Last checked at 4 Nov 2008 07:00
4 November 2008
Mears Group PLC
("Mears" or "the Group")
Interim Management Statement ("IMS")
Continued Strong Trading Across All Divisions
Mears today releases its IMS for the period from 1 July 2008 to date.
Trading update
Mears has continued to experience strong trading across all divisions since announcing its interim results in August 2008. The full year results are forecast to be in line with management's expectations.
The demand for our services has never been stronger. Importantly, our two growth markets, Social Housing and Domiciliary Care, which account for over 80 per cent of Group revenues, are defensive sectors where spend is predominantly non discretionary and cash generation is robust. Given our public sector client base, we are substantially immune to bad debts and our customer work patterns and payment terms have remained on schedule.
Social Housing
Our Social Housing division is well positioned in a growing market and the outlook remains excellent. The Board continues to expect organic growth rates in excess of 30 per cent in the current year. There is continuing demand for a long-term, broadly-based service provision which plays to our strengths as a leader in that market. We are seeing continued consolidation of Registered Social Landlords ("RSLs") and a trend of Local Authorities transferring their housing stock into Housing Trusts. Both these trends provide increased opportunities to the larger broad-based Social Housing players such as Mears.
The Group has announced a number of new social housing contract awards since 1 July, amounting to over £230m and a total of in excess of £400m since the annual results were announced in March, and we continue to build on the strong performance in the first half. The bid pipeline remains strong and we are currently at advanced stages of negotiating further significant opportunities.
Domiciliary Care
Careforce continues to build a presence across a growing geographical area and is well placed to take a leading position in the consolidation and evolution of the Domiciliary Care market. We are pleased to announce further contract awards as follows:
NorfolkA contract to supply home care to Norfolk County Council ("NCC"); initially for a period of 5 years commencing in January 2009, with a possible extension for a further 2 years thereafter. The expected volume under this contract is 3,700 hours per week. This represents the single largest new contract award achieved by Careforce since it was acquired by Mears and extends the Careforce coverage into a new geographical location. Following the award of this contract, the number of providers to NCC has been reduced from 11 to 5 with Careforce being awarded a third of the works.
Windsor and Maidenhead
A contract to supply homecare to the Royal Borough of Windsor and Maidenhead Council will commence February 2009 and run for a period of 2 years with a possible extension for a further 2 years thereafter. It is expected that the hours supplied under this contract will be 1,100 hours per week. This is in addition to the work we do with the Council already.
These new awards add a further 4,800 hours per week or £3m of annualised revenues and including the 5 contracts won by the Group's Domiciliary Care division since the full year results were announced takes the total to 11,000 hours per week added since March.
The integration and rebranding of Careforce's 11 bolt-on acquisitions is nearing completion. We have continued to invest significantly in IT, accounting systems and in our workforce's development and training programmes.
The Government remains committed to prioritising the agenda of housing in an ageing society to ensure that as people grow older they stay comfortable and secure in their own homes. We continue to see a convergence between our Social Housing and Care divisions, with increasing opportunities to combine our Care and Repair offerings and thereby add further value for our customers.
Mechanical and Electrical (M&E)
The M&E division has continued to make a significant contribution since 1 July 2008, both in terms of turnover and operating profit. This continues to be a sound and well managed business.
Financial position
Mears continues to benefit from a strong balance sheet with low gearing. Our strong cash flow continues to give us significant financial flexibility to take advantage of any acquisition opportunities that may arise.
Outlook
We have secured revenues for the current year and have already secured 81 per cent (2007: 78 per cent) of next year's budgeted revenue. We have a strong and experienced management team which has been extremely successful in building our forward order book. This now stands in excess of £1.6 billion and we are well positioned in an active contract bidding market to grow this further. We remain confident in Mears' prospects for the future as we continue to grow the Group.
Mears is today hosting an analyst presentation at 9.30 a.m. to be held at Arbuthnot Securities, Arbuthnot House, 20 Ropemaker Street, London EC2 9AR.
Enquiries:
Mears Group PLC
Bob Holt, Chief Executive Tel: +44(0)7778 798 816 Andrew Smith, Finance Director Tel: +44(0)7712 866 461
Threadneedle Communications Trevor Bass/Alex White Tel: +44(0)20 7936 9666
Joint Broker to Mears Group PLC - Investec Keith Anderson/Daniel Adams Tel: +44(0)20 7597 5970
Joint Broker to Mears Group PLC - Arbuthnot Securities Richard Tulloch/Ben Wells Tel: +44(0)20 7012 2000
Hansard Group John Bick Tel: +44(0)7872 061007