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Andrews Sykes Group PLC   -  ASY   

Half-year Report

Released 07:00 27-Sep-2019

RNS Number : 8748N
Andrews Sykes Group PLC
27 September 2019
 

Andrews Sykes Group plc

Interim Financial Statements 2019

 

Andrews Sykes Group plc ("Andrews Sykes" or the "Company" or the "Group") announces unaudited results for the six months ended 30 June 2019.

 

Summary of results

for the six months ended 30 June 2019

 

 

(Unaudited)

 

6 months ended

 30 June 2019

 

6 months ended

 30 June 2018

 

                £'000

 

                £'000

 

 

 

 

Revenue from continuing operations

34,974

 

37,815

EBITDA* from continuing operations

11,435

 

12,429

Operating profit

6,918

 

9,280

Profit for the financial period

5,449

 

7,528

Basic earnings per share (pence)

12.92p

 

17.82p

Interim dividends declared per equity share (pence)

11.90p

 

11.90p

Cash and cash equivalents

23,770

 

         21,489

 

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

 

Enquires 

Andrews Skyes 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 result for the first half of 2019 was below that of the previous year, the winter period was much milder than 2018, meaning that there was less opportunities for our heating and boiler hire products. The first 6 months of 2019 were also drier than the previous year and this had an adverse impact on our pump hire business. Overall, the group's revenue for the six months ended 30 June 2019 was £35.0 million, a decrease of £2.8 million when compared with the same period last year. As a consequence the operating profit decreased by £2.4 million from £9.3 million in the first half of 2018 to £6.9 million for the six months ended 30 June 2019.

The group continues to be profitable and cash generative. Cash generated from operations was £7.5 million (2018: £7.6 million) after negative working capital movements of £3.9 million (2018: £4.8 million). As a result of adopting the accounting requirements of the new leasing standard, IFRS 16, existing lease commitments at 1 January 2019 of £11.4 million were recognised on the balance sheet. This is the major reason why net funds decreased by £15.0 million from £23.3 million as at 31 December 2018 to £8.3 million as at 30 June 2019 A further £1.1 million of lease obligations were recognised due to new leases being entered into during the period. Other significant cash outflows during the period include paying the 2018 final dividend of £5.0 million, net capital expenditure of £2.4 million and UK and overseas corporation tax payments of £2.5 million.

Management continue to safeguard the operational structure of the business. Cash spent on new plant and equipment, primarily hire fleet assets, amounted to £2.8 million and a further £1.4 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

The shortfall came from our main hire and sales business segment throughout the UK and Europe. The UK hire business experienced a drop in total revenue of 11.7%, a major part of the shortfall came from fuel sales, which reduced by 40% compared to the previous year.

Our operations across the Benelux region experienced a drop in revenue of 9% and our newer business in France also traded slightly below last year's level. Only Italy and Switzerland, of our European hire businesses, traded ahead of the previous year.

Andrews Air Conditioning and Refrigeration, our UK air conditioning installation business, produced a positive result that was ahead of last year for the first half.

Khansaheb Sykes, our business based in the UAE, had a stronger start to the year following a difficult start to 2018. The operating profit of Khansaheb Sykes has increased from £1.01 million to £1.37 million in the first half of the year.

Profit for the financial period and Earnings per Share

Profit before tax was £6.8 million (2018: £9.3 million) mainly due to the above £2.4 million decrease in operating profit.

The total tax charge has decreased by £0.5 million from £1.8 million for the six months ended 30 June 2018 to £1.3 million for the current six month period. The effective tax rate remained unchanged from June 2018 at 19.4% for the six months ended 30 June 2019. This is slightly higher than the standard effective UK corporation tax rate of 19% which is mainly due to non-tax deductible expenses and the effect of a change in the rate of future corporation tax reducing the amount recognised for the deferred tax asset. 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 £5.5 million (2018: £7.5 million), a decrease of £2.0 million (2018: increase of £0.9 million) compared with the same period last year. The basic earnings per share decreased by 4.90 pence, or 27.50%, from 17.82 pence for the first half of 2018 to 12.92 pence for the period under review reflecting the decrease in profit discussed above.

Impact of the adoption of the new accounting standard on leases

The group has adopted IFRS 16, which establishes principles for the recognition, measurement, presentation and disclosures of leases, with effect from 1 January 2019.

 

The group has recognised a right-of-use asset and a lease liability of £11.4 million in respect of existing operating leases of properties, plant machinery and equipment as at 1 January 2019.  The nature of expenses related to these leases has changed because the group reversed operating lease payments of £1.2 million but recognised a £1.1 million depreciation charge for right-of-use assets and an interest expense of £0.15 million on the lease liabilities. Therefore EBITDA was improved by £1.2 million and operating profit by £0.1 million. Overall profit before tax was reduced by £0.05 million primarily due to the effect of charging more interest at the beginning of the lease term.

 

There was also a significant impact on the group's net funds as a result of the adoption of IFRS 16 as at 1 January 2019. Net funds were reduced by £11.4 million as a result of recognising lease obligations that correspond with the capitalised right of use asset as at the date of transition and by a net further £0.1 million as a result of applying IFRS 16 to new leases entered into in the current period. There has been no change to the group's contractual cash flows as a result of this change in accounting policy.

 

Dividends

The final dividend of 11.90 pence per ordinary share for the year ended 31 December 2018 was approved by members at the AGM held on 18 June 2019. Accordingly on 21 June 2019 the Company made a total dividend payment of £5,019,000 which was paid to shareholders on the register as at 31 May 2019.

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 2019 of 11.90 pence per share which in total amounts to £5,019,000. This will be paid on 8 November 2019 to shareholders on the register as at 11 October 2019. The shares will go ex-dividend on 10 October 2019.

Outlook

Trading in the third quarter has started slightly more positively. In the UK the Pump hire revenue has shown a steady improvement and air conditioning hire revenue in mainland Europe has been strong, this has been driven by some extreme temperatures across the region, however the UK has not reached the very high levels we saw during the long hot summer of 2018. Once again activity in the Middle East has remained consistent through the summer period.

The board has continued to invest in the business, with new depot openings during the year and further hire fleet investments. This will ensure that the business can optimise any weather driven opportunities whilst at the same time growing the geographic coverage organically.

 

 

 

JG Murray

Chairman

26 September 2019

 

 

 

Consolidated income statement

for the 6 months ended 30 June 2019 (unaudited)

 

 

6 months

ended

30 June

2019

£'000

 

6 months

ended

30 June

2018

£'000

 

         12 months ended

     31 December 

                  2018

                 £'000

Continuing operations

 

 

 

 

 

 

 

 

 

 

 

Revenue

34,974

 

37,815

 

78,563

Cost of sales

(15,535)

 

(16,256)

 

(31,908)

 

 

 

 

 

 

Gross profit

19,439

 

21,559

 

46,655

 

 

 

 

 

 

Distribution costs

(5,762)

 

(5,987)

 

(12,073)

 

 

 

 

 

 

Administrative expenses

(6,759)

 

(6,292)

 

(13,901)

 

 

 

 

 

 

Operating profit

6,918

 

9,280

 

20,681

 

 

 

 

 

 

EBITDA*

11,435

 

12,429

 

26,737

Depreciation and impairment losses

(3,697)

 

(3,399)

 

(6,666)

Depreciation of right-of-use assets

(1,098)

 

-

 

-

Profit on the sale of plant and equipment

278

 

250

 

610

Operating profit

6,918

 

9,280

 

20,681

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

61

 

60

 

125

Finance costs

(46)

 

(47)

 

(97)

Interest charge on right-of-use leases

(157)

 

-

 

-

Intercompany foreign exchange gains and losses

(16)

 

52

 

                     336

Profit before taxation

6,760

 

9,345

 

21,045

 

 

 

 

 

 

Taxation

(1,311)

 

(1,817)

 

(3,999)

 

 

 

 

 

 

Profit for the financial period

 

 

 

 

 

 

 

 

There were no discontinued operations in either of the above periods

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted (pence)

12.92p

 

17.82p

 

40.39p

 

 

 

 

 

 

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 2019 (unaudited)

 

 

30 June
             2019

 

30 June
2018

 

31 December 2018

 

         £'000

 

        £'000

 

         £'000

Non-current assets

 

 

 

 

 

Property, plant and equipment

24,046

 

23,186

 

23,651

Right-of-use assets

11,387

 

-

 

-

Lease prepayments

44

 

46

 

45

Deferred tax asset

435

 

176

 

677

Retirement benefit pension surplus

1,286

 

3,354

 

1,356

 

37,198

 

26,762

 

25,729

 

 

 

 

 

 

Current assets

 

 

 

 

 

Stocks

5,969

 

5,807

 

5,083

Trade and other receivables

20,115

 

20,100

 

19,994

Overseas tax (denominated in Euros)

278

 

47

 

-

Cash and cash equivalents

23,770

 

21,489

 

27,862

 

50,132

 

47,443

 

52,939

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

(11,444)

 

(12,598)

 

(12,889)

Current tax liabilities

(1,104)

 

(1,624)

 

(1,858)

Overseas tax (denominated in euros)

-

 

-

 

(436)

Bank loans

(493)

 

(493)

 

(493)

Obligations under right-of-use leases

(2,141)

 

-

 

-

Obligations under finance leases

-

 

(26)

 

(5)

 

(15,182)

 

(14,741)

 

(15,681)

 

 

 

 

 

 

Net current assets

34,950

 

32,702

 

37,258

 

 

 

Total assets less current liabilities

72,148

 

59,464

 

62,987

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Bank loans

(3,487)

 

(3,979)

 

(3,983)

Obligations under right-of-use leases

(9,320)

 

-

 

-

 

(12,807)

 

(3,979)

 

(3,983)

 

 

 

 

 

 

Net assets

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Called-up share capital

422

 

422

 

422

Share premium

13

 

13

 

13

Retained earnings

54,363

 

50,789

 

54,013

Translation reserve

4,297

 

4,005

 

4,300

Other reserves

246

 

246

 

246

 

 

 

 

 

 

Surplus attributable to equity holders of the parent

59,341

 

55,475

 

58,994

 

 

 

 

 

 

Non-controlling interest

-

 

10

 

10

 

 

 

 

 

 

Total equity

 

 

 

Consolidated cash flow statement

for the six months ended 30 June 2019 (unaudited)

 

 

6 months

ended

30 June

2019

£'000

 

6 months

ended

30 June

2018

£'000

 

         12 months ended

     31 December 

                  2018

                 £'000

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

Cash generated from operations

7,530

 

7,600

 

22,888

Interest paid

(201)

 

(42)

 

(88)

Net UK corporation tax paid

(1,300)

 

(946)

 

(2,236)

Overseas tax paid

(1,233)

 

(1,052)

 

(1,454)

 

 

 

 

 

 

Net cash inflow from operating activities

4,796

 

5,560

 

19,110

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Sale of property, plant and equipment

382

 

472

 

944

Purchase of property, plant and equipment

(2,812)

 

(4,031)

 

(7,142)

Interest received

43

 

16

 

41

Net cash outflow from investing activities

(2,387)

 

(3,543)

 

(6,157)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Loan repayments

(500)

 

(500)

 

                   (500)

Capital repayments for right-of-use lease obligations

(1,025)

 

-

 

                         -

Finance lease capital repayments

(5)

 

(24)

 

                     (45)

Equity dividends paid

(5,019)

 

(5,029)

 

              (10,048)

Purchase of own shares

-

 

(438)

 

                   (438)

Net cash outflow from financing activities

(6,549)

 

(5,991)

 

(11,031)

 

 

 

 

 

Net (decrease) / increase in cash and cash equivalents

(4,140)

 

(3,974)

 

                 1,922

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the period

27,862

 

25,311

 

                25,311

Effect of foreign exchange rate changes

48

 

152

 

                     629

 

 

 

 

 

 

Cash and cash equivalents at end of the period

23,770

 

21,489

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

(4,140)

 

(3,974)

 

1,922

Net cash outflow from the decrease in debt

1,530

 

524

 

545

Non-cash movements re new right-of-use assets

(1,134)

 

-

 

-

Non-cash movements re costs of raising loan finance

(4)

 

(4)

 

(8)

(Decrease)/increase in net funds during the period

(3,748)

 

(3,454)

 

2,459

Opening net funds at the beginning of period

23,381

 

20,293

 

20,293

Transitional adjustment for right-of-use assets at start of period

(11,363)

 

-

 

-

Effect of foreign exchange rate changes on right-of-use leases

11

 

-

 

-

Effect of foreign exchange rate changes

48

 

152

 

                    629

Closing net funds at the end of period

8,329

 

16,991

 

 

Consolidated statement of comprehensive total income (CSOCTI)

for the six months ended 30 June 2019 (unaudited)

 

 

6 months

ended

30 June

2019

£'000

 

6 months

ended

30 June

2018

£'000

 

         12 months ended

     31 December 

                  2018

                 £'000

 

 

 

 

 

 

Profit for the financial period

5,449

 

7,528

 

17,046

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified to profit and loss:

 

 

 

 

 

Currency translation differences on foreign currency net investments

 

(2)

 

 

110

 

 

405

 

 

 

 

 

 

Items that will never be reclassified to profit and loss:

 

 

 

 

 

Remeasurement of defined benefit liabilities and assets

(96)

 

(75)

 

(1,649)

Related deferred tax

16

 

14

 

313

 

 

 

 

 

 

Other comprehensive income for the period net of tax

(82)

 

49

 

(931)

 

 

 

 

 

 

Total comprehensive income for the period

5,367

 

7,577

 

16,115

 

 

 

Notes to the consolidated interim financial statements

for the six months ended 30 June 2019 (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 2018 does not constitute the group's statutory accounts for 2018 as defined in Section 434 of the Companies Act 2006. Statutory accounts for 2018 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 26 September 2019, 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 16 on 1 January 2019, 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 2018.

 

IFRS 16 introduced a single, on-balance-sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. The group adopted IFRS 16 on 1 January 2019 and applied the Standard's modified retrospective approach. Under this approach the cumulative effect of initially applying IFRS 16 is recognised as an adjustment to assets and liabilities at the date of initial application. Comparative information is not restated. Management has decided to make use of the practical expedient not to perform a full review of existing leases, bringing onto the balance sheet the net present value of the remaining outstanding lease obligations as at the date of transition as both an asset and liability, and has also applied IFRS 16 to new or modified contracts. There are recognition exemptions for short-term leases and leases of low-value items and the group has decided to make use of the short-term leases exemptions.

 

The group has recognised a right-of-use asset and a lease liability for its operating leases of properties, plant machinery and equipment, other than those that fall within the above recognition exemption.  The nature of expenses related to these leases has changed because the group has recognised a depreciation charge for right-of-use assets and an interest expense, charged within finance costs, on the lease liabilities. The assets are depreciated on a straight-line basis over the remaining life of the lease and the interest expense is calculated in order to give a constant rate of return on the outstanding capital liability. Previously, the group recognised operating lease expenses on a straight-line basis over the term of the lease as a reduction in operating profit, and recognised assets and liabilities only to the extent that there was a timing difference between actual lease payments and the expense recognised.

 

As at 1 January 2019, the date of transition to IFRS 16, the group recognised additional right-of-use assets and liabilities of £11.4 million. An additional £1.1 million of new leases were capitalised and a depreciation expense of £1.1 million was recognised in the period. EBITDA was improved by approximately £1.2 million due to the removal of operating lease payments of this amount that would have been charged in accordance with the previous standards, and operating profit for the current period was improved by approximately £0.1 million. Overall profit before tax was reduced by approximately £0.05 million primarily due to the effect of charging more interest at the beginning of the lease term.

 

There was a significant impact on the group's net funds as a result of the adoption of IFRS 16 as at 1 January 2019. Net funds were reduced by £11.4 million as a result of capitalising existing lease obligations as at the date of transition and by a further £0.1 million as a result of applying IFRS 16 to new leases entered into in the current period. There has been no change to the group's repayment obligations or commitments as a result of this change in accounting policy.

 

There was no impact for the group's finance leases. IFRS 16 did not make any significant changes to the accounting for lessors, and therefore there were no changes for leases where the group acts as a lessor.

3       Revenue

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

 

6 months

ended

30 June

2019

£'000

 

6 months

ended

30 June

2018

£'000

 

         12 months ended

     31 December 

                  2018

                 £'000

Continuing operations

 

 

 

 

 

Hire

30,042

 

32,847

 

67,813

Sales

2,863

 

3,152

 

6,817

Maintenance

957

 

936

 

1,791

Installations

1,112

 

880

 

2,142

 

 

 

 

 

 

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

 

34,974

 


37,815

 

 

78,563

 

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

 

6 months

ended

30 June

2019

£'000

 

6 months

ended

30 June

2018

£'000

 

         12 months ended

     31 December 

                  2018

                 £'000

 

 

 

 

 

 

United Kingdom

20,886

 

23,993

 

49,092

Rest of Europe

8,147

 

8,664

 

18,202

Middle East and Africa

5,941

 

5,158

 

11,269

 

 

 

 

 

 

 

34,974

 

37,815

 

78,563

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

 

4       Taxation

 

6 months

ended

30 June

2019

£'000

 

6 months

ended

30 June

2018

£'000

 

      12 months

ended

  31 December 

             2018   £'000

Current tax

 

 

 

 

 

UK corporation tax at 19% (30 June 2018 and 31 December 2018: 19%)

 

731

 


1,252

 

 

2,807

Adjustments in respect of prior periods

(185)

 

-

 

(32)

 

546

 

1,252

  

2,775

Overseas tax

508

 

618

 

1,444

Adjustments to overseas tax in respect of prior periods

(1)

 

7

 

42

Total current tax charge

1,053

 

1,877

 

4,261

 

 

 

 

 

 

Deferred tax

 

 

 

 

 

Deferred tax on the origination and reversal of temporary differences

 

73

 


(60)

 


(260)

Adjustments in respect of prior periods

185

 

-

 

(2)

Total deferred tax charge /(credit)

258

 

(60)

 

(262)

 

 

 

 

 

 

Total tax charge for the financial period attributable to

continuing operations

 

1,311

 


1,817

 

 

3,999

 

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 2018 and 31 December 2018: 19%) as follows:

 

6 months

ended

30 June

2019

£'000

 

6 months

ended

30 June

2018

£'000

 

         12 months ended

     31 December 

                  2018

                 £'000

 

 

 

 

 

 

Profit before taxation from continuing and total operations

6,760

 

9,345

 

21,045

 

 

 

 

 

 

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

  (30 June 2018 and 31 December 2018: 19%)

 

1,284

 


1,776

 

 

3,999

Effects of:

 

 

 

 

 

Expenses not deductible for tax purposes

72

 

50

 

114

Utilisation of overseas trading losses

(12)

 

(24)

 

(44)

Effects of different tax rates of subsidiaries operating abroad

(110)

 

(22)

 

(78)

Overseas tax losses not recognised

29

 

30

 

-

Effect of change in rate of corporation tax

49

 

-

 

-

Adjustments to tax charge in respect of previous periods

(1)

 

7

 

8

Total tax charge for the financial period

1,311

 

1,817

 

3,999

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 2020 having been substantially enacted in October 2015. UK deferred tax has been provided at 17% (30 June 2018 and 31 December 2018:  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 2019

 

Continuing

earnings

 

Number of

Shares

 

£'000

 

 

 

 

 

 

Basic earnings/weighted average number of shares

5,449

 

42,174,359

 

 

 

 

Basic earnings per ordinary share (pence)

12.92p

 

 

 

 

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

 

 

 

 

12 months ended 31 December 2018

 

Continuing

Earnings

 

Number of

Shares

 

£'000

 

 

 

 

 

 

Basic earnings/weighted average number of shares

17,046

 

42,207,255

 

 

 

 

Basic earnings per ordinary share (pence)

40.39p

 

 

Diluted earnings per share

There were no dilutive instruments outstanding at 30 June 2019 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 2019 were as follows:

 

Paid during the 6 months ended

30 June 2019

 

Pence per
share

 

Total dividend
paid

 

 

 

£'000

 

 

 

 

Final dividend for the year ended 31 December 2018 paid to members on the register as at 31 May 2019 on 21 June 2019

 

11.90p

 

 

5,019

The above dividend was charged against reserves during the 6 months ended 30 June 2019.

On 26 September 2019 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 8 November 2019 to shareholders on the register as at 11 October 2019 and will be charged against reserves in the second half of 2019.

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.

Dividends declared and paid on ordinary one pence shares during the 6 months ended 31 December 2018 were as follows:

 

 

Paid during the 12 months ended

31 December 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

Interim dividend declared on 27 September 2018 and paid to shareholders on the register as at 12 October 2018 on 9 November 2018

11.90p

 

5019

 

23.80p

 

10,048

The above dividends were charged against reserves during the 12 months ended 31 December 2018.

 

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 2019 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 £1,286,000 (30 June 2018: £3,354,000; 31 December 2018: £1,356,000). 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 triennial recalculation of the funding deficit as at 31 December 2016, a revised schedule of contributions and recovery plan was agreed with the pension scheme trustees in October 2017.  In accordance with this schedule of contributions, which was backdated to be effective from 1 January 2017, the group made additional contributions during 2017 to remove the funding deficit in the group scheme calculated 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 2019 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 December 2016 (30 June 2018 and 31 December 2018: 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

2019

%

30 June

2018

%

31 December

2018

%

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

3.20

2.20

3.20

2.20

 

75

N/A

3.10

2.60

3.10

2.10

 

75

N/A

3.20

2.80

3.20

2.20

 

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 2019 is 110% S2NA CMI2017 (30 June 2018: 110% S2NA CMI2016; 31 December 2018: 110% S2NA CMI2017) with a 1.25% per annum long term improvement for both males and females (30 June 2018 and 31 December 2018: 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

2019

30 June

2018

31 December

2018

 

 

 

 

Male, current age 45

Female, current age 45

22.8 years

24.9 years

22.9 years

25.0 years

22.8 years

24.9 years

Male, current age 65

21.4 years

21.5 years

21.4 years

Female, current age 65

23.4 years

23.5 years

23.4 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

2019

£'000

 

30 June

2018

£'000

 

31 December

                  2018

 £'000

 

 

 

 

 

 

Total fair value of plan assets

44,060

 

43,968

 

41,036

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

 

(42,774)

 


(40,614)

 

 

(39,680)

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

 

 

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

 

 30 June

 2019

  £'000

 

30 June

 2018

  £'000

 

31 December

 2018

£'000

 

 

 

 

 

 

Fair value of plan assets at the start of the period

41,036

 

45,657

 

45,657

Interest income on pension scheme assets

562

 

551

 

1,103

Actual return less interest income on pension scheme assets

3,343

 

(671)

 

(2,645)

Employer contributions

60

 

60

 

120

Benefits paid   

(888)

 

(1,592)

 

(3,068)

Administration expenses charged in the income statement

(53)

 

(37)

 

(131)

 

 

 

 

 

 

Fair value of plan assets at the end of the period

44,060

 

43,968

 

41,036

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

 

30 June

2019

 

30 June

2018

 

31 December 2018

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

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

 

(39,680)

 


(42,293)

 

 

(42,293)

Interest on defined benefit obligation

(543)

 

(509)

 

(1,019)

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

   accordance with stated assumptions

 

(3,439)

 


596

 

 

                       996

Benefits paid

888

 

1,592

 

                    3,068

Past service cost - GMP equalisation

-

 

-

 

                      (432)

 

 

 

 

 

 

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

 

(42,774)

 


(40,614)

 

 

(39,680)

Amounts recognised in the income statement

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

 

          30 June

                 2019

 

           30 June

              2018

 

  31 December

               2018

 

                £'000

 

              £'000

 

               £'000

 

 

 

 

 

 

Interest income on pension scheme assets

562

 

551

 

1,103

Interest expense on pension scheme liabilities

(543)

 

(509)

 

(1,019)

Net pension interest credit included within finance income

19

 

42

 

84

Scheme administration expenses and GMP equalisation

(53)

 

(37)

 

(563)

Net pension  (charge) / credit in the income statement

(34)

 

5

 

(479)

 

7       Retirement benefit obligations - defined benefit pension scheme (continued)

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

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

 

            30 June

                 2019

 

           30 June

               2018

 

  31 December

               2018

 

                £'000

 

               £'000

 

               £'000

 

 

 

 

 

 

Actual return less interest income on pension scheme assets

3,343

 

(671)

 

(2,645)

Experience gains and losses arising on plan obligation

-

 

-

 

(412)

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

 

(3,439)

 


596

 

 

1,408

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

(96)

 

(75)

 

(1,649)

8       Called up share capital

 

 30 June

 2019

 

30 June

 2018

 

31 December

 2018

 

                £'000

 

           £'000

 

             £'000

Issued and fully paid:

 

 

 

 

 

42,174,359 ordinary shares of one pence each (30 June 2018 and 31 December 2018: 42,174,359 ordinary shares of one pence each)


422

 


422

 


422

During the period the Company did not buy back any shares for cancellation (June 2018 and December 2018: 87,723 shares bought back for a total consideration of £437,689).

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

2019

 

6 months

ended

30 June

2018

 

12 months

ended

31 December 2018

 

£'000

 

£'000

 

 

 

 

 

 

 

 

Profit for the period attributable to equity shareholders

5,449

 

7,528

 

             17,046

Adjustments for:

 

 

 

 

 

Taxation charge

1,311

 

1,817

 

               3,999

Finance costs

46

 

47

 

                    97

Finance income

(61)

 

(60)

 

                    (125)

Interest charge on right-of-use leases

157

 

-

 

-

Inter-company foreign exchange gains and losses

16

 

(52)

 

                     (336)

Profit on the sale of property, plant and equipment

(278)

 

(250)

 

                    (610)

Depreciation

3,697

 

3,399

 

                   6,666

Depreciation of right-of-use assets

1,098

 

-

 

-

 

 

 

 

 

 

EBITDA*

11,435

 

12,429

 

                 26,737

 

 

 

 

 

 

Excess of pension contributions compared with service and

administration expenses including GMP equalisation

 

(7)

 

 


(23)

 

 

                      443

Workings capital movements:

 

 

 

 

 

Stocks

(2,324)

 

               (2,799)

 

                 (2,682)

Trade and other receivables

(120)

 

(2,245)

 

                  (2,139)

Trade and other payables

(1,454)

 

238

 

                      529

Cash generated from operations

7,530

 

7,600

 

                 22,888

* 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

 2019

 

30 June

2018

 

31 December

 2018

 

£'000

 

                £'000

 

               £'000

 

 

 

 

 

 

Cash and cash equivalents per consolidated cash flow statement

23,770

 

21,489

 

27,862

 

 

 

 

 

 

Bank loans:

 

 

 

 

 

At the beginning of the period

(4,476)

 

(4,968)

 

(4,968)

Loans repaid

500

 

500

 

500

Loans drawn down

 

 

-

 

-

Other non-cash changes

(4)

 

(4)

 

(8)

At the of the period

(3,980)

 

(4,472)

 

(4,476)

 

 

 

 

 

 

Finance lease liabilities:

 

 

 

 

 

At the beginning of the period

(5)

 

(50)

 

(50)

Leases repaid

5

 

24

 

45

At the end of the period

-

 

(26)

 

(5)

 

 

 

 

 

 

Right-of-use lease obligations:

 

 

 

 

 

At the beginning of the period

-

 

-

 

-

Transitional adjustment for obligations at start of period

(11,363)

 

-

 

-

Leases repaid

1,025

 

-

 

-

Leases drawn down

(1,134)

 

-

 

-

Foreign exchange

11

 

-

 

-

At the of the period

(11,461)

 

-

 

-

 

 

 

 

 

 

Gross debt

(15,441)

 

(4,498)

 

(4,481)

 

 

 

 

 

 

Net funds

8,329

 

16,991

 

23,381

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.

 

 

 

 

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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Half-year Report - RNS