REG - Andrews Sykes Group - Final Results <Origin Href="QuoteRef">ANSY.L</Origin>

Andrews SykesAnnouncement

15/07/2015 16:11

RNS Number : 2699M
Andrews Sykes Group PLC
06 May 2015
Andrews Sykes Group plc
Summary of results
For the 12 months ended 31 December 2014

 12 months
ended
31 December
2014
'000

12 months
ended
31 December
2013
'000
Revenue from continuing operations
 56,400

 61,072




EBITDA* from continuing operations
 15,569

 18,592




Operating profit 
 11,311

 14,683




Profit after tax for the financial period
 9,311

 11,518




Basic earnings per share from total operations (pence)
 22.03p

 27.25p




Interim and final dividends paid per equity share (pence)
 23.80p

 17.80p




Proposed final dividend per equity share (pence) 
 11.90p

 11.90p




Net cash inflow from operating activities
 10,621

 14,216




Total interim and final dividends paid
 10,058

 7,523




Net funds
 16,846

 19,113
* 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 
Altium Capital 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 2014 was 56.4 million, a decrease of 4.7 million, or 7.6%, compared with the same period last year. This decrease had an adverse impact on operating profit which fell by 3.4 million from 14.7 million last year to 11.3 million in the year under review. This decrease is primarily due to two factors: the under-performance of our operations in the Benelux region and our heating business in the UK: both of which mainly impacted the group's performance in the first half of the year and had been largely addressed by the end of the fourth quarter.
As a consequence of the above, our basic earnings per share decreased from 27.25p last year to 22.03p in the current period. Although lower than in the previous year, the basic earnings per share is still considered to be a positive factor reflecting once again the strong trading performance of the majority of the group's businesses.
The group continues to generate strong cash flows. Net cash inflow from operating activities was 10.6 million compared with 14.2 million last year. Net funds only decreased by 2.3 million from 19.1 million last year to 16.8 million at 31 December 2014 despite shareholder related cash outflows of 10.1 million (2013: 7.5 million) on equity dividends. Therefore, over the last two financial years, the group has returned 17.6 million in cash to shareholders. At the same time the level of external bank borrowings reduced from 8 million as at the end of last year to 7 million as at 31 December 2014. The Board is now proposing a further final dividend totalling 5.0 million payable in June 2015. 
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 4.4 million was invested in the hire fleet this year, a level very similar to last year's expenditure of 4.6 million. In addition, the group invested a further 0.5 million on 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 2014
26,759
4,349
1st half 2013
29,774
6,427



2nd half 2014
29,641
6,962
2nd half 2013
31,298
8,256



Total 2014
56,400
11,311
Total 2013
61,072
14,683



The above table demonstrates that the majority of the trading shortfall compared with last year occurred in the first half of the year. Turnover in that period was 10.1% lower than in the same period in 2013 resulting in a reduction in operating profit of 32.3%. However, the group's trading results improved in the second half of the year. Whilst still behind last year's levels, the percentage shortfall in turnover and operating profit compared to 2013 both significantly reduced, to 5.3% and 15.6% respectively, compared with the first half year. The majority of the shortfall in the second half occurred in the third quarter; by the end of the fourth quarter trading had nearly recovered to the previous year's levels.
Once again our main hire and sales business sector in the UK and Europe faced challenging trading conditions throughout the year. Our UK pump business performed well and made a significant contribution to the group's operating profit. Similarly our specialist chiller and boiler hire divisions both traded ahead of last year as did our air conditioning and ventilation business. However, overall, the operating profit of this business segment fell from 13.5 million last year to 10.5 million in 2014 which is the main reason for the decline in the group's overall performance this year.
The fall in profitability of this business sector was mainly due to two factors: a sharp decline in trading in the Benelux region and a disappointing performance from our UK heating business. The poor trading performance in the Benelux region was due to a combination of two factors: a decline in the construction sector in the Netherlands and a mild winter throughout the region which failed to stimulate demand for our heating products. This also had an adverse impact on our heating business in the UK which was responsible for the majority of the shortfall in turnover of our main UK trading subsidiary, Andrews Sykes Hire Limited. Nevertheless, by the end of 2014, economic trading conditions throughout Europe had improved significantly and weather conditions had returned to seasonal normality. Consequently, we are now able to look forward to 2015 with a more optimistic outlook. 
Despite the above adverse trading conditions, the group's diverse product range is able to return a robust performance during any weather conditions. This is supported by the continuing development of non-weather dependent niche markets which continue to benefit the performance of our specialist hire divisions. We will continue to invest in and develop these businesses as well as our traditional core products and services.
Our hire and sales business in the Middle East had a successful year. Nevertheless the operating profit for this business segment fell from 1.8 million in 2013 when trading was particularly good to 1.5 million in 2014. Our climate rental division which was formed in 2012 continues to expand and returned a positive contribution to the business results.
Turnover of our fixed installation business sector in the UK was 0.1 million ahead of 2013 at 4.0 million but due to price competition and a change in mix in this fragmented market, operating margins were reduced. Consequently operating profit for this business sector fell from 0.4 million in 2013 to just over 0.2 million in the current year.
Careful cost control resulted in a 0.1 million reduction in central overheads from 1.0 million in 2013 to 0.9 million in the current year.
Profit for the financial year
Profit before tax was 11.8 million this year compared with 15.0 million last year. This is mainly attributable to the above 3.4 million reduction in operating profit which has been slightly offset by an increase in dividends received from Oasis Sykes, our trade investment in Saudi Arabia. Net finance costs increased by 0.1 million compared with 2013.
Tax charges reduced from 3.5 million to 2.5 million in 2014 due to a combination of the decrease in profits before tax and a fall in the overall effective tax rate from 23.0% in 2013 to 20.8% in 2014. Profit for the financial year was 9.3 million compared with 11.5 million last year.
Equity dividends
The company paid two dividends during the year. On 19 June 2014 a final dividend for the year ended 31 December 2013 of 11.9 pence per ordinary share was paid and this was followed on 2 December 2014 by the payment of an interim dividend for 2014 also of 11.9 pence per share. Therefore, during 2014, 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 2014 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 19 June 2015 to shareholders on the register on 29 May 2015.
Net funds
At 31 December 2014 the group had net funds of 16.8 million compared with 19.1 million last year, a decrease of only 2.3 million despite the payment of the above equity dividends totalling 10.1 million during the year.
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 2015. 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 challenges in all of its geographical markets but our business remains strong, cash generative and well developed, with positive net funds. Improvements have already been seen in the Benelux region and we anticipate improved performances from our newly established, but currently small, businesses in France, Switzerland and Luxembourg. The board is therefore cautiously optimistic for further success in 2015 always being mindful of the favourable or adverse impact that the weather can have on our business.
JG Murray
Chairman
5 May 2015
Andrews Sykes Group plc
Consolidated Income Statement
For the 12 months ended 31 December 2014

 12 months
ended
31 December
2014
'000

12 months
ended
31 December
2013
'000
Continuing operations







Revenue
Cost of Sales
 56,400
 (24,101)

 61,072
 (25,318)




Gross profit
 32,299

 35,754




Distribution costs
 (10,410)

 (10,994)




Administrative expenses
 (10,578)

 (10,077)




Operating profit
 11,311

 14,683




EBITDA*
Depreciation and impairment losses
Profit on the sale of plant and equipment
 15,569
 (4,563)
 305

 18,592
 (4,459)
 550
Operating profit
 11,311

 14,683








Income from trade investments
Finance income+
Finance costs+
 517
 342
 (414)

 194
 1,730
 (1,643)
Profit before taxation
 11,756

 14,964




Taxation
 (2,445)

 (3,446)




Profit for the financial period
 9,311

 11,518




There were no discontinued operations in either of the above periods







Earnings per share






Basic (pence)
 22.03p

 27.25p
Diluted (pence)
 22.03p

 27.25p




Interim and final dividends paid per equity share (pence)
 23.80p

 17.80p




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.
+ Restated in accordance with IAS19 (2011).
Andrews Sykes Group plc
Consolidated Statement of Comprehensive Total Income
For the 12 months ended 31 December 2014

12 months
ended
31 December
2014
'000

12 months
ended
31 December
2013
'000




Profit for the financial period
 9,311

 11,518




Other comprehensive charges







Items that may be reclassified to profit and loss:



Currency translation differences on foreign currency net



Investments
 (312)

 137




Items that will never be reclassified to profit and loss:



Remeasurement of defined benefit assets and liabilities
 (802)

 (1,524)
Related deferred tax
 160

 388




Other comprehensive charges for the period net of tax
 (954)

 (999)




Total comprehensive income for the period
 8,357

 10,519
Andrews Sykes Group plc
Consolidated Balance Sheet
As at 31 December 2014


31 December 2014

31 December 2013


 '000

 '000

 '000

 '000
Non-current assets








Property, plant and equipment



 16,388



 16,432
Lease prepayments



 51



 53
Trade investments



 164



 164
Deferred tax asset



 626



 618
Retirement benefit pension surplus



 1,253



 1,204




 18,482



 18,471









Current assets








Stocks

 4,618



 3,231


Trade and other receivables

 14,348



 14,631


Overseas tax (denominated in Euros)

 133



 280


Cash and cash equivalents

 24,077



 27,417




 43,176



 45,559











Current liabilities








Trade and other payables

 (10,963)



 (10,271)


Current tax liabilities

 (1,321)



 (1,599)


Bank loans

 (980)



 (980)


Obligations under finance leases

 (114)



 (114)


Provisions

 (9)



 (13)




 (13,387)



 (12,977)











Net current assets



 29,789



 32,582









Total assets less current liabilities



 48,271



 51,053









Non-current liabilities








Bank loans

 (5,975)



 (6,955)


Obligations under finance leases

 (162)



 (255)


Provisions

- 



 (8)















 (6,137)



 (7,218)









Net assets



 42,134



 43,835









Equity








Called-up share capital



 423



 423
Share premium



 13



 13
Retained earnings



 39,295



 40,684
Translation reserve



 2,148



 2,460
Other reserves



 245



 245









Surplus attributable to equity holders of the parent

 42,124



 43,825









Minority interest



 10



 10









Total equity



 42,134



 43,835
Andrews Sykes Group plc
Consolidated Cash Flow Statement 
For the 12 months ended 31 December 2014

12 months
ended
31 December
2014
'000

12 months
ended
31 December
2013
'000





Cash flows from operating activities




Cash generated from operations

 13,222

 17,689
Interest paid

 (166)

 (243)
Net UK corporation tax paid

 (2,268)

 (2,340)
Withholding tax paid

 (47)

 (39)
Overseas tax paid

 (120)

 (851)


 

 
Net cash flow from operating activities 

 10,621

 14,216





Investing activities




Dividends received from trade investments

 517

 194
Sale of property, plant and equipment

 511

 706
Purchase of property, plant and equipment

 (3,727)

 (4,392)
Interest received

 270

 281
Net cash flow from investing activities

 (2,429)

 (3,211)





Financing activities




Loan repayments

 (1,000)

 (8,000)
New loans raised

 -

 8,000
Finance lease capital repayments

 (93)

 (97)
Equity dividends paid

 (10,058)

 (7,523)





Net cash flow from financing activities

 (11,151)

 (7,620)





Net (decrease) / increase in cash and cash equivalents

 (2,959)

 3,385





Cash and cash equivalents at the beginning of the period

 27,417

 24,108
Effect of foreign exchange rate changes

 (381)

 (76)





Cash and cash equivalents at end of the period

 24,077

 27,417





Reconciliation of net cash flow to movement in net funds in the period









Net (decrease) / increase in cash and cash equivalents

 (2,959)

 3,385
Cash outflow from the decrease in debt

 1,093

 8,097
Cash inflow from the increase in loans

 -

 (8,000)
Non-cash movement in respect of raising loan finance

 (20)

 65
Movement in net funds during the period

 (1,886)

 3,547
Opening net funds at the beginning of the period

 19,113

 15,642
Effect of foreign exchange rate changes

 (381)

 (76)
Closing net funds at the end of the period

 16,846

 19,113







Andrews Sykes Group plc
Consolidated Statement of Changes in Equity
For the 12 months ended 31 December 2014

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 2012 
423
13
37,825
2,323
245
40,829

10

40,839











Profit for the financial period
 -
 -
 11,518
 -
-
 11,518

-

 11,518











Othercomprehensivecharges:





















Items that may be reclassified to profit and loss:










Currency translation differences on foreign currency net investments
 -
 -
 -
 137
-
 137

-

 137











Items that will never be reclassified to profit and loss:










Remeasurement of defined benefit assets and liabilities
 -
 -
 (1,524)
 -
-
 (1,524)

-

 (1,524)
Related deferred tax
 -
 -
 388
 -
 -
 388

-

 388











Total other comprehensive charges
 -
 -
 (1,136)
 137
-
 (999)

-

 (999)











Transactions with owners recorded directly in equity



















Dividends paid 
 -
 - 
 (7,523)
 -
-
 (7,523)

-

 (7,523)











Total transactions with owners
 -
 -
 (7,523)
 -
-
 (7,523)

-

 (7,523)











At 31 December 2013
 423
13
 40,684
 2,460
245
 43,825

10
 
 43,835






















Profit for the financial period
-
-
9,311
-
-
9,311 

-

9,311











Other comprehensive charges:





















Items that may be reclassified to profit and loss:










Currency translation differences on foreign currency net investments
 -
 -
 -
(312)
-
 (312)

-

 (312)











Items that will never be reclassified to profit and loss:










Remeasurement of defined benefit assets and liabilities
-
-
(802)
-
-
(802)

-

(802)
Related deferred tax
 -
 -
 160
 -
 -
 160

-

 160











Total other comprehensive charges
-
-
(642)
(312)
-
(954)

-

(954)











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 2014
 423
 13
39,295
 2,148
 245
 42,124

10
 
 42,134











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 2014 or 31 December 2013 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 2014 financial year and until the date of signing these accounts within its financial covenants as contained in the bank agreement. Consequently the loans have been analysed between current and non-current liabilities in accordance with the agreed repayment profile.
Both loan capital and interest payments have been made in accordance with the bank agreement. On 30 April 2014 the first capital repayment of 1 million was made and this was followed by a further capital payment, also of 1 million on 30 April 2015. Interest is paid bi-annually at the end of October and April. 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 2014 amounted to 24.1 million compared with 27.4 million as at 31 December 2013. Profit and cash flow projections for 2015 and 2016, 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 current bank facility agreement entered and 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 uncertain external influences and the current uncertain economic outlook for certain of our trading territories in Europe.
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 15 May 2015 following which copies will be available either from the registered office of the company; Premier House, Darlington Street, Wolverhampton, WV1 4JJ; or from the company's website; www.andrews-sykes.com. The Annual Report and Financial Statements for the 12 months ended 31 December 2013 have been delivered to the Registrar of Companies and those for the 12 months ended 31 December 2014 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 Tuesday 16 June 2015 at Floor 5, 10 Bruton Street, London, W1J 6PX.

This information is provided by RNS
The company news service from the London Stock Exchange
  END
FR PKPDQABKDCPK