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- Interim Management Statement
4th November 2008
4 November 2008
Mears Group PLC
("Mears"or "the Group")
Interim Management Statement("IMS")
Continued Strong Trading Across All Divisions
Mearstoday releases its IMS for the period from 1July2008to date.
Mearshascontinued toexperience strongtrading across all divisions since announcingitsinterim results in August 2008.The full year resultsareforecast to bein line with management's expectations.
The demand for our services has never been stronger. Importantly,our twogrowth markets,Social Housing and Domiciliary Care,whichaccount for over 80per centof Group revenues, are defensive sectors where spend is predominantly nondiscretionaryandcash generationisrobust. Given ourpublic sector client base, we aresubstantiallyimmune to bad debtsand our customer work patterns and payment terms have remained on schedule.
Our Social Housing division is well positioned in agrowingmarketand the outlook remains excellent. TheBoard continues to expect organic growth rates in excess of 30per centin the current year.There is continuingdemand foralong-term,broadly-based service provisionwhich plays to our strengths asaleader in that market.We are seeing continued consolidation of Registered Social Landlords ("RSLs") and a trend of Local Authorities transferring their housing stock into Housing Trusts.Both these trends provide increased opportunities to the largerbroad-basedSocial Housingplayers suchas Mears.
The Group has announced a number of new social housing contract awards since 1 July, amounting to over 230m and a total of in excess of 400m since the annual results were announced in March, and we continue to build on the strong performance in the first half. The bid pipeline remains strong and we are currently at advanced stages of negotiating further significant opportunities.
Careforce continues to build a presence across a growing geographical areaandiswellplaced to take a leading position in the consolidationand evolutionof the Domiciliary Care market.We arepleased to announce further contract awards as follows:
NorfolkA contract to supply home care toNorfolk CountyCouncil("NCC"); initially for a period of 5 years commencing in January 2009, with a possible extension for a further 2 years thereafter. The expected volume under this contract is 3,700 hours per week. This represents the single largest new contract award achieved by Careforce since it was acquired by Mears and extends the Careforce coverage into a new geographical location. Following the award of this contract,the number of providerstoNCChas been reduced from 11 to 5 with Careforce being awarded a third of the works.
A contract to supply homecare tothe Royal Borough of Windsor and MaidenheadCouncil will commenceFebruary 2009and run for a period of2yearswith a possibleextensionfor a further 2 years thereafter. It is expected that the hours supplied under this contract will be1,100hours per week.This is in addition to the work we do with the Council already.
These new awards add a further 4,800 hours per week or 3m of annualised revenuesand includingthe5contracts wonby the Group's Domiciliary Care divisionsince the full year resultswere announcedtakes the total to11,000 hoursper weekaddedsince March.
The integration and rebranding of Careforce's11bolt-on acquisitions is nearing completion. We have continued to invest significantlyin IT, accounting systems andin ourworkforce'sdevelopment and training programmes.
TheGovernment remains committed to prioritising the agenda of housing in an ageing societytoensure that as people grow older they stay comfortable and secure in their own homes. We continue to see a convergence between our Social Housing and Care divisions, withincreasing opportunities to combine our Care and Repair offeringsand thereby add further valueforour customers.
Mechanical and Electrical (M&E)
The M&E division has continued to make a significant contribution since 1 July 2008, both in terms of turnover and operating profit.This continues to be a sound and well managed business.
Mearscontinues to benefit from a strong balance sheet with low gearing.Our strong cash flow continues to give us significant financial flexibility to take advantage of any acquisition opportunities that may arise.
We have secured revenues for the current year and have already secured 81 per cent (2007: 78 per cent) of next year's budgeted revenue. We have a strong and experienced management team which has been extremely successful in building our forward order book. This now stands in excess of 1.6 billion and we are well positioned in an active contract bidding market to grow this further. We remain confident in Mears' prospects for the future as we continue to grow the Group.
Mears is today hosting an analyst presentation at 9.30 a.m. to be held at Arbuthnot Securities, Arbuthnot House,20 Ropemaker Street,LondonEC2 9AR.
Mears Group PLC
Bob Holt, Chief Executive Tel:+44(0)7778 798 816 Andrew Smith, Finance Director Tel:+44(0)7712 866 461
Threadneedle CommunicationsTrevor Bass/Alex White Tel:+44(0)20 7936 9666
Joint Broker to Mears Group PLC - Investec Keith Anderson/Daniel Adams Tel:+44(0)20 7597 5970
Joint Broker to Mears GroupPLC- Arbuthnot Securities Richard Tulloch/Ben Wells Tel:+44(0)20 7012 2000
Hansard Group John Bick Tel:+44(0)7872 061007