HIGHLIGHTS

• Double-digit increases in sales and profits for the 16th consecutive year
  - Over 70% of increase in turnover came from extensions to the scope and scale of existing
  contracts
  - Profit before goodwill, tax and an incremental pension cost of £4.5m resulting from an increase in
  long term contribution is up 26%
  
• Succession of sales records broken
  - Largest new contract – 25-year Merseyrail Electrics contract worth £1.8bn
  - Largest rebid – 11-year contract at Goose Bay, Canada worth C$400m
  - Largest contract extension – 15-year extension to the Atomic Weapons Establishment contract
  worth over £1bn
  - Largest North American contract – 10-year Ontario driver examination services contract worth
  C$600m
  
• Strong cash performance
  - First half year free cash inflow £14.2m (2002: outflow of £11.5m)
  - Great Southern Railway sale and leaseback generated £5.8m of cash
  
• Acquisition of remaining 50% share in Premier Custodial Group successfully completed in July
  
• Restructuring and review of underperforming businesses
  - Business reorganisation resulted in exceptional charge of £4.5m while generating ongoing
  savings of £1.5m a year
  - Agreement reached with Network Rail to terminate East Midlands track maintenance contract in
  January 2004
  
• Continued high visibility of earnings
  - Forward order book up from £7.1bn to £9.9bn
  - 99% of 2003 turnover already secured
  - 86% of 2004 turnover already secured
  
• Substantial range of future opportunities
  - Bids worth £6bn submitted and under evaluation
  - £8bn of further opportunities identified     

Kevin Beeston, Executive Chairman, said:

“We have had an outstanding six months, continuing the Group’s double-digit growth record. After breaking a succession of sales records we’ve increased our forward order book by £2.8bn to £9.9bn while delivering a strong profit and cash performance.

We are confident that our standing among customers and potential customers remains high, and our credibility is underpinned by a track record of delivery. We look forward to sustained, profitable growth - in the second half and for the foreseeable future.”