For Immediate Release
03 June 2015
Mears Group PLC
('Mears' or 'the Group' or 'the Company')
Mears Group PLC (LSE: MER), the provider of services to the Social Housing and Care sectors in the UK, today issues its trading statement for the period 1 January 2015 to date. This statement will also be delivered at the Company's Annual General Meeting, being held at 9.30am today at Buchanan, 107 Cheapside, London, EC2V 6DN.
Mears continues to deliver a solid trading performance across both core divisions in line with management expectations.
The Group has now achieved 93% visibility of the £881 million consensus revenue forecast for 2015 and 82% visibility of the £930 million consensus revenue forecast for 2016 (prior to the acquisition of the Care at Home division of Care UK Limited announced on 1 June 2015).
Whilst new bidding opportunities remain slow to develop, we have continued to make solid progress in our Social Housing division. In aggregate, Mears has secured new social housing contracts since 1 January 2015 amounting to £62 million, a conversion rate by value of 39%. Notably, we have secured a 10 year contract with Croydon Churches worth £30 million. The Group expects increased bidding activity in the second half of 2015.
Our Care business has continued to progress well. In aggregate, Mears has secured new Care contracts since 1 January 2015 amounting to £26 million, a conversion rate by value of 61%.
Acquisition of the Care at Home division of Care UK Limited
On 1 June 2015, Mears announced the acquisition of the Care at Home division of Care UK ('CAH').
The acquisition of CAH increases significantly Mears' scale within the UK domiciliary care market, making Mears the second largest provider. CAH has excellent geographic-fit with our existing Care business with limited customer cross-over. Mears' position with a number of strategically important clients will be improved; a number of these are believed to be sympathetic towards re-tendering with output-based contracts, where Mears is the undisputed leader. Historically, CAH has held one of the best track records of compliance and regulatory ratings amongst the national providers.
Developing the Care market
As previously reported, the award of an innovative partnering contract by Torbay & Southern Devon NHS Trust ('Torbay') represented a significant milestone. In a move away from traditional 'task and time' based contracts, Mears will be paid by results based upon meeting desired outcomes that have been agreed directly with service users. This change in commissioning is central to the Group's strategy and we are well positioned, as a high quality business focused upon service delivery, to benefit from this market change. The Torbay contract, which mobilised in April 2015, has commenced positively. We are pleased to report a number of opportunities in the pipeline are now following outcome-based approaches. The acquisition of CAH will make Mears a more attractive partner for the emerging, larger partnering-orientated contracts such as those already held by Mears in Torbay and Wiltshire.
Development of Housing Management
In October 2014, Mears completed the acquisition of the Omega Group ('Omega'), a leading private sector provider of accommodation and management services to the Social Housing market. This acquisition enhances our ability to work more widely with housing providers to improve the delivery of housing and asset management services and to increase the supply and management of housing, in line with our strategy to grow and evolve our Housing Management offering. Since its acquisition, the performance of Omega has exceeded the Group's original expectations and the Group has secured a number of contracts for the provision of lettings, housing management and temporary accommodation services. A number of the Group's most significant new bidding opportunities extend into Housing Management services.
Mears continues to benefit from its financial strength and the efficiency with which the Group manages working capital. The Group's revolving credit facility of £120 million is committed until July 2018 and provides sufficient headroom above our current working capital requirements.
Commenting, David Miles, Chief Executive, Mears Group, said:
"I am pleased with the progress made to date by the Group in 2015. Both the Social Housing and Care divisions continue to deliver high quality customer service which remains our key differentiator underpinning our success in bidding new contracts and providing strong revenue visibility.
"I am delighted to have announced the acquisition of CAH earlier this week. In many ways, this deal mirrors our acquisition of Morrison. We have acquired a significant competitor at an attractive valuation. Our focus will be on enhancing service delivery and thus generating financial improvements. This acquisition further strengthens Mears' market leadership in Care. Given our strong operational platform and differentiated service delivery ethos, together with our proven ability to turnaround businesses, I am confident that we will deliver improvements to CAH's contracts, customers, service users and employees.
"Whilst, as we anticipated, new bidding opportunities in Social Housing have been subdued in the first half of 2015, I am excited by a number of material contract opportunities that are now reaching an advanced bidding stage that bring together a broader range of our Housing services."
For further information, contact:
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
Alan Long, Executive Director Tel: +44(0)7979 966 453
Richard Darby, Sophie McNulty, Sophie Cowles Tel: +44(0)20 7466 5000
Notes for editors
Mears is a leading social housing repairs and maintenance service provider to Local Authorities and Registered Social Landlords in the UK and now commands a leading position in the UK Local Authorities' outsourced care market, providing personal care services to people in their own homes.
Following the CAH acquisition, Mears employs in excess of 17,000 people and provides maintenance and repairs services to in excess of 10% of the UK social housing stock. Mears also provides care, on a daily basis, to over 30,000 service users.