29-09-16: Interim Report 2016

* Earnings Before Interest, Taxation, Depreciation, profit on the sale of property, plant and equipment, Amortisation and non-recurring items.

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The group produced a successful result for the first half of 2016, once again the winter months created some good opportunities for our heating and boiler hire products. Overall, the group's revenue for the six months ended 30 June 2016 was £30.3 million, an increase of £2.1 million compared with the same period last year. As a consequence operating profit increased by £1.4 million from £5.0 million in the first half of 2015 to £6.4 million for the six months ended 30 June 2016.

The group continues to be profitable and cash generative. Cash generated from operations was £7.1 million (2015:

£5.0 million) and net funds increased by £0.8 million from £14.6 million as at 31 December 2015 to £15.4 million as at 30 June 2016 this was after paying the 2015 final dividend of 11.9 pence per share, or £5.0 million in total, during the period.

Management continue to safeguard the operational structure of the business. Cash spent on new plant and equipment, primarily hire fleet assets, amounted to £2.2 million and a further £0.7 million from stock was also added to the hire fleet. We have continued our policy of pursuing organic growth within our market sectors and start up costs of the new businesses discussed in previous Strategic Reports continue to be expensed as incurred. Continuing investment in both our existing core businesses and the ongoing development of new operations and income streams will ensure that we remain in a strong position and will safeguard profitability into the future.

Our main hire and sales business segment in the UK and Europe continued to expand during first half of 2016. Our pumping activity has increased when compared to 2015 and, despite a mild winter, our heating products have maintained revenue levels. Demand for our air conditioning products was in line with previous years.

Our operations across the Benelux region have continued a strong recovery with growth on last year's performance being recorded. Our recently established businesses in France, Switzerland and Luxembourg continue to trade in line with our expectations.

Andrews Air Conditioning & Refrigeration, our UK air conditioning installation business, produced an operating profit of £0.1 million.

Khansaheb Sykes, our long established business based in the UAE, had a strong start to the year, with improvements in our traditional pump hire activities. The climate rental division also continues to make a positive contribution. Overall, the operating profit of Khansaheb Sykes was £0.3 million ahead of the same period last year.

Profit before tax was £7.5 million (2015: £4.7 million) reflecting both the above £1.4 million increase in operating profit and a significant improvement in net finance income and costs, also of £1.4 million, compared with the same period in 2015. This improvement was primarily due to a net inter-company foreign exchange gain of £1.1 million compared with a loss of £0.3 million in 2015 which in turn was mainly due to the weakening of Sterling.

The total tax charge increased by £0.4 million from £0.9 million for the six months ended 30 June 2015 to £1.3 million for the current six month period. The effective tax rate decreased from 20.2% for the six months ended 30 June 2015 to 17.7% in the current period. The rate for the current period is less than the standard UK corporation tax rate of 20% which is mainly due to (i) the utilisation of off balance sheet overseas tax losses due, in part, to overseas foreign exchange gains and (ii) the effect of profits being made in lower tax regions overseas. A reconciliation of the theoretical corporation tax charge based on the accounts profit multiplied by the UK annualised corporation tax rate of 20% and the actual tax charge is given in note 4 of these interim accounts.

Profit after tax was £6.2 million (2015: £3.7 million) and consequently the basic earnings per share increased by

5.83 pence, or 66%, from 8.83 pence for the first half of 2015 to 14.66 pence for the period under review. There were no share buy-backs in the period.

The final dividend of 11.90 pence per ordinary share for the year ended 31 December 2015 was approved by members at the AGM held on 21 June 2016. Accordingly on 24 June 2016 the company made a total dividend payment of £5,029,000 which was paid to shareholders on the register as at 27 May 2016.

The board continues to adopt the policy of returning value to shareholders whenever possible. The group remains profitable, cash generative and financially strong. Accordingly the board has decided to declare an interim dividend for 2016 of 11.90 pence per share which in total amounts to £5,029,000. This will be paid on 2 November 2016 to shareholders on the register as at 7 October 2016. The shares will go ex-dividend on 6 October 2016.

During the period, and in accordance with the agreed repayment profile, the group repaid the third annual instalment of £1 million that was due for payment on 30 April 2016. The remaining loan balance of £5 million is due for repayment in full on 30 April 2017 and therefore this amount has been included within current liabilities as at 30 June 2016. The group intends to finance this loan repayment by a new loan of the same amount and management have already commenced negotiations with the banks to secure this position.

Trading in the third quarter to date has continued to be positive. After a slow start to the summer Europe has experienced above average temperatures during September which continue to stimulate high demand for air conditioning products. Once again activity in the Middle East has remained consistent through the summer period, with trading levels ahead of last year in both Sharjah and Abu Dhabi.

The board remains cautiously optimistic that the group will return an improved performance for the full year.

* Earnings Before Interest, Taxation, Depreciation, profit on the sale of property, plant and equipment, Amortisation and non- recurring items.