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Mears earnings diluted by Mitie acquisition but order book provides confidence

Chief executive David Miles said he was satisfied with the progress made in the first half and confident of making further progress for the full year and over the longer-term

Mears Group PLC -

Mears Group PLC (LON:MER) reported slightly lower first-half profits but still managed to cut debt as it integrated the businesses acquired from the collapsed Mitie. 

The services provider to the UK housing and care sectors, which snapped up certain business assets and contracts from Mitie’s property services division (MPS) last November, generated £480.8mln of revenue in the six months to 30 June, up 10% on this time last year.

Profit before tax, ignoring exceptional costs and the amortisation of acquisition intangibles, was down 10% to £17.1mln, as the MPS additions diluted profit margins from 4.9% to 4.5%.  

Earnings per share were further diluted by the shares issued as part of the acquisition, falling 18% to 12.27p on a normalised diluted basis. 

But chief executive David Miles said he was satisfied with the progress made in the first half and confident of making further progress for the full year and over the longer-term.

The £3bn order book was the chief reason, up 43% on this time last year but down from £3.2bn at the end of December, following successful bidding wins, including the one-off impact of the Asylum Accommodation and Support Services contract, augmented by MPS.

"A significant amount of time and focused effort has been directed towards the integration of MPS and the mobilisation of AASC. I am confident that the group is well placed to benefit from this up-front investment,” Miles said.

A good cash performance led to better daily net debt slightly than was expected, with the daily average debt reducing to £110.7mln from £113.2mln last year.

The Mears board showed their confidence by upping the interim dividend 3% to 3.65p per share.

Quick facts: Mears Group PLC

Price: 253 GBX

AIM:MER
Market: AIM
Market Cap: £279.54 m
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