Mears Group PLC Pre-Close Trading Update
Mears Group PLC, the provider of support services to the Housing and Care sectors in the UK, has issued a pre-close trading update ahead of its interim results for the six months to 30 June 2019.
During the half year, Mears continued to make solid progress with its plans. The anticipated results for the financial year to 31 December 2019 continue in line with previous guidance.
At the start of the year, Mears announced that it had been successful in securing three regions of the Asylum Accommodation and Support Contract (‘AASC’) with an estimated contract value of £100m per year over a ten year period. The first half of 2019 has seen an intensive period of mobilisation and this will continue into the second half. A fuller update will be provided within the Group’s interim statement.
Mears completed the acquisition of certain business assets and contracts from the property maintenance business of Mitie (‘MPS’) in November 2018. The integration of MPS is progressing well with the migration of the three operating systems onto the single Mears Contract Management platform on-track for a target completion in September 2019. Good progress has been made in securing synergies through the business combination and delivering operational improvements.
In March 2019 the Group stated its intention to reposition its Development activities and, as current contractual obligations unwind, it will no longer participate in those contracts that have a high requirement for working capital funding. The Group has already made solid progress towards achieving that aim.
A property acquisition facility of £30m was introduced in 2017 to enable the Group to acquire and build portfolios of properties prior to their disposal to long term funding partners. The Board previously indicated its desire to unwind and cancel this facility during the course of 2019. Good progress has been made in this area with the facility reduced to £15m during the first half and there is visibility of a further reduction in the second half.
Mears continues to place great emphasis on managing working capital tightly. The Group expects to report a small reduction in the average daily net debt in the first half year compared with the average net debt reported for the 2018 financial year.
Mears will announce its interim results on Tuesday 13 August 2019.
David Miles, Chief Executive of Mears Group, commented:
“I am very satisfied with the progress made in the first half of 2019 particularly against the well documented challenges others have and are experiencing with the support services arena.
“A significant amount of time and focused effort has been directed towards the integration of MPS and the mobilisation of AASC. I am confident that the Group is well placed to benefit from this up-front investment. Our well proven and unique approach to contract mobilisation remains one of our key differentiators.
“The Board continues to accelerate the unwinding of the working capital absorbed within Development activities announced three months ago. We will ensure that the Group remains well-positioned to contribute to the housing development needs of our customers.”