Last checked at 20 Jun 2018 07:00
20 June 2018 |
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 2018.
Mears continues to make solid progress in both of its core divisions and results for the full year are expected to be in line with management expectations.
The Group is pleased to report that revenues in the Housing division have stabilised during the first half as clients have now completed the assessment of their housing portfolios with an increased focus towards safety and compliance.
As stated previously, the Housing bidding pipeline is considerable and includes two opportunities that are very significant in scale. The Group has made encouraging progress and is at an advanced bidding stage on a number of these.
The Housing division has secured new work, through a competitive bidding process, of circa £70m. The most significant award is a contract to deliver repairs and maintenance services to Riverside Housing Association for an initial period of five years, valued at £62m. There is an option to extend the contract for a further five years, taking the total opportunity to £125m. The contract covers over 11,500 homes across the Midlands, East Anglia and South of England. The service requires Mears to work alongside Riverside's own in-house maintenance provider. The contract is due to commence in July 2018.
The Group continues to develop innovative solutions to address the significant shortfall of affordable housing. Mears has been engaged, through a negotiated bidding process, by the London Borough of Waltham Forest ("LBWF") to arrange the purchase and refurbishment of 365 homes, currently under private ownership. The key aim is to provide LBWF with an alternative, affordable housing supply to replace the significant bed and breakfast accommodation costs currently incurred. Mears has engaged funding partners to finance the purchase of properties on behalf of the client, while it will carry out refurbishment works and act as managing agent for the portfolio. The contract will be operated by LBWF and Mears for 40 years and the arrangement is valued at circa £75m. The operation will mobilise in July 2018 and the purchase and refurbishment phase will continue over a period of 24 months.
The Care division has experienced a good first half with operating margins increasing in line with previous guidance, reflecting a successful restructuring of the business and a balance of better quality contracts with a clear and sustainable margin.
As reported previously, the Group has carried out a review of its operational and central support structures to ensure that they deliver best value. This is particularly relevant given the evolution towards a broader service offering with a changing support requirement. The review has concluded with annualised savings of circa £5m, in line with previous guidance. In addition, a review of local operations is also being undertaken and a further update will be provided within the interim statement.
Mears will be announcing its interim results on Tuesday 14 August 2018.
David Miles, Chief Executive of Mears Group, commented:
"I am satisfied with the progress made in the first half of 2018. The current pipeline of opportunities is particularly exciting. The strategic evolution of our business means we are gaining access to opportunities that previously would have been out of our reach and the senior team is very focused on converting these into secured orders.
"The Mears operation is performing very well and I am encouraged by our excellent service delivery which remains our key differentiator."
Housing briefing
Mears will today be hosting a briefing on its Housing division for investors and analysts. The briefing will include a series of presentations from senior members of the Group management team on the changing nature of Affordable Housing in the UK and the opportunities for Mears in the future.
No new material trading information will be disclosed. A copy of the presentations will be made available on the Group's website later today at https://investors.mearsgroup.co.uk.
For further information, contact:
Mears Group PLC
David Miles, Chief Executive | Tel: +44(0)7778 220 185 |
Andrew Smith, Finance Director | Tel: +44(0)7712 866 461 |
Alan Long, Executive Director | Tel: +44(0)7979 966 453 |
www.mearsgroup.co.uk
|
Buchanan
Mark Court, Sophie Wills, Catriona Flint Tel: +44(0)20 7466 5000
mears@buchanan.uk.com
Notes for editors
Mears employs around 12,000 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. Our Care teams provide support to over 15,000 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.