21st Jan 2020 09:57
(Alliance News) - Social housing and care provider Mears Group PLC said Tuesday is underlying profit in 2019 will be in line with internal expectations and is also at an advanced stage of selling its standalone Domiciliary Care operations.
For 2019, Mears expects to report revenue for continuing activities of more than GBP900 million, which is about 16% higher than the GBP773 million seen in 2018. The strong growth was driven by the company's MPS acquisition, which added revenue of about GBP115 million.
Underlying pretax profit in 2018 was GBP38.5 million.
Mears order book at the end of 2019 stood at GBP2.5 billion, compared to GBP3.0 billion at the end of 2018. The company said it was lower due to the timing of existing contracts coming up for renewal.
"The board has reached an advanced stage in the sale of the England & Wales Domiciliary Care business and intends to dispose of its Scottish standalone Domiciliary Care business in 2020. Both these activities will accordingly be reported as discontinuing within the 2019 results," Mears noted.
The England & Wales business generated revenue of about GBP36 million in 2019, with the Scottish business adding GBP22 million. Mears expects to record a goodwill impairment of about GBP85.0 million for the disposals in 2019.
Mears said its Extra Care & Supported Living business remain "core" to its "Housing with Care" strategy and will be retained. The unit generated GBP20 million in revenue in 2019.
"The retention of these capabilities provide the group with a demonstrable competence in the management of vulnerable people, and is expected to facilitate other value generating opportunities in the future," Mears said.
Turning to the company's Asylum Accommodation & Support Contract, Mears said it is now fully operational and generated revenue of about GBP45 million in 2019 with annualised revenue in excess of GBP100 million.
"Mears made substantial changes to the contract's property portfolio during the fourth quarter which better positions the group to improve returns whilst delivering a high quality service. The company is well placed to deliver further improvements in 2020," the company added.
Chief Executive David Miles said: "2019 was a very busy year for Mears. A significant amount of time and focused effort has been directed towards the integration of MPS and the mobilisation of the asylum housing contract. I am confident that we are well placed to benefit from this upfront investment in our core business.
"Our exit from standalone Domiciliary Care will enable us to focus our efforts where we can deliver superior returns for shareholders. In line with this, we also continue to make progress unwinding our exposure to Development activities."
Mears is scheduled to release its 2019 results on March 24.
Shares in Mears Group were 3.8% higher in London on Tuesday morning at 301.00 pence each.
By Paul McGowan; [email protected]
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