TIDMASY
RNS Number : 5871Y
Andrews Sykes Group PLC
10 May 2019
Andrews Sykes Group plc
Summary of results
For the 12 months ended 31 December 2018
12 months 12 months
ended ended
31 December 31 December
2018 2017
GBP'000 GBP'000
Revenue from continuing operations 78,563 71,300
EBITDA* from continuing operations 26,737 22,851
Operating profit 20,681 17,589
Profit after tax for the financial period 17,046 14,101
Basic earnings per share from total operations
(pence) 40.39p 33.37p
Interim and final dividends paid per equity
share (pence) 23.80p 23.80p
Proposed final dividend per equity share
(pence) 11.90p 11.90p
Net cash inflow from operating activities 19,110 17,862
Total interim and final dividends paid 10,048 10,058
Net funds 23,381 20,293
* 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.
For further information please contact:
Andrews Sykes Group plc
Paul Wood, Group Managing Director
Andrew Phillips, Chief Financial Officer 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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Andrews Sykes Group plc
Chairman's Statement
Overview and financial highlights
Summary
The group's revenue for the year ended 31 December 2018 was
GBP78.6 million, an increase of GBP7.3 million, or 10.2%, compared
with the same period last year. This increase had a more than
proportionate impact on operating profit which increased by 17.6%,
or GBP3.1 million, from GBP17.6 million last year to GBP20.7
million in the year under review. This increase, which follows a
11.2% increase last year, reflects strong and improved performances
from both our hire and sales businesses in the UK and Europe and a
strong and stable performance from our business in the Middle
East.
Net finance income was GBP0.4 million this year compared with
net finance costs of GBP0.3 million in 2017. This is largely
attributable to a foreign exchange gain arising on the
retranslation of inter-company balances of GBP0.3 million this year
compared with a loss of GBP0.3 million in 2017. This reflects
further weakening of Sterling compared with both the Euro and UAE
Dirham.
The group has reported an increase in the basic earnings per
share of 7.02p, or 21%, from 33.37p in 2017 to 40.39p in the
current year. This is mainly attributable to the above improvement
in the group's operating profit which has enhanced the quality of
earnings. The growth in the basic EPS 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 GBP19.1 million compared with
GBP17.9 million last year. Despite shareholder related cash
outflows of GBP10.5 million on ordinary dividends and share
buybacks, net funds increased by GBP3.1 million from GBP20.3
million at 31 December 2017 to GBP23.4 million at 31 December
2018.
Our policy of returning affordable dividends to shareholders
continues and, over the last five financial years, the group has
paid GBP50.3 million in cash to shareholders. This has not been at
the
expense of our other obligations; the group pays its external
creditors in accordance with their agreed credit terms, it operates
well within its banking covenants and has met its obligations as
they fall due to fund the defined benefit pension scheme.
Therefore, in the light of the improved operating profit and
substantial net funds that are available, the Board is once again
proposing a further final dividend payment amounting to GBP5.0
million which, if approved at the forthcoming AGM, will be paid in
June 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 GBP7.5 million was
invested in the hire fleet this year, GBP0.6 million more than last
year and significantly more than the wasting depreciation charge of
GBP5.9 million. In addition, the group invested a further GBP1.1
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.
Operating performance
The following table splits the results between the first and
second half years:
Turnover Operating profit
GBP'000 GBP'000
--------- ------------------
1st half 2018 37,815 9,280
--------- ------------------
1st half 2017 35,334 8,171
--------- ------------------
2nd half 2018 40,748 11,401
--------- ------------------
2nd half 2017 35,966 9,418
--------- ------------------
Total 2018 78,563 20,681
--------- ------------------
Total 2017 71,300 17,589
--------- ------------------
/
--------- ------------------
The above table demonstrates that the successful performance in
the first half of the year continued into the second half. Turnover
in the first half of the year showed a 7.0% improvement over the
same period in 2017 and, in the second half, the percentage
improvement increased to 13.3%. Operating profit for the first half
year showed a 13.6% improvement compared with the same period in
2017 and a 21.1% improvement for the second half year.
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. The
effect this year was even more pronounced than normal due to the
long and hot summer throughout Northern Europe providing excellent
opportunities for this area of our business.
The operating profit of our main business segment in the UK and
Northern Europe increased from GBP15.2 million last year to GBP19.1
million in the year under review. During the first quarter a period
of very cold weather created good opportunities for our heating and
boiler hire activities and this was followed by a long hot summer
which provided excellent opportunities for our air conditioning and
chiller products. The group's management team took advantage of the
opportunities presented to them and the improved profitability
would not have been forthcoming without the considerable efforts of
all our staff. The pumping business again performed well following
continued success over recent years. Our traditional businesses
continue to be developed and supported by the expansion of
non-weather dependent niche markets which benefit the performance
of our specialist hire divisions. 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 had another
satisfactory trading year. Although the operating profit for this
business segment reduced from GBP2.9 million in 2017 to GBP2.4
million in the current year, the majority of this reduction
occurred in the first half of the year. Trading showed a
significant improvement in the second half of the year..
Our fixed installation business sector in the UK returned a
reduced operating profit of GBP0.1 million this year compared with
GBP0.4 million in 2017. The market continues to be fragmented with
high levels of price competition.
Central overheads were GBP0.9 million in both the current year
and 2017.
Profit for the financial year
Profit before tax was GBP21.1 million this year compared with
GBP17.3 million last year, an increase of GBP3.8 million. This is
attributable to the above GBP3.1 million increase in operating
profit which is supplemented by a swing in finance costs from a net
charge of GBP0.3 million last year to a net credit of GBP0.4
million this year. This was primarily due to foreign exchange rate
movements as discussed above.
Tax charges increased from GBP3.2 million in 2017 to GBP4.0
million this year. The overall effective tax
rate increased from 18.4% in 2017 to 19.0%, primarily due to a
change in mix of profits with a greater percentage of the group's
profits being earned in Europe this year compared with the Middle
East where corporation tax rates are very low. A detailed
reconciliation of the theoretical corporation tax charge based on
the accounts profit multiplied by 19% and the actual tax charge is
given in note 11 to the consolidated financial statements. Profit
for the financial year was GBP17.1 million compared with GBP14.1
million last year.
Equity dividends
The company paid two dividends during the year. On 25 June 2018,
a final dividend for the year ended 31 December 2017 of 11.9 pence
per ordinary share was paid and this was followed on 9 November
2018 by the payment of an interim dividend for 2018, also of 11.9
pence per share. Therefore, during 2018, a total of GBP10.1 million
in cash dividends has been returned to our ordinary
shareholders.
I am pleased to announce that, in view of the group's ongoing
profitability and its significant cash resources, the Board has
proposed a final dividend for 2018, also of 11.9 pence per ordinary
share. If approved at the forthcoming Annual General Meeting this
dividend, which in total amounts to GBP5.0 million, will be paid on
21 June 2019 to shareholders on the register as at 31 May 2019.
Share buybacks
The company purchased 87,723 of its own one pence ordinary
shares for cancellation during the period for a consideration of
GBP0.4 million. This purchase enhanced earnings per share and was
for the benefit of all shareholders. As at 9 May 2019, there
remained an outstanding general authority for the directors to
purchase 5,195,037 ordinary one pence shares that was granted at
last year's Annual General Meeting.
The Board believes that it is in the best interests of
shareholders if it has 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 funds
At 31 December 2018, the group had net funds of GBP23.4 million
compared with GBP20.3 million last year, an increase of GBP3.1
million despite shareholder related cash outflows of GBP10.5
million on ordinary dividends and share buybacks during the
year.
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 loan repayment
of GBP0.5 million was made in accordance with the bank agreement on
30 April 2018. The remaining balance of GBP4.5 million will be
repaid by three equal annual instalments of GBP0.5 million per
annum commencing on 30 April 2019 followed by a final balloon
repayment of GBP3 million due on 30 April 2022.
Outlook
The group's policy to increase investments in new
technologically advanced and environmentally friendly non-seasonal
products will be continued into 2019. Investments will also
continue in our traditional businesses to ensure we are ready to
support our customers in times of extreme weather conditions.
The group continues to face both challenges and opportunities in
all of its geographical markets but our business remains strong,
cash generative and well developed, with positive net funds. The
Board remains mindful of the favourable or adverse impact that the
weather can have on our business.
JG Murray
Chairman
9 May 2019
Andrews Sykes Group plc
Consolidated Income Statement
For the 12 months ended 31 December 2018
12 months 12 months
ended ended
31 December 31 December
2018 2017
GBP'000 GBP'000
Continuing operations
Revenue 78,563 71,300
Cost of Sales (31,908) (30,086)
Gross profit 46,655 41,214
Distribution costs (12,073) (11,571)
Administrative expenses (13,901) (12,054)
Operating profit 20,681 17,589
EBITDA* 26,737 22,851
Depreciation and impairment losses (6,666) (5,917)
Profit on the sale of plant and equipment 610 655
---------------------- -------------------------------
Operating profit 20,681 17,589
---------------------- -------------------------------
Finance income 461 82
Finance costs (97) (386)
---------------------- -------------------------------
Profit before taxation 21,045 17,285
Taxation (3,999) (3,184)
Profit for the financial period attributable
to equity holders of the parent 17,046 14,101
====================== ===============================
There were no discontinued operations
in either of the above periods
Earnings per share
Basic (pence) 40.39p 33.37p
Diluted (pence) 40.39p 33.37p
Interim and final dividends paid per
equity share (pence) 23.80p 23.80p
Proposed final dividend per equity share
(pence) 11.90p 11.90p
* Earnings Before Interest, Taxation, Depreciation, profit on
the sale of property, plant and equipment, Amortisation and
non-
recurring items.
Andrews Sykes Group plc
Consolidated Statement of Comprehensive Total Income
For the 12 months ended 31 December 2018
12 months 12 months
ended ended
31 December 31 December
2018 2017
GBP'000 GBP'000
Profit for the financial period 17,046 14,101
------------------------- ---------------------------
Other comprehensive (charges) / income
Items that may be reclassified to
profit and loss:
Currency translation differences
on foreign operations 405 (2)
Items that will never be reclassified
to profit and loss:
Remeasurement of defined benefit
assets and liabilities (1,649) 1,391
Related deferred tax 313 (264)
Other comprehensive (charges) / income
for the period net of tax (931) 1,125
------------------------- ---------------------------
Total comprehensive income for the
period 16,115 15,226
========================= ===========================
Andrews Sykes Group plc
Consolidated Balance Sheet
As at 31 December 2018
31 December 2018 31 December 2017
--------------------------- ------------------------------------
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 23,651 21,911
Lease prepayments 45 47
Deferred tax asset 677 102
Retirement benefit pension
surplus 1,356 3,364
-------------- ------------------
25,729 25,424
Current assets
Stocks 5,083 3,860
Trade and other receivables 19,994 17,852
Cash and cash equivalents 27,862 25,311
----------- ----------------
52,939 47,023
----------- ----------------
Current liabilities
Trade and other payables (12,889) (12,358)
Current tax liabilities (2,294) (1,696)
Bank loans (493) (493)
Obligations under finance
leases (5) (43)
(15,681) (14,590)
----------- ----------------
Net current assets 37,258 32,433
Total assets less current
liabilities 62,987 57,857
Non-current liabilities
Bank loans (3,983) (4,475)
Obligations under finance
leases - (7)
(3,983) (4,482)
-------------- ------------------
Net assets 59,004 53,375
============== ==================
Equity
Called-up share capital 423 423
Share premium 13 13
Retained earnings 54,013 48,789
Translation reserve 4,300 3,895
Other reserves 246 245
Surplus attributable to equity holders
of the parent 58,994 53,365
Non-controlling interests 10 10
Total equity 59,004 53,375
============== ==================
Andrews Sykes Group plc
Consolidated Cash Flow Statement
For the 12 months ended 31 December 2018
12 months 12 months
ended ended
31 December 31 December
2018 2017
GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 22,888 21,090
Interest paid (88) (84)
Net UK corporation tax paid (2,236) (2,142)
Overseas tax paid (1,454) (1,002)
Net cash flow from operating activities 19,110 17,862
--------------------------- --------------------------------
Investing activities
Sale of property, plant and equipment 944 861
Purchase of property, plant and
equipment (7,142) (5,790)
Interest received 41 51
--------------------------------
Net cash flow from investing activities (6,157) (4,878)
--------------------------- --------------------------------
Financing activities
Loan repayments (500) (5,000)
New loans raised - 4,973
Finance lease capital repayments (45) (101)
Equity dividends paid (10,048) (10,058)
Purchase of own shares (438) -
Net cash flow from financing activities (11,031) (10,196)
--------------------------- --------------------------------
Net increase in cash and cash equivalents 1,922 2,788
Cash and cash equivalents at the
beginning of the period 25,311 22,819
Effect of foreign exchange rate
changes 629 (296)
Cash and cash equivalents at the
end of the period 27,862 25,311
=========================== ================================
Reconciliation of net cash flow
to movement in net funds in the
period
Net increase in cash and cash equivalents 1,922 2,788
Cash outflow from the repayment
of loans and finance leases 545 5,101
Cash inflow from the drawdown of
new loans net of charges - (4,963)
Non-cash movement in respect of
raising loan finance (8) (10)
Increase in net funds during the
period 2,459 2,916
Opening net funds at the beginning
of the period 20,293 17,673
Effect of foreign exchange rate
changes 629 (296)
--------------------------- --------------------------------
Closing net funds at the end of
the period 23,381 20,293
=========================== ================================
Andrews Sykes Group plc
Consolidated Statement of Changes in Equity
For the 12 months ended 31 December 2018
Attributable to equity holders of Minority 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
2016 423 13 43,619 3,897 245 48,197 10 48,207
Profit for the
financial
period - - 14,101 - - 14,101 - 14,101
Other
comprehensive
income and
(charges):
Items that may
be
reclassified
to
profit and
loss:
Currency
translation
differences
on foreign
operations - - - (2) - (2) - (2)
Items that
will
never be
reclassified
to profit and
loss:
Remeasurement
of
defined
benefit
assets and
liabilities - - 1,391 - - 1,391 1,391
Related
deferred
tax - - (264) - - (264) - (264)
Total other
comprehensive
income and
(charges) - - 1,127 (2) - 1,125 - 1,125
---------- -------------- ----------- ------------------- ------------ ----------- --------- -----------
Transactions
with
owners
recorded
directly in
equity:
Dividends paid - - (10,058) - - (10,058) - (10,058)
Total
transactions
with owners - - (10,058) - - (10,058) - (10,058)
---------- -------------- ----------- ------------------- ------------ ----------- --------- -----------
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
(charges) and
income:
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
(charges) and
income - - (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
---------- -------------- ----------- ------------------- ------------ ----------- --------- -----------
Andrews Sykes Group plc
Notes
For the 12 months ended 31 December 2018
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 2018 or 31
December 2017 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 2018
financial year and until the date of signing these accounts within
its financial covenants as contained in the bank agreement.
Both loan capital and interest payments have been made in
accordance with the bank agreements. The first annual repayment due
in accordance with the loan agreement dated 30 April 2017 of GBP0.5
million was made on 30 April 2018. The group's profit and cash flow
projections indicate that the financial covenants included within
the new bank loan agreement will be met for the foreseeable
future.
The group continues to have substantial cash resources which at
31 December 2018 amounted to GBP27.9 million compared with GBP25.3
million as at 31 December 2017. Profit and cash flow projections
for 2019 and 2020, which have been prepared on a conservative basis
taking into account reasonably possible changes in trading
performance, indicate that the group will be profitable and
generate positive cash flows after loan repayments. These forecasts
and projections indicate that the group should be able to operate
within the new bank facility agreement and that all associated
covenants will be met.
The Board considers that the group has considerable financial
resources and a wide operational base. As a consequence, the Board
believes that the group is well placed to manage its business risks
successfully, as demonstrated by the current year's result, despite
some uncertain external influences.
After making enquiries, the Board has a reasonable expectation
that the group has adequate resources to continue in operational
existence for the foreseeable future. Accordingly, the Board
continues to adopt the going concern basis when preparing the
Annual Report and Financial Statements from which this preliminary
announcement is derived.
3. 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 17 May 2019
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 2017 have been delivered to the
Registrar of Companies and those for the 12 months ended 31
December 2018 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.
4. Date of Annual General Meeting
The group's Annual General Meeting will be held at 10.30 a.m. on
Tuesday, 18 June 2019 at 2 Eaton Gate, London, SW1W 9BJ.
This information is provided by RNS, the news service of the
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END
FR CKCDNFBKDQPK
(END) Dow Jones Newswires
May 10, 2019 02:00 ET (06:00 GMT)
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