Final Results

Andrews Sykes Group PLC 26 April 2007 Andrews Sykes Group plc 26 April 2007 Preliminary Results Preliminary Announcement For the 52 weeks ended 31 December 2006 SUMMARY OF RESULTS 52 weeks ended 52 weeks ended 31 December 2006 31 December 2005 £'000 £'000 Turnover from continuing operations 59,768 50,673 EBITDA* from continuing operations 18,645 14,747 Operating profit** from continuing operations 14,907 11,062 (Loss) / profit on business disposals (142) 6,404 Profit on ordinary activities after taxation 9,661 14,127 Basic earnings per share from continuing operations (pence) 22.00p 15.24p Net cash inflow from operating activities 15,804 10,196 Net Debt 14,810 19,658 * Earnings before Interest, Taxation, Depreciation and Amortisation as reconciled in the consolidated profit and loss account ** Operating profit as shown on the consolidated profit and loss account Chairman's Statement Overview and financial highlights I am very pleased to be able to report a record group operating profit from continuing operations of £14.9 million for 2006, which compares with £11.1 million last year. This improvement in trading is largely due to our dual strategies of aligning costs with sustainable revenues and focussing on the development of high margin niche markets thereby enabling the group to deliver exceptionally good results when the opportunities arise. Our principal UK trading subsidiary, Andrews Sykes Hire, performed exceptionally well returning turnover of £43.0 million, an improvement of 20% compared with last year. This was due to a combination of favourable weather conditions and business initiatives introduced by management during the year to stimulate demand. A more detailed review of this year's performance is given in the Operations and Financial Reviews within the Directors' Report. The basic earnings per share from continuing operations increased by over 44% from 15.24 pence last year to 22.00 pence this year - another record for our group. This reflects both the improved trading performance and the benefit of the tender offer exercise that was completed in September 2005. I remain confident that the current strategies being followed by management will continue to deliver satisfactory profit levels in the future. We will continue to contain our costs, to invest in both traditional and new products and to develop new market places when the opportunities arise in order to maximise the return on capital employed. Management changes On 5 December 2006 Paul Wood was appointed to the Board as Managing Director having previously been Director of Operations. Paul has a vast experience in the industry having originally joined the group in August 1978. Paul has much to contribute to the group in terms of his industry experience and management leadership and I look forward to working with him over the coming years. Also on 5 December 2006 Jean Christophe Pillois was appointed Finance Director following the resignation of Tony Bourne on 2 October 2006. There have also been some other changes to our non-executive directors. Richard Pollard resigned on 5 December 2006 and three new non-executive directors, Marie Claire Leon, Xavier Mignolet and Joel Simmonds were appointed to the Board on 8 February 2007. I welcome the new appointees and I am sure that their experience will be appreciated by the Board. Net debt Net debt has been reduced by £4.9 million to £14.8 million this year despite the following cash outflows: • Capital expenditure net of disposal proceeds £6.5 million • Corporation tax payments £2.8 million • Net interest payments £1.1 million • Defined benefit pension scheme payments £1.5 million There was a relatively high level of capital expenditure required this year in order to satisfy increased customer demand and to invest in new products that will give returns in future years. The other cash outflows are in line with our expectations. Share buy back programme The Board continues to believe that shareholder value will be optimised by the purchase, when appropriate, of our own shares. The earnings per share this year has benefited from the tender offer exercise that was completed in September 2005 when the company purchased 13.4 million shares for cancellation. Consequently at the forthcoming AGM, the Board will request that shareholders vote in favour of a resolution to renew the authority to purchase up to 12.5% of the ordinary shares in issue. Dividend The Board is not recommending the payment of a final dividend this year. Future dividend policy will be reviewed regularly by the Board. Outlook The group's continuing strategy of containing costs and investing in both its traditional core products and services and new environmentally friendly products proved to be successful during 2006. Overall trading in the first quarter of 2007 was in line with expectations. JG Murray Chairman 25 April 2007 Andrews Sykes Group plc Consolidated Profit and Loss Account For the 52 weeks ended 31 December 2006 52 weeks 52 weeks ended 31 ended 31 December 2006 December 2005 Total Continuing Discontinued Total activities activities activities activities £'000 £'000 £'000 £'000 Turnover 59,768 50,673 4,415 55,088 Cost of sales (26,932) (23,675) (2,414) (26,089) Gross profit 32,836 26,998 2,001 28,999 Distribution costs (9,471) (8,038) (699) (8,737) Administrative expenses (note 3) (8,458) (7,898) (960) (8,858) Operating profit 14,907 11,062 342 11,404 EBITDA * 18,645 14,747 615 15,362 Depreciation and asset disposals (3,724) (3,671) (273) (3,944) Operating profit before goodwill 14,921 11,076 342 11,418 amortisation Goodwill amortisation (14) (14) - (14) Operating profit 14,907 11,062 342 11,404 Profit on the sale of property 206 - Exceptional (loss) / profit on the (142) 6,404 disposal of businesses - discontinued (note 5) Profit on ordinary activities before 14,971 17,808 interest and taxation Net interest payable (1,174) (738) Profit on ordinary activities before 13,797 17,070 taxation Tax on profit on ordinary activities (4,136) (2,943) 9,661 14,127 Profit on ordinary activities after taxation being profit for the financial period Earnings per share from continuing operations (pence): Basic 22.00p 15.24p Fully diluted 22.00p 15.24p Earnings per share from total operating results (pence): Basic 21.68p 28.16p Fully diluted 21.68p 28.16p Dividends paid per equity share (pence) _ 14.0p All turnover and operating profit in the current period relates to continuing operations. There were no material acquisitions in either period. * Earnings before Interest, Taxation, Depreciation and Amortisation Andrews Sykes Group plc Consolidated Balance Sheet As at 31 December 2006 31 December 31 December 2006 2005 £'000 £'000 Fixed assets Intangible assets: Goodwill 17 31 Tangible assets 14,599 12,011 Investments 164 164 14,780 12,206 Current assets Stocks 4,336 4,532 Debtors 17,280 13,929 Cash at bank and in hand 10,190 10,342 31,806 28,803 Creditors: Amounts falling due within one year Bank loans (5,000) (5,000) Other creditors (10,108) (8,627) Corporation and overseas tax (2,292) (1,060) (17,400) (14,687) Net current assets 14,406 14,116 Total assets less current liabilities 29,186 26,322 Creditors: Amounts falling due after more than one year Bank loans (20,000) (25,000) Provisions for liabilities (24) (469) Net assets excluding pension liability 9,162 853 Pension Liability (4,604) (4,434) Net assets / (liabilities) including 4,558 (3,581) pension liability Capital and reserves Called - up share capital 446 446 Revaluation reserve 736 741 Other reserves 213 222 Profit and loss account 3,153 (4,994) ESOP reserve - (6) Surplus / (deficit) attributable to equity 4,548 (3,591) shareholders Minority interests (equity) 10 10 Total capital employed 4,558 (3,581) Andrews Sykes Group plc Consolidated Cash Flow Statement For the 52 weeks ended 31 December 2006 52 weeks 52 weeks ended ended 31 December 31 December 2006 2005 £'000 £'000 Net cash inflow from operating activities 15,804 10,196 as reconciled in note 4 Returns on investment and servicing of finance Interest received 476 484 Interest paid (1,591) (946) Net cash outflow for returns on investment (1,115) (462) and servicing of finance Cash outflow for taxation (2,807) (1,984) Capital expenditure and financial investment Purchase of tangible fixed assets (7,067) (4,056) Sale of tangible fixed assets 526 608 Net cash outflow for capital expenditure (6,541) (3,448) and financial investment Acquisitions and disposals Cash received on the disposal of - 10,204 subsidiary undertakings Disposal costs paid less consideration (183) - received on prior year disposals Net cash balances disposed of with - (214) subsidiaries Net cash (outflow) / inflow for (183) 9,990 acquisitions and disposals Equity dividends paid - (8,119) Cash inflow before the use of liquid resources and financing (5,158 (6,173) Management of liquid resources Movement in bank deposits - 477 Financing Sale of own shares by ESOP 4 9 Loan repayments (5,000) (11,000) New loans drawn down - 30,000 Purchase of own shares (16) (24,168) Net cash outflow from financing (5,012) (5,159) Increase in cash in the period 146 1,491 Analysis of net funds / (debt) Cash at bank and in hand 10,190 10,342 Total loans and overdrafts (25,000) (30,000) Net debt as reconciled in note 6 (14,810) (19,658) Andrews Sykes Group plc Other Consolidated Statements For the 52 weeks ended 31 December 2006 Consolidated statement of total recognised gains and losses 52 weeks 52 weeks ended ended 31 December 31 December 2006 2005 £'000 £'000 Profit for the financial period 9,661 14,127 Currency translation differences on foreign (321) 48 currency net investments Actual return less expected return on pension 578 2,702 scheme assets Experience gains and losses arising on the (340) (4) pension scheme liabilities Changes in assumptions underlying the present (1,937) (3,538) value of the scheme liabilities UK deferred tax attributable to the pension 510 252 scheme asset and liability adjustments Total recognised gains and losses relating to 8,151 13,587 the period transferred to reserves Reconciliation of movement in group shareholders' funds / (deficit) 52 weeks 52 weeks ended ended 31 December 31 December 2006 2005 £'000 £'000 Profit for the financial period 9,661 14,127 Dividends paid - (8,119) Consideration for the purchase of own (16) (24,168) shares Sale of own shares by the ESOP trust 4 9 Currency translation differences on (321) 48 foreign currency net investments Actual return less expected return on 578 2,702 pension scheme assets Experience gains and losses arising on (340) (4) the pension scheme liabilities Changes in assumptions underlying the (1,937) (3,538) present value of the scheme liabilities UK deferred tax attributable to the 510 252 pension scheme asset and liability adjustments Net increase / (decrease) in 8,139 (18,691) shareholders' funds Shareholders' (deficit) / funds at the (3,591) 15,100 beginning of the period Shareholders' funds / (deficit) at the 4,548 (3,591) end of the period Andrews Sykes Group plc Notes to the accounts For the 52 weeks ended 31 December 2006 1. Segmental analysis The group's turnover may be analysed between the following principal activities: 52 weeks ended 31 December 52 weeks ended 31 December 2005 2006 Continuing Discontinued Total Continuing activities activities activities activities Activity: £'000 £'000 £'000 £'000 Hire 43,088 34,459 1,930 36,389 Sales 8,762 7,024 2,485 9,509 Installation 7,918 9,190 - 9,190 Total 59,768 50,673 4,415 55,088 The integrated nature of the group's operations does not permit a meaningful analysis of profit before 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 and installation of a range of equipment including pumps, portable heating, air conditioning, drying and ventilation. The impact of discontinued activities on turnover (both by geographical origin and destination), profit before interest and tax and net assets in the tables below relates mainly to the United Kingdom. The geographical analysis of the group's turnover was as follows: By origination: 52 weeks 52 weeks ended ended 31 December 31 December 2006 2005 £'000 £'000 United Kingdom 50,254 48,041 Rest of Europe 5,435 3,674 Middle East and Africa 4,079 3,373 59,768 55,088 By destination: 52 weeks 52 weeks ended ended 31 December 31 December 2006 2005 £'000 £'000 United Kingdom 49,070 47,612 Rest of Europe 6,240 3,737 Middle East and Africa 4,116 3,478 Rest of World 342 261 59,768 55,088 The analysis of profit before interest and tax and net assets / (liabilities) by geographical origin was as follows: Net assets / (liabilities) Profit before interest including pension and tax liability 52 weeks 52 weeks ended ended 31 As at As at 31 December December 31 December 31 December 2006 2005 2006 2005 £'000 £'000 £'000 £'000 United Kingdom 12,670 16,141 22,254 17,642 Rest of Europe 1,876 1,155 1,940 1,785 Middle East and Africa 425 512 2,070 2,144 14,971 17,808 26,264 21,571 Net debt (14,810) (19,658) Taxation (2,292) (1,060) Pension liability (4,604) (4,434) Net assets/(liabilities) 4,558 (3,581) 2. Earnings per ordinary share The basic figures have been calculated by reference to the weighted average number of ordinary shares in issue, excluding those in the ESOP reserve, during the period of 44,557,701 (52 weeks ended 31 December 2005: 50,156,508). The calculation of the diluted earnings per ordinary share is based on the profits as set out in the table below and on 44,562,172 (52 weeks ended 31 December 2005: 50,168,119) ordinary shares. The share options have a dilutive effect for the period calculated as follows: 52 weeks ended 31 December 2006 52 weeks ended 31 December 2005 Continuing Total No. of Continuing Total No. of earnings earnings shares earnings earnings shares £'000 £'000 £'000 £'000 Basic earnings/weighted 9,803 9,661 44,557,701 7,646 14,127 50,156,508 average number of shares Weighted average number of 15,603 24,932 shares under option Number of shares that would have been issued at fair value (11,132) (13,321) Earnings/ diluted weighted 9,803 9,661 44,562,172 7,646 14,127 50,168,119 average number of shares Diluted earnings per 22.00p 21.68p 15.24p 28.16p ordinary share (pence) 3. Exceptional administrative expenses Administrative expenses include the following exceptional costs: 52 weeks 52 weeks ended ended 31 December 31 December 2006 2005 £'000 £'000 Reorganisation and redundancy payments 656 - The above costs relate to redundancy payments and legal costs incurred following the termination of the employment contracts of former Board members and other senior employees during the period. 4. Reconciliation of operating profit to net cash inflow from operating activities 52 weeks 52 weeks ended ended 31 December 31 December 2006 2005 £'000 £'000 Operating profit 14,907 11,404 Goodwill amortisation 14 14 Depreciation 4,055 4,280 Profit on sale of tangible fixed (332) (336) assets excluding property Decrease in stocks 196 37 Increase in debtors (2,839) (591) Decrease in creditors and (197) (4,612) provisions Net cash inflow from operating 15,804 10,196 activities 5. Exceptional (loss) / profit on the disposal of businesses The exceptional (charges) / credits during the period were as follows: 52 weeks 52 weeks ended ended 31 December 31 December 2006 2005 £'000 £'000 Profit on disposal of subsidiary undertakings - 6,564 Adjustments in respect of deferred consideration receivable and legal costs payable on prior year (27) - disposals Provisions for onerous lease commitments (115) (160) (142) 6,404 Last year the group sold two subsidiary undertakings, Accommodation Hire Limited and Engineering Appliances Limited, realising a combined profit on disposal of £6,564,000. This year certain adjustments have been made to both the deferred consideration receivable and legal costs payable which have resulted in the net charge of £27,000 as noted above. The group has various onerous property lease commitments inherited from the Cox Plant business which was sold during 2002. During both the current and previous financial years the directors have re-assessed the level of provisions required in respect of these commitments and have accordingly adjusted the onerous lease provision. This has resulted in a charge to the profit and loss account of £115,000 (52 weeks ended 31 December 2005: £160,000). 6. Analysis of net debt As at Cash Other non As at 31 December flow cash 31 December 2006 movements 2005 £'000 £'000 £'000 £'000 Cash at bank and in hand 10,190 146 (298) 10,342 Debt due in one year (5,000) 5,000 (5,000) (5,000) Debt due after one year (20,000) - 5,000 (25,000) Gross debt (25,000) 5,000 - (30,000) Net debt (14,810) 5,146 (298) (19,658) 7. The financial information set out above has been prepared in accordance with UK GAAP using accounting policies that are consistent with those adopted in the statutory accounts for the 52 weeks ended 31 December 2005. There have not been any new UK Accounting Standards issued during the period that have an impact on the group. 8. The financial information set out above does not constitute the group's statutory accounts for the 52 weeks ended 31 December 2006 or the 52 weeks ended 31 December 2005 but it is derived from those accounts. The financial statements for the 52 weeks ended 31 December 2005 have been filed and those for the 52 weeks ended 31 December 2006 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. 9. 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. The Company's Annual General Meeting will be held at 10.30 a.m. on Wednesday 6 June 2007 at Floor 5, 10 Bruton Street, London, W1J 6PX. ENDS This information is provided by RNS The company news service from the London Stock Exchange

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