As chairman and chief executive of a business that has shown a compound growth rate of around 40 per cent per annum over the past decade or so, Bob Holt might be excused for feeling pleased with himself.
Not a bit of it. The man who has steered the Mears Group from an insignificant building concern – bought for a song in 1996 – to a £200 million company with a full LSE listing in some ways appears underwhelmed by the figures.
Although he admits to a sense of pride in what he has achieved in little more than a decade, he claims: “I don’t necessarily regard our growth as being that fast. In fact, we’ve been quite pedestrian in some of the things we’ve done.”
The word “pedestrian”, in this instance, needs redefining. With a background in the salt mines of accountancy, followed by a stint running large corporates including the maintenance division of MITIE, he decided to indulge a longstanding ambition to own his own business.
In February 1996, he bought control of Mears – a small-time builder with fewer than 100 employees and revenues of £9 million on which it barely broke even – for what he describes as “next to nothing”. Reports suggest it was around £50,000.
In October of the same year, he floated it on AIM with a market value of £3.6 million and a share price of 10p. For a few years, the company kept its head down and made a number of small acquisitions while getting its act together, says Holt.
Successive years of spectacular growth propelled the business up the league table to the point where it is now one of the two leaders in its chosen field – the repair and maintenance of social housing stock – with around 100 registered social landlords (RSLs) and responsibility for the care of around ten per cent of the nation’s social housing stock.
In June this year, Mears took the plunge and went for a full listing on the London Stock Exchange, and is currently valued at around £200 million. It has been as high as £250 million. At the time of writing, its share price stands at 247p.
Not that Holt cares much about market valuations, as long as the underlying business is sound and he and his team – whose talents he extols at every opportunity – can continue to meet the expectations of the City. To date, he says, they have not been disappointed.
Clearly, it is becoming increasingly difficult to pull those 40 per cent rabbits from the hat, bearing in mind the size the business is now, with revenues of £410 million and forecast profits of between £20 million and £21 million.
But in a highly fragmented marketplace worth in the region of £10 billion a year, handsome double-digit growth is still within reach, and last year Mears hit 25 per cent. This year, analysts predict the increase will be in the order of 31 per cent.
“We have never failed to meet the City’s forecasts,” is Holt’s boast.
He admits that fortune has smiled on him and that, to a large extent, he has been made to look good by a growing market. But Holt also appreciates his own worth, particularly his role in developing a revolutionary business model he introduced to shake the sector out of its old “master-servant” relationship.
“We created a new form of partnership model, and now work alongside our clients as true partners,” says Holt. Others have followed in Mears’s footsteps, and partnering in the sector is now the norm rather than the exception.
The close relationship the business has nurtured with its clients has opened the door to a new business opportunity.
A large percentage of tenants in the social housing sector are old, infirm or suffering from some form of disability, and Holt and his management team reasoned that since they were already on the doorstep looking after the property, so to speak, the next logical move was to step across the threshold to offer domiciliary care to the same group of people.
With that in mind, Mears stumped up £22 million to buy Careforce, a specialist in the field, in April last year. Since then, Careforce itself has been busy on the acquisition front, notching up nine acquisitions of its own in just under 12 months.
Holt’s commitment to the business was never more clearly demonstrated than three or four years ago when he kicked himself upstairs to become chairman, leaving the day-to-day running of the business in the hands of a new chief executive.
In fact, the business stalled without his certain touch on the tiller, and the board asked him to resume executive control. That was in January 2007, and things are now back on course, but not without “some bloody hard work” by the team as a whole.
But that goes with the territory. “I don’t know many lazy people who make a success of things,” he adds.
Because of the nature of the business model he pioneered, Holt has the security of knowing what the future has in store for him.
The contracts that Mears has with its partners around the UK are usually for five, seven or ten years, which puts Holt in a different fiscal dimension.
He explains: “I’m actually in a time warp, where I’m sitting in August 2009. Everyone else in my business is in July 2008, but I have already put out my interims for 2009, because I broadly know where those are likely to be.
“I have already got 100 per cent of this year’s consensus revenue numbers for the City, and probably approaching 90 per cent of the consensus turnover numbers for 2009.
“I’m already looking at: ‘Where do we go next? Where do we want to be? How should the business be structured? Is my main board constituted with the right expertise?’ and so on.
“I have the very great luxury, unlike most other people, of being able to think a year ahead. And that’s a fantastic position to be in.”