Interim losses for Mears as clients put maintenance work put on hold

For the six months ended 30^th June 2020 Mears Group made a pre-tax loss of £11.5m on revenue down 7% to £407.0m (2019: £439.2m). For the same period in 2019 it made a pre-tax profit of £25.2m.

Operating loss on continuing operations was £6.7m (2019: £18.1m profit).

“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 £2.5m,” the board said. “The results for the first half include all the loss of revenue, under-recovery of overheads and other incremental costs within the operating result.”

Maintenance revenues fell 19% to £261.7m (2019: £323.3m). This was partly offset by an increase in management revenues and the new Home Office asylum accommodation and support contract (AASC), which started in September 2019.

Maintenance work volumes at the end of July had still reached only 42% of normal levels (up from 25% at the end of June) although are expected to reach ‘more normal levels’ by the end of the year.

Mears still has staff on furlough but expects them all back at work by the end of next month. Mears furloughed more than 2,000 employees at  peak, reducing to around 1,600 at the end of June and 980 by the end of July.

The Covid-19 crisis has also delayed the tendering process in maintenance activities, although Mears’ win rate on tenders that are going ahead is more than 80%.

“Inevitably, the Covid-19 crisis has impacted short-term financial performance in these results,” said chief executive David Mears, “particularly as maintenance contract volumes reduced to emergency-only to protect the safety of staff and service users alike.

"Activity levels are returning to normal, and I am very confident as to the financial stability and the long-term wellbeing of the group. The group has taken positive and considered actions during the Covid-19 period to ensure that the group is stronger than ever and well positioned once the UK sees a return towards normality."

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