Interim Results

Andrews Sykes Group PLC 29 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 operations of the Group during the first half of 2005, due to a competitive market and low demand caused by the unfavourable weather conditions of a mild, dry winter. Nevertheless the Group has continued to generate cash and has successfully disposed of a non-core subsidiary company, Accommodation Hire Limited, during the first half of 2005. The initial net cash inflow from this disposal in the first 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 adversely impacted by the full adoption of a new accounting standard, FRS 17 - Retirement benefits, which became effective from 1 January 2005. The net effect of this adjustment 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 details of which were circulated to shareholders on 28 July 2005, was approved by the members at an Extraordinary General Meeting. The offer was subsequently approved by the High Court on 14 September 2005 and on 26 September 2005 payment of the tender offer consideration of £23.8 million was despatched to those members who accepted the offer. The Group's net debt subsequent to the tender offer is approximately £24 million after taking into account a payment of £3 million into the company's defined benefit pension scheme. The Board has decided not to declare an interim dividend in respect of the current financial period. As stated in the tender offer circular, the Board intends to review its dividend policy next at the time of the announcement of the preliminary results for the financial period ending 31 December 2005 at which point it will communicate its decision to shareholders. Prospects The period of comparatively poor trading appears to have ended at the end of May. The business performance for the month of June 2005 showed an improvement compared with June 2004 and trading in the third quarter of 2005, to the date of this statement, shows an improvement over the same period in 2004. JG Murray Chairman 29 September 2005 Andrews Sykes Group plc Consolidated Profit and Loss Account For 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 £'000 Turnover 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 - ordinary Administrative - - - - - - (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 - 39 income Operating 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 7,903 before goodwill amortisation 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 7,888 interest 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 4,934 taxation 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 4.0p restated) 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 weeks ended 31 December 2004 have been restated due to both the full adoption of FRS 17 - Retirement Benefits and FRS 21 - Events after the Balance Sheet Date with effect from 1 January 2005 as set out in note 8. Andrews Sykes Group plc Consolidated Balance Sheet As at 2 July 2005 2 July 2005 3 July 2004 31 December 2004 (as restated*) (as restated*) £'000 £'000 £'000 Fixed assets Intangible assets: Goodwill 38 52 45 Tangible assets 11,940 16,755 15,876 Investments 164 164 164 12,142 16,971 16,085 Current assets Stocks 4,801 4,950 4,942 Debtors 14,002 15,790 15,071 Cash at bank and in hand 12,308 10,904 9,295 31,111 31,644 29,308 Creditors falling due within one year Loans 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 year Loans (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 reserves Called - up share capital 11,598 11,598 11,598 Share premium account 10,678 10,678 10,678 Revaluation reserve 743 749 746 Other reserves 7,395 7,392 7,389 Profit 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 been restated due to both the full adoption of FRS 17 - Retirement Benefits and FRS 21 - Events after the Balance Sheet Date with effect from 1 January 2005 as set out in note 8. Andrews Sykes Group plc Consolidated cash flow statement For 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 finance Interest received 245 173 410 Interest 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 expenditure Purchase 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 disposals Cash received on the disposal of subsidiary undertakings as 9,614 - - set out in note 6 Net 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 resources Movement in bank deposits (87) 476 (1) Financing Sale of shares held in ESOP 9 12 16 Loan 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 9,295 Total 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 plc Other Consolidated Statements For 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 4,934 Currency translation differences on foreign currency net investments (88) (105) 78 Actual return less expected return on pension scheme assets 419 (75) 354 Experience gains and losses arising on the pension scheme liabilities (38) 24 (601) UK deferred tax attributable to the pension scheme asset (114) 15 74 and 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 3,571 financial 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 4,934 Dividends (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 16 Currency translation differences on foreign currency net investments (88) (105) 78 Actual return less expected return on pension scheme assets 419 (75) 354 Experience gains and losses arising on the pension scheme liabilities (38) 24 (601) UK deferred tax attributable to the pension scheme asset and (114) 15 74 liability 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 17,101 stated FRS 17 adjustment (6,288) (6,104) (6,104) FRS 21 adjustment 8,119 1,740 1,740 Shareholders' 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 weeks ended 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 been restated due to both the full adoption of FRS 17 - Retirement Benefits and FRS 21 - Events after the Balance Sheet Date with effect from 1 January 2005. Andrews Sykes Group plc Notes to the accounts For 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 Board on 28 September 2005. The financial information contained in this interim report does not constitute statutory accounts for the Group for the relevant periods. The interim report is neither audited nor reviewed. The results for the 53 weeks ended 31 December 2004 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. The interim statement has been prepared in accordance with the accounting policies set out in the Group's 2004 Annual Report and Financial Statements with the 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 the first time this period and have a prior year impact as detailed in note 8. FRS 22 - Earnings per Share and the relevant paragraphs of FRS 25 - Financial Instruments, Presentation and Disclosure have also been applied but have no impact. 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 2004 Activity: £'000 £'000 £'000 Hire 17,169 20,195 40,698 Sales 5,331 6,135 12,000 Installation 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 £'000 United Kingdom 23,574 28,419 56,332 Rest of Europe 1,529 1,212 2,918 Middle 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 £'000 United Kingdom 23,190 27,892 55,571 Rest of Europe 1,561 1,317 3,154 Middle East and Africa 1,665 1,832 3,505 Rest of World 342 366 450 26,758 31,407 62,680 Andrews Sykes Group plc Notes to the accounts For 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 22,969 Rest of Europe 387 469 988 813 1,528 1,391 Middle 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 average number 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 the profits 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 for the 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 57,968,589 average number of shares Weighted average number of shares under 30,000 4,362,604 option Number of shares that would have been issued at fair value (14,075) (1,909,473) Earnings/ diluted weighted average 2,667 9,680 57,992,597 4,014 4,281 60,421,720 number of shares Diluted earnings per ordinary share 4.60p 16.69p 6.64p 7.09p (pence) Andrews Sykes Group plc Notes to the accounts For 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 cash cancellation offer to all of the Company's share option holders. The price offered was £1.95 per share and the offer remained open for acceptance until 8 December 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 £'000 Operating profit 3,962 6,585 7,889 Goodwill amortisation 7 7 14 Depreciation 2,286 2,847 5,489 Profit on sale of fixed assets (197) (521) (959) Decrease in stocks 141 666 674 Decrease /( 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 Hire Limited (AHL), to Wernick Hire Limited. AHL, which specialised in the hire and sale of temporary accommodation units and toilet facilities, was managed as a separate business operation and the net assets sold and consideration received and receivable are as follows: 26 weeks to 2 July 2005 £'000 Tangible fixed assets 3,231 Debtors 1,479 Creditors (922) Cash at bank 439 Corporation tax (29) Deferred tax 118 Bank loans (1,225) Net assets sold 3,091 Profit on disposal 6,797 Total net consideration 9,888 Andrews Sykes Group plc Notes to the accounts For the 26 weeks ended 2 July 2005 Satisfied by: Cash received net of disposal costs paid 9,614 Deferred consideration receivable less disposal costs payable 274 9,888 The exceptional charge of £305,000 in the 53 weeks ended 31 December 2004 relates to an adjustment to an onerous lease liability provision in respect of the 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) 8,818 Bank 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 are analysed as follows: The opening equity shareholders' funds at 27 December 2003 were restated as follows: Equity shareholders' funds £'000 £'000 Equity shareholders' funds at 27 December 2003 as previously stated 17,101 Adoption 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 £'000 Equity shareholders' funds at 31 December 2004 as previously stated 13,269 Adoption 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 a credit of approximately £30,000. The impact of adopting FRS 21 on the current period 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 available from 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

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