RNS Number:6486C
Andrews Sykes Group PLC
26 April 2001
Andrews Sykes Group Preliminary Results
26 April 2001
Preliminary Results
Key Points
- EBITDA decreased from #27.2 m to #24.1m.
- Profit on ordinary activities before tax and exceptional items decreased
from #11.6 million to #10.3 million.
- Operating cashflow per share before exceptional items (diluted basis)
increased from 25.5p to 29.8p.
- Cash increased during period by #6.6m.
- Gearing (net debt as a proportion of equity funds) reduced from 98.6% to
55.3%.
- In excess of #2.5m spent on share buy-back programme to enhance
shareholder value.
52 weeks 53 weeks
ended ended
30 December 1 January
2000 2000
#'000 #'000
Turnover 86,869 94,673
EBITDA* 24,088 27,238
Profit on ordinary activities before tax and
exceptional items 10,283 11,588
Goodwill charges (10,217) (434)
Profit on ordinary activities before tax 500 7,998
Operating cash flow per share (diluted basis)** 29.8p 25.5p
Adjusted diluted earnings per share 7.81p 9.16p
Gearing 55.3% 98.6%
* Earnings before interest, taxation, depreciation, exceptional items and
goodwill charges.
** Operating cashflow before exceptional items.
CHAIRMAN'S STATEMENT
The period ended December 2000 proved to be a difficult one for parts of the
Group. The full effect of a poor trading year in plant hire and unfavourable
summer weather conditions have impacted heavily on the Group's overall trading
performance.
The ongoing downward pressure on UK general plant hire prices continues to
impair the Group's ability to maintain turnover and gross profits at the
desired level in this business, with the trading of Cox Plant Limited seeing a
further decline in the second half of 2000. This follows the pattern of
trading experienced across this sector and is in line with other major
competitors in the UK general plant hire business. Consequently a further full
and detailed review of Cox Plant Limited has been carried out, which has led
the Board to reassess the value of the goodwill carried on the balance sheet.
It is the view of the Board that the remaining balance of goodwill of #3.8
million is no longer supportable and this has been written off in full. This
brings the total value of goodwill written off in the period in respect of Cox
Plant Limited to #6.8 million.
As outlined in last year's report we continue with our declared strategy to
restructure the Group to focus on UK specialist hire and rental activity,
where margins and potential profit growth are considered to be greatest.
Further to this aim, a full review of Refrigeration Compressor Remanufacturers
Limited, our subsidiary undertaking trading in the remanufacture of
compressors, indicated to the Board that it has seen a major decline in its
market place, with its margins in serious decline. As a result, the Board
believes the goodwill arising on the acquisition of this business can no
longer be supported, and the balance of #3.0 million has been written off in
the financial statements of the Group.
In line with my half year report, the Group has now completed the actions
required to close the operations in both Poland and Singapore. The closure
costs were not significant and have been fully absorbed in the reported
figures.
As I have already mentioned, the impact of the factors outlined above has been
significant and consequently Group turnover fell by 8.2% to #86.9 million,
gross profit before exceptional items reduced by 5.0% to #37.0 million and
operating profit before exceptional items fell by 11.5% to #12.7 million. The
Group, however, remains cash generative, showing a year on year increase of #
6.6 million and gearing, being net debt as a proportion of equity funds,
reduced from 98.6% to 55.3%.
It remains the Board's belief that optimisation of shareholder value will best
be served by continuing the current share buy-back programme and the Board
will request at the next Annual General Meeting that shareholders vote in
favour of a resolution to give authority to purchase up to 12.5% (increase
from 10% authorised at the previous Annual General Meeting) of the ordinary
shares in issue. At such time that the Board considers the interests of
shareholders will best be served by the payment of dividends, the dividend
policy will be resumed.
Progress to date on the share buyback programme has resulted in 4,556,428
shares being repurchased in the period up to 30 December 2000 at a total cost
of #2,550,805 with a further 2,925,000 shares repurchased in January and
February 2001 at a cost of #2,278,838.
Overall the Group has seen a difficult year of change with emphasis being
directed increasingly towards the UK core business streams and, in particular,
towards strengthening the Group's market position in all areas where we lead
the market. In order to achieve this Robert Stevens, the Chief Executive, has
directed attention throughout the year to reshaping the Group, in line with
our desire to move further towards providing added value services which build
on the Group's solid base of rental and hire. He and his management team will
continue to focus on growing our core hire and rental portfolio of businesses
in the UK, whist retaining our presence in Holland and UAE where we also have
market leadership operating in similar products and services.
We are already seeing the benefit of these developments, with trading in the
first quarter of 2001 demonstrating growth over 2000 in the core UK Andrews
Sykes business. However Cox Plant continues to experience difficulties in
trading levels. Overall the group is modestly ahead of last year.
J G Murray
Chairman
25 April 2001
Andrews Sykes Group plc
Consolidated profit and loss account
For the 52 weeks ended 30 December 2000
Continuing Continuing
52 weeks ended 30 December 2000 53 weeks ended 1 January 2000
--------------------------------------------------------------
Before Before
Exceptional Exceptional Total Exceptional Exceptional Total
Items Items Items Items
#'000 #'000 #'000 #'000 #'000 #'000
Turnover 86,869 0 86,869 94,673 0 94,673
Cost of sales -49,904 -9,783 -59,687 -55,761 -418 -56,179
---------- ----------- -------- ---------- ---------- --------
Gross profit 36,965 -9,783 27,182 38,912 -418 38,494
Distribution -6,045 0 -6,045 -6,603 0 -6,603
costs
Administrative -18,292 0 -18,292 -18,119 -2,217 -20,336
expenses
Other operating 35 0 35 120 0 120
income
---------- ----------- -------- --------- ----------
--------Operating profit 12,663 -9,783 2,880 14,310 -2,635
11,675
---------- ----------- -------- --------- ----------
--------EBITDA* 24,088 0 24,088 27,238 0
27,238
Depreciation and -10,991 0 -10,991 -12,494 0 -12,494
asset disposals
---------- ----------- -------- --------- ----------
--------Operating profit
before
exceptional items
and goodwill 13,097 0 13,097 14,744 0 14,744
charges
Exceptional items 0 0 0 0 -2,635 -2,635
Goodwill charges -434 -9,783 -10,217 -434 0 -434
---------- ----------- -------- -------- ----------
--------Operating profit 12,663 -9,783 2,880 14,310 -2,635
11,675
---------- ----------- -------- -------- ----------
--------Income from other 0 0 0 135 0
135
participating
interests
Loss on the
termination of
overseas
Operations 0 0 0 0 -955 -955
Net interest -2,380 0 -2,380 -2,857 0 -2,857
payable
---------- ----------- -------- -------- ----------
--------Profit/ (loss) on
ordinary
activities before
Taxation 10,283 -9,783 500 11,588 -3,590 7,998
Tax on profit on -3,635 0 -3,635 -3,511 837 -2,674
ordinary
activities
---------- ----------- -------- -------- ----------
--------(Loss)/ profit on
ordinary
activities after
Taxation being
(loss)/ 6,648 -9,783 -3,135 8,077 -2,753 5,324
profit for the financial
period
---------- ----------- -------- --------
Dividends paid
and proposed:
Equity 0 -1,326
shares
Non equity 0 -220
shares
Retained (loss) / -------
---------profit for the
financial
Period -3,135 3,778
attributable to
ordinary
shareholders
===== =====
Basic (loss) / -3.48p 5.97p
earnings per
ordinary share
Diluted (loss) / -3.48p 5.73p
earnings per
share
Add back: Goodwill 11.27p 0.47p
charges
Exceptional items 0.00p 2.96p
Negative dilutive
effect of share 0.02p 0.00p
options
Adjusted diluted 7.81p 9.16p
earnings per
share
===== =====
Dividends per
share:
Equity shares 0.00p 1.44p
Non equity shares 0.00p 3.50p
There were no material acquisitions or discontinued operations during either
period.
* Earnings before interest, taxation, depreciation, and amortisation excluding
exceptional items.
Andrews Sykes Group plc
Consolidated Balance Sheet
at 30 December 2000
30 December 1 January
2000 2000
#'000 #'000
Fixed assets
Intangible assets: Goodwill 172 7,418
Tangible fixed assets 29,775 35,164
Investments 688 622
---------------- -----------------
30,635 43,204
Current assets ---------------- -----------------
Stocks 5,758 7,829
Overseas tax 174 37
Other debtors 20,941 24,883
Cash at bank and in hand 10,423 3,764
--------------- -----------------
37,296 36,513
---------------
-----------------Creditors: Amounts falling due within
one year
Loans overdrafts and finance lease -20,213 -7,800
obligations
Other creditors -12,422 -14,836
Corporation and overseas tax -2,384 -1,518
---------------- -----------------
-35,019 -24,154
---------------- -----------------
Net current assets 2,277 12,359
---------------- -----------------
Total assets less current liabilities 32,912 55,563
Creditors: Amounts falling due after
more than one year
Loans and finance lease obligations -5,000 -24,812
Provisions for liabilities and charges -1,160 -1,493
---------------- ----------------
Net assets 26,752 29,258
---------------- -----------------
Capital and reserves
Called up share capital 17,593 18,443
Share premium account 10,406 10,394
Revaluation reserve 767 773
Other reserves 1,202 280
Profit and loss account -3,226 -642
---------------- -----------------
Equity shareholders' funds 26,742 29,248
Minority interests (equity) 10 10
---------------- -----------------
26,752 29,258
---------------- -----------------
Analysis of net debt
Cash at bank and in hand 10,423 3,764
Total loans, overdrafts and finance -25,213 -32,612
lease obligations
---------------- -----------------
Net debt -14,790 -28,848
---------------- -----------------
As a percentage of equity shareholders' 55.3% 98.6%
funds
Andrews Sykes Group plc
Consolidated cash flow statement
For the 52 weeks ended 30 December 2000
52 weeks 53 weeks
ended ended
30 December 1 January
2000 2000
#'000 #'000
Net cash inflow from operating activities 27,018 19,469
-------------- ---------------
Returns on investments and servicing of
finance
Net interest paid -2,145 -3,222
Preference dividends paid 0 -257
-------------- ---------------
Net cash outflow for returns on investments -2,145 -3,479
and servicing of finance
--------------
---------------Cash outflow for taxation -2,931
-4,408
-------------- ---------------
Capital expenditure
Purchase of own shares by ESOP -151 -458
Purchase of tangible fixed assets -7,303 -4,677
Sale of tangible fixed assets 1,966 1,175
-------------- ---------------
Net cash outflow for capital expenditure -5,488 -3,960
-------------- ---------------
Acquisitions
Payment of deferred consideration on 0 -6,500
previous acquisitions
--------------
---------------Net cash outflow for acquisitions 0
-6,500
--------------
---------------Equity dividends paid 0
-3,297
--------------
---------------Cash inflow / (outflow) before the use of
liquid resources
and financing 16,454 -2,175
--------------
---------------Management of liquid resources
Movement in bank deposits -90 575
--------------
---------------Financing
Issue of ordinary share capital net of 73 932
issue costs
Loan repayments -7,273 -9,303
New loans drawn down 0 4,400
New hire purchase and finance lease 0 36
agreements
Capital element of finance lease repayments -126 -176
Purchase of own shares -2,551 -16
--------------
---------------Net cash outflow from financing -9,877
-4,127
--------------
---------------Increase / (decrease) in cash in the period 6,487
-5,727
-------------- ---------------
Andrews Sykes Group plc
Notes to the financial statements
For the 52 weeks ended 30 December 2000
1. Segmental analysis
The Group's turnover may be analysed between the following principal products
and activities:
52 weeks 53 weeks
ended ended
30 1 January
December
2000 2000
#'000 #'000
Product Group:
Pumps 19,387 22,375
Heating and ventilation 12,836 9,130
Air conditioning 22,904 21,578
General plant and accommodation 28,589 31,306
Other 3,153 10,284
--------
----------Total 86,869
94,673
---------
----------Activity:
Hire 58,018 59,766
Sales 15,837 19,825
Installation 13,014 15,082
---------
----------Total 86,869
94,673
---------
----------The Integrated nature of the Group's operations does
not permit a meaningful analysis of net assets by the
above product groups or activities.
The results can be further analysed by class of
business as follows :
Turnover Profit Profit / Net
before (loss) assets
Exceptionals Exceptionals Before
& goodwill & goodwill Interest
Amortisation amortisation And tax
#'000 #'000 #'000 #'000 #'000
52 weeks ended 30 December
2000:
Pumps, heating, 58,280 11,997 -2,985 9,012 22,420
ventilation, air
conditioning and other
General plant and 28,589 1,100 -7,232 -6,132 4,332
accommodation
-------- ------------ ------------ -------- ---------
86,869 13,097 -10,217 2,880 26,752
-------- ------------ ----------- ---------
---------53 weeks ended 1 January
2000:
Pumps, heating, 63,367 12,018 -3,604 8,414 17,472
ventilation, air
conditioning and other
General Plant and 31,306 2,861 -420 2,441 11,786
accommodation
-------- ------------ ------------ -------- ---------
94,673 14,879 -4,024 10,855 29,258
-------- ------------ ------------ --------
---------The geographical analysis of the
Group's turnover was as follows:
By geographical origin By geographical
destination
52 weeks 53 weeks 52 weeks 53 weeks
ended ended ended ended
30 December 1 January 30 December 1 January
2000 2000 2000 2000
#'000 #'000 #'000 #'000
United Kingdom 82,203 86,907 80,865 85,274
Rest of Europe 1,849 2,678 2,575 3,503
Middle East and Africa 2,532 3,490 2,865 4,197
The Americas 0 639 281 661
Rest of World 285 959 283 1,038
---------- ---------- --------- ------------
86,869 94,673 86,869 94,673
---------- ---------- --------- ------------
Andrews Sykes Group plc
Notes to the financial statements
For the 52 weeks ended 30 December 2000
The analysis of profit before interest and tax and net assets
by geographical origin was as follows:
Profit before interest Net Net
and tax assets assets
52 weeks 53 weeks 52 weeks 53 weeks
ended ended ended ended
30 December 1 January 30 1
December January
2000 2000 2000 2000
#'000 #'000 #'000 #'000
United Kingdom 2,813 10,586 35,360 51,224
Rest of Europe 240 738 5,171 5,499
Middle East and Africa 213 97 1,541 1,388
The Americas 88 595 0 220
Rest of World 298 29 0 57
----------- ---------- -------- ---------
2,880 10,855 42,072 57,948
----------- ----------
Net debt 14,790 28,848
Taxation and dividends (payable) / 530 158
recoverable
------- ----------
26,752 29,258
------- ----------
2. Exceptional items 52 weeks 53 weeks
ended ended
30 1
December January
2000 2000
#'000 #'000
Goodwill impairment (note 3) 9,783 0
SFP contractual settlement costs 0 1,440
Redundancy and reorganisation 0 1,014
Abortive acquisition costs 0 181
-------- ---------
9,783 2,635
Loss on the termination of overseas 0 955
operations
-------- ---------
9,783 3,590
-------- ---------
Under agreements entered into in 1989, Sterling Fluid Products Limited ("SFP")
manufactured Sykes Pumps for the Group. The agreements, which contained a
minimum annual purchase obligation, were terminated in 1995 and SFP claimed #
4.9 million in settlement plus additional interest and costs. The dispute was
settled out of court last year with a total payment due to SFP of #3 million.
The settlement gave rise to the above exceptional charge last year after
provisions made in previous periods and was inclusive of costs.
The loss on the termination of overseas operations arose following the decision
to withdraw from both America and Egypt last year.
Andrews Sykes Group plc
Notes to the financial statements
For the 52 weeks ended 30 December 2000
52 weeks 53 weeks
3. Amortisation of goodwill ended ended
30 December 1 January
2000 2000
#'000 #'000
Amortisation of goodwill attributable to Cox
Plant Limited:
Annual goodwill amortisation charge -420 -420
Charge arising from impairment review -6,812 0
-------------- --------------
-7,232 -420
Amortisation of goodwill attributable to -14 -14
other subsidiary undertakings
Pre FRS 10 goodwill:
Provision against goodwill previously -2,971 0
written off to reserves
-------------- --------------
-10,217 -434
============== ===========
During the period and in accordance with FRS 11: Impairment of fixed assets and
goodwill, the directors have performed an impairment review of the carrying
value of the goodwill attributable to Cox Plant Limited at 30 December 2000.
Having due regard to the results of Cox Plant Limited during the period and the
early part of 2001 the directors considered the cashflows for the business
discounted at a rate of 10%. Accordingly, full provision has been made against
the balance of goodwill as at 30 December 2000.
The directors consider that the goodwill arising on the acquisition of
Refrigeration Compressor Remanufacturers Limited has suffered a permanent
diminution in value and the value of the goodwill arising on acquisition of #
2,971,000, which was previously charged directly to reserves in accordance with
SSAP 22: Accounting for goodwill, can no longer be supported. The full amount
has been credited back to reserves and charged to the current period profit and
loss account in accordance with the Group's stated accounting policy.
4. Reconciliation of operating profit to net cash
inflow from operating activities
52 weeks 53 weeks
ended ended
30 December 1 January
2000 2000
#'000 #'000
Operating profit 2,880 11,675
Amortisation and impairment of goodwill 10,217 434
Depreciation 11,120 12,660
Provision against investments 85 0
Profit on sale of tangible fixed assets -129 -166
Decrease in stocks 2,071 1,563
Decrease / (increase) in debtors 3,760 -1,625
Decrease in creditors and provisions -2,986 -5,072
-------------- --------------
Net cash inflow from operating activities 27,018 19,469
-------------- --------------
Andrews Sykes Group plc
Notes to the financial statements
For the 52 weeks ended 30 December 2000
5. Reconciliation of net cash flow to
movement in net debt
52 weeks 53 weeks
ended ended
30 December 1 January
2000 2000
#'000 #'000
Increase / (decrease) in cash in the period 6,487 -5,727
Cash outflow from movement in debt and 7,399 5,043
lease financing
Cash outflow / (inflow) from movement in 90 -575
liquid resources
--------------
---------------Change in net debt resulting from cash 13,976
-1,259
flows
Loan notes issued 0 -600
Translation differences 82 -105
-------------- ---------------
Movement in period 14,058 -1,964
Opening net debt -28,848 -26,884
--------------
---------------Closing net debt -14,790
-28,848
--------------
---------------6. Consolidated statement of total
recognised gains and losses
52 weeks 53 weeks
ended ended
30 December 1 January
2000 2000
#'000 #'000
(Loss) / profit for the financial period -3,135 5,324
Currency translation differences on foreign 136 -97
currency net investments
-------------
---------------Total gains and losses in the period -2,999
5,227
------------- ---------------
7. Reconciliation of movement in Group
shareholders' funds 52 weeks 53 weeks
ended ended
30 December 1 January
2000 2000
#'000 #'000
(Loss) / profit for the financial period -3,135 5,324
Dividends 0 -1,546
Other recognised gains and losses 136 -97
Proceeds from ordinary shares issued 73 932
Consideration on the purchase of own shares -2,551 -16
Goodwill previously written off to reserves 2,971 0
expensed in the year
-------------- ---------------
Net (decrease) / increase in shareholders' -2,506 4,597
funds
Shareholders' funds at the beginning of the 29,248 24,651
period
---------------
--------------Shareholders' funds at the end of the 26,742
29,248
period
---------------------- -------
Andrews Sykes Group plc
Notes to the financial statements
For the 52 weeks ended 30 December 2000
8. Earnings per ordinary share.
The basic figures have been calculated by reference to the weighted average
number of ordinary 20 pence shares in issue during the period of 90,156,589 (53
weeks ended 1 January 2000: 85,496,779).
The calculation of the diluted earnings per ordinary share is based on a diluted
loss of #3,135,000 (53 weeks ended 1 January 2000: profit of #5,324,000) and on
90,690,403 (53 weeks ended 1 January 2000: 92,975,902) ordinary shares. The
share options have a negative dilutive effect for the period ended 30 December
2000 calculated as follows:
52 weeks ended 53 weeks ended
30 December 2000 1 January 2000
Losses Number Earnings Number
of of
#000 shares #000 shares
Basic (loss) / earnings /
weighted average number of
Shares -3,135 90,156,589 5,104 85,496,779
Weighted average number of 0 995,000 0 4,131,898
shares under option
Number of shares that would
have been issued at
fair value 0 -461,186 0 -2,144,280
Dividend saving / weighted
average number of ordinary
shares arising from the
conversion of
the preference shares 0 0 220 5,491,505
Diluted (loss) / earnings / -------- ---------- ----- ----------
weighted average number
of shares -3,135 90,690,403 5,324 92,975,902
-------- ---------- ----- ---------
Diluted (loss) / earnings per -3.46p 5.73p
ordinary share (pence)
---------- ---------
The adjusted diluted earnings per share excluding goodwill amortisation and
exceptional items is based upon the weighted average number of ordinary shares
as set out in the table above. The earnings can be reconciled to the diluted
earnings as follows:
52 weeks 53 weeks
ended Ended
30 December 1 January
2000 2000
#'000 #'000
Diluted (losses) / earnings -3,135 5,324
Goodwill charges 10,217 434
Net exceptional charges 0 2,753
-------------- --------------
Adjusted diluted earnings 7,082 8,511
-------------- --------------
Adjusted diluted earnings per share (pence) 7.81p 9.16p
-------------- --------------
The above figures have been disclosed to demonstrate maintainable earnings.
Andrews Sykes Group plc
Notes to the financial statements
For the 52 weeks ended 30 December 2000
9. Basis of preparation
Cox Plant Limited is a significant subsidiary of Andrews Sykes Group plc and
the financial statements of that company have been prepared and consolidated
into the financial statements of Andrews Sykes Group on a going concern basis.
Cox Plant Limited has credit facilities which are non-recourse to the rest of
the Group and are only secured on the assets of Cox Plant Limited and
Accommodation Hire Limited. These are made available to Cox Plant Limited
subject to that company meeting a number of performance criteria. During the
period ended 30 December 2000 certain of these criteria were not achieved and
hence the company is technically in breach of its covenants and the loans of #
19,750,000 are repayable on demand and have therefore been reclassified as
falling due within one year. Whilst the bank has formally waived the breach of
covenants in respect of the period and has indicated in discussions with Group
management that it does not intend to demand repayment of any of the
borrowings, formal confirmation of the ongoing availability of facilities and
revised performance criteria have yet to be issued for the next 12 months. The
bank has indicated that it intends to confirm facilities and criteria
following receipt of the results for the first quarter of 2001 and
confirmation is therefore not available at the date of approval of the
financial statements of the Group. Based on the cash flow projections of Cox
Plant Limited that are currently available the directors consider that the
company will be able to meet the loan repayments as they fall due together
with all normal operating expenses to be incurred over the next 12 months from
the date of approval of the financial statements of the Group.
Accordingly the financial statements of the Group have been prepared on a
going concern basis and do not include any adjustments to the assets and
liabilities of Cox Plant Limited that are consolidated into these financial
statements and that would result if the facilities were withdrawn from Cox
Plant Limited. Such adjustments would include revision of the carrying values
of balance sheet assets, the requirement for further provision for additional
liabilities that may arise and balance sheet reclassifications for fixed
assets.
10. The above financial information has been extracted from the Company's
financial statements for the 52 weeks ended 30 December 2000 and the 53 weeks
ended 1 January 2000. The financial statements for the 53 weeks ended 1
January 2000 have been filed and those for the 52 weeks ended 30 December 2000
will be filed with the Registrar of Companies. The Company's auditors gave
unqualified reports on the accounts for both these periods and the reports did
not contain a statement under section 237 (2) or (3) of the Companies Act
1985.
11. Copies of the Annual Report and Financial Statements will be circulated to
shareholders shortly and will be available from the Registered office of the
Company; Premier House, Darlington Street, Wolverhampton, WV1 4JJ
12. The Company's Annual General Meeting will be held at 10.30 a.m. on 14 June
2001 at The Grosvenor House Hotel, Park Lane, London, W1A 3AA
For further information please contact:
Robert Stevens (Chief Executive) Telephone 01483 505 551
Andrews Sykes Group plc
Issued by:
John Goold
Weber Shandwick Worldwide Telephone 020 7329 0096
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