Andrew Sykes Regulatory News (ASY)

25 Apr 2005 07:00

Andrews Sykes Group PLC25 April 2005 Andrews Sykes Group plc (the "Company") 25 April 2005 Preliminary Results for the 53 weeks ended 31 December 2004 FINANCIAL HIGHLIGHTS • EBITDA* from continuing operations £17.1 million. • Profit on ordinary activities before exceptional items and taxation £12.4million.** • Net debt reduced by £1.8 million from last year at £2.9 million representing 22.1% of equity shareholders' funds. • Adjusted diluted earnings per share 14.23 pence. SUMMARY OF RESULTS 53 weeks ended 52 weeks ended 31 December 2004 27 December 2003 £'000 £'000Turnover from continuing operations 62,680 68,252EBITDA* from continuing operations 17,060 19,666Profit on ordinary activities before exceptional items and 12,364 13,976taxation **Operating profit 7,644 14,446Profit on ordinary activities after taxation 4,945 9,957Basic earnings per share (pence) 8.53p 16.82pAdjusted diluted earnings per share (pence) 14.23p 15.30pInterim dividend per share (pence) 1.0p -Proposed dividend per share (pence) 14.0p 3.0pNet debt 2,930 4,723Gearing 22.1% 27.6% * Earnings before interest, depreciation, exceptional items and goodwill charges (as reconciled onthe face of the consolidated profit and loss account). ** PBT £7,187,000 (2003: £14,574,000) add back adjustments following the sale of a business £305,000(2003: less £598,000) and exceptional share option cash cancellation costs of £4,872,000 (2003:£Nil). Chairman's Statement Summary of results I am pleased to be able to report that your Group has achieved a satisfactoryresult for the year 2004, despite unfavourable weather conditions. Compared with2003 the Group's profit on ordinary activities before tax and exceptionalcharges was £12.4m, compared with £14.0m last year (PBT £14.6m less £0.6mexceptional credits). This is reduced to £7.2m after charging exceptional itemsof £4.9m for the cash cancellation of employee share options and £0.3m leaseprovisions on the disposal of Cox Plant. Profit after tax amounted to £4.9m.Consequently the adjusted diluted earnings per share decreased from 15.3 penceto 14.2 pence but the basic earnings per share reduced further from 16.8 penceto 8.5 pence due to the effect of the exceptional items noted above. 2004 was a year of consolidation, reflecting a hiatus in the UK market place,exacerbated by an unusual combination of weather conditions: a warm winter, anextended period of low water tables caused by a year of low rainfall, and a coolsummer. We continue to focus on controlling costs and re-aligning the cost basetowards selling activity in order to be able to take advantage of any tradingopportunities that become available. Despite the exceptional cash outflows of £4.9m for the cancellation of theemployee share options and £0.6m attributable to purchase of own shares, netdebt reduced from £4.7m last year to £2.9m at 31 December 2004. I consider the Group has performed satisfactorily in a difficult tradingenvironment and is well placed to compete in a competitive market sector. Overview of continuing operations Turnover from continuing operations decreased from £68.3m to £62.7m andoperating profit before exceptional items from £14.4m to £12.5m in 2004(operating profit of £7.6m add back £4.9m exceptional costs). The downturnaffected the UK core businesses especially Hire whose turnover decreased from£38.9m to £36.5m. The operating profits of our main UK businesses fell from£11.5m to £10.1m. Although all product ranges were affected due to adverseweather conditions, the lack of prolonged summer conditions in 2004 compared tothe record temperatures of 2003 meant air conditioning was especially affected. The UK fixed air conditioning company, Andrews Air Conditioning andRefrigeration, achieved an operating profit of £0.6m compared to £0.7m in theprevious year. Although turnover decreased by £0.7m margins improved and thevalue of gross margin was maintained. Despite a £1.6m decrease in turnover, Accommodation Hire, our subsidiary thatspecialises in the hire of temporary accommodation units and toilet facilities,achieved an operating profit of a similar level to that in 2003. Engineering Appliances, the specialist heating and ventilation business, sawturnover fall by £0.9m from £3.8m to £2.9m. The Group's well established heating and air conditioning business in TheNetherlands had a successful year achieving an operating profit of £1.1mcompared to £0.9m last year. Similarly our operation in the Middle East,Khansaheb Sykes LLC, increased its profits to £0.4m from £0.3m last year. I remain confident that our strategy of continuing to concentrate upondeveloping the UK specialist hire and rental market by organic growthsupplemented by niche market acquisitions offers opportunity for further profitgrowth and added shareholder value. Earnings per share and buy back programme As set out in the Note 9 of the Financial Statements, the adjusted dilutedearnings per share excluding exceptional items is 14.2 pence compared with 15.3pence last year. Basic earnings per share was 8.5 pence compared with 16.8pence 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 reported in my interim statement, the Board declared an interim dividend of1.0 pence per ordinary share in respect of the year ended 31 December 2004 andthis was paid on 4 November 2004. The Board is now pleased to propose a finalspecial dividend of 14.0 pence per share, to return surplus cash toshareholders. This will be paid on 15 June 2005 to shareholders on the registeron 13 May 2005. Outlook Expectations for the first quarter are broadly similar to the last quarter of2004. With costs under control the business is well positioned to takeadvantage of market opportunities as they arise. I would therefore expect theGroup to achieve a better year in 2005. JG MurrayChairman22 April 2005 Andrews Sykes Group plcConsolidated profit and loss accountFor the 53 weeks ended 31 December 2004 53 weeks ended 31 December 2004 52 weeks ended 27 December 2003 Before Exceptional Total Total exceptional items items £'000 £'000 £'000 £'000 Turnover 62,680 - 62,680 68,252Cost of sales (30,286) - (30,286) (34,084) Gross profit 32,394 - 32,394 34,168Distribution costs (9,682) - (9,682) (9,647)Administrative costs (10,235) (4,872) (15,107) (10,080)Other operating income 39 - 39 5 Operating profit / (loss) 12,516 (4,872) 7,644 14,446 EBITDA* 17,060 - 17,060 19,666 Depreciation and asset (4,530) - (4,530) (5,206)disposals Operating profit before 12,530 - 12,530 14,460goodwillamortisation and exceptionalitems Exceptional items - (4,872) (4,872) -Goodwill amortisation (14) - (14) (14) Operating profit / (loss) 12,516 (4,872) 7,644 14,446 Income from other participating interests 304 - Adjustments following the disposal of a business - (305) 598discontinued Profit before interest and 7,643 15,044taxation Net interest payable (456) (470) Profit on ordinary activities before taxation 7,187 14,574 Tax on profit on ordinary (2,242) (4,617)activities Profit on ordinary activities after taxationbeing profit for the financial period 4,945 9,957 Dividends paid and proposed on equity shares (8,699) (1,740) Retained (loss) / profit for the financial (3,754) 8,217periodattributable to equityshareholders Andrews Sykes Group plcConsolidated profit and loss accountFor the 53 weeks ended 31 December 2004 (continued) Basic earnings per ordinary 8.53p 16.82pshare Diluted earnings per share 8.20p 16.25pAdd back: Goodwill 0.02p 0.02p amortisation Exceptional items 6.01p (0.97)p Adjusted diluted earnings per 14.23p 15.30pshare Dividends per share: Equity shares 15.0p 3.0p Activities in both the current and preceding periods derive from continuingoperations. *Earnings before interest, taxation, depreciation and amortisation excludingexceptional items Andrews Sykes Group plcConsolidated Balance SheetAt 31 December 2004 31 December 27 December 2004 2003 £'000 £'000Fixed assetsIntangible assets: Goodwill 45 59Tangible fixed assets 15,876 18,015Investments 164 164 16,085 18,238Current assetsStocks 4,942 5,616Debtors 15,230 14,953Cash at bank and in hand 9,295 11,251 29,467 31,820 Creditors: Amounts falling due within one yearBank loans (2,490) (3,749)Other creditors (9,989) (11,173)Proposed dividends (8,119) (1,740)Corporation and overseas tax (1,099) (3,191) (21,697) (19,853) Net current assets 7,770 11,967 Total assets less current 23,855 30,205liabilities Creditors: Amounts falling due after more than oneyearBank loans (9,735) (12,225) Provisions for liabilities and charges (841) (869) Net assets 13,279 17,111 Capital and reservesCalled-up share capital 11,598 11,615Share premium account 10,678 10,678Revaluation reserve 746 752Other reserve 7,389 7,378Profit and loss account (17,123) (13,284)ESOP reserve (19) (38)Equity shareholders' funds 13,269 17,101 Minority interests (equity) 10 10Total capital employed 13,279 17,111 Analysis of net debt Cash at bank and in hand 9,295 11,251Bank loans (12,225) (15,974) Net debt (2,930) (4,723) As a percentage of equity shareholders' funds 22.1% 27.6% Andrews Sykes Group plcConsolidated cash flow statementFor the 53 weeks ended 31 December 2004 53 weeks ended 52 weeks ended 31 December 2004 27 December 2003 £'000 £'000 Net cash inflow from operating activities 11,677 17,329 Dividends received from participating 139 -interests Return on Investments and servicing of financeInterest received 410 335Interest paid (865) (828)Net cash outflow returns on Investments and servicing of (455) (493)finance Cash outflow for taxation (4,288) (3,214) Capital expenditure and financial investmentPurchase of tangible fixed (3,936) (7,405)assetsSale of tangible fixed assets 1,483 868 Net cash outflow for capital expenditure and financial (2,453) (6,537)Investment Acquisitions and disposalsCash received following the disposal of a - 1,500business Equity dividends paid (2,320) - Cash inflow before the use of liquid resources and 2,300 8,585financing Management of liquid resourcesMovement in bank deposits (1) 3,862 FinancingIssue of ordinary share capital net of issue - 252costsLoans repaid (3,749) (3,740)New loans drawn down - 1,259Purchase of own shares for (630) (3,883)cancellationSale of own shares by ESOP 16 176Purchase of own shares by ESOP - (88)Net cash outflow from (4,363) (6,024)financing (Decrease) / increase in cash in the period (2,064) 6,423 Andrews Sykes Group plcNotes to the financial statementsFor the 53 weeks ended 31 December 2004 1. Segmental analysis The Group's turnover may be analysed between the following principalactivities: 53 weeks ended 52 weeks ended 31 December 2004 27 December 2003 Continuing Continuing operations operations £'000 £'000 Hire 40,698 43,537Sales 12,000 13,990Installation 9,982 10,725Total 62,680 68,252 The Integrated nature of the Group's operations does not permit a meaningful analysis of profitbefore interest and tax or net assets by the above activities. The results and net assets are attributable to the Group's principal activity, the hire, sale andinstallation of a range of equipment including portable heating, drying, ventilation, pumps andtemporary accommodation. The geographical analysis of the Group's turnover wasas follows: By geographical origin By geographical destination 53 weeks ended 52 weeks ended 53 weeks 52 weeks 27 December ended 31 ended 27 31 December 2003 December December 2004 2004 2003 £'000 £'000 £'000 £'000United Kingdom 56,332 61,925 55,571 60,196Rest of Europe 2,918 3,239 3,154 4,388Middle East and 3,430 3,088 3,505 3,153AfricaRest of World - - 450 515 62,680 68,252 62,680 68,252 The analysis of profit before interest and tax and net assets by geographical originwas as follows: Profit before interest and tax Net assets Net assets 53 weeks ended 52 weeks ended 53 weeks 52 weeks 31 December 27 December ended 31 ended 27 2004 2003 December December 2004 2003 £'000 £'000 £'000 £'000United Kingdom 5,901 13,983 22,597 24,211Rest of Europe 988 771 1,391 1,155Middle East and 754 290 1,439 1,399Africa 7,643 15,044 25,427 26,765 Net debt (2,930) (4,723)Taxation and dividends payable (9,218) (4,931) 13,279 17,111 Andrews Sykes Group plcNotes to the financial statementsFor the 53 weeks ended 31 December 2004 2. Reconciliation of operating profit to net cash inflow from operatingactivities 53 weeks 52 weeks ended 31 ended 27 December 2004 December 2003 £'000 £'000Operating profit 7,644 14,446Goodwill 14 14amortisationDepreciation 5,489 5,575Profit on sale of tangible (959) (369)fixed assetsDecrease / (increase) in 674 (924)stocksIncrease in debtors (29) (847)Decrease in creditors and (1,156) (566)provisions Net cash inflow from operating activities 11,677 17,329 3. Reconciliation of net cash flow to movement in netdebt 53 weeks 52 weeks ended 31 ended 27 December 2004 December 2003 £'000 £'000(Decrease) / increase in cash paid in the period (2,064) 6,423Cash outflow from movement in net debt 3,749 2,481Cash outflow / (inflow) from movement in liquid 1 (3,862)resources Change in net debt resulting from cash flows 1,686 5,042 Translation 107 (14)differences Movement in period 1,793 5,028 Opening net debt (4,723) (9,751) Closing net debt (2,930) (4,723) 4. Consolidated statement of total recognised gains and loss 53 weeks 52 weeks ended 31 ended 27 December 2004 December 2003 £'000 £'000Profit for the financial 4,945 9,957periodCurrency translation differences on foreign currency net investments 78 (18) Total recognised gains and losses in the period 5,023 9,939 Andrews Sykes Group plcNotes to the financial statementsFor the 53 weeks ended 31 December 2004 5. Reconciliation of movements in Group shareholders' funds 53 weeks 52 weeks ended 31 ended 27 December 2004 December 2003 £'000 £'000Profit for the financial 4,945 9,957periodDividends (8,699) (1,740)Other recognised gains and 78 (18)lossesIssue of ordinary - 252sharesPurchase of own shares for cancellation (172) (4,341)Sale of own shares by the ESOP trust 16 176Purchase of own shares by the ESOP trust - (88)Net (decrease) / increase in shareholders' (3,832) 4,198fundsShareholders' funds at the beginning of the 17,101 12,903periodShareholders' funds at the end of the period 13,269 17,101 6. Earnings per ordinary share The basic figures have been calculated by reference to the weighted averagenumber of ordinary 20 pence shares in issue during the period of 57,967,089 (52weeks ended 27 December 2003: 59,186,675). The calculation of the diluted earnings share is based on a profit of £4,945,000(52 weeks ended 27 December 2003: £9,957,000) and on 60,300,966 (52 weeks ended27 December 2003: 61,255,953) ordinary shares. The share options have a dilutiveeffect for the period ended 31 December 2004 calculated as follows: 53 weeks ended 31 52 weeks ended 27 December 2004 December 2003 Earnings Number of Earnings Number of £'000 shares £'000 shares Basic earnings / weighted average number of 4,945 57,967,089 9,957 59,186,675shares Weighted average number of share under 4,093,505 4,372,604option Number of shares that would have been issued of fair (1,759,628) (2,303,326)value Earnings / diluted weighted average 4,945 60,300,966 9,957 61,255,953number of shares Diluted earnings per ordinary share 8.20p 16.25p(pence) The adjusted diluted earnings per share excluding goodwill amortisation andexceptional items is based upon the weighted average number of ordinary sharesas set out in the table above. The earnings can be reconciled to the adjustedearnings as follows: 53 weeks ended 52 weeks ended 31 27 December 2004 December 2003 £'000 £'000 Earnings 4,945 9,957Goodwill 14 14amortisationExceptional items (net of tax) Costs of cash cancellation offer 3,410 - Provision for warranty and closure - (348) provisions Provision against doubtful debts - (250) Provision for onerous lease 214 - commitments Adjusted earnings 8,583 9,373 Adjusted diluted earnings per share 14.23p 15.30p(pence) The above figures have been disclosed to demonstrate underlying performance . Andrews Sykes Group plcNotes to the financial statementsFor the 53 weeks ended 31 December 2004 7. The tax charge for the year was £2,242,000 (52 weeks ended 27 December 2003: £4,617,000) which represents an overall effective tax charge of 31.2% (52 weeks ended 27 December 2003: 31.7%). The tax charge is higher than the standard 30% UK corporation tax rate primarily due to non tax deductible items in the UK, withholding tax written off and the taxation of certain overseas profits at different tax rates. 8. The financial information set out above has been prepared using accounting policies that are consistent with those adopted in the statutory accounts for the 53 weeks ended 31 December 2004. 9. The financial information set out above does not constitute the Group's statutory accounts for the 53 weeks ended 31 December 2004 or the 52 weeks ended 27 December 2003 but it is derived from those accounts. The financial statements for the 52 weeks ended 27 December 2003 have been filed and those for the 53 weeks ended 31 December 2004 will be filed with the Registrar of Companies. The Company's auditors gave unqualified reports on the accounts for both these periods and the reports did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. 10. Copies of the Annual Report and Financial Statements will be circulated to shareholders shortly and will be available from the Registered office of the Company, Premier House, Darlington Street, Wolverhampton, WV1 4JJ. 11. The Company's Annual General Meeting will be held at 11.00 am on 8 June 2005 at Floor 5, 10 Bruton Street, London, W1J 6PX. This information is provided by RNS The company news service from the London Stock Exchange