You may have seen fleets of transit vans with a cheery red and black logo zipping around city centres belonging to Aquis-listed building maintenance company, Mears [AQSE:MER]. Mears is also listed on the FTSE’s main market under the ticker code LON:MER.
The company started life in 1988 with one van and a portacabin in Gloucester and by 1992 had a GBP2.5m turnover, after winning its first local authority maintenance contract and since then has built its business on the back of local authority contracts.
In 1996, Mears which had by this time increased its turnover to GBP12m, listed on the AIM market and using its new financial clout, it made its first significant acquisition of Haydon & Co, which brought 500 new employees to the company. Today it employs nearly 5,500 employees and was recently named by The Sunday Times as one of the Top-25 best big companies to work for.
- Vinanz providing picks and shovels for cryptominers
- Aquis and SIX offer a powerful partnership
- One Health Group performance driven by NHS demand
By 2008, Mears was migrated from AIM to the FTSE Main Market and currently has a market capitalization of GBP361.4m. The company has grown consistently through acquisition and has also diversified its operations from just property maintenance, to include contracts from local and national government for managing sheltered and vulnerable housing units, including for asylum seekers, the homeless and the elderly, and facilities management. However, in the last year Mears exited the housebuilding trade
Profit up on back of new contracts
In its last results to end-December 2023, published in March, Mears reported a 14% increase in revenue to GBP1.1bn and increased profit before tax by 34% to GBP46.9m. Mears announced a full year dividend of 13p, up 24% year-on-year. The company’s shares on Aquis have increased by 34.5% over one-year.
In the year, Mears brought in GBP175m of new contracts and received GBP47m of grants, with GBP120m of works from the Social Housing Decarbonisation fund. With the new government’s intention to ‘build, build, build’ in order to add 1.5 million new homes in the next five years, with many of them in the ‘affordable’ or social housing classes in newly-classed ‘greybelt’ planning zones, the scope for Mear’s maintenance division is set to expand in the medium-term. The company is targeting a 5% margin. Mears also secured new contracts with the Home Office, Ministry of Defence and Ministry of Justice.
The maintenance company has energetically been returning money to its shareholders through share buyback, during 2023, Mears completed two buyback programmes, which saw the purchase and cancellation of 12.2m ordinary shares of 1p each at an average price of 272.7p, representing 11% of the group’s issued share capital at the start of the 2023 year, a return of surplus capital of GBP33.2m. The company’s Employee Benefit Trust also purchased 1.7m shares to settle share-based employee remuneration reducing the dilutive impact of such instruments.
Mears anticipates profit ahead of expectations
This year Mears continued its strong performance and is expecting profit to be ahead of expectations. Mears’ chief executive, Lucas Critchley said: “Trading in the first half has been excellent across the group and this will be reflected in a strong set of interim numbers in August.”
“We have made good progress in the first-half, with a focus on developing and broadening the range of services we offer to clients. In addition, an increased operational focus, making fuller use of the group’s IT system capabilities, is resulting in operational and commercial improvements, and is reflected in the continued progress in operating margins.”
With a strong balance sheet, a growing order book, and a clear focus on delivering value to shareholders, Mears is well-positioned to capitalize on the opportunities presented by the UK’s housing market. The company’s expansion into new service areas and its commitment to operational efficiency suggest a promising future.
