Mears revels in Connaught's woes as cuts fuel demand
Wednesday 18 August 2010
Mears Group took a swipe at its ailing rival, Connaught, yesterday as it announced record first-half profits and unprecedented demand for its services.
The social housing and home care provider was forced to reassure investors in June after Connaught warned that public spending cuts had hit its business.
But Mears' finance director, Andrew Smith, said Connaught's woes were of its own creation and that Mears was hoping to take advantage of the problems to win more business.
He made his comments as Rok, another rival, said first-half profit halved after warning last week that accounting problems would hurt earnings.
"There has been a lot of commentary around more than one of our competitors but as more news comes out they appear to be company-specific issues," Mr Smith said.
"If a client is looking to provide services through a single provider then financial stability becomes more important."
Pre-tax profit rose 42 per cent to £9.3m in the first half. The interim dividend rose 19 per cent to 1.9p a share.
Mears maintains hundreds of thousands of homes owned by housing associations and local councils.
Mr Smith said 80 per cent of revenues were for maintenance governed by tenancy agreements or safety rules and could not be cut. The other 20 per cent was from capital spending already in place.
The company said tight public finances drove record contract wins as local authorities outsourced work to cut costs. Connaught said its relationships with customers had not been affected by recent events. Rok said it also hoped to take business from Connaught.
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