Social housing and homecare group Mears (MER) delivered a record half-year underlying operating profit of £15.5m - up 15 per cent year on year. The headline profit fall merely reflected a £6.5m charge relating to the acquisition of social housing competitor Morrison. Moreover, the order book rose from £2.7bn to £3.8bn, and the group has already secured this year's targeted revenue stream, as well as 85 per cent of 2014's.
The integration of Morrison into the social housing division is now broadly complete and is expected to contribute around £240m of revenue in the full year. Moreover, the turnaround at Morrison, following restructuring, means that it's now operating at break-even and integration synergies have already exceeded £10m. Mears has also expanded its care division with April's acquisition of homecare group ILS for £22.5m. That helped boost divisional turnover by 8 per cent to £60.5m and, even though organic growth was a modest 0.7 per cent, the operating margin there was maintained at 8.1 per cent - despite pricing pressures.
However, the group's mechanical and electrical services division continued to experience tough trading conditions, and turnover was nearly halved to £18.7m, with operating losses widening from £0.4m to £1.5m.
Broker Canaccord Genuity expects full-year adjusted pre-tax profit of £36.7m, giving EPS of 28.1p (from £29.1m and 23.9p in 2012).
| MEARS (MER) | ||||
|---|---|---|---|---|
| ORD PRICE: | 420p | MARKET VALUE: | £416m | |
| TOUCH: | 418-420p | 12-MONTH HIGH: | 440p | LOW: 260p |
| DIVIDEND YIELD: | 2% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 190p* | NET DEBT: | 12% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 307 | 10.3 | 9.81 | 2.30 |
| 2013 | 458 | 3.99 | 3.72 | 2.50 |
| % change | +49 | -61 | -62 | +9 |
Ex-div: 16 Oct Payment: 4 Nov *Includes intangible assets of £182m, or 184p a share | ||||
