The firm also blamed aggressive pricing from competitors for a slowdown in securing new contracts, which it had expected to make up the shortfall in ongoing activity with clients.
Overall group revenue slipped 4% to £900m with pre-tax profit from ongoing operations also down 10% to £26.5m, as housing maintenance operating margins slipped from 5.6% to 5.2%.
The group’s full pre-tax profits slumped to £8.8m after Mears took a hit of £16.5m from offloading its mechanical and electrical division, which included a legacy issues from a business operating in the United Arab Emirates. The exceptional write-off covers liabilities from performance guarantees as contracts reach completion.
David Miles, Chief Executive Officer of Mears, said that the tragic events of Grenfell Tower caused unforeseen delays in the timing of planned workload as clients’ attention was diverted towards ensuring that their housing portfolios were safe and fully compliant.
He said: “While 2017 proved to be a challenging year, we have made solid operational progress.
“The decline in housing revenues following the tragic events at Grenfell Tower has stabilised although there still remains some uncertainty as to the speed at which these revenues will recover.
“The performance of the Care division has been a highlight, returning to profitability as planned following a period of restructuring, putting the Care division on a stable footing.”
Miles added: “On a positive note, the current pipeline of opportunities for Mears has never been greater.
“We anticipate competitively bidding contract values in excess of £2bn during the course of 2018.”
He added that Mears would continue to focus on bidding only at sustainable pricing levels but was confident of major project wins based on its 33% bid conversion rate.
Miles said: “The strategic evolution of our business means we are gaining access to opportunities that previously would have been out of our reach.
“While the board has decided to adopt a more conservative approach in how it guides the market on its expectations, the Mears operation is performing very well and I am encouraged that our excellent service delivery is putting us in a good position to secure new opportunities.“