TIDMASY
RNS Number : 5576M
Andrews Sykes Group PLC
12 May 2020
Andrews Sykes Group plc
Preliminary results
For the 12 months ended 31 December 2019
Summary
12 months 12 months
ended ended
31 December 31 December
2019 2018
GBP'000 GBP'000
Revenue from continuing operations 77,246 78,563
EBITDA* from continuing operations 28,519 26,737
Operating profit 19,298 20,681
Profit after tax for the financial period 15,019 17,046
Basic earnings per share from total operations
(pence) 35.61p 40.39p
Interim and final dividends paid per equity
share (pence) 23.80p 23.80p
Proposed final dividend per equity share
(pence) 10.50p 11.90p
Net cash inflow from operating activities 18,522 19,110
Total interim and final dividends paid 10,038 10,048
Cash reserves** 23,897 23,381
Net funds 12,136 23,381
* Earnings Before Interest, Taxation, Depreciation, profit on
sale of property, plant and equipment, Amortisation and
non-recurring items as reconciled on the consolidated income
statement.
** Cash at bank less bank loans before IFRS 16 right-of-use
lease obligations
For further information please contact:
Andrews Sykes Group plc
Paul Wood, Group Managing Director 01902 328700
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GCA Altium Limited (NOMAD)
Tim Richardson 0207 484 4040
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Arden Partners plc (Broker)
Steve Douglas 020 7614 5900
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Chairman's Statement
Outlook
Andrews Sykes Group plc (the "group") remains resilient as
sectors in which we trade have shown continuous demand whilst
facing an unprecedented challenge in the form of the coronavirus
pandemic. We are thankful and proud of our team members who
continue to respond as essential service providers.
The group's trading in the first quarter of 2020 started
positively, especially in the UK where the pump hire business
benefited from the recent abnormally wet weather while March was
unfavourably affected by the pandemic. As many of our products are
sourced from China, our supply chain was only mildly affected as
most of our goods had already been delivered before the virus
spread. Customer demand in specific geographical areas of our
business has been affected more than others. Our relatively small
businesses in Italy and France faced strict lockdowns in late
February and March, and the UK introduced a more flexible lockdown
on 23 March 2020. The Benelux countries have adopted a similar
approach, we are able to continue to trade, albeit at a reduced
level and with increased health and safety and social distancing
measures. In the UAE trading is also continuing but at a lower
level than in the past.
The wellbeing of our employees and business partners is of
paramount importance as we adhere to the local government
guidelines. In the UK we have temporarily closed some of our
smaller depots, introduced social distancing measures in our larger
depots and embraced at home working employees. Our priority is to
keep operations safe for customers, employees and business
partners.
The result for 2019 was the second best on record following the
record result in 2018, and cash reserves* are robust. We have
modelled with caution the effects of sales decline along with other
factors to ensure the group remains within its bank facilities
including cash flow forecasts for a period in excess of 12 months.
The group has cash reserves* beyond May 2021 without renegotiating
its bank facilities. The Board therefore considers the group is
well positioned to manage through the impact of the pandemic
considering its strong balance sheet and significant net cash
position.
The Board has in the past declared two dividends, an interim of
11.9 pence per share payable in November and a final, also of 11.9
pence per share, payable the following June. The Board has decided
to propose a final dividend of 10.5 pence per share that will be
paid in June 2020.
* Defined as cash at bank less bank loans before IFRS 16
right-of-use lease obligations.
2019 trading summary
The group's revenue for the year ended 31 December 2019 was
GBP77.2 million, a decrease of GBP1.3 million, or 1.7%, compared
with the same period last year. This decrease had a more than
proportionate impact on operating profit which decreased by 6.7%,
or GBP1.4 million, from GBP20.7 million last year to GBP19.3
million in the year under review. This decrease would have been
GBP0.3 million greater had it not been for the adoption of IFRS 16
for the first time this year. Further details of the effect of IFRS
16 on the results this year are disclosed in note 3 of this
preliminary announcement. Despite this decrease, which followed a
17.6% increase last year, the performances from both our hire and
sales businesses in the UK and Europe continue to be strong
supported by a further improved performance from our business in
the Middle East. Although down on an exceptional result last year,
the current year's trading performance is the second best on
record.
Net finance costs were GBP0.7 million this year compared with
net finance income of GBP0.4 million in 2018. This is largely
attributable to two factors; firstly an interest charge of GBP0.5
million this year on right-of-use lease obligations following the
adoption of IFRS 16 on 1 January 2019, further details of which are
given in note 3 of this preliminary announcement, and secondly a
foreign exchange loss arising on the retranslation of inter-company
balances of GBP0.3 million this year compared with a gain of GBP0.3
million in 2018. This reflects slight strengthening of Sterling
compared with both the Euro and UAE Dirham.
The group has reported a decrease in the basic earnings per
share of 4.78p, or 11.8%, from 40.39p in 2018 to 35.61p in the
current year. This is mainly attributable to the above decrease in
the group's operating profit and increase in net finance costs.
Nevertheless, the basic EPS remains high and is indicative of the
underlying business performance and strength of the group.
The group continues to generate strong cash flows. Net cash
inflow from operating activities was GBP18.5 million compared with
GBP19.1 million last year. Despite shareholder related cash
outflows of GBP10.0 million on ordinary dividends, net cash
reserves* increased by GBP0.5 million from GBP23.4 million at 31
December 2018 to GBP23.9 million at 31 December 2019.
Cost control, cash and working capital management continue to be
priorities for the group. Capital expenditure is concentrated on
assets that give a good return and in total GBP7.8 million was
invested in the hire fleet this year, GBP0.3 million more than last
year and significantly more than the wasting depreciation charge of
GBP6.4 million. In addition, the group invested a further GBP0.8
million in property, plant and equipment. These actions will ensure
that the group's infrastructure and revenue generating assets are
sufficient to support future growth and profitability. Hire fleet
utilisation, condition and availability continue to be the subjects
of management focus.
* Defined as cash at bank less bank loans before IFRS 16
right-of-use lease obligations.
Operating performance
The following table splits the results between the first and
second half years:
Turnover Operating profit
GBP'000 GBP'000
--------- -----------------
1st half 2019 34,974 6,918
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1st half 2018 37,815 9,280
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2nd half 2019 42,272 12,380
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2nd half 2018 40,748 11,401
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Total 2019 77,246 19,298
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Total 2018 78,563 20,681
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The above table demonstrates that after a disappointing result
in the first half of 2019, trading improved significantly in the
second half year. Whilst turnover in the first half of the year
showed a 7.5% decrease compared with the same period in 2018,
improved trading in the second half year resulted in turnover
increasing by 3.7% compared with the second half of 2018. Overall
turnover was only 1.7% below the record result returned last
year.
Operating profit followed the trend in turnover. In the first
half of the year, operating profit was 25.5% below the same period
in 2018 but in the second half it improved significantly to show an
8.6% improvement compared with 2018. Traditionally, the group makes
more profit in the second half year due to the higher profit
margins on its air conditioning products which are hired
predominantly in the second half of the year and this factor was
apparent this year.
The operating profit of our main business segment in the UK and
Northern Europe decreased from GBP19.1 million last year to GBP16.9
million in the year under review. The winter of 2019 was much
milder than 2018 meaning that there were less opportunities for our
heating and boiler hire products. Trading improved in the second
half and whilst revenue from our air conditioning business did not
reach the very high levels of 2018, primarily due to the lack of a
hot summer in the UK in 2019, it was in line with our expectations.
The wet weather in the final quarter enabled the pump hire business
to recover after a slow start to the year and the results of our
heating business were also better than expected. This year's result
demonstrates that with properly directed investment, a
well-maintained hire fleet, a knowledgeable management team and
dedicated employees, we are able to take full advantage of
opportunities when they are presented to us and deliver a strong
performance for the benefit of all shareholders.
Our hire and sales business in the Middle East delivered a very
good trading result. Operating profit for this business segment
increased from GBP2.4 million in 2018 to GBP3.2 million in the
current year reflecting a strong performance in both the first and
second halves of the year. This result was driven by several large
projects in the region including the 2020 Expo which is planned to
be held in Dubai.
Our fixed installation business sector in the UK returned an
improved operating profit of GBP0.2 million this year compared with
GBP0.1 million in 2018. The market continues to be fragmented with
high levels of price competition.
Central overheads were GBP1.0 million in the current year
compared with GBP0.9 million in 2018.
Profit for the financial year
Profit before tax was GBP18.6 million this year compared with
GBP21.1 million last year, a decrease of GBP2.5 million. This is
attributable to the above GBP1.4 million decrease in operating
profit and by a swing in finance costs from a net credit of GBP0.4
million last year to a net charge of GBP0.7 million this year. This
was due to two factors: an interest charge on right-of-use lease
obligations of GBP0.5 million following the adoption of IFRS 16 for
the first time in 2019; and a foreign exchange loss arising on the
retranslation of inter-company balances of GBP0.3 million this year
compared with a gain of GBP0.3 million in 2018, reflecting slight
strengthening of Sterling compared with both the Euro and UAE
Dirham.
Tax charges decreased from GBP4.0 million in 2018 to GBP3.6
million this year. The overall effective tax
rate increased slightly from 19.0% in 2018 to 19.1% this year.
Profit for the financial year was GBP15.0 million compared with
GBP17.1 million last year.
Equity dividends
The company paid two dividends during the year. On 21 June 2019,
a final dividend for the year ended 31 December 2018 of 11.9 pence
per ordinary share was paid and this was followed on 8 November
2019 by the payment of an interim dividend for 2019, also of 11.9
pence per share. Therefore, during 2019, a total of GBP10.0 million
in cash dividends has been returned to our ordinary
shareholders.
For the reasons given in the outlook section above, the Board
has decided to propose a final dividend of 10.5 pence per share. If
approved at the forthcoming Annual General Meeting this dividend,
which in total amounts to GBP4.4 million, will be paid on 19 June
2020 to shareholders on the register as at 29 May 2020.
Share buybacks
The company did not purchase any of its own ordinary shares for
cancellation during the period under review. In previous years,
purchases were made which enhanced earnings per share and were for
the benefit of all shareholders. As at 11 May 2020, there remained
an outstanding general authority for the directors to purchase
5,271,794 ordinary shares which was granted at last year's Annual
General Meeting.
The Board believes that it is in the best interests of
shareholders to have this authority in order that market purchases
may be made in the right circumstances if the necessary funds are
available. Accordingly, at the next Annual General Meeting,
shareholders will be asked to vote in favour of a resolution to
renew the general authority to make market purchases of up to 12.5%
of the ordinary share capital in issue.
Net cash reserves* and funds
At 31 December 2019, the group had net cash reserves* of GBP23.9
million compared with GBP23.4 million last year, an increase of
GBP0.5 million despite shareholder related cash outflows of GBP10.0
million on ordinary dividends during the year.
As a result of adopting the accounting requirements of the new
leasing standard, IFRS 16, existing lease commitments as at 1
January 2019 of GBP11.7 million were recognised on the balance
sheet. The group adopted the standard's modified retrospective
approach as at 1 January 2019 in accordance with which the
cumulative effect of initially applying IFRS 16 was recognised as
an adjustment to capitalise right-of-use assets and lease
liabilities at the date of initial application. Comparative
information was not restated. As at 31 December 2019 the group had
right-of-use lease liabilities of GBP11.8 million and consequently
net funds, after the IFRS 16 adjustment, at that date were GBP12.1
million.
* Defined as cash at bank less bank loans before IFRS 16
right-of-use lease obligations.
Bank loan facilities
The group continues to operate within its bank covenants. In
April 2017, a bank loan of GBP5 million was taken out with the
group's bankers, Royal Bank of Scotland. The first three loan
repayments of GBP0.5 million were made in accordance with the bank
agreement on 30 April 2018, 2019 and 2020.The remaining balance of
GBP3.5 million is due to be repaid by one annual instalment of
GBP0.5 million on 30 April 2021 followed by a final balloon
repayment of GBP3 million due on 30 April 2022.
JG Murray
Chairman
11 May 2020
Consolidated Income Statement
For the 12 months ended 31 December 2019
12 months 12 months
ended ended
31 December 31 December
2019 2018
GBP'000 GBP'000
Continuing operations
Revenue 77,246 78,563
Cost of Sales (31,908)
(32,244)
------------- -----------------------------
Gross profit 45,002 46,655
Distribution costs (11,996) (12,073)
Administrative expenses (13,708) (13,901)
Operating profit 19,298 20,681
EBITDA* 28,519 26,737
Depreciation and impairment losses (7,203) (6,666)
Depreciation of right-of-use assets (2,538) -
Profit on the sale of plant and equipment 520 610
------------- -----------------------------
Operating profit 19,298 20,681
------------- -----------------------------
Finance income 146 461
Finance costs (884) (97)
------------- -----------------------------
Profit before taxation 18,560 21,045
Taxation (3,541) (3,999)
Profit for the financial period attributable
to equity holders of the parent 15,019 17,046
============= =============================
There were no discontinued operations
in either of the above periods
Earnings per share
Basic (pence) 35.61p 40.39p
Diluted (pence) 35.61p 40.39p
Interim and final dividends paid per
equity share (pence) 23.80p 23.80p
Proposed final dividend per equity share
(pence) 10.50p 11.90p
* Earnings Before Interest, Taxation, Depreciation, profit on
the sale of property, plant and equipment, Amortisation and non-
recurring items.
Consolidated Statement of Comprehensive Total Income
For the 12 months ended 31 December 2019
12 months 12 months
ended ended
31 December 31 December
2019 2018
GBP'000 GBP'000
Profit for the financial period 15,019 17,046
-------------- ----------------------------
Other comprehensive (charges) / income
Items that may be reclassified to
profit and loss:
Currency translation differences
on foreign operations (906) 405
Foreign exchange difference on IFRS 1 -
16 adjustments
Related deferred tax - -
Items that will never be reclassified
to profit and loss:
Remeasurement of defined benefit
assets and liabilities 559 (1,649)
Related deferred tax (106) 313
Other comprehensive (charges) for
the period net of tax (452) (931)
-------------- ----------------------------
Total comprehensive income for the
period 14,567 16,115
============== ============================
Consolidated Balance Sheet
As at 31 December 2019
31 December 2019 31 December 2018
------------------------------- -----------------------------------
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 24,561 23,651
Right-of-use assets 11,515 -
Prepayments 44 45
Deferred tax asset 254 677
Retirement benefit pension
surplus 1,963 1,356
---------------- ------------------
38,337 25,729
Current assets
Stocks 6,333 5,083
Trade and other receivables 21,333 19,994
Cash and cash equivalents 27,880 27,862
------------- ---------------
55,546 52,939
------------- ---------------
Current liabilities
Trade and other payables (12,942) (12,889)
Current tax liabilities (1,674) (2,294)
Bank loans (493) (493)
Right-of-use lease obligations (2,279) -
Obligations under finance
leases - (5)
(17,388) (15,681)
------------- ---------------
Net current assets 38,158 37,258
Total assets less current
liabilities 76,495 62,987
Non-current liabilities
Bank loans (3,490) (3,983)
Right-of use lease obligations (9,482) -
(12,972) (3,983)
---------------- ------------------
Net assets 63,523 59,004
================ ==================
Equity
Called-up share capital 422 422
Share premium 13 13
Retained earnings 59,447 54,013
Translation reserve 3,395 4,300
Other reserves 246 246
Surplus attributable to equity holders
of the parent 63,523 58,994
Non-controlling interests - 10
Total equity 63,523 59,004
================ ==================
Consolidated Cash Flow Statement
For the 12 months ended 31 December 2019
12 months 12 months
ended ended
31 December 31 December
2019 2018
GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 22,917 22,888
Interest paid (609) (88)
Net UK corporation tax paid (2,227) (2,236)
Overseas tax paid (1,559) (1,454)
Net cash flow from operating activities 18,522 19,110
--------------------- --------------------------------
Investing activities
Sale of property, plant and equipment 685 944
Purchase of property, plant and
equipment (6,207) (7,142)
Interest received 100 41
--------------------------------
Net cash flow from investing activities (5,422) (6,157)
--------------------- --------------------------------
Financing activities
Loan repayments (500) (500)
Capital repayments for right-of-use (2,296) -
lease obligations
Finance lease capital repayments - (45)
Equity dividends paid (10,038) (10,048)
Purchase of own shares - (438)
Net cash flow from financing activities (12,834) (11,031)
--------------------- --------------------------------
Net increase in cash and cash equivalents 266 1,922
Cash and cash equivalents at the
beginning of the period 27,862 25,311
Effect of foreign exchange rate
changes (248) 629
Cash and cash equivalents at the
end of the period 27,880 27,862
===================== ================================
Reconciliation of net cash flow
to movement in net funds in the
period
Net increase in cash and cash equivalents 266 1,922
Cash outflow from the repayment
of loans and right-of-use lease
obligations 2,796 545
Non-cash movement in respect of
raising loan finance (7) (8)
Non-cash movements re new right-of-use (2,593) -
lease obligations
Increase in net funds during the
period 462 2,459
Opening net funds at the beginning
of the period 23,381 20,293
Transitional adjustment for right-of-use (11,699) -
leases at the start of the period
Effect of foreign exchange rate 240 -
changes on right-of-use lease obligations
Effect of foreign exchange rate
changes (248) 629
--------------------- --------------------------------
Closing net funds at the end of
the period 12,136 23,381
===================== ================================
Consolidated Statement of Changes in Equity
For the 12 months ended 31 December 2019
Attributable to equity holders of Non-controlling Total
the parent company interest equity
----------------------------------------------------------------------------------------
Share Share Retained Translation Other
capital Premium earnings reserve reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 December
2017 423 13 48,789 3,895 245 53,365 10 53,375
Profit for the
financial
period - - 17,046 - - 17,046 - 17,046
Other
comprehensive
income and
(charges):
Items that may
be
reclassified to
profit and loss:
Currency
translation
differences on
foreign
operations - - - 405 - 405 - 405
Items that will
never be
reclassified
to profit and
loss:
Remeasurement of
defined benefit
assets and
liabilities - - (1,649) - - (1,649) (1,649)
Related deferred
tax - - 313 - - 313 - 313
Total other
comprehensive
income and
(charges) - - (1,336) 405 - (931) - (931)
---------- -------------- ----------- ------------------- ------------ ------------ ---------------- --------------
Transactions
with
owners recorded
directly in
equity:
Purchase of own
shares (1) - (438) - 1 (438) - (438)
Dividends paid - - (10,048) - - (10,048) - (10,048)
Total
transactions
with owners (1) - (10,486) - 1 (10,486) - ( 10,486)
---------- -------------- ----------- ------------------- ------------ ------------ ---------------- --------------
At 31 December
2018 422 13 54,013 4,300 246 58,994 10 59,004
Profit for the
financial
period - - 15,019 - - 15,019 - 15,019
Other
comprehensive
(charges) and
income:
Items that may
be
reclassified to
profit and loss:
Currency
translation
differences on
foreign
operations - - - (906) - (906) - (906)
Foreign exchange
differences on
IFRS 16
adjustments - - - 1 - 1 - 1
Related deferred - - - - - - - -
tax
Items that will
never be
reclassified
to profit and
loss:
Remeasurement of
defined benefit
assets and
liabilities - - 559 - - 559 - 559
Related deferred
tax - - (106) - - (106) - (106)
Total other
comprehensive
income and
(charges) - - 453 (905) - (452) - (452)
---------- -------------- ----------- ------------------- ------------ ------------ ---------------- --------------
Transactions
with
owners recorded
directly in
equity:
Dividends paid - - (10,038) - - (10,038) - (10,038)
Write-off of
non-controlling
interest - - - - - - (10) (10)
Total
transactions
with owners - - (10,038) - - (10,038) (10) (10,048)
---------- -------------- ----------- ------------------- ------------ ------------ ---------------- --------------
At 31 December
2019 422 13 59,447 3,395 246 63,523 - 63,523
---------- -------------- ----------- ------------------- ------------ ------------ ---------------- --------------
Notes
For the 12 months ended 31 December 2019
1. Basis of preparation
Whilst the information included in this preliminary announcement
has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
(IFRSs), this announcement does not itself contain sufficient
information to comply with IFRSs. Therefore the financial
information set out above does not constitute the company's
financial statements for the 12 months ended 31 December 2019 or 31
December 2018 but it is derived from those financial
statements.
2. Going Concern
The Board remains satisfied with the group's funding and
liquidity position. The group has operated throughout the 2019
financial year within its financial covenants as contained in the
bank agreement.
The coronavirus pandemic will have an impact on our business
during 2020. Reduced customer demand and our ongoing ability to
meet that demand have been identified as our main areas of risk.
Our supply chain has not been badly affected as the majority of our
goods had already been delivered before the virus spread.
Management has prepared a detailed "bottom-up" profit and loss
and cash flow forecast for the 24 months ending 31 December 2021 on
a cautiously realistic basis. This takes into account reduced
activity levels across all income streams and geographical
locations taking into account specific factors relevant in each of
our businesses. It has been assumed that the impact of the
coronavirus pandemic affects trading for the remainder of 2020 and
thereafter things return to a more normal level. These forecasts
have been reviewed and approved by the Board.
Certain product lines are more resilient than others and we are
experiencing an increase in demand in certain sectors, notably
healthcare, emergency temporary hires to cover the breakdown of
customer equipment and the hire of dewatering equipment in the UAE
to enable construction work to continue.
The impact on the business as of the end of March has been
limited with trading levels close to expectation. Cash flow has not
changed significantly and we continue to provide our full range of
products and services across all territories. We are thankful and
proud of our team members who continue to respond as essential
service providers.
The wellbeing of our employees and business partners is of
paramount importance as we adhere to the local government
guidelines. We have temporarily mothballed some of our smallest
depots, introduced social distancing measures in our larger depots
and have enabled at home working for many employees. Appropriate
supplies of PPE are provided to our staff to enable them to carry
out their duties in a safe manner. Our priority is to keep
operations safe for customers, employees and business partners.
In the UK, approximately 50% of our employees are furloughed. In
France, Italy, Belgium and Luxembourg we are currently working with
significantly reduced staff levels, with the most of our staff
enlisted to the appropriate government employment retention
schemes. In the UAE and Holland, our employees are currently
continuing to work in a close to normal way.
Our cash flow forecast assumes that cash collections will reduce
over the next nine months as customers take longer to settle their
debts. We will continue to make payments to our suppliers in
accordance with our agreed terms and, with the exception of the May
2020 UK VAT payment that will be deferred until later in 2020, all
fiscal payments to the UK and overseas government bodies will
continue to be made on time. Bank loan repayments are also forecast
to be made in accordance with the bank agreement. Due to the
reduced level of activity, forecast capital expenditure for 2020 is
cGBP1.2 million less than 2019.
A triennial funding valuation for the group defined benefit
pension scheme is currently being prepared by the pension scheme
trustees as at 31 December 2019. Management has received an
estimate of the deficit as at that date and it has been assumed
that this will be agreed and paid to the pension scheme by 31
December 2020.
For the purposes of the cash forecast only, we have assumed that
a normal level of dividends will be resumed in November 2020.
The above factors have all been reflected in the forecast for
the 24 months ending 31 December 2021. The headline numbers at a
group level are as follows:
-- The actual cash reserves* as at 31 March 2020 are GBP27.2
million compared with GBP23.9 million as at 31 December 2019. This
increase reflects strong trading and debt collections in the first
quarter with supplier and other payments being made on schedule
with payment plans being agreed with some key suppliers and
landlords. Group operating profit in the first quarter was cGBP4.6
million.
-- Group turnover for the 12 months ending 31 December 2020 is
forecast to be lower than 2019. Operating profit is therefore
consequently likely to reduce, however the group still expects to
produce a profit for 2020.
-- Closing cash reserves* as at 31 December 2020 are forecast to
be below the level reported at 31 December 2019, although cash
reserves* are not forecast to fall below cGBP15 million at any
month end.
-- In 2021 we expect to return to normal levels of trading.
Therefore, it is forecast that the group will have significant
cash reserves* throughout 2020 and 2021. Ignoring the positive cash
flow in the first quarter, the group's net cash outflow in the nine
months ending 31 December 2020 is forecast to be approximately
GBP10 million. Even in an extreme scenario and this trend continued
throughout 2021 resulting in an additional cash outflow of cGBP12
million, the group would still have cash reserves* of cGBP5 million
at 31 December 2021. In this extreme scenario, further remedial
action would be taken. Payroll costs could be controlled at the
current levels until the business recovers, additional staff could
be furloughed and capital expenditure could be postponed until a
later date. Our bank has been very supportive and has indicated
that it would be prepared to make additional loan facilities
available the group if required. Dividend payments could also be
reduced or suspended to further conserve cash. The Board is,
however, confident that none of these additional measures will be
necessary due to the level of confidence it has in the future
trading performance of the group.
The group has considerable financial resources and a wide
operational base. Based on the detailed forecast prepared by
management taking into account the anticipated impact of the
coronavirus pandemic, the Board has a reasonable expectation that
the group has adequate resources to continue to trade for the
foreseeable future even in the extreme scenario that the downturn
continues throughout 2021. Accordingly, the Board continues to
adopt the going concern basis when preparing this Annual Report and
Financial Statements.
* Defined as cash at bank less bank loans before IFRS 16
right-of-use lease obligations.
3 . International Financial Reporting Standards (IFRS) adopted
for the first time in 2019
With the exception of the adoption of the new leasing standard,
IFRS 16, there were no new standards or amendments to standards
adopted for the first time this year that had a material impact on
the results of the group. The prior year comparatives have not been
restated for any changes in accounting policies that were required
due to the adoption of new standards this year.
The group has adopted IFRS 16, which establishes principles for
the recognition, measurement, presentation and disclosures of
leases, with effect from 1 January 2019.
IFRS 16 introduced a single, on-balance-sheet lease accounting
model for lessees. A lessee recognises a right-of-use asset
representing its right to use the underlying asset and a lease
liability representing its obligation to make lease payments. The
group adopted IFRS 16 on 1 January 2019 and applied the standard's
modified retrospective approach. Under this approach the cumulative
effect of initially applying IFRS 16 is recognised as an adjustment
to assets and liabilities at the date of initial application.
Comparative information is not restated. Management has decided to
make use of the practical expedient not to perform a full review of
existing leases, bringing onto the balance sheet the net present
value of the remaining outstanding lease obligations as at the date
of transition as both an asset and liability, and has also applied
IFRS 16 to new or modified contracts. There are recognition
exemptions for short-term leases and leases of low-value items and
the group has decided to make use of the short-term lease
exemption. The group also took advantage of the practical
expedients to exclude initial indirect costs in measuring the
right-of-use assets and applying hindsight to options to extend
contracts when determining the lease term at the date of initial
application.
The group has recognised a right-of-use asset and a lease
liability for its operating leases of properties, plant machinery
and equipment, other than those that fall within the above
recognition exemption. The amount capitalised was the net present
value of the future expected minimum capital payments under the
group's operating lease obligations discounted at the group's
incremental borrowing rate as at 1 January 2019. Prepaid and
accrued lease payments were considered to be immaterial and
therefore the right-of-use assets were measured at an amount equal
to the lease liability. The nature of expenses related to these
leases has changed because the group has recognised a depreciation
charge for right-of-use assets and an interest expense, charged
within finance costs, on the lease liabilities. The assets are
depreciated on a straight-line basis over the remaining life of the
lease and the interest expense is calculated in order to give a
constant rate of interest on the outstanding capital liability.
Previously, the group recognised operating lease expenses on a
straight-line basis over the term of the lease as a reduction in
operating profit, and recognised assets and liabilities only to the
extent that there was a timing difference between actual lease
payments and the expense recognised.
As at 1 January 2019, the date of transition to IFRS 16, the
group recognised an additional right-of-use asset and associated
right-of-use lease obligations of GBP11.7 million.
As stated above the group, has adopted the modified
retrospective approach and has not restated the comparative
figures. The key effects on the current year's consolidated income
statement and balance sheet can be summarised as follows:
2019 on a consistent Effect of IFRS As reported this
basis with 2018 16 year
GBP'000 GBP'000 GBP'000
--------------------- --------------- -----------------
Income statement
--------------------- --------------- -----------------
EBITDA 25,702 2,817 28,519
--------------------- --------------- -----------------
Depreciation (7,203) (2,538) (9,741)
--------------------- --------------- -----------------
Profit on sale
of fixed assets 520 - 520
------------------------- --------------------- --------------- -----------------
Operating profit 19,019 279 19,298
--------------------- --------------- -----------------
Net finance costs (212) (526) (738)
------------------------- --------------------- --------------- -----------------
Profit before
taxation 18,807 (247) 18,560
--------------------- --------------- -----------------
Taxation (3,588) 47 (3,541)
------------------------- --------------------- --------------- -----------------
Profit after taxation 15,219 (200) 15,019
------------------------- --------------------- --------------- -----------------
Balance sheet
--------------------- --------------- -----------------
Non-current assets 26,775 11,562 38,337
--------------------- --------------- -----------------
Net current assets 40,437 (2,279) 38,158
------------------------- --------------------- --------------- -----------------
Total assets less
current liabilities 67,212 9,283 76,495
--------------------- --------------- -----------------
Non-current liabilities (3,490) (9,482) (12,972)
------------------------- --------------------- --------------- -----------------
Net assets 63,722 (199) 63,523
------------------------- --------------------- --------------- -----------------
Translation reserve 3,394 1 3,395
--------------------- --------------- -----------------
Share capital
and other reserves 60,328 (200) 60,128
------------------------- --------------------- --------------- -----------------
Shareholders'
funds 63,722 (199) 63,523
------------------------- --------------------- --------------- -----------------
Net funds 23,897 (11,761) 12,136
------------------------- --------------------- --------------- -----------------
There was no significant impact for the group's finance leases
which were repaid in full during 2019.
IFRS 16 did not made any significant changes to the accounting
for lessors, and therefore there was no significant change in this
area as a result of adopting IFRS 16.
4. Distribution of Annual Report and Financial Statements
The group expects to distribute copies of the full Annual Report
and Financial Statements that comply with IFRSs by 20 May 2020
following which copies will be available either from the registered
office of the company; St David's Court, Union Street,
Wolverhampton, WV1 3JE; or from the company's website;
www.andrews-sykes.com . The Annual Report and Financial Statements
for the 12 months ended 31 December 2018 have been delivered to the
Registrar of Companies and those for the 12 months ended 31
December 2019 will be filed at Companies House following the
company's Annual General Meeting. The auditor has reported on those
financial statements; the report was unqualified, did not draw
attention to any matters by way of emphasis without qualifying
their report and did not contain details of any matters on which
they are required to report by exception.
5. Date of Annual General Meeting
The group's Annual General Meeting will be held at 3.30 p.m. on
Tuesday, 16 June 2020 at Unit 5, Peninsular Park Road, London, SE7
7TZ.However in the light of the COVID-19 crisis and the compulsory
"Stay at Home" measures implemented by the UK Government which
limit public gatherings of more than two people, shareholders will
not be permitted to attend this Annual General Meeting and persons
seeking to attend the Annual General Meeting will be refused entry.
Please see the Notice of Annual General Meeting that will be
distributed with the Annual Report and Financial Statements for
more information.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EAPSFFFAEEFA
(END) Dow Jones Newswires
May 12, 2020 02:00 ET (06:00 GMT)
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