Interim Results

Mercury Recycling Group PLC
08 September 2006



                          MERCURY RECYCLING GROUP PLC



               INTERIM REPORT FOR THE PERIOD ENDING 30 JUNE 2006





Chairman's Statement



I am pleased to report the Group's unaudited results for the six months ended 30
June 2006, show a further increase in sales of nearly 20% compared to the same
period last year to £1,219,000 from £1,031,000.  Operating profits at the
interim stage, excluding goodwill amortisation and exceptional items, increased
by 60% to £212,000 from £133,000, whereas the profit for the last financial year
was £268,000.  It will also be noted that, for the first time, we have a
positive earnings.



The results were achieved despite yet another Government delay in the
introduction of the WEEE Directive which, as I have indicated previously, will
legally enforce the recycling of all Gas Discharge Lamps.  The Directive was
originally expected to be implemented in 2006 or early 2007.  The Government
have now finally announced a firm commitment to implement this Directive in the
Summer of 2007.



As reported in the 2005 Report and Accounts, Share Options were granted to both
Executive Directors and Senior Executives.  Under new, and complex financial
reporting requirements, the value of the share options has to be reported in the
Profit and Loss Account and reflected as a reserve in the Balance Sheet.  A
prior year adjustment has been required in respect of the effect on previous
years.



Our enclosed Interim results show continuing sales growth and your Board is
confident of this trend continuing in the second half of the year.  Future
prospects should be enhanced when the Directive is implemented in 2007.  This is
especially important, as our new plant and premises have the capacity to
substantially increase recycling output without any further capital expenditure.





The Rt Hon The Lord Barnett JP PC

Chairman

8 September 2006






Group Profit and Loss Account

For the Six months ended 30 June 2006


                                                                           As restated
                                                         6 Months             6 Months            Year
                                                                ended            ended           ended
                                                              30.6.06          30.6.05        31.12.05
                                                                £'000            £'000           £'000

Turnover                                                        1,219            1,031           2,147

Cost of sales                                                   (104)            (120)           (218)

Gross profit                                                    1,115              911           1,929


Administrative expenses                                       (1,034)            (951)         (2,110)

Operating profit before amortisation, relocation costs            212              133             268

and share based payment costs
Relocation costs                                                 (17)             (57)           (216)
Share based payment costs                                        (12)             (14)            (29)
Goodwill amortisation                                           (102)            (102)           (204)

Group operating profit/(loss)                                      81             (40)           (181)

Interest receivable                                                 1                7               2
Interest payable                                                 (14)              (1)            (14)

Profit/(loss) on ordinary activities before taxation               68             (34)           (193)

Taxation                                                            -                -               -
Profit/(loss) on ordinary activities after

taxation retained for the period                                   68             (34)           (193)

Earnings/(loss) per share:    Basic (pence)                     0.20p          (0.10p)         (0.57p)
                              Diluted                           0.19p              N/A             N/A




Group Balance Sheet

As at 30 June 2006


                                                                               As restated
                                                                     As at           As at           As at
                                                                   30.6.06         30.6.05        31.12.05
                                                                     £'000           £'000           £'000
Fixed assets

Tangible assets                                                      1,142             994           1,142

Intangible assets                                                    3,124           3,327           3,225
                                                                     4,266           4,321           4,367
Current assets

Debtors                                                                493             445             531
Cash at hand and in bank                                                29             181               1
                                                                       522             626             532
Creditors: amounts due within one year                               (302)           (727)           (515)


Net current assets/(liabilities)                                       220           (101)              17

Creditors: amounts due after more than one year                      (290)            (44)           (308)

Provisions for liabilities                                            (84)               -            (44)

Total assets less current liabilities                                4,112           4,176           4,032


Capital and reserves

Called up share capital                                              3,336           3,336           3,336

Share premium account                                                  242             242             242
Other reserve                                                          448             612             530

Merger reserve                                                       (111)           (111)           (111)
Share based payment reserve                                             59              32              47
Profit and loss account                                                138              65            (12)

Equity shareholders' funds                                           4,112           4,176           4,032





Group Cash Flow Statement

For the six months ended 30 June 2006


                                                                               As restated
                                                               6 Months           6 Months        6 Months
                                                                     ended           ended           ended
                                                                   30.6.06         30.6.05        31.12.05
                                                                     £'000           £'000           £'000


Net cash inflow from operating activities                              127             148             145


Returns on investment and servicing of finance

  Interest paid                                                       (14)             (1)            (14)
  Interest received                                                      1               7               2

Capital expenditure and financial investment

  Purchase of tangible fixed assets                                   (77)           (431)           (706)

                                                                        37           (277)           (573)

Financing

  New loan                                                               -             300             300
  Repayment of loans                                                   (4)             (7)               -
  Capital element of hire purchase                                     (5)             (5)            (25)

Increase/(decrease) in cash in period                                   28              11           (298)


Reconciliation of operating profit/(loss) to

net cash inflow from operating activities

Operating profit/(loss)                                                 81            (40)           (181)
Depreciation                                                            81              43              93

Amortisation of goodwill                                               102             102             204
Share based payment costs                                               12              14              29
Profit on disposal of assets                                           (4)             (5)             (5)
Relocation costs - Loss on disposal                                      -               -             122
Decrease / (increase) in debtors                                        38            (98)           (241)
(Decrease) / increase in creditors                                   (183)             132             124

Net cash inflow from operating activities                              127             148             145






Notes



1.             Earnings per share



The calculation of basic earnings per share is based upon the profit for the
period of £68,000 (2005 - first half - loss £34,000) and the weighted-average
number of 33,359,000 (2005 - first half - 33,359,000) shares in issue during the
period.



Adjusted earnings per share is calculated using earnings before amortisation of
goodwill and exceptional items.  Adjusted earnings is one of the primary
performance measures used by the directors and is provided, in addition to the
statutory results prepared under UK GAAP, to assist the shareholders to gain a
clearer understanding of the underlying performance of the business.


                                                                 6 Months         6 Months         6 Months
                                                                       to               to               to
                                                                  30.6.06          30.6.05         31.12.05
                                                                    pence            pence            pence


Basic earnings/(loss) per share                                      0.20           (0.10)           (0.57)

Goodwill, relocation costs and share based payment costs             0.47             0.52             1.33
Adjusted earnings per share                                          0.67             0.42             0.76






2.             Basis of preparation



The interim financial information has been prepared on the basis of the
accounting policies set out in the accounts for the year ended 31 December 2005
with the exception of share based payments set out in note 4.



The interim financial information is unaudited.  The financial information does
not constitute statutory accounts as defined by section 240 of the Companies Act
1985.  Full accounts of the company for the year ended 31 December 2005 on which
the Auditors gave an unqualified report, have been delivered to the Registrar of
Companies.  These accounts consolidate the accounts of Mercury Recycling Group
Plc and all of its wholly owned subsidiaries.  The goodwill arising on the
acquisition of Mercury Recycling Limited and Simister Engineering Limited has
been capitalised and amortised over the Directors' estimate of its useful life.



3.             Copies of report



Copies of this interim statement will be despatched to shareholders and will be
available to the public at the Registered Office, Mercury House, 17 Commerce
Way, Trafford Park, Manchester, M17 1HW.



4.             Share based payments



During the period the group has adopted FRS20 and restated comparative figures
accordingly.



The fair value of shares/options granted is recognised as an employee expense
with a corresponding increase in equity.  The fair value is measured at the
grant date and spread over the period during which the employee becomes
unconditionally entitled to the share/option.



In accordance with the transitional provisions of FRS20, no expense is recorded
in respect of grants made prior to 27 November 2002 or which have vested by 1
January 2006.


Operating profits have been reduced as follows:-                 6 Months         6 Months         6 Months
                                                                       to               to               to
                                                                  30.6.06          30.6.05         31.12.05
                                                                    £'000            £'000            £'000


Share based payment charge                                             12               14               29





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