Interim report
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RNS Number : 4706P Mears Group PLC 06 August 2026 Mears Group PLC ( " Mears " or " the Group " or " the Company " ) Interim Results for the six months ended 30 June 2026 Strong progress against financial and strategic objectives Full year guidance confirmed Mears Group PLC , the leading provider of housing services to the public and regulated sectors in the UK , announces its interim financial results for the six months ended 30 June 2026 ( " H1 2026 " ) . Financial Highlights Group revenues , before divested Facilities Management activities , increased by 2 % to £ 555.6m ( H1 2025 : £ 544.2m ) . Strong growth in Maintenance - led activities ( + 7 % ) , offset by anticipated reduction in Management - led revenues . This rebalancing between Maintenance - led and Management - led activities is a trend that is expected to continue . Operating margin ( pre - IFRS 16 ) reduced to 5.2 % ( H1 2025 : 5.6 % ) owing to intensive period of new contract commencements but remains within stated range . Adjusted profit before tax decreased by 10 % to £ 28.9m ( H1 2025 : £ 32.2m ) , in line with expectations and consistent with guidance . EBITDA to Operating cash conversion at 92 % ( H1 2025 : 105 % ) reflecting cash generative business model and quality of earnings . Average daily net cash of £ 29.7m ( H1 2025 : £ 67.7m ) , the reduction reflects several cash outflows occurring over the course of the second half of 2025 and previously reported , including M & A , property acquisitions , an unwind of negative working capital and shareholder distributions . In addition , during the first half the Group utilised £ 13.6m in purchase of own shares . Adjusted diluted EPS reduced by 9 % to 25.26p ( H1 2025 : 27.82p ) reflecting the profit reduction on a reducing share count . Interim dividend of 6.20p ( H1 2025 : 5.60p ) , an increase of 11 % , reflecting the Board's continuing confidence . H1 2026 H1 2025 Change % Total Revenue 560.0 559.4 + 0 % Revenue - Maintenance - led ( £ m ) 1 305.7 287.0 + 7 % 2 Revenue Management - led ( £ m ) 249.9 257.2 -3 % Statutory operating profit ( £ m ) 34.6 36.4 -5 % Statutory operating margin % 6.2 % 6.5 % -30 bps Adjusted operating profit ( pre - IFRS 16 ) ( £ m ) 3 29.2 31.3 -7 % Adjusted operating margin % ³ 5.2 % 5.6 % -40 bps Statutory profit before tax ( £ m ) 38.0 32.0 + 18 % Adjusted profit before tax ( £ m ) 4 28.9 32.2 -10 % Statutory diluted EPS ( p ) 36.01 27.68 + 30 % Adjusted diluted EPS ( p ) 4 25.26 27.82 -9 % Interim dividend per share ( p ) 6.20 5.60 + 11 % Average daily net cash ( £ m ) 29.7 67.7 -57 % 1 . Excluding divested Facilities Management ( ' FM ' ) activities 2 . 7 % growth comprises 4 % organic and 3 % acquired 3 . 4 . See Alternative Performance Measures for definitions and reconciliation to statutory measures Excluding profit on disposal of FM activities and before the amortisation of acquisition intangibles and the impact of IFRS 16 Excluding profit on disposal of FM activities and before the amortisation of acquisition intangibles Strong progress against strategic objectives Growth in our traditional Maintenance - led activities underpinned by a high level of contract retention , driven by strength of Group's service delivery and customer relationships :
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o Key contract retentions include Cross Keys Homes, Livin, Moat Homes, Thurrock Council and Leeds City Council, in aggregate contributing over £1bn in new contract orders o The award of new contracts with Birmingham City Council (Total Contract Value, ('TCV') £450m, 10 years) and Rooftop Housing Group (TCV £150m, 10 years) o Order book at an all-time high of £4.2bn (H1 2025: £3.3bn, excluding FM). · The post-acquisition integration of Pennington Choices ('Pennington') is largely complete, which has extended Mears' capabilities in Compliance and accelerated progress against this key strategic objective. · Disposal of the non-core Facilities Management ('FM') activities for cash consideration of £18m which brings a further simplification to the Group, reinforcing our focus on delivering housing services. The Group's FM activities reportedrevenue and profit before tax in FY25 of £32.1m and £2.8m respectively. · Interim dividend of 6.20p will be payable on 1 October 2026 to shareholders on the register of members at the close of business on 11 September 2026. The shares will go ex-dividend on 10 September 2026. · Consistent with the Group's capital allocation strategy, the Board approved a further £20m share buyback programme which is currently ongoing.Lucas Critchley, Chief Executive Officer of the Group, commented: "Mears is well positioned to deliver results for the full year FY26 in line with market expectations1. "Mears has continued to make strong progress against its key strategic objectives. The Group continues to deliver growthin its core maintenance activities, having performed strongly through an intensive period of contract rebids, complementedby strategically important new business wins with Birmingham City Council and Rooftop Housing Group. We are welladvanced with the integration of the Pennington business, which is already proving to be an excellent acquisition,accelerating the development of the Mears' Compliance offer, as well as strengthening the Mears provision for long-term,strategic, asset management contracts. We also remain well positioned to deliver additional housing services to CentralGovernment." Note: 1. Market expectations for FY26 are considered to be revenue and adjusted profit before tax of £1,038m and £50.7m respectively. Certain information contained in this announcement would have constituted inside information for the purposes of Article 7 ofthe UK Market Abuse Regulation. Upon the publication of this announcement, such information is now considered to be in thepublic domain and is disclosed in accordance with the Company's obligations under Article 17 of the UK Market AbuseRegulation. For further information, contact: Mears Group PLC Tel: +44(0)1452 634 600Lucas Critchley Andrew Smith Deutsche Numis Tel: +44(0)207 260 1000Julian Cater Kevin Cruickshank Panmure Liberum Tel: +44(0)207 886 2500Tom Scrivens James Sinclair-Ford About Mears Mears is a leading provider of services to the Affordable Housing sector, providing a range of services to individuals within theirhomes. We manage and maintain around 450,000 homes across the UK and work predominantly with Central Government andLocal Government, typically through long-term contracts. We equally consider the residents of the homes that we manage andmaintain to be our customers, and we take pride in the high levels of customer satisfaction that we achieve. Mears currently employs over 5,750 people and provides services in every region of the UK. In partnership with our Housingclients, we provide property management and maintenance services. Mears has extended its activities to provide broaderhousing solutions to solve the challenge posed by the lack of affordable housing and to provide accommodation and support forthe most vulnerable. We focus on long-term outcomes for people rather than short-term solutions and invest in innovations that have a positiveimpact on people's quality of life and on their communities' social, economic, and environmental wellbeing. Our innovativeapproaches and market leading positions are intended to create value for our customers and the people they serve while alsodriving sustainable financial returns for our providers of capital, especially our shareholders.
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CHIEF EXECUTIVE REVIEW The Board is pleased to report another period in which the Group has made strong progress against all of its key strategicobjectives. Mears' key differentiators remain its strong customer centric approach, combined with a granular operational focus,underpinned by our proprietary IT operating platform. Our success is rooted in finding solutions to our clients' complex housingrelated challenges. The first half saw a strengthening in our operational structure, and the completion of succession planningthat has evolved over several years. The Group made several senior compliance, commercial and operational appointments.These have combined well, extending our bandwidth and ensuring that the Group maintains a disciplined approach and strictcontrols during a particularly busy period of new contract starts and other front-line developments. Teamwork is a core Mearsvalue, and the joint working between operational and central teams has been a key factor in the strength of the first halfperformance. Our strong performance continues to be underpinned by the quality of our employees who continually demonstrate diligence,empathy and a dedication to deliver a great service user experience, in an often-challenging work environment. Local Government - Maintenance A key component of the strategic plan is to deliver growth within Local Government maintenance activities. The executive teamexpects to continue to deliver annual growth within this segment of 5-9% in the medium term. This is viewed as a relativelyconservative target, given the resilient social housing repairs and maintenance market has reported annual growth of morethan 10% since the pandemic, driven by increasing regulation, rising compliance obligations and sustained investment inexisting homes. The Group reported revenue growth of 12% in FY25. As detailed below, the Group is, once again, well placedto outperform the stated growth target range in FY26, and the full year impact of the new contracts also positions the Groupwell for FY27. Over the course of the first half, the Group made strong progress across its key Local Government objectives, underpinned byan excellent period of contract retentions during which the Group was re-awarded contracts with Cross Keys Homes(Peterborough), Leeds City Council, Livin (Sedgefield), Moat Homes and Thurrock Council, amounting to an aggregate neworder intake of over £1bn. Central to this success is strong operational performance and the deep relationships established withthose clients and within those communities. In addition, the first half saw the Group secure contracts with Birmingham CityCouncil and Rooftop Housing Group, both new customer relationships, which are covered in greater detail below. At the half year end, the Group's Order Book stood at £4.2bn, of which £3.3bn related to Maintenance-led activities. Positively,an intensive 24-month period of re-bids, which saw over half the Group's maintenance contracts subject to re-procurement, hasnow largely concluded. The visibility of forward revenues is significantly improved, and the Group can focus its biddingresources on securing further growth opportunities with new customers. In addition, there is a solid bidding pipeline of newgrowth opportunities. Importantly, Mears recognised early that its market was evolving from a largely repairs-driven requirement to an increasingcompliance and asset investment need, requiring increased strategic thinking, and professional and technical capabilities.Mears responded quickly, extending its service capabilities to cover these emerging opportunities. The integration of the Pennington business is largely complete and is already proving to be an excellent acquisition in terms ofboth cultural and strategic fit, and the margin enhancement opportunities the business brings to the Group. The acquisition hasaccelerated the development of the Mears' Compliance offer, as well as strengthened the Mears proposition for long-term,strategic, asset management contracts. The Group has continued to develop its operational and commercial expertise to deliver standalone planned, projects andretrofit works. The Group is adopting a disciplined approach, initially building this capability within its existing operationalstrongholds. The Group remains selective in terms of bidding planned asset investment opportunities, typically focusing onareas that are more technical in nature, often linked to building safety and retrofit, and where price plays a lesser role in theselection criteria. The Group continues to develop opportunities with Registered Providers who wish to retain their insourced repairs service.Mears' offer in this area has been developed to complement and not compete with clients' in-house capability. Central Government - Management The Group places emphasis on ensuring that its operational performance is exemplary whilst understanding the developingneeds and requirements of Ministers and Central Government. Mears aims to be seen as the Housing Specialist for CentralGovernment, and its ambition is to deliver additional housing, welfare and wraparound services to this key client group. Mears'strong operational delivery and partnering ethos ensure that it is well positioned as opportunities come to market. The Asylum Accommodation and Support contract (AASC) continues to receive significant focus. The Group continues to workhard to deliver against Government objectives, in a compliant and caring manner. Good progress has been made, with the useof hotels reducing from the peak seen in 2024, and this has been sustained through the first half. Mears has workedcollaboratively to secure sufficient residential dispersed accommodation to remove the requirement for short-term contingentsolutions. Divestment of non-core activities Mears has a consistent and well-communicated strategy focused entirely on delivering housing services to the public andregulated sector. The Group owned a small FM business with a focus on educational and healthcare customers, which was alegacy from a historic acquisition. This business was largely self-contained, and delivered consistent financial outputs, withlimited resources allocated from the wider Group. Given the Group's focus on housing, the Board took a decision to divest thisbusiness. The transaction completed on 2 March 2026 and further detail is included below. Operational Review H1 2026 £m H1 2025 £m FY 2025 £m Revenue Maintenance-led1 305.7 287.0 588.5 Management-led 249.9 257.2 515.0 Sub-total - Continuing activities 555.6 544.2 1,103.5 Facilities Management (divested) 4.4 15.2 32.1 Total 560.0 559.4 1,135.5
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Operating profit measures: Operating profit (post-IFRS 16) 34.6 36.4 75.0 Operating profit margin (post-IFRS 16) % 6.2% 6.5% 6.6% Adjusted operating profit (pre-IFRS 16)2 29.2 31.3 65.2 Adjusted operating profit margin (pre-IFRS 16)2 5.2% 5.6% 5.7% Profit before tax measures: Statutory profit before tax 38.0 32.0 63.5 Adjusted profit before tax3 28.9 32.2 63.9 1. Excluding FM activities2. Excluding the amortisation of acquisition intangibles and the impact of IFRS 16. See Alternative Performance Measures fordefinitions and reconciliation to statutory measures3. Excluding profit on disposal of FM activities and before the amortisation of acquisition intangibles. Group revenues, excluding the Facilities Management activities that were the subject of disposal, increased by 2% to £555.6m (2025: £544.2m). Maintenance-led activities reported revenues increasing by 7%, of which organic growth was 4%. Organic growth will accelerate in 2H26 owing to the impact from recent bidding success. In the case of the remobilisations on existing contracts, revenue has reduced in the short term as clients look to prioritise the day-to-day repairs ahead of planned investment activities during the initial start-up phase. The Pennington acquisition contributed 3% of revenue in the first half. The division has excellent revenue visibility and an expectation of achieving the top end of its revenue growth target for the full year. Management-led activities, excluding AASC and ARAP, delivered modest growth. Including these two contracts, Management-led activities reduced by 3%. As reported previously, the Group has experienced elevated volumes in its Asylum Accommodation and Support contract (AASC). These peaked in 2024, and there has been a continued drive to reduce the use of contingency accommodation and secure alternative, more appropriate solutions by increasing the use of dispersed residential accommodation. AASC revenue reduced by 5%, half year on half year, to £180m. The site-based works delivered to the MOD in respect of the Afghan Relocation and Assistance Policy ('ARAP') concluded in November 2025, as expected, and for a revenue reduction of £8m when comparing half on half performance. Adjusted operating margin (pre-IFRS 16) reduced to 5.2% (H1 2025: 5.6%). This reduction was in line with the Board's expectations through an intensive period of new contract commencements. A new contract typically follows a profit trajectory whereby it moves from generating an initial loss to achieving the full tendered profit margin over a period of around twenty-four months. The new mobilisations are on track with this anticipated phasing, whilst also meeting the desired operational and customer performance levels. Given the high number of new contracts commencing in the second half, the trend in operating margin is expected to continue over the immediate term, before those maturing contracts drive margin accretion. Notwithstanding the initial investment absorbed in the new contracts, the Board anticipates maintaining margins within its stated target range. More broadly, the Board remains pleased with operational and financial performance across the entire contract estate. The strict adherence to business systems and processes remains a key factor in ensuring that operating margins can be maintained in the target range. The disposal of the FM activities resulted in some operating margin dilution, however, this impact was largely absorbed through the acquisition of the higher margin Pennington business. The Board remains confident that the Group will maintain adjusted operating margins within its previously stated target range of 5-6%, as the new contracts bed down and the business mix continues to evolve. OUR PEOPLE Key to our strong performance is maintaining a motivated and engaged workforce. The staff turnover metric has continued toimprove, reducing to 18.8% (FY 2025: 20.1%), and the Group is committed to growing its own talent and providingopportunities for internal progression. Mears employs around 350 apprentices. Maintaining a consistently high-quality apprenticeship programme, underpinned bylong-term employment opportunities, remains a priority. To support continuous improvement, the Group has invested in
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developing mentors to ensure a robust and scalable support framework for apprentices. Apprenticeships form a key componentof the Group's long-term workforce strategy, with a clear focus on progression beyond programme completion into sustainablelong-term careers. Almost one third of our new apprentice intake identify as coming from lower socio-economic backgrounds.This forms a strong contribution to our commitment to improve social mobility. BUSINESS DEVELOPMENT The Group's forward order book today stands at £4.2bn (H1 2025: £3.3bn) and the high number of contractretentions has improved the order book phasing, giving the Group a high level of visibility of market forecastrevenues over the medium term. The Group has a strong record of retaining contracts. Re-bids naturally bring some risk of attrition and require ashift in focus away from bidding new works. It is extremely significant that having reported 100% retention againstall contracts expiring in FY25, the Group secured further retentions in respect of Cross Keys Homes, Livin, MoatHomes, Thurrock Council and Leeds City Council in the first half, in aggregate contributing over £1bn in newcontract orders. A key highlight for the first half was the Group's appointment by Birmingham City Council ("BCC") to provide responsive and void maintenance, gas servicing and heating installation, planned maintenance and improvement works to Council housing stock. The base contract has an estimated value of £450m over the initial period of 10 years and will see the Group deliver work to 11,500 units of Council housing stock within the BCC West-Central region. This is an important new customer relationship, and the Group will look to develop a strong base within Birmingham and strengthen its presence in the Midlands area. The Group secured another key new customer relationship with the award of a contract with Rooftop Housing Group ('Rooftop'), carrying an estimated value of £150m over 10 years, which will see the Group deliver maintenance services to 7,000 units of housing in South Worcestershire and North Gloucestershire. This is a strategically important success for the Group. Whilst Rooftop is a medium-sized social landlord, it is a good example of an innovative procurement approach adopted that sees all client-spend directed through the partnership and brings both longevity and a material annual revenue. Management believes it has an opportunity to continue to use Mears' position as market leader to encourage more clients to follow this course. The investment that Mears has made to broaden its service offer positions the Group well and the pool of competitors with a credible alternative offer is small. A summary of the new maintenance contracts secured in the first half are detailed below. Importantly, a number ofretentions have provided the Group an opportunity to deliver additional services for those customers. Client Retention/GrowthNew contractstart dateContract Length (years) Annual valueTotal contractvalue Livin Retention Apr 2026 10+3+2 £21m £210m Cross Keys Homes Retention Jul 2026 5+5+5 £27m £135m Birmingham City Council Growth Jul 2026 10+5 £45m £450m Rooftop Housing Growth Jul 2026 10 £15m £150m Leeds City Council Retention Oct 2026 5+5 £19m £93m Moat Homes Retention & Growth Nov 2026 10+5 £28m £280m Thurrock Council Retention & Growth Nov 2026 5+5 £24m £120m Total value to be mobilised inFY26 £179m £1,438m To be balanced, the Group saw the loss of its contract with Eastbourne and Lewes Council, which generatedannual revenues of c.£8m, that expired at the end of March 2026. The Group will continue to maintain a disciplinedapproach when bidding, and the tendered price was a factor in this loss. In addition, the Group will see its contractwith Orbit Housing, with annual revenues of c.£30m, end in March 2027. Whilst the Group has delivered strongoperational performance to this client, the contract has proved financially challenging, absorbing a disproportionatelevel of working capital. The Group has continued to make additional investment to enhance the Group's pre-sales capabilities, improvingprospective clients' understanding of Mears' service quality and capabilities before the commencement of newprocurement processes. The payback from this investment can take time to crystallise, given the elongated bidprocess. In addition, the Group has applied additional bidding resource to reflect its broadening service offer. Theadditional investment in people has been augmented with the purchase of a Customer Relationship Managementsystem ('CRM'), ensuring that we fully connect all data linked to prospective customers. The Group will remain disciplined and highly selective when targeting new contract opportunities. Since the acquisition of Pennington, the business has enjoyed a strong period of securing orders with new clients.The increased scope of the Group's Compliance capabilities has seen new opportunities created with both existingMears and Pennington clients. CASH FLOW AND WORKING CAPITAL MANAGEMENT
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The Group has continued to deliver strong cash performance, with conversion of EBITDA to operating cash in thefirst six months of 92% (H1 2025: 105%). The Group reported an adjusted net cash position at 30 June 2026 of£70.5m (H1 2025: £81.1m). Of greater significance is the day-to-day performance, with average daily adjusted netcash for the first six months of £29.7m (H1 2025: £67.7m). The reduction in the average daily net cash reflectsseveral cash outflows which occurred during the second half of 2025, as well as absorbing £13.6m in purchase ofown shares in the first half of FY26. The Group continues to generate strong free cashflows and reported anadjusted net cash balance on a daily basis throughout the first half. EARNINGS PER SHARE ('EPS'), DIVIDEND AND CAPITAL ALLOCATION Adjusted diluted EPS reduced by 9% to 25.26p (H1 2025: 27.82p), tracking the reduction in profit. The reduction in the sharecount resulting from the share buyback programme will provide a tailwind for the second half. Our capital allocation policy remains consistent and prioritises investment to support our organic growth strategy,augmented by strategic bolt-on acquisitions to further enhance our service offering and accelerate the delivery ofour plan. The excellent visibility of future revenue and profits, combined with strong cash generation underpins aprogressive dividend and other routes for returning surplus funds to shareholders remain under consideration. Given the excellent trading performance of the Group, the continued generation of cash and the positive outlook,the Board is proposing an interim dividend of 6.20p per share (H1 2025: 5.60p). The Board continues to believethat a capital allocation policy combining a progressively growing dividend within a cover range of 2.0-2.5x, withthe return of any excess capital via on-market buyback purchases of shares, remains appropriate. During the first half of the year, the Board approved a further return of surplus capital of £20m to shareholders,implemented through a buyback programme of on-market purchases. As at 30 June 2026, the Group hadcompleted the purchase and cancellation of 2.9m ordinary shares of 1p each at an average price of 396p. Since2023, buybacks have reduced the Group's ordinary share count by 30.3m shares at a total cash cost of over£100m. In addition, the Employee Benefit Trust (EBT) has purchased 3.9m shares (net of shares utilised to matchoption exercises). OUTLOOK AND GUIDANCE The Group has made a solid start to FY26. The strong period of contract retentions, augmented by new awardsfrom Birmingham City Council and Rooftop Housing Group, provides the Board a high level of confidence that theGroup will deliver against its Maintenance-led organic growth target of 5-9% per annum in the current year. The fullyear impact of these new contracts will also provide a strong tailwind for FY27, notwithstanding the loss of theOrbit contract. The low level of renewals in the next three years and a strong pipeline of new bidding opportunities,provides confidence that growth within the stated range can be sustained over the medium term. The Group continues to develop its operational and commercial expertise to deliver planned works, which will befurther buoyed by the reformed Decent Homes standard. The combined Mears-Pennington Compliance offer willincrease the addressable market and opportunity for growth in that area. The precise timing of the normalisation of AASC revenues remains uncertain, but there is a clear political drive to see all hotel accommodation vacated during 2026, consistent with management's profit guidance. The Group anticipates that AASC revenues will continue to normalise to an annual revenue of c.£200m, although the timing is uncertain. Over the medium term, the Group believes that it is well positioned to deliver additional housing-related services to Central Government clients. The strong growth reported in the Group's Local Government activities combined with the anticipated reduction in Central Government as AASC revenues normalise, bringing an improving balance between Maintenance-led and Management-led work, and an improved quality to the order book in terms of phasing, longevity, breadth and underlying profitability. The Group remains well positioned to maintain adjusted operating margins, over the medium term within the rangeof 5-6%. The guidance for the current year is maintained towards the lower end of that range, owing to the highnumber of new contracts being mobilised in the period, combined with the uncertainty as to speed of revenuereduction in the AASC activities. The disciplined approach to new contract bidding and a robust approach tooperational and commercial management are key margin drivers over the medium term. We expect to continue to deliver strong underlying cash generation, reflecting the quality of earnings and the lowcapital intensity nature of our operating model. FY26 Medium term Revenue · Maintenance-led revenue growth of c.8%-9% Management-led revenuesreducing from £515m in FY25 to c.£470m in FY26, linked to AASCnormalisation · Maintenance-led revenue growth of c.5- 9% · Further reduction in Management-led revenues linked to AASC normalisation Operatingmargin · 5.0-5.2% (pre-IFRS 16). Post-IFRS 16 margins c.80-90bps higher · 5.0-6.0% (pre-IFRS 16) · Post-IFRS 16 margins c.80-90bps higher. Interest · Net finance income (pre-IFRS 16), c.£2.5m · Net finance income (pre-IFRS 16); expected to reduce from FY26 level.Linked to net cash balance.
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· Finance costs (IFRS 16), £15.0m · PBT impact from IFRS 16, c.£4.0m charge · IFRS 16 related charges broadly consistent with FY26 level EBITDA tooperating cashconversion · c.90% · 90%-100% dependent upon organic growth ALTERNATIVE PERFORMANCE MEASURES ('APM') The Interim Report includes both statutory and adjusted performance measures. APMs are considered useful tostakeholders in assessing the underlying performance of the business, adjusting for items which could distort theunderstanding of performance in the year and between periods, and when comparing the financial outputs to thoseof our peers. The APMs have been set considering the requirements and views of the Group's investors and debtfunders among other stakeholders and are aligned to the Group's strategy. Reflecting the steady state of the business and the quality of the earnings, the Group has used an unadjustedprofit before tax and earnings per share as its headline profit measures. The Group makes regular referencethroughout the Interim Report to an adjusted operating profit, measured before the impact of IFRS 16, and statedboth in pounds (£) and as a percentage margin (%). This adjusted measure is a key metric for the seniormanagement team when assessing new contract opportunities and existing branch performance. The Group also uses an adjusted net cash measure which excludes IFRS 16 lease obligations from the statutorynet debt measure. This is referenced in both a spot measure (on 31 December) and in a 365-day average. These APMs should not be considered as a substitute for or superior to International Financial ReportingStandards (IFRS) measures, and the Board has reported both statutory and alternative measures with equalprominence throughout the Interim Report. The method of calculation and a reconciliation between each APM and the relevant statutory measure are detailedbelow, together with an explanation as to why management considers the APM to be useful in helping users tohave a better understanding of the Group's underlying performance. This section of the Interim Report alsoprovides additional analysis to give the user an easier route to understand underlying performance and derivingtheir own profit and EBITDA measures. H1 2026£'000 H1 2025£'000 FY 2025£'000 Profit before tax 37,958 32,046 63,488Profit on disposal of subsidiary (9,363) - - Amortisation of acquisition intangibles 284 122 387Adjusted profit before tax 28,879 32,168 63,875IFRS 16 profit impact 1,523 1,631 4,629Share of profit in associates 357 (455) (12)Net finance income (non-IFRS 16) (1,515) (2,107) (3,299)Adjusted operating profit pre-IFRS 16 29,244 31,237 65,193Amortisation of software 878 1,014 1,867Depreciation and loss on disposal (non-IFRS 16) 2,566 3,415 7,608Share of profit in associates (357) 455 12Adjusted EBITDA pre-IFRS 16 32,331 36,121 74,680IFRS 16 profit impact (1,523) (1,631) (4,629)Finance costs (IFRS 16) 7,138 6,922 14,851Depreciation, profit on disposal and impairment (IFRS 16) 39,357 33,422 72,519EBITDA post-IFRS 16 77,303 74,834 157,421Amortisation of software and acquisition intangibles (1,162) (1,136) (2,254)Depreciation, loss on disposal and impairment (IFRS 16) (39,357) (33,422) (72,519)Depreciation and loss on disposal (non-IFRS 16) (2,566) (3,415) (7,608)Share of profit in associates 357 (455) (12)Operating profit post-IFRS 16 34,575 36,406 75,028 The Directors use the Operating profit pre-IFRS 16 measure to generate the Group's headline operating margin. Whilst thisgenerates a lower operating margin, it reflects how the underlying contracts have been tendered, how the senior executiveteam assess performance, and is also more aligned to the underlying cash generation. In addition, this measure is also usedfor the purposes of assessing the Group's compliance with its banking covenants which utilise pre-IFRS 16 measures. H1 2026£'000 H1 2025£'000 FY 2025£'000 Revenue 559,959 559,384 1,135,461 Adjusted operating profit pre-IFRS 161 29,244 31,237 65,193Adjusted operating margin % 5.2% 5.6% 5.7% Adjusted earnings per share measure H1 2026p H1 2025p FY 2025p Statutory diluted earnings per share 36.01 27.68 53.86Effect of profit on disposal of subsidiary (11.09) - - Effect of amortisation of acquisition intangibles 0.34 0.14 0.45Adjusted diluted earnings per share 25.26 27.82 54.31 H1 2026p H1 2025p FY 2025p Profit attributable to shareholders 30,423 23,754 46,222Profit on disposal of subsidiary (9,363) - - Amortisation of acquisition intangibles 284 122 387Adjusted earnings 21,344 23,876 46,609
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IFRS 16 impact upon profit before tax The profit impact in respect of IFRS 16, which was included within the APM analysis above, is detailed below: H1 2026£'000 H1 2025£'000 FY 2025£'000 Charge to income statement on a post-IFRS 16 basis (46,495) (40,344) (86,514)Charge to income statement on a pre-IFRS 16 basis (44,972) (38,713) (82,741)Profit impact from the adoption of IFRS 16 and beforeimpairment (1,523) (1,631) (3,773)Impairment of right of use assets - - (856)Profit impact from the adoption of IFRS 16 (1,523) (1,631) (4,629) Accounting standards require that, where a contract is identified as a lease under the rules of IFRS 16, the Grouprecognises its right to use a leased asset and a lease liability representing its obligation to make lease payments.The depreciation cost of the leased asset is typically charged to profit within cost of sales, and the interest cost ofthe newly recognised lease liability is charged to finance costs. On the basis that depreciation is required to becharged on a straight-line basis, but the interest element is charged on an amortised cost basis, this results in ahigher charge being applied to the income statement in the early years of a lease, with this impact reversing overthe later years. Ultimately, IFRS 16 has no impact on the lifetime profitability of the contracts and there are no cashflow impacts, but the standard alters the phasing over time, front-loading the cost. Adjusted net cash The Group excludes the financial impact of IFRS 16 from its adjusted net cash measure. This adjusted net cashmeasure has been introduced to align the net borrowing definition to the Group's banking covenants, which arerequired to be stated before the impact of IFRS 16. The Group does not recognise lease obligations as traditional debt instruments given a significant proportion ofthese leases have break provisions which allow the Group to cancel the associated lease obligation with minimalassociated cost. A reconciliation between the net debt and the adjusted measure is detailed below: H1 2026£'000 H1 2025£'000 FY 2025£'000 Cash and cash equivalents 70,469 81,138 51,807Lease liabilities (current) (73,547) (67,125) (80,652)Lease liabilities (non-current) (234,097) (232,844) (238,069)Net debt (including IFRS 16 lease obligations) (237,175) (218,831) (266,914) In addition to the average daily net cash measure, the Group also measures the cash inflow from operating activities as aproportion of EBITDA and this cash conversion percentage is a key performance measure, reflecting the Group's ability toconvert profit into cash. The Board targets a measure of more than 90%, and performance that is greater than 100% is considered outstanding. The strength of the Group's operating cash flows reflects both the underlying quality of the earnings,and the Group's operating systems which underpin a strong cash culture. H1 2026£'000 H1 2025£'000 FY 2025£'000 EBITDA 77,303 74,834 157,421Cash inflow from operating activities 71,346 78,821 128,340Cash conversion % 92% 105% 82% Statutory profit before taxThe Board recognises that any reported profit will include singular components which, in isolation, may beconsidered unusual, infrequent, non-recurring or non-underlying. Additional detail is disclosed separately within thenotes to the financial statements, and these are signposted below to assist the user in accessing these and tobetter understand the underlying performance in the period. H1 2026£'000 H1 2025£'000 FY 2025£'000 Profit on disposal of subsidiary 9,363 - - Impairment of right of use assets - - (856) Amortisation of acquired intangibles (284) (122) (387) Loss on sale and leaseback transaction - - (122)Increase in fair value of other investments 450 650 1,500Onerous contract provisions (released/utilised less provided) 769 - (1,289)Legal provisions (provided less amounts released unused) (75) - (2,025) Cash flow and working capital management The Group has reported an adjusted net cash position at the period-end of £70.5m (H1 2025: £81.1m). Whilst it is reassuring to report a strong cash position within the period-end balance sheet, of much greater significance is the performance over the 182-day period. The average daily adjusted net cash for the period was £29.7m (H1 2025: £67.7m). The reduction in the average daily net cash reflects several cash outflows which occurred over the course of the second half of 2025 including c.£27.4m of properties purchased ((net of sale and leaseback proceeds) to support the AASC contract,£13.9m in ordinary dividends, and an unwind in a negative working capital position attached to contractual payments on account and gainshares of c.£36m. In addition, during the first half the Group absorbed £13.6m in purchase of own shares.
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H1 2026£'000 H1 2025£'000 FY 2025£'000 Average daily adjusted net cash 29,700 67,700 52,826Adjusted net cash at period end 70,469 81,138 51,807 Mears fosters a "cash culture", whereby the Group's front-line operations understand that invoicing and cash collection are intrinsically linked, and that a works order is not complete until the monies are banked. This culture has underpinned our cash performance over many years. A key performance measure for the Group is the percentage of EBITDA that is converted into operating cash flow. The ability of the Group to bank its profits over multiple periods provides a clear indication of the quality of the earnings. H1 2026£'000 H1 2025£'000 FY 2025£'000 Profit before tax 37,958 32,046 63,488Net finance costs 5,623 4,815 11,552Depreciation and amortisation 3,728 4,551 9,862Right of use asset depreciation and impairment 39,357 33,422 72,519Profit on disposal of subsidiary (9,363) - -EBITDA 77,303 74,834 157,421Other adjustments 1,353 61 574Change in inventories (76) (278) 263Change in operating receivables (13,101) (16,758) (24,684)Change in operating payables and provisions 5,867 20,962 (5,234)Operating cash flow 71,346 78,821 128,340Operating cash to EBITDA conversion 92% 105% 82% Disposal - Morrison Facilities ServicesIn March 2026, the Group completed the disposal of 100% of the share capital in Morrison Facilities ServicesLimited, a business delivering Facilities Management with a focus on the education and health sectors. Thisbusiness was previously identified as non-core and has been the subject of a competitive sales process. The sale was for a total consideration of £18.0m, settled in cash on completion. The business is sold on a debt and cash-free basis, and with a normal level of working capital. Details of the profit on disposal of the subsidiary are set out below: £'000 Cash consideration 18,000 Net debt and working capital adjustments 1,391 Costs of disposal (604) Cash disposed with subsidiary (2,975) Proceeds from sale of subsidiary, net of cash disposed 15,812 Net assets disposed, excluding cash (6,449) Profit on disposal of subsidiary 9,363 Share capital During the first half of 2026, the Board approved a return of surplus capital of £20m to shareholders, which was implemented through a programme of on-market purchases, resulting in the purchase and cancellation of 2.9m ordinary shares of 1p each at an average price of 396p. As detailed below, over the last three and a half years, buybacks have reduced the Group's ordinary share count by 30.3m shares at an average price of 332p with a total cash cost of in excess of £100m. Year Opening basicshare count(m) Buyback(m)Option exercise(m) Closing basicshare count(m) Buyback cashcost£m2023 111.0 (12.2) 2.7 101.6 (33.0)2024 101.6 (10.9) 0.2 90.8 (40.2)2025 90.8 (4.3) - 86.4 (16.4)H1 2026 86.4 (2.9) 0.1 83.6 (11.5)Total 111.0 (30.3) 3.0 83.6 101.1
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Half-year condensed consolidated statement of profit or loss For the six months ended 30 June 2026 Note Six monthsended 30June 2026(unaudited)£'000 Six monthsended 30June 2025(unaudited)£'000 Year ended 31December2025 (audited)£'000 Sales revenue 3 559,959 559,384 1,135,461 Cost of sales (426,569) (429,567) (869,622) Gross profit 133,390 129,817 265,839 Administrative expenses (98,815) (93,411) (190,811) Operating profit 34,575 36,406 75,028 Share of (losses)/profits of associates (357) 455 12 Profit on disposal of subsidiary 9,363 - - Finance income 5 1,811 2,491 4,526 Finance costs 5 (7,434) (7,306) (16,078) Profit for the period before tax 37,958 32,046 63,488 Tax expense 6 (7,545) (8,421) (17,549) Profit for the period from continuing operations 30,413 23,625 45,939 Attributable to: Owners of Mears Group PLC 30,423 23,754 46,222 Non-controlling interest (10) (129) (283) Profit for the period 30,413 23,625 45,939 Earnings per share Basic 8 37.12p 28.62p 55.70p Diluted 8 36.01p 27.68p 53.86p All results are in respect of continuing operations. The accompanying notes form an integral part of these condensed consolidated financial statements. Half-year condensed consolidated statement of comprehensive income For the six months ended 30 June 2026 Note Six monthsended 30June 2026 (unaudited)£'000 Six monthsended 30June 2025 (unaudited)£'000 Year ended 31December2025 (audited)£'000 Profit for the period 30,413 23,625 45,939 Other comprehensive income: Which will not be subsequently reclassified to the Consolidated Statement of Profit or Loss: Actuarial gain/(loss) on defined benefit pension scheme 2,163 831 284 Pension guarantee asset movements in respect of actuarial gain (191) (183) (296) (Decrease)/increase in deferred tax asset in respect of defined benefit pension schemes (493) (162) 3 Other comprehensive income for the period 1,479 486 (9) Total comprehensive income for the period 31,892 24,111 45,930 Attributable to: Owners of Mears Group PLC 31,902 24,240 46,213 Non-controlling interest (10) (129) (283) Total comprehensive income for the period 31,892 24,111 45,930 All results are in respect of continuing operations. The accompanying notes form an integral part of these condensed consolidated financial statements.
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Half-year condensed consolidated balance sheet As at 30 June 2026 Note As at 30 June 2026(unaudited)£'000 As at 30 June 2025(unaudited)(restated*)£'000 As at 31December2025(audited)£'000 Assets Non-current Goodwill 118,206 121,868 118,206 Intangible assets 11,035 5,873 9,695 Property, plant and equipment 50,964 61,757 51,919 Right of use assets 276,875 273,619 289,308 Investments 3,879 3,380 3,786 Loan notes and other non-current receivables 18,916 10,414 20,196 Pension and other employee benefits 16 26,581 24,504 24,097 506,456 501,415 517,207 Current Inventories 889 1,452 824 Trade and other receivables 9 168,669 149,803 155,034 Current tax assets 734 502 186 Cash and cash equivalents 70,469 81,138 48,479 240,761 232,895 204,523 Assets classified as held for sale - - 18,376 Total current assets 240,761 232,895 222,899 Total assets 747,217 734,310 740,106 Equity Equity attributable to the shareholders of Mears Group PLC Share capital and premium 14 3,619 3,506 3,506 Capital redemption reserve 14 303 274 274 Share-based payment reserve 4,590 3,611 4,637 Treasury shares 14 (13,709) (13,897) (13,897) Merger reserve - 7,971 7,971 Retained earnings 217,925 182,993 199,254 Total equity attributable to the shareholders of Mears Group PLC 212,728 184,458 201,745 Non-controlling interest 3,065 3,229 3,075 Total equity 215,793 187,687 204,820 Liabilities Non-current Deferred tax liabilities 6,173 3,662 5,606 Lease liabilities 234,097 232,844 238,069 Non-current provisions 11 10,991 9,529 10,742 251,261 246,035 254,417 Current Trade and other payables 10 201,337 226,734 185,049 Lease liabilities 73,547 67,125 80,652 Provisions 11 5,279 6,729 6,023 Current tax liabilities - - - 280,163 300,588 271,724 Liabilities directly associated with assets classified as held for sale - - 9,145 Current liabilities 280,163 300,588 280,869 Total liabilities 531,424 546,623 535,286
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Total equity and liabilities 747,217 734,310 740,106 * The 30 June 2025 figures have been restated in respect of a change in presentation of equity, as described in note 14. The accompanying notes form an integral part of these condensed consolidated financial statements. Half-year condensed consolidated cash flow statement For the six months ended 30 June 2026 Note Sixmonthsended 30June 2026(unaudited)£'000 Sixmonthsended 30June 2025(unaudited)£'000 Yearended 31December2025 (audited)£'000 Operating activities Result for the period before tax 37,958 32,046 63,488 Adjustments 15 40,698 42,849 94,507 Change in inventories (76) (278) 263 Change in trade and other receivables (13,101) (16,758) (24,684) Change in trade, other payables and provisions 5,867 20,962 (5,234) Cash inflow from operating activities before taxation 71,346 78,821 128,340 Taxes paid (7,246) (6,800) (15,689) Net cash inflow from operating activities 64,100 72,021 112,651 Investing activities Payment for acquisition of subsidiary, net of cash acquired - - (8,889) Additions to property, plant and equipment (2,061) (26,590) (45,243) Additions to other intangible assets (2,501) (765) (1,703) Loans to related parties - - (3,160) Proceeds from sale of subsidiary, net of cash disposed 12 15,812 - - Proceeds from sale and leaseback of residential property - - 18,094 Repayment of loans from related parties 1,673 - 110 Proceeds from disposals of property, plant and equipment 150 162 305 Interest received 711 1,688 3,028 Net cash outflow from investing activities 13,784 (25,505) (37,458) Financing activities Proceeds from share issue 142 60 60 Proceeds from distribution of shares from treasury 6 6 6 Purchase of own shares (13,566) (17,792) (17,792) Proceeds from disposal of own shares - 552 552 Discharge of lease liabilities (37,988) (32,403) (68,347) Interest paid (7,816) (7,205) (15,383) Dividends paid - Mears Group shareholders - - (13,886) Net cash outflow from financing activities (59,222) (56,782) (114,790) Cash and cash equivalents, beginning of period 51,807 91,404 91,404 Net increase/(decrease) in cash and cash equivalents 18,662 (10,266) (39,597) Cash and cash equivalents, end of period 70,469 81,138 51,807 All results are in respect of continuing operations. The accompanying notes form an integral part of these condensed consolidated financial statements. Half-year condensed consolidated statement of changes in equity For the six months ended 30 June 2026 (unaudited) Attributable to equity shareholders of the Company Sharecapital andpremium £'000 Capitalredemptionreserve* £'000 Share-basedpaymentreserve £'000 Treasuryshares £'000 Mergerreserve £'000 Retainedearnings £'000 Non-controllinginterest £'000 Totalequity £'000
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At 1 January 2025 3,489 - 3,604 (14,985) 7,971 184,028 3,358 187,465 Restatement - 231 - - - (231) - - As restated 3,489 231 3,604 (14,985) 7,971 183,797 3,358 187,465 Net result for the period - - - - - 23,754 (129) 23,625 Other comprehensive income - - - - - 486 - 486 Total comprehensive income for the period - - - - - 24,240 (129) 24,111 Tax credit on share-based payments - - - - - 1,410 - 1,410 Issue of shares 60 - - - - - - 60 Purchase of treasury shares - - - (1,619) - - - (1,619) Disposal of treasury shares - - - 553 - - - 553 Cancellation of shares (43) 43 - - - (16,173) - (16,173) Share options - value of employee services - - 1,145 - - - - 1,145 Share options - exercised or lapsed - - (1,138) 2,154 - (1,010) - 6 Dividends - - - - (9,271) - (9,271) At 30 June 2025 3,506 274 3,611 (13,897) 7,971 182,993 3,229 187,687 At 1 January 2026 3,506 274 4,637 (13,897) 7,971 199,254 3,075 204,820 Net result for the period - - - - - 30,423 (10) 30,413 Other comprehensive income - - - - - 1,479 - 1,479 Total comprehensive income for the period - - - - - 31,902 (10) 31,892 Tax credit on share-based payments - - - - - 772 - 772 Issue of shares 142 - - - - - - 142 Purchase of treasury shares - - - (2,110) - - - (2,110) Cancellation of shares (29) 29 - - - (11,456) - (11,456) Share options - value of employee services - - 1,290 - - - - 1,290 Share options - exercised or lapsed - - (1,337) 2,298 - (955) - 6 Transfer on disposal of subsidiary - - - - (7,971) 7,971 - - Dividends - - - - (9,563) - (9,563) At 30 June 2026 3,619 303 4,590 (13,709) - 217,925 3,065 215,793 * The nominal value of shares repurchased and cancelled has been re-presented for the prior period in the capital redemption reserve as detailed in note 14. The accompanying notes form an integral part of these condensed consolidated financial statements. Notes to the half-year condensed consolidated financial statements For the six months ended 30 June 2026 1. Corporate information Mears Group PLC is a public limited company incorporated in England and Wales whose shares are publicly traded. The half-year condensed consolidated financial statements of the Company and its subsidiaries for the six months ended 30 June 2026 were authorised for issue in accordance with a resolution of the Directors on 5 August 2026. 2. Basis of preparation and accounting principles (a) Basis of preparation The financial information comprises the unaudited results for the six months ended 30 June 2026 and 30 June 2025, together with the audited results for the year ended 31 December 2025. The half-year condensed consolidated financial statements for the six months ended 30 June 2026 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority, with IAS 34 'Interim Financial Reporting', as contained in UK-adopted international accounting standards. The half-year condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements as at 31 December 2025, which have been prepared in accordance with United Kingdom adopted International Accounting Standards in conformity with the requirements of the Companies Act 2006. This half-year condensed consolidated financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2025 were approved by the Board of Directors on 25
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March 2026. Those accounts, which contained an unqualified audit report under Section 495 of the Companies Act 2006, have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006. The half-year condensed consolidated financial statements for the six months ended 30 June 2026 have not been audited or reviewed by an auditor pursuant to the Auditing Practices Board guidance on the Review of Interim Financial Information. There have been no significant changes to estimates of amounts reported in prior financial years. Going concern The Directors consider that, as at the date of approving the interim financial statements, there is a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the period to at least 30 September 2027. When making this assessment, management considers whether the Group will be able to maintain adequate liquidity headroom above the level of its borrowing facilities and to operate within the financial covenants applicable to those facilities which will be measured at 31 December 2026 and 30 June 2027. As at 30 June 2026 and 5 August 2026, the Group had £70m of committed borrowing facilities of which none was drawn. The principal borrowing facilities are subject to covenants as detailed on page 46 of the 2025 Annual Report. The nature of the principal risks and uncertainties faced by the Group has not changed significantly from those set out on pages 52 to 54 of the 2025 Annual Report and is not expected to change over the next 12 months. The Group has modelled its cash flow outlook for the period to 30 September 2027 and the forecasts indicate significant liquidity headroom will be maintained above the Group's borrowing facilities and that financial covenants will be met throughout the period. The Directors have a reasonable expectation that the Company and its subsidiaries have adequate resources to continue in operational existence until 30 September 2027. Accordingly, they continue to adopt the going concern basis in preparing the interim statement. Tax A tax charge of £7.5m (2025: £8.4m) is recognised for the period. This tax charge is recognised based on the best estimate of the average effective income tax rate on profit before tax for the full financial year. For the six months ended 30 June 2026, the average effective income tax rate and tax charge have been determined excluding the profit on disposal of the subsidiary, which is not expected to give rise to a tax charge. (b) Significant accounting policies The accounting policies adopted in the preparation of the half-year condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2025. 3. Revenue The Group's revenue disaggregated by nature is as follows: Six monthsended 30 June 2026 (unaudited)£'000 Six monthsended 30 June 2025(unaudited)£'000 Revenue from contracts with customers Repairs and maintenance 267,876 268,274 Contracting 23,491 22,616 Professional services 9,773 375 Property income 236,991 245,714 Care services 12,145 10,864 Other 92 65 550,368 547,908 Lease income 9,591 11,476 559,959 559,384 4. Segment reporting Segment information is presented in respect of the Group's operating segments based on the format that the Group reports to its chief operating decision maker for the purpose of allocating resources and assessing performance. Six months ended 30 June 2026 Six months ended 30 June 2025 Maintenance £'000 Management £'000 Total £'000 Maintenance £'000 Management £'000 Total £'000 Revenue 310,032 249,927 559,959 302,194 257,190 559,384 Cost of sales (226,789) (199,780) (426,569) (228,549) (201,018) (429,567) Gross profit 83,243 50,147 133,390 73,645 56,172 129,817 Administrative costs (70,699) (28,116) (98,815) (60,334) (33,077) (93,411) Share of profits of associates (305) (52) (357) 428 27 455 Profit on disposal of subsidiary 9,363 - 9,363 - - - Net finance income/(costs) 680 (6,303) (5,623) 954 (5,769) (4,815)
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Profit before tax 22,282 15,676 37,958 14,693 17,353 32,046 Tax expense (7,545) (8,421) Profit for the period 30,413 23,625 5. Finance income and finance costs Six monthsended 30 June 2026 (unaudited)£'000 Six monthsended 30 June 2025(unaudited)£'000 Interest charge on overdrafts and loans (224) (320) Interest on lease obligations (7,138) (6,922) Other interest expense (72) (64) Finance costs on bank loans, overdrafts and leases (7,434) (7,306) Interest charge on net defined benefit scheme obligations - - Total finance costs (7,434) (7,306) Interest income resulting from short-term bank deposits 543 1,514 Interest income resulting from net defined benefit scheme assets 668 632 Other interest income 600 345 Finance income 1,811 2,491 Net finance charge (5,623) (4,815) 6. Tax expense Tax recognised in the Consolidated Statement of Profit or Loss: Six monthsended 30 June 2026 (unaudited)£'000 Six monthsended 30 June 2025 (unaudited)£'000 United Kingdom corporation tax 7,534 8,479 Adjustment in respect of previous periods - - Total current tax charge recognised in Consolidated Statement of Profit or Loss 7,534 8,479 Total deferred taxation recognised in Consolidated Statement of Profit or Loss 11 (58) Total tax charge recognised in Consolidated Statement of Profit or Loss 7,545 8,421 7. Dividends Six monthsended 30 June 2025 (unaudited) £'000 Six monthsended 30 June 2024 (unaudited) £'000 Final 2025 dividend of 11.90p per share 9,563 9,271 The dividend disclosed within the half year condensed consolidated statement of changes in equity represents the final 2025 dividend of 11.90p per share proposed in the 31 December 2025 financial statements and approved at the Group's Annual General Meeting on 3 June 2026. This was paid on 9 July 2026. The Board has declared an interim dividend of 6.20p (2025: 5.60p) per share. This is not recognised as a liability at 30 June 2026 and will be payable on 1 October 2026 to shareholders on the register of members at the close of business on 11 September 2026. The shares will go ex-dividend on 10 September 2026. 8. Earnings per share Six monthsended 30 June 2026 (unaudited) p Six monthsended 30 June 2025 (unaudited) p Basic earnings per share 37.12 28.62 Diluted earnings per share 36.00 27.68 All results relate to continuing activities. The calculation of EPS is based on a weighted average of ordinary shares in issue during the period. The diluted EPS is based on a weighted average of ordinary shares calculated in accordance with IAS 33 'Earnings per Share', which assumes that all dilutive options will be exercised. IAS 33 defines dilutive options as those whose exercise would decrease earnings per share or increase loss per share from continuing operations.
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Six monthsended 30 June 2026 (unaudited) Million Six monthsended 30 June 2025 (unaudited) Million Weighted average number of shares in issue: 81.96 82.99 · Dilutive effect of share options 2.54 2.83 Weighted average number of shares for calculating diluted earnings per share 84.50 85.82 9. Trade and other receivables As at 30 June 2026 (unaudited) £'000 As at 30 June 2025 (unaudited)£'000 As at 31December 2025 (audited)£'000 Trade receivables 37,424 28,625 23,921 Contract assets 94,850 88,952 98,692 Prepayments and accrued income 31,442 29,252 26,104 Other debtors 4,973 2,974 6,317 Total trade and other receivables 168,669 149,803 155,034 Included in contract assets is a balance of £18.3m (2025: £19.5m) recognised in respect of a single Maintenance contract, elements of which are subject to a dispute. The Directors have referred this dispute to an adjudication and may seek other routes of legal recourse in due course. The Group has taken legal advice and engaged an independent expert with quantity surveying proficiency. The carrying value reflects the Directors' best estimate of the likely outcome. The Directors recognise that there is litigation risk associated with any claim. Based on the information available to the Directors, a range of possible outcomes is considered to be +/- £2.0m above and below this net balance. The uncertainty is expected to be resolved within this financial year, and the final settlement could result in a recovery which is either greater than or less than the net contract asset recognised at 30 June 2026. 10. Trade and other payables As at 30 June 2026 (unaudited) £'000 As at 30 June 2025 (unaudited)(restated)£'000 As at 31December 2025 (audited)£'000 Trade payables 79,248 59,748 58,688 Accruals 42,211 55,839 51,649 Social security and other taxes 30,389 32,170 26,458 Contract liabilities 16,392 27,070 22,209 Repayments due to customers 20,893 41,245 23,516 Other creditors 2,641 1,391 2,529 Dividends payable 9,563 9,271 - 201,337 226,734 185,049 The disclosure as at 30 June 2025 has been restated to separate repayments due to customers from other contract liabilities, in line with the similar restatement detailed in the 2025 Annual Report. 11. Provisions A summary of the movement in provisions during the period is shown below: Onerous contract provisions £'000 Property provisions £'000 Insurance provisions £'000 Legal and other provisions £'000 Total £'000 At 1 January 2026 8,956 2,276 4,283 1,250 16,765 Provided during the period 200 - 1,126 75 1,401 Utilised during the period (192) (50) (877) - (1,119) Unused amounts reversed (777) - - - (777) At 30 June 2026 8,187 2,226 4,532 1,325 16,270 At the start of 2026, the Group carried various provisions relating to expected outflows of uncertain timing or amount. Further details of these provisions as they stood at 31 December 2025 can be found in the 2025 Annual Report. One onerous contract provision was released unused during the period as a result of a new contract win, meaning the previously expected losses linked to the cost of demobilisation are no longer expected to occur. The utilisation of the remaining onerous contract provision has been in line with expectations at 31 December 2025.
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12. Disposal of subsidiary As detailed in the 2025 Annual Report, the Group disposed of one of its subsidiaries, Morrison Facilities Services Limited ('MFS') on 2 March 2026. MFS was a provider of facilities management services with a focus on the education and healthcare sectors and was therefore non-core to the Group's focus on housing services. The sale was for consideration of £18.0m, adjusted to a debt- and cash-free basis with a normal level of working capital. A breakdown of the fair value of assets and liabilities of the disposed entity as at the date of disposal is set out below: £'000 Goodwill 6,779 Intangible assets 1,670 Property, plant and equipment 64 Right of use assets 171 Pension assets 585 Inventories 98 Trade and other receivable 5,515 Trade and other payables (7,752) Lease liabilities (182) Current tax liabilities (229) Deferred tax liabilities (270) Net assets disposed, excluding cash 6,449 Cash 2,975 Net assets disposed 9,424 Details of the cash received and profit on disposal of the subsidiary are set out below: £'000 Cash consideration 18,000 Net debt and working capital adjustments 1,391 Costs of disposal (604) Cash disposed with subsidiary (2,975) Proceeds from sale of subsidiary, net of cash disposed 15,812 Net assets disposed, excluding cash (6,449) Profit on disposal of subsidiary 9,363 13. Financial instruments Categories of financial instruments As at 30 June 2026 (unaudited) £'000 As at 30 June 2025 (unaudited)£'000 As at 31December 2025 (audited)£'000 Non-current assets Fair value (level 3) Investments - other investments 2,800 1,500 2,350 Amortised cost Loan notes 18,916 10,414 20,196 Current assets Amortised cost Trade receivables 37,424 28,625 23,921 Contract assets 94,850 88,952 98,692 Other debtors 4,973 2,974 6,317 Cash at bank and in hand 70,469 81,138 48,479 207,716 201,689 177,409 Non-current liabilities Amortised cost Lease liabilities (234,097) (232,844) (238,069) Current liabilities Amortised cost Trade payables (79,248) (59,748) (58,688)
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As at 30 June 2026 (unaudited) £'000 As at 30 June 2025 (unaudited)£'000 As at 31December 2025 (audited)£'000 Accruals (42,211) (55,839) (51,649) Lease liabilities (73,547) (67,125) (80,652) Repayments due to customers (20,893) (41,245) (23,516) Other creditors (2,641) (1,391) (2,529) Dividends payable (9,563) (9,271) - (228,103) (234,619) (217,034) (232,768) (253,860) (255,148) The IFRS 13 hierarchy level categorisation relates to the extent the fair value can be determined by reference to comparable market values. The classifications range from level 1, where instruments are quoted on an active market, through to level 3, where the assumptions used to arrive at fair value do not have comparable market data. The fair values of investments in unlisted equity instruments are determined by reference to an assessment of the fair value of the entity to which they relate. This is typically based on a multiple of earnings of the underlying business (level 3). There have been no transfers between levels during the period. Fair value information The fair value of the Group's financial assets and liabilities approximates to the book value, as disclosed above. 14. Share capital and reserves Share capital and premium As at 30 June 2026 (unaudited) £'000 As at 30 June 2025 (unaudited) £'000 Allotted, called up and fully paid At 1 January 86,474,628 (2025: 90,764,444) ordinary shares of 1p each (audited) 3,506 3,489 Issue of 52,668 (2025:30,003) shares on exercise of share options 142 60 Cancellation of 2,871,031 (2025: 4,319,819) shares following share buybacks (29) (43) At 30 June 83,656,265 (2025: 86,474,628) ordinary shares of 1p each (unaudited) 3,619 3,506 During the period 52,668 (2025:30,003) ordinary 1p shares were issued in respect of share options exercised. Capital redemption reserve As at 30 June 2026 (unaudited) £'000 As at 30 June 2025 (unaudited) £'000 At 1 January 27,423,175 (2025: 23,103,356) ordinary shares of 1p each (audited) 274 231 Cancellation of 2,871,031 (2025: 4,319,819) shares following share buybacks 29 43 At 30 June 83,656,265 (2025: 27,423,175) ordinary shares of 1p each (unaudited) 303 274 During the period 2,871,031 (2025: 4,319,819) shares were repurchased by the Group and cancelled at a cost of £11.m (2025: £16.2m). In the interim statement for the period ended 30 June 2025, the cumulative total nominal value of shares repurchased and cancelled was credited to retained earnings. Following a review, the cumulative total nominal value of shares repurchased is now presented as a capital redemption reserve. Treasury shares Thousands £'000 At 1 January 2026 4,067 13,897 Acquired by the EBT 522 2,110 Distributed to employees by the EBT (672) (2,298) At 30 June 2026 3,917 13,709 15. Notes to the Consolidated Cash Flow Statement The following non-operating cash flow adjustments have been made to the result for the period before tax: Six monthsended 30 June 2026 (unaudited) £'000 Six monthsended 30 June 2025 (unaudited)£'000 Year ended 31 December 2025 (audited)£'000 Depreciation 41,977 36,088 78,439 Impairment of right of use assets - - 856 (Profit)/loss on disposal of assets (54) 749 710
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Profit on disposal of subsidiary (9,363) - - Loss on sale and leaseback transaction - - 122 Amortisation 1,162 1,136 2,254 Share-based payment charge 1,290 1,145 2,286 IAS 19 pension movement 156 21 (200) Movement in fair value of investments (450) (650) (1,500) Share of profits of associates 357 (455) (12) Finance income (1,811) (2,491) (4,526) Finance cost 7,434 7,306 16,078 Total 40,698 42,849 94,507 For the purpose of the Consolidated Cash Flow Statement, cash and cash equivalents comprised the following: As at 30 June 2026 (unaudited) £'000 As at 30 June 2025 (unaudited)£'000 As at 31 December 2025 (audited)£'000 Bank and cash 15,469 13,138 43,479 Readily available deposits 55,000 68,000 5,000 Bank and cash attributable to assets held for sale - - 3,328 Total 70,469 81,138 51,807 16. Pensions The Group contributes to defined benefit schemes which require contributions to be made to separately administered funds. The assets of the schemes are administered by trustees in funds independent from the assets of the Group. In certain cases, the Group will participate under Admitted Body status in Local Government Pension Schemes. The Group will contribute for a finite period up until the end of the particular contract. The Group is required to pay regular contributions as detailed in the scheme's schedule of contributions. In some cases, these contributions are capped, and any excess can be recovered from the body from which the employees originally transferred. Where the Group has a contractual right to recover the costs of making good any deficit in the scheme from the Group's client, the fair value of that asset has been recognised as a separate pension guarantee asset. For all schemes included within Other schemes, the Group does not have an unconditional right to benefit from any surplus and therefore, where such schemes are in a surplus position, the surplus is recognised only to the extent that the Group will benefit from reduced contributions in the period prior to the expiry of the associated contract. For the purposes of the interim financial statements management has estimated the movements in pension liabilities by reference to the changes in principal assumptions since 31 December 2025, using the sensitivities to movements in these assumptions calculated at that time. The movements in pension assets have been estimated either by reference to preliminary asset valuations at 30 June 2026 or to market index returns over the period for different asset classes in line with the asset portfolios held at 31 December 2025. The principal actuarial assumptions that have changed since 31 December 2025 are as follows: As at 30 June 2026 (unaudited) As at 31December 2025 (audited) Discount rate 6.10% 5.60% Retail prices inflation 2.95% 2.85% Consumer prices inflation 2.65% 2.55% Rate of increase of salaries 2.95% 2.85% The amounts recognised in the Consolidated Balance Sheet and major categories of plan assets are: As at 30 June 2026 (unaudited) As at 31 December 2025 (audited) Group schemes £'000 Other schemes £'000 Total £'000 Group schemes £'000 Other schemes £'000 Total £'000 Group's estimated asset share 117,640 127,350 244,990 119,784 122,075 241,859 Present value of funded scheme liabilities (91,537) (68,776) (160,313) (96,449) (74,804) (171,253) Funded status 26,103 58,574 84,677 23,335 47,271 70,606 Scheme surpluses not recognised as assets - (58,096) (58,096) - (45,924) (45,924) Pension assets 26,103 478 26,581 23,335 1,347 24,682 Assets classified as held for sale - - - - (585) (585) Pension assets recognised 26,581 23,335 762 24,097 The Group's defined benefit obligation is sensitive to changes in certain key assumptions. A 0.1% reduction in the net discount rate (the base discount rate less the rate of inflation) would result in an increase in the present value of the defined benefit obligation of approximately 1.6%, although an element of the increase would be mitigated by an increase in the pension guarantee assets or a reduction in the unrecognised surplus, as described above.
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17. Half-year condensed consolidated financial statements Further copies of the Interim Report are available from the registered office of Mears Group PLC at 2nd Floor, 5220 Valiant Court, Gloucester Business Park, Brockworth, Gloucester, GL3 4FE or www.mearsgroup.co.uk. 18. Principal risks and uncertainties The nature of the principal risks and uncertainties faced by the Group has not changed significantly from those set out on pages 52 to 54 of the 2025 Annual Report and Accounts and is not expected to change over the next six months. 19. Forward-looking statements This report contains certain forward-looking statements with respect to the financial condition, results of operations and businesses of Mears Group PLC. These statements involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. The Directors confirm, to the best of their knowledge, that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union and that the Interim Report includes a fair review of the information required by Rules 4.2.4, 4.2.7 and 4.2.8 of the Disclosure and Transparency Rules of the UK Financial Conduct Authority. By order of the Board L J Critchley A C M Smith Chief Executive Officer Chief Finance Officer lucas.critchley@mearsgroup.co.uk andrew.smith@mearsgroup.co.uk 5 August 2026 This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authorityto act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this informationmay apply. For further information, please contact rns@lseg.com or visit www.rns.com. RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the informationcontained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. Forfurther information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy. END