Mears Group revenue grew by 14% in 2023 to 拢1,089m (2022: 拢960m) and pre-tax profit was up by nearly a third to 拢46.9m (2022: 拢34.9m).
Mears鈥� largest single customer is the Home Office, with who it has an asylum accommodation and support contract (AASC). When this contract was won, in 2019, the company expected it to generate annual revenues of around 拢120m, which would, under normal conditions, amount to around 15% of group revenues.
However, Mears said that the AASC had 鈥渆xperienced elevated volumes as a result of a backlog linked to the challenges of the Covid-19 pandemic. As a result, this customer relationship accounted for over 40% of group revenues in 2023 and this elevated position has continued into 2024.鈥�
That one contract meant that Mears鈥� management-led activities saw revenues grow by 34% in 2023 to 拢543.3m.
鈥淚t is a tremendous achievement that an area of the business which the group entered less than 10-years ago, and has been grown almost entirely organically, now comprises half the group's revenues,鈥� said chief executive Lucas Critchley.
By contrast Mears鈥� housing maintenance activities 鈥� its traditional core business 鈥� reported a revenue increase of just 1% to 拢543.3m.
However, despite the growth in revenues in management-led activities, segment profits have not improved by so much 鈥� 拢25.7m before tax in 2023 against 拢24.3m in 2022. By contrast, the housing maintenance segment has substantially improved profits, up from 拢11.8m to 拢22.1m, as a result of underperforming contracts completing.
Mears also reports that it is 鈥渨ell-placed鈥� in bidding for a 拢1.5bn contract with North Lanarkshire Council to provide reactive maintenance, compliance, servicing and planned works. The contract would start in July 2024 and run for 12 years, with an annual value in the region of 拢125m. North Lanarkshire is already a Mears client but this would double its work for that council.
Chief executive Lucas Critchley summarised: "We are delighted to have delivered strong growth in revenues, profits and cash generation in 2023. The group is recognised as a leading housing specialist, and we continually look to evolve our capabilities to further strengthen our market position. The board believe that the group is well-positioned for the future and is pleased that the strong trading momentum built in 2023 has continued into 2024.鈥�
He added: 鈥淭he group has benefitted from the strategic redirection of the business over the last five years, having exited from a number of non-core activities and applying a rigorous approach to improving operating margins.鈥�
There are seven AASC contracts operational in the UK in the hands of three contractors: Mears (Northeast/Yorkshire/Humber, Northern Ireland and Scotland); Clearsprings Ready Homes (South and Wales); and Serco (Midlands & East of England and Northwest England). The contracts were signed in January 2019 and run through until 31st August 2029. At time of signing they were collectively worth more than 拢4.5bn, with Mears' share worth 拢1.45bn over 10 years.
According to the House of Commons Library, the Home Office spent 拢3.6bn on asylum support costs in 2022/23, nearly double the spending in 2021/22.
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