Chairmans Statement

Overview and financial highlights

I am very pleased to be able to report a record group operating profit from continuing operations of £14.9 million for 2006, which compares with £11.1 million last year. This improvement in trading is largely due to our dual strategies of aligning costs with sustainable revenues and focussing on the development of high margin niche markets thereby enabling the group to deliver exceptionally good results when the opportunities arise.

Our principal UK trading subsidiary, Andrews Sykes Hire, performed exceptionally well returning turnover of £43.0 million, an improvement of 20% compared with last year. This was due to a combination of favourable weather conditions and business initiatives introduced by management during the year to stimulate demand. A more detailed review of this years performance is given in the Operations and Financial Review within the Directors Report

The basic earnings per share from continuing operations increased by over 44% from 15.24 pence last year to 22.00 pence this year – another record for the group. This reflects the improved trading performance and the benefit of the tender offer exercise that was completed in September 2005.

I remain confident that the current strategies being followed by management will continue to deliver satisfactory profit levels in the future. We will continue to contain our costs, to invest in both traditional and new products and to develop new market places when the opportunities arises in order to maximise return on capital employed.

Management changes

On the 5 December 2006 Paul Wood was appointed to the Board as Managing Director having previously been Director of Operations. Paul has a vast experience in the industry having originally joined the group in 1978. Paul has much to contribute to the group in terms of his industry experience and management leadership and I look forward to working with him over the coming years.

Also on the 5 December 2006 jean Christophe Pillois was appointed Finance Director following the resignation of Tony Bourne on 2 October 2006.

There have also been some other changes to our non-executive directors. Richard Pollard resigned on5 December 2006 and three new non-executives directors, Marie Claire Leon, Xavier Mignolet and Joel Simmonds were appointed to the Board on 8 February 2007. I welcome the new appointees and I am sure that their experience will be appreciated by the Board.

Net debt

Net debt has been reduced by £4.9 million to £14.8 million this year despite the following cash outflows:

Capital expenditure net of disposal proceeds £6.5 million
Corporation tax payments £2,8 million
Net interest payments £1.1 million
Defined benefit pension scheme payments £1.5 million

There was a relatively high level of capital expenditure required this year in order to satisfy increased customer demand and to invest in new products that will give returns in future years. The other cash outflows are inline with our expectations.

Share buy back programme

The Board continues that shareholder value will be optimised by the purchase, when appropriate, of our own shares The earnings per share this year has benefited from the tender offer exercise that was completed in September 2005 when the company purchased 13.4 million shares for cancellation.

Consequently at the forthcoming AGM, the Board will request that that shareholders vote in favour of a resolution to renew the authority to purchase up to 12.5% of the ordinary shares in issue.

Dividend

The Board is not recommending the payment of a final dividend this year. Future dividend policy will be reviewed regularly by the board

Outlook

The Group’s continued strategy of containing costs and investing in both its traditional core products and services and new environmentally friendly products proved to be successful during 2006. Overall trading in the first quarter of 2007 was in line with expectations.

JG Murray
Chairman
25 April 2007