Interim Results
Andrews Sykes Group PLC
30 September 2004
ANDREWS SYKES GROUP PLC
Interim Results for the 27 weeks ended 3 July 2004
Dear Shareholders
I have pleasure in presenting the results of our Group for the 27 weeks ended 3
July 2004.
Overview
Overall our Group's performance in the first half of 2004 has been satisfactory.
The salient features of the results for the 27 weeks ended 3 July 2004 compared
with the 26 weeks ended 28 June 2003 are as follows:
• Earnings before Interest, Taxation, Depreciation and Goodwill
Amortisation (EBITDA, as reconciled on the face of the profit and loss
account) derived from continuing operations increased by 2.5% from £8.6
million to £8.8 million.
• Profit on ordinary activities before tax has increased by 10.4% from
£5.6 million to £6.2 million.
• Basic earnings per share has increased by 14.2% from 6.46 pence to
7.38 pence.
• Gearing has been further reduced from 27.6% as at 27 December 2003 to
20.4% as at 3 July 2004 reflecting the Group's strong underlying cash
generative abilities.
Financial review
In previous statements I have reported to you that our Board has been following
two key financial strategies. Firstly costs have been set at levels allowing us
to respond to peaks in demand and yet achieve high levels of profitability in
medium and low demand times. Secondly focussed initiatives have been followed
to develop the specialist hire markets which the Board considers have the
highest potential for profit growth. I am pleased to be able to report that both
these initiatives have, yet again, proved to be effective in the first half of
2004.
Even though the UK had unusually dry weather conditions during the first half of
this year, the level of turnover achieved by our main UK trading company,
Andrews Sykes Hire, was approximately £0.8 million higher in 2004 than in 2003.
Our strategies have therefore proven to be beneficial and have been responsible
for the increase in the Group's profit on ordinary activities before tax of £0.6
million from £5.6 million to £6.2 million. This indicates the strong underlying
profitability of our Group and demonstrates that even in difficult weather
conditions an excellent level of profit can be maintained.
Cash flow and gearing
Our Group continues to generate strong cash flows with a net cash inflow from
operating activities of £6.6 million in the first half of 2004, an increase of
£0.4 million over the same period last year. Gearing has been reduced from 27.6%
at 27 December 2003 to 20.4% at 3 July 2004 despite the payment of the 2003
final dividend of £1.7 million.
Earnings per share, share buy back programme and interim dividend
Mainly due to improvements in the Group's profit after taxation, the basic
earnings per share has increased from 6.46 pence in the first half of 2003 to
7.38 pence in the same period this year. Whilst the share buy back programme has
been very beneficial to the company in the past, the Board now believes that it
a dividend payment policy is now in the best interest of shareholders.
Accordingly I am pleased to announce that the Board has declared an interim
dividend of 1.0 pence per ordinary share. This will be paid on 4 November 2004
to shareholders on the register on 8 October 2004. The shares will go ex
dividend on 6 October 2004.
Prospects
The results for the third quarter of 2004 have been affected by the unusually
cold weather conditions in July and August which didn't stimulate the demand for
temperature control equipment.
September trading is in line with expectations and with the return of normal
weather conditions the Group is well positioned to benefit in the future from
the commercial strategies implemented since the beginning of the year.
JG Murray
Chairman
29 September 2004
Consolidated Profit and Loss Account for the 27 weeks ended 3 July 2004
27 weeks to 26 weeks to 52 weeks to
3 July 28 June 27 December
2004 2003 2003
(as restated*)
Continuing Continuing Continuing
activities activities activities
£'000 £'000 £'000
Turnover 31,407 32,371 68,252
Cost of sales -15,291 -16,810 -34,084
Gross profit 16,116 15,561 34,168
Distribution costs -4,745 -4,641 -9,647
Administrative expenses -4,949 -5,020 -10,080
Other operating income 18 - 5
Operating profit 6,440 5,900 14,446
EBITDA ** 8,773 8,556 19,666
Depreciation and asset disposals -2,326 -2,649 -5,206
Operating profit before goodwill amortisation 6,447 5,907 14,460
Goodwill amortisation -7 -7 -14
Operating profit 6,440 5,900 14,446
Profit on the disposal of a business - discontinued - - 598
Net interest payable -225 -272 -470
Profit on ordinary activities before taxation 6,215 5,628 14,574
Tax on profit on ordinary activities -1,938 -1,778 -4,617
Profit on ordinary activities after taxation being profit 4,277 3,850 9,957
for the financial period
Dividends proposed on equity shares -580 - -1,740
Retained profit for the financial period attributable to 3,697 3,850 8,217
ordinary shareholders
Basic earnings per ordinary share (pence) 7.38p 6.46p 16.82p
Diluted earnings per ordinary share (pence) 7.08p 6.25p 16.25p
Goodwill amortisation (pence) 0.01p 0.01p 0.02p
Exceptional items (pence) - - -0.97p
Adjusted diluted earnings per ordinary share (pence) 7.09p 6.26p 15.30p
Equity dividend per share (pence) 1.00p - 3.00p
* The comparative figures for the 26 weeks ended 28 June 2003 have been
restated (i) to comply with UITF 38 - Accounting for ESOP Trusts - which was
issued in December 2003, (ii) the reclassification of certain property and
salary expenses out of administration to distribution costs as this more
appropriately reflects the nature of the expense and the reclassification of
certain overseas costs to ensure consistency with 2003.
** Earnings Before Interest, Taxation, Depreciation and Amortisation.
There were no material acquisitions in any period.
Consolidated Balance Sheet as at 3 July 2004
3 July 28 June 27 December
2004 2003 2003
(as restated*)
£'000 £'000 £'000
Fixed assets
Intangible assets: Goodwill 52 66 59
Tangible assets 16,755 16,196 18,015
Investments 164 164 164
16,971 16,426 18,238
Current assets
Stocks 4,950 5,507 5,616
Debtors 15,999 16,988 14,953
Cash at bank and in hand 10,904 9,482 11,251
31,853 31,977 31,820
Creditors falling due within one year
Loans and overdrafts -3,119 -3,740 -3,749
Other creditors -9,197 -10,879 -10,715
Purchase of own shares - -47 -458
Corporation and overseas tax -2,680 -2,832 -3,191
Dividends -580 - -1,740
-15,576 -17,498 -19,853
Net current assets 16,277 14,479 11,967
Receivable within one year 16,277 13,260 11,967
Due after more than one year - 1,219 -
16,277 14,479 11,967
Total assets less current liabilities 33,248 30,905 30,205
Creditors falling due after more than one year
Loans -11,980 -14,470 -12,225
Provisions for liabilities and charges -725 -1,480 -869
Net assets 20,543 14,955 17,111
Capital and reserves
Called up share capital 11,598 11,836 11,615
Share premium account 10,678 10,476 10,678
Revaluation reserve 749 754 752
Other reserves 7,392 7,113 7,378
Profit and loss account -9,859 -15,077 -13,284
ESOP reserve -25 -157 -38
Equity shareholders' funds 20,533 14,945 17,101
Minority interests (equity) 10 10 10
20,543 14,955 17,111
* The comparative figures for the 26 weeks ended 28 June 2003 have been
restated to comply with UITF 38 - Accounting for ESOP Trusts - which was issued
in December 2003.
Consolidated Cash Flow Statement for the 27 weeks ended 3 July 2004
27 weeks to 26 weeks to 52 weeks to
3 July 28 June 27 December
2004 2003 2003
£'000 £'000 £'000
Net cash inflow from operating activities 6,555 6,224 17,329
Returns on investments and servicing of finance
Interest received 173 163 335
Interest paid -396 -371 -828
Net cash outflow for returns on investments and servicing of -223 -208 -493
finance
Cash outflow for taxation -2,175 -1,143 -3,214
Capital expenditure
Purchase of tangible fixed assets -2,002 -2,348 -7,405
Purchase of shares held in ESOP - -88 -88
Sale of tangible fixed assets 818 273 868
Sale of shares held in ESOP 12 82 176
Net cash outflow for capital expenditure -1,172 -2,081 -6,449
Acquisitions and disposals
Cash received following the disposal of a business - - 1,500
Net cash inflow for acquisitions and disposals - - 1,500
Equity dividends paid -1,740 - -
Cash inflow before the use of liquid resources and financing 1,245 2,792 8,673
Management of liquid resources
Movement in bank deposits 476 -2,493 3,862
Financing
Issue of ordinary share capital net of issue costs - - 252
New loans drawn down - - 1,259
Loan repayments -875 -245 -3,740
Purchase of own shares -630 -1,802 -3,883
Net cash outflow from financing -1,505 -2,047 -6,112
Increase / (decrease) in cash in the period 216 -1,748 6,423
Analysis of net debt
Bank current and deposit accounts and cash in hand 10,904 9,482 11,251
Total loans and overdrafts -15,099 -18,210 -15,974
Net debt -4,195 -8,728 -4,723
Net debt as a percentage of shareholders' funds (as -20.4% -58.4% -27.6%
restated)
Consolidated Statement of Total Recognised Gains and Losses for the 27 weeks
ended 3 July 2004
27 weeks to 26 weeks to 52 weeks to
3 July 28 June 27 December
2004 2003 2003
(as restated)
£'000 £'000 £'000
Profit for the financial period 4,277 3,850 9,957
Currency translation differences on foreign currency net -105 36 -18
investments
Total recognised gains and losses in the period 4,172 3,886 9,939
Notes to the accounts for the 27 weeks ended 3 July 2004
1. Basis of preparation
The interim report for the 27 weeks ended 3 July 2004 was approved by the Board
on 29 September 2004. 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 52 weeks
ended 27 December 2003 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 financial information has been prepared in accordance with the accounting
policies adopted within the financial statements for the 52 weeks ended 27
December 2003.
2. Segmental analysis
The Group's turnover may be analysed between the following principal activities:
27 weeks to 26 weeks to 52 weeks to
3 July 28 June 27 December
2004 2003 2003
£'000 £'000 £'000
Activity:
Hire 20,195 20,549 43,537
Sales 6,135 6,737 13,990
Installation 5,077 5,085 10,725
Total 31,407 32,371 68,252
The geographical analysis of the Group's turnover was as follows:
By origination: 27 weeks to 26 weeks to 52 weeks to
3 July 28 June 27 December
2004 2003 2003
£'000 £'000 £'000
United Kingdom 28,419 29,249 61,925
Rest of Europe 1,212 1,602 3,239
Middle East and Africa 1,776 1,520 3,088
31,407 32,371 68,252
By destination: 27 weeks to 26 weeks to 52 weeks to
3 July 28 June 27 December
2004 2003 2003
£'000 £'000 £'000
United Kingdom 27,892 28,454 60,196
Rest of Europe 1,317 2,067 4,388
Middle East and Africa 1,832 1,570 3,153
Rest of World 366 280 515
31,407 32,371 68,252
The analysis of profit before interest and tax and net assets by geographical
origin was as follows:
Profit before interest and tax Net assets
27 weeks to 26 weeks to 52 weeks to As at As at As at
3 July 28 June 27 December 3 July 28 June 27 December
2004 2003 2003 2004 2003 2003
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom 5,694 5,360 13,983 24,541 23,668 24,211
Rest of Europe 469 388 771 1,528 1,263 1,155
Middle East and Africa 277 152 290 1,929 1,584 1,399
6,440 5,900 15,044 27,998 26,515 26,765
Net debt -4,195 -8,728 -4,723
Taxation and dividends payable -3,260 -2,832 -4,931
20,543 14,955 17,111
3. Reconciliation of operating profit to net cash inflow from operating activities
27 weeks to 26 weeks to 52 weeks to
3 July 28 June 27 December
2004 2003 2003
(as restated)
£'000 £'000 £'000
Operating profit 6,440 5,900 14,446
Goodwill amortisation 7 7 14
Depreciation 2,847 2,709 5,575
Profit on sale of fixed assets -521 -60 -369
Decrease /(increase) in stocks 666 -815 -924
Increase in debtors -1,266 -1,223 -847
Decrease in creditors and provisions -1,618 -294 -566
Net cash inflow from operating activities 6,555 6,224 17,329
4. 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 57,968,589 (26 weeks ended 28 June 2003: 59,605,878).
The calculation of the diluted earnings per ordinary share is based on the
profits as set out in the table below and on 60,421,720 (26 weeks ended 28 June
2003: 61,557,328) ordinary shares. The share options have a dilutive effect for
the period calculated as follows:
27 weeks to 3 July 2004 26 weeks to 28 June
2003
(as restated)
Total Number of Total Number of
earnings shares earnings shares
£'000 £'000
Basic earnings/weighted average number of shares 4,277 57,968,589 3,850 59,605,878
Weighted average number of shares under option 4,362,604 4,710,057
No. of shares that would have been issued at fair -1,909,473 -2,758,607
value
Earnings/ diluted weighted average number of shares 4,277 60,421,720 3,850 61,557,328
Diluted earnings per ordinary share (pence) 7.08p 6.25p
The adjusted diluted earnings per share excluding goodwill amortisation is based
upon the weighted average number of ordinary shares as set out in the table
above. The earnings can be reconciled to the adjusted earnings as follows:
27 weeks to 3 26 weeks to
July 2004 28 June 2003
(as
restated)
£'000 £'000
Earnings 4,277 3,850
Goodwill amortisation 7 7
Adjusted earnings 4,284 3,857
Adjusted diluted earnings per ordinary share (pence) 7.09p 6.26p
5. Reconciliation of movements in Group shareholders' funds
27 weeks to 26 weeks to 52 weeks to
3 July 28 June 27 December
2004 2003 2003
(as restated)
£'000 £'000 £'000
Profit for the financial period 4,277 3,850 9,957
Dividends -580 - -1,740
Other recognised gains and losses -105 36 -18
Proceeds from ordinary shares issued - - 252
Consideration for the purchase of own shares -172 -1,849 -4,341
Sale of own shares by the ESOP trust 12 93 176
Purchase of own shares by the ESOP trust - -88 -88
Net increase in shareholders' funds 3,432 2,042 4,198
Shareholders' funds at the beginning of the period 17,101 12,903 12,903
Shareholders' funds at the end of the period 20,533 14,945 17,101
6. 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.
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