New contract wins enable Mears to raise its dividend

Mears Group, the social housing maintenance company, posted a 42 per cent increase in first-half pre-tax profit to £13.2m on the back of new contract wins.

The Gloucester-based firm said yesterday it booked a significant amount of new business from local councils during the past 12 months. The new wins include a £200m contract with Brighton & Hove and a £170m contract with Lambeth.

Chairman Bob Holt said: “The opportunity for Mears has never been better. We are [the] 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.”

Holt said he did not expect a downturn in business after the government’s October spending review, and added he believed proposed changes to housing benefit will “promote the migration away from private dwellings towards social housing”.

The firm said its sales rose nine per cent to £252.6m, while it said it would boost its interim dividend 19 per cent to 1.9p.

Market expectations for Mear’s full-year pre-tax profit range between £29.4m and £31.3m with the consensus at £30.4m.

Mears’ performance contrasts with that of rival Connaught, which has seen the value of its shares plunge since issuing a profit warning in June and saying it was in dire need of cash as cutbacks by the new coalition government hit its business.