Mears Group

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08/01/2010 Robert Tyerman

Social housing star Mears Group indicates a ‘successful trading outcome’ for 2009 and says it has secured three quarters of 2010’s forecast revenues of £539m.

Analysts now expect the acquisitive company, steered by entrepreneur Bob Holt, to report pre-tax profits for 2009 up some 45% to £23m on turnover 13% ahead at £474m, with nearly £28m pre-tax on the cards for this year. Fully listed Mears won new contracts worth more than £550m last year, which potential contract extensions could take to £650m and says its forward order book now stands at £1.8bn.

Claiming ‘demand for our services has never been stronger’, Holt points out that nearly 90% of the company’s revenues come from social housing and domiciliary care. He maintains these are defensive markets, where spending is ‘largely non-discretionary’ and which provide ‘substantial immunity from bad debts’.

Mears cites a strong bid pipeline for contracts and says it is now at ‘advanced stages of negotiating further significant opportunities’. The shares, which have fluctuated between 210.25p and 298.25p over the past year, now trade at 283p and have scope for further gains.

Tags: Deals & contracts, Full list, Growth Stocks, Mergers & acquisitions

Sector: Support Services

Companies: Mears Group

Market cap: £210.5m

PE Forecast: 13

Share price: 283p