Mears will look to grow its development arm in anticipation of fewer public sector maintenance contract renewals in the next 12 months, its half-year results have revealed.
The firm increased pre-tax profit 4 per cent to £19m for the six months to 30 June 2018, up from £18.3m in the same period of 2017.
Revenue for the period stood at £435.3m, down 8 per cent compared with the £470.8m posted in H1 2017.
The company’s maintenance arm drove much of this revenue in the first half, bringing in £292.9m over the six months.
Mears said it had responded to housing market growth by developing its housebuilding capabilities to widen its focus beyond responsive and planned maintenance work.
The firm added that, while it did not see itself as a property developer, an increasing number of contracts required a broader offering of services.
As an example of its broader offering, Mears cited its appointment as preferred bidder for a £110m contract to build four care homes under a design, build, finance and operate (DBFO) model.
The contract comprises £50m for the design-and-build component, to be completed in 2019/20, around £50m for housing management and maintenance over a 50-year period, and £10m for care provision over an initial 10-year period.
Mears said it anticipated a “good pipeline” of DBFO opportunities with local authorities looking to boost their assisted living and care facilities.
However, housing maintenance growth was expected to be low, as most work was secured through public procurement and there were no existing contracts up for renewal over the next 18 months.
The company said its smallest but fastest-growing division was housing development, driven by the shortage of affordable housing.
Its development arm’s work followed either a contracting model or a joint venture model, the firm added.
Last month Mears was forced to call a general meeting after a shareholder called for the removal of chairman Bob Holt.
Mears subsequently announced that Mr Holt would not seek re-appointment at the next AGM in June 2019.