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Andrews Sykes Group PLC  -  ASY   

Interim Financial Statements 2018

Released 07:00 28-Sep-2018

RNS Number : 2363C
Andrews Sykes Group PLC
28 September 2018
 

28 September 2018

 

Andrews Sykes Group plc

Interim Financial Statements 2018

Andrews Sykes Group plc ("Andrews Sykes" or the "Company" or the "Group") announces unaudited results for the six months ended 30 June 2018.

 

Summary

 

 

(Unaudited)

 

6 months ended

30 June 2018

 

6 months ended

 30 June 2017

 

£'000

 

£'000

 

 

 

 

Revenue from continuing operations

37,815

 

35,334

EBITDA* from continuing operations

12,429

 

10,892

Operating profit

9,280

 

8,171

Profit for the financial period

7,528

 

6,570

Basic earnings per share (pence)

17.82p

 

15.55p

Interim dividends declared per equity share (pence)

11.90p

 

11.90p

Net funds

16,991

 

17,403

         

 

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

 

Enquiries:

Andrews Sykes Group plc                                                                                 +44 (0) 1902 328 700

Andy Phillips (CFO)

Mark Calderbank (Company Secretary)

GCA Altium (Nominated Adviser)                                                                   +44 (0) 20 7484 4040

Tim Richardson

 

Chairman's Statement

Overview

The Group produced a successful result for the first half of 2018, once again the winter months created some good opportunities for our heating and boiler hire products. Overall, the Group's revenue for the six months ended 30 June 2018 was £37.8 million, an increase of £2.5 million compared with the same period last year. As a consequence operating profit increased by £1.1 million from £8.2 million in the first half of 2017 to £9.3 million for the six months ended 30 June 2018.

The Group continues to be profitable and cash generative. Cash generated from operations was £7.6 million (2017: £8.6 million) but net funds decreased by £3.3 million from £20.3 million as at 31 December 2017 to £17.0 million as at 30 June 2018, partly due to an increase in working capital of £4.8 million. This was also after paying the 2017 final dividend of 11.9 pence per share, or £5.0 million in total, during the period.

Management continue to safeguard the operational structure of the business. Cash spent on new plant and equipment, primarily hire fleet assets, amounted to £4.0 million and a further £0.9 million from stock was also added to the hire fleet. We have continued our policy of pursuing organic growth within our market sectors and start up costs of the new businesses discussed in previous Strategic Reports continue to be expensed as incurred. Continuing investment in both our existing core businesses and the ongoing development of new operations and income streams will ensure that we remain in a strong position and will safeguard profitability into the future.

Operations review

Our main hire and sales business segment in the UK and Europe continued to expand during first half of 2018. Our pumping activity has stayed in line with expectation and our heating products have increased revenue levels by 21%. Demand for our air conditioning products has increased by 14%.

Our operations across the Benelux region have experienced continued strong growth. Our recently established businesses in France and Switzerland continue to trade in line with our expectations. In Italy we have had a strong trading result driven by a 39% increase in revenues.

Andrews Air Conditioning & Refrigeration, our UK air conditioning installation business, produced an operating profit in line with previous periods.

Khansaheb Sykes, our business based in the UAE, had a challenging start to the year, maintaining similar hire revenue levels to 2017 whilst sales revenues have fallen back against expectation. As a result, the operating profit of Khansaheb Sykes has reduced to £1.0 million from £1.2 million in the first half of the year.

Profit for the financial period and Earnings per Share

 

Profit before tax was £9.3 million (2017: £8.1 million) reflecting the above £1.1 million increase in operating profit. The total tax charge was increased by £0.3 million from £1.5 million for the six months ended 30 June 2017 to £1.8 million for the current six month period. The effective tax rate increased from 19.0% for the six months ended 30 Jun 2017 to 19.4% in the current period. The rate for the current period is slightly higher than the standard effective UK corporation tax rate of 19% which is mainly due to the effect of profits being made in overseas regions with different tax rates to those in the UK and non-tax deductible expenses. A reconciliation of the theoretical corporation tax charge based on the accounts profit multiplied by the UK annualised corporation tax rate of 19% and the actual tax charge is given in note 4 of these interim financial statements.

Profit after tax was £7.5 million (2017: £6.6 million), an increase of £0.9 million or 14.58% (2017: £0.4 million or 6.05%) compared with the same period last year. The basic earnings per share increased by 2.27 pence, or 14.59%, from 15.55 pence for the first half of 2017 to 17.82 pence for the period under review reflecting both the increase in profit and shares purchased for cancellation during the period.

Share buybacks

The board continues to believe that shareholder value will be optimised by the purchase by the Company, when appropriate, of its own shares.

During the current period, on 31 May 2018, a total of 87,723 ordinary shares were purchased for cancellation for a total consideration of £438,000. These purchases enhanced earnings per share and were for the benefit of all shareholders.

Dividends

The final dividend of 11.90 pence per ordinary share for the year ended 31 December 2017 was approved by members at the AGM held on 20 June 2018. Accordingly on 25 June 2018 the Company made a total dividend payment of £5,029,000 which was paid to shareholders on the register as at 1 June 2018.

The board continues to adopt the policy of returning value to shareholders whenever possible. The Group remains profitable, cash generative and financially strong. Accordingly the board has decided to declare an interim dividend for 2018 of 11.90 pence per share which in total amounts to £5,019,000. This will be paid on 9 November 2018 to shareholders on the register as at 12 October 2018. The shares will go ex-dividend on 11 October 2018.

Outlook

Trading in the third quarter to date has continued to be positive. Europe has experienced strong trading results through the summer months as a result of continued high demand for air conditioning products. Once again activity in the Middle East has remained consistent through the summer period.

The board remains cautiously optimistic that the Group will have further success in the remainder of the year. 

 

JG Murray

Chairman

27 September 2018

 

 

 

Consolidated income statement

for the 6 months ended 30 June 2018 (unaudited)

 

 

6 months

ended

30 June

2018

£'000

 

6 months

ended

30 June

2017

£'000

 

        12 month

ended

31 December

2017

£'000

Continuing operations

 

 

 

 

 

 

 

 

 

 

 

Revenue

37,815

 

35,334

 

71,300

Cost of sales

(16,256)

 

(15,328)

 

(30,086)

 

 

 

 

 

 

Gross profit

21,559

 

20,006

 

41,214

 

 

 

 

 

 

Distribution costs

(5,987)

 

(5,917)

 

(11,571)

 

 

 

 

 

 

Administrative expenses

(6,292)

 

(5,918)

 

(12,054)

 

 

 

 

 

 

Operating profit

9,280

 

8,171

 

17,589

 

 

 

 

 

 

EBITDA*

12,429

 

10,892

 

22,851

Depreciation and impairment losses

(3,399)

 

(3,013)

 

(5,917)

Profit on the sale of plant and equipment

250

 

292

 

655

Operating profit

9,280

 

8,171

 

17,589

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

60

 

49

 

82

Finance costs

(47)

 

(59)

 

(93)

Intercompany foreign exchange gains and losses

52

 

(51)

 

(293)

Profit before taxation

9,345

 

8,110

 

17,285

 

 

 

 

 

 

Taxation

(1,817)

 

(1,540)

 

(3,184)

 

 

 

 

 

 

Profit for the financial period

7,528

 

6,570

 

14,101

 

 

 

 

 

 

There were no discontinued operations in either of the above periods

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted (pence)

17.82p

 

15.55p

 

33.37p

 

 

 

 

 

 

Dividends paid during the period per equity share (pence)

11.90p

 

11.90p

 

23.80p

 

 

 

 

 

 

Proposed dividend per equity share (pence)

11.90p

 

11.90p

 

11.90p

 


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

   recurring items.

 

 

Consolidated balance sheet

as at 30 June 2018 (unaudited)

 

 

30 June
                2018

 

30 June
2017

 

31 December 2017

 

         £'000

 

        £'000

 

         £'000

Non-current assets

 

 

 

 

 

Property, plant and equipment

23,186

 

20,756

 

21,911

Lease prepayments

46

 

48

 

47

Trade investments

-

 

164

 

-

Deferred tax asset

176

 

326

 

102

Retirement benefit pension surplus

3,354

 

2,575

 

3,364

 

26,762

 

23,869

 

25,424

 

 

 

 

 

 

Current assets

 

 

 

 

 

Stocks

5,807

 

4,542

 

3,860

Trade and other receivables

20,100

 

18,817

 

17,852

Overseas tax (denominated in Euros)

47

 

-

 

-

Cash and cash equivalents

21,489

 

22,453

 

25,311

 

47,443

 

45,812

 

47,023

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

(12,598)

 

(12,354)

 

(12,358)

Current tax liabilities

(1,624)

 

(1,375)

 

(1,318)

Overseas tax (denominated in euros)

-

 

(404)

 

(378)

Bank loans

(493)

 

(493)

 

(493)

Obligations under finance leases

(26)

 

(61)

 

(43)

 

(14,741)

 

(14,687)

 

(14,590)

 

 

 

 

 

 

Net current assets

32,702

 

31,125

 

32,433

 

 

 

 

 

 

Total assets less current liabilities

59,464

 

54,994

 

57,857

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Bank loans

(3,979)

 

(4,471)

 

(4,475)

Obligations under finance leases

-

 

(25)

 

(7)

 

(3,979)

 

(4,496)

 

(4,482)

 

 

 

 

 

 

Net assets

55,485

 

50,498

 

53,375

 

 

 

 

 

 

Equity

 

 

 

 

 

Called-up share capital

422

 

423

 

423

Share premium

13

 

13

 

13

Retained earnings

50,789

 

45,917

 

48,789

Translation reserve

4,005

 

3,890

 

3,895

Other reserves

246

 

245

 

245

 

 

 

 

 

 

Surplus attributable to equity holders of the parent

55,475

 

50,488

 

53,365

 

 

 

 

 

 

Minority interest

10

 

10

 

10

 

 

 

 

 

 

Total equity

55,485

 

50,498

 

53,375

 

Consolidated cash flow statement

for the six months ended 30 June 2018 (unaudited)

 

 

6 months

ended

30 June

2018

£'000

 

6 months

ended

30 June

2017

£'000

 

         12 months ended

    31 December

                  2017

                 £'000

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

Cash generated from operations

7,600

 

8,606

 

21,090

Interest paid

(42)

 

(56)

 

(84)

Net UK corporation tax paid

(946)

 

(1,208)

 

(2,142)

Overseas tax paid

(1,052)

 

(340)

 

(1,002)

 

 

 

 

 

 

Net cash inflow from operating activities

5,560

 

7,002

 

17,862

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Sale of property, plant and equipment

472

 

392

 

861

Purchase of property, plant and equipment

(4,031)

 

(2,594)

 

(5,790)

Interest received

16

 

38

 

51

Net cash outflow from investing activities

(3,543)

 

(2,164)

 

(4,878)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Loan repayments

(500)

 

(5,000)

 

(5,000)

New loans raised net of arrangement fees

-

 

4,963

 

4,963

Finance lease capital repayments

(24)

 

(65)

 

(101)

Equity dividends paid

(5,029)

 

(5,029)

 

(10,058)

Purchase of own shares

(438)

 

-

 

-

Net cash outflow from financing activities

(5,991)

 

(5,131)

 

(10,196)

 

 

 

 

 

 

Net (decrease) / increase in cash and cash equivalents

(3,974)

 

(293)

 

2,788

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the period

25,311

 

22,819

 

22,819

Effect of foreign exchange rate changes

152

 

(73)

 

(296)

 

 

 

 

 

 

Cash and cash equivalents at end of the period

21,489

 

22,453

 

25,311

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

(3,974)

 

(293)

 

2,788

Net cash outflow from the decrease in debt

524

 

102

 

138

Non-cash movements re costs of raising loan finance

(4)

 

(6)

 

(10)

(Decrease)/increase in net funds during the period

(3,454)

 

(197)

 

2,916

Opening net funds at the beginning of period

20,293

 

17,673

 

17,673

Effect of foreign exchange rate changes

152

 

(73)

 

(296)

Closing net funds at the end of period

16,991

 

17,403

 

20,293

 

Consolidated statement of comprehensive total income (CSOCTI)

for the six months ended 30 June 2018 (unaudited)

 

 

6 months

ended

30 June

2018

£'000

 

6 months

ended

30 June

2017

£'000

 

         12 months ended

     31 December

                  2017

                 £'000

 

 

 

 

 

 

Profit for the financial period

7,528

 

6,570

 

14,101

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified to profit and loss:

 

 

 

 

 

Currency translation differences on foreign currency net investments

 

110

 


(7)

 


(2)

 

 

 

 

 

 

Items that will never be reclassified to profit and loss:

 

 

 

 

 

Remeasurement of defined benefit liabilities and assets

(75)

 

935

 

1,391

Related deferred tax

14

 

(178)

 

(264)

 

 

 

 

 

 

Other comprehensive income for the period net of tax

49

 

750

 

1,125

 

 

 

 

 

 

Total comprehensive income for the period

7,577

 

7,320

 

15,226

 

Notes to the consolidated interim financial statements

for the six months ended 30 June 2018 (unaudited)

 

1       General information

Basis of preparation

These interim financial statements have been prepared in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as adopted by the European Union and with the Companies Act 2006.

The information for the 12 months ended 31 December 2017 does not constitute the Group's statutory accounts for 2017 as defined in Section 434 of the Companies Act 2006. Statutory accounts for 2017 have been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain statements under Section 498(2) or (3) of the Companies Act 2006. These interim financial statements, which were approved by the Board of Directors on 27 September 2018, have not been audited or reviewed by the auditors.

The interim financial statement has been prepared using the historical cost basis of accounting except for:

(i)      Properties held at the date of transition to IFRS which are stated at deemed cost;

(ii)     Assets held for sale which are stated at the lower of  (i) fair value less anticipated disposal costs and (ii) carrying value;

(iii)    Derivative financial instruments (including embedded derivatives) which are valued at fair value; and

(iv)   Pension scheme assets and liabilities calculated at fair value in accordance with IAS 19.

Functional and presentational currency

The financial statements are presented in pounds Sterling because that is the functional currency of the primary economic environment in which the Group operates.

2       Accounting policies

With the exception of the adoption of IFRS 15 on 1 January 2018, these interim financial statements have been prepared on a consistent basis and in accordance with the accounting policies set out in the Group's Annual Report and Financial Statements 2017. There was no material impact on the Group's results as a consequence of the transition to IFRS 15 as the Group's activities are primarily (i) the hire of assets, mainly on short term leases, and (ii) the sale of goods the revenue for which was previously recognised at a point in time when the transfer of risks and rewards occurs which is consistent with IFRS 15. The comparative figures in these interim financial statements have not been restated as a consequence of adopting IFRS 15 for the first time this period.

3       Revenue

An analysis of the Group's revenue is as follows:

 

6 months

ended

30 June

2018

£'000

 

6 months

ended

30 June

2017

£'000

 

         12 months ended

     31 December

                  2017

                 £'000

Continuing operations

 

 

 

 

 

Hire

32,847

 

29,405

 

59,314

Sales

3,152

 

3,906

 

7,485

Installations

1,816

 

2,023

 

4,501

 

 

 

 

 

 

Group consolidated revenue from the sale of goods and provision of services


37,815

 

 

35,334

 


71,300

 

The geographical analysis of the Group's revenue by origination is:

 

6 months

ended

30 June

2018

£'000

 

6 months

ended

30 June

2017

£'000

 

         12 months ended

     31 December

                  2017

                 £'000

 

 

 

 

 

 

United Kingdom

23,993

 

22,624

 

44,704

Rest of Europe

8,664

 

7,067

 

14,715

Middle East and Africa

5,158

 

5,643

 

11,881

 

 

 

 

 

 

 

37,815

 

35,334

 

71,300

The geographical analysis of the Groups' revenue by destination is not materially different to that by origination.

4       Taxation

 

6 months

ended

30 June

2018

£'000

 

6 months

ended

30 June

2017

£'000

 

         12 months ended

    31 December

                  2017

                 £'000

Current tax

 

 

 

 

 

UK corporation tax at 19% (30 June 2017 and 31 December 2017: 19.25%)


1,252

 


1,008

 


1,947

Adjustments in respect of prior periods

-

 

-

 

(62)

 

1,252

 

1,008

﷐  

1,885

Overseas tax

618

 

474

 

1,125

Adjustments to overseas tax in respect of prior periods

7

 

3

 

(19)

Total current tax charge

1,877

 

1,485

 

2,991

 

 

 

 

 

 

Deferred tax

 

 

 

 

 

Deferred tax on the origination and reversal of temporary differences


(60)

 


55

 


163

Adjustments in respect of prior periods

-

 

-

 

30

Total deferred tax (credit) / charge

(60)

 

55

 

193

 

 

 

 

 

 

Total tax charge for the financial period attributable to

continuing operations


1,817

 


1,540

 


3,184

 

The tax charge for the financial period can be reconciled to the profit before tax per the income statement multiplied by the effective standard annualised corporation tax rate in the UK of 19% (30 June 2017 and 31 December 2017: 19.25%) as follows:

 

6 months

ended

30 June

2018

£'000

 

6 months

ended

30 June

2017

£'000

 

         12 months ended

     31 December

                  2017

                 £'000

 

 

 

 

 

 

Profit before taxation from continuing and total operations

9,345

 

8,110

 

17,285

 

 

 

 

 

 

Tax at the UK effective annualised corporation tax rate of 19%

  (30 June 2017 and 31 December 2017: 19.25%)


1,776

 


1,561

 


3,327

Effects of:

 

 

 

 

 

Expenses not deductible for tax purposes

50

 

57

 

144

Utilisation of overseas trading losses

(24)

 

(3)

 

(30)

Effects of different tax rates of subsidiaries operating abroad

(22)

 

(93)

 

(225)

Overseas tax losses not recognised

30

 

16

 

21

Effect of change in rate of corporation tax

-

 

(1)

 

(2)

Adjustments to tax charge in respect of previous periods

7

 

3

 

(51)

Total tax charge for the financial period

1,817

 

1,540

 

3,184

The total effective tax charge for the financial period represents the best estimate of the weighted average annual effective tax rate expected for the full financial year applying tax rates that have been substantively enacted by the balance sheet date. Accordingly UK corporation tax has been provided at 19%; the rate of 19% for the tax year ending 31 March 2019 having been substantially enacted in October 2015. UK deferred tax has been provided at 19% being the rate substantially enacted at the balance sheet date at which the timing differences are expected to substantially reverse.         

5       Earnings per share

Basic earnings per share

The basic figures have been calculated by reference to the weighted average number of ordinary shares in issue and the earnings as set out below.  There are no discontinued operations in any period.

 

 

6 months ended 30 June 2018

 

Continuing

earnings

 

Number of

Shares

 

£'000

 

 

 

 

 

 

Basic earnings/weighted average number of shares

7,528

 

42,251,117

 

 

 

 

Basic earnings per ordinary share (pence)

17.82p

 

 

 

 

6 months ended 30 June 2017

 

Continuing

earnings

 

Number of

Shares

 

£'000

 

 

 

 

 

 

Basic earnings/weighted average number of shares

6,570

 

42,262,082

 

 

 

 

Basic earnings per ordinary share (pence)

15.55p

 

 

 

 

12 months ended 31 December 2017

 

Continuing

earnings

 

Number of

Shares

 

£'000

 

 

 

 

 

 

Basic earnings/weighted average number of shares

14,101

 

42,262,082

 

 

 

 

Basic earnings per ordinary share (pence)

33.37p

 

 

Diluted earnings per share

There were no dilutive instruments outstanding at 30 June 2018 or either of the comparative periods and therefore there is no difference in the basic and diluted earnings per share for any of these periods. There were no discontinued operations in any period.

6       Dividend payments

Dividends declared and paid on ordinary one pence shares during the 6 months ended 30 June 2018 were as follows:

 

Paid during the 6 months ended

30 June 2018

 

Pence per
share

 

Total dividend
paid

 

 

 

£'000

 

 

 

 

Final dividend for the year ended 31 December 2017 paid to members on the register as at 1 June 2018 on 25 June 2018

 

11.90p

 

 

5,029

The above dividend was charged against reserves during the 6 months ended 30 June 2018.

On 27 September 2018 the directors declared an interim dividend of 11.90 pence per ordinary share which in total amounts to £5,019,000. This will be paid on 9 November 2018 to shareholders on the register as at 12 October 2018 and will be charged against reserves in the second half of 2018.

Dividends declared and paid on ordinary one pence shares during the 6 months ended 30 June 2017 were as follows:

 

Paid during the 6 months ended

30 June 2017

 

Pence per
share

 

Total dividend
paid

 

 

 

£'000

 

 

 

 

Final dividend for the year ended 31 December 2016 paid to members on the register as at 26 May 2017 on 26 June 2017

 

11.90p

 

 

5,029

The above dividend was charged against reserves during the 6 months ended 30 June 2017.

Dividends declared and paid on ordinary one pence shares during the 6 months ended 31 December 2017 were as follows:

 

 

Paid during the 12 months ended

31 December 2017

 

Pence per
share

 

Total dividend
paid

 

 

 

£'000

 

 

 

 

Final dividend for the year ended 31 December 2016 paid to members on the register as at 26 May 2017 on 26 June 2017

 

11.90p

 

 

5,029

Interim dividend declared on 28 September 2017 and paid to shareholders on the register as at 6 October 2017 on 3 November 2017

 

11.90p

 

 

5,029

 

23.80p

 

10,058

The above dividends were charged against reserves during the 12 months ended 31 December 2017.

7       Retirement benefit obligations - Defined benefit pension scheme

The Group closed the UK group defined benefit pension scheme to future accrual as at 29 December 2002. The assets of the defined benefit pension scheme continue to be held in a separate trustee administered fund.

As at 30 June 2018 the Group had a net defined benefit pension scheme surplus, calculated in accordance with IAS 19 (revised) using the assumptions as set out below, of £3,354,000 (30 June 2017: £2,575,000; 31 December 2017: £3,364,000). The asset has been recognised in the financial statements as the directors are satisfied that it is recoverable in accordance with IFRIC 14.

Following the 2016 triennial recalculation of the funding deficit, a revised schedule of contributions was agreed with the pension scheme trustees. In accordance with this schedule of contributions the group made additional contributions in 2017 to remove the funding deficit as at 31 December 2016 of £710,000 and this was eliminated by 31 December 2017.

The next formal triennial funding valuation is due as at 31 December 2019. The Group currently expects to make pension contributions of £120,000 during 2018 in accordance with the current schedule of contributions of which £60,000 was paid in the first half year.

Assumptions used to calculate the scheme surplus

A qualified independent actuary has updated the results of the 31 December 2016 (30 June 2017and 31 December 2017: 31 December 2016) full actuarial valuation to calculate the surplus as disclosed below:

The major assumptions used to determine the present value of the scheme's defined benefit obligation were:
 

 

30 June

2018

%

30 June

2017

%

31 December

2017

%

 

 

Rate of increase in pensionable salaries

Rate of increase in pensions in payment

Discount rate applied to scheme liabilities

Inflation assumption - RPI

Inflation assumption - CPI

Percentage of members taking maximum tax free lump sum on retirement

N/A

3.10

2.60

3.10

2.10

 

75

N/A

3.20

2.60

3.20

2.20

                       

90

N/A

3.10

2.50

3.10

2.10

 

75

                 

 

From 1 January 2011, the government amended the basis for statutory increases to deferred pensions and pensions in payment. Such increases are now based on inflation measured by the Consumer Price Index (CPI) rather than the Retail Price Index (RPI). Having reviewed the scheme rules and considered the impact of the change on this pension scheme, the directors consider that future increases to (i) all deferred pensions and (ii) Guaranteed Minimum Pensions accrued between 6 April 1988 and 5 April 1997 and currently in payment will be based on CPI rather than RPI. Accordingly, this assumption was adopted as at 31 December 2010 and subsequently.

Assumptions regarding future mortality experience are set based on advice in accordance with published statistics. The mortality table used at 30 June 2018 is 110% S2NA CMI2016 (30 June 2017: 110% S2NA CMI2015; 31 December 2017: 110% S2NA CMI2016) with a 1.25% per annum long term improvement for both males and females (30 June 2017: 1% males and females; 31 December 2017: 1.25% males and females).

The assumed average life expectancy in years of a pensioner retiring at the age of 65 given by the above tables is as follows:
 

 

30 June

2018

30 June

2017

31 December

2017

 

 

 

 

Male, current age 45

Female, current age 45

22.9 years

25.0 years

22.6 years

24.9 years

22.9 years

25.0 years

 

Valuations

The fair value of the scheme's assets, which are not intended to be realised in the short term and may be subject to significant change before they are realised, and the present value of the scheme's liabilities, which are derived from cash flow projections over long periods and are inherently uncertain, were as follows:

 

30 June

2018

£'000

 

30 June

2017

£'000

 

31 December

2017

£'000

 

 

 

 

 

 

 

 

 

Total fair value of plan assets

43,968

 

44,403

 

45,657

 

Present value of defined benefit funded obligation calculated in accordance with stated assumptions


(40,614)

 


(41,828)

 


(42,293)

 

Surplus in the scheme calculated in accordance with stated assumptions recognised in the balance sheet


3,354

 


2,575

 


3,364

                     

The movement in the fair value of the scheme's assets during the period was as follows: 

 

 30 June

 2018

  £'000

 

30 June

 2017

  £'000

 

31 December

 2017

£'000

 

 

 

 

 

 

Fair value of plan assets at the start of the period

45,657

 

43,368

 

43,368

Interest income on pension scheme assets

551

 

580

 

1,159

Actual return less interest income on pension scheme assets

(671)

 

848

 

2,047

Employer contributions

60

 

540

 

920

Benefits paid   

(1,592)

 

(851)

 

(1,687)

Administration expenses charged in the income statement

(37)

 

(82)

 

(150)

 

 

 

 

 

 

Fair value of plan assets at the end of the period

43,968

 

44,403

 

45,657

The movement in the present value of the defined benefit obligation during the period was as follows:

 

30 June

2018

 

30 June

2017

 

31 December 2017

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Present value of defined benefit funded at the beginning of the period


(42,293)

 


(42,207)

 


(42,207)

Interest on defined benefit obligation

(509)

 

(559)

 

(1,117)

Actuarial gain/(loss) recognised in the CSOCTI calculated in

   accordance with stated assumptions


596

 


87

 


(656)

Benefits paid

1,592

 

851

 

1,687

 

 

 

 

 

 

Closing present value of defined benefit funded obligation calculated in accordance with stated assumptions


(40,614)

 


(41,828)

 


(42,293)

Amounts recognised in the income statement

The amounts credited / (charged) in the income statement were:

 

            30 June

                 2018

 

           30 June

               2017

 

  31 December

               2017

 

                £'000

 

               £'000

 

               £'000

 

 

 

 

 

 

Interest income on pension scheme assets

551

 

580

 

1,159

Interest expense on pension scheme liabilities

(509)

 

(559)

 

(1,117)

Net pension interest credit included within finance income

42

 

21

 

42

Scheme administration expenses

(37)

 

(82)

 

(150)

Net pension credit / (charge) in the income statement

5

 

(61)

 

(108)

Actuarial gains and losses recognised in the consolidated statement of comprehensive total income (CSOCTI)

The amounts (charged) / credited in the CSOCTI were:

 

            30 June

                 2018

 

           30 June

               2017

 

  31 December

               2017

 

                £'000

 

               £'000

 

               £'000

 

 

 

 

 

 

Actual return less interest income on pension scheme assets

(671)

 

848

 

2,047

Experience gains and losses arising on plan obligation

-

 

210

 

160

Changes in demographic and financial assumptions underlying the present value of plan obligations


596

 

 

(123)

 


(816)

Actuarial (loss) / gain calculated in accordance with stated assumptions recognised in the CSOCTI


(75)

 

 

935

 


1,391

8       Called up share capital

 

 30 June

 2018

 

30 June

 2017

 

31 December

 2017

 

                £'000

 

           £'000

 

             £'000

Issued and fully paid:

 

 

 

 

 

42,174,359 ordinary shares of one pence each (30 June 2017 and 31 December 2017: 42,262,082 ordinary shares of one pence each)



422

 



423

 



423

During the period the Company bought back 87,723 shares for cancellation for a total consideration of £437,689 (June 2017 and December 2017: Nil shares bought back).

The Company did not issue any shares in the period or either of the comparative periods. No share options were granted, forfeited or expired during the periods and there were no share options outstanding at any period end.

The Company has one class of ordinary shares which carry no right to fixed income.

9       Cash generated from operations

 

6 months

ended

30 June

2018

 

6 months

ended

30 June

2017

 

12 months

ended

31 December 2017

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Profit for the period attributable to equity shareholders

7,528

 

6,570

 

14,101

Adjustments for:

 

 

 

 

 

Taxation charge

1,817

 

1,540

 

3,184

Finance costs

47

 

59

 

93

Finance income

(60)

 

(49)

 

(82)

Inter-company foreign exchange gains and losses

(52)

 

51

 

293

Profit on the sale of property, plant and equipment

(250)

 

(292)

 

(655)

Depreciation

3,399

 

3,013

 

5,917

 

 

 

 

 

 

EBITDA*

12,429

 

10,892

 

22,851

 

 

 

 

 

 

Excess of pension contributions compared with service and

administration expenses


(23)

 

 

 

(458)

 


(770)

Write off of trade investments

-

 

-

 

164

Workings capital movements:

 

 

 

 

 

Stocks

                (2,799)

 

(728)

 

(1,022)

Trade and other receivables

(2,245)

 

(402)

 

563

Trade and other payables

238

 

(698)

 

(696)

Cash generated from operations

7,600

 

8,606

 

21,090

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

10     Analysis of net funds and movement in financing liabilities

 

 30 June

 2018

 

30 June

2017

 

31 December

 2017

 

£'000

 

                 £'000

 

               £'000

 

 

 

 

 

 

Cash and cash equivalents per consolidated cash flow statement

21,489

 

22,453

 

25,311

 

 

 

 

 

 

Bank loans:

 

 

 

 

 

At the beginning of the period

(4,968)

 

(4,995)

 

(4,995)

Loans repaid

500

 

5,000

 

5,000

Loans drawn down

-

 

(4,963)

 

(4,963)

Other non-cash changes

(4)

 

(6)

 

(10)

At the of the period

(4,472)

 

(4,964)

 

(4,968)

 

 

 

 

 

 

Finance lease liabilities:

 

 

 

 

 

At the beginning of the period

(50)

 

(151)

 

(151)

Leases repaid

24

 

65

 

101

At the end of the period

(26)

 

(86)

 

(50)

 

 

 

 

 

 

Gross debt

(4,498)

 

(5,050)

 

(5,018)

 

 

 

 

 

 

Net funds

16,991

 

17,403

 

20,293

11     Distribution of interim financial statements

Following a change in regulations in 2008, the Company is no longer required to circulate this half year report to shareholders. This enables us to reduce costs associated with printing and mailing and to minimise the impact of these activities on the environment.

 

A copy of the interim financial statements is available on the Company's website, www.andrews-sykes.com.

 

 


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Interim Financial Statements 2018 - RNS