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Mears to Expand Care Division Despite Government Funding Risks

Aug. 14 (Bloomberg) -- Mears Group Plc., which operates low-income housing for the U.K. government, said it intends to make more acquisitions to broaden its social care business by the end of the year.

“Our aspirations are to make acquisitions in mobility, nursing, and physiotherapy,” Chief Executive Officer David Miles said in a phone interview today. As well as organically growing existing assets, the company expects the additional services, which require higher expertise, to raise operating margins, he said.

Mears reported group sales of 307.2 million pounds ($482.5 million) in the six months to June, up 5 percent from a year earlier, according to a regulatory statement. Sales in its care division increased 8 percent to 56.1 million pounds.

Miles said there are risks in expanding into a politically led market. The government’s care and support White Paper introduced in July has “good ideas” but needs clearer thinking on funding, according to Miles. Mears expects a review of the bill within three years, he said.

“My main concern is the demographic time-bomb in care, budgets are growing but that is not in line with the number of people who are living longer,” Miles said. “A significant funding increase will be required to deliver high quality care.”

Shares rose 2.1 percent, the most in three weeks, to 266 pence as of 8.30 a.m in London trading. The company announced an interim dividend of 2.3 pence per share payable Nov. 5, according to the regulatory statement.

Mears provides over 160,000 hours of care to 20,000 people each week, according to the statement. It offers maintenance and repairs services covering more than 10 percent of U.K. social housing.

To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net

To contact the editor responsible for this story: Douglas Lytle at dlytle@bloomberg.net

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