Interim Results

Mears Group PLC
02 September 2003


I am pleased to announce record results for the six months ended 30 June 2003.
Profit before tax and the amortisation of goodwill increased by 40.0% to £2.31m
(2002: £1.65m) on turnover up by 30.5% to £49.65m (2002: £38.06m). Profits have
shown an annual compound growth rate of 42% since Mears was listed on the
Alternative Investment Market in October 1996.

Earnings before amortisation of goodwill increased by 33.5% to 2.87p per share
(2002: 2.15p).

Net profit margins increased again in the period to 4.3% up from 4.1% in the
comparable period last year.

Excellent cash management again resulted in the generation of £1.70m of positive
cash inflow from operating activities in the period.

The Group had no borrowings and cash in the bank of £6.41m at the end of June
2003.

The Board has declared an interim dividend of 0.35p per share (2002: 0.25p), an
increase of 40%, payable on 10 November 2003 to shareholders on the register on
24 October 2003.

Acquisitions

I am also pleased to confirm the recent acquisition of SCION Group Limited
(Scion) a multi-disciplined facility services group. 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. Mears has been in dialogue
with Scion over many years and the industry trends of large public and private
sector customers seeking to work with larger service providers, has encouraged
Scion to find a partner who shared their views of customer focussed facility
service partnership. I welcome Tony Southon and his team into the Group.

Full details of the Scion and other acquisitions are contained in the Financial
review.

Trading review

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 Tristar Homes, Stockport Metropolitan Council, Broomleigh
Housing Association and Northampton Borough Council. The record order book of
£400m stretches as far ahead as 2012.

It should be remembered that Mears provides 'essential support services' and is
not subject in its core business to any aspect of discretionary spending from
its customers.

Operations

Mears operates principally in five sectors.

Public sector services

By far the largest part of Mears, representing 60% of Group turnover, is the
provision of a range of maintenance services to the social housing and central
Government sectors. 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 a preferred supplier.

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. The business has expanded
into new sectors and new geographical areas and is looking to strengthen its
presence by the acquisition of a maintenance services business that will
increase greatly the range and scope of services provided. The London based
housing division has performed satisfactorily and is well placed to maximise
other opportunities should the anticipated downturn in the housing market occur.

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 recent 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 in the public
sector.

I look forward to bringing exciting news of this business in the future.

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. I am pleased with the
performance of this business which is well ahead of our expectations. Mears has
subsequently acquired two other small regional painting businesses and
negotiations are at an advanced stage to acquire further businesses to increase
its regional presence.

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
picks up every new challenge, embracing 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 embrace an even wider corporate social responsibility ethos by
our commitment to 'working in the community for the community' and I am
delighted to confirm that all our recent initiatives are working well. The
paired reading scheme where employees of the Group visit a local school and are
paired with a schoolchild, spending an hour a week with the child, has been a
big success. Three employees have recently completed a sponsored walk in Iceland
on behalf of a local based national charity. In addition we continue to support
a large number of community based schemes with the emphasis on improving the
local community for all.

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 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 demand for
our services has never been stronger.

Our future earnings are highly visible whilst the excellent generation of cash
from our operations allows us to seek out earnings enhancing acquisition
opportunities. The record order book demonstrates a commitment to long-term
partnership opportunities in stable market sectors.

Again my sincere thanks 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 welcome to all the teams who have recently and will shortly be
joining the Group.

I look forward to bringing further news of developments of Mears in the future.



Bob Holt

Chairman
2 September 2003


I am delighted to report another six months of significant progress across all
aspects of the Group. Turnover in the six months to 30 June 2003 was up by 30.5%
at just under £50m. This increase came primarily from the recent awards under
the Government's Best Value initiative and new contract awards. Contract
extensions under Partnering arrangements at Basildon, Croydon and Wycombe have
further strengthened the quality of the order book which now stands at £400m of
which £310m is at guaranteed net margins.

The Group's operating margin before goodwill amortisation rose to 4.5% up from
4.3% in the first half of 2002. Of particular note, however, is the growth in
the core maintenance net margin which saw an increase from 3.5% up to 4.3%. This
again highlights the value of having guaranteed margin business. The reduction
in the vehicle collection and delivery net margin from 6.9% to 5.0% has been
well signalled, and reflects in part a change in level of service required by
the vehicle industry.

The increased interest credit reflects the continued emphasis on cash collection
which has been a foundation of the Group's success. The cash inflow in the six
months amounted to £0.84m (£1.56m in 2002). This is against a background of
continued investment in management and the IT infrastructure to support the
Group's development and after £0.48m was paid as a further instalment on the
deferred consideration payable following the acquisition of the M & T Group in
December 2002. Overall at 30 June 2003 our net funds position stood at £6.41m
(2002: £4.17m).

Earnings per share before goodwill amortisation was up 33.5% at 2.87p (2002:
2.15p). The Group has been on a full tax charge for some time. Basic earnings
per share at 2.61p (2002: 2.02p) represents an increase of 29.2%.

The Group has been active on the acquisitions front and the following
transactions have taken place since June 2003.

Scion Group Limited

A cash payment of £750,000 was made on 22 August 2003 to acquire 100% of the
share capital of this business. A further £250,000 is payable upon the final
receipt of certain monies due to the business. A two year earn-out arrangement
based on profitability has been established which caps the total consideration
at £6m. This will be payable after the results for the year ending December
2005. In the accounts to 31 March 2003, Scion Group Limited showed a profit
before tax of £0.07m on turnover of £27.56m and had net assets of £0.70m which
include debt of £3.98m.

Grogan Decorators Limited

This Company was formed on 28 July 2003 to acquire certain assets of a long
standing painting business based in Halifax. A payment of £73,000 was made which
included goodwill of £55,000. This is the first of what is scheduled to be a
number of small regional painting and decorating services acquisitions to create
a national network.

Sheffield Decor Services Limited

On 19 August 2003 Mears acquired 100% of the issued share capital of a painting
and decorating business for a consideration of £86,030. In addition an earn-out
arrangement exists based on profits in the three years after completion with a
total consideration capped at £220,000.

At 30 June 2003 the net assets of the Group stood at £10.86m up from £8.57m at
30 June 2002. The Group is currently making significant investment in its
infrastructure to prepare a sound footing for the future growth of the Group.
Key appointments are being made across all the disciplines in both operational
and administrative functions.



David J Robertson

Finance Director
2 September 2003

                                               6 months to           6 months to               Year to
                                              30 June 2003          30 June 2002      31 December 2002
                                    Note             £'000                 £'000                 £'000
Turnover                               1            49,652                38,061                78,834

Cost of sales                                     (37,166)              (28,478)              (58,759)
Gross profit                                        12,486                 9,583                20,075

Administrative expenses                           (10,396)               (8,024)              (16,563)
Operating profit                                     2,090                 1,559                 3,512

Share of operating profit in                             3                     1                     8
associate
                                                     2,093                 1,560                 3,520

Net interest received                                   64                    17                    86
Profit on ordinary activities
before taxation                                      2,157                 1,577                 3,606

Tax on profit on ordinary              2             (690)                 (473)               (1,112)
activities

Profit on ordinary activities after                  1,467                 1,104                 2,494
taxation

Equity minority interests                               10                    23                    35

Profit for the financial                             1,477                 1,127                 2,529
period

Dividends                              3             (200)                 (141)                 (565)

Profit retained                                      1,277                   986                 1,964

Earnings per share                     4
Basic                                                2.61p                 2.02p                 4.51p

Basic pre amortisation                               2.87p                 2.15p                 4.79p
Diluted earnings per share                           2.52p                 1.95p                 4.36p



                                                      As at                 As at                 As at
                                               30 June 2003          30 June 2002      31 December 2002
                                     Note             £'000                 £'000                 £'000
Fixed assets

Intangible assets                                     5,285                 2,518                 5,433
Tangible assets                                       1,705                 1,547                 1,641
Investment in associate                                  40                    31                    37
Investments                                              62                    56                    62
                                                      7,092                 4,152                 7,173
Current assets

Stocks                                                1,828                 1,241                 1,266
Debtors                                              16,627                15,780                15,920
Cash at bank and in hand                              6,410                 4,168                 5,566
                                                     24,865                21,189                22,752
Creditors: amounts falling
due within one year                                (19,362)              (16,774)              (18,129)
Net current assets                                    5,503                 4,415                 4,623
Total assets less current                            12,595                 8,567                11,796
liabilities
Provisions for liabilities and                      (1,735)                     -               (2,260)
charges
                                                     10,860                 8,567                 9,536
Capital and reserves

Called up share capital                                 569                   565                   565
Share premium account                                 3,023                 2,967                 2,970
Profit and loss account                               7,301                 5,046                 6,024
Equity shareholders' funds              8            10,893                 8,578                 9,559

Equity minority interests                              (33)                  (11)                  (23)
                                                     10,860                 8,567                 9,536



                                                      6 months to        6 months to             Year to
                                                     30 June 2003       30 June 2002    31 December 2002
                                          Note              £'000              £'000               £'000
Net cash inflow from operating               5              1,695              1,717               4,743
activities

Returns on investments and
servicing of finance
Interest received                                              65                 19                  86
Interest paid                                                   -                (3)                 (3)
Net cash inflow from returns on
investments and servicing of finance                           65                 16                  83
Taxation (paid)/received                                    (146)                  5               (538)
Capital expenditure
Purchase of tangible fixed assets                           (352)              (403)               (731)
Sale of tangible fixed assets                                   -                  2                  17
Purchase of investment                                          -               (30)                (36)
Net cash outflow from capital expenditure                   (352)              (431)               (750)
Acquisitions
Purchase of subsidiary                                      (475)                  -               (837)
undertakings
Net cash acquired with subsidiary                               -                  -                 479
undertakings
Net cash outflow from acquisitions                          (475)                  -               (358)
Equity dividends paid                                           -                  -               (479)
Financing
Issue of shares                                                57                248                 252
Net cash inflow from financing                                 57                248                 252

Increase in cash                             6                844              1,555               2,953




1. Turnover and profit on ordinary activities before taxation

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
                       6 months to    6 months to  6 months to  6 months to As at              As at

                           30 June        30 June      30 June      30 June      30 June     30 June
                              2003           2002         2003         2002         2003        2002
                             £'000          £'000        £'000        £'000        £'000       £'000

Maintenance, mechanical
and electrical services     43,138         30,880        1,834        1,083        9,485       7,326

Vehicle collection and
delivery                     6,514          7,181          323          494        1,375       1,241

                            49,652         38,061        2,157        1,577       10,860       8,567



2. Taxation

The tax charge for the six months ended 30 June 2003 has been based on the
estimated tax rate for the full year.

3. Dividends
                                                            6 months to               6 months to
                                                           30 June 2003              30 June 2002
                                                                  £'000                     £'000
Ordinary shares
- interim dividend of 0.35p (2002: 0.25p) per share payable
on 10 November 2003                                                 200                       141



4. Earnings per share

Basic earnings per share is based on equity earnings of £1.48m (2002: £1.13m)
and 56.64m (2002: 55.77m) ordinary shares of 1p each, being the average number
of shares in issue during the period.

Basic pre amortisation earnings per share is based on equity earnings before
charging for the amortisation of goodwill of £1.63m (2002: £1.20m).

For diluted earnings per share the average number of shares in issue is
increased to 58.54m (2002: 57.83m) to reflect the potential diluting effect of
employee share schemes.


5. Net cash inflow from operating activities
                                               6 months to        6 months to             Year to
                                              30 June 2003       30 June 2002    31 December 2002
                                                     £'000              £'000               £'000

Operating profit                                     2,090              1,559               3,512
Depreciation and amortisation                          436                281                 610
Loss on disposal of fixed assets                         -                  2                   6
(Increase) in stocks                                 (562)                (9)                (29)
(Increase)/decrease in debtors                       (708)               (41)                 575
Increase/(decrease) in creditors                       439               (75)                  69
Net cash inflow from operating activities            1,695              1,717               4,743



6. Reconciliation of net cash flow to movement in net funds

                                                      6 months to         6 months to             Year to
                                                     30 June 2003        30 June 2002    31 December 2002
                                                            £'000               £'000               £'000

Change in net funds resulting from cash flows
and movement in net funds in the period                       844               1,555               2,953
Net funds at start of period                                5,566               2,613               2,613
Net funds at end of period                                  6,410               4,168               5,566



7. Analysis of changes in net funds
                                                               At                     At
                                                   1 January 2003           Cash flow        30 June 2003
                                                            £'000               £'000               £'000

Funds - cash at bank and in hand                            5,566                 844               6,410



8. Reconciliation of movements in equity shareholders' funds

                                                      6 months to         6 months to             Year to
                                                     30 June 2003        30 June 2002    31 December 2002
                                                            £'000               £'000               £'000

Profit for the financial period                             1,477               1,127               2,529
Dividends                                                   (200)               (141)               (565)
                                                            1,277                 986               1,964
Issue of shares                                                57                 597                 600
Net increase in equity shareholders' funds                  1,334               1,583               2,564
Equity shareholders' funds at start of period               9,559               6,995               6,995
Equity shareholders' funds at end of period                10,893               8,578               9,559


9. Preparation of interim financial information

The interim financial statements have been prepared on a basis consistent with
the accounting policies disclosed in the Annual Report and Accounts for the year
ended 31 December 2002.

The consolidated results for the year ended 31 December 2002 have been extracted
from the financial statements for that year and do not constitute full statutory
accounts for the Group. The Group accounts for the year ended 31 December 2002
received an unqualified audit report and did not include a statement under
section 237 (2) or (3) of the Companies Act 1985 and have been filed with the
Registrar of Companies.

10. Interim financial statements

Further copies of the interim statements are available from the registered
office of Mears Group PLC at The Leaze, Salter Street, Berkeley, Gloucestershire
GL13 9DB, or www.mearsgroup.co.uk.


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