Housing maintenance firm Mears has unveiled a sluggish performance in its 2017 full-year results, as its clients put work on hold amid the fallout from the Grenfell Tower disaster.
Group revenue at the business was down 4% to £900.2m in the year to 31 December 2017, from £940.1m in 2016.
Mears’ housing maintenance work makes up 85% of that figure, and its housing revenue for the year fell 3% to £766.1m, from £787.5m in the same period the year before.
Its care revenue fell 12% to £134.1m, down from £152.6m in 2016.
Group pretax profit from continuing activities before exceptional items dropped 10% to £26.5m, from £29.4m in 2016.
However, the figure did not include the £16.5m hit Mears took for offloading its mechanical and electrical division.
Meanwhile, housing operating margins reduced to 5.2% (down from 5.6% in 2016), which Mears said reflected falling revenues, which in turn made overhead recovery tougher.
However, its care division went back into the black, returning a £500,000 operating profit in 2017, having made a £1.2m loss in 2016.
The firm had already been expecting a tough year, downgrading its profit forecast and cutting its full-year revenue predictions in August 2017, as it warned that clients would delay new contracts following the Grenfell Tower fire.
Mears, which had no involvement in Grenfell Tower itself, said group revenue was “impacted by both delays to the timing of planned workloads following the tragic events at Grenfell Tower and a slow period in securing new contract revenues in housing”.
That was compounded by a “planned rationalisation” of care contracts, one of the other main strands of Mears’ business.
Nonetheless, the company pointed to a bidding pipeline of £2bn for 2018, which it said was “well in excess” of normal bidding levels.
Chief executive David Miles said: “While 2017 proved to be a challenging year, we have made solid operational progress. The decline in housing revenues following the tragic events at Grenfell Tower has stabilised although there still remains some uncertainty as to the speed at which these revenues will recover.
“The performance of the care division has been a highlight, returning to profitability as planned following a period of restructuring, putting the care division on a stable footing.
“On a positive note, the current pipeline of opportunities for Mears has never been greater. We anticipate competitively bidding contract values in excess of £2bn during the course of 2018.
“The strategic evolution of our business means we are gaining access to opportunities that previously would have been out of our reach.”
