Pre-Close Trading Update

RNS Number : 2158Z

Mears Group PLC

11 January 2011

 



11 January 2011

Mears Group PLC

("Mears" or "the Group")

Pre-Close Trading Update

Trading Statement

Mears is delighted to report that trading for the year ended 31 December 2010 across all divisions was in line with management expectations.

During a particularly busy period of new contract mobilisations in the fourth quarter of the year, the Group has maintained its robust working capital management with strong profit to cash conversion.  

Our bid pipeline remains robust at £3 billion and further new contract successes have increased the Group's order book to £2.7 billion providing unprecedented forward visibility of consensus forecast revenues for 2011 of in excess of 90% and approaching 80% for 2012.

The Group will be announcing its preliminary results for the year ended 31 December 2010 on Tuesday, 15 March 2011.

Social Housing contract awards

Mears announces further new contract awards, which are subject to conclusion of the normal leaseholder consultation period, valued at £193 million (including extensions):

Tower Hamlets Homes

A 5-year partnership contract to provide responsive repairs, void services, gas servicing and breakdown cover.  The contract is valued at £60 million for the initial 5-year period, with an option to extend for a further 5 years giving a total contract value of £120 million including extensions.  We have been appointed as sole partner to deliver the services to 12,700 tenanted and 8,600 leasehold properties. The contract is due to commence in April 2011.

Penwith Housing Association and Devon and Cornwall Housing Association

A 5-year contract to provide external cyclical maintenance and repair services in Cornwall.  The contract is worth in excess of £6 million over the five-year period.  Penwith Housing Association (PHA) and Devon and Cornwall Housing Association (DCHA) own and manage more than 6,800 properties throughout Cornwall.  This award represents a renewal for the cyclical repairs service with PHA and additional value from DCHA and is due to start in April 2011.

Moat Homes

A 10-year partnership providing responsive repairs and void maintenance services. We have been appointed as sole partner to deliver these services to 15,000 properties, predominantly in the South East of England. The contract is valued at £67 million over the life of the partnership.  The contract award is subject to the satisfactory conclusion of the normal standstill period.  Moat is an existing client of Mears who awarded us an interim contract 18 months ago.  We are delighted to be able to extend this relationship for the long term. The new contract will mobilise in April 2011.

Domiciliary Care contract awards

We have seen continued success in bidding for Domiciliary Care contracts with a further 4 contracts won, amounting to £6m in addition to the £12m we announced in our Interim Management Statement on 2 November 2010. Wins included significant increases in work from some existing clients such as Wigan Council, as well as new client wins such as Worcester City Council.

Acquisition of certain social housing business assets of Rok Building Limited ("Rok")

Mears announces that it has entered into a contract to acquire the social housing business assets of the Bristol social housing division of Rok. 

The assets comprise social housing contracts relating primarily to kitchen and bathroom installations together with roofing, cladding and insulation works. The acquisition provides access to five potential new customer relationships. The contracts are predominantly frameworks and as such the Group will not attribute any value to these within its order book valuation. However this acquisition has provided access to a number of new clients that are strategically important. A nominal consideration was paid for the contracts themselves.

The assets transferred to Mears also comprise the outstanding trade debtors and work in progress. A cash consideration of £1.5 million was paid in respect of these working capital balances which represents a pound for pound payment against their book value.

The Bristol social housing division of Rok has historically generated a profit contribution.

Acquisition of trade and assets from Anchor Staying Put

Mears is pleased to announce the acquisition of a group of Home Improvement Agencies from Anchor Housing for a nominal fee.

Home Improvement Agencies are currently contracted by Local Authorities to provide primarily home adaptation and handyman services, to vulnerable owner occupiers in local communities. 

Home Improvement Agencies play a vital role in helping to keep people in their own home for longer. Their role is likely to expand in the future to cover a broader range of services that support independent living, including home safety and signposting of services such as Domiciliary Care, to an increasing number of Individual Budget holders. This demonstrates the link we are forging with Local Authorities in providing care and repair and we thus see this acquisition as an important conduit to achieving this.

We consider this purchase to be an excellent complement to our existing operations and extends our geographic footprint into a number of Local Authorities where we previously had no presence.

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

"2010 has been a watershed year for Mears Group, which is now the market leader in both Social Housing and Domiciliary Care. We have won record levels of contracts in both divisions and completed the acquisition of Supporta, cementing our market leading position in Domiciliary Care, a market that continues to grow as care in the home is by far the most affordable solution for Local Authorities.

"Mears is well placed to lead and consolidate the Domiciliary Care market place which is some 10 years behind the more developed Social Housing market. We can use the experience gained in Social Housing to enhance the market efficiencies in Domiciliary Care and share the benefits with our clients. Targeted acquisitions will be considered in order to broaden the diversity of Mears' Domiciliary Care offering along the services supply chain and expand the range of services provided to people in their homes. Mears' clients will benefit from a national platform for the provision of an enhanced quality service provision. Mears will soon be the only Domiciliary Care operator listed in the London Stock Exchange.    

 "Our focus for Social Housing will be to continue growing through further contract wins, expand the geographic offering through targeted acquisitions of regional businesses with existing relationships with Registered Social Landlords and on-going innovation through further partnerships such as that with British Gas.

"We have a demonstrable track record of identifying and capitalising on inefficient markets, and developing strong strategic relationships with our clients which has sustained annual double digit growth in our earnings since coming to the Stock Market in 1996.

"Most importantly, we have the right management team in place to take our business forward and capitalise on the many opportunities in our growth markets."

About Mears

www.mearsgroup.co.uk

(tickers: MER.L MER.LN  MER.PL)

Mears is a leading social housing repairs and maintenance service provider to Local Authorities and Registered Social Landlords in the UK and, following the acquisition of Supporta, now commands a leading position in the UK Local Authorities' outsourced domiciliary care market, providing personal care services to people in their own homes.

Mears employs in excess of 12,000 people and provides maintenance and repairs services to in excess of 10% of the UK social housing stock. Mears also provides over 150,000 hours of domiciliary care to 20,000 service users each week.

Enquiries:
Mears Group PLC
David Miles, Chief Executive	Tel: [phone]
Bob Holt, Chairman	Tel: [phone]
Andrew Smith, Finance Director	Tel: [phone]
Joint Broker - Investec
Keith Anderson/Daniel Adams	Tel: [phone]
Joint Broker - Collins Stewart
Mark Dickenson/Ileana Antypas	Tel: [phone]
IR - Gable Communications	Tel: [phone]
John Bick	Tel: [phone]

 

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