Mears chief executive David Miles has warned that negativity surrounding outsourcing following the collapse of Carillion and Interserve’s pre-pack administration has been “unhelpful”.
His comments came as the company reported revenue for 2018 of £869.8m, down 3% on the year before. Profit before tax, exceptional costs and amortisation of acquisition intangibles was £38.5m for the year to 31 December 2018, up slightly on the £37.1m it made the year before.
Commenting on the results, Miles said: “The negativity surrounding outsourcing has been unhelpful, especially when so many of the issues have been specific to other companies in the sector. Unlike other providers in the sector, Mears has remained highly focused on a single area, providing services to tenants in and around their homes. We are specialists in providing housing solutions and we understand the needs of our service users, many of whom are vulnerable.”
Mears’ housing division, which focuses on maintenance, management and development, reported a drop in revenue in 2018 to £753.2m, down from £766.1m the year before, although it pointed to rising revenue in the second half of the year, following a sharp reduction in the second half of 2017 in the wake of the Grenfell Tower disaster. Operating profit fell to £37.6m, down from £39.5m.
Meanwhile, the group’s order book stands at £3.2bn, up from £2.6bn in 2017.
Shareholder pressure
The business has been under pressure from its shareholders to deliver better financial outcomes, in particular when it comes to cash generation and has announced a shift in priorities for the rest of the year as it moves to boost returns and reduce debt levels.
The firm has carried out a review of its central support structures and has cut around £5m of cost out of the business. Meanwhile net debt for the year, excluding its property acquisition facility, was £113.2m, which was behind the target Mears set for itself at the start of the year of £110m.
Miles said: “We recognise shareholders are seeking better financial outcomes, particularly in respect of cash generation, and the board is clear that it must take action to refocus the group’s main activities to those of a specialist housing provider with maintenance and management being fundamental to this. Those group activities that are peripheral to this core activity, especially where they absorb working capital, will be reviewed in terms of how we can deliver the best financial return for shareholders including cessation, downscaling or disposal if appropriate.”
