Mears Share Price (MER)

N+1 Singer kept its "buy" stance on social housing company Mears (MER) with an increase in target price from 345p to 390p. The broker cites the acquisition of a "sizeable competitor", Morrison Facilities Services, for 24 million pounds as justification of the increase in its target. Although the company is currently loss making, the broker believes that management will turn the business around and deliver medium-term earnings. The shares remained flat at 302.25p.

Trading update The Group is continuing to experience solid trading in both its core divisions of Social Housing and Care and, excluding the impact of the acquisition of Morrison, the anticipated outcome for the full year results remains in line with management's expectations. The first half of 2012 saw the most intense period of new contract mobilisation in our history, with seven significant new contracts commencing in this period with an annual value of in excess of £50 million. As we reported in our interim results on 14 August 2012, the quality of the mobilisations and the subsequent service delivery had exceeded our high expectations, however, the large volume of new works had resulted in a dilution of the social housing operating margin in the first half, as mobilisation costs are expensed upfront. Since 1 July 2012, the newly mobilised contracts have bedded down further, and in line with our expectations, we are seeing an improvement in the operating margin of those contracts.

Commenting, David Miles, Chief Executive, Mears Group, said: "I am delighted with the progress Mears has made in recent months. The acquisition of Morrison will further consolidate our market leading position and contract profile in Social Housing. Group revenue visibility stands at 99% and our order book and pipeline are particularly strong. "The new contract success with Cambridgeshire County Council is extremely positive. We expect this strategic partnership to develop in a way similar to many of our housing contracts, with a focus on achieving a range of life enhancing outcomes for our clients rather than just the traditional task and time approach that is common within care services today. Cambridgeshire County Council has shown real vision by recognising that the best way to meet some of the most difficult challenges within health and social care is through working closely together in partnership. This is an important milestone for us and I remain positive in our ability to shape and prosper in this market."

Social Housing Division: · April mobilisations now bedded down with a positive impact on H2 margins. · New contracts awarded to the Social Housing division in the last 3 months with a value of £107m. · Successful mobilisations of new contracts with Southwark Council and Notting Hill Housing Trust. · Our on-going commitment to provide energy solutions to address fuel poverty has given rise to a number of opportunities with existing clients. Care Division: · New contracts awarded to the Care division in the last 3 months with a value of £19m. · Notable new contract success with Cambridgeshire County Council under a Strategic Partnership arrangement.

Interim Management Statement Mears releases its Interim Management Statement ("IMS") for the period from 1 July 2012 to date. Mears today also announces the acquisition of Morrison Facilities Services Limited ("Morrison"). The information included in this IMS Statement does not reflect the impact of this acquisition. Summary of Key Highlights Group: · Today separately announces the acquisition of Morrison. · The Group is continuing to experience solid trading in both its core divisions of Social Housing and Care. · Group order book of £2.6 billion with secured revenues of 99% of current consensus forecast revenues for 2012, 86% for 2013. · Bid pipeline remains in excess of £3.0 billion, with an immediate bidding opportunity of £1.1 billion, underpinning the Board's continuing confidence in the future.

http://www.investegate.co.uk/mears-grp-plc-(mer)/rns/interim-management-statement/201211080700166082Q/