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Andrews Sykes Group PLC  -  ASY   

Final Results

Released 07:00 11-May-2017

RNS Number : 7615E
Andrews Sykes Group PLC
11 May 2017
 

Andrews Sykes Group plc

Summary of results

For the 12 months ended 31 December 2016

 

 


       12 months

              ended

   31 December

                 2016

                £'000

 

       12 months

             ended 

   31 December

                 2015

                £'000

 

Revenue from continuing operations

                 65,389

              60,058




EBITDA* from continuing operations

                 20,664

              17,701




Operating profit

                 15,816

              13,208




Profit after tax for the financial period

                 14,473

              10,800




Basic earnings per share from total operations (pence)

                  34.25p

               25.55p




Interim and final dividends paid per equity share (pence)

                  23.80p

               23.80p




Proposed final dividend per equity share (pence)

                  11.90p

               11.90p




Net cash inflow from operating activities

                 15,133

             12,124




Total interim and final dividends paid

                 10,058

             10,058




Net funds

                 17,673

             14,558

 

*  Earnings Before Interest, Taxation, Depreciation, profit on sale of property, plant and equipment, Amortisation and non-   

   recurring items as reconciled on the consolidated income statement.

For further information please contact:

Andrews Sykes Group plc

Paul Wood, Group Managing Director

Andrew Phillips, Chief Financial Officer

 

01902 328700

 

GCA Altium Limited  (NOMAD)

Paul Lines

Adam Sivner

 

0845 505 4300

Arden Partners plc (broker)

Steve Douglas

 

020 7614 5900

 

 

 

 

 

Chairman's Statement

Overview and financial highlights

 

 

Summary

 

The group's revenue for the year ended 31 December 2016 was £65.4 million, an increase of £5.3 million, or 8.9%, compared with the same period last year. This increase had a more than proportionate impact on operating profit which increased by 19.7%, or £2.6 million, from £13.2 million last year to £15.8 million in the year under review. This increase, which follows a 16.8% increase last year, reflects strong performances from both our hire and sales businesses in the UK and Europe and the Middle East. Part of this increase, in Sterling terms, is due to the relatively weak pound compared with overseas currencies but nevertheless the underlying trading performance in our overseas subsidiaries shows a significant improvement compared to last year.

 

Net finance income was £1.7 million this year compared with £0.2 million in 2015. This is largely attributable to a foreign exchange gain arising on the retranslation of inter-company balances of £1.6 million which is also due to the relatively weak value of Sterling compared with overseas currencies, notably the Euro and the UAE Dirham.

 

Mainly as a consequence of the increase in operating profit and net finance income, our basic earnings per share increased by 34.1% from 25.55p last year to 34.25p in the current period. The basic earnings per share is a positive factor reflecting the strong trading performance of the group's businesses.

 

The group continues to generate strong cash flows. Net cash inflow from operating activities was £15.1 million compared with £12.1 million last year. Despite shareholder related cash outflows of £10.1 million on ordinary dividends, net funds increased by £3.2 million from £14.5 million at 31 December 2015 to £17.7 million at 31 December 2016.

 

Our policy of returning affordable dividends to shareholders continues. Over the last four financial years the group has paid £37.7 million in cash to shareholders. At the same time the level of external bank borrowings reduced from £6 million as at the end of last year to £5 million as at 31 December 2016. The Board is once again proposing a further final dividend payment amounting to £5.0 million which, if approved at the forthcoming AGM, would be paid in June 2017.

 

Cost control, cash and working capital management continue to be priorities for the group. Capital expenditure is concentrated on assets that give a good return and in total £6.2 million was invested in the hire fleet this year, £0.6 million more than last year and significantly more than the wasting depreciation charge of £4.5 million. In addition, the group invested a further £0.7 million in property, plant and equipment. These actions will ensure that the group's infrastructure and revenue generating assets are sufficient to support future growth and profitability. Hire fleet utilisation, condition and availability continue to be the subjects of management focus.

 



 

 

Operating performance

 

The following table splits the results between the first and second half years:

 


Turnover

 Operating profit


£'000

£'000

1st half 2016

30,287

6,395

1st half 2015

28,240

4,973




2nd half 2016

35,102

9,421

2nd half 2015

31,818

8,235




Total 2016

65,389

15,816

Total 2015

60,058

13,208




 

The above table demonstrates that the successful performance in the first half of the year continued into the second half. Turnover in the first half of the year showed a 7.2% improvement over the same period in 2015 and, in the second half, the percentage improvement increased to 10.3%. Operating profit for the first half year showed a 28.6% improvement compared with the same period in 2015 and a 14.4% improvement for the second half year. Although the percentage improvement was lower in the second half this year this is in comparison to a much stronger performance in the second half of last year. Traditionally the group makes more profit in the second half year due to the higher profit margins on its air conditioning products which are hired predominantly in the second half of the year.

 

The above significant improvement in operating profit has been achieved despite any significant extremes in climatic conditions. The operating profit of our main business segment in the UK and Northern Europe increased from £11.3 million last year to £13.8 million in the year under review. Whilst demand for our pumping and dehumidification products was stimulated by the floods in the North of England at the beginning of 2016, the absence of a hot summer did not help our air conditioning business. Generally the underlying performance was better than last year across the business sector due to robust operational management. Our traditional businesses continue to be developed and supported by the expansion of non-weather dependent niche markets which benefit the performance of our specialist hire divisions. This year's result further demonstrates that with a diverse product range we are able to return a strong performance despite the absence of any significant extreme weather conditions.

 

Our hire and sales business in the Middle East had another excellent trading year. The operating profit for this business segment increased from £2.3 million last year to £2.9 million in 2016. Trading was strong throughout the region and our climate rental division returned a positive contribution to the business results.

 

Our fixed installation business sector in the UK returned a slightly reduced operating profit of £0.3 million this year, £0.1 million behind the result achieved last year. The market continues to be fragmented with high levels of price competition.

 

Central overheads increased from £0.8 million in 2015 to £1.2 million in the current year.

 

Profit for the financial year

 

Profit before tax was £17.5 million this year compared with £13.4 million last year. This is attributable to the above £2.6 million increase in operating profit and the £1.5 million increase in net finance income. No dividends were received in either year from Oasis Sykes, our trade investment in Saudi Arabia.

  

Tax charges increased from £2.6 million in 2015 to £3.1 million this year. The overall effective tax rate reduced from 19.2% in 2015 to 17.5% primarily due to an increase in profits earned by our business based in the Middle East, where corporation tax rates are very low, the utilisation of off balance sheet overseas tax losses and a reduction in the UK corporation tax rate. Profit for the financial year was £14.4 million compared with £10.8 million last year.

 

Equity dividends

The company paid two dividends during the year. On 24 June 2016 a final dividend for the year ended 31 December 2015 of 11.9 pence per ordinary share was paid and this was followed on 2 November 2016 by the payment of an interim dividend for 2016 also of 11.9 pence per share. Therefore, during 2016, a total of £10.1 million in cash dividends has been returned to our ordinary shareholders.

I am pleased to announce that, in view of the group's ongoing profitability and its significant cash resources, the Board has proposed a final dividend for 2016 also of 11.9 pence per ordinary share. If approved at the forthcoming Annual General Meeting this dividend, which in total amounts to £5.0 million, will be paid on 26 June 2017 to shareholders on the register as at 26 May 2017.

Net funds

 

At 31 December 2016 the group had net funds of £17.7 million compared with £14.5 million last year, an increase of £3.2 million despite the payment of the above equity dividends totalling £10.1 million during the year.

 

Bank loan facilities

The final capital repayment of £5 million that was due under the bank loan agreement entered into in April 2013 was made in accordance with the agreed repayment schedule on30 April 2017. This was financed by a new five year loan of £5 million also with the Royal Bank of Scotland. This will be repaid by four equal annual instalments of £0.5 million per annum commencing in April 2018 followed by a final balloon repayment of £3 million due in April 2022.

 

Share buybacks

 

During the current year the company did not purchase any ordinary shares for cancellation. However, in prior periods such purchases were made and these enhanced earnings per share and were for the benefit of all shareholders.

The Board believes that it is in the best interest of shareholders if it has this authority in order that market purchases may be made in the right circumstances if the necessary funds are available. Accordingly, at the next Annual General Meeting, shareholders will be asked to vote in favour of a resolution to renew the general authority to make market purchases of up to 12.5% of the ordinary share capital in issue.

Outlook

The group's policy to increase investments in new technologically advanced and environmentally friendly non-seasonal products will be continued into 2017. Investments will also continue in our traditional businesses to ensure we are ready to support our customers in times of extreme weather conditions.

The group continues to face both challenges and opportunities in all of its geographical markets but our business remains strong, cash generative and well developed, with positive net funds. The Board is therefore cautiously optimistic for further success in 2017, always being mindful of the favourable or adverse impact that the weather can have on our business.

 

JG Murray

Chairman

10 May 2017

 

 

 

 

 

 



Andrews Sykes Group plc

Consolidated Income Statement

For the 12 months ended 31 December 2016

 


12 months

               ended

  31 December 

                 2016

                £'000


12 months

               ended

   31 December

                 2015

                   £'000

Continuing operations








Revenue

Cost of Sales

              65,389

            (26,677)


                60,058

              (25,284)





Gross profit

              38,712


                34,774





Distribution costs

            (11,512)


              (10,828)





Administrative expenses

            (11,384)


              (10,738)





Operating profit

              15,816


                13,208





EBITDA*

Depreciation and impairment losses

Profit on the sale of plant and equipment

              20,664

              (5,310)

                   462


                17,701

                (4,959)

                     466

Operating profit

              15,816


                13,208









Finance income

Finance costs

                1,875

                 (150)


                     323

                   (164)

Profit before taxation

              17,541


                13,367





Taxation

              (3,068)


                (2,567)





Profit for the financial period

              14,473


                10,800





There were no discontinued operations in either of the above periods








Earnings per share







Basic (pence)

               34.25p


                25.55p

Diluted (pence)

               34.25p


                25.55p





Interim and final dividends paid per equity share (pence)

               23.80p


                23.80p





Proposed final dividend per equity share (pence)

               11.90p


                11.90p

 

 

*  Earnings Before Interest, Taxation, Depreciation, profit on the sale of property, plant and equipment, Amortisation and non-

   recurring items.

 

 

 

Andrews Sykes Group plc

Consolidated Statement of Comprehensive Total Income

For the 12 months ended 31 December 2016

 

 

 


          12 months

                 ended

    31 December 

                  2016

                 £'000


12 months

                 ended

     31 December 

                  2015

                   £'000





Profit for the financial period

                14,473


                10,800





Other comprehensive income / (charges)








Items that may be reclassified to profit and loss:




Currency translation differences on foreign currency net




Investments

                  1,924


                   (175)





Items that will never be reclassified to profit and loss:




Remeasurement of defined benefit assets and liabilities

                (2,201)


                  1,157

Related deferred tax

                     418


                   (207)





Other comprehensive income for the period net of tax

                     141


                    775





Total comprehensive income for the period

                14,614


               11,575

 

 

 

 

 

 

Andrews Sykes Group plc

Consolidated Balance Sheet

As at 31 December 2016

 

 



31 December 2016


31 December 2015

 



      £'000


         £'000


        £'000


         £'000

 

Non-current assets









 

Property, plant and equipment




       20,062




       17,750

 

Lease prepayments




              49




              50

 

Trade investments




            164




            164

 

Deferred tax asset




            559




            282

 

Retirement benefit pension surplus




         1,161




         2,443

 





       21,995




       20,689

 










 

Current assets









 

Stocks


      4,994




     4,199



 

Trade and other receivables


    18,425




   16,584



 

Overseas tax (denominated in Euros)


           -




          17



 

Cash and cash equivalents


    22,819




   20,715



 



    46,238




   41,515



 










 

Current liabilities









 

Trade and other payables


   (13,055)




   (11,090)



 

Current tax liabilities


     (1,825)




     (1,306)



 

Bank loans


     (4,995)




        (980)



 

Obligations under finance leases


        (102)




        (101)



 



   (19,977)




   (13,477)



 










 

Net current assets




       26,261




       28,038

 










 

Total assets less current liabilities




       48,256




       48,727

 










 

Non-current liabilities









 

Bank loans


              -




     (4,995)



 

Obligations under finance leases


          (49)




          (81)



 










 









        (5,076)

 





             (49)





 

Net assets




       48,207




        43,651

 










 

Equity









 

Called-up share capital




            423




            423

 

Share premium




              13




              13

 

Retained earnings




       43,619




       40,987

 

Translation reserve




         3,897




         1,973

 

Other reserves




            245




            245

 










 

Surplus attributable to equity holders of the parent


       48,197




        43,641

 

      










 

Minority interest




              10




              10

 










 

Total equity




       48,207




       43,651

 

 

 

 

 

 

 

 



Andrews Sykes Group plc

Consolidated Cash Flow Statement

For the 12 months ended 31 December 2016

 

 


 

 

          12 months

                ended

    31 December

                   2016

                   £'000


          12 months

                ended

     31 December

                   2015

                   £'000






Cash flows from operating activities





Cash generated from operations


                   17,693


                     14,623

Interest paid


                      (136)


                        (155)

Net UK corporation tax paid


                   (1,846)


                     (1,881)

Overseas tax paid


                      (578)


                        (463)






Net cash flow from operating activities


                   15,133


                     12,124






Investing activities





Sale of property, plant and equipment


                        673


                          711

Purchase of property, plant and equipment


                   (5,392)


                     (5,234)

Interest received


                        241


                          197

Net cash flow from investing activities


                   (4,478)


                     (4,326)






Financing activities





Loan repayments


                   (1,000)


                     (1,000)

Finance lease capital repayments


                      (116)


                          (94)

Equity dividends paid


                 (10,058)


                   (10,058)






Net cash flow from financing activities


                 (11,174)


                   (11,152)






Net decrease in cash and cash equivalents


                      (519)


                     (3,354)






Cash and cash equivalents at the beginning of the period


                   20,715


                     24,077

Effect of foreign exchange rate changes


                     2,623


                            (8)





                      

Cash and cash equivalents at the end of the period


                   22,819


                     20,715






Reconciliation of net cash flow to movement in net funds in the period










Net decrease in cash and cash equivalents


                      (519)


                     (3,354)

Cash outflow from the decrease in debt


                     1,115


                       1,094

Non-cash movement in respect of raising loan finance


                        (20)


                          (20)

Non-cash movements re new finance leases and hire purchase agreements

                        (84)


                             -

Movement in net funds during the period


                        492


                     (2,280)

Opening net funds at the beginning of the period


                   14,558


                     16,846

Effect of foreign exchange rate changes


                     2,623


                            (8)

Closing net funds at the end of the period


                   17,673


                     14,558






 

 

 

 

 

 



Andrews Sykes Group plc

Consolidated Statement of Changes in Equity

For the 12 months ended 31 December 2016

 


Attributable to equity holders of the parent company


Minority

interest


Total

equity

 

 

 

Share

capital

£'000

Share

Premium

£'000

Retained

earnings

£'000

Translation reserve

£'000

Other

reserves

£'000

 

Total

£'000


 

 

     £'000


 

 

     £'000

At 31 December 2014     

    423

  13

   39,295

        2,148

 245

   42,124


10

    

   42,134












Profit for the financial period

        -

             -

  10,800  

               -

 -

  10,800     


-


  10,800    












Other comprehensive income and (charges):






















Items that may be reclassified to profit and loss:











Currency translation differences on foreign currency net investments

        -

            -

           -

          (175)

-

     (175)    


-


     (175)     












Items that will never be reclassified to profit and loss:











Remeasurement of defined benefit assets and liabilities

                  

        -

 

            - 

             

     1,157

  

               -

 

 -

 

     1,157

     


 

-


 

     1,157 

     

Related deferred tax

        -

            -

      (207)

               -

  -

     (207)       


-


      (207)












Total other comprehensive income and (charges)

                  

        -

                

            -

           

        950

         

          (175) 

 

 -

         

       775     


 

 -


          

       775     












Transactions with owners recorded directly in equity




















Dividends paid                      

         -

            -

 (10,058)

               -

-

 (10,058)


 -


 (10,058)












Total transactions with owners

         -

            -

 (10,058)

               -

-

 (10,058)


-


 (10,058)












At 31 December 2015

    423

          13

   40,987

        1,973       

        245

  43,641  


10

     

   43,651 























Profit for the financial period

         -

            -

   14,473

               -

-

   14,473


-


   14,473












Other comprehensive income and (charges):






















Items that may be reclassified to profit and loss:











Currency translation differences on foreign currency net investments

         -

            -

            -

         1,924

-

     1,924


-


     1,924












Items that will never be reclassified to profit and loss:











Remeasurement of defined benefit assets and liabilities

         -

            -

   (2,201)

                -

-

   (2,201)


-


   (2,201)

Related deferred tax

         -

            -

        418

                -

-

        418


-


        418












Total other comprehensive income and (charges)

         -

            -

   (1,783)

         1,924

-

        141


-


        141












Transactions with owners recorded directly in equity:






















Dividends paid                       

         -

            -

 (10,058)

                -

-

(10,058)


-


 (10,058)












Total transactions with owners

         -

            -

 (10,058)

                -

-

(10,058)


-


 (10,058)












At 31 December 2016

    423

          13

   43,619

         3,897

       245

   48,197


  10

 

   48,207












 

 

 

 

 

 

 

 

 

 

Notes

 

 

1.   Basis of preparation

Whilst the information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. Therefore the financial information set out above does not constitute the company's financial statements for the 12 months ended 31 December 2016 or 31 December 2015 but it is derived from those financial statements.

2.   Going Concern

The board remains satisfied with the group's funding and liquidity position. The group has operated throughout the 2016 financial year and until the date of signing these accounts within its financial covenants as contained in the bank agreement.

Both loan capital and interest payments have been made in accordance with the bank agreement. The first two capital repayments of £1 million each were made on the due dates in prior periods and these were followed by a further capital repayment, also of £1 million, on 30 April 2016. Interest is paid bi-annually at the end of October and April.

The final loan repayment was made on 30 April 2017, financed by a new five year loan of £5 million also with the Royal Bank of Scotland. This will be repaid by four equal annual instalments of £0.5 million per annum commencing on 30 April 2018 followed by a final balloon repayment of £3 million due on 30 April 2022. Interest will be charged at the 3 month LIBOR rate plus a margin of 1.1%. The group's profit and cash flow projections indicate that the financial covenants included within the new bank loan agreement will be met for the foreseeable future.

The group continues to have substantial cash resources which at 31 December 2016 amounted to £22.8 million compared with £20.7 million as at 31 December 2015. Profit and cash flow projections for 2017 and 2018, which have been prepared on a conservative basis taking into account reasonably possible changes in trading performance, indicate that the group will be profitable and generate positive cash flows after loan repayments. These forecasts and projections indicate that the group should be able to operate within the new bank facility agreement and that all associated covenants will be met.

The board considers that the group has considerable financial resources and a wide operational base. As a consequence, the board believes that the group is well placed to manage its business risks successfully, as demonstrated by the current year's result, despite some uncertain external influences.

After making enquiries, the board has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the board continues to adopt the going concern basis when preparing this Annual Report and Financial Statements.

3.   Distribution of Annual Report and Financial Statements

The group expects to distribute copies of the full Annual Report and Financial Statements that comply with IFRSs by 19 May 2017 following which copies will be available either from the registered office of the company; St David's Court, Union Street, Wolverhampton, WV1 3JE; or from the company's website; www.andrews-sykes.com. The Annual Report and Financial Statements for the 12 months ended 31 December 2015 have been delivered to the Registrar of Companies and those for the 12 months ended 31 December 2016 will be filed at Companies House following the company's Annual General Meeting. The auditors have reported on those financial statements; their report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain details of any matters on which they are required to report by exception.

4.   Date of Annual General Meeting

The group's Annual General Meeting will be held at 10.30 a.m. on Wednesday 21 June 2017 at 2 Eaton Gate, London, SW1W 9BJ.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Final Results - RNS