Interim Results

Mercury Group PLC
29 June 2006


MERCURY GROUP PLC
MGP.L

                               MERCURY GROUP PLC

                           ('Mercury' or 'the Group')

             Interim Results for the six months ended 31 March 2006


CHAIRMAN'S STATEMENT

Having joined Mercury in May 2006, this is my first report for the Group.

As Mercury acquired its three subsidiaries, Navitas Hemway (facilities
management), TelCo Solutions (project management) and Smith Melzack Pepper
Angliss (commercial estate agency) during the first half of the year ended 30
September 2005, results for the period under review have been compared with
results for the second half of the last financial year rather than the first
half in order to provide a better comparison.

For the six months ended 31 March 2006, turnover was unchanged at £3.13m
compared to the second half of last year. Operating loss before goodwill
amortisation and exceptional items was £188,750 (2005: operating profit of
£336,375 for the six months to 30 September). The loss before tax and
exceptional items was £325,775 (2005: profit of £181,665 for the six months to
30 September). Net assets stood at £8.2m on 31 March 2006 (2005: £8.6m at 30
September). Cash balances at 31 March 2006 stood at £805,577 (2005: £1.44m at 30
September).

Following the period end, the Group issued a total of 6,481,049 new Ordinary
Shares of 1.0p each at 9.166p per share in the share capital of the Group to the
vendors of Navitas Hemway, including certain directors of Mercury. This
represented the final payment of the deferred purchase price as agreed at the
time of acquisition in December 2004.

Trading over the first half has been disappointing. While there have been some
good contract wins, with TelCo securing two new contracts to provide project
monitoring services to HBOS and Cheshire Building Society, there has also been
slippage in the timing of some key contracts throughout the business. This will
adversely affect results for the full year. Full year results will also reflect
non-recurring costs totalling £450,000. These non-recurring items relate to an
aborted acquisition and our restructuring programme.

The integration of our subsidiaries within the Group is underway and we are in
the process of making organisational changes aimed at setting an appropriate
cost base for the Group going forward. We anticipate annualised savings of
approximately £350,000 as a result.

Looking ahead, we remain focused on developing our existing businesses, both
organically and via acquisition. With clients looking for continued drive
towards greater efficiencies without being distracted from their own core
business activities, we believe there are good growth opportunities in the
marketplace.


Walter Goldsmith
Chairman


Enquiries:

Simon Michaels, Finance Director     Mercury Group Plc   020 7422 6585

Katie Tzouliadis                     Biddicks            020 7448 1000



MERCURY GROUP PLC

CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months ended 31 March 2006

                                          6 Months    6 Months          Year
                                             Ended       Ended         Ended
                                           31.3.06     31.3.05       30.9.05
                                         Unaudited   Unaudited       Audited
                                                 £           £             £

Turnover                                 3,131,668     782,082     3,915,807

Cost of sales                             (870,401)   (292,386)     (987,181)

Gross Profit                             2,261,267     489,696     2,928,626

Administrative expenses                 (2,620,435)   (786,949)   (3,391,168)


Operating Loss                            (359,168)   (297,253)     (462,542)

Amortisation of goodwill arising on
acquisition of associate                         -       (8441)            -

Share of loss of associate                       -     (35,152)      (36,899)

Amounts written back on investments              -           -        70,358

Interest receivable and similar income      25,073      26,091        32,132

Interest payable and similar charges       (16,680)     (1,362)      (34,236)

Profit before Taxation                    (350,775)   (316,117)     (431,187)

Taxation                                   (19,458)          -         1,335

Profit after Taxation                     (370,233)   (316,117)     (429,852)

Dividends                                        -           -             -

Retained Profit                           (370,233)   (316,117)     (429,852)

Basic earnings per share (see note 3)       (0.35p)     (0.02p)       (0.58p)

Diluted earnings per share (see note 3)     (0.34p)          -             -



MERCURY GROUP PLC

CONSOLIDATED BALANCE SHEET
As at 31 March 2006

                              31 March       31 March     30 September
                                  2006           2005             2005
                             Unaudited      Unaudited          Audited
                                     £              £                £
Fixed Assets
Tangible assets                144,424        100,444          115,794
Investments                    120,710              -           70,359
Intangible assets            6,241,577      5,873,445        6,406,592
                             6,506,711      5,973,889        6,592,745
Current Assets
Stocks                               -                          80,000
Debtors                      2,253,219      1,607,044        1,835,289
Cash at bank and in hand       805,577        292,129        1,439,464

                             3,058,796      1,899,173        3,354,753

Creditors: Amounts falling
due within one year         (1,369,030)    (2,057,583)      (1,342,040)

Net Current Assets/          
(Liabilities)                1,689,766       (158,410)       2,012,713

Total Assets less Current
Liabilities                  8,196,477      5,815,479        8,605,458

Creditors: Amounts falling
due after more that one
year                                 -       (260,980)          (1,150)

Net Assets                   8,196,477      5,554,499        8,604,308

Capital and Reserves
Called up share capital      1,064,964      8,900,003        1,064,946
Share premium account          319,188      3,167,827          356,805
Shares to be issued          2,938,262      2,231,349        2,938,262
Distributable reserve        4,711,109              -        4,711,109
Other reserve                  156,954        156,953          156,953
Profit and loss account       (994,000)    (8,901,633)        (623,767)

Shareholders' Funds          8,196,477      5,554,499        8,604,308




MERCURY GROUP PLC

CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 March 2006

                                    6 Months      6 Months            Year
                                       Ended         Ended           Ended
                                    31 March      31 March    30 September
                                        2006          2005            2005
                                   Unaudited     Unaudited         Audited
                                           £             £               £

Net cash outflow from operating     (497,369)   (1,120,575)     (2,399,148)     
activities

Returns on Investments and
Servicing of Finance
Interest received                     25,073        26,091          32,132     
Interest paid                        (16,680)       (1,362)        (27,031)

Net cash outflow for returns on
investments and servicing of
finance                                8,393        24,729           5,101

Taxation                             (33,001)      (82,981)        (84,359)

Capital Expenditure and Financial
Investment
Purchase of tangible fixed assets    (71,426)       (7,379)        (80,071)
Purchase of investments              (50,351)            -               -

Net cash outflow for capital
expenditure and financial
investment                          (121,777)       (7,379)        (80,071)

Acquisitions
Cash acquired with subsidiary              -      (130,035)       (130,035)
Purchase of subsidiary               
undertakings                          (1,500)     (411,198)       (411,198)

Net Cash Outflow for Acquisitions     (1,500)     (541,233)       (541,233)

Equity Dividends Paid                      -             -               -
 
Net cash outflow before financing   (645,254)   (1,727,439)     (3,099,710)

Financing
Cost of capital reconstruction       (37,617)            -               -
Net cash proceeds from                     
share issue                                -       505,500       3,284,642
Capital element of finance lease      
payments                              (1,319)         (792)         (3,642)

Net cash (outflow)/ inflow from     
financing                            (38,936)      504,708       3,281,000

(Decrease)/Increase in Cash         (684,190)   (1,222,731)        181,290




MERCURY GROUP PLC

NOTES TO THE CONSOLIDATED CASHFLOW STATEMENT
For the six months ended 31 March 2006

                                                     6 Months    6 Months        Year
                                                        Ended       Ended       Ended
                                                      31.3.06     31.3.05     30.9.05
                                                    Unaudited   Unaudited     Audited
(a) Reconciliation of operating loss to net cash            £           £           £
    outflow from operating activities

    Operating loss                                   (359,168)   (297,253)   (462,542)
    Depreciation                                       42,796      11,026      56,767
    Amortisation of goodwill                          166,515      52,485     215,636
    Decrease/(increase) in work in progress            80,000           -           -
    Decrease/(increase) in debtors                   (437,388)   (939,825)   (693,832)
    (Decrease)/increase in creditors                    9,876      52,992  (1,515,177)
   

    Net cash outflow from operating                  (497,369) (1,120,575) (2,399,148)
    activities

(b) Reconciliation of net cash flow to movement in
    net funds

    (Decrease) /Increase in cash in the period       (684,190) (1,222,731)    181,290
    Increase in debt in period                              -           -           -
    Movement in net funds in the period              (684,190) (1,222,731)    181,290

    Net funds at 30 September 2005                  1,133,184     951,894     951,894
  
    Net funds at 31 March 2006                        448,994    (270,837)  1,133,184

(c) Analysis of changes in net funds
                                                 At                                At
                                          1 October      Cash       Other    31 March
                                               2005      Flow     Changes        2006
                                                  £         £           £           £
    Cash at bank and in                   1,439,464  (633,886)          -     805,578
    hand
    Overdrafts                             (306,280)  (50,304)          -    (356,584)

    Total                                 1,133,184  (684,190)          -     448,994




MERCURY GROUP PLC

NOTES TO THE INTERIM STATEMENT

For the six months ended 31 March 2006

1.       The financial information contained in the Interim Report does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. The comparative financial information for the year ended 30 September 2005
is an abridged version of the group's published financial statements for that
year, which contained an unqualified audit report and which have been filed with
the Registrar of Companies.

2.       Accounting Policies

The financial statements are prepared in accordance with applicable accounting
standards. The principal accounting policies adopted in the preparation of the
financial statements are described below and have remained unchanged.

Accounting Convention
The financial statements have been prepared under the historical cost convention
modified to include the revaluation of certain investments and in accordance
with applicable accounting standards.

Basis of Consolidation
The group profit and loss account and balance sheet consist of the financial
statements of the parent company and its subsidiary undertakings. The group's
share of associated undertakings' profits or losses are included in the group
profit and loss account, and added to the cost of investments in the balance
sheet.

The results of businesses acquired or disposed of during the year have been
included from the effective date of acquisition or up until the date of
disposal. Profits or losses on intra-group transactions are eliminated in full.

Turnover
Turnover represents fees invoiced, excluding discounts, other sales taxes and
VAT.

Tangible Fixed Assets
Depreciation is provided on the cost of tangible fixed assets in equal annual
instalments over the estimated useful lives of the assets. The rates of
depreciation are as follows:

Office equipment 25% on cost
Computer equipment 33% on cost

Taxation
The charge for taxation is based on the results for the year and takes into
account deferred taxation. Provision is made for material deferred taxation, in
respect of all timing differences that have originated but not reversed at the
balance sheet date. Deferred tax assets are recognised only to the extent that
the directors consider that it is more likely than not that there will be
suitable taxable profits from which the future reversal of the underlying timing
differences can be deducted.

Leases
Operating lease rentals are charged to the profit and loss account in equal
annual amounts over the course of the lease.

Investments
Investments are included at valuation on the following basis:

(a)     Listed investments are valued at directors' estimate of market values
given the size of the holding.

(b)     Unquoted investments are valued by the directors at the cost of the
investment, subject to any impairment in value.

Goodwill
Goodwill arising from the purchase of subsidiary and associated undertakings,
represents the excess of the fair value of the purchase consideration over the
fair value of the net assets or share of net assets acquired.

The goodwill arising on acquisitions is capitalised as an intangible asset and
amortised over a period of 20 years.

Hire Purchase Contracts
Assets obtained under hire purchase contracts, which transfer to the group
substantially all the risks and rewards of ownership of the assets, are
capitalised as tangible fixed assets and depreciated over their estimated useful
life. Obligations under such contracts are included in creditors net of finance
charges allocated to future periods. The finance element of the payment is
charged in the profit and loss account so as to produce a constant periodic rate
of charge on the net obligations outstanding in each period.

Pensions
Certain subsidiaries of the company operate defined contribution pension schemes
for their employees and directors. The assets of the schemes are held separately
from those of the group. The annual contributions payable are charged to the
profit and loss account. The company provides no other post-retirement benefits
to its employees and directors.

Financial Instruments
The group's financing strategy, which is approved at board level is to raise
cash to finance the group's operations and acquisitions.

The debt is currently at floating rates and the resulting interest rate exposure
is kept under review by the board.

Stocks
Stock is valued at the lower of cost and net realisable value. Provisions are
made for obsolete, slow moving and defective stock where appropriate.

3. Earnings per Share

The calculation of basic earnings per share is based on the earnings for the
year of (£370,233) (year ended 31 September 2005 - (£429,852) and six months
ended 31 March 2005 - (£316,117)) and on a weighted average number of shares of
0.1p each in issue during the period of 106,494,600 (year ended 30 September -
73,594,097, six months ended 31 March 2005 - 1,537,327,773 (pre consolidation)).
The calculation of diluted earnings per share is based on the earnings for the
year of £(370,233) and on a weighted average number of shares of 0.1p during the
period of 109,315,773.

4. Reconciliation of Movement in Shareholders' Funds is as follows:
                                                                   £
Shareholders' funds at 1 October 2005                      8,604,308
Loss for the period                                         (370,213)
Cost of capital reduction scheme                             (37,617)

Shareholders' funds at 31 March 2006                       8,191,478

5. Interim Statement

Copies are available free of charge for a period of one month from the date of
this announcement on request from the Group's registered office: Devonshire
House, 146 Bishopsgate, London EC2M 4JX


INDEPENDENT REVIEW REPORT TO MERCURY GROUP PLC

Introduction

We have been instructed by the company to review the financial information set
out on pages 2 to 7 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.

Directors' Responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.

Review Work Performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and based thereon, assessing
whether the accounting policies and presentation have been consistently applied
unless otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with Auditing
Standards and therefore provides a lower level of assurance than an audit.
Accordingly we do not express an audit opinion on the financial information.

Review Conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 March 2006.


Kingston Smith LLP
Chartered Accountants

Devonshire House
60 Goswell Road
London
EC1M 7AD






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