Last checked at 1 Oct 2010 07:00
1 October 2010
Mears Group PLC
("Mears" or "the Group")
Acquisition of Jackson Lloyd Limited ("JL")
Summary of Acquisition
·; JL operates social housing maintenance contracts in the North West of England
·; Mears will integrate the business immediately and is expected to generate significant cost and efficiency savings
·; The acquisition is expected to be earnings enhancing for the year ending 31 December 2011 following the costs of reorganisation incurred in 2010
·; Mears has acquired JL for £2.7m in cash and the repayment of £2.1m of net debt. Additional deferred consideration of up to a maximum of £1.0m is subject to performance criteria. Consideration is being satisfied from the Company's existing debt facilities
·; JL has an order book of in excess of £80m
Mears is pleased to announce that it has acquired the entire share capital of JL for an initial cash consideration of £2.7m. JL operates maintenance contracts with customers predominantly in the North West of England. An additional deferred consideration is payable up to a maximum of £1.0m, subject to the achievement of performance criteria linked to contract retention and profitability. The consideration is being satisfied from the Company's existing debt facilities.
For the 15 month period ended 31 March 2010, the unaudited accounts for JL report that the business generated revenues of £38.6m and a loss before tax of £3.8m. The last audited accounts, for the 12 month period to 31 December 2008, reported revenues of £31.5m and a loss before tax of £0.4m. Gross assets as at 31 December 2008 were £8.6m. The business has recently gone through a restructuring whereby overheads have been significantly reduced together with an increased focus on underlying operating margin. The completion balance sheet reports net liabilities in the region of £1.4m including a net debt of £2.1m which was repaid immediately upon acquisition from the Group's existing banking facility.
Mears expects to generate further significant cost and efficiency savings. The Company will focus on delivering a quality service and maximising customer satisfaction which is typically key to enhancing profitability and ensuring contract longevity. The principal benefits of the acquisition are anticipated to arise in 2011 and beyond; it is expected to be earnings neutral for the year ending 31 December 2010 (before the costs of restructure) and earnings enhancing for the year ending 31 December 2011. The Group treats an acquisition with the same level of detailed focus as when mobilising new contracts and this process commences with immediate effect. In addition, the Group's operational support functions will be incorporated into the existing structures of JL. It is anticipated that the mobilisation and restructure will be completed before 31 December 2010 with an anticipated cost of £1.0m.
Commenting, Bob Holt, Chairman of Mears, said:
"The acquisition of the JL business fits comfortably into our social housing division and broadens our footprint in the North West of England. I am delighted to welcome a further 450 employees into the Group. We continue to seek to acquire businesses with the potential to meet the strategic objectives of the Group."
About Mears www.mearsgroup.co.uk (tickers: MER.L MER.LN MER.PL)
Mears is a leading social housing repairs and maintenance service provider to Local Authorities and Registered Social Landlords in the UK and has a leading position in the UK Local Authorities' outsourced domiciliary care market, providing personal care services to people in their own homes.
Mears employs in excess of 12,000 people and provides maintenance and repairs services to 500,000 homes nationwide. Mears also provides over 150,000 hours of domiciliary care to 20,000 service users each week.
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Enquiries: | www.mearsgroup.co.uk
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| Mears Group PLC |
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| Bob Holt, Chairman | Tel: +44(0)7778 798 816 |
| Andrew Smith, Finance Director | Tel: +44(0)7712 866 461 |
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| Joint Broker - Investec |
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| Keith Anderson/Daniel Adams | Tel: +44(0)20 7597 5970 |
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| Joint Broker - Collins Stewart |
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| Mark Dickenson/Ileana Antypas | Tel: +44(0)20 7523 8350 |
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| Financial PR - Threadneedle Communications | Tel: +44(0)20 7653 9859 |
| Trevor Bass/Alex White |
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| IR - Hansard Communications | Tel: +44(0)20 7245 1100 |
| John Bick/Kirsty Corcoran | Tel: +44(0)7872 061007 |
This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and businesses of Mears Group PLC. These statements involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Nothing in this announcement should be construed as a profit forecast.