Final Results

Andrews Sykes Group PLC 25 April 2005 Andrews Sykes Group plc (the 'Company') 25 April 2005 Preliminary Results for the 53 weeks ended 31 December 2004 FINANCIAL HIGHLIGHTS • EBITDA* from continuing operations £17.1 million. • Profit on ordinary activities before exceptional items and taxation £12.4million.** • Net debt reduced by £1.8 million from last year at £2.9 million representing 22.1% of equity shareholders' funds. • Adjusted diluted earnings per share 14.23 pence. SUMMARY OF RESULTS 53 weeks ended 52 weeks ended 31 December 2004 27 December 2003 £'000 £'000 Turnover from continuing operations 62,680 68,252 EBITDA* from continuing operations 17,060 19,666 Profit on ordinary activities before exceptional items and 12,364 13,976 taxation ** Operating profit 7,644 14,446 Profit on ordinary activities after taxation 4,945 9,957 Basic earnings per share (pence) 8.53p 16.82p Adjusted diluted earnings per share (pence) 14.23p 15.30p Interim dividend per share (pence) 1.0p - Proposed dividend per share (pence) 14.0p 3.0p Net debt 2,930 4,723 Gearing 22.1% 27.6% * Earnings before interest, depreciation, exceptional items and goodwill charges (as reconciled on the face of the consolidated profit and loss account). ** PBT £7,187,000 (2003: £14,574,000) add back adjustments following the sale of a business £305,000 (2003: less £598,000) and exceptional share option cash cancellation costs of £4,872,000 (2003: £Nil). Chairman's Statement Summary of results I am pleased to be able to report that your Group has achieved a satisfactory result for the year 2004, despite unfavourable weather conditions. Compared with 2003 the Group's profit on ordinary activities before tax and exceptional charges was £12.4m, compared with £14.0m last year (PBT £14.6m less £0.6m exceptional credits). This is reduced to £7.2m after charging exceptional items of £4.9m for the cash cancellation of employee share options and £0.3m lease provisions on the disposal of Cox Plant. Profit after tax amounted to £4.9m. Consequently the adjusted diluted earnings per share decreased from 15.3 pence to 14.2 pence but the basic earnings per share reduced further from 16.8 pence to 8.5 pence due to the effect of the exceptional items noted above. 2004 was a year of consolidation, reflecting a hiatus in the UK market place, exacerbated by an unusual combination of weather conditions: a warm winter, an extended period of low water tables caused by a year of low rainfall, and a cool summer. We continue to focus on controlling costs and re-aligning the cost base towards selling activity in order to be able to take advantage of any trading opportunities that become available. Despite the exceptional cash outflows of £4.9m for the cancellation of the employee share options and £0.6m attributable to purchase of own shares, net debt reduced from £4.7m last year to £2.9m at 31 December 2004. I consider the Group has performed satisfactorily in a difficult trading environment and is well placed to compete in a competitive market sector. Overview of continuing operations Turnover from continuing operations decreased from £68.3m to £62.7m and operating profit before exceptional items from £14.4m to £12.5m in 2004 (operating profit of £7.6m add back £4.9m exceptional costs). The downturn affected the UK core businesses especially Hire whose turnover decreased from £38.9m to £36.5m. The operating profits of our main UK businesses fell from £11.5m to £10.1m. Although all product ranges were affected due to adverse weather conditions, the lack of prolonged summer conditions in 2004 compared to the record temperatures of 2003 meant air conditioning was especially affected. The UK fixed air conditioning company, Andrews Air Conditioning and Refrigeration, achieved an operating profit of £0.6m compared to £0.7m in the previous year. Although turnover decreased by £0.7m margins improved and the value of gross margin was maintained. Despite a £1.6m decrease in turnover, Accommodation Hire, our subsidiary that specialises in the hire of temporary accommodation units and toilet facilities, achieved an operating profit of a similar level to that in 2003. Engineering Appliances, the specialist heating and ventilation business, saw turnover fall by £0.9m from £3.8m to £2.9m. The Group's well established heating and air conditioning business in The Netherlands had a successful year achieving an operating profit of £1.1m compared to £0.9m last year. Similarly our operation in the Middle East, Khansaheb Sykes LLC, increased its profits to £0.4m from £0.3m last year. I remain confident that our strategy of continuing to concentrate upon developing the UK specialist hire and rental market by organic growth supplemented by niche market acquisitions offers opportunity for further profit growth and added shareholder value. Earnings per share and buy back programme As set out in the Note 9 of the Financial Statements, the adjusted diluted earnings per share excluding exceptional items is 14.2 pence compared with 15.3 pence last year. Basic earnings per share was 8.5 pence compared with 16.8 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 reported in my interim statement, the Board declared an interim dividend of 1.0 pence per ordinary share in respect of the year ended 31 December 2004 and this was paid on 4 November 2004. The Board is now pleased to propose a final special dividend of 14.0 pence per share, to return surplus cash to shareholders. This will be paid on 15 June 2005 to shareholders on the register on 13 May 2005. Outlook Expectations for the first quarter are broadly similar to the last quarter of 2004. With costs under control the business is well positioned to take advantage of market opportunities as they arise. I would therefore expect the Group to achieve a better year in 2005. JG Murray Chairman 22 April 2005 Andrews Sykes Group plc Consolidated profit and loss account For the 53 weeks ended 31 December 2004 53 weeks ended 31 December 2004 52 weeks ended 27 December 2003 Before Exceptional Total Total exceptional items items £'000 £'000 £'000 £'000 Turnover 62,680 - 62,680 68,252 Cost of sales (30,286) - (30,286) (34,084) Gross profit 32,394 - 32,394 34,168 Distribution costs (9,682) - (9,682) (9,647) Administrative costs (10,235) (4,872) (15,107) (10,080) Other operating income 39 - 39 5 Operating profit / (loss) 12,516 (4,872) 7,644 14,446 EBITDA* 17,060 - 17,060 19,666 Depreciation and asset (4,530) - (4,530) (5,206) disposals Operating profit before 12,530 - 12,530 14,460 goodwill amortisation and exceptional items Exceptional items - (4,872) (4,872) - Goodwill amortisation (14) - (14) (14) Operating profit / (loss) 12,516 (4,872) 7,644 14,446 Income from other participating interests 304 - Adjustments following the disposal of a business - (305) 598 discontinued Profit before interest and 7,643 15,044 taxation Net interest payable (456) (470) Profit on ordinary activities before taxation 7,187 14,574 Tax on profit on ordinary (2,242) (4,617) activities Profit on ordinary activities after taxation being profit for the financial period 4,945 9,957 Dividends paid and proposed on equity shares (8,699) (1,740) Retained (loss) / profit for the financial (3,754) 8,217 period attributable to equity shareholders Andrews Sykes Group plc Consolidated profit and loss account For the 53 weeks ended 31 December 2004 (continued) Basic earnings per ordinary 8.53p 16.82p share Diluted earnings per share 8.20p 16.25p Add back: Goodwill 0.02p 0.02p amortisation Exceptional items 6.01p (0.97)p Adjusted diluted earnings per 14.23p 15.30p share Dividends per share: Equity shares 15.0p 3.0p Activities in both the current and preceding periods derive from continuing operations. *Earnings before interest, taxation, depreciation and amortisation excluding exceptional items Andrews Sykes Group plc Consolidated Balance Sheet At 31 December 2004 31 December 27 December 2004 2003 £'000 £'000 Fixed assets Intangible assets: Goodwill 45 59 Tangible fixed assets 15,876 18,015 Investments 164 164 16,085 18,238 Current assets Stocks 4,942 5,616 Debtors 15,230 14,953 Cash at bank and in hand 9,295 11,251 29,467 31,820 Creditors: Amounts falling due within one year Bank loans (2,490) (3,749) Other creditors (9,989) (11,173) Proposed dividends (8,119) (1,740) Corporation and overseas tax (1,099) (3,191) (21,697) (19,853) Net current assets 7,770 11,967 Total assets less current 23,855 30,205 liabilities Creditors: Amounts falling due after more than one year Bank loans (9,735) (12,225) Provisions for liabilities and charges (841) (869) Net assets 13,279 17,111 Capital and reserves Called-up share capital 11,598 11,615 Share premium account 10,678 10,678 Revaluation reserve 746 752 Other reserve 7,389 7,378 Profit and loss account (17,123) (13,284) ESOP reserve (19) (38) Equity shareholders' funds 13,269 17,101 Minority interests (equity) 10 10 Total capital employed 13,279 17,111 Analysis of net debt Cash at bank and in hand 9,295 11,251 Bank loans (12,225) (15,974) Net debt (2,930) (4,723) As a percentage of equity shareholders' funds 22.1% 27.6% Andrews Sykes Group plc Consolidated cash flow statement For the 53 weeks ended 31 December 2004 53 weeks ended 52 weeks ended 31 December 2004 27 December 2003 £'000 £'000 Net cash inflow from operating activities 11,677 17,329 Dividends received from participating 139 - interests Return on Investments and servicing of finance Interest received 410 335 Interest paid (865) (828) Net cash outflow returns on Investments and servicing of (455) (493) finance Cash outflow for taxation (4,288) (3,214) Capital expenditure and financial investment Purchase of tangible fixed (3,936) (7,405) assets Sale of tangible fixed assets 1,483 868 Net cash outflow for capital expenditure and financial (2,453) (6,537) Investment Acquisitions and disposals Cash received following the disposal of a - 1,500 business Equity dividends paid (2,320) - Cash inflow before the use of liquid resources and 2,300 8,585 financing Management of liquid resources Movement in bank deposits (1) 3,862 Financing Issue of ordinary share capital net of issue - 252 costs Loans repaid (3,749) (3,740) New loans drawn down - 1,259 Purchase of own shares for (630) (3,883) cancellation Sale of own shares by ESOP 16 176 Purchase of own shares by ESOP - (88) Net cash outflow from (4,363) (6,024) financing (Decrease) / increase in cash in the period (2,064) 6,423 Andrews Sykes Group plc Notes to the financial statements For the 53 weeks ended 31 December 2004 1. Segmental analysis The Group's turnover may be analysed between the following principal activities: 53 weeks ended 52 weeks ended 31 December 2004 27 December 2003 Continuing Continuing operations operations £'000 £'000 Hire 40,698 43,537 Sales 12,000 13,990 Installation 9,982 10,725 Total 62,680 68,252 The Integrated nature of the Group's operations does not permit a meaningful analysis of profit before interest and tax or net assets by the above activities. The results and net assets are attributable to the Group's principal activity, the hire, sale and installation of a range of equipment including portable heating, drying, ventilation, pumps and temporary accommodation. The geographical analysis of the Group's turnover was as follows: By geographical origin By geographical destination 53 weeks ended 52 weeks ended 53 weeks 52 weeks 27 December ended 31 ended 27 31 December 2003 December December 2004 2004 2003 £'000 £'000 £'000 £'000 United Kingdom 56,332 61,925 55,571 60,196 Rest of Europe 2,918 3,239 3,154 4,388 Middle East and 3,430 3,088 3,505 3,153 Africa Rest of World - - 450 515 62,680 68,252 62,680 68,252 The analysis of profit before interest and tax and net assets by geographical origin was as follows: Profit before interest and tax Net assets Net assets 53 weeks ended 52 weeks ended 53 weeks 52 weeks 31 December 27 December ended 31 ended 27 2004 2003 December December 2004 2003 £'000 £'000 £'000 £'000 United Kingdom 5,901 13,983 22,597 24,211 Rest of Europe 988 771 1,391 1,155 Middle East and 754 290 1,439 1,399 Africa 7,643 15,044 25,427 26,765 Net debt (2,930) (4,723) Taxation and dividends payable (9,218) (4,931) 13,279 17,111 Andrews Sykes Group plc Notes to the financial statements For the 53 weeks ended 31 December 2004 2. Reconciliation of operating profit to net cash inflow from operating activities 53 weeks 52 weeks ended 31 ended 27 December 2004 December 2003 £'000 £'000 Operating profit 7,644 14,446 Goodwill 14 14 amortisation Depreciation 5,489 5,575 Profit on sale of tangible (959) (369) fixed assets Decrease / (increase) in 674 (924) stocks Increase in debtors (29) (847) Decrease in creditors and (1,156) (566) provisions Net cash inflow from operating activities 11,677 17,329 3. Reconciliation of net cash flow to movement in net debt 53 weeks 52 weeks ended 31 ended 27 December 2004 December 2003 £'000 £'000 (Decrease) / increase in cash paid in the period (2,064) 6,423 Cash outflow from movement in net debt 3,749 2,481 Cash outflow / (inflow) from movement in liquid 1 (3,862) resources Change in net debt resulting from cash flows 1,686 5,042 Translation 107 (14) differences Movement in period 1,793 5,028 Opening net debt (4,723) (9,751) Closing net debt (2,930) (4,723) 4. Consolidated statement of total recognised gains and loss 53 weeks 52 weeks ended 31 ended 27 December 2004 December 2003 £'000 £'000 Profit for the financial 4,945 9,957 period Currency translation differences on foreign currency net investments 78 (18) Total recognised gains and losses in the period 5,023 9,939 Andrews Sykes Group plc Notes to the financial statements For the 53 weeks ended 31 December 2004 5. Reconciliation of movements in Group shareholders' funds 53 weeks 52 weeks ended 31 ended 27 December 2004 December 2003 £'000 £'000 Profit for the financial 4,945 9,957 period Dividends (8,699) (1,740) Other recognised gains and 78 (18) losses Issue of ordinary - 252 shares Purchase of own shares for cancellation (172) (4,341) Sale of own shares by the ESOP trust 16 176 Purchase of own shares by the ESOP trust - (88) Net (decrease) / increase in shareholders' (3,832) 4,198 funds Shareholders' funds at the beginning of the 17,101 12,903 period Shareholders' funds at the end of the period 13,269 17,101 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 57,967,089 (52 weeks ended 27 December 2003: 59,186,675). The calculation of the diluted earnings share is based on a profit of £4,945,000 (52 weeks ended 27 December 2003: £9,957,000) and on 60,300,966 (52 weeks ended 27 December 2003: 61,255,953) ordinary shares. The share options have a dilutive effect for the period ended 31 December 2004 calculated as follows: 53 weeks ended 31 52 weeks ended 27 December 2004 December 2003 Earnings Number of Earnings Number of £'000 shares £'000 shares Basic earnings / weighted average number of 4,945 57,967,089 9,957 59,186,675 shares Weighted average number of share under 4,093,505 4,372,604 option Number of shares that would have been issued of fair (1,759,628) (2,303,326) value Earnings / diluted weighted average 4,945 60,300,966 9,957 61,255,953 number of shares Diluted earnings per ordinary share 8.20p 16.25p (pence) 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 the adjusted earnings as follows: 53 weeks ended 52 weeks ended 31 27 December 2004 December 2003 £'000 £'000 Earnings 4,945 9,957 Goodwill 14 14 amortisation Exceptional items (net of tax) Costs of cash cancellation offer 3,410 - Provision for warranty and closure - (348) provisions Provision against doubtful debts - (250) Provision for onerous lease 214 - commitments Adjusted earnings 8,583 9,373 Adjusted diluted earnings per share 14.23p 15.30p (pence) The above figures have been disclosed to demonstrate underlying performance . Andrews Sykes Group plc Notes to the financial statements For the 53 weeks ended 31 December 2004 7. The tax charge for the year was £2,242,000 (52 weeks ended 27 December 2003: £4,617,000) which represents an overall effective tax charge of 31.2% (52 weeks ended 27 December 2003: 31.7%). The tax charge is higher than the standard 30% UK corporation tax rate primarily due to non tax deductible items in the UK, withholding tax written off and the taxation of certain overseas profits at different tax rates. 8. 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. 9. The financial information set out above does not constitute the Group's statutory accounts for the 53 weeks ended 31 December 2004 or the 52 weeks ended 27 December 2003 but it is derived from those accounts. The financial statements for the 52 weeks ended 27 December 2003 have been filed and those for the 53 weeks ended 31 December 2004 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 11.00 am on 8 June 2005 at Floor 5, 10 Bruton Street, London, W1J 6PX. This information is provided by RNS The company news service from the London Stock Exchange

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