RNS No 2041c
ANDREW SYKES GROUP PLC
17th March 1999
Another record year for Andrews Sykes Group plc
Preliminary results for the 12 months ended 26 December 1998.
Financial Highlights
Turnover #83.8 million up 40%
EBITDA #23.2 million up 52%
Profit before tax #12.1 million up 3%
Operating cash flow #21.6 million up 72%
Operating cash flow per share 23.9p up 64%
Proposed ordinary dividend 3.6p per 20p share up 20%
Commenting on the results, Chairman Mr J G Murray said:
"I am pleased to report another record year for the Group despite the
anticipated first year exceptional and interest costs associated with the
acquisition of Cox in June.
The strong cash flow generated by Cox has helped us to reduce gearing from
254% at the date of acquisition to just 138% at the end of December and we
expect gearing to continue to reduce rapidly.
The integration of Cox is being completed and interest costs will fall rapidly
as gearing reduces.
With our commitment to continuous improvement within the existing businesses
we remain optimistic for the remainder of 1999."
For further information please contact:
Eric Hook (Chief Executive) Telephone today 0171 329 0096
Andrews Sykes Group plc Telephone company 01902 328700
John Goold / Emily Bruning
Shandwick Consultants Limited Telephone 0171 329 0096
Chairman's Statement
I am pleased to report on the further progress made by our Group during 1998.
Group turnover has increased to #83.8 million, including #19.6 million from
businesses acquired during the year, principally a seven month contribution
from Cox Plant Hire. Profit before tax has risen by 3% to #12.1 million which
is another record for the Group. The increase has been achieved despite the
anticipated first year exceptional and interest costs of Cox. The integration
is being completed and interest costs will fall rapidly as gearing reduces. We
are proposing an increased final dividend of 2.4 pence per ordinary share,
bringing the total for the year to 3.6 pence, an increase of 20% on 1997.
1998 was a very challenging year for the Group and a lot has been achieved.
The acquisition of Cox Plant Hire in June added a fourth leg to the heating,
pumping and air-conditioning hire businesses of Andrews Sykes. Although
dilutive in the short term, this strategy has already proved beneficial, as
general plant hire is less directly related to the weather cycle than heating
and air-conditioning. Good contributions from pumping, and some of the other
UK and overseas subsidiaries ensured that turnover in the continuing
businesses of Andrews Sykes grew by 7% to #64.2 million. The acquisition of
Cox ensures that Group profitability will be less affected by extremes in the
weather patterns in the future and adds a business with a strong cash flow and
growth potential, particularly by acquisition.
We set ourselves very ambitious targets for the integration of Cox in order to
benefit from the savings and operational benefits as quickly as possible. The
head office and the central administration centres were closed and Andrews
Sykes' own computer systems were introduced to the 41 plant and accommodation
depots of Cox from the beginning of October. The hire fleet was rationalised
and the surplus plant in poor condition was sold. Improved management
information from our systems and better workshop procedures have begun to
improve utilisation. New management has been introduced and this, together
with a more focused approach to customer service, will lead to further
improvements during 1999. Additionally, we can now approach some of the larger
industrial customers with a much wider spread of products from the combined
Andrews Sykes and Cox portfolios.
Net cash flow from operating activities rose 72% to #21.6 million helped by
the strong cash flows generated by Cox. This has enabled us to reduce gearing
from 254% at the date of acquisition to just 138% at the end of December and,
without further acquisitions, we expect gearing to continue to reduce rapidly.
The large majority of the debt is within Cox and is without recourse to the
Andrews Sykes Group whose own borrowing capacity is largely untouched.
Diluted earnings per share excluding amortisation and exceptionals showed a
modest improvement from 9.29 pence to 9.33 pence after the issue of a further
4.3 million shares to partially finance the Cox acquisition. On the same basis
cash flow from operations rose by 64% from 14.6 pence to 23.9 pence per share.
So far in 1999 we have seen an improvement in trading conditions compared with
the same period last year and the economic uncertainty of the late summer and
autumn of 1998 highlighted by many commentators has not affected our
businesses. With further gains expected in the operational performance of Cox
together with our commitment to continuous improvement within the existing
businesses, we remain optimistic for the remainder of 1999.
Thanks to the staff who have worked so hard to achieve these results in a
challenging year.
J G Murray
Chairman
Andrews Sykes Group plc
Consolidated profit and loss account
For the 12 months ended 26 December 1998
12 months
to
12 months to 26 December 1998 27 December
------------------------------- 1997
Continuing Acquisitions Total Total
operations
#'000 #'000 #'000 #'000
Turnover 64,190 19,624 83,814 59,915
Cost of Sales -35,014 -13,164 -48,178 -31,126
---------- ---------- -------- ---------
Gross profit 29,176 6,460 35,636 28,789
Distribution costs -5,342 -813 -6,155 -5,932
Administrative expenses -10,781 -5,217 -15,998 -11,171
(including exceptional items
set out in note 2)
Other operating income 124 0 124 115
--------- --------- -------- -----------
Operating profit 13,177 430 13,607 11,801
----------------------------- --------- --------- -------- -----------
EBITDA* 16,275 6,972 23,247 15,254
Depreciation, asset disposals
and property revaluation (4,168) (5,297) (9,465) (3,453)
---------- ---------- -------- -----------
Operating profit before
exceptional items 12,107 1,675 13,782 11,801
and amortisation of goodwill
Exceptional items 1,070 -989 81 0
Amortisation of Goodwill 0 -256 -256 0
----------------------------- --------- --------- -------- -----------
Operating profit 13,177 430 13,607 11,801
--------- --------- -------- -----------
Share of operating profit of associates 122 0
Income from other participating interests 459 0
Net interest payable (group) -2,138 -98
------------------------------------------------------ -------- ---------
Profit on ordinary activities before taxation 12,050 11,703
Tax on profit on ordinary activities -3,810 -3,752
----------------------------------------------------- -------- ---------
Profit on ordinary activities after taxation
being profit for the financial period 8,240 7,951
Dividends paid and proposed:
Equity shares -2,980 -2,311
Non equity shares -460 -546
-------- ---------
Retained profit for the financial period attributable
to ordinary shareholders 4,800 5,094
======== =========
Earnings per ordinary share 9.67 9.98
Earnings per share excluding goodwill 9.99 9.98
Amortisation
Diluted earnings per share 9.14 9.29
Goodwill amortisation 0.28 0.00
Exceptional items -0.09 0.00
-------- ---------
Adjusted diluted earnings per share 9.33 9.29
======== =========
Dividends per share:
Equity shares 3.60 3.00
Non equity shares 7.00 7.00
*Earnings Before Interest, Taxation, Depreciation and Amortisation
There were no discontinued operations during the period.
The comparative figures for earnings and dividends per share have been
restated to take account of the sub division of the #1 ordinary shares into
five 20 pence ordinary shares which was effective from 4 June 1998 and the
implementation of Financial Reporting Standard No. 14: Earnings Per Share.
Andrews Sykes Group plc
Consolidated Balance Sheet
As at 26 December 1998
26 December 27 December
1998 1997
(as restated)
#'000 #'000
Fixed assets
Intangible assets 7,852 0
Tangible assets 44,125 13,369
Investments 515 237
---------------- -------------
52,492 13,606
---------------- -------------
Current assets
Stocks 9,392 7,059
Debtors 24,075 13,887
Cash at bank and in hand 10,171 4,328
---------------- -------------
43,638 25,274
Creditors: Amounts falling due within
one year
Loans, overdrafts and finance lease
obligations -8,863 -2,767
Other creditors -22,640 -16,824
Deferred consideration -7,100 -700
Corporation tax -3,633 -4,383
---------------- -------------
Net current assets 1,402 600
---------------- -------------
Total assets less current liabilities 53,894 14,206
Creditors: Amounts falling due after
more than one year
Loans and finance lease obligations -28,192 -1,332
Other creditors and provisions -1,041 -1,060
Deferred consideration 0 -600
---------------- -------------
Net assets 24,661 11,214
---------------- -------------
Capital and reserves
Called up share capital 19,739 18,857
Share premium account 8,168 782
Revaluation reserve 787 361
Other reserves 278 270
Profit and loss account -4,321 -9,066
---------------- -------------
24,651 11,204
---------------- -------------
Shareholders' funds
Equity 21,467 7,795
Non equity 3,184 3,409
---------------- -------------
24,651 11,204
Minority interests (equity) 10 10
---------------- -------------
24,661 11,214
---------------- -------------
Analysis of net debt
Cash at bank and in hand 10,171 4,328
Deferred consideration -7,100 -1,300
Total loans, overdrafts and finance -37,055 -4,321
lease obligations
---------------- -------------
Net debt -33,984 -1,293
---------------- -------------
Net debt as a percentage of
shareholders' funds 138% 12%
Andrews Sykes Group plc
Consolidated cash flow statement
For the 12 months ended 26 December 1998
12 months to 12 months to
26 December 27 December
1998 1997
#'000 #'000
Net cash inflow from operating
activities 21,554 12,533
-------------- --------------
Returns on investments and
servicing of finance
Loan facility fees -953 0
Net interest paid -1,228 -75
Dividends received 459 0
Preference dividends paid -462 -560
Interest element of finance lease
payments -38 -41
-------------- --------------
Net cash outflow for returns on
investments and servicing of
finance -2,222 -676
-------------- --------------
Cash outflow for taxation -3,714 -2,212
-------------- --------------
Capital expenditure
Purchase of tangible fixed assets -6,266 -6,274
Sale of tangible fixed assets 4,023 1,024
-------------- --------------
Net cash outflow for capital
expenditure -2,243 -5,250
-------------- --------------
Acquisitions
Purchase of subsidiary undertakings -45,379 -869
Net cash acquired with subsidiary
undertakings 359 97
Payment of deferred consideration
on previous acquisitions -46 -1,405
Purchase of interests in associates -156 -73
-------------- --------------
Net cash outflow for acquisitions -45,222 -2,250
Equity dividends paid -2,541 -1,710
-------------- --------------
Cash (outflow)/inflow before the
use of liquid resources
and financing -34,388 435
-------------- --------------
Management of liquid resources
Movement in bank deposits 2,080 -1,838
-------------- --------------
Financing
Issue of ordinary share capital net
of issue costs 8,276 412
New loan draw downs and factoring
advances 37,823 94
New hire purchase and finance lease
agreements 277 0
Loan repayments -5,922 -1,000
Capital element of finance lease
repayments -186 -298
Purchase of own shares -85 -92
-------------- --------------
Net cash inflow/(outflow) from
financing 40,183 -884
-------------- --------------
Increase / (decrease) in cash in
the period 7,875 -2,287
-------------- --------------
Andrews Sykes Group plc
Notes to the financial statements
For the 12 months ended 26 December 1998
1. Segmental analysis
The Group's turnover may be analysed between the following principal products
and activities:
12 months to 12 months to
26 December 27 December
1998 1997
#'000 #'000
Product Group:
Pumps 23,389 22,279
Heating and ventilation 9,553 10,949
Air conditioning 22,487 18,980
General plant 19,023 0
Other 9,362 7,707
-------------- --------------
Total 83,814 59,915
-------------- --------------
Activity:
Hire 47,988 31,424
Sales 23,057 18,036
Installation 12,769 10,455
-------------- --------------
Total 83,814 59,915
-------------- --------------
The integrated nature of the Group's operations does not permit a meaningful
analysis of operating profit and net assets by product group or activity.
The geographical analysis of the Group's turnover was as follows:
By geographical origin By geographical destination
12 months 12 months to 12 months 12 months
to to to
26 December 27 December 26 December 27 December
1998 1997 1998 1997
#'000 #'000 #'000 #'000
United Kingdom 75,413 52,825 72,474 49,768
Rest of Europe 3,078 3,326 4,155 4,287
Middle East and
Africa 4,064 3,764 5,607 5,191
The Americas 1,073 0 1,149 218
Rest of World 186 0 429 451
----------- ------------ ----------- -----------
83,814 59,915 83,814 59,915
----------- ------------ ----------- -----------
The analysis of operating profit and net assets by geographical origin was as
follows:
Operating Profit Net assets
12 months 12 months
to to
26 December 27 December 26 December 27 December
1998 1997 1998 1997
#'000 #'000 #'000 #'000
United Kingdom 12,133 10,617 49,554 14,312
Rest of Europe 765 567 5,130 722
Middle East and
Africa 633 617 836 1,006
The Americas 50 0 -289 0
Rest of World 26 0 -9 0
----------- ----------- ----------- -----------
13,607 11,801 55,222 16,040
----------- ----------- ----------- -----------
Net (debt) / funds -26,884 7
Taxation and
dividends payable -3,677 -4,833
----------- -----------
24,661 11,214
----------- -----------
Andrews Sykes Group plc
Notes to the financial statements
For the 12 months ended 26 December 1998
2. Exceptional items 12
months
to
12 months to 26 December 1998 27
December
1997
Continuing Acquisitions Total Total
#'000 #'000 #'000 #'000
Redundancy and reorganisation 0 -989 -989 0
Release of bonus provisions 1,370 0 1,370 0
Abortive acquisition costs -300 0 -300 0
---------- ---------- ------- --------
1,070 -989 81 0
---------- ---------- ------- --------
At an Extraordinary General Meeting held on 1 June 1998 the shareholders voted
to replace cash bonuses for three directors linked to the Company's share
price with equivalent share options. Accordingly, provisions relating to the
cash bonuses built up in previous periods have been released.
3. Reconciliation of operating profit to net cash inflow from operating
activities
12 months to 12 months to
26 December 27 December
1998 1997
#'000 #'000
Operating profit 13,607 11,801
Amortisation of goodwill 256 0
Depreciation 9,379 3,603
Deficit on revaluation of freehold
and long leasehold properties 165 0
(Profit) on sale of fixed assets -79 -150
(Increase) in stocks -1,807 -2,029
(Increase) in debtors -911 -1,234
Increase in creditors and
provisions 944 542
0 0
------------ ------------
Net cash inflow from operating
activities 21,554 12,533
------------ ------------
Andrews Sykes Group plc
Notes to the financial statements
For the 12 months ended 26 December 1998
4. Reconciliation of net cash flow to movement in net (debt) / funds
12 months to 12 months to
26 December 27 December
1998 1997
#'000 #'000
Increase/ (decrease) in cash in the
period 7,875 -2,287
Cash (inflow) / outflow from movement
in debt and lease financing -31,992 1,204
Cash (inflow) / outflow from movement
in liquid resources -2,080 1,838
------------- ------------
Change in net debt resulting from cash
flows -26,197 755
------------- ------------
Finance lease, hire purchase and other
financing arrangements acquired with
subsidiaries -42 -285
Loan notes issued -700 -1,600
Translation differences 48 -43
------------- ------------
Movement in period -26,891 -1,173
Opening net funds 7 1,180
------------- ------------
Closing net (debt) / funds -26,884 7
------------- ------------
5. Consolidated statement of total recognised gains and losses
12 months to 12 months to
26 December 27 December
1998 1997
#'000 #'000
Profit for the financial period 8,240 7,951
Currency translation differences on
foreign currency net investments 49 -51
Surplus on revaluation of freehold and
long leasehold properties 407 0
------------- -------------
Total gains and losses in the period 8,696 7,900
------------- -------------
Andrews Sykes Group plc
Notes to the financial statements
For the 12 months ended 26 December 1998
6. Reconciliation of movements in group shareholders' funds
12 months to 12 months to
26 December 27 December
1998 1997
#'000 #'000
Profit for the financial period 8,240 7,951
Dividends -3,440 -2,857
Other recognised gains and losses 49 -51
Goodwill taken to reserves on the
purchase of subsidiary undertakings 0 -3,347
Proceeds from ordinary shares issued 8,276 412
Consideration on the purchase of own
shares -85 -92
Revaluation of freehold and long
leasehold properties 407 0
------------- -------------
Net increase in shareholders' funds 13,447 2,016
Shareholders' funds at the beginning of
the period 11,204 9,188
Shareholders' funds at the end of the
period 24,651 11,204
------------- -------------
Andrews Sykes Group plc
Notes to the financial statements
For the 12 months ended 26 December 1998
7. Earnings per ordinary share
The basic figures have been calculated by reference to the weighted average
number of 20 pence ordinary shares in issue during the period of 80,457,940
(1997: 74,209,585) after adjusting for the bonus element of the open offer.
The earnings are the Group's profit after taxation and preference dividends.
The figures can be reconciled to the adjusted earnings per share numbers given
on the face of the profit and loss account as follows:
12 months 12 months
to to
26 December 27 December
1998 1997
#'000 #'000
Basic earnings 7,780 7,405
Add back goodwill amortisation 256 0
------------- ------------
Adjusted basic earnings 8,036 7,405
------------- ------------
Adjusted basic earnings per
ordinary share 9.99 9.98
------------- ------------
The calculation of the diluted earnings per ordinary share is based on diluted
earnings of #8,249,000 (1997: #8,006,000) and on 90,228,030 (1997:
86,139,786) ordinary shares calculated as follows:
12 months to 12 months to
26 December 1998 27 December 1997
Earnings Number of Earnings Number of
#'000 shares #'000 Shares
Basic earnings / weighted
average number of shares 7,780 80,457,940 7,405 74,209,585
Weighted average number of
shares under option 0 6,071,497 0 3,800,883
Number of shares that would
have been issued at fair
value 0 -3,752,557 0 -1,415,160
Dividend saving / weighted
average number of ordinary
shares arising from the
conversion of the preference
shares 469 7,451,150 601 9,544,478
--------- ---------- -------- -----------
Diluted earnings / weighted
average number of shares 8,249 90,228,030 8,006 86,139,786
--------- ---------- -------- -----------
Diluted earnings per
ordinary share 9.14 9.29
---------- -----------
The adjusted diluted earnings per share is based upon the weighted average
number of ordinary shares as set out in the table above. The diluted earnings
can be reconciled to the adjusted diluted earnings as follows:
12 months to 12 months to
26 December 27 December
1998 1997
#'000 #'000
Diluted earnings 8,249 8,006
Add back goodwill amortisation 256 0
Less net exceptional credits -81 0
------------ ----------------
Adjusted diluted earnings 8,424 8,006
------------ ----------------
Adjusted diluted earnings per
share 9.33 9.29
------------ ----------------
Andrews Sykes Group plc
Notes to the financial statements
For the 12 months ended 26 December 1998
8. The proposed final dividend of 2.4 pence per ordinary share will, subject
to approval at the Annual General Meeting, be paid on 28 May 1999 to
shareholders on the register on 6 April 1999.
9. The above financial information has been extracted from the Company's
financial statements for the 12 months ended 26 December 1998 and the 12
months ended 27 December 1997. The financial statements for the 12 months
ended 27 December 1997 have been filed and those for the 12 months ended 26
December 1998 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.
10. 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.
11. The Company's Annual General Meeting will be held at 12.00 noon on 26 May
1999 at The Grosvenor House Hotel, Park Lane, London, W1A 3AA.
END
FR CCACDDDKBQND
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