Trading Update and Board Changes

RNS Number : 9545I

Mears Group PLC

08 December 2022

 

Mears Group PLC

("Mears", the "Group", or "the Company")

Trading Update and Board Changes

Trading Update

Mears (LSE: MER), the UK Housing solutions provider, today provides an update on current trading and the outlook for its financial year to 31 December 2022.

Since the half year results which were announced on 4 August 2022, the Group has continued to experience strong trading. Based on the performance to date, and with good visibility through to the end of the year, the Board now expects that the Group will deliver revenues for the full financial year to 31 December 2022 of c.£950m and adjusted profit before tax of c.£33.5m, both above the current range of market expectations. This better-than-expected trading performance has been driven by the continued elevated volumes within the Group's Management-led contracts.  Average daily net cash for the 11 months to 30 November 2022 of c.£40m is also ahead of previous guidance.

The Group has been bidding several material contract opportunities during the second half and is pleased to have been short-listed in respect of the re-tender of the North Lanarkshire Future Integrated Housing Service contract, estimated at £1.8bn over 15 years . The anticipated commencement date for the new contract is January 2024. In addition, the Group is awaiting the outcome of the Community Accommodation Services (CAS3) tender to the MoJ. Mears currently delivers services within two pilot areas in the UK, and the new bid relates to a national roll-out. Mears bid on 8 of the 10 areas, with an aggregate annual contract value of more than £20m.

The Board is confident in the outlook for 2023 and is focused on continuing to improve the operating margin and delivering strong cash generation.

Board Changes

Chairman succession

Kieran Murphy joined the Board as Chairman in January 2019, led the Board through a very challenging period, and oversaw a strategic transformation of the business that resulted in the simplification of the Group, the disposal and closure of non-core businesses, and a very significant strengthening of cash flow generation and the balance sheet. With this achieved, Kieran has indicated to the Board that he wishes to pursue new opportunities elsewhere and to step down from his role as Chairman. Accordingly, he will not seek re-election at the Group's AGM in May 2023. 

Consequently, Chris Loughlin, Senior Independent Director, will become Chairman following the 2023 AGM. Chris has been a Non-Executive Director at Mears since September 2019.

CEO succession

Lucas Critchley will be appointed to the Board as Executive Director on 1 January 2023. Lucas joined the Group in 2004 and has held senior roles across the Group. He possesses significant experience in the delivery of contracts to Local and Central Government clients, and shares Mears' commitment to partnering and excellence in Customer Service. The appointment of Lucas is in line with our previous announcement on the 27 May 2022, relating to the planned succession to the current Chief Executive Officer, David Miles. David will work towards his planned retirement from the PLC board after 27 years. This transition is well under way, and it is intended that Lucas will become CEO during 2023.

Other changes

Alan Long has indicated that it is his intention to retire from Mears and resign his position as Executive Director of Mears on 31 December 2022. The Board, and senior management team, conveys its thanks for the significant contribution that Alan has made over a period of 17 years and offers Alan its best wishes for the future.

Claire Gibbard, Employee Director, having reached the end of her term in office, will resign as Director at the year end. The Board would like to thank Claire for her input and support. The Board is pleased to announce the appointment of Hema Nar as the new Employee Director. Hema, who will be appointed as a Director on 1 January 2023, has been employed by the Group since 2020, working as a Bid Manager within the Business Development function. The Board recognises the potential for improving the quality of decision-making through effective engagement with employees. The Employee Director appointment has created another mechanism to help the Board to receive insight from and promote effective communication with our colleagues across the country.

David Miles, Chief Executive Officer, commented:

"I am delighted with the strong financial performance of the Group and the business remains firmly on track to deliver revenues and profit before tax for the full financial year above our previous guidance. Our market leading position, based on a clear strategy and resilient operating platform, is underpinning current momentum and positions the Group for further sustainable growth in the medium-term.

"It is with some sadness that we wish Alan Long farewell, and we wish him a long and healthy retirement. I would personally like to put on record my thanks for his dedication, support and loyalty shown over many years."

Chris Loughlin, Senior Independent Director commented:

"Kieran has presided over a period of tremendous change at Mears and successfully guided the Group to its current strong position. He will leave the Group in an excellent position to capitalise on the opportunities which are available to it. On behalf of the Board, I would like to express our gratitude for his leadership and the contribution which he has made. I am delighted to succeed him as Chairman, and I welcome the opportunity to work with the Executive Team to continue the Group's success in its core markets."

Kieran Murphy, Chairman, commented:

"Given Mears' transformation, I consider it an opportune time for me to hand over the reins. I give my best wishes to Chris, David, and Lucas as they look to continue the Group's success."

Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) ("MAR") prior to its release as part of this announcement and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

For further information, contact:

Mears Group PLC

David Miles	Tel: [phone]
Lucas Critchley	Tel: [phone]
Andrew Smith	Tel: [phone]
www.mearsgroup.co.uk

About Mears

Mears is the leading provider of services to the Affordable Housing sector in the UK: responsible for the maintenance of c.10% of the UK's social housing stock; and managing over 10,000 homes for local and central government. 

Mears currently employs around 5,500 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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