TIDMMER
RNS Number : 8247H
Mears Group PLC
08 December 2020
8 December 2020
Mears Group PLC
("Mears", the "Group", or "the Company")
Trading update
Mears (LSE: MER), the UK Housing solutions provider, today
announces its scheduled trading update ahead of its financial year
ending 31 December 2020.
Group performance
Trading performance continued in line with the Board's
expectations and the Group has delivered an operating profit
throughout the second half of the financial year. Accordingly, the
Group is expecting to report total revenues of around GBP825m (H1:
GBP407m) for the full year and a small profit before tax (H1:
GBP5.8m loss).(1) Cash performance has been strong in the second
half, with the Group's average daily net debt position for the 5
months to 30 November reducing to GBP88m (H1: GBP121m), also
benefiting from a GBP16m VAT deferral from the March-20 quarter
end. Completion of the Terraquest disposal is expected shortly and
taking into account the initial cash proceeds, the Group is
expected to be net cash positive at year end(2) .
Operations
In our social housing Maintenance contracts, work volumes
strengthened steadily through the third quarter reaching 79%(3) in
October (June 2020: 25%) as clients cautiously extended the scope
of works permissible in people's homes but PPE/social-distancing
protocols continued to reduce operative productivity. The Group did
not see a significant impact on work volumes in November during the
second national lock-down and this resilience provides the Board
reassurance when looking forward to 2021. The Group's Central
Government contracts, notably Key Worker and AASC, have continued
to perform strongly through the second half, with the Group
adapting well to changing service user needs and the higher work
levels.
Strategic developments
The Group made excellent progress in the second half, completing
its programme of strategic re-focussing with the sale of its
Scottish Care business for up to GBP2.5m in September and the
disposal of TerraQuest for up to GBP72m in December 2020.
In addition, as reported in our interim results, the Group took
the strategic decision during H1 to withdraw from c. GBP50m of
annualised Maintenance contract revenues which were either
underperforming or where no financial support was forthcoming from
clients through the first national lock down. The Group's central
support functions have also been rationalised in proportion to the
reduction in revenues. These closures and cost reductions are now
complete and expensed during the year.
Outlook
With local and/or national Covid-related restrictions likely to
persist well into Q1 2021, near term forecasting inevitably remains
difficult. However, 2021 should see the Group transition back to
our more normalised levels . Our central case is that work volumes
in Maintenance remain at or near current levels (c. 80%) until
spring. By contrast, continued Covid-related restrictions are
likely to keep user numbers elevated within our Central Government
contracts before returning to more normalised levels in H2
2021.
Notes :
1. Total revenues and profit before tax is stated inclusive of
part-year contribution from the TerraQuest business which is due to
complete on 9 December 2020 and will be treated as discontinued.
Adjusted operating profit and profit before tax is normalised,
before exceptional items and before the amortisation of acquired
intangibles.
2. Includes anticipated Day-1 disposal proceeds of GBP56m before
costs of GBP3m and the benefit of c. GBP16m of VAT deferred for 1
year from March-20.
3. Maintenance work volumes as measured by number of jobs
relative to historical average.
David Miles, Chief Executive Officer of the Group,
commented:
"In common with most businesses, 2020 has been a challenging
year for the Group, but one the company and particularly its
employees have risen to with great fortitude. We have also received
great support from clients and customers. Despite the challenges,
we have continued to provide the highest levels of service, plus
made excellent progress on our strategic priorities. We exit the
year as a singularly focussed Housing specialist and trusted
partner to local and central government, bringing innovative
solutions to help tackle many of the deep-rooted issues within the
UK's social and affordable housing sectors.
With a portfolio of high-quality contracts focused on our core
Housing services and the Group's strengthened balance sheet, we
look to the future with confidence."
A conference call will be held for analysts and shareholders at
8.30am on 8 December 2020 hosted by David Miles, CEO and Andrew
Smith, CFO. Joining instructions are below:
Dial-in: +44 20 3655 9505
Pin code: 1069383#
A recording of this call will be available in the Investor
section of the Mears Group website later today.
For further information, contact:
Mears Group PLC
David Miles, Chief Executive Officer Tel: +44(0)7778 220 185
Andrew Smith, Finance Director Tel: +44(0)7712 866 461
Alan Long, Executive Director Tel: +44(0)7979 966 453
Joe Thompson, Investor Relations Tel: +44(0)7980 844 580
www.mearsgroup.co.uk
The person responsible for arranging the release of this
announcement on behalf of Mears Group PLC is Ben Westran, Company
Secretary.
About Mears
Mears currently employs around 6,000 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 and to provide accommodation and
support for the most vulnerable.
We focus on long-term outcomes for people rather than short-term
solutions and invest in innovations that have a positive impact on
people's quality of life and on their communities' social, economic
and environmental wellbeing. Our innovative approaches and market
leading positions are intended to create value for our customers
and the people they serve while also driving sustainable financial
returns for our providers of capital, especially our
shareholders.
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END
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