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Enterprise PLC (ETR)

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Friday 23 March, 2007

Enterprise PLC

Final Results

Enterprise PLC
23 March 2007


                                                                   23 March 2007


                                 Enterprise plc
                  ('Enterprise', 'the Company' or 'the Group')

            Preliminary Results for the year ended 31 December 2006

Enterprise plc, the support services company, is pleased to announce preliminary
results for the year ended 31 December 2006

                                         2006         2005
Revenue £m(1)                           642.9        528.2       + 21.7%
Operating Profit £m(2)                   40.9         33.7       + 21.4%
PBT(2) £m                                35.5         29.7       + 19.5%
Earnings per share (adjusted, diluted)   33.9         26.8       + 26.5%
Dividend per share p                      8.4          7.6       + 10.5%
          
     o    Growth in 2006 in line with Board expectations
     o    Exceptional item of £10.1m in 2006, due to restructuring and
          reappraisal of certain contracts
     o    Successful start to major MoD JV contracts
     o    Bord Gais contract started in Republic of Ireland, £30m per year over
          five years
     o    Progress in 'bundled' services with Local Authorities
     o    Improved integration throughout the organisation
     o    Initiatives underway to sustain long term growth
     o    Discussions with 3i regarding a potential offer at 605 pence per share
          (including the final dividend in relation to the year ended 31 
          December 2006) are now at an advanced stage, although there can be no 
          certainty that an offer for the Company will be forthcoming

Commenting on the performance and prospects, Owen McLaughlin, Chairman and CEO,
said,

'2006 was a year of continued progress in both revenue and total operating
profit(2). The strategy of the Group has been broadly unchanged for some years. 
We are focussed on customers in the utilities and public sector markets which can
best utilise our unique culture and operating systems. We have a good track
record of growth and have delivered well for all stakeholders in the business.

Development of the business, at an acceptable pace, can only be sustained over
the next few years through continued focus on our strengths, continued decisive
action to streamline the business and the continued development of our
management teams. A number of the required initiatives are already underway and
are beginning to have a positive effect, but some of the changes will take time
to be implemented.'

Enquiries:

Weber Shandwick Financial                                          020 7067 0700
Nick Oborne or Louise Robson

--------------------------
(1) Including share of jointly controlled entities and associate 
(2) Before exceptional items of £10.1m (2005 - £nil)



                                 Enterprise plc
                  ('Enterprise', 'the Company' or 'the Group')

            Preliminary Results for the year ended 31 December 2006

Chairman and Chief Executive's Statement

Introduction

2006 was a year of continued progress, both in terms of revenue and operating
profit(2) and our work to focus on our management strengths and main markets to
underpin the Group's future prospects.

Following my return to the role of CEO, announced on 5 April 2006, I spent a
great deal of time with customers and management in detailed discussions about
our performance and prospects. As I was pleased to confirm in our interim report
in September, the customers I met were very positive and wanted us to do more
work for them, especially bundled services, and my meetings confirmed the high
quality, experience and commitment of the top management of Enterprise.

Development of the business, at an acceptable pace, can only be sustained over
the next few years through continued focus on our strengths, continued decisive
action to streamline the business and the continued development of our
management teams. A number of the required initiatives are already underway and
are beginning to have a positive effect, but some of the changes will take time
to be implemented.


Financial Performance

Total Operating Profit(2) rose by 21.4% in the year ended 31 December 2006, to
£40.9m from £33.7m in the prior year. Revenue(1) rose by 21.7% over the same
period, from £528.2m to £642.9m. Most of the revenue growth was organic with
significant contributions coming from the first nine months of the Ministry of
Defence ('MoD') contracts in which we are a joint venture ('JV') partner and our
Waste and Streetscene contracts in Wolverhampton. The businesses acquired in
2005 contributed over £45m of additional revenue in 2006, reflecting their first
full year in the Group.

Our forward order book currently stands at around £2 billion.

We announced in July 2006 that an exceptional charge, now finalised at £10.1m,
would affect adversely the results for the year. While it was a great
disappointment to me to have to inform shareholders of the need to make this
charge, early and quick implementation of the related restructuring has
positioned the Group to take advantage of the available opportunities.

Our net debt rose in the year by 11.7% to £68.7m and our average debt over the
year was £90m. Cash generation from operations, however, improved, despite the
cash impact (£3.9m) of the exceptional charge.


Dividend

The Board is recommending a final dividend of 4.84p, making a total for the year
of 8.39p, an increase of 0.79p (10.5%) from 2005.


Operational and Strategic Progress

Our operating performance in 2006 was in line with the Board's expectations. We
achieved strong underlying growth in revenue and invested in the future
development of the Group. We improved relationships with our top 10 customers
during the year and obtained more work from most of them; together they account
for some 60% of revenue including share of jointly controlled entities and
associate. Trading in 2007 is in line with management expectations.

The highlight of last year, in both operational and strategic terms, was the
successful start we made to the two MoD JVs. These two contracts (Regional Prime
Central and Modern Housing Solutions) started formally in April 2006. Alongside
our partners we are responsible for the maintenance and repair of some 45,000
dwellings in England and Wales occupied by the military and 8,500 other MoD
buildings and assets. The workflow within these projects is managed through our
contact centre in the North West of England, the Matchworks, and is controlled
using our WorkManager system.

There were many other important aspects to our performance in 2006. The key ones
included:

     o    Winning a £30m per year contract in the Republic of Ireland from a new
          customer, Bord Gais, under a five-year contract. Mobilisation started 
          on 1 December 2006. This contract is our first major piece of work in 
          the Republic of Ireland.

     o    Extending the work we do for Openreach, the BT subsidiary, in terms of
          geographical regions and the types of tasks we perform. We are now 
          responsible for Wales as well as three other regions in the UK. We 
          have been doing work inside the exchanges for the first time, 
          assisting the implementation of the local loop unbundling.

     o    Commencing new work with Severn Trent, one of our main customers for
          water utility services, in buildings maintenance with long-term 
          contracts worth up to £10m per year.

     o    Developing our JV with Liverpool City Council and gaining some £5m per
          year of new work in grounds maintenance on a ten year contract. We are 
          a partner in the Capital of Culture 2008 programme, assisting 
          Liverpool to celebrate this award.

     o    Starting our 14-year refuse collection contract with Wolverhampton
          City Council.

Our strategy is to grow primarily, if not wholly, through organic development
over the short and medium term. The addition of increased capability in
consultancy has been an important development for us and we are now working with
a number of customers on performance improvement projects that may develop into
larger scale contracts in the longer term.


Operational Review

Utility Services

The division increased its revenue by 9.7% in 2006; revenue was £319.2m versus
£290.9m in the prior year. The full year impact of the revenue from our
operations in the electricity sector, acquired in mid 2005 and re-named
Enterprise Power Services, and growth in the water sector was partially offset
by a reduced workload in telecoms.

Operating margin(2) rose to 7.4% in the year compared with 7.1% in 2005. The mix
of work and improved cost control helped us to improve this margin performance.

The telecoms sector delivered a good result. For the first time in our long
relationship with the part of BT for whom we work, now re-named Openreach, we
were asked to work inside telephone exchanges. We see this as a sign of progress
and confidence in our ability to perform well. In 2006 revenue fell by around 5%
on the prior year due to the timing of certain projects. Recently we have been
awarded maintenance work in Wales which is in addition to the three regions in
which we currently operate.

Since the middle of 2006 we have been engaged in a process of re-tender for our
core telecoms work with Openreach. Having recently won additional work in Wales
we are reasonably confident that the outcome of the re-tender process will be
positive, but this is by no means certain. Openreach is looking at a number of
alternative ways of dividing the geographic regions of the UK and structuring
the work. The outcome may be beneficial for us but it is too early to tell and
the loss of one or more regions would have an adverse impact on the Group.

In the electricity sector our progress has been good. The business has now been
fully integrated with the core operations and recently moved from its Kingston
upon Thames base to Cockfosters, where it shares offices with our water
operations. In 2004 Ofgem demanded a 50% increase in spending on the network in
the current five year programme. The impact of that increase is only now
starting to be seen in increased workloads.

The water business had another good year in operational terms. The historic
difficulties in the South of England with one customer are not fully resolved
but the current work in that region is now on more acceptable terms. Our core
water projects for Severn Trent are performing in line with expectations. We
were pleased that during 2006 Severn Trent awarded us new work in building
maintenance which could be worth up to an additional £10m per year.

Our work for Trans4M, worth around £20m per year in revenue, saw progress in
2006. We are currently in the process of re-tendering for part of this work and
for some additional work. The outcome is uncertain at this stage but we are
hopeful that we shall, at the minimum, maintain the existing level of revenue.
Our work for Trans4M makes a margin broadly in line with the group average.

In the gas sector we were successful in both improving the existing operations
and winning new work in the Republic of Ireland. The latter is particularly
important due to its scale, £30m per year for five years, and the opportunities
it may open for us in the country. The work was mobilised initially on 1
December 2006 with an emergency operation. The timing of contract start-up,
being so close to the Christmas period, meant that we did not commence with full
scale operations until early 2007. This reduced the potential risks we faced but
it also meant that the contract had a very small impact on the 2006 results and
will take time to build a strong presence and optimum margins.

We have continued to invest in our core WorkManager and Direct Service Provider
systems. IT spend for 2007, related to these systems, will rise by over 30% and
be more consistent with the growing scale of the business.

Public/Private Sector Maintenance

The division was enlarged during 2006 by the inwards transfer from the
Professional Services operations of two companies acquired in 2005, Beha
Williams Norman Limited and Trinity Solutions Group Limited. Having adjusted the
2005 numbers to allow for this change, the division showed growth in its revenue
of 20.9% from £180.6m in 2005 to £218.3m in 2006. Just over half of that
increase came from organic growth and the remainder was the full year effect of
the acquisitions made in 2005.

Operating margins(2) were improved on the prior year, rising to 6.6% from 6.2% in
2005. The increase was due to a better mix of work and improved overhead
recovery.

We acquired MRS Environmental Services Limited, a refuse collection and street
cleansing company in 2004 and it continues to perform well. The extension of its
work in the City of London has been one of its most recent successes. The loss
of a central London contract in refuse collection was counterbalanced by winning
a contract for Dartford Council. Our revenue in this activity was boosted by the
start of a £12m per year contract in Wolverhampton.

Social housing maintenance remains competitive, as indicated in our interim
statement. The market for work in Decent Homes has not been a target for us and
that remains the area in which most of our competitors are concentrated. Our
focus is on the long term maintenance work in which our operating methods are
most effective. Our contracts in this area performed well in 2006 and were
complemented by the activity of JJ McGinley Limited, in the South of England,
acquired in 2005 and now trading under the name of Enterprise.

Our JV with Liverpool City Council goes from strength to strength. Annualised
revenue is now approaching £60m per year, following the award of grounds
maintenance work worth up to £5m additional revenue per year.

The property maintenance operations acquired in 2004 and 2005, Heating and
Building Maintenance Company Limited, CRW Maintenance Limited and Durley Group
Holdings Limited, have now been combined and are trading as Enterprise Property
Solutions. This business operates mainly in the North of England and the
presence of the acquired building maintenance operations in the South has
enabled us to offer national coverage. This is helping us win work with many
customers, especially the MoD and Whitbread, though we are still in the early
stages. We now carry out much work based upon mandatory provisions or regulatory
requirements for Whitbread and have recently won a large contract based on our
good performance.

Trinity Solutions Group Limited, acquired in 2005, has been re-named Enterprise
Recruitment Services Limited. The business operates mainly with Local Government
matching the recruitment needs of its customers with people who have the
required skills and experience. This business has the potential to have many
links with the core operations of the Group and we have made great strides to
integrate it with our existing customer relationships.

During 2006 we increased the marketing and development resource in this
operation and have a well co-ordinated campaign to win more 'bundled' services
contracts in Local Government in the UK.

Professional Services

Revenue in this division fell by £11.8m in 2006 from £40.6m in 2005. The primary
reason was the change in emphasis in the education business away from the
provision of low margin hardware (laptops and whiteboards) and towards the
managed service offerings.

Operating profit(2) was lower than 2005 at £0.6m, due to the weak performance in
the education sector and the effect of restructuring one of the two consultancy
operations acquired in 2005. Our long established International Consultancy
business performed well, and was in line with the previous year.

The consulting operations are now trading as EnterpriseConsulting and are an
integral part of the future of the Group. Many of the skills and contacts gained
as a result of the acquisitions in this area will be crucial to achieve the long
term goals for the whole Group.

The education operations are undergoing a review. The market for the services we
can offer has altered significantly over the last three years, since we took the
decision to enter this area. Steps to improve profitability were taken and our
managed services businesses are starting to perform well.


Corporate Social Responsibility

The Board pays very serious attention to the corporate social responsibility
Enterprise has for all of its stakeholders. We have increased our efforts over
the last twelve months and that progress will continue into the long-term.

In terms of the community, the JV with Liverpool City Council continues its good
work. We have used the JET Social Enterprise training model to good effect. This
provides accelerated training programmes for job seekers to secure employment.
Enterprise Liverpool also has an involvement with the local community trust and
has provided funding for community projects from its surpluses.

In the North East we have established a training programme with Acklington
prison to enable the re-training of offenders to work in the utilities industry.
This is progressing well and we are looking at other schemes elsewhere in the
UK.

We are closely associated with Corpus Christi College, based in Preston,
assisting the school to achieve its goal of specialising in sport, applied IT
and engineering. Corpus Christi intends to play a key role in the delivery of
the 14-19 Education and Skills agenda. The educational specialisms at the
college will complement the efforts of other schools in the area.

We now focus all of our Group charity efforts on Derian House, a children's
hospice and Coppice School, a specialist facility for disabled children. We
raised over £2,000 for these two charities during the year from employee
donations. The Company also makes a donation to these organisations and during
the year we contribute in many other ways with, for instance, pupils from
Coppice School recently visiting our offices in Leyland to learn about some of
the work we do for our customers. Each part of our business is encouraged to
make a contribution to local community charities.

We have recently established the Enterprise Foundation. This is a company
limited by guarantee which we have created as a JV with EDS (North West)
Limited. The role of the Foundation is to work with the communities in which we
operate to establish social enterprises, assist regeneration projects and
perform community-related works.

Our Health and Safety record remains one of which we are justly proud. Our
WorkManager systems make Health and Safety the key driver of all its projects.
We are at the closing stages of implementing a significant upgrade to our
existing Health and Safety processes and aim to ensure that we stay at the
leading edge in this aspect of our operations.

In the workplace we conducted an Employee survey in mid 2006. The outcome was
that over 90% of employees believed that they can manage the demands of their
role and the majority felt that communications are good in their area of work.
The survey highlighted that employees knew less than they would like about other
parts of the Group and we have taken measures to remedy that aspect of the
findings. Employees having a good understanding of the Group and being able to
sell those services to existing customers is an important aspect of how we shall
achieve growth.

Ensuring that the environment is sustainable is not just a corporate
responsibility but is part of what we do every day. For instance, we fixed
around 100,000 water leaks during the year, reducing wastage of clean water, we
work with social housing organisations to maintain domestic heating systems and
last year we replaced over 2,000 old inefficient boilers with new energy
efficient ones. Throughout the organisation we are seeking new ways to improve
our contribution to the environment.


Our people

It has been a year of change for the organisation and I want to thank everyone
for their contribution. We are focussed on the development of our employees and
committed to growing the business mainly through the existing management and
staff, although we shall look outside for specialist skills, where needed.


Outlook

The strategy of the Group has been broadly unchanged for some years. We are
focussed on customers in the utilities and public sector markets which can best
utilise our unique culture and operating systems. We have a good track record of
growth and have delivered well for all stakeholders in the business.

The long term challenge we have is to grow our customer relationships and
develop our people. I am confident that the initiatives we have launched this
year will help us to deliver continued growth and sustainable profits and cash
over the long-term.


Update on offer discussions

On 19 February 2007, in response to press speculation, the committee of
independent non-executive directors of Enterprise, comprising Nick Woollacott
and Alistair Hetherington (the 'Independent Committee'), confirmed that it was
in discussions with 3i Investments PLC ('3i') regarding a potential offer for
the Company at 605 pence per share (including the final dividend in relation to
the year ended 31 December 2006).

These discussions are now at an advanced stage and a further announcement will
be made as appropriate. The statements in this announcement regarding a
potential offer are made without the consent of 3i and there can be no certainty
that an offer for the Company will be forthcoming.


Finance Director's Review 2006

The results for 2006 show good growth in the revenue and operating profit(2) of
the Group and an improvement in the operating margins in the two main divisions
of the business.

The exceptional charge of £10.1m before tax announced on 6 July 2006 arose
partly due to the decision by the Board in the spring of 2006 to accelerate the
integration of the acquisitions and restructure the enlarged business and partly
due to reappraisal of certain contracts.


Revenue

Group revenue, including share of jointly controlled entities and associate,
grew in 2006 to £642.9m, an increase of £114.7m (21.7%) on the prior year.
Growth in 2006 was generated by recent organic contracts wins, including the JV
contracts with the MoD, which had a revenue in excess of £60m in 2006, the waste
collection contract we started in Wolverhampton (won in 2005) and the full year
effect of acquisitions made in 2005. No acquisitions were made in 2006.

Revenue in the Utility division increased by £28.3m (9.7%) with the full year
effect of Enterprise Power Services' acquisition and growth in the water
operations offsetting a reduced revenue in telecoms.

The Public/Private Sector Maintenance division showed an increase in revenue of
£37.7m (20.9%) reflecting the Wolverhampton contract and the full year effect of
the building maintenance/property repair businesses acquired in 2005.


Operating profit and profit before tax

Total operating profit(2) increased by £7.2m (21.4%) in the year to £40.9m. Group
operating margins(2) were in line with last year at 6.4%. Finance costs (net)
increased from £4.0m to £5.4m due to higher average debt following the
acquisitions made in the two years to August 2005, the increase in working
capital required to achieve growth and the cash costs of the exceptional
charges.

Profit before tax(2) increased by £5.8m (19.5%) to £35.5m. Adjusted fully diluted
earnings per share rose by 26.5% to 33.9p.

Within the Utilities division operating margin(2) was 7.4% (2005: 7.1%),
reflecting an improved performance in the water operations as the business in
the South of England begins to obtain a more acceptable level of return.

Margins(2) in the Public/Private Sector Maintenance division grew to 6.6% (2005:
6.2%), reflecting a change in work mix and an improvement in the results of
businesses acquired in 2005.

The core professional services operations were restructured this year to focus
more effectively on the delivery of bundled service opportunities and
relationship development for the broader Group and the operating margin(2) was
reduced by, among other things, business development costs. The division is
making a significant contribution to the main Group operations and is now
trading as EnterpriseConsulting.


Return on Capital Employed

The Group's operating performance in 2006 has enabled us to sustain our return
on capital at a high level. We have consistently produced returns ahead of our
cost of capital and last year was no exception.

                                2002     2003     2004     2005     2006
Operating Profit £m*            18.7     22.3     26.4     34.0     41.9
Capital Employed (Ave) £m         91      104      125      162      200
ROCE %                          20.5     21.4     21.1     20.9     20.9

* excludes tax on jointly controlled entities and associate and exceptional
items


Cash and interest

In 2006 several non-recurring items impacted on cash balances: the
exceptional charge, which had an adverse operating cash impact of £3.9m; the
increase in working capital needed for one customer in the utility division that
extended its payment period from 7 to 45 days; the purchase of shares by the
Group EBT and payments in respect of prior year acquisitions. Despite the above,
cash generated from operations was ahead of the previous year.

The Group's operations are funded by leases, working capital and debt
facilities. The existing bank facility has a limit of £170m. Average net debt in
2006 was £90m and the Group remained well within the covenants throughout the
year. The available headroom for borrowings improves the Group's short-term
flexibility.

The Group's current borrowing facilities expire in September 2007 and, as a
result, are repayable within one year. Discussions have taken place with the
Group's bankers regarding the extension of these facilities and, subject to
formal approval by credit committee, the banks have agreed to extend the
facilities for at least two years from September 2007.

The Group does not enter into derivative transactions for the purpose of profit
and does not trade in financial instruments. Lease obligations, other than
property and vehicles, are related to specific contracts and our aim continues
to be to retain no liability beyond those contracts.

The level of net interest payments in 2006 was £1.4m higher than the prior year
at £5.4m as a result of higher average levels of debt. While year end debt in
2006 was only slightly higher than the prior year the average level was much
higher due to the timing of the acquisitions in 2005, coupled with the effect of
the exceptional item and customer credit period extension noted above.

Net finance charges in 2006 were 5.7 times covered by total operating profit(2)
and 3.9 times covered by operating cash flow, which the Group regards as prudent
levels.


Taxation

The Group tax charge for the year represents 23.7% of reported Group profit
(excluding exceptional items). The charge is lower than the standard rate due to
the inclusion in reported profit before tax of the share of results of jointly
controlled entities and associate net of related tax and the settlement of prior
year tax returns. We expect the tax charge to revert to being at or near the
standard rate in the future.


Dividends

The Board is recommending a final dividend of 4.84p, making a total for the year
of 8.39p, an increase of 0.79p from 2005.


Pensions

The majority of the Group's employees who are in pension schemes are members of
defined contribution pension schemes. Therefore the Group has limited exposure
to under-funding of pensions. The Group operates one defined benefit scheme in
respect of Brophy Grounds Maintenance employees and at the last actuarial
valuation this scheme had an estimated deficit of £1.5m.


Balance Sheet

At 31 December 2006 the Group's Shareholders Funds stood at £143.5m. This
represents an increase of £12.7m on the prior year and reflects the net profit
after dividends generated in the financial year.


FOR THE YEAR ENDED 31 DECEMBER 2006
GROUP INCOME STATEMENT

                                                      2006        2006    2006    2005
                                           Pre-exceptional Exceptional   
                                                     items       items   Total   Total
                                                       £'m         £'m     £'m     £'m
_______________________________________________________________________________________
_______________________________________________________________________________________

Revenue

Continuing operations                                642.9         0.0   642.9   528.2
Group continuing operations and share of 
  jointly controlled entities and associate          642.9         0.0   642.9   528.2
Less share of jointly controlled entities 
  and associate                                      (76.6)        0.0   (76.6)  (16.1)
_______________________________________________________________________________________
_______________________________________________________________________________________

Group revenue - continuing operations                566.3         0.0   566.3   512.1
_______________________________________________________________________________________

Operating profit

Continuing operations                                 38.6       (10.1)   28.5    32.8
_______________________________________________________________________________________

                                                      38.6       (10.1)   28.5    32.8

Share of results of jointly controlled
  entities and associate                               2.3         0.0     2.3     0.9
_______________________________________________________________________________________

Total operating profit  - continuing operations       40.9       (10.1)   30.8    33.7

Investment revenue                                     0.7         0.0     0.7     0.8

Finance costs                                         (6.1)        0.0    (6.1)   (4.8)
_______________________________________________________________________________________

Profit before tax                                     35.5       (10.1)   25.4    29.7

Tax                                                   (8.4)        3.1    (5.3)   (8.4)
_______________________________________________________________________________________

Profit for the year from continuing operations        27.1        (7.0)   20.1    21.3
_______________________________________________________________________________________

Attributable to:
Equity holders of the parent                                              20.1    21.3
                                           ____________________________________________

Earnings per share (in pence) from continuing operations
Basic                                                                     25.0p   26.6p
Diluted                                                                   24.5p   26.4p

Adjusted earnings per share (in pence) from continuing operations
Basic                                                                     34.6p   27.0p
Diluted                                                                   33.9p   26.8p

Dividends for the financial year
Interim dividend paid 
  (2006 - 3.55p per share, 2005 -3.2p per share)                          £2.9m   £2.6m
Final dividend proposed 
  (2006 - 4.84p per share, 2005 - 4.4p per share)                         £3.9m   £3.5m


AS AT 31 DECEMBER 2006                              
GROUP BALANCE SHEET                              
                                                        2006      2005
                                                         £'m       £'m
_______________________________________________________________________
Non-current assets

Goodwill                                               162.7     157.4
Other intangible assets                                  1.2       0.8
Property, plant and equipment                            9.3       7.6
Loan advanced to jointly controlled entity               0.0       0.8
Interest in jointly controlled entities                  2.8       0.4
Interest in associate                                    0.1       0.0
Deferred tax asset                                       0.4       1.1
Other investments                                        0.2       0.1
_______________________________________________________________________
                                                       176.7     168.2
_______________________________________________________________________
Current assets

Inventories                                              4.2       2.0
Trade and other receivables                            130.5     115.6
Cash at bank and in hand                                35.8      40.9
_______________________________________________________________________
                                                       170.5     158.5
_______________________________________________________________________
Total assets                                           347.2     326.7
_______________________________________________________________________
Non-current liabilities

Bank loans                                               0.0     100.0
Retirement benefit obligation                            1.5       1.6
Trade and other payables                                 3.3       4.1
Obligations under finance leases                         1.8       1.0
Provisions                                               0.0       0.9
_______________________________________________________________________
                                                         6.6     107.6
_______________________________________________________________________
Current liabilities

Short term borrowings and overdrafts                   101.9       0.7
Obligations under finance leases                         0.8       0.7
Tax liabilities                                          3.9       5.5
Provisions                                               0.5       0.6
Trade and other payables                                90.0      80.8
_______________________________________________________________________
                                                       197.1      88.3
_______________________________________________________________________
Total liabilities                                      203.7     195.9
_______________________________________________________________________
Net assets                                             143.5     130.8
_______________________________________________________________________
Equity attributable to equity holders of the parent

Share capital                                            4.0       4.0
Investment in own shares                                (2.1)      0.0
Share premium                                           12.9      12.9
Other reserves                                          58.7      58.7
Retained earnings                                       70.0      55.2
_______________________________________________________________________
Total equity                                           143.5     130.8
_______________________________________________________________________



FOR THE YEAR ENDED 31 DECEMBER 2006
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE

                                                                  2006        2005
                                                                   £'m         £'m
___________________________________________________________________________________

Actuarial gains on defined benefit pension schemes 
  (net of tax)                                                     0.0         0.3
Share of actuarial gains in jointly controlled entities 
  (net of tax)                                                     1.2           -
___________________________________________________________________________________
Net income recognised directly in reserves                         1.2         0.3

Profit for the year                                               20.1        21.3
___________________________________________________________________________________

Total recognised income and expense for the year                  21.3        21.6
___________________________________________________________________________________

Attributable to:
Equity holders of the parent                                      21.3        21.6
___________________________________________________________________________________



FOR THE YEAR ENDED 31 DECEMBER 2006
GROUP CASH FLOW STATEMENT

                                                                  2006       2005
                                                                   £'m        £'m
__________________________________________________________________________________
Reconciliation of operating profit to cash generated from operations

Cash flow from operating activities
Operating profit                                                  30.8       33.7
Adjustments for:
                  Depreciation of property, plant and              
                    equipment                                      3.3        3.3
                  Amortisation of other intangible assets          0.1          -
                  Exceptional items                               10.1          -
                  Profit on disposal of property, plant and       
                    equipment                                     (0.1)      (0.5)
                  Share of results in jointly controlled          
                    entities and associate                        (2.3)      (0.9)
                  Operating charge for defined benefit               
                    pension scheme                                   -        0.3
                  Share based payment charge                       0.6        0.3
                  Movement in provisions                          (1.8)         -
                  Increase in receivables                        (23.3)     (25.6)
                  Increase in inventories                         (2.2)      (0.7)
                  Increase in payables                             9.8       10.4
__________________________________________________________________________________
Cash flows from operating activities                              25.0       20.3
Cash outflow in respect of exceptional items                      (3.9)         -
__________________________________________________________________________________

Cash flows from operating activities                              21.1       20.3

Tax paid                                                          (6.2)      (4.1)
__________________________________________________________________________________
Net cash from operating activities                                14.9       16.2
__________________________________________________________________________________

Investing activities

Acquisition of own shares                                         (3.0)         -
Expenditure on product development                                (0.5)      (0.8)
Acquisitions of subsidiaries net of cash acquired                 (3.3)     (43.4)
Purchase of property, plant and equipment                         (3.3)      (2.1)
Proceeds on disposal of property, plant and equipment              0.1        1.7
Loans repaid by jointly controlled entities                        0.8          -
Loans repaid by venture funds                                        -        0.1
Dividends received from jointly controlled entities                0.7        0.3
__________________________________________________________________________________
Net cash used in investing activities                             (8.5)     (44.2)
__________________________________________________________________________________

Financing activities 

Finance costs paid                                                (6.1)      (4.8)
Interest received                                                  0.7        0.8
Proceeds on issue of ordinary shares                                 -          -
New bank loans raised                                                -       62.0
Principal payments under finance leases                           (0.9)      (1.0)
Dividends paid                                                    (6.4)      (5.8)
__________________________________________________________________________________
Net cash (used in)/from financing activities                     (12.7)      51.2
__________________________________________________________________________________
__________________________________________________________________________________
Net (decrease)/increase in cash and cash equivalents              (6.3)      23.2
__________________________________________________________________________________
Cash and cash equivalents at beginning of the year                40.2       17.0
__________________________________________________________________________________
Cash and cash equivalents at end of the year                      33.9       40.2
__________________________________________________________________________________


FOR THE YEAR ENDED 31 DECEMBER 2006

1. BUSINESS AND GEOGRAPHICAL SEGMENTS

For management purposes, the Group is currently organised into the following
divisions; Utility Services, Public/Private Sector Maintenance Services and
Professional Services. These divisions are the basis on which the Group reports
its primary segment information.

During the year ended 31 December 2006, certain businesses have changed
divisions to more closely align them with their managerial reporting lines and
type of business. As a result of these movements, the comparative amounts for
the year ended 31 December 2005 have been restated. The impact is to increase
Public/ Private Sector Maintenance Services revenue by £9.7m and operating
profit by £0.7m. The revenue and operating profits of the Professional Services
division have decreased by the same amounts.

Segment information about these divisions is presented below:

                                            Revenue             Operating Profit
                                        2006        2005         2006       2005
                                                Restated                Restated
                                          £m          £m           £m         £m
Continuing operations pre exceptional
  items

Utility services                       319.2       290.9         23.6       20.6
Public/Private Sector maintenance
  services                             218.3       180.6         14.4       11.2
Professional Services                   28.8        40.6          0.6        1.0
                                      ___________________      __________________
Total existing operations              566.3       512.1         38.6       32.8
                                                               __________________

Exceptional items (see note 2)

Utility services                                                 (7.7)         -
Public/Private Sector maintenance services                       (1.3)         -
Professional Services                                            (1.1)         -
                                                               __________________
                                                                (10.1)         -
                                                               __________________
Continuing operations post exceptional items

Utility Services                                                 15.9       20.6
Public/Private Sector maintenance services                       13.1       11.2
Professional Services                                            (0.5)       1.0
                                                               __________________
                                                                 28.5       32.8

Share of results of jointly controlled entities (before tax)      3.3        1.2
Tax of jointly controlled entities                               (1.0)      (0.3)
                                                               __________________
Share of results of jointly controlled entities (after tax)       2.3        0.9
                                                               __________________

Total operating profit                                           30.8       33.7
                                                               __________________
Investment income                                                 0.7        0.8
Finance costs                                                    (6.1)      (4.8)

Profit before tax                                                25.4       29.7

Tax                                                              (5.3)      (8.4)
                                                               __________________
Profit for the year from continuing operations                   20.1       21.3
                                                               __________________


The analysis of the segmental assets and liabilities of the Group are set out below:
             
                                                              2006       2005
                                                             Total      Total
                                                                     Restated
                                                                £m         £m
Assets

Utility services                                             214.4      202.4
Private/Public Sector Maintenance services                    92.7       85.3 
Professional Services                                         38.4       38.9
                                                            __________________
                                                             345.5      326.6
Unallocated assets                                            65.7       52.5

Intercompany eliminations                                    (67.1)     (53.0)
Interest in Jointly controlled entities & associate            3.1        0.6
                                                            __________________
Consolidated total assets                                    347.2      326.7
                                                            __________________

Liabilities

Utility services                                             119.6       98.7
Private/Public Sector Maintenance services                    39.7       37.4
Professional Services                                          9.0        9.2
                                                            __________________
                                                             168.3      145.3
Unallocated liabilities                                      102.5      103.6
Intercompany eliminations                                    (67.1)     (53.0)
                                                            __________________
Consolidated total liabilities                               203.7      195.9
                                                            __________________

                                                            __________________
Net assets                                                   143.5      130.8
                                                            __________________


2. Exceptional items

                                                              2006       2005
                                                                £m         £m

Reorganisation costs                                           3.5          -
Adjustments relating to historic contract issues               6.6          -
                                                            __________________

                                                              10.1          -
                                                            __________________


Following board changes in the year, a review of the business has been conducted
and as a result certain areas of the business have been restructured. This has
resulted in £3.5m of reorganisation costs being incurred in the year, primarily
relating to headcount reductions.

In addition, a reappraisal of certain historical contract issues has taken place
resulting in a charge to the income statement of £6.6m. This relates to
provisions made against contract issues of £8.6m offset by the release of
onerous contract provision no longer required of £2.0m following favourable
settlement in the year.


3. Dividends

                                                             2006          2005
                                                               £m            £m
Amount recognised as distributions to equity 
  holders in the period:

Final dividend for the year ended 31 December 2005 
  of 4.4p (2004:4.0p) per share.                              3.5           3.2

Interim dividend for the year ended 31 December 2006 
of 3.55p (2005: 3.2p) per share.                              2.9           2.6
                                                              _________________

                                                              6.4           5.8
                                                              _________________

Proposed final dividend for the year ended 31 December        
  2006 of 4.84p (2005: 4.4p) per share.                       3.9           3.5
                                                              _________________


The proposed final dividend is subject to approval by shareholders at the Annual
General Meeting and has not been included as a liability in these financial
statements.



4. Earnings per share

From continuing operations

Earnings per share of the parent is based on the following data:

Earnings
________
                                                           2006       2005
                                                             £m         £m
___________________________________________________________________________
Earnings for the purposes of basic earnings per share
  (profit for the year attributable to equity holders of 
    the parent)                                            20.1       21.3
___________________________________________________________________________

Number of shares
________________
                                                           2006       2005
                                                            No.        No.
___________________________________________________________________________

Weighted average number of ordinary shares for the
  purposes of basic earnings per share                     80.1       80.2

Effect of dilutive potential ordinary shares:
  Share options                                             1.8        0.7
___________________________________________________________________________

Weighted average number of ordinary shares for the
  purposes of diluted earnings per share                   81.9       80.9
___________________________________________________________________________


Adjusted EPS
____________


An adjusted earnings per share has been calculated in addition to the earnings
per share required by IAS 33 - Earnings per share - and is based on earnings
excluding the effect of the charge for share based payments and exceptional
items. It has been calculated to allow shareholders to gain a clearer
understanding of the performance of the Group.

Details of the adjusted earnings per share are set out as follows:

                                               Basic              Diluted
                                        
                                          2006       2005      2006     2005
                                         pence      pence     pence    pence
_____________________________________________________________________________
Earnings per share                        25.0       26.6      24.5     26.4

IFRS 2 charge on dilutive shares           0.7        0.4       0.7      0.4
Exceptional items net of tax               8.9        0.0       8.7      0.0
_____________________________________________________________________________

Adjusted earnings per share               34.6       27.0      33.9     26.8
_____________________________________________________________________________




5. Analysis of cash and cash equivalents and reconciliation of net debt


                                          At    Non cash      Cash  At end of
                                   beginning   movements      flow       year
                                     of year
                                          £m          £m        £m         £m
______________________________________________________________________________

Cash at bank and in hand                40.9           -      (5.1)      35.8
Overdrafts                              (0.7)          -      (1.2)      (1.9)
______________________________________________________________________________
Cash and cash equivalents               40.2           -      (6.3)      33.9

Bank loans due in less than one year     0.0      (100.0)      0.0     (100.0)
Bank loans greater than one year      (100.0)      100.0       0.0        0.0
Finance leases less than one year       (0.7)       (1.0)      0.9       (0.8)
Finance leases greater than one year    (1.0)       (0.8)        -       (1.8)
______________________________________________________________________________
Net debt                               (61.5)       (1.8)     (5.4)     (68.7)
______________________________________________________________________________


6. MOVEMENTS IN SHAREHOLDERS' EQUITY

                                                              2006        2005
                                                               £'m         £'m
_______________________________________________________________________________

Equity at the beginning of the year                          130.8       113.3
_______________________________________________________________________________

Profit for the year                                           20.1        21.3
Actuarial gains on defined benefit schemes (net of tax)        0.0         0.3
Share of actuarial gains in jointly controlled entities 
  (net of tax)                                                 1.2         0.0
_______________________________________________________________________________
Total recognised income and expense for the year              21.3        21.6
_______________________________________________________________________________

Recognised directly in equity
Dividends paid                                               (6.4)       (5.8)
Investment in own shares                                     (3.0)        0.0
Premium on shares issued as part of acquisition               0.0         1.4
Credit to equity for share based payments                     0.8         0.3
New share capital subscribed                                  0.0         0.0
_______________________________________________________________________________

Net charge recognised directly in equity                     (8.6)       (4.1)
_______________________________________________________________________________

Total movements                                              12.7        17.5
_______________________________________________________________________________

Equity at end of the year                                   143.5       130.8
_______________________________________________________________________________



7. Statutory accounts

The financial information set out in this announcement does not constitute the
Company's statutory financial statements for the year ended 31 December 2006 or
31 December 2005 as detailed in section 240 of the Companies Act 1985, but is
derived from those financial statements. The statutory financial statements for
2005 have been delivered to the Registrar of Companies and those for 2006 will
be delivered following the Company's annual general meeting. The auditors have
reported on these financial statements: their reports were unqualified and did
not contain statements under Section 237 (2) or (3) Companies Act 1985.

Whilst the financial information included in this preliminary announcement has
been computed in accordance with International Financial Reporting Standards
(IFRS), this announcement does not in itself contain sufficient information to
comply with IFRS. The accounting policies used in the preparation of this
preliminary announcement are consistent with those in the full financial
statements which have yet to be published.

The preliminary results for the year ended 31 December 2006 were approved by the
Board of Directors on 22 March 2007.











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