Last checked at 11 Jan 2024 07:00
Mears Group PLC
("Mears", the "Group", or the "Company")
Trading Update
Strong trading performance and cash generation
Significantly upgraded earnings expectations for FY24
Mears (LSE: MER), the UK Housing solutions provider, announces the following update on trading for the financial year ended 31 December 2023 ('FY23') and its expectations for the current financial year ('FY24').
The strong financial performance reported in the interim results on 4 August 2023 continued through the second half of FY23. The Board anticipates reporting results for the full year that are modestly ahead of market expectations1 with revenues and adjusted profit before tax in excess of £1,050m and £43m respectively.
The Group delivered a strong conversion of EBITDA to operating cash flow, with net cash at 31 December 2023 of c.£105m and an average daily net cash over the 12-month period of c.£75m, both of which are ahead of previous guidance. The net cash position is reported after making shareholder distributions during FY23 of c.£49m, comprising both ordinary dividend and share purchases.
The momentum seen in 2023 is expected to continue into 2024 and, as a result, the Board's expectations for FY24 now sit materially ahead of market expectations1. The Board continues to anticipate a reduction in management-led revenues as the elevated activity level seen across FY23 normalises. However, adjusted profit before tax in FY24 is now expected to be of a similar quantum to FY23, reflecting continued margin progression.
The Board expects to see continued strong cash performance in FY24. With share purchase authorities obtained at the June 2023 AGM having been utilised in full in completing the buyback programmes in 2023, the Board intends to seek shareholder approval for additional authority to purchase shares and expects to issue a Notice of General Meeting in due course. This will provide the Board with sufficient flexibility in delivering against its capital allocation strategy.
Lucas Critchley, Chief Executive Officer, said:
"We are delighted to have achieved strong revenues, profits and cash generation in 2023. This strong momentum is expected to continue into 2024 and the Group continues to deliver well against its clearly defined strategy, underpinned by our long track-record for operating excellence."
Note:
1 The Board consider the current consensus analyst forecasts for FY23, prior to this announcement, to be revenues of £1031m and adjusted profit before tax of £40.9m. Adjusted profit before tax is reported before the amortisation of acquisition intangibles. On the same basis, the Board considers market expectations for FY24, prior to this announcement, to be revenues of £888m and adjusted profit before tax of £ £33.9m respectively.
Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) ("MAR") prior to its release as part of this announcement and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.
For further information, contact: |
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Mears Group PLC | Tel: +44(0)1452 634 600 |
Andrew Smith |
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Lucas Critchley |
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Deutsche Numis | Tel: +44(0)207 260 1000 |
Julian Cater |
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Kevin Cruickshank |
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Panmure Gordon | Tel: +44(0)207 886 2500 |
Tom Scrivens |
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James Sinclair-Ford |
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About Mears
Mears is the leading provider of services to the Affordable Housing sector, providing a range of services to individuals within their homes. We manage and maintain around 450,000 homes across the UK and work predominantly with Central Government and Local Government typically through long-term contracts. We equally consider the residents of the homes that we manage and maintain to be our customers, and we take pride in the high levels of customer satisfaction that we achieve.
Mears currently employs around 5,500 people and provides services in every region of the UK. In partnership with our Housing clients, we provide property management and maintenance services. 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.