Final Results
Andrews Sykes Group PLC
27 April 2006
Andrews Sykes Group plc
27 April 2006
Preliminary Results for the year ended 31 December 2005
FINANCIAL HIGHLIGHTS
EBITDA* from continuing operations £14.7 million
Profit on ordinary activities after taxation £14.1 million
Net debt £19.7 million after distributing total payments of £31.9 million to
shareholders
Basic earnings per share from continuing operations 15.24 pence
SUMMARY OF RESULTS
52 weeks ended 53 weeks ended
31 December 2005 31 December 2004
(as restated **)
£'000 £'000
Turnover from continuing operations 50,673 52,116
EBITDA* from continuing operations 14,747 15,656
Operating profit*** from continuing operations 11,062 11,871
Profit / (loss) on the disposal of businesses 6,404 (305)
Profit on ordinary activities after taxation 14,127 4,934
Basic earnings per share from
continuing operations (pence) 15.24p 8.13p
Dividends paid of 14.0 p
(2004: 4.0 p) per share 8,119 2,320
Net Debt 19,658 2,930
* Earnings before interest, taxation, depreciation and amortisation as
reconciled in the consolidated profit and loss account after adding back
exceptional items of £Nil (2004: £4,848,000).
** The comparative figures have been restated due to both the full adoption of
FRS 17 - Retirement Benefits and FRS 21 - Events after the Balance Sheet Date
with effect from 1 January 2005.
*** Operating profit as reconciled in the consolidated profit and loss account
after adding back exceptional items of £Nil (2004: £4,848,000).
Chairman's Statement
Summary of results
Following a disappointing first half of the year, I am pleased to be able to
report that, as anticipated in my half year report, trading strongly improved in
the second half. Taking the year as a whole, operating profit from continuing
operations before exceptional items was £11.1 million compared with £11.9
million last year (operating profit £7 million add back exceptional
administration costs £4.9 million), a decrease of £0.8 million.
Management changes
The Group's Chief Executive, Robert Stevens, resigned on 1 March 2006 to take
early retirement.
Robert was appointed to the Board in January 2000 as Chief Executive. Since that
time he has been responsible for the development of the Group's strategy to
ensure that the Group remains a market leader. The Board and I thank Robert for
his contribution to the Group since his appointment and wish him a long and
successful retirement.
Also on 1 March 2006, Paul Wood was appointed as Director of Operations. Paul
has a vast experience in the industry having originally joined the Group in
August 1978. The Board and I look forward to working with Paul over the coming
years.
Business disposals
2005 has been another year of change for our Group. As I reported to you in the
interim report, during the first half of the year we successfully disposed of a
non core subsidiary undertaking, Accommodation Hire Limited, a company
specialising in the hire and sale of temporary accommodation units. This was
followed in October 2005 by the disposal of Engineering Appliances Limited. This
company specialises in the sale of pipe work and ducting components and was
therefore also non core to the Group. The combined profit on disposal of these
businesses was £6.6 million, the total net cash inflows after disposal costs
being £11.2 million.
Capital reduction, tender offer and dividend payments
On 26 September the capital reduction and tender offer programme was completed
culminating in the payment of £23.8 million to those shareholders who chose to
accept the offer. Combined with the payment of the 2004 special final dividend
of £8.1 million this means that a total of £31.9 million was returned to
shareholders during the year.
Pension scheme payments
As reported in the Financial Review, the Group has adopted the requirements of
FRS 17 - Retirement Benefits in full this year which has had the effect of
reducing opening shareholders' funds at 1 January 2005 by approximately £9
million before deferred tax relief.
During the year the Group has made pension contributions of £4.3 million to the
defined benefit pension scheme. This includes not only the regular monthly
contributions but also special one off payments of £3.4 million aimed at
reducing the pension scheme deficit, which after actuarial adjustments amounts
to £6.3 million before deferred tax relief. The Group has now reached an
agreement with the pension scheme regulator and pension scheme trustees to
continue the monthly contributions at the current level until 2009 or until the
deficit is eliminated, if earlier.
Net debt
Due to the combination of the above factors, the Group's net debt has increased
from £2.9 million at 1 January 2005 to £19.7 million by 31 December 2005. The
principal movements are the return of £31.9 million funds to the shareholders,
pension scheme payments of £4.3 million and cash inflow of £11.2 million on the
disposal of businesses.
Earnings per share and buy back programme
As set out in note 9 of the financial statements, the basic earnings per share
from continuing operations is 15.24 pence compared with 8.13 pence last year.
The Board continues to believe that shareholder value will be optimised by the
purchase, when appropriate, of our own shares coupled with investment in organic
growth. Consequently, the Board will request that shareholders vote in favour of
a resolution to renew the authority to purchase up to 12.5% of the ordinary
shares in issue.
Dividend
As the Company returned £31.9 million to shareholders during the year, the Board
is not proposing a final dividend this year. Future dividend policy will be
regularly reviewed by the Board.
Outlook
The colder winter continued well into the first quarter of 2006 giving the Group
a good start to the new financial year. Costs remain well under control and
therefore the Group remains ready to take advantage of market opportunities and
beneficial weather conditions.
JG Murray
Chairman
26 April 2006
Andrews Sykes Group plc
Consolidated Profit and Loss Account
For the 52 weeks ended 31 December 2005
52 weeks to 31 December 2005 53 weeks to 31 December 2004
(as restated **)
Continuing Discontinued Total Continuing Discontinued Total
activities activities activities activities
£'000 £'000 £'000 £'000 £'000 £'000
Turnover 50,673 4,415 55,088 52,116 10,564 62,680
Cost of sales (23,675) (2,414) (26,089) (24,258) (6,028) (30,286)
Gross profit 26,998 2,001 28,999 27,858 4,536 32,394
Distribution costs (8,038) (699) (8,737) (8,005) (1,677) (9,682)
Administrative expenses -
ordinary (7,898) (960) (8,858) (8,021) (1,969) (9,990)
Administrative expenses -
exceptional (note 3) - - - (4,848) (24) (4,872)
Total administrative
expenses (7,898) (960) (8,858) (12,869) (1,993) (14,862)
Other operating income - - - 39 - 39
Operating profit 11,062 342 11,404 7,023 866 7,889
EBITDA * 14,747 615 15,362 10,808 1,625 12,433
Depreciation and asset
disposals (3,671) (273) (3,944) (3,771) (759) (4,530)
Operating profit before
goodwill amortisation 11,076 342 11,418 7,037 866 7,903
Goodwill amortisation (14) - (14) (14) - (14)
Operating profit 11,062 342 11,404 7,023 866 7,889
Income from other participating
interests - 304
Exceptional profit / (loss) on the disposal of 6,404 (305)
businesses
- discontinued (note 5)
Profit on ordinary activities before interest and 17,808 7,888
taxation
Net interest payable (738) (718)
Profit on ordinary activities before taxation 17,070 7,170
Tax on profit on ordinary activities (2,943) (2,236)
Profit on ordinary activities after taxation being 14,127 4,934
profit for the financial period
Earnings per share from continuing operations:
Basic 15.24p 8.13p
Fully diluted 15.24p 7.82p
Earnings per share from total operating results:
Basic 28.16p 8.51p
Fully diluted 28.16p 8.18p
Dividends paid per equity share (as restated for FRS 14.0p 4.0p
21)
There were no material acquisitions in any period.
* Earnings Before Interest, Taxation, Depreciation and
Amortisation.
** The comparative figures for the 53 weeks ended 31 December 2004 have been
restated due to both the full adoption of FRS 17 - Retirement Benefits and FRS
21 - Events after the Balance Sheet Date with effect from 1 January 2005 as set
out in note 7.
Andrews Sykes Group plc
Consolidated Balance Sheet
As at 31 December 2005
31 December 31 December
2005 2004
(as restated*)
£'000 £'000
Fixed assets
Intangible assets: Goodwill 31 45
Tangible assets 12,011 15,876
Investments 164 164
12,206 16,085
Current assets
Stocks 4,532 4,942
Debtors 13,929 15,071
Cash at bank and in hand 10,342 9,295
28,803 29,308
Creditors falling due within one year
Bank loans (5,000) (2,490)
Other creditors (8,627) (9,989)
Corporation and overseas tax (1,060) (1,099)
(14,687) (13,578)
Net current assets 14,116 15,730
Total assets less current liabilities 26,322 31,815
Creditors falling due after more than one year
Bank loans (25,000) (9,735)
Provisions for liabilities (469) (310)
Net assets excluding pension liability 853 21,770
Pension Liability (4,434) (6,660)
Net (liabilities) / assets including pension liability (3,581) 15,110
Capital and reserves
Called - up share capital 446 11,598
Share premium account - 10,678
Revaluation reserve 741 746
Other reserves 222 7,389
Profit and loss account (4,994) (15,292)
ESOP reserve (6) (19)
(Deficit) / surplus attributable to equity shareholders (3,591) 15,100
Minority interests (equity) 10 10
Total capital employed (3,581) 15,110
* The comparative figures as at 31 December 2004 have been restated due to both
the full adoption of FRS 17 - Retirement Benefits and FRS 21 - Events after the
Balance Sheet Date with effect from 1 January 2005 as set out in note 7.
Andrews Sykes Group plc
Consolidated cash flow statement
For the 52 weeks ended 31 December 2005
52 weeks to 53 weeks to
31 December 31 December
2005 2004
£'000 £'000
Net cash inflow from operating activities as reconciled in note 4 10,196 11,677
Dividend received from participating interests - 139
Returns on investments and servicing of finance
Interest received 484 410
Interest paid (946) (865)
Net cash outflow for returns on investments and servicing of finance (462) (455)
Cash outflow for taxation (1,984) (4,288)
Capital expenditure and financial investment
Purchase of tangible fixed assets (4,056) (3,936)
Sale of tangible fixed assets 608 1,483
Net cash outflow for capital expenditure and financial investment (3,448) (2,453)
Acquisitions and disposals
Cash received on the disposal of subsidiary undertakings as set out in 10,204 -
note 5
Net cash balances disposed of with subsidiaries (214) -
Net cash inflow for acquisitions and disposals 9,990 -
Equity dividends paid (8,119) (2,320)
Cash inflow before the use of liquid
resources and financing 6,173 2,300
Management of liquid resources
Movement in bank deposits 477 (1)
Financing
Sale of shares held in ESOP 9 16
Loan repayments (11,000) (3,749)
New loans taken out in the year 30,000 -
Purchase of own shares (24,168) (630)
Net cash outflow from financing (5,159) (4,363)
Increase / (decrease) in cash in the period 1,491 (2,064)
Analysis of net funds / (debt)
Bank current and deposit accounts and cash in hand 10,342 9,295
Total loans and overdrafts (30,000) (12,225)
Net debt as reconciled in note 6 (19,658) (2,930)
Andrews Sykes Group plc
Other Consolidated Statements
For the 52 weeks ended 31 December 2005
Consolidated statement of total recognised gains and losses
52 weeks to 53 weeks to
31 December 31 December
2005 2004
(as restated *)
£'000 £'000
Profit for the financial period 14,127 4,934
Currency translation differences on foreign currency net investments 48 78
Actual return less expected return on pension scheme assets 2,702 354
Experience gains and losses arising on the pension scheme liabilities (4) (601)
Changes in assumptions underlying the present value of the scheme (3,538) -
liabilities
UK deferred tax attributable to the pension scheme asset and liability 252 74
adjustments
Total recognised gains and losses relating to the year 13,587 4,839
transferred to reserves
FRS 17 prior year adjustment as set out in note 7 (6,288)
Total recognised gains and losses since the 2004 annual report and 7,299
financial statements
Reconciliation of movement in Group shareholders' (deficit) / funds
52 weeks to 53 weeks to
31 December 31 December
2005 2004
(as restated **)
£'000 £'000
Profit for the financial period 14,127 4,934
Dividends paid (8,119) (2,320)
Consideration for the purchase of own shares (24,168) (172)
Sale of own shares by the ESOP trust 9 16
Currency translation differences on foreign currency net investments 48 78
Actual return less expected return on pension scheme assets 2,702 354
Experience gains and losses arising on the pension scheme liabilities (4) (601)
Changes in assumptions underlying the present value of the scheme (3,538) -
liabilities
UK deferred tax attributable to the pension scheme asset and liability 252 74
adjustments
Net (decrease) / increase in shareholders' funds (18,691) 2,363
Prior year adjustments:
Shareholders' funds at the beginning of the period as previously stated 13,269 17,101
FRS 17 adjustment (6,288) (6,104)
FRS 21 adjustment 8,119 1,740
Shareholders' funds at the beginning of the period as restated 15,100 12,737
Shareholders' (deficit) / funds at the end of the period (3,591) 15,100
* The comparative figures for the 53 weeks ended 31 December 2004 have been
restated due to the full adoption of FRS 17 - Retirement Benefits with effect
from 1 January 2005 as set out in note 7.
** The comparative figures as at 31 December 2004 have been restated due to both
the full adoption of FRS 17 - Retirement Benefits and FRS 21 - Events after the
Balance Sheet Date with effect from 1 January 2005 as set out in note 7.
Andrews Sykes Group plc
Notes to the accounts
For the 52 weeks ended 31 December 2005
1. Segmental analysis
The Group's turnover may be analysed between the following
principal activities:
52 weeks to 53 weeks to
31 December 2005 31 December 2004
Continuing Discontinued Continuing Discontinued
activities activities Total activities activities Total
Activity: £'000 £'000 £'000 £'000 £'000 £'000
Hire 34,459 1,930 36,389 33,991 6,707 40,698
Sales 7,024 2,485 9,509 8,143 3,857 12,000
Installation 9,190 - 9,190 9,982 - 9,982
Total 50,673 4,415 55,088 52,116 10,564 62,680
The impact of discontinued activities on turnover (both by geographical origin
and destination), profit before interest and tax and net assets in the tables
below relates mainly to the United Kingdom.
The geographical analysis of the Group's turnover was as
follows:
By origination: 52 weeks to 53 weeks to
31 December 31 December
2005 2004
£'000 £'000
United Kingdom 48,041 56,332
Rest of Europe 3,674 2,918
Middle East and Africa 3,373 3,430
55,088 62,680
By destination: 52 weeks to 53 weeks to
31 December 31 December
2005 2004
£'000 £'000
United Kingdom 47,612 55,571
Rest of Europe 3,737 3,154
Middle East and Africa 3,478 3,505
Rest of World 261 450
55,088 62,680
The analysis of profit before interest and tax and net (liabilities) / assets by
geographical origin was as follows:
Profit before Net (liabilities) / assets
interest and tax including pension liability
52 weeks to 53 weeks to As at As at
31 December 31 December 31 December 31 December
2005 2004 2005 2004
(as (as restated)
restated)
£'000 £'000 £'000 £'000
United Kingdom 16,141 6,146 17,642 22,969
Rest of Europe 1,155 988 1,785 1,391
Middle East and Africa 512 754 2,144 1,439
17,808 7,888 21,571 25,799
Net debt (19,658) (2,930)
Taxation (1,060) (1,099)
Pension liability (4,434) (6,660)
(3,581) 15,110
Andrews Sykes Group plc
Notes to the accounts
For the 52 weeks ended 31 December 2005
2. Earnings per share
The basic figures have been calculated by reference to the weighted average
number of ordinary shares in issue, excluding those in the ESOP reserve, during
the period of 50,156,508 (53 weeks ended 31 December 2004: 57,967,089).
The calculation of the diluted earnings per ordinary share is based on the
profits as set out in the table below and on 50,168,119 (52 weeks ended 31
December 2004: 60,300,966) ordinary shares. The share options have a dilutive
effect for the period calculated as follows:
52 weeks to 31 December 2005 53 weeks to 31 December 2004
(as restated)
Total Continuing Total No. of
Continuing earnings earnings earnings
earnings No. of shares
shares
£'000 £'000 £'000 £'000
Basic earnings/weighted average 7,646 14,127 50,156,508 4,713 4,934 57,967,089
number of shares
Weighted average number of shares
under option 24,932 4,093,505
Number of shares that would have
been issued at fair value (13,321) (1,759,628)
Earnings/ diluted weighted 7,646 14,127 50,168,119 4,713 4,934 60,300,966
average number of shares
Diluted earnings per ordinary 15.24p 28.16p 7.82p 8.18p
share (pence)
3. Exceptional administrative expenses
The following item has been disclosed on the face of the profit and loss
account due to its size:
52 weeks to 53 weeks to
31 December 31 December
2005 2004
£'000 £'000
Exceptional costs of cash cancellation offer - 4,872
On 18 November 2004 the Board of Andrews Sykes Group plc made a cash
cancellation offer to all of the Company's share option holders. The price
offered was £1.95 per share and the offer remained open for acceptance until 8
December 2004.
4. Reconciliation of operating profit to net cash inflow from operating
activities
52 weeks to 53 weeks to
31 December 31 December
2005 2004
(as restated)
£'000 £'000
Operating profit 11,404 7,889
Goodwill amortisation 14 14
Depreciation 4,280 5,489
Profit on sale of fixed assets (336) (959)
Decrease in stocks 37 674
Increase in debtors (591) (29)
Decrease in creditors and provisions (4,612) (1,401)
Net cash inflow from operating activities 10,196 11,677
5. Exceptional profit / (loss) and cash received on the disposal of
businesses
The exceptional credits / (charges) during the period were as follows:
52 weeks to 53 weeks to
31 December 31 December
2005 2004
£'000 £'000
Profit on disposal of subsidiary undertakings 6,564 -
Provisions for onerous lease commitments (160) (305)
6,404 (305)
Profit on disposal of subsidiary undertakings
On 6 May 2005 the Group sold its subsidiary undertaking, Accommodation Hire
Limited (AHL). AHL, which specialised in the hire and sale of temporary
accommodation units and toilet facilities, was regarded as a non core activity
and was managed on a largely autonomous basis separate from the rest of the
group.
On 3 October 2005 the Group sold another subsidiary undertaking, Engineering
Appliances Limited (EA), to its principal supplier. EA was also a non core
business activity specialising in compensating bellows, expansion joints and de-
airators for pipe work and ducting.
The assets sold and consideration received on the sale of these subsidiaries is
set out in the table below:
Sale of Sale of Total
Accommodation Engineering 52 weeks to
Hire Limited Appliances 31 December
Limited 2005
£'000 £'000 £'000
Tangible fixed assets 3,231 74 3,305
Stocks - 373 373
Debtors 1,476 787 2,263
Creditors (908) (402) (1,310)
Cash at bank / (bank overdraft) 439 (225) 214
Corporation tax (32) 25 (7)
Deferred tax 118 40 158
Bank loans (1,225) - (1,225)
Net assets sold 3,099 672 3,771
Profit / (loss) on disposal 6,683 (119) 6,564
Total net consideration 9,782 553 10,335
Satisfied by:
Cash received net of disposal costs paid 9,535 669 10,204
Deferred consideration receivable less disposal costs 247 (116) 131
payable
9,782 553 10,335
Provisions for onerous lease commitments
The Group has various onerous property lease commitments inherited from the Cox
Plant business which was sold during 2002. During both the current and previous
financial years the directors have re-assessed the level of provisions required
in respect of these commitments and have accordingly adjusted the onerous lease
provision. This has resulted in a charge to the profit and loss account of
£160,000 (53 weeks ended 31 December 2004: £305,000).
6. Analysis of net debt
As at Cash flow Disposal of Other non As at
subsidiaries cash
31 December excluding movements 31 December
2005 cash 2004
£'000 £'000 £'000 £'000 £'000
Cash 10,342 1,491 - 33 8,818
Bank deposit - (477) - - 477
Total cash at bank and in hand 10,342 1,014 - 33 9,295
Debt due in one year (5,000) 6,000 1,225 (9,735) (2,490)
Debt due after one year (25,000) (25,000) - 9,735 (9,735)
Gross debt (30,000) (19,000) 1,225 - (12,225)
Net debt (19,658) (17,986) 1,225 33 (2,930)
Andrews Sykes Group plc
Notes to the accounts
For the 52 weeks ended 31 December 2005
7. Prior year adjustment
The total of the prior year adjustments arising from the application of FRS 17 -
Retirement Benefits and FRS 21 - Events after the Balance Sheet date are
analysed as follows:
The opening consolidated equity shareholders' funds at 27 December 2003 were restated
as follows:
Equity shareholders' funds
£'000 £'000
Equity shareholders' funds at 27 December 2003 as previously stated 17,101
Adoption of FRS 17 as at 27 December 2003 (6,104)
Liability for 2003 final dividend not declared at 27 December 2003 1,740
Total prior period adjustments (4,364)
Equity shareholders' funds at 27 December 2003 as restated 12,737
The closing consolidated equity shareholders' funds at 31 December 2004 were restated
as follows:
Equity shareholders' funds
£'000 £'000
Equity shareholders' funds at 31 December 2004 as previously stated 13,269
Adoption of FRS 17 as at 31 December 2004 (6,288)
Liability for 2004 final dividend not declared at 31 December 2004 8,119
Total prior period adjustments 1,831
Equity shareholders' funds at 31 December 2004 as restated 15,100
The impact of adopting FRS 17 on the current period profit and loss account is a
credit of approximately £30,000. The impact of adopting FRS 21 on the current
period reserved movement is a charge of approximately £8.1 million.
8. The tax charge for the year was £2,943,000 (53 weeks ended 31 December
2004: £2,236,000) which represents an overall effective tax charge of 17.2%
(53 weeks ended 31 December 2004: 31.2%).
This year the tax charge is lower than the standard 30% UK tax rate primarily
due to the exceptional profit on the disposal of the businesses of £6,564,000
not being subject to corporation tax and the benefit of certain prior year tax
adjustments. The effective rate of tax in both years has been increased by non
tax deductible items in the UK, withholding tax written off and the taxation of
certain overseas profits at different tax rates from those prevailing in the UK.
9. The financial information set out above has been prepared using accounting
policies that are consistent with those adopted in the statutory accounts for
the 53 weeks ended 31 December 2004 with the exception of the adoption of both
FRS 17 - Retirement Benefits and FRS 21 - Events after the Balance Sheet Date.
Both these standards are applicable for the first time this year and have a
prior year impact as detailed in note 7. FRS 22 - Earnings per Share and the
relevant paragraphs of FR 25 - Financial Instruments: Presentation and
Disclosure have also been applied but have no impact.
10. The financial information set out above does not constitute the Group's
statutory accounts for the 52 weeks ended 31 December 2005 or the 53 weeks ended
31 December 2004 but it is derived from those accounts. The financial statements
for the 53 weeks ended 31 December 2004 have been filed and those for the 52
weeks ended 31 December 2005 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.
11. 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.
12. The Company's Annual General Meeting will be held at 10.30 a.m. on 7 June
2006 at Floor 5, 10 Bruton Street, London, W1J 6PX.
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