RNS Number : 7615E
Andrews Sykes Group PLC
11 May 2017
Andrews Sykes Group plc
Summary of results
For the 12 months ended 31 December 2016
12 months ended 31 December 2016 '000
12 months ended 31 December 2015 '000
Revenue from continuing operations
65,389
60,058
EBITDA* from continuing operations
20,664
17,701
Operating profit
15,816
13,208
Profit after tax for the financial period
14,473
10,800
Basic earnings per share from total operations (pence)
34.25p
25.55p
Interim and final dividends paid per equity share (pence)
23.80p
23.80p
Proposed final dividend per equity share (pence)
11.90p
11.90p
Net cash inflow from operating activities
15,133
12,124
Total interim and final dividends paid
10,058
10,058
Net funds
17,673
14,558
* Earnings Before Interest, Taxation, Depreciation, profit on sale of property, plant and equipment, Amortisation and non-
recurring items as reconciled on the consolidated income statement.
For further information please contact:
Andrews Sykes Group plc Paul Wood, Group Managing Director Andrew Phillips, Chief Financial Officer
01902 328700
GCA Altium Limited (NOMAD) Paul Lines Adam Sivner
0845 505 4300
Arden Partners plc (broker) Steve Douglas
020 7614 5900
Chairman's Statement
Overview and financial highlights
Summary
The group's revenue for the year ended 31 December 2016 was 65.4 million, an increase of 5.3 million, or 8.9%, compared with the same period last year. This increase had a more than proportionate impact on operating profit which increased by 19.7%, or 2.6 million, from 13.2 million last year to 15.8 million in the year under review. This increase, which follows a 16.8% increase last year, reflects strong performances from both our hire and sales businesses in the UK and Europe and the Middle East. Part of this increase, in Sterling terms, is due to the relatively weak pound compared with overseas currencies but nevertheless the underlying trading performance in our overseas subsidiaries shows a significant improvement compared to last year.
Net finance income was 1.7 million this year compared with 0.2 million in 2015. This is largely attributable to a foreign exchange gain arising on the retranslation of inter-company balances of 1.6 million which is also due to the relatively weak value of Sterling compared with overseas currencies, notably the Euro and the UAE Dirham.
Mainly as a consequence of the increase in operating profit and net finance income, our basic earnings per share increased by 34.1% from 25.55p last year to 34.25p in the current period. The basic earnings per share is a positive factor reflecting the strong trading performance of the group's businesses.
The group continues to generate strong cash flows. Net cash inflow from operating activities was 15.1 million compared with 12.1 million last year. Despite shareholder related cash outflows of 10.1 million on ordinary dividends, net funds increased by 3.2 million from 14.5 million at 31 December 2015 to 17.7 million at 31 December 2016.
Our policy of returning affordable dividends to shareholders continues. Over the last four financial years the group has paid 37.7 million in cash to shareholders. At the same time the level of external bank borrowings reduced from 6 million as at the end of last year to 5 million as at 31 December 2016. The Board is once again proposing a further final dividend payment amounting to 5.0 million which, if approved at the forthcoming AGM, would be paid in June 2017.
Cost control, cash and working capital management continue to be priorities for the group. Capital expenditure is concentrated on assets that give a good return and in total 6.2 million was invested in the hire fleet this year, 0.6 million more than last year and significantly more than the wasting depreciation charge of 4.5 million. In addition, the group invested a further 0.7 million in property, plant and equipment. These actions will ensure that the group's infrastructure and revenue generating assets are sufficient to support future growth and profitability. Hire fleet utilisation, condition and availability continue to be the subjects of management focus.
Operating performance
The following table splits the results between the first and second half years:
Turnover
Operating profit
'000
'000
1st half 2016
30,287
6,395
1st half 2015
28,240
4,973
2nd half 2016
35,102
9,421
2nd half 2015
31,818
8,235
Total 2016
65,389
15,816
Total 2015
60,058
13,208
The above table demonstrates that the successful performance in the first half of the year continued into the second half. Turnover in the first half of the year showed a 7.2% improvement over the same period in 2015 and, in the second half, the percentage improvement increased to 10.3%. Operating profit for the first half year showed a 28.6% improvement compared with the same period in 2015 and a 14.4% improvement for the second half year. Although the percentage improvement was lower in the second half this year this is in comparison to a much stronger performance in the second half of last year. Traditionally the group makes more profit in the second half year due to the higher profit margins on its air conditioning products which are hired predominantly in the second half of the year.
The above significant improvement in operating profit has been achieved despite any significant extremes in climatic conditions. The operating profit of our main business segment in the UK and Northern Europe increased from 11.3 million last year to 13.8 million in the year under review. Whilst demand for our pumping and dehumidification products was stimulated by the floods in the North of England at the beginning of 2016, the absence of a hot summer did not help our air conditioning business. Generally the underlying performance was better than last year across the business sector due to robust operational management. Our traditional businesses continue to be developed and supported by the expansion of non-weather dependent niche markets which benefit the performance of our specialist hire divisions. This year's result further demonstrates that with a diverse product range we are able to return a strong performance despite the absence of any significant extreme weather conditions.
Our hire and sales business in the Middle East had another excellent trading year. The operating profit for this business segment increased from 2.3 million last year to 2.9 million in 2016. Trading was strong throughout the region and our climate rental division returned a positive contribution to the business results.
Our fixed installation business sector in the UK returned a slightly reduced operating profit of 0.3 million this year, 0.1 million behind the result achieved last year. The market continues to be fragmented with high levels of price competition.
Central overheads increased from 0.8 million in 2015 to 1.2 million in the current year.
Profit for the financial year
Profit before tax was 17.5 million this year compared with 13.4 million last year. This is attributable to the above 2.6 million increase in operating profit and the 1.5 million increase in net finance income. No dividends were received in either year from Oasis Sykes, our trade investment in Saudi Arabia.
Tax charges increased from 2.6 million in 2015 to 3.1 million this year. The overall effective tax rate reduced from 19.2% in 2015 to 17.5% primarily due to an increase in profits earned by our business based in the Middle East, where corporation tax rates are very low, the utilisation of off balance sheet overseas tax losses and a reduction in the UK corporation tax rate. Profit for the financial year was 14.4 million compared with 10.8 million last year.
Equity dividends
The company paid two dividends during the year. On 24 June 2016 a final dividend for the year ended 31 December 2015 of 11.9 pence per ordinary share was paid and this was followed on 2 November 2016 by the payment of an interim dividend for 2016 also of 11.9 pence per share. Therefore, during 2016, a total of 10.1 million in cash dividends has been returned to our ordinary shareholders.
I am pleased to announce that, in view of the group's ongoing profitability and its significant cash resources, the Board has proposed a final dividend for 2016 also of 11.9 pence per ordinary share. If approved at the forthcoming Annual General Meeting this dividend, which in total amounts to 5.0 million, will be paid on 26 June 2017 to shareholders on the register as at 26 May 2017.
Net funds
At 31 December 2016 the group had net funds of 17.7 million compared with 14.5 million last year, an increase of 3.2 million despite the payment of the above equity dividends totalling 10.1 million during the year.
Bank loan facilities
The final capital repayment of 5 million that was due under the bank loan agreement entered into in April 2013 was made in accordance with the agreed repayment schedule on30 April 2017. This was financed by a new five year loan of 5 million also with the Royal Bank of Scotland. This will be repaid by four equal annual instalments of 0.5 million per annum commencing in April 2018 followed by a final balloon repayment of 3 million due in April 2022.
Share buybacks
During the current year the company did not purchase any ordinary shares for cancellation. However, in prior periods such purchases were made and these enhanced earnings per share and were for the benefit of all shareholders.
The Board believes that it is in the best interest of shareholders if it has this authority in order that market purchases may be made in the right circumstances if the necessary funds are available. Accordingly, at the next Annual General Meeting, shareholders will be asked to vote in favour of a resolution to renew the general authority to make market purchases of up to 12.5% of the ordinary share capital in issue.
Outlook
The group's policy to increase investments in new technologically advanced and environmentally friendly non-seasonal products will be continued into 2017. Investments will also continue in our traditional businesses to ensure we are ready to support our customers in times of extreme weather conditions.
The group continues to face both challenges and opportunities in all of its geographical markets but our business remains strong, cash generative and well developed, with positive net funds. The Board is therefore cautiously optimistic for further success in 2017, always being mindful of the favourable or adverse impact that the weather can have on our business.
JG Murray
Chairman
10 May 2017
Andrews Sykes Group plc
Consolidated Income Statement
For the 12 months ended 31 December 2016
12 months ended 31December 2016 '000
12 months ended 31 December 2015 '000
Continuing operations
Revenue Cost of Sales
65,389 (26,677)
60,058 (25,284)
Gross profit
38,712
34,774
Distribution costs
(11,512)
(10,828)
Administrative expenses
(11,384)
(10,738)
Operating profit
15,816
13,208
EBITDA* Depreciation and impairment losses Profit on the sale of plant and equipment
20,664 (5,310) 462
17,701 (4,959) 466
Operating profit
15,816
13,208
Finance income Finance costs
1,875 (150)
323 (164)
Profit before taxation
17,541
13,367
Taxation
(3,068)
(2,567)
Profit for the financial period
14,473
10,800
There were no discontinued operations in either of the above periods
Earnings per share
Basic (pence)
34.25p
25.55p
Diluted (pence)
34.25p
25.55p
Interim and final dividends paid per equity share (pence)
23.80p
23.80p
Proposed final dividend per equity share (pence)
11.90p
11.90p
* Earnings Before Interest, Taxation, Depreciation, profit on the sale of property, plant and equipment, Amortisation and non-
recurring items.
Andrews Sykes Group plc
Consolidated Statement of Comprehensive Total Income
For the 12 months ended 31 December 2016
12 months ended 31December 2016 '000
12 months ended 31December 2015 '000
Profit for the financial period
14,473
10,800
Other comprehensive income / (charges)
Items that may be reclassified to profit and loss:
Currency translation differences on foreign currency net
Investments
1,924
(175)
Items that will never be reclassified to profit and loss:
Remeasurement of defined benefit assets and liabilities
(2,201)
1,157
Related deferred tax
418
(207)
Other comprehensive income for the period net of tax
141
775
Total comprehensive income for the period
14,614
11,575
Andrews Sykes Group plc
Consolidated Balance Sheet
As at 31 December 2016
31 December 2016
31 December 2015
'000
'000
'000
'000
Non-current assets
Property, plant and equipment
20,062
17,750
Lease prepayments
49
50
Trade investments
164
164
Deferred tax asset
559
282
Retirement benefit pension surplus
1,161
2,443
21,995
20,689
Current assets
Stocks
4,994
4,199
Trade and other receivables
18,425
16,584
Overseas tax (denominated in Euros)
-
17
Cash and cash equivalents
22,819
20,715
46,238
41,515
Current liabilities
Trade and other payables
(13,055)
(11,090)
Current tax liabilities
(1,825)
(1,306)
Bank loans
(4,995)
(980)
Obligations under finance leases
(102)
(101)
(19,977)
(13,477)
Net current assets
26,261
28,038
Total assets less current liabilities
48,256
48,727
Non-current liabilities
Bank loans
-
(4,995)
Obligations under finance leases
(49)
(81)
(5,076)
(49)
Net assets
48,207
43,651
Equity
Called-up share capital
423
423
Share premium
13
13
Retained earnings
43,619
40,987
Translation reserve
3,897
1,973
Other reserves
245
245
Surplus attributable to equity holders of the parent
48,197
43,641
Minority interest
10
10
Total equity
48,207
43,651
Andrews Sykes Group plc
Consolidated Cash Flow Statement
For the 12 months ended 31 December 2016
12 months ended 31December 2016 '000
12months ended 31 December 2015 '000
Cash flows from operating activities
Cash generated from operations
17,693
14,623
Interest paid
(136)
(155)
Net UK corporation tax paid
(1,846)
(1,881)
Overseas tax paid
(578)
(463)
Net cash flow from operating activities
15,133
12,124
Investing activities
Sale of property, plant and equipment
673
711
Purchase of property, plant and equipment
(5,392)
(5,234)
Interest received
241
197
Net cash flow from investing activities
(4,478)
(4,326)
Financing activities
Loan repayments
(1,000)
(1,000)
Finance lease capital repayments
(116)
(94)
Equity dividends paid
(10,058)
(10,058)
Net cash flow from financing activities
(11,174)
(11,152)
Net decrease in cash and cash equivalents
(519)
(3,354)
Cash and cash equivalents at the beginning of the period
20,715
24,077
Effect of foreign exchange rate changes
2,623
(8)
Cash and cash equivalents at the end of the period
22,819
20,715
Reconciliation of net cash flow to movement in net funds in the period
Net decrease in cash and cash equivalents
(519)
(3,354)
Cash outflow from the decrease in debt
1,115
1,094
Non-cash movement in respect of raising loan finance
(20)
(20)
Non-cash movements re new finance leases and hire purchase agreements
(84)
-
Movement in net funds during the period
492
(2,280)
Opening net funds at the beginning of the period
14,558
16,846
Effect of foreign exchange rate changes
2,623
(8)
Closing net funds at the end of the period
17,673
14,558
Andrews Sykes Group plc
Consolidated Statement of Changes in Equity
For the 12 months ended 31 December 2016
Attributable to equity holders of the parent company
Minority interest
Total equity
Share capital '000
Share Premium '000
Retained earnings '000
Translation reserve '000
Other reserves '000
Total '000
'000
'000
At 31 December 2014
423
13
39,295
2,148
245
42,124
10
42,134
Profit for the financial period
-
-
10,800
-
-
10,800
-
10,800
Other comprehensive income and (charges):
Items that may be reclassified to profit and loss:
Currency translation differences on foreign currency net investments
-
-
-
(175)
-
(175)
-
(175)
Items that will never be reclassified to profit and loss:
Remeasurement of defined benefit assets and liabilities
-
-
1,157
-
-
1,157
-
1,157
Related deferred tax
-
-
(207)
-
-
(207)
-
(207)
Total other comprehensive income and (charges)
-
-
950
(175)
-
775
-
775
Transactions with owners recorded directly in equity
Dividends paid
-
-
(10,058)
-
-
(10,058)
-
(10,058)
Total transactions with owners
-
-
(10,058)
-
-
(10,058)
-
(10,058)
At 31 December 2015
423
13
40,987
1,973
245
43,641
10
43,651
Profit for the financial period
-
-
14,473
-
-
14,473
-
14,473
Other comprehensive income and (charges):
Items that may be reclassified to profit and loss:
Currency translation differences on foreign currency net investments
-
-
-
1,924
-
1,924
-
1,924
Items that will never be reclassified to profit and loss:
Remeasurement of defined benefit assets and liabilities
-
-
(2,201)
-
-
(2,201)
-
(2,201)
Related deferred tax
-
-
418
-
-
418
-
418
Total other comprehensive income and (charges)
-
-
(1,783)
1,924
-
141
-
141
Transactions with owners recorded directly in equity:
Dividends paid
-
-
(10,058)
-
-
(10,058)
-
(10,058)
Total transactions with owners
-
-
(10,058)
-
-
(10,058)
-
(10,058)
At 31 December 2016
423
13
43,619
3,897
245
48,197
10
48,207
Notes
1. Basis of preparation
Whilst the information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. Therefore the financial information set out above does not constitute the company's financial statements for the 12 months ended 31 December 2016 or 31 December 2015 but it is derived from those financial statements.
2. Going Concern
The board remains satisfied with the group's funding and liquidity position. The group has operated throughout the 2016 financial year and until the date of signing these accounts within its financial covenants as contained in the bank agreement.
Both loan capital and interest payments have been made in accordance with the bank agreement. The first two capital repayments of 1 million each were made on the due dates in prior periods and these were followed by a further capital repayment, also of 1 million, on 30 April 2016. Interest is paid bi-annually at the end of October and April.
The final loan repayment was made on 30 April 2017, financed by a new five year loan of 5 million also with the Royal Bank of Scotland. This will be repaid by four equal annual instalments of 0.5 million per annum commencing on 30 April 2018 followed by a final balloon repayment of 3 million due on 30 April 2022. Interest will be charged at the 3 month LIBOR rate plus a margin of 1.1%. The group's profit and cash flow projections indicate that the financial covenants included within the new bank loan agreement will be met for the foreseeable future.
The group continues to have substantial cash resources which at 31 December 2016 amounted to 22.8 million compared with 20.7 million as at 31 December 2015. Profit and cash flow projections for 2017 and 2018, which have been prepared on a conservative basis taking into account reasonably possible changes in trading performance, indicate that the group will be profitable and generate positive cash flows after loan repayments. These forecasts and projections indicate that the group should be able to operate within the new bank facility agreement and that all associated covenants will be met.
The board considers that the group has considerable financial resources and a wide operational base. As a consequence, the board believes that the group is well placed to manage its business risks successfully, as demonstrated by the current year's result, despite some uncertain external influences.
After making enquiries, the board has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the board continues to adopt the going concern basis when preparing this Annual Report and Financial Statements.
3. Distribution of Annual Report and Financial Statements
The group expects to distribute copies of the full Annual Report and Financial Statements that comply with IFRSs by 19 May 2017 following which copies will be available either from the registered office of the company; St David's Court, Union Street, Wolverhampton, WV1 3JE; or from the company's website; www.andrews-sykes.com. The Annual Report and Financial Statements for the 12 months ended 31 December 2015 have been delivered to the Registrar of Companies and those for the 12 months ended 31 December 2016 will be filed at Companies House following the company's Annual General Meeting. The auditors have reported on those financial statements; their report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain details of any matters on which they are required to report by exception.
4. Date of Annual General Meeting
The group's Annual General Meeting will be held at 10.30 a.m. on Wednesday 21 June 2017 at 2 Eaton Gate, London, SW1W 9BJ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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