RNS Number:1195Y
Andrews Sykes Group PLC
29 April 2004
Andrews Sykes Group plc
Preliminary Results for the 52 weeks ended 27 December 2003
FINANCIAL HIGHLIGHTS
* The basic earnings per share increased by 45.5% from 11.56 pence to
16.82 pence
* EBITDA* from continuing operations increased by #1.5 million from last
year at #19.7 million
* Profit on ordinary activities before taxation increased by #2.4 million
from last year to #14.6 million
* Net debt reduced by #5.1 million from last year at #4.7 million
representing 27.6% of equity shareholders' funds
SUMMARY OF RESULTS
52 weeks ended 52 weeks ended
27 December 2003 28 December 2002
#'000 #'000
Turnover from continuing operations 68,252 64,477
EBITDA* from continuing operations 19,666 18,204
Profit on ordinary activities before taxation 14,574 12,167
Basic earnings per share (pence) 16.82p 11.56p
Proposed final dividend per share (pence) 3.0p -
Net Debt 4,723 9,751
Gearing 27.6% 75.6%
* Earnings before interest, taxation, depreciation, exceptional items and
goodwill charges (as reconciled on the face of the consolidated profit and loss
account)
CHAIRMANS STATEMENT
Summary of results
I am pleased to be able to report that your Group has achieved another
satisfactory result in the year under review. The Group's profit on ordinary
activities before taxation was #14.6 million which, after a tax charge of #4.6
million, gives a profit for the financial period of #10.0 million. The basic
earnings per share has increased from 11.6 pence to 16.8 pence and I am pleased
to announce that the Board has proposed a final dividend of 3.0 pence per share.
As I reported to you last year we have reorganised the UK core businesses by
reducing the fixed costs and linking them to a sustainable level of turnover.
This has proved to be beneficial during 2003 although, in common with many other
companies, significant increases in liability insurance have masked these
benefits. Focussed initiatives to improve turnover have also lead to substantial
improvements in the Group's operating profit. The Board's strategy for
developing the specialist hire and rental markets, where the margins and the
potential for profit growth are considered to be the greatest, is proving to be
effective and will continue to be followed.
Even after cash outflows of #3.9 million attributable to the share buy back
programme, net debt has been significantly reduced by #5.1 million from #9.8
million last year to #4.7 million at 27 December 2003 thereby demonstrating our
Group's strong cash generative performance in the period.
I consider that the Group is in a strong financial position and is well placed
to be able to take advantage of commercial opportunities as and when they arise.
Overview of continuing operations
Turnover from continuing operations increased by #3.8 million from #64.5 million
to #68.3 million and operating profit from continuing operations increased by
#1.7 million from #12.7 million to #14.4 million in 2003. The majority of these
improvements are attributable to our main UK core business, Andrews Sykes Hire,
whose turnover increased by #3.3 million to #38.9 million. Due to focussed
initiatives to increase turnover the operating profit of this company increased
by #1.8 million to #11.5 million.
Weather was also a factor in the above results, but in different and opposing
ways. Whilst last year summer in the UK and Northern Europe was unusually hot
and dry, giving ideal conditions for our air conditioning hire business which
ran for several months at maximum utilisation, it also caused problems for our
pumping business which suffered because of the unusually low water table levels.
Overall, however, the results show a significant improvement compared with last
year and this underlines the benefits of a clear strategy and a diverse but
complementary product range which enables satisfactory profits to be achieved
whatever the weather conditions.
The UK fixed air conditioning installation business operated through Andrews Air
Conditioning & Refrigeration achieved an operating profit of #0.7 million, the
same as that achieved in 2002. Business activity grew by #1.4 million, or 16.7%,
compared with last year but downward pressure on margins and increases in
variable costs eliminated the volume gains achieved.
The Group's well established heating drying and air conditioning business in The
Netherlands also had another very successful year returning an operating profit
of #0.9 million compared with #0.8 million last year. Similarly our operation in
the Middle East, Khansaheb Sykes LLC, continues to perform well and it returned
an operating profit of #0.3 million which is unchanged from last year.
The above improvements in our core businesses were, however, partially eroded by
reduced profits in two of our smaller businesses.
Further details of the financial performance are given in the financial review
contained within the Annual report and financial statements. I remain confident
that our strategy of continuing to concentrate upon developing the UK specialist
hire and rental markets by organic growth, supplemented by niche market
acquisitions in the appropriate market sectors as and when opportunities arise,
offers the best opportunity for future profit growth and added shareholder
value. Therefore these policies will continue to be adopted.
Earnings per share and share buy back programme
As set out in note 6, the adjusted diluted earnings per share, which excludes
the exceptional gain of #0.6 million on the disposal of Cox Plant, is 15.3 pence
compared with 11.5 pence last year. The Board continues to believe that
shareholder value will be optimised by the purchase, when appropriate, of our
own shares coupled with investment in organic growth. Consequently the Board
will request that shareholders vote in favour of a resolution to renew the
authority to purchase up to 12.5% of the ordinary shares in issue.
Dividend
The Board is pleased to propose a final dividend of 3.0 pence per share. This
will be paid on 11 June 2004 to shareholders on the register on 14 May 2004.
Outlook
The results of the first quarter of 2004 are in line with both last year and
expectations. I expect that the Group will achieve another successful year.
JG Murray
Chairman
28 April 2004
Consolidated profit and loss account
For the 52 weeks ended 27 December 2003
52 weeks ended 52 weeks ended 28 December 2002
27 December 2003 (as restated)
Total Continuing Discontinued Total
operations operations
#'000 #'000 #'000 #'000
Turnover 68,252 64,477 6,067 70,544
Cost of sales (34,084) (33,043) (4,299) (37,342)
Gross profit 34,168 31,434 1,768 33,202
Distribution costs (9,647) (9,050) (1,033) (10,083)
Administrative expenses (10,080) (9,724) (885) (10,609)
Other operating income 5 21 - 21
Operating profit / (loss) 14,446 12,681 (150) 12,531
EBITDA * 19,666 18,204 1,028 19,232
Depreciation and asset disposals (5,206) (5,468) (1,178) (6,646)
Operating profit / (loss) before goodwill 14,460 12,736 (150) 12,586
amortisation
Goodwill amortisation (14) (55) - (55)
Operating profit / (loss) 14,446 12,681 (150) 12,531
Profit on the disposal of a business - discontinued 598 -
Profit before interest 15,044 12,531
Net interest payable (470) (364)
Profit on ordinary activities before taxation 14,574 12,167
Tax on profit on ordinary activities (4,617) (3,850)
Profit on ordinary activities after taxation being
profit for the financial period 9,957 8,317
Dividends proposed:
Equity shares (1,740) -
Retained profit for the financial period
attributable to ordinary shareholders 8,217 8,317
Basic earnings per ordinary share (pence) 16.82 11.56
Diluted earnings per share (pence) 16.25 11.42
Add back: Goodwill amortisation 0.02 0.08
Exceptional items (0.97) -
Adjusted diluted earnings per share (pence) 15.30 11.50
Dividends per share (pence):
Equity shares 3.00 -
Non equity shares - -
Activities in the current year derive from continuing operations. There were no
material acquisitions in either period.
* Earnings before interest, taxation, depreciation, and amortisation excluding
exceptional items.
The comparative figures have been restated to (i) comply with UITF 38 -
Accounting for ESOP Trusts - which was issued in December 2003, (ii) the
reclassification of certain property and salary expenses out of administration
to distribution costs as this more appropriately reflects the nature of the
expense and the reclassification of certain overseas costs to ensure consistency
with 2003.
Consolidated Balance Sheet
At 27 December 2003
27 December 28 December
2003 2002
As restated
#'000 #'000
Fixed assets
Intangible assets: Goodwill 59 73
Tangible fixed assets 18,015 16,638
Investments 164 164
18,238 16,875
Current assets
Stocks 5,616 4,692
Debtors 14,953 15,614
Cash at bank and in hand 11,251 8,704
31,820 29,010
Creditors: Amounts falling due within one year
Bank loans (3,749) (2,490)
Other creditors (11,173) (10,881)
Proposed dividends (1,740) -
Corporation and overseas tax (3,191) (2,018)
(19,853) (15,389)
Net current assets 11,967 13,621
Receivable within 1 year 11,967 11,292
Due after more than one year - 2,329
11,967 13,621
Total assets less current liabilities 30,205 30,496
Creditors: Amounts falling due after more than one year
Bank loans (12,225) (15,965)
Provisions for liabilities and charges (869) (1,618)
Net assets 17,111 12,913
Capital and reserves
Called up share capital 11,615 12,044
Share premium account 10,678 10,476
Revaluation reserve 752 757
Other reserves 7,378 6,907
Profit and loss account (13,284) (17,104)
ESOP reserve (38) (177)
Equity shareholders' funds 17,101 12,903
Minority interests (equity) 10 10
17,111 12,913
Analysis of net debt
Cash at bank and in hand 11,251 8,704
Bank loans (15,974) (18,455)
Net debt (4,723) (9,751)
As a percentage of equity shareholders' funds 27.6% 75.6%
The comparative figures have been restated to comply with UITF 38 - Accounting
for ESOP Trusts - issued in December 2003.
Consolidated cash flow statement
At 27 December 2003 52 weeks 52 weeks
ended ended
27 December 28 December
2003 2002
#'000 #'000
Net cash inflow from operating activities 17,329 18,866
Returns on investments and servicing of finance
Interest received 335 297
Interest paid (828) (724)
Net cash outflow for returns on investments and servicing of finance (493) (427)
Cash outflow for taxation (3,214) (3,373)
Capital expenditure and financial investment
Sale of own shares by ESOP 176 221
Purchase of own shares by ESOP (88) -
Purchase of tangible fixed assets (7,405) (6,020)
Sale of tangible fixed assets 868 1,076
Net cash outflow for capital expenditure and financial investment (6,449) (4,723)
Acquisitions and disposals
Cash received following the disposal of a business 1,500 7,205
Net cash inflow for acquisitions and disposals 1,500 7,205
Cash inflow before the use of liquid resources and financing 8,673 17,548
Management of liquid resources
Movement in bank deposits 3,862 (1,250)
Financing
Issue of ordinary share capital net of issue costs 252 90
Loans repaid (3,740) (17,595)
New loans drawn down 1,259 18,700
Purchase of own shares for cancellation (3,883) (17,819)
Net cash outflow from financing (6,112) (16,624)
Increase / (decrease) in cash in the period 6,423 (326)
Notes to the financial statements
For the 52 weeks ended 27 December 2003
1. Segmental analysis
The Group's turnover may be analysed between the following principal activities:
52 weeks ended 52 weeks ended 28 December 2002
27 December 2003
Total Continuing Discontinued Total
Continuing
#'000 #'000 #'000 #'000
Activity:
Hire 43,537 40,643 5,489 46,132
Sales 13,990 14,336 578 14,914
Installation 10,725 9,498 - 9,498
Total 68,252 64,477 6,067 70,544
The integrated nature of the Group's operations does not permit a meaningful
analysis of net assets by the above activities.
The results can be further analysed by class of business as follows:
52 weeks ended 27 December 2003:
Profit before Profit /(loss) Net assets
exceptionals Exceptionals before
& goodwill & goodwill interest
Turnover amortisation amortisation and tax
#'000 #'000 #'000 #'000 #'000
Pumps, heating, ventilation, air conditioning,
accommodation and other 68,252 14,460 (14) 14,446 26,765
General Plant - - 598 598 -
68,252 14,460 584 15,044 26,765
Net debt (4,723)
Taxation and dividends payable (4,931)
17,111
52 weeks ended 28 December 2002 (as restated):
Pumps, heating, ventilation, air conditioning,
accommodation and other 64,477 12,736 (55) 12,681 24,682
General Plant 6,067 (150) - (150) -
70,544 12,586 (55) 12,531 24,682
Net debt (9,751)
Taxation (2,018)
12,913
The geographical analysis of the Group's turnover was as follows:
By geographical By geographical
origin destination
52 weeks 52 weeks 52 weeks 52 weeks
ended ended ended ended
27 December 28 December 27 December 28 December
2003 2002 2003 2002
#'000 #'000 #'000 #'000
United Kingdom 61,925 64,396 60,196 63,650
Rest of Europe 3,239 3,174 4,388 3,809
Middle East and Africa 3,088 2,974 3,153 3,069
Rest of World - - 515 16
68,252 70,544 68,252 70,544
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
ended ended
27 December 28 December 27 December 28 December
2003 2002 2003 2002
(as restated) (as restated)
#'000 #'000 #'000 #'000
United Kingdom 13,983 11,538 24,211 22,504
Rest of Europe 771 720 1,155 943
Middle East and Africa 290 273 1,399 1,235
15,044 12,531 26,765 24,682
Net debt (4,723) (9,751)
Taxation and dividends payable (4,931) (2,018)
17,111 12,913
2. Reconciliation of operating profit to net cash inflow from operating
activities
52 weeks 52 weeks
ended ended
27 December 28 December
2003 2002
(as restated)
#'000 #'000
Operating profit 14,446 12,531
Goodwill amortisation 14 55
Depreciation 5,575 6,841
Profit on sale of tangible fixed assets (369) (195)
Increase in stocks (924) (425)
Increase in debtors (847) (989)
(Decrease) / increase in creditors and provisions (566) 1,048
Net cash inflow from operating activities 17,329 18,866
3. Reconciliation of net cash flow to movement in net debt
52 weeks 52 weeks
ended ended
27 December 28 December
2003 2002
#'000 #'000
Increase / (decrease) in cash in the period 6,423 (326)
Cash outflow / (inflow) from movement in net debt 2,481 (1,105)
Cash (inflow) / outflow from movement in liquid resources (3,862) 1,250
Change in net debt resulting from cash flows 5,042 (181)
Translation differences (14) (41)
Movement in period 5,028 (222)
Opening net debt (9,751) (9,529)
Closing net debt (4,723) (9,751)
4. Consolidated statement of total recognised gains and losses
52 weeks 52 weeks
ended ended
27 December 28 December
2003 2002
#'000 #'000
Profit for the financial period 9,957 8,317
Currency translation differences on foreign currency net investments (18) (64)
Total gains and losses in the period 9,939 8,253
Note on prior period adjustment
Total recognised gains and losses relating to the year as above 9,939
Prior period adjustment 43
Total gains and losses recognised since the last Annual Report 9,982
5. Reconciliation of movements in Group shareholders' funds
52 weeks 52 weeks
ended ended
27 December 28 December
2003 2002
(as restated*)
#'000 #'000
Profit for the financial period 9,957 8,317
Dividends (1,740) -
Other recognised gains and losses (18) (64)
Issue of ordinary shares 252 90
Purchase of own shares for cancellation (4,341) (17,819)
Sale of own shares by the ESOP trust 176 221
Purchase of own shares by the ESOP trust (88) -
Net increase / (decrease) in shareholders' funds 4,198 (9,255)
Shareholders' funds at the beginning of the period (as restated) 12,903 22,158
Shareholders' funds at the end of the period 17,101 12,903
*The opening shareholders' funds at 29 December 2002 as previously reported
amounted to #13,080,000 before the prior year adjustment of #177,000 that was
required in order to comply with UITF 38 - Accounting for ESOP Trusts - that was
issued in December 2003.
6. 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 59,186,675
(52 weeks ended 28 December 2002: 71,949,134).
The calculation of the diluted earnings per ordinary share is based on a profit
of #9,957,000 (52 weeks ended 28 December 2002 as restated: #8,317,000) and on
61,255,953 (52 weeks ended 28 December 2002: 72,815,175) ordinary shares. The
share options have a dilutive effect for the period ended 27 December 2003
calculated as follows:
52 weeks ended 52 weeks ended 28
27 December 2003 December 2002
(as restated)
Earnings Number of Earnings Number of
#'000 shares #'000 shares
Basic earnings / weighted average number of shares 9,957 59,186,675 8,317 71,949,134
Weighted average number of shares under option 4,372,604 4,717,604
Number of shares that would have been issued at fair value (2,303,326) (3,851,563)
Earnings / diluted weighted average number of shares
9,957 61,255,953 8,317 72,815,175
Diluted earnings per ordinary share (pence) 16.25 11.42
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 adjusted
earnings as follows:
52 weeks 52 weeks
ended ended
27 December 28 December
2003 2002
(as restated)
#'000 #'000
Earnings 9,957 8,317
Goodwill amortisation 14 55
Exceptional items (598) -
Adjusted earnings 9,373 8,372
Adjusted diluted earnings per share (pence) 15.30 11.50
The above figures have been disclosed to demonstrate maintainable earnings.
7. The financial information set out above has been prepared using accounting
policies that are consistent with those adopted in the statutory accounts for
the 52 weeks ended 28 December 2002 as amended for (i) the adoption of UITF 38
"Accounting for ESOP Trusts", (ii) the reclassification of certain property and
salary expenses out of administration to distribution costs as this more
appropriately reflects the nature of the expenses and the reclassification of
certain overseas costs to ensure consistency with 2003.
As a result of these changes in accounting policies the comparative figures have
been restated. This results in an increase in operating profit of #43,000 and a
transfer of #3,950,000 to distribution costs from administrative expenses for
the 52 weeks ended 28 December 2002. The effect of the changes on the current
year is similar to the effect on the prior year. The net assets as at 28
December 2002 have been reduced by #177,000.
8. The financial information set out above does not constitute the Group's
statutory accounts for the 52 weeks ended 27 December 2003 or the 52 weeks ended
28 December 2002 but it is derived from those accounts. The financial statements
for the 52 weeks ended 28 December 2002 have been filed and those for the 52
weeks ended 27 December 2003 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.
9. 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.
10. The Company's Annual General Meeting will be held at 10.30 a.m. on 9 June
2004 at Floor 5, 10 Bruton Street, London, W1J 6PX.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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