Mears Group
HOLDSocial housing and domiciliary care specialist Mears Group boasts a £1.6bn order book after increasing annual pre-tax profits 8% to £16.6m.
The Gloucester-based company, steered by entrepreneurial chief executive Bob Holt, lifted turnover 38% to £420.4m last year, helped by strong organic growth in social housing and the impact of domiciliary care acquisitions made in 2007. Earnings, before amortisation and share option charges, rose 18.8% to 20.12p a share and the proposed dividend is increased in line with that to 4.75p a share.
Fully listed Mears says it has won contracts worth more than £460m over the past 12 months and has secured 89% of City-forecast revenue of £460.5m for this year and 54% of forecast revenue for 2010. The company ended the year with £6.6m cash, lower than analysts had expected because of stepped-up investment in work in progress and slower payments from customers of the company’s mechanical and engineering division.
Holt argues convincingly that Mears’ key sectors are defensive, powered by spending that is mostly non-discretionary and thus immune to the recession, unless, presumably, it becomes much more severe. House broker Investec sees 15% earnings growth this year, with further improvement in 2010.
Mears Group shares, which hit 377.75p in early 2007 and were recommended by Growth Company Investor at 272p in February last year, fell to 195p in October, but have rallied since then on the company’s defensive appeal. That should stand them in relatively good stead.
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Market cap: £178m
PE Forecast: 11p
Share price: 241p
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