Mears' (MER) housing management business Morrison, acquired from Anglian Water in 2012, began to bed in well last year. As expected, revenues for the acquired business fell to £200m during 2014, following non-recurring items that resulted in a spike in revenues during the previous year. This meant that the contribution of the group's social housing division, which typically accounts for around 85 per cent of group turnover, fell 4 per cent to £715m. However, contract margins for the acquired entity improved during the year, pulling up the division's margins by 30 basis points to 4.8 per cent. Mears' overall progress is reflected by a 30 per cent rise in operating profit to £30.7m.
The group's care division increased its contract win rate by 4 percentage points to 73 per cent. The value of contracts won by the division grew by around a third to £130m last year. Mears struck deals including a five-year contract to provide 'living well at home' services with the Torbay and South Devon Trust, with an estimated value of £50m.
Broker Investec Securities expects adjusted EPS of 32.7p this year, along with pre-tax profit of £44.3m.
MEARS (MER) | ||||
|---|---|---|---|---|
| ORD PRICE: | 445p | MARKET VALUE: | £450m | |
| TOUCH: | 434-447p | 12-MONTH HIGH: | 540p | LOW: 355p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 195p* | NET CASH: | £2.5m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 524 | 16.4 | 17.7 | 6.75 |
| 2011 | 589 | 20.6 | 19.9 | 7.50 |
| 2012 | 617 | 20.0 | 19.6 | 8.00 |
| 2013 | 866 | 21.7 | -1.2 | 8.80 |
| 2014 | 839 | 29.7 | 25.0 | 10.00 |
| % change | -3 | +36 | - | +14 |
Ex-div: 11 Jun Payment: 2 Jul *includes intangible assets of £227m, or 225p a share | ||||
