<PAGE>

Exhibit 99.1


<TABLE>
                                              LACLEDE GAS COMPANY
                                              STATEMENTS OF INCOME
                                                  (UNAUDITED)

(Thousands)
<CAPTION>
                                                                 Three Months Ended         Six Months Ended
                                                                     March 31,                  March 31,
                                                                 2003         2002         2003          2002
                                                                 ----         ----         ----          ----
<S>                                                           <C>          <C>          <C>           <C>
Operating Revenues:
  Utility                                                     $ 357,456    $ 256,802    $ 574,621     $ 440,013
  Other                                                             653          596        1,303         1,203
                                                           ----------------------------------------------------
      Total Operating Revenues                                  358,109      257,398      575,924       441,216
                                                           ----------------------------------------------------

Operating Expenses:
  Utility
    Natural and propane gas                                     247,918      156,115      381,761       271,709
    Other operation expenses                                     29,663       28,804       60,987        55,080
    Maintenance                                                   4,950        4,318        9,394         8,632
    Depreciation and amortization                                 5,596        6,053       11,089        12,635
    Taxes, other than income taxes                               22,579       18,437       36,707        31,336
                                                           ----------------------------------------------------
      Total utility operating expenses                          310,706      213,727      499,938       379,392
  Other                                                             638          605        1,273         1,179
                                                           ----------------------------------------------------
      Total Operating Expenses                                  311,344      214,332      501,211       380,571
                                                           ----------------------------------------------------
Operating Income                                                 46,765       43,066       74,713        60,645
Other Income and Income Deductions - Net                            (87)        (208)         956           716
                                                           ----------------------------------------------------
Income Before Interest and Income Taxes                          46,678       42,858       75,669        61,361
                                                           ----------------------------------------------------

Interest Charges:
  Interest on long-term debt                                      5,205        5,205       10,410        10,410
  Other interest charges                                            944        1,203        2,068         2,610
                                                           ----------------------------------------------------
      Total Interest Charges                                      6,149        6,408       12,478        13,020
                                                           ----------------------------------------------------
Income Before Income Taxes                                       40,529       36,450       63,191        48,341
Income Tax Expense                                               15,631       13,869       23,695        17,880
                                                           ----------------------------------------------------
Net Income                                                       24,898       22,581       39,496        30,461
Dividends on Redeemable Preferred Stock                              15           15           31            36
                                                           ----------------------------------------------------
Earnings Applicable to Common Stock                           $  24,883    $  22,566    $  39,465     $  30,425
                                                           ====================================================


See notes to financial statements.
</TABLE>


                                     1

<PAGE>
<PAGE>

<TABLE>
                                          LACLEDE GAS COMPANY
                                             BALANCE SHEETS


<CAPTION>
                                                                             Mar. 31          Sept. 30
                                                                               2003             2002
                                                                               ----             ----
                                                                                   (Thousands)
                                                                           (UNAUDITED)
<S>                                                                         <C>              <C>
                        ASSETS
Utility Plant                                                               $1,007,958       $ 988,747
  Less: Accumulated depreciation and amortization                              402,357         394,371
                                                                        -------------------------------
      Net Utility Plant                                                        605,601         594,376
                                                                        -------------------------------

Other Property and Investments                                                  27,483          27,132
                                                                        -------------------------------

Current Assets:
  Cash and cash equivalents                                                     11,744           1,317
  Accounts receivable                                                          140,807          65,258
    Less: Allowances for doubtful accounts                                      (5,309)         (3,718)
  Materials, supplies, and merchandise at avg. cost                              4,225           4,326
  Natural gas stored underground at LIFO cost                                   24,463          77,087
  Propane gas at FIFO cost                                                      10,128          14,712
  Delayed customer billings                                                     33,682               -
  Deferred income taxes                                                          8,417          12,305
  Prepayments and other                                                          7,034           2,515
                                                                        -------------------------------
      Total Current Assets                                                     235,191         173,802
                                                                        -------------------------------

Deferred Charges:
  Prepaid pension cost                                                         111,879         114,313
  Regulatory assets                                                             74,929          72,484
  Other                                                                          3,852           3,714
                                                                        -------------------------------
      Total deferred charges                                                   190,660         190,511
                                                                        -------------------------------
Total Assets                                                                $1,058,935       $ 985,821
                                                                        ===============================



See notes to financial statements.
</TABLE>


                                      2

<PAGE>
<PAGE>

<TABLE>
                                           LACLEDE GAS COMPANY
                                        BALANCE SHEETS (Continued)

<CAPTION>
                                                                             Mar. 31          Sept. 30
                                                                               2003             2002
                                                                               ----             ----
                                                                        (Thousands, except share amounts)
                                                                           (UNAUDITED)
<S>                                                                         <C>              <C>
                 CAPITALIZATION AND LIABILITIES
Capitalization:
  Common stock and Paid-in capital (100 shares issued and
      outstanding)                                                         $   82,579       $  82,579
  Retained earnings                                                           207,466         180,719
  Accumulated other comprehensive income (loss)                                  (339)           (339)
                                                                         -----------------------------
      Total common stock equity                                               289,706         262,959
  Redeemable preferred stock                                                    1,258           1,266
  Long-term debt (less sinking fund requirements)                             259,588         259,545
                                                                         -----------------------------
      Total Capitalization                                                    550,552         523,770
                                                                         -----------------------------

Current Liabilities:
  Notes payable                                                               122,390         118,870
  Accounts payable                                                             78,374          30,838
  Advance customer billings                                                         -          24,832
  Current portion of long-term debt                                            25,000          25,000
  Taxes accrued                                                                30,686           9,495
  Unamortized purchased gas adjustment                                          9,524          22,976
  Other                                                                        34,729          32,597
                                                                         -----------------------------
      Total Current Liabilities                                               300,703         264,608
                                                                         -----------------------------

Deferred Credits and Other Liabilities:
  Deferred income taxes                                                       158,516         156,924
  Unamortized investment tax credits                                            5,472           5,629
  Pension and postretirement benefit costs                                     18,511          14,658
  Other                                                                        25,181          20,232
                                                                         -----------------------------
      Total Deferred Credits and Other Liabilities                            207,680         197,443
                                                                         -----------------------------
Total Capitalization and Liabilities                                       $1,058,935       $ 985,821
                                                                         =============================



See notes to financial statements.
</TABLE>


                                     3

<PAGE>
<PAGE>

<TABLE>
                                          LACLEDE GAS COMPANY
                                        STATEMENTS OF CASH FLOWS
                                              (UNAUDITED)

<CAPTION>
                                                                                  Six Months Ended
                                                                                      March 31,
                                                                                 2003           2002
                                                                                 ----           ----
                                                                                     (Thousands)
<S>                                                                            <C>            <C>
Operating Activities:
 Net Income Applicable to Common Stock                                         $ 39,496       $ 30,461
 Adjustments to reconcile net income
  to net cash provided by (used in) operating activities:
    Depreciation and amortization                                                11,089         12,635
    Deferred income taxes and investment
     tax credits                                                                  2,707        (14,359)
    Other - net                                                                     297            393
    Changes in assets and liabilities:
      Accounts receivable - net                                                 (73,958)       (34,497)
      Unamortized purchased gas adjustments                                     (13,452)        (6,305)
      Deferred purchased gas costs                                                5,992         48,197
      Advance customer billings - net                                           (58,514)       (24,481)
      Accounts payable                                                           47,536           (358)
      Taxes accrued                                                              21,191         15,761
      Natural gas stored underground                                             52,624         56,436
      Other assets and liabilities                                                7,674         (5,802)
                                                                          -----------------------------
          Net cash provided by operating activities                            $ 42,682       $ 78,081
                                                                          -----------------------------

Investing Activities:
  Construction expenditures                                                     (22,714)       (22,273)
  Employee benefit trusts                                                          (507)           125
  Other investments                                                                 176         (1,006)
                                                                          -----------------------------
          Net cash used in investing activities                                $(23,045)      $(23,154)
                                                                          -----------------------------

Financing Activities:
  Issuance of short-term debt - net                                               3,520        (41,450)
  Dividends paid                                                                (12,722)       (12,685)
  Preferred stock reacquired and other                                               (8)          (395)
                                                                          -----------------------------
          Net cash used in financing activities                                $ (9,210)      $(54,530)
                                                                          -----------------------------

Net Increase in Cash and Cash Equivalents                                      $ 10,427       $    397
Cash and Cash Equivalents at Beg of Period                                        1,317          3,223
                                                                          -----------------------------
Cash and Cash Equivalents at End of Period                                     $ 11,744       $  3,620
                                                                          =============================

Supplemental Disclosure of Cash Paid (Refunded)
 During the Period for:

    Interest                                                                   $ 11,369       $ 10,863
    Income taxes                                                                 (4,303)        12,284


See notes to financial statements.
</TABLE>


                                     4

<PAGE>
<PAGE>

                             LACLEDE GAS COMPANY
                        NOTES TO FINANCIAL STATEMENTS

1.)      Effective October 1, 2001, Laclede Gas Company (Laclede Gas or the
         Utility) and its subsidiaries became subsidiaries of The Laclede
         Group, Inc. (Laclede Group or the Company), an exempt holding
         company under the Public Utility Holding Company Act of 1935. See
         the Company's Annual Report on Form 10-K for the year ended
         September 30, 2002 for additional details on this restructuring.

         These notes are an integral part of the accompanying financial
         statements of Laclede Gas. In the opinion of Laclede Gas, this
         interim report includes all adjustments (consisting of normal
         recurring accruals) necessary for the fair presentation of the
         results of operations for the periods presented. Certain
         prior-period amounts have been reclassified to conform to
         current-period presentation. This Form 10-Q should be read in
         conjunction with the Notes to Financial Statements contained in the
         Company's Fiscal 2002 Form 10-K.

2.)      On October 3, 2002, the Missouri Public Service Commission (MoPSC
         or the Commission) approved a settlement reached among the parties
         to the 2002 rate case, filed by the Utility on January 25, 2002.
         The terms of the settlement included (1) an annual rate increase of
         $14 million effective on November 9, 2002; (2) a moratorium on
         additional rate filings until March 1, 2004; and (3) an innovative
         rate design that is expected to provide the Utility with the
         ability to recover its distribution costs, which are essentially
         fixed, in a manner that is significantly less sensitive to weather.
         The settlement also provided for, among other things, changes
         resulting in negative amortization of the depreciation reserve of
         $3.4 million annually effective from July 1, 2002 until the
         Utility's next rate case proceeding, minor changes in depreciation
         rates effective January 1, 2003, and changes in the regulatory
         treatment of pension costs primarily designed to stabilize such
         costs, effective during fiscal 2003. Also approved was an incentive
         program beginning in fiscal 2003 under which the Utility may
         achieve, under specific conditions, income related to management of
         its gas supply commodity costs. Previously deferred costs of $.3
         million are being recovered and amortized on a straight-line basis
         over a ten-year period, without return on investment, effective
         with implementation of the new rates, in addition to certain
         amounts authorized previously.

3.)      Laclede Gas is a natural gas distribution utility having a material
         seasonal cycle. As a result, these interim statements of income for
         Laclede Gas are not necessarily indicative of annual results or
         representative of succeeding quarters of the fiscal year. Due to
         the seasonal nature of the business of Laclede Gas, earnings are
         typically concentrated in the November through April period, which
         generally corresponds with the heating season. The Utility
         typically experiences losses during the non-heating season. The
         seasonal effect is expected to be tempered somewhat by the impact
         of the weather mitigation rate design implemented in November 2002.

4.)      Net provisions (benefit) for income taxes was as follows during the
         periods set forth below:

<TABLE>
<CAPTION>
                                 Three Months Ended        Six Months Ended
                                      March 31,                March 31,
                                 ------------------        -----------------
                                  2003         2002        2003         2002
                                  ----         ----        ----         ----
                                                 (Thousands)
<S>                             <C>          <C>         <C>          <C>
         Federal
           Current              $ 13,215     $  4,571    $ 17,980     $ 27,632
           Deferred                  102        7,303       2,243      (12,363)
         State and Local
           Current                 2,249          721       3,008        4,607
           Deferred                   65        1,274         464       (1,996)
                              -------------------------------------------------
               Total            $ 15,631     $ 13,869    $ 23,695     $ 17,880
                              =================================================
</TABLE>


                                     5

<PAGE>
<PAGE>

5.)      Under the Gas Supply Incentive Plan (GSIP) of Laclede Gas, the
         Utility shared with its customers certain gains and losses related
         to the acquisition and management of its gas supply assets. The
         provisions of the GSIP extended through September 30, 2001. In
         September 2001, the MoPSC ruled that the GSIP should be allowed to
         expire. The Utility requested clarification and rehearing. On
         February 19, 2002, the MoPSC denied the Utility's application for
         rehearing. Laclede Gas filed a petition for judicial review of the
         MoPSC's decision with the Cole County Circuit Court, together with
         a motion requesting that the MoPSC's decision be stayed. The
         request for stay was denied on May 13, 2002. On April 3, 2003, the
         Cole County Circuit Court issued its Order and Judgment affirming
         the MoPSC's decision to terminate the GSIP. The Company is
         currently reviewing whether to seek further judicial review of the
         MoPSC's decision. However, pursuant to the 2001 rate case
         settlement, the MoPSC authorized Laclede Gas to retain all income
         from releases of pipeline capacity effective December 1, 2001.
         Income from releases of pipeline capacity was previously shared
         with customers under the terms of the GSIP. Laclede Gas will
         continue to retain all income resulting from sales outside of its
         traditional service area, as previously authorized by the
         Commission. Income related to releases of pipeline capacity and
         sales made outside its traditional service area are volatile in
         nature and subject to market conditions.

<TABLE>
<CAPTION>
                                                          Three Months Ended             Six Months Ended
                                                               March 31,                    March 31,
                                                       -----------------------     ------------------------
                                                            2003        2002            2003         2002
                                                            ----        ----            ----         ----
                                                                            (Thousands)
<S>                                                        <C>         <C>             <C>          <C>
         Pre-Tax Income - Capacity Release                 $  702      $  411          $1,315       $  580
         Pre-Tax Income - Off System Sales                  5,085       1,954           6,715        3,103
                                                       -----------------------     ------------------------
         Total Pre-Tax Income                              $5,787      $2,365          $8,030       $3,683
                                                       =======================     ========================
</TABLE>

6.)      In compliance with generally accepted accounting principles,
         transactions between Laclede Gas and its affiliates as well as
         intercompany balances on Laclede Gas' balance sheet have not been
         eliminated from the Laclede Gas financial statements. These amounts
         are not disclosed on the face of the Laclede Gas financial
         statements, since they are not material.

         Laclede Gas provides administrative and general support to
         affiliates. All such costs, which are not material, are billed to
         the appropriate affiliates and are reflected in accounts receivable
         on Laclede Gas' Balance Sheet. Laclede Gas may also, on occasion,
         borrow funds from, or lend funds to, affiliated companies. At March
         31, 2003, the Laclede Gas Balance Sheet reflected a total of $8.4
         million of intercompany receivables and $5.1 million of
         intercompany payables.

7.)      The Regulated Gas Distribution segment consists of the regulated
         operations of Laclede Gas. Laclede Gas is a public utility engaged
         in the retail distribution of natural gas serving an area in
         eastern Missouri, with a population of approximately 2.0 million,
         including the City of St. Louis, St. Louis County, and parts of
         eight other counties. The Non-Regulated Other segment includes the
         retail sales of gas appliances. There are no material intersegment
         revenues.


                                     6

<PAGE>
<PAGE>

<TABLE>
<CAPTION>
                                         Regulated
                                            Gas        Non-Regulated
         (Thousands)                   Distribution        Other         Eliminations  Consolidated
         ------------------------------------------------------------------------------------------
<S>                                     <C>               <C>               <C>         <C>
         Three Months Ended
         March 31, 2003
         --------------
         Operating revenues             $  357,456        $   653           $    -      $  358,109
         Net income (loss)                  24,889              9                -          24,898
         Total assets                    1,057,345          1,590                -       1,058,935

         Six Months Ended
         March 31, 2003
         --------------
         Operating revenues             $  574,621        $ 1,303           $    -      $  575,924
         Net income (loss)                  39,478             18                -          39,496
         Total assets                    1,057,345          1,590                -       1,058,935

         Three Months Ended
         March 31, 2002
         --------------
         Operating revenues             $  256,802        $   596           $    -      $  257,398
         Net income (loss)                  22,587             (6)               -          22,581
         Total assets                      973,795          1,447                -         975,242

         Six Months Ended
         March 31, 2002
         --------------
         Operating revenues             $  440,013        $ 1,203           $    -      $  441,216
         Net income (loss)                  30,446             15                -          30,461
         Total assets                      973,795          1,447                -         975,242
</TABLE>

8.)      Laclede Gas is subject to various environmental laws and
         regulations that, to date, have not materially affected the
         Company's financial position and results of operations. As these
         laws, regulations, and their interpretation evolve, however,
         additional costs may be incurred.

         With regard to a former manufactured gas plant site located in
         Shrewsbury, Missouri, Laclede Gas and state and federal
         environmental regulators have agreed upon certain actions and those
         actions are nearing completion. Laclede Gas currently estimates the
         overall costs of these actions will be approximately $2.3 million.
         As of March 31, 2003, Laclede Gas has paid or reserved for these
         actions. If regulators require additional actions or assert
         additional claims, Laclede Gas will incur additional costs.

         Laclede Gas enrolled a second former manufactured gas plant site
         into the Missouri Voluntary Cleanup Program (VCP). The VCP provides
         opportunities to minimize the scope and cost of site cleanup while
         maximizing possibilities for site development. This site is located
         in and is presently owned by the City of St. Louis, Missouri. The
         City of St. Louis has separately authorized a developer to prepare
         both a Remedial Action Plan (RAP), for submission to the VCP, and a
         site development plan. Laclede Gas continues to explore with the
         developer what role, if any, it might play in these efforts.
         Laclede Gas continues to evaluate other options as well, including,
         but not limited to, the submission of its own RAP to the VCP.
         Laclede Gas currently estimates that the cost of site
         investigations, agency oversight and related legal and engineering
         consulting may be approximately $629,000. Currently, Laclede Gas
         has paid or reserved for these actions. Laclede has requested that
         other former site owners and operators share in these costs and one
         party has agreed to participate and has reimbursed Laclede Gas to
         date for $173,000. Laclede Gas anticipates additional reimbursement
         from this party. Laclede Gas plans to seek proportionate
         reimbursement of all costs relative to this site from other
         potentially responsible parties if practicable.

                                     7

<PAGE>
<PAGE>

         Costs incurred are charged to expense or capitalized in accordance
         with generally accepted accounting principles. A predetermined
         level of expense is included in Laclede Gas' rates.

         Laclede Gas has been advised that a third former manufactured gas
         plant site previously operated but no longer owned by Laclede Gas
         may contain gas plant waste that may require remediation. Laclede
         Gas is working to determine the nature and extent of such waste, if
         any, and its responsibility, if any, for any remediation costs.

         While the scope of costs relative to the Shrewsbury site will not
         be significant, the scope of costs relative to the other sites is
         unknown and may be material. Laclede Gas has notified its insurers
         that it seeks reimbursement of its costs at these three
         manufactured gas plant sites. In response, the majority of insurers
         have reserved their rights. While some of the insurers have denied
         coverage, Laclede Gas continues to seek reimbursement from them.
         With regard to the Shrewsbury site, denials of coverage are not
         expected to have any material impact on the financial position and
         results of operations of Laclede Gas. With regard to the other two
         sites, since the scope of costs are unknown and may be significant,
         denials of coverage may have a material impact on the financial
         position and results of operations of Laclede Gas. Such costs, if
         incurred, have typically been subject to recovery in rates.

9.)      On June 28, 2002, the Staff of the MoPSC filed its recommendation
         in a proceeding established to review Laclede Gas' gas costs for
         fiscal 2001. In its recommendation, the Staff proposed to disallow
         approximately $4.9 million in pre-tax gains achieved by Laclede Gas
         in its incentive-based Price Stabilization Program. This Program
         was discontinued at the end of the 2001-2002 heating season.
         Laclede Gas believes that Staff's position lacks merit and has
         vigorously opposed the adjustment in proceedings before the MoPSC,
         including a formal hearing that was held on this matter in February
         2003. Final briefs relating to this matter were filed with the
         Commission in April 2003. Regulatory proceeding results are,
         however, inherently uncertain, and to the extent that a final
         Commission decision sustains Staff's recommended disallowance, the
         proceeding's outcome could have a material effect on the future
         financial position and results of operations of Laclede Gas.
         Missouri statutes provide an opportunity for court review of
         Commission decisions.

10.)     In June 2001, the FASB issued SFAS No. 141, "Business
         Combinations", which requires all business combinations in the
         scope of this Statement to be accounted for using the purchase
         method. The provisions of this Statement apply to all business
         combinations initiated after June 30, 2001. The FASB also issued
         SFAS No. 142, "Goodwill and Other Intangible Assets", which
         addresses how acquired goodwill and other intangible assets that
         are acquired individually or with a group of other assets should be
         accounted for in financial statements upon acquisition and after
         they have been initially recognized in the financial statements.
         The complete adoption of SFAS Nos. 141 and 142 on October 1, 2002
         did not have a material effect on the financial position and
         results of operations of Laclede Gas.

         The FASB issued SFAS No. 143, "Accounting for Asset Retirement
         Obligations", which addresses financial accounting and reporting
         for obligations associated with the retirement of tangible
         long-lived assets and associated asset retirement costs. It applies
         to legal obligations associated with the retirement of long-lived
         assets that result from acquisition, construction, development
         and/or the normal operation of a long-lived asset, except for
         certain obligations of lessees. The provisions of the Statement
         provide for rate-regulated entities that meet the criteria for
         application of SFAS No. 71, such as Laclede Gas, to recognize
         regulatory assets or liabilities for differences in the timing of
         recognition of the period costs associated with asset retirement
         obligations for financial reporting pursuant to this Statement and
         rate-making purposes. The adoption of this Statement on October 1,
         2002 did not affect the financial position and results of
         operations of Laclede Gas. There are legal obligations related to
         final abandonment of the Utility's gas distribution system.
         However, these obligations related to mass property and other
         distribution system assets generally are in perpetuity and can not
         be measured under SFAS No. 143 because of indeterminate settlement
         dates and cash flow estimates.

                                     8

<PAGE>
<PAGE>

         SFAS No. 148, "Accounting for Stock-Based Compensation - Transition
         and Disclosure", provides alternative methods for a voluntary
         change to the fair value based method of accounting for stock-based
         compensation. In addition, this statement requires prominent
         disclosures in both annual and interim financial statements about
         the method of accounting for stock-based employee compensation and
         the method used on reported results. The disclosure provisions are
         effective for financial reports containing condensed financial
         statements for interim periods beginning after December 15, 2002.
         The required disclosures are included in this report.

         FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure
         Requirements for Guarantees, Including Indirect Guarantees of
         Indebtedness of Others", requires an entity to recognize, at the
         inception of a guarantee, a liability for the fair value of the
         obligation undertaken in issuing the guarantee. This requirement is
         to be applied on a prospective basis to guarantees issued or
         modified after December 31, 2002. This Interpretation also requires
         disclosures in interim and annual financial statements about
         obligations under certain guarantees that the entity has issued.
         These disclosure requirements are effective for financial
         statements of interim or annual periods ending after December 15,
         2002. The required disclosures are included in this report.


                                     9

<PAGE>
<PAGE>

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

LACLEDE GAS COMPANY
-------------------

This management's discussion analyzes the financial condition and results of
operations of Laclede Gas Company (Laclede Gas or the Utility). It includes
management's view of factors that affect its business, explanations of past
financial results including changes in earnings and costs from the prior
year, and their effects on overall financial condition and liquidity.

Certain matters discussed in this report, excluding historical information,
include forward-looking statements. Certain words, such as "anticipate,"
"believe," "estimate," "expect," "intend," "plan," "seek," and similar words
and expressions identify forward-looking statements that involve
uncertainties and risks. Future developments may not be in accordance with
our expectations or beliefs and the effect of future developments may not be
those anticipated. Among the factors that may cause results to differ
materially from those contemplated in any forward-looking statement are:

o    weather conditions and catastrophic events;
o    economic, competitive, political and regulatory conditions;
o    legislative, regulatory and judicial mandates and decisions, some of
     which may be retroactive, including those affecting
     o   allowed rates of return
     o   incentive regulation
     o   industry and rate structures
     o   purchased gas adjustment provisions
     o   franchise renewals
     o   environmental or safety matters;
     o   taxes;
     o   accounting standards;
o    the results of litigation;
o    retention, ability to attract, ability to collect from and conservation
     efforts of customers;
o    capital and energy commodity market conditions including the ability to
     obtain funds for necessary capital expenditures and the terms and
     conditions imposed for obtaining sufficient gas supply; and
o    employee workforce issues.

Readers are urged to consider the risks, uncertainties and other factors
that could affect our business as described in this report. All
forward-looking statements made in this report rely upon the safe harbor
protections provided under the Private Securities Litigation Reform Act of
1995. We do not, by including this statement, assume any obligation to
review or revise any particular forward-looking statement in light of future
events.

The Management's Discussion and Analysis of Financial Condition and Results
of Operations should be read in conjunction with the Utility's Financial
Statements and the combined notes thereto.


                                     10

<PAGE>
<PAGE>

LACLEDE GAS COMPANY

RESULTS OF OPERATIONS

Quarter Ended March 31, 2003

Laclede Gas' earnings are generated by the sale of heating energy, which has
historically been heavily influenced by the weather. Temperatures in Laclede
Gas' service area during the second quarter of the current fiscal year were
essentially normal, but 17% colder than the same quarter last year. While
this colder weather produced higher earnings year to year, the effect of
weather on earnings for the quarter ended March 31, 2003 was mitigated by
the implementation of a new rate design on November 9, 2002. This new rate
design lessens the impact of weather on the Utility's earnings and recovers
fixed costs more evenly during the heating season. This resulting shift in
the interim margin revenue pattern resulted in lower margin revenue for the
quarter ended March 31, 2003 compared with the same period last year.

Laclede Gas' earnings applicable to common stock were $24.9 million for the
quarter ended March 31, 2003 compared with $22.6 million for the quarter
ended March 31, 2002. In addition to the impact of higher gas sales
resulting from colder weather, the earnings of Laclede Gas were also
favorably affected by the general rate increase implemented November 9, 2002
and higher income from off system sales. These benefits were partially
offset by the shift in the quarterly margin revenue associated with the new
rate design and the effect of income recorded in the same quarter last year
produced by the Utility's Price Stabilization Program.

Operating revenues for the quarter ended March 31, 2003 were $358.1 million,
or $100.7 million more than the same period last year. The increase was
primarily attributable to higher Purchased Gas Adjustment (PGA) Clause rates
that are passed on to Utility customers, subject to prudence review, higher
gas sales levels resulting from colder weather, increased off-system and
capacity release revenues, and the general rate increase. System therms sold
and transported increased by 54.5 million therms, or 12.9%, above the
quarter ended March 31, 2002.

Operating expenses for the quarter ended March 31, 2003 increased $97.0
million from the same quarter last year. Natural and propane gas expense
increased $91.8 million above last year's level primarily attributable to
higher rates charged by our suppliers, higher volumes purchased for sendout
due to the colder weather and higher off-system gas expense. Other operation
and maintenance expenses increased $1.5 million, or 4.5%, primarily due to
higher pension costs, higher group insurance charges, increased insurance
premiums and higher wage rates, partially offset by a lower provision for
uncollectible accounts and reduced distribution charges. Depreciation and
amortization expense decreased $.4 million primarily due to the effect of
negative amortization of a portion of the depreciation reserve effective
July 1, 2002, as authorized by the Missouri Public Service Commission
(MoPSC). This effect was partially offset by increased depreciable property.
Taxes, other than income, increased $4.1 million, or 22.5%, primarily due to
higher gross receipts taxes (reflecting the increased revenues).

The $.3 million decrease in interest charges is primarily due to a reduction
in short-term interest charges (reflecting reduced rates).

The increase in income taxes is primarily due to higher pre-tax income.


Six Months Ended March 31, 2003
-------------------------------

Due to the seasonal nature of Laclede Gas' business, earnings are typically
concentrated in the November through April period, which generally
corresponds with the heating season. The Utility typically

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experiences losses during the non-heating season. The seasonal effect is
expected to be tempered somewhat by the impact of the weather mitigation
rate design implemented in November 2002.

Laclede Gas' earnings applicable to common stock were $39.5 million for the
six months ended March 31, 2003 compared with $30.4 million for the same
period last year. Earnings were favorably affected by higher gas sales
arising from temperatures in its service area that were colder than last
year, the benefit of the general rate increases put into effect by the
Utility on December 1, 2001 and November 9, 2002 and higher income from off
system sales. Temperatures for the six-month period ended March 31, 2003
were 2% colder than normal and 23% colder than the same period last year.
These benefits were partially offset by the factors mentioned previously
related to the quarter ended March 31, 2003.

Operating revenues for the six months ended March 31, 2003 were $575.9
million, or $134.7 million more than the same period last year. The increase
was primarily attributable to higher PGA rates that are passed on to Utility
customers, subject to prudence review, higher gas sales levels resulting
from colder weather, increased off-system and capacity release revenues, and
the general rate increases. System therms sold and transported increased by
111.0 million therms, or 16.0%, above the six months ended March 31, 2002.

Operating expenses for the six months ended March 31, 2003 increased $120.6
million from the same period last year. Natural and propane gas expense
increased $110.0 million above last year's level primarily attributable to
higher volumes purchased for sendout due to the colder weather, higher rates
charged by our suppliers and higher off system gas expense. Other operation
and maintenance expenses increased $6.7 million, or 10.5 %, primarily due to
higher pension costs, higher wage rates, higher group insurance charges,
increased insurance premiums, and a higher provision for uncollectible
accounts, partially offset by reduced distribution charges. Depreciation and
amortization expense decreased $1.5 million primarily due to the effect of
negative amortization of a portion of the depreciation reserve effective
July 1, 2002, as authorized by the Missouri Public Service Commission
(MoPSC). This effect was partially offset by increased depreciable property.
Taxes, other than income, increased $5.4 million, or 17.1%, primarily due to
higher gross receipts taxes (reflecting the increased revenues).

The $.5 million decrease in interest expense was primarily due to a
reduction in short-term interest charges (reflecting reduced rates).

The increase in income taxes is mainly due to higher pre-tax income.


Regulatory Matters
------------------

Laclede Gas previously appealed the MoPSC's decision in its 1999 rate case
relative to the calculation of its depreciation rates. The Circuit Court
remanded the decision to the MoPSC based on inadequate findings of fact. The
MoPSC upheld its previous order and Laclede Gas appealed this second order
to the Circuit Court. Last year, the Circuit Court ruled that the MoPSC's
second order was lawful and reasonable, and Laclede Gas appealed the Circuit
Court's decision to the Missouri Western District Court of Appeals. On March
4, 2003 the Court of Appeals issued an opinion remanding the decision to the
MoPSC based on the MoPSC's failure to support and explain its decision with
adequate findings of fact. The MoPSC has asked that the Court reconsider its
opinion or transfer this matter to the Missouri Supreme Court.

On May 31, 2002, the Staff of the Commission filed a Motion to Investigate
Laclede Gas Company's alleged transfer of its gas supply function to Laclede
Energy Services, Inc. (LES), a subsidiary of Laclede Group, and such
action's ramifications, including whether such alleged transfer required
Commission approval or was otherwise lawful. On June 10, 2002 Laclede Gas
responded, pointing out that it had not transferred its gas supply functions
to LES but had instead delegated five employees to LES with responsibility
for performing various gas supply administrative duties, many of which had
been performed in prior years by an outside party. Laclede Gas remained
primarily responsible for the gas supply function. Laclede Gas urged the
Commission to deny Staff's Motion on this and other grounds. The Commission
concluded that a case should be established to investigate the issues raised
by the Staff. The Commission

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also ordered the Staff to file a status report regarding progress of the
investigation and Laclede Gas to file any responses to the Staff's status
report. On March 28, 2003, Laclede Gas filed a Motion with the Commission
indicating that LES would be dissolved and that in light of such action the
parties had agreed that the investigation could be terminated and the case
closed. On April 14, 2003, LES ceased to exist as a corporation. On April 22,
2003, the Commission ordered that the investigation be dismissed and the
case closed.

On July 29, 2002, Laclede Gas filed a proposed Catch-Up/Keep-Up Program with
the MoPSC that would permit the Company to use a portion of the savings from
its negotiated pipeline discounts to fund a low-income energy assistance
program. Pursuant to, and among revisions to the Program filed by the
Utility on September 23, 2002, the amount of discount savings that could be
used for this purpose would be limited to $6 million per year. In response
to certain objections filed by the MoPSC Staff and Missouri Office of the
Public Counsel, the Commission suspended the tariffs implementing the
Program and scheduled a prehearing conference that occurred on October 23,
2002. On January 16, 2003, the Commission, by a 3 to 2 vote, issued an order
rejecting the proposed plan. On January 23, 2003, the Utility filed a Motion
for Reconsideration seeking to identify whether the Commission would approve
the Program at a reduced funding level of $3 million per year. On February
13, 2003 the Commission convened a hearing for oral argument. On March 6,
2003 the Commission denied the Company's Motion for Reconsideration.

On June 28, 2002, the Staff of the MoPSC filed its recommendation in a
proceeding established to review Laclede Gas' gas costs for fiscal 2001. In
its recommendation, the Staff proposed to disallow approximately $4.9
million in pre-tax gains achieved by Laclede Gas in its incentive-based
Price Stabilization Program. This Program was discontinued at the end of the
2001-2002 heating season. Laclede Gas believes that Staff's position lacks
merit and has vigorously opposed the adjustment in proceedings before the
MoPSC, including a formal hearing that was held on this matter in February
2003. Final briefs relating to this matter were filed with the Commission in
April 2003. Regulatory proceeding results are, however, inherently
uncertain, and to the extent that a final Commission decision sustains
Staff's recommended disallowance, the proceeding's outcome could have a
material effect on the future financial position and results of operations
of Laclede Gas. Missouri statutes provide an opportunity for court review of
Commission decisions.


Critical Accounting Policies
----------------------------

Our discussion and analysis of our financial condition, results of
operations, liquidity and capital resources is based upon our financial
statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. Generally
accepted accounting principles require that we make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities. We
evaluate our estimates on an ongoing basis. We base our estimates on
historical experience and on various other assumptions that we believe are
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results may differ from
these estimates. We believe the following represent the more significant
items requiring the use of judgment and estimates in preparing our
consolidated financial statements:

         Allowances for doubtful accounts - Estimates of the collectibility
         of trade accounts receivable are based on historical trends, age of
         receivables, economic conditions, credit risk of specific
         customers, and other factors.

         Employee benefits and postretirement obligations - Pension and
         postretirement obligations are calculated by actuarial consultants
         that utilize several statistical factors and other assumptions
         related to future events, such as discount rates, returns on plan
         assets, compensation increases, and mortality rates. The amount of
         expense recognized by the Utility is dependent on the regulatory
         treatment provided for such costs. Certain liabilities related to
         group medical benefits and workers' compensation claims, portions
         of which are self-insured and/or contain stop/loss coverage with
         third-party insurers to limit exposure, are established based on
         historical trends.

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Laclede Gas accounts for its regulated operations in accordance with
Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for
the Effects of Certain Types of Regulation." This statement sets forth the
application of accounting principles generally accepted in the United States
of America for those companies whose rates are established by or are subject
to approval by an independent third-party regulator. The provisions of SFAS
No. 71 require, among other things, that financial statements of a regulated
enterprise reflect the actions of regulators, where appropriate. These
actions may result in the recognition of revenues and expenses in time
periods that are different than non-regulated enterprises. When this occurs,
costs are deferred as assets in the balance sheet (regulatory assets) and
recorded as expenses when those amounts are reflected in rates. Also,
regulators can impose liabilities upon a regulated company for amounts
previously collected from customers and for recovery of costs that are
expected to be incurred in the future (regulatory liabilities). Management
believes that the current regulatory environment supports the continued use
of SFAS No. 71 and that all regulatory assets and liabilities are
recoverable or refundable through the regulatory process. We believe the
following represent the more significant items recorded through the
application of SFAS No. 71:

         The Utility's Purchased Gas Adjustment (PGA) Clause allows Laclede
         Gas to flow through to customers, subject to prudence review, the
         cost of purchased gas supplies, including the costs, cost
         reductions and associated carrying costs associated with the
         Utility's use of natural gas financial instruments. The difference
         between actual costs incurred and costs recovered through the
         application of the PGA are recorded as regulatory assets and
         liabilities that are recovered or refunded in a subsequent period.

For further discussion of significant accounting policies, see the Notes to
the Consolidated Financial Statements included in the Company's 10-K for the
year ended September 30, 2002.


Accounting Pronouncements
-------------------------

In June 2001, the FASB issued SFAS No. 141, "Business Combinations", which
requires all business combinations in the scope of this Statement to be
accounted for using the purchase method. The provisions of this Statement
apply to all business combinations initiated after June 30, 2001. The FASB
also issued SFAS No. 142, "Goodwill and Other Intangible Assets", which
addresses how acquired goodwill and other intangible assets that are
acquired individually or with a group of other assets should be accounted
for in financial statements upon acquisition and after they have been
initially recognized in the financial statements. The complete adoption of
SFAS Nos. 141 and 142 on October 1, 2002 did not have a material effect on
the financial position and results of operations of Laclede Gas.

The FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations",
which addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and associated
asset retirement costs. It applies to legal obligations associated with the
retirement of long-lived assets that result from acquisition, construction,
development and/or the normal operation of a long-lived asset, except for
certain obligations of lessees. The provisions of the Statement provide for
rate-regulated entities that meet the criteria for application of SFAS No.
71, such as Laclede Gas, to recognize regulatory assets or liabilities for
differences in the timing of recognition of the period costs associated with
asset retirement obligations for financial reporting pursuant to this
Statement and rate-making purposes. The adoption of this Statement on
October 1, 2002 did not affect the financial position and results of
operations of Laclede Gas. There are legal obligations related to final
abandonment of the Utility's gas distribution system. However, these
obligations related to mass property and other distribution system assets
generally are in perpetuity and can not be measured under SFAS No. 143
because of indeterminate settlement dates and cash flow estimates.

SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure", provides alternative methods for a voluntary change to the fair
value based method of accounting for stock-based compensation. In addition,
this statement requires prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the

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method used on reported results. The disclosure provisions are effective for
financial reports containing condensed financial statements for interim
periods beginning after December 15, 2002. The required disclosures are
included in this report.

FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
of Others", requires an entity to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. This requirement is to be applied on a prospective
basis to guarantees issued or modified after December 31, 2002. This
Interpretation also requires disclosures in interim and annual financial
statements about obligations under certain guarantees that the entity has
issued. These disclosure requirements are effective for financial statements
of interim or annual periods ending after December 15, 2002. The required
disclosures are included in this report.


Liquidity and Capital Resources
-------------------------------

The Utility's short-term borrowing requirements typically peak during colder
months when Laclede Gas borrows money to cover the gap between when it
purchases its natural gas and when its customers pay for that gas. These
short-term cash requirements have traditionally been met through the sale of
commercial paper supported by lines of credit with banks.

Laclede Gas currently has a primary line of credit in place of up to $215
million, expiring September 15, 2003, and supplemental credit lines of $15
million expiring January 31, 2004. During the quarter ending March 31, 2003,
Laclede Gas sold commercial paper aggregating to a maximum of $174.2 million
at any one time, but did not borrow from the banks under the aforementioned
agreements. At this writing, Laclede Gas has aggregate lines of credit
totaling $230 million. Short-term commercial paper borrowings outstanding at
March 31, 2003 were $122.4 million at a weighted average interest rate of
1.38%. Based on short-term borrowings at March 31, 2003, a change in
interest rates of 100 basis points would increase or decrease pre-tax
earnings and cash flows by approximately $1.2 million on an annual basis.

Most of Laclede Gas' lines of credit include a covenant limiting total debt,
including short-term debt, to no more than 70% of total capitalization. On
March 31, 2003, total debt was 58% of total capitalization.

Laclede Gas has filed a shelf registration on Form S-3. Of the $350 million
of securities originally registered under this S-3, $270 million of debt
securities remained registered and unissued as of March 31, 2003. The MoPSC
authorization for issuing securities registered on Form S-3 expires in
September 2003. The amount, timing and type of additional financing to be
issued under this shelf registration will depend on cash requirements and
market conditions.

Utility construction expenditures were $22.7 million for the six months
ended March 31, 2003, compared with $22.3 million for the same period last
year.

Capitalization at March 31, 2003, excluding current obligations of long-term
debt, increased $26.8 million since September 30, 2002 and consisted of
52.6% common stock equity, .2% preferred stock and 47.2% long-term debt.

The seasonal nature of Laclede Gas' sales affects the comparison of certain
balance sheet items at March 31, 2003 and at September 30, 2002, such as
Accounts Receivable - Net, Gas Stored Underground, Notes Payable, Accounts
Payable, Regulatory Liabilities, and Advance and Delayed Customer Billings.


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Market Risk
-----------
The management of Laclede Gas adopted a risk management policy that provides
for the purchase of natural gas financial instruments with the goal of
managing price risk associated with purchasing natural gas on behalf of its
customers. This policy prohibits speculation. Costs and cost reductions,
including carrying costs, associated with the Utility's use of natural gas
financial instruments are allowed to be passed on to the Utility's customers
through the operation of its Purchased Gas Adjustment Clause, through which
the MoPSC allows the Utility to recover gas supply costs. Accordingly,
Laclede Gas does not expect any earnings impact as a result of the use of
these financial instruments. At March 31, 2003, the Utility held
approximately 5.9 million MmBtu of futures contracts at an average price of
$5.17 per MmBtu. Additionally, approximately 25.0 million MmBtu of price
risk mitigation was in place through the use of option-based strategies.
These positions have various expiration dates, the longest of which extends
through March 2004.


Environmental Matters
---------------------

Laclede Gas is subject to various environmental laws and regulations that,
to date, have not materially affected the Company's financial position and
results of operations. As these laws, regulations, and their interpretation
evolve, however, additional costs may be incurred.

With regard to a former manufactured gas plant site located in Shrewsbury,
Missouri, Laclede Gas and state and federal environmental regulators have
agreed upon certain actions and those actions are nearing completion.
Laclede Gas currently estimates the overall costs of these actions will be
approximately $2.3 million. As of March 31, 2003, Laclede Gas has paid or
reserved for these actions. If regulators require additional actions or
assert additional claims, Laclede Gas will incur additional costs.

Laclede Gas enrolled a second former manufactured gas plant site into the
Missouri Voluntary Cleanup Program (VCP). The VCP provides opportunities to
minimize the scope and cost of site cleanup while maximizing possibilities
for site development. This site is located in and is presently owned by the
City of St. Louis, Missouri. The City of St. Louis has separately authorized
a developer to prepare both a Remedial Action Plan (RAP), for submission to
the VCP, and a site development plan. Laclede Gas continues to explore with
the developer what role, if any, it might play in these efforts. Laclede Gas
continues to evaluate other options as well, including, but not limited to,
the submission of its own RAP to the VCP. Laclede Gas currently estimates
that the cost of site investigations, agency oversight and related legal and
engineering consulting may be approximately $629,000. Currently, Laclede Gas
has paid or reserved for these actions. Laclede has requested that other
former site owners and operators share in these costs and one party has
agreed to participate and has reimbursed Laclede Gas to date for $173,000.
Laclede Gas anticipates additional reimbursement from this party. Laclede
Gas plans to seek proportionate reimbursement of all costs relative to this
site from other potentially responsible parties if practicable.

Costs incurred are charged to expense or capitalized in accordance with
generally accepted accounting principles. A predetermined level of expense
is included in Laclede Gas' rates.

Laclede Gas has been advised that a third former manufactured gas plant site
previously operated but no longer owned by Laclede Gas may contain gas plant
waste that may require remediation. Laclede Gas is working to determine the
nature and extent of such waste, if any, and its responsibility, if any, for
any remediation costs.

While the scope of costs relative to the Shrewsbury site will not be
significant, the scope of costs relative to the other sites is unknown and
may be material. Laclede Gas has notified its insurers that it seeks
reimbursement of its costs at these three manufactured gas plant sites. In
response, the majority of insurers have reserved their rights. While some of
the insurers have denied coverage, Laclede Gas continues to seek
reimbursement from them. With regard to the Shrewsbury site, denials of
coverage are not expected to have any material impact on the financial
position and results of operations of Laclede Gas. With regard to the

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other two sites, since the scope of costs are unknown and may be
significant, denials of coverage may have a material impact on the financial
position and results of operations of Laclede Gas. Such costs, if incurred,
have typically been subject to recovery in rates.



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