Final Results - Year Ended 31 December 1999
Mears Group PLC
4 April 2000
MEARS GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED
31st DECEMBER 1999
TURNOVER UP 142% AT £47.5m (1998 - £19.6m)
PRE TAX PROFITS UP 30% AT £1,069,040 (1998 - £820,535)
EARNINGS PER SHARE UP 22% AT 1.90p (1998 - 1.56p)
DIVIDENDS PER SHARE UP 25% AT 0.5p (1998 - 0.4p)
NEW CONTRACT AWARD
ORDER BOOK IN EXCESS OF £100 MILLION
4TH APRIL 2000
MEARS GROUP PLC
The Board of Mears Group PLC today announce record profits for
the year ended 31 December 1999.
Profits before tax were up 30% at £1,069,040 (£820,535 - 1998)
on turnover up 142% at £47,455,954 (£19,635,263 - 1998).
Earnings per share, before the amortisation of goodwill,
increased by 32% to 2.13p (1.61p - 1998). After the amortisation
of goodwill the earnings per share increased by 22% to 1.90p
(1.56p - 1998).
The Board recommends a final dividend of 0.4p per ordinary share
making a total dividend for the year of 0.5p (0.4p - 1998). The
final dividend is payable on 4th July 2000 to shareholders on
the register on 14th April 2000.
TRADING REVIEW
The results include four months of trading from Haydon and
Company Limited. Haydon, which was acquired by the Group on 1st
September 1999, had been loss making for the two years prior to
acquisition. The Group acquired Haydon for an initial
consideration of £500,000 with a further consideration payable
of £2 million plus or minus half the profit or loss of Haydon in
the following two years.
On 29th March 2000 the Board reached an agreement in principle
to settle the contingent consideration at a fixed sum of
£771,110, with no further payments to be made.
The Board has been mindful of both reaching an early settlement
to the final consideration so as to avoid an uncertain outcome
to the extent of the consideration payable, and to continue the
improvement in profitability of Haydon without the need to share
those improvements with the former owners. Both these issues are
now resolved.
I am delighted to confirm that, following a substantial
reorganisation, the Haydon business is now performing well. A
number of contracts have been renegotiated and the Group expects
to show a substantial improvement to the Haydon business in the
current year. These results reflect that Haydon had a turnover
of £12 million in the four months since acquisition with no
contribution to profit nor any loss recognised. The effect of
tax losses from Haydon reduced, on consolidation, the tax
payable by the Group by £120,000.
The Haydon acquisition brought into the Group additional
geographical coverage, an expanded range of services provided
and new business sectors in which to operate. The original
Haydon branded business was primarily involved in the provision
of mechanical and electrical services to the commercial sector
and since acquisition has been reorganised back to its core
business discipline. The management team are motivated and
incentivised to provide a profitable platform for growth in the
future. I welcome Dave Cutler and his management team into the
Group. Haydon have reduced their involvement in the rail
infrastructure and refurbishment sector after incurring
significant losses in the past.
The majority of the Group's business, accounting for £25 million
of turnover in the year, continues to be in the provision of
maintenance services to the local authority, social housing and
Ministry of Defence housing estate sectors under the Mears brand
name. These sectors provide the Group with long-term contracts
with organisations who are unlikely to encounter financial
restrictions in any periods of economic downturn. The citizens
charter, upon which most tenants rely, provides protection for
tenants to be provided with a timely response repair service to
satisfy their property maintenance needs.
During the year the core business continued to grow and was
strengthened by the purchase of a number of response maintenance
contracts complete with a management team in the north of
England. The management team has become an integral part of
Mears within a short period of time and along with the existing
Mears businesses in the south east and south west of England are
recognised by clients as a preferred supplier of response and
planned maintenance services. Additional contracts were awarded
to the Group in the year in Warrington, Trowbridge, Liverpool,
South Oxfordshire, Dover and Thanet.
I am pleased to announce that since the year end we have been
awarded a contract with Ashford District Council for an initial
period of five years at a value of £1.2 million per annum. The
trend of contracts being awarded for longer periods continues.
The air conditioning installation business disappointed in the
year with the management team unable to build the business in a
healthy economy for mechanical services. The Group is unlikely
to invest further in this sector until the business has a
profitable basis for growth. Turnover in the year was £4
million.
United Fleet Distribution Limited was acquired by the Group in
October 1998. UFD is regarded as the largest provider of trade
plated vehicle distribution services with only a small
involvement in the trailer delivery market.
The business provides in excess of 300 drivers on a daily basis
and delivered 125,000 vehicles in the year with a turnover of £6
million. The relocation of the central control to prestigious
offices in the centre of Birmingham and the installation of a
new computer software system has provided the infrastructure for
substantial growth for the future. UFD have been awarded a
contract to collect and deliver the motor fleet for Motability
UK Limited one of the largest providers of vehicles in the UK.
Due to the growth of the business in the year, the Board
continues to invest in quality systems and people to ensure a
controlled environment for all parts of the business. The
control of the business at the micro level is paramount to the
future success of the Group. The Group operates in a high
volume, low margin environment and the control of costs and the
management of cash is vital. The Group's central services team
has been strengthened in the year so as to ensure that all the
necessary controls are in place and adhered to.
It gives me great pleasure to preside over a Group that has
produced record profits for the year and again delivered
everything that has been expected. The Group currently has an
order book in excess of £100 million.
During the year a significant amount of effort has been made to
increase the awareness of the Group with the investing public at
large. Following the launch of the Group's web site at
www.mearsgroup.co.uk, it is intended to provide regular updates
and information to all those wishing to register via the web
site E- mail facility.
The building blocks are in place to develop the business further
and to take advantage of the opportunities that exist within the
support services sector. The Board is actively seeking other
acquisition opportunities to further develop the geographical
coverage and range of services provided.
The Board is mindful of the excellent support received from the
Group's suppliers and customers.
The members of staff who manage the businesses within the Group
deserve a special mention. Without the very real commitment of
staff at all levels we would not have achieved the high
profitable growth as reported.
It is for all these reasons stated herewith that the Board
remains optimistic about the future. I look forward to being
able to report another year of good progress in twelve months
time.
MEARS GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 1999
1999 1999 1998 1998
£ £ £ £
Turnover
Continuing operations 35,219,648 19,635,263
Acquisitions 12,236,306 -
---------- ----------
47,455,954 19,635,263
Cost of sales (37,855,760) (15,456,718)
------------ ------------
Gross profit
Continuing operations 8,373,844 4,178,545
Acquisitions 1,226,350 -
---------- ----------
9,600,194 4,178,545
Administrative expenses (9,952,116) (3,327,386)
Exceptional item 1,580,804 -
Operating profit
Continuing operations 1,228,882 851,159
Acquisitions - -
1,228,882 851,159
Net interest (159,842) (30,634)
---------- ----------
Profit on ordinary 1,069,040 820,525
activities before taxation
Tax on profit on ordinary (190,926) (244,268)
activities ---------- ----------
Profit on ordinary 878,114 576,257
activities after taxation
Equity minority interests 19,104 29,018
---------- ----------
Profit for the financial 897,218 605,275
year
Dividends (256,194) (178,545)
---------- ----------
Profit retained 641,024 426,730
========== ==========
Earnings per share
Basic 1.90p 1.56p
========== ==========
Diluted earnings per share 1.70p 1.50p
========== ==========
The exceptional item represents a partial release of the negative
goodwill arising from the acquisition of Haydon and Company Limited.
MEARS GROUP PLC
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 1999
1999 1999 1998 1998
£ £ £ £
Fixed assets
Intangible assets - 2,315,874 2,098,967
positive goodwill
Intangible assets - (1,558,356) -
negative goodwill
Tangible assets 1,017,702 401,026
Investments 19 -
----------- ----------
1,775,239 2,499,993
Current assets
Stocks 3,282,137 998,082
Debtors 18,325,307 4,877,332
Cash at bank and in hand 2,878,176 638,824
---------- ----------
24,485,620 6,514,238
Creditors: amounts falling (22,157,142) (5,332,439)
due within one year ----------- -----------
Net current assets 2,328,478 1,181,799
---------- ----------
Total assets less current 4,103,717 3,681,792
liabilities
Creditors: amounts falling (600,000) (800,000)
due after more than one
year
Provisions for liabilities
and charges (6,500) (6,500)
----------- ----------
3,497,217 2,875,292
========== =========
Capital and reserves
Called up share capital 471,363 471,363
Share premium account 2,135,343 2,135,343
Other reserve (249,898) (249,898)
Profit and loss account 1,177,076 536,052
---------- ---------
Equity shareholders' funds 3,533,884 2,892,860
Equity minority interests (36,667) (17,568)
----------- ----------
3,497,217 2,875,292
=========== ==========
MEARS GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 1999
1999 1998
£ £
Net cash inflow from operating 1,488,070 915,247
activities
Returns on investments and servicing of finance
Interest received 995 6,394
Interest paid (140,268) (33,749)
Finance lease and hire purchase interest paid (2,789) (3,279)
interest paid ---------- ---------
Net cash outflow from returns on (142,062) (30,634)
investments and servicing of ---------- ---------
finance
Taxation paid (279,181) (282,147)
Capital expenditure
Purchase of intangible fixed assets (338,495) -
Purchase of tangible fixed assets (471,469) (114,087)
Sale of tangible fixed assets 19,695 131,050
Purchase of investment (19) -
---------- ---------
Net cash (outflow)/inflow from capital expenditure (790,288) 16,963
---------- ---------
Acquisitions
Purchase of subsidiary undertakings (576,409) (1,887,164)
Net cash acquired with subsidiary undertakings 7,684 7,287
--------- -----------
Net cash outflow from acquisitions (568,725) (1,879,877)
--------- -----------
Equity dividends paid (188,545) (118,836)
Financing
Issue of shares - 600,000
Repayment of borrowings (200,000) -
Receipts from borrowings 500,000 1,000,040
Capital element of finance leases (14,955) (26,821)
and hire purchase rentals --------- ----------
Net cash inflow from financing 285,045 1,573,219
--------- ----------
(Decrease)/increase in cash (195,686) 193,935
========= ==========
NOTES
The financial information set out does not constitute the
Group's statutory accounts for the years to 31 December 1999
or 1998 but is derived from the Group's statutory accounts
for the year to 31 December 1999 which will be delivered to
the Registrar of Companies following the Company's Annual
General Meeting. Statutory accounts for the year to 31
December 1998 have been delivered to the Registrar of
Companies. The auditors reported on those accounts, their
report was unqualified and did not contain statements under
section 237(2) or (3) of the Companies Act 1985.
Copies of the Report and Accounts will be posted to
shareholders in due course and will be available at the
Company's registered office at The Leaze, Salter Street,
Berkeley, Gloucestershire, GL13 9DB or available on the
Company's website at www.mearsgroup.co.uk.
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