Mears Group PLC Pre-Close Trading Update (9158R)
June 20 2018 - 1:00AM
UK Regulatory
TIDMMER
RNS Number : 9158R
Mears Group PLC
20 June 2018
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 GBP70m. 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
GBP62m. There is an option to extend the contract for a further
five years, taking the total opportunity to GBP125m. 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 GBP75m. 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 GBP5m, 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 Tel: +44(0)7712 866 461
Director
Alan Long, Executive Tel: +44(0)7979 966 453
Director
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.
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END
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