Mears Share Discussion Threads

[miss womble] 26/8/2010 10:12

PS Tubbs Incestors is not a word I am familiar with !!!!Thanks for the laugh in these trying times

[tom.b] 26/8/2010 09:12

The news and indicators is all very good... it's a bit dissappointing that the price seems in the doldrums ... Good time to buy IMO, because they are fairly well protected from government cuts, have most of the years revenue already secured and unlike others in the field have a solid balance sheet with cash surpluses to weather any setbacks.

[pstubbs50] 25/8/2010 13:45

Some nice big trades in the last hour - 1m total. I am assuming they are all buys!

[pstubbs50] 25/8/2010 12:26

Rivaldo - I agree. Will take a while for it all to filter through, but I see this as a big plus for incestors. Very volatile markets don't help, but this is one share that I feel totally comfortable holding.

[rivaldo] 25/8/2010 12:06

Many thx for the posts above - looks like the flood of clients bailing out of CNT and into the arms of MER and others is beginning.....

[sjewson] 25/8/2010 07:58

Lets not forget that the Sandwell contract (425 Million) is up in December 2010.
Happy days for Mears.



Monday 28th June 2010, 11:30AM BST.
More jobs go as work on houses winds down

Jobs are being axed by the company behind a £425 million revamp of council homes in the Black Country – with 30 already having left their posts.

West Bromwich-based Connaught will slash jobs when its contract with Sandwell Homes to transform 29,000 council houses in the borough as part of the Decent Homes programme comes to an end in December.

Around 30 people working on the project have already left the company.

No redundancies have yet been made and the company is now in a statutory consultation period and said it is looking at the opportunities for retaining and redeploying people.

Company spokesman Paul Haines, said: "Because our contract with Sandwell Homes will be coming to an end in December, we have been forced to place our employees on this contract at risk of redundancy.

"We have agreed to requests from 30 employees to leave immediately. For the remainder of our employees, we are exploring opportunities to either redeploy or reassign as many as possible.

"Wherever possible we will also try to accommodate any further requests from staff to leave.

"However this will be on a phased basis to ensure that we can continue to fulfil our obligations to Sandwell Homes for the remainder of our contract."

[pstubbs50] 24/8/2010 08:36

Exciting times ahead for Mears - thanks for posting those links...

[rivaldo] 24/8/2010 08:25

Great spot Cambo - the first of many to be re-tendered no doubt....

MER must be the frontrunner for any re-tendering - and of course ROK are hardly in much of a position to compete either at present.

[cambium] 23/8/2010 15:29

Have Mears been approached for the Barnet contract which they have terminated from February?

[celeritas] 23/8/2010 15:27

Mears are in a very strong position here, take ROK whilst it's still cheap putting it well ahead of all competition. Connaughts lost customers will then inevitably go to Mears, either by Connaught going under or because confidence is lost in them honouring contracts.

[tom.b] 23/8/2010 11:32

Last two trades for over 130,000 seemed like institutional buys (not sells) as listed on level 2.. bit missleading that... but I'm happy Mears continue to progress slowly rather than in wild swings.. going all the way to £3 IMO DYOR

[tom.b] 20/8/2010 15:28

Should be a few snapped up at these levels before closing....

[cambium] 20/8/2010 10:50

yes sorry should of attributed that to him.

[rivaldo] 20/8/2010 10:28

Thx Cambo - from Edmond Jackson on i.i.i I see.

I'd hope for a re-rating to around 330p, i.e the broker valuation.

Lots of stories around re CNT clients talking to competitors about moving their business away from CNT, and about the problems at CNT being deep-seated and business-wide, especially as regards the poor carrying out of services on the social housing side, the late payment of suppliers etc etc.

I wonder who will get all that new business :o))

[cambium] 20/8/2010 08:24

Might stormy times for UK public sector spending beget a ray of sunshine - creating value out of weak sentiment? Related shares have taken a pounding since the aims of the coalition government became clear, although there will be winners besides losers because outsourcing is inherent to local authorities containing costs.


Mears (MER), mainly in social housing repairs and maintenance, is a good example. This is a long-established growth company, having listed on AIM in 1996 and won awards such as "best performing share over five years". So there is a track record although even with a full listing it is possible for such a share to come under a cloud of generally weak sentiment.


The FTSE SmallCap shares fell from a 2010 peak of 313p last May to 226p by end-June; also as FTSE 250-listed Connaught (CNT) experienced contractual problems. Mears has sought to distance itself from the Connaught affair, issuing a bullish trading update on 28 June which asserted: "strong trading across all divisions... not experiencing any downward pressure on spend in its social housing business". About 80% of Mears' revenue is tied to tenancy agreements or safety rules and is therefore secure.


This reassurance helped the shares recover to about 260p, capitalising the group at about £220 million, although wariness towards UK public spending and the example of Connaught has still affected a modest rating. Mears' price-earnings multiple is only about 10 times 2010 forecasts, falling to nine times for 2011, relative to averaging in the mid to late teens during 2007-09 and in a twenties range in prior years. Yet double-digit earnings growth is forecast for each of the next two years, underpinned by a high level of visibility on contracts.


Company REFS shows the brokers' consensus looking for a jump in normalised pre-tax profit from £18.5 million to £30.4 million this year, and £35.1 million in 2011, which on the face of it hardly squares with Britain in austerity. It is being helped somewhat by acquisitions, principally Supporta plc (which has introduced personal care services to people at home) although the main social housing side shows a modest split between overall and organic revenue.


Mears' first-half results, announced on 17 August, proclaimed a 42% rise in pre-tax profit to £13.2 million on group revenue up 9% to £252.6 million; although organic revenue growth was about 5%, and profit was "pre-amortisation of acquisition intangibles" and also before acquisition costs (of Supporta). From the income statement, interim pre-tax profit was effectively flat at £70 million while basic normalised earnings per share edged up from about 10.0p to 11.6p. Brokers' analysts are looking for about 25p for the full year and 28p in 2011.


The second half onwards should be bolstered by Mears' order book, which has risen from £1.8 billion to £2.6 billion, like for like, with 92% visibility of revenue claimed this year, and 81% for 2011. With a conversion rate of operating profit to cash of 94%, it represents the kind of financial profile the stockmarket is likely to warm to during challenging times.


Such a cash conversion rate enabled net debt of £13.5 million at end-June despite average borrowings of £45 million for the first half and the acquisition of Supporta plc introducing net debt of £18.4 million. Balance sheet net assets worked out at £135.2 million although as typifies this kind of acquisitive service group, £94.3 million of this comprised goodwill and £24.1 million intangibles.


Besides noting in his interim results' outlook statement, that social housing and domiciliary care are 'defensive sectors where spend is largely non-discretionary, Mears' chairman hinted at "a number of opportunities with existing and prospective customers to unlock significant additional revenue" - so it will be interesting to keep watch for news of what they comprise.


So the order book and dropped hint both lend confidence in the brokers' growth forecasts for second half 2010 onwards, these projections being made before the 17 August interims. It will also be worth keeping a lookout for further forecasts being reported as REFS cites three brokers currently with new notes 'embargoed'.


Mears' prospective yield is just over 2.5% so the emphasis here is on the risk/reward profile for capital growth, with the dividend possibly aiding institutional involvement. The top three shareholders are Schroder, Majedie and Artemis, as asset managers, each with about 7% and respectable records in equities.


It would be encouraging to see some director buying, to affirm the sense for value, as there has been no purchases this year despite Mears' share price fall. Possibly, awareness of additional contracts soon to be announced limits the directors' trading despite the company having just released results. Otherwise, the chairman/chief executive owns 500,000 shares, the finance director 50,000 shares and the vice-chairman 23,300 shares.


Admittedly, these are not as substantial like some PLC directors.


Sticklers for corporate governance may raise eyebrows at a combined chairman/chief executive, an issue that has tended to coincide with 'problem companies' in the past, especially where acquisitions are involved. In its defence, Mears has a good long-term record and arguably an executive chairman can work effectively on a smaller company board.


In conclusion, Mears is interesting as a sound and proven business with its shares currently trading on a modest rating due to sector worries. If the P/E multiple improves to just 12 times, this would imply a share price of about 300p - where it has already traded this year - hence useful upside of about 20%. The shares therefore look attractive for serious small cap investors looking to compound funds annually at around this rate.

[rivaldo] 19/8/2010 13:05

Thx for that pstubbs50, will try to listen to it tonight.

Looks like the share price is breaking upwards now.

[edale] 18/8/2010 14:41

pst, thanks for the link, interesting that they also have 70% of the 2012 revenue in place. Suspect not many companies can say that.

[pstubbs50] 18/8/2010 13:26

Here's the report & interview with Bob Holt on cnbc

[pstubbs50] 18/8/2010 13:22

Look at the movement pattern over the last 5 years. Contant swinging. It's now hopefully time for the next move up and the results should reinforce that.

The difference this time is the view you take:
(a) the sector is in poor shape with the current economic situation therefore Mears is a poor co to invest in
(b) Mears will take advantage of the demise of Connaught and other poor players in the sector, and will benefit.

For me, Mears are one of the strongest companies around. They constantly deliver.

I know which option I'm backing.

[tom.b] 18/8/2010 12:56

Onwards and upwards to £3.00 over the next few weeks.. maybe sooner.. it's a nobrainer...but dyor...

[melody9999] 18/8/2010 12:32

Good stuff - nice to back the winner.

Holt said : "Once again I can confirm that Mears is not experiencing, nor do we anticipate, any downward pressure on either our social housing or domiciliary care revenues.

The 'nor do we anticipate' I see as very re-assuring giving the forward looking nature of the market - should encourage new inst and PI investors into MER.

[rivaldo] 18/8/2010 12:30

Collins Stewart have a 335p valuation:



"Leading social housing and geriatric care group Mears reported yet another set of record half-year results and closed 10p higher at 260.25p. First-half pre-tax profits soared 42pc to £13.2m and the dividend is hiked 19% to 1.9p.

Analysts forecast £30.5m pretax for the full year. The current order book stands at £2.6bn with a sales pipeline of £3bn and operating cash conversion at 94% of profit. Collins Stewart's target price is 335p."

[rivaldo] 18/8/2010 07:53

MER's excellent results are enabling them to put distance between them and not only CNT, but also ROK given ROK's own problems....



"Mears revels in Connaught's woes as cuts fuel demand
By Sean Farrell
Wednesday, 18 August 2010

Mears Group took a swipe at its ailing rival, Connaught, yesterday as it announced record first-half profits and unprecedented demand for its services.

The social housing and home care provider was forced to reassure investors in June after Connaught warned that public spending cuts had hit its business.

But Mears' finance director, Andrew Smith, said Connaught's woes were of its own creation and that Mears was hoping to take advantage of the problems to win more business.

He made his comments as Rok, another rival, said first-half profit halved after warning last week that accounting problems would hurt earnings.

"There has been a lot of commentary around more than one of our competitors but as more news comes out they appear to be company-specific issues," Mr Smith said.

"If a client is looking to provide services through a single provider then financial stability becomes more important."

Pre-tax profit rose 42 per cent to £9.3m in the first half. The interim dividend rose 19 per cent to 1.9p a share.

Mears maintains hundreds of thousands of homes owned by housing associations and local councils.

Mr Smith said 80 per cent of revenues were for maintenance governed by tenancy agreements or safety rules and could not be cut. The other 20 per cent was from capital spending already in place.

The company said tight public finances drove record contract wins as local authorities outsourced work to cut costs. Connaught said its relationships with customers had not been affected by recent events. Rok said it also hoped to take business from Connaught."