Social housing contractor hits out at underbidding as turnover rises 11%

Social housing contractor Mears is looking to benefit from the fallout of the collapses of Connaught and Rok, it said today, announcing strong results to the city.

Mears chairman Bob Holt used his results statement to criticise the “underbidding” that led to the failures.

He said: “The social housing sector has recently seen a number of very public corporate failures.

“A contributing factor to these failures was and continues to be the practice of tendering at unsustainable prices, which lead to consequences that benefit no one.”

“Fortunately for all concerned, Mears’ long term partnership approach and financial and operational discipline means that it is well placed to ’pick up the pieces’ from competitor failures,” he added.

Mears also said that it was on course to sign its first “in-sourcing” contract with a local authority, where it supports a council’s direct labour organisation.

This is in response to growing concern from housing associations and councils, since the failure of Rok and Connaught, about outsourcing services, and the impact of further rises in VAT.

Chief executive David Miles said: “Mears has continued to develop a number of in-sourcing models to address the needs of a wide range of clients. We have been notified of an award of our first in-sourcing solutions contract with a local authority to provide support to their Direct Labour Organisation (DLO).”

The comments came as Mears reported pre-tax profits down 5% to £18.7m on revenues up 11% to £524m. The drop in profits was mainly due to the financing of acquisitions over the year and other exceptional costs, with operating profit up 27% to £31.8m.

Holt said: “I am delighted to report our 15th year of uninterrupted growth and record final results for the Mears Group.

“In this watershed year, we have consolidated our market leading position in our selected growth markets.

“We have continued to work in partnership with our clients and endeavour to ensure that the public sector receive the best value for money.

“We are well positioned commercially, operationally and financially to seek and capitalise on the many opportunities in our chosen markets.”