TIDMASY

RNS Number : 9855R

Andrews Sykes Group PLC

27 September 2017

Andrews Sykes Group plc

Interim Financial Statements 2017

Summary of results

for the six months ended 30 June 2017

 
                                                          (Unaudited) 
                                                       6 months       6 months 
                                                          ended          ended 
                                                   30 June 2017   30 June 2016 
                                                        GBP'000        GBP'000 
 
Revenue from continuing operations                       35,334         30,287 
EBITDA* from continuing operations                       10,892          8,799 
Operating profit                                          8,171          6,395 
Inter-company foreign exchange gains and losses            (51)          1,062 
Profit for the financial period                           6,570          6,195 
Basic earnings per share (pence)                         15.55p         14.66p 
Interim dividends declared per equity share 
 (pence)                                                 11.90p         11.90p 
Net funds                                                17,403         15,392 
 
 

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

Chairman's Statement

Overview

The group produced a successful result for the first half of 2017, 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 2017 was GBP35.3 million, an increase of GBP5.0 million compared with the same period last year. As a consequence operating profit increased by GBP1.8 million from GBP6.4 million in the first half of 2016 to GBP8.2 million for the six months ended 30 June 2017.

The group continues to be profitable and cash generative. Cash generated from operations was GBP8.6 million (2016: GBP7.1 million) and net funds decreased by GBP0.3 million from GBP17.7 million as at 31 December 2016 to GBP17.4 million as at 30 June 2017, this was after paying the 2016 final dividend of 11.9 pence per share, or GBP5.0 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 GBP2.6 million and a further GBP1.2 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 2017. Our pumping activity has stayed in line with expectation and our heating products have increased revenue levels by 12%. Demand for our air conditioning products has increased mainly due to a warmer than expected start to the summer in the month of June.

Our operations across the Benelux region have experienced continued strong growth. Our recently established businesses in France, Switzerland and Luxembourg continue to trade in line with our expectations. In Italy we have had a strong trading result driven by a 50% 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 long established business based in the UAE, had a reasonable start to the year, maintaining similar revenue levels of 2016. The climate rental division also continues to make a positive contribution. Overall, the operating profit of Khansaheb Sykes was in line with expectation.

Profit for the financial period and Earnings per Share

Profit before tax was GBP8.1 million (2016: GBP7.5 million) reflecting both the above GBP1.8 million increase in operating profit and a significant decrease in net finance income of GBP1.2 million, compared with the same period in 2016. This decrease was primarily due to a net inter-company foreign exchange gain of GBP1.1 million reported in 2016 compared with a loss of GBP0.1 million in 2017.

The total tax charge increased by GBP0.2 million from GBP1.3 million for the six months ended 30 June 2016 to GBP1.5 million for the current six month period. The effective tax rate increased from 17.7% for the six months ended 30 June 2016 to 19.0% in the current period. The rate for the current period is slightly less than the standard effective UK corporation tax rate of 19.25% which is mainly due to the effect of profits being made in lower tax regions overseas partially offset by 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 19.25% and the actual tax charge is given in note 4 of these interim financial statements.

Profit after tax was GBP6.6 million (2016: GBP6.2 million) and consequently the basic earnings per share increased by 0.89 pence, or 6%, from 14.66 pence for the first half of 2016 to 15.55 pence for the period under review. There were no share buy-backs in the period.

Dividends

The final dividend of 11.90 pence per ordinary share for the year ended 31 December 2016 was approved by members at the AGM held on 21 June 2017. Accordingly on 26 June 2017 the company made a total dividend payment of GBP5,029,000 which was paid to shareholders on the register as at 26 May 2017.

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 2017 of 11.90 pence per share which in total amounts to GBP5,029,000. This will be paid on 3 November 2017 to shareholders on the register as at 6 October 2017. The shares will go ex-dividend on 5 October 2017.

Bank loan agreement

During the period, and in accordance with the agreed repayment profile, the group repaid the final annual instalment of GBP1 million that was due for payment on 30 April 2017. The remaining loan balance of GBP5 million has been refinanced over a five year period.

Outlook

Trading in the third quarter to date has continued to be positive. Europe has experienced strong results through to September 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   28 September 2017 
  Chairman 
 

Consolidated income statement

for the 6 months ended 30 June 2017 (unaudited)

 
                                              6 months   6 months       12 months 
                                                 ended      ended           ended 
                                               30 June    30 June     31 December 
                                                  2017       2016            2016 
                                               GBP'000    GBP'000         GBP'000 
 Continuing operations 
 
 Revenue                                        35,334     30,287          65,389 
 Cost of sales                                (15,328)   (12,692)        (26,677) 
 
 Gross profit                                   20,006     17,595          38,712 
 
 Distribution costs                            (5,917)    (5,772)        (11,512) 
 Administrative expenses                       (5,918)    (5,428)        (11,384) 
 
 Operating profit                                8,171      6,395          15,816 
 
 EBITDA*                                        10,892      8,799          20,664 
 Depreciation and impairment losses            (3,013)    (2,702)         (5,310) 
 Profit on the sale of plant and equipment         292        298             462 
 Operating profit                                8,171      6,395          15,816 
 
 
 Finance income                                     49        145             308 
 Finance costs                                    (59)       (73)           (150) 
 Intercompany foreign exchange gains 
  and losses                                      (51)      1,062           1,567 
 Profit before taxation                          8,110      7,529          17,541 
 
 Taxation                                      (1,540)    (1,334)         (3,068) 
 
 Profit for the financial period                 6,570      6,195          14,473 
                                             ---------  ---------  -------------- 
 
 There were no discontinued operations in either 
  of the above periods 
 
 Earnings per share from continuing operations 
 
 Basic and diluted (pence)                      15.55p     14.66p          34.25p 
 
 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 2017 (unaudited)

 
                                             30 June          30 June       31 December 
                                                2017             2016              2016 
                                    ----------------  ---------------  ---------------- 
                                             GBP'000          GBP'000           GBP'000 
 Non-current assets 
 Property, plant and equipment                20,756           18,604            20,062 
 Lease prepayments                                48               49                49 
 Trade investments                               164              164               164 
 Deferred tax asset                              326              482               559 
 Retirement benefit pension 
  surplus                                      2,575            1,512             1,161 
                                    ----------------  ---------------  ---------------- 
                                              23,869           20,811            21,995 
                                    ----------------  ---------------  ---------------- 
 
 Current assets 
 Stocks                                        4,542            5,709             4,994 
 Trade and other receivables                  18,817           16,052            18,425 
 Cash and cash equivalents                    22,453           20,590            22,819 
                                              45,812           42,351            46,238 
                                    ----------------  ---------------  ---------------- 
 
 Current liabilities 
 Trade and other payables                   (12,354)         (11,414)          (13,055) 
 Current tax liabilities                     (1,375)          (1,345)           (1,575) 
 Overseas tax (denominated 
  in euros)                                    (404)             (44)             (250) 
 Bank loans                                    (493)          (4,985)           (4,995) 
 Obligations under finance 
  leases                                        (61)            (129)             (102) 
                                            (14,687)         (17,917)          (19,977) 
                                    ----------------  ---------------  ---------------- 
 
 Net current assets                           31,125           24,434            26,261 
 
 Total assets less current 
  liabilities                                 54,994           45,245            48,256 
 
 Non-current liabilities 
 Bank loans                                  (4,471)                -                 - 
 Obligations under finance 
  leases                                        (25)             (84)              (49) 
                                             (4,496)             (84)              (49) 
                                    ----------------  ---------------  ---------------- 
 
 Net assets                                   50,498           45,161            48,207 
                                    ----------------  ---------------  ---------------- 
 
 Equity 
 Called-up share capital                         423              423               423 
 Share premium                                    13               13                13 
 Retained earnings                            45,917           41,096            43,619 
 Translation reserve                           3,890            3,374             3,897 
 Other reserves                                  245              245               245 
 
 Surplus attributable to equity 
  holders of the parent                       50,488           45,151            48,197 
 
 Minority interest                                10               10                10 
 
 Total equity                                 50,498           45,161            48,207 
                                    ----------------  ---------------  ---------------- 
 

Consolidated cash flow statement

for the six months ended 30 June 2017 (unaudited)

 
                                                   6 months                       6 months                    12 months 
                                                      ended                          ended                        ended 
                                                    30 June                        30 June                  31 December 
                                                       2017                           2016                         2016 
                                                    GBP'000                        GBP'000                      GBP'000 
 Cash flows from operating 
 activities 
 Cash generated from 
  operations                                          8,606                          7,111                       17,693 
 Interest paid                                         (56)                           (66)                        (136) 
 Net UK corporation tax paid                        (1,208)                          (941)                      (1,846) 
 Overseas tax paid                                    (340)                          (263)                        (578) 
 
 Net cash inflow from 
  operating 
  activities                                          7,002                          5,841                       15,133 
                               ----------------------------   ----------------------------   -------------------------- 
 
 Investing activities 
 Sale of property, plant and 
  equipment                                             392                            415                          673 
 Purchase of property, plant 
  and equipment                                     (2,594)                        (2,237)                      (5,392) 
 Interest received                                       38                            124                          241 
                               ----------------------------   ---------------------------- 
 Net cash outflow from 
  investing 
  activities                                        (2,164)                        (1,698)                      (4,478) 
                               ----------------------------   ----------------------------   -------------------------- 
 
 Financing activities 
 Loan repayments                                    (5,000)                        (1,000)                      (1,000) 
 New loans raised net of 
 arrangement 
 fees                                                 4,962                              -                            - 
 Finance lease capital 
  repayments                                           (64)                           (53)                        (116) 
 Equity dividends paid                              (5,029)                        (5,029)                     (10,058) 
                               ----------------------------   ---------------------------- 
 Net cash outflow from 
  financing 
  activities                                        (5,131)                        (6,082)                     (11,174) 
                               ----------------------------   ----------------------------   -------------------------- 
 
 Net decrease in cash and 
  cash 
  equivalents                                         (293)                        (1,939)                        (519) 
 
 Cash and cash equivalents at 
  the beginning of the period                        22,819                         20,715                       20,715 
 Effect of foreign exchange 
  rate 
  changes                                              (73)                          1,814                        2,623 
 
 Cash and cash equivalents at 
  end of the period                                  22,453                         20,590                       22,819 
                               ----------------------------   ----------------------------   -------------------------- 
 
 Reconciliation of net cash flow to movement in net funds 
  in the period 
 
 Net decrease in cash and 
  cash 
  equivalents                                          (293)                       (1,939)                        (519) 
 Net cash outflow from the 
  decrease 
  in debt                                                102                         1,053                        1,115 
 Non-cash movement re new 
  financial 
  leases                                                   -                          (84)                         (84) 
 Non-cash movements re costs 
  of raising loan finance                                (6)                          (10)                         (20) 
                               -----------------------------       -----------------------   -------------------------- 
 Decrease in net funds during 
  the period                                           (197)                         (980)                          492 
 Opening net funds at the 
  beginning 
  of period                                           17,673                        14,558                       14,558 
 Effect of foreign exchange 
  rate 
  changes                                               (73)                         1,814                        2,623 
                               -----------------------------       -----------------------   -------------------------- 
 Closing net funds at the end 
  of period                                           17,403                        15,392                       17,673 
                               -----------------------------       -----------------------   -------------------------- 
 
 

Consolidated statement of comprehensive total income (CSOCTI)

for the six months ended 30 June 2017 (unaudited)

 
                                               6 months  6 months     12 months 
                                                  ended     ended         ended 
                                                30 June   30 June   31 December 
                                                   2017      2016          2016 
                                                GBP'000   GBP'000       GBP'000 
 
Profit for the financial period                   6,570     6,195        14,473 
 
Other comprehensive income: 
 
Items that may be reclassified to 
 profit and loss: 
Currency translation differences on 
 foreign currency net investments                   (7)     1,401         1,924 
 
Items that will never be reclassified 
 to profit and loss: 
Remeasurement of defined benefit liabilities 
 and assets                                         935   (1,305)       (2,201) 
Related deferred tax                              (178)       248           418 
 
Other comprehensive income for the 
 period net of tax                                  750       344           141 
 
Total comprehensive income for the 
 period                                           7,320     6,539        14,614 
 
 

Notes to the consolidated interim financial statements

for the six months ended 30 June 2017

   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 2016 does not constitute the group's statutory accounts for 2016 as defined in Section 434 of the Companies Act 2006. Statutory accounts for 2016 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 28 September 2017, 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 

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 2016.

   3       Revenue 

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

 
                                           6 months  6 months     12 months 
                                              ended     ended         ended 
                                            30 June   30 June   31 December 
                                               2017      2016          2016 
                                            GBP'000   GBP'000       GBP'000 
Continuing operations 
Hire                                         29,405    25,450        54,852 
Sales                                         3,906     2,806         6,386 
Installations                                 2,023     2,031         4,151 
 
Group consolidated revenue from the 
 sale of goods and provision of services     35,334    30,287        65,389 
                                           --------  --------  ------------ 
 

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

 
                                         6 months  6 months     12 months 
                                            ended     ended         ended 
                                          30 June   30 June   31 December 
                                             2017      2016          2016 
                                          GBP'000   GBP'000       GBP'000 
 
United Kingdom                             22,624    20,171        41,754 
Rest of Europe                              7,067     4,787        12,105 
Middle East and Africa                      5,643     5,329        11,530 
 
                                           35,334    30,287        65,389 
                         ------------------------  --------  ------------ 
 

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

   4       Taxation 
 
                                                          6 months  6 months     12 months 
                                                             ended     ended         ended 
                                                           30 June   30 June   31 December 
                                                              2017      2016          2016 
                                                           GBP'000   GBP'000       GBP'000 
Current tax 
UK corporation tax at 19.25% (30 June 
 2016 and 31 December 2016: 20%)                             1,008       980         2,253 
Adjustments in respect of prior periods                          -         -         (138) 
                                          ------------------------  --------  ------------ 
                                                             1,008       980         2,115 
Overseas tax                                                   474       299           838 
Adjustments to overseas tax in respect 
 of prior periods                                                3         7          (26) 
Total current tax charge                                     1,485     1,286         2,927 
                                          ------------------------  --------  ------------ 
 
Deferred tax 
Deferred tax on the origination and 
 reversal of temporary differences                              55        48            38 
Adjustments in respect of prior periods                          -         -           103 
Total deferred tax charge                                       55        48           141 
                                          ------------------------  --------  ------------ 
 
Total tax charge for the financial 
 period attributable to 
 continuing operations                                       1,540     1,334         3,068 
                                          ------------------------  --------  ------------ 
 

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 19.25% (30 June 2016 and 31 December 2016: 20%) as follows:

 
                                                                    6 months  6 months                12 months 
                                                                       ended     ended                    ended 
                                                                     30 June   30 June              31 December 
                                                                        2017      2016                     2016 
                                                                     GBP'000   GBP'000                  GBP'000 
 
Profit before taxation from continuing and total operations            8,110     7,529                   17,541 
                                                                    --------  --------  ----------------------- 
 
Tax at the UK effective annualised corporation tax rate of 19.25% 
 (30 June 2016 and 31 December 2016: 20%)                              1,561     1,506                    3,508 
Effects of: 
Expenses not deductible for tax purposes                                  57        45                       48 
Movement in overseas trading losses                                       13      (46)                     (87) 
Effect of different tax rates of subsidiaries operating abroad          (93)     (175)                    (337) 
Effect of change in rate of corporation tax                              (1)       (3)                      (3) 
Adjustments to tax charge in respect of previous periods                   3         7                     (61) 
Total tax charge for the financial period                              1,540     1,334                    3,068 
                                                                    --------  --------  ----------------------- 
 
 

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 19.25%; the rate of 19% for the tax year ending 31 March 2018 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 
                                                      2017 
                                            ------------------------ 
                                             Continuing    Number of 
                                               earnings       Shares 
                                                GBP'000 
 
Basic earnings/weighted average number 
 of shares                                        6,570   42,262,082 
                                            ----------- 
 
Basic earnings per ordinary share (pence)        15.55p 
 
 
 
                                             6 months ended 30 June 
                                                      2016 
                                            ------------------------ 
                                             Continuing    Number of 
                                               earnings       shares 
                                                GBP'000 
 
Basic earnings/weighted average number 
 of shares                                        6,195   42,262,082 
                                            ----------- 
 
Basic earnings per ordinary share (pence)        14.66p 
 
 
 
                                                 12 months ended 31 December 
                                                             2016 
                                            --------------------------------- 
                                                  Continuing        Number of 
                                                    earnings           shares 
                                                     GBP'000 
 
Basic earnings/weighted average number 
 of shares                                            14,473       42,262,082 
                                            ---------------- 
 
Basic earnings per ordinary share (pence)             34.25p 
 

Diluted earnings per share

There were no dilutive instruments outstanding at 30 June 2017 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 2017 were as follows:

 
                                                   Paid during the 6 months 
                                                       ended 30 June 2017 
                                                ------------------------------- 
                                                                 Total dividend 
                                                Pence per share            paid 
                                                                        GBP'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.

On 28 September 2017 the directors declared an interim dividend of 11.90 pence per ordinary share which in total amounts to GBP5,029,000. This will be paid on 3 November 2017 to shareholders on the register on 6 October 2017 and will be charged against reserves in the second half of 2017.

Dividends declared and paid on ordinary one pence shares during the 6 months ended 30 June 2016 were as follows:

 
                                                   Paid during the 6 months 
                                                       ended 30 June 2016 
                                                ------------------------------- 
                                                                 Total dividend 
                                                Pence per share        declared 
                                                                        GBP'000 
 
Final dividend for the year ended 31 December 
 2015 paid to members on the register as 
 at 27 May 2016 on 24 June 2016                          11.90p           5,029 
                                                ---------------  -------------- 
 
 

The above dividend was charged against reserves during the 6 months ended 30 June 2016.

Dividends declared and paid on ordinary one pence shares during the 12 month period ended 31 December 2016 were as follows:

 
                                                    Paid during the 12 months 
                                                      ended 31 December 2016 
                                                 ------------------------------- 
                                                                  Total dividend 
                                                 Pence per share            paid 
                                                                         GBP'000 
 
Final dividend for the year ended 31 December 
 2015 paid to members on the register as 
 at 27 May 2016 on 24 June 2016                           11.90p           5,029 
Interim dividend declared on 28 September 
 2016 and paid to shareholders on the register 
 as at 7 October 2016 on 2 November 2016                  11.90p           5,029 
                                                 ---------------  -------------- 
                                                          23.80p          10,058 
                                                 ---------------  -------------- 
 

The above dividends were charged against reserves during the 12 months ended 31 December 2016.

   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 2017 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 GBP2,575,000 (30 June 2016: GBP1,512,000; 31 December 2016: GBP1,161,000). 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 2013 a revised schedule of contributions and recovery plan was agreed with the pension scheme trustees in June 2014. In accordance with this schedule of contributions, which is effective from 1 January 2014, the group made additional contributions in 2014 to remove the funding deficit calculated as at 31 December 2013 and this has now been eliminated as at 31 December 2014. Subsequently, to date, the group has continued to make a contribution towards expenses of GBP10,000 per month. In addition the group made an additional voluntary contribution of GBP32,000 per month from January 2016 and this was increased to GBP80,000 per month from April 2016. The formal triennial funding valuation as at 31 December 2016 is currently being finalised and this is likely to show a deficit of GBP0.7 million. The group has agreed to continue to make the current level of monthly contributions until either the formal approval of the schedule of contributions or the elimination of the estimated deficit, whichever is the earlier.

Assumptions used to calculate the scheme surplus

A qualified independent actuary has updated the results of the provisional December 2016 (30 June 2016 and 31 December 2016: December 2013) 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   30 June   31 December 
                                       2017      2016          2016 
                                          %         %             % 
 Rate of increase in pensionable 
  salaries                              N/A       N/A           N/A 
  Rate of increase in pensions 
   in payment                          3.20      2.90          3.30 
  Discount rate applied to scheme 
   liabilities                         2.60      2.80          2.70 
  Inflation assumption - RPI           3.20      2.90          3.30 
  Inflation assumption - CPI           2.20      1.90          2.30 
  Percentage of members taking 
   maximum tax free lump sum on 
   retirement                          90.0      90.0          90.0 
 

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 2017 is 110% S2NA CMI2015 (30 June 2016 and 31 December 2016: 110% S2NA CMI2015) with a 1% per annum long term improvement for both males and females (30 June 2016 and 31 December 2016: 1% 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       30 June   31 December 
                                  2017          2016          2016 
 
 Male, current age 45       22.6 years    22.6 years    22.6 years 
  Female, current age 45    24.9 years    24.9 years    24.9 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      30 June   31 December 
                                                  2017         2016          2016 
                                               GBP'000      GBP'000       GBP'000 
 
 Total fair value of plan assets                44,403       40,768        43,368 
 Present value of defined benefit funded 
  obligation calculated in 
  accordance with stated assumptions          (41,828)     (39,256)      (42,207) 
                                           -----------  -----------  ------------ 
 Surplus in the scheme calculated in 
  accordance with stated 
  assumptions recognised in the balance 
  sheet                                          2,575        1,512         1,161 
                                           -----------  -----------  ------------ 
 

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

 
                                             30 June   30 June  31 December 
                                                2017      2016         2016 
                                             GBP'000   GBP'000      GBP'000 
 
Fair value of plan assets at the start 
 of the period                                43,368    37,734       37,734 
Interest income on pension scheme assets         580       688        1,383 
Actual return less interest income 
 on pension scheme assets                        848     2,737        4,927 
Employer contributions                           540       396          936 
Benefits paid                                  (851)     (717)      (1,490) 
Administration expenses charged in 
 the income statement                           (82)      (70)        (122) 
 
Fair value of plan assets at the end 
 of the period                                44,403    40,768       43,368 
                                           ---------  --------  ----------- 
 

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

 
                                              30 June    30 June  31 December 
                                                 2017       2016         2016 
                                              GBP'000    GBP'000      GBP'000 
 
Present value of defined benefit funded 
 at the beginning of the period              (42,207)   (35,291)     (35,291) 
Interest on defined benefit obligation          (559)      (640)      (1,278) 
Actuarial gain/(loss) recognised in 
 the CSOCTI calculated in 
 accordance with stated assumptions                87    (4,042)      (7,128) 
Benefits paid                                     851        717        1,490 
 
Closing present value of defined benefit 
 funded obligation calculated 
 in accordance with stated assumptions       (41,828)   (39,256)     (42,207) 
                                           ----------  ---------  ----------- 
 
 

Amounts recognised in the income statement

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

 
                                                            30 June                30 June            31 December 
                                                               2017                   2016                   2016 
                                                            GBP'000                GBP'000                GBP'000 
 
Interest income on pension scheme 
 assets                                                         580                    688                  1,383 
Interest expense on pension scheme 
 liabilities                                                  (559)                  (640)                (1,278) 
                                             ----------------------  ---------------------  --------------------- 
Net pension interest credit included 
 within finance income                                           21                     48                    105 
Scheme administration expenses                                 (82)                   (70)                  (122) 
Net pension charge in the income statement                     (61)                   (22)                   (17) 
                                             ----------------------  ---------------------  --------------------- 
 
 

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

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

 
                                                        30 June                30 June            31 December 
                                                           2017                   2016                   2016 
                                                        GBP'000                GBP'000                GBP'000 
 
Actual return less interest income 
 on pension scheme assets                                   848                  2,737                  4,927 
Experience gains and losses arising 
 on plan obligation                                         210                    281                      - 
                                         ----------------------  ---------------------  --------------------- 
Changes in demographic and financial 
 assumptions underlying the present 
 value of plan obligations                                (123)                (4,323)                (7,128) 
Actuarial gain/(loss) in calculated 
 in accordance with stated assumptions 
 recognised in the CSOCTI                                   935                   (22)                (2,201) 
                                         ----------------------  ---------------------  --------------------- 
 
 
   8       Called up share capital 
 
                                                           30 June            30 June          31 December 
                                                              2017               2016                 2016 
                                                           GBP'000            GBP'000              GBP'000 
Issued and fully paid: 
42,262,082 ordinary shares of one 
 pence each (30 June 2016 and 31 December 
 2016: 42,262,082 ordinary shares of 
 one pence each)                                               423                423                  423 
                                            ----------------------  -----------------  ------------------- 
 

The company did not buy back any shares for cancellation during the 6 months ended 30 June 2017 or either of the comparative periods. 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 any of 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  6 months     12 months 
                                              ended     ended         ended 
                                            30 June   30 June   31 December 
                                               2017      2016          2016 
                                            GBP'000   GBP'000       GBP'000 
 
Profit for the period attributable 
 to equity shareholders                       6,570     6,195        14,473 
Adjustments for: 
Taxation charge                               1,540     1,334         3,068 
Finance costs                                    59        73           150 
Finance income                                 (49)     (145)         (308) 
Inter-company foreign exchange gains 
 and losses                                      51   (1,062)       (1,567) 
Profit on the sale of property, plant 
 and equipment                                (292)     (298)         (462) 
Depreciation                                  3,013     2,702         5,310 
 
EBITDA*                                      10,892     8,799        20,664 
 
Excess of pension contributions compared 
 with service and 
 administration expenses                      (458)     (326)         (814) 
Workings capital movements: 
Stocks                                        (728)   (2,195)       (2,251) 
Trade and other receivables                   (402)       508       (1,876) 
Trade and other payables                      (698)       325         1,970 
Cash generated from operations                8,606     7,111        17,693 
                                           --------  --------  ------------ 
 
 

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

   10     Analysis of net funds 
 
                                      30 June                  30 June            31 December 
                                         2017                     2016                   2016 
                                      GBP'000                  GBP'000                GBP'000 
 
Cash and cash equivalents per cash 
 flow statement                        22,453                   20,590                 22,819 
                                     --------  -----------------------  --------------------- 
 
Bank loans                            (4,964)                  (4,985)                (4,995) 
Obligations under finance leases         (86)                    (213)                  (151) 
                                     --------  -----------------------  --------------------- 
Gross debt                            (5,050)                  (5,198)                (5,146) 
                                     --------  -----------------------  --------------------- 
Net funds                              17,403                   15,392                 17,673 
                                     --------  -----------------------  --------------------- 
 
   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 company news service from the London Stock Exchange

END

IR FDLFLDKFLBBL

(END) Dow Jones Newswires

September 28, 2017 04:28 ET (08:28 GMT)

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