I am pleased to report an encouraging first half. The Company continues to grow strongly and to consolidate its position as a leading provider of services to the owners and occupiers of commercial, industrial and government property.

Pre-tax profit for the first half year amounted to £14.1m, an increase of 29.5% over the same period last year. This was achieved on turnover of £241.6m, up 21.2%, of which 20.2% was accounted for by organic growth. Earnings per share rose by 32.9% from 2.2p to 2.9p. During the period, the Group generated operating cash flow of £15.4m.

Proposed lnterim Dividend

The Directors are proposing an interim dividend of 0.7p per share, an increase of 27.3% from the corresponding period of the previous year. This dividend will be paid on 2 April 2002 to shareholders on the register on 8 March 2002.

The Building Services Division consists of Engineering Services, Property Services and Access Systems. Collaborative arrangements are becoming the norm in the industry and MITIE, because of its customer focused attitude and track record, is a sought after partner for this type of project. The Government’s investment in the infrastructure of public services provides MITIE Group companies in this Division with further opportunities for growth. In the private sector there is a little hesitancy, in some sectors, for clients to confirm orders but this has not impacted on our forward workload, which continues to be healthy.

Engineering Services

MITIE Engineering Services is now equipped to handle complex projects, particularly in the public sector’s search for Best Value. Formal partnering agreements are in place with BT, Cornwall County Council and Bristol University and have resulted in contracts valued at £4m or more with each. Growth has been driven by orders for the education sector, local health authorities and county councils. New contracts include University College Cardiff, Newbury College, Somerset College of Art and Technology, Dawlish Hospital and Cornwall Fire Stations as well as Gartree Prison and The Home Office.

In the private sector, relationships with our valued clients Cannons Leisure, Primark, Vodafone, Warners, BT and The Savoy Group continue to produce orders. Additional major contracts have been won for Hutchison Telecom, Manchester Arndale Centre, Thompson & Capper and Whatley Manor Hotel. All regions report a strong forward workload for the second half of the year and 40% of next year’s targeted turnover has already been secured. While it is sensible to temper optimism with caution, we have seen few cancellations of orders and are reasonably confident that the market for our services remains strong because we have concentrated on niche markets and on working direct to our end-user clients whenever possible.

Property Services

MITIE Property Services’ contracts are increasingly longer in term, affording visible forward earnings. The unique ability to provide a nationwide service opens up good opportunities for large, central and local government contracts that may extend over a period of years. Some of those won recently, such as Brent and Birmingham Councils, and Pathfinder projects for converting Job Centres for Trillium, are now contributing to growth as anticipated. Other significant contracts have been won for Vodafone, Virgin Trains, Canary Wharf Contractors Ltd, HM Prison Service and the MoD and the outlook for this discipline remains bright.

Access Systems

MITIE Access Systems has consolidated its position following the opening of the new branches referred to when we announced our full year results in July. New accounts include Radisson Hotels in Glasgow, Higgins Group and Newcastle City Council. We have seen a continuing improvement in hire rates achieved by MITIE Powered Access. Our hire and sale business, trading as MITIE Generation, continues to achieve high utilisation rates though we did see a temporary decline in direct sales immediately after 11 September. However the hire income continues to hold up well.

Support Services

Support Services’ principal disciplines are Cleaning, Engineering Maintenance and Managed Services. Catering and Security are managed within the Cleaning discipline, while Managed Services incorporates Business Services and PFI.

All parts of this Division have continued to benefit from the development of outsourcing as an established business process, providing our customers with expertise in non-core activities.

Cleaning

Cleaning continues to win business by developing national customers. In recent reports we mentioned securing major national contracts with RBS NatWest, BAE Systems and Barclays. These contracts have been successfully mobilised and we anticipate seeing full income flow from these in future results. There has been an increase in work won in the education sector, including Sheffield City Council, Morrison FM for West Lothian Schools and New College, Durham. A major contract for a leading financial institution in London was started in the period, while Shell, Halifax and Ikea, all existing clients, have shown their confidence in MITIE by awarding additional contracts. Bundled service packages continue to be required, enabling us to cross-sell further services.

Engineering Maintenance

The Engineering Maintenance discipline has continued to grow profitably by successfully winning large, quality clients while retaining its existing ones. Contracts for Nokia and Xerox have been expanded and are now national. The value of new work shows a substantial increase over the same period last year. We have strengthened our position in the retail sector, winning two new contracts at shopping centres for Prudential, as well as three for Standard Life. The Foreign & Commonwealth Office contract was successfully re-tendered for a further three years and a new national contract for Ernst & Young is now in place.

Managed Services

Managed Services continues to perform well with new facilities contracts started at Bloombergs, Vizzavi and Global Switch. Our long-term partnership with Trillium goes from strength to strength and we have recently entered a 5-year contract to supply an integrated services package with them for the BBC’s Scottish estate.

Our partnering agreement with Sainsbury’s entered a new phase as we relocated 3,000 of their staff into their new Holborn Business Centre and supplied a further integrated package directly to their IT suppliers, Accenture, in Southwark.