Interim Results
ANDREWS SYKES GROUP PLC
14 October 1999
INTERIM RESULTS FOR THE SIX MONTHS
ENDED 26 JUNE 1999
Chairman's Statement
The salient points of the accounts for the six months ended 26 June 1999 are
as follows:
£000
Turnover increased by 30.8 % to 44,238
EBITDA increased by 39.8% to 11,946
Operating profit before exceptional items and goodwill amortisation
increased by 2.6% to 5,811
Adjusted fully diluted earnings per share declined by 3.5 % to 3.83 p
Net assets increased by 10.4 % to 24, 596
Interim dividend increased by 20% per share to 1.44 p
Financial
Turnover of the Group for the six months ended 26 June 1999 increased 30.8 per
cent from £33,817,000 to £44,238,000.
Despite a small increase in operating profit before exceptional items and
goodwill amortisation the profit before tax declined from £5,938,000 to
£2,189,000 mainly due to exceptional items which have a year on year
difference of £2,401,000 and disappointing weather related trading conditions
in our air conditioning activity during the months of May and June.
The exceptional items and one off costs relate to the out of court settlement
of a nine year old dispute and a potential liability in excess of £5 million
with Sterling Fluid Products Ltd (Sterling), provision against overseas stock
levels and abortive acquisition activities. The settlement removes a
significant contingent liability from our accounts but much more importantly,
we have re-established our exclusive rights, previously granted to Sterling,
to use the Sykes Pumps name world-wide and the sole rights to market Sykes
Pumps.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) remain
very strong, the 39.8 per cent increase being mainly attributable to the
inclusion of Cox for a full six months.
In the last twelve months we have reduced net group debt by £11.3 million
which has reduced the gearing from 195 per cent to 131 per cent. We intend to
continue our policy of rapid debt repayment in order to position the company
for further acquisitions. The strong cash flow further allows us to
continually invest in our modern fleet and to develop key specialist high
margin hire products.
Management
After a disappointing below expectations first half, there have been a number
of significant changes. After the end of the period under review Mr Eric Hook
resigned as chief executive. Also, the company has terminated the employment
of Mr Simon Harbridge, the company secretary.
We have taken the necessary actions to appoint several energetic key
individuals to grow the turnover and profitability of our business. The Chief
Executive Officer selection process is nearly finalised and an announcement
will be made in due course.
In the meantime, John Hall, our Group UK Operations Director will continue to
assume the role of Interim Group Managing Director. Following a review of our
management controls we intend also to appoint a Financial Director, a position
currently being undertaken on an interim basis by Director, Jean-Christophe
Pillois.
Among other new appointments, we have created and filled a new management
position of International Business Manager in view of the increasing
importance of our overseas business which now represents in annualised
turnover in excess of £9 million and approximately 13 per cent of group
operating profit before exceptional items and goodwill amortisation.
Prospects
Our projections for the second half are promising. Following the first half,
appropriate corrective measures have been taken.
We are confident in the future profitability of our company, and the board of
directors has recommended an increase of 20 per cent in the interim dividend
to 1.44p per share.
JG Murray
Chairman
For further information please contact
Jean-Jacques Murray, Director
Andrews Sykes Group plc Tel 0171 409 0258
Issued by
John Goold
Shandwick International Tel 0171 329 0096
Andrews Sykes Group plc
Group Profit and Loss Account
For the six months ended 26 June 1999
6 months ended 6 months ended 12 months ended
26 June 27 June 26 December
1999 1998 1998
Total Total Total
£'000 £'000 £'000
Turnover 44,238 33,817 83,814
Cost of Sales (26,393) (18,874) (48,178)
--------- --------- ---------
Gross profit 17,845 14,943 35,636
Net operating expenses (14,067) (8,731) (22,029)
(including exceptional items
set out in note 3)
--------- --------- ---------
Group operating profit 3,778 6,212 13,607
-----------------------------------------------------------------------------
EBITDA* 11,946 8,545 23,247
Depreciation, asset
disposals and property
revaluation (6,135) (2,879) (9,465)
-------- -------- --------
Operating profit before 5,811 5,666 13,782
exceptionals and
amortisation of goodwill
Exceptional items (1,816) 585 81
Amortisation of goodwill (217) (39) (256)
--------- -------- --------
Group operating profit 3,778 6,212 13,607
========= ========= =========
-----------------------------------------------------------------------------
Share of operating (loss) /
profit of associates (7) 76 122
Income from other
participating interests - - 459
Net interest payable (1,582) (350) (2,138)
--------- -------- ---------
Profit on ordinary
activities before tax 2,189 5,938 12,050
Tax on profit on ordinary
activities (737) (1,871) (3,810)
--------- --------- ---------
Profit on ordinary
activities after taxation 1,452 4,067 8,240
being profit for the
financial period
Dividends:
Ordinary shares (1,328) (987) (2,980)
Convertible preference
shares (186) (239) (460)
-------- -------- --------
Retained (loss) / profit for
the period (62) 2,841 4,800
======== ======== ========
Earnings per ordinary share 1.53 4.88 9.67
Fully diluted earnings per
ordinary share 1.47 4.59 9.14
Exceptional items 2.11 (0.66) (0.09)
Amortisation of goodwill 0.25 0.04 0.28
-------- ------- --------
Adjusted fully diluted
earnings per ordinary share 3.83 3.97 9.33
======== ======= ========
Dividends per share:
Preference 3.50 3.50 7.00
Ordinary 1.44 1.20 3.60
There were no significant acquisitions or discontinued operations during the
period.
Earnings Before Interest, Taxation, Depreciation, and Amortisation excluding
exceptional items and goodwill amortisation.
Andrews Sykes Group plc
Consolidated Balance Sheet
As at 26 June 1999
26 June 27 June 26 December
1999 1998 1998
£'000 £'000 £'000
Fixed assets
Intangible assets 7,635 7,988 7,852
Tangible assets 39,057 51,086 44,125
Investments 578 371 515
-------- -------- -------
47,270 59,445 52,492
-------- -------- -------
Current assets
Stocks 8,165 9,074 9,392
Debtors 24,374 25,973 24,075
Cash at bank and in hand 5,543 3,941 10,171
------- ------- -------
38,082 38,988 43,638
Creditors falling due within
one year
Loans and overdrafts (7,500) ( 7,382) (8,723)
Other creditors and provisions (19,192) (22,123) (22,780)
Deferred consideration (600) (7,200) (7,100)
Corporation and overseas tax (2,728) (3,903) (3,633)
------- ------- -------
Net current assets /
(liabilities) 8,062 (1,620) 1,402
------- ------- -------
Total assets less current
liabilities 55,332 57,825 53,894
Creditors falling due after
more than one year
Loans (29,453) (32,128) (28,003)
Other creditors and provisions (1,203) (1,160) (1,230)
Deferred consideration - (600) -
Corporation tax (80) (1,655) -
-------- -------- -------
Net assets 24,596 22,282 24,661
-------- -------- -------
Capital and reserves
Called up share capital 19,737 19,847 19,739
Share premium account 8,168 8,028 8,168
Revaluation reserve 776 353 787
Other reserves 284 270 278
Profit and loss account (4,379) (6,226) (4,321)
-------- -------- --------
24,586 22,272 24,651
Shareholders' funds -------- -------- --------
Equity 21,402 18,863 21,467
Non equity 3,184 3,409 3,184
-------- -------- --------
24,586 22,272 24,651
Minority interests (equity) 10 10 10
-------- -------- --------
24,596 22,282 24,661
-------- -------- --------
Analysis of net debt
Cash at bank and in hand 5,543 3,941 10,171
Deferred consideration (600) (7,800) (7,100)
Total loans, overdrafts and (37,179) (39,661) (37,055)
finance lease obligations
-------- -------- --------
Net debt (32,236) (43,520) (33,984)
-------- -------- --------
Net debt as a percentage of
shareholders' funds 131% 195% 138%
-------- -------- --------
Andrews Sykes Group plc
Consolidated cash flow statement
For the six months ended 26 June 1999
6 months 6 months 12 months
ended ended ended
26 June 1999 27 June 1998 26 December 1998
Total Total Total
£'000 £'000 £'000
Net cash inflow from operating
activities 8,112 5,642 21,554
------- ------- -------
Returns on investments and
servicing of finance
Debt issue costs - (680) (953)
Net interest paid (1,975) (188) (1,228)
Dividends received - - 459
Preference dividends paid (223) (239) (462)
Interest element of finance
lease payments (15) (21) (38)
-------- -------- --------
Net cash outflow for returns on
investments and servicing of
finance (2,213) (1,128) (2,222)
-------- -------- --------
Cash outflow for taxation (1,095) (681) (3,714)
-------- -------- --------
Capital expenditure
Purchase of tangible fixed
assets (1,853) (2,625) (6,266)
Purchase of shares held in ESOP (70) - -
Sale of tangible fixed assets 871 399 4,023
-------- -------- --------
Net cash outflow for capital
expenditure (1,052) (2,226) (2,243)
-------- -------- --------
Acquisitions
Purchase of subsidiary
undertakings - (44,236) (45,379)
Net cash acquired with
subsidiary undertakings - 359 359
Payment of deferred
consideration on previous
acquisitions (6,500) (46) (46)
Purchase of interests in
associates - (58) (156)
-------- -------- --------
Net cash outflow for
acquisitions (6,500) (43,981) (45,222)
--------- -------- ---------
Equity dividends paid (1,987) (1,547) (2,541)
--------- -------- ---------
Cash outflow before the use of
liquid resources and financing (4,735) (43,921) (34,388)
--------- -------- ---------
Management of liquid resources
Movement in bank deposits (313) (88) 2,080
--------- -------- ---------
Financing
Issue of ordinary share capital
net of issue costs - 8,236 8,276
New loan draw downs and
factoring advances 3,900 37,857 37,823
Loan repayments (3,673) (2,472) (5,922)
Net Capital element of finance
lease payments (91) (87) 91
Purchase of own shares (17) - (85)
-------- -------- --------
Net cash inflow from financing 119 43,534 40,183
-------- -------- --------
(Decrease) / increase in cash
in the period (4,929) (475) 7,875
-------- -------- --------
Andrews Sykes Group plc
Notes to the accounts
For the six months ended 26 June 1999
1.The interim report for the six months ended 26 June 1999 was approved by
the board on 13 October 1999. The financial information contained in this
interim report does not constitute statutory accounts for the Group for the
relevant periods. The interim report is unaudited but has been reviewed by
the auditors. The results for the 12 months ended 26 December 1998 have
been extracted from the audited financial statements that have been filed
with the Registrar of Companies. The report of the auditors was
unqualified and did not contain a statement under section 237(2) or (3) of
the Companies Act 1985.
2. Segmental analysis
The Group's turnover may be analysed between the following principal
products and activities:
Six months ended Six months ended 12 months ended
26 June 27 June 26 December
1999 1998 1998
Total Total Total
£'000 £'000 £'000
Product group:
Pumps 12,085 11,681 23,389
Heating and 4,700 4,472 9,553
ventilation
Air-conditioning 7,952 10,105 22,487
General plant 14,640 2,805 19,023
Other 4,861 4,754 9,362
--------- -------- --------
Total 44,238 33,817 83,814
--------- -------- --------
Activity:
Hire 28,076 17,280 47,988
Sales 10,792 10,208 23,057
Installation 5,370 6,329 12,769
-------- -------- --------
Total 44,238 33,817 83,814
-------- -------- --------
The geographical analysis of the Group's turnover by origin was as follows:
Six months ended Six months ended 12 months ended
26 June 27 June 26 December
1999 1998 1998
Total Total Total
£'000 £'000 £'000
United Kingdom 39,826 30,623 75,413
Rest of Europe 1,206 951 3,078
Middle East and Africa 1,938 1,949 4,064
The Americas 436 294 1,073
Far East 832 - 186
-------- ------- -------
44,238 33,817 83,814
-------- ------- -------
The results can be further analysed by class of business :
Profit before
exceptionals Execptionals Group
Turnover & goodwill & goodwill operating profit
£'000 £'000
June 1999
Pumps, heating,
ventilation, air-
conditioning and
other 29,598 4,368 (1,823) 2,545
General Plant 14,640 1,443 (210) 1,233
------- -------- -------- ---------
44,238 5,811 (2,033) 3,778
------- -------- -------- ---------
June 1998
Pumps, heating,
ventilation, air-
conditioning and
other 31,012 5,495 1,055 6,550
General Plant 2,805 171 (509) (338)
------- -------- ------- -------
33,817 5,666 546 6,212
------- -------- ------- -------
December 1998
Pumps, heating,
ventilation, air-
conditioning and
other 64,791 12,095 1,059 13,154
General Plant 19,023 1,687 (1,234) 453
------- ------- ------- -------
83,814 13,782 (175) 13,607
------- ------- ------- -------
3. Exceptional items Six months ended Six months ended 12 months ended
26 June 27 June 26 December
1999 1998 1998
Total Total Total
£'000 £'000 £'000
Sterling contractual
settlement costs (1,432) - -
Redundancy and
reorganisation (217) (485) (989)
Release of bonus
provisions - 1,370 1,370
Abortive costs (167) (300) (300)
-------- -------- --------
(1,816) 585 81
-------- -------- --------
Under agreements entered into in 1989, Sterling Fluid Power Products Limited
('Sterling') manufactured Sykes Pumps for the group. The agreements, which
contained a minimum annual purchase obligation, were terminated in 1995 and
Sterling claimed £4.9 million in settlement plus additional interest and
costs. The dispute has been settled out of court with a total payment due to
Sterling of £3 million and has re-established the exclusive rights which had
been granted to Sterling by Andrews Sykes' previous management to use the
Sykes Pumps name in the U S A, Iran, Iraq, and the sole right to market Sykes
Pumps in those territories.
The settlement has given rise to the above exceptional charge after provisions
made in previous years and is inclusive of costs
4. Reconciliation of operating profit to net cash inflow from operating
activities
Six months ended Six months ended 12 months ended
26 June 27 June 26 December
1999 1998 1998
Total Total Total
£'000 £'000 £'000
Operating profit 3,778 6,212 13,607
Amortisation of goodwill 217 39 256
Depreciation and deficit
on property revaluations 6,156 2,958 9,544
(Profit) on sale of
fixed assets (21) (79) (79)
Decrease / (increase) in
stocks 1,227 (1,489) (1,807)
(Increase)/decrease in
debtors (952) (1,509) (911)
(Decrease)/increase in
creditors and provisions (2,293) (490) 944
--------- -------- --------
Net cash inflow from
operating activities 8,112 5,642 21,554
--------- -------- --------
Andrews Sykes Group plc
Notes to the accounts
For the six months ended 26 June 1999
5. Earnings per share
The basic figures have been calculated by reference to the weighted average
number of 20p ordinary shares in issue during the period of 82,766,023 (6
months ended 27 June 1998: 78,481,271) after adjusting for the bonus element
of the open offer. The earnings are the Group's profit after taxation and
preference dividends.
The calculation of the diluted earnings per ordinary share is based on diluted
earnings of £1,266,000 (6 months ended 27 June 1998: £4,067,000) and on
86,118,661 (6 months ended 27 June 1998: 88,551,554) ordinary shares
calculated as follows:
Six months ended Six months ended
26 June 1999 27 June 1998
--------------------------------------------------
Earnings No. of shares Earnings No. of shares
£'000 £'000 £'000 £'000
Basic earnings/weighted
average number of shares 1,266 82,766,023 3,828 78,481,271
Weighted average number
of shares under option 5,311,518 3,759,607
Number of shares that
would have been issued
at fair value (1,958,880) (1,265,294)
Dividend saving/weighted
average number of
ordinary shares arising
on the conversation of
the preference shares 239 7,575,970
------- --------- ------- ---------
Diluted
earnings/weighted
average number of shares 1,266 86,118,661 4,067 88,551,554
-------- ---------- -------- ------------
Diluted earnings per
ordinary share (pence) 1.47p 4.59p
-------- ---------- -------- ------------
No account has been taken of the conversion of the preference shares in the
six months ended 26 June 1999 as the conversion is not dilutive.
The adjusted 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 can be reconciled to the diluted
earnings as follows:
Six months ended Six months ended
26 June 27 June
1999 1998
Total Total
£'000 £'000
Diluted earnings 1,266 4,067
Goodwill amortisation 217 39
Net exceptional charge/(credit) 1,816 (585)
--------- ---------
Adjusted diluted earnings 3,299 3,521
--------- ---------
Adjusted diluted earnings per
ordinary share (pence) 3.83p 3.97p
--------- ---------
Andrews Sykes Group plc
Notes to the accounts
For the six months ended 26 June 1999
6. Consolidated statement of total recognised gains and losses
Six months ended Six months ended 12 months ended
26 June 27 June 26 December
1999 1998 1998
Total Total Total
£'000 £'000 £'000
Profit for the
financial period 1,452 4,067 8,240
Currency translation
differences on foreign
currency net
investments 14 (9) 49
Surplus on the
revaluation of
freehold and
long leasehold
properties - - 407
--------- --------- ---------
Total gains and losses
in the period 1,466 4,058 8,696
--------- -------- ---------
7. Reconciliation of movements in group shareholders' funds
Six months ended Six months ended 12 months ended
26 June 27 June 26 December
1999 1998 1998
Total Total Total
£'000 £'000 £'000
Profit for the 1,452 4,067 8,240
financial period
Dividends (1,514) (1,226) (3,440)
Other recognised gains 14 (9) 49
and losses
Proceeds from ordinary - 8,236 8,276
shares issued
Consideration on the
purchase of own shares (17) - (85)
Surplus on the
revaluation of
freehold and
long leasehold
properties - - 407
----------- ---------- ----------
Net (decrease) /
increase in
shareholders' funds (65) 11,068 13,447
Shareholders' funds at
the beginning of the
period 24,651 11,204 11,204
----------- ---------- ----------
Shareholders' funds at
the end of the period 24,586 22,272 24,651
----------- ---------- ----------
8. A copy of this statement will be posted to all shareholders and is
available from the Company's registered office at Premier House, Darlington
Street, Wolverhampton, WV1 4JJ.
KPMG Audit Plc
2 Cornwall Street
Birmingham
B3 2DL
Independent review by KPMG Audit Plc to Andrews Sykes Group plc
Introduction
We have been instructed by the company to review the financial information set
out on pages 3 to 8 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The Listing
Rules of the London Stock Exchange require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where they are to be
changed in the next annual accounts in which case any changes, and the reasons
for them, are to be disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4: Review of interim financial information issued by the Audit Practices
Board. A review consists principally of making enquiries of group management
and applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the accounting policies
and presentation have been consistently applied unless otherwise disclosed. A
review is substantially less in scope than an audit performed in accordance
with Auditing Standards and therefore provides a lower level of assurance than
an audit. Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 26 June 1999.
KPMG Audit Plc
Chartered Accountants
Registered Auditor
Latest directors dealings
- 49 minutes ago NCC Group
- 49 minutes ago Bluebird Merchant Ventures (DI)
- 49 minutes ago Origin Enterprises (CDI)
- 49 minutes ago Elixirr International
- 49 minutes ago Allergy Therapeutics