Mears Regulatory News (MER)

25 March 2021

Mears Group PLC

("Mears", the "Group", or "the Company")

Pre-close trading update

Mears (LSE: MER), the UK Housing solutions provider, today announces its pre-close trading update for the financial year ending 31 December 2020 ("FY2020") and the year to date.

Financial results for the period ended 31 December 2020

The Group is expecting to announce results consistent with the trading update released on 8 December 20201. On a Continuing basis, excluding revenues and profits from the Domiciliary Care and Terraquest businesses disposed of in the period, the Group should deliver second half revenues of c. £413m (H1: £398m) and a second half profit before tax of c. £4.7m (H1 loss: £8.2m). Accordingly, the Group expects to report full year FY2020 Continuing revenues of c. £811m (2019: £884m) and a full year Continuing normalised loss before tax of c. £3.5m (2019: £31.8m profit)2.

Cash performance has also been strong, delivering quarter on quarter improvement across 2020. The Group expects to report an adjusted3 net cash position as at 31 December 2020 of £56.9m (2019 net debt: £51.0m). This reflects net cash proceeds (after transaction costs) of c. £52.5m from the disposal of Terraquest in December 2020, and a number of Covid-19 related deferrals and payments received on account which will unwind in the first half of FY20213. Average adjusted daily net debt for the year to 31 December 2020 was £97.3m (2019: £114.4m). The Group estimates that its underlying average daily net debt at the year-end to be in the region of £65m.3

Current trading

The Board is pleased with the resilient trading and liquidity performance of the Group during the first quarter of FY2021 and is confident of a full recovery as lockdown restrictions are lifted. During the first national lockdown, the Group adapted quickly to new ways of working safely and effectively. The Group has seen a continuation of these working practices and methods through the first quarter of 2021. Our clients and service users have also adapted to the changing environment and as such, the Group has seen a lesser impact on work volumes during the third lockdown compared to the first, whilst focus has once again been towards the delivery of essential and priority services to our vulnerable service users.

David Miles, Chief Executive Officer of the Group, commented: 

"I am extremely proud of the resilience shown by the Group during a year which has seen unprecedented challenges. Notwithstanding the fact that much of the energy and focus in 2020 was expended in reacting to the operational challenges brought by Covid-19, it is pleasing that the Group made strong progress against all its key strategic objectives. These were to refocus on housing activities, significantly to reduce indebtedness and to improve the returns which we obtain on our invested capital. Notwithstanding the headwind of a third national lockdown, I am delighted at how well the Group has started the new year."

Notes:

1.Trading update released on 8 December 2020 referred to expected FY2020 trading numbers inclusive of the activities of Terraquest, comprising revenues of circa £20m and an operating profit of circa £5m. The disposal of Terraquest has subsequently completed and its financials will be included in discontinued in FY2020 results.

2. 'Normalised' profit/loss before tax is before exceptional items and amortisation of acquired intangibles

3. Adjusted net cash / (debt) excludes lease obligations. One-off cash items includes VAT deferral, client payments received on account and cost accruals relating to lump sum contracts, aggregating to a circa £40m benefit to the reported spot 31 December 2020 net cash position.

For further information, contact:

The person responsible for arranging the release of this announcement on behalf of Mears Group PLC is Ben Westran, Company Secretary.

About Mears

Mears currently employs around 6,000 people and provides 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 and to provide accommodation and support for the most vulnerable.

We focus on long-term outcomes for people rather than short-term solutions and invest in innovations that have a positive impact on people's quality of life and on their communities' social, economic and environmental wellbeing. Our innovative approaches and market leading positions are intended to create value for our customers and the people they serve while also driving sustainable financial returns for our providers of capital, especially our shareholders.