Mears Group has announced record revenue and rising profits, although its recently acquired Morrison business lost £2.3 million in under two months.
The group’s results for 2012 announced revenue of £679.5m, up 15 per cent on 2011, while social housing revenue rose 22 per cent and pre-tax profits were up slightly to £31.7m.
Care revenue was up 4 per cent to £112.6m.
Chief executive David Miles said the acquisition had been “transformational”, but that Morrison had encountered “significant operational challenges” after pursuing an aggressive growth strategy at the expense of margins and delivery.
He added that Mears was at “an advanced stage” in restructuring the operational management and social housing functions.
“While in aggregate the Morrison contracts that we acquired are currently generating an operating loss, we are making good progress in moving towards extracting value from these contracts,” he said.
“Mears has a strong track record of turning around, integrating and extracting substantial value from acquired businesses, along with an excellent track record in terms of service delivery and profitability.”
The group also announced £443m in new contract wins, the bulk of which came from the social housing sector.
Net debt stood at £57m, down slightly from £58.5m in 2011.
Morrison provided a revenue boost of £45m, with the group saying it expected a £200m expected turnover in future years.