(ASY.L) Andrews Sykes Group PLC Buy/Sell

Operations review

Our main trading subsidiary in the UK, Andrews Sykes Hire, and our operations in Northern Europe continue to perform satisfactorily albeit below the levels achieved last year. This is primarily due to the current economic environment and the consequent impact on customer spending profiles. Our fixed air conditioning installation business has been particularly affected by this change possibly due to potential customers deferring capital expenditure in these difficult times. Conversely our UK specialist hire divisions continue to perform well as does our operation in the UAE which showed an improvement in operating profit compared with the first half of 2008.

Prospects

After a short favourable spell of hot weather in the UK and Northern Europe at the end of June and beginning of July, and despite forecasts to the contrary, the summer has been mixed with only average temperatures and rainfall patterns. We therefore expect our all important air conditioning business to return a satisfactory performance.

Our ongoing strategy of moving into non-weather related products and services, particularly those targeted at essential industry sectors, has provided a sound profit base for the current year. Overall, therefore, we currently anticipate the result for the second half of 2009 to be satisfactory but below the record level achieved last year.

JG Murray

Chairman

29 September 2009

Continuing operations
Revenue 28,766 33,873 67,394
Cost of sales (12,766) (15,552) (30,523)
Gross profit 16,000 18,321 36,871

Distribution costs (5,001) (4,959) (10,144)

Administrative expenses: - (4,390) (4,554) (8,803)

Recurring

EBITDA* 8,763 10,868 22,002
Depreciation (2,518) (2,551) (4,827)
Profit on the sale of plant 364 491 749

and equipment
Normalised operating profit 6,609 8,808 17,924
Profit on the sale of property - 529 559
Operating profit 6,609 9,337 18,483

Finance income 155 476 673
Finance costs (1,135) (1,025) (2,479)
Inter-company foreign exchange 873 (318) (1,300)

gains and losses
Profit before taxation 6,502 8,470 15,377

Taxation (1,883) (2,301) (4,321)

Profit for the financial 4,619 6,169 11,056

period There were no discontinued operations in any of the above periods. Earnings per share from continuing operations
Basic (pence) 10.43 p 13.85 p 24.85 p
Diluted (pence) 10.43 p 13.85 p 24.85 p

Dividends paid per equity 0.00 p 33.60 p 33.60 p

share (pence)

Andrews Sykes Group plc Consolidated Balance Sheet As at 30 June 2009 (unaudited)
30 June 2009 30 June 2008 31 December 2008
£'000 £'000 £'000

Non-current assets
Property, plant and equipment 14,556 15,489 16,108
Lease prepayments 86 93 90
Trade investments 164 164 164
Deferred tax asset - 831 -
Derivative financial - 100 -

instruments
14,806 16,677 16,362

Current assets Stocks
Trade and other receivables 6,561 5,904 7,993
Cash and cash equivalents 14,265 17,447 17,764
Assets held for sale 17,974 12,870 18,233

39,205 36,626 44,395

Current liabilities
Trade and other payables (7,818) (11,899) (11,833)
Current tax liabilities (1,504) (1,633) (1,371)
Bank loans (6,000) (5,000) (5,000)
Obligations under finance (206) (252) (217)

leases
(15,528) (18,784) (18,421)

Net current assets 23,677 17,842 25,974

Total assets less current 38,483 34,519 42,336

liabilities Non-current liabilities
Bank loans (23,000) (29,000) (29,000)
Obligations under finance (770) (900) (836)
leases (1,026) (432) -
Retirement benefit obligations (340) - (90)
Deferred tax liability (68) - (108)

Derivative financial instruments
(25,204) (30,332) (30,034)

Net assets 13,279 4,187 12,302

Equity
Called-up share capital 443 446 443
10,545 2,675 7,127
Retained earnings 2,056 834 4,497
Translation reserve 225 222 225

Other reserves
Surplus attributable to equity 13,269 4,177 12,292

holders of the parent
Minority interest 10 10 10

Total Equity 13,279 4,187 12,302

Andrews Sykes Group plc Consolidated Cash Flow Statement For the 6 months ended 30 June 2009 (unaudited)
6 months ended 6 months ended 12 months ended
30 June 2009 30 June 31 December 2008

(as restated*)
£'000 £'000 £'000

Cash flows from operating
activities 9,288 8,139 15,573
Cash generated from operations (1,284) (846) (2,484)
Interest paid (746) (802) (1,836)
Net UK corporation tax paid - (70) (3)
Net withholding tax paid (243) (249) (661)

Overseas tax paid
Net cash inflow from operating 7,015 6,172 10,589

activities Investing activities
Sale of assets held for sale - - 656
Sale of plant and equipment 568 636 974
Purchase of property, plant (1,549) (2,458) (5,082)
and equipment 118 405 808

Interest received
Net cash outflow from (863) (1,417) (2,644)

investing activities Financing activities
Loan repayments (5,000) (24,000) (24,000)
New loans raised - 34,000 34,000
Finance lease capital (77) (195) (308)
repayments - (14,970) (14,970)
Equity dividends paid - - (259)

Purchase of own shares
Net cash outflow from (5,077) (5,165) (5,537)

financing activities
Net increase / (decrease) in 1,075 (410) 2,408

cash and cash equivalents
Cash and cash equivalents at 18,233 13,102 13,102
beginning of period (1,334) 178 2,723

Effect of foreign exchange rate changes
Cash and cash equivalents at 17,974 12,870 18,233

the end of the period

Reconciliation of net cash flow to movement in net debt in the period

Net increase /(decrease) in cash and cash 1,075 (410) 2,408

equivalents
Cash outflow from loan and finance lease 5,077 24,195 24,308

repayments
Cash inflow from the increase in loans - (34,000) (34,000)
Non cash movements in respect of finance - 74 (14)

leases
Non cash movements in the fair value of 40 125 (9)

derivative instruments
Movement in net debt during the period 6,192 (10,016) (7,307)
Opening net debt at the beginning of period (16,928) (12,344) (12,344)
Effect of foreign exchange rate changes (1,334) 178 2,723
Closing net debt at the end of the period (12,070) (22,182) (16,928)

Andrews Sykes Group plc Consolidated Statement Of Recognised Income and Expense For the 6 months ended 30 June 2009 (unaudited)
6 months ended 6 months ended 12 months ended
30 June 2009 30 June 2008 31 December 2008
£'000 £'000 £'000

Actual return less expected (1,444) (1,759) (2,764)
return on pension scheme - - (196)

assets Experience gains and losses
arising on plan obligation (499) 205 1,435
Changes in demographic and - - (275)
financial assumptions 275 - -
underlying the present value (2,441) 560 4,223
of plan obligations 467 435 504

Net pension asset not recognised due to uncertainty over recoverability Release provision re non recognition of pension scheme asset Currency translation differences on foreign currency net investments Deferred tax on items posted directly to equity
Net (expense) / income (3,642) (559) 2,927

recognised directly in equity
Profit for the period 4,619 6,169 11,056

attributable to parent's shareholders Total recognised income and expense for the period
attributable to equity holders 977 5,610 13,983

of the parent

Andrews Sykes Group plc

Notes to the consolidated interim financial statements

For the 6 months ended 30 June 2009 (unaudited)

1. General information

Basis of preparation

These interim financial statements have been prepared in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as adopted by the European Union and with the Companies Act 2006.

The information for the 12 months ended 31 December 2008 does not constitute the group's statutory accounts for 2008 as defined in Section 434 of the Companies Act 2006. Statutory accounts for 2008 have been delivered to the Registrar of Companies. The Auditor's report on those accounts was unqualified and did not contain statements under Section 498(2) or (3) of the Companies Act 2006. These interim financial statements, which were approved by the Board of Directors on 29 September 2009, have not been audited or reviewed by the auditor.

These interim financial statements have been prepared using the historical cost basis of accounting except for:

i) Properties held at the date of transition to IFRS which are stated at deemed cost;

ii) Assets held for sale which are stated at the lower of fair value less anticipated disposal costs and carrying value and

iii) Derivative financial instruments (including embedded derivatives) which are valued at fair value.

Functional and presentational currency

The financial statements are presented in pounds Sterling because that is the functional currency of the primary economic environment in which the group operates.

2. Accounting policies

These interim financial statements have been prepared on a consistent basis and in accordance with the accounting policies set out in the group's Annual Report and Financial Statements 2008.

3 Revenue

An analysis of the

group's revenue is

as follows:
6 months ended 6 months ended 12 months ended
30 June 30 June 31 December 2008
2009 2008 £'000
£'000 £'000

Continuing

operations 22,515 26,311 51,575
Hire 4,437 4,926 10,904
Sales 1,814 2,636 4,915

Installations

Group consolidated

revenue from the

sale of goods and 155 476 673

provision of

services 873 - -

Finance income

Inter-company

foreign exchange

gains

Gross consolidated 29,794 34,349 68,067

revenue 4 Taxation
6 months ended 6 months ended 12 months ended
30 June 30 June 31 December 2008
2009 2008 £'000
£'000 £'000

Current tax

UK corporation tax 890 883 1,776
Adjustments in (12) - (29)

respect of prior

periods
878 883 1,747
Overseas tax 288 410 639
Adjustments to - - (63)

overseas tax in

respect of prior

periods

Total current tax 1,166 1,293 2,323

charge

Deferred tax

Deferred tax on the

origination and

reversal of

temporary 717 1,008 1,916
differences - - 82

Adjustments in

respect of prior

periods

Total deferred tax 717 1,008 1,998

charge

Total tax charge for 1,883 2,301 4,321

the financial period

4 Taxation (continued)

The tax charge for the financial period can be reconciled to the profit before tax per the consolidated income statement

multiplied by the standard effective corporation tax rate in the UK of 28% (June 2008 and December 2008: 28.5%) as follows:

6 months ended 6 months ended 12 months
30 June 30 June ended
2009 2008 31 December 2008
£'000 £'000 £'000
Profit before 6,502 8,470 15,377

taxation from

continuing and total

operations

Tax at the UK 1,821 2,414 4,382

effective

corporation tax rate

of 28% 43 45 92
(June 2008 and - (139) (130)

December 2008:

28.5%) 31 (14) 20

Effects of:

Expenses not - (5) (33)
deductible for tax (12) - (10)

purposes

Capital gain

sheltered by capital

losses and

indexation allowance

Effects of different

tax rates of

subsidiaries

operating abroad

Effect of change in

tax rate to 28%

Adjustments to tax

charge in respect of

previous periods

Total tax charge for 1,883 2,301 4,321

the financial period

Andrews Sykes Group plc Notes to the consolidated interim financial statements For the 6 months ended 30 June 2009 (unaudited)

5 Earnings per share
Basic earnings per share
The basic figures have been calculated by reference to the weighted average number of
ordinary shares in issue and the earnings as set out below. There are no discontinued
operations in any period.
6 months ended 30 June 2009
Continuing Number
earnings of shares
£'000
4,619
44,268,365
Basic
earnings/weighted
average number of
shares

Basic earnings per 10.43p
ordinary share
(pence)

The total effective tax charge for the financial period represents the best estimate of the weighted average annual effective tax rate expected for the full financial year. In accordance with IAS 12 no account has been taken in these interim financial statements of the 2009 Finance Act that was substantially enacted on 8 July 2009 as this is after the balance sheet date. It is estimated that as a result of this change in tax legislation, deferred tax liabilities on unremitted earnings from overseas undertakings provided as at 30 June 2009 of approximately £1.8 million (31 December 2008: £1.2 million) will be released in the second half year.

6 months ended 30 June 2008
Continuing earnings Number
£'000 of shares
6,169

44,552,865
Basic earnings/weighted average
number of shares

Basic earnings per ordinary share 13.85p
(pence)
12 months ended 31 December 2008
Continuing earnings Number
£'000 of shares
11,056

44,493,594

Basic earnings/weighted average number of shares
Basic earnings per ordinary share 24.85p

(pence)

Diluted earnings per share

The calculation of the diluted earnings per ordinary share in the previous periods is based on the profits and shares as set out in the tables below. The options have an antidilutive effect in the current period and therefore there is no change to the basic earnings per share as disclosed above. There are no discontinued operations in any period.

5 Earnings per share

(continued)

Diluted earnings per

share (continued)
6 months ended 30 June 2008
Continuing earnings Number
£'000 of shares
Basic 6,169 44,552,865
earnings/weighted 15,000

average number of

shares

Weighted average (11,966)

number of shares

under option

Number of shares

that would have been

issued at fair value

to satisfy the above

options

Earnings/diluted 6,169 44,555,899

weighted average

number of shares

Diluted earnings per 13.85p

ordinary share

(pence)

12 months ended 31 December 2008
Continuing earnings Number
£'000 of shares
Basic 11,056 44,493,594
earnings/weighted 15,000

average number of

shares

Weighted average (13,602)

number of shares

under option

Number of shares

that would have been

issued at fair value

to satisfy the above

options

Earnings/diluted 11,056 44,494,992

weighted average

number of shares

Diluted earnings per 24.85p

ordinary share

(pence)

6 Dividend payments

The directors have not declared any interim dividends in respect of the period under review.

The directors declared and paid the following interim dividends in respect of the 12 months ended

31 December 2008 during the six months ended 30 June 2008:

Pence per
share £'000

Interim dividend declared on 26 March 2008

and paid to shareholders on the register 6.50p 2,896

as at 4 April 2008 on 18 April 2008

Interim dividend declared on 24 April 2008

and paid to shareholders on the register 27.10p 12,074

as at 2 May 2008 on 16 May 2008
33.60p 14,970

7 Retirement benefit obligations - Defined benefit pension scheme

The group closed the UK group defined benefit pension scheme to future accrual as at 29 December 2002. The assets of the defined

benefit pension scheme continue to be held in a separate trustee administered fund.

The group are making additional contributions to remove the funding deficit in the group pension scheme. These contributions

include both one-off and regular monthly payments, currently £125,000 per month, and are agreed in advance with the trustees of

the pension scheme.

Assumptions used to calculate the scheme deficit

A full actuarial valuation was carried out as at 31 December 2007. A qualified independent actuary has updated the results of this

valuation to calculate the deficit as disclosed below.

The major assumptions used in this valuation to determine the present value of the scheme's defined benefit obligation were as

follows:

30 June 30 June 31 December 2008

Rate of increase in N/A N/A N/A
pensionable salaries 3.50% 4.00% 3.00%
Rate of increase in 6.20% 6.60% 6.00%
pensions in payment 3.50% 4.10% 3.00%

Discount rate

applied to scheme

liabilities

Inflation assumption

Assumptions regarding future mortality experience are set based on advice in accordance with published statistics. The current

mortality table used is PA92YOBMC+2 at all the above period ends.

The assumed average life expectancy in years of a pensioner retiring at the age of 65 given by the above tables is as follows:

30 June 30 June 31 December 2008

Male, current age 45 21.3 years 21.3 years 21.3 years
Female, current age 24.0 years 24.0 years 24.0 years

45

Valuations

The fair value of the scheme's assets, which are not intended to be realised in the short-term and may be subject to significant

change before they are realised, and the present value of the scheme's liabilities which are derived from cash flow projections

over long periods and are inherently uncertain, were as follows:

30 June 30 June 31 December 2008
2009 2008 £'000
£'000 £'000
Total fair value of plan assets 25,981 26,794 26,440

Present value of defined benefit funded

obligation calculated in accordance with (27,007) (27,226) (26,165)

stated assumptions

(Deficit)/surplus in the scheme calculated

in accordance with stated assumptions (1,026) (432) 275

Net pension asset not recognised due to

uncertainty over recoverability

Pension liability recognised in the (1,026) (432) -

balance sheet

The movement in the fair value of the scheme's assets over the reporting period are as follows:

30 June 30 June 31 December 2008
2009 2008 £'000
£'000 £'000
Fair value of plan 26,440 25,913 25,913
assets at the start 662 692 1,401
of the period (1,444) (1,759) (2,764)
Expected return on 750 750 1,500
plan assets - 1,700 1,700
Actuarial losses (427) (502) (1,310)
recognised in the

Employer
contributions -
normal
Employer
contributions -
non-recurring
Benefits paid
Fair value of plan 25,981 26,794 26,440
assets at the end of
the period

The movement in the present value of the defined benefit obligation during the period was as follows:

30 June 30 June 31 December 2008
2009 2008 £'000
£'000 £'000
Opening present value of defined benefit (26,440) (27,151) (27,151)
funded obligation (770) (782) (1,563)
Interest on defined benefit obligation
Actuarial (loss) / gain recognised in the (499) 205 1,239
SORIE in accordance with stated
assumptions - - (275)
Pension asset not recognised due to
uncertainty over future recoverability 275 - -
Release provision re non recognition of 427 502 1,310
pension scheme asset
Benefits paid
Closing present value of defined benefit
funded obligation (27,007) (27,226) (26,440)

Amounts recognised in the income statement

The amounts (charged) / credited in the
income statement were:

30 June 30 June 31 December 2008
2009 2008 £'000
£'000 £'000
Expected return on pension scheme assets 662 692 1,401
Interest on pension scheme liabilities (770) (782) (1,563)
Net pension interest charge (108) (90) (162)

7 Retirement benefit obligations - Defined benefit pension scheme (continued)

Actuarial gains and losses recognised in the statement of recognised income and expense (SORIE)

The amounts (charged) / credited in the SORIE were:

30 June 30 June 31 December 2008
2009 2008 £'000
£'000 £'000
Actual return less expected return on scheme assets (1,444) (1,759) (2,764)
Experience gains and losses arising on plan obligation - - (196)

Changes in demographic and financial assumptions underlying the

present value of plan obligations (499) 205 1,435

Actuarial loss calculated in accordance with stated assumptions
(1,943) (1,554) (1,525)

Pension asset not recognised due to uncertainty over future

recoverability - - (275)

Release provision re non recognition of pension scheme asset

Actuarial loss recognised in the SORIE (1,668) (1,554) (1,800)
Cumulative actuarial loss recognised in the SORIE (4,810) (2,896) (3,142)
8 Share Capital
30 June 30 June 31 December 2008
2009 2008 £'000
£'000 £'000
Issued and fully paid: 443 446 443

44,268,365 ordinary shares of one pence each

(June 2008: 44,552,865, December 2008: 44,268,365 ordinary

shares of one pence each)

During the period the company did not buy back any shares for cancellation (June 2008: Nil shares; December 2008 284,500 shares for a total

consideration of £258,620).

The company has one class of ordinary shares which carry no right to fixed income.

At 30 June 2009 cash options to subscribe for ordinary shares under the executive share option scheme were held as follows:

Number of one pence
ordinary shares
Date of Grant Date normally Subscription price per share 30 June 2009 30 June 2008 31 December 2008
exercisable
November 2001 November 2004 to 89.5 pence 15,000 15,000 15,000
October 2011

No share options were granted, forfeited or expired during either the current or previous financial periods.

No share options were exercised during the period (June 2008 and December 2008: Nil options).

9 Cash generated from operations
6 months ended 6 months 6 months ended
30 June ended 31 December
2009 30 June 2008

(as restated*)
£'000 £'000 £'000
Profit for the 4,619 6,169 11,056

period attributable

to equity

shareholders

Adjustments for:

Taxation charge

Finance costs 1,883 2,301 4,321
Finance income 262 1,343 3,779
Profit on the sale (155) (476) (673)
of property, plant (364) (1,020) (1,308)
and equipment 2,518 2,551 4,827

Depreciation

Excess of normal (750) (750) (1,500)

pension

contributions - (1,700) (1,700)

compared with

service cost

Non-recurring

pension

contributions

Cash generated from 8,013 8,418 18,802

operations before

movements in working

capital

Decrease / 1,432 (162) (2,251)
(increase) in stocks 3,499 (603) (1,647)

Decrease /

(increase) in trade (3,656) 501 684

and other

receivables - (15) (15)

(Decrease) /

increase in trade

and other payables

Decrease in

provisions
9,288 8,139 15,573

expenses. They are now included within "effect of foreign exchange rate changes" to be consistent with the

presentation in the 12 months ended 31 December 2008.

10 Analysis of net debt
30 June 30 June 31 December 2008
2009 2008 £'000
£'000 £'000
Cash and cash equivalents per cash flow 17,974 12,870 18,233

statement

Derivative financial instruments - 100 -
Financial assets - 100 -
Bank loans (29,000) (34,000) (34,000)
Obligations under finance leases (976) (1,152) (1,053)
Derivative financial instruments (68) - (108)
Financial liabilities (30,044) (35,152) (35,161)
Net debt (12,070) (22,182) (16,928)

11 Distribution of interim financial statements

Following a change in regulations in 2008, the company is no longer required to circulate this half year

report to shareholders. This enables us to reduce costs associated with printing and mailing and to minimise

the impact of these activities on the environment. A copy of the interim financial statements is available

on the company's website, www.andrews-sykes.com

This information is provided by RNS The company news service from the London Stock Exchange

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