Mears Regulatory News (MER)

Mears Group PLC

("Mears" or "the Group")

Pre-Close Trading Update

Mears Group PLC (LSE: MER), the provider of support services to the Housing and Care sectors in the UK, today issues a pre-close trading update ahead of its interim results for the six months to 30 June 2017.

Mears continues to make solid progress in both its core divisions.

Housing

In Housing, which accounts for circa 83% of Group revenues, the Group continues to perform well.

The Housing division has achieved 96% visibility of consensus revenue forecast for 2017 which falls a little short of the revenue target at the half year stage. Operating margins are expected to be in-line with management expectations.

The extension of our services from maintenance to a wider housing offering remains our key focus and much of the first half year has been focussed on developing further opportunities in this area, particularly through Mears' own social housing Registered Providers and through the development of alternative funding lines. We continue to see significant new opportunities for the Group in housing management and the Group will provide more detail around the progress made in this key area at its half year statement.

Care

The Care business, which accounts for circa 17% of Group revenues continues to find market conditions challenging although underlying trading has shown improvement month on month through the first half year and management expect this trajectory to continue.

We have continued to place significant emphasis on maintaining a portfolio of contracts that can provide clear and sustainable margins. The division saw a reduction of around 20% of its branches during the last quarter of 2016, the majority of which arose within our North region. Further closures have been triggered during the first half of 2017, predominantly in the Midlands and London region covering 10% of revenues, improving further the quality of our care contract portfolio.

During the first half, the Care division has secured solid price increases from existing contracts to match increases in its cost base driven by the National Living Wage and Apprentice Levy, and has enjoyed a successful period of new contract bidding, securing work at substantially improved pricing.

Management expects the Care division to report a loss in the first half but anticipates a profitable second half year.

Commenting, David Miles, Chief Executive, Mears Group, said:

"I am pleased with the solid progress made in the first half of 2017 in terms of both service delivery and the progress we have made in developing our broader service offering.

"We anticipated the increasingly complex challenges that would face our Housing clients and we have broadened our offering accordingly. I am delighted with the size of the opportunities that are available to us and we are working hard to ensure we convert a number of these.

 "Whilst we continue to find the Care market challenging, we have made good progress in this area and our order book is significantly improved with a portfolio of good quality contracts at clear, sustainable margins.

"We continue to achieve high levels of service delivery and customer satisfaction. The quality of our service delivery continues to be our key differentiator and underpins our success."

Mears will be announcing its interim results on Tuesday 15 August 2017.

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About Mears

Mears today employs over 15,000 people, providing services in every region of the UK. In partnership with our Housing clients, we maintain, repair and upgrade the homes of hundreds of thousands of people in communities from remote rural villages to large inner city estates. Mears has extended its activities to provide broader housing solutions to solve the challenge posed by the lack of affordable housing. Our Care teams provide support to around 20,000 people a year, enabling older and disabled people to continue living in their own homes.

We focus on long-term outcomes for people rather than short-term solutions, and invest in innovations that make a positive impact on people's quality of life and on their communities' social, economic and environmental wellbeing.