Trading Update

RNS Number : 3588Y

Mears Group PLC

05 December 2017

 

For immediate release                                                                                                                                    5 December 2017

Mears Group PLC

 ("Mears" or "the Group")

Trading Update

Mears, the provider of support services to the Social Housing and Care sectors in the UK, today releases a trading update.

When Mears released its half year results in August 2017, it highlighted an increased level of uncertainty in respect of its Housing revenues, as clients' attention was diverted towards ensuring their portfolios are safe and compliant, resulting in a short-term impact to the Housing division's planned workloads. Since then, the Housing division has seen some further softening of revenues for the current financial year.

Trading in the Care division remains in line with our expectations and we remain confident that Care will deliver a profit in the second half and for the full year overall. All material branch closures have now concluded, the costs of which have been accounted for in normal trading. 

Mears is enjoying a busy period of new contract bidding opportunities through both its traditional bid pipeline and increasingly through other negotiated routes giving confidence that we are well positioned to meet our 2018 expectations.

The challenges encountered in 2017 have led to the Group taking a more detailed review of its central support structures so as to ensure that its support functions deliver best value. This is particularly relevant given the evolution towards a broader service offering with a changing support requirement. Mears has commenced a right-sizing across a range of support functions which will span the year end. Further detail will be provided at the time of the full year results in March 2018.

Discontinued activities

In 2013, the Group disposed of its Mechanical and Electrical division, which included an entity operating in the UAE with a number of contractual performance guarantees from the Group which remain in place for a limited period following disposal and are due to fall away in 2018 as the underlying commitments unwind.  Disappointingly, a number of those performance guarantees have been called and the Group is required to settle funds against those contingent liabilities.

Mears has taken legal advice and believes there is a realistic expectation that these funds will be recovered in due course. However it is currently the intention to fully provide for this as an exceptional item within the 2017 results. This exceptional item is expected to be up to £16.5 million which includes a provision for future legal costs and a full provision for all outstanding performance guarantees.

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

"I do not wish to gloss over our 2017 performance and I understand the importance of delivering against our financial targets in the short term.  Whilst some of the short-term challenges in Housing could not have been anticipated, it is frustrating a number of other opportunities that could have helped mitigate these challenges did not develop quickly enough. Nonetheless, I am pleased with the progress made over the last year across the entire Mears business and on a range of important indictors.  

"I am particularly excited at the prospects for Mears over a medium-term time horizon and the management team are focused on the quantum of bidding opportunities currently in the pipeline. The Mears operations are performing well and I am very encouraged that this excellent performance is putting us in a good position to tender for new opportunities that until recently, would have been beyond our reach. The Group is well placed to deliver against its 2018 targets."

For further information, contact:

Mears Group PLC

David Miles, Chief Executive	Tel: [phone]
Andrew Smith, Finance Director	Tel: [phone]
Alan Long, Executive Director	Tel: [phone]
www.mearsgroup.co.uk

Buchanan

Richard Darby/Mark Court/Sophie Cowles                   Tel: [phone]

www.buchanan.uk.com

About Mears

Mears today employs over 13,000 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 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.

 

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