TIDMASY
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 12 months
ended ended
31 December 31 December
2016 2015
GBP'000 GBP'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
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GCA Altium Limited (NOMAD)
Paul Lines
Adam Sivner 0845 505 4300
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Arden Partners plc (broker)
Steve Douglas 020 7614 5900
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Chairman's Statement
Overview and financial highlights
Summary
The group's revenue for the year ended 31 December 2016 was
GBP65.4 million, an increase of GBP5.3 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 GBP2.6 million, from GBP13.2 million last year to GBP15.8
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 GBP1.7 million this year compared with
GBP0.2 million in 2015. This is largely attributable to a foreign
exchange gain arising on the retranslation of inter-company
balances of GBP1.6 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 GBP15.1 million compared with
GBP12.1 million last year. Despite shareholder related cash
outflows of GBP10.1 million on ordinary dividends, net funds
increased by GBP3.2 million from GBP14.5 million at 31 December
2015 to GBP17.7 million at 31 December 2016.
Our policy of returning affordable dividends to shareholders
continues. Over the last four financial years the group has paid
GBP37.7 million in cash to shareholders. At the same time the level
of external bank borrowings reduced from GBP6 million as at the end
of last year to GBP5 million as at 31 December 2016. The Board is
once again proposing a further final dividend payment amounting to
GBP5.0 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 GBP6.2 million was
invested in the hire fleet this year, GBP0.6 million more than last
year and significantly more than the wasting depreciation charge of
GBP4.5 million. In addition, the group invested a further GBP0.7
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
--------------- --------- ------------------
GBP'000 GBP'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 GBP11.3 million last year to GBP13.8
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 GBP2.3 million last year to GBP2.9 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 GBP0.3 million this year,
GBP0.1 million behind the result achieved last year. The market
continues to be fragmented with high levels of price
competition.
Central overheads increased from GBP0.8 million in 2015 to
GBP1.2 million in the current year.
Profit for the financial year
Profit before tax was GBP17.5 million this year compared with
GBP13.4 million last year. This is attributable to the above GBP2.6
million increase in operating profit and the GBP1.5 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 GBP2.6 million in 2015 to GBP3.1
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 GBP14.4 million compared with
GBP10.8 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 GBP10.1 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 GBP5.0 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 GBP17.7 million
compared with GBP14.5 million last year, an increase of GBP3.2
million despite the payment of the above equity dividends totalling
GBP10.1 million during the year.
Bank loan facilities
The final capital repayment of GBP5 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 GBP5 million also with the
Royal Bank of Scotland. This will be repaid by four equal annual
instalments of GBP0.5 million per annum commencing in April 2018
followed by a final balloon repayment of GBP3 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 12 months
ended ended
31 December 31 December
2016 2015
GBP'000 GBP'000
Continuing operations
Revenue 65,389 60,058
Cost of Sales (26,677) (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* 20,664 17,701
Depreciation and impairment
losses (5,310) (4,959)
Profit on the sale of plant
and equipment 462 466
------------------------ ---------------------
Operating profit 15,816 13,208
------------------------ ---------------------
Finance income 1,875 323
Finance costs (150) (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 12 months
ended ended
31 December 31 December
2016 2015
GBP'000 GBP'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 31 December
2016 2015
---------------------------------- ---------------------------------
GBP'000 GBP'000 GBP'000 GBP'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 12 months
ended ended
31 December 31 December
2016 2015
GBP'000 GBP'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 (84) -
leases and hire purchase agreements
-----------------------------
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 Minority Total
of the parent company interest equity
--------------------------------------------------------------------------------------------------------------
Share Share Retained Translation Other
capital Premium earnings reserve reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 GBP1 million each were made on the due dates in prior
periods and these were followed by a further capital repayment,
also of GBP1 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 GBP5 million also with the Royal Bank of
Scotland. This will be repaid by four equal annual instalments of
GBP0.5 million per annum commencing on 30 April 2018 followed by a
final balloon repayment of GBP3 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 GBP22.8 million compared with GBP20.7
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
END
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