Fire tragedy at Grenfell will hit profits at Mears Group
L Social housing and care group sees shares dive l Group says new work freeze should be temporary
The Grenfell Tower tragedy will hit earnings at social housing and care provider Mears Group this year as clients put new projects on ice – hitting shares in the company yesterday.
Mears, which has a strong Scottish footprint, said the lethal fire in west London had meant local authorities were focused on checking that their housing stock was safe and complied with regulations rather than on beginning new work. The company, which employs 2,300 in social housing and care services in north Lanarkshire and Aberdeenshire respectively, gave the warning alongside its interim results.
In a stock exchange statement, it said: “The recent tragic events at Grenfell Tower will impact the housing division later this year as clients review the commissioning and safety practices at their properties.
“These unexpected events will inevitably impact the timing of our workloads as clients’ attentions have naturally been diverted towards ensuring their housing portfolios are safe and fully compliant.”
Mears had no involvement in the Grenfell disaster, but does provide cladding for tower blocks.
As a result, Mears said delays in planned works orders will see housing revenues of circa £800 million in 2017 versus an original expectation of £830m, with a resulting “loss of profit and lower overhead recovery”.
However, the company added that it believed the delays in procurement decisions would be temporary, adding the housing order book is not affected.
David Miles, chief executive of Mears, said: “Whilst the likely revenue shortfall for the full year is frustrating, the group will be working closely with its partners and clients at this time to address their immediate priorities.”
It came as the company posted flat pre-tax profits of £12.7m for the first six months of 2017, on revenues up just 1 per cent at £470.8m. Shares in the company fell 7.6 per cent, or 36.75p, to 448.25p.
Russ Mould, investment director at AJ Bell, said: “Delays to social housing contracts in the wake of the Grenfell Tower disaster mean that Mears will miss its budgets for the year and add to a litany of woe for the support services sector, where firms such as Aggreko, G4S, Interserve, Carillion, Serco and Mitie have already badly disappointed, albeit for a wide range of different reasons.”
The dividend rises 5 per cent to 3.45p. Glasgow-based housebuilder Dawn Homes says it is to boost its presence across Central Scotland and Ayrshire with the help of a £14 million funding package from Bank of Scotland. Work recently began on a 20-unit executive development in Torrance, East Dunbartonshire, comprising four and five bedroom properties. Pictured are Andy Seaton, left, relationship director for Bank of Scotland, and Alan Macdonald, chairman and founder of Dawn Homes.