Social housing contractor hits out at underbidding as turnover rises 11%

Social housing contractor Mears is looking to benefit from the fallout of the collapses of Connaught and Rok, it said today, announcing strong results to the city.

Mears chairman Bob Holt used his results statement to criticise the 鈥渦nderbidding鈥� that led to the failures.

He said: 鈥淭he social housing sector has recently seen a number of very public corporate failures.

鈥淎 contributing factor to these failures was and continues to be the practice of tendering at unsustainable prices, which lead to consequences that benefit no one.鈥�

鈥淔ortunately for all concerned, Mears鈥� long term partnership approach and financial and operational discipline means that it is well placed to 鈥檖ick up the pieces鈥� from competitor failures,鈥� he added.

Mears also said that it was on course to sign its first 鈥渋n-sourcing鈥� contract with a local authority, where it supports a council鈥檚 direct labour organisation.

This is in response to growing concern from housing associations and councils, since the failure of Rok and Connaught, about outsourcing services, and the impact of further rises in VAT.

Chief executive David Miles said: 鈥淢ears has continued to develop a number of in-sourcing models to address the needs of a wide range of clients. We have been notified of an award of our first in-sourcing solutions contract with a local authority to provide support to their Direct Labour Organisation (DLO).鈥�

The comments came as Mears reported pre-tax profits down 5% to 拢18.7m on revenues up 11% to 拢524m. The drop in profits was mainly due to the financing of acquisitions over the year and other exceptional costs, with operating profit up 27% to 拢31.8m.

Holt said: 鈥淚 am delighted to report our 15th year of uninterrupted growth and record final results for the Mears Group.

鈥淚n this watershed year, we have consolidated our market leading position in our selected growth markets.

鈥淲e have continued to work in partnership with our clients and endeavour to ensure that the public sector receive the best value for money.

鈥淲e are well positioned commercially, operationally and financially to seek and capitalise on the many opportunities in our chosen markets.鈥�

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