Mitie Group plc
LEI number: 213800MTCLTKEHWZMJ03
19 November 2018
This announcement contains inside information
Sale of Mitie's Social Housing business
Mitie Group plc (LSE: MTO) ("Mitie" or the "Group") today announces it has entered into an agreement to sell its social housing business to Mears Group plc (LSE: MERG.L) ("Mears") for a consideration of up to £35 million in cash (on a debt free, cash free basis) (the "Consideration"). The deal will be structured as a sale of the entire issued share capitals of Mitie Property Management Limited and MPS Housing Limited (the latter being a newly incorporated subsidiary of Mitie which has acquired the assets and undertaking of Mitie Property Services (UK) Limited ("MPSUK")) (together, "MPM"). The deal is conditional on a private placing by Mears and the completion of a TUPE consultation process with affected employees of MPSUK.
The Consideration comprises an initial payment of £22.5 million, payable in cash at completion, subject to a completion accounts adjustment mechanism, and a deferred consideration of up to £12.5 million, payable in cash over a period of two years post completion subject to the achievement of certain performance milestones. The majority of the proceeds will be used to strengthen the Group's balance sheet and accelerate partial repayment of the deficit under the Group's defined benefit pension scheme, with the balance being reinvested in core businesses.
MPM is a leading provider of property repairs and maintenance services to the social housing sector, employing over 1,000 people and providing property services to over 30 social housing providers in the UK. MPM carries out over 265,000 responsive repairs each year, along with 25,000 repairs for critical services delivered 365/24 hours a day to clients.
MPM was previously part of Mitie's Property Management division, which also included Mitie's commercial painting and roofing refurbishment businesses. Mitie's painting and roofing operations now sit within the Group's Engineering Services division and are not part of the transaction.
MPM's revenues were £128 million and earnings before interest and tax, adjusted to exclude non-recurring items and the recharge of Mitie central service costs, were £5 million for the financial year ended 31 March 2018. Earnings before interest and tax, adjusted to exclude non-recurring items and the recharge of Mitie central service costs for the six months ended 30 September 2018 are expected to be £2 million. At the balance sheet date of 30 September 2018, MPM had gross assets of £40.3 million.1
Phil Bentley, Chief Executive Officer, Mitie, commented:
"Mitie's strategy is to focus on its core businesses and core clients, where service delivery and margin can be enhanced by the use of technology to deliver the critical environment reliability and cost efficiency that our clients increasingly demand from their "Connected Workspace".
"MPM is a specialist provider of repairs and maintenance services to the social housing sector. The sale of MPM to Mears will allow Mitie to continue to focus and build scale in its core businesses. Mears is highly regarded in the social housing sector and has the specialist skills required to deliver to its client base."
MPM's Managing Director, Vicky Fordham-Lewis, will remain as a Managing Director as part of Mears' enlarged operations.
The sale of MPM constitutes a Class 2 transaction for the purposes of the UK Financial Conduct Authority's Listing Rules and is expected to complete by the end of November.
1 Note: numbers are based on the aggregation of unaudited management accounts in respect of the selected assets and undertaking to be transferred as part of MPM
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For further information, contact:
Claire Lovegrove |
Head of Media Relations |
T: +44 (0)20 3123 8716 |
M: +44 (0)790 027 6400 |
E: [email protected] |
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Anna Gavrilova |
Head of Investor Relations |
T: +44 (0)20 3123 8675 |
M: +44 (0)738 443 9112 |
E: [email protected] |
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Peter Dickinson |
General Counsel and Company Secretary |
T: +44 (0) 203 123 8157 |
M: +44 (0)776 821 5013 |
E: [email protected] |
Notes for editors
About Mitie Property Management
Mitie's social housing business provides a range of repairs and maintenance services in the UK and has become one of the top five service providers to the UK social housing sector. Employing over 1,000 employees, Mitie has been caring for residents' homes for over 25 years. The business includes experts in estate management and property maintenance, as well as all the main building and specialist trades. Mitie Property Management offers a range of services, including delivering reactive repairs, planned and cyclical maintenance services to over 100 local authorities and housing providers nationwide.
About Mitie
Founded in 1987, Mitie is the UK's leading facilities management and professional services company. It offers a range of specialist services including Catering, Care and Custody Support Services, Cleaning and Environmental Services, Engineering Services, Professional Services, and Security.
Mitie employs 55,000 people across the country, looking after a large, diverse, blue-chip customer base, from banks and retailers, to hospitals, schools and government offices. It takes care of its customers' people and buildings, by delivering the basics brilliantly and by deploying advanced technology. It is pioneering the Connected Workspace, using smart analytics to provide valuable insight and deliver efficiencies to create outstanding work environments for customers.
