Both Mitie and Interserve Facilities Management have traded better than expected during the Covid crisis, according to financial results published today.
The results state that revenue was up 12 per cent on the first quarter “with monthly sequential improvements in sales particularly across cleaning, security and fixed technical services contracts”.
Public sector contracts also showed “good resilience during this challenging period with strong performances” from food retail, online retail, healthcare and pharmaceuticals customers, indicate the results.
Group revenue from continuing operations for the second quarter was £514 million versus £458 million in the first quarter of FY20/21.
For the six months ended 30 September 2020, revenue was £972 million, which was 9.8 per cent lower than the same period in the previous year.
The final deal term of the sale and purchase agreement to acquire Interserve on a cash-free and debt-free basis, comprising £120 million in cash and 248 million shares in the newly enlarged Mitie (17.5 per cent), puts the transaction – expected to complete in November – at £190 million based on Friday’s closing share price.
The acquisition will mean a stronger financial profile which will “enable the group to keep investing in award-winning technology, secure long-term financing, deliver sustainable free cash flow and resume payment of dividends”, according to its statement.
Phil Bentley, chief executive of Mitie, said the company had, in particular, “been successful at renewing strategic contracts and winning new business during this period”.
He added: “Recognising this momentum, we have renegotiated the terms of the Interserve Facilities Management transaction, reducing the vendor’s consideration shares by 31 per cent (110 million shares) to 248 million shares (17.5 per cent of the Enlarged Group), valuing the current consideration at £190 million. Mitie’s existing shareholders will therefore hold a greater proportion (82.5 per cent) of the Enlarged Group and enjoy a greater share of the benefits of the transaction.”
Bentley said the acquisition of Interserve Facilities Management “accelerates the delivery of our technology-led strategy, expanding our scale and footprint to create the UK’s largest facilities management company”.
The combination of these two businesses would, he said, "transform our competitive positioning, unlock significant growth opportunities for both our business and our 77,500 colleagues and strengthen our financial profile, better balancing our public and private sector divisions and driving greater returns from the investments we have made in technology, systems and customer service over the past three years".