Highlights

  • Berenberg issues Buy rating on Mears Group with a target price of GBP 5.50.
  • Profit before tax up 5% to £32.0 million in H1 2025.
  • Diluted EPS increased 20% to 27.68p, supported by earnings and share buybacks.
  • New acquisition of Pennington Choices boosts Mears’ compliance and asset management capabilities.

Mears Group PLC (LSE:MER), the UK’s leading provider of housing and compliance services to the public and regulated sectors, has received a Buy rating from Berenberg Bank, with a target price of GBP 5.50. The rating might follow the company’s announcement of its interim financial results for the six months ended 30 June 2025 and the completion of its acquisition of Pennington Choices Group Limited.

Financial Performance – H1 2025

For the six months ended 30 June 2025, Mears Group reported revenues of £559.4 million, representing a 4% year-on-year reduction compared with £580.0 million in the same period last year. The decline reflected normalisation in management-led activities, partially offset by 8% growth in maintenance-led operations.

Profit before tax increased by 5% to £32.0 million (H1 2024: £30.5 million), while the operating margin (pre-IFRS 16) improved to 5.6% from 5.2% a year earlier. The Group maintained a strong cash position with average daily net cash of £66.7 million and a cash conversion rate of 105% of EBITDA.

Diluted earnings per share (EPS) rose 20% to 27.68p (2024: 23.12p), reflecting profit growth and the completion of a £16.0 million share buyback programme, which repurchased 4.3 million shares at an average price of 371p each.

An interim dividend of 5.60p per share was declared, up 18% year-on-year, payable on 2 October 2025 to shareholders on record as of 12 September 2025.

Operational Achievements and Contract Wins

Mears maintained a 100% contract retention rate over the past 12 months, securing new orders valued at approximately £1.5 billion. Key contracts include new agreements with the London Borough of Brent, Aberdeenshire Council, and Moat Homes, covering around 22,000 properties across southern England.

The group also continued investing in people, technology, and compliance services, positioning itself to capitalise on emerging market opportunities in asset management.

Acquisition of Pennington Choices

On 15 September 2025, Mears announced the acquisition of Pennington Choices Group Limited for £9.5 million in cash, financed entirely from existing resources. Based in Warrington, Pennington Choices employs around 150 staff and provides a range of compliance services including fire risk assessments, asbestos testing, and energy certification.

Mears expects Pennington Choices to contribute £17.0 million in revenue and £1.5 million in adjusted EBITDA (post-synergies) in its first full year within the Group.

Outlook

The Board expects adjusted profit before tax for the full year 2025 to be modestly ahead of market expectations and remains optimistic about the company’s trajectory into 2026.

MER shares traded at GBX 351.67 per share on 29 October 2025.