Companies: MER   

AIM-star Mears, led by indefatigable chairman and chief executive Bob Holt, has cheered followers with news of a ‘flagship’ £65m contract win with Birmingham City Council. Under the significant deal, Mears will deliver repairs and ‘voids refurbishment’ – essentially refurbishing empty buildings – in the Northern area of the city.

Holt says the deal, initially running for 4.5 years with an option to extend to seven years, together with a recent win with Midland Heart Housing, gives Mears a very strong Midlands presence from which it should be able to win more work. Of late, Holt has returned Mears to a more selective approach to bidding, putting the company ‘back at the cutting edge’ of the social housing sector, where it first wowed the market.

Mears has pleased its investors with a slew of recent contracts, including an £89m housing repairs contract in Sedgefield and the aforementioned £50m, ten-year response and repairs deal with Midland Heart Housing, one of the top ten housing and regeneration groups in the country. They’re deals that have boosted its already formidable forward order book (£1.24bn at the interim stage).

Meanwhile, the company has also been busy augmenting its care division, created through last year’s takeover of domiciliary care counter Careforce, through acquisitions (such as Complete Care and Pooks Care) in a fragmented market in which Holt hopes to replicate Mears’ social housing success. Based on forecast profits of £16.9m and earnings of 16.3p for December ’07 – results are expected in March – Mears, well managed with a tremendous track record and great visibility of earnings, trades on an undemanding price-to-earnings ratio of around 15 times. Strong buy.

Save 50% off your first year’s subscription to Growth Company Investor magazine, and gain immediate access to all the recommendations online. Click here.