mitie group plc
annual report 2003
mitie group plc  annual report 2003
mitie group plc the stable block barley wood wrington bristol bs40 5sa
t 01934 862006  f 01934 862239
wwwmitiecouk  e informationmitiecouk
mitie is an equal opportunities employer mitie group plc
is a unique organisation because 
of its motivational culture of share 
ownership and the range of 
its services
1 financial highlights
2 chairman’s statement
4 chief executive’s review
10 corporate social responsibility
12 group finance director’s review
15 board of directors
16 directors’ report
18 remuneration report
22 corporate governance
24 independent auditors’ report
25 group profit and loss account
26 reconciliation of movements in shareholders’ funds
26 note of historical cost profits and losses
27 group balance sheet
28 company balance sheet
29 group cash flow statement
30 accounting policies
32 notes to the accounts
48 five year summary
49 notice of meeting
51 corporate information
designed by one print management by ampm mitie group plc annual report 2003 1
turnover £ 565 8m £ 5189m up 9
profit before tax – £341m £310m up 10
pregoodwill
i
profit before tax £318m £304m up 5
earnings per share – 73p 68p up 8
pregoodwill
ii
earnings per share 65p 65p
cash £550m £251m up 119
dividend per share 19p 16p up 19
“we continue to deliver profitable growth 
by remaining focused on our core activities
and putting our customers first”
david m telling chairman
turnover £m financial highlights 2002 2003
2003 5658
5189 2002
profit before tax – pregoodwill
i
£m
2003 341
310 2002
profit before tax £m
2003 318
304 2002
earnings per share – pregoodwill
ii
pence
2003 73
68 2002
earnings per share pence
2003 65
65 2002
cash £m
2003 550
251 2002
dividend per share pence
2003 19
16 2002
the organisation comprises specialist businesses in
the fields of cleaning engineering maintenance
managed services property services engineering
services and access systems
i statutory proforma profit before tax is shown within the group profit and 
loss account
ii reconciliation of earnings per share is shown in note 7 to
the accounts mitie group plc annual report 2003 2
chairman’s statement i am pleased to be
able to report that mitie’s 2003 results show a
sixteenth consecutive year of profitable growth
and very positive cash flow 
david m telling chairman
“i know that these positive results have only been
possible because of the hard work dedication
and motivation of our people who are
achieving considerable success”
mitie group plc “mitie” has made
good progress and our support services
division has had a particularly strong
year despite changing economic
conditions that have tightened our
markets over the past twelve months
our commitment to delivering service
levels that enable customers to achieve
their own objectives underpins this
continuing success
results
turnover rose to £5658 million an increase of
9 and profit before tax goodwill amortisation
and impairment rose by 10 to £341 million
earnings per share pregoodwill amortisation and
impairment rose by 8 to 73p note 7 we
have increased our cash balance by £299 million
to £550 million your board is recommending a
final dividend of 11p per share making a total
of 19p for the year an increase of 19
corporate developments
development of the mitie business model has
continued strongly throughout the financial year
we have started eight new companies managed
services and engineering maintenance have
increased their national coverage we have
introduced our engineering discipline into niche
markets such as social housing utilities and
technology and in the south east of england we
have started a landscape business and an interior
contracting business 
in january 2003 we signed our biggest ever
contract worth over £100 million the contract
with rollsroyce provides opportunities for all
of our businesses and is the first major example
of how mitie companies working together can
benefit our customers on a national basis
we have continued our strategy of reducing 
our exposure to capitalintensive businesses 
we sold our access contracting companies in
june 2002 and we are closing both mitie lindsay
ltd and mitie hydrocat ltd
since the year end we have completed the
acquisitions of trident safeguards ltd a manned
guarding security company and eagle pest
control services uk ltd these acquisitions will
accelerate our development in markets where
we see good potential mitie group plc annual report 2003 3
people
these positive results have only been possible
because of the hard work dedication and
motivation of our people who are achieving
considerable success in difficult times i would
like to thank all of them for their efforts this year
mitie people understand that their own success
comes from satisfying their customers in order 
to achieve this they take the time to understand
their customers’ goals and the contribution that
mitie can make towards reaching them 
our management team has been strengthened 
by the appointment of ruby mcgregorsmith
as group finance director in december 2002
and she has already added considerable value
we have also increased the number of non
executive directors manish j chande was
appointed in july 2002 david c ord in october
2002 and cullum mcalpine in april 2003
between them they have a wide range of skills
and experience that will add considerably 
to the strength of the board
three people who have contributed greatly to
mitie’s success have retired during the year
nigel swiffen retired as a nonexecutive director
after 11 years john urquhart as head of
corporate affairs after enthusiastically
representing the company for 10 years and
marshall thomas as group chief accountant
who joined mitie shortly after its formation in
1987 i thank them all for their period of loyal
service and wish them well in their retirement
outlook
mitie has enjoyed success for over fifteen years
and will i believe deliver further profitable
growth over the years to come the current year
has started in line with expectations and we will
develop by building on the many unique
qualities that mitie can offer and by continually
seeking to enhance shareholder value 
the strength in depth of our management puts us
in a position where even in the most challenging
of market conditions we are able to make
progress we have 23000 highly talented and
motivated people who understand the mitie
philosophy of putting customers first our capacity
to deliver services nationally ensures that we are
well placed to benefit from the continuing trend
towards outsourcing and the bundling of services
our companies are realising significant benefits
from working together and this is a trend i expect
to continue these attributes combined with the
extra growth of our startup companies mean
that we are well placed for the future
mitie is known for quality in services customers
and earnings your company will remain focused
on its core activities and continue to grow the
business by putting its customers first
david m telling
chairman mitie group plc annual report 2003 4
chief executive’s review our progress this year 
is a tribute to our dedicated workforce
the goal that i set last year was for 
mitie to become the first choice provider
of support and building services to the
owners and occupiers of industrial
commercial and government buildings
i believe that we are making good
progress towards this 
market opportunities
the markets in which we operate continue 
to change as our customers seek new methods 
of procurement as a group we will continue 
to review our strategy regularly to ensure that 
the solutions we offer meet the needs of existing
and potential clients we currently see three 
areas of opportunity which we are ideally 
placed to serve
1 single service specialist single service
companies have been the basis for mitie’s
ongoing success however our share of the
total potential market is still below 2 –
leaving considerable opportunity for
expansion our aim is for each of our single
service companies to capture 5 of their
respective market and where appropriate
to start new companies to help achieve this
2 bundled services many of our major clients
such as dell computer corporation and mci are
approaching us to see if we can provide more
than one service rollsroyce is a good example
they have demonstrated their confidence in
mitie by awarding us a comprehensive
contract across a number of our services and
this is a trend that i see continuing
in these cases mitie selects the best individual
or team to run the contract the customer is
able to retain an active role in the management
of their facility whilst benefiting from a
combination of specialist operating companies
providing a bundled service under a single
point of contact
3 facilities management many customers want
to focus completely on their core activity in
this case mitie managed services can 
look after the customer’s complete property
portfolio from estate management to the
management and provision of a multiactivity
and services contract 
ian r stewart chief executive
“rollsroyce have demonstrated their confidence
in mitie by awarding us a comprehensive
contract across a number of our services” 5 mitie group plc annual report 2003
revenue visibility
we have continued to see an improvement 
in the visibility of our future earnings this 
is an encouraging trend and one that i expect 
to continue the percentage of budgeted revenue
secured for 2004 is 64 at 31 march 2003
compared to 61 last year the percentage of
budgeted revenue secured for 2005 is 33 at
31 march 2003 compared to 32 last year
margins
it is a tribute to our management that they have
been able to produce consistently high margins in
such a competitive environment by listening to
our customers and delivering our services in the
most costeffective way we are confident that we
can maintain this trend 
during the first half of this year the margin in
our support services division was affected by
oneoff bid costs relating to our involvement in
two large governmentpfi contracts but i am
pleased to report that margins in the second half
of the year reflect an improved performance
with greater exposure to economic fluctuations
margins within the building services division
have been under pressure our decision to close
the marine portion of mitie lindsay ltd and
mitie hydrocat ltd businesses – because of their
high capital requirements and extreme
vulnerability to changes in market conditions –
also impacted on performance in this division
we have withdrawn completely from the marine
market and incorporated the industrial painting
capability within our existing property services
companies 
pfi private finance initiative
we said in our interim report that we have
decided not to be involved in pfi projects as 
an equity investor this remains our policy
any reference therefore to pfi projects is purely 
as a facility manager or service provider
cash
the planned reduction in our exposure to 
the capitalintensive parts of our business resulted
in the receipt of £114 million and at the end of
this financial year we had a positive cash balance
of £550 million we expect that we will continue
to be cash generative
we recognise that cash ultimately belongs to the
shareholders and that it is my responsibility to
ensure that they receive the maximum long term
return on our assets the appointment of colin
hale as strategic development director last year
was as a result of our stated intention to look at
small strategic acquisitions that can accelerate our
development in some key areas the recent
acquisitions of trident safeguards ltd and eagle
pest control services uk ltd show a strong
cultural fit with mitie and will have an impact
on our long term development trident
safeguards ltd adds considerably to our security
discipline in the south east of england eagle pest
control services uk ltd will allow us to selfdeliver
a service that our customers frequently request
we will continue to review the efficiency of our
balance sheet and will manage our assets with the
best interests of our shareholders in mind
percentage of revenue secured
at 31 march 2003
2004 64 36
33 67 2005
at 31 march 2002
2003 61 39
32 68 2004
engineering services
through creating a controlled
ambient environment we bring
buildings to life in a way that
enables our customers to fulfil
their own objectives clients for
our design and installation
refurbishment and newbuild
projects range from national
companies to individual
schools mitie engineering
services comprises thirteen
regional contracting companies
and six specialist companies


Summary:
 mitie group plc annual report 2003 4
chief executive’s review our progress this year 
is a tribute to our dedicated workforce
the goal that i set last year was for 
mitie to become the first choice provider
of support and building services to the
owners and occupiers of industrial
commercial and government buildings
i believe that we are making good
progress towards this 
market opportunities
the markets in which we operate continue 
to change as our customers seek new methods 
of procurement as a group we will continue 
to review our strategy regularly to ensure that 
the solutions we offer meet the needs of existing
and potential clients we currently see three 
areas of opportunity which we are ideally 
placed to serve
1 single service specialist single service
companies have been the basis for mitie’s
ongoing success however our share of the
total potential market is still below 2 –
leaving considerable opportunity for
expansion our aim is for each of our single
service companies to capture 5 of their
respective market and where appropriate
to start new companies to help achieve this
2 bundled services many of our major clients
such as dell computer corporation and mci are
approaching us to see if we can provide more
than one service rollsroyce is a good example
they have demonstrated their confidence in
mitie by awarding us a comprehensive
contract across a number of our services and
this is a trend that i see continuing
in these cases mitie selects the best individual
or team to run the contract the customer is
able to retain an active role in the management
of their facility whilst benefiting from a
combination of specialist operating companies
providing a bundled service under a single
point of contact
3 facilities management many customers want
to focus completely on their core activity in
this case mitie managed services can 
look after the customer’s complete property
portfolio from estate management to the
management and provision of a multiactivity
and services contract 
ian r stewart chief executive
“rollsroyce have demonstrated their confidence
in mitie by awarding us a comprehensive
contract across a number of our services” 5 mitie group plc annual report 2003
revenue visibility
we have continued to see an improvement 
in the visibility of our future earnings this 
is an encouraging trend and one that i expect 
to continue the percentage of budgeted revenue
secured for 2004 is 64 at 31 march 2003
compared to 61 last year the percentage of
budgeted revenue secured for 2005 is 33 at
31 march 2003 compared to 32 last year
margins
it is a tribute to our management that they have
been able to produce consistently high margins in
such a competitive environment by listening to
our customers and delivering our services in the
most costeffective way we are confident that we
can maintain this trend 
during the first half of this year the margin in
our support services division was affected by
oneoff bid costs relating to our involvement in
two large governmentpfi contracts but i am
pleased to report that margins in the second half
of the year reflect an improved performance
with greater exposure to economic fluctuations
margins within the building services division
have been under pressure our decision to close
the marine portion of mitie lindsay ltd and
mitie hydrocat ltd businesses – because of their
high capital requirements and extreme
vulnerability to changes in market conditions –
also impacted on performance in this division
we have withdrawn completely from the marine
market and incorporated the industrial painting
capability within our existing property services
companies 
pfi private finance initiative
we said in our interim report that we have
decided not to be involved in pfi projects as 
an equity investor this remains our policy
any reference therefore to pfi projects is purely 
as a facility manager or service provider
cash
the planned reduction in our exposure to 
the capitalintensive parts of our business resulted
in the receipt of £114 million and at the end of
this financial year we had a positive cash balance
of £550 million we expect that we will continue
to be cash generative
we recognise that cash ultimately belongs to the
shareholders and that it is my responsibility to
ensure that they receive the maximum long term
return on our assets the appointment of colin
hale as strategic development director last year
was as a result of our stated intention to look at
small strategic acquisitions that can accelerate our
development in some key areas the recent
acquisitions of trident safeguards ltd and eagle
pest control services uk ltd show a strong
cultural fit with mitie and will have an impact
on our long term development trident
safeguards ltd adds considerably to our security
discipline in the south east of england eagle pest
control services uk ltd will allow us to selfdeliver
a service that our customers frequently request
we will continue to review the efficiency of our
balance sheet and will manage our assets with the
best interests of our shareholders in mind
percentage of revenue secured
at 31 march 2003
2004 64 36
33 67 2005
at 31 march 2002
2003 61 39
32 68 2004
engineering services
through creating a controlled
ambient environment we bring
buildings to life in a way that
enables our customers to fulfil
their own objectives clients for
our design and installation
refurbishment and newbuild
projects range from national
companies to individual
schools mitie engineering
services comprises thirteen
regional contracting companies
and six specialist companies