This was a mixed showing for Mears (MER) due to the contrasting fortunes of its social housing and care divisions. The group managed to push up gross profit by 3 per cent to £232m, although net earnings pulled back as margins were squeezed through integration costs linked to the acquisition of the Care at Home business from Care UK. The deal did, however, feed through into top-line growth, along with the contribution of Omega, the social housing services company Mears bought in October 2014.
The challenges facing the care division were borne out by a dramatic reversal in profitability year on year. But the performance of the social housing business, which accounts for four-fifths of group revenue, provides cause for optimism. Investors will also take heart from a £3.5bn order book, up 6 per cent from a year earlier, and representing 96 per cent of consensus forecast revenue. Separately, the group announced it had been awarded preferred bidder status on a £100m homecare services contract for Devon County Council.
Peel Hunt gives adjusted pre-tax profit of £48m for 2016, leading to EPS of 35.5p, against £36.8m and 28p in 2015.
| MEARS GROUP (MER) | ||||
|---|---|---|---|---|
| ORD PRICE: | 395.3p | MARKET VALUE: | £403m | |
| TOUCH: | 395-404p | 12-MONTH HIGH: | 475p | LOW: 362p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 189p* | NET DEBT: | £0.06m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 589 | 20.6 | 19.9 | 7.5 |
| 2012 | 617 | 20.0 | 19.6 | 8.0 |
| 2013 | 866 | 21.7 | -1.2 | 8.8 |
| 2014 | 839 | 29.7 | 25.0 | 10.0 |
| 2015 | 881 | 25.9 | 20.3 | 11.0 |
| % change | +5 | -13 | -19 | +10 |
Ex-div: 16 Jun Payment: 7 Jul *Includes intangible assets of £225m, or 221p a share | ||||
