Interim Results
Andrews Sykes Group PLC
25 September 2003
Andrews Sykes Group plc
Interim results for the 26 weeks ended 28 June 2003
Chairman's Statement
Dear Shareholders,
I have pleasure in submitting the results of our Group for the 26 weeks ended 28
June 2003.
Overview
Our Group's performance for the first half of 2003 has shown an improvement
compared with last year. The salient features of the results for the 26 weeks
ended 28 June 2003 compared with the equivalent period in 2002 are as follows:
• Turnover from continuing operations has increased by 7.7% from £30.0
million to £32.4 million reversing last year's downward trend.
• Earnings before Interest, Taxation, Depreciation and Goodwill Amortisation
(EBITDA) derived from continuing operations has increased by 12.4 % from
£7.6 million to £8.5 million.
• Profit on ordinary activities before tax has increased by 23.3% from £4.6
million to £5.6 million.
• Basic earnings per share has increased by 51.7% from 4.24 pence to 6.43
pence.
• Gearing has been reduced from 74.5% as at 28 December 2002 to 57.8% as at
28 June 2003 thereby demonstrating our Group's strong cash generative
performance in the period.
Financial review
In the 2002 Annual Report I reported to you that we reorganised the UK core
businesses by reducing fixed costs and linked them to a sustainable level of
turnover. This policy placed us in a strong position to maximise profitability.
I am now pleased to be able to report that this strategy, combined with a
focused management initiative to improve turnover, has resulted in a strong
performance from the UK core businesses in the first half of 2003. Our overseas
operations also performed strongly, particularly the well established heating,
drying and air conditioning business operating in The Netherlands through
Andrews Sykes BV.
The Board's strategy for developing the specialist hire and rental markets,
where the margins and the potential for profit growth are considered to be the
greatest, will continue to be followed.
Cash flow and gearing
The Group continues to generate strong cash flows with a net cash inflow from
operating activities of £6.2 million. Gearing has been reduced from 74.5% to
57.8% due to a combination of a £1.0 million reduction in net debt to £8.7
million and an increase of £2.0 million in net assets. This has been achieved
despite a £1.8 million reduction in equity shareholders' funds due to the
share buy-back programme.
Share buy-back programme and Earnings per Share
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.
During the first half of 2003 the company has purchased 1,039,750 shares for
cancellation at a total cost of £1,849,478.
Due to the improvements in our Group's profit after taxation and the share
buy-back programme, the basic earnings per share has increased from 4.24 pence
in the first half of 2002 to 6.43 pence in the first half of the current year.
An interim dividend has not been declared for the current period but the
dividend payment policy is under continual review and will be resumed at such
time that the Board considers it to be in the best interests of shareholders.
Prospects
Overall our Group had a much improved result for the first half of 2003 in
comparison to the equivalent period last year. The hot weather conditions in
July and August have resulted in a better than average performance by our air
conditioning hire business, thereby giving us a good start to the second half.
JG Murray
Chairman
24 September 2003
Consolidated Profit and Loss Account
for the 26 weeks ended 28 June 2003
26 weeks to 28 26 weeks to 29 26 weeks to 29 26 weeks to 29 52 weeks to 28
June 2003 June 2002 June 2002 June 2002 December 2002
Continuing Continuing Discontinued
Activities Activities Activities Total Total
£'000 £'000 £'000 £'000 £'000
Turnover 32,371 30,045 6,067 36,112 70,544
Cost of sales (16,831) (15,799) (4,299) (20,098) (37,342)
Gross profit 15,540 14,246 1,768 16,014 33,202
Distribution costs (2,827) (2,581) (346) (2,927) (6,133)
Administrative expenses (6,828) (6,698) (1,563) (8,261) (14,602)
Other operating income - - - - 21
Operating profit/(loss) 5,885 4,967 (141) 4,826 12,488
EBITDA* 8,541 7,598 984 8,582 19,189
Depreciation and asset disposals (2,649) (2,609) (1,125) (3,734) (6,646)
Operating profit/(loss) before goodwill 5,892 4,989 (141) 4,848 12,543
amortisation
Goodwill amortisation (7) (22) - (22) (55)
Operating profit/(loss) 5,885 4,967 (141) 4,826 12,488
Net interest payable (272) (272) (364)
Profit on ordinary activities before tax 5,613 4,554 12,124
Tax on profit on ordinary activities (1,778) (1,459) (3,850)
Profit on ordinary activities after 3,835 3,095 8,274
taxation being retained profit for the
financial period
Basic earnings per ordinary share 6.43p 4.24p 11.50p
(pence)
Diluted earnings per ordinary share 6.23p 4.21p 11.36p
(pence)
Goodwill amortisation (pence) 0.01p 0.03p 0.08p
Adjusted diluted earnings per ordinary 6.24p 4.24p 11.44p
share (pence)
*Earnings before Interest, Taxation, Depreciation and Amortisation
Consolidated Balance Sheet
as at 28 June 2003
28 June 2003 29 June 2002 28 December 2002
£'000 £'000 £'000
Fixed assets
Intangible assets: Goodwill 66 106 73
Tangible assets 16,196 17,045 16,638
Investments 321 567 341
16,583 17,718 17,052
Current assets
Stocks 5,507 4,433 4,692
Debtors 16,988 15,562 15,614
Cash at bank and in hand 9,482 10,374 8,704
31,977 30,369 29,010
Creditors falling due within one year
Loans and overdrafts (3,740) (5,490) (2,490)
Other creditors (10,879) (11,009) (10,881)
Purchase of own shares (47) (236) -
Corporation and overseas tax (2,832) (1,420) (2,018)
(17,498) (18,155) (15,389)
Net current assets 14,479 12,214 13,621
Receivable in one year 13,260 9,833 11,292
Due after more than one year 1,219 2,381 2,329
14,479 12,,214 13,621
Total assets less current liabilities 31,062 29,932 30,673
Creditors falling due after more than one year
Loans (14,470) (3,210) (15,965)
Provisions for liabilities and charges (1,480) (1,461) (1,618)
Net assets 15,112 25,261 13,090
Capital and reserves
Called up share capital 11,836 14,616 12,044
Share premium account 10,476 10,476 10,476
Revaluation reserve 754 759 757
Other reserves 7,113 4,337 6,907
Profit and loss account (15,077) (4,937) (17,104)
Equity shareholders' funds 15,102 25,251 13,080
Minority interests (equity) 10 10 10
15,112 25,261 13,091
Consolidated Cash Flow Statement
for the 26 weeks ended 28 June 2003
26 weeks to 26 weeks to 52 weeks to
28 June 2003 29 June 2002 28 December 2002
Total Total Total
£'000 £'000 £'000
Net cash inflow from operating activities 6,224 8,457 18,866
Returns on investments and servicing of finance
Interest received 163 117 297
Interest paid (371) (472) (724)
Net cash outflow for returns on investments and (208) (355) (427)
servicing of finance
Cash outflow for taxation (1,143) (1,598) (3,373)
Capital expenditure
Purchase of tangible fixed assets (2,348) (2,992) (6,020)
Purchase of shares held in ESOP (88) - -
Sale of tangible fixed assets 273 631 1,076
Sale of shares held in ESOP 82 - 221
Net cash outflow for capital expenditure (2,081) (2,361) (4,723)
Acquisitions and disposals
Cash received on the disposal of subsidiary - 7,253 7,205
undertakings
Net cash inflow for acquisitions and disposals - 7,253 7,205
Cash inflow before the use of liquid resources and 2,792 11,396 17,548
financing
Management of liquid resources
Increase in bank deposits (2,493) (3,298) (1,250)
Financing
Issue of ordinary share capital net of issue costs - 90 90
New loan draw downs - 3,700 18,700
Loan repayments (245) (12,350) (17,595)
Purchase of own shares (1,802) (308) (17,819)
Net cash outflow from financing (2,047) (8,868) (16,624)
Decrease in cash in the period (1,748) (770) (326)
Analysis of net (debt)/funds
Cash at bank and in hand 9,482 10,374 8,704
Total loans and overdrafts (18,210) (8,700) (18,455)
Net (debt)/funds (8,728) 1,674 (9,751)
Net (debt)/funds as a percentage of shareholders' funds (57.8%) 6.6% (74.5%)
Consolidated Statement of Total Recognised Gains and Losses
for the 26 weeks ended 28 June, 2003
26 weeks to 26 weeks to 52 weeks to
28 June 2003 29 June 2002 28 December 2002
Total Total Total
£'000 £'000 £'000
Profit for the financial period 3,835 3,095 8,274
Currency translation differences on foreign currency 36 11 (64)
net investments
Total recognised gains and losses in the period 3,871 3,106 8,210
Notes to the Accounts
for the 26 weeks ended 28 June 2003
1 Basis of preparation
The interim report for the 26 weeks ended 28 June 2003 was approved by the Board
on 24 September 2003. The financial information contained in this interim report
does not constitute statutory accounts for the Group for the relevant periods.
The interim report is neither audited nor reviewed. The results for the 52 weeks
ended 28 December 2002 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 28
December 2002.
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
28 June 2003 29 June 2002 28 December 2002
Total Total Total
£'000 £'000 £'000
Product group:
Pumps 9,207 8,965 17,625
Heating, ventilation and air-conditioning 14,594 13,001 33,291
Accommodation & other 8,570 8,079 13,561
General plant - 6,067 6,067
Total 32,371 36,112 70,544
Activity:
Hire 20,549 23,937 46,132
Sales 6,737 7,482 14,914
Installation 5,085 4,693 9,498
Total 32,371 36,112 70,544
The geographical analyses of the Group's turnover by origin was as follows:
26 weeks to 26 weeks to 52 weeks to
28 June 2003 29 June 2002 28 December 2002
Total Total Total
£'000 £'000 £'000
United Kingdom 29,249 33,729 64,396
Rest of Europe 1,602 1,025 3,174
Middle East and Africa 1,520 1,358 2,974
Total 32,371 36,112 70,544
2 Segmental analysis (continued)
The results can be further analysed by class of business:
Turnover £'000 Profit/(loss) Goodwill Charges Profit/(loss) Net assets
before goodwill before interest
charges and tax
£'000 £'000 £'000 £'000
26 weeks ended 28 June 2003:
Pumps, heating, ventilation, air 32,371 5,892 (7) 5,885 15,112
conditioning, accommodation & other
26 weeks ended 29 June 2002:
Pumps, heating, ventilation, air 30,045 4,989 (22) 4,967 25,261
conditioning, accommodation & other
General plant 6,067 (141) - (141) -
36,112 4,848 (22) 4,826 25,261
52 weeks ended 28 December 2002:
Pumps, heating, ventilation, air 64,477 12,693 (55) 12,638 13,090
conditioning, accommodation & other
General plant 6,067 (150) - (150) -
70,544 12,543 (55) 12,488 13,090
3 Reconciliation of operating profit to net cash inflow from operating
activities
26 weeks to 26 weeks to 52 weeks to
28 June 2003 29 June 2002 28 December 2002
Total Total Total
£'000 £'000 £'000
Operating profit 5,885 4,826 12,488
Goodwill amortisation 7 22 55
Depreciation 2,709 4,001 6,841
Loss on sale of investments 15 38 43
Profit on sale of fixed assets (60) (267) (195)
Increase in stocks (815) (195) (425)
Increase in debtors (1,223) (992) (989)
(Decrease)/increase in creditors and provisions (294) 1,024 1,048
Net cash inflow from operating activities 6,224 8,457 18,866
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 59,605,878 (26 weeks
ended 29 June 2002: 73,033,559).
The calculation of the diluted earnings per ordinary share is based on the
profits as set out in the table below and on 61,557,328 (26 weeks ended 29 June
2002: 73,509,893) ordinary shares. The share options have a dilutive effect for
the period calculated as follows:
26 weeks to 26 weeks to
28 June 2003 29 June 2002
Earnings No. of Shares Earnings No of Shares
£'000 £'000
Basic earnings/weighted average number of shares 3,835 59,605,878 3,095 73,033,559
Weighted average number of shares under option 4,710,057 4,624,835
Number of shares that would have been issued at (2,758,607) (4,148,501)
fair value
Earnings/diluted weighted average number of shares 3,835 61,557,328 3,095 73,509,893
Diluted earnings per ordinary share (pence) 6.23p 4.21p
The adjusted diluted earnings per share excluding goodwill amortisation 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
28 June 2003 29 June 2002
Earnings Earnings
£'000 £'000
Earnings 3,835 3,095
Goodwill amortisation 7 22
Adjusted earnings 3,842 3,117
Adjusted diluted earnings per ordinary share (pence) 6.24p 4.24p
5 Reconciliation of movements in Group shareholders' funds
26 weeks to 26 weeks to 52 weeks to
28 June 2003 29 June 2002 28 December 2002
Total Total Total
£'000 £'000 £'000
Profit for the financial period 3,835 3,095 8,274
Other recognised gains and losses 36 11 (64)
Proceeds from ordinary shares issued - 90 90
Consideration payable for the purchase of own shares (1,849) (544) (17,819)
Net increase/(decrease) in shareholders' funds 2,022 2,652 (9,519)
Shareholders' funds at the beginning of the period 13,080 22,599 22,599
Shareholders' funds at the end of the period 15,102 25,251 13,080
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.
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