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Mears trumps rivals with further revenue and profit growth

17 Aug 10 Construction and support services group Mears has trumped its rivals by delivering another solid set of results, for the six months to 30 June 2010.

Construction and support services group Mears has trumped its rivals by delivering another solid set of results, for the six months to 30 June 2010.

Revenue for the period was up 9% to £252.6m (H1 2009: £232.7m), while profit before tax grew an impressive 42% to £13.2m (H1 2009: £9.3m).

Alarm bells have been ringing recently at other construction firms with heavy public sector workloads, most notably Connaught.

But Mears, which provides maintenance and repairs to over 500,000 homes, appears to have bucked the trend.

It reported new contract wins in excess of £500m, taking its order book of £2.6bn (12 months ago: £1.8bn). In social housing, its bid pipeline stands at £3bn.

The firm said 92% of forecast revenue for 2010 was visible and 81% for 2011.

Group operating margin increased to 5.8% (H1 2009: 4.2%).

In Mears' social housing division, revenue increased to £184.7m (H1 2009: £176.0m), organic growth of 5%.

In the domiciliary care division, revenue rose by 64% to £47.8m (2009: £29.1m). This included organic growth of 7%, but most of the revenue increase was down to the acquisition of Supporta, which has now been integrated under the Mears Care brand. The division's operating margin was 7.5% (H1 2009: 5.7%).

Mears now provides over 150,000 hours of domiciliary care to 20,000 service users each week, and reported a continuing trend of local authorities to procure services from fewer and larger care providers

Bob Holt, chairman, said: "The opportunity for Mears has never been better.

“We are market leader in Social Housing where the significant majority of our revenues are non-discretionary spend for services which our clients have a legal obligation to provide. The proposed changes to the system for housing benefit will in our opinion promote the migration away from private dwellings towards social housing.

“The changes to the housing finance system will also provide local authorities opportunities for further investment in their housing stock which can only be positive for a leading provider like Mears.

“In addition, the majority of our social housing revenue is derived from housing associations who are less affected by any reduction in public sector spending.

"The group has a clear strategy of building market leader positions in each of its core businesses. We consider it to be of paramount importance to be recognised as the leading provider of quality services. The quality of the management team acquired with Supporta has exceeded our expectations and we now have the structure in place to continue to build our Domiciliary Care business model."

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