28th Nov 2005 07:02
MITIE Group PLC28 November 2005 MITIE Group PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005 "MITIE will continue to grow by listening to our customers, understanding theirneeds and delivering services that meet those needs." Ian R Stewart, Chief Executive • Revenue up by 14.5% and profit from continuing operations up by 7.8% • Strong performance from Support Services with profit growth of 18.3% • Property Services increased profits by 12.8% • Challenging six months for Engineering Services • Acquisition of two security companies for up to £12.4m • Dividend up 18.8% to 1.9p FINANCIAL HIGHLIGHTS 2005 2004Revenue £449.2m £392.4m up 14.5%Profit before tax - continuing operations* £23.4m £21.7m up 7.8%Profit for the period (after tax) £14.1m £12.6m up 11.5%Basic Earnings per share 4.3p 3.6p up 17.6%Dividend per share 1.9p 1.6p up 18.8% *Figures are shown before other operating income of £nil (2004: £1.3m) relatingto the profit on sale of a freehold property (shown as exceptional under UK GAAPin the prior year). Notes:MITIE: Management Incentive Through Investment EquityACTIVITY: MITIE, the support services company, maintains, manages and improves buildings and infrastructure for its customers. FOR FURTHER INFORMATION:Ian Stewart, Chief Executive, MITIE Group PLC Mobile: 07979 701002Ruby McGregor-Smith, Chief Operating Officer, MITIE Group PLC Mobile: 07979 701004John Telling, Head of Corporate Affairs, MITIE Group PLC Mobile: 07979 701006On 28 November at UBS Investment Bank, 1 Finsbury Avenue Press Room: 020 7567 0560 Switchboard: 020 7567 8000 Chief Executive's Review OverviewWe have seen measured progress in the period and have achieved good levels ofgrowth in revenue and profit. We have grown pre-tax profit before otheroperating income (£1.3m in the previous year) by 7.8% to £23.4m. Our EngineeringServices business has undergone some restructuring and continues to operate in achallenging market. •Revenue was £449.2m, an increase of 14.5% over last year. •Profit before tax (before other operating income) on an IFRS basis grew by 7.8% to £23.4m. •The underlying profit from continuing operations before the impact of acquisitions on a former UK GAAP basis* was £23.6m representing 10.5% growth year on year. •Earnings per share grew by 17.6% to 4.3p •Our forward order book has increased, with 92% of budgeted revenue secured for this financial year as at 30 September 2005. MarketsThe markets in which MITIE operates cover all parts of the economy with around40% of work coming from the public sector and 60% from the private sector. Thisdiversified business portfolio helps strengthen the long-term sustainability ofour revenue stream and create consistent growth. MITIE has a comparatively lowmarket share of the total outsourced market and therefore good opportunities forgrowth. Revenue visibilityWe continue to experience good visibility of earnings due to the long-termnature of contracts in the business, with 92% of budgeted revenue for thisfinancial year secured as at 30 September 2005. AcquisitionsMITIE announced the acquisition of two security companies in the six months to30 September 2005. Intruder International Ltd, a specialist provider ofelectronic security solutions in the UK, which focuses on networked securitysolutions, was acquired on 3 May 2005 for up to £4.2m. The Watch Security Ltd, aprovider of manned guarding and electronic security solutions, based in Warwickand operating throughout the Midlands, was purchased on 30 June 2005 for up to£8.2m. These acquisitions have advanced the development of a national electronicsecurity business to complement our existing manned guarding business. They havealso completed our national footprint for security, enabling us to provide ourcustomers with a more comprehensive service and to compete for larger, nationalcontracts. They are both being successfully integrated into the business and arefully embracing the MITIE ethos and culture. PensionsSubject to the approval of the Pension Trustees, it the intention of the Boardto make a one-off contribution of £7.75m in this financial year to fund thecurrent actuarial deficit on the MITIE Group PLC Pension Scheme (the Group'sprincipal defined benefit pension scheme). Discontinued operationsIncluded in discontinued losses this year is a £2.4m settlement relating to thedisposal of the Access Contracting businesses in June 2002. This amount was paidin October 2005. * former UK GAAP is based on the Group's accounting policies in existence at 31March 2005 and does not take account of any changes to UK GAAP since that date. Board ChangesI was delighted when the Board accepted the Nomination Committee'srecommendation that Ruby McGregor-Smith should be appointed Chief OperatingOfficer. She will be responsible for all operations and will continue to act asGroup Finance Director until a successor is appointed. The recruitment processfor her replacement is in progress. Ishbel Macpherson was appointed as a Non-Executive Director on 28 July 2005. Shebrings considerable financial and banking experience to MITIE. DividendThe Board has declared an interim dividend of 1.9p per share (2004: 1.6p), anincrease of 18.8%.The dividend will be paid on 31 March 2006 to Shareholders on the Register atthe close of business on 10 March 2006. The dividend cover, based on the Group'sprofit for the period, is 2.4 times. Business ReviewSupport ServicesThe Support Services activities within MITIE are Cleaning, Catering, Landscape,Pest Control, Security, Managed Services and Engineering Maintenance.Growth is in line with management's expectations. We are experiencing goodlevels of contract retentions and there are a large number of new opportunitiesavailable. CleaningCleaning has won new contracts in all regions and had a solid first half. Winsinclude work with Kellogg's in Manchester, EMI in Kensington, Motorola, City ofYork Council and Bruntwood Estates. Our retail cleaning business has continued to secure additional work with Tescoand has been awarded work with Homebase Stores in the South of England, theFishergate Shopping Centre in Preston and St James Shopping Centre in Edinburgh,where the service offering has also been expanded to include engineeringmaintenance. Contract retentions across the business include North Middlesex Hospital, LloydsTSB and South Wales Magistrates Courts. The Historic Royal Palaces contract, which comprises prestigious properties suchas Hampton Court Palace and Kensington Palace, has recently been retained onre-bid and also extended to include the Tower of London, where MITIE Securityalso already operates. MITIE Waste & Environmental has been awarded work with Brent Cross ShoppingCentre. The University College London cleaning contract was retained andextended earlier this year to include MITIE's waste and environmental services.This specialist business has also won four Green Apple Environment Awards forexcellence in environmental awareness for clients Novartis Pharmaceuticals,Foster & Partners, United Business Media and Brent Cross Shopping Centre. Theyalso won the Premises and Facilities Management Sustainability Award inpartnership with our client Hewlett Packard. Cleaning has once again been nominated for a number of Kimberly-Clark GoldenServices Awards and was successful in two categories, for Birmingham Midshiresand for the Dover Harbour Board. CateringCatering has launched its "City Living" concept, developed by our chefs andnutritionists, that looks at how food can help reduce stress, improve energy andbeat off illness when commuting and working in the City. Results will be used toredesign menus to provide customers with more information about the food theyeat. Catering has been successful in winning a five-year contract with Hamleys ToyStore on Regent Street, London, where our caterers are working with Hamleys toprovide a cafe bar with a new kids zone hosting children's parties, themedbrunches, afternoon teas and also catering services for corporate events at thestore. LandscapeOur landscaping business continues to grow and consolidate its position in themarketplace. Notable contract wins include those with Yorkshire MetropolitanHousing, two NHS Trusts in the West Midlands and Shropshire, Keele Universityand Tyneside Metro. Landscape has also renewed several contracts with King Sturge Management andtheir ground maintenance contract at BOC, Windlesham that was also extended toinclude tropical plant maintenance. Their multi-site contract with Lloyds TSBfor over 700 sites across the UK has had a successful start. Pest ControlPest Control is experiencing margin pressure as major competitors strive tomaintain market share. However, they have been awarded contracts with the OpenUniversity and the University of Central England and continue to pursueaggressively new business opportunities. SecurityThe acquisitions of Watch and Intruder have been covered earlier in this Review.These new businesses fit in with our strategy to provide a total securitysolution nationwide. MITIE Security is now ranked as number seven in the UKguarding market by revenue and, with the national footprint now complete, aimsto increase its market share with more national contracts. During the period, MITIE Security has been awarded contracts with Goodrich, inpartnership with MITIE Cleaning, the Royal Liver Building and have extendedtheir contract with the London Borough of Islington. The business is progressing well and is on track to meet the necessary deadlinesfor the licensing of its employees. Managed ServicesWorking with MITIE Engineering Maintenance, Managed Services has secured athree-year contract with the Department for Culture, Media and Sport, deliveringfacilities management, full maintenance and fabric services to four of theirbuildings in central London. It has also been awarded an FM contract withT-Mobile that will cover 10 major T-Mobile buildings, 15 switch centres and 130retail outlets across the UK. In addition, Managed Services has been awarded anextension to its contract with Monteray in Scotland. MITIE PFI, which provides facilities management to PFI school projects,continues its success. MITIE PFI has invested a total of £20,000 in two PFIschools projects in Darlington and Haverstock. During the first six months ofthe year MITIE PFI has been awarded facilities management contracts for theCombined Secondary Schools Project for Leeds City Council and the Ealing 2,Boldon in South Tyneside, Argyll & Bute and Kent projects. All contracts are fora period of between 25 and 28 years. MITIE Business Services has recently won a contract to deliver mail anddistribution, reprographics and general office services to the London office of3i and have been awarded the management of the mail and distribution services atABN Amro, an extension to the central reprographic services currently providedto the bank. It has also been awarded the contract to provide reception servicesto Osborne Clarke's London offices, where MITIE already provides cleaning andhospitality catering services. MITIE's work with East London Business Alliance was recently recognised when wewere awarded one of Morgan Stanley's highest awards for Corporate SocialResponsibility, the Local Community Initiative Award 2005. MITIE has alreadyplaced 27 people from disadvantaged areas of East London into full-timeemployment through ELBA. The new 'Real Apprentice' scheme is the first of itskind in London and highlights the power of public and private sector businessesworking in harmony to benefit the local community. Engineering MaintenanceEngineering Maintenance has been successful in winning a five-year contract toprovide full mechanical and engineering (M&E) and fabric maintenance services tofour major United States Air Force bases. Other contracts awarded in the periodinclude a three-year contract with AIG and a five-year contract for 23 NHSbuildings in and around Barnet and Enfield, both to provide full M&E and fabricmaintenance services. Engineering Maintenance has also been awarded an M&Emaintenance and reactive repairs contract with MOD sites at Warminster andLarkhill. Engineering Maintenance retained its contract with Microsoft, where MITIECleaning also provides services, for a further three years. The contract coversMicrosoft's main head office campus in Thames Valley Park, Reading, as well asregional offices in London, Chertsey and Edinburgh. The Alliance & Leicestercustomer service centre at Carlton Park, Leicester was also retained for afurther five years. Property ServicesProperty Services is achieving success in the social housing market. Property Services has made a substantial investment in the social housing marketand is beginning to see increased activity and success in this market sector. Ithas secured significant contract awards from housing associations, registeredsocial landlords and arm's-length management organisations in Leeds, Glasgow,Dumfries and Galloway, Brunel, Southampton and with Family Housing Association.These contracts span across the Decent Homes initiative, responsive and plannedmaintenance and are, in the main, governed by partnering agreements. Othersignificant awards include a major refurbishment for Brunel Care, a contractrenewal for maintenance with Sentinel Housing Group and cyclical paintingcontracts with Ipswich Borough Council and Cambridge Services. A major fit-out of the Media Centre at BBC Broadcast Centre in White City hasbeen completed by our specialist fit-out business, MITIE Interiors, togetherwith extensive fast-track projects for Landflex, UBS, CEPOL Centrex, GreatPortland Estates and Standard Life. MITIE Roofing has won extensive businessfrom HM Prison Service for buildings in East Anglia, Dorset and Devon. MITIEFire Protection is providing services to BAA on Terminal 5 at Heathrow Airport. Engineering ServicesEngineering Services continues to experience difficult trading conditions. The trading climate continues to be challenging, with market changes leading toa need for some restructuring of the business. This includes consolidatingbusinesses in London and the South East, to form a single cohesive company, withan increased capability and wider experience across the full range of activitiesto take advantage of increased opportunities. The market conditions in thePharmaceutical and Cleanrooms sector have changed with clients no longer seeingbenefits from value added engineering; this has resulted in us closing two ofour companies. Our strategy of growth in the specialist retail sector has again shownoutstanding results. Increased activity by Primark and Marks & Spencer hasresulted in a full order book for the retail business extending into the nextfinancial year. Other notable contracts secured include Land SecuritiesTrillium, Porcelanosa, Surrey County Council, Royal College of Anaesthetists andCare Homes in Gloucestershire and Shropshire. Additional work has also beenawarded by the British Library, The Grosvenor House Hotel, The Palace ofWestminster, Gloucester Police and Ascot Racecourse. By targeting opportunities in Education we have won work at the universities ofBristol, Birmingham, Plymouth, Middlesex, UCL and Manchester and FiltonColleges, as well as at schools and academies across the UK. OutlookMarkets continue to be competitive across all of our businesses. The fact thatwe are able to achieve good growth levels is a tribute to the determination ofour people and the quality of our services. MITIE will continue to grow bylistening to our customers, understanding their needs and delivering servicesthat meet those needs. The Board is confident that we will achieve our targetsfor the year. Consolidated Income Statement Year to Six months to 30 September 31 March 2005 2004 2005 (unaudited) (unaudited) (unaudited) £m £m £mContinuing operationsRevenue 449.2 392.4 799.7Cost of sales (362.8) (319.5) (638.9)Gross profit 86.4 72.9 160.8 Other operating income - 1.3 1.5Administration expenses (64.5) (52.2) (116.7)Profit from operations 21.9 22.0 45.6 Profit from operations excludingother operating income 21.9 20.7 44.1 Investment income 1.2 0.9 2.1Finance income 0.3 0.1 0.2Profit before tax 23.4 23.0 47.9Tax (6.9) (6.6) (13.9)Profit for the period fromcontinuing operations 16.5 16.4 34.0 Discontinued operationsLoss for the period fromdiscontinued operations (2.4) (3.8) (3.8) Profit for the period 14.1 12.6 30.2 Attributable:Equity holders of the parent 13.0 11.2 27.0Minority interest 1.1 1.4 3.2 14.1 12.6 30.2 Earnings per share (EPS)- basic 4.3p 3.6p 8.8p- diluted 4.2p 3.6p 8.7pEPS excluding discontinued operations:- basic 5.1p 4.9p 10.1p- diluted 5.0p 4.9p 10.0p Consolidated Statement of Recognised Income and Expense Year to Six months to 30 September 31 March 2005 2004 2005 (unaudited) (unaudited) (unaudited) £m £m £m Actuarial losses on defined benefitpension schemes (4.3) (3.5) (1.5)Expense in relation to share-basedpayments 0.3 0.2 0.5Tax credit on items taken directlyto equity 1.1 1.1 0.3Net expense recognised directly inequity (2.9) (2.2) (0.7) Profit for the period fromoperations 14.1 12.6 30.2 Total recognised income for thefinancial period 11.2 10.4 29.5 Attributable to:Equity holders of the parent 10.1 9.0 26.3Minority interests 1.1 1.4 3.2 Summary Group Balance Sheet At 30 September At 31 March 2005 2004 2005 (unaudited) (unaudited) (unaudited) £m £m £mNon-current assetsGoodwill and intangibles 70.3 52.7 52.7Property, plant and equipment 31.2 27.6 27.2Deferred tax assets 4.4 3.6 3.0Total non-current assets 105.9 83.9 82.9 Current assetsInventories 6.1 6.7 6.3Trade and other receivables 212.7 164.2 180.0Cash and cash equivalents 62.6 50.5 61.5Total current assets 281.4 221.4 247.8 Total assets 387.3 305.3 330.7 Current liabilitiesTrade and other payables (196.1) (145.3) (159.9)Tax liabilities (8.0) (4.5) (7.4)Obligations under finance leases (0.3) (1.1) (0.2)Total current liabilities (204.4) (150.9) (167.5) Net current assets 77.0 70.5 80.3 Non-current liabilitiesRetirement benefit obligation (11.4) (10.1) (7.6)Obligation under finance leases (0.8) (0.2) (0.8)Deferred tax liabilities (0.2) - -Long-term provisions (13.7) (9.8) (9.2)Total non-current liabilities (26.1) (20.1) (17.6) Total liabilities (230.5) (171.0) (185.1) Net assets 156.8 134.3 145.6 EquityShare capital 7.7 7.6 7.6Share premium account 12.4 10.3 11.5Merger reserve 52.0 44.2 44.1Revaluation reserve (0.2) (0.3) (0.2)Capital redemption reserve 0.3 0.2 0.3Other reserve 0.4 1.0 0.6Share-based payment reserve 1.0 0.4 0.7Retained earnings 74.0 64.4 71.4Equity attributable to equityholders of the parent 147.6 127.8 136.0 Minority interests 9.2 6.5 9.6Total equity 156.8 134.3 145.6 Summary Group Cash Flow Statement Year to Six months to 30 September 31 March 2005 2004 2005 (unaudited) (unaudited) (unaudited) £m £m £mNet cash inflow from operatingactivitiesProfit from operations beforeinterest and taxation 21.9 22.0 45.6(Loss)/profit from discontinuedoperations (2.4) 1.0 1.0Depreciation 4.6 5.9 10.7Share based payment expense 0.3 0.2 0.5Profit on sale of property, plantand equipment (0.2) (1.4) (1.8)Decrease / (increase) in workingcapital 5.2 (10.7) (9.3)Cash generated from operations 29.4 17.0 46.7Minority dividends paid (0.1) (0.1) (0.1)Interest received 1.3 1.0 2.3Income tax paid (7.5) (6.4) (13.5)Net cash generated from operatingactivities 23.1 11.5 35.4 Net cash used in investingactivitiesPurchase of property, plant andequipment (7.4) (9.5) (14.0)Purchase of subsidiary undertakings (9.4) (0.2) (0.2)Disposals of property, plant andequipment 0.9 3.2 3.2Disposal of subsidiary undertaking - 8.9 8.9Net cash (outflow)/inflow frominvesting activities (15.9) 2.4 (2.1) Net cash used in financingactivitiesRepayments of obligations underfinance leases (0.1) (0.1) (0.3)Issue of share capital 1.0 1.0 3.0Share buybacks (1.6) (9.6) (14.9)Equity dividends paid (5.4) (4.2) (9.1)Net cash outflow from financing (6.1) (12.9) (21.3) Net increase in cash and cashequivalents 1.1 1.0 12.0 Notes 1 Basis of preparationThe Group's interim results for the six months ended 30 September 2005 are thefirst to be prepared in accordance with International Financial ReportingStandards (IFRS) as adopted by the European Union. Consequently, a number of theaccounting policies adopted in the preparation of these interim financialstatements are different from those adopted in the financial statements for theyear ended 31 March 2005, which were prepared under UK GAAP. Details of the changes in accounting policies arising from the adoption of IFRS,together with restated information for the six months ended 30 September 2004and for the year ended 31 March 2005, have been provided in the attachedsupplementary guidance on IFRS. The accounting policies set out in that documenthave been consistently applied to all periods presented in these interimfinancial statements with the exception of the impact of IAS 32 and IAS 39Financial Instruments. In accordance with IFRS 1 First Time Adoption ofInternational Financial Reporting Standards, the Group has elected not torestate comparative information for the impact of IAS 32 and IAS 39, but hasonly adopted these standards in the interim financial statements for the sixmonths ended 30 September 2005. This adoption had no impact on the financialstatements. These interim financial statements do not constitute full statutory accounts andare unaudited and unreviewed. The financial information for the year ended 31 March 2005 does not representfull accounts within the meaning of Section 240 of the Companies Act 1985. Thestatutory accounts for this period, which were prepared under UK GAAP, have beenfiled with the Registrar of Companies. The auditors' report on those accountswas unqualified. 2 Segmental analysis Six months to 30 September 2005 Six months to 30 September 2004 Revenue Profit Profit Profit Revenue Profit Profit Profit before before margin before before margin tax interest tax interest and tax and tax £m £m £m % £m £m £m %SupportServices 238.7 16.0 15.2 6.7 206.6 13.5 12.9 6.5PropertyServices 78.2 4.4 4.3 5.6 64.1 3.9 3.7 6.0EngineeringServices 132.3 3.0 2.7 2.2 121.7 4.3 3.9 3.5 Continuingoperationsbefore otheroperatingincome 449.2 23.4 22.2 5.2 392.4 21.7 20.5 5.5 Otheroperatingincome - - - - - 1.3 1.3 -Continuingoperations 449.2 23.4 22.2 5.2 392.4 23.0 21.8 5.9Discontinuedoperations - (2.4) (2.4) - 18.9 (3.5) (3.2) -Total 449.2 21.0 19.8 - 411.3 19.5 18.6 - Included within the Support Services segment for the six months ended 30September 2005 are amounts that relate to companies acquired in the period;turnover of £6,349,000 and pre-tax losses of £31,000 (including integrationcosts). Six months to 30 September 2005 2004 Total TotalRevenue £m £mSupport ServicesCleaning 98.8 92.6Catering 7.3 6.4Landscape 1.8 1.0Pest Control 2.5 2.4Security 36.5 24.6Managed Services 46.6 46.0Engineering Maintenance 45.2 33.6Total Support Services 238.7 206.6 Property Services 78.2 64.1Engineering Services 132.3 121.7 Total continuing operations 449.2 392.4Discontinued operations - 18.9 Total 449.2 411.3 3 DividendThe proposed interim dividend of 1.9p (2004: 1.6p) per Ordinary Share will bepaid on 31 March 2006 to Shareholders on the Register on 10 March 2006. 4 Earnings per shareBasic diluted earnings per share have been calculated in accordance with IAS33'Earnings Per Share'. The calculation of the basic and diluted EPS is based on the following data: 6 months to 6 months to Year to 30 September 30 September 31 March 2005 2004 2005 million million million Number of shares Weighted average number of ordinaryshares for the purpose of basic EPS 303.7 308.1 306.4 Effect of dilutive potentialordinary shares:share options 2.8 0.8 4.1 Weighted average number ofordinary shares for the purpose of diluted EPS 306.5 308.9 310.5 6 months ended 6 months ended Year ended 30 September 30 September 31 March 2005 2004 2005 Earnings Per share Earnings Per share Earnings Per share amount amount amount £m pence £m pence £m penceBasic EPSEarnings forthe purposesof basicEPSbeing netprofitattributableto theequityholders ofMITIE GroupPLC 13.0 4.3p 11.2 3.6p 27.0 8.8p Add back:Losses fromdiscontinuedactivities 2.4 0.8p 3.8 1.3p 3.8 1.3p Basicearningsbeforediscontinued activities 15.4 5.1p 15.0 4.9p 30.8 10.1pDilutedEPSEarnings forthe purposeof diluted EPS 13.0 4.2p 11.2 3.6p 27.8 8.7p Dilutedearningsbeforediscontinuedactivities 15.4 5.0p 15.0 4.9p 30.8 10.0pHeadlineEPSBasicearningsbeforediscontinued activities 15.4 5.1p 15.0 4.9p 30.8 10.1p Otheroperatingincome - - (1.3) (0.5p) (1.5) (0.5p) Headlineearnings perOrdinary Share 15.4 5.1p 13.7 4.4p 29.3 9.6p 5 Purchase of subsidiary undertakings MITIE MITIE MITIE MITIE Air MITIE Air Business Engineering Engineering MITIE MITIE Conditioning Conditioning Services Services Services Security Security (Wales) Ltd (West) Ltd Ltd (Retail) (Swansea) (North) Scotland) Total Ltd Ltd Ltd Ltd £m £m £m £m £m £m £m £mMinorityinterest 0.1 0.1 1.1 0.1 0.2 0.2 0.1 1.9 Goodwill 0.4 0.3 4.9 - 0.6 1.2 0.1 7.5Totalpurchase 0.5 0.4 6.0 0.1 0.8 1.4 0.2 9.4considerationShares issued-MITIE GroupPLC 0.4 0.4 5.1 0.1 0.7 1.1 0.2 8.0Deferredconsideration - - 0.7 - 0.1 0.1 - 0.9Cashconsiderationbeingcash outflowin the period 0.1 - 0.2 - - 0.2 - 0.5 5 Purchase of subsidiary undertakings (continued)On 3 May 2005 MITIE acquired a 100% interest in the ordinary share capital ofIntruder International Ltd. In the period from 1 November 2004 to acquisition the profit after taxation was £0.1m (Year to 31 October 2004 was £0.3m). The provisional net assets acquired and the related consideration were asfollows: £mIntangible assets 0.1Property, plant and equipment 1.2Inventories 0.1Trade and other receivables 1.0Cash and cash equivalents 0.4Trade and other payables (0.8)Current tax liabilities (0.1)Loans (0.8)Net assets acquired 1.1 Goodwill 3.1Total consideration 4.2 Satisfied by:Cash 4.0Directly attributable costs 0.2 Net cash outflow arising on acquisition:Cash consideration 4.2Cash and cash equivalents acquired (0.4)Net cash outflow 3.8 On 30 June 2005 MITIE acquired a 100% interest in the ordinary share capital ofThe Watch Security Ltd. In the period from 1 July 2004 to acquisition the profitafter taxation was £0.4m (Year to 30 June 2004 was £0.3m). The provisional net assets acquired and the related consideration were asfollows: £mProperty, plant and equipment 0.8Inventories 0.1Trade and other receivables 1.9Cash and cash equivalents 1.1Trade and other payables (2.4)Current tax liabilities (0.1)Loans (0.1)Net assets acquired 1.3 Goodwill 6.9Total consideration 8.2 Satisfied by:Cash 6.0Deferred consideration 2.0Purchase consideration 8.0Directly attributable costs 0.2Total consideration 8.2 Net cash outflow arising on acquisition:Cash consideration 6.2Cash and cash equivalents acquired (1.1)Net cash outflow 5.1 6 Reserves Called Share up Share Capital based share premium Merger Revaluation redemption Other payment Retained capital account reserve reserve reserve reserve reserve earnings Total £m £m £m £m £m £m £m £m £mAt beginningof year 7.6 11.5 44.1 (0.2) 0.3 0.6 0.7 71.4 136.0 Shares issuedand netpremiumarising inrespect ofacquisitions 0.1 - 7.9 - - - - - 8.0Shares issuedand netpremiumin connectionof exerciseofshare options - 0.9 - - - (0.2) - - 0.7Own sharesacquired - - - - - - - (1.6) (1.6)Profit for theperiodattributableto equityholders of theparent - - - - - - - 13.0 13.0Dividend paid - - - - - - - (5.6) (5.6)Expense inrelation tosharebased payments - - - - - - 0.3 - 0.3Net actuarialloss ondefinedbenefitpensionschemes - - - - - - - (4.3) (4.3)Tax credit onitems takendirectly toequity - - - - - - - 1.1 1.1 Balance at 30September 2005 7.7 12.4 52.0 (0.2) 0.3 0.4 1.0 74.0 147.6 Copies of this statement will be posted to all Shareholders and will beavailable to the public from the Company's Head Office at 8 Monarch Court, TheBrooms, Emersons Green, Bristol, BS16 7FH. International Financial Reporting Standards ('IFRS') Supplementary guidance on conversion to IFRS for the year to 31 March 2006. Contents •Summary •Introduction •IFRS 1 - First-time Adoption of International Financial Reporting Standards •Key IFRS adjustments and their impact on the financial statements •Accounting policies under IFRS •Restatement of balance sheet as at 1 April 2004 (the opening balance sheet under IFRS) •Reconciliation for the year ended 31 March 2005 - Profit and loss - Equity Appendix •Unaudited reconciliation for 6 months to 30 September 2004 - Profit and loss - Equity SummaryIFRS are new financial reporting standards applicable to the Group for the firsttime in the interim report for the six months to 30 September 2005. The Group isrequired to apply these new standards retrospectively to the Group's results forall comparative financial information, as if the Group had reported under IFRSin previous accounting periods. Certain exemptions exist for the first set ofaccounts prepared on this basis and are detailed in the document below.There is no change to the underlying performance of the Group. The only changeto cash or cash flows under IFRS is a reclassification of current assetinvestments to cash equivalents. The restatements result in the following changes: •an increase of £3.4m in the full-year profit before tax to 31 March 2005 to £47.9m, and an increase of £1.7m for the six-month period ended 30 September 2004 to £23.0m; and •an increase in net assets at 31 March 2005 of £3.8m, a decrease in net assets of £0.3m at 30 September 2004 and a decrease in net assets of £0.2m at 1 April 2004. Restatements arise primarily as a result of: •goodwill is no longer amortised; •goodwill written off directly to reserves under UK GAAP prior to 1998 is not included in determining the loss on disposal of MITIE Generation Ltd; •recognition of defined benefit pension scheme liabilities; •inclusion of fair value charges in relation to share-based payments; •dividend liabilities only recognised in the accounts when authorised; and •change in the recognition of deferred tax assets. IntroductionTo date the consolidated financial statements of MITIE Group PLC (the Group)have been prepared in accordance with UK Generally Accepted AccountingPrinciples (UK GAAP). For the current financial year it is required to preparethese in accordance with International Accounting Standards (IAS) andInternational Financial Reporting Standards (IFRS) and related interpretationsas adopted by the European Union (EU). References to IFRS throughout thisdocument refer to both IAS and IFRS. The first Annual Report under IFRS will be for the year ending 31 March 2006 andthe first interim results reported under IFRS are for the six months ended 30September 2005. This statement explains the differences that arise when theGroup's results are prepared under IFRS compared to UK GAAP. It sets outreconciliations of the Group's balance sheets from UK GAAP to IFRS as at 1 April2004 (the opening balance sheet as at the date of transition to IFRS), at 30September 2004 and at 31 March 2005. In addition, this statement sets out reconciliations of the Group's profit andloss accounts prepared under UK GAAP to those prepared in accordance with IFRSfor the six months to 30 September 2004 and for the year to 31 March 2005. This statement has been prepared by management using its best knowledge of theexpected standards and interpretations of the International Accounting StandardsBoard (IASB), facts, circumstances and accounting policies that will be appliedwhen the Company prepares its first complete set of IFRS financial statements asat 31 March 2006. Until such time, it is possible that the IFRS comparatives for2005 and the accompanying opening balance sheet in this document may requireadjustment. IFRS 1 - First-time Adoption of International Financial Reporting Standards IFRS 1 establishes the transitional arrangements for the preparation of thefirst set of financial statements in accordance with IFRS. In general, IFRS isrequired to be applied retrospectively so that previous financial information isalso reported under IFRS for comparative purposes. Outlined below is the Group's effective position on the transitionalarrangements under IFRS 1. Business combinationsThe Group has elected not to apply IFRS 3 retrospectively to businesscombinations that took place before 1 April 2004. The Group will account for acquisitions prior to 1 April 2004 as follows: •the carrying amount of goodwill recognised under UK GAAP at 1 April 2004 will not be adjusted to reflect any intangible assets acquired; •from 1 April 2004 goodwill will no longer be amortised but will be reviewed annually for impairment; and •goodwill written off directly to reserves under UK GAAP prior to 1998 will not be included in determining any subsequent profit or loss on disposal. Employee benefitsUnder IFRS 1, the Group will elect to take advantage of the exemption, whichallows cumulative actuarial gains or losses on defined benefit pension schemesat the date of transition to IFRS to be recognised immediately. Going forward,actuarial gains and losses will be recognised in full in the period in whichthey occur, being reported in the consolidated statement of recognised incomeand expense. Share based paymentsFollowing IFRS 2, the Group has applied fair value to all grants of equityinstruments after 7 November 2002 that had not vested by 1 April 2005. At 1 April 2004, the cumulative IFRS 2 charge has been shown within a separateShare based Payment Reserve within Equity. Going forward (in accordance with IFRS 2), the imputed fair value at the date ofgrant of options issued under savings-related and executive share option schemeswill be charged to profit from operations on a straight-line basis over thevesting period. Key IFRS adjustments and their impact on the financial statements IFRS 2 - Share based paymentsUnder IFRS 2, share awards must be measured at fair value at grant date andshould be recognised as an expense to operating profit on a straight-line basisover the vesting period. No expense was required under UK GAAP. The Group has valued all share option awards granted since 7 November 2002 (adate specified in IFRS 2) that vest after the effective date of IFRS 2 on 1April 2004. The Group has used the Black-Scholes model for the valuations. The impact is to reduce the Group's reported operating profit. This is £0.5m forthe year ended 31 March 2005 and £0.2m for the period ended 30 September 2004.Related deferred tax assets amounting to £0.0m at 1 April 2004, £0.1m at 30September 2004 and £0.2m at 31 March 2005 have been recognised and will bereleased when the share options vest and are exercised. IFRS 3 - Business combinationsUnder IFRS 3, goodwill is no longer amortised and, instead, is assessed annuallyfor impairment. Goodwill arising on acquisitions before 1 April 2004 will not berestated. As a result of this change, the Group's operating profit will be increased bythe goodwill previously amortised under UK GAAP. For the year to 31 March 2005,this was £2.8m and for the half year to 30 September 2004, it totalled £1.4m. In the year ended 31 March 2005 the loss on disposal of MITIE Generation Ltdincluded £5.0m of goodwill which arose on acquisition prior to FRS10 Goodwilland which had previously been written off in reserves. Under IFRS, this goodwillremains written off in reserves and does not get included in the loss on sale.The loss on sale of MITIE Generation Ltd has been adjusted to £3.8m. IAS 10 - Events after the balance sheet dateUnder IAS 10, dividends proposed after the balance sheet date are not recognisedas a liability at the balance sheet date. Dividends are therefore recorded inthe Group's financial statements in the period in which they are authorised.Dividends proposed, but not approved at the balance sheet date have beenreversed from the financial statements. This increased the net assets of theGroup by £4.5m at 1 April 2004, £4.8m at 30 September 2004 and £5.6m at 31 March2005. IAS 12 - Income taxesDue to the changes required in respect of pension liabilities and share basedpayments, additional deferred tax on these adjustments has been recognised infull. IAS 19 - Employee benefitsThe key impact on the Group will be accounting for retirement benefits fordefined benefit pension schemes. The Group has previously accounted for theseschemes using SSAP 24 and in accordance with the transition rules under FRS 17. The adoption of IAS 19 does not result in a significant change to operatingprofit. The impact on the Group's balance sheet at 1 April 2004 will be torecognise a pension liability of £7.1m (equal to the deficit in the definedbenefit pension schemes). The net impact is to reduce shareholders' equity by£5.0m (after deferred tax). At 30 September 2004 the Group's pension liability amounted to £10.1m (£7.1m,net of deferred tax). At 31 March 2005 the Group's pension liability amounted to £7.6m (£5.3m, net ofdeferred tax). Presentation of financial statementsThe income statement and balance sheet contained within this document have beenpresented substantially in accordance with IAS 1 'Presentation of FinancialStatements'. This format and presentation may require modification as best practice developsand any further guidance is issued. Reconciliation of equity at 1 April 2004 UK GAAP IFRS IFRS 2 Share IAS 12 based IAS 10 Deferred IAS 19 payments Dividends tax Pensions £m £m £m £m £m £mNon-current assetsGoodwill and intangibles 51.9 - - - - 51.9Property, plant and equipment 40.3 - - - - 40.3Deferred tax assets - - - 0.3 2.1 2.4Total non-current assets 92.2 - - 0.3 2.1 94.6 Current assetsInventories 7.1 - - - - 7.1Trade and other receivables 151.9 - - - - 151.9Cash and cash equivalents 49.5 - - - - 49.5Total current assets 208.5 - - - - 208.5 Total assets 300.7 - - 0.3 2.1 303.1 Current liabilitiesTrade and other payables (146.3) - - - - (146.3)Tax liabilities (6.5) - - - - (6.5)Obligations under finance leases (0.1) - - - - (0.1)Proposed dividend (4.5) - 4.5 - - -Total current liabilities (157.4) - 4.5 - - (152.9) Net current assets 51.1 - 4.5 0.3 2.1 55.6 Non-current liabilitiesRetirement benefit obligations - - - - (7.1) (7.1)Deferred tax liabilities (0.1) - - - - (0.1)Long-term provisions (7.4) - - - - (7.4)Total non-current liabilities (7.5) - - - (7.1) (14.6) Total liabilities (164.9) - 4.5 - (7.1) (167.5) Net assets 135.8 - 4.5 0.3 (5.0) 135.6 EquityShare capital 7.7 - - - - 7.7Share premium account 9.8 - - - - 9.8Merger reserve 40.9 - - - - 40.9Revaluation reserves (0.4) - - - - (0.4)Capital redemption reserve - - - - - -Other reserve 1.0 - - - - 1.0Share based payment reserve - 0.2 - - - 0.2Retained earnings 70.2 (0.2) 4.5 0.3 2.1 69.8Equity attributable to equityholders of the parent 129.2 - 4.5 0.3 (5.0) 129.0 Minority interest 6.6 - - - - 6.6Total equity 135.8 - 4.5 0.3 (5.0) 135.6 Summary of significant accounting policies under IFRSThe significant accounting polices adopted in the preparation of the Group'sIFRS financial information are set out below. Basis of preparationThe consolidated financial information have been prepared on the historical costbasis. The consolidated financial information are presented substantially inaccordance with IAS 1 'Presentation of Financial Statements'. However, thisformat and presentation may require modification as best practice develops andany further guidance is issued. Basis of consolidationThe consolidated financial statements comprise the financial statements of MITIEGroup PLC and all its subsidiaries. The financial statements of the subsidiariesare in accordance with UK Generally Accepted Accounting Principles (UK GAAP).Adjustments are made in the consolidated accounts to bring into line anydissimilar accounting policies that may exist between UK GAAP and IFRS. All intercompany balances and transactions, including unrealised profits arisingfrom intra-group transactions, have been eliminated in full. Subsidiaries are consolidated from the date on which control is transferred tothe Group and cease to be consolidated from the date on which control istransferred out of the Group. GoodwillGoodwill arising on consolidation represents the excess of the cost ofacquisition over the Group's interest in the fair value of the identifiableassets and liabilities of a subsidiary, associate or jointly-controlled entityat the date of acquisition. Cost of acquisition includes all deferred amountsthat become payable in the future. Goodwill is recognised as an asset and reviewed for impairment at leastannually. Any impairment is recognised immediately in profit or loss and is notsubsequently reversed. On disposal of a subsidiary, associate or jointly-controlled entity, theattributable amount of goodwill is included in the determination of the profitor loss on disposal. Goodwill arising on acquisitions before the date of transition to IFRS has beenretained at the previous UK GAAP amounts subject to being tested for impairmentat that date. Goodwill written off to reserves under UK GAAP prior to 1998 hasnot been reinstated and is not included in determining any subsequent profit orloss on disposal. Property, plant and equipmentProperty, plant and equipment are stated at cost less accumulated depreciationand any impairment in value. Depreciation is charged so as to write off the costof the assets over their estimated useful lives and is calculated on astraight-line basis as follows: Freehold buildings and long leasehold property - over 50 years Leasehold improvements - period of the lease Plant and equipment - 3-14 years The carrying values of property, plant and equipment are reviewed for impairmentwhen events or changes in circumstances indicate the carrying value may not berecoverable. If any such indication exists and where the carrying values exceedthe estimated recoverable amount, the assets or cash-generating units arewritten down to their recoverable amount. The recoverable amount of property,plant and equipment is the greater of net selling price and value in use. Inassessing value in use, the estimated future cash flows are discounted to theirpresent value using a pre-tax discount rate that reflects current marketassessments of the time value of money and the risks specific to the asset. InvestmentsAll investments are initially recorded at cost, being the fair value of theconsideration given and including acquisition charges associated with theinvestment. Subsequently, they are reviewed for impairment if events or changesin circumstances indicate the carrying value may not be recoverable. Foreign currencyTransactions in foreign currencies are recorded at the rate of exchange at thedate of transaction or, if hedged, at the forward contract rate. Monetary assetsand liabilities denominated in foreign currencies at the balance sheet date arereported at the rates of exchange prevailing at that date or, if appropriate, atthe forward contract rate. LeasingFinance leases, which transfer to the Group substantially all the risks andbenefits incidental to ownership of the leased item, are capitalised at theinception of the lease at the fair value of the leased item or, if lower, at thepresent value of the minimum lease payments. Lease payments are apportionedbetween the finance charges and reduction of the lease liability so as toachieve a constant rate of interest on the remaining balance of the liability.Finance charges are charged directly against income. Capitalised leased assets are depreciated over the shorter of the estimated lifeof the asset or the lease term. Leases where the lessor retains substantiallyall the risks and benefits of ownership of the asset are classified as operatingleases. Operating lease payments are recognised as an expense in the incomestatement on a straight-line basis over the lease term. Any lease incentives areamortised over the lesser of the life of the operating lease or to the firstopportunity for termination. InventoriesInventories are stated at the lower of cost and net realisable value.Costs represent materials, direct labour and overheads. Net realisable value isbased on estimated selling price, less further costs expected to be incurred tocompletion and disposal. Provision is made for obsolete, slow moving ordefective items where appropriate. RevenueRevenue is recognised to the extent that it is probable that the economicbenefits will flow to the Group and the revenue can be reliably measured. Otherthan in respect of long-term contracts, described below, revenue represents feeincome recognised in respect of services provided during the period (stated netof value added tax). Revenue is earned solely within the United Kingdom. Revenue from long-term contracts represents the sales value of work done in theyear, including fees invoiced and estimates in respect of amounts to be invoicedafter the year-end. Profits are recognised on long-term contracts where thefinal outcome can be estimated reliably. In calculating this, the percentage ofcompletion method is used based on the proportion of costs incurred to the totalestimated cost. Cost includes direct staff costs and outlays. Full provision ismade for all known or anticipated losses on each contract immediately suchlosses are forecast. Gross amounts due from customers are stated at the proportion of the anticipatednet sales value earned to date, less amounts billed on account. To the extentthat fees paid on account exceed the value of work performed, they are includedin creditors as gross amounts due to customers. Revenue from bundled contracts consists of various components which operateindependently of each other and for which reliable fair values can beestablished. Accordingly, each component is accounted for separately as if itwere an individual contractual arrangement. TaxThe tax expense represents the sum of the tax currently payable and deferredtax. The tax currently payable is based on taxable profit for the year. Taxableprofit differs from net profit as reported in the income statement because itexcludes items of income or expense that are taxable or deductible in otheryears and it further excludes items that are never taxable or deductible. TheGroup's liability for current tax is calculated using tax rates that have beenenacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available, against which deductible temporarydifferences can be utilised. Such assets and liabilities are not recognised ifthe temporary difference arises from goodwill or from the initial recognition(other than in a business combination) of other assets and liabilities in atransaction that affects neither the tax profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the income statement, except when it relates to itemscharged or credited directly to equity, in which case the deferred tax is alsodealt with in equity. Pension schemesThe Group operates two defined benefit pension schemes. The Group also operatesa fully insured defined contribution pension scheme, the assets of which areheld in independently administered funds. Payments to the defined contribution pension schemes are charged as an expenseas they fall due. For the defined benefit pension schemes, the cost of providing benefits isdetermined using the Projected Unit Credit Method, with actuarial valuationsbeing carried out at each balance sheet date. Actuarial gains and losses arerecognised in full in the period in which they occur. They are recognisedoutside profit or loss and presented in the statement of recognised income andexpense. Past service cost is recognised immediately to the extent that the benefits arealready vested, and otherwise is amortised on a straight-line basis over theaverage period until the benefits become vested. The retirement benefit obligation recognised in the balance sheet represents thepresent value of the defined benefit obligation as adjusted for unrecognisedpast service cost, and as reduced by the fair value of scheme assets. Any assetresulting from this calculation is limited to past service cost, plus thepresent value of available refunds and reductions in future contributions to theplan. ProvisionsProvisions are recognised when the Group has a present obligation (legal orconstructive) as a result of a past event and it is possible that an outflow ofresources embodying economic benefits will be required to settle the obligationand a reliable estimate can be made of the amount of the obligation. Where theGroup expects some or all of a provision to be reimbursed, for example under aninsurance contract, the reimbursement is recognised as a separate asset but onlywhen the reimbursement is virtually certain. The expense relating to anyprovision is presented in the income statement net of any reimbursement. If theeffect of the time value of money is material, provisions are determined bydiscounting the expected future cash flows at a pre-tax rate that reflectscurrent market assessments of the time value of money and, where appropriate,the risks specific to the liability. Where discounting is used, the increase inthe provision due to the passage of time is recognised as a borrowing cost. Pre-contract costsAll bid costs are expensed through the income statement up to the point wherecontract award (or full recovery of costs) is virtually certain. Bid costsincurred after this point are then capitalised within trade and otherreceivables. On the contract award these bid costs are amortised through theincome statement over the contract period by reference to the stage ofcompletion of the contract activity at the balance sheet date. Share based paymentsThe Group operates a number of executive and employee share schemes. For allgrants of share options and awards, the fair value as at the date of grant iscalculated using the Black-Scholes model and the corresponding expense isrecognised over the vesting period. The Group has taken advantage of the transitional provisions of IFRS2 in respectof equity-settled awards and has applied IFRS2 only to equity-settled awardsgranted after 7 November 2002 that had not vested before 1 April 2005. Reconciliation of profit for the year ended 31 March 2005 UK GAAP IFRS IFRS 2 Share IFRS 3 IAS 12 based Business Deferred IAS 19 payment combinations tax Pensions £m £m £m £m £m £mContinuing operationsRevenue 799.7 - - - - 799.7Cost of sales (638.9) - - - - (638.9)Gross profit 160.8 - - - - 160.8 Other operating income 1.5 - - - - 1.5Administration expenses (119.9) (0.5) 2.8 - 0.9 (116.7)Profit from operations 42.4 (0.5) 2.8 - 0.9 45.6 Investment income 2.1 - - - - 2.1Finance income - - - - 0.2 0.2Profit before tax 44.5 (0.5) 2.8 - 1.1 47.9 Tax (14.1) 0.2 - - - (13.9)Profit for the year fromcontinuing operations 30.4 (0.3) 2.8 - 1.1 34.0 Discontinued operationsLoss for the period fromdiscontinued operations (8.8) - 5.0 - - (3.8)Profit for the period 21.6 (0.3) 7.8 - 1.1 30.2 Attributable to:Equity holders of the parent 18.4 (0.3) 7.8 - 1.1 27.0Minority interest 3.2 - - - - 3.2 21.6 (0.3) 7.8 - 1.1 30.2Earnings per shareBasic 6.0p 8.8pDiluted 5.9p 8.7pEarnings per share beforediscontinued operationsBasic 9.1p 10.1pDiluted 9.0p 10.0p The amount shown above as the loss for the period from discontinued operationson a UK GAAP basis is calculated as follows: £m Revenue 18.9Cost of sales (12.6)Gross profit 6.3Administration expenses (5.3)Profit before tax 1.0Tax (0.2)Profit for the period from discontinued operations 0.8 Exceptional loss on sale of discontinued operations (9.6) Loss for the period from discontinued operations (8.8) Reconciliation of equity at 31 March 2005 (date of last UK GAAP Statements) UK GAAP IFRS IFRS 2 Share IFRS 3 IAS 12 based Business IAS 10 Deferred IAS 19 payment combinations Dividends tax Pensions £m £m £m £m £m £m £mNon-currentassetsGoodwill andintangibles 49.9 - 2.8 - - - 52.7Property, plantand equipment 27.2 - - - - - 27.2Deferred taxassets - 0.2 - - 0.5 2.3 3.0Total non-currentassets 77.1 0.2 2.8 - 0.5 2.3 82.9 Current assetsInventories 6.3 - - - - - 6.3Trade and otherreceivables 180.0 - - - - - 180.0Cash and cashequivalents 61.5 - - - - - 61.5Total currentassets 247.8 - - - - - 247.8 Total assets 324.9 0.2 2.8 - 0.5 2.3 330.7 CurrentliabilitiesTrade and otherpayables (159.9) - - - - - (159.9)Tax liabilities (7.4) - - - - - (7.4)Obligations underfinance leases (0.2) - - - - - (0.2)Proposed dividend (5.6) - - 5.6 - - -Total currentliabilities (173.1) - - 5.6 - - (167.5) Net current assets 74.7 - - 5.6 - - 80.3 Non-currentliabilitiesRetirement benefitobligation - - - - - (7.6) (7.6)Deferred taxliabilities (0.8) - - - - - (0.8)Long-termprovisions (9.2) - - - - - (9.2)Total non-currentliabilities (10.0) - - - - (7.6) (17.6) Total liabilities (183.1) - - 5.6 - (7.6) (185.1) Net assets 141.8 0.2 2.8 5.6 0.5 (5.3) 145.6 EquityShare capital 7.6 - - - - - 7.6Share premiumaccount 11.5 - - - - - 11.5Merger reserve 44.1 - - - - - 44.1Revaluationreserves (0.2) - - - - - (0.2)Capital redemptionreserve 0.3 - - - - - 0.3Other reserve 0.6 - - - - - 0.6Share basedpayment reserve - 0.7 - - - - 0.7Retained earnings 68.3 (0.5) 2.8 5.6 0.5 (5.3) 71.4Equityattributable toequity holdersof the parent 132.2 0.2 2.8 5.6 0.5 (5.3) 136.0 Minority interest 9.6 - - - - - 9.6Total equity 141.8 0.2 2.8 5.6 0.5 (5.3) 145.6 AppendixUnaudited reconciliation of profit for six months to 30 September 2004 UK GAAP IFRS IFRS 2 Share IFRS 3 IAS 12 based Business Deferred IAS 19 payment combinations tax Pensions £m £m £m £m £m £mContinuing operationsRevenue 392.4 - - - - 392.4Cost of sales (319.5) - - - - (319.5)Gross profit 72.9 - - - - 72.9 Other operating income 1.3 - - - - 1.3Administration expenses (53.8) (0.2) 1.4 - 0.4 (52.2)Profit from operations 20.4 (0.2) 1.4 - 0.4 22.0 Investment income 0.9 - - - - 0.9Finance income - - - - 0.1 0.1Profit before tax 21.3 (0.2) 1.4 0.5 23.0 Tax (6.7) 0.1 - - (6.6)Profit for the period fromcontinuing operations 14.6 (0.1) 1.4 - 0.5 16.4 Discontinued operationsLoss for the period fromdiscontinued operations (8.8) - 5.0 - - (3.8)Profit for the period 5.8 (0.1) 6.4 - 0.5 12.6 Attributable to:Equity holders of the parent 4.4 (0.1) 6.4 - 0.5 11.2Minority interest 1.4 - - - - 1.4 5.8 (0.1) 6.4 - 0.5 12.6Earnings per shareBasic 1.4p 3.6pDiluted 1.4p 3.6pEarnings per share beforediscontinued operationsBasic 4.5p 4.9pDiluted 4.5p 4.9p The amount shown above as the loss for the period from discontinuedoperations on a UK GAAP basis is calculated as follows: £m Revenue 18.9Cost of sales (12.6)Gross profit 6.3Administration expenses (5.3)Profit before tax 1.0Tax (0.2)Profit for the period from discontinued operations 0.8 Exceptional loss on sale of discontinued operations (9.6) Loss for the period from discontinued operations (8.8) Appendix Unaudited reconciliation of equity at 30 September 2004 UK GAAP IFRS IFRS 2 Share IFRS 3 IAS 12 based Business IAS 10 Deferred IAS 19 payment combinations Dividends tax Pensions £m £m £m £m £m £m £mNon-currentassetsGoodwill andintangibles 51.3 - 1.4 - - - 52.7Property, plantand equipment 27.6 - - - - - 27.6Deferred taxassets - 0.1 - - 0.5 3.0 3.6Total non-currentassets 78.9 0.1 1.4 - 0.5 3.0 83.9 Current assetsInventories 6.7 - - - - - 6.7Trade and otherreceivables 164.2 - - - - - 164.2Cash and cashequivalents 50.5 - - - - - 50.5Total currentassets 221.4 - - - - - 221.4 Total assets 300.3 0.1 1.4 - 0.5 3.0 305.3 CurrentliabilitiesTrade and otherpayables (145.3) - - - - - (145.3)Tax liabilities (4.5) - - - - - (4.5)Obligations underfinance leases (1.1) - - - - - (1.1)Proposed dividend (4.8) - - 4.8 - - -Total currentliabilities (155.7) - - 4.8 - - (150.9) Net current assets 65.7 - - 4.8 - - 70.5 Non-currentliabilitiesRetirement benefitobligation - - - - - (10.1) (10.1)Deferred taxliabilities (0.2) - - - - - (0.2)Long-termprovisions (9.8) - - - - - (9.8)Total non-currentliabilities (10.0) - - - - (10.1) (20.1) Total liabilities (165.7) - - 4.8 - (10.1) (171.0) Net assets 134.6 0.1 1.4 4.8 0.5 (7.1) 134.3 EquityShare capital 7.6 - - - - - 7.6Share premiumaccount 10.3 - - - - - 10.3Merger reserve 44.2 - - - - - 44.2Revaluationreserves (0.3) - - - - - (0.3)Capital redemptionreserve 0.2 - - - - - 0.2Other reserve 1.0 - - - - - 1.0Share basedpayment reserve - 0.4 - - - - 0.4Retained earnings 65.1 (0.3) 1.4 4.8 0.5 (7.1) 64.4Equity attributable toequity holdersof the parent 128.1 0.1 1.4 4.8 0.5 (7.1) 127.8 Minority interest 6.5 - - - - - 6.5 Total equity 134.6 0.1 1.4 4.8 0.5 (7.1) 134.3 Copies of this statement will be posted to all Shareholders and will beavailable to the public from the Company's Head Office at 8 Monarch Court, TheBrooms, Emersons Green, Bristol, BS16 7FH. Financial CalendarShares ex-dividend 8 March 2006Record date for interim dividend 10 March 2006Payment date for interim dividend of 1.6p per 2.5p share 31 March 2006Preliminary results for the year to 31 March 2006 22 May 2006Annual General Meeting 27 July 2006 MITIE Group PLC,8 Monarch Court,The Brooms,Emersons Green,Bristol, BS16 7FHT 0117 970 8800F 0117 302 6743E [email protected] www.mitie.co.uk This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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