Housing operator Mears ups guidance as Ministry of Defence extends contracts
Affordable housing operator Mears has reported an “excellent” set of results driven by government social housing contract wins and high demand from immigration-related services.
Mears, which manages 17,000 houses for local and central government, reported a 10 per cent rise in revenue for the six months ended June 30, to £580m up from £525.6m.
Profit before tax at the company, which is also responsible for keeping 750,000 social housing homes in “good repair”, increased by 44 per cent to £30.5m, from £21.2m last year.
“The group continues to see an elevated level of revenue… predominantly driven by immigration-related services,” it said.
The services that it delivers to the Ministry of Defence have been extended – likely amid a push to settle asylum seekers after a huge backlog of cases during the pandemic – with a new workstream linked to the Afghan Resettlement Accommodation Programme to support settlers in their relocation and with accommodation, the company said.
Mears upgraded its guidance for the full year to revenue of £1.1bn, with adjusted profit before tax between £53m and £55m – ahead of current market expectations.
Mears has secured over £50m in funding via the Social Housing Decarbonisation Fund to date, with £10m secured this year. The group was awarded the new North Lanarkshire Council contract, for a minimum of eight years.
It is expected to deliver annual revenues of over £125m, a “significant increase on the previous contract”, Mears said.
Lucas Critchley, chief executive officer, said: “Trading in the first half has been excellent across the group and is reflected in a strong set of interim numbers.
“We have made good progress in the first half, with a focus on developing and broadening the range of services we offer to clients.
“In addition, an increased operational focus, making fuller use of the group’s IT system capabilities, is resulting in operational and commercial improvements, and is evident in the continued progress in operating margins.”
The company completed its third share buyback programme this year, bringing the total cash returned via buybacks to £53m since May 2023.
Analysts at Panmure Liberum rated the stock a ‘buy’ as they raised their guidance for profit before tax to £55m from £50m.
Shares were up six per cent in morning trading.