Final Results

Andrews Sykes Group PLC 25 April 2002 Andrews Sykes Group plc Preliminary Announcement For the 52 weeks ended 29 December 2001 FINANCIAL HIGHLIGHTS Turnover decreased from £86.9 million to £84.2 million EBITDA decreased from £24.1 million to £22.8 million Operating profit before exceptional items increased from £12.7 million to £13.4 million Profit on ordinary activities before taxation and exceptional items increased from £10.3 million to £11.9 million The adjusted diluted earnings per share increased from 7.81 pence to 10.15 pence Cash inflow from operations fell from £27.0 million to £26.6 million In excess of £12.6 million spent of the share buy back programme to enhance shareholder value Cash decreased during the period by £5.2 million Gearing (net debt as a proportion of equity funds) further reduced from 55.3% to 42.2% SUMMARY OF RESULTS 52 weeks ended 52 weeks ended 29 December 2001 30 December 2000 £'000 £'000 Turnover 84,184 86,869 EBITDA* 22,769 24,088 Profit on ordinary activities before taxation and exceptional items 11,916 10,283 Goodwill charges 44 10,217 Profit on ordinary activities before taxation 12,252 500 Operating cash flow per share (diluted basis, pence)** 33.6p 29.8p Adjusted diluted earnings per share (pence) 10.15p 7.81p Gearing 42.2% 55.3% * Earnings before interest, taxation, depreciation, exceptional items and goodwill charges ** Operating cash flow before exceptional items Chairman's statement The 2001 financial year proved to be one of mixed fortunes for our Group. Overall, as shown by the financial highlights, the operating profit before exceptional items was £13.4 million compared with £12.7 million last year. Our strategy to focus upon the UK specialist hire and rental markets continues to be successful. In total, excluding Cox Plant and its subsidiaries, the Group's continuing UK based activities generated an operating profit before exceptional items of £12.2 million compared with £11.8 million last year. The result would have been even better this year had there not been a deterioration in the fixed air conditioning business, which eroded a very satisfactory performance by the main UK based hire and sales operation sector. I am confident that our strategy of organic growth within the UK supplemented by niche acquisitions in the appropriate market sectors remains appropriate and will therefore continue to be followed. On 17 April 2002 we commenced the employee consultation process regarding the proposed sale of the general plant hire business and assets of Cox Plant Limited as the sale negotiations had reached an advanced stage. A further announcement in relation to the proposed disposal will be made in due course. The Board believes that this is a positive move both for the Andrews Sykes Group and for the Cox Plant employees as the new management will be able to direct their efforts to develop and market the general plant business. We will continue with our strategy of focusing upon and investing in the Group's traditional core business activities. Accommodation Hire, however, performed well during 2001 with a turnover of £9.2 million and an operating profit of £1 million. Investment will continue to be made into this business sector which will be further integrated into our traditional core business activities. As reported last year, the Board undertook a full review of our subsidiary, Refrigeration Compressor Remanufacturers Limited, in the light of a decline in the margins being achieved. During the first half of this year the trading performance continued to decline and therefore the operation was closed in the second half of the year. The closure costs are not significant and have been fully absorbed in the reported figures. The Group's well established overseas business in Holland generated an operating profit of £0.6 million this year compared with £0.3 million last year. The operation in the United Arab Emirates performed less well mainly due to a deterioration in the general market conditions in the middle east. This year the operating profit was virtually break even compared with £0.2 million last year. Opportunities to further develop these companies will be pursued as and when they arise. During the period under review the Group has purchased a total of 15,158,838 ordinary 20 pence shares for cancellation at a cost of £12,628,997. During January and February 2002 a further 10,000 ordinary 20 pence shares were purchased for cancellation at a cost of £9,580. The 2001 share buy back programme increased the adjusted diluted earnings per share figure for the current year by approximately one pence per share and the full year effect will be to increase the diluted earnings per share figure by a further one pence. Therefore, as reported in both last years annual report and the half yearly statement, the Board continues to believe that shareholder value will be optimised by a judicious purchase of our own shares coupled with investment in organic growth. At the next Annual General Meeting the Board will request that shareholders vote in favour of a resolution to give authority to purchase up to 12.5% of the ordinary shares in issue. At such time that the Board considers the interests of the shareholders will be best served by the payment of dividends, this policy will be resumed. As I reported in my interim statement John Hall retired from the main Board on 28 February 2002. John was appointed Operations Director of our main UK subsidiary company in June 1990 and he became a main Board Director in December 1994. He made a valuable contribution to the Group over the years and I wish him well in his retirement. The role of Operations Director has temporarily been assumed by Robert Stevens who will be assisted by key members of the senior management team. 2001 was a year of change and development for Andrews Sykes. We consolidated our position as being a market leader in our core business activities. The first quarter of 2002 has not started particularly well for our Group. The winter has continued to be mild. Nevertheless we will persist in our efforts and continue to add value to our shareholders. JG Murray Chairman 24 April 2002 Andrews Sykes Group plc Consolidated profit & loss account For the 52 weeks ended 29 December 2001 Continuing 52 Continuing weeks ended 52 weeks ended 29 December 30 December 2000 2001 Before Total exceptional Exceptional Total items items £'000 £'000 £'000 £'000 Turnover 84,184 86,869 - 86,869 Cost of sales (46,449) (49,904) (9,783) (59,687) Gross profit 37,735 36,965 (9,783) 27,182 Distribution costs (6,753) (6,045) - (6,045) Administrative expenses (17,627) (18,292) - (18,292) Other operating income - 35 - 35 Operating profit 13,355 12,663 (9,783) 2,880 EBITDA * 22,769 24,088 - 24,088 Depreciation and asset disposals (9,370) (10,991) - (10,991) Operating profit before exceptional items and 13,399 13,097 - 13,097 goodwill charges Goodwill charges (44) (434) (9,783) (10,217) Operating profit 13,355 12,663 (9,783) 2,880 Profit on the disposal of property 336 - - - Net interest payable (1,439) (2,380) - (2,380) Profit/(loss) on ordinary activities before 12,252 10,283 (9,783) 500 taxation Tax on profit on ordinary activities (3,914) (3,635) - (3,635) Profit/(loss) on ordinary activities after 8,338 6,648 (9,783) (3,135) taxation being retained profit/(loss) for the financial period attributable to ordinary shareholders Basic earnings/(loss) per ordinary share 10.52p (3.48)p Diluted earnings/(loss) per share 10.51p (3.48)p Add back: Goodwill amortisation 0.06p 0.48p Exceptional items (0.42)p 10.79p Negative dilutive effect 0.00p 0.02p of share options Adjusted diluted earnings per share 10.15p 7.81p Dividends per share: Equity shares 0.00p 0.00p There were no material acquisitions or discontinued operations during either period. * Earnings before interest, taxation, depreciation, and amortisation excluding exceptional items. Andrews Sykes Group plc Consolidated Balance Sheet At 29 December 2001 29 December 30 December 2001 2000 £'000 £'000 Fixed assets Intangible assets: Goodwill 128 172 Tangible fixed assets 24,560 29,775 Investments 605 688 25,293 30,635 Current assets Stocks 4,675 5,758 Overseas tax - 174 Other debtors 17,779 20,941 Cash at bank and in hand 7,821 10,423 30,275 37,296 Creditors: Amounts falling due within one year Loans, overdraft and finance lease obligations (12,350) (20,213) Other creditors (12,229) (12,422) Corporation and overseas tax (2,351) (2,384) (26,930) (35,019) Net current assets 3,345 2,277 Total assets less current liabilities 28,638 32,912 Creditors: Amounts falling due after more than one year Loans (5,000) (5,000) Provisions for liabilities and charges (1,029) (1,160) Net assets 22,609 26,752 Capital and reserves Called up share capital 14,686 17,593 Share premium account 10,421 10,406 Revaluation reserve 762 767 Other reserves 4,236 1,202 Profit and loss account (7,506) (3,226) Equity shareholders' funds 22,599 26,742 Minority interests (equity) 10 10 22,609 26,752 Analysis of net debt Cash at bank and in hand 7,821 10,423 Total loans, overdrafts and finance lease (17,350) (25,213) obligations Net debt (9,529) (14,790) As a percentage of equity shareholders' funds 42.2% 55.3% Andrews Sykes Group plc Consolidated cash flow statement For the 52 weeks ended 29 December 2001 52 weeks 52 weeks ended ended 29 December 30 December 2001 2000 £'000 £'000 Net cash inflow from operating activities 26,648 27,018 Returns on investments and servicing of finance Net interest paid (1,270) (2,145) Net cash outflow for returns on investments and (1,270) (2,145) servicing of finance Cash outflow for taxation (4,005) (2,931) Capital expenditure and financial investment Purchase of own shares by ESOP - (151) Sale of own shares by ESOP 68 - Purchase of tangible fixed assets (5,749) (7,303) Sale of tangible fixed assets 2,057 1,966 Net cash outflow for capital expenditure (3,624) (5,488) Cash inflow before the use of liquid resources and financing 17,749 16,454 Management of liquid resources Movement in bank deposits (2,580) (90) Financing Issue of ordinary share capital net of issue 140 73 costs Loan and loan note repayments (7,800) (7,273) Capital element of finance lease repayments (63) (126) Purchase of own shares (12,629) (2,551) Net cash outflow from financing (20,352) (9,877) (Decrease)/increase in cash in the period (5,183) 6,487 Andrews Sykes Group plc Notes to the financial statements For the 52 weeks ended 29 December 2001 1. Segmental analysis The Group's turnover may be analysed between the following principal products and activities: 52 weeks 52 weeks ended ended 29 December 30 December 2001 2000 £'000 £'000 Product Group: Pumps 19,850 19,387 Heating and ventilation 13,822 12,836 Air conditioning 21,138 22,904 General Plant and accommodation 25,877 28,589 Other 3,497 3,153 Total 84,184 86,869 Activity: Hire 58,891 58,018 Sales 16,269 15,837 Installation 9,024 13,014 Total 84,184 86,869 The integrated nature of the Group's operation does not permit a meaningful analysis of net assets by the above product groups or activities. The results can be further analysed by class of business as follows: Profit before Profit/ exceptionals (loss) Exceptionals & before & goodwill goodwill interest amortisation amortisation and tax Turnover £'000 £'000 £'000 Net assets £'000 £'000 52 weeks ended 29 December 2001: Pumps, heating, ventilation, air 58,307 12,814 (44) 12,770 18,525 conditioning and other General plant and accommodation 25,877 585 336 921 4,084 84,184 13,399 292 13,691 22,609 52 weeks ended 30 December 2000: Pumps, heating, ventilation, air conditioning and other 58,280 11,997 (2,985) 9,012 22,420 General plant and accommodation 28,589 1,100 (7,232) (6,132) 4,332 86,869 13,097 (10,217) 2,880 26,752 The geographical analysis of the Group's turnover was as follows: By geographical origin By geographical destination 52 weeks 52 weeks 52 weeks 52 weeks ended ended ended ended 29 December 30 December 29 December 30 December 2001 2000 2001 2000 £'000 £'000 £'000 £'000 United Kingdom 79,248 82,203 77,714 80,865 Rest of Europe 2,284 1,849 3,311 2,575 Middle East and Africa 2,652 2,532 2,834 2,865 The Americas - - 299 281 Rest of World - 285 26 283 84,184 86,869 84,184 86,869 The analysis of profit before interest and tax and net assets by geographical origin was as follows: Profit before interest Net assets Net assets and tax 52 weeks 52 weeks 52 weeks 52 weeks ended ended ended ended 30 December 29 December 30 December 29 December 2001 2000 2001 2000 £'000 £'000 £'000 £'000 United Kingdom 13,035 2,813 26,941 35,360 Rest of Europe 600 240 5,803 5,171 Middle East and Africa 56 213 1,745 1,541 The Americas - (88) - - Rest of World - (298) - - 13,691 2,880 34,489 42,072 Net debt (9,529) (14,790) Taxation and dividends payable (2,351) (530) 22,609 26,752 2. Exceptional items 52 weeks 52 weeks ended ended 29 December 30 December 2001 2000 £'000 £'000 Goodwill impairment (note 3) - 9,783 3. Amortisation of goodwill 52 weeks 52 weeks ended ended 29 December 30 December 2001 2000 £'000 £'000 Annual goodwill amortisation charge (44) (434) Charge arising from impairment review of Cox Plant - (6,812) Limited (44) (7,246) Other pre FRS 10 goodwill Provision against goodwill previously written off - (2,971) to reserve (44) (10,217) During last year and in accordance with FRS 11: Impairment of fixed assets and goodwill, the directors performed an impairment review of the carrying value of the goodwill attributable to Cox Plant Limited at 30 December 2000. Having due regard to the results of Cox Plant Limited during the period and the early part of 2001 the directors considered the cashflows for the business discounted at a rate of 10%. Accordingly, full provision was made against the balance of goodwill as at 30 December 2000. The directors consider that the goodwill arising on the acquisition of Refrigeration Compressor Remanufacturers Limited suffered a permanent diminution in value last year and the value of the goodwill arising on acquisition of £2,971,000, which was previously charged directly to reserves in accordance with SSAP 22: Accounting for goodwill, was no longer justified. The full amount was credited back to reserves and charged to last year's profit and loss account in accordance with the Group's stated accounting policy. 4. Reconciliation of operating profit to net cash inflow from operating activities 52 weeks 52 weeks ended ended 29 December 30 December 2001 2000 £'000 £'000 Operating profit 13,355 2,880 Amortisation and impairment of goodwill 44 10,217 Depreciation 9,638 11,120 Provision against investments - 85 Profit on sale of tangible fixed assets (268) (129) Decrease in stocks 1,083 2,071 Decrease in debtors 3,154 3,760 Decrease in creditors and provisions (358) (2,986) Net cash inflow from operating activities 26,648 27,018 5. Reconciliation of net cash flow to movement in net debt 52 weeks 52 weeks ended ended 29 December 30 December 2001 2000 £'000 £'000 (Decrease)/increase in cash in the period (5,183) 6,487 Cash outflow from movement in debt and lease 7,863 7,399 financing Cash outflow from movement in liquid resources 2,580 90 Changes in net debt resulting from cash flows 5,260 13,976 Translation differences 1 82 Movement in period 5,261 14,058 Opening net debt (14,790) (28,848) Closing net debt (9,529) (14,790) 6. Consolidated statement of total recognised gains and losses 52 weeks 52 weeks ended ended 29 December 30 December 2001 2000 £'000 £'000 Profit/(loss) for the financial period 8,338 (3,135) Currency translation differences on foreign currency net investments 8 136 Total gains and losses in the period 8,346 (2,999) 7. Reconciliation of movements in Group shareholders' funds 52 weeks 52 weeks ended ended 29 December 30 December 2001 2000 £'000 £'000 Profit/(loss) for the financial period 8,338 (3,135) Other recognised gains and losses 8 136 Proceeds from ordinary shares issued 140 73 Consideration on the purchase of own shares (12,629) (2,551) Goodwill previously written off to reserves expensed in the year - 2,971 Net decrease in shareholders' funds (4,143) (2,506) Shareholders' funds at the beginning of the period 26,742 29,248 Shareholders funds at the end of the period 22,599 26,742 8. Earnings per ordinary share The basic figures have been calculated by reference to the weighted average number of ordinary 20 pence shares in issue during the period of 79,221,681 (52 weeks ended 30 December 2000: 90,156,589). FRS 14 strictly requires that potentially ordinary shares should be treated as potentially dilutive when they increase net loss per share. This disclosure is not given for the 52 weeks ended 30 December 2000 as it would not provide any meaningful information. This is consistent with IAS 33. The calculation of the diluted earnings per ordinary share is based on a profit of £8,338,000 (52 weeks ended 30 December 2000: loss of £3,135,000) and on 79,305,491 (52 weeks ended 30 December 2000: 90,690,403) ordinary shares. The share options have a dilutive effect for the period ended 29 December 2001 calculated as follows: 52 weeks ended 29 December 52 weeks ended 30 2001 December 2000 Earnings Number of Losses Number of £'000 shares £'000 shares Basic earnings/(loss)/weighted average number of shares 8,338 79,221,681 (3,135) 90,156,589 Weighted average number of shares under option - 225,000 - 995,000 Number of shares that would have been issued at fair value - (141,190) - (461,186) Earnings/(loss)/diluted weighted average number of shares 8,338 79,305,491 (3,135) 90,690,403 Diluted earnings/(loss) per ordinary share (pence) 10.51p (3.46)p The adjusted diluted earnings per share excluding goodwill amortisation and exceptional items is based upon the weighted average number of ordinary shares as set out in the table above. The earnings/(losses) can be reconciled to the adjusted earnings as follows: 52 weeks 52 weeks ended ended 29 December 30 December 2001 2000 £'000 £'000 Earnings/(losses) 8,338 (3,135) Goodwill amortisation 44 434 Exceptional items (336) 9,783 Adjusted earnings 8,046 7,082 Adjusted diluted earnings per share (pence) 10.15p 7.81p The above figures have been disclosed to demonstrate maintainable earnings. 9. Basis of accounting The financial statements are prepared under the historical cost convention, modified by the revaluation of freehold and long leasehold land and buildings, and in accordance with applicable Accounting Standards. In accordance with FRS 18 the directors reviewed the accounting standards adopted by the company during the year to ensure they are the most appropriate ones to follow. No amendments were required. The transitional requirements of FRS 17 ' Retirement benefits' have also been adopted. 10. Classification of loans Cox Plant Limited has credit facilities which are non -recourse to the rest of the Group and are only secured on the assets of Cox Plant Limited and Accommodation Hire Limited. These are made available to Cox Plant Limited subject to that company meeting a number of performance criteria. During the period ended 29 December 2001 certain of these criteria were not achieved and hence the company is technically in breach of its covenants. Loans of £12,350,000 are repayable on demand and have therefore been reclassified as falling due within one year. Since the end of the year the bank has formally waived the breach of covenants and has indicated that facilities will be made available until at least 24 April 2003. 11. The above financial information has been extracted from the Company's financial statements for the 52 weeks ended 29 December 2001 and the 52 weeks ended 30 December 2000. The financial statements for the 52 weeks ended 30 December 2000 have been filed and those for the 52 weeks ended 29 December 2001 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. 12. 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. 13. The Company's Annual General Meeting will be held at 10.30 a.m. on 29 May 2002 at The Grosvenor House Hotel, Park Lane, London, W1A 3AA. This information is provided by RNS The company news service from the London Stock Exchange

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