Care business causes Mears profit drop
A social housing contractor has seen its profits fall by 12% following the acquisition of a loss-making care business.
Mears published its final year results for 2015 this morning, with revenue rising to £881.1m from £838.7m in 2014 – an increase of 5%.
However, its profit for the year fell to £36.8m – down from £42m in 2014. The drop was a result of the purchase of the Care at Home (CAH) business from Care UK in May 2015, with a fall in profits anticipated at the time.
Mears made £735.1m from its social housing business, up 3% on 2014, and said in the results it predicts “solid underlying growth for the coming year”.
The operating margin in its housing business rose to 5.8%, a one percentage point rise from 2014. This was linked to improving margins from the Morrison contracts it acquired when it took over the company in November 2012, as well as a shift towards more housing management work.
It acquired a housing management business in 2014, which it now says will increase fourfold by the end of 2016.
David Miles, chief executive of Mears, said: “Our housing business has delivered a strong performance. We are delighted with the progress being made with our developing housing management business. The speed of change in this area is particularly exciting and we are well placed to benefit from an extensive pipeline of opportunities.”
However, he described the care market as “challenging”.
Mears’ operating margin on its care business fell to -1.1%, primarily a result of the CAH acquisition, but also due to increased carer pay.