Andrew Sykes Regulatory News (ASY)

29 Sep 2005 07:00

Andrews Sykes Group PLC29 September 2005 Andrews Sykes Group plc (the "Company") 29 September 2005 Interim Results for the 26 weeks to 2 July 2005 Chairman's Statement Overview and financial highlights Trading from continuing operations has been difficult across the UK operationsof the Group during the first half of 2005, due to a competitive market and lowdemand caused by the unfavourable weather conditions of a mild, dry winter. Nevertheless the Group has continued to generate cash and has successfullydisposed of a non-core subsidiary company, Accommodation Hire Limited, duringthe first half of 2005. The initial net cash inflow from this disposal in thefirst half year amounted to £9.2 million after costs. The financial highlights for the first six months of 2005 were as follows: • EBITDA (as reconciled on the face of the profit and loss account) derived from continuing activities decreased from £8 million in 2004 to £5.5 million this period. • Profit on ordinary activities before tax increased from £6.2 million in 2004 to £10.5 million after the exceptional profit on the sale of the accommodation business of £6.8 million. • After this exceptional profit, basic earnings per share from total operations increased from 7.39 pence in 2004 to 16.70 pence this period. • Despite the payment of the 2004 special final dividend of £8.1 million during the period, at 2 July 2005 the Group has net funds of £1.3 million compared with net debt of £2.9 million at 31 December 2004. In common with many other UK companies, shareholders' funds have been adverselyimpacted by the full adoption of a new accounting standard, FRS 17 - Retirementbenefits, which became effective from 1 January 2005. The net effect of thisadjustment has been to reduce shareholders' funds by approximately £6 million. Capital reduction, tender offer and dividend policy On 24 August 2005 the proposed capital reduction and tender offer, full detailsof which were circulated to shareholders on 28 July 2005, was approved by themembers at an Extraordinary General Meeting. The offer was subsequently approvedby the High Court on 14 September 2005 and on 26 September 2005 payment of thetender offer consideration of £23.8 million was despatched to those members whoaccepted the offer. The Group's net debt subsequent to the tender offer isapproximately £24 million after taking into account a payment of £3 million intothe company's defined benefit pension scheme. The Board has decided not to declare an interim dividend in respect of thecurrent financial period. As stated in the tender offer circular, the Boardintends to review its dividend policy next at the time of the announcement ofthe preliminary results for the financial period ending 31 December 2005 atwhich point it will communicate its decision to shareholders. Prospects The period of comparatively poor trading appears to have ended at the end ofMay. The business performance for the month of June 2005 showed an improvementcompared with June 2004 and trading in the third quarter of 2005, to the date ofthis statement, shows an improvement over the same period in 2004. JG MurrayChairman 29 September 2005 Andrews Sykes Group plcConsolidated Profit and Loss AccountFor the 26 weeks ended 2 July 2005 26 weeks to 2 July 2005 27 weeks to 3 July 2004 53 weeks to 31 December 2004 (as restated **) (as restated **) Continuing Discontinued Total Continuing Discontinued Total Continuing Discontinued Total activities activities activities activities activities activities £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Turnover 24,342 2,416 26,758 27,614 3,793 31,407 54,982 7,698 62,680 Cost of sales (12,280) (1,381) (13,661) (13,096) (2,195) (15,291) (25,845) (4,441) (30,286) Gross profit 12,062 1,035 13,097 14,518 1,598 16,116 29,137 3,257 32,394 Distribution costs (3,969) (430) (4,399) (4,145) (600) (4,745) (8,434) (1,248) (9,682) Administrative (4,467) (271) (4,738) (4,257) (547) (4,804) (8,863) (1,127) (9,990)expenses - ordinaryAdministrative - - - - - - (4,872) - (4,872)expenses -exceptional (note 4)Total administrative (4,467) (271) (4,738) (4,257) (547) (4,804) (13,735) (1,127) (14,862)expenses Other operating 2 - 2 18 - 18 39 - 39incomeOperating profit 3,628 334 3,962 6,134 451 6,585 7,007 882 7,889 EBITDA * 5,478 580 6,058 8,028 890 8,918 10,792 1,641 12,433 Depreciation and (1,843) (246) (2,089) (1,887) (439) (2,326) (3,771) (759) (4,530)asset disposals Operating profit 3,635 334 3,969 6,141 451 6,592 7,021 882 7,903before goodwillamortisation Goodwill amortisation (7) - (7) (7) - (7) (14) - (14) Operating profit 3,628 334 3,962 6,134 451 6,585 7,007 882 7,889 Income from other participating interests - - 304 Exceptional profit / (loss) on the 6,797 - (305)disposal of a business - discontinued (note 6) Profit on ordinary activities before 10,759 6,585 7,888interest and taxation Net interest payable (211) (366) (718) Profit on ordinary activities before 10,548 6,219 7,170 Tax on profit on ordinary activities (868) (1,938) (2,236)taxation Profit on ordinary activities after 9,680 4,281 4,934taxation being profit for the financial period Earnings per share from continuing operations: Basic (pence) 4.60p 6.92p 7.56p Diluted (pence) 4.60p 6.64p 7.27p Earnings per share from total operating results: Basic (pence) 16.70p 7.39p 8.51p Diluted (pence) 16.69p 7.09p 8.18p Dividends paid per equity share (pence, as 14.0p 3.0p 4.0prestated) There were no material acquisitions in any period. * Earnings Before Interest, Taxation, Depreciation and Amortisation. ** The comparative figures for the 27 weeks ended 3 July 2004 and the 53 weeksended 31 December 2004 have been restated due to both the full adoption of FRS17 - Retirement Benefits and FRS 21 - Events after the Balance Sheet Date witheffect from 1 January 2005 as set out in note 8. Andrews Sykes Group plcConsolidated Balance SheetAs at 2 July 2005 2 July 2005 3 July 2004 31 December 2004 (as restated*) (as restated*) £'000 £'000 £'000Fixed assetsIntangible assets: Goodwill 38 52 45Tangible assets 11,940 16,755 15,876Investments 164 164 164 12,142 16,971 16,085Current assetsStocks 4,801 4,950 4,942Debtors 14,002 15,790 15,071Cash at bank and in hand 12,308 10,904 9,295 31,111 31,644 29,308Creditors falling due within one yearLoans and overdrafts (2,000) (3,119) (2,490)Other creditors (7,738) (9,197) (9,989)Corporation and overseas tax (1,267) (2,680) (1,099) (11,005) (14,996) (13,578) Net current assets 20,106 16,648 15,730 Total assets less current liabilities 32,248 33,619 31,815 Creditors falling due after more than one yearLoans (9,000) (11,980) (9,735) Provisions for liabilities (339) (24) (310) Net assets excluding pension liability 22,909 21,615 21,770 Pension Liability (6,050) (6,628) (6,660) Net assets including pension liability 16,859 14,987 15,110 Capital and reservesCalled - up share capital 11,598 11,598 11,598Share premium account 10,678 10,678 10,678Revaluation reserve 743 749 746Other reserves 7,395 7,392 7,389Profit and loss account (13,559) (15,415) (15,292)ESOP reserve (6) (25) (19)Equity shareholders' funds 16,849 14,977 15,100 Minority interests 10 10 10 16,859 14,987 15,110 * The comparative figures as at 3 July 2004 and 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 8. Andrews Sykes Group plcConsolidated cash flow statementFor the 26 weeks ended 2 July 2005 26 weeks 27 weeks to 53 weeks to to 2 July 3 July 31 December 2005 2004 2004 £'000 £'000 £'000 Net cash inflow from operating activities as reconciled in note 5 4,258 6,555 11,677 Dividend received from participating interests - - 139 Returns on investments and servicing of financeInterest received 245 173 410Interest paid (353) (396) (865) Net cash outflow for returns on investments and servicing of finance (108) (223) (455) Cash outflow for taxation (642) (2,175) (4,288) Capital expenditurePurchase of tangible fixed assets (1,856) (2,002) (3,936)Sale of tangible fixed assets 395 818 1,483 Net cash outflow for capital expenditure (1,461) (1,184) (2,453) Acquisitions and disposalsCash received on the disposal of subsidiary undertakings as 9,614 - -set out in note 6Net cash balances disposed of with subsidiary (439) - - Net cash inflow for acquisitions and disposals 9,175 - - Equity dividends paid (8,119) (1,740) (2,320) Cash inflow before the use of liquid resources and financing 3,103 1,233 2,300 Management of liquid resourcesMovement in bank deposits (87) 476 (1) FinancingSale of shares held in ESOP 9 12 16Loan repayments - (875) (3,749)Purchase of own shares - (630) (630)Net cash inflow / (outflow) from financing 9 (1,493) (4,363) Increase / (decrease) in cash in the period 3,025 216 (2,064) Analysis of net funds / (debt)Bank current and deposit accounts and cash in hand 12,308 10,904 9,295Total loans and overdrafts (11,000) (15,099) (12,225) Net funds / (debt) as reconciled in note 7 1,308 (4,195) (2,930)Net funds / (debt) as a percentage of shareholders' funds (as restated) 7.76% (28.01%) (19.40%) Andrews Sykes Group plcOther Consolidated StatementsFor the 26 weeks ended 2 July 2005 Consolidated statement of total recognised gains and losses 26 weeks to 27 weeks to 53 weeks to 31 2 July 2005 3 July 2004 December 2004 (as restated*) (as restated*) £'000 £'000 £'000 Profit for the financial period 9,680 4,281 4,934Currency translation differences on foreign currency net investments (88) (105) 78Actual return less expected return on pension scheme assets 419 (75) 354Experience gains and losses arising on the pension scheme liabilities (38) 24 (601)UK deferred tax attributable to the pension scheme asset (114) 15 74and liability adjustments Total recognised gains and losses relating to the year 9,859 4,140 4,839 FRS 17 prior year adjustment as set out in note 8 (6,288) Total recognised gains and losses since the 2004 annual report and 3,571financial statements Reconciliation of movement in Group shareholders' funds 26 weeks to 2 27 weeks to 3 53 weeks to 31 July 2005 July 2004 December 2004 (as restated**) (as restated**) £'000 £'000 £'000 Profit for the financial period 9,680 4,281 4,934Dividends (8,119) (1,740) (2,320)Consideration for the purchase of own shares - (172) (172)Sale of own shares by the ESOP trust 9 12 16Currency translation differences on foreign currency net investments (88) (105) 78Actual return less expected return on pension scheme assets 419 (75) 354Experience gains and losses arising on the pension scheme liabilities (38) 24 (601)UK deferred tax attributable to the pension scheme asset and (114) 15 74liability adjustments Net increase in shareholders' funds 1,749 2,240 2,363 Shareholders funds at the beginning of the period as previously 13,269 17,101 17,101statedFRS 17 adjustment (6,288) (6,104) (6,104)FRS 21 adjustment 8,119 1,740 1,740Shareholders' funds at the beginning of the period as restated 15,100 12,737 12,737 Shareholders' funds at the end of the period 16,849 14,977 15,100 * The comparative figures for the 27 weeks ended 3 July 2004 and the 53 weeksended 31 December 2004 have been restated due to the full adoption of FRS 17 -Retirement Benefits with effect from 1 January 2005. ** The comparative figures as at 3 July 2004 and 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. Andrews Sykes Group plcNotes to the accountsFor the 26 weeks ended 2 July 2005 1. Basis of preparation The interim report for the 26 weeks ended 2 July 2005 was approved by the Boardon 28 September 2005. The financial information contained in this interim reportdoes not constitute statutory accounts for the Group for the relevant periods.The interim report is neither audited nor reviewed. The results for the 53 weeksended 31 December 2004 have been extracted from the audited financial statementsthat have been filed with the Registrar of Companies. The report of the auditorswas unqualified and did not contain a statement under section 237(2) or (3) ofthe Companies Act 1985. The interim statement has been prepared in accordance with the accountingpolicies set out in the Group's 2004 Annual Report and Financial Statements withthe exception of the adoption of both FRS 17 - Retirement Benefits and FRS 21 -Events after the Balance Sheet date. Both these standards are applicable for thefirst time this period and have a prior year impact as detailed in note 8. FRS22 - Earnings per Share and the relevant paragraphs of FRS 25 - FinancialInstruments, Presentation and Disclosure have also been applied but have noimpact. 2. Segmental analysis The Group's turnover may be analysed between the following principal activities: 26 weeks to 27 weeks to 53 weeks to 2 July 3 July 31 December 2005 2004 2004Activity: £'000 £'000 £'000Hire 17,169 20,195 40,698Sales 5,331 6,135 12,000Installation 4,258 5,077 9,982 Total 26,758 31,407 62,680 The geographical analysis of the Group's turnover was as follows: By origination: 26 weeks to 27 weeks to 53 weeks to 2 July 3 July 31 December 2005 2004 2004 £'000 £'000 £'000United Kingdom 23,574 28,419 56,332Rest of Europe 1,529 1,212 2,918Middle East and Africa 1,655 1,776 3,430 26,758 31,407 62,680 By destination: 26 weeks to 27 weeks to 53 weeks to 2 July 3 July 31 December 2005 2004 2004 £'000 £'000 £'000United Kingdom 23,190 27,892 55,571Rest of Europe 1,561 1,317 3,154Middle East and Africa 1,665 1,832 3,505Rest of World 342 366 450 26,758 31,407 62,680 Andrews Sykes Group plcNotes to the accountsFor the 26 weeks ended 2 July 2005 2. Segmental analysis (continued) The analysis of profit before interest and tax and net assets by geographical origin was as follows: Profit before interest and tax Net assets including pension liability 26 weeks to 27 weeks to 53 weeks to As at As at As at 2 July 2005 3 July 2004 31 December 2 July 2005 3 July 2004 31 December 2004 2004 (as restated) (as restated) (as restated)(as restated) £'000 £'000 £'000 £'000 £'000 £'000 United Kingdom 10,146 5,839 6,146 20,262 25,033 22,969Rest of Europe 387 469 988 813 1,528 1,391Middle East and Africa 226 277 754 1,793 1,929 1,439 10,759 6,585 7,888 22,868 28,490 25,799 Net cash / (debt) 1,308 (4,195) (2,930)Taxation (1,267) (2,680) (1,099)Pension liability (6,050) (6,628) (6,660) 16,859 14,987 15,110 3. Earnings per share The basic figures have been calculated by reference to the weighted averagenumber of 20p ordinary shares in issue, excluding those in the ESOP reserve,during the period of 57,976,672 (27 weeks ended 3 July 2004: 57,968,589). The calculation of the diluted earnings per ordinary share is based on theprofits as set out in the table below and on 57,992,597 (27 weeks ended 3 July 2004: 60,421,720) ordinary shares. The share options have a dilutive effect forthe period calculated as follows: 26 weeks to 2 July 2005 27 weeks to 3 July 2004 (as restated) Continuing Total No. of shares Continuing Total earnings No. of shares earnings earnings earnings £'000 £'000 £'000 £'000 Basic earnings/weighted 2,667 9,680 57,976,672 4,014 4,281 57,968,589average number of sharesWeighted average number of shares under 30,000 4,362,604optionNumber of shares that would have beenissued at fair value (14,075) (1,909,473) Earnings/ diluted weighted average 2,667 9,680 57,992,597 4,014 4,281 60,421,720number of sharesDiluted earnings per ordinary share 4.60p 16.69p 6.64p 7.09p(pence) Andrews Sykes Group plcNotes to the accountsFor the 26 weeks ended 2 July 2005 4. Exceptional administrative expenses The following item has been disclosed on the face of the profit and loss account due to its size: 26 weeks to 27 weeks to 53 weeks to 2 July 3 July 31 December 2005 2004 2004 £'000 £'000 £'000 Exceptional 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. 5. Reconciliation of operating profit to net cash inflow from operating activities 26 weeks to 27 weeks to 53 weeks to 2 July 2005 3 July 2004 31 December 2004 (as restated) (as restated) £'000 £'000 £'000Operating profit 3,962 6,585 7,889Goodwill amortisation 7 7 14Depreciation 2,286 2,847 5,489Profit on sale of fixed assets (197) (521) (959)Decrease in stocks 141 666 674Decrease /( increase) in debtors 20 (1,266) (29)Decrease in creditors and provisions (1,961) (1,763) (1,401) Net cash inflow from operating activities 4,258 6,555 11,677 6. Profit / (loss) and cash received on the disposal of subsidiary undertakings On 6 May 2005 the Group sold its subsidiary undertaking, Accommodation HireLimited (AHL), to Wernick Hire Limited. AHL, which specialised in the hire andsale of temporary accommodation units and toilet facilities, was managed as aseparate business operation and the net assets sold and consideration receivedand receivable are as follows: 26 weeks to 2 July 2005 £'000 Tangible fixed assets 3,231Debtors 1,479Creditors (922)Cash at bank 439Corporation tax (29)Deferred tax 118Bank loans (1,225) Net assets sold 3,091 Profit on disposal 6,797 Total net consideration 9,888 Andrews Sykes Group plcNotes to the accountsFor the 26 weeks ended 2 July 2005 Satisfied by: Cash received net of disposal costs paid 9,614Deferred consideration receivable less disposal costs payable 274 9,888 The exceptional charge of £305,000 in the 53 weeks ended 31 December 2004relates to an adjustment to an onerous lease liability provision in respect ofthe Cox Plant business that was sold by the Group during 2002. 7. Analysis of net funds / (debt) As at Cash Disposal of Other non As at 2 July flow subsidiaries cash 31 December 2005 excluding movements 2004 cash £'000 £'000 £'000 £'000 £'000 Cash 11,744 3,025 - (99) 8,818Bank deposit 564 87 - - 477 Total cash at bank and in hand 12,308 3,112 - (99) 9,295 Debt due in one year (2,000) - 1,225 (735) (2,490)Debt due after one year (9,000) - - 735 (9,735) Gross debt (11,000) - 1,225 - (12,225) Net funds / (debt) 1,308 3,112 1,225 (99) (2,930) 8. 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 equity shareholders' funds at 27 December 2003 were restated as 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 equity shareholders' funds at 31 December 2004 were restated as 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 reserve movement is a charge of approximately £8.1 million. 9. Distribution of interim statement A copy of this statement will be posted to all shareholders and is availablefrom the Company's registered office at Premier House, Darlington Street,Wolverhampton, WV1 4JJ. This information is provided by RNS The company news service from the London Stock Exchange