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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.
Mears is well-placed, but the shares don't reflect this. They trade on a multiple of just under 10 times underlying forecast earnings for 2012, which is well below the support services average of 12 times. True, we won't see a return to the heady days of a 25 times earnings multiple. But steady workflow and assured revenues translating into strong cash flow and progressive dividends mean the shares are a solid growth stock.
Mears has other plus points. Back in 2010, lack of cash did for Rok and Connaught, but cash flow is moving in the right direction at Mears. Cash generated from operating activities in the first-half improved from £7.5m a year ago to £12m, which allowed net debt to be halved from £13.4m to £6.2m in the first six months of 2012. The care business is also forging ahead. Sales were up 8 per cent to £56m, with operating profits up 17 per cent to £4.5m. But City analysts were expecting faster growth. The slow progress is in part due to the government dragging its heels on the white paper on health and social care, but also down to a dearth of acquisitions. There could be progress on both fronts in the next six months. Mr Miles says he is looking to acquire a couple of care-at-home businesses in the third or fourth quarter, and the government should clarify support for domestic care in the next session of parliament. There are risks inherent in this, though. Pressure on public spending will remain intense and the backlash against outsourcing after the G4S debacle could stall decisions, especially as social care for the elderly leaves so much to be desired.
After suffering from government cutbacks and a fractious relationship with the City, shares in social housing and care provider Mears have drifted down to ratings last seen 10 years ago. But the company has just reported record levels of activity, it is generating plenty of cash and, in the past five years, has doubled its sales and improved its earnings, yet the share price has gone sideways. Add in assured revenues and the potential for growth in its home-care business and we reckon the shares are worth buying. During the years of Blairite public-spending profligacy, social housing maintenance was a wonderful place to be. By late 2006, Mears' shares were touching 350p, trading on a multiple of over 25 times earnings. Then came the demise of Connaught and Rok, companies occupying a similar space to Mears. As a result, investors fled. Yet throughout this Mears weathered the storm, increasing its dividend every year. It has now emerged with less competition, more business, and a better outlook. Mears' first-half results for 2012 were encouraging, with revenue up 5 per cent to £307m and adjusted pre-tax profit up 2 per cent to £14.3m. The order book was flat at £2.7bn, yet provides for 99 per cent of 2012's expected revenues and 85 per cent of next year's. The numbers were all the more impressive because Mears mobilised a record number of new contracts in the period, whose annual revenues will top £50m. As chief executive David Miles explains, when Mears begins a new contract its takes in start-up costs, such as buying new vans and employing staff, upfront. As a result, contracts tend to lose money in the first six months, break even in the next six; then they move into profit, hitting peak profitability around the 18-month mark. Understandably, the social housing unit, which took on all this work, reported operating profit margins down from 5.5 per cent to 5 per cent, on sales up 4 per cent to £215m.
Financial position Mears continues to benefit from a strong balance sheet. The efficiency with which the Group manages working capital has always been a cornerstone of our business, which is of particular importance during the current period of strong organic growth. Commenting, David Miles, Chief Executive, Mears Group, said: "I am delighted at the progress made by the Group in recent months. We have demonstrated our ability to embrace change and adapt to the challenges that the current economic environment continues to present. Mears' positive momentum positions us well to benefit from an active contract bidding market. I remain confident in the prospects for the future growth of the Group. "Our Social Housing business has long been recognised as the market leader in terms of operational performance and tenant satisfaction. Our differentiated offering focussed on quality of service is providing now, more than ever, opportunities to further reinforce our position as the partner of choice for customers seeking solutions to important and significant underlying needs. "I am proud of our achievements in the care sector and our ability to offer vulnerable people high quality services. Moreover, we are achieving strong margins in what remains a complex politically-led market. We continue to seek acquisitions to broaden our care offerings where appropriate. The well documented challenges in the care market are likely to accelerate in 2012, and Mears continues to be at the forefront of seeking pragmatic solutions to these challenges and I remain very positive of our future role in the care market. It is disappointing that the Social Care white paper has once again been delayed. It would appear that the challenge for the long term funding of Care is unlikely to now be addressed in legislation before the back end of 2013. The political debate cannot be one of simply mindlessly reducing spend and ignoring new sources of funding, but rather one which seeks to deliver long term joined-up good value services to an increasingly important section of society."
Interim Management Statement 97% visibility of consensus forecast revenues for 2012 and 80% visibility for 2013 Mears today releases its Interim Management Statement ("IMS") for the period from 1 January 2012 to date. Mears continues to deliver solid trading across all divisions in line with management expectations. We have now achieved 100% visibility of forecast consensus revenues in Social Housing for the current year. For the Group as a whole, we have visibility of 97% of consensus forecast revenues for the current year and have in excess of 80% visibility of Group forecast consensus revenues for 2013. The order book currently stands at £2.8 billion and the bid pipeline remains in excess of £3.0 billion with the immediate bidding opportunity for new contracts due to start on or before April 2013 at approximately £2.0 billion.
http://www.investegate.co.uk/Article.aspx?id=201205140700222309D
he company announced earlier this week that it had beat profit forecasts for 2011 as it sought to grow its care homes business. Turnover came in at £589m slightly below the consensus forecast of £598m but still 12% ahead of 2010. Profits before tax beat expectations, totalling £31.5m versus a forecast of £31.2m. The figure was 9% up on 2010
Bob Holt, Chairman of Mears, a social housing maintenance firm, has exercised share options for over 1,500,000 ordinary shares and subsequently sold two million shares - his entire holding of ordinary shares in the firm. He sold the shares for 250p each for a total of £0.5m. 56-year-old Holt has retained an interest in share options under the Special Incentive Plan over one million ordinary shares.
Mears are making me redundant next summer, so i hope that by then the share price has gone up a bit to soften the blow!
Broker Collins Stewart expects 2011 pre-tax profits of £34.3m and EPS of 27.7p. We last placed a buy recommendation on the shares in March at 280p, and with the current price at 275p we remain positive. Mears is operating in a largely non-discretionary area of the market and, in addition, with a huge level of visibility there is added comfort.
MearsLONG-TERM BUY 16/08/2011 Miles Nolan Leading social housing to domiciliary care group Mears (MER) has reported a record set of interim results, driven by strong nationwide demand for its services. In the six months to June, sales jumped 16% to £292.6m as pre-tax profits leapt 55% to £10.9m. Shareholders are also being rewarded with a 13% hike in the dividend to 2.15p. Mears is witnessing 'unprecedented levels of opportunity in the public sector' and boasts of 97% visibility for 2011 consensus forecasts, and 85% for 2012. Fully listed Mears has a chunky £2.7bn order book and secured over £300m of new work during the period. In social housing, Mears has a potential pipeline of new business worth £3bn, with just over half of this due to be tendered in the next 12 months. It has secured a raft of work following the demise of rival Connaught, including a ten-year contract with Barnet Homes and work with Notting Hill Housing. Mears has also picked up the social housing business assets of the Bristol division of the collapsed Rok. In the care arm, sales increased 8% to £51.7m with a maintained operating margin of 7.5%. The trend by local authorities to rationalise suppliers continues, and earlier this month Mears continued its expansion with the £7m acquisition of Choices Care. The planned novation of 12 contracts will take Mears more into higher-margin acuity care, and is expected to be earnings enhancing next year. A partnership with British Gas and Cross Key Homes is expected to establish the largest photovoltaic solar panel scheme in the UK – the first step will be 3,500 homes in Peterborough. Mears is undertaking a large proportion of the installations as well as work such as electrical components and scaffolding.
Commenting, David Miles, Chief Executive, Mears Group, said: "This acquisition is the first step towards implementing our stated strategy to develop a broader care offering to our clients. The Social Care market has significant opportunities for organic growth and for further acquisitions. I am delighted to welcome a further 500 employees into the Group."
Acquisition of certain business assets from Choices Care Community Services Limited (in administration) ('Choices') Mears is pleased to announce the acquisition of the Supported Living division of Choices, a leading provider of Social Care services in Scotland and the North of England. The main business of Choices is the provision of a supported living service to adults with learning disabilities, autism and mental health needs, in their own homes. Service recipients tend to have a more complex care support package than can be seen in the more traditional domiciliary care area, due to the higher acuity needs of the individual. At the time of its final results in March of this year, the Board stated its strategy was to broaden the diversity of Mears' domiciliary care offering and to begin supplying services to individuals with higher acuity needs in their own homes. The acquisition of Choices fits well with this criteria and is consistent with our strategy of targeting growth in higher need care areas. Mears has acquired the trade and certain assets of the Supported Living division for a total cash consideration of £7.40 million. The consideration includes a refundable deposit of up to £5.0 million dependent upon the successful novation of the acquired contracts. The consideration is being satisfied from the Company's existing debt facilities. The gross assets of the business being acquired are £150,000, and the annualised operating profit associated with the assets being acquired is estimated to be in the region of £1.50 million. We will look to integrate the acquisition into our Care division which already has a strong presence in Scotland. The principal benefits of the acquisition are anticipated to arise in 2012 and beyond. It is expected to be earnings neutral for the year ending 31 December 2011 after the costs of restructure and earnings enhancing for the year ending 31 December 2012. Choices is recognised by both Scottish and English authorities for the quality of care the Company provides. Mears believes that this acquisition will give our Care division the scale and competence to win more contracts of this nature across the rest of the UK.
http://www.investegate.co.uk/Article.aspx?id=201108040700187141L
Commenting, David Miles, Chief Executive, Mears Group, said: "We see increasing opportunities in this area into 2012, particularly as the 'Green deal' and other energy efficiency measures come into play. Cross Keys will provide us an important reference site to lead our drive into this emerging energy opportunity as we continue to successfully leverage our partnership with British Gas, which gives us access to both funding and expertise in this area."
Mears wins £20 million Photovoltaic solar panel installation contract in Peterborough Mears is pleased to announce the award of a Photovoltaic ("PV") solar panel installation contract in Peterborough which it believes to be the largest Social Housing PV scheme in the UK. The contract award, won with Mears' partner British Gas, is with Cross Keys Homes in Peterborough and will see PV panels fitted to in excess of 3,500 homes. The installation costs are being funded by British Gas as a part of a Feeding in Tariff ("FIT") scheme over a 25 year period. Mears will be carrying out a significant proportion of the installations, as well as all associated works such as scaffolding and electrical components. This scheme will see the first PV fitted in September 2011, with all works completed by April 2012. The Group has valued its share of the contract to be in the region of £20 million.
http://www.investegate.co.uk/Article.aspx?id=201108020700135328L
Mears, the social housing repairs and services contractor to local authorities, appears to be doing rather well in these austere times. Yesterday, the group, which is also a provider to registered social landlords, said it had secured GBP120m of new contracts since it unveiled its full-year results on 15 March. It now trades on a forward earnings multiple of 7.2 on the estimates for 2012, a discount to both its support services and its contracting peers. Based on this lowly valuation and in light of the recent strong momentum, we think that Mears is worth a punt, says the Independent.
Commenting, David Miles, Chief Executive, Mears Group, said: "We continue to see high levels of opportunity within the public sector. We believe that the demand and opportunity for our two growth markets will continue to be strong and that Mears is well placed to benefit. "Our Social Housing division will continue to focus on further organic growth. The continuing consolidation in Registered Social Landlords ("RSLs"), the reforms to the Housing Finance system and changing demographics, all continue to provide increasing opportunities for Mears. The partnership with British Gas also demonstrates our leadership in providing solutions for our clients in the context of the Green Agenda. "Mears Care is well placed to lead and consolidate the Domiciliary Care market place which is some 10 years behind the more developed Social Housing market. We can use the experience gained in Social Housing to enhance the market efficiencies in Domiciliary Care and share the benefits with our clients. We continue to target acquisitions that will broaden the diversity of Mears' Domiciliary Care offering along the services supply chain and expand the range of services provided to people in their homes. "Most importantly, we have the right management team in place to take our business forward and capitalise on the many opportunities available in our growth markets."
Mears today releases its Interim Management Statement ("IMS") for the period from 1 January 2011 to date. Trading update · Mears continues to deliver solid trading across all divisions in line with management expectations. · £120 million of new contract awards since publication in March of the final results for the year to 31 December 2010, which include: o £52 million 10 year repair and maintenance contract with Bedfordshire Pilgrims Housing Association o Additional repair and maintenance contracts totalling £30 million over an average of 4 year terms, including Dover District Council and Leeds City Council o Mears awarded its first in-sourcing solutions contract with Epping Forest District Council to provide support to their Direct Labour Organisation o Several new Domiciliary Care contracts ranging from two to five years in duration with an estimated aggregate value of £37 million over their lifetime o A £4 million, three year contract for the Home Improvement Agency service provided by Gloucestershire County Council. · British Gas partnership developing well - environmental works already commenced across two Registered Social customers. · Roll-out of the Mears Care IT system commenced in April and remains on track. · Mears order book currently stands at £2.7 billion with secured revenues in excess of 93% of the £620 million consensus revenue forecast for the current year and in excess of 80% of the £667 million consensus revenue forecast for 2012.