No Pain, No Gain: Mears shows that stock market is harder to please

Interim figures from Mears, the support services group that rejoined the No Pain, No Gain portfolio in March, received a far from enthusiastic reception. The shares, after storming ahead before the results, slumped by around 30p, although some of the ground lost has been recovered.

Why, with profits a little ahead of expectations, did the stock market behave so belligerently? There was an element of profit-taking, but it would be foolish to rule out a degree of disappointment with a "mere" 25 per cent profit advance. After all, in these tormented days, the hard-to-please stock market resolutely refuses to draw encouragement from even the most outstanding performance.

Its inability to acknowledge an impressive display is all part and parcel of the credit crunch. Investment confidence has been shattered. Not surprisingly, the professionals who descended on Mears in the days ahead of the figures, and lifted the shares to above 320p, were quick to reap their rewards. They are an essential element of the stock market and, in happier times, are needed to keep the wheels turning. The trouble these days is that another vital ingredient – the buy-and-hold investor, both big and small – has little appetite, other than to indulge in occasional bargain-hunting.

Until such an imbalance is adjusted, shares, as a whole, are going nowhere. And with the credit crisis showing little sign of abating, it is difficult to see confidence returning and buyers re-emerging in any force. As I have commented in the past, the small-cap segment has been hit particularly hard. Mears has recently switched from AIM to a full listing, but with a capitalisation of around £220m, it is still a minor player.

Of course, companies, as well as investors, are suffering. Scintillating profits are still occasionally being achieved, but many organisations, particularly banks, builders and retailers, are displaying the deep wounds inflicted by a much tighter economy that has, I suggest, already slipped into recession.

Few, if any, businesses are entirely recession-proof. But Mears can claim a resilience that others must envy. It has two main divisions – looking after social housing, and providing domiciliary care. Its customers are local authorities and social landlords, and they usually sign long-term contracts. Consequently, its earnings enjoy a high degree of visibility. Its order book is £1.7bn. So a large element of revenue for some years to come is already secured. Indeed, all this year's sales are in the bag; so are 80 per cent of next year's. Even 53 per cent of 2010's income is guaranteed. And, as chairman Bob Holt points out, its clients are "substantially immune from bad debts".

Half-year profits emerged at £8.7m against £6.9m. After stripping out amortisation relating to acquisitions, the figures were £7.7m compared with £6.6m. Interim dividend is 1.35p a share (1.1p).

The ever-increasing cost of materials and labour is a problem for all businesses. Yet impressive progress from Mears is still expected. For the full year, profits should top £20m against £15.5m. Around £25m has been pencilled in for next year. Not bad for a company that produced profits of £426,000 when it arrived on the stock market in 1996 at 10p a share.

Mears, like a number of other companies, has taken advantage of the growing acceptance of outsourcing since the Labour government came to power. Housing is its major strength, although its fledgling home-care business is growing rapidly. Since last year's £23.8m takeover of Careforce, it has been busy snapping up small care operations, and in the half-year spent £3.4m on two bolt-ons.

Domiciliary care margins were reduced largely because of the hunger for expansion. Prospects, however, are encouraging, with Mears convinced that its health operations will follow the growth pattern it has experienced in social housing.

Although profits have continued to progress, the group's shares have been damaged in the stock-market downturn. At one time, they hit 380p, but as I write, they are a little above 300p.

I have followed the group's fortunes since its early days as a quoted company. Indeed, the portfolio first alighted on the shares when they were 23p. It sold at 71.5p. In view of the subsequent progress, it was, quite clearly, not one of my brightest decisions. When the portfolio returned to the shares in March, it paid 272p for the privilege.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Bafetibis Gomis of Swansea City is stretchered off at White Hart Lane
Jerry Seinfeld Comedians in Cars Getting Coffee
peopleSitcom star urges men to be more supportive of women than ever
Life and Style
Living for the moment: Julianne Moore playing Alzheimer’s sufferer Alice
Jay Z
businessJay-Z's bid for Spotify rival could be blocked
footballLouis van Gaal is watching a different Manchester United and Wenger can still spring a surprise
The spider makes its break for freedom
A propaganda video shows Isis forces near Tikrit
voicesAdam Walker: The Koran has violent passages, but it also has others that explicitly tells us how to interpret them
Arts and Entertainment
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle v United player ratings
Life and Style
love + sex
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Graduate Application Support Analyst

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Reach Volunteering: External Finance Trustee Needed!

    Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

    Christine McCleave: FP&A Analyst

    £36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

    Recruitment Genius: Sales Executive - OTE £40,000

    £15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

    Day In a Page

    War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

    Baghdad fights to win back Tikrit from Isis – but then what?

    Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
    Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

    What is it like to live with Alzheimer's?

    Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
    The Internet of Things: Meet the British salesman who gave real-world items a virtual life

    Setting in motion the Internet of Things

    British salesman Kevin Ashton gave real-world items a virtual life
    Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

    Election 2015: A dead heat between Mr Bean and Dick Dastardly!

    Lord Ashcroft reveals latest polling – and which character voters associate with each leader
    Audiences queue up for 'true stories told live' as cult competition The Moth goes global

    Cult competition The Moth goes global

    The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
    Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

    Pakistani women come out fighting

    Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
    Leonora Carrington transcended her stolid background to become an avant garde star

    Surreal deal: Leonora Carrington

    The artist transcended her stolid background to become an avant garde star
    LGBT History Month: Pupils discuss topics from Sappho to same-sex marriage

    Education: LGBT History Month

    Pupils have been discussing topics from Sappho to same-sex marriage
    11 best gel eyeliners

    Go bold this season: 11 best gel eyeliners

    Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
    Cricket World Cup 2015: Tournament runs riot to make the event more hit than miss...

    Cricket World Cup runs riot to make the event more hit than miss...

    The tournament has reached its halfway mark and scores of 300 and amazing catches abound. One thing never changes, though – everyone loves beating England
    Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

    Katarina Johnson-Thompson: Ready to jump at first major title

    After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
    Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

    Climate change key in Syrian conflict

    And it will trigger more war in future
    How I outwitted the Gestapo

    How I outwitted the Gestapo

    My life as a Jew in wartime Berlin
    The nation's favourite animal revealed

    The nation's favourite animal revealed

    Women like cuddly creatures whilst men like creepy-crawlies
    Is this the way to get young people to vote?

    Getting young people to vote

    From #VOTESELFISH to Bite the Ballot