RNS Number:0840V
Andrews Sykes Group PLC
25 April 2002
Andrews Sykes Group plc
Preliminary Announcement
For the 52 weeks ended 29 December 2001
FINANCIAL HIGHLIGHTS
Turnover decreased from £86.9 million to £84.2 million
EBITDA decreased from £24.1 million to £22.8 million
Operating profit before exceptional items increased from £12.7 million to £13.4
million
Profit on ordinary activities before taxation and exceptional items increased
from £10.3 million to £11.9 million
The adjusted diluted earnings per share increased from 7.81 pence to 10.15 pence
Cash inflow from operations fell from £27.0 million to £26.6 million
In excess of £12.6 million spent of the share buy back programme to enhance
shareholder value
Cash decreased during the period by £5.2 million
Gearing (net debt as a proportion of equity funds) further reduced from 55.3% to
42.2%
SUMMARY OF RESULTS
52 weeks ended 52 weeks ended
29 December 2001 30 December 2000
£'000 £'000
Turnover 84,184 86,869
EBITDA* 22,769 24,088
Profit on ordinary activities before taxation and
exceptional items
11,916 10,283
Goodwill charges 44 10,217
Profit on ordinary activities before taxation 12,252 500
Operating cash flow per share (diluted basis, pence)** 33.6p 29.8p
Adjusted diluted earnings per share (pence) 10.15p 7.81p
Gearing 42.2% 55.3%
* Earnings before interest, taxation, depreciation, exceptional
items and goodwill charges
** Operating cash flow before exceptional items
Chairman's statement
The 2001 financial year proved to be one of mixed fortunes for our Group.
Overall, as shown by the financial highlights, the operating profit before
exceptional items was £13.4 million compared with £12.7 million last year.
Our strategy to focus upon the UK specialist hire and rental markets continues
to be successful. In total, excluding Cox Plant and its subsidiaries, the
Group's continuing UK based activities generated an operating profit before
exceptional items of £12.2 million compared with £11.8 million last year. The
result would have been even better this year had there not been a deterioration
in the fixed air conditioning business, which eroded a very satisfactory
performance by the main UK based hire and sales operation sector. I am
confident that our strategy of organic growth within the UK supplemented by
niche acquisitions in the appropriate market sectors remains appropriate and
will therefore continue to be followed.
On 17 April 2002 we commenced the employee consultation process regarding the
proposed sale of the general plant hire business and assets of Cox Plant Limited
as the sale negotiations had reached an advanced stage. A further announcement
in relation to the proposed disposal will be made in due course. The Board
believes that this is a positive move both for the Andrews Sykes Group and for
the Cox Plant employees as the new management will be able to direct their
efforts to develop and market the general plant business. We will continue with
our strategy of focusing upon and investing in the Group's traditional core
business activities.
Accommodation Hire, however, performed well during 2001 with a turnover of £9.2
million and an operating profit of £1 million. Investment will continue to be
made into this business sector which will be further integrated into our
traditional core business activities.
As reported last year, the Board undertook a full review of our subsidiary,
Refrigeration Compressor Remanufacturers Limited, in the light of a decline in
the margins being achieved. During the first half of this year the trading
performance continued to decline and therefore the operation was closed in the
second half of the year. The closure costs are not significant and have been
fully absorbed in the reported figures.
The Group's well established overseas business in Holland generated an operating
profit of £0.6 million this year compared with £0.3 million last year. The
operation in the United Arab Emirates performed less well mainly due to a
deterioration in the general market conditions in the middle east. This year
the operating profit was virtually break even compared with £0.2 million last
year. Opportunities to further develop these companies will be pursued as and
when they arise.
During the period under review the Group has purchased a total of 15,158,838
ordinary 20 pence shares for cancellation at a cost of £12,628,997. During
January and February 2002 a further 10,000 ordinary 20 pence shares were
purchased for cancellation at a cost of £9,580.
The 2001 share buy back programme increased the adjusted diluted earnings per
share figure for the current year by approximately one pence per share and the
full year effect will be to increase the diluted earnings per share figure by a
further one pence. Therefore, as reported in both last years annual report and
the half yearly statement, the Board continues to believe that shareholder value
will be optimised by a judicious purchase of our own shares coupled with
investment in organic growth. At the next Annual General Meeting the Board will
request that shareholders vote in favour of a resolution to give authority to
purchase up to 12.5% of the ordinary shares in issue. At such time that the
Board considers the interests of the shareholders will be best served by the
payment of dividends, this policy will be resumed.
As I reported in my interim statement John Hall retired from the main Board on
28 February 2002. John was appointed Operations Director of our main UK
subsidiary company in June 1990 and he became a main Board Director in December
1994. He made a valuable contribution to the Group over the years and I wish
him well in his retirement. The role of Operations Director has temporarily
been assumed by Robert Stevens who will be assisted by key members of the senior
management team.
2001 was a year of change and development for Andrews Sykes. We consolidated
our position as being a market leader in our core business activities.
The first quarter of 2002 has not started particularly well for our Group. The
winter has continued to be mild. Nevertheless we will persist in our efforts
and continue to add value to our shareholders.
JG Murray
Chairman
24 April 2002
Andrews Sykes Group plc
Consolidated profit & loss account
For the 52 weeks ended 29 December 2001
Continuing 52 Continuing
weeks ended 52 weeks ended
29 December 30 December 2000
2001
Before
Total exceptional Exceptional Total
items items
£'000 £'000 £'000 £'000
Turnover 84,184 86,869 - 86,869
Cost of sales (46,449) (49,904) (9,783) (59,687)
Gross profit 37,735 36,965 (9,783) 27,182
Distribution costs (6,753) (6,045) - (6,045)
Administrative expenses (17,627) (18,292) - (18,292)
Other operating income - 35 - 35
Operating profit 13,355 12,663 (9,783) 2,880
EBITDA * 22,769 24,088 - 24,088
Depreciation and asset disposals (9,370) (10,991) - (10,991)
Operating profit before exceptional items and 13,399 13,097 - 13,097
goodwill charges
Goodwill charges (44) (434) (9,783) (10,217)
Operating profit 13,355 12,663 (9,783) 2,880
Profit on the disposal of property 336 - - -
Net interest payable (1,439) (2,380) - (2,380)
Profit/(loss) on ordinary activities before 12,252 10,283 (9,783) 500
taxation
Tax on profit on ordinary activities (3,914) (3,635) - (3,635)
Profit/(loss) on ordinary activities after 8,338 6,648 (9,783) (3,135)
taxation being retained profit/(loss) for the
financial period attributable to ordinary
shareholders
Basic earnings/(loss) per ordinary share 10.52p (3.48)p
Diluted earnings/(loss) per share 10.51p (3.48)p
Add back: Goodwill amortisation 0.06p 0.48p
Exceptional items (0.42)p 10.79p
Negative dilutive effect 0.00p 0.02p
of share options
Adjusted diluted earnings per share 10.15p 7.81p
Dividends per share:
Equity shares 0.00p 0.00p
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 29 December 2001
29 December 30 December
2001 2000
£'000 £'000
Fixed assets
Intangible assets: Goodwill 128 172
Tangible fixed assets 24,560 29,775
Investments 605 688
25,293 30,635
Current assets
Stocks 4,675 5,758
Overseas tax - 174
Other debtors 17,779 20,941
Cash at bank and in hand 7,821 10,423
30,275 37,296
Creditors: Amounts falling due within one year
Loans, overdraft and finance lease obligations (12,350) (20,213)
Other creditors (12,229) (12,422)
Corporation and overseas tax (2,351) (2,384)
(26,930) (35,019)
Net current assets 3,345 2,277
Total assets less current liabilities 28,638 32,912
Creditors: Amounts falling due after more than
one year
Loans (5,000) (5,000)
Provisions for liabilities and charges (1,029) (1,160)
Net assets 22,609 26,752
Capital and reserves
Called up share capital 14,686 17,593
Share premium account 10,421 10,406
Revaluation reserve 762 767
Other reserves 4,236 1,202
Profit and loss account (7,506) (3,226)
Equity shareholders' funds 22,599 26,742
Minority interests (equity) 10 10
22,609 26,752
Analysis of net debt
Cash at bank and in hand 7,821 10,423
Total loans, overdrafts and finance lease (17,350) (25,213)
obligations
Net debt (9,529) (14,790)
As a percentage of equity shareholders' funds 42.2% 55.3%
Andrews Sykes Group plc
Consolidated cash flow statement
For the 52 weeks ended 29 December 2001
52 weeks 52 weeks
ended ended
29 December 30 December
2001 2000
£'000 £'000
Net cash inflow from operating activities 26,648 27,018
Returns on investments and servicing of finance
Net interest paid (1,270) (2,145)
Net cash outflow for returns on investments and (1,270) (2,145)
servicing of finance
Cash outflow for taxation (4,005) (2,931)
Capital expenditure and financial investment
Purchase of own shares by ESOP - (151)
Sale of own shares by ESOP 68 -
Purchase of tangible fixed assets (5,749) (7,303)
Sale of tangible fixed assets 2,057 1,966
Net cash outflow for capital expenditure (3,624) (5,488)
Cash inflow before the use of liquid resources
and financing 17,749 16,454
Management of liquid resources
Movement in bank deposits (2,580) (90)
Financing
Issue of ordinary share capital net of issue 140 73
costs
Loan and loan note repayments (7,800) (7,273)
Capital element of finance lease repayments (63) (126)
Purchase of own shares (12,629) (2,551)
Net cash outflow from financing (20,352) (9,877)
(Decrease)/increase in cash in the period (5,183) 6,487
Andrews Sykes Group plc
Notes to the financial statements
For the 52 weeks ended 29 December 2001
1. Segmental analysis
The Group's turnover may be analysed between the following principal products
and activities:
52 weeks 52 weeks
ended ended
29 December 30 December
2001 2000
£'000 £'000
Product Group:
Pumps 19,850 19,387
Heating and ventilation 13,822 12,836
Air conditioning 21,138 22,904
General Plant and accommodation 25,877 28,589
Other 3,497 3,153
Total 84,184 86,869
Activity:
Hire 58,891 58,018
Sales 16,269 15,837
Installation 9,024 13,014
Total 84,184 86,869
The integrated nature of the Group's operation 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:
Profit before Profit/
exceptionals (loss)
Exceptionals & before
& goodwill goodwill interest
amortisation amortisation and tax
Turnover £'000 £'000 £'000 Net assets
£'000 £'000
52 weeks ended 29 December 2001:
Pumps, heating, ventilation, air 58,307 12,814 (44) 12,770 18,525
conditioning and other
General plant and accommodation 25,877 585 336 921 4,084
84,184 13,399 292 13,691 22,609
52 weeks ended 30 December 2000:
Pumps, heating, ventilation, air
conditioning and other
58,280 11,997 (2,985) 9,012 22,420
General plant and accommodation 28,589 1,100 (7,232) (6,132) 4,332
86,869 13,097 (10,217) 2,880 26,752
The geographical analysis of the Group's turnover was as follows:
By geographical origin By geographical
destination
52 weeks 52 weeks 52 weeks 52 weeks
ended ended ended ended
29 December 30 December 29 December 30 December
2001 2000 2001 2000
£'000 £'000 £'000 £'000
United Kingdom 79,248 82,203 77,714 80,865
Rest of Europe 2,284 1,849 3,311 2,575
Middle East and Africa 2,652 2,532 2,834 2,865
The Americas - - 299 281
Rest of World - 285 26 283
84,184 86,869 84,184 86,869
The analysis of profit before interest and tax and net assets by geographical
origin was as follows:
Profit before interest Net assets Net assets
and tax
52 weeks 52 weeks 52 weeks 52 weeks ended
ended ended ended 30 December
29 December 30 December 29 December
2001 2000 2001 2000
£'000 £'000 £'000 £'000
United Kingdom 13,035 2,813 26,941 35,360
Rest of Europe 600 240 5,803 5,171
Middle East and Africa 56 213 1,745 1,541
The Americas - (88) - -
Rest of World - (298) - -
13,691 2,880 34,489 42,072
Net debt (9,529) (14,790)
Taxation and dividends payable (2,351) (530)
22,609 26,752
2. Exceptional items
52 weeks 52 weeks
ended ended
29 December 30 December
2001 2000
£'000 £'000
Goodwill impairment (note 3) - 9,783
3. Amortisation of goodwill
52 weeks 52 weeks
ended ended
29 December 30 December
2001 2000
£'000 £'000
Annual goodwill amortisation charge (44) (434)
Charge arising from impairment review of Cox Plant - (6,812)
Limited
(44) (7,246)
Other pre FRS 10 goodwill
Provision against goodwill previously written off - (2,971)
to reserve
(44) (10,217)
During last year and in accordance with FRS 11: Impairment of fixed assets and
goodwill, the directors 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 was 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 suffered a permanent diminution
in value last year 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, was no longer justified. The full amount was
credited back to reserves and charged to last year's 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 52 weeks
ended ended
29 December 30 December
2001 2000
£'000 £'000
Operating profit 13,355 2,880
Amortisation and impairment of goodwill 44 10,217
Depreciation 9,638 11,120
Provision against investments - 85
Profit on sale of tangible fixed assets (268) (129)
Decrease in stocks 1,083 2,071
Decrease in debtors 3,154 3,760
Decrease in creditors and provisions (358) (2,986)
Net cash inflow from operating activities 26,648 27,018
5. Reconciliation of net cash flow to movement in net debt
52 weeks 52 weeks
ended ended
29 December 30 December
2001 2000
£'000 £'000
(Decrease)/increase in cash in the period (5,183) 6,487
Cash outflow from movement in debt and lease 7,863 7,399
financing
Cash outflow from movement in liquid resources 2,580 90
Changes in net debt resulting from cash flows 5,260 13,976
Translation differences 1 82
Movement in period 5,261 14,058
Opening net debt (14,790) (28,848)
Closing net debt (9,529) (14,790)
6. Consolidated statement of total recognised gains and losses
52 weeks 52 weeks
ended ended
29 December 30 December
2001 2000
£'000 £'000
Profit/(loss) for the financial period 8,338 (3,135)
Currency translation differences on foreign
currency net investments 8 136
Total gains and losses in the period 8,346 (2,999)
7. Reconciliation of movements in Group shareholders' funds
52 weeks 52 weeks
ended ended
29 December 30 December
2001 2000
£'000 £'000
Profit/(loss) for the financial period 8,338 (3,135)
Other recognised gains and losses 8 136
Proceeds from ordinary shares issued 140 73
Consideration on the purchase of own shares (12,629) (2,551)
Goodwill previously written off to reserves
expensed in the year - 2,971
Net decrease in shareholders' funds (4,143) (2,506)
Shareholders' funds at the beginning of the period 26,742 29,248
Shareholders funds at the end of the period 22,599 26,742
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 79,221,681 (52
weeks ended 30 December 2000: 90,156,589).
FRS 14 strictly requires that potentially ordinary shares should be treated as
potentially dilutive when they increase net loss per share. This disclosure is
not given for the 52 weeks ended 30 December 2000 as it would not provide any
meaningful information. This is consistent with IAS 33.
The calculation of the diluted earnings per ordinary share is based on a profit
of £8,338,000 (52 weeks ended 30 December 2000: loss of £3,135,000) and on
79,305,491 (52 weeks ended 30 December 2000: 90,690,403) ordinary shares. The
share options have a dilutive effect for the period ended 29 December 2001
calculated as follows:
52 weeks ended 29 December 52 weeks ended 30
2001 December 2000
Earnings Number of Losses Number of
£'000 shares £'000 shares
Basic earnings/(loss)/weighted average
number of shares
8,338 79,221,681 (3,135) 90,156,589
Weighted average number of shares
under option - 225,000 - 995,000
Number of shares that would have been
issued at fair value - (141,190) - (461,186)
Earnings/(loss)/diluted weighted
average number of shares 8,338 79,305,491 (3,135) 90,690,403
Diluted earnings/(loss) per ordinary
share (pence) 10.51p (3.46)p
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/(losses) can be reconciled to the
adjusted earnings as follows:
52 weeks 52 weeks
ended ended
29 December 30 December
2001 2000
£'000 £'000
Earnings/(losses) 8,338 (3,135)
Goodwill amortisation 44 434
Exceptional items (336) 9,783
Adjusted earnings 8,046 7,082
Adjusted diluted earnings per share (pence) 10.15p 7.81p
The above figures have been disclosed to demonstrate maintainable earnings.
9. Basis of accounting
The financial statements are prepared under the historical cost
convention, modified by the revaluation of freehold and long leasehold land and
buildings, and in accordance with applicable Accounting Standards. In
accordance with FRS 18 the directors reviewed the accounting standards adopted
by the company during the year to ensure they are the most appropriate ones to
follow. No amendments were required. The transitional requirements of FRS 17 "
Retirement benefits" have also been adopted.
10. Classification of loans
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 29 December 2001 certain of these criteria were not achieved and
hence the company is technically in breach of its covenants. Loans of
£12,350,000 are repayable on demand and have therefore been reclassified as
falling due within one year.
Since the end of the year the bank has formally waived the breach of covenants
and has indicated that facilities will be made available until at least 24 April
2003.
11. The above financial information has been extracted from the Company's
financial statements for the 52 weeks ended 29 December 2001 and the 52 weeks
ended 30 December 2000. The financial statements for the 52 weeks ended 30
December 2000 have been filed and those for the 52 weeks ended 29 December 2001
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.
12. 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.
13. The Company's Annual General Meeting will be held at 10.30 a.m. on 29
May 2002 at The Grosvenor House Hotel, Park Lane, London, W1A 3AA.
This information is provided by RNS
The company news service from the London Stock Exchange
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