Social housing and home care outsourcer Mears (MER) has its hands full turning around its acquisition of loss-making social housing competitor Morrison - restructuring costs are forecast to rise to £6m in the year ahead. Strip out £1.9m in restructuring and acquisition costs, and group adjusted pre-tax profit rose 7 per cent in 2012 to £33.6m - at the lower end of market expectations.
The social housing division did grow revenue 22 per cent to £504.7m, helped by robust growth in core maintenance contracts, while the order book jumped to £3.8bn - securing 88 per cent of current year revenue. The Morrison acquisition boosted revenues, too, but it also came with a £2.3m operating loss - dragging Mears' reported group operating margin down from 5.7 per cent to 4.6 per cent. Meanwhile, the mechanical and engineering business saw last year's £1.3m profit turned into a £1.6m loss amidst tough trading conditions - management plans to either sell the unit or turn it around within a year. The care business managed a modest 4 per cent growth in revenue (1 per cent on an organic basis) to £112.6m - although the operating margin there did rise from 8 per cent to 8.3 per cent.
Housebroker Canaccord Genuity expects adjusted pre-tax profit of £35m for 2013, giving EPS of 28p (26.1p in 2012).
MEARS (MER) | ||||
---|---|---|---|---|
ORD PRICE: | 374p | MARKET VALUE: | £344m | |
TOUCH: | 373.8-374.3p | 12-MONTH HIGH: | 383p | LOW: 246p |
DIVIDEND YIELD: | 2.1% | PE RATIO: | 17 | |
NET ASSET VALUE: | 184p* | NET DEBT: | 7% |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2008 | 420 | 16.6 | 17.4 | 4.75 |
2009 | 470 | 18.4 | 18.8 | 5.70 |
2010 | 524 | 16.4 | 17.7 | 6.75 |
2011 | 589 | 20.6 | 19.9 | 7.50 |
2012 | 680 | 20.8 | 21.9 | 8.00 |
% change | +15 | +1 | +10 | +7 |
Ex-div: 12 Jun Payment: 2 Jul *Includes intangible assets of £164m, or 178p a share |