RNS Number:6005K
Andrews Sykes Group PLC
01 May 2003
Andrews Sykes Group plc
Preliminary Announcement
For the 52 weeks ended 28 December 2002
FINANCIAL HIGHLIGHTS
The adjusted diluted earnings per share increased by 12.7% from 10.15 pence to
11.44 pence
Profit on ordinary activities before taxation and exceptional items increased by
#0.2 million from last year at #12.1 million
#17.8 million spent on the share buy back programme to further enhance
shareholder value
The loss making Cox Plant hire business was sold on 6 June 2002 at break even to
book value
SUMMARY OF RESULTS
52 weeks ended 52 weeks ended
28 December 2002 29 December 2001
#'000 #'000
Turnover 70,544 84,184
EBITDA* 19,189 22,769
Profit on ordinary activities before taxation and
exceptional items 12,124 11,916
Profit on the disposal of property - 336
Profit on ordinary activities before taxation 12,124 12,252
Basic earnings per share (pence) 11.50p 10.52p
Adjusted diluted earnings per share (pence) 11.44p 10.15p
Gearing 74.5% 42.2%
* Earnings before interest, taxation, depreciation, exceptional items
and goodwill charges
For additional information contact :
R.J. Stevens: 01902 328700
Chairman's statement
Summary of results
Overall, the Group has achieved another satisfactory result in the year under
review. The Group's profit before taxation was #12.1 million which, after a tax
charge of #3.8 million, gives a retained profit for the financial period of #8.3
million. Although 2002 was a year of reorganisation for the Group, the profit
after tax was maintained at the same level as last year. The share buy back and
cancellation programme continues to be successful and has reduced the number of
shares in issue helping to improve the adjusted diluted earnings per share from
10.15 pence to 11.44 pence.
During 2002 we have reorganised the UK core business by reducing the fixed costs
and linking them to a sustainable level of turnover. This places us in a strong
position to maximise profitability.
The sale of the business of the loss making subsidiary, Cox Plant Hire, was
completed on 6 June 2002, at a valuation that achieved break-even on the
carrying value in the balance sheet.
Overview of continuing operations
Turnover from continuing operations decreased from #67.5 million last year to
#64.5 million in 2002. This was mainly attributable to a decline in the UK hire
revenue, which fell by 12% below the level achieved in 2001, which in turn was
due to increased competition in our UK core markets on all our product ranges
and the weather which was not particularly favourable for our Group.
Accordingly operating profit from continuing operations decreased but only by
#1.2 million from #13.8 million last year to #12.6 million in 2002. As notified
in the interim report, the year started off badly with first half profits of
#5.0 million compared with #7.1 million in 2001, a reduction of #2.1 million.
Nevertheless the second half recovered successfully with profits of #7.6 million
compared to #6.7 million in the previous year, an increase of #0.9 million. This
is a satisfactory result considering the depressed economic conditions
throughout our principal geographical trading markets in the UK, Northern Europe
and the Middle East.
The disappointing result of our UK hire business was significantly mitigated by
improved results elsewhere in the Group as set out below.
The UK fixed air conditioning installation business, operated through Andrews
Air Conditioning & Refrigeration, experienced a significant recovery with
operating profits for the year of #0.7m from an operating loss in 2001 of #0.3m
This business has been the subject of management attention over the past 18
months with the result that the business returned to the profit levels achieved
in 2000.
Accommodation Hire continued to perform well in 2002 with a turnover of #9.9
million and an operating profit of #1.2 million compared with #1.0 million last
year. Following the successful disposal of the general plant business this
operation is now being further integrated into the Andrews Sykes depot network
and investment will continue to be made as required.
Engineering Appliances performed in line with our expectations returning an
operating profit of #0.7 million, the same as last year.
The Group's well established business in The Netherlands had a very successful
year generating an operating profit of #0.8 million compared with #0.6 million
last year. I am also pleased to report that the same can be said of our
operation in the UAE, Khansaheb Sykes LLC, the operating profit increasing from
a break even position in 2001 to #0.3 million this year.
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 acquisitions in the appropriate market sectors, offers the
best opportunity for future profit growth and added shareholder value and
therefore this policy will continue to be adopted.
Disposal of the general plant hire business
The sale of the Cox general plant hire business was completed on 6 June 2002 at
break even. Net cash consideration of #7.2 million was received immediately
following the disposal and a further #1.8 million is due to be received in May
2004. I consider that this is a particularly satisfactory outcome for our Group
as this business made a loss before taxation of #1.5 million in 2001 and #0.6
million in 2002 prior to its disposal.
Therefore this disposal will enhance the earnings per share in future periods.
Just as importantly, the disposal has enabled management to reposition the
business and move away from the construction industry sector, with traditionally
low profit levels, and concentrate on further developing value added products
with higher gross margins.
Earnings per share and share buy back programme
As set out in note 6, the adjusted diluted earnings per share increased from
10.15 pence in 2001 to 11.44 pence this year.
The 2002 share buy back programme has enhanced the adjusted diluted earnings per
share figure by approximately 0.2p in the year. The effect in the year is very
small because approximately 88% of the share buy backs occurred in the last
quarter of the financial year. The full year effect of the share buy backs would
have been to further increase the adjusted diluted earnings per share by 2.3p.
Therefore, as reported in both last year's annual report and the half year
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.
The dividend payment policy will be resumed at such time that the Board
considers it to be in the best interest of the shareholders.
Andrews Sykes Group Pension Scheme
The Group has for many years operated a defined benefit pension scheme for the
benefit of the majority of its UK employees. This scheme provided a pension
based on the employees final salary and length of service.
In common with a number of long established UK companies the Board reviewed the
appropriateness of the scheme taking into account the interests of both the
employees and the shareholders. The Board concluded that the scheme was no
longer appropriate and therefore, with the agreement of the Trustees, the
Andrews Sykes Group Pension Scheme was closed on 31 December 2002.
On the same date a new pension scheme was introduced, the Andrews Sykes
Stakeholder Pension Plan, to which the majority of UK employees are eligible.
The scheme is managed on behalf of the Group by Legal & General. As this scheme
is a defined contribution scheme the Group will not be exposed to any
fluctuation in the value of this scheme's investments in future years.
Outlook
The first quarter of 2003 has started better than last year. The all important
results of Andrews Sykes Hire are in line with expectations and continue to
reflect the improved performance achieved in the second half of last year. The
other businesses are also performing to plan. If these trends continue we should
have a successful year.
JG Murray
Chairman
30 April 2003
Andrews Sykes Group plc
Consolidated profit & loss account
For the 52 weeks ended 28 December 2002
52 weeks ended 28 December 2002 52 weeks ended 29 December 2001
Continuing Discontinued Total Continuing Discontinued Total
operations operations operations operations
#'000 #'000 #'000 #'000 #'000 #'000
Turnover 64,477 6,067 70,544 67,497 16,687 84,184
Cost of sales (33,043) (4,299) (37,342) (34,210) (12,239) (46,449)
----------- ----------- --------- ----------- ----------- ---------
Gross profit 31,434 1,768 33,202 33,287 4,448 37,735
Distribution costs (5,787) (346) (6,133) (5,928) (825) (6,753)
Administrative expenses (13,030) (1,572) (14,602) (13,561) (4,066) (17,627)
Other operating income 21 - 21 - - -
----------- ----------- --------- ----------- ----------- ---------
Operating profit/(loss) 12,638 (150) 12,488 13,798 (443) 13,355
----------- ----------- --------- ----------- ----------- ---------
EBITDA* 18,161 1,028 19,189 19,326 3,443 22,769
Depreciation and asset (5,468) (1,178) (6,646) (5,484) (3,886) (9,370)
disposals
----------- ----------- --------- ----------- ----------- ---------
Operating profit/(loss) 12,693 (150) 12,543 13,842 (443) 13,399
before goodwill
amortisation
Goodwill amortisation (55) - (55) (44) - (44)
----------- ----------- --------- ----------- ----------- ---------
Operating profit/(loss) 12,638 (150) 12,488 13,798 (443) 13,355
----------- ----------- --------- ----------- ----------- ---------
Profit on the disposal of property 0 336
- discontinued
Net interest (364) (1,439)
payable
--------- ---------
Profit on ordinary activities 12,124 12,252
before taxation
Tax on profit on ordinary (3,850) (3,914)
activities
--------- ---------
Profit on ordinary activities after 8,274 8,338
taxation being profit for the
financial period attributable to
ordinary shareholders
Basic earnings per ordinary share 11.50 10.52
(pence)
Diluted earnings per share (pence) 11.36 10.51
Add back: Goodwill amortisation 0.08 0.06
Exceptional items 0.00 (0.42)
--------- ---------
Adjusted diluted earnings per share 11.44 10.15
(pence)
* Earnings before interest, taxation, depreciation, and amortisation excluding
exceptional items.
Andrews Sykes Group plc
Consolidated Balance Sheet
At 28 December 2002
28 December 29 December
2002 2001
#'000 #'000
Fixed assets
Intangible assets: Goodwill 73 128
Tangible fixed assets 16,638 24,560
Investments 341 605
17,052 25,293
Current assets
Stocks 4,692 4,675
Debtors 15,614 17,779
Cash at bank and in hand 8,704 7,821
29,010 30,275
Creditors: Amounts falling due within one year
Bank loans (2,490) (12,350)
Other creditors (10,881) (12,228)
Corporation and overseas tax (2,018) (2,352)
(15,389) (26,930)
Net current assets 13,621 3,345
Receivable within 1 year 11,292 1,427
Due after more than one year 2,329 1,918
13,621 3,345
Total assets less current liabilities 30,673 28,638
Creditors: Amounts falling due after more than
one year
Bank loans (15,965) (5,000)
Provisions for liabilities and charges (1,618) (1,029)
Net assets 13,090 22,609
Capital and reserves
Called up share capital 12,044 14,686
Share premium account 10,476 10,421
Revaluation reserve 757 762
Other reserves 6,907 4,236
Profit and loss account (17,104) (7,506)
Equity shareholders' funds 13,080 22,599
Minority interests (equity) 10 10
13,090 22,609
Analysis of net debt
Cash at bank and in hand 8,704 7,821
Bank loans (18,455) (17,350)
Net debt (9,751) (9,529)
As a percentage of equity shareholders' funds 74.5% 42.2%
Andrews Sykes Group plc
Consolidated cash flow statement
For the 52 weeks ended 28 December 2002
52 weeks 52 weeks
ended ended
28 December 29 December
2002 2001
#'000 #'000
Net cash inflow from operating activities 18,866 26,648
Returns on investments and servicing of finance
Interest received 297 307
Interest paid (724) (1,577)
Net cash outflow for returns on investments and (427) (1,270)
servicing of finance
Cash outflow for taxation (3,373) (4,005)
Capital expenditure and financial investment
Sale of own shares by ESOP 221 68
Purchase of tangible fixed assets (6,020) (5,749)
Sale of tangible fixed assets 1,076 2,057
Net cash outflow for capital expenditure and (4,723) (3,624)
financial investment
Acquisitions and disposals
Cash received on the disposal of a business 7,205 -
Net cash inflow for acquisitions and disposals 7,205 -
Cash inflow before the use of liquid resources
and financing 17,548 17,749
Management of liquid resources
Movement in bank deposits (1,250) (2,580)
Financing
Issue of ordinary share capital net of issue 90 140
costs
Loans repaid (17,595) (7,800)
Capital element of finance lease repayments - (63)
New loans drawn down 18,700 -
Purchase of own shares (17,819) (12,629)
Net cash outflow from financing (16,624) (20,352)
Decrease in cash in the period (326) (5,183)
Andrews Sykes Group plc
Notes to the financial statements
For the 52 weeks ended 28 December 2002
1. Segmental analysis
The Group's turnover may be analysed between the following principal products
and activities:
52 weeks ended 28 December 2002 52 weeks ended 29 December 2001
Continuing Discontinued Total Continuing Discontinued Total
#'000 #'000 #'000 #'000 #'000 #'000
Product Group:
Pumps 17,625 - 17,625 19,850 - 19,850
Heating, ventilation and air
conditioning 33,291 - 33,291 34,960 - 34,960
Accommodation and other 13,561 - 13,561 12,687 - 12,687
General plant - 6,067 6,067 - 16,687 16,687
Total 64,477 6,067 70,544 67,497 16,687 84,184
Activity:
Hire 40,643 5,489 46,132 44,103 14,788 58,891
Sales 14,336 578 14,914 14,370 1,899 16,269
Installation 9,498 - 9,498 9,024 - 9,024
Total 64,477 6,067 70,544 67,497 16,687 84,184
The integrated nature of the Group's operations 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/(loss)
exceptionals Exceptionals & before
& goodwill goodwill interest and
Turnover amortisation amortisation tax Net assets
#'000 #'000 #'000 #'000 #'000
52 weeks ended 28 December 2002:
Pumps, heating, ventilation, air 64,477 12,693 (55) 12,638 24,859
conditioning, accommodation and other
General plant 6,067 (150) - (150) -
70,544 12,543 (55) 12,488 24,859
Net debt (9,751)
Taxation and dividends payable (2,018)
13,090
52 weeks ended 29 December 2001:
Pumps, heating, ventilation, air 67,497 13,842 (18) 13,824 30,325
conditioning, accommodation and
other
General plant 16,687 (443) 310 (133) 4,165
84,184 13,399 292 13,691 34,490
Net debt (9,529)
Taxation and dividends payable (2,352)
22,609
The geographical analysis of the Group's turnover was as follows:
By geographical origin By geographical destination
52 weeks ended 52 weeks ended 52 weeks ended 52 weeks ended
28 December 29 December 28 December 29 December
2002 2001 2002 2001
#'000 #'000 #'000 #'000
United Kingdom 64,396 79,248 63,650 77,714
Rest of Europe 3,174 2,284 3,809 3,311
Middle East and Africa 2,974 2,652 3,069 2,834
Rest of World - - 16 325
70,544 84,184 70,544 84,184
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
28 December 29 December 28 December 29 December
2002 2001 2002 2001
#'000 #'000 #'000 #'000
As restated
United Kingdom 11,495 13,035 22,681 31,744
Rest of Europe 720 600 943 1,312
Middle East and Africa 273 56 1,235 1,434
12,488 13,691 24,859 34,490
Net debt (9,751) (9,529)
Taxation and dividends payable (2,018) (2,352)
13,090 22,609
The analysis of net assets for 2001 has been restated to ensure consistency with
2002.
2. Reconciliation of operating profit to net cash inflow from operating
activities
52 weeks ended 52 weeks ended
28 December 29 December
2002 2001
#'000 #'000
Operating profit 12,488 13,355
Goodwill amortisation 55 44
Depreciation 6,841 9,638
Loss on sale of investments 43 -
Profit on sale of tangible fixed assets (195) (268)
(Increase)/decrease in stocks (425) 1,083
(Increase)/decrease in debtors (989) 3,154
Increase/(decrease) in creditors and provisions 1,048 (358)
Net cash inflow from operating activities 18,866 26,648
3. Reconciliation of net cash flow to movement in net debt
52 weeks ended 52 weeks ended
28 December 29 December
2002 2001
#'000 #'000
Decrease in cash in the period (326) (5,183)
Cash (inflow)/outflow from movement in debt and lease (1,105) 7,863
financing
Cash outflow from movement in liquid resources 1,250 2,580
Change in net debt resulting from cash flows (181) 5,260
Translation differences (41) 1
Movement in period (222) 5,261
Opening net debt (9,529) (14,790)
Closing net debt (9,751) (9,529)
4. Consolidated statement of total recognised gains and losses
52 weeks ended 52 weeks ended
28 December 2002 29 December 2001
#'000 #'000
Profit for the financial period 8,274 8,338
Currency translation differences on foreign currency net (64) 8
investments
Total gains and losses in the period 8,210 8,346
5. Reconciliation of movements in Group shareholders' funds
52 weeks ended 52 weeks ended
28 December 2002 29 December 2001
#'000 #'000
Profit for the financial period 8,274 8,338
Other recognised gains and losses (64) 8
Proceeds from ordinary shares issued 90 140
Consideration on the purchase of own shares (17,819) (12,629)
Net decrease in shareholders' funds (9,519) (4,143)
Shareholders' funds at the beginning of the period 22,599 26,742
Shareholders' funds at the end of the period 13,080 22,599
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 71,949,134 (52
weeks ended 29 December 2001: 79,221,681).
The calculation of the diluted earnings per ordinary share is based on a profit
of #8,274,000 (52 weeks ended 29 December 2001: #8,338,000) and on 72,815,175
(52 weeks ended 29 December 2001: 79,305,491) ordinary shares. The share
options have a dilutive effect for the period ended 28 December 2002 calculated
as follows:
52 weeks ended 52 weeks ended
28 December 2002 29 December 2001
Earnings Number of Earnings Number of
#'000 shares #'000 Shares
Basic earnings/weighted average number of 8,274 71,949,134 8,338 79,221,681
shares
Weighted average number of shares under option - 4,717,604 - 225,000
Number of shares that would have been issued - (3,851,563) - (141,190)
at fair value
Earnings/diluted weighted average number of 8,274 72,815,175 8,338 79,305,491
shares
Diluted earnings per ordinary share (pence) 11.36p 10.51p
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 be adjusted
earnings as follows:
52 weeks ended 52 weeks ended
28 December 29 December
2002
#'000 2001
#'000
Earnings 8,274 8,338
Goodwill amortisation 55 44
Exceptional items - (336)
Adjusted earnings 8,329 8,046
Adjusted diluted earnings per share (pence) 11.44p 10.15p
The above figures have been disclosed to demonstrate maintainable earnings.
7. The financial information set out above does not constitute the
Group's statutory accounts for the 52 weeks ended 28 December 2002 or the 52
weeks ended 29 December 2001 but it is derived from those accounts. The
financial statements for the 52 weeks ended 29 December 2001 have been filed and
those for the 52 weeks ended 28 December 2002 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.
8. 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.
9. The Company's Annual General Meeting will be held at 10.30 a.m. on 4
June 2003 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
END
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