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- Interim Management Statement
14th May 2012
14 May 2012
Mears Group PLC
("Mears" or "the Group")
Interim Management Statement
97% visibility of consensus forecast revenues for 2012 and
80% visibility for 2013
Mears today releases its Interim Management Statement ("IMS") for the period from 1 January 2012 to date.
Mears continues to deliver solid trading across all divisions in line with management expectations.
We have now achieved 100% visibility of forecast consensus revenues in Social Housing for the current year. For the Group as a whole, we have visibility of 97% of consensus forecast revenues for the current year and have in excess of 80% visibility of Group forecast consensus revenues for 2013. The order book currently stands at 2.8 billion and the bid pipeline remains in excess of 3.0 billion with the immediate bidding opportunity for new contracts due to start on or before April 2013 at approximately 2.0 billion.
Since 1 January 2012, we have seen the most intense period of new contract mobilisation in the Group's history with the commencement of eight new social housing contracts. These new contracts have started well, and as stated in the March preliminary announcement, these will generate additional costs in the early mobilisation phase, which are all expensed in the period. The overall strength of our social housing business means that despite these costs and the effect of the final wind-down of the Decent Homes works, we still anticipate a solid social housing operating margin.
Care and Support
The division has successfully mobilised a number of new contracts during the period since 1 January 2012. A change in the sales mix as we deliver more acute services provides an opportunity to strengthen and enhance our operating profit margin. While we remain selective with new contract bidding, we see a number of opportunities which fit our bidding criteria and which can provide further opportunities for growth. We remain mindful of getting the right balance between growing our top line whilst at all times protecting our operating margin
Mears' Other Services accounted for less than 4% of Group operating profit in 2011 and predominantly comprises our Mechanical & Electrical operation. Trading within the division continues to encounter challenging conditions with the trading environment remaining highly competitive. We do not anticipate a significant profit contribution from this division in the current year.
Mears continues to benefit from a strong balance sheet. The efficiency with which the Group manages working capital has always been a cornerstone of our business, which is of particular importance during the current period of strong organic growth.
Commenting, David Miles, Chief Executive, Mears Group, said:
"I am delighted at the progress made by the Group in recent months. We have demonstrated our ability to embrace change and adapt to the challenges that the current economic environment continues to present. Mears' positive momentum positions us well to benefit from an active contract bidding market. I remain confident in the prospects for the future growth of the Group.
"Our Social Housing business has long been recognised as the market leader in terms of operational performance and tenant satisfaction. Our differentiated offering focussed on quality of service is providing now, more than ever, opportunities to further reinforce our position as the partner of choice for customers seeking solutions to important and significant underlying needs.
"I am proud of our achievements in the care sector and our ability to offer vulnerable people high quality services. Moreover, we are achieving strong margins in what remains a complex politically-led market. We continue to seek acquisitions to broaden our care offerings where appropriate. The well documented challenges in the care market are likely to accelerate in 2012, and Mears continues to be at the forefront of seeking pragmatic solutions to these challenges and I remain very positive of our future role in the care market. It is disappointing that the Social Care white paper has once again been delayed. It would appear that the challenge for the long term funding of Care is unlikely to now be addressed in legislation before the back end of 2013. The political debate cannot be one of simply mindlessly reducing spend and ignoring new sources of funding, but rather one which seeks to deliver long term joined-up good value services to an increasingly important section of society."
(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 care and support 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.
Mears Group PLC
David Miles, Chief Executive
Tel: +44(0)7778 220 185
Andrew Smith, Finance Director
Tel: +44(0)7712 866 461
Bob Holt, Chairman
Tel: +44(0)7778 798 816
Joint Broker - Investec
Keith Anderson/Daniel Adams
Tel: +44(0)20 7597 5970
Joint Broker - Canaccord Genuity
Mark Dickenson/Lucy Tilley
Tel: +44(0)20 7523 8350
IR - Gable Communications
Tel: +44(0) 20 7193 7463
John Bick/Justine James
Tel: +44(0)7872 061 007
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