MEARS GROUP PLC

MER
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Mears : Interim results for 6 months ended 30 June 2021 - Investor Presentation

08/12/2021 | 04:31am

Mears Group

Interim results for the 6 months ended 30 June 2021

12August 2021

EXECUTIVE

SUMMARY

"The Group has performed well and traded resiliently

through another lock-down

impacted reporting period.

The business is in good shape and with the long-term challenges of affordable

housing, public health and

climate change high on the political agenda at local and central Government, we look forward to the future with confidence."

Key themes

Financial highlights

Operating highlights

Key messages

  • Good revenue recovery as Covid-restrictions eased
    • Group revenues £443.7m +11.8% (yoy)
    • Maintenance-led+7.3%
    • Management-led+15.1%
  • Profitability strengthened towards normalised levels
    • Adjusted operating profit (pre-IFRS 16) £13.7m (3.1% margin)1
    • Adjusted profit before tax of £11.1m (H1 2020: £8.1m loss)1
  • Cash conversion remains high
    • Average daily net debt £8.2m (FY 2020: £97.3m)
  • Restoration of dividends and updated guidance for FY 2021
  • Successful transition back to normal commercial mechanisms
  • MoJ contract win - Mears seen as a trusted housing specialist by central Government
  • Solid pipeline conversion with > £150m of contract wins year-to-date
    • 60% success rate in Maintenance year-to-date

1.Adjusted profit / (loss) measures on continuing activities before non-underlying items, the amortisation of acquired

2

intangibles but inclusive of share of profit from associates.

OPERATIONAL DELIVERY

Customers

Clients

Workforce

"The 'Mears Operating Model' is responding very

well to client, customer and

Customer service levels remained high

  • Internal and external (NPS) customer satisfaction scores remain above benchmarks

Successful transition back to normal operating and commercial mechanisms across the Group

• Almost all Maintenance

contracts are back to normal

Mears self-delivery model and high employee engagement helping to mitigate impact of labour shortages across the sector

• Retained Sunday Times "Top

employee needs through this difficult period of unlocking."

80%

70%

60%

50%

40%

30%

20%

NPS (Last 12 months)

Sector group - high1

Sector group - average1

commercial mechanisms

R&M volumes returning to

normal levels, but planned

works building more slowly

Good pipeline conversion

25 Best Big Companies in the

UK to Work For" accreditation

Mental health awareness

training

• Retained Social Mobility and

Diversity accreditations

Employee turnover remains

low

Return to the office going well

retaining the 'best of both worlds'

• Covid-related innovations in

remote working and

10%

Sector group - low1

0%

communication

• Face-to-face service delivery

1. Sector group high, low and average, based on research performed by SMOKE Customer Intelligence (www.smokeci.com), taking into account over 35,000 responses to

3

the NPS (Recommend) question from different "services" companies they work with. 2. The Mears customer engagement forum (inde pendently supported and verified by the

Centre for Governance and Scrutiny a national charity specialist in all aspects of governance).

HIGH QUALITY ORDERBOOK AND EXCELLENT PIPELINE CONVERSION

"£2.5bn high quality orderbook and pipeline building."

Commentary

£2.5bn orderbook as 30 June 2021

  • Benefitted from good conversion
  • Improved orderbook quality and visibility
  • H1 2021 order intake > £150m (> £250m incl. extensions) (Redbridge, Angus (new), Leeds, Lambeth Gas)
  • Win rate c. 60% by value (Maintenance)
  • Other live bids: > £360m (>£580m incl. extensions) (Moat, Tower Hamlets, but excluding North Lanarkshire
    - see next slide and RLAP)
  • Still awaiting RLAP (Retention) decision

Ministry of Justice

Client:

  • Ministry of Justice, HMPPS

Services provided:

  • Housing property management, maintenance and welfare support
  • Supporting low and medium risk released prisoners from initial accommodation into a settled home

Opportunity:

  • Current contract is a good fit in terms of scale, scope, and core competencies required
  • Partnering approach with another central Government department
  • Opportunity to develop longevity and scale of relationship

Regions:

  • North East and North West

Key terms:

  • No void risk

4

NORTH

LANARKSHIRE -

INTEGRATED

CONTRACT

OPPORTUNITY

"An initial bid has been submitted for North Lanarkshire's integrated housing services contract,

which would represent one

of the largest local authority contracts ever tendered."

Current Repairs &

Maintenance

contract

£55m pa

(since 2012)

New contract(s)

Other FM &

Infrastructure

Services

£50-150m pa

(20 years)

Future

Integrated

Housing

Services

Contract

£120-150m pa

(20 years)

Mears tender process

  • Mears bid submitted June 2021
  • Very positive feedback on quality of submission
  • Will progress to next round
  • Client sticking to its initial principles:
    • 80/20 Quality/Pricing approach
    • Longevity of relationship
    • An integrated partnering led approach

5

Disclaimer

Mears Group plc published this content on 12 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 August 2021 08:30:03 UTC.

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