Interim Results - Replacement
Andrews Sykes Group PLC
29 September 2000
The following amendments have been made to the 'Interim Results' announcement
released at 07:05 today under RNS No 7485R.
Parts of the text of the announcement were duplicated. The duplications have
been removed.
In Note 5, the entry for 'Amortisation of goodwill as set out in note 4' for the
53 weeks to 1 January 2000 should read 434 and not 4.
All other details remain unchanged. The full corrected text is shown below.
ANDREWS SYKES GROUP PLC
INTERIM RESULTS FOR THE 26 WEEKS TO 1 JULY 2000
Chairman's Statement
I am able to report a satisfactory start to trading results for the year
2000. The salient points of the accounts for the six months ended 1
July 2000 are as follows:
£000
Group operating profit before exceptional 6,574
items and goodwill amortisation increased
by £763,000 to
EBITDA remained virtually unchanged at 11,943
Group operating profit decreased by 3,357
£421,000 to
Profit before tax remained virtually 2,166
unchanged at
Net cash inflow from operating activities
increased by £3,495,000 to 11,607
Gearing reduced from 98.6% to 77.1%
Financial review
Our plans to focus on our core UK based hire business has shown early
progress with effective controls being implemented across the Group.
The decision has been taken to close both the small operations in Poland
and Singapore where we considered both the return on capital employed
and growth potential for the Group to be unsatisfactory. The closure
costs were not significant and have been fully absorbed in the reported
figures.
We continued to develop and implement sales focused strategies as
outlined in the 1999 report and accounts. Despite all management's
efforts the effect of the continuing downward pressure on general plant
hire prices during the period impaired the Group's ability both to
increase turnover and grow profits to the desired extent. Consequently
a further detailed financial review of Cox Plant Limited has been
carried out in accordance with FRS 11 which has led management to
reassess the carrying value for goodwill on the balance sheet. It was
the view of the Board that the value of goodwill was overstated by £3
million and therefore this has been written off in the half year accounts.
The above write off is a non cash item and therefore has had no effect
on the Group's ability to generate cash. I am pleased to be able to
report that the net cash inflow from operating activities has increased
by £3.5 million compared with the same period last year to £11.6
million. The Group's operating profit before exceptional items and
goodwill amortisation also showed a 13% improvement compared to the
previous year.
Whilst the air conditioning hire and unit sales show an improvement
compared to the first half of 1999 they are still below the level
achieved in the same period in 1998 due to a relatively poor summer. In
particular the air conditioning business suffered from poor weather
related trading conditions in May and June after a promising period in
April.
Prospects
The poor summer continues to depress air conditioning hire into the
third quarter and as a result the outlook for the second half remains
cautious with efforts being directed at non-seasonal activity to
underpin the new strategies for the medium to long term.
Share buy back programme
During the period under review the company has purchased 1,575,000
shares for a total consideration of £876,000.
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. In consequence the policy outlined previously will
continue.
J G Murray
Chairman
29 September 2000
For further information please contact:
Robert Stevens (Chief Executive) Telephone 01902 328 700
Andrews Sykes Group plc
Andrews Sykes Group plc
Group Profit and Loss Account
For the 26 weeks ended 1 July 2000
26 weeks to 26 weeks to 53 weeks to
1 July 2000 26 June 1999 1 January 2000
Total Total Total
£'000 £'000 £'000
Turnover 43,864 44,238 94,673
Cost of Sales (25,434) (26,393) (56,179)
Gross profit 18,430 17,845 38,494
Net operating expenses (15,073) (14,067) (26,819)
(previous periods include exceptional
items set out in note 3)
Group operating profit 3,357 3,778 11,675
EBITDA* 11,943 11,946 27,238
Depreciation and asset disposals (5,369) (6,135) (12,494)
Operating profit before exceptional items 6,574 5,811 14,744
and amortisation of goodwill
Exceptional items 0 (1,816) (2,635)
Amortisation of goodwill as set out in (3,217) (217) (434)
note 4
Group operating profit 3,357 3,778 11,675
Share of operating (loss)/profit of 0 (7) 0
associates
Income from other participating interests 0 0 135
Loss on the termination of overseas 0 0 (955)
operations
Net interest payable (1,191) (1,582) (2,857)
Profit on ordinary activities before tax 2,166 2,189 7,998
Tax on profit on ordinary activities (1,753) (737) (2,674)
Profit on ordinary activities after 413 1,452 5,324
taxation being profit for the financial
period
Dividends: Ordinary shares 0 (1,328) (1,326)
Convertible preference 0 (186) (220)
shares
Retained profit / (loss) for the period 413 (62) 3,778
Basic earnings per ordinary share 0.45 1.53 5.97
Fully diluted earnings per ordinary share 0.45 1.47 5.73
Exceptional items 0.00 2.11 2.96
Amortisation of goodwill 3.49 0.25 0.47
Adjusted fully diluted earnings per 3.94 3.83 9.16
ordinary share
Dividends per share: Preference 0.00 3.50 3.50
Ordinary 0.00 1.44 1.44
There were no significant acquisitions or discontinued operations during
the period.
*Earnings Before Interest, Taxation, Depreciation and Amortisation
excluding exceptional items and goodwill amortisation.
Andrews Sykes Group plc
Consolidated Balance Sheet
As at 1 July 2000
1 July 26 June 1 January
2000 1999 2000
£'000 £'000 £'000
Fixed assets
Intangible assets 4,201 7,635 7,418
Tangible assets 32,252 39,057 35,164
Investments 773 578 622
37,226 47,270 43,204
Current assets
Stocks 6,950 8,165 7,829
Debtors 22,960 24,374 24,920
Cash at bank and in hand 6,848 5,543 3,764
36,758 38,082 36,513
Creditors falling due within one year
Loans and overdrafts (6,700) (7,500) (7,673)
Other creditors and provisions (11,742) (19,192) (14,963)
Deferred consideration 0 (600) 0
Corporation and overseas tax (2,382) (2,728) (1,518)
Net current assets 15,934 8,062 12,359
Total assets less current liabilities 53,160 55,332 55,563
Creditors falling due after more than one year
Loans (22,300) (29,453) (24,750)
Other creditors and provisions (1,446) (1,203) (1,555)
Corporation tax (515) (80) 0
Net assets 28,899 24,596 29,258
Capital and reserves
Called up share capital 18,129 19,737 18,443
Share premium account 10,399 8,168 10,394
Revaluation reserve 770 776 773
Other reserves 601 284 280
Profit and loss account (1,010) (4,379) (642)
28,889 24,586 29,248
Shareholders' funds
Equity 28,889 21,402 29,248
Non equity 0 3,184 0
28,889 24,586 29,248
Minority Interests (equity) 10 10 10
28,899 24,596 29,258
Analysis of net debt
Cash at bank and in hand 6,848 5,543 3,764
Deferred consideration 0 (600) 0
Total loans, overdrafts and finance lease (29,126) (37,179) (32,612)
obligations
Net debt (22,278) (32,236) (28,848)
Net debt as a percentage of a 77.1% 131.1% 98.6%
shareholders' funds
Andrews Sykes Group plc
Consolidated cash flow statement
For the 26 weeks ended 1 July 2000
26 weeks to 26 weeks to 53 weeks to
1 July 2000 26 June 1999 1 January 2000
£'000 £'000 £'000
Net cash inflow from operating activities 11,607 8,112 19,469
Returns on investments and servicing of
finance
Net interest paid (1,108) (1,975) (3,213)
Preference dividends paid 0 (223) (257)
Interest element of finance lease (4) (15) (9)
payments
Net cash outflow for returns on (1,112) (2,213) (3,479)
investments and servicing
of finance
Cash outflow for taxation (442) (1,095) (4,408)
Capital expenditure
Purchase of tangible fixed assets (3,413) (1,853) (4,677)
Purchase of shares held in ESOP (151) (70) (458)
Sale of tangible fixed assets 884 871 1,175
Net cash outflow for capital expenditure (2,680) (1,052) (3,960)
Acquisitions
Payment of deferred consideration on 0 (6,500) (6,500)
previous acquisitions
Net cash outflow for acquisitions 0 (6,500) (6,500)
Equity dividends paid 0 (1,987) (3,297)
Cash inflow/(outflow) before the use of
liquid resources and financing 7,373 (4,735) (2,175)
Management of liquid resources
Movement in bank deposits 189 (313) 575
Financing
Issue of ordinary share capital net of 6 0 932
issue costs
New loan draw downs and factoring 0 3,900 4,400
advances
Loan repayments (3,423) (3,673) (9,303)
Net capital element of finance lease (63) (91) (140)
payments
Purchase of own shares (876) (17) (16)
Net cash (outflow) / inflow from (4,356) 119 (4,127)
financing
Increase/(decrease) in cash in the period 3,206 (4,929) (5,727)
Andrews Sykes Group plc
Notes to the accounts
For the 26 weeks ended 1 July 2000
1. The interim report for the 26 weeks ended 1 July 2000 was approved by
the board on 29 September 2000. 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 53 weeks ended 1 January
2000 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.
2. Segmental analysis
The Group's turnover may be analysed between the following
principal products and activities:
26 weeks to 26 weeks to 53 weeks to
1 July 2000 26 June 1999 1 January 2000
Total Total Total
£'000 £'000 £'000
Product group:
Pumps 9,896 12,085 22,375
Heating and ventilation 5,266 4,700 9,130
Air-conditioning 9,153 7,952 21,578
General plant 14,799 14,640 31,306
Other 4,750 4,861 10,284
Total 43,864 44,238 94,673
Activity:
Hire 29,956 28,076 59,766
Sales 7,877 10,792 19,825
Installation 6,031 5,370 15,082
Total 43,864 44,238 94,673
The geographical analysis of the Group's
turnover was as follows:
26 weeks to 26 weeks to 53 weeks to
1 July 2000 26 June 1999 1 January 2000
Total Total Total
£'000 £'000 £'000
United Kingdom 41,590 39,826 86,907
Rest of Europe 851 1,206 2,678
Middle East and Africa 1,283 1,938 3,490
The Americas 0 436 639
Rest of the World 140 832 959
43,864 44,238 94,673
The results can be further analysed by class of business:
Turnover Profit Exceptionals Group Net
before & goodwill operating assets
exceptionals profit
& goodwill
£'000 £'000 £'000 £'000 £'000
26 weeks ended
1 July 2000:
Pumps, heating, 29,065 5,700 (7) 5,693 20,619
ventilation, air-
conditioning & other
General plant 14,799 874 (3,210) (2,336) 8,280
43,864 6,574 (3,217) 3,357 28,899
26 weeks ended
26 June 1999:
Pumps, heating, 29,598 4,368 (1,823) 2,545 12,721
ventilation, air-
conditioning & other
General plant 14,640 1,443 (210) 1,233 11,875
44,238 5,811 (2,033) 3,778 24,596
53 weeks ended
1 January 2000:
Pumps, heating, 63,367 12,018 (3,604) 8,414 17,472
ventilation, air-
conditioning & other
General plant 31,306 2,861 (420) 2,441 11,786
94,673 14,879 (4,024) 10,855 29,258
3. Exceptional items 26 weeks to 26 weeks to 53 weeks to
1 July 26 June 1 January
2000 1999 2000
Total Total Total
£'000 £'000 £'000
Sterling contractual 0 (1,432) (1,440)
settlement costs
Redundancy and 0 (217) (1,014)
reorganisation
Abortive costs 0 (167) (181)
0 (1,816) (2,635)
Loss on the termination of 0 0 (955)
overseas operations
0 (1,816) (3,590)
Under agreements entered into in 1989, Sterling Fluid Products Limited ('SFP')
manufactured Sykes Pumps for the group. The agreements, which contained a
minimum annual purchase obligation, were terminated in 1995 and SFP claimed
£4.9 million in settlement plus additional interest and costs. The dispute
was settled out of court last year with a total payment to SFP of £3 million
and has re-established the exclusive rights which had been granted to SFP by
Andrews Sykes' previous management to use the Sykes Pumps name in the USA,
Iran, Iraq, and the sole right to market Sykes Pumps in those territories.
The settlement gave rise to the above exceptional charge last year after
provisions made in prior years and is inclusive of costs.
4. Amortisation of goodwill 26 weeks 26 weeks 53 weeks to
to 1 July to 26 June 1 January
2000 1999 2000
Total Total Total
£'000 £'000 £'000
Ordinary goodwill (217) (217) (434)
amortisation charge
Charge arising from (3,000) 0 0
impairment review
(3,217) (217) (434)
During the period and in accordance with FRS 11 the directors have performed
an impairment review of the carrying value of goodwill attributable to Cox
Plant Limited at 1 July 2000. The above £3 million charge arises from this
review.
Amortisation of goodwill is not an allowable item when computing the Company's
taxable profits. Therefore this has resulted in a high effective tax rate for
the 26 weeks to 1 July 2000.
5. Reconciliation of operating profit to net cash inflow from operating
activities
26 weeks to 26 weeks to 53 weeks to
1 July 26 June 1 January
2000 1999 2000
Total Total Total
£'000 £'000 £'000
Operating profit 3,357 3,778 11,675
Amortisation of goodwill as set 3,217 217 434
out in note 4
Depreciation 5,797 6,156 12,660
Profit on sale of fixed (428) (21) (166)
assets
Decrease in stocks 879 1,227 1,563
Decrease/(increase) in 1,993 (952) (1,625)
debtors
Decrease in creditors and (3,208) (2,293) (5,072)
provisions
Net cash inflow from 11,607 8,112 19,469
operating activities
6. 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 91,449,890 (26
weeks ended 26 June 1999: 82,766,023) after adjusting for the bonus element of
the open offer. The earnings are the Group's profit after taxation and
preference dividends.
The calculation of the diluted earnings per ordinary share is based on diluted
earnings of £413,000 (26 weeks ended 26 June 1999: £1,266,000) and on
92,231,636 (26 weeks ended 26 June 1999: 86,118,661) ordinary shares
calculated as follows:
26 weeks to 1 July 2000 26 weeks to 26 June 1999
Earnings No. of Earnings No. of
£'000 shares £'000 shares
Basic earnings/weighted
average number 413 91,449,890 1,266 82,766,023
of shares
Weighted average number of 1,245,000 5,311,518
shares under option
Number of shares that (463,254) (1,958,880)
would have been issued have
been issued at fair value
Dividend saving/weighted 0 0 0 0
average number of ordinary
shares arising on the
conversion of the preference
shares
Diluted earnings/weighted 413 92,231,636 1,266 86,118,661
average number of shares
Diluted earnings per ordinary share 0.45p 1.47p
No account has been taken on the conversion of the preference shares in the
six months ended 26 June 1999 as the conversion was not dilutive.
The adjusted 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 diluted
earnings as follows:
26 weeks to 26 weeks to
1 July 2000 26 June 1999
Total Total
£'000 £'000
Diluted earnings 413 1,266
Goodwill amortisation 3,217 217
Net exceptional charge 0 1,816
Adjusted diluted earnings 3,630 3,299
Adjusted diluted earnings per ordinary share 3.94p 3.83p
(pence)
7.Consolidated statement of total recognised gains and losses
26 weeks to 26 weeks to 53 weeks to
1 July 2000 26 June 1999 1 January 2000
Total Total Total
£'000 £'000 £'000
Profit for the financial period 413 1,452 5,324
Currency translation differences on 98 14 (97)
foreign currency net investments
Total gains and losses in the period 511 1,466 5,227
8. Reconciliation of movements in group shareholders' funds
26 weeks to 26 weeks to 53 weeks to
1 July 2000 26 June 1999 1 January 2000
Total Total Total
£'000 £'000 £'000
Profit for the financial period 413 1,452 5,324
Dividends 0 (1,514) (1,546)
Other recognised gains and losses 98 14 (97)
Proceeds from ordinary shares issued 6 0 932
Consideration for the purchase (876) (17) (16)
of own shares
Net (decrease)/increase in (359) (65) 4,597
shareholders' funds
Shareholders' funds at the 29,248 24,651 24,651
beginning of the period
Shareholders' funds at the 28,889 24,586 29,248
end of the period
9. 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.
KPMG Audit Plc
2 Cornwall Street
Birmingham
B3 2DL
INDEPENDENT REVIEW BY KPMG AUDIT PLC TO ANDREWS SYKES GROUP PLC
Introduction
We have been instructed by the company to review the interim financial
information and 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 Listing Rules of the Financial Services Authority
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 they are to be changed in the
next annual accounts in which case any changes, and the reasons for
them, are to be disclosed.
Review work performed
We conducted our review in accordance with guidance contained in
Bulletin 1999/4: Review of interim financial information issued by the
Auditing Practices Board. 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 is
substantially less in scope than an audit performed in accordance with
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 26 weeks ended 1 July 2000.
KPMG Audit Plc 29 September 2000
Chartered Accountants
Registered Auditor
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