Interim Results

Andrews Sykes Group PLC
25 September 2003

Andrews Sykes Group plc


Interim results for the 26 weeks ended 28 June 2003


Chairman's Statement


Dear Shareholders,

I have pleasure in submitting the results of our Group for the 26 weeks ended 28
June 2003.


Overview

Our Group's performance for the first half of 2003 has shown an improvement
compared with last year. The salient features of the results for the 26 weeks
ended 28 June 2003 compared with the equivalent period in 2002 are as follows:


  • Turnover from continuing operations has increased by 7.7% from £30.0
    million to £32.4 million reversing last year's downward trend.
  • Earnings before Interest, Taxation, Depreciation and Goodwill Amortisation
    (EBITDA) derived from continuing operations has increased by 12.4 % from
    £7.6 million to £8.5 million.
  • Profit on ordinary activities before tax has increased by 23.3% from £4.6
    million to £5.6 million.
  • Basic earnings per share has increased by 51.7% from 4.24 pence to 6.43
    pence.
  • Gearing has been reduced from 74.5% as at 28 December 2002 to 57.8% as at
    28 June 2003 thereby demonstrating our Group's strong cash generative
    performance in the period.



Financial review

In the 2002 Annual Report I reported to you that we reorganised the UK core
businesses by reducing fixed costs and linked them to a sustainable level of
turnover. This policy placed us in a strong position to maximise profitability.
I am now pleased to be able to report that this strategy, combined with a
focused management initiative to improve turnover, has resulted in a strong
performance from the UK core businesses in the first half of 2003.  Our overseas
operations also performed strongly, particularly the well established heating,
drying and air conditioning business operating in The Netherlands through
Andrews Sykes BV.


The Board's strategy for developing the specialist hire and rental markets,
where the margins and the potential for profit growth are considered to be the
greatest, will continue to be followed.


Cash flow and gearing

The Group continues to generate strong cash flows with a net cash inflow from
operating activities of £6.2 million. Gearing has been reduced from 74.5% to
57.8% due to a combination of a £1.0 million reduction in net debt to £8.7
million and an increase of £2.0 million in net assets. This has been achieved
despite a £1.8 million reduction in equity shareholders' funds due to the
share buy-back programme.


Share buy-back programme and Earnings per Share

The Board continues to believe that shareholder value will be optimised by a
judicious purchase of our own shares, coupled with investment in organic growth.
During the first half of 2003 the company has purchased 1,039,750 shares for
cancellation at a total cost of £1,849,478.


Due to the improvements in our Group's profit after taxation and the share
buy-back programme, the basic earnings per share has increased from 4.24 pence
in the first half of 2002 to 6.43 pence in the first half of the current year.


An interim dividend has not been declared for the current period but the
dividend payment policy is under continual review and will be resumed at such
time that the Board considers it to be in the best interests of shareholders.


Prospects

Overall our Group had a much improved result for the first half of 2003 in
comparison to the equivalent period last year. The hot weather conditions in
July and August have resulted in a better than average performance by our air
conditioning hire business, thereby giving us a good start to the second half.



JG Murray
Chairman
24 September 2003





Consolidated Profit and Loss Account
for the 26 weeks ended 28 June 2003


                                         26 weeks to 28  26 weeks to 29  26 weeks to 29  26 weeks to 29   52 weeks to 28
                                              June 2003       June 2002       June 2002       June 2002    December 2002
                                             Continuing      Continuing    Discontinued           
                                             Activities      Activities      Activities           Total            Total
                                                  £'000           £'000           £'000           £'000            £'000

Turnover                                         32,371          30,045           6,067          36,112           70,544
Cost of sales                                  (16,831)        (15,799)         (4,299)        (20,098)         (37,342)

Gross profit                                     15,540          14,246           1,768          16,014           33,202
Distribution costs                              (2,827)         (2,581)           (346)         (2,927)          (6,133)
Administrative expenses                         (6,828)         (6,698)         (1,563)         (8,261)         (14,602)
Other operating income                                -               -               -               -               21

Operating profit/(loss)                           5,885           4,967           (141)           4,826           12,488


EBITDA*                                           8,541           7,598             984           8,582           19,189
Depreciation and asset disposals                (2,649)         (2,609)         (1,125)         (3,734)          (6,646)

Operating profit/(loss) before goodwill          5,892            4,989           (141)           4,848           12,543
amortisation
Goodwill amortisation                              (7)             (22)               -            (22)             (55)

Operating profit/(loss)                          5,885            4,967           (141)           4,826           12,488



Net interest payable                             (272)                                            (272)            (364)

Profit on ordinary activities before tax         5,613                                            4,554           12,124
Tax on profit on ordinary activities           (1,778)                                          (1,459)          (3,850)

Profit on ordinary activities after              3,835                                            3,095            8,274
taxation being retained profit for the
financial period


Basic earnings per ordinary share                6.43p                                            4.24p           11.50p
(pence)

Diluted earnings per ordinary share              6.23p                                            4.21p           11.36p
(pence)

Goodwill amortisation (pence)                    0.01p                                            0.03p            0.08p

Adjusted diluted earnings per ordinary           6.24p                                            4.24p           11.44p
share (pence)



*Earnings before Interest, Taxation, Depreciation and Amortisation




Consolidated Balance Sheet
as at 28 June 2003

                                                                28 June 2003          29 June 2002      28 December 2002
                                                                       £'000                 £'000                 £'000
Fixed assets
Intangible assets:  Goodwill                                              66                   106                    73
Tangible assets                                                       16,196                17,045                16,638
Investments                                                              321                   567                   341
                                                                      16,583                17,718                17,052

Current assets
Stocks                                                                 5,507                 4,433                 4,692
Debtors                                                               16,988                15,562                15,614
Cash at bank and in hand                                               9,482                10,374                 8,704
                                                                      31,977                30,369                29,010

Creditors falling due within one year
Loans and overdrafts                                                 (3,740)               (5,490)               (2,490)
Other creditors                                                     (10,879)              (11,009)              (10,881)
Purchase of own shares                                                  (47)                 (236)                     -
Corporation and overseas tax                                         (2,832)               (1,420)               (2,018)
                                                                    (17,498)              (18,155)              (15,389)
Net current assets                                                    14,479                12,214                13,621


Receivable in one year                                                13,260                 9,833                11,292
Due after more than one year                                           1,219                 2,381                 2,329
                                                                      14,479               12,,214                13,621


Total assets less current liabilities                                 31,062                29,932                30,673
Creditors falling due after more than one year
Loans                                                               (14,470)               (3,210)              (15,965)
Provisions for liabilities and charges                               (1,480)               (1,461)               (1,618)

Net assets                                                            15,112                25,261                13,090

Capital and reserves
Called up share capital                                               11,836                14,616                12,044
Share premium account                                                 10,476                10,476                10,476
Revaluation reserve                                                      754                   759                   757
Other reserves                                                         7,113                 4,337                 6,907
Profit and loss account                                             (15,077)               (4,937)              (17,104)
Equity shareholders' funds                                            15,102                25,251                13,080
Minority interests (equity)                                               10                    10                    10
                                                                      15,112                25,261                13,091




Consolidated Cash Flow Statement
for the 26 weeks ended 28 June 2003

                                                                  26 weeks to           26 weeks to         52 weeks to
                                                                 28 June 2003          29 June 2002    28 December 2002
                                                                        Total                 Total               Total
                                                                        £'000                 £'000               £'000

Net cash inflow from operating activities                               6,224                 8,457               18,866

Returns on investments and servicing of finance
Interest received                                                         163                   117                  297
Interest paid                                                           (371)                 (472)                (724)

Net cash outflow for returns on investments and                         (208)                 (355)                (427)
servicing of finance

Cash outflow for taxation                                             (1,143)               (1,598)              (3,373)

Capital expenditure
Purchase of tangible fixed assets                                     (2,348)               (2,992)              (6,020)
Purchase of shares held in ESOP                                          (88)                     -                    -
Sale of tangible fixed assets                                             273                   631                1,076
Sale of shares held in ESOP                                                82                     -                  221

Net cash outflow for capital expenditure                              (2,081)               (2,361)              (4,723)

Acquisitions and disposals
Cash received on the disposal of subsidiary                                 -                 7,253                7,205
undertakings

Net cash inflow for acquisitions and disposals                              -                 7,253                7,205

Cash inflow before the use of liquid resources and                      2,792                11,396               17,548
financing

Management of liquid resources
Increase in bank deposits                                             (2,493)               (3,298)              (1,250)

Financing
Issue of ordinary share capital net of issue costs                          -                    90                   90
New loan draw downs                                                         -                 3,700               18,700
Loan repayments                                                         (245)              (12,350)             (17,595)
Purchase of own shares                                                (1,802)                 (308)             (17,819)

Net cash outflow from financing                                       (2,047)               (8,868)             (16,624)

Decrease in cash in the period                                        (1,748)                 (770)                (326)

Analysis of net (debt)/funds
Cash at bank and in hand                                                9,482                10,374                8,704
Total loans and overdrafts                                           (18,210)               (8,700)             (18,455)

Net (debt)/funds                                                      (8,728)                 1,674              (9,751)

Net (debt)/funds as a percentage of shareholders' funds               (57.8%)                  6.6%              (74.5%)





Consolidated Statement of Total Recognised Gains and Losses
for the 26 weeks ended 28 June, 2003

                                                                  26 weeks to           26 weeks to         52 weeks to
                                                                 28 June 2003          29 June 2002    28 December 2002
                                                                        Total                 Total               Total
                                                                        £'000                 £'000               £'000

Profit for the financial period                                         3,835                 3,095               8,274
Currency translation differences on foreign currency                       36                    11                (64)
net investments

Total recognised gains and losses in the period                         3,871                 3,106               8,210



Notes to the Accounts
for the 26 weeks ended 28 June 2003



1 Basis of preparation

The interim report for the 26 weeks ended 28 June 2003 was approved by the Board
on 24 September 2003. The financial information contained in this interim report
does not constitute statutory accounts for the Group for the relevant periods.
The interim report is neither audited nor reviewed. The results for the 52 weeks
ended 28 December 2002 have been extracted from the audited financial statements
that have been filed with the Registrar of Companies. The report of the auditors
was unqualified and did not contain a statement under section 237(2) or (3) of
the Companies Act 1985.


The financial information has been prepared in accordance with the accounting
policies adopted within the financial statements for the 52 weeks ended 28
December 2002.



2 Segmental analysis

The Group's turnover may be analysed between the following principal products
and activities:


                                                                  26 weeks to           26 weeks to         52 weeks to
                                                                 28 June 2003          29 June 2002    28 December 2002
                                                                        Total                 Total               Total
                                                                        £'000                 £'000               £'000

Product group:
Pumps                                                                   9,207                 8,965               17,625
Heating, ventilation and air-conditioning                              14,594                13,001               33,291
Accommodation & other                                                   8,570                 8,079               13,561
General plant                                                               -                 6,067                6,067
Total                                                                  32,371                36,112               70,544

Activity:
Hire                                                                   20,549                23,937               46,132
Sales                                                                   6,737                 7,482               14,914
Installation                                                            5,085                 4,693                9,498
Total                                                                  32,371                36,112               70,544



The geographical analyses of the Group's turnover by origin was as follows:


                                                                  26 weeks to           26 weeks to         52 weeks to
                                                                 28 June 2003          29 June 2002    28 December 2002
                                                                        Total                 Total               Total
                                                                        £'000                 £'000               £'000

United Kingdom                                                         29,249                33,729              64,396
Rest of Europe                                                          1,602                 1,025               3,174
Middle East and Africa                                                  1,520                 1,358               2,974
Total                                                                  32,371                36,112              70,544



2 Segmental analysis (continued)


The results can be further analysed by class of  business:


                                        Turnover £'000    Profit/(loss) Goodwill Charges    Profit/(loss)    Net assets
                                                        before goodwill                   before interest
                                                                charges                           and tax  
                                                                  £'000            £'000            £'000         £'000
26 weeks ended 28 June 2003:

Pumps, heating, ventilation, air                32,371            5,892              (7)            5,885         15,112
conditioning, accommodation & other


26 weeks ended 29 June 2002:

Pumps, heating, ventilation, air                30,045            4,989             (22)            4,967         25,261
conditioning, accommodation & other
General plant                                    6,067            (141)                -            (141)              -

                                                36,112            4,848             (22)            4,826         25,261



52 weeks ended 28 December 2002:

Pumps, heating, ventilation, air                64,477           12,693             (55)           12,638         13,090
conditioning, accommodation & other
General plant                                    6,067            (150)                -            (150)              -

                                                70,544           12,543             (55)           12,488         13,090




3 Reconciliation of operating profit to net cash inflow from operating
activities

                                                                  26 weeks to           26 weeks to          52 weeks to
                                                                 28 June 2003          29 June 2002     28 December 2002
                                                                        Total                 Total                Total
                                                                        £'000                 £'000                £'000

Operating profit                                                        5,885                 4,826               12,488
Goodwill amortisation                                                       7                    22                   55
Depreciation                                                            2,709                 4,001                6,841
Loss on sale of investments                                                15                    38                   43
Profit on sale of fixed assets                                           (60)                 (267)                (195)
Increase in stocks                                                      (815)                 (195)                (425)
Increase in debtors                                                   (1,223)                 (992)                (989)
(Decrease)/increase in creditors and provisions                         (294)                 1,024                1,048

Net cash inflow from operating activities                               6,224                 8,457               18,866



4 Earnings per share

The basic figures have been calculated by reference to the weighted average
number of 20p ordinary shares in issue during the period of 59,605,878 (26 weeks
ended 29 June 2002: 73,033,559).


The calculation of the diluted earnings per ordinary share is based on the
profits as set out in the table below and on 61,557,328 (26 weeks ended 29 June
2002: 73,509,893) ordinary shares. The share options have a dilutive effect for
the period calculated as follows:


                                                               26 weeks to                          26 weeks to
                                                               28 June 2003                        29 June 2002
                                                         Earnings        No. of Shares         Earnings     No of Shares
                                                                             £'000                              £'000

Basic earnings/weighted average number of shares            3,835           59,605,878            3,095       73,033,559
Weighted average number of shares under option                               4,710,057                         4,624,835
Number of shares that would have been issued at                            (2,758,607)                       (4,148,501)
fair value

Earnings/diluted weighted average number of shares          3,835           61,557,328            3,095       73,509,893

Diluted earnings per ordinary share (pence)                 6.23p                                 4.21p

The adjusted diluted earnings per share excluding goodwill amortisation is based
upon the weighted average number of ordinary shares as set out in the table
above. The earnings can be reconciled to the adjusted earnings as follows:


                                                                                  26 weeks to                26 weeks to
                                                                                 28 June 2003               29 June 2002
                                                                                     Earnings                   Earnings
                                                                                        £'000                      £'000
Earnings                                                                                3,835                      3,095
Goodwill amortisation                                                                       7                         22
Adjusted earnings                                                                       3,842                      3,117
Adjusted diluted earnings per ordinary share (pence)                                    6.24p                      4.24p



5 Reconciliation of movements in Group shareholders' funds


                                                                  26 weeks to           26 weeks to          52 weeks to
                                                                 28 June 2003          29 June 2002     28 December 2002
                                                                        Total                 Total                Total
                                                                        £'000                 £'000                £'000
Profit for the financial period                                         3,835                 3,095                8,274
Other recognised gains and losses                                          36                    11                 (64)
Proceeds from ordinary shares issued                                        -                    90                   90
Consideration payable for the purchase of own shares                  (1,849)                 (544)             (17,819)
Net increase/(decrease) in shareholders' funds                          2,022                 2,652              (9,519)
Shareholders' funds at the beginning of the period                     13,080                22,599               22,599
Shareholders' funds at the end of the period                           15,102                25,251               13,080


6 Distribution of interim statement

A copy of this statement will be posted to all shareholders and is available
from the Company's registered office at Premier House, Darlington Street,
Wolverhampton, WV1 4JJ.


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