Andrew Sykes Regulatory News (ASY)

27 Apr 2006 07:01

Andrews Sykes Group PLC27 April 2006 Andrews Sykes Group plc 27 April 2006 Preliminary Results for the year ended 31 December 2005 FINANCIAL HIGHLIGHTS EBITDA* from continuing operations £14.7 million Profit on ordinary activities after taxation £14.1 million Net debt £19.7 million after distributing total payments of £31.9 million toshareholders Basic earnings per share from continuing operations 15.24 pence SUMMARY OF RESULTS 52 weeks ended 53 weeks ended 31 December 2005 31 December 2004 (as restated **) £'000 £'000 Turnover from continuing operations 50,673 52,116EBITDA* from continuing operations 14,747 15,656Operating profit*** from continuing operations 11,062 11,871Profit / (loss) on the disposal of businesses 6,404 (305)Profit on ordinary activities after taxation 14,127 4,934Basic earnings per share from continuing operations (pence) 15.24p 8.13pDividends paid of 14.0 p (2004: 4.0 p) per share 8,119 2,320Net Debt 19,658 2,930 * Earnings before interest, taxation, depreciation and amortisation asreconciled in the consolidated profit and loss account after adding backexceptional items of £Nil (2004: £4,848,000). ** The comparative figures have been restated due to both the full adoption ofFRS 17 - Retirement Benefits and FRS 21 - Events after the Balance Sheet Datewith effect from 1 January 2005. *** Operating profit as reconciled in the consolidated profit and loss accountafter adding back exceptional items of £Nil (2004: £4,848,000). Chairman's Statement Summary of results Following a disappointing first half of the year, I am pleased to be able toreport that, as anticipated in my half year report, trading strongly improved inthe second half. Taking the year as a whole, operating profit from continuingoperations before exceptional items was £11.1 million compared with £11.9million last year (operating profit £7 million add back exceptionaladministration costs £4.9 million), a decrease of £0.8 million. Management changes The Group's Chief Executive, Robert Stevens, resigned on 1 March 2006 to takeearly retirement. Robert was appointed to the Board in January 2000 as Chief Executive. Since thattime he has been responsible for the development of the Group's strategy toensure that the Group remains a market leader. The Board and I thank Robert forhis contribution to the Group since his appointment and wish him a long andsuccessful retirement. Also on 1 March 2006, Paul Wood was appointed as Director of Operations. Paulhas a vast experience in the industry having originally joined the Group inAugust 1978. The Board and I look forward to working with Paul over the comingyears. Business disposals 2005 has been another year of change for our Group. As I reported to you in theinterim report, during the first half of the year we successfully disposed of anon core subsidiary undertaking, Accommodation Hire Limited, a companyspecialising in the hire and sale of temporary accommodation units. This wasfollowed in October 2005 by the disposal of Engineering Appliances Limited. Thiscompany specialises in the sale of pipe work and ducting components and wastherefore also non core to the Group. The combined profit on disposal of thesebusinesses was £6.6 million, the total net cash inflows after disposal costsbeing £11.2 million. Capital reduction, tender offer and dividend payments On 26 September the capital reduction and tender offer programme was completedculminating in the payment of £23.8 million to those shareholders who chose toaccept the offer. Combined with the payment of the 2004 special final dividendof £8.1 million this means that a total of £31.9 million was returned toshareholders during the year. Pension scheme payments As reported in the Financial Review, the Group has adopted the requirements ofFRS 17 - Retirement Benefits in full this year which has had the effect ofreducing opening shareholders' funds at 1 January 2005 by approximately £9million before deferred tax relief. During the year the Group has made pension contributions of £4.3 million to thedefined benefit pension scheme. This includes not only the regular monthlycontributions but also special one off payments of £3.4 million aimed atreducing the pension scheme deficit, which after actuarial adjustments amountsto £6.3 million before deferred tax relief. The Group has now reached anagreement with the pension scheme regulator and pension scheme trustees tocontinue the monthly contributions at the current level until 2009 or until thedeficit is eliminated, if earlier. Net debt Due to the combination of the above factors, the Group's net debt has increasedfrom £2.9 million at 1 January 2005 to £19.7 million by 31 December 2005. Theprincipal movements are the return of £31.9 million funds to the shareholders,pension scheme payments of £4.3 million and cash inflow of £11.2 million on thedisposal of businesses. Earnings per share and buy back programme As set out in note 9 of the financial statements, the basic earnings per sharefrom continuing operations is 15.24 pence compared with 8.13 pence last year. The Board continues to believe that shareholder value will be optimised by thepurchase, when appropriate, of our own shares coupled with investment in organicgrowth. Consequently, the Board will request that shareholders vote in favour ofa resolution to renew the authority to purchase up to 12.5% of the ordinaryshares in issue. Dividend As the Company returned £31.9 million to shareholders during the year, the Boardis not proposing a final dividend this year. Future dividend policy will beregularly reviewed by the Board. Outlook The colder winter continued well into the first quarter of 2006 giving the Groupa good start to the new financial year. Costs remain well under control andtherefore the Group remains ready to take advantage of market opportunities andbeneficial weather conditions. JG Murray Chairman 26 April 2006 Andrews Sykes Group plcConsolidated Profit and Loss AccountFor the 52 weeks ended 31 December 2005 52 weeks to 31 December 2005 53 weeks to 31 December 2004 (as restated **) Continuing Discontinued Total Continuing Discontinued Total activities activities activities activities £'000 £'000 £'000 £'000 £'000 £'000Turnover 50,673 4,415 55,088 52,116 10,564 62,680Cost of sales (23,675) (2,414) (26,089) (24,258) (6,028) (30,286) Gross profit 26,998 2,001 28,999 27,858 4,536 32,394Distribution costs (8,038) (699) (8,737) (8,005) (1,677) (9,682)Administrative expenses -ordinary (7,898) (960) (8,858) (8,021) (1,969) (9,990)Administrative expenses -exceptional (note 3) - - - (4,848) (24) (4,872) Total administrativeexpenses (7,898) (960) (8,858) (12,869) (1,993) (14,862)Other operating income - - - 39 - 39 Operating profit 11,062 342 11,404 7,023 866 7,889 EBITDA * 14,747 615 15,362 10,808 1,625 12,433 Depreciation and assetdisposals (3,671) (273) (3,944) (3,771) (759) (4,530) Operating profit beforegoodwill amortisation 11,076 342 11,418 7,037 866 7,903Goodwill amortisation (14) - (14) (14) - (14) Operating profit 11,062 342 11,404 7,023 866 7,889 Income from other participatinginterests - 304Exceptional profit / (loss) on the disposal of 6,404 (305)businesses - discontinued (note 5)Profit on ordinary activities before interest and 17,808 7,888taxation Net interest payable (738) (718) Profit on ordinary activities before taxation 17,070 7,170Tax on profit on ordinary activities (2,943) (2,236) Profit on ordinary activities after taxation being 14,127 4,934profit for the financial period Earnings per share from continuing operations:Basic 15.24p 8.13pFully diluted 15.24p 7.82p Earnings per share from total operating results:Basic 28.16p 8.51pFully diluted 28.16p 8.18pDividends paid per equity share (as restated for FRS 14.0p 4.0p21) There were no material acquisitions in any period. * Earnings Before Interest, Taxation, Depreciation andAmortisation. ** The comparative figures for the 53 weeks ended 31 December 2004 have beenrestated due to both the full adoption of FRS 17 - Retirement Benefits and FRS21 - Events after the Balance Sheet Date with effect from 1 January 2005 as setout in note 7. Andrews Sykes Group plcConsolidated Balance SheetAs at 31 December 2005 31 December 31 December 2005 2004 (as restated*) £'000 £'000Fixed assetsIntangible assets: Goodwill 31 45Tangible assets 12,011 15,876Investments 164 164 12,206 16,085Current assetsStocks 4,532 4,942Debtors 13,929 15,071Cash at bank and in hand 10,342 9,295 28,803 29,308Creditors falling due within one yearBank loans (5,000) (2,490)Other creditors (8,627) (9,989)Corporation and overseas tax (1,060) (1,099) (14,687) (13,578) Net current assets 14,116 15,730 Total assets less current liabilities 26,322 31,815 Creditors falling due after more than one yearBank loans (25,000) (9,735) Provisions for liabilities (469) (310) Net assets excluding pension liability 853 21,770 Pension Liability (4,434) (6,660) Net (liabilities) / assets including pension liability (3,581) 15,110 Capital and reservesCalled - up share capital 446 11,598Share premium account - 10,678Revaluation reserve 741 746Other reserves 222 7,389Profit and loss account (4,994) (15,292)ESOP reserve (6) (19)(Deficit) / surplus attributable to equity shareholders (3,591) 15,100 Minority interests (equity) 10 10Total capital employed (3,581) 15,110 * The comparative figures as at 31 December 2004 have been restated due to boththe full adoption of FRS 17 - Retirement Benefits and FRS 21 - Events after theBalance Sheet Date with effect from 1 January 2005 as set out in note 7. Andrews Sykes Group plcConsolidated cash flow statementFor the 52 weeks ended 31 December 2005 52 weeks to 53 weeks to 31 December 31 December 2005 2004 £'000 £'000Net cash inflow from operating activities as reconciled in note 4 10,196 11,677 Dividend received from participating interests - 139 Returns on investments and servicing of financeInterest received 484 410Interest paid (946) (865) Net cash outflow for returns on investments and servicing of finance (462) (455) Cash outflow for taxation (1,984) (4,288) Capital expenditure and financial investmentPurchase of tangible fixed assets (4,056) (3,936)Sale of tangible fixed assets 608 1,483 Net cash outflow for capital expenditure and financial investment (3,448) (2,453) Acquisitions and disposalsCash received on the disposal of subsidiary undertakings as set out in 10,204 -note 5Net cash balances disposed of with subsidiaries (214) - Net cash inflow for acquisitions and disposals 9,990 - Equity dividends paid (8,119) (2,320) Cash inflow before the use of liquidresources and financing 6,173 2,300 Management of liquid resourcesMovement in bank deposits 477 (1) FinancingSale of shares held in ESOP 9 16Loan repayments (11,000) (3,749)New loans taken out in the year 30,000 -Purchase of own shares (24,168) (630)Net cash outflow from financing (5,159) (4,363) Increase / (decrease) in cash in the period 1,491 (2,064) Analysis of net funds / (debt)Bank current and deposit accounts and cash in hand 10,342 9,295Total loans and overdrafts (30,000) (12,225) Net debt as reconciled in note 6 (19,658) (2,930) Andrews Sykes Group plcOther Consolidated StatementsFor the 52 weeks ended 31 December 2005 Consolidated statement of total recognised gains and losses 52 weeks to 53 weeks to 31 December 31 December 2005 2004 (as restated *) £'000 £'000Profit for the financial period 14,127 4,934Currency translation differences on foreign currency net investments 48 78Actual return less expected return on pension scheme assets 2,702 354Experience gains and losses arising on the pension scheme liabilities (4) (601)Changes in assumptions underlying the present value of the scheme (3,538) -liabilitiesUK deferred tax attributable to the pension scheme asset and liability 252 74adjustments Total recognised gains and losses relating to the year 13,587 4,839transferred to reservesFRS 17 prior year adjustment as set out in note 7 (6,288) Total recognised gains and losses since the 2004 annual report and 7,299financial statements Reconciliation of movement in Group shareholders' (deficit) / funds 52 weeks to 53 weeks to 31 December 31 December 2005 2004 (as restated **) £'000 £'000Profit for the financial period 14,127 4,934Dividends paid (8,119) (2,320)Consideration for the purchase of own shares (24,168) (172)Sale of own shares by the ESOP trust 9 16Currency translation differences on foreign currency net investments 48 78Actual return less expected return on pension scheme assets 2,702 354Experience gains and losses arising on the pension scheme liabilities (4) (601)Changes in assumptions underlying the present value of the scheme (3,538) -liabilitiesUK deferred tax attributable to the pension scheme asset and liability 252 74adjustments Net (decrease) / increase in shareholders' funds (18,691) 2,363Prior year adjustments:Shareholders' funds at the beginning of the period as previously stated 13,269 17,101FRS 17 adjustment (6,288) (6,104)FRS 21 adjustment 8,119 1,740Shareholders' funds at the beginning of the period as restated 15,100 12,737 Shareholders' (deficit) / funds at the end of the period (3,591) 15,100 * The comparative figures for the 53 weeks ended 31 December 2004 have beenrestated due to the full adoption of FRS 17 - Retirement Benefits with effectfrom 1 January 2005 as set out in note 7. ** The comparative figures as at 31 December 2004 have been restated due to boththe full adoption of FRS 17 - Retirement Benefits and FRS 21 - Events after theBalance Sheet Date with effect from 1 January 2005 as set out in note 7. Andrews Sykes Group plcNotes to the accountsFor the 52 weeks ended 31 December 2005 1. Segmental analysis The Group's turnover may be analysed between the followingprincipal activities: 52 weeks to 53 weeks to 31 December 2005 31 December 2004 Continuing Discontinued Continuing Discontinued activities activities Total activities activities TotalActivity: £'000 £'000 £'000 £'000 £'000 £'000Hire 34,459 1,930 36,389 33,991 6,707 40,698Sales 7,024 2,485 9,509 8,143 3,857 12,000Installation 9,190 - 9,190 9,982 - 9,982 Total 50,673 4,415 55,088 52,116 10,564 62,680 The impact of discontinued activities on turnover (both by geographical originand destination), profit before interest and tax and net assets in the tablesbelow relates mainly to the United Kingdom. The geographical analysis of the Group's turnover was asfollows:By origination: 52 weeks to 53 weeks to 31 December 31 December 2005 2004 £'000 £'000United Kingdom 48,041 56,332Rest of Europe 3,674 2,918Middle East and Africa 3,373 3,430 55,088 62,680 By destination: 52 weeks to 53 weeks to 31 December 31 December 2005 2004 £'000 £'000United Kingdom 47,612 55,571Rest of Europe 3,737 3,154Middle East and Africa 3,478 3,505Rest of World 261 450 55,088 62,680 The analysis of profit before interest and tax and net (liabilities) / assets by geographical origin was as follows: Profit before Net (liabilities) / assets interest and tax including pension liability 52 weeks to 53 weeks to As at As at 31 December 31 December 31 December 31 December 2005 2004 2005 2004 (as (as restated) restated) £'000 £'000 £'000 £'000United Kingdom 16,141 6,146 17,642 22,969Rest of Europe 1,155 988 1,785 1,391Middle East and Africa 512 754 2,144 1,439 17,808 7,888 21,571 25,799 Net debt (19,658) (2,930)Taxation (1,060) (1,099)Pension liability (4,434) (6,660) (3,581) 15,110 Andrews Sykes Group plcNotes to the accountsFor the 52 weeks ended 31 December 2005 2. Earnings per share The basic figures have been calculated by reference to the weighted averagenumber of ordinary shares in issue, excluding those in the ESOP reserve, duringthe period of 50,156,508 (53 weeks ended 31 December 2004: 57,967,089). The calculation of the diluted earnings per ordinary share is based on theprofits as set out in the table below and on 50,168,119 (52 weeks ended 31December 2004: 60,300,966) ordinary shares. The share options have a dilutiveeffect for the period calculated as follows: 52 weeks to 31 December 2005 53 weeks to 31 December 2004 (as restated) Total Continuing Total No. of Continuing earnings earnings earnings earnings No. of shares shares £'000 £'000 £'000 £'000Basic earnings/weighted average 7,646 14,127 50,156,508 4,713 4,934 57,967,089number of shares Weighted average number of sharesunder option 24,932 4,093,505Number of shares that would havebeen issued at fair value (13,321) (1,759,628) Earnings/ diluted weighted 7,646 14,127 50,168,119 4,713 4,934 60,300,966average number of sharesDiluted earnings per ordinary 15.24p 28.16p 7.82p 8.18pshare (pence) 3. Exceptional administrative expenses The following item has been disclosed on the face of the profit and lossaccount due to its size: 52 weeks to 53 weeks to 31 December 31 December 2005 2004 £'000 £'000Exceptional costs of cash cancellation offer - 4,872 On 18 November 2004 the Board of Andrews Sykes Group plc made a cashcancellation offer to all of the Company's share option holders. The priceoffered was £1.95 per share and the offer remained open for acceptance until 8December 2004. 4. Reconciliation of operating profit to net cash inflow from operating activities 52 weeks to 53 weeks to 31 December 31 December 2005 2004 (as restated) £'000 £'000Operating profit 11,404 7,889Goodwill amortisation 14 14Depreciation 4,280 5,489Profit on sale of fixed assets (336) (959)Decrease in stocks 37 674Increase in debtors (591) (29)Decrease in creditors and provisions (4,612) (1,401) Net cash inflow from operating activities 10,196 11,677 5. Exceptional profit / (loss) and cash received on the disposal ofbusinesses The exceptional credits / (charges) during the period were as follows: 52 weeks to 53 weeks to 31 December 31 December 2005 2004 £'000 £'000Profit on disposal of subsidiary undertakings 6,564 -Provisions for onerous lease commitments (160) (305) 6,404 (305) Profit on disposal of subsidiary undertakings On 6 May 2005 the Group sold its subsidiary undertaking, Accommodation HireLimited (AHL). AHL, which specialised in the hire and sale of temporaryaccommodation units and toilet facilities, was regarded as a non core activityand was managed on a largely autonomous basis separate from the rest of thegroup. On 3 October 2005 the Group sold another subsidiary undertaking, EngineeringAppliances Limited (EA), to its principal supplier. EA was also a non corebusiness activity specialising in compensating bellows, expansion joints and de-airators for pipe work and ducting. The assets sold and consideration received on the sale of these subsidiaries isset out in the table below: Sale of Sale of Total Accommodation Engineering 52 weeks to Hire Limited Appliances 31 December Limited 2005 £'000 £'000 £'000Tangible fixed assets 3,231 74 3,305Stocks - 373 373Debtors 1,476 787 2,263Creditors (908) (402) (1,310)Cash at bank / (bank overdraft) 439 (225) 214Corporation tax (32) 25 (7)Deferred tax 118 40 158Bank loans (1,225) - (1,225)Net assets sold 3,099 672 3,771Profit / (loss) on disposal 6,683 (119) 6,564Total net consideration 9,782 553 10,335 Satisfied by: Cash received net of disposal costs paid 9,535 669 10,204Deferred consideration receivable less disposal costs 247 (116) 131payable 9,782 553 10,335 Provisions for onerous lease commitments The Group has various onerous property lease commitments inherited from the CoxPlant business which was sold during 2002. During both the current and previousfinancial years the directors have re-assessed the level of provisions requiredin respect of these commitments and have accordingly adjusted the onerous leaseprovision. This has resulted in a charge to the profit and loss account of£160,000 (53 weeks ended 31 December 2004: £305,000). 6. Analysis of net debt As at Cash flow Disposal of Other non As at subsidiaries cash 31 December excluding movements 31 December 2005 cash 2004 £'000 £'000 £'000 £'000 £'000Cash 10,342 1,491 - 33 8,818Bank deposit - (477) - - 477 Total cash at bank and in hand 10,342 1,014 - 33 9,295 Debt due in one year (5,000) 6,000 1,225 (9,735) (2,490)Debt due after one year (25,000) (25,000) - 9,735 (9,735) Gross debt (30,000) (19,000) 1,225 - (12,225) Net debt (19,658) (17,986) 1,225 33 (2,930) Andrews Sykes Group plcNotes to the accountsFor the 52 weeks ended 31 December 2005 7. Prior year adjustment The total of the prior year adjustments arising from the application of FRS 17 -Retirement Benefits and FRS 21 - Events after the Balance Sheet date areanalysed as follows: The opening consolidated equity shareholders' funds at 27 December 2003 were restatedas follows: Equity shareholders' funds £'000 £'000Equity shareholders' funds at 27 December 2003 as previously stated 17,101Adoption of FRS 17 as at 27 December 2003 (6,104)Liability for 2003 final dividend not declared at 27 December 2003 1,740 Total prior period adjustments (4,364) Equity shareholders' funds at 27 December 2003 as restated 12,737 The closing consolidated equity shareholders' funds at 31 December 2004 were restatedas follows: Equity shareholders' funds £'000 £'000Equity shareholders' funds at 31 December 2004 as previously stated 13,269Adoption of FRS 17 as at 31 December 2004 (6,288)Liability for 2004 final dividend not declared at 31 December 2004 8,119 Total prior period adjustments 1,831 Equity shareholders' funds at 31 December 2004 as restated 15,100 The impact of adopting FRS 17 on the current period profit and loss account is acredit of approximately £30,000. The impact of adopting FRS 21 on the currentperiod reserved movement is a charge of approximately £8.1 million. 8. The tax charge for the year was £2,943,000 (53 weeks ended 31 December2004: £2,236,000) which represents an overall effective tax charge of 17.2% (53 weeks ended 31 December 2004: 31.2%). This year the tax charge is lower than the standard 30% UK tax rate primarilydue to the exceptional profit on the disposal of the businesses of £6,564,000not being subject to corporation tax and the benefit of certain prior year taxadjustments. The effective rate of tax in both years has been increased by nontax deductible items in the UK, withholding tax written off and the taxation ofcertain overseas profits at different tax rates from those prevailing in the UK. 9. The financial information set out above has been prepared using accountingpolicies that are consistent with those adopted in the statutory accounts forthe 53 weeks ended 31 December 2004 with the exception of the adoption of bothFRS 17 - Retirement Benefits and FRS 21 - Events after the Balance Sheet Date.Both these standards are applicable for the first time this year and have aprior year impact as detailed in note 7. FRS 22 - Earnings per Share and therelevant paragraphs of FR 25 - Financial Instruments: Presentation andDisclosure have also been applied but have no impact. 10. The financial information set out above does not constitute the Group'sstatutory accounts for the 52 weeks ended 31 December 2005 or the 53 weeks ended31 December 2004 but it is derived from those accounts. The financial statementsfor the 53 weeks ended 31 December 2004 have been filed and those for the 52weeks ended 31 December 2005 will be filed with the Registrar of Companies. TheCompany's auditors gave unqualified reports on the accounts for both theseperiods and the reports did not contain a statement under section 237 (2) or (3)of the Companies Act 1985. 11. Copies of the Annual Report and Financial Statements will be circulated toshareholders shortly and will be available from the Registered office of theCompany; Premier House, Darlington Street, Wolverhampton, WV1 4JJ. 12. The Company's Annual General Meeting will be held at 10.30 a.m. on 7 June2006 at Floor 5, 10 Bruton Street, London, W1J 6PX. This information is provided by RNS The company news service from the London Stock Exchange