MITIE Group PLC
Annual Report and Accounts 2008
MITIE’s strategy is centred on sustainable, profitable growth. In delivering this strategy our main aim is to secure value enhancement for our shareholders and other stakeholders. We use the following financial and non-financial key performance indicators (KPIs) along with other management tools to measure our success in the delivery of our strategy and the management of our business:
Financial KPIs
Group EBITA Description: Our earnings before interest, tax and amortisation (EBITA) margin provides us with a good indicator of the profitability of our business. Where we have material, non-recurring charges, such as integration costs, we exclude these from our measure. Target range: Maintain EBITA margins between 5.0% and 6.0% per annum. Comment: We have maintained our underlying margins at 5.1% and improved our reported margins from their 2007 levels of 4.9%. Acquisition related integration costs reduced reported EBITA in 2007. |  |
Conversion of EBITDA to cash (%) Description: The efficiency with which we manage the generation of cash is an important indicator for our business. MITIE is built on a sound understanding of the importance of cash and working capital management and that ethos remains critical to our business. The conversion of the Group’s earnings before interest, tax, depreciation and amortisation (EBITDA) to cash is one of the significant cash flow indicators for MITIE. Target range: Over 90.0% of Group EBITDA converted to cash. Comment: We have achieved our target this year with 90.3% of Group EBITDA being converted to cash. |  |
Capital expenditure as a percentage of revenue (%) Description: Our strength lies in the management of people and in the provision of suitable assets to support their work, but our business is not capital intensive. We continue to monitor and control capital expenditure, and target growth and acquisitions in areas that do not require substantial capital expenditure. Target range: Maintain below 2.0% of revenue. Comment: We have reduced our capital expenditure KPI to 1.4% (2007: 1.8%) keeping it well below the 2.0% target limit. |  |
Dividend growth (%) Description: It is important that we continue to target a progressive dividend policy that provides an appropriate return to shareholders and that provides a dividend which grows in line with the underlying earnings of the Group. Dividend cover is calculated by reference to our underlying, cash-based earnings which we measure using our basic EPS before amortisation of intangibles, imputed interest charges relating to acquisitions and material nonrecurring charges. There were no material non-recurring charges in 2008, whilst in 2007 adjustment was made in respect of acquisition related integration costs. The adjusted EPS after these items is 14.9p (2007: 12.8p) giving rise to underlying growth of 16.4%. Target range: At least in line with underlying earnings growth at a cover rate of 2.5 times adjusted earnings. Comment: Our dividend growth for the year is 17.6 %, giving cover of 2.5 times adjusted earnings. | 
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Non-financial KPIs
Reportable accidents (per 1,000 employees) Description: Reportable accidents are defined as fatalities, major injuries and injuries resulting in absence from work of over three days. Our people are our greatest asset. Providing them with a safe environment in which to work is of paramount importance to us, so we use a KPI for reportable accidents to assess our performance. Objective: Retain focus on reducing the risk of accidents in our business. Comment: Our focus on health and safety has enabled us to reduce reportable accidents to 4.0 per 1,000 employees. |  |
Management retention (%) Description: MITIE is a people business and we pride ourselves in creating and nurturing outstanding management. Monitoring how successful we are in retaining our people is an important measure for us. Target: Enhance focus on the development and retention of management to maintain a retention rate of over 90.0%. Comment: We have increased our management retention rates to 92.0%. |  |
Carbon dioxide emissions (tonnes equivalent CO2 per employee) Description: We are conscious of the impact of our operations on the environment. Our CO2 emissions are calculated using DEFRA conversion factors following a review of our fuel and utilities usage. The rate of CO2 emissions per MITIE employee is calculated using the average number of people employed during the year. Objective: Understand and minimise the environmental impact of our operations. Comment: This year, we have reduced our CO2 emissions per employee from 0.70 tonnes equivalent per employee to 0.64 tonnes equivalent. |  |
Retention of existing contracts within Facilities Services (%) Description: In order to achieve sustainable, profitable growth, we monitor the percentage of existing contracts retained in our Facilities Services division on a rolling 12-month basis. Target: Achieve contract retention rates in excess of 90.0%. Comment: We have improved our contract retention rate in our Facilities Services division to 86.0%. |  |
Forward order book (£bn) Description: Our forward order book figure is the total future revenue for all of the contracts that we have signed with customers. This figure gives us a good indication of our ability to sustain our growth rates. Target: Increase order book. Comment: At the end of the year our order book was at £4.4bn, showing growth from the prior year. |  |
