Social housing specialist’s strategy prompted by maintenance work slowing, with fastest growth in management and development sectors
Housing and care group Mears saw an 8% dip in turnover while pre-tax profit rose 4%, as it looks to scale back its maintenance work to focus on growing its housing management and development business.
In its interim results for the six months to June 2018, the company said: “Increasingly, the group’s drive is towards developing opportunities within housing management and housing development.
“Whilst the traditional stand-alone maintenance market still provides potential for growth, the Group has reduced its dependency upon client discretionary spend.”
The Gloucester-based firm said its housing division saw a 7% revenue fall to £374.9m, from £402.1m for the same period in 2017, however revenue has increased from the second half of last year when the operation posted £364m.
Reporting total group turnover for the six months of £435.3m, down from £470m for the same period, and pre-tax profit of £19m, up from £18.3m, which it said was in line with management expectations.
While the company said it expects its housing division to deliver annual revenue growth of 5% over the medium term, growth in maintenance is expected to be low compared with housing management which should achieve double digit growth.
Housing development, despite being its smallest revenue stream at the moment, is expected to be the fastest growing area of activity “driven by the significant shortage of affordable housing”.
The firm said although it preferred to work with clients on a contracting basis, it was increasingly seeing an opportunity to “share the funding with its Registered Provider partner”. It said: “As at 30 June 2018, the working capital invested in housing development amounted to £13.7m (2017: £4.8m)”.
Mears also said it has been appointed as preferred bidder on a housing with care services contract for an unnamed client worth £110m, with £50m relating to design and build work. Mears will create four “extra care” housing schemes via a Design, Build, Finance and Operate model.
Mears also confirmed chairman Bob Holt will not be standing for re-election at its 2019 AGM and that a replacement will be identified by the end of October, while announcing the appointment of three new non-executive directors.