TIDMASY
RNS Number : 8748N
Andrews Sykes Group PLC
27 September 2019
Andrews Sykes Group plc
Interim Financial Statements 2019
Andrews Sykes Group plc ("Andrews Sykes" or the "Company" or the
"Group") announces unaudited results for the six months ended 30
June 2019.
Summary of results
for the six months ended 30 June 2019
(Unaudited)
6 months 6 months
ended ended
30 June 2019 30 June
2018
GBP'000 GBP'000
Revenue from continuing operations 34,974 37,815
EBITDA* from continuing operations 11,435 12,429
Operating profit 6,918 9,280
Profit for the financial period 5,449 7,528
Basic earnings per share (pence) 12.92p 17.82p
Interim dividends declared per equity share (pence) 11.90p 11.90p
Cash and cash equivalents 23,770 21,489
============= ===========
* Earnings Before Interest, Taxation, Depreciation, profit on
the sale of property, plant and equipment, Amortisation and
non-recurring items.
Enquires
Andrews Skyes Group plc +44 (0) 1902 328 700
Andy Phillips (CFO)
Mark Calderbank (Company Secretary)
GCA Altium (Nominated Adviser) +44 (0) 20 7484 4040
Tim Richardson
Chairman's Statement
Overview
The group result for the first half of 2019 was below that of
the previous year, the winter period was much milder than 2018,
meaning that there was less opportunities for our heating and
boiler hire products. The first 6 months of 2019 were also drier
than the previous year and this had an adverse impact on our pump
hire business. Overall, the group's revenue for the six months
ended 30 June 2019 was GBP35.0 million, a decrease of GBP2.8
million when compared with the same period last year. As a
consequence the operating profit decreased by GBP2.4 million from
GBP9.3 million in the first half of 2018 to GBP6.9 million for the
six months ended 30 June 2019.
The group continues to be profitable and cash generative. Cash
generated from operations was GBP7.5 million (2018: GBP7.6 million)
after negative working capital movements of GBP3.9 million (2018:
GBP4.8 million). As a result of adopting the accounting
requirements of the new leasing standard, IFRS 16, existing lease
commitments at 1 January 2019 of GBP11.4 million were recognised on
the balance sheet. This is the major reason why net funds decreased
by GBP15.0 million from GBP23.3 million as at 31 December 2018 to
GBP8.3 million as at 30 June 2019 A further GBP1.1 million of lease
obligations were recognised due to new leases being entered into
during the period. Other significant cash outflows during the
period include paying the 2018 final dividend of GBP5.0 million,
net capital expenditure of GBP2.4 million and UK and overseas
corporation tax payments of GBP2.5 million.
Management continue to safeguard the operational structure of
the business. Cash spent on new plant and equipment, primarily hire
fleet assets, amounted to GBP2.8 million and a further GBP1.4
million from stock was also added to the hire fleet. We have
continued our policy of pursuing organic growth within our market
sectors and start up costs of the new businesses discussed in
previous Strategic Reports continue to be expensed as incurred.
Continuing investment in both our existing core businesses and the
ongoing development of new operations and income streams will
ensure that we remain in a strong position and will safeguard
profitability into the future.
Operations review
The shortfall came from our main hire and sales business segment
throughout the UK and Europe. The UK hire business experienced a
drop in total revenue of 11.7%, a major part of the shortfall came
from fuel sales, which reduced by 40% compared to the previous
year.
Our operations across the Benelux region experienced a drop in
revenue of 9% and our newer business in France also traded slightly
below last year's level. Only Italy and Switzerland, of our
European hire businesses, traded ahead of the previous year.
Andrews Air Conditioning and Refrigeration, our UK air
conditioning installation business, produced a positive result that
was ahead of last year for the first half.
Khansaheb Sykes, our business based in the UAE, had a stronger
start to the year following a difficult start to 2018. The
operating profit of Khansaheb Sykes has increased from GBP1.01
million to GBP1.37 million in the first half of the year.
Profit for the financial period and Earnings per Share
Profit before tax was GBP6.8 million (2018: GBP9.3 million)
mainly due to the above GBP2.4 million decrease in operating
profit.
The total tax charge has decreased by GBP0.5 million from GBP1.8
million for the six months ended 30 June 2018 to GBP1.3 million for
the current six month period. The effective tax rate remained
unchanged from June 2018 at 19.4% for the six months ended 30 June
2019. This is slightly higher than the standard effective UK
corporation tax rate of 19% which is mainly due to non-tax
deductible expenses and the effect of a change in the rate of
future corporation tax reducing the amount recognised for the
deferred tax asset. A reconciliation of the theoretical corporation
tax charge based on the accounts profit multiplied by the UK
annualised corporation tax rate of 19% and the actual tax charge is
given in note 4 of these interim financial statements.
Profit after tax was GBP5.5 million (2018: GBP7.5 million), a
decrease of GBP2.0 million (2018: increase of GBP0.9 million)
compared with the same period last year. The basic earnings per
share decreased by 4.90 pence, or 27.50%, from 17.82 pence for the
first half of 2018 to 12.92 pence for the period under review
reflecting the decrease in profit discussed above.
Impact of the adoption of the new accounting standard on
leases
The group has adopted IFRS 16, which establishes principles for
the recognition, measurement, presentation and disclosures of
leases, with effect from 1 January 2019.
The group has recognised a right-of-use asset and a lease
liability of GBP11.4 million in respect of existing operating
leases of properties, plant machinery and equipment as at 1 January
2019. The nature of expenses related to these leases has changed
because the group reversed operating lease payments of GBP1.2
million but recognised a GBP1.1 million depreciation charge for
right-of-use assets and an interest expense of GBP0.15 million on
the lease liabilities. Therefore EBITDA was improved by GBP1.2
million and operating profit by GBP0.1 million. Overall profit
before tax was reduced by GBP0.05 million primarily due to the
effect of charging more interest at the beginning of the lease
term.
There was also a significant impact on the group's net funds as
a result of the adoption of IFRS 16 as at 1 January 2019. Net funds
were reduced by GBP11.4 million as a result of recognising lease
obligations that correspond with the capitalised right of use asset
as at the date of transition and by a net further GBP0.1 million as
a result of applying IFRS 16 to new leases entered into in the
current period. There has been no change to the group's contractual
cash flows as a result of this change in accounting policy.
Dividends
The final dividend of 11.90 pence per ordinary share for the
year ended 31 December 2018 was approved by members at the AGM held
on 18 June 2019. Accordingly on 21 June 2019 the Company made a
total dividend payment of GBP5,019,000 which was paid to
shareholders on the register as at 31 May 2019.
The board continues to adopt the policy of returning value to
shareholders whenever possible. The group remains profitable, cash
generative and financially strong. Accordingly the board has
decided to declare an interim dividend for 2019 of 11.90 pence per
share which in total amounts to GBP5,019,000. This will be paid on
8 November 2019 to shareholders on the register as at 11 October
2019. The shares will go ex-dividend on 10 October 2019.
Outlook
Trading in the third quarter has started slightly more
positively. In the UK the Pump hire revenue has shown a steady
improvement and air conditioning hire revenue in mainland Europe
has been strong, this has been driven by some extreme temperatures
across the region, however the UK has not reached the very high
levels we saw during the long hot summer of 2018. Once again
activity in the Middle East has remained consistent through the
summer period.
The board has continued to invest in the business, with new
depot openings during the year and further hire fleet investments.
This will ensure that the business can optimise any weather driven
opportunities whilst at the same time growing the geographic
coverage organically.
JG Murray 26 September 2019
Chairman
Consolidated income statement
for the 6 months ended 30 June 2019 (unaudited)
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 34,974 37,815 78,563
Cost of sales (15,535) (16,256) (31,908)
Gross profit 19,439 21,559 46,655
Distribution costs (5,762) (5,987) (12,073)
Administrative expenses (6,759) (6,292) (13,901)
Operating profit 6,918 9,280 20,681
EBITDA* 11,435 12,429 26,737
Depreciation and impairment losses (3,697) (3,399) (6,666)
Depreciation of right-of-use assets (1,098) - -
Profit on the sale of plant and equipment 278 250 610
--------- --------- ------------------------
Operating profit 6,918 9,280 20,681
--------- --------- ------------------------
Finance income 61 60 125
Finance costs (46) (47) (97)
Interest charge on right-of-use leases (157) - -
Intercompany foreign exchange gains and losses (16) 52 336
Profit before taxation 6,760 9,345 21,045
Taxation (1,311) (1,817) (3,999)
Profit for the financial period 5,449 7,528 17,046
--------- --------- ------------------------
There were no discontinued operations in either
of the above periods
Earnings per share from continuing operations
Basic and diluted (pence) 12.92p 17.82p 40.39p
Dividends paid during the period per equity share
(pence) 11.90p 11.90p 23.80p
Proposed dividend per equity share (pence) 11.90p 11.90p 11.90p
* Earnings Before Interest, Taxation, Depreciation, profit on
the sale of property, plant and equipment, Amortisation and
non-
recurring items.
Consolidated balance sheet
as at 30 June 2019 (unaudited)
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 24,046 23,186 23,651
Right-of-use assets 11,387 - -
Lease prepayments 44 46 45
Deferred tax asset 435 176 677
Retirement benefit pension surplus 1,286 3,354 1,356
---------------- --------------- ----------------
37,198 26,762 25,729
---------------- --------------- ----------------
Current assets
Stocks 5,969 5,807 5,083
Trade and other receivables 20,115 20,100 19,994
Overseas tax (denominated in Euros) 278 47 -
Cash and cash equivalents 23,770 21,489 27,862
50,132 47,443 52,939
---------------- --------------- ----------------
Current liabilities
Trade and other payables (11,444) (12,598) (12,889)
Current tax liabilities (1,104) (1,624) (1,858)
Overseas tax (denominated in euros) - - (436)
Bank loans (493) (493) (493)
Obligations under right-of-use leases (2,141) - -
Obligations under finance leases - (26) (5)
(15,182) (14,741) (15,681)
---------------- --------------- ----------------
Net current assets 34,950 32,702 37,258
Total assets less current liabilities 72,148 59,464 62,987
Non-current liabilities
Bank loans (3,487) (3,979) (3,983)
Obligations under right-of-use leases (9,320) - -
(12,807) (3,979) (3,983)
---------------- --------------- ----------------
Net assets 59,341 55,485 59,004
---------------- --------------- ----------------
Equity
Called-up share capital 422 422 422
Share premium 13 13 13
Retained earnings 54,363 50,789 54,013
Translation reserve 4,297 4,005 4,300
Other reserves 246 246 246
Surplus attributable to equity holders of the parent 59,341 55,475 58,994
Non-controlling interest - 10 10
Total equity 59,341 55,485 59,004
---------------- --------------- ----------------
Consolidated cash flow statement
for the six months ended 30 June 2019 (unaudited)
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 7,530 7,600 22,888
Interest paid (201) (42) (88)
Net UK corporation tax paid (1,300) (946) (2,236)
Overseas tax paid (1,233) (1,052) (1,454)
Net cash inflow from operating activities 4,796 5,560 19,110
--------- --------- --------------------------
Investing activities
Sale of property, plant and equipment 382 472 944
Purchase of property, plant and equipment (2,812) (4,031) (7,142)
Interest received 43 16 41
--------- ---------
Net cash outflow from investing activities (2,387) (3,543) (6,157)
--------- --------- --------------------------
Financing activities
Loan repayments (500) (500) (500)
Capital repayments for right-of-use lease obligations (1,025) - -
Finance lease capital repayments (5) (24) (45)
Equity dividends paid (5,019) (5,029) (10,048)
Purchase of own shares - (438) (438)
--------- ---------
Net cash outflow from financing activities (6,549) (5,991) (11,031)
--------- --------- --------------------------
Net (decrease) / increase in cash and cash equivalents (4,140) (3,974) 1,922
Cash and cash equivalents at the beginning of the
period 27,862 25,311 25,311
Effect of foreign exchange rate changes 48 152 629
Cash and cash equivalents at end of the period 23,770 21,489 27,862
--------- --------- --------------------------
Reconciliation of net cash flow to movement in net funds in the
period
Net (decrease)/increase in cash and cash equivalents (4,140) (3,974) 1,922
Net cash outflow from the decrease in debt 1,530 524 545
Non-cash movements re new right-of-use assets (1,134) - -
Non-cash movements re costs of raising loan finance (4) (4) (8)
--------- --------- --------------------------
(Decrease)/increase in net funds during the period (3,748) (3,454) 2,459
Opening net funds at the beginning of period 23,381 20,293 20,293
Transitional adjustment for right-of-use assets (11,363) - -
at start of period
Effect of foreign exchange rate changes on right-of-use 11 - -
leases
Effect of foreign exchange rate changes 48 152 629
--------- --------- --------------------------
Closing net funds at the end of period 8,329 16,991 23,381
--------- --------- --------------------------
Consolidated statement of comprehensive total income
(CSOCTI)
for the six months ended 30 June 2019 (unaudited)
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Profit for the financial period 5,449 7,528 17,046
-------- -------- ------------------
Other comprehensive income:
Items that may be reclassified to profit and loss:
Currency translation differences on foreign currency
net investments (2) 110 405
Items that will never be reclassified to profit
and loss:
Remeasurement of defined benefit liabilities and
assets (96) (75) (1,649)
Related deferred tax 16 14 313
-------- -------- ------------------
Other comprehensive income for the period net of
tax (82) 49 (931)
-------- -------- ------------------
Total comprehensive income for the period 5,367 7,577 16,115
-------- -------- ------------------
Notes to the consolidated interim financial statements
for the six months ended 30 June 2019 (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 2006.
The information for the 12 months ended 31 December 2018 does
not constitute the group's statutory accounts for 2018 as defined
in Section 434 of the Companies Act 2006. Statutory accounts for
2018 have been delivered to the Registrar of Companies. The
auditor's report on those accounts was unqualified and did not
contain statements under Section 498(2) or (3) of the Companies Act
2006. These interim financial statements, which were approved by
the Board of Directors on 26 September 2019, have not been audited
or reviewed by the auditors.
The interim financial statement has 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 (i)
fair value less anticipated disposal costs and (ii) carrying
value;
(iii) Derivative financial instruments (including embedded
derivatives) which are valued at fair value; and
(iv) Pension scheme assets and liabilities calculated at fair value in accordance with IAS 19.
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.
2 Accounting policies
With the exception of the adoption of IFRS 16 on 1 January 2019,
these interim financial statements have been prepared on a
consistent basis and in accordance with the accounting policies set
out in the Group's Annual Report and Financial Statements 2018.
IFRS 16 introduced a single, on-balance-sheet lease accounting
model for lessees. A lessee recognises a right-of-use asset
representing its right to use the underlying asset and a lease
liability representing its obligation to make lease payments. The
group adopted IFRS 16 on 1 January 2019 and applied the Standard's
modified retrospective approach. Under this approach the cumulative
effect of initially applying IFRS 16 is recognised as an adjustment
to assets and liabilities at the date of initial application.
Comparative information is not restated. Management has decided to
make use of the practical expedient not to perform a full review of
existing leases, bringing onto the balance sheet the net present
value of the remaining outstanding lease obligations as at the date
of transition as both an asset and liability, and has also applied
IFRS 16 to new or modified contracts. There are recognition
exemptions for short-term leases and leases of low-value items and
the group has decided to make use of the short-term leases
exemptions.
The group has recognised a right-of-use asset and a lease
liability for its operating leases of properties, plant machinery
and equipment, other than those that fall within the above
recognition exemption. The nature of expenses related to these
leases has changed because the group has recognised a depreciation
charge for right-of-use assets and an interest expense, charged
within finance costs, on the lease liabilities. The assets are
depreciated on a straight-line basis over the remaining life of the
lease and the interest expense is calculated in order to give a
constant rate of return on the outstanding capital liability.
Previously, the group recognised operating lease expenses on a
straight-line basis over the term of the lease as a reduction in
operating profit, and recognised assets and liabilities only to the
extent that there was a timing difference between actual lease
payments and the expense recognised.
As at 1 January 2019, the date of transition to IFRS 16, the
group recognised additional right-of-use assets and liabilities of
GBP11.4 million. An additional GBP1.1 million of new leases were
capitalised and a depreciation expense of GBP1.1 million was
recognised in the period. EBITDA was improved by approximately
GBP1.2 million due to the removal of operating lease payments of
this amount that would have been charged in accordance with the
previous standards, and operating profit for the current period was
improved by approximately GBP0.1 million. Overall profit before tax
was reduced by approximately GBP0.05 million primarily due to the
effect of charging more interest at the beginning of the lease
term.
There was a significant impact on the group's net funds as a
result of the adoption of IFRS 16 as at 1 January 2019. Net funds
were reduced by GBP11.4 million as a result of capitalising
existing lease obligations as at the date of transition and by a
further GBP0.1 million as a result of applying IFRS 16 to new
leases entered into in the current period. There has been no change
to the group's repayment obligations or commitments as a result of
this change in accounting policy.
There was no impact for the group's finance leases. IFRS 16 did
not make any significant changes to the accounting for lessors, and
therefore there were no changes for leases where the group acts as
a lessor.
3 Revenue
An analysis of the group's revenue is as follows:
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Continuing operations
Hire 30,042 32,847 67,813
Sales 2,863 3,152 6,817
Maintenance 957 936 1,791
Installations 1,112 880 2,142
Group consolidated revenue from the sale of goods
and provision of services 34,974 37,815 78,563
-------- -------- ------------------
The geographical analysis of the group's revenue by origination
is:
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
United Kingdom 20,886 23,993 49,092
Rest of Europe 8,147 8,664 18,202
Middle East and Africa 5,941 5,158 11,269
34,974 37,815 78,563
-------- -------- ------------------
The geographical analysis of the group's revenue by destination
is not materially different to that by origination.
4 Taxation
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2019 2018 2018 GBP'000
GBP'000 GBP'000
Current tax
UK corporation tax at 19% (30 June 2018 and 31 December
2018: 19%) 731 1,252 2,807
Adjustments in respect of prior periods (185) - (32)
-------- -------- --------------
546 1,252 2,775
Overseas tax 508 618 1,444
Adjustments to overseas tax in respect of prior periods (1) 7 42
Total current tax charge 1,053 1,877 4,261
-------- -------- --------------
Deferred tax
Deferred tax on the origination and reversal of temporary
differences 73 (60) (260)
Adjustments in respect of prior periods 185 - (2)
Total deferred tax charge /(credit) 258 (60) (262)
-------- -------- --------------
Total tax charge for the financial period attributable
to
continuing operations 1,311 1,817 3,999
-------- -------- --------------
The tax charge for the financial period can be reconciled to the
profit before tax per the income statement multiplied by the
effective standard annualised corporation tax rate in the UK of 19%
(30 June 2018 and 31 December 2018: 19%) as follows:
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Profit before taxation from continuing and total operations 6,760 9,345 21,045
-------- -------- --------------------
Tax at the UK effective annualised corporation tax
rate of 19%
(30 June 2018 and 31 December 2018: 19%) 1,284 1,776 3,999
Effects of:
Expenses not deductible for tax purposes 72 50 114
Utilisation of overseas trading losses (12) (24) (44)
Effects of different tax rates of subsidiaries operating
abroad (110) (22) (78)
Overseas tax losses not recognised 29 30 -
Effect of change in rate of corporation tax 49 - -
Adjustments to tax charge in respect of previous periods (1) 7 8
Total tax charge for the financial period 1,311 1,817 3,999
-------- -------- --------------------
The total effective tax charge for the financial period
represents the best estimate of the weighted average annual
effective tax rate expected for the full financial year applying
tax rates that have been substantively enacted by the balance sheet
date. Accordingly UK corporation tax has been provided at 19%; the
rate of 19% for the tax year ending 31 March 2020 having been
substantially enacted in October 2015. UK deferred tax has been
provided at 17% (30 June 2018 and 31 December 2018: 19%) being the
rate substantially enacted at the balance sheet date at which the
timing differences are expected to substantially reverse.
5 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 and the
earnings as set out below. There are no discontinued operations in
any period.
6 months ended 30
June 2019
----------------------
Continuing Number of
earnings Shares
GBP'000
Basic earnings/weighted average number of shares 5,449 42,174,359
---------- ----------
Basic earnings per ordinary share (pence) 12.92p
6 months ended 30
June 2018
----------------------
Continuing Number of
Earnings Shares
GBP'000
Basic earnings/weighted average number of shares 7,528 42,251,117
---------- ----------
Basic earnings per ordinary share (pence) 17.82p
12 months ended 31
December 2018
----------------------
Continuing Number
Earnings of
Shares
GBP'000
Basic earnings/weighted average number of shares 17,046 42,207,255
---------- ----------
Basic earnings per ordinary share (pence) 40.39p
Diluted earnings per share
There were no dilutive instruments outstanding at 30 June 2019
or either of the comparative periods and therefore there is no
difference in the basic and diluted earnings per share for any of
these periods. There were no discontinued operations in any
period.
6 Dividend payments
Dividends declared and paid on ordinary one pence shares during
the 6 months ended 30 June 2019 were as follows:
Paid during the 6
months ended
30 June 2019
-------------------------
Pence per Total dividend
share paid
GBP'000
Final dividend for the year ended 31 December 2018 paid to
members on the register as at 31 May 2019 on 21 June 2019 11.90p 5,019
--------- --------------
The above dividend was charged against reserves during the 6
months ended 30 June 2019.
On 26 September 2019 the directors declared an interim dividend
of 11.90 pence per ordinary share which in total amounts to
GBP5,019,000. This will be paid on 8 November 2019 to shareholders
on the register as at 11 October 2019 and will be charged against
reserves in the second half of 2019.
Dividends declared and paid on ordinary one pence shares during
the 6 months ended 30 June 2018 were as follows:
Paid during the 6
months ended
30 June 2018
--------------------
Pence per Total
share dividend
paid
GBP'000
Final dividend for the year ended 31 December 2017 paid to
members on the register as at 1 June 2018 on 25 June 2018. 11.90p 5,029
--------- ---------
The above dividend was charged against reserves during the 6
months ended 30 June 2018.
Dividends declared and paid on ordinary one pence shares during
the 6 months ended 31 December 2018 were as follows:
Paid during the
12 months ended
31 December 2018
--------------------
Pence per Total
share dividend
paid
GBP'000
Final dividend for the year ended 31 December 2017 paid to
members on the register as at 1 June 2018 on 25 June 2018 11.90p 5,029
Interim dividend declared on 27 September 2018 and paid to
shareholders on the register as at 12 October 2018 on 9 November
2018 11.90p 5019
--------- ---------
23.80p 10,048
--------- ---------
The above dividends were charged against reserves during the 12
months ended 31 December 2018.
7 Retirement benefit obligations - Defined benefit pension scheme
The group closed the UK Group defined benefit pension scheme to
future accrual as at 29 December 2002. The assets of the defined
benefit pension scheme continue to be held in a separate trustee
administered fund.
As at 30 June 2019 the group had a net defined benefit pension
scheme surplus, calculated in accordance with IAS 19 (revised)
using the assumptions as set out below, of GBP1,286,000 (30 June
2018: GBP3,354,000; 31 December 2018: GBP1,356,000). The asset has
been recognised in the financial statements as the directors are
satisfied that it is recoverable in accordance with IFRIC 14.
Following the triennial recalculation of the funding deficit as
at 31 December 2016, a revised schedule of contributions and
recovery plan was agreed with the pension scheme trustees in
October 2017. In accordance with this schedule of contributions,
which was backdated to be effective from 1 January 2017, the group
made additional contributions during 2017 to remove the funding
deficit in the group scheme calculated as at 31 December 2016 of
GBP710,000 and this was eliminated by 31 December 2017.
The next formal triennial funding valuation is due as at 31
December 2019. The group currently expects to make pension
contributions of GBP120,000 during 2019 in accordance with the
current schedule of contributions of which GBP60,000 was paid in
the first half year.
Assumptions used to calculate the scheme surplus
A qualified independent actuary has updated the results of the
December 2016 (30 June 2018 and 31 December 2018: December 2016)
full actuarial valuation to calculate the surplus as disclosed
below:
The major assumptions used to determine the present value of the
scheme's defined benefit obligation were:
30 June 30 June 31 December
2019 2018 2018
% % %
Rate of increase in pensionable salaries N/A N/A N/A
Rate of increase in pensions in payment 3.20 3.10 3.20
Discount rate applied to scheme liabilities 2.20 2.60 2.80
Inflation assumption - RPI 3.20 3.10 3.20
Inflation assumption - CPI 2.20 2.10 2.20
Percentage of members taking maximum tax free lump 75 75 75
sum on retirement
From 1 January 2011, the government amended the basis for
statutory increases to deferred pensions and pensions in payment.
Such increases are now based on inflation measured by the Consumer
Price Index (CPI) rather than the Retail Price Index (RPI). Having
reviewed the scheme rules and considered the impact of the change
on this pension scheme, the directors consider that future
increases to (i) all deferred pensions and (ii) Guaranteed Minimum
Pensions accrued between 6 April 1988 and 5 April 1997 and
currently in payment will be based on CPI rather than RPI.
Accordingly, this assumption was adopted as at 31 December 2010 and
subsequently.
Assumptions regarding future mortality experience are set based
on advice in accordance with published statistics. The mortality
table used at 30 June 2019 is 110% S2NA CMI2017 (30 June 2018: 110%
S2NA CMI2016; 31 December 2018: 110% S2NA CMI2017) with a 1.25% per
annum long term improvement for both males and females (30 June
2018 and 31 December 2018: 1.25% males and females).
The assumed average life expectancy in years of a pensioner
retiring at the age of 65 given by the above tables is as
follows:
30 June 30 June 31 December
2019 2018 2018
Male, current age 45 22.8 years 22.9 years 22.8 years
Female, current age 45 24.9 years 25.0 years 24.9 years
Male, current age 65 21.4 years 21.5 years 21.4 years
Female, current age 65 23.4 years 23.5 years 23.4 years
Valuations
The fair value of the scheme's assets, which are not intended to
be realised in the short term and may be subject to significant
change before they are realised, and the present value of the
scheme's liabilities, which are derived from cash flow projections
over long periods and are inherently uncertain, were as
follows:
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Total fair value of plan assets 44,060 43,968 41,036
Present value of defined benefit funded obligation
calculated in accordance with stated assumptions (42,774) (40,614) (39,680)
----------- ---------- ------------
Surplus in the scheme calculated in accordance with
stated assumptions recognised in the balance sheet 1,286 3,354 1,356
----------- ---------- ------------
The movement in the fair value of the scheme's assets during the
period was as follows:
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Fair value of plan assets at the start of the period 41,036 45,657 45,657
Interest income on pension scheme assets 562 551 1,103
Actual return less interest income on pension scheme
assets 3,343 (671) (2,645)
Employer contributions 60 60 120
Benefits paid (888) (1,592) (3,068)
Administration expenses charged in the income statement (53) (37) (131)
Fair value of plan assets at the end of the period 44,060 43,968 41,036
--------- -------- -----------
The movement in the present value of the defined benefit
obligation during the period was as follows:
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Present value of defined benefit funded at the beginning
of the period (39,680) (42,293) (42,293)
Interest on defined benefit obligation (543) (509) (1,019)
Actuarial /(loss) / gain recognised in the CSOCTI
calculated in
accordance with stated assumptions (3,439) 596 996
Benefits paid 888 1,592 3,068
Past service cost - GMP equalisation - - (432)
Closing present value of defined benefit funded obligation
calculated in accordance with stated assumptions (42,774) (40,614) (39,680)
--------- --------- --------------------------
Amounts recognised in the income statement
The amounts (charged) / credited in the income statement
were:
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Interest income on pension scheme assets 562 551 1,103
Interest expense on pension scheme
liabilities (543) (509) (1,019)
---------------------- --------------------- ---------------------
Net pension interest credit included within
finance
income 19 42 84
Scheme administration expenses and GMP
equalisation (53) (37) (563)
Net pension (charge) / credit in the income
statement (34) 5 (479)
---------------------- --------------------- ---------------------
7 Retirement benefit obligations - defined benefit pension scheme (continued)
Actuarial gains and losses recognised in the consolidated
statement of comprehensive total income (CSOCTI)
The amounts (charged) / credited in the CSOCTI were:
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Actual return less interest income on
pension scheme
assets 3,343 (671) (2,645)
Experience gains and losses arising on plan
obligation - - (412)
Changes in demographic and financial
assumptions
underlying the present value of plan
obligations (3,439) 596 1,408
Actuarial (loss) calculated in accordance
with
stated assumptions recognised in the CSOCTI (96) (75) (1,649)
---------------------- --------------------- ---------------------
8 Called up share capital
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Issued and fully paid:
42,174,359 ordinary shares of one pence each (30
June 2018 and 31 December 2018: 42,174,359
ordinary
shares of one pence each) 422 422 422
---------------------- ----------------- -------------------
During the period the Company did not buy back any shares for
cancellation (June 2018 and December 2018: 87,723 shares bought
back for a total consideration of GBP437,689).
The Company did not issue any shares in the period or either of
the comparative periods. No share options were granted, forfeited
or expired during the periods and there were no share options
outstanding at any period end.
The Company has one class of ordinary shares which carry no
right to fixed income.
9 Cash generated from operations
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000
Profit for the period attributable to equity
shareholders 5,449 7,528 17,046
Adjustments for:
Taxation charge 1,311 1,817 3,999
Finance costs 46 47 97
Finance income (61) (60) (125)
Interest charge on right-of-use leases 157 - -
Inter-company foreign exchange gains and losses 16 (52) (336)
Profit on the sale of property, plant and equipment (278) (250) (610)
Depreciation 3,697 3,399 6,666
Depreciation of right-of-use assets 1,098 - -
EBITDA* 11,435 12,429 26,737
Excess of pension contributions compared with service
and
administration expenses including GMP equalisation (7) (23) 443
Workings capital movements:
Stocks (2,324) (2,799) (2,682)
Trade and other receivables (120) (2,245) (2,139)
Trade and other payables (1,454) 238 529
Cash generated from operations 7,530 7,600 22,888
-------- ---------------------- -------------------------
* Earnings Before Interest, Taxation, Depreciation, profit on
the sale of property, plant and equipment, Amortisation and
non-recurring items.
10 Analysis of net funds and movement in financing liabilities
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Cash and cash equivalents per consolidated cash flow
statement 23,770 21,489 27,862
-------- ----------------------- ---------------------
Bank loans:
At the beginning of the period (4,476) (4,968) (4,968)
Loans repaid 500 500 500
Loans drawn down - -
Other non-cash changes (4) (4) (8)
-------- ----------------------- ---------------------
At the of the period (3,980) (4,472) (4,476)
-------- ----------------------- ---------------------
Finance lease liabilities:
At the beginning of the period (5) (50) (50)
Leases repaid 5 24 45
-------- ----------------------- ---------------------
At the end of the period - (26) (5)
-------- ----------------------- ---------------------
Right-of-use lease obligations:
At the beginning of the period - - -
Transitional adjustment for obligations at start of
period (11,363) - -
Leases repaid 1,025 - -
Leases drawn down (1,134) - -
Foreign exchange 11 - -
-------- ----------------------- ---------------------
At the of the period (11,461) - -
-------- ----------------------- ---------------------
Gross debt (15,441) (4,498) (4,481)
-------- ----------------------- ---------------------
Net funds 8,329 16,991 23,381
-------- ----------------------- ---------------------
11 Distribution of interim financial statements
Following a change in regulations in 2008, the Company is no
longer required to circulate this half year report to shareholders.
This enables us to reduce costs associated with printing and
mailing and to minimise the impact of these activities on the
environment. A copy of the interim financial statements is
available on the Company's website, www.andrews-sykes.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR VQLFLKKFLBBB
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September 27, 2019 02:00 ET (06:00 GMT)
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