Financial adviser Arbuthnot has raised its forecast for Mears' turnover in 2005 by 8.2% to £145m, largely as a result of the company's acquisition of facilities management group Scion in August. It also estimates that pre-tax profit at Mears will grow to £6.3m by 2005, up from £3.6m in 2002.
The announcement continues a successful run for Mears, which won the alternative investment market's company of the year award last week. It has also outperformed the AIM average since 2000 [see graph].
The note from the analyst added that the government's housing programme would drive further growth. It said: "Mears continues to benefit from the government's commitment to bring all council homes to a decent standard by 2010. Mears' order book now stands at £400m and extends to 2012."
City sources said that the company's performance is likely to be improved by additional acquisitions.
Mears’ order book stands at £400m and extends to 2012
City analysts’ statement
One source said: "It is certainly an acquisitive group. It has a lot of financial muscle and there seem to be one or two opportunities out there."
Bob Holt, the chairman of Mears, said that he was "hopeful" of buying a firm in the next 12 months. He added: "We are looking for opportunities and we are always in talks with people."
Mears is the latest company in the building sector to admit that it is the market for acquisitions. Recently, contractor ROK tried and failed to buy Galliford Try for £113m; housebuilder Taylor Woodrow was successful in a £480m bid for rival Wilson Connolly.
The City believes that contractors have realised that they need to increase their skills base to provide more comprehensive services on building projects, and are looking to acquisition to achieve this.