RNS Number:6354E
Andrews Sykes Group PLC
27 September 2007
Andrews Sykes Group plc
Interim Financial Statements
30 June 2007
Overview and financial highlights
I am pleased to be able to report that, despite unfavourable weather conditions,
the underlying Group trading profit has been maintained at a similar level
compared with the same period in 2006. This is due to our continuing cost
control and diversification strategies which ensure that satisfactory results
can be achieved even in the face of less than ideal trading conditions.
The financial highlights of this period compared with the first half of 2006 are
as follows:
2007 2006
#'000 #'000
Revenue 27,185 27,609
Trading profit before pension curtailment 5,665 5,442
charge
EBITDI* 6,635 7,211
Profit for the financial 2,857 3,340
period
Adjusted basic earnings per share from 7.88 7.50
continuing operations excluding pension pence pence
curtailment charge
Basic earnings per share from continuing 6.41 7.50
operations pence pence
Net cash inflow from operating 3,414 3,691
activities
* Earnings Before Interest, Taxation, Depreciation and Impairment provisions as
reconciled on the face of the income statement.
Operations review
Continued close and detailed operational, marketing and financial management
have delivered a very good result in the face of unhelpful climate conditions.
We regard good customer relations as key to maintaining and developing market
share in highly competitive markets. Thus the much lower temperatures in the UK
in the early summer compared with 2006, though reducing our comfort air
conditioning revenues, have not had a proportionate effect on our market share
which has held up in difficult times.
We have also started, very cautiously, using our group expertise and resources
to open new depots in Holland and Belgium as well as a company specialising in
air conditioning in Florida, USA. Initial results from these start ups are
encouraging.
Pension curtailment offer
During the financial period an offer was made to all deferred members of our
defined benefit pension scheme giving them the opportunity to transfer their
accrued pension rights to an alternative pension scheme provider. Whilst it will
take several months for this offer to be finalised, the anticipated financial
effects have been reflected in these interim financial statements.
In summary it is expected that the cash cost to the group will be approximately
#4.6 million, of which #0.1 million had been paid by the period end, and this
will be financed primarily by new bank borrowings. It is anticipated that the
offer will result in a reduction in the pension scheme deficit of approximately
#3.7 million and a charge to the income statement of #0.9 million.
Prospects
The continuation of unfavourable weather conditions in the UK and Northern
Europe has resulted in air conditioning revenues below those of the remarkable
summer of 2006. We have however held onto our market share but lower
temperatures have impacted on the opening months of the second half. Fortunately
the pump division continues to perform well, ahead of both last year and our
expectations.
Nevertheless, overall, I am confident that I will still be able to report a
reasonable result for the second half of 2007.
JG Murray
Chairman
27 September 2007
Andrews Sykes Group plc
Consolidated Income Statement
For the 26 weeks ended 30 June 2007 (unaudited)
26 weeks 26 weeks 52 weeks
ended ended ended
30 June 1 July 31 December
2007 2006 2006
#'000 #'000 #'000
Continuing operations
Revenue 27,185 27,609 59,768
Cost of sales -12,696 -13,434 -26,918
Gross profit 14,489 14,175 32,850
Distribution costs -4,250 -4,433 -9,471
Administrative expenses -4,574 -4,300 -8,107
Trading profit before pension curtailment charge 5,665 5,442 15,272
Pension curtailment charge (see note 5) -934 - -
Operating profit 4,731 5,442 15,272
EBITDI* 6,635 7,211 18,887
Depreciation and impairment losses -2,255 -2,012 -4,153
Profit on the sale of property, plant and 351 243 538
equipment
Operating profit 4,731 5,442 15,272
Finance income 1,480 1,197 2,277
Finance costs -1,910 -1,855 -3,549
Profit before taxation 4,301 4,784 14,000
Taxation -1,444 -1,444 -4,150
Profit for the period from continuing operations 2,857 3,340 9,850
Discontinued operations
Loss for the period from discontinued operations - - -142
Profit for the financial period 2,857 3,340 9,708
Earnings per share from continuing operations
Basic (pence) 6.41p 7.50p 22.11p
Diluted (pence) 6.41p 7.49p 22.10p
Earnings per share from total operations
Basic (pence) 6.41p 7.50p 21.79p
Diluted (pence) 6.41p 7.49p 21.79p
* Earnings Before Interest,
Taxation, Depreciation and
Impairment provisions
Andrews Sykes Group plc
Consolidated Balance Sheet
As at 30 June 2007 (unaudited)
30 June 2007 1 July 2006 31 December
2006
#'000 #'000 #'000
Non-current assets
Property, plant and equipment 15,340 13,205 15,201
Goodwill - 31 31
Lease prepayments 224 234 229
Trade investments 164 164 164
Deferred tax asset 2,361 3,223 3,201
Derivative financial instruments 161 - 23
18,250 16,857 18,849
Current assets
Stocks 5,830 4,475 4,336
Trade and other receivables 15,318 14,528 16,217
Cash and cash equivalents 11,908 11,435 10,190
Assets held for sale - 188 -
33,056 30,626 30,743
Current liabilities
Trade and other payables -14,436 -8,560 -10,108
Current tax liabilities -1,343 -2,133 -2,292
Bank loans -5,000 -5,000 -5,000
Obligations under finance leases -233 -233 -233
Provisions -15 -495 -24
-21,027 -16,421 -17,657
Net current assets 12,029 14,205 13,086
Total assets less current liabilities 30,279 31,062 31,935
Non-current liabilities
Bank loans -20,000 -25,000 -20,000
Obligations under finance leases -1,078 -1,214 -1,147
Retirement benefit obligations -2,190 -5,633 -6,577
-23,268 -31,847 -27,724
Net assets / (liabilities) 7,011 -785 4,211
Equity
Share capital 446 446 446
Retained earnings 6,701 -1,366 3,854
Translation reserve -368 -97 -321
Other reserves 222 222 222
Surplus / (deficit) attributable to the parent's 7,001 -795 4,201
shareholders
Minority interest 10 10 10
Total equity 7,011 -785 4,211
Andrews Sykes Group plc
Consolidated Cash Flow Statement
For the 26 weeks ended 30 June 2007 (unaudited)
26 weeks 26 weeks 52 weeks
ended ended ended
30 June 1 July 31 December
2007 2006 2006
#'000 #'000 #'000
Cash flows from operating activities
Cash generated from operations 5,259 5,356 15,935
Interest paid -211 -877 -1,591
Net UK Corporation tax paid -1,352 -600 -2,465
Withholding tax paid -69 -52 -52
Overseas tax paid -213 -136 -290
Net cash flow from operating 3,414 3,691 11,537
activities
Investing activities
Disposal costs paid less consideration received 295 -138 -183
on prior year disposals
Sale of property, plant and equipment 389 342 526
Purchase of property, plant & equipment -2,408 -2,804 -7,067
Interest received 136 164 476
Net cash flow from investing activities -1,588 -2,436 -6,248
Financing activities
Loan repayments - - -5,000
Finance lease capital repayments -69 -64 -131
Purchase of own shares - -16 -16
Sale of own shares by ESOP - 4 4
Net cash flow from financing activities -69 -76 -5,143
Net increase in cash and cash equivalents 1,757 1,179 146
Cash and cash equivalents at beginning of period 10,190 10,342 10,342
Effect of foreign exchange rate changes -39 -86 -298
Cash and cash equivalents at end of period 11,908 11,435 10,190
Reconciliation of net cash flow to movement in net debt in the period
Net increase in cash and cash equivalents 1,757 1,179 146
Cash outflow from the decrease in debt 69 64 5,131
Non cash movements in the fair value of 138 - 23
derivatives
Movement in net debt during the period 1,964 1,243 5,300
Opening net debt at the beginning of period -16,167 -21,169 -21,169
Effect of foreign exchange rate changes -39 -86 -298
Closing net debt at the end of period -14,242 -20,012 -16,167
Andrews Sykes Group plc
Consolidated Statement of Recognised Income and Expense
For the 26 weeks ended 30 June 2007 (unaudited)
26 weeks 26 weeks 52 weeks
ended ended ended
30 June 1 July 31 December
2007 2006 2006
#'000 #'000 #'000
Actual return less expected return on pension - - 636
scheme assets
Experience gains and losses arising on plan - - -340
obligation
Changes in demographic and financial assumptions
underlying the present value of - - -1,937
plan obligations
Currency translation differences on foreign -46 -97 -321
currency net investments
Deferred tax on items posted directly to equity -11 - 493
Net income recognised directly in equity -57 -97 -1,469
Profit for the period attributable to equity 2,857 3,340 9,708
shareholders
Total recognised income and expense for the
period attributable to equity shareholders 2,800 3,243 8,239
Andrews Sykes Group plc
Notes to the consolidated financial statements
For the 26 weeks ended 30 June 2007
(unaudited)
1. General information
Basis of preparation
These interim financial statements have been prepared in accordance with
International Accounting Standards (IAS) and International Financial Reporting
Standards (IFRS) as adopted by the European Union and with the Companies Act
1985. It complies with the requirements of IAS 34 - Interim Financial Reporting.
The information for the 52 weeks ended 31 December 2006 does not constitute the
Group's statutory accounts for 2006 as defined in Section 240 of the Companies
Act 1985. Statutory accounts for 2006 have been delivered to the Registrar of
Companies. The Auditors' report on those accounts was unqualified and did not
contain statements under Section 237(2) or (3) of the Companies Act 1985. These
interim Financial Statements, which were approved by the Board of Directors on
26 September 2007, have not been audited or reviewed by the Auditors.
These interim financial statements have been prepared using the historical cost
basis of accounting except for:
i) Properties held at the date of transition to IFRS which are stated at deemed
cost;
ii) Assets held for sale which are stated at the lower of fair value less
anticipated disposal costs and carrying value and
iii) Derivative financial instruments (including embedded derivatives) which are
valued at fair value.
Functional and presentational currency
The financial statements are presented in pounds sterling because that is the
functional currency of the primary economic environment in which the group
operates.
First time adoption of International Financial Reporting Standards
This is the Group's first interim statement that has been prepared in accordance
with IFRS. The Group's transition date for adoption of IFRS is 1 January 2006.
An explanation of how the transition to IFRS has affected the Group's financial
position at the date of transition, 1 July 2006 (the date of the last interim
report prepared in accordance with UK GAAP) and 31 December 2006 (the last
reporting date under UK GAAP) together with a reconciliation of the results for
the 26 weeks ended 1 July 2006 and 52 weeks ended 31 December 2006 under UK GAAP
to IFRS are given in note 11.
The Group has revised its accounting policies where applicable to conform with
IFRS and the significant policies having an effect on the interim statement are
set out below. These policies have been applied consistently to all the periods
presented across all group companies and in preparing the opening balance sheet
as at 1 January 2006 for the purpose of transition to IFRS.
The Group has taken advantage of the following exemptions on transition to IFRS
as permitted by paragraph 13 of IFRS 1:
* The requirements of IFRS 3 - Business Combinations - have not been applied
to business combinations that occurred before the date of transition to
IFRS.
* The carrying values of freehold and leasehold properties are based on
previously adopted UK GAAP valuations and these are now taken as deemed
cost on transition to IFRS.
2. Significant accounting policies
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up to
30 June 2007. Control is achieved where the Company has the power to govern the
financial and operating policies of an investee so as to obtain benefits from
its activities.
Minority interests in the net assets of consolidated subsidiaries are identified
separately from the Group's equity therein. Minority interests consist of the
amount of those interests at the date of the original business combination (see
below) and the minority's share of changes in equity since the date of the
combination. Losses applicable to the minority in excess of the minority's
interest in the subsidiary's equity are allocated against the interests of the
Group except to the extent that the minority has a binding obligation and is
able to make an additional investment to cover the losses.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Business combinations and goodwill
Goodwill arising on consolidation represents the excess of consideration over
the group's interest in the fair value of assets acquired. Goodwill is
recognised as an asset and is not amortised. It is reviewed for impairment at
each reporting date as detailed in "impairment of non-financial assets" below.
In accordance with the options that are available under IFRS 1, the Group has
elected not to apply IFRS 3 retrospectively to past business combinations that
occurred before the date of transition to IFRS. Accordingly goodwill amounting
to #37,206,000 that had previously been offset against reserves under UK GAAP
has not been recognised in the opening IFRS balance sheet.
Trade investments
The results of entities over which the Group is not in a position to be able to
exercise significant influence despite holding a significant shareholding are
not accounted for as associates and therefore are not equity accounted. These
companies are classified as trade investments and are carried at cost within
non-current assets as they are held as long term investments. Dividend income is
recognised in the income statement on a cash basis when received.
Property, plant and equipment
Property is carried at deemed cost at the date of transition to IFRS based on
the previous UK GAAP valuations adopted in 1998. Plant and equipment held at the
date of transition and subsequent additions to property, plant and equipment are
stated at purchase cost including directly attributable costs. The Group does
not have a revaluation policy.
Freehold land is not depreciated. Depreciation of other property, plant and
equipment is provided on a straight line basis using rates calculated to write
down the cost of each asset to its estimated residual value over its estimated
useful life as follows:
Property:
Freehold buildings and long leasehold property 2%
Short leasehold buildings Period of the
lease
Equipment for hire:
Heating, air conditioning and other environmental control 20%
equipment
Pumping equipment 10% to 33%
Accessories 33%
Motor vehicles 20% to 25%
Plant and machinery 7.5% to 33%
Fixtures and fittings 20%
Annual reviews are made of estimated useful lives and material residual values.
Leased assets
Lessor accounting
The group does not hold any assets for hire under finance leases.
Assets held for use under operating leases are recorded as hire fleet assets
within property, plant and equipment and are depreciated over their useful lives
to their estimated residual value.
Lessee accounting
Property leases are split into two elements, land and buildings and each
considered in isolation. The land element is always classified as an operating
lease and the building element is reviewed to determine if it is operating or
finance in nature. Initial rental payments in respect of operating leases are
included in current and non-current assets as appropriate and amortised to the
income statement over the period of the lease. Ongoing rental payments are
charged as an expense in the income statement on a straight line basis until the
date of the next rent review. Finance leases are capitalised and depreciated in
accordance with the accounting policy for property, plant and equipment.
As permitted by IFRS 1 at the date of transition to IFRS, the carrying value of
long leasehold properties are based on the previous UK GAAP valuations adopted
in 1998 and this has been taken as deemed cost.
Immaterial peppercorn rentals and ground rents in respect of all properties are
expensed to the profit and loss account on an accruals basis.
The group does not have any items of plant and equipment financed by finance
leases or similar hire purchase agreements.
Rental costs arising from operating leases are charged as an expense in the
income statement on a straight line basis over the period of the lease.
Non-current assets held for sale
Non-current assets and disposal groups are reclassified as assets held for sale
if their carrying value will be recovered through a sale transaction which is
highly probable to be completed within 12 months of the initial classification.
Assets held for sale are valued at the lower of carrying amount at the date of
initial classification and fair value less costs to sell.
Impairment of non-financial assets
Goodwill is tested annually for impairment, or more frequently if there are any
changes in circumstances or events that indicate that a potential impairment may
exist. Goodwill impairments cannot be reversed.
Property, plant and equipment are reviewed for indications of impairment when
events or changes in circumstances indicate that the carrying amount may not be
recovered. If there are indications then a test is performed on the asset
affected to assess its recoverable amount against carrying value.
An asset impaired is written down to the higher of value in use or its fair
value less costs to sell.
Deferred and current taxation
The charge for taxation is based on the taxable profit or loss for the period
and takes into account taxation deferred because of differences between the
treatment of certain items for taxation and for accounting purposes. Full
provision is made for the tax effects of these differences. Deferred tax is
provided on unremitted earnings from overseas subsidiaries where it is probable
that these earnings will be remitted to the UK in the foreseeable future.
Deferred tax is measured using tax rates that have been enacted, or
substantively enacted, by the year end balance sheet date. Deferred tax assets
and liabilities are not discounted.
The carrying amount of deferred tax assets is reviewed at each reporting balance
sheet date to ensure that it is probable that sufficient taxable profits will be
available to allow the asset to be recovered. Assets and liabilities, in respect
of both deferred and current tax, are only offset when there is a legally
enforceable right to offset and the assets and liabilities relate to taxes
levied by the same taxation authority.
Deferred and current tax are charged or credited in the income statement except
when they relate to items charged directly to equity in which case the
associated tax is also dealt with in equity.
Stocks
Stocks are valued at the lower cost of purchase and net realisable value. Cost
comprises actual purchase price and where applicable associated direct costs
incurred bringing the stock to its present location and condition. Net
realisable value is based on estimated selling price less further costs expected
to be incurred to completion and disposal. Provision is made for obsolete, slow
moving or defective items where appropriate.
Financial instruments
Financial assets and financial liabilities are recognised on the consolidated
balance sheet when the group becomes a party to the contractual provisions of
the instrument.
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the group after
deducting all of its liabilities.
Derivative financial instruments and hedge accounting
The Group's borrowings are subject to floating rates based on LIBOR plus a
margin of between 0.5% and 1.25%. The Group uses financial derivatives to cap
the term loan (#20 million at 30 June 2007) exposure to LIBOR to a maximum of
5.5% throughout its term.
The Group's policy is not to hedge its international assets with respect to
foreign currency balance sheet translation exposure, nor against foreign
currency transactions. The Group does not use financial instruments for
speculative purposes.
Derivatives embedded in other financial instruments or other host contracts are
treated as separate derivatives when their risks and characteristics are not
closely related to those of the host contracts.
Derivative financial instruments are initially measured at cost and are
remeasured at fair value at the balance sheet date. Changes in the fair value of
derivative financial instruments that are designated and are effective as hedges
of future cash flows are recognised directly in equity and the ineffective
portion is recognised immediately in the income statement. Changes in the fair
value of derivative financial instruments that do not qualify for hedge
accounting are recognised in the income statement as they arise.
Trade and other receivables
Trade and other receivables are measured at initial recognition at fair value
and are subsequently measured at amortised cost using the effective interest
rate method. Allowances for irrecoverable amounts, which are dealt with in the
income statement, are calculated based on the difference between the asset's
carrying amount and the present value of estimated future cash flows discounted
at the effective interest rate computed at initial recognition.
Cash and cash equivalents
Cash and cash equivalents includes cash-in-hand, cash-at-bank and short term
highly liquid investments that are readily convertible into known amounts of
cash within three months from the date of initial acquisition with an
insignificant risk of a change in value.
Trade and other payables
Trade and other payables are measured at initial recognition at fair value and
are subsequently measured at amortised cost using the effective interest rate
method.
Bank loans
Interest bearing bank loans are recorded at the proceeds received less capital
repayments made. Finance charges are accounted for on an accruals basis in the
profit and loss account using the effective interest rate method. They are
included within accruals to the extent that they are not settled in the period
in which they arise.
Provisions
Provisions are created where the group has a present obligation (legal or
constructive) as a result of a past event where it is probable that the group
will be required to settle that obligation. Provisions are measured at the
directors' best estimate of the expenditure required to settle the obligation at
the balance sheet date. Provisions are only discounted to present value where
the effect is material.
Defined benefit retirement benefit costs
The interest cost and the expected return on assets are included within finance
costs and finance income respectively within the income statement. Actuarial
gains and losses are recognised immediately in the consolidated Statement of
Recognised Income and Expense (SORIE).
The defined benefit scheme is funded with the assets of the scheme held
separately in trustee administered funds. Pension scheme assets are measured at
fair value and liabilities are measured on an actuarial basis using the
projected unit method and discounted at a rate equivalent to the current rate of
return on a high quality corporate bond of equivalent currency and term to the
scheme liabilities. Full actuarial valuations are obtained triennially and are
updated at each year end balance sheet date in accordance with IAS 19. The
assumptions used in the half year interim statements are normally consistent
with the previous year end unless the directors are aware of any significant
factors which would render these assumptions invalid.
Net defined benefit pension scheme deficits are presented separately on the
balance sheet within non-current liabilities before tax relief. The attributable
deferred tax asset is included within deferred tax and is subject to the
recognition criteria as set out in the accounting policy on deferred and current
taxation. Net defined benefit pension scheme surpluses are only recognised to
the extent of any refunds and reductions in future contributions to the scheme.
Net debt
Net debt is defined as cash and cash equivalents, bank and other loans including
finance lease obligations and derivative financial instruments stated at current
fair value.
Revenue recognition
Revenue
Revenue represents the fair value of the consideration received and receivable
for the hire, sale and installation of environmental control products after
deducting trade discounts and volume rebates. Revenue is recognised for sales on
despatch of goods and for short term hire items on a straight line basis over
the period of the hire. Installation revenue is recognised as the contract
progresses on the basis of work completed. Revenue excludes Value added Tax.
Investment and interest income
Dividend income is recognised in the income statement when the shareholder's
right to receive payment has been established.
Interest income from bank deposit accounts is accrued on a time basis calculated
by reference to the principal on deposit and the effective interest rate
applicable.
Foreign currencies
Transactions in foreign currencies are recorded at the rate of exchange at the
date of the transaction. Monetary assets and liabilities in foreign currencies
are translated into pounds sterling at the financial reporting period end rates.
The results of overseas subsidiary undertakings, associates and trade
investments are translated into pounds sterling at average rates for the period
unless exchange rates fluctuate significantly during that period in which case
exchange rates at the date of transactions are used. The closing balance sheets
are translated at the period end rates and the exchange differences arising are
transferred to the group's translation reserve as a separate component of equity
and are reported within the Statement of Other Recognised Income and Expense.
All other exchange differences are included within the Income Statement in the
period.
Operating profit
Operating profit is defined as the profit for the period from continuing
operations after all operating costs and income but before investment income,
income from other participating interests, finance income, finance costs, other
gains and losses and taxation. Operating profit is disclosed as a separate line
on the face of the income statement.
Finance costs
Finance costs are recognised in the income statement on an accruals basis in the
period in which they are incurred.
3 Revenue
An analysis of the Group's revenue is as follows:
26 weeks 26 weeks 52 weeks
ended ended ended
30 June 1 July 31 December
2007 2006 2006
#'000 #'000 #'000
Continuing operations
Hire 19,693 19,151 43,088
Sales 4,084 4,539 8,762
Installations 3,408 3,919 7,918
Group consolidated revenue from the sale of goods and services 27,185 27,609 59,768
Finance income 1,480 1,197 2,277
Gross consolidated revenue 28,665 28,806 62,045
4 Business and Geographical Segmental Analysis
Explanation
The Group operates in the United Kingdom, Northern Europe, the United Arab
Emirates and America providing the hire and sale of a range of
environmental control equipment. It also installs fixed air conditioning
equipment within the United Kingdom.
The directors consider that the nature of the risks and returns within the
hire and sales market are comparable across the geographical sectors within
which the group operates. However different risks and returns are faced by
the fixed air conditioning installation business.
The Group hires and sells similar equipment to the same market from its
depot network.
The integrated nature of this operation does not permit a meaningful
analysis of profit, assets or liabilities between hire and sales.
Principal business segment are therefore as follows:
The hire and sale of environmental control equipment - Hire & sales
The installation and maintenance of fixed air conditioning equipment - Fixed
installation UK Direct costs are allocated to each segment, central costs
are included in unallocated overheads and expenses.
Principal geographical segments are:
United Kingdom
Rest of Europe
Middle East and Africa
The Group was also previously involved in the hire and sale of accommodation
units and the sale of light engineering products in the UK. There were no
sales of these products in either the current or preceding financial
periods, the discontinued activities relate to adjustments made following
the disposal of these businesses (see note 6 ).
Segmental information about these businesses is presented below. Inter
segment sales are charged at arms length prices.
Business Segments
Income statement analysis Hire & Fixed Sub Eliminations Consolidated
26 weeks ended 30 June 2007 sales installation total results
#'000 #'000 #'000 #'000 #'000
Revenue
External sales 23,777 3,408 27,185 - 27,185
Inter-segment sales 42 7 49 -49 -
Total revenue 23,819 3,415 27,234 -49 27,185
Segment result 5,813 160 5,973 -7 5,966
Unallocated overheads and expenses -301
Pension curtailment charge -934
Operating profit 4,731
Finance income 1,480
Finance costs -1,910
Profit before taxation 4,301
Taxation -1,444
Profit for the financial period 2,857
Balance sheet information Hire & Fixed Sub Eliminations Consolidated
As at 30 June 2007 sales installation total results
#'000 #'000 #'000 #'000 #'000
Segment assets 44,614 3,293 47,907 -42 47,865
Trade investments 164
Deferred tax asset 2,361
Derivative financial instruments 161
Unallocated corporate assets 755
Consolidated total assets 51,306
Segment liabilities -12,670 -1,147 -13,817 42 -13,775
Current tax liabilities -1,343
Bank loans -25,000
Obligations under finance leases -1,311
Provisions -15
Pensions -2,190
Unallocated corporate liabilities -661
Consolidated total liabilities -44,295
Other information Hire & Fixed Sub Eliminations Consolidated
26 weeks ended 30 June 2007 sales installation total results
#'000 #'000 #'000 #'000 #'000
Capital additions 2,380 28 2,408 - 2,408
Depreciation 2,156 68 2,224 - 2,224
Income statement analysis Hire & Fixed Sub Eliminations Consolidated
26 weeks ended 1 July sales installation total results
2006
#'000 #'000 #'000 #'000 #'000
Revenue
External sales 23,690 3,919 27,609 - 27,609
Inter-segment sales 47 12 59 -59 -
Total revenue 23,737 3,931 27,668 -59 27,609
Segment result 5,811 149 5,960 -9 5,951
Unallocated overheads and expenses -509
Operating profit 5,442
Finance income 1,197
Finance costs -1,855
Profit before taxation 4,784
Taxation -1,444
Profit for the financial period 3,340
Balance sheet information Hire & Fixed Sub Eliminations Consolidated
As at 1 July 2006 sales installation total results
#'000 #'000 #'000 #'000 #'000
Segment assets 38,893 3,110 42,003 -23 41,980
Trade investments 164
Deferred tax asset 3,223
Assets held for sale 188
Unallocated corporate 1,928
assets
Consolidated total assets 47,483
Segment liabilities -7,052 -1,168 -8,220 23 -8,197
Current tax liabilities -2,133
Bank loans -30,000
Obligations under finance leases -1,447
Provisions -495
Pensions -5,633
Unallocated corporate liabilities -363
Consolidated total liabilities -48,268
Other information Hire & Fixed Sub Eliminations Consolidated
26 weeks ended 1 July sales installation total results
2006
#'000 #'000 #'000 #'000 #'000
Capital additions 2,800 5 2,805 - 2,805
Depreciation 1,922 90 2,012 - 2,012
Income statement analysis Hire & Fixed Sub Eliminations Consolidated
52 weeks ended 31 December 2006 sales installation total results
#'000 #'000 #'000 #'000 #'000
Revenue
External sales 51,850 7,918 59,768 - 59,768
Inter-segment sales 109 16 125 -125 -
Total revenue 51,959 7,934 59,893 -125 59,768
Segment result 15,862 269 16,131 -19 16,112
Unallocated overheads and expenses -840
Operating profit 15,272
Finance income 2,277
Finance costs -3,549
Profit before taxation 14,000
Taxation -4,150
Profit for the period from continuing operations 9,850
Post tax profit for the period from discontinued operations -142
Profit for the financial period after taxation and discontinued operations 9,708
Balance sheet information Hire & Fixed Sub Eliminations Consolidated
As at 31 December 2006 sales installation total results
#'000 #'000 #'000 #'000 #'000
Segment assets 41,591 3,543 45,134 -345 44,789
Trade investments 164
Deferred tax asset 3,201
Derivative financial instruments 23
Unallocated corporate 1,415
assets
Consolidated total assets 49,592
Segment liabilities -8,724 -1,586 -10,310 345 -9,965
Current tax liabilities -2,292
Bank loans -25,000
Obligations under finance leases -1,380
Provisions -24
Pensions -6,577
Unallocated corporate liabilities -143
Consolidated total liabilities -45,381
Other information Hire & Fixed Sub Eliminations Consolidated
52 weeks ended 31 December 2006 sales installation total results
#'000 #'000 #'000 #'000 #'000
Capital additions 7,060 7 7,067 - 7,067
Depreciation 3,984 169 4,153 - 4,153
Geographical segments
The geographical analysis of the Group's revenue was as
follows:
By origin By destination
26 weeks 26 weeks 52 weeks 26 weeks 26 weeks 52 weeks
ended ended ended ended ended ended
30 June 1 July 31 December 30 June 1 July 31 December
2007 2006 2006 2007 2006 2006
#'000 #'000 #'000 #'000 #'000 #'000
United Kingdom 22,761 22,487 50,254 21,987 22,137 49,070
Rest of Europe 2,095 3,131 5,435 2,854 3,180 6,240
Middle East and Africa 2,172 1,991 4,079 2,173 2,027 4,116
Rest of the world 157 - - 171 265 342
27,185 27,609 59,768 27,185 27,609 59,768
The carrying amount of segment assets and additions to property, plant and equipment analysed by the
geographical area in which the assets are located are as
follows:
Additions to property,
Segment assets plant and equipment
26 weeks 26 weeks 52 weeks 26 weeks 26 weeks 52 weeks
ended ended ended ended ended ended
30 June 1 July 31 December 30 June 1 July 31 December
2007 2006 2006 2007 2006 2006
#'000 #'000 #'000 #'000 #'000 #'000
United Kingdom 41,769 36,532 39,265 2,050 2,484 6,374
Rest of Europe 2,979 2,734 2,767 163 182 487
Middle East and Africa 2,876 2,714 2,757 111 139 206
Rest of the world 241 - - 84 - -
47,865 41,980 44,789 2,408 2,805 7,067
5 Pension curtailment charge 26 weeks 26 weeks 52 weeks
ended ended ended
30 June 1 July 31 December
2007 2006 2006
#'000 #'000 #'000
Pension curtailment -934 - -
charge
During the financial period an offer was made to all deferred members of the
Andrews Sykes Group Pension Scheme (a closed defined benefit scheme) to
transfer their accrued pension rights to an alternative pension scheme
provider of their choice. Independent Financial Advice was made available
free of charge to all deferred members. In summary the offer was to increase
each individual member's transfer value by 40% compared with the amount
that was then available from the scheme, this bonus could be paid either as
a cash payment direct to the member or as an enhanced transfer value to the
member's new pension scheme provider.
These interim financial statements include estimated reserves of the likely
cost of this offer, including legal expenses, employment costs and
curtailment settlement gains and losses. However as the process of
transferring the member's pension rights was still in progress when these
interim financial statements were prepared, the estimated liabilities will
be recalculated in the year end financial statements.
It is currently estimated that the net cash outflow as a result of this
offer will be approximately #4,582,000 of which #66,000 had been spent at
30 June 2007. The movement in the Retirement benefit obligation during the
period is as follows:
#'000
Liability at the beginning of the period before 6,577
deferred tax
Ordinary contributions paid during the period -750
Expected return on assets -1,050
Interest on liabilities 1,061
Anticipated effect of transfer value -3,648
offer
Liability at the end of the period before deferred 2,190
tax
In accordance with the Group's accounting policies, the actuarial
assumptions used to calculate the above obligation are those applied in the
last annual report and financial statements. These assumptions will be
reviewed in detail at the end of the financial year.
6 Discontinued activities 26 weeks 26 weeks 52 weeks
ended ended ended
30 June 1 July 31 December
2007 2006 2006
#'000 #'000 #'000
Adjustments directly related to prior period
disposals
Provisions for onerous lease - - 115
commitments
Profit adjustments in respect of the sale of subsidiary - - 27
undertakings
Loss for the period before taxation - - 142
Attributable tax charge - - -
Loss for the period from discontinued operations - - 142
During the 52 weeks ended 31 December 2005 the Group sold two subsidiary
undertakings, Accommodation Hire Limited and Engineering Appliances Limited
realising a combined profit on disposal of #6,564,000 under UK GAAP.
During the 52 weeks ended 31 December 2006 certain adjustments were made to
both the deferred consideration receivable and legal costs payable which
resulted in the net charge of #27,000 under UK GAAP last year.
The Group has various onerous property lease commitments inherited from the
Cox Plant business which was sold during 2002. During the previous financial
years the directors re-assessed the level of provisions required in
respect of these commitments and have accordingly adjusted the onerous lease
provision. This resulted in a charge to the income statement of #115,000
under UK GAAP during the 52 weeks ended 31 December 2005.
Cash flows attributable to the above discontinued activities have been
included within the following categories in the cash flow statement:
26 weeks 26 weeks 52 weeks
ended ended ended
30 June 1 July 31 December
2007 2006 2006
#'000 #'000 #'000
Investing activities 295 -138 -183
7 Earnings per share
Basic earnings per share
The basic figures have been calculated by reference to the weighted average
number of ordinary shares in issue, excluding those in the ESOP reserve, and
the earnings as set out below:
26 weeks to 30 June 2007
Continuing Total Number
earnings earnings of shares
#'000 #'000
Basic earnings/weighted average number of shares 2,857 2,857 44,552,715
Basic earnings per ordinary share 6.41p 6.41p
(pence)
26 weeks to 1 July 2006
Continuing Total Number
earnings earnings of shares
#'000 #'000
Basic earnings/weighted average number of shares 3,340 3,340 44,562,701
Basic earnings per ordinary share 7.50p 7.50p
(pence)
52 weeks to 31 December 2006
Continuing Total Number
earnings earnings of shares
#'000 #'000
Basic earnings/weighted average number of shares 9,850 9,708 44,557,701
Basic earnings per ordinary share 22.11p 21.79p
(pence)
Adjusted basic earnings per share excluding pension curtailment charge
The basic figures excluding the pension curtailment charge have been
calculated by reference to the weighted average number of ordinary shares
in issue, excluding those in the ESOP reserve, and the earnings as set out
below:
26 weeks to 30 June 2007
Continuing Total Number
earnings earnings of shares
#'000 #'000
Basic earnings/weighted average number of shares 2,857 2,857 44,552,715
Add back pension curtailment charge net of tax 654 654
Adjusted basic earnings/weighted average number of shares 3,511 3,511 44,552,715
Adjusted basic earnings per ordinary share (pence) excluding 7.88p 7.88p
pension curtailment charge
The pension curtailment charge has no impact on the calculation of the basic
earnings per ordinary share for either the 26 weeks ended 1 July 2006 or the
52 weeks ended 31 December 2006.
Diluted earnings per share
The calculation of the diluted earnings per ordinary share is based on the
profits and shares as set out in the tables below. The share options have a
dilutive effect for the period calculated as follows:
26 weeks to 30 June 2007
Continuing Total Number
earnings earnings of shares
#'000 #'000
Basic earnings/weighted average number of shares 2,857 2,857 44,552,715
Weighted average number of shares under option 15,000
Number of shares that would have been issued at
fair value -8,001
Earnings/ diluted weighted average number of 2,857 2,857 44,559,714
shares
Diluted earnings per ordinary share (pence) 6.41p 6.41p
26 weeks to 1 July 2006
Continuing Total Number
earnings earnings of shares
#'000 #'000
Basic earnings/weighted average number of shares 3,340 3,340 44,562,701
Weighted average number of shares under option 16,194
Number of shares that would have been issued at
fair value -13,369
Earnings/ diluted weighted average number of 3,340 3,340 44,565,526
shares
Diluted earnings per ordinary share (pence) 7.49p 7.49p
52 weeks to 31 December 2006
Continuing Total Number
earnings earnings of shares
#'000 #'000
Basic earnings/weighted average number of shares 9,850 9,708 44,557,701
Weighted average number of shares under option 15,603
Number of shares that would have been issued at
fair value -11,132
Earnings/ diluted weighted average number of 9,850 9,708 44,562,172
shares
Diluted earnings per ordinary share (pence) 22.10p 21.79p
Adjusted diluted earnings per share excluding pension curtailment charge
The calculation of the diluted earnings per ordinary share excluding the
pension curtailment charge is based on the profits and shares as set out in
the table below. The share options have a dilutive effect for the
period calculated as follows:
26 weeks to 30 June 2007
Continuing Total Number
earnings earnings of shares
#'000 #'000
Basic earnings/weighted average number of shares 2,857 2,857 44,552,715
Add back pension curtailment charge net of tax 654 654
Weighted average number of shares under option 15,000
Number of shares that would have been issued at
fair value -8,001
Adjusted earnings/ diluted weighted average number of shares 3,511 3,511 44,559,714
Adjusted diluted earnings per ordinary share (pence) excluding 7.88p 7.88p
pension curtailment charge
The pension curtailment charge has no impact on the calculation of the
diluted earnings per ordinary share for either the 26 weeks ended 1 July
2006 or the 52 weeks ended 31 December 2006.
8 Share capital
30 June 1 July 31 December
2007 2006 2006
#'000 #'000 #'000
Authorised:
1,398,170,943 ordinary shares of one pence each 13,982 13,982 13,982
Issued and fully paid:
44,552,865 ordinary shares of one pence each
(1 July 2006: 44,552,865, 31 December: 44,552,865 ordinary 446 446 446
shares of one pence each)
During the period the company did not buy back any shares for cancellation
(26 weeks ended 1 July 2006: 15,000 shares).
The company has one class of ordinary shares which carry no right to fixed
income.
At 30 June 2007 cash options to subscribe for ordinary shares under the
executive share option scheme were held as follows:
Number of one pence
Date of Grant Date normally exercisable Subscription ordinary shares
price per 30 June 1 July 30 December
share 2007 2006 2006
November 2001 November 2004 to October 89.5 pence 15,000 15,000 15,000
2011
No share options were granted, forfeited or expired during either the
current or previous financial periods.
No share options were exercised during the period.
(26 weeks ended 1 July 2006: 5,000 share options on 16 February 2006 when
the average share price was #1.115).
9 Cash generated from operations
26 weeks 26 weeks 52 weeks
ended ended ended
30 June 1 July 31 December
2007 2006 2006
#'000 #'000 #'000
Profit for the period attributable to equity 2,857 3,340 9,708
shareholders
Adjustments for:
Loss from discontinued operations - - 142
Taxation charge 1,444 1,444 4,150
Finance costs 1,910 1,855 3,549
Finance income -1,480 -1,197 -2,277
Profit on the sale of property, plant and -351 -243 -538
equipment
Depreciation and 2,224 2,012 4,153
amortisation
Impairment losses 31 - -
Excess of pension contributions compared with service cost -750 -750 -1,503
Cash generated from operations before movements in working 5,885 6,461 17,384
capital
(Increase) / decrease in stocks -1,493 57 196
Decrease / (increase) in trade and other 760 -1,247 -2,829
receivables
Increase in trade and other payables 116 59 1,544
(Decrease) / increase in provisions -9 26 -360
Cash generated from operations 5,259 5,356 15,935
10 Analysis of net debt
30 June 1 July 31 December
2007 2006 2006
#'000 #'000 #'000
Cash and cash equivalents per cash flow statement 11,908 11,435 10,190
Derivative financial instruments 161 - 23
Financial assets 161 - 23
Bank loans -25,000 -30,000 -25,000
Obligations under finance leases -1,311 -1,447 -1,380
Financial liabilities -26,311 -31,447 -26,380
Net debt -14,242 -20,012 -16,167
11 Explanation of transition to IFRS
This is the first period that the group has prepared its consolidated
financial statements under IFRS. The following disclosures are required in
the year of transition to explain the financial impact of adopting IFRS on
the group. The last financial statements under UK GAAP were for the 52 weeks
ended 31 December 2006 and the date of transition to IFRS was 1 January 2006.
Reconciliation of equity as at 1 January 2006 (date of transition to IFRS)
UK GAAP Reclas IFRS 1 IFRS 5 IAS 17 IAS 19 IAS 39 IFRS
sifi First time Non Leases Employee Fair value
cations adoption current benefits adjustments
assets
Note 1 Note 2 Note 3 Note 4 Note 5 Note 6
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Non-current assets
Goodwill 31 - - - - - - 31
Property, plant & 12,011 - - - 699 - - 12,710
equipment
Lease prepayments - - - - 239 - - 239
Trade investments 164 - - - - - - 164
Deferred tax asset - 2,672 - - 169 17 - 2,858
12,206 2,672 - - 1,107 17 - 16,002
Current assets
Stocks 4,532 - - - - - - 4,532
Trade and other 13,929 -772 - - 10 - - 13,167
receivables
Cash and cash 10,342 - - - - - - 10,342
equivalents
28,803 -772 - - 10 - - 28,041
Current liabilities
Trade and other -14,687 6,060 - - - - - -8,627
payables
Current tax - -1,060 - - - - - -1,060
liabilities
Bank loans - -5,000 - - - - - -5,000
Obligations under
finance leases - - - - -233 - - -233
Provisions - -469 - - - - - -469
-14,687 -469 - - -233 - - -15,389
Net current assets 14,116 -1,241 - - -223 - - 12,652
Total assets less 26,322 1,431 - - 884 17 - 28,654
current liabilities
Non-current
liabilities
Bank loans -25,000 - - - - - - -25,000
Obligations - - - - -1,278 - - -1,278
under finance
leases
Pension -4,434 -1,900 - - - -58 - -6,392
liabilities
Provisions -469 469 - - - - - -
-29,903 -1,431 - - -1,278 -58 - -32,670
Net liabilities -3,581 - - - -394 -41 - -4,016
Equity
Called-up share 446 - - - - - - 446
capital
ESOP reserve -6 - - - - - - -6
Retained earnings -4,994 - 741 - -394 -41 - -4,688
Revaluation reserve 741 - -741 - - - - -
Other reserves 222 - - - - - - 222
Deficit -3,591 - - - -394 -41 - -4,026
attributable
to equity holders
of the parent
Minority interest 10 - - - - - - 10
Total equity -3,581 - - - -394 -41 - -4,016
Reconciliation of equity as at 1 July 2006 (date of last UK GAAP Interim Statement)
UK GAAP Reclass- IFRS 1 IFRS 3 IAS 17 IAS 19 IFRS 5 IFRS
ifications First time Business Leases Employee Asset held
adoption combinations benefits for sale
Note 1 Note 2 Note 3 Note 4 Note 5 Note 7
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Non-current assets
Goodwill 24 - - 7 - - - 31
Property, plant & 12,741 - - - 652 - -188 13,205
equipment
Lease prepayments - - - - 234 - - 234
Trade investments 164 - - - - - - 164
Deferred tax asset - 3,041 - - 165 17 - 3,223
12,929 3,041 - 7 1,051 17 -188 16,857
Current assets
Stocks 4,475 - - - - - - 4,475
Trade and other 15,886 -1,368 - - 10 - - 14,528
receivables
Cash and cash 11,435 - - - - - - 11,435
equivalents
Assets held - - - - - - 188 188
for sale
31,796 -1,368 - - 10 - 188 30,626
Current liabilities
Trade and other -8,560 - - - - - - -8,560
payables
Current tax -2,133 - - - - - - -2,133
liabilities
Bank loans -5,000 - - - - - - -5,000
Obligations - - - -233 - - - -233
under finance
leases
Provisions - -495 - - - - - -495
-15,693 -495 - - -233 - - -16,421
Net current 16,103 -1,863 - - -223 - 188 14,205
assets
Total assets 29,032 1,178 - 7 828 17 - 31,062
less current
liabilities
Non-current
liabilities
Bank loans -25,000 -25,000
Obligations - -1,214 -1,214
under finance
leases
Pension -3,902 -1,673 -58 -5,633
liabilities
Provisions -495 495 -
-29,397 -1,178 - - -1,214 -58 - -31,847
Net assets -365 - - 7 -386 -41 - -785
Equity
Called-up share 446 446
capital
Retained earnings -1,776 92 738 7 -386 -41 -1,366
Translation reserve - -97 -97
Revaluation reserve 738 -738 -
Other reserves 217 5 222
Surplus -375 - - 7 -386 -41 - -795
attributable to
equity holders
of the parent
Minority interest 10 10
Total equity -365 - - 7 -386 -41 - -785
Reconciliation of equity as at 31 December 2006 (date of last UK GAAP Financial Statements)
UK GAAP Reclass- IFRS 1 IFRS 3 IAS 17 IAS 19 IAS 39 IFRS
ifications First time Business Leases Employee Fair value
adoption combinations benefits adjustments
Note 1 Note 2 Note 3 Note 4 Note 5 Note 6
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Non-current assets
Goodwill 17 - - 14 - - - 31
Property, plant & 14,599 - - - 602 - - 15,201
equipment
Lease prepayments - - - - 229 - - 229
Trade investments 164 - - - - - - 164
Deferred tax asset - 3,046 - - 162 - -7 3,201
Derivative financial - - - - - - 23 23
instruments
14,780 3,046 - 14 993 - 16 18,849
Current assets
Stocks 4,336 - - - - - - 4,336
Trade and other 17,280 -1,073 - - 10 - - 16,217
receivables
Cash and cash 10,190 - - - - - - 10,190
equivalents
31,806 -1,073 - - 10 - - 30,743
Current liabilities
Trade and other -17,400 7,292 - - - - - -10,108
payables
Current tax - -2,292 - - - - - -2,292
liabilities
Bank loans - -5,000 - - - - - -5,000
Obligations - - - - -233 - - -233
under finance
leases
Provisions - -24 - - - - - -24
-17,400 -24 - - -233 - - -17,657
- - - - - - - -
Net current 14,406 -1,097 - - -223 - - 13,086
assets
Total assets 29,186 1,949 - 14 770 - 16 31,935
less current
liabilities
Non-current
liabilities
Bank loans -20,000 - - - - - - -20,000
Obligations - - - - -1,147 - - -1,147
under finance
leases
Pension -4,604 -1,973 - - - - - -6,577
liabilities
Provisions -24 24 - - - - - -
-24,628 -1,949 - - -1,147 - - -27,724
Net assets 4,558 - - 14 -377 - 16 4,211
Equity
Called-up share 446 - - - - - - 446
capital
Retained earnings 3,153 312 736 14 -377 - 16 3,854
Translation - -321 - - - - - -321
reserve
Revaluation 736 - -736 - - - - -
reserve
Other reserves 213 9 - - - - - 222
Surplus 4,548 - - 14 -377 - 16 4,201
attributable to
equity holders
of the parent
Minority interest 10 - - - - - - 10
Total equity 4,558 - - 14 -377 - 16 4,211
Reconciliation of profit for the 26 weeks ended 1 July 2006
UK GAAP Reclass- IFRS 3 IAS 17 IAS 19 IAS 39 IFRS
ifications Business Leases Employee Fair value
combinations benefits adjustments
Note 1 Note 3 Note 4 Note 5 Note 6
#'000 #'000 #'000 #'000 #'000 #'000 #'000
Revenue 27,609 27,609
Cost of sales -13,441 - 7 - - - -13,434
Gross profit 14,168 - 7 - - - 14,175
Distribution costs -4,433 - - - - - -4,433
Administrative -4,372 - - 72 - - -4,300
expenses
Operating profit 5,363 - 7 72 - - 5,442
Finance income 282 - - - 915 - 1,197
Finance costs -880 - - -60 -915 - -1,855
Profit before taxation 4,765 - 7 12 - - 4,784
Taxation -1,440 - - -4 - - -1,444
Profit for the financial 3,325 - 7 8 - - 3,340
period
Reconciliation of profit for the 52 weeks ended 31 December 2006
UK GAAP Reclass- IFRS 3 IAS 17 IAS 19 IAS 39 IFRS
ifications Business Leases Employee Fair value
combinations benefits adjustments
Note 1 Note 3 Note 4 Note 5 Note 6
#'000 #'000 #'000 #'000 #'000 #'000 #'000
Revenue 59,768 - - - - - 59,768
Cost of sales -26,932 - 14 - - - -26,918
Gross profit 32,836 - 14 - - - 32,850
Distribution costs -9,471 - - - - - -9,471
Administrative -8,458 206 - 145 - - -8,107
expenses
Operating profit 14,907 206 14 145 - - 15,272
Finance income 477 - - - 1,777 23 2,277
Finance costs -1,651 - - -121 -1,777 - -3,549
Profit on the sale of 206 -206 - - - - -
property
Loss on disposal -142 142 - - - - -
of business -
discontinued
Profit before taxation 13,797 142 14 24 - 23 14,000
Taxation -4,136 - - -7 - -7 -4,150
Profit for the period 9,661 142 14 17 - 16 9,850
from continuing
operations
Loss for the period - -142 - - - - -142
from discontinued
operations
Profit for the financial 9,661 - 14 17 - 16 9,708
period
Notes to the reconciliations of equity
and profit
1 Reclassifications are required as certain items are shown differently under
IFRS compared with UK GAAP. Reclassifications relate to
(i) disclosing the defined benefit pension obligation gross of deferred tax
under IFRS compared with net under UK GAAP, (ii) the disclosure of current
tax liabilities and financial liabilities as separate items on the face of
the balance sheet under IFRS,
( iii ) the split of provisions for liabilities between current and long
term creditors under IFRS, (iv) the reclassification of profit on sale
of property within administration expenses under IFRS and (v) the disclosure
of loss on disposal of business as a discontinued operation.
In addition the foreign exchange translation adjustments are disclosed as
a separate reserve under IFRS from the date of transition.
2 As permitted by IFRS 1 - First time adoption of IFRS, the group has elected
to treat the October 1998 revaluation of the UK freehold and long leasehold
properties as deemed cost at that date. The valuation was carried out by DTZ
Debenham Tie Leung, Chartered Surveyors, at open market value for existing
use in accordance with the RICS Statement of Asset Valuation Practice and
Guidance notes. The aggregate deemed gross cost included within property,
plant and equipment is #2,731,000. Although no adjustment is required to the
carrying value of property, plant and equipment; the revaluation reserve
carried under UK GAAP has been transferred to retained earnings as a
consequence of this election.
3 As required by IFRS 3 - Business Combinations, purchased goodwill is not
amortised and is stated at it's carrying value at the date of transition to
IFRS. Accordingly goodwill amortisation charged in accordance with UK GAAP
has been reversed.
4 IFRS requires property leases to be split into two elements, Land and
Buildings. Each element is then considered independently and treated as a
finance or operating lease as appropriate. This treatment differs to UK GAAP
which requires the wholeproperty lease to be considered in its entirety.
Consequently certain leasehold buildings have been brought onto the balance
sheet under IFRS and conversely certain leasehold land, that was previously
treated as a finance lease under UK GAAP, has been reclassified as an off
balance sheet operating lease. Lease premiums relating to land have been
reclassified as prepayments.
5 The calculation of the defined benefit pension scheme liability under IFRS
requires the schemes assets to be valued at the lower bid market value
compared with mid market value required by UK GAAP. In addition the
disclosure requirements under IAS 19 differ in certain respects to FRS 17
with interest charges being disclosed on a gross rather than net basis.
6 IAS 39 requires all derivative financial instruments to be valued and
brought onto the balance sheet. There was no equivalent requirement under
UK GAAP. During the second half of 2006 the group purchased an interest
rate cap and this has been brought onto the balance sheet at fair value at
31 December 2006.
7 At 30 June 2006 the group held certain assets whose carrying value was
recovered primarily through a sales transaction rather than by continuing
use. In accordance with IFRS 5 - Non-current assets held for sale and
discontinued operations - these have been reclassified as a separate
non-current asset and are carried at the lower of the previous accounts
written down value and the net anticipated sale proceeds.
Other than presentational differences, there are no material adjustments to
the previous cash flow statements presented under UK GAAP.
12 Distribution of interim
financial statement
A copy of these interim financial statements will be posted to all
shareholders and is available from the Company's registered office at
Premier House, Darlington Street, Wolverhampton, WV1 4JJ. A copy will also be
available on the Company's website, www.andrews-sykes.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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