TIDMASY
RNS Number : 4968O
Andrews Sykes Group PLC
18 May 2018
Andrews Sykes Group plc
Summary of results
For the 12 months ended 31 December 2017
12 months 12 months
ended ended
31 December 31 December
2017 2016
GBP'000 GBP'000
Revenue from continuing operations 71,300 65,389
EBITDA* from continuing operations 22,851 20,664
Operating profit 17,589 15,816
Profit after tax for the financial period 14,101 14,473
Basic earnings per share from total operations
(pence) 33.37p 34.25p
Interim and final dividends paid per equity
share (pence) 23.80p 23.80p
Proposed final dividend per equity share
(pence) 11.90p 11.90p
Net cash inflow from operating activities 17,862 15,133
Total interim and final dividends paid 10,058 10,058
Net funds 20,293 17,673
* Earnings Before Interest, Taxation, Depreciation, profit on
sale of property, plant and equipment, Amortisation and non-
recurring items as reconciled on the consolidated income
statement.
For further information please contact:
Andrews Sykes Group plc
Paul Wood, Group Managing Director
Andrew Phillips, Chief Financial Officer 01902 328700
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GCA Altium Limited (NOMAD)
Tim Richardson 0207 484 4040
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Arden Partners plc (Broker)
Steve Douglas 0207 614 5900
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Andrews Sykes Group plc
Chairman's Statement
Overview and financial highlights
Summary
The group's revenue for the year ended 31 December 2017 was
GBP71.3 million, an increase of GBP5.9 million, or 9.0%, compared
with the same period last year. This increase had a more than
proportionate impact on operating profit which increased by 11.2%,
or GBP1.8 million, from GBP15.8 million last year to GBP17.6
million in the year under review. This increase, which follows a
19.7% increase last year, reflects strong and improved performances
from both our hire and sales businesses in the UK and Europe and a
strong and stable performance from our business in the Middle
East.
Net finance costs were GBP0.3 million this year compared with an
income of GBP1.7 million in 2016. This is largely attributable to a
foreign exchange loss arising on the retranslation of inter-company
balances of GBP0.3 million this year compared with a gain of GBP1.6
million in 2016. Last year's gain was mainly due to the relative
weakening of Sterling compared with overseas currencies, notably
the Euro and the UAE Dirham. This year, movements in foreign
exchange rates have been much smaller and mixed, Sterling weakening
slightly against the Euro but strengthening against the UAE Dirham
and the US Dollar, the combined effect of which has resulted in an
exchange loss of GBP0.3 million in the current year.
Despite the increase in operating profit, our basic earnings per
share decreased by 2.6% from 34.25p in 2016 to 33.37p in 2017.
However, last year's result was significantly impacted by the
one-off foreign exchange gain on inter-company loans discussed
above. The most important factor is that the group's operating
profit improved again this year which has enhanced the quality of
earnings. The basic EPS remains strong and is indicative of the
underlying business performance and strength of the group.
The group continues to generate strong cash flows. Net cash
inflow from operating activities was GBP17.9 million compared with
GBP15.1 million last year. Despite shareholder related cash
outflows of GBP10.1 million on ordinary dividends, net funds
increased by GBP2.6 million from GBP17.7 million at 31 December
2016 to GBP20.3 million at 31 December 2017.
Our policy of returning affordable dividends to shareholders
continues and, over the last five financial years, the group has
paid GBP47.8 million in cash to shareholders. This has not been at
the expense of our other obligations; the group pays its external
creditors in accordance with their agreed credit terms, it operates
well within its banking covenants and has paid nearly GBP1 million
into the defined benefit pension scheme during 2017 to eliminate
the funding deficit of GBP0.7 million as at 31 December 2016.
Therefore, in the light of the improved operating profit and
substantial net funds that are available, the Board is once again
proposing a further final dividend payment amounting to GBP5.0
million which, if approved at the forthcoming AGM, will be paid in
June 2018.
Cost control, cash and working capital management continue to be
priorities for the group. Capital expenditure is concentrated on
assets that give a good return and in total GBP6.9 million was
invested in the hire fleet this year, GBP0.7 million more than last
year and significantly more than the wasting depreciation charge of
GBP5.1 million. In addition, the group invested a further GBP1.0
million in property, plant and equipment. These actions will ensure
that the group's infrastructure and revenue generating assets are
sufficient to support future growth and profitability. Hire fleet
utilisation, condition and availability continue to be the subjects
of management focus.
Operating performance
The following table splits the results between the first and
second half years:
Turnover Operating profit
GBP'000 GBP'000
--------- ------------------
1st half 2017 35,334 8,171
--------- ------------------
1st half 2016 30,287 6,395
--------- ------------------
2nd half 2017 35,966 9,418
--------- ------------------
2nd half 2016 35,102 9,421
--------- ------------------
Total 2017 71,300 17,589
--------- ------------------
Total 2016 65,389 15,816
--------- ------------------
The above table demonstrates that the successful performance in
the first half of the year continued into the second half. Turnover
in the first half of the year showed a 16.7% improvement over the
same period in 2016 and operating profit was 27.8% higher than the
equivalent period last year. Such significant improvements cannot
be maintained indefinitely, especially when compared to a strong
second half result in the previous year. Consequently, turnover in
the second half improved by a more modest 2.5% compared with 2016
and operating profit was virtually unchanged from the same period
in last year.
The above significant improvement in operating profit has been
achieved despite any significant extremes in climatic conditions.
The operating profit of our main business segment in the UK and
Northern Europe increased from GBP13.8 million last year to GBP15.2
million in the year under review. The warmer than expected start to
the summer in June 2017 was short-lived and in general the 2017
summer was cool and wet which didn't stimulate demand for our air
conditioning products. The pumping business again performed well
following a successful year in 2016. Generally the underlying
performance was better than last year across the business sector
due to robust operational management. Our traditional businesses
continue to be developed and supported by the expansion of
non-weather dependent niche markets which benefit the performance
of our specialist hire divisions. This year's result further
demonstrates that with a diverse product range we are able to
return a strong performance despite the absence of any significant
extreme weather conditions.
Our hire and sales business in the Middle East had another
strong trading year. The operating profit for this business segment
was maintained at GBP2.9 million, the same result as that achieved
in 2016. Trading was strong throughout the UAE and our climate
rental division returned a positive contribution to the business
results.
Our fixed installation business sector in the UK returned a
slightly improved operating profit of GBP0.4 million this year
compared with GBP0.3 million in 2016. The market continues to be
fragmented with high levels of price competition.
Central overheads decreased from GBP1.2 million in 2016 to
GBP0.9 million in the current year.
Profit for the financial year
Profit before tax was GBP17.3 million this year compared with
GBP17.5 million last year. This is attributable to the above GBP1.8
million increase in operating profit which was offset by a GBP2.0
million adverse swing in finance expenses from a credit of GBP1.7
million last year to a charge of GBP0.3 million this year. This was
primarily due to foreign exchange rate movements as discussed
above.
Tax charges increased slightly from GBP3.1 million in 2016 to
GBP3.2 million this year. The overall effective tax rate increased
from 17.5% in 2016 to 18.4%, primarily due to a change in mix of
profits with a greater percentage of the group's profits being
earned in Europe this year compared with the Middle East where
corporation tax rates are very low. A detailed reconciliation of
the theoretical corporation tax charge based on the accounts profit
multiplied by 19.25% and the actual tax charge is given in note 11
to the consolidated financial statements. Profit for the financial
year was GBP14.1 million compared with GBP14.4 million last
year.
Equity dividends
The company paid two dividends during the year. On 26 June 2017,
a final dividend for the year ended 31 December 2016 of 11.9 pence
per ordinary share was paid and this was followed on 3 November
2017 by the payment of an interim dividend for 2017, also of 11.9
pence per share. Therefore, during 2017, a total of GBP10.1 million
in cash dividends has been returned to our ordinary
shareholders.
I am pleased to announce that, in view of the group's ongoing
profitability and its significant cash resources, the Board has
proposed a final dividend for 2017, also of 11.9 pence per ordinary
share. If approved at the forthcoming Annual General Meeting this
dividend, which in total amounts to GBP5.0 million, will be paid on
25 June 2018 to shareholders on the register as at 1 June 2018.
Net funds
At 31 December 2017, the group had net funds of GBP20.3 million
compared with GBP17.7 million last year, an increase of GBP2.6
million despite the payment of the above equity dividends totalling
GBP10.1 million during the year.
Bank loan facilities
On 30 April 2017, and in accordance with the agreed repayment
profile, the group repaid the final instalment of GBP5 million that
was due for repayment on that date. Subsequently, the group took
out a new loan of GBP5 million which is repayable by four equal
annual instalments of GBP0.5 million per annum followed by a final
balloon repayment of GBP3 million due in April 2022. The first
annual loan repayment of GBP0.5 million was made on 30 April
2018.
Share buybacks
During the current year the company did not purchase any
ordinary shares for cancellation. However, in prior periods such
purchases were made and these enhanced earnings per share and were
for the benefit of all shareholders.
The Board believes that it is in the best interests of
shareholders if it has this authority in order that market
purchases may be made in the right circumstances if the necessary
funds are available. Accordingly, at the next Annual General
Meeting, shareholders will be asked to vote in favour of a
resolution to renew the general authority to make market purchases
of up to 12.5% of the ordinary share capital in issue.
Outlook
The group's policy to increase investments in new
technologically advanced and environmentally friendly non-seasonal
products will be continued into 2018. Investments will also
continue in our traditional businesses to ensure we are ready to
support our customers in times of extreme weather conditions.
The group continues to face both challenges and opportunities in
all of its geographical markets but our business remains strong,
cash generative and well developed, with positive net funds. The
Board is therefore cautiously optimistic for further success in
2018, always being mindful of the favourable or adverse impact that
the weather can have on our business.
JG Murray
Chairman
17 May 2018
Andrews Sykes Group plc
Consolidated Income Statement
For the 12 months ended 31 December 2017
12 months 12 months
ended ended
31 December 31 December
2017 2016
GBP'000 GBP'000
Continuing operations
Revenue 71,300 65,389
Cost of Sales (30,086) (26,677)
Gross profit 41,214 38,712
Distribution costs (11,571) (11,512)
Administrative expenses (12,054) (11,384)
Operating profit 17,589 15,816
EBITDA* 22,851 20,664
Depreciation and impairment losses (5,917) (5,310)
Profit on the sale of plant and equipment 655 462
------------------------ -----------------------
Operating profit 17,589 15,816
------------------------ -----------------------
Finance income 82 1,875
Finance costs (386) (150)
------------------------ -----------------------
Profit before taxation 17,285 17,541
Taxation (3,184) (3,068)
Profit for the financial period 14,101 14,473
======================== =======================
There were no discontinued operations
in either of the above periods
Earnings per share
Basic (pence) 33.37p 34.25p
Diluted (pence) 33.37p 34.25p
Interim and final dividends paid per
equity share (pence) 23.80p 23.80p
Proposed final dividend per equity share
(pence) 11.90p 11.90p
* Earnings Before Interest, Taxation, Depreciation, profit on
the sale of property, plant and equipment, Amortisation and
non-
recurring items.
Andrews Sykes Group plc
Consolidated Statement of Comprehensive Total Income
For the 12 months ended 31 December 2017
12 months 12 months
ended ended
31 December 31 December
2017 2016
GBP'000 GBP'000
Profit for the financial period 14,101 14,473
----------------------- ------------------------
Other comprehensive income / (charges)
Items that may be reclassified to
profit and loss:
Currency translation differences
on foreign currency net
Investments (2) 1,924
Items that will never be reclassified
to profit and loss:
Remeasurement of defined benefit
assets and liabilities 1,391 (2,201)
Related deferred tax (264) 418
Other comprehensive income for the
period net of tax 1,125 141
----------------------- ------------------------
Total comprehensive income for the
period 15,226 14,614
======================= ========================
Andrews Sykes Group plc
Consolidated Balance Sheet
As at 31 December 2017
31 December 2017 31 December 2016
------------------------------- ---------------------------------
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 21,911 20,062
Lease prepayments 47 49
Trade investments - 164
Deferred tax asset 102 559
Retirement benefit pension
surplus 3,364 1,161
---------------- ----------------
25,424 21,995
Current assets
Stocks 3,860 4,994
Trade and other receivables 17,852 18,425
Cash and cash equivalents 25,311 22,819
------------- ---------------
47,023 46,238
------------- ---------------
Current liabilities
Trade and other payables (12,358) (13,055)
Current tax liabilities (1,696) (1,825)
Bank loans (493) (4,995)
Obligations under finance
leases (43) (102)
(14,590) (19,977)
------------- ---------------
Net current assets 32,433 26,261
Total assets less current
liabilities 57,857 48,256
Non-current liabilities
Bank loans (4,475) -
Obligations under finance
leases (7) (49)
(4,482) (49)
---------------- ----------------
Net assets 53,375 48,207
================ ================
Equity
Called-up share capital 423 423
Share premium 13 13
Retained earnings 48,789 43,619
Translation reserve 3,895 3,897
Other reserves 245 245
Surplus attributable to equity holders
of the parent 53,365 48,197
Non-controlling interests 10 10
Total equity 53,375 48,207
================ ================
Andrews Sykes Group plc
Consolidated Cash Flow Statement
For the 12 months ended 31 December 2017
12 months 12 months
ended ended
31 December 31 December
2017 2016
GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 21,090 17,693
Interest paid (84) (136)
Net UK corporation tax paid (2,142) (1,846)
Overseas tax paid (1,002) (578)
Net cash flow from operating activities 17,862 15,133
---------------------------- -----------------------------
Investing activities
Sale of property, plant and equipment 861 673
Purchase of property, plant and
equipment (5,790) (5,392)
Interest received 51 241
-----------------------------
Net cash flow from investing activities (4,878) (4,478)
---------------------------- -----------------------------
Financing activities
Loan repayments (5,000) (1,000)
New loans raised 4,973 -
Finance lease capital repayments (101) (116)
Equity dividends paid (10,058) (10,058)
Net cash flow from financing activities (10,196) (11,174)
---------------------------- -----------------------------
Net increase/(decrease) in cash
and cash equivalents 2,788 (519)
Cash and cash equivalents at the
beginning of the period 22,819 20,715
Effect of foreign exchange rate
changes (296) 2,623
Cash and cash equivalents at the
end of the period 25,311 22,819
============================ =============================
Reconciliation of net cash flow
to movement in net funds in the
period
Net increase/(decrease) in cash
and cash equivalents 2,788 (519)
Cash outflow from the repayment
of loans and finance leases 5,101 1,115
Cash inflow from the drawdown of
new loans net of charges (4,963)
Non-cash movement in respect of
raising loan finance (10) (20)
Non-cash movements re new finance leases
and hire purchase agreements - (84)
----------------------------
Increase in net funds during the
period 2,916 492
Opening net funds at the beginning
of the period 17,673 14,558
Effect of foreign exchange rate
changes (296) 2,623
---------------------------- -----------------------------
Closing net funds at the end of
the period 20,293 17,673
============================ =============================
Andrews Sykes Group plc
Consolidated Statement of Changes in Equity
For the 12 months ended 31 December 2017
Attributable to equity holders of Minority Total
the parent company interest equity
------------------------------------------------------------------------------------
Share Share Retained Translation Other
capital Premium earnings reserve reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 December
2015 423 13 40,987 1,973 245 43,641 10 43,651
Profit for the
financial
period - - 14,473 - - 14,473 - 14,473
Other
comprehensive
income and
(charges):
Items that may
be
reclassified
to
profit and
loss:
Currency
translation
differences
on foreign
currency net
investments - - - 1,924 - 1,924 - 1,924
Items that
will
never be
reclassified
to profit and
loss:
Remeasurement
of
defined
benefit
assets and
liabilities - - (2,201) - - (2,201) - (2,201)
Related
deferred
tax - - 418 - - 418 - 418
Total other
comprehensive
income and
(charges) - - (1,783) 1,924 - 141 - 141
---------- -------------- ----------- ------------------ ---------- ----------- --------- -----------
Transactions
with
owners
recorded
directly in
equity
Dividends paid - - (10,058) - - (10,058) - (10,058)
Total
transactions
with owners - - (10,058) - - (10,058) - (10,058)
---------- -------------- ----------- ------------------ ---------- ----------- --------- -----------
At 31 December
2016 423 13 43,619 3,897 245 48,197 10 48,207
Profit for the
financial
period - - 14,101 - - 14,101 - 14,101
Other
comprehensive
income and
(charges):
Items that may
be
reclassified
to
profit and
loss:
Currency
translation
differences
on foreign
currency net
investments - - - (2) - (2) - (2)
Items that
will
never be
reclassified
to profit and
loss:
Remeasurement
of
defined
benefit
assets and
liabilities - - 1,391 - - 1,391 1,391
Related
deferred
tax - - (264) - - (264) - (264)
Total other
comprehensive
income and
(charges) - - 1,127 (2) - 1,125 - 1,125
---------- -------------- ----------- ------------------ ---------- ----------- --------- -----------
Transactions
with
owners
recorded
directly in
equity:
Dividends paid - - (10,058) - - (10,058) - (10,058)
Total
transactions
with owners - - (10,058) - - (10,058) - (10,058)
---------- -------------- ----------- ------------------ ---------- ----------- --------- -----------
At 31 December
2017 423 13 48,789 3,895 245 53,365 10 53,375
---------- -------------- ----------- ------------------ ---------- ----------- --------- -----------
Andrews Sykes Group plc
Notes
For the 12 months ended 31 December 2017
1. Basis of preparation
Whilst the information included in this preliminary announcement
has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
(IFRSs), this announcement does not itself contain sufficient
information to comply with IFRSs. Therefore the financial
information set out above does not constitute the company's
financial statements for the 12 months ended 31 December 2017 or 31
December 2016 but it is derived from those financial
statements.
2. Going Concern
The Board remains satisfied with the group's funding and
liquidity position. The group has operated throughout the 2017
financial year and until the date of signing these accounts within
its financial covenants as contained in the bank agreement.
Both loan capital and interest payments have been made in
accordance with the bank agreements. A new loan was negotiated with
the bank to finance the final balloon repayment of GBP5 million due
under the previous loan on 30 April 2017. The first annual payment
under the new loan agreement of GBP0.5 million was made in
accordance with the agreement on 30 April 2018. The group's profit
and cash flow projections indicate that the financial covenants
within the new bank loan agreement will be met for the foreseeable
future.
The group continues to have substantial cash resources which at
31 December 2017 amounted to GBP25.3 million compared with GBP22.8
million as at 31 December 2016. Profit and cash flow projections
for 2018 and 2019, which have been prepared on a conservative basis
taking into account reasonably possible changes in trading
performance, indicate that the group will be profitable and
generate positive cash flows after loan repayments. These forecasts
and projections indicate that the group should be able to operate
within the new bank facility agreement and that all associated
covenants will be met.
The Board considers that the group has considerable financial
resources and a wide operational base. As a consequence, the Board
believes that the group is well placed to manage its business risks
carefully, as demonstrated by the current year's result, despite
some uncertain external influences.
After making enquiries, the Board has a reasonable expectation
that the group has adequate resources to continue in operational
existence for the foreseeable future. Accordingly, the Board
continues to adopt the going concern basis when preparing this
Annual Report and Financial Statements.
3. Distribution of Annual Report and Financial Statements
The group expects to distribute copies of the full Annual Report
and Financial Statements that comply with IFRSs by 25 May 2018
following which copies will be available either from the registered
office of the company; St David's Court, Union Street,
Wolverhampton, WV1 3JE; or from the company's website;
www.andrews-sykes.com. The Annual Report and Financial Statements
for the 12 months ended 31 December 2016 have been delivered to the
Registrar of Companies and those for the 12 months ended 31
December 2017 will be filed at Companies House following the
company's Annual General Meeting. The auditor has reported on those
financial statements; the report was unqualified, did not draw
attention to any matters by way of emphasis without qualifying
their report and did not contain details of any matters on which
they are required to report by exception.
4. Date of Annual General Meeting
The group's Annual General Meeting will be held at 10.30 a.m. on
Wednesday, 20 June 2018 at 2 Eaton Gate, London, SW1W 9BJ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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