Interim Results
Andrews Sykes Group PLC
26 September 2002
Andrews Sykes Group plc
Interim Results for the 26 weeks ended 29 June 2002
Chairman's Statement
Dear Shareholder
Overview
Despite our best efforts the Group's performance for the first half of 2002 has
been disappointing but this was not totally unexpected. The salient features of
the results for the six months ended 29 June 2002 compared with the equivalent
period in 2001 are as follows:
• Turnover from continuing operations has decreased by 10.8% from
£33.7million to £30.0 million.
• Earnings before interest, taxation, depreciation and goodwill charges
(EBITDA) derived from continuing operations has decreased by 23.0% from £9.9
million to £7.6 million.
• Operating profit derived from continuing operations has decreased by
30.0% from £7.1 million to £5.0 million.
• Profit after tax has decreased by 25.3% from £4.1 million to £3.1 million.
• Adjusted diluted earnings per share decreased by 13.6% from 4.91 pence to
4.24 pence.
• The net debt of £9.5 million at 29 December 2001 has been eliminated
and as at 29 June 2002, has been converted into net funds of £1.7 million.
Financial Review
In the 2001 Annual Report I reported to you that the first quarter of 2002 had
not started particularly well for our Group. Unfortunately this trend continued
for the remainder of the first half resulting in a decrease in turnover of £3.7
million from continuing operations compared to the same period in 2001.
This was due to two major factors. Firstly, the Group suffered from increased
competition in our core UK markets on all of our product ranges. The market for
the hire of portable air conditioning and heating equipment has been eroded by
the availability of cheap units for sale at many discount stores. Similarly the
pump hire market has been adversely affected by increased competition
particularly for the hire of small pumps for which limited technical support is
required. As a consequence virtually all of the fall in turnover is attributable
to a decline in the hire revenue. Excluding discontinued operations, hire
revenue in the first half of 2002 fell by £3.3 million, or 15%, compared with
the first half of 2001. The turnover of our main UK core business, Andrews Sykes
Hire, fell from £17.4 million in the first half of 2001 to £14.0 million for the
first six months of this year, a decrease of 19.8%. The gross profit of this
business decreased by 21.4% in the same period.
The second factor affecting the results is that the weather has not been
particularly favourable for our Group. Last winter was mild and this was
followed by an unremarkable spring and an early summer lacking prolonged hot
periods which would have stimulated demand for our air-conditioning products.
As with any hire business, the Group's costs are largely fixed in the short term
and hence the decrease in turnover has had a more than proportionate impact on
the operating profit. As noted above, operating profit from continuing
operations fell by £2.1 million, or 30%, as a consequence of the £3.7 million
decrease in turnover.
The Board's strategy is to continue to develop the UK specialist hire and rental
activity where both margins and the potential for profit growth are considered
to be the greatest. In particular the policy of identifying and developing niche
markets, which have reduced levels of competition and higher levels of
profitability, will continue to be followed. Central overheads will also
continue to be well controlled.
Disposal of Cox Plant
On 6 June 2002 we completed the disposal of the trade and net assets of our loss
making general plant hire business, Cox Plant, at break even. I consider that
this is a particularly satisfactory outcome for our Group as this company made a
loss before tax of £1.4 million in the last financial year.
The total gross proceeds were £9.3 million which, after adjusting for disposal
costs, resulted in net proceeds of £9.15 million. The immediate net cash inflow
was £7.25 million, a further £50,000 is due by the end of the current financial
year and the balance of £1.85 million is due for payment in May 2004.
The above net cash receipt has been used to reduce the outstanding loans and
this, together with the significant amount of cash generated by the Group in the
first 6 months, has resulted in the Group's net debt position of £9.5 million at
29 December 2001 being converted into £1.7 million of net funds. This has
already started to result in significant interest savings as well as placing the
Group in a better position to take advantage of growth opportunities as and when
they arise.
Share buy-back programme and Earnings Per Share (EPS)
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.
Consequently the policy outlined in last year's annual report will continue.
During the first half of 2002 the company has purchased 526,465 shares for
cancellation, at a total cost of £544,240.
The adjusted diluted EPS has reduced from 4.91 pence for the first half of 2001
to 4.24 pence for the six months ended 29 June 2002.
Changes in directors and advisors
On 29 May 2002 the Board appointed Mr AA Bourne as the Group Financial Director.
Mr Bourne takes over the position from Mr J-C Pillois who has been acting as
Interim Finance Director since October 1999. Mr Pillois will continue to act as
a non-executive director of the Group.
Prospects
The effects of the increase in competition that adversely affected our results
for the first half of the year are expected to continue into the second six
months. The results for July were also depressed by a period of relatively cool
weather.
The Group received a one off benefit from the Commonwealth Games event held in
Manchester during July primarily through the hire of accommodation and
associated services. The turnover of our European operations was also boosted by
increased activity levels following the floods in Central Europe during July and
August.
If the forthcoming winter is as mild as the previous one then our management and
staff will have a tough time in the months ahead. Nevertheless I remain
confident in their ability to rise to this challenge.
JG Murray
Chairman
25 September 2002
Andrews Sykes Group plc
Consolidated profit & loss account
For the 26 weeks ended 29 June 2002
26 weeks to 26 weeks to 26 weeks 26 weeks to 26 weeks to 26 weeks 52 weeks to
29 June 2002 29 June 2002 to 29 30 June 2001 30 June 2001 to 30 29 December
Continuing Discontinued June 2002 Continuing Continuing June 2001 2001
activities activities Total activities activities Total Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Turnover 30,045 6,067 36,112 33,700 8,485 42,185 84,184
Cost of sales (15,799) (4,299) (20,098) (17,144) (6,338) (23,482) (46,449)
Gross profit 14,246 1,768 16,014 16,556 2,147 18,703 37,735
Distribution costs (2,581) (346) (2,927) (2,466) (439) (2,905) (6,753)
Administrative expenses (6,698) (1,563) (8,261) (6,995) (2,007) (9,002) (17,627)
Operating profit / (loss) 4,967 (141) 4,826 7,095 (299) 6,796 13,355
EBITDA * 7,598 984 8,582 9,864 1,844 11,708 22,769
Depreciation and asset (2,609) (1,125) (3,734) (2,762) (2,128) (4,890) (9,370)
disposals
Operating profit / (loss) 4,989 (141) 4,848 7,102 (284) 6,818 13,399
before goodwill
amortisation
Goodwill amortisation (22) 0 (22) (7) (15) (22) (44)
Operating profit 4,967 (141) 4,826 7,095 (299) 6,796 13,355
Profit on the disposal of 0 0 336
property
Net interest payable (272) (773) (1,439)
Profit on ordinary 4,554 6,023 12,252
activities before tax
Tax on profit on ordinary (1,459) (1,878) (3,914)
activities
Profit on ordinary 3,095 4,145 8,338
activities after taxation
being retained profit for
the financial period
Basic earnings per ordinary 4.24p 4.88p 10.52p
share
Diluted earnings per 4.21p 4.88p 10.51p
ordinary share
Goodwill amortisation 0.03p 0.03p 0.06p
Exceptional items 0.00p 0.00p (0.42p)
Adjusted diluted earnings 4.24p 4.91p 10.15p
per share
* Earnings before interest, taxation, depreciation, and amortisation.
Andrews Sykes Group plc
Consolidated Balance Sheet
As at 29 June 2002
29 June 30 June 2001 29 December
2002 Restated 2001 Restated
£'000 £'000 £'000
Fixed assets
Intangible assets 106 150 128
Tangible fixed assets 17,045 26,867 24,560
Investments 567 623 605
17,718 27,640 25,293
Current assets
Stocks 4,433 5,423 4,675
Debtors 15,562 21,718 17,779
Cash at bank and in hand 10,374 10,519 7,821
30,369 37,660 30,275
Creditors falling due within one year
Loans and overdrafts (5,490) (12,800) (12,350)
Other creditors (11,009) (15,743) (12,228)
Purchase of own shares (236) 0 0
Corporation and overseas tax (1,420) (3,026) (2,352)
(18,155) (31,569) (26,930)
Net current assets 12,214 6,091 3,345
Total assets less current liabilities 29,932 33,731 28,638
Creditors falling due after more than one year
Loans (3,210) (9,900) (5,000)
Corporation and overseas tax 0 (245) 0
Provisions for liabilities and charges (1,461) (943) (1,029)
Net assets 25,261 22,643 22,609
Capital and reserves
Called up share capital 14,616 15,650 14,686
Share premium account 10,476 10,421 10,421
Revaluation reserve 759 765 762
Other reserves 4,337 3,275 4,236
Profit and loss account (4,937) (7,478) (7,506)
Equity shareholders' funds 25,251 22,633 22,599
Minority interests (equity) 10 10 10
25,261 22,643 22,609
In order to ensure comparability of corresponding amounts and more fully comply
with the Companies Act 1985 provisions previously disclosed within other
creditors and provisions have been separately disclosed as Provisions for
liabilities and charges.
This has resulted in an increase in provisions for liabilities and charges at 30
June 2001 of £943,000 (29 December 2001: £1,029,000) and a corresponding
decrease in other creditors and provisions due after more than one year.
Andrews Sykes Group plc
Consolidated cash flow statement
For the 26 weeks ended 29 June 2002
26 weeks to 26 weeks to 52 weeks ended
29 June 2002 30 June 2001 29 December 2001
Total Total Total
£'000 £'000 £'000
Net cash inflow from operating activities 8,457 11,362 26,648
Returns on investments and servicing of finance
Interest received 117 183 307
Interest paid (472) (910) (1,577)
Net cash outflow for returns on investments and (355) (727) (1,270)
servicing of finance
Cash outflow for taxation (1,598) (1,261) (4,005)
Capital expenditure and financial investment
Purchase of tangible fixed assets (2,992) (2,959) (5,749)
Sale of tangible fixed assets 631 855 2,057
Sale of shares held in ESOP 0 65 68
Net cash outflow for capital expenditure (2,361) (2,039) (3,624)
Acquisitions and disposals
Cash received on the disposal of subsidiary 7,253 0 0
undertakings
Net cash inflow for acquisitions and disposals 7,253 0 0
Cash inflow before the use of liquid resources and 11,396 7,335 17,749
financing
Management of liquid resources
Movement in bank deposits (3,298) (8,559) (2,580)
Financing
Issue of ordinary share capital net of issue costs 90 140 140
New loan draw downs and factoring advances 3,700 0 0
Loan repayments (12,350) (2,450) (7,800)
Net capital element of finance lease payments 0 (59) (63)
Purchase of own shares (308) (4,916) (12,629)
Net cash outflow from financing (8,868) (7,285) (20,352)
Decrease in cash in the period (770) (8,509) (5,183)
Analysis of net funds / (debt)
Cash at bank and in hand 10,374 10,519 7,821
Total loans, overdrafts and finance lease (8,700) (22,704) (17,350)
obligations
Net funds / (debt) 1,674 (12,185) (9,529)
Net funds / (debt) as a percentage of 6.6% (53.8%) (42.2%)
shareholders' funds
Consolidated statement of total recognised gains and losses
For the 26 weeks ended 29 June 2002
26 weeks to 26 weeks to 52 weeks to 29
29 June 2002 30 June 2001 December 2001
Total Total Total
£'000 £'000 £'000
Profit for the financial period 3,095 4,145 8,338
Currency translation differences on foreign 11 45 8
currency net investments
Total gains and losses in the period 3,106 4,190 8,346
Andrews Sykes Group plc
Notes to the accounts
For the 26 weeks ended 29 June 2002
1. Basis of preparation
The interim report for the 26 weeks ended 29 June 2002 was approved by the Board
on 25 September 2002. The financial information contained in this interim report
does not constitute statutory accounts for the Group for the relevant periods.
The interim report is unaudited but has been reviewed by the auditors. The
results for the 52 weeks ended 29 December 2001 have been extracted from the
audited financial statements that have been filed with the Registrar of
Companies. The report of the auditors was unqualified and did not contain a
statement under section 237(2) or (3) of the Companies Act 1985.
The financial information has been prepared in accordance with the accounting
policies adopted within the financial statements for the 52 weeks ended 29
December 2001 as amended for the adoption of FRS 19 - 'Deferred Taxation'. The
adoption of this standard has no impact on the primary statements included
within these interim results.
2. Segmental analysis
The Group's turnover may be analysed between the following principal products
and activities:
26 weeks to 26 weeks to 52 weeks to
29 June 2002 30 June 2001 29 December
2001
Total Total Total
£'000 £'000 £'000
Product Group:
Pumps 8,965 10,368 19,850
Heating and ventilation 13,001 13,335 34,960
Air conditioning 8,079 9,997 12,687
General Plant and accommodation 6,067 8,485 16,687
Total 36,112 42,185 84,184
Activity:
Hire 23,937 29,590 58,891
Sales 7,482 8,092 16,269
Installation 4,693 4,503 9,024
Total 36,112 42,185 84,184
The geographical analysis of the Group's turnover by origin was as follows:
26 weeks to 26 weeks to 52 weeks to
29 June 30 June 29 December
2002 2001 2001
Total Total Total
£'000 £'000 £'000
United Kingdom 33,729 39,911 79,248
Rest of Europe 1,025 902 2,284
Middle East 1,358 1,372 2,652
36,112 42,185 84,184
Andrews Sykes Group plc
Notes to the accounts
For the 26 weeks ended 29 June 2002
2. Segmental analysis cont...
The results can be further analysed by class of business:
Profit/(loss) Profit/
before (loss)
exceptionals Exceptionals before
and goodwill and goodwill interest Net assets/
Turnover charges charges and tax (liabilities)
£'000 £'000 £'000 £'000 £'000
26 weeks ended 29 June 2002:
Pumps, heating, ventilation, air 30,045 4,989 (22) 4,967 25,261
conditioning, accommodation and
other
General plant 6,067 (141) 0 (141) 0
36,112 4,848 (22) 4,826 25,261
26 weeks ended 30 June 2001:
Pumps, heating, ventilation, air 33,700 7,102 (7) 7,095 25,195
conditioning, accommodation and
other
General plant 8,485 (284) (15) (299) (2,552)
42,185 6,818 (22) 6,796 22,643
52 weeks ended 29 December 2001:
Pumps, heating, ventilation, air 67,497 13,812 12 13,824 23,032
conditioning, accommodation and
other
General plant 16,687 (413) 280 (133) (423)
84,184 13,399 292 13,691 22,609
3. Reconciliation of operating profit to net cash inflow from
operating activities
26 weeks to 26 weeks to 52 weeks to
29 June 2002 30 June 2001 29 December
2001
Total Total Total
£'000 £'000 £'000
Operating profit 4,826 6,796 13,355
Goodwill amortisation 22 22 44
Depreciation 4,001 5,241 9,638
Provision against investments 38 0 0
Profit on sale of fixed assets (267) (351) (268)
(Increase) / decrease in stocks (195) 335 1,083
(Increase) / decrease in debtors (992) (430) 3,154
Increase / (decrease) in creditors and provisions 1,024 (251) (358)
Net cash inflow from operating activities 8,457 11,362 26,648
4. Earnings per share
The basic figures have been calculated by reference to the weighted average
number of 20p ordinary shares in issue during the period of 73,033,559 (26 weeks
ended 30 June 2001: 84,925,445).
The calculation of the diluted earnings per ordinary share is based on the
profits as set out in the table below and on 73,509,893 (26 weeks ended 30 June
2001: 85,017,432) ordinary shares. The share options have a dilutive effect
for the period calculated as follows:
Andrews Sykes Group plc
Notes to the accounts
For the 26 weeks ended 29 June 2002
4. Earnings per share cont....
26 weeks to 29 June 2002 26 weeks to 30 June 2000
Number of Total Number of Total
shares earnings shares earnings
£'000 £'000
Basic earnings/weighted average number of shares 73,033,559 3,095 84,925,445 4,145
Weighted average number of shares under option 4,624,835 245,000
Number of shares that would have been issued at (4,148,501) (153,013)
fair value
Earnings/diluted weighted average number of 73,509,893 3,095 85,017,432 4,145
shares
Diluted earnings per ordinary share (pence) 4.21p 4.88p
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:
26 weeks to 26 weeks to
29 June 2002 30 June 2001
Total Total
earnings earnings
£'000 £'000
Earnings 3,095 4,145
Goodwill amortisation 22 22
Adjusted earnings 3,117 4,167
Adjusted diluted earnings per ordinary share 4.24p 4.91p
(pence)
5. Reconciliation of movements in group shareholders' funds
26 weeks to 26 weeks to 52 weeks to
29 December
29 June 2002 30 June 2001 2001
Total Total Total
£'000 £'000 £'000
Profit for the financial period 3,095 4,145 8,338
Other recognised gains and losses 11 45 8
Proceeds from ordinary shares issued 90 140 140
Cancellation of own shares under the share buy (544) (8,439) (12,629)
back scheme
Net decrease in shareholders' funds 2,652 (4,109) (4,143)
Shareholders' funds at the beginning of the period 22,599 26,742 26,742
Shareholders' funds at the end of the period 25,251 22,633 22,599
6. Distribution of interim statement
A copy of this statement will be posted to all shareholders and is available
from the Company's registered office at Premier House, Darlington Street,
Wolverhampton, WV1 4JJ.
Enquiries:
Robert Stevens
Chief Executive
Andrews Sykes Group plc
01902 328700
INDEPENDENT REVIEW REPORT TO ANDREWS SYKES GROUP PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 29 June 2002 which comprises the consolidated profit and
loss account, balance sheet, summarised cash flow statement, reconciliation of
movement in shareholders' funds and related notes 1 to 6. We have read the
other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the interim report and have chosen to adopt the
requirements of the Listing Rules of the Financial Services Authority which
require that the accounting policies and presentation applied to the interim
figures should be consistent with those applied in preparing the preceding
annual accounts except where any changes, and the reasons for them, are
disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 29 June 2002 .
Deloitte & Touche
Chartered Accountants
25 September 2002
Birmingham
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 5 minutes ago MJ Gleeson
- 12 minutes ago Land Securities Group
- 13 minutes ago Ithaca Energy
- 30 minutes ago CLS Holdings
- 2 hours ago Taseko Mines Limited NPV (DI)