18th Aug 2020 11:51
(Alliance News) - Mears Group PLC on Tuesday announced a pretax loss for the first half of 2020 having felt the full grip of Covid-19.
The Gloucester-based housing and social care provider swung to a pretax loss in the six months ended June 30 of GBP11.5 million from a profit of GBP12.1 million a year prior.
Revenue fell 7.3% to GBP407.0 million from GBP439.2 million a year prior.
A reduction in Maintenance revenue to GBP261.7 million, down 19% from GBP323.3 million a year before, was partly offset by a 54% increase in Management revenue to GBP135.7 million from GBP88.2 million. This was delivered by a new asylum accommodation and support contract, which commenced in September last year.
Mears said: "Covid-19 has had a significant impact on the group's activities and the associated financial results, causing both a loss of revenue and additional costs. A conservative estimate of the cost of protective equipment, the irrecoverable costs of furloughed employees and restructure costs in the first half amounted to in excess of GBP2.5 million."
The company added: "Work volumes reduced to circa 15% of normal levels at the height of the lockdown. In the majority of cases, the group secured interim arrangements to reflect the reduction in revenues and to ensure the interim pricing allowed for the recovery of direct labour and local overheads."
Mears did not propose an interim dividend but intends to return to a progressive dividend policy once it is confident that activity and working practices have returned to normal. It paid 3.65 pence last year.
Going forward, Mears remains cautious about new contract win volumes in the short to medium term despite the current encouraging win rate on tenders.
"The withdrawal from under-performing contracts and the normalisation of volumes on existing contracts, post Covid-19, should be positive for margins over this period," Mears said.
Housing management contracts continue to perform in-line with expectations, it said.
"The robust nature of the Mears' business model and the essential services delivered provide confidence about the future and the group's contribution to the recovery of the UK as a whole," the company said.
Mears shares were up 8.3% at 125.11 pence each on Tuesday morning in London.
By Greg Roxburgh; [email protected]
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