Social housing services provider Mears (MER) is exiting its standalone care activities – chairman Kieran Murphy says the sector is “severely structurally underfunded and it is has proved impossible for the group to generate an adequate financial return”. The England and Wales domiciliary care business was offloaded to Cera Care Operations for £5m in February, and the group is looking to sell its Scottish unit as well. For the year ending 31 December, these operations were held as ‘discontinued’ and registered an £87m loss (including the impairment of goodwill and fixed assets). This pushed Mears into an overall £66m loss, from a profit of £25m in 2018.
Putting the care business to one side, revenue growth from continuing operations was driven by the acquisition of Mitie Property Services (MPS) and the mobilisation of the asylum accommodation and support contract (AASC). While adjusted operating profit ticked up 6 per cent to £41m, the margin contracted by 0.5 percentage points to 4.6 per cent. This was due to the lower-margin MPS business and loss-making housing development division.
Covid-19 has seen maintenance activity for local authorities and housing associations deferred, and may impact the timing of contract bids this year. As previously announced, there is no final dividend, which should save around £10m.
House broker Peel Hunt forecasts adjusted pre-tax profit of £17.4m and EPS of 12.2p in 2020, down from £37.3m and 27.3p in 2019.
| MEARS (MER) | ||||
| ORD PRICE: | 170p | MARKET VALUE: | £188m | |
| TOUCH: | 169-171p | 12-MONTH HIGH: | 323p | LOW: 115p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 108p* | NET DEBT: | £320m** | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 881 | 25.9 | 20.3 | 11.0 |
| 2016 | 940 | 29.4 | 23.5 | 11.7 |
| 2017 | 900 | 26.5 | 20.3 | 12.0 |
| 2018 (Restated) | 772 | 27.4 | 21.9 | 12.4 |
| 2019 | 905 | 25.2 | 18.9 | 3.65 |
| % change | +17 | -8 | -14 | -71 |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £152m, or 137p a share, **Includes lease liabilities of £269m | ||||
