(Alliance News) - MITIE Group PLC on Wednesday reported a decline in revenue for the first half of its financial year, although the group did note its resilience, with its second quarter being stronger than the first.
The facilities management firm also said it has amended the terms for its acquisition of Interserve's Facility Management business, first announced in late June.
Mitie will now acquire the business for GBP120 million in cash, and issuing 248.0 million shares in Mitie, valuing the deal at GBP190 million, based on the closing share price of 28.20 pence on Friday last week.
The original deal was for Mitie to acquire Interserve's Support Services arm for GBP271 million, comprising GBP151 million raised through the issue of 358 million shares, at a price of 42.2 pence each as well as a cash payment of GBP120 million.
However, in September, the UK Competition & Markets Authority said it will investigate Mitie's proposed acquisition.
Mitie said the acquisition is expected to be accretive to earnings per share for the year to the ending March 31, 2022. Subject to shareholder approval and clearance from the UK CMA, the group expects the acquisition to be completed by the end of November.
For the six months to the end of September, revenue from continuing operations was GBP972 million, down 9.8% from GBP1.08 billion the year before. The revenue decline included the reduced scope of the NHS Properties contract and the loss of the UK Ministry of Justice.
In the second quarter, revenue in the second quarter was GBP514 million, a 12% rise from GBP458 million reported for the first quarter, driven by a strong performance from Mitie's food retail, online retail and healthcare customers.
However, demand from the group's clients in the property, finance and professional services sectors remained weak.
Looking ahead, profitability for the second half is expected to be materially higher due to Winter Services and greater project work.
However, Mitie does not expect to recommend an interim dividend for its current financial year.
"Reassuringly both Mitie and Interserve Facilities Management have traded better than expected during the Covid crisis. However, Mitie, in particular, has been successful at renewing strategic contracts and winning new business during this period," said Chief Executive Phil Bentley.
"Recognising this momentum, we have renegotiated the terms of the Interserve Facilities Management transaction, reducing the vendor's consideration shares by 31% to 248 million shares, valuing the current consideration at GBP190 million Mitie's existing shareholders will therefore hold a greater proportion (82.5%) of the enlarged group and enjoy a greater share of the benefits of the transaction," Bentley added.
Mitie will publish its interim results on November 19.
Shares in Mitie were up 7.0% at 29.15 pence on Wednesday in London.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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