17:00 Tue 05 May 2020
Mears Grp PLC - Covid-19 Update
5 May 2020
Mears Group PLC
("Mears" or the "Group" or the "Company")
Covid-19 update
Since providing an initial update on
Operational progress
Normally, the Group's housing maintenance activities would account for around two-thirds of Group revenues. These services are largely non-discretionary and provide a consistent and highly visible revenue stream. However in the current climate, we have worked with Local Authority and
The Group's housing management activities normally amount to around one-quarter of Group revenues. There is no reduction in demand in this area, given the large numbers of vulnerable people, who often need daily support. The challenge is to continue to support vulnerable service users whilst adhering to the strict rules around how our employees can safely interact with colleagues and service users. Indeed, within the Group's Asylum contract, volume numbers are increasing, with new service users entering the system and few exiting. Whilst the requirement for additional accommodation is challenging in the short-term from an operational perspective, the contractual mechanism reduces much of the financial risk.
The Group's development activities would normally account for around five per cent. of Group revenue. These activities have been mothballed, and action taken to immediately reduce the fixed cost base. This area is considered low risk from both an operational and financial standpoint. The working capital already absorbed in this area is secure but will unwind over a longer time horizon than originally envisaged.
The Group's care activities account for the balance of Group revenues and continue to deliver service as normal. The Board is very appreciative of the hard work and professionalism of the Care team where we continue to provide an excellent service to a particularly vulnerable group of service users. The Group has successfully used every avenue possible to ensure our staff have the PPE needed to carry out their work and to support them in every way we can. Feedback from our customers has been exceptionally positive.
Financial impact
Excellent progress has been made in mitigating the financial impact of the operational changes described above. The Group believes that operating losses during the full lockdown period, where an emergency only service is being provided, will be modest, and a small positive free cash flow should be generated.
The Group has taken advantage of a number of reliefs made available by Central Government. The Group has furloughed staff where appropriate and only where staff costs could not be recovered through our customer contracts. The Group has also enjoyed the benefit of the deferral of its VAT liability for the
Liquidity and funding
The Group reported average daily net debt in 2019 of
The Company believes that its existing banking facilities, a total commitment of
The Company announced on
"The Group has made excellent progress in taking the necessary steps to address these current challenges. Whilst it is not possible to predict the future with certainty, I am confident as to the financial stability and the long-term wellbeing of the Group. I am extremely proud of the professionalism and hard work shown by the Mears team in the most challenging of circumstances."
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:
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Tel: +44(0)7778 220 185 |
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Tel: +44(0)7712 866 461 |
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Tel: +44(0)7979 966 453 |
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Buchanan
Mark Court/
About Mears
Mears currently employs around 7,500 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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