Outsourced services provider Mears Group (LON:MER) reported a 48% rise in first-half operating profit to £14.6m from £9.8m, excluding its acquisition of Supporta, which completed at the end of January. Revenue for the six months to end-June rose 9% to £252.6m from £232.7m while normalised diluted EPS was up 15% at 10.8p. The group raised its interim dividend 19% to 1.9p from 1.6p. Costs of the acquisition and integration of Supporta were £2.45m. Including these, the group made an operating profit of £8.39m, compared with the previous £7.84m, and a pre-tax profit of £7.02m, down from £7.30m. Shares in the group responded with a rise of 3.5% to 258.5p.

Chairman Bob Holt said: "The opportunity for Mears has never been better. Our order book is solid and stands at £2.6bn with a sales pipeline of £3.0bn and operating cash conversion at 94% of profit. Mears continues to build on that same long term-platform for profitable growth which has been the cornerstone of our success."

The group reported record contract wins during the period of more than £500m. Operating margins increased across all divisions, with group operating margin rising to 5.8% from 4.2%. The Social Housing division's revenue increased to £184.7m from £176.0m, showing organic growth of 5%. Domiciliary Care revenue was up 64% to £47.8m from £29.1m, including organic growth of 7%.

Mears said there were unprecedented levels of opportunity in the public sector. It saw a continuing trend for local authorities to procure services from fewer and larger care providers. New Social Housing maintenance contracts in the second half were expected to take the total order value of contracts in 2010 to more than £1bn.

Holt added: "The proposed changes to the system for housing benefit will in our opinion promote the migration away from private dwellings towards social housing. The changes to the housing finance system will also provide local authorities opportunities for further investment in their housing stock which can only be positive for a leading provider like Mears. In addition, the majority of our Social Housing revenue is derived from Housing Associations, who are less affected by any reduction in public sector spending."



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