Last checked at 11 May 2010 07:00
11 May 2010
Mears Group PLC
("Mears" or "the Group")
Interim Management Statement
Mears today releases its Interim Management Statement ("IMS") for the period from 1 January 2010 to date.
·; Continued strong trading across all the Group's divisions;
·; Over £500 million of new contract awards in Social Housing;
·; 9 new contract awards in domiciliary care;
·; Integration of the Supporta acquisition is well advanced.
Trading update
Mears is continuing to deliver strong trading across all divisions.
Since publication of our final results on 9 March 2010 for the year to 31 December 2009, we have announced contract wins of over £500 million in Social Housing and a bid pipeline which still remains in excess of £3 billion. The order book currently stands at £2.5 billion with secured revenues of 91% of consensus forecast for the current year and 77% for 2011.
Social Housing
The period since 1 January 2010 has seen a record number of new contract mobilisations on the back of the significant bidding success reported in 2009. New contracts mobilised during this period include:
Brighton & Hove City Council
A ten year partnership to provide housing stock upgrades, responsive repairs and comprehensive maintenance services. The contract is valued at £200 million for the 10 year period which commenced in April 2010. Brighton & Hove manages 12,500 homes.
Crawley Borough Council
A ten year partnership with Crawley Borough Council in West Sussex to provide responsive repairs and voids services. The contract is valued at £30 million for the 10 year period.
Canterbury City Council
A five year partnership to provide responsive repairs and voids services to Canterbury City Council. The contract is valued at £28 million for the initial 5 year period with a performance option to extend to 15 years increasing the value to in excess of £82 million.
Thanet District Council
A five year partnership to provide responsive repairs and voids services. The contract is valued at £13 million for the initial 5 year period and also includes a performance option to extend to 15 years giving a value of in excess of £40 million.
Birmingham City Council
A five and a half year partnership to provide gas maintenance services to the central area of Birmingham's housing portfolio. This contract is worth £12 million. This is an extension to the response repairs service we currently provide to the same area for the City.
Since announcing our preliminary results in March 2010, Mears has experienced considerable further success with the award of further significant new contract opportunities.
Family Mosaic
A ten year contract to the value of £300 million. The contract relates to homes in London and the Home Counties and is now expected to commence in August 2010. Mears, as the principal partner will be responsible for responsive, void, gas maintenance, property surveying and estates management services to more than 20,000 homes across the area..
London Borough of Lambeth
The London Borough of Lambeth intends to award a long-term partnership contract, subject to leaseholder consultation, for a 7 year term with an extension of up to a further 3 years dependent on performance. It is valued at £170 million (including extension) and is expected to commence in October 2010. Thisis a long-term partnership contract to provide responsive repairs, void refurbishment, estate management, decent homes and planned maintenance. The contract relates to the North housing region which includes around 8,000 of the 20,100 tenanted homes within Lambeth.
Mears' Social Housing division is well positioned in this growing market where the demand for long-term, broadly-based service provision remains strong and plays to Mears' strengths as a market leader. The bid pipeline remains strong and Mears continues to be seen as a preferred supplier of services to a number of large buyers of its full range of services.
Domiciliary Care
In February 2010 we completed the acquisition of Supporta plc which has long been seen as the provider of the highest standards of care in the sector as well as attaining the highest level of profitability. Supporta brings to the Group a strong management team and we are well advanced with rebranding our two Care operations as Mears Care under the management of Bernadette Walsh, the former Managing Director of Supporta Care.
We have been awarded further significant contracts since March 2010, estimated to be worth in the region of £30 million, reflecting ongoing trends in awarding consolidating contracts to providers with an excellent quality reputation and a capability to deliver against the emerging personalisation agenda.
The most significant success has been with a new client relationship at Enfield Council. Enfield has reduced the number of providers from 20 to 4, with the contract length being for an initial 3 year period with a 2 year extension. It is worth an estimated £12m over this five year period. This further strengthens our presence across London with us having a presence in 25 of the 32 London Boroughs.
In addition we have been awarded a further 3 contracts in Scotland with East Dunbartonshire, Glasgow and North Lanarkshire Councils and we are optimistic as to further success in this geographical area where we have an increasingly strong presence and where there is an increasing trend to outsource. In Wales, we have added Newport to our existing presence in Port Talbot.
In England we have had wins in Harrow, Newcastle, South Tyneside, Redcar and Cleveland, Cumbria, Greenwich and Lincolnshire, further enhancing our geographical coverage.
Our bid pipeline remains extremely healthy in this sector and we would expect to be able to make further positive announcements in the near future.
Financial position
Mears continues to benefit from a strong balance sheet.
All costs relating to tender, contract set-up and the initial inefficiencies during the period of contract mobilisation continue to be written off as incurred.
Outlook
Mears' two growth markets of Social Housing and Domiciliary Care, which account for approximately 90 per cent of Group revenues, are defensive sectors where spend is predominantly non-discretionary and cash generation is robust. Given the Group's public sector client base, Mears is substantially immune to bad debts and our customer work patterns and payment terms have remained on schedule.
Mears is well positioned to benefit from an active contract bidding market and remains confident in the prospects for the future growth of the Group.
Commenting, Bob Holt, Chairman, Mears Group, said:
"The provision of value for money services to the public sector is vital both for the UK economy and the future of Mears. We have long held the view that in terms of quality of service Mears are second to none. The recent new bidding success further demonstrates the positioning of Mears as a first class public sector partner with whom customers desire to work in long term partnership arrangements.
"Mears social housing bid pipeline for contract tenders remains in excess of £3 billion and we continue to place great emphasis on winning good quality contracts that can provide clear and sustainable margins. There are tremendous opportunities with existing customers to unlock significant additional revenue.
"The contract awards within our Domiciliary Care division reflect the combined strength of the marriage between Careforce and Supporta. We have made excellent progress on the integration of these two businesses, which will be rebranded as Mears Care by June 2010.
"The Group has a clear strategy of building market leading positions in each of its core businesses. We consider it to be of paramount importance to be recognised as the provider of quality services. I have total confidence that, through the acquisition of Supporta, our shareholders will benefit significantly from our continuing investment into Care.
"We continue to see unprecedented levels of opportunity within the public sector. We believe that the demand and opportunity for our two growth markets will continue to be strong and that Mears is well placed to benefit from this."
ends.
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 Housing Landlords in the UK and, following the acquisition of Supporta, now commands 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 11,000 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.
| Enquiries:
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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/Piers Coombs | Tel: +44(0)20 7523 8350 |
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Financial PR |
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Threadneedle Communications |
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| Trevor Bass/Alex White | Tel: +44(0)20 7936 9666 |
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IR - Hansard Communications |
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| John Bick/Kirsty Corcoran | Tel: +44(0)7245 1100 Tel: +44(0)7872 061007 |