19th Mar 2019 10:06
LONDON (Alliance News) - Mears Group PLC is to take steps to reduce its debt over the next two years, it said on Tuesday, while it is also will review non-core activities.
Shares were down 7.6% on Tuesday at a price of 268.00 pence each.
Housing and care services firm Mears said following discussions with shareholders, it is to take "active" steps to reduce debt and review capital allocation. Mears ended 2018 with GBP65.9 million in debt, up from GBP25.8 million. It said its average debt during 2018 was worse than expected.
Mears recognises shareholders want better financial outcomes, it said, and it is clear "it must take action" to refocus activities to those of a specialist housing provider. As a result, non-core activities will be reviewed, with disposals possible.
"It is also clear shareholders, and the market collectively, are taking a much more cautious view about indebtedness, again understandably in the light of events elsewhere in the sector," said Chair Kieran Murphy.
"It is appropriate the company should take account of this in its plans for the current year and into 2020."
"We must now direct our capital resources to those areas which deliver the best financial returns, whilst always ensuring we do not lose our long-term approach to how we run the business," Murphy added.
Mears released a "solid" set of financial results for 2018 on Tuesday, with revenue falling 3.4% to GBP869.8 million.
Revenue from the Housing unit was GBP753.2 million, down 1.7% on the prior year, while Care revenue slipped 13% to GBP116.6 million.
Housing fell below expectations for revenue, though some was re-phased into 2019, but Care did return to profitability on an operating basis.
However, group underlying pretax profit rose 3.8% to GBP38.5 million, with Mears' statutory pretax profit climbing 7.4% to GBP28.4 million.
Mears is paying an 8.85 pence final dividend. This means the total for 2018 is 12.40p, 3.3% up on the 12.00p returned for 2017.
At the end of 2018, Mears' order book was GBP3.2 billion, up from GBP2.6 billion a year before.
Looking ahead, as guided mid-February, revenue could breach the GBP1 billion mark in 2019 for the first time ever, with profit growth to be "satisfactory".
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