Mears Group (MER) H1 2025 earnings summary

Executive summary

• Revenue declined 4% year-over-year to £559.4m, but statutory profit before tax rose 5% to £32.0m and adjusted operating margin improved to 5.6% from 5.2%.

• Statutory diluted EPS increased 20% to 27.68p; interim dividend per share up 18% to 5.60p, reflecting board confidence.

• Achieved 100% contract retention in maintenance-led activities and secured new orders approaching £1.5bn, including flagship contracts.

• Continued investment in people and technology to expand compliance and asset management capabilities and support new market opportunities.

• Successfully mobilized new contracts, including Milton Keynes City Council and Moat Homes.

Financial highlights

• Operating profit rose 8% year-over-year to £36.9m; operating margin increased 70bps to 6.6%.

• Profit before tax up 5% to £32.0m; adjusted operating margin (pre-IFRS 16) at 5.6%.

• EBITDA to cash conversion at 105%, though down from 119% in H1 2024.

• Average daily net cash at £66.7m; adjusted net cash at 30 June 2025 was £81.1m.

• Dividend and share buybacks totaled £26.5m, with £16m returned via buyback and 4.3m shares cancelled.

Outlook and guidance

• Maintenance-led revenue expected to grow 8-9% in FY25; management-led revenue to decline by £100m due to AASC normalization.

• Adjusted operating margin guidance (pre-IFRS 16) of 5.3-5.6% for FY25, with medium-term target range of 5.0-6.0%.

• Board expects adjusted profit before tax for the full year to be modestly ahead of market expectations.

• Continued investment in people and technology to support organic growth and new service offerings.

• Working capital unwind anticipated in H2 2025; employer's National Insurance changes to add £5m annual payroll cost.