Half-year Results

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.

See Alternative Performance Measures for definitions and reconciliation to statutory measures

• Excluding divested Facilities Management ('FM') activities
• 7% growth comprises 4% organic and 3% acquired
• 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:

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 reported revenue 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 growth in its core maintenance activities, having performed strongly through an intensive period of contract rebids, complemented by strategically important new business wins with Birmingham City Council and Rooftop Housing Group. We are well advanced 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 Central Government."

Note:

• Market expectations for FY26 are considered to be revenue and adjusted profit before tax of £1,038m and £50.7m respectively.

Upon the publication of this announcement, such information is now considered to be in the public domain and is disclosed in accordance with the Company's obligations under Article 17 of the UK Market Abuse Regulation.

CHIEF EXECUTIVE REVIEW

The Board is pleased to report another period in which the Group has made strong progress against all of its key strategic objectives.

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 housing related challenges. The first half saw a strengthening in our operational structure, and the completion of succession planning that 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 strict controls during a particularly busy period of new contract starts and other front-line developments. Teamwork is a core Mears value, and the joint working between operational and central teams has been a key factor in the strength of the first half performance.

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 team expects to continue to deliver annual growth within this segment of 5-9% in the medium term. This is viewed as a relatively conservative target, given the resilient social housing repairs and maintenance market has reported annual growth of more than 10% since the pandemic, driven by increasing regulation, rising compliance obligations and sustained investment in existing homes. The Group reported revenue growth of 12% in FY25. As detailed below, the Group is, once again, well placed to outperform the stated growth target range in FY26, and the full year impact of the new contracts also positions the Group well for FY27.

Over the course of the first half, the Group made strong progress across its key Local Government objectives, underpinned by an 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 new order intake of over £1bn. Central to this success is strong operational performance and the deep relationships established with those clients and within those communities. In addition, the first half saw the Group secure contracts with Birmingham City Council 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, has now largely concluded. The visibility of forward revenues is significantly improved, and the Group can focus its bidding resources on securing further growth opportunities with new customers. In addition, there is a solid bidding pipeline of new growth opportunities.

Importantly, Mears recognised early that its market was evolving from a largely repairs-driven requirement to an increasing compliance 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 of both cultural and strategic fit, and the margin enhancement opportunities the business brings to the Group. The acquisition has accelerated 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 and retrofit works. The Group is adopting a disciplined approach, initially building this capability within its existing operational strongholds. The Group remains selective in terms of bidding planned asset investment opportunities, typically focusing on areas that are more technical in nature, often linked to building safety and retrofit, and where price plays a lesser role in the selection 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 developing needs and requirements of Ministers and Central Government. Mears aims to be seen as the Housing Specialist for Central Government, 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 work hard to deliver against Government objectives, in a compliant and caring manner. Good progress has been made, with the use of hotels reducing from the peak seen in 2024, and this has been sustained through the first half. Mears has worked collaboratively to secure sufficient residential dispersed accommodation to remove the requirement for short-term contingent solutions.

Divestment of non-core activities

Mears has a consistent and well-communicated strategy focused entirely on delivering housing services to the public and regulated sector. The Group owned a small FM business with a focus on educational and healthcare customers, which was a legacy from a historic acquisition. This business was largely self-contained, and delivered consistent financial outputs, with limited resources allocated from the wider Group. Given the Group's focus on housing, the Board took a decision to divest this business. The transaction completed on 2 March 2026 and further detail is included below.

Operational Review

• Excluding FM activities
• Excluding the amortisation of acquisition intangibles and the impact of IFRS 16. 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.

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 to improve, reducing to 18.8% (FY 2025: 20.1%), and the Group is committed to growing its own talent and providing opportunities for internal progression.

Mears employs around 350 apprentices. Maintaining a consistently high-quality apprenticeship programme, underpinned by long-term employment opportunities, remains a priority. To support continuous improvement, the Group has invested in developing mentors to ensure a robust and scalable support framework for apprentices. Apprenticeships form a key component of the Group's long-term workforce strategy, with a clear focus on progression beyond programme completion into sustainable long-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 contract retentions has improved the order book phasing, giving the Group a high level of visibility of market forecast revenues over the medium term.

The Group has a strong record of retaining contracts. Re-bids naturally bring some risk of attrition and require a shift in focus away from bidding new works. It is extremely significant that having reported 100% retention against all contracts expiring in FY25, the Group secured further retentions in respect of Cross Keys Homes, Livin, Moat Homes, Thurrock Council and Leeds City Council in the first half, in aggregate contributing over £1bn in new contract 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 of retentions have provided the Group an opportunity to deliver additional services for those customers.

To be balanced, the Group saw the loss of its contract with Eastbourne and Lewes Council, which generated annual revenues of c.£8m, that expired at the end of March 2026. The Group will continue to maintain a disciplined approach when bidding, and the tendered price was a factor in this loss. In addition, the Group will see its contract with Orbit Housing, with annual revenues of c.£30m, end in March 2027. Whilst the Group has delivered strong operational performance to this client, the contract has proved financially challenging, absorbing a disproportionate level of working capital.

The Group has continued to make additional investment to enhance the Group's pre-sales capabilities, improving prospective clients' understanding of Mears' service quality and capabilities before the commencement of new procurement processes. The payback from this investment can take time to crystallise, given the elongated bid process. In addition, the Group has applied additional bidding resource to reflect its broadening service offer. The additional investment in people has been augmented with the purchase of a Customer Relationship Management system ('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 existing Mears and Pennington clients.

CASH FLOW AND WORKING CAPITAL MANAGEMENT

The Group has continued to deliver strong cash performance, with conversion of EBITDA to operating cash in the first 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 net cash for the first six months of £29.7m (H1 2025: £67.7m). The reduction in the average daily net cash reflects several cash outflows which occurred during the second half of 2025, as well as absorbing £13.6m in purchase of own shares in the first half of FY26. The Group continues to generate strong free cashflows and reported an adjusted 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 share count 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 of our plan. The excellent visibility of future revenue and profits, combined with strong cash generation underpins a progressive 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 believe that a capital allocation policy combining a progressively growing dividend within a cover range of 2.0-2.5x, with the 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 had completed the purchase and cancellation of 2.9m ordinary shares of 1p each at an average price of 396p. Since 2023, 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 match option exercises).

OUTLOOK AND GUIDANCE

The Group has made a solid start to FY26. The strong period of contract retentions, augmented by new awards from Birmingham City Council and Rooftop Housing Group, provides the Board a high level of confidence that the Group will deliver against its Maintenance-led organic growth target of 5-9% per annum in the current year. The full year impact of these new contracts will also provide a strong tailwind for FY27, notwithstanding the loss of the Orbit 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 be further buoyed by the reformed Decent Homes standard. The combined Mears-Pennington Compliance offer will increase 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 range of 5-6%. The guidance for the current year is maintained towards the lower end of that range, owing to the high number of new contracts being mobilised in the period, combined with the uncertainty as to speed of revenue reduction in the AASC activities. The disciplined approach to new contract bidding and a robust approach to operational 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 low capital intensity nature of our operating model.

ALTERNATIVE PERFORMANCE MEASURES ('APM')

The Interim Report includes both statutory and adjusted performance measures. APMs are considered useful to stakeholders in assessing the underlying performance of the business, adjusting for items which could distort the understanding of performance in the year and between periods, and when comparing the financial outputs to those of our peers. The APMs have been set considering the requirements and views of the Group's investors and debt funders 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 unadjusted profit before tax and earnings per share as its headline profit measures. The Group makes regular reference throughout the Interim Report to an adjusted operating profit, measured before the impact of IFRS 16, and stated both in pounds (£) and as a percentage margin (%). This adjusted measure is a key metric for the senior management 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 statutory net 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 Reporting Standards (IFRS) measures, and the Board has reported both statutory and alternative measures with equal prominence throughout the Interim Report.

The method of calculation and a reconciliation between each APM and the relevant statutory measure are detailed below, together with an explanation as to why management considers the APM to be useful in helping users to have a better understanding of the Group's underlying performance. This section of the Interim Report also provides additional analysis to give the user an easier route to understand underlying performance and deriving their own profit and EBITDA measures.

The Directors use the Operating profit pre-IFRS 16 measure to generate the Group's headline operating margin. Whilst this generates a lower operating margin, it reflects how the underlying contracts have been tendered, how the senior executive team assess performance, and is also more aligned to the underlying cash generation. In addition, this measure is also used for the purposes of assessing the Group's compliance with its banking covenants which utilise pre-IFRS 16 measures.

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:

Accounting standards require that, where a contract is identified as a lease under the rules of IFRS 16, the Group recognises 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 of the newly recognised lease liability is charged to finance costs. On the basis that depreciation is required to be charged on a straight-line basis, but the interest element is charged on an amortised cost basis, this results in a higher charge being applied to the income statement in the early years of a lease, with this impact reversing over the later years. Ultimately, IFRS 16 has no impact on the lifetime profitability of the contracts and there are no cash flow 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 cash measure has been introduced to align the net borrowing definition to the Group's banking covenants, which are required to be stated before the impact of IFRS 16.

The Group does not recognise lease obligations as traditional debt instruments given a significant proportion of these leases have break provisions which allow the Group to cancel the associated lease obligation with minimal associated cost. A reconciliation between the net debt and the adjusted measure is detailed below:

In addition to the average daily net cash measure, the Group also measures the cash inflow from operating activities as a proportion of EBITDA and this cash conversion percentage is a key performance measure, reflecting the Group's ability to convert 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.

Statutory profit before tax

The Board recognises that any reported profit will include singular components which, in isolation, may be considered unusual, infrequent, non-recurring or non-underlying. Additional detail is disclosed separately within the notes to the financial statements, and these are signposted below to assist the user in accessing these and to better understand the underlying performance in the period.

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.

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.

Disposal - Morrison Facilities Services

In March 2026, the Group completed the disposal of 100% of the share capital in Morrison Facilities Services Limited, a business delivering Facilities Management with a focus on the education and health sectors. This business 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

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.

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

Other comprehensive income:

Which will not be subsequently reclassified to the Consolidated Statement of Profit or Loss:

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 balance sheet

As at 30 June 2026

* 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

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

* 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

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.

• Basis of preparation and accounting principles
• 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 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.

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.

Revenue

The Group's revenue disaggregated by nature is as follows:

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.

Tax expense

Tax recognised in the Consolidated Statement of Profit or Loss:

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.

Earnings per share

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.

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.

Trade and other payables

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.

Provisions

A summary of the movement in provisions during the period is shown below:

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.

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

Details of the cash received and profit on disposal of the subsidiary are set out below:

£'000

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.

Share capital and reserves

During the period 52,668 (2025:30,003) ordinary 1p shares were issued in respect of share options exercised.

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

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:

For the purpose of the Consolidated Cash Flow Statement, cash and cash equivalents comprised the following:

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:

The amounts recognised in the Consolidated Balance Sheet and major categories of plan assets are:

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.

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.

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.

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