Serco : Acquisition of leading Australian facilities management company

Serco Group plc ('Serco' or 'the Group'), the international provider of services to governments, through its Australian subsidiary, Serco Group Pty Limited, has reached agreement to acquire Facilities First Australia Holdings Pty Limited (FFA). The business is to be acquired for an enterprise value of A$76.5m (£43m), subject to standard net working capital adjustments, with the consideration to be satisfied from Serco's existing debt facilities. FFA's revenue for the year ended June 2020 was A$282m (£156m), adjusted EBITDA was approximately A$12m and Underlying Trading Profit around A$11m (£6m); the transaction represents a multiple of 6.2x June 20 adjusted EBITDA and 6.8x June 20 adjusted EBIT. The acquisition is expected to be accretive to earnings in 2021; as a consequence of the transaction Serco Group leverage will increase by approximately 0.2x, from the 0.5x the Group expects to see at 31 December 2020. The acquisition has received Australian Foreign Investment Review Board approval and is expected to complete on 4 January 2021.

FFA is a specialist provider of cleaning, facility maintenance and management services to government; over 80% of its revenues come from long-term government contracts and it has an order book of around A$434m (£240m). Its 2,500 employees and experienced management team bring to Serco new skills and reach in government facilities management, which is expected to see a significant amount of bidding opportunities in the coming years.

Commenting on the acquisition, Rupert Soames, Serco Group Chief Executive, said: 'This acquisition adds expertise and heft to our facilities management operations in Australia, while retaining our government focus. The combination of Serco and Facilities First will enable Serco Australia to target a significant pipeline of new opportunities which we expect to mature in the next few years. We welcome the employees and management of FFA as they join Serco and look forward to working with them as we further grow our Australian business.'