Final Results

Mears Group PLC
30 March 2004


Chairman's Statement

I am pleased to announce record results for the year ended 31 December 2003.

Profit before tax and the amortisation of goodwill increased by 39.2% to £5.24m
(2002: £3.76m) on turnover up by 42.4% to £112.3m (2002: £78.8m). Profits have
shown an annual compound growth rate of 43% since Mears was listed on the
Alternative Investment Market in October 1996.

Earnings before amortisation of goodwill increased by 35.1% to 6.47p per share
(2002: 4.79p).

Excellent cash management again resulted in the generation of £4.7m of positive
cash inflow from operating activities in the period.

The Group had cash in the bank of £1.9m at the end of December 2003 after
expending £5.4m on acquisitions.

The Board recommends a final dividend of 1p per share making a total dividend
for the year of 1.35p per share, an increase of 35% from the previous year
(2002: 1.0p per share). The final dividend is payable on 1 July 2004 to
shareholders on the register on 4 June 2004.

The order book increased to a record level of £550m (2002: £300m).

Acquisitions

I am also pleased to confirm the acquisition of Scion Group Limited (Scion).
Scion provides a range of facility services including grounds maintenance,
building maintenance, mechanical and electrical services and facility and estate
management to a wide range of customers in the public and private sectors. In
addition the Group acquired Powersave Limited (Powersave) a mechanical and
electrical maintenance services company. The painting division was strengthened
following the acquisition of three regional painting contracting businesses. I
welcome all the new employees into the Group.

Full details of the acquisitions are contained in the Financial Review.

Trading review

Mears provides 'essential support services' and is not subject in its core
business to any aspect of discretionary spending from its customers. Social
housing represents a huge addressable market which continues to demonstrate
strong and robust growth. The market for these services is highly fragmented and
Mears operates in the top tier of the sector with few focussed competitors with
such a high level of service delivery capability. The vision is to become the
market leader in transforming the housing environment, improving homes,
improving neighbourhoods and improving lives. Growth has become a natural
function of our strong management ethos and delivery platform.

Mears has continued its excellent progress in the period and has been awarded a
number of new contracts, mostly on a long-term partnership basis. Contracts have
been awarded with New Islington and Hackney Housing Association, Berneslai
Homes, (the Arms Length Management Organisation of Barnsley Metropolitan Borough
Council), Leeds North East Homes, London Borough of Ealing, Crawley Borough
Council, Stockport Metropolitan Council, Thanet District Council and Wigan and
Leigh Housing. The record order book of £550m stretches as far ahead as 2019.

Operations

Mears operates principally in five sectors.

Public sector services

By far the largest part of Mears, representing 65% of Group turnover, is the
provision of a range of maintenance services to the social housing and central
Government sectors. The Group is well positioned to take significant advantage
of the public sector reform agenda.

The Government has made a commitment to bring all council housing up to a decent
standard by 2010. This is driven by the Decent Homes Standard initiative and
will make a significant impact on the estimated £19 billion backlog of repair
and improvement work required to local authority housing in England and Wales.
Mears has been successful in the award of long-term partnering contracts to
ensure that social housing providers comply with that standard. The contracts
are typically for five years or longer and contain annual benchmarked spending
requirements. Mears provides a mixture of both rapid response and planned
maintenance to deliver a total quality outsourced building maintenance service.
The partnership ethos embraces the tenant, client, employee and every
stakeholder in that process. As the contracts near the end of their term the
Group has demonstrated an excellent record of contract renewal. The division has
enjoyed buoyant trading conditions and continues to be recognised as providing a
high level of service delivery.

Mechanical and electrical services

This business provides mechanical and electrical services in the commercial,
housing, education and healthcare sectors operating as Haydon Mechanical &
Electrical. Haydon has performed well in the period and has increased its
exposure within the social housing sector working alongside other Group
companies to provide a domestic heating installation and refurbishment service.
The business has expanded both into new sectors and geographical areas and has
strengthened its presence by the acquisition of Powersave which has increased
the range and scope of services provided. The London based housing division has
performed excellently and is well positioned to capitalise upon the current
housing initiatives promoted by central Government in the recent Budget.

Vehicle collection and delivery

United Fleet Distribution (UFD) provides a collection and delivery service to
large commercial customers who typically own a large vehicle fleet. UFD is the
market leader in the single vehicle collection sector and holds some of the
largest contracts for these services in the UK operating from a number of
locations. The business performed well in the period.

Facility management (FM)

Mears FM provides a total building management service to its customers managing
a large number of individual services. Since its formation in September 2001,
the business has performed excellently and expanded significantly.

The award by Northampton Borough Council of a seven year partnership contract
for the management of all white collar building management services has expanded
the range of services offered by Mears FM and the Group into the public sector.

Painting and decorating services

In December 2002 the Group acquired M & T Group Limited with the aim of building
a national painting and decorating services business.  Mears has subsequently
acquired three other small regional painting businesses to maximise the
opportunities that are available in the social housing and other sectors.

Strategy and expansion

Throughout Mears we operate a reward based culture with bonus and incentive
arrangements in place at all levels. Of equal importance is the ethos of
partnership, both within the Group and towards its customers. We are seen as an
employer who is admired internally and externally and I have been impressed by
the number of our people who want to be a Mears employee for a very long time.

In an age where loyalty is almost a forgotten word we have a management team who
look to embrace change, welcoming new colleagues into the Group and seeking to
build long-term futures for all. Record profits reflect this approach with
employees at all levels committed to a common ethos.

We are looking to strengthen the management of the Group at all levels with a
particular emphasis on the recruitment of the best junior and senior management
from within the social housing and services sector. As such we are looking to be
regarded as the number one employer at attracting the very top talent available.

The Group has been successful in recruiting people early in the cycle of bidding
for contracts ensuring that the management is already in situ when contracts
have been awarded. With this proactive approach to recruitment it is unlikely
that the Group will place any undue pressure on the existing management team in
any particular area. The management team is in place already to cope with the
anticipated growth in demand for 2004 and a recruitment drive to bring on board
the additional people for 2005 is already in hand to capitalise on the
significant growth opportunities available.

We are looking to embrace an even wider corporate social responsibility (CSR)
ethos by our commitment to improving homes, improving neighbourhoods and
improving lives. I am delighted to confirm that all our recent initiatives are
working well. We have recently formalised our CSR approach with the formation of
a committee, chaired by myself, and represented throughout the Group with
employees from all the business units.  In addition we continue to support a
large number of community based schemes on a national basis with the emphasis on
improving the local community for all.

At our Group management development conference in December 2003, David
Hempleman-Adams, the British explorer spoke on the topic of team working in a
project environment, a topic he was qualified to discuss as he had returned that
week from his successful world record attempt to cross the Atlantic in a hot air
balloon. The Mears team were thrilled at the prospect of being involved with
David in any future world record attempt.

I am delighted to confirm that the Mears Altitude Challenge Balloon world record
altitude attempt was successful on 23 March 2004. David and his team of
assistants from Mears are to be congratulated. The event carried out in Denver,
Colorado in the United States was managed by teams in the USA and the UK which
included Mears employees. This was indeed a fantastic achievement which typified
team working at its very best, whilst also raising monies for Cancer Research.

It is, I believe, these types of initiatives which will continue to set Mears
apart from its competitors. Success can and will be judged in different ways and
the Group has been tremendously successful to date and can continue to improve
with the commitment of all. I commend this commitment and the support of staff
at all levels.

Mears has a proven, robust and sustainable business model upon which to expand
both the size of the Group and the range of services provided. The social
housing sector continues to provide significant opportunities for growth. The
demand for our services has never been stronger.

Our future earnings are highly visible and our order book has risen from £300
million a year ago to £550 million at present, whilst the generation of cash
from our operations allows us to seek out earnings enhancing acquisition
opportunities. Some mergers and acquisitions activity is likely and I anticipate
a consolidation of service providers to maximise the significant opportunities
for public sector contracts which are getting bigger and longer. It is becoming
the norm for contracts to be awarded for well in excess of five years and we are
in discussions with two of our leading customers to extend existing contractual
arrangements to a fifteen year term.

The record order book demonstrates a commitment to long-term partnership
opportunities in stable and growing market sectors.

Again my sincere congratulations to everyone involved within the business, there
are too many individuals to name here but they are all aware of my tremendous
gratitude. I also extend a warm welcome to all the teams who have recently
joined the Group.

I look forward to bringing further news of exciting developments for Mears as
the year progresses.

Bob Holt
Chairman
29 March 2004



Financial Review

Turnover

Total turnover increased by 42.4% to £112.3m. Acquisitions contributed £9.1m of
the overall growth leaving organic growth at 30.9% in the year.

Profit on ordinary activities before tax and goodwill amortisation

Profit on ordinary activities before tax and goodwill was up 39.2% at £5.24m.
Margins in the original maintenance, mechanical and electrical services business
reached 5.0% up from 4.2%. This excludes the effect of Scion (acquired in August
2003) where there was a small loss before taxation. In total the acquisitions
contributed £0.08m operating profit to the Group result. United Fleet
Distribution Ltd saw a return to more normal levels of profit in 2003 following
the windfall in the previous year.

Goodwill

The acquisition of M & T Group at the end of 2002 together with the acquisitions
in 2003 of Scion, Powersave and the three decorating subsidiaries all
contributed to the increase in amortisation of goodwill from £0.2m to £0.4m in
the year.

Acquisitions

The following transactions took place during the year:

On 22 August 2003 the Group acquired the entire issued share capital of Scion
Group Limited. The initial cost of acquisition was satisfied by £661,910 cash
and £206,250 loan notes. A contingent deferred consideration is payable over a
two year period commencing in 2005, by annual instalments and is based on a
multiple of pre tax profits for the financial years ending 31 December 2004 and
31 December 2005. The maximum total consideration is capped at £6m.

On 2 September 2003 the Group acquired the entire issued share capital of
Powersave Limited for £1,105,547 including acquisition costs, satisfied by cash
of £415,547, share options valued at £90,000 and deferred consideration of
£600,000. The deferred consideration is payable in annual instalments of loan
notes commencing in August 2006. The maximum consideration payable including
acquisition costs is £1,105,547.

On 28 July 2003 the Group acquired the trade and assets of Grogan Decorations
and on 19 August 2003 the Group acquired the trade and assets of Sheffield
Decor. On 1 September 2003 the Group acquired the entire issued share capital of
Andrew Decorations Limited. The total consideration payable including
acquisition costs of these painting and decorating businesses is £635,010.

Interest

Overall the Group achieved an interest credit of £0.08m (2002 £0.09m). Whilst
bank interest received was up slightly at £0.1m from £0.09m the impact of
acquisitions in the year and associated debt reduced the overall receipt in the
year.

Earnings per share

Earnings per share before goodwill amortisation grew in the year by 35.1% to
6.47p up from 4.79p.

Cash flow

Net cash inflow from operating activities represented 99% of operating profit
whilst 80% of EBITDA was converted into operating cash flow. The Group remained
cash positive to the tune of £1.9m at 31 December 2003 despite the impact of
acquisitions which resulted in an outflow of £5.4m. The 30.9% organic growth in
turnover required some £4.0m of working capital. This was offset, however, by an
improvement in debtor days of some 8 days.

Net Assets

At 31 December 2003 the Group's net assets had risen from £9.5m to £12.3m.
Whilst working capital within this had reduced to £2.2m, this is merely a
reflection of the investment in new businesses and infrastructure to provide a
sound platform for organic growth.

Order book

The record forward order book of £550m provides further visibility of earnings.
The element of planned turnover for 2004 which has been secured now stands at
100%.

David J Robertson
Finance Director
29 March 2004


Consolidated Profit & Loss Account
for the year ended 31 December 2003
                                                               £'000        £'000        £'000        £'000
Turnover

Continuing operations                                 2      103,177                    78,834
Acquisitions                                                   9,094                         -
                                                                          112,271                    78,834
Cost of sales
Continuing operations                                       (76,260)                  (58,759)
Acquisitions                                                 (7,008)                         -
                                                                         (83,268)                  (58,759)
Gross profit
Continuing operations                                         26,917                    20,075
Acquisitions                                                   2,086                         -
                                                                           29,003                    20,075
Administrative expenses                                                  (24,276)                  (16,563)
Operating profit
Continuing operations                                          4,647                     3,512
Acquisitions                                                      80                         -
                                                                            4,727                     3,512
Share of operating profit in associate                                          9                         8
                                                                            4,736                     3,520
Net interest                                                                   78                        86
Profit on ordinary activities before taxation         2                     4,814                     3,606
Tax on profit on ordinary activities                  3                   (1,571)                   (1,112)
Profit on ordinary activities after taxation                                3,243                     2,494
Equity minority interests                                                       7                        35
Profit for the financial year                                               3,250                     2,529
Dividends                                             4                     (773)                     (565)
Profit retained                                                             2,477                     1,964

Earnings per share
Basic                                                 5                     5.72p                     4.51p
Basic pre amortisation                                5                     6.47p                     4.79p
Diluted                                               5                     5.48p                     4.36p
Diluted pre amortisation                              5                     6.20p                     4.63p

There were no recognised gains or losses other than the profit for the financial
year.

All activities are continuing.


Consolidated Balance Sheet
at 31 December 2003

                                                                2003         2003         2002         2002
                                                               £'000        £'000        £'000        £'000
Fixed assets
Intangible assets                                             12,273                     5,433
Tangible assets                                                3,093                     1,641
Investments - associates                                          45                        37
Investments - other                                               62                        62
                                                                           15,473                     7,173
Current assets
Stocks                                                         2,487                     1,266
Debtors                                                       24,875                    15,920
Cash at bank and in hand                                       3,408                     5,566
                                                              30,770                    22,752
Creditors: amounts falling due within one year              (28,600)                  (18,129)
Net current assets                                                          2,170                     4,623
Total assets less current liabilities                                      17,643                    11,796
Creditors: amounts falling due after more than                            (5,351)                   (2,260)
one year
                                                                           12,292                     9,536

Capital and reserves
Called up share capital                                                       570                       565
Share premium account                                                       3,041                     2,970
Shares to be issued                                                            90                         -
Profit and loss account                                                     8,501                     6,024
Equity shareholders' funds                                                 12,202                     9,559
Equity minority interests                                                      90                      (23)
                                                                           12,292                     9,536

The financial statements were approved by the Board of Directors on 29 March
2004.

R Holt                              D J Robertson
Director                            Director



Consolidated Cash Flow Statement
for the year ended 31 December 2003
                                                                                           2003         2002
                                                                                          £'000        £'000

Net cash inflow from operating activities                                        6        4,691        4,743
Returns on investments and servicing of finance
Interest received                                                                           103           86
Interest paid                                                                               (8)          (3)
Finance lease interest paid                                                                (14)            -
Net cash inflow from returns on investments and servicing of finance                         81           83
Taxation paid                                                                           (1,543)        (538)
Capital expenditure and financial investment
Purchase of tangible fixed assets                                                         (829)        (731)
Sale of tangible fixed assets                                                                 3           17
Purchase of investment                                                                        -         (36)
Net cash outflow from capital expenditure and financial investment                        (826)        (750)
Acquisitions
Purchase of subsidiary undertakings                                                     (2,037)        (837)
Net cash acquired with subsidiary undertakings                                          (3,351)          479
Net cash outflow from acquisitions                                                      (5,388)        (358)
Equity dividends paid                                                                     (623)        (479)
Financing
Issue of shares                                                                              76          252
Capital element of finance lease rentals                                                   (97)            -
Repayment of borrowings                                                                    (36)            -
Net cash (outflow)/inflow from financing                                                   (57)          252
(Decrease)/increase in cash                                                      7      (3,665)        2,953


Notes to the preliminary announcement
for the year ended 31 December 2003

1. Basis of preparation

The financial information set out in the announcement does not constitute the
Company's statutory accounts for the years ended 31 December 2003 or 2002. The
financial information for the year ended 31 December 2002 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies.  The auditors reported on those accounts; their report was
unqualified and did not contain a statement under s237(2) or (3) Companies Act
1985. The statutory accounts for the year ended 31 December 2003 will be
finalised on the basis of the financial information presented by the directors
in this preliminary announcement and will be delivered to the Registrar of
Companies following the Company's annual general meeting.

2. Segmental analysis

Turnover and profit on ordinary activities before taxation are attributable to
the following activities carried out entirely within the UK.

                                                Turnover            Profit before taxation           Net assets
                                              2003          2002         2003          2002         2003          2002
                                             £'000         £'000        £'000         £'000        £'000         £'000

Maintenance, mechanical and                 99,574        62,916        4,193         2,531       10,693         8,208
electrical services
Vehicle collection and delivery             12,697        15,918          621         1,075        1,599         1,328
                                           112,271        78,834        4,814         3,606       12,292         9,536


3. Tax on profit on ordinary activities

The tax charge represents:
                                                                                            2003         2002
                                                                                           £'000        £'000

United Kingdom corporation tax at 30% (2002: 30%)                                          1,285        1,111
Share of tax charge of associate                                                               1            1
Total current tax                                                                          1,286        1,112
Origination and reversal of timing differences                                               285            -
Tax on profit on ordinary activities                                                       1,571        1,112


4. Dividends
                                                                                            2003         2002
                                                                                           £'000        £'000
Ordinary shares
      - interim dividend of 0.35p (2002: 0.25p) per share paid                               200          141
      - proposed final dividend of 1.00p (2002: 0.75p) per share                             573          424
                                                                                             773          565
5. Earnings per share

Basic earnings per share is based on equity earnings of £3.25m (2002: £2.53m)
and 56.78m (2002: 56.13m) ordinary shares at 1p each, being the average number
of shares in issue during the year.

For diluted earnings per share the average number of shares in issue is
increased to 59.29m (2002: 58.03m) to reflect the potential dilution effect of
employee share schemes.

A pre amortisation earnings per share is disclosed in order to show performance
undistorted by amortisation. The pre amortisation earnings per share is based on
equity earnings (after adding back amortisation) of £3.68m (2002: £2.69m).
                                                         Basic                      Diluted
                                                   2003           2002         2003           2002
                                                      p              p            p              p
Earnings per share                                 5.72           4.51         5.48           4.36
Effect of eliminating amortisation                 0.75           0.28         0.72           0.27
Pre amortisation earnings per share                6.47           4.79         6.20           4.63


6. Net cash inflow from operating activities
                                                                                            2003         2002
                                                                                           £'000        £'000

Operating profit                                                                           4,727        3,512
Depreciation and amortisation                                                              1,122          610
Loss on disposal of fixed assets                                                              39            6
Increase in stocks                                                                       (1,069)         (29)
(Increase)/decrease in debtors                                                           (3,461)          575
Increase in creditors                                                                      3,333           69
Net cash inflow from operating activities                                                  4,691        4,743


7. Reconciliation of net cash flow to movement in net funds
                                                                                            2003         2002
                                                                                           £'000        £'000

(Decrease)/increase in cash in the year                                                  (3,665)        2,953
Cash outflow from financing                                                                  133            -
Change in net funds resulting from cash flows                                            (3,532)        2,953
Loans and finance leases acquired with subsidiaries                                        (434)            -
Net funds at 1 January 2003                                                                5,566        2,613
Net funds at 31 December 2003                                                              1,600        5,566

8. Analysis of changes in net funds
                                                                At                                       At
                                                         1 January         Cash                 31 December
                                                              2003         flow    Acquisition         2003
                                                             £'000        £'000          £'000        £'000

Cash at bank and in hand                                     5,566      (2,163)              5        3,408
Overdraft                                                        -        1,849        (3,356)      (1,507)
                                                             5,566        (314)        (3,351)        1,901
Debt                                                             -           36           (36)            -
Finance leases                                                   -           97          (398)        (301)
                                                             5,566        (181)        (3,785)        1,600

9. Calendar

The proposed final dividend will be paid on 1 July 2004 to shareholders on the
register on 4 June 2004.

The Annual Report will be posted to shareholders on 10 May 2004 and will be
available from the registered office at The Leaze, Salter Street, Berkeley,
Gloucestershire, GL13 9DB.

The Annual General Meeting will be held on 2 June 2004 at the offices of
Arbuthnot, Arbuthnot House, 20 Ropemaker Street, London EC2Y 9AR.

This preliminary announcement of results for the year ended 31 December 2003 was
approved by the Directors on 29 March 2004.


END
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