Mears Group PLC (LON:MER) has updated on the sale of its Domiciliary Care operation as well as its performance for 2019.
In a trading update for the year ending 31 December, the care home and social housing group said the sale of its Domiciliary Care business in England and Wales was “at an advanced stage” while the sale of the Scottish segment of the business is expected this year.
READ: Mears earnings diluted by Mitie acquisition but order book provides confidence
Chief executive David Miles said the disposal will help the firm focus on areas where it can deliver “superior returns for shareholders”, adding that in line with this strategy the company is also continuing to unwind its exposure to development activities.
Meanwhile, Mears expects to report revenues excluding its Domiciliary Care business of more than £900mln for the year, up from £773mln in the prior year and driven by the acquisition of the property services arm of Mitie Group PLC (LON:MTO) in November 2018. Underlying pre-tax profits are expected to be in line with expectations.
A contract to provide accommodation for asylum seekers in the UK, secured last January, is also “fully operational” and so far has delivered around £45mln in revenues.
The company’s order book is expected to dip to £2.5bn from £3bn due to existing contracts coming up for renewal.
"We continue to see a good pipeline of opportunities providing Housing with Care, in the majority of cases to provide, manage and maintain accommodation and to care for the service users”, Miles said.
In a note on Tuesday, Mears house broker Liberum reiterated their ‘buy’ rating and 450p target price, saying that while they expected the sale of the Domiciliary Care business to only raise £7.5mln, it will “result in a simpler group” that will be “easier to manage and more focused”.
The shares were 6.9% higher at 310p in early trading on Tuesday.