• HR and people
• Procurement and fleet
• Key project and divisional updates
The Chief Executive’s update paper incorporated matters relating to strategy and matters discussed at MGX meetings and
Bid Committee meetings.
Chief Financial
Officer’s update
At every Board meeting the Chief Financial Officer presented a paper on the financial performance of the Group.
Chief of Staff,
General Counsel &
Company Secretary’s
update
At every Board meeting the Chief of Staff, General Counsel & Company Secretary presented a paper on topics such as:
• Acquisitions and disposals
• Quality, Health, Safety and Environment (QHSE) performance and statistics
• HR and colleague-related matters
• Diversity and inclusion network activities
• Internal and external communications
• Whistleblowing
• Governance and regulatory matters
• Material litigation
Investor relations An investor relations report was presented at every Board meeting on topics such as:
• Share price performance
• Investor engagement and feedback
• Analyst research and consensus
• Share register analysis
• Sector news
Director attendance
Position Name Board
Nomination
Committee
Audit
Committee
Remuneration
Committee
ESG
Committee
Chairman Derek Mapp 7/7 2/2 – – –
Executive Directors Phil Bentley 7/7 – – – –
Simon Kirkpatrick 7/7 – – – –
Independent Non-
Executive Directors
Baroness Couttie
1
2/5 – 3/5 – 2/4
Jennifer Duvalier 7/7 2/2 – 3/3 –
Chet Patel 7/7 – 6/7 3/3 –
Mary Reilly 7/7 2/2 7/7 – –
Salma Shah 7/7 – – 3/3 6/6
Roger Yates 7/7 2/2 7/7 3/3 –
1. Baroness Couttie was unable to attend some meetings due to ill-health and died on 12 December 2022.
Strategy and the Boardroom
continued
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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 38 to 42.
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 38
to 42 and Mitie’s Real Living Wage commitment
on page 40.
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.
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.
Mitie’s award-winning inclusion learning and
development programme, Count Me In, is
available to all colleagues and continued into
FY23. As part of the Count on Mitie phase of
Count Me In, a new eLearning activity ‘Inclusivity,
Culture and You’ and a new ‘Speak Up’ exercise
were launched during the year. The new
eLearning activity explores the impact of
creating an inclusive culture on individuals, Mitie,
Mitie’s customers and the wider community.
The ‘Speak Up’ exercise encourages colleagues
to speak up if they notice non-inclusive
behaviours or behaviours that fall outside Mitie’s
Values. The exercise also equips colleagues with
guidance on how to identify these behaviours
and provides support and confidence to speak
up. Further details on Mitie’s Count Me In
programme can be found on page 38 and at
www.mitiepeople.com/countmein.
CMA investigation
As announced on 4 March 2022, the
Competition and Markets Authority (CMA)
launched an investigation into suspected
anti-competitive conduct in connection with the
participation by the Company, Mitie Care and
Custody Limited and PAE Incorporated in the
ongoing procurement processes run by the UK
Government (Home Office) for the contracts
to supply certain services at Heathrow and
Derwentside Immigration Removal Centres
(IRC) in the UK. On 7 December 2022, the
CMA announced that it had provisionally
decided to close the investigation on the basis
that there were no grounds for action. On
14 February 2023, the CMA announced that
it had reached a final decision to close the
investigation on the basis that there were no
grounds for action.
Mitie strongly condemns anti-competitive
practices and cooperated fully with the CMA
and the investigation.
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, Team Talk Live 2023 and the annual
colleague engagement survey, Upload. Regular
Town Hall events with colleagues at Mitie offices
are also held by the Board, including a Town Hall
event held at Mitie’s Birmingham office during
FY23. 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, Net Promoter Score
and lost time injury frequency rate, which
allow trends and changes to be identified
and monitored.
Town Hall event for colleagues in Birmingham,
with all Board members in attendance
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Culture at Mitie
continued
Set out below are further examples of how the
Board monitors culture.
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 to the Board
includes details of incident reports received in
the period between meetings, as well as details
of ongoing 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. 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
core values and influenced through Mitie’s
LiveSafe programme. The programme facilitates
proactive leadership, leading to better trust
and accountability in all aspects of health, safety
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 FY23. These events
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. She then champions their voice in
Board discussions.
Details of the activities undertaken by Jennifer
and other Non-Executive Directors during the
year can be found on pages 94 and 95.
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.
Objectives
The objectives of Jennifer’s programme of
activities include:
• Ensure that the Board hears from a wide
cross-section of Mitie colleagues both in the
UK and internationally
• Hear from colleagues from a diverse
range of backgrounds, roles, contracts
and business units
• Ensure Board and MGX involvement in key
equality, diversity and inclusion events
• Create opportunities to get involved in the
work of colleagues to better understand
their lived experience at work, subject to
health and safety rules
• Create 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
and wellbeing management. In turn, this helps
increase performance, influence ownership,
improve customer service, reduce absence,
reduce accidents and increase creativity and
innovation, ultimately embedding a thriving
culture throughout the organisation.
In FY23, a ‘WeCare’ engagement week was
launched. Throughout the week Mitie’s HSE
function engaged with clients and frontline
colleagues.
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.
2022 Upload survey
Mitie’s annual employee engagement survey,
Upload, provides 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 42. Details of 2022 Upload
survey insights (You Said) and actions taken
(We Did) can be found on page 42.
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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
FY23, Mitie refreshed 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 equality, diversity and inclusion
event each month. The wider Board will
continue to join Jennifer in attending listening
sessions and equality, diversity and inclusion
events during FY24.
The Board’s role in colleague engagement is
supported by Mitie’s Chief People Officer and
Internal Communications Business Partner. In
collaboration with the business division leads,
the Chief People Officer and Internal
Communications Business Partner evaluate
Mitie’s Upload survey data and Net Promoter
Score (NPS) scores to propose a range of site
visits that ensure effective reach to Mitie
colleagues globally.
The Internal Communications Business Partner
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 one-to-one meeting with managers and then
hold an informal session with the frontline site
team 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 by the Board during its 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/
mitiepeople.com and in Mitie’s weekly
round-up email, Recap.
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.
Therefore, 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 Upload survey
and regular Pulse surveys, spending time with
the HR teams and attending virtual Q&A events,
and 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 people
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 FY23 included:
• Benefits and recognition: awareness of Mitie
benefits is mixed
• Technology and access to systems: recognised
as an area for improvement for some Project
Forté users
• Pay: rates of pay in the context of the
cost-of-living crisis
• Communications: a desire for more
effective communication with colleagues
across business divisions
It is so important for other Board
members and me to hear directly
from colleagues on what they
value about working for Mitie
and what can be improved to
make their working lives better.
We take feedback received from
colleagues very seriously and ideas
for improvements are fed back to
the wider Board and MGX.
I always feel really energised when
I leave colleague listening sessions
about what is going well and the
great ideas from colleagues for
what can be improved. I am always
blown away by how dedicated
our frontline colleagues are to
supporting our customers, often
in very challenging circumstances.
Jennifer Duvalier
Designated Non-Executive Director
for workforce engagement
Jennifer with colleagues at a panel discussion to
celebrate International Women’s Day in March 2023.
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Annual Report and Accounts 2023
Details of actions taken in response to feedback received are set out below.
Benefits and recognition
Positive feedback Improvement areas Actions taken
Mitie’s £10m Winter Support package benefits
and one-off bonus, which was announced in
November 2022, was positively received by the
majority of colleagues.
Benefits such as Mitie’s MiDeals platform were
welcomed by colleagues, many of whom said
they had made great savings.
There was an overwhelmingly positive response
from colleagues to Mitie’s Virtual GP service.
Colleagues who had narrowly missed out on the
Winter Support package benefits and one-off
bonus, due to having earned slightly over £30k
in base pay or slightly over £35k including
overtime, felt disappointed in the level of
support received. In particular, those who had
missed out due to overtime felt this was unfair,
with some commenting that they needed to do
overtime in order to afford everyday expenses.
There was some lack of understanding of the
benefits available to Mitie colleagues and how
to access them.
Derek Mapp committed to work with the MGX
and Reward and Recognition team to better
understand the decision-making process for not
having provided the Winter Support package
benefits and one-off bonus to those who crossed
the £35k earnings threshold due to overtime.
Mitie launched an Employee Value Proposition
(EVP) campaign, MyMitie, to demonstrate to
colleagues why Mitie is a ‘Great Place to Work’
and to ensure colleagues know what is on offer
to them – from benefits to career progression
opportunities. An evaluation of the first eight
weeks of the campaign showed that over
55% of eligible colleagues had spent the £50
voucher given to them through the Winter
Support package, equating to over £1m in
downloaded vouchers.
Technology and access to systems
There was greater access to phones, laptops and
tablets than there had been previously.
Project Forté continued to be an issue for some
teams, with users stating that the system still did
not work properly for them.
The Board requested that the Project Forté team
visit the specific sites where there were issues to
work with colleagues to resolve them.
Pay
Colleagues welcomed the London Living Wage
increase in January 2023 and the one-off bonus
provided to eligible colleagues as part of the
Winter Support package.
Some colleagues raised pay as an issue and
commented that competitors offered higher
rates of pay.
Mitie continues to be a Recognised Service
Provider with the Living Wage Foundation. Mitie
is committed to paying the Real Living Wage for
all directly employed colleagues and campaigns
for its widespread take-up within its customer
contracts. Mitie incorporates Real Living Wage
costings when submitting bids to prospective and
current customers so that they can choose the
Real Living Wage at the point of tender.
Communications
Lots of communication had been sent by
Mitie to colleagues. Communication around
benefits and the Winter Support package
had been good.
Communications sent by Mitie did not always
reach frontline colleagues and colleagues
without regular access to IT.
Communication cascades did not always work.
Sometimes there was too much communication.
A communications review was conducted
between January and March 2023, involving focus
groups of frontline colleagues and a survey for
managers. The results informed a business case
and discovery project for a new Mitie colleague
app, the aim of which is to improve the reach and
targeting of communications.
Culture at Mitie
continued
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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,
with the next external evaluation due in FY24.
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.
Process followed for internal FY23 evaluation:
January
• Engagement, scope and focus of
review agreed
• Evaluation meeting slots diarised
February
• The Chairman conducted evaluation
meetings with Board members and senior
management
• The Senior Independent Director
conducted an evaluation meeting with
the Chairman
March
• Findings were collated and evaluated
• The Chairman and Senior Independent
Director provided a report to the Board
and Committees
• Outcomes of the internal Board evaluation
were established, and actions agreed by the
Board and Committees
Internal Board evaluation process
Outcomes from the internal FY23 evaluation
Outcomes/suggestions Actions undertaken or planned
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
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
Board strategy day in September 2023
To hold more regular Independent Non-Executive Directors only sessions To be scheduled at the end of each Board meeting where possible
To encourage Non-Executive Director mentoring of MGX members Mentoring partnerships to be mapped by appropriate skillset
Progress made on actions identified in prior year
Outcomes from the evaluation conducted for FY22 were reviewed at the March 2022 Board and Nomination Committee meetings. Progress made
during FY23 on actions identified as part of the FY22 evaluation is set out below.
Outcomes/suggestions Actions previously undertaken or planned Progress made on actions during FY23
The Board concluded that it and its Committees
had continued to operate effectively during
FY22. The selection of new Non-Executive
Directors was critical to addressing any gaps in
experience of the Board and ensuring chemistry
and collegiate working was maintained.
A full induction has been arranged for Chet
Patel and Salma Shah. Committee membership
has been reviewed and refreshed, in light of
their appointment.
Chet and Salma completed their induction
process in FY23. Following the death of Baroness
Couttie in December 2022, the Nomination
Committee agreed at its January 2023 meeting
that the Board would review and address any
resulting gaps in experience or skills as part of the
FY23 Board evaluation process.
Jennifer Duvalier would continue to act as the
Company’s designated Non-Executive Director
responsible for oversight of the Board’s
engagement with the workforce. However, the
Chair and other Non-Executive Directors would
additionally attend and participate in colleague
listening sessions.
A calendar of events has been agreed for FY23
which will be attended by both Jennifer and
other Non-Executive Directors.
Jennifer and other Non-Executive Directors
participated in multiple Employee Voice sessions
and other colleague events during FY23, as set
out on pages 94 and 95.
To continue to progress a number of ambitious
programmes of ESG-centred activities.
The Board and ESG Committee (formerly
known as the Social Value & Responsible
Business Committee), through its oversight and
governance of all Mitie’s social value and
responsible business initiatives, will continue to
evaluate how ESG issues affect key aspects of
the business, what Mitie’s ambitions and goals
should be as a long-term sustainable business
and opportunities to better report on
these activities.
The ESG Committee developed Mitie’s ESG
strategy during FY23. The ESG strategy was
presented to the Board for approval in
September 2022. The Board and ESG
Committee continue to drive Mitie’s ESG agenda
forward and Mitie continues to receive external
recognition of its ambitious ESG-centred
activities. Further detail can be found in the
ESG Committee report on pages 131 and 132.
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Annual Report and Accounts 2023
Nomination Committee report
The Committee’s activities
had particular focus on
succession planning, to
ensure Board members’ skills
and experience continue
to align with Mitie’s strategy
and the Board’s composition
is representative of wider
society and our stakeholders.
Derek Mapp
Chair of the Nomination Committee
As Chairman of the Nomination Committee,
Iam 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 April 2022, we welcomed Chet
Patel and Salma Shah as our new Non-Executive
Directors. Chet and Salma both joined the
Remuneration Committee, with Chet also
joining the Audit Committee. Salma joined
the ESG Committee and was subsequently
appointed as its Chair in January 2023. Chet and
Salma joined the Nomination Committee in
March 2023. Chet has extensive experience in
the B2B service environment, promoting sales
and growth strategies, while Salma brings a
wealth of public sector expertise.
During the year, the Board performed an
internal evaluation of progress against the FY23
areas of focus and the resulting actions, as
well as agreeing new areas of focus for FY24.
Further information on the evaluation can be
found on page 103.
Succession planning was a key focus in the
year, with the Board reviewing draft plans on
executive succession planning, contingency
planning, and career development.
The Committee also reviewed the number
of external directorships held by each Non-
Executive Director as well as individual time
commitments.
Derek Mapp
Chair of the Nomination Committee
Nomination Committee members
At the date of this report and throughout
FY23, the Nomination Committee
comprised:
Chair
1
:
Derek Mapp
Committee members:
Baroness Couttie (until 12 December
2022)
Jennifer Duvalier
Chet Patel (from 22 March 2023)
Mary Reilly
Salma Shah (from 22 March 2023)
Roger Yates
All members of the Nomination
Committee are considered independent in
accordance with the Code.
Nomination Committee meetings
The Committee met twice during FY23.
The attendance of individual Committee
members can be found on page 98.
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 review the structure, size and
composition of the Board
• Ensure plans are in place for an
orderly succession to Board and senior
management positions
• Consider the length of service of the
Board as a whole
• Identify and nominate, for approval
by the Board, candidates to fill Board
vacancies as and when they arise
• Keep under review the number of
external directorships held by each Non-
Executive Director
• Review the results of the Board
evaluation process that relate to the
composition of the Board
• Keep 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
chairthe Committee.
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Annual Report and Accounts 2023
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 FY23.
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 below.
Succession planning
The Board recognises the importance of
succession planning and Board refreshment and
maintains succession plans for the Board and
senior management.
During FY23, the Nomination Committee
discussed succession planning at both its
meetings.
The Board considered the Board skills matrix in
the context of succession planning as a tool to
help identify potential composition needs for the
future, and to ensure that plans are proactive
and not just reactive in nature.
The tenure of members of the Board is well
balanced, with the Chairman having been
appointed in May 2017 and all the Non-
Executive Directors having served for less than
six years. The Committee considers tenure
when determining a Non-Executive Director’s
independence.
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 Chet Patel and Salma Shah, who
were appointed Non-Executive Directors from
1 April 2022. Sam Allen Associates has recently
been re-appointed to search for an additional
Non-Executive Director to the Board as part
of the Board’s succession planning. Sam Allen
Associates had no other connection with the
Company or individual Directors.
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 table
below sets out how each Director’s individual
skills and experience contribute to the balance
required by the Board to deliver the Group’s
strategy and manage risk.
Further details of each Director’s skills and
experience are set out in their biographies on
pages 87 to 89.
Board skills matrix
Skills/experience area Derek Mapp Phil Bentley
Simon
Kirkpatrick
Jennifer
Duvalier Chet Patel Mary Reilly Salma Shah Roger Yates
Leadership and
business operations Exceptional Exceptional ✔ ✔ ✔ ✔ ✔
Strategy development ✔ Exceptional ✔ ✔ ✔ ✔ ✔
Corporate governance Exceptional ✔ ✔ ✔ ✔ ✔ ✔ ✔
Audit/risk management
and assurance ✔ Exceptional ✔ Exceptional ✔
Remuneration/HR Exceptional ✔
Commercial ✔ Exceptional ✔ ✔ Exceptional ✔ ✔
Technology/digital ✔ Exceptional
Finance 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.
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Annual Report and Accounts 2023
Nomination Committee report
continued
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 2022 AGM, each Director in post at the
time stood for election or re-election and was
appointed or re-appointed by shareholders.
At the 2023 AGM, all Directors will stand for
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
legislation.
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 2023 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 of
Staff, General Counsel & 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 FY23.
External positions held by the Chairman and
current Non-Executive Directors are detailed
in their biographies on pages 87 to 89.
Induction and training
On joining the Board, all Directors receive a
personally tailored induction which includes:
• Meetings with Executive Directors, the
Chief of Staff, General Counsel & 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
Chet Patel and Salma Shah completed their
induction process in FY23.
All Directors have access to Mitie’s Board
Handbook on an electronic Board portal
which includes:
• Schedule of matters reserved for the Board
• Committee 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 2023.
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.
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:
• Ensure the Board’s membership reflects
a combination of demographics, skills,
experience, race, age, gender, educational and
professional backgrounds which provides a
range of perspectives, insights and challenges
needed to support good decision-making and
reflects the diverse workforce at Mitie
• Maintain 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
• Ensure 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
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Mitie Group plc
Annual Report and Accounts 2023
• Ensure there is at least one Director from
a minority ethnic background, provided this
remains consistent with the skills and diversity
requirements when searching for a new
appointment to the Board
• Support and monitor activities to increase
the percentage of senior management roles
held by women and other underrepresented
groups across Mitie
The policy recognises that there may be periods
of time when the balance falls below this during
the search and recruitment process. As at
31March 2023, the Company did not meet the
obligations set out under LR 9.8.6R (9) of the
Listing Rules that at least 40% of the individuals
on its board are women and that at least one
of the Chair, CEO, CFO or SID is female. The
Company had previously met the first target as
a result of the appointment of Salma on 1 April
2022, but female representation on the Board
fell from 44.4% to 37.5% following Philippa’s
death in December 2022. At 31 March 2023, the
Board included two Directors from a minority
ethnic background. We have initiated the search
for an additional Non-Executive Director to
recruit a talented Board member with the
appropriate mix of skills, capabilities and market
knowledge in continuing to ensure the Board
is effective.
The information required under LR 9.8.6 (10)
is set out below, for which purpose executive
management comprises members of the Mitie
Group Executive (MGX). For the purpose
of LR 9.8.6 (11), diversity data is disclosed by
individuals via Mitie’s People Hub system at
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 is available at
www.mitie.com/investors/corporate-governance.
A breakdown of the gender balance of those in
senior management and their direct reports can
be found on page 39.
Board and executive management diversity
at 31 March 2023
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 62.5% 4 8 80%
Women 3 37.5% – 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) 6 75% 4 9 90%
Mixed/Multiple Ethnic Groups – – – – –
Asian/Asian British 2 25% – 1 10%
Black/African/Caribbean/Black British – – – – –
Other ethnic group, including Arab – – – – –
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Mitie Group plc
Annual Report and Accounts 2023
Audit Committee report
The Group has made good
progress to improve its
internal controls framework
to ensure the continued
integrity of financial
reporting as the Group
transforms and delivers
growth.
Mary Reilly
Chair of the Audit Committee
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 2023 (FY23). This report
provides 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 interaction with
BDO LLP (BDO), the Group’s external auditor.
During the year, we were deeply saddened by
the passing away of our colleague and fellow
Audit Committee member, Baroness Philippa
Couttie, in December 2022. Our thoughts and
condolences remain with her family.
In FY23, Greg Watts took over from Scott
McNaughton as the lead partner for BDO for
the Group audit of Mitie. Scott had been the
lead partner for BDO for the Group audit
for the previous five years and, in accordance
with rotation requirements for audit partners
on listed entity audits, the FY22 audit was
Scott’s final year. During FY23, I have held
several meetings with Greg to ensure that
the effectiveness of the Group audit has been
maintained throughout the transition.
During the year, the Group’s Head of Internal
Audit, Simon Dunn, resigned to pursue another
opportunity and was replaced by Sameen
Sheikh. We thank Simon for his valuable
contributions during his time with Mitie and
extend a warm welcome to Sameen.
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.
The business has also continued to focus on
the implementation of its transformation
programme, 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 throughout the year, which
gave me an opportunity to gauge the extent of
any significant emerging issues and to monitor
developments.
The Group has made good progress to
improve its internal controls framework to
ensure the continued integrity of financial
reporting as the Group transforms and
delivers growth, including:
• For the acquired businesses, the review of
balance sheets, accounting policies, processes
and controls as part of the acquisition
accounting and integration processes;
Audit Committee members
Chair:
Mary Reilly
Committee members:
Roger Yates
Chet Patel
Baroness Couttie (until 12 December
2022)
Frequency of meetings
The Audit Committee met seven times
during FY23.
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,
amongst 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 the 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.
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• Training has continued to be provided to
finance teams on a regular basis across the
year to ensure consistent application of the
Group’s accounting policies;
• As revenue recognition continues to be a
critical area of judgement for the Group,
periodic reviews have been conducted by
Group Finance to assess compliance with the
Group’s accounting policy;
• The internal audit and controls teams have
been strengthened to effectively manage
complexity introduced by the growth of the
Group, and in readiness for the impending
corporate governance reforms in the UK;
• A comprehensive review of the key internal
controls across the Group has been
undertaken to ensure these continue to
function effectively and that key controls
have been updated to reflect organisational
changes and the newly acquired businesses;
and
• In May 2023, the FRC issued its consultation
document on the UK Corporate Governance
Code which focuses largely on internal
controls, assurance and resilience. The
Group is currently considering the potential
implications for Mitie, in the context of the
work already underway in this area.
In addition to fulfilling its normal programme of
activities during the year, the areas of focus for
the Audit Committee in relation to the FY23
financial statements have been:
• Evaluating judgements made by management
on the adequacy of provisions required
on loss-making contracts and the
appropriateness of the related disclosures;
• Assessing the impact and disclosure of the
accounting policy change in respect of the
amendment to IAS 37 regarding costs a
company should include as the costs of
fulfilling a contract when assessing whether
a contract is onerous;
• Challenging management’s judgements in
relation to impairment assessments for the
carrying value of goodwill, timing of revenue
recognition on certain contracts and the
recoverability of deferred tax assets in
relation to losses;
• Reviewing the appropriateness of recognition
of pensions 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;
• Assessing judgements made by management
in respect of acquisitions completed in the
year. In particular, focus was placed on fair
value adjustments to recognise acquired
intangible assets on the acquisitions of
Custom Solar, 8point8 and P2ML and
the accounting treatment for deferred
consideration;
• Considering the classification of certain
costs 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,
to ensure the result is that a reader of the
Annual Report and Accounts is provided with
an improved understanding of the underlying
results of the business;
• Assessing the appropriateness of controls
established to ensure the continued accuracy
of financial reporting during the transition
to a new operational system in the Technical
Services division as part of Project Forté;
• Challenging the approach taken by
management to support the going concern
and viability statements set out on pages 152
to 153 and 84 respectively;
• Assessing the appropriateness of climate-
related disclosures and evaluating to
ensure that the Task Force on Climate-
related Financial Disclosures (TCFD)
recommendations have been embedded
appropriately;
• Reviewing and challenging the progress made
on key workstreams in readiness for the
impending corporate governance reforms
in the UK; 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 110 to 115.
In conclusion, the Audit Committee can provide
positive assurance to the Board that the Annual
Report and Accounts 2023, when taken as a
whole, are fair, balanced and understandable
and provide shareholders with sufficient and
appropriate information to enable 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 2023
AGM to answer any questions about the work
of the Audit Committee.
Mary Reilly
Chair of the Audit Committee
110
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Annual Report and Accounts 2023
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
Head 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 has 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 £10.5m
have been recognised at 31 March 2023 (2022:
£13.2m). These primarily relate to a number
of loss-making contracts that were acquired
with the Interserve business, which are now
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 £8.4m in the
year ended 31 March 2023 (2022: £8.7m)
with 18 years remaining on the contract.
Management has also assessed the impact of
the Group’s accounting policy change resulting
from the amendment to IAS 37 regarding the
costs that a company should include in relation
to fulfilling a contract when assessing whether a
contract is onerous. This has led to an increase
in onerous contract provisions of £1.1m.
Other contract-specific provisions, totalling
£38.8m, have been recognised at 31 March
2023 (2022: £43.1m), 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
took 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 has
received updates from management throughout
the year and has also reviewed and discussed
papers presented by management on specific
areas of revenue recognition where judgement
is required.
Valuation of goodwill
The Group carries goodwill as an intangible asset
on its balance sheet in respect of businesses it
has acquired (see Note 12 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 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 has considered
papers prepared by management and has
challenged the assumptions and methodology
applied to assess the carrying value of goodwill.
Other material accounting 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 has also considered papers
prepared by management in respect of the
following matters:
• Assumptions used for pensions actuarial
valuations for accounting purposes;
• Appropriateness of recognition of pensions
surpluses on defined benefit schemes as
assets on the Group balance sheet;
• The recoverability of deferred tax assets;
• Accounting for acquisitions, including Custom
Solar, 8point8 and P2ML;
• The controls established to ensure the
continued accuracy of financial reporting
during the transition to a new operational
system in the Technical Services division as
part of Project Forté; and
• Distributable reserves assessments prior to
distributions to shareholders and review of
Mitie Group plc interim accounts.
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 an improved 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 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.
Strategic report Governance Financial statements
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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 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 £3.7m of income has been
reported within Other Items, in addition to
charges, which reflected a balanced assessment.
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 statements.
A reconciliation of the APMs to the equivalent
IFRS measures is provided in the Appendix –
Alternative Performance Measures on
pages 212 to 215.
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 31 March 2026, 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 73 to 82.
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 has 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 include 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, the Board is
satisfied that the Group will be able to operate
within the level of its facilities for the foreseeable
future. For this reason, the Board considers 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 pages 152 and 153.
In accordance with the Code, the Directors
have assessed the viability of the Group over the
three-year period to 31 March 2026. 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 2026. The more
detailed assessment of the Group’s long-term
viability is set out in the viability statement on
page 84.
Climate reporting
The Audit Committee has reviewed the
climate-related disclosures across governance,
strategy, risk management and metrics and
targets and concurred with management that
the requirements of all 11 TCFD disclosure
recommendations have been complied with.
The Audit Committee challenged management
on the impact of climate risks on financial results,
in particular relating to asset impairments
and the estimation of provisions for onerous
contracts. Following this review, the Audit
Committee concurred with management that
there were no material financial statement
impacts for FY23 in respect of these matters.
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.
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 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.
Mitie continues to review and improve its
approach to governance, risk management
and internal controls. During FY23, the risk
management framework has continued to be
enhanced, new training has been rolled out,
ISO 22301 Business Continuity certification
has been obtained, and the full adoption and
integration of the Group’s risk management
platform has been completed. In addition, Mitie
has rolled out its first annual risk management
maturity assessment.
The Risk Committee has met four times in
FY23 to continue to oversee the risk assessment
processes across the Group. This allows better
coordination for the reporting of risks to the
senior leadership team (the MGX), the Audit
Committee and the Board. The impact of the
Russian invasion of Ukraine, the cost-of-living
crisis and ongoing inflation challenges have
ensured continued focus on improving the
consistency of risk processes and effective
management of risks.
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
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.
Operational and financial systems improvement
projects have been delivered in the Technical
Services division and former Interserve
businesses, which move the business onto
consistent platforms. The review and
documentation of key internal controls in the
internal control framework have also continued
to progress during the year. These programmes
will help ensure further the reliability and
accuracy of management information as well as
providing greater visibility of the effectiveness
of internal controls and the risk management
approach over financial reporting. The work
of the Internal Audit function targets areas
of the business where risk management and
internal controls are suspected of requiring
improvement, which has helped to improve
the risk management and internal control
frameworks. The Group has an externally
hosted whistleblowing line, and all reports
are reviewed, investigated and actions taken
as appropriate.
112
Mitie Group plc
Annual Report and Accounts 2023
Audit Committee report
continued
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 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 continues to operate. Ultimate
responsibility for risk management lies with
the Board, delegated to the Chief Executive
Officer, who further delegates it to 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 of Staff, General Counsel
& Company Secretary 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 FY23,
the Risk Committee has regularly reviewed the
impact on the business of the risks associated
with the changing external environment through
horizon scanning. The changes to the risk profile
are 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 ‘5 x 5’ 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. A review 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 Head of Internal
Audit. The Audit Committee formally reviews
performance throughout the year and advises
on the effectiveness of the risk management
system in place.
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 73 to 82.
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 has been in place
throughout FY23 and remains in place up to
the date of approval of the Annual Report.
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 relevant responsibilities to fulfil this
requirement are allocated across multiple
functions, however the Internal Audit team are
responsible for developing, implementing and
reporting on the internal controls framework.
To ensure alignment with good practice, Mitie’s
system of internal control has been designed
in line with the COSO framework and consists
of financial (including fraud), operational and
compliance controls.
The system covers transactional, monitoring
and oversight controls at divisional and
functional level, comprising business leadership
review and direction, and detailed process
controls and control activities, which are
embedded in business processes. A formal and
comprehensive internal control framework has
been implemented which includes a detailed
maturity model and target maturity scores
to work towards. This is helping to improve
internal controls compliance across the Group
and to raise awareness at all levels within the
organisation of the importance of effective and
sustainable controls. The framework will also
help to ensure compliance with impending UK
legislation on corporate governance, specifically
the internal control reporting requirements.
Strategic report Governance Financial statements
113
Mitie Group plc
Annual Report and Accounts 2023
Mitie is actively implementing a culture of
control compliance, championed by the Audit
Committee, Board and Chief Executive Officer.
A recent survey indicated that employees have
a good understanding of internal controls and
their importance in operational and financial
processes. Work is underway to develop and
test a suite of internal controls training modules,
including mandatory basic training for all staff,
helping them to understand their responsibilities
and the potential impact of any control non-
compliance. More focused training will be
provided for process and control owners in
line with their roles. To ensure that the training
achieves the desired results, and helps improve
control culture, an engaging and interactive
approach is being taken to develop the online
training modules. This is supported by a clear set
of KPIs to measure success.
Mitie’s policies and procedures are documented
in the Integrated Management System (IMS).
These are reviewed regularly and are available
to management and employees through an
intranet portal. Divisional and functional
leadership teams ensure that controls are
operating within the processes and procedures,
and that risks are being appropriately managed.
Where guidance is required, teams reach out
to consult with the Internal Audit team and
ensure that correct guidelines are followed
when developing or changing controls.
The Internal Audit team tests the effectiveness
of internal controls and risk management
systems over financial reporting as part of its
Controls Self-Assessment (CSA) programme
and through individual internal audit reviews
of key financial controls included in the annual
Internal Audit plan. The Internal Audit team
is also developing a risk-based controls testing
programme which covers a broad range of
internal controls over financial reporting.
The Audit Committee conducts a formal review
of the effectiveness of the internal controls
annually. This review is supported by regular
reporting from the Head of Internal Audit
and includes results of control assessments
undertaken by the Internal Audit function
in conjunction with the business leadership
teams. The review focuses on the key financial,
operational and compliance controls which
manage the risks faced by the business. The
Audit Committee also reviews the results of
the audit and assurance work completed by the
Internal Audit team, which are reported to each
Audit Committee meeting. The internal audit
work plan is targeted at any known areas of
potential control weakness, areas with high risk
of change and strategic deliverables. Remedial
action plans developed by management to
address any control weaknesses found are
monitored by the Audit Committee to ensure
timely closure of the actions.
Assurance
In accordance with the FRC’s Guidance on Risk
Management, Internal Control and Related
Financial and Business Reporting and the Code,
the Board performs a formal annual assessment
of the operation and effectiveness of the
Group’s internal control framework, covering
all material controls, including financial,
operational and compliance controls, and
updates this assessment prior to the signing
of the Annual Report and Accounts.
These activities are monitored at executive and
divisional leadership level to ensure that control
improvements are implemented appropriately
and that they are effective. The Head of Internal
Audit assesses the application of control
environment improvements and attends Audit
Committee meetings to provide regular updates
on the effectiveness of the Group’s internal
control framework and the results of the
internal audit work undertaken.
This year, the updates have also covered the
multiple workstreams which are underway to
improve the control framework and set Mitie
up to successfully comply with the forthcoming
legislative and regulatory changes. These
initiatives include, but are not limited to, the
development of a risk based controls testing
programme, building on the audit and assurance
policy and resilience statement requirements.
The Audit Committee challenges and provides
feedback to ensure that work undertaken by
the Internal Audit team is of a good standard.
Features of the internal control and risk
management frameworks, which ensure
accuracy and reliability of financial reporting,
include:
• A culture of good governance, integrity,
transparency, competence, fairness,
and responsibility;
• Group policies and procedures to support
and ensure consistency throughout
the business;
• Clearly defined responsibilities, delegated
in accordance with the Group’s delegated
authority register;
• A defined and agreed approach and appetite
to managing risks and opportunities facing the
business; and
• The identification and documentation of
key internal controls and clearly defined
responsibility for their effective functioning,
monitoring and reporting.
Responsibility for internal control and risk
management systems is devolved into each
division and any control weaknesses within
divisions are investigated and resolved with
‘lessons learnt’ exercises undertaken to
drive a culture of continuous improvement.
Management and the Audit Committee seek to
ensure that the cause of any control weaknesses
identified are understood and mitigating actions
are taken to limit the potential for recurrence.
In view of the work of the Internal Audit
function, management and the external auditor,
it is considered unlikely that a weakness within a
particular division would have a material impact
on the Group.
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 FY23, 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
Since starting with Mitie as Head of Internal
Audit, Sameen has strengthened the Internal
Audit team by recruiting additional auditors,
provided assurance on a number of important
projects and commenced a new internal
controls review. Sameen has engaged with key
stakeholders across the Group to gain business
insight, which has been used to develop an
internal audit strategy for the financial year
ending 31 March 2024.
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 Head 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. 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 function.
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Annual Report and Accounts 2023
Audit Committee report
continued
All internal audit reports issued during the
year are made accessible to the members of
the Audit Committee and the Company’s
external auditor (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.
Post-implementation reviews of key change
projects and audits of regulatory and process
compliance formed key elements of the Internal
Audit plan for FY23. The Internal Audit plan
was presented to and approved by the Audit
Committee in March 2022, but kept under
continual review throughout the year. The plan
was approved and delivered accordingly.
The key areas of focus in the FY23 Internal
Audit plan have included:
• A review of the risk and control activities
in the intercompany transactions across
the Group;
• A review of IR35 process compliance;
• Assessment of controls over expenses
management with a particular focus on
executive expenses;
• Post-implementation reviews of key
system changes;
• Audits of contract management processes;
and
• An audit of governance processes over
Finance Transformation.
Regular updates were provided to the Audit
Committee throughout FY23 by the Head 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
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
impending legislation on reporting of internal
controls and raise awareness of the importance
of internal controls in the business.
Through the updates from the Head 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,
due to sharp focus from senior management.
This remains an important area for the Audit
Committee, and management is required to
provide an explanation if planned completion
dates are missed.
Review of whistleblowing processes
The Internal Audit team supports the
whistleblowing and investigations process by
providing dedicated resource and expertise for
fraud investigations. In FY23, Mitie continued to
operate its independent whistleblowing service
via the ‘EthicsPoint’ service, as well as receiving
whistleblowing concerns through the CEO’s
direct channel called ‘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 coming out of any
investigations conducted by the Internal Audit
team are tracked to completion. An update on
whistleblowing activity is provided to the Board
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 Internal Audit function
and reported to the Audit Committee. The
related Internal Audit 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.
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 of Mitie
for FY23. Greg took over the audit from Scott
McNaughton, who had been the lead partner
for BDO on the Group audit of Mitie for the
previous five years. In accordance with rotation
requirements for audit partners on listed entity
audits, the FY22 audit was Scott’s final year on
the Group audit. The partners involved with
divisional audits are not required to rotate at
this time.
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
audit process and opportunities to place
more reliance on controls as part of the
audit approach.
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 became effective from
15 March 2020 and 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 FY23, irrespective of
value, was submitted to the Audit Committee.
A summary of the fees paid to the external
auditor for FY23 is set out in Note 6 to the
consolidated financial statements. Fees for other
audit-related services of £195,000 related to the
review of the half-yearly financial report and fees
for other non-audit services totalled £11,000.
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 of Staff, General
Counsel & 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 136.
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Annual Report and Accounts 2023
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 2023.
The report is split into two 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.
Business performance and context
In FY23 Mitie’s performance surpassed the
Board’s expectations. Group revenue (including
share of joint ventures and associates) exceeded
£4bn for the first time, having more than replaced
almost £450m of short-term Covid-related
contract revenue. Operating profit before other
items was £162.1m (FY22: £166.9m), with the
prior year being boosted by higher margin
Covid work.
Excluding short-term Covid work, revenue and
operating profit before other items increased by
14% and 44%, respectively, and Mitie’s operating
margin increased to 3.8% (FY22: 3.0%) reflecting
growth in projects work and the focus on margin
enhancement initiatives.
Basic earnings per share before other items grew
by 3.3% to 9.5p, benefiting from the re-financing of
debt instruments and share buybacks. Free cash
flow was £65.7m for the year, after closing the
customer invoice discounting facility which had a
£45m impact.
Supporting our colleagues
Mitie is a people business; our exceptional
colleagues are integral to the Group’s success. As
such, a key topic of conversation during the year
has been the impact that rising inflation costs and
the cost-of-living crisis continues to have on our
colleagues. The bulk of Mitie’s workforce is made
up of frontline colleagues, where these pressures
are greatest, and the Board is committed to
supporting them and all colleagues in a meaningful
way.
With the full support of the Remuneration
Committee, during the year, management
launched the new Employee Value Proposition,
‘Together, We are Mitie’, which also included our
Winter Support package. We ran national
roadshows to promote awareness of benefits and
the existing support available to all colleagues.
Under this framework, we took targeted actions
to provide direct support to our lowest paid
colleagues, including:
• For 40,000 of our lowest-paid colleagues, we
made a cash contribution into our discounts
offering in December, and a cash bonus
payment in January
• We waived fees for our advance salary offering
for six months, allowing colleagues to access
their pay before pay day
• Under our all-employee share plans, we gifted
free shares in March, earlier than usual
• For our hourly paid colleagues, we increased
pay in line with the National Minimum Wage,
National Living Wage or Real Living Wage
Foundation 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 2023 was set at 4%, balancing Group
affordability with talent market pressures.
Remuneration decisions and outcomes in
respect of FY23
Salary
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.
Simon Kirkpatrick was appointed as CFO with
effect from 1 April 2021. As highlighted at
appointment and in previous remuneration
reports, his salary was intentionally set at the
lower end of the market and significantly lower
than the salary of the previous CFO to serve on a
non-interim basis (Paul Woolf at £430,000).
We continue to take actions
to support our colleagues
through cost-of-living
challenges, while continuing
to ensure that remuneration
outcomes are fair, reflective
of performance and
appropriate in the context
of the shareholder and
employee experience.
Jennifer Duvalier
Chair of the Remuneration Committee
Remuneration Committee
members
At the date of this report and throughout
FY23, the Remuneration Committee
comprised:
Chair:
Jennifer Duvalier
Committee members:
Chet Patel
Salma Shah
Roger Yates
Remuneration Committee
meetings
The Remuneration Committee met three
times during FY23.
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. 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.
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Annual Report and Accounts 2023
It was noted that, over the years, as Simon
developed in the role and subject to his
performance and development, the Committee
expected to increase his salary to be in line with
the market. The Committee was and is aware that
proxy advisory bodies may highlight these
increases as a repeated area of concern. However,
the Committee considers this to have been, and
still to be, the most appropriate approach for the
individual, the Company and its shareholders. In
line with this approach, the Committee
determined that it was appropriate to increase
the CFO’s salary from £378,000 to £400,000
(+5.8%) from 1 April 2023.
This remains towards the lower end of typical
FTSE 250 salary levels for a CFO and is 7% below
the previous non-interim incumbent. The
Committee intends this to be the final increase of
this type and in the future expects increases to be
in line with or below the wider workforce rate.
FY23 bonus
The annual bonus for FY23 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.
FY23 was a good year of Group performance.
Operating profit of £162.1m was between target
and maximum, revenue of £4,055.1m exceeded
the maximum and free cash flow of £65.7m was
around target performance. Assessment of
strategic and individual performance was such that
78.2% and 80.2% of the maximum overall bonus
was determined for the CEO and CFO on a
formulaic basis.
The Committee then looked at overall financial
and non-financial performance, also taking into
account the experience of all stakeholders and
applied a discretionary reduction of 20% of the
maximum bonus opportunity. Subsequent bonus
outcomes were therefore 58.2% and 60.2% of the
maximum for the CEO and CFO.
The Committee was satisfied that this
represented a fair and appropriate outcome.
Half of the bonus amount is deferred into shares
for two years. Performance against targets and
the bonus outcomes are described in more
detail on pages 122 and 123 in the Annual Report
on Remuneration.
2020 LTIP
The Committee assessed the outcome of the
August 2020 Long Term Incentive Plan (LTIP)
award against two performance measures:
Earnings Per Share (EPS) growth and cash
conversion. Targets under both measures were
met in full and this resulted in a formulaic outcome
of 100% of the overall maximum. As with the
bonus outcome, the Committee also looked at
this outcome in the round and was particularly
mindful of external sentiment around perceived
windfall gains for executives. Having carefully
considered the performance of the Group and
changes in the Company’s share price since the
date of grant, the Committee used its discretion
to reduce the vesting out-turn by 10%, with the
result that 90% of the maximum award will vest in
August 2023.
Performance against targets and discussion of the
adjustment applied to this award are described in
more detail on pages 125 and 126 in the Annual
Report on Remuneration.
Incentive outcomes
As noted above and in every year, the Committee
challenged itself to ensure that bonus and LTIP
outcomes were appropriate in the round. The
Committee was comfortable that the final
incentive outcomes summarised above and taken
together were appropriately commensurate with
both organisational and individual performance.
Furthermore, it considered that they were
appropriate in the context of the shareholder,
employee and customer experience in FY23.
Incentives approach for FY24
For FY24, the Committee is intending to
operate the annual bonus and LTIP using the
same broad framework that was used for FY23
with some changes of emphasis in the mix and
measures used:
• Phil Bentley’s maximum bonus and LTIP
opportunity will be unchanged at 160% and
200% of salary
• Simon Kirkpatrick’s maximum bonus
opportunity will be increased from 130% to
135% of salary. Simon’s LTIP opportunity will
be increased from 150% to 175% of salary.
These are within the shareholder-approved
policy limits and below the median for
FTSE 250 CFO roles
• 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
FY24 will be: revenue (27.5%), profit (27.5%),
free cash flow (25%), individual objectives (10%)
and other strategic targets (10%)
• The LTIP will continue to be based 85% on
financial and 15% on Environment, Social &
Governance (ESG) targets. The mix for FY24
will be: EPS (50%), cash conversion (35%) and
ESG (15%). 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
The changes in the mix of measures relative to the
approach for FY23 represent an increased focus
on cash: in the bonus, the weighting of free cash
flow has been increased from 10% to 25%; and in
the LTIP, the ROIC measure (35%) has been
replaced with cash conversion. This reflects the
growing strategic importance of generating strong
cash flows. Nevertheless, ROIC continues to be a
key measure, and strong ROIC performance is
currently incentivised in both the 2021 Enhanced
Delivery Plan and 2022 LTIP awards ending with
FY24 and FY25 performance respectively. ROIC
will also be an underpin for the 2023 LTIP award,
ending with FY26 performance.
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 the Winter Support package, thanking
management for its efforts and support.
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
the executives in relation to that of the wider
workforce.
Policy review
The Committee will undertake a review of our
remuneration policy during FY24 to ensure that it
continues to appropriately support the delivery of
the Group’s long-term strategic priorities. To the
extent any material changes are proposed, we will
consult with shareholders as appropriate. The
remuneration policy will then be submitted for
shareholder approval at the 2024 AGM, in line
with the regulations.
Conclusion
We will be seeking approval for the Directors’
remuneration report (advisory vote) at the 2023
AGM. I welcome your views and feedback on
the report.
Jennifer Duvalier
Chair of the Remuneration Committee
jennifer.duvalier@mitie.com
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Annual Report and Accounts 2023
Executive remuneration at a glance
How we intend to operate our policy for FY24
The following table provides an overview of our remuneration policy and summarises the approach for remuneration arrangements for Executive
Directors for FY23 alongside how the Committee intends to apply the policy in FY24. The full policy approved at the 2021 AGM is available on our website
(www.mitie.com/investors/corporate-governance) and in the Annual Report and Accounts 2021.
At a glance Overview of policy FY23 FY24
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: £378,000
CEO: £900,000 (no increase)
CFO: £400,000 (+5.8%)
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 FY23 include private
medical cover, car allowance/car
and financial/tax planning advice.
No changes to benefits are planned
for FY24.
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.
CEO: 3% of base salary (in line with
the workforce) from 1 January
2023, previously 20% of base salary
CFO: 3% of base salary (in line with
the workforce)
CEO: 3% of base salary (in line with
the workforce)
CFO: 3% of base salary (in line with
the workforce)
Maximum bonus
opportunity
Maximum bonus opportunity is 160% of base
salary for the Chief Executive Officer and
up to 135% of base salary for any other
Executive Director.
CEO: 160% of base salary
CFO: 130% of base salary
CEO: 160% of base salary
CFO: 135% 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.
70% financial, 30% strategic At least 70% financial for FY24
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 (35%)
Profit (35%)
Strategic targets (30%)
Revenue (27.5%)
Profit (27.5%)
Free cash flow (25%)
Individual (10%)
Other strategic (10%)
Maximum LTIP
opportunity
Awards may be made up to a maximum level of
200% of base salary.
CEO: 200% of base salary
CFO: 150% of base salary
CEO: 200% of base salary
CFO: 175% of base salary
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%)
ROIC (35%)
ESG (15%)
Adjusted EPS (50%)
Cash conversion (35%)
ESG (15%)
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At a glance Overview of policy FY23 FY24
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.
Enhanced Delivery
Plan (EDP)
(One-off award made
in FY22)
Maximum award of up to 640% of base salary for the Chief Executive Officer and up to 260% of base salary for the Chief
Financial Officer.
Awards will vest based on performance measured over three years.
• Return on invested capital (75%)
• Synergies (25%)
Vesting is also subject to both an absolute share price underpin and a net debt underpin.
Shares released after at least five years (vesting after three years plus two-year holding period).
The table below reports a single figure of total remuneration for each of the Executive Directors for the financial year ended 31 March 2023 and their
comparative figures for the financial year ended 31 March 2022.
Further information on the above is provided in the Annual Report on Remuneration.
Single figure for FY23
Phil Bentley
2023
Salary £900,000
Benefits £41,662
Pensions £141,750
Bonus £838,181
LTIP £3,929,806
Total £5,851,399
Simon Kirkpatrick
2023
Salary £378,000
Benefits £3,499
Pensions £11, 34 0
Bonus £295,857
LTIP £685,928
Total £1,374,624
2022
Salary £900,000
Benefits £22,706
Pensions £180,000
Bonus £1,368,000
LTIP £1,437,455
Total £3,90 8 ,161
2022
Salary £350,000
Benefits £6,942
Pensions £10,500
Bonus £432,250
LT I P £9 8 ,115
Total £897,807
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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 FY24 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)
LTIP
50% adjusted EPS 35% cash conversion
ROIC underpin
15% ESG measures
EDP (2021 award)
25% synergies 75% ROIC
Note: details of the FY24 annual bonus targets will be disclosed in the FY24 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 were consulted on the Committee’s
approach to remuneration, including the changes to the remuneration policy and introduction of the EDP, which were
approved by shareholders at the 2021 AGM.
Simplicity The overall 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 118 of
the 2021 Annual Report and Accounts 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, LTIP and EDP.
Proportionality Performance measures and target ranges under the Annual Bonus Plan, LTIP and EDP 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
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Mitie Group plc
Annual Report and Accounts 2023
Executive Director remuneration (subject to audit)
The table below reports a single figure of total remuneration for each of the Executive Directors for FY23 and their comparative figures for FY22:
Year Salary Benefits
1
Pension
2
Total
fixed pay
Annual
bonus
3
LTIP
4
Total
variable pay To tal
Phil Bentley 2023 £900,000 £41,662 £141,750 £1,083,412 £838,181 £3,929,806 £4,767,987 £5,851,399
2022 £900,000 £22,706 £180,000 £1,102,706 £1,368,000 £1,437,455 £2,805,455 £3,908,161
Simon Kirkpatrick 2023 £378,000 £3,499 £11,340 £392,839 £295,857 £685,928 £981,785 £1,374,624
2022 £350,000 £6,942 £10,500 £367,442 £432,250 £98,115 £530,365 £897,807
Notes:
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 FY23
was determined is provided on pages 122 and 123.
4. The LTIP figures disclosed for FY23 include the 2020 LTIP awards which have been valued, in line with the regulations, using the average share price of the last three months of
FY23 (80.22p) and include dividend equivalents accrued over the vesting period. The share price at grant was 34.1p and 55.8% of the LTIP amounts included in the table above are
attributable to share price appreciation. Further information about how the level of vesting (90%) was determined and the Committee’s consideration of windfall gains is provided
on pages 125 and 126. 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 include 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 FY22 are in respect of the 2019 LTIP and have been adjusted from the figures included in the FY22 remuneration table to reflect the actual valuation based on the closing
share price on the date of vesting, which for Phil Bentley was 59.3p and for Simon Kirkpatrick was 63.4p (the difference being the vesting dates) and include dividend equivalents
accrued until the vesting dates.
Non-Executive Director remuneration (subject to audit)
The fees for the Non-Executive Directors for FY23 and their comparative figures for FY22 are set out below:
2023
1
£’000
2022
1
£’000
Derek Mapp 225 225
Baroness Couttie
2
43 60
Jennifer Duvalier 67 60
Chet Patel
3
52 –
Mary Reilly 62 60
Salma Shah
4
54 –
Roger Yates 61 59
Former Director – 46
Total 564 510
Notes:
1. All amounts were paid in cash and no other UK taxable benefits were received in either year.
2. Baroness Couttie died on 12 December 2022.
3. Chet Patel joined the Board on 1 April 2022.
4. Salma Shah joined the Board on 1 April 2022 and assumed the role of Chair of the ESG Committee with effect from 25 January 2023.
Base salary and benefits
For salaried colleagues the overall pay budget increase for 2023 was set at 4%, 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. To ensure alignment with the wider workforce, Phil Bentley’s cash allowance in lieu of pension contributions was reduced
from 20% to 3% of salary from 1 January 2023.
Simon Kirkpatrick was appointed as CFO with effect from 1 April 2021. As highlighted at appointment and in previous remuneration reports, his salary was
intentionally set at the lower end of the market and significantly lower than the salary of the previous CFO to serve on a non-interim basis (Paul Woolf at
£430,000). It was noted that, over the years, as Simon developed in the role and subject to his performance and development, the Committee expected
to increase his salary to be in line with the market. The Committee was and is aware that proxy advisory bodies may highlight these increases as a repeated
area of concern. However, the Committee considers this to have been, and still to be, the most appropriate approach for the individual, the Company and
its shareholders. In line with this approach, the Committee determined that it was appropriate to increase the CFO’s salary from £378,000 to £400,000
(+5.8%) from 1 April 2023. This remains towards the lower end of typical FTSE 250 salary levels for a CFO and is 7% below the previous non-interim
incumbent. The Committee intends this to be the final increase of this type and in the future expects increases to be in line with or below the wider
workforce rate.
Annual Report on Remuneration
Directors’ remuneration report
122
Mitie Group plc
Annual Report and Accounts 2023
Annual Report on Remuneration
continued
Non-Executive Director fees
From
1 April 2023
1
£’000
From
1 April 2022
£’000
Chairman fees
2
225 225
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
Notes:
1. The core fees of £52,000 per annum paid to each Non-Executive Director (including the Chairman) would ordinarily total £312,000 for FY24. Total fees including additional duties
would ordinarily amount to £529,000 for FY24 (£564,000 actual for FY23).
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) FY23
Awards in respect of FY23 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 130% of base salary.
The awards were structured by reference to performance against a blend of financial (70% of the bonus opportunity) and strategic targets (the remaining
30%). 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 20% of the maximum bonus opportunity. This resulted in bonuses for the CEO and CFO of 58.2% and 60.2% 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
35% of the award £148.3m threshold
£160.5m target
£166.6m maximum
£162.1m 22% out of 35%
Revenue
2
35% of the award £3,621m threshold
£3,765m target
£3,908m maximum
£4,055.1m 35% out of 35%
Free cash flow 10% of the award £55m threshold
£70m target
£86m maximum
£65.7m 4.2% out of 10%
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 80% of the
maximum for the CEO and 100% of the maximum for the CFO
8% 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 90% of the maximum for the CFO
9% out of 10% for CEO
9% out of 10% for CFO
Total formulaic outcome 78.2% of max. for CEO
80.2% of max. for CFO
Application of Committee
discretion
The Committee looked at overall financial and non-financial performance, also taking into
account the experience of all stakeholders, and applied a discretionary reduction of 20% of the
maximum bonus opportunity. The resultant bonus outcomes of 58.2% and 60.2% of maximum
were considered fair and appropriate in the round and reflected what had been a good year of
management performance.
(20%)
Annual bonus outcome 58.2% of max. for CEO
60.2% of max. for CFO
Notes:
1. Operating profit before other items.
2. Revenue including share of joint ventures and associates.
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123
Mitie Group plc
Annual Report and Accounts 2023
Performance against the strategic targets and individual objectives set for Phil Bentley and Simon Kirkpatrick were as follows:
Phil Bentley (CEO)
Strategic targets
Strategy • Introduced the Target Operating Model, with substantial savings identified
• Improved ‘straight-through processing’ by at least 10%
• Added Security project capabilities through the acquisitions of Linx and R H Irving, but did not
expand telecoms infrastructure and decarbonisation presence, in part due to constraints of
ROIC targets
Individual objectives
Customers • Major new contracts won and others retained
• Corporate Affairs Agenda established and strong plans being executed
• Enhanced Mitie’s credentials through holding two successful Property Technology conferences
Colleagues • 500 managers have received Yellow/Green belt training in Six Sigma/Lean system
• Highly successful Team-Talk Live programme. 33,700 Upload surveys completed; Office occupancy
up by 20%; employee engagement increased by 7ppts to 57%
ESG • High quality 2022 ESG report issued; on track to deliver ESG commitments
• Championed ED&I agenda, although diversity across second tier of management fell
Simon Kirkpatrick (CFO)
Strategic targets
Strategy • Delivered in year margin enhancement savings of >£40m
• Implemented structural simplification project, reducing the number of legal entities in the Group
by 25%
• Confirmed BBB credit rating and further £1m reduction in finance costs through closure of
customer invoice discounting facility
• Increased expected Interserve cost synergies by £5m to £55m
• Increased stakeholder engagement including ISOC and TSOC visits
Individual objectives
Finance function • Commenced movement of further transactional finance roles into the Shared Service Centre,
driving profit improvement of c£2.5m
• Implemented SAP into new acquisitions to drive process improvements and efficiencies
• Improved controls reporting ahead of FRC requirement for controls self-assessment for UK plc’s
Reporting • Insights and league tables of operational, financial and people metrics through new data
lake reporting
• Developed live Group inflation reporting, including cost impact, labour and procurement metrics
• Implemented new cash reporting system to track underlying metrics on a weekly basis
The bonus outcome is therefore as follows:
Total bonus payable
% of maximum
Total bonus
£’000
Cash
£’000
Deferred shares
£’000
Phil Bentley 58.2% of maximum 838 419 419
Simon Kirkpatrick 60.2% of maximum 296 148 148
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124
Mitie Group plc
Annual Report and Accounts 2023
Annual Report on Remuneration
continued
Annual Bonus Plan FY24
The maximum bonus opportunity for FY24 for Phil Bentley and Simon Kirkpatrick will be 160% and 135% of base salary. 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 FY24 will be: revenue (27.5%), profit (27.5%), free cash flow (25%), individual objectives (10%) and other strategic targets (10%).
The changes in the mix of measures relative to the approach for FY23 represent an increased focus on cash, for which the weighting has increased from
10% to 25%. This reflects the growing strategic importance of generating strong cash flows.
Details of the targets set will be disclosed in the FY24 remuneration report.
LTIP awards granted in 2022 (subject to audit)
On 17 June 2022, 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 22
Nil-cost
options
3,266,787 £1,800,000 200% Performance
conditions are
set out in the
table below
Three financial
years ending
31 March 2025
25%
Simon Kirkpatrick Performance LTIP
June 22
Nil-cost
options
1,029,038 £567,000 150% Performance
conditions are
set out in the
table below
Three financial
years ending
31 March 2025
25%
Note:
1. Number of shares was calculated based on the closing middle market price of 55.10p on the last trading day prior to the start of the financial year on 1 April 2022.
The LTIP awards granted on 17 June 2022 are subject to three performance measures: adjusted EPS, ROIC and ESG targets. These awards will vest in
June 2025 conditional on performance in respect of the period of three years ending 31 March 2025 against the following measures:
Performance measure Weighting Performance range Vesting of portion of the award
Earnings Per Share
(EPS)
50% of the award Threshold = 7.1p
Target = 7.9p
Maximum = 8.7p
25%
70%
100%
Return on Invested
Capital (ROIC)
35% of the award Threshold = 19.9%
Target = 22.1%
Maximum = 24.3%
25%
70%
100%
Environment, Social &
Governance (ESG)
targets
15% of the award • Greenhouse gas emission reduction: (a) revenue intensity of Scope 1 and 2 emissions reduced to
4.5%; and (b) 5% pa reduction in Scope 3 emissions
• Fleet zero carbon: 85% of Mitie’s total fleet is zero tailpipe emissions
• Employee engagement: improve employee engagement by 4ppt
• Customer engagement: improve Net Promoter Score (NPS) by 4
• Gender diversity: increase percentage of women holding senior leadership roles to 35%
• Ethnic diversity: increase percentage of racially diverse colleagues holding senior leadership roles
to10%
The Committee has the 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.
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125
Mitie Group plc
Annual Report and Accounts 2023
LTIP 2023
Phil Bentley and Simon Kirkpatrick will be granted LTIP awards in 2023 at 200% and 175% of base salary respectively. The awards will vest in 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
EPS 50% of the award Threshold = 9.9p
Target = 10.9p
Maximum = 12p
25%
70%
100%
Cash conversion 35% of the award Threshold = 70%
Target = 80%
Maximum = 90%
25%
70%
100%
ESG 15% of the award • Greenhouse gas emission reduction: (a) revenue intensity of Scope 1 and 2 emissions reduced to
4%; and (b) 5% pa reduction in Scope 3 emissions
• Fleet zero carbon: 100% of Mitie’s total fleet is 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 ROIC underpin such that if ROIC performance 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 FY23 represents an increased focus on cash, with the previous ROIC measure being
replaced with cash conversion. This reflects the growing strategic importance of cash conversion. Nevertheless, ROIC still remains a key measure and is a
performance measure for both the 2021 Enhanced Delivery Plan and the 2022 LTIP awards, for which the performance periods end on 31 March 2024
and 31 March 2025 respectively. As noted, it will also be an underpin for this 2023 LTIP award, for which the performance period ends on 31 March 2026.
Notwithstanding the above, the Committee still has full discretion to ensure that the level of any vesting outcome 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 August 2020 LTIP award vesting in FY24
The performance period for the August 2020 LTIP awards (in FY21) ended on 31 March 2023 (FY23). The Committee assessed performance against two
performance measures:
Performance measure Weighting
Performance
range Vesting of portion of the award
Mitie
performance
Vesting
(% of max)
EPS growth 50% of the award Threshold = 6% pa
Target = 9% pa
Maximum = 12% pa
25%
70%
100%
24% pa 100%
Cash conversion 50% of the award Threshold = 80% pa
Target = 85% pa
Maximum = 90% pa
25%
70%
100%
112% pa 100%
This results in 100% vesting of the 2020 LTIP awards on a formulaic basis.
The Committee is mindful of shareholder guidance around perceived ‘windfall gains’ and committed at grant to ensure that the level of vesting outcome
would be appropriate for this LTIP award based on the overall performance of the Group and the shareholder experience. In considering any fair and
appropriate adjustment, the Committee debated a number of key factors before its determination. These are outlined below:
• The August 2020 grant used a share price of 34.1p as the basis for determining the number of shares awarded. The share price has since recovered to
81.8p at 31 March 2023. The June 2019 grant was based on an equivalent share price of 79.1p to determine the award level at that time.
• The July 2017 grant was based on an equivalent share price of 139p and therefore the value of that award at vesting was significantly impacted by the
low share price in 2020. There was no exercise of positive discretion for ‘windfall losses’ at vesting, consistent with the shareholder experience over the
same period. Furthermore, bonuses were waived in FY18 and FY20 despite the formulaic outcome and executive salaries were reduced by up to 30%
for five months during 2020. The Remuneration Committee has a strong track record in ensuring remuneration outcomes are appropriate in the
context of stakeholder experiences.
• On the face of it, the fall in share price in 2020 and its subsequent recovery since arguably represents a windfall gain in the context of the global
pandemic and its impact on general markets. However, management performance over this period has been very strong. The team successfully
managed through the Covid period winning significant extra business and completing the transformational acquisition of Interserve. The executive team
also drove significant cost savings both from the Interserve deal and Mitie’s own overhead base. Revenue from continuing operations has increased from
£2.1bn in FY20 to £4bn in FY23 (+93%) and profit before other items on the same basis has increased from £78m to £162m (+108%) over the three
years. All of this is reflected in the share price having beaten expectations and outperformed the market. Ultimately, the attribution of which factors
impacted share price growth and to what extent is complex and extremely subjective. Nevertheless, the Committee considered that some of the
growth is due to market recovery but some is also due to strong performance from management.
Taking all of the considerations into account, the Committee concluded that a discretionary reduction of 10% was appropriate for Executive Directors.
This results in a final vesting of 90% of the maximum.
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126
Mitie Group plc
Annual Report and Accounts 2023
Annual Report on Remuneration
continued
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 outcome of 90% of the maximum was appropriate and no further discretion
wasapplied.
The August 2020 LTIP awards will vest in August 2023 and all 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 2023 share prices.
Loss of office payments (subject to audit)
There have been no loss of office payments to past Directors during FY23.
Payments to past Directors (subject to audit)
There have been no payments to past Directors during FY23 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
1
FY21/FY22
1
FY22/FY23
1
Salary
2
Benefits
3
Bonus Salary
2
Benefits
3
Bonus Salary
2
Benefits
3
Bonus
Average pay based on Mitie’s
UK employees 2.5% (20.8)% (23.9)% 4.1% 5.7% 99.4% 8.1% (0.5)% 130.6%
Executive Directors
Phil Bentley (12.5)% (25.0)% N/A
4
14.3% 10.1% 20.9% 0% 83.5% (38.7)%
Simon Kirkpatrick
5
N/A N/A N/A N/A N/A N/A 8.0% (49.6)% (31.6)%
Non-Executive Directors
Derek Mapp (12.5)% – – 14.3% – – 0% – –
Baroness Couttie
6
(10.5)% – – 14.3% – – (28.0)% – –
Jennifer Duvalier (12.5)% – – 14.3% – – 11.7% – –
Mary Reilly (12.5)% – – 14.3% – – 3.3% – –
Roger Yates (12.5)% – – 14.3% – – 3.4% – –
Chet Patel
7
N/A N/A N/A N/A N/A N/A N/A N/A N/A
Salma Shah
7
N/A N/A N/A N/A N/A N/A N/A N/A N/A
Notes:
1. The average UK employee figures reflect the changes in average annual pay for UK employees employed 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
PhilBentley 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-19.
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
benefit 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. Baroness Couttie died on 12 December 2022.
7. Chet Patel and Salma Shah joined the Board on 1 April 2022 and therefore there are no prior year comparatives. In next year’s report, it will be possible to show a FY23/FY24 change
in remuneration.
CEO pay ratio
The table below sets out the CEO pay ratio in respect of FY23. 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
FY23 Option B 271:1 248:1 206:1
FY22
1
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
Note:
1. The FY22 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.
Strategic report Governance Financial statements
127
Mitie Group plc
Annual Report and Accounts 2023
The pay ratios set out above were calculated using the Group’s FY23 gender pay data based on employees as at 5 April 2022 under method B.
MethodB was selected because it made use of robust, readily available data and did not require additional analysis into the more than 70,000 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.
The CEO pay ratio figures for FY23 have increased this year due to an increase in the CEO’s single figure, as a result of the LTIP 2020 vesting. 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
FY23 Base salary (FTE) £20,386 £22,574 £27,183
Total pay (FTE) £21,565 £23,610 £28,357
Relative spend on pay
The table below shows the total cost of remuneration in the Group, compared with dividends distributed.
Year ended
31 March 2023
£m
Year ended
31 March 2022
£m Change
Aggregate employee remuneration 1,996 2,132 (6.4)%
Equity dividends 29 6 383%
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 pay-out 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 13
Mitie
March 14 March 15 March 16 March 17 March 18 March 19 March 20 March 21 March 22 March 23
FTSE 250 FTSE 350 Support Services FTSE 350
FY14 FY15 FY16
FY17 Ruby
McGregor-
Smith
1
FY17 Phil
Bentley
1
FY18 F Y19 FY20 FY21 FY22 FY23
Single figure
remuneration £1,447,266 £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
3
£5,851,399
Annual bonus element
(actual as a % of max) 90% 50% 73% 0% waived waived 79% waived 78.6% 95% 58.2%
LTIP element (actual
vesting as a % of max) 0% 25% 69.5% 0% N/A N/A N/A 79.7%
2
50% 100% 90%
Notes:
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 which vested at 100% and 53% respectively.
3. The single remuneration figure for FY22 has been adjusted from the figure published in the FY22 remuneration table to reflect the actual valuation of Phil Bentley’s 2019 LTIP award
based on the closing share price on the date of vesting, being 59.3p.
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128
Mitie Group plc
Annual Report and Accounts 2023
Annual Report on Remuneration
continued
Share ownership (subject to audit)
Number of shares
owned as at
31 March 2023
1
Value of
target holding
Target
shareholding
2
Percentage of salary
held as at
31 March 2023
Percentage of target
achieved as at
31 March 2023
Compliance with
share ownership
guidelines
Phil Bentley 10,930,500 £1,800,000 3,082,192 709% 355% Achieved
Simon Kirkpatrick 383,932 £756,000 1,294,521 59% 30% Not achieved
but compliant
3
Notes:
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 FY22 (58.4p).
3. Simon Kirkpatrick was appointed to the Board on 1 April 2021.
Directors’ outstanding share interests (subject to audit)
The following tables 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
2022
10
Granted
in year
Lapsed
in year
Exercised
in year
Options
outstanding
as at
31 March
2023
11
Exercise
price
Earliest
normal
exercise
date
Phil Bentley July 2017 LTIP
1
171,559 – – (171,559) – Nil-cost July 2020
8
Aug 2018 LTIP
2
1,141,535 – – – 1,141,535 Nil-cost Aug 2021
8
June 2019 LTIP
3
2,275,608 – – – 2,275,608 Nil-cost June 2022
8
Aug 2020 LTIP
4
5,278,592 – – – 5,278,592 Nil-cost Aug 2023
8
Sep 2021 LTIP
5
2,975,206 – – – 2,975,206 Nil-cost Sep 2024
8
July 2021 EDP
6
9,520,661 – – – 9,520,661 Nil-cost July 2024
8
June 2021 Deferred Bonus Plan (DBP)
12
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
7
– 3,266,787 – – 3,266,787 Nil-cost June 2025
8
June 2022 DBP
13
– 1,105,008 – – 1,105,008 Nil-cost June 2024
Simon Kirkpatrick Oct 2019 LTIP
3
148,913 – – (148,913) – Nil-cost Oct 2022
Aug 2020 LTIP
4
322,580 – – – 322,580 Nil-cost Aug 2023
Sep 2021 LTIP
5
867,768 – – – 867,768 Nil-cost Sep 2024
8
July 2021 EDP
6
1,504,132 – – – 1,504,132 Nil-cost July 2024
8
Dec 2020 CSP
9
577,427 – – (577,427) – Nil-cost Dec 2022
Sep 2020 SAYE 46,187 – – – 46,187 27.28p Dec 2023
June 2022 LTIP
7
– 1,029,038 – – 1,029,038 Nil-cost June 2025
8
June 2022 DBP
13
– 349,151 – – 349,151 Nil-cost June 2024
Notes:
1. The performance criteria applicable to the 2017 LTIP awards were disclosed on pages 155 and 156 of the FY20 remuneration report.
2. The performance criteria applicable to the 2018 LTIP awards were disclosed on page 110 of the FY21 remuneration report.
3. The performance criteria applicable to the 2019 LTIP awards were disclosed on page 125 of the FY22 remuneration report.
4. The performance criteria applicable to the 2020 LTIP awards were disclosed on pages 108 and 109 of the FY21 remuneration report.
5. The performance criteria applicable to the 2021 LTIP awards were disclosed on page 123 of the FY22 remuneration report.
6. The performance criteria applicable to the 2021 EDP awards were disclosed on page 124 of the FY22 remuneration report.
7. The performance criteria applicable to the 2022 LTIP awards are disclosed on page 124 of this FY23 remuneration report.
8. Awards are subject to an additional two-year holding period.
9. The 2020 Conditional Share Plan (CSP) awards are subject to a personal performance rating.
10. 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).
11. The closing market price of the Company’s shares as at 31 March 2023 was 81.8p. The highest and lowest closing market prices during FY23 were 83.9p and 51.1p respectively.
12. 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.
13. 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 of the 1-5 day
average share price before the date of grant (61.9p).
Strategic report Governance Financial statements
129
Mitie Group plc
Annual Report and Accounts 2023
Directors’ share ownership
Number of
ordinary shares
beneficially
owned as at
31 March 2023
(or date of
cessation if
earlier)
1
Number of
ordinary shares
beneficially
owned as at
31 March 2022
(or date of
cessation if
earlier)
Executive Directors
Phil Bentley 10,930,500 10,754,889
Simon Kirkpatrick 383,932 6,332
Non-Executive Directors
Derek Mapp 616,935 553,812
Baroness Couttie
2
100,631 86,311
Jennifer Duvalier 93,308 78,243
Chet Patel
3
15,818 –
Mary Reilly 107,948 92,663
Salma Shah
3
5,648 –
Roger Yates 160,000 160,000
Notes:
1. The number of shares beneficially owned since 31 March 2023 has changed due to planned purchases that took place on 3 and 6 April 2023 for Non-Executive Directors. The revised
figures are as follows: Derek Mapp – 627,460 shares, Jennifer Duvalier – 95,665 shares, Mary Reilly – 110,756 shares, Salma Shah – 7,613 shares, and Chet Patel – 41,206 shares. In
addition, Phil Bentley made two SIP transactions, one on 13 April 2023 where an additional 276 shares were acquired and one on 15 May 2023 where 243 shares were acquired.
2. Baroness Couttie died on 12 December 2022.
3. Salma Shah and Chet Patel joined the Board on 1 April 2022.
There have been no changes, other than those in Note 1 above, between 1 April 2023 and 6 June 2023, the last practicable date prior to the date of
thisreport.
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 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 2023 Dilution
All share plans (maximum 10%) 0.5%
Discretionary share plans (maximum 5%) 0.4%
Directors’ remuneration report
130
Mitie Group plc
Annual Report and Accounts 2023
Annual Report on Remuneration
continued
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 2022 AGM, a resolution was passed to approve the 2022 Directors’ remuneration report. The results of the votes on these resolutions
were as follows:
Number of votes Votes in favour Votes against Withheld
1
2021 Directors’ remuneration policy – 2021 AGM 835.7m 356.9m 1.4m
70.1% 29.9%
2022 Directors’ remuneration report – 2022 AGM 943.5m 207.5m 0.0m
82.0% 18.0%
Note:
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 £14,900 (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.
Strategic report Governance Financial statements
131
Mitie Group plc
Annual Report and Accounts 2023
Environment, Social & Governance (ESG)
Committee report
Report from the ESG Committee Chair
On behalf of the Board, I am pleased to present
the ESG Committee report for the year ended
31 March 2023.
I would firstly like to note the contribution
made by the late Baroness Couttie. Philippa was
instrumental in the development of Mitie’s ESG
agenda. Philippa established the ESG Committee
(which was previously known as the Social Value
& Responsible Business Committee) in January
2020 and was Chair of the Committee and the
Mitie Foundation until her death in December
2022. Philippa will be remembered for helping
to establish Mitie as the ESG leader in the
facilities management industry.
Over the following pages, this report provides
an insight into some of the ESG Committee’s
key activities during FY23. Mitie’s activities
and outputs in relation to ESG and Mitie’s
governance framework in relation to the Task
Force on Climate-related Financial Disclosures
(TCFD) are set out on pages 47 to 57 of this
Annual Report and further information is also
available at www.mitie.com/about-mitie/
social-value-and-responsible-business.
As further detailed over the following pages, the
Committee’s activities in FY23 focused on areas
such as:
• Development of the Group’s ESG strategy
• Engagement with ESG rating agencies
Our work in ESG provides
great purpose to Mitie
across all aspects of
sustainability and social value,
both within the organisation
and through the delivery
to our customers and the
communities we work in.
Salma Shah
Chair of the ESG Committee
• Adoption of a science-based target for
Scope 3 emissions
• Fleet strategy, including an analysis of
high-mileage drivers and specialist vehicles
• Increasing the number of colleagues
undertaking apprenticeships across the
Mitie business
• Increasing diversity of leadership roles and
inclusivity in Mitie’s culture
I’m proud to say that Mitie’s leadership position
in relation to ESG continued to be externally
recognised during FY23, with Mitie having won
multiple awards, including:
• GREENFLEET Awards 2022 – awarded
Private Sector Car Fleet of the Year
• What Van? Awards 2023 – awarded Green
Fleet of the Year
• Fleet News Awards – Private Sector Fleet
of the Year: more than 1,000 vehicles
• Zero Waste Awards 2022 – Mitie Waste
awarded four-star rating for project with
McCormick
• Flowers in the City Awards 2022 – Living
Wall Trophy
• Top Employers Institute Awards 2023 –
Top Employer United Kingdom
• Inclusive Companies Awards 2022 –
Inclusive Top 50 UK Employer
• UK Social Mobility Awards 2022 –
Community Programme of the Year:
Silver Award
• National Apprenticeship Service 2022 –
Top 100 Apprenticeship Employers
Areas of focus for the Committee in FY24
are expected to include:
• Deployment of Mitie’s social value delivery
programme across customer accounts
• Continued engagement with ESG rating
agencies
• Decarbonisation of Mitie’s estate and energy
consumption reductions through Mitie’s ISO
50001 Energy Management System
• Drive sustainability and social value initiatives
through the supply chain to reduce Scope 3
emissions in alignment with Mitie’s science-
based target
• Support the social mobility of
underrepresented groups
• Enhance colleagues’ knowledge and
awareness of sustainability
• Incorporate circular economy initiatives
into business operations
• Monitor performance against Mitie’s FY24
social value targets and react to challenges
accordingly
• Identify and adopt nature-based solutions
where possible
Salma Shah
Chair of the ESG Committee
ESG Committee members
At the date of this report and throughout
FY23, the ESG Committee comprised:
Chair:
Salma Shah (from 25 January 2023)
Baroness Couttie (until 12December
2022)
Committee members:
Salma Shah (until 25 January 2023)
Peter Dickinson, Chief of Staff, General
Counsel & Company Secretary
Jasmine Hudson, Chief People Officer
Claire Lovegrove, Director of
Corporate Affairs
Jason Roberts, Group Director for
Sustainability & Social Value
(from 25 January 2023)
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 FY23.
Key purpose of the ESG
Committee
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
ESG Committee
To benefit Mitie’s customers, employees,
shareholders and other key stakeholders,
the key responsibilities of the ESG
Committee include:
• Prepare the Group’s ESG strategy on an
annual basis, and submit it to the Board
for final approval and adoption
• Promote, oversee and monitor the
implementation of the Group’s
ESG strategy
• 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’s Terms of Reference
are available at www.mitie.com/investors/
corporate-governance.
132
Mitie Group plc
Annual Report and Accounts 2023
Task Force on Climate-related
Financial Disclosures (TCFD)
Mitie’s TCFD, including the governance
arrangements in place, are set out in detail
on pages 47 to 57.
Key activities during the year
ESG strategy
The Committee reviewed and further
developed the Group’s ESG strategy during the
year prior to its presentation to the Board for
approval in September 2022. The ESG strategy
encompasses a 15-point plan and forms the
backbone of Mitie’s drive towards a continuous
improvement cycle for sustainability and social
value within Mitie.
Fleet strategy
The Committee analysed the results of a review
of high-mileage drivers within the Mitie business
and discussed the challenges associated with
transitioning high-mileage drivers and certain
specialist vehicles to electric vehicles in line with
Mitie’s Fleet strategy. In connection with this,
a sub-committee of the Plan Zero Working
Group was set up to investigate ways to address
the challenges, including the possibility of using
alternative fuels.
Engagement with ESG rating agencies
The Committee continued to look for ways to
improve Mitie’s ESG scores with ESG rating
agencies, accrediting bodies and Sustainable
Indices. The Committee reviewed responses
to rating agency 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 received
the highest-ranking Platinum Award in
The Sustainable FM Index’s December 2022
report for the second year running.
Science-based target
The Committee approved the adoption of a
science-based target which was submitted to
the Science Based Targets initiative (SBTi) for
approval in July 2022. Mitie’s Net Zero by 2035
science-based target applies to its Scope 3
emissions. Mitie’s existing Net Zero by 2025
Plan Zero commitment applies to its Scope 1
and 2 emissions.
ESG Report 2022
The Committee reviewed Mitie’s ESG Report
2022 and the Board’s feedback on the report.
Mitie’s ESG Report 2022 outlined progress
made across all areas of the Group’s ESG
strategy and shared key achievements for
each of the five pillars of Mitie’s social value
framework: environment, people, community,
responsible supply chain and innovation.
The report is available to download at
www.mitie.com/esg/.
Committee Chair
Salma Shah was appointed Chair of the
Committee by the Board in January 2023
following the death of Baroness Couttie in
December 2022. Salma had been a member
of the Committee since her appointment to
the Board in April 2022. Salma has a wealth of
experience in ESG matters and a background
in public policy and public affairs.
Support for apprenticeships
The Committee kept Mitie’s apprenticeship levy
strategy under review and discussed ways to
increase Mitie’s apprenticeship levy utilisation
rate and apprenticeship levy gifting. As part of
these discussions, the Committee identified
barriers which were hindering Mitie’s ability
to maximise apprenticeship levy spend.
These barriers included a lack of suitable
apprenticeship programmes available for
colleagues in certain job roles. Following on from
these discussions, Mitie has become involved in
the development of an apprenticeship trailblazer
suitable for Mitie’s frontline security operatives.
Equality, diversity and inclusion
The Committee was updated on Mitie’s Equality,
Diversity & Inclusion (ED&I) strategy which was
launched at a MLT meeting in December 2022
and rolled out to the wider organisation as part
of Mitie’s Team Talk Live event in February 2023.
The Committee also discussed, planned and
completed actions in relation to Mitie’s ED&I
commitments, colleague feedback from diversity
network events and initiatives such as the
addition of pronouns to email signatures.
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
colleague eligibility criteria with a view to trying
to expand this where possible and made
suggestions for ways in which to increase
colleague engagement in volunteering initiatives.
Performance against targets
The Committee reviewed performance against
the Group’s FY23 social value 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, the Committee approved the
appointment of Giving Back Ambassadors
within the Mitie business to support the drive
for Mitie colleagues to participate in volunteering
activities. Mitie achieved 11 of its FY23 social
value targets. Further detail can be found on
pages 37 to 59.
Mitie Foundation
The Committee was regularly updated on the
activities of the Mitie Foundation. During FY23,
the Mitie Foundation continued to support
young people and those who face barriers
to work, such as the long-term unemployed,
those with disabilities or learning difficulties,
ex-service personnel and ex-offenders.
A total of 347 Mitie Foundation candidates
were recruited into the Mitie business in FY23.
Further detail of the activities of the Mitie
Foundation can be found on page 58 and at
www.mitie.com/mitie-foundation.
Environment, Social & Governance (ESG) Committee report
continued
Strategic report Governance Financial statements
133
Mitie Group plc
Annual Report and Accounts 2023
The Directors present their Annual Report, together with the audited financial statements of the
Company and the Group, for the year ended 31 March 2023.
The Directors’ report required under the Companies Act 2006 comprises the corporate governance
statement on pages 85 to 107. The corporate governance statement on pages 85 to 107 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 2023
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 38 to 42.
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 38 to 42.
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 35
and 36.
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 54 to 57.
Environmental data Environmental data can be found in the Strategic report on page 54.
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 116
to 130 and Note 31 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 116
to 130
Shareholder waiver of dividends and
future dividends
Directors’ report on page 133
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 pages 2 to 5 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, 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 36
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 12 to 17.
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 60 to 72.
The Group’s profit before tax from continuing
operations for the year ended 31 March 2023
was £105.5m (2022: £52.3m).
Dividends
An interim dividend of 0.7p per Ordinary
Share (2022: 0.4p) with a total value of £9.4m
(2022: £5.7m) was paid to shareholders on
1 February 2023.
The Directors recommend a final dividend of
2.2p per Ordinary Share (2022: 1.4p) with a
total value of £28.7m (2022: £19.5m) based
upon the number of shares in issue (excluding
treasury shares and shares held by the Employee
Benefit Trust) as at 6 June 2023. Subject to
approval at the 2023 AGM, the final dividend
will be paid on 4 August 2023 to shareholders
on the register as at close of business on
23 June 2023.
Total dividends per Ordinary Share for the year
ended 31 March 2023 will be 2.9p (2022: 1.8p).
As at 31 March 2023, the Company had
distributable reserves of £116.5m (2022:
£54.6m).
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 2023.
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
FY23 are set out on page 92. Full biographical
details of the current Directors, including
Committee membership and external
appointments, are set out on pages 87 to 89.
Director independence
The Board considered the independence of
all Non-Executive Directors during FY23
and determined that, as at 31 March 2023,
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.
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 of Staff,
General Counsel & 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 FY23 and remains in force as at the
date of this report.
Directors’ report
134
Mitie Group plc
Annual Report and Accounts 2023
Directors’ report
continued
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
FY23 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 28
to the consolidated financial statements.
Details of the Group’s debt instruments are set
out in Note 24 to the consolidated financial
statements. Throughout FY23, 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,
US private placement loan notes and derivatives
which are used to manage interest, currency and
other risks when necessary or material.
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 25 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 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 2023, 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
Chapter5 of the Disclosure Guidance and
Transparency Rules):
Number of
Ordinary Shares % of voting rights
Silchester International Investors LLP 167,981,846 12.30%
FIL Limited 137,634,294 10.08%
Schroder plc 84,491,458 6.19%
Heronbridge Investment Management 74,092,816 5.43%
Alchemy Special Opportunities Fund IV 71,039,339 5.20%
BlackRock Inc 64,370,983 4.71%
FMR LLC 61,534,382 4.51%
Vanguard Group 61,529,166 4.51%
Oasis Investments II Master Fund 56,201,527 4.12%
JPMorgan Asset Management 52,544,407 3.85%
Brandes Investment Partners LLP 50,916,438 3.73%
Apex Financial Services (Trust Company) Limited 50,903,160 3.73%
Changes that have been notified to the Company pursuant to Chapter 5 of the Disclosure Guidance and Transparency Rules between 31 March 2023 and
6 June 2023, the latest practicable date prior to the date of this report, are set out below.
Number of
Ordinary Shares % of voting rights
FIL Limited 144,654,320 10.60%
Norges Bank 40,591,655 2.99%
Directors’ interests in the Company’s share capital are set out in the Directors’ remuneration report on page 129.
2022 Annual General Meeting
The 2022 Annual General Meeting (AGM) was
held on 26 July 2022 in London as a combined
physical and electronic meeting (a hybrid
meeting). At the meeting all resolutions passed,
with more than 78% of the votes cast in favour.
The resolutions which received a vote of more
than 20% against (as a percentage of the votes
cast) were in respect of the re-election of Roger
Yates and the additional authority to disapply
pre-emption rights (up to a nominal value
equivalent to 5% of Mitie’s issued share capital
excluding treasury shares) for the purposes of
acquisitions and capital investments.
The majority of the votes received against the
re-election of Roger Yates were attributable
to one of the Company’s major shareholders
whose policy is not to support Non-Executive
Directors who are over-committed to
other activities.
Strategic report Governance Financial statements
135
Mitie Group plc
Annual Report and Accounts 2023
The Company has taken on board this feedback
and has sought to provide re-assurance that all
Non-Executive Directors have sufficient time to
dedicate to their duties. Roger retired from the
Board of St James’ Place plc on 18 May 2023.
Roger’s biography can be found on page 89.
A single shareholder cast the majority of votes
against the additional authority to disapply
pre-emption rights, in line with their published
proxy voting and corporate governance policy.
To address these concerns, the Board will not
be seeking to dis-apply pre-emption rights at
the 2023 AGM.
2023 Annual General Meeting
Mitie’s 2023 AGM will be held on 25 July 2023
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 26 July 2022, the
Company’s shareholders authorised:
• The Directors to allot Ordinary Shares
up to an aggregate nominal amount of
£3,578,612.88, equating to 10% of the issued
share capital of the Company (excluding
treasury shares) as at 10 June 2022
• The disapplication of pre-emption rights over
allotted shares up to an aggregate nominal
value of £1,789,306.44, equating to 5% of
the issued share capital (excluding treasury
shares) and 4.997% of the issued share capital
(including treasury shares) of the Company,
each as at 10 June 2022
• The disapplication of pre-emption rights over
allotted shares up to an aggregate nominal
value of £1,789,306.44, equating to 5% of
the issued share capital (excluding treasury
shares) and 4.997% of the issued share capital
(including treasury shares) of the Company,
each as at 10 June 2022, in connection with
the financing (or refinancing, if the authority
is to be used within six months after the
original transaction) of an acquisition or
specified capital investment which is
announced contemporaneously with the
allotment or which has taken place in the
preceding six-month period and is disclosed
in the announcement of the allotment
• The Company to make market purchases of
its own shares up to a total of 143,144,515
Ordinary Shares, equating to 10% of the
issued share capital (excluding treasury
shares) of the Company as at 10 June 2022
These authorities will expire on the earlier date
of 30 September 2023 and the conclusion of
the 2023 AGM. A renewal of these authorities
will be put to shareholders at the 2023 AGM.
Further details are included in the notes to the
Notice of AGM.
During FY23, the Company utilised the above
authorities to:
• Allot 1,594,993 new Ordinary Shares with
an aggregate nominal value of £39,874.83
in connection with the exercise of options
by employees participating in the Mitie
Group plc 2011 SAYE scheme for aggregate
consideration of £993,827
• Undertake market purchases in relation to
the share buyback programme announced
on 9 June 2022 of 57,657,918 Ordinary Shares
(representing 4.22% of the issued share
capital of the Company (including treasury
shares) as at 31 March 2023). The aggregate
nominal value of the shares purchased was
£1,441,448 and the total aggregate amount
paid was £43,542,032 (excluding expenses)
During FY23, the Company utilised the authority
granted at the AGM held on 27 July 2021 to
undertake market purchases in relation to
the share buyback programme announced
on 9 June 2022 of 11,081,821 Ordinary Shares
(representing 0.81% of the issued share capital
of the Company (including treasury shares) as
at 31 March 2023). The aggregate nominal value
of the shares purchased was £277,046 and the
total aggregate amount paid was £6,691,573
(excluding expenses).
The Employee Benefit Trust acquired 47.9m
Ordinary Shares through market purchases,
with a further 2.2m committed during FY23
(2022: 22.9m shares). 23.8m shares were
distributed by the Employee Benefit Trust
during FY23 to satisfy awards under Mitie
Group plc’s Long Term Incentive Plan and
Conditional Share Plan, and to the SIP Trust.
The total number of Ordinary Shares held by
the Company in treasury as at 31 March 2023
was 2,353, representing 0.0002% of the issued
share capital of the Company (2022: 1,290,992,
representing 0.1% of the issued share capital
of the Company). 1,288,639 shares were
distributed from treasury in connection
with the exercise of options by employees
participating in the Mitie Group plc 2011 SAYE
scheme during FY23.
Exercisable awards under the Mitie Group plc
2011 Executive Share Option scheme were
underwater during FY23 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 35 to the consolidated
financial statements.
By order of the Board
Peter Dickinson
Chief of Staff, General Counsel &
Company Secretary
7 June 2023
136
Mitie Group plc
Annual Report and Accounts 2023
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 International Accounting
Standards in conformity 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 their 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 Company 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
7 June 2023
Simon Kirkpatrick
Chief Financial Officer
7 June 2023
Statement of Directors’ responsibilities
in respect of the Annual report, Remuneration report and financial statements
137
Mitie Group plc
Annual Report and Accounts 2023
Strategic report Governance Financial statements
138 Independent auditor’s report to the members of
Mitie Group plc
145 Consolidated incomestatement
146 Consolidated statement of comprehensive income
147 Consolidated balance sheet
149 Consolidated statement of changes in equity
150 Consolidated statement of cash flows
152 Notes to the consolidated financial statements
206 Company balance sheet
207 Company statement of changes in equity
208 Notes to the Company financial statements
212 Appendix – Alternative Performance Measures
Financial statements
138
Mitie Group plc
Annual Report and Accounts 2023
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 2023
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 31 March 2023 which comprise
the Consolidated Income Statement, the
Consolidated Statement of Comprehensive
Income, the Consolidated Balance Sheet, the
Consolidated Statement of Changes in Equity,
the Consolidated Statement of Cash Flows, and
notes to the consolidated financial statements,
including a summary of significant 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 Balance Sheet, the
Company Statement of Changes in Equity and
notes to the Company financial statements,
including a summary of significant 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
31 March 2018 and subsequent financial
periods. The period of total uninterrupted
engagement including reappointments is six
years, covering the years ended 31 March 2018
to 31 March 2023.
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.
Conclusions relating to
goingconcern
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 2023;
• We obtained the Directors’ cash flow
forecasts covering the period to 30
September 2024 and challenged the key
assumptions in respect of revenue growth,
gross profit margins, cash generation and
the potential impact of key provisions 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 of 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 new financing agreements
in respect of the US Private Placement
notes issued by the Group during the
year to confirm maturity terms and
covenants attached;
• 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.
Strategic report Governance Financial statements
139
Mitie Group plc
Annual Report and Accounts 2023
Overview
Coverage
1
90% (2022: 97%) of Group revenue
93% (2022: 91%) of Group total assets
Key Audit Matters (“KAMs”) 1) Revenue recognition in respect of new and modified contracts and cut-off of accrued income - consistent
with prior year
2) Onerous contract provisions – consistent with prior year*
3) Contract specific provisions – consistent with prior year*
The prior year KAMs also included “Accounting for the acquisition of the Interserve component.” This
acquisition was completed on 30 November 2020 and as the accounting for this area was concluded in the
prior year, it is not considered a KAM in the current year.
* The onerous contract provisions and contract specific provisions were recorded as one KAM in the prior year. We have disclosed
these as separate KAMs in the current year, which is consistent with our risk assessment.
Materiality Group financial statements as a whole
£6.3m (2022: £6.4m) based on 5% of continuing profit before tax and non-recurring other items (2022: 5%
continuing profit before tax and non-recurring other items)
1 These are areas which have been subject to a full scope audit or specific audit procedures
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 as
disclosed in Note 3 to the financial statements.
Technical Services, Business Services, Central
Government & 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
desktop review procedures.
BDO LLP, through either the Group audit team
or component audit teams, completed all full
scope audits, specific audit procedures and
desktop 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 phases 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; and
• Review of the component auditors’ working
papers 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
and Parent Company’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 meetings and other papers
related to climate change.
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 47 with 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.
140
Mitie Group plc
Annual Report and Accounts 2023
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
Revenue recognition in respect of new
and modified contracts and cut-off of
accrued income
The accounting policies and critical
judgements applied are disclosed in
Notes 1 and 2.
The 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 risk
that cut-off has not been correctly
applied and that revenue has not been
appropriately recognised in respect of
accrued income.
Due to the above we considered
revenue recognition in respect of these
matters to be a key audit matter.
We completed the following audit procedures:
• 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 that the related revenue recognition was in accordance
with the requirements of the applicable accounting standard.
• Tested a sample of accrued income balances at the 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.
Key observations:
We found that new and modified contracts were being accounted
for in accordance with the requirements of the applicable accounting
standard and that 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.
Onerous contract provisions
The accounting policies and critical
judgements applied are disclosed in
Notes 1 and 2.
Provisions are disclosed in Note 21.
Material onerous contract provisions
are recognised within the Communities
component.
The contracts are in some cases for
durations of up to 20 years and
significant judgement is required on
future operational costs and efficiencies
to determine the level of provision
required.
Furthermore, as disclosed in Note 2, the
Group has a contract with a remaining
term of 18 years, which has recorded a
significant loss in the current year and
recent prior years, for which no onerous
contract provision is recognised. This is
an area of Management judgement
and estimation.
In respect of this matter, the disclosure
provided and the estimated range of
possible outcomes given, are key areas
of Management judgement. Due to
this we considered onerous contract
provisions to be a key audit matter.
We completed the following audit procedures in relation to onerous
contract provisions within the Communities component:
• Assessed the completeness of onerous contract provisions
through review of a sample of contracts to assess contract
performance and identify any loss-making or potentially
loss-making contracts for which a provision had not been
considered.
• Critically evaluated Management’s contract profitability and
turnaround plan for the specific contract which has recorded
a significant loss in the current year and recent prior years.
Obtained an understanding of, and challenged, Management’s
assumptions used within the calculations. This included considering
whether initiatives were within the Group’s contractual ability to
implement, the ability to reasonably assess their financial impact,
and the forecast timing of their implementation.
• For the population of onerous contracts, we reviewed actual
results for each contract for the period against Management’s
forecast for the same period, to test their forecast accuracy.
• Challenged Management on the appropriateness of the initiatives
within the onerous contract provision assessments which reduce
the provision recorded.
• Evaluated the sensitivity analysis prepared by Management
and performed our own sensitivity calculations to assess the
appropriateness of the provisions recorded.
• Reviewed the adequacy of the Group’s disclosures in respect of
onerous contracts and their compliance with the requirements
of IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
Key observations:
We found that the judgements made by Management in assessing
the onerous contract provisions are appropriate and the amounts
recorded by Management are reasonable.
Furthermore, we consider the disclosures around these matters to
be appropriate.
Strategic report Governance Financial statements
141
Mitie Group plc
Annual Report and Accounts 2023
Key audit matter How the scope of our audit addressed the key audit matter
Contract specific provisions
The accounting policies and critical
judgements applied are disclosed in
Notes 1 and 2.
Provisions are disclosed in Note 21.
Material contract specific provisions are
recognised within the Communities
component. Significant estimation is
involved in determining the costs likely
to be incurred to resolve these claims
and judgement is required to determine
the extent of the Group’s liability.
In respect of this matter, the disclosure
provided and the estimated range of
possible outcomes given, are key areas
of Management judgement. 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 management, the Group’s internal legal counsel and
external legal counsel where applicable.
• Reviewed relevant communications with third parties
where available.
• Critically evaluated assessments prepared by Management in
respect of the claims, and challenged assumptions used within
them.
• Developed independent ranges for each 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 made by Management in assessing
the contract specific provisions are appropriate and the amounts
recorded by Management are reasonable.
We found that the judgements made by Management in assessing
the contract specific provisions are appropriate and the amounts
recorded by Management are reasonable.
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
2023
£m
2022
£m
2023
£m
2022
£m
Materiality 6.3 6.4 4.4 4.4
Basis for determining
materiality
5% of continuing profit before tax and non-recurring
Other Items
70% of Group materiality
Rationale for the
benchmark applied
The Parent Company does not trade and materiality
was set at a percentage of Group materiality.
The Parent Company does not trade and materiality
was set at a percentage of Group materiality.
Performance materiality 4.4 4.4 3.0 3.0
Basis for determining
performance materiality
70% of Materiality
Rationale for
benchmark applied
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 misstatements.
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 12% and 78% (2022: 20% and 84% ) of Group materiality dependent on the size and our
assessment of the risk of material misstatement of that component. Component materiality ranged from £0.75m to £4.9m (2022: £1.25m to £5.4m).
In the audit of each component, we further applied performance materiality levels of 70% (2022: 65%-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 £315k (2022: £224k). We also agreed to
report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
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Independent auditor’s report to the members of Mitie Group plc
continued
Other information
The Directors are responsible for the other information. The other information comprises the information included in the annual report and accounts
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 136; 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 84.
Other Code provisions • The Directors’ statement on fair, balanced and understandable set out on page 115;
• The Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set
out on page 84;
• The section of the annual report that describes the review of effectiveness of risk management and internal
control systems set out on page 112; and
• The section describing the work of the audit committee set out on page 109.
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 their 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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Responsibilities of Directors
As explained more fully in the statement of
Directors’ responsibilities within the Directors’
report set out on page 136, 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 an 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
litigation. 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 risk of
fraud; and
– Internal controls established to mitigate
risks related to fraud.
• Review of minutes of Board and Audit
Committee meetings to identify 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 forensic 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
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 in revenue recognition, 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 defined risk criteria, by
agreeing to supporting documentation;
• Testing a sample of accrued income for
correct cut-off (refer to revenue recognition
KAM); and
• Assessing significant estimates and judgements
made by Management for bias (refer to
onerous contract provisions and contract
specific provisions KAMs).
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 results of their work performed
in this regard.
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Independent auditor’s report to the members of Mitie Group plc
continued
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
7 June 2023
BDO LLP is a limited liability partnership
registered in England and Wales (with
registered number OC305127).
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Notes
2023 2022
Before
Other items
£m
Other
items
1
£m
Tot al
£m
Before
Other items
£m
Other
items
1
£m
Total
£m
Continuing operations
Revenue including share of joint ventures and associates 4,055.1 – 4,055.1 3,996.8 – 3,996.8
Less: share of revenue of joint ventures and associates 15 (110.1 ) – (110.1 ) (93.5 ) – (93.5 )
Group revenue 3 3,945.0 – 3,945.0 3,903.3 – 3,903.3
Cost of sales (3,508.5 ) – (3,508.5 ) (3,451.5 ) – (3,451.5 )
Gross profit 436.5 – 436.5 451.8 – 451.8
Administrative expenses (282.7 ) (48.8 ) (331.5 ) (291.5 ) (102.2 ) (393.7 )
Other income – 3.7 3.7 – 9.8 9.8
Share of profit/(loss) of joint ventures and associates 15 8.3 – 8.3 6.6 (2.4 ) 4.2
Operating profit/(loss)
2
3, 6 162.1 (45.1 ) 117.0 166.9 (94.8 ) 72.1
Finance income 8 2.2 – 2.2 0.2 – 0.2
Finance costs 8 (13.7 ) – (13.7 ) (20.0 ) – (20.0 )
Net finance costs (11.5 ) – (11.5 ) (19.8 ) – (19.8 )
Profit/(loss) before tax 150.6 (45.1 ) 105.5 147.1 (94.8 ) 52.3
Tax 9 (22.6 ) 8.2 (14.4 ) (19.0 ) (2.0 ) (21.0 )
Profit/(loss) from continuing operations after tax 128.0 (36.9 ) 91.1 128.1 (96.8 ) 31.3
Discontinued operations
Profit from discontinued operations before tax 5 – – – 3.0 17.0 20.0
Tax 9 – – – (0.6 ) – (0.6 )
Profit from discontinued operations after tax – – – 2.4 17.0 19.4
Profit/(loss) for the year attributable to owners of the parent 128.0 (36.9 ) 91.1 130.5 (79.8 ) 50.7
Earnings per share (EPS) attributable to owners of the parent
From continuing operations:
Basic 11 9.5 p 6.8 p 9.2 p 2.2 p
Diluted 11 8.6 p 6.2 p 8.3 p 2.0 p
Total Group:
Basic 11 9.5 p 6.8 p 9.4 p 3.6 p
Diluted 11 8.6 p 6.2 p 8.5 p 3.3 p
Notes:
1. Other items are as described in Note 4.
2. Including net impairment losses on trade receivables and accrued income of £2 .8 m (2022: £0. 8 m).
Consolidated income statement
For the year ended 31 March 2023
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Consolidated statement of comprehensive income
For the year ended 31 March 2023
Notes
2023
£m
2022
£m
Profit for the year 91.1 50.7
Items that will not be reclassified to profit or loss in subsequent years
Remeasurement of net defined benefit pension liabilities 32 (0.9 ) 22.1
Share of other comprehensive (expense)/income of joint ventures 15 (2.4 ) 0.7
Tax credit/(charge) relating to items that will not be reclassified to profit or loss in subsequent years 9 2.6 (3.8 )
(0.7 ) 19.0
Items that may be reclassified to profit or loss in subsequent years
Exchange differences on translation of foreign operations 1.5 0.1
Net losses on cash flow hedges taken to equity
1
(0.3 ) (0.5 )
Tax credit relating to items that may be reclassified to profit or loss in subsequent years 9 – 0.1
Other comprehensive income for the year 0.5 18.7
Total comprehensive income for the year attributable to owners of the parent 91.6 69.4
Note:
1. Net losses on cash flow hedges taken to equity include fair value gains of £9 .6 m (2022: £5.1 m) on derivative financial instruments used for hedging private placement notes
(see Note25). These gains are reclassified to profit or loss and netted against foreign exchange losses on private placement notes of £9.9 m (2022: £5. 6 m).
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Notes
2023
£m
2022
1
£m
Non-current assets
Goodwill 12 312.3 301.3
Other intangible assets 13 252.6 258.9
Property, plant and equipment 14 156.9 143.9
Interests in joint ventures and associates 15 8.8 11.9
Trade and other receivables 16 23.5 25.1
Contract assets 17 0.8 1.6
Retirement benefit assets 32 2.4 1.6
Deferred tax assets 22 20.4 11.1
Total non-current assets 777.7 755.4
Current assets
Inventories 18 13.5 11.9
Trade and other receivables 16 786.8 686.7
Contract assets 17 1.1 1.6
Derivative financial instruments 25 – 19.6
Current tax receivable – 1.0
Cash and cash equivalents 23 248.3 345.2
Total current assets 1,049.7 1,066.0
Total assets 1,827.4 1,821.4
Current liabilities
Trade and other payables 19 (899.5 ) (841.2 )
Deferred income 20 (83.3 ) (83.5 )
Current tax payable (0.8 ) (4.1 )
Financing liabilities 24 (32.0 ) (171.1 )
Provisions 21 (54.2 ) (54.7 )
Total current liabilities (1,069.8 ) (1,154.6 )
Net current liabilities (20.1 ) (88.6 )
Non-current liabilities
Trade and other payables 19 (2.3 ) (2.8 )
Deferred income 20 (19.8 ) (32.6 )
Financing liabilities 24 (254.0 ) (129.5 )
Provisions 21 (57.2 ) (62.3 )
Retirement benefit liabilities 32 (2.6 ) (13.8 )
Total non-current liabilities (335.9 ) (241.0 )
Total liabilities (1,405.7 ) (1,395.6 )
Net assets 421.7 425.8
Note:
1. Trade and other receivables of £1 7 .3 m have been reclassified from current assets to non-current assets as at 31 March 2022. See Note 1.
Consolidated balance sheet
As at 31 March 2023
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Consolidated balance sheet continued
As at 31 March 2023
Notes
2023
£m
2022
£m
Equity
Share capital 28 34.0 35.7
Share premium 28 131.5 130.6
Merger reserve 29 157.0 358.6
Own shares reserve 29 (59.0 ) (36.9 )
Other reserves
1
29 36.3 28.4
Hedging and translation reserve 29 (1.4 ) (2.6 )
Retained profits/(losses) 123.3 (88.0 )
Equity attributable to owners of the parent 421.7 425.8
Note:
1. Other reserves include the share-based payments reserve and the capital redemption reserve. Refer to Note 29.
The consolidated financial statements of Mitie Group plc, company registration number SC019230, were approved by the Board of Directors and
authorised for issue on 7 June 2023. They were signed on its behalf by:
Phil Bentley Simon Kirkpatrick
Chief Executive Officer Chief Financial Officer
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Share
capital
£m
Share
premium
£m
Merger
reserve
£m
Own shares
reserve
£m
Other
reserves
1
£m
Hedging and
translation
reserve
£m
Retained
profits/
(losses)
£m
Tot al
equity
£m
At 1 April 2021 35.6 130.6 358.6 (28.8 ) 14.5 (2.3 ) (150.7 ) 357.5
Profit for the year – – – – – – 50.7 50.7
Other comprehensive income/(expense) – – – – – (0.3 ) 19.0 18.7
Total comprehensive income/(expense) – – – – – (0.3 ) 69.7 69.4
Transactions with owners
Dividends paid – – – – – – (5.7 ) (5.7 )
Issue of shares 0.1 – – (0.1 ) – – – –
Purchase of own shares – – – (13.8 ) – – – (13.8 )
Share-based payments – – – 5.8 13.9 – (1.1 ) 18.6
Tax on share-based payments – – – – – – (0.2 ) (0.2 )
Total transactions with owners 0.1 – – (8.1 ) 13.9 – (7.0 ) (1.1 )
At 31 March 2022 35.7 130.6 358.6 (36.9 ) 28.4 (2.6 ) (88.0 ) 425.8
At 31 March 2022 (as reported) 35.7 130.6 358.6 (36.9 ) 28.4 (2.6 ) (88.0 ) 425.8
Impact of change in accounting policy in the year
2
At 1 April 2022 35.7 130.6 358.6 (36.9 ) 28.4 (2.6 ) (89.1 ) 424.7
Profit for the year – – – – – – 91.1 91.1
Other comprehensive income – – – – – 1.2 (0.7 ) 0.5
Total comprehensive income – – – – – 1.2 90.4 91.6
Transactions with owners
Dividends paid – – – – – – (28.9 ) (28.9 )
Purchase of own shares – – – (37.7 ) – – – (37.7 )
Realisation of merger reserve
3
Share buybacks
4
(1.7 ) – – – 1.7 – (50.7 ) (50.7 )
Share-based payments
5
Tax on share-based payments – – – – – – 6.0 6.0
Total transactions with owners (1.7 ) 0.9 (201.6 ) (22.1 ) 7.9 – 122.0 (94.6 )
At 31 March 2023 34.0 131.5 157.0 (59.0 ) 36.3 (1.4 ) 123.3 421.7
Notes:
1. Other reserves include the share-based payments reserve and the capital redemption reserve. Refer to Note 29.
2. Retained losses as at 1 April 2022 have been adjusted for the change in accounting policy for onerous contract assessments as a result of the amendment to IAS 37 Onerous Contracts
– Cost of Fulfilling a Contract. Refer to Note 1.
3. The merger reserve represents amounts relating to premiums arising on shares issued subject to the provisions of Section 612 of the Companies Act 2006. During the year ended
31March 2023, the realisation of the merger reserve included £170.3 m related to intercompany loans that have been settled as qualifying consideration in connection with the rights
issue during the year ended 31 March 2021, which utilised a cashbox structure.
4. The share buyback resulted in the purchase of 68.8m ordinary shares which have subsequently been cancelled during the year ended 31 March 2023. Refer to Note 28.
5. Includes £0.9 m and £0.7 m in respect of new shares and treasury shares respectively, which were issued on exercise of Save As You Earn share options. Refer to Notes 28 and 29.
Consolidated statement of changes in equity
For the year ended 31 March 2023
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Consolidated statement of cash flows
For the year ended 31 March 2023
Notes
2023
£m
2022
£m
Continuing operations – operating profit before Other items 3 162.1 166.9
Continuing operations – Other items 4 (45.1 ) (94.8 )
Discontinued operations – operating profit after Other items 5 – 19.9
Adjustments for:
Share-based payments expense 31 17.3 18.6
Defined benefit pension costs 32 3.4 4.4
Defined benefit pension contributions 32 (16.5 ) (14.2 )
Depreciation of property, plant and equipment 14, 26 43.1 41.6
Amortisation of intangible assets 13 29.2 27.2
Amortisation of customer contracts and relationships for joint ventures arising on business combinations 15 – 2.4
Share of profit of joint ventures and associates 15 (8.3 ) (6.6 )
Amortisation of contract assets 17 1.3 1.7
Impairment of non-current assets 13, 26 0.2 3.7
Loss on disposal of property, plant and equipment 0.1 0.5
Gain on disposal of businesses – (13.0 )
Interserve completion accounts adjustment – 45.6
Operating cash flows before movements in working capital 186.8 203.9
(Increase)/decrease in inventories (0.9 ) 0.9
Increase in receivables (89.8 ) (66.0 )
Increase in contract assets – (1.0 )
Decrease in deferred income (15.5 ) (2.6 )
Increase in payables 44.9 135.9
Decrease in provisions (8.6 ) (7.2 )
Cash generated from operations 116.9 263.9
Income taxes paid (19.8 ) (16.2 )
Interest paid (14.1 ) (17.5 )
Net cash generated from operating activities 83.0 230.2
Investing activities
Acquisition of businesses, net of cash acquired
1
30 (16.6 ) (24.9 )
Interserve completion accounts settlement 25 6.0 –
Disposal of businesses, net of cash disposed – 29.9
Interest received 2.2 0.3
Purchase of property, plant and equipment 14 (10.9 ) (15.4 )
Dividends received from joint ventures and associates 15 9.0 4.0
Purchase of other intangible assets 13 (14.3 ) (20.2 )
Disposal of property, plant and equipment 0.1 0.4
Net cash used in investing activities (24.5 ) (25.9 )
Note:
1. Acquisition of businesses is net of cash acquired of £2. 0 m (2022: £4.8 m). Refer to Note 30.
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Notes
2023
£m
2022
£m
Financing activities
Purchase of own shares 29 (37.7 ) (13.8 )
Shares bought back and cancelled 28 (50.7 ) –
Capital element of lease rentals 26 (34.5 ) (33.9 )
Proceeds from new private placement notes 24 120.0 –
Repayment of private placement notes 24 (150.8 ) –
Settlement of derivative financial instruments 25 29.2 –
Repayment of bank loans (4.1 ) –
Payment of arrangement fees (0.5 ) (1.7 )
Proceeds received on settlement of share-based payment transactions 28, 29 1.6 –
Equity dividends paid 10 (28.9 ) (5.7 )
Net cash used in financing activities (156.4 ) (55.1 )
Net (decrease)/increase in cash and cash equivalents (97.9 ) 149.2
Net cash and cash equivalents at beginning of the year 345.2 196.2
Effect of foreign exchange rate changes 1.0 (0.2 )
Net cash and cash equivalents at end of the year 23 248.3 345.2
The above statement of consolidated cash flows includes cash flows from both continuing and discontinued operations.
Consolidated statement of cash flows continued
For the year ended 31 March 2023
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1. Basis of preparation and significant accounting policies continued
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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1. Basis of preparation and significant accounting policies continued
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Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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1. Basis of preparation and significant accounting policies continued
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1. Basis of preparation and significant accounting policies continued
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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1. Basis of preparation and significant accounting policies continued
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1. Basis of preparation and significant accounting policies continued
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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1. Basis of preparation and significant accounting policies continued
Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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Notes to the consolidated financial statements continued
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Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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For the year ended 31 March 2023
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For the year ended 31 March 2023
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For the year ended 31 March 2023
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Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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Notes to the consolidated financial statements continued
For the year ended 31 March 2023
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For the year ended 31 March 2023
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For the year ended 31 March 2023
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Company balance sheet
As at 31 March 2023
Notes
2023
£m
2022
£m
Non-current assets
Investments in subsidiaries 4 639.3 640.1
Other receivables 5 0.3 0.3
Deferred tax assets 6 5.6 2.8
Total non-current assets 645.2 643.2
Current assets
Trade and other receivables 5 87.7 188.3
Current tax receivable 7 21.1 20.6
Cash and cash equivalents 1.1 1.6
Total current assets 109.9 210.5
Total assets 755.1 853.7
Current liabilities
Trade and other payables 8 (45.2) (42.7)
Provisions 9 (4.5) (3.2)
Total current liabilities (49.7) (45.9)
Net current assets 60.2 164.6
Non-current liabilities
Provisions 9 (10.6) (7.5)
Total non-current liabilities (10.6) (7.5)
Total liabilities (60.3) (53.4)
Net assets 694.8 800.3
Equity
Share capital 10 34.0 35.7
Share premium 10 131.5 130.6
Merger reserve 10 157.0 358.6
Own shares reserve 10 (59.0) (36.9)
Other reserves 10 36.3 28.4
Retained profits
1
395.0 283.9
Total equity 694.8 800.3
Note:
1. The loss for the financial year ended 31 March 2023 was £6.7m (2022: £15.3m).
The accompanying notes on pages 208 to 211 form an integral part of the financial statements.
The financial statements of Mitie Group plc, company registration number SC019230, were approved by the Board of Directors and authorised for issue
on 7 June 2023. They were signed on its behalf by:
Phil Bentley Simon Kirkpatrick
Chief Executive Officer Chief Financial Officer
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Company statement of changes in equity
For the year ended 31 March 2023
Share
capital
£m
Share
premium
£m
Merger
reserve
£m
Own shares
reserve
£m
Other
reserves
£m
Retained
profits/
(losses)
£m
Tot al
equity
£m
At 1 April 2021 35.6 130.6 358.6 (28.8) 14.5 306.2 816.7
Loss for the year – – – – – (15.3) (15.3)
Total comprehensive expense – – – – – (15.3) (15.3)
Transactions with owners
Dividends paid – – – – – (5.7) (5.7)
Issue of shares 0.1 – – (0.1) – – –
Purchase of own shares – – – (13.8) – – (13.8)
Share-based payments – – – 5.8 13.9 (1.1) 18.6
Tax on share-based payments – – – – – (0.2) (0.2)
Total transactions with owners 0.1 – – (8.1) 13.9 (7.0) (1.1)
At 31 March 2022 35.7 130.6 358.6 (36.9) 28.4 283.9 800.3
At 1 April 2022 35.7 130.6 358.6 (36.9) 28.4 283.9 800.3
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 – – – (37.7) – – (37.7)
Realisation of merger reserve
1
– – (201.6) – – 201.6 –
Share buybacks
2
(1.7) – – – 1.7 (50.7) (50.7)
Share-based payments
3
– 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) 7.9 117.8 (98.8)
At 31 March 2023 34.0 131.5 157.0 (59.0) 36.3 395.0 694.8
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. During the year ended
31 March 2023, the realisation of the merger reserve included £170.3m related to intercompany loans that have been settled as qualifying consideration in connection with the rights
issue during the year ended 31 March 2021, which utilised a cashbox structure.
2. The share buyback resulted in the purchase of 68.8m ordinary shares which have subsequently been cancelled during the year ended 31 March 2023. Refer to Note 28.
3. Includes £0.9m and £0.7m in respect of new shares and treasury shares respectively, which were issued on exercise of Save As You Earn share options.
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Notes to the Company financial statements
For the year ended 31 March 2023
1. Basis of preparation and significant accounting policies
(a) Basis of preparation and accounting
Mitie Group plc (the Company) is a public company limited by shares, incorporated in the United Kingdom and registered in Scotland. 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;
• comparative period reconciliations for share capital;
• the statement of compliance with UK-adopted International Accounting Standards;
• disclosures in respect of capital management;
• the effects of new but not yet effective UK-adopted International Accounting Standards;
• 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; 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 own income statement.
There are no new and mandatorily effective standards in the year that could have a material impact on the financial statements.
(b) Significant accounting policies
The significant accounting policies and measurement bases adopted are the same as those disclosed in Note 1 to 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 consolidated
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.
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
balance sheet date.
Deferred tax is provided in full on temporary differences that result in an obligation at the balance sheet 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
balance sheet 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 31 to 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.
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1. Basis of preparation and significant 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.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty, that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial year, are discussed below:
Impairment of investments in subsidiaries
The carrying amounts of investments in subsidiaries have been disclosed in Note 4. Determining whether an investment is impaired may require an
estimation of its recoverable amount. The recoverable amount involves an estimation of the future cash flows and the selection of appropriate discount
rates in order to calculate present values.
2. Staff numbers and costs
There were no persons employed by the Company (including Directors) during the years ended 31 March 2023 and 31 March 2022. Information about
the Directors’ remuneration has been disclosed in the consolidated financial statements.
3. Auditor’s remuneration
The auditor’s remuneration for audit services to the Company has been disclosed in Note 6 to the consolidated financial statements.
4. Investments in subsidiaries
£m
Cost
At 1 April 2021 648.9
Additions 51.6
Capital contribution with respect to share-based payments 10.7
At 31 March 2022 711.2
Capital contribution with respect to share-based payments 10.6
At 31 March 2023 721.8
Impairment
At 1 April 2021 69.4
Charge for the year 1.7
At 31 March 2022 71.1
Charge for the year 11.4
At 31 March 2023 82.5
Net book value
At 31 March 2023 639.3
At 31 March 2022 640.1
Details of the Company’s subsidiary undertakings have been disclosed in Note 36 to 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 was further 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% (2022: 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 13.2% to 14.6%, have been
derived from the Company’s post-tax weighted average cost of capital, which was 9.9% at 31 March 2023 (2022: 7.8%). 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 an impairment of £11.4m (2022: £1.7m) was required to the Company’s investment in Mitie
Roofing Limited. All other investments had significant headroom and required no impairment.
An increase in the discount rate of 1% would not have resulted in a further impairment in the Company’s investments (2022: £1.7m).
Notes to the Company financial statements continued
For the year ended 31 March 2023
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5. Trade and other receivables
2023
£m
2022
£m
Amounts owed by subsidiaries 56.3 156.0
Other receivables 26.0 32.4
Prepayments 5.7 0.2
Total 88.0 188.6
Current 87.7 188.3
Non-current 0.3 0.3
Total 88.0 188.6
Amounts owed by subsidiaries are repayable on demand. The Directors consider that the carrying amount of trade and other receivables approximates
their fair value. Included within amounts owed by subsidiaries above is £nil (2022: £92.0m) relating to interest-bearing loans (2022: at 5% per annum).
6. Deferred tax assets
Accelerated
capital
allowance
£m
Share-based
payments timing
difference
£m
Tot al
£m
At 1 April 2021 0.4 1.0 1.4
Credit to income statement 0.1 1.5 1.6
Charge to equity – (0.2) (0.2)
At 31 March 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
7. Current tax receivable
As at 31 March 2023, the Company held a current tax receivable of £21.1m (2022: £20.6m), comprising amounts owed by subsidiaries in relation to Group
relief of £3.4m (2022: £3.4m), £16.1m (2022: £17.6m) of tax payments made on behalf of other Group entities and £1.6m (2022: £0.4m owed to tax
authorities) owed by tax authorities.
8. Trade and other payables
2023
£m
2022
£m
Trade payables 4.4 1.8
Amounts owed to subsidiaries 11.7 15.6
Other taxes and social security 3.9 3.0
Accruals
21.2 22.3
Other payables 4.0 –
Total 45.2 42.7
Amounts owed to subsidiaries are repayable on demand. The Directors consider that the carrying amount of trade and other payables approximates their
fair value.
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9. Provisions
£m
At 1 April 2022 10.7
Additional provisions in the year 9.3
Utilised in the year (4.9)
At 31 March 2023 15.1
Current 4.5
Non-current 10.6
Total 15.1
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 three to five years. This includes a provision for claims incurred but not yet reported and is
based on information available at the balance sheet date.
10. Equity
Details of the Company’s share capital, share premium, merger reserve, own shares reserve and other reserves have been disclosed in Notes 28 and 29
to the consolidated financial statements.
11. Dividends
Dividends payable have been disclosed in Note 10 to the consolidated financial statements.
12. Contingent liabilities
The Company enters into financial guarantee arrangements to guarantee the indebtedness of other companies within the Group. In this respect the
Company treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to make a
payment under the guarantee.
In addition, the Company and its subsidiaries have provided performance and financial guarantees, issued by financial institutions on its behalf, amounting
to £33.7m (2022: £29.2m) in the ordinary course of business. These are not expected to result in any material financial loss.
As disclosed in Note 36 to 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 2023. 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 31 to the consolidated financial statements.
14. Related parties
The Company makes management charges to its subsidiaries and receives dividends from its subsidiaries according to their ability to remit them.
Other details of the Group’s related party transactions have been disclosed in Note 34 to 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 Mitie Group plc for the years ended 31 March 2023 or 31 March 2022. Detailed disclosures of Directors’ remuneration and share interests
are given in the Directors’ remuneration report on pages 116 to 130.
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 2023 (2022: £nil).
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Appendix – Alternative Performance Measures
The Group presents various Alternative Performance Measures (APMs) as management believes that these are useful for users of the financial statements
in helping to provide a balanced view of, and relevant information on, the Group’s financial performance.
In assessing its performance, the Group has adopted certain non-statutory measures which, unlike its statutory measures, cannot be derived directly from
its 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 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, 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
2023
£m
2022
£m
Operating profit from continuing operations Statutory measures 117.0 72.1
Adjust for: restructure costs Note 4 16.6 10.9
Adjust for: acquisition and disposal related costs Note 4 25.1 89.3
Adjust for: other exceptional items Note 4 3.4 (5.4)
Operating profit before Other items from continuing operations Performance measures 162.1 166.9
Operating profit from discontinued operations Statutory measures – 19.9
Adjust for: acquisition and disposal related costs Note 4 – (4.0)
Adjust for: gain on disposal Note 4 – (13.0)
Operating profit before Other items from discontinued operations Performance measures – 2.9
Operating profit before Other items – Group Performance measures 162.1 169.8
Reconciliations are provided below to show how the Group’s segmental reported results are adjusted to exclude Other items.
Operating profit/(loss)
2023 2022
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
Segment
Business Services 66.6 0.9 67.5 89.9 17.6 107.5
Technical Services 23.3 10.8 34.1 8.9 21.1 30.0
CG&D 60.6 (0.8) 59.8 41.9 (3.5) 38.4
Communities 20.9 0.4 21.3 9.0 10.9 19.9
Specialist Services 34.3 0.6 34.9 29.4 3.1 32.5
Care & Custody 10.2 – 10.2 8.7 1.2 9.9
Landscapes 9.0 0.5 9.5 8.6 0.6 9.2
Waste 8.5 0.1 8.6 7.4 0.9 8.3
Spain 6.6 – 6.6 4.7 0.4 5.1
Corporate centre (88.7) 33.2 (55.5) (107.0) 45.6 (61.4)
Total from continuing operations 117.0 45.1 162.1 72.1 94.8 166.9
Social Housing – – – 4.0 (4.0) –
Document Management – – – 18.8 (16.0) 2.8
Nordics and Poland – – – (2.9) 3.0 0.1
Total from discontinued operations
1
– – – 19.9 (17.0) 2.9
Total Group 117.0 45.1 162.1 92.0 77.8 169.8
Note:
1. The reported operating profit from discontinued operations comprises the profit before net finance income and tax of £nil (2022: £6.9m) and gain on disposal before tax of £nil
(2022: £13.0 m).
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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 for continuing operations. The table below reconciles this to the statutory basic earnings per share.
Earnings per share
2023
pence
2022
pence
Statutory basic earnings per share Statutory measures 6.8 3.6
Adjust for: earnings per share from discontinued operations – (1.4)
Statutory basic earnings per share from continuing operations 6.8 2.2
Adjust for: Other items per share from continuing operations 2.7 7.0
Basic earnings per share before Other items from continuing operations Performance measures 9.5 9.2
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 from continuing operations
2023
£m
2022
£m
Group revenue Statutory measures 3,945.0 3,903.3
Adjust for: share of revenue of joint ventures and associates 110.1 93.5
Revenue including share of joint ventures and associates Performance measures 4,055.1 3,996.8
Adjust for: revenue from short-term Covid-related contracts
1
(15.3) (448.5)
Revenue excluding short-term Covid-related contracts Performance measures 4,039.8 3,548.3
Note:
1. Includes £14.5m (2022: £428.7m) attributable to the Business Services segment.
Operating profit from continuing operations
2023
£m
2022
£m
Operating profit Statutory measures 117.0 72.1
Adjust for: Other items 45.1 94.8
Operating profit before other items Performance measures 162.1 166.9
Adjust for: operating profit from short-term Covid-related contracts
1
(7.1) (59.6)
Operating profit excluding short-term Covid-related contracts Performance measures 155.0 107.3
Note:
1. Includes £7.0m (2022: £59.6m) attributable to the Business Services segment.
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Appendix – Alternative Performance Measures
continued
Net (debt)/cash and total financial obligations
Net (debt)/cash 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)/cash measure.
Total financial obligations (TFO) is defined as the Group’s net (debt)/cash including the amount of invoice discounting under the Group’s customer invoice
discounting (CID) facility 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)/cash
2023
£m
2022
£m
Cash and cash equivalents Statutory measures 248.3 345.2
Adjusted for: restricted cash and cash held on trust
1
Note 23 (6.4) (37.5)
Financing liabilities Note 24 (286.0) (300.6)
Derivative financial instruments hedging private placement notes Note 25 – 19.6
Net (debt)/cash Performance measures (44.1) 26.7
Customer invoice discounting facility Note 16 – (44.5)
Net retirement benefit liabilities Note 32 (0.2) (12.2)
TFO Performance measures (44.3) (30.0)
Note:
1. Included within these amounts is restricted cash of £6.4m (2022: £17.5m). Amounts at 31 March 2022 included £20.0m that was held across the Group’s bank accounts 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. This cash was subsequently remitted
to the CID facility provider by 5 April 2022.
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 £84.3m for the year ended 31 March 2023, compared with £24.7m for the year ended 31 March 2022.
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
2023
1
£m
2022
£m
Net cash generated from operating activities Statutory measures 83.0 230.2
Add: net decrease/(increase) in restricted cash and cash held on trust 31.1 (18.8)
Interest received Note 8 2.2 0.3
Dividends received from joint ventures and associates Note 15 9.0 4.0
Purchase of property, plant and equipment Note 14 (10.9) (15.4)
Purchase of other intangible assets Note 13 (14.3) (20.2)
Disposal of property, plant and equipment 0.1 0.4
Capital element of lease rentals paid Note 26 (34.5) (33.9)
Free cash inflow Performance measures 65.7 146.6
Note:
1. During the year ended 31 March 2023, management has updated its definition of free cash flow to exclude cash outflow on purchase of own shares. This is due to a change in
management’s policy on satisfying share awards to purchasing shares rather than issuing new shares and is consistent with the exclusion of cash outflow on share buy backs from
free cash flow.
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Earnings before interest, tax, depreciation and amortisation
Earnings from continuing operations before interest, tax, depreciation and amortisation (EBITDA) is a measure of the Group’s profitability. EBITDA is
measured as profit/(loss) before tax from continuing operations 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
2023
£m
2022
£m
Profit/(loss) before tax from continuing operations Statutory measures 105.5 52.3
Add: net finance costs from continuing operations Note 8 11.5 19.8
Operating profit from continuing operations 117.0 72.1
Add: Other items from continuing operations Note 4 45.1 94.8
Operating profit before Other items from continuing operations 162.1 166.9
Add:
Depreciation of property, plant and equipment Note 14, 26 43.1 41.4
Amortisation of non-current assets
1
Note 13 7.8 7.7
Amortisation of contract assets Note 17 1.3 1.7
Impairment of non-current assets
1
Note 13, 26 0.2 0.8
EBITDA Performance measures 214.5 218.5
Note:
1. Excludes amounts classified in the consolidated income statement as Other items and amounts for discontinued operations.
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.
2023
£m
2022
£m
Net assets Statutory measures 421.7 425.8
Add:
Non-current liabilities 335.9 241.0
Current provisions Note 21 54.2 54.7
Current private placement notes Note 24 – 141.0
Deduct:
Current derivative financial assets Note 25 – (19.6)
Non-current deferred tax assets Note 22 (20.4) (11.1)
Cash and cash equivalents Note 23 (248.3) (345.2)
Invested capital Performance measures 543.1 486.6
Continuing operating profit before Other items 162.1 166.9
Tax
1
(24.3) (21.5)
Continuing operating profit before Other items after tax
1
137.8 145.4
ROIC %
2
Performance measures 25.4% 29.9%
Notes:
1. Tax charge has been calculated at the effective tax rate for the year on pre-tax profits before Other items for continuing operations of 15.0% (2022: 12.9%).
2. The ROIC metric used for the purposes of the Enhanced Delivery Plan (EDP) requires further adjustments under the detailed rules agreed with shareholders.
216
Mitie Group plc
Annual Report and Accounts 2023
Overview
HY24 interim results 23 November 2023
Dividends
FY23 interim dividend (0.7p paid) 1 February 2023
FY23 final dividend (2.2p proposed):
Ex-dividend date 22 June 2023
Record date 23 June 2023
Last date for receipt/revocation of Dividend
Reinvestment Plan (DRIP) mandate 10 July 2023
Payment date 4 August 2023
Annual General Meeting
2023 Annual General Meeting 25 July 2023
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
10th Floor
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.
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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
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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
More information
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Mitie Group plc Annual Report and Accounts 2023