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REG - Andrews Sykes Group - Half-year Results

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RNS Number : 8968A  Andrews Sykes Group PLC  28 September 2022

 

27 September
2022

 

ANDREWS SYKES GROUP PLC

("Andrews Sykes" or "the Company" or "the Group")

 

Half Year Results

Unaudited results for the six months ended 30 June 2022

 

Summary of Results

 

                                             Unaudited             Unaudited

six months ended
six months ended

30 June
30 June

2022
2021
                                                        £000                  £000

 Revenue from continuing operations                     37,903                35,693
 EBITDA* from continuing operations                     13,181                12,402
 Operating profit                                       8,489                 7,955
 Profit for the financial period                        6,477                 6,239
 Cash and cash equivalents                              34,430                24,717
 Net funds                                              21,741                9,673

                                                        (pence)               (pence)
 Basic earnings per share                               15.36                 14.79
 Interim dividend declared per equity share             11.90                 11.90
 Special dividend declared per equity share             16.60                 -

 

* Earnings before interest, taxation, depreciation, profit on the sale of
property, plant and equipment, amortisation and non-recurring items

 

Enquiries

 

 Andrews Sykes Group plc                               T: +44 (0)1902 328 700

 Carl Webb, Managing Director

 Ian Poole, Finance Director and Company Secretary

 Houlihan Lokey UK Limited (Nominated Advisor)         T: +44 (0)20 7484 4040

 Tim Richardson

CHAIRMAN'S STATEMENT

 

Overview

 

The Group's revenue for the 6 months ended 30 June 2022 (the "period") was
£37.9 million, an increase of £2.2 million compared with the same period in
2021 and a record for the first half year. Operating profit for the period was
£8.5 million compared with £8.0 million in 2021, an increase of £0.5
million, reflecting the increased revenue. Overall, net funds increased by
£5.2 million from £16.5 million as at 31 December 2021 to £21.7 million as
at 30 June 2022.

 

Operations review

 

Revenue at Andrews Sykes Hire in the UK continues to grow and improved by 2.1%
compared with the same period in 2021. Our businesses in the rest of Europe
experienced a very strong increase in revenue, improving 16.8% compared to the
same period in 2021. This result was driven by an exceptional performance from
our Italian subsidiary, Nolo Climat, with revenues 92.9% up on the same period
in 2021 with the early and prolonged high summer temperatures seen in Italy
increasing demand in our cooling products. Consequently, the combined
operating profit for the UK and European hire businesses in the period was
£1.0 million above the level achieved in 2021.

 

Climat Location in France has continued to struggle with revenues 12.0% lower
than the same period in 2021. As a result, the decision has been made to
restructure the business in France and restructuring costs, including depot
closures and redundancy, of £0.5m have been incurred during the period. We
are confident that once completed, the restructuring will right-size the
French operation and lead to profitable future growth.

 

Andrews Air Conditioning and Refrigeration, our UK air conditioning
installation business, has traded broadly in line with last year. Whilst
revenue increased 3.7% in the period compared to the first six months of 2021,
it still remains 33.1% lower than the corresponding period in 2019. Operating
profit decreased by £0.1m as compared to first half of 2021 as a continuing
struggle to recruit and retain engineers negatively impacted results.

 

Khansaheb Sykes, our business based in the UAE, has continued to experience a
difficult trading environment but pleasingly recorded revenue growth of 5.8%
versus the first half of 2021. Despite this revenue increase and a favourable
exchange rate between the Dirham and Sterling, operating profit is comparable
to the first half of 2021 and continues to be depressed by increased historic
bad debt charges.

 

Profit for the financial period and Earnings per Share

 

Profit before tax for the period was £8.5 million compared with £7.6 million
in the same period last year. This £0.9m increase is attributable to the
£0.5 million improvement in operating profit, a net foreign exchange gain on
inter-company balances of £0.2 million (2021: loss of £0.1m) due to the
weakening of Sterling compared with the Euro, and a net increase of £0.1
million in interest receivable resulting from the full repayment of the £3.0
million loan outstanding as at 31 December 2021 and higher interest received
on cash deposits.

 

The total tax charge for the period increased by £0.7 million to £2.1
million (2021: £1.3 million), an effective tax rate of 24.0% (2021: 17.5%).
The increase in the overall effective rate of tax is driven by a lower level
of capital allowances claimed in the UK, coupled with higher profits generated
in Italy which has a higher tax rate than in the UK.

 

Profit after tax in the period was £6.5 million (2021: £6.2 million). Basic
earnings per share increased by 0.57 pence, or 3.9%, to 15.36 pence (2021:
14.79 pence) reflecting this increase in profit.

 

Dividends

 

The final dividend of 12.50 pence per ordinary share for the year ended 31
December 2021 was approved by members at the AGM held on 14 June 2022.
Accordingly, on 17 June 2022 the Company made a total dividend payment of
£5.27 million which was paid to shareholders on the register as at 27 May
2022.

 

The board continues to adopt the policy of returning value to shareholders
whenever possible. The Group remains profitable, cash generative and
financially strong. Accordingly, the board has decided to declare an interim
dividend of 11.90 pence per ordinary share which in total amounts to £5.0
million.

 

In addition to the interim dividend, the board has assessed the company's
ongoing cash requirements and has concluded that, as a result of the company's
robust cash generation, a portion of the current cash reserves are surplus to
the company's requirements. The board has therefore decided to return this
surplus capital to Andrews Sykes shareholders by way of a special dividend of
16.60 pence per ordinary share which in total amounts to £7.0 million. Both
the interim and special dividends will be paid on 4 November 2022 to
shareholders on the register as at 7 October 2022.

 

Outlook

 

The second half of the year has started resiliently with record temperatures
in the UK and Europe positively impacting demand for the Group's air
conditioning units and chillers. This increased summer demand leads management
to be optimistic over the full year results. In the longer term, management
remains optimistic that the business will continue to improve but are mindful
of the current economic climate and the impact that heightened energy prices,
inflation and recession risk can pose to the business and customer demand.

 

 

 

JG Murray

Chairman

27 September 2022

 

Consolidated Income Statement

for the six months ended 30 June 2022

 

 

 

 Note                                                                          Unaudited          Unaudited          Year ended

six months ended
six months ended
31 December 2021

30 June 2022
30 June 2021
                                                                               £000               £000               £000
 Revenue                                                                  2    37,903             35,693             75,219
 Cost of sales                                                                 (15,338)           (15,064)           (29,001)
 Gross profit                                                                  22,565             20,629             46,218
 Distribution costs                                                            (6,846)            (6,386)            (14,066)
 Administrative expenses                                                       (7,230)            (6,412)            (10,759)
 Other operating income                                                        -                  124                151
 Operating profit                                                              8,489              7,955              20,074

 EBITDA*                                                                       13,181             12,402             28,946
 Depreciation and impairment losses                                            (3,444)            (3,399)            (6,628)
 Depreciation of right-of-use assets                                           (1,528)            (1,622)            (3,111)
 Profit on the sale of plant and equipment and right-of-use assets             280                574                867
 Operating profit                                                              8,489              7,955              20,074
 Finance income                                                           3    316                7                  24
 Finance costs                                                            3    (278)              (401)              (599)
 Profit before tax                                                             8,527              7,561              19,499
 Tax expense                                                              4    (2,050)            (1,322)            (3,959)
 Profit for the period from continuing operations attributable to equity       6,477              6,239              15,540
 holders of the Parent Company

 Earnings per share from continuing operations:
 Basic and diluted                                                        5    15.36p             14.79p             36.85p

 Dividend per equity share paid during the period                              12.50p             11.50p             23.40p

 Proposed dividend per equity share                                            11.90p             11.90p             12.50p
 Proposed special dividend per equity share                                    16.60p             -                  -

 

 

(*) Earnings before interest, taxation, depreciation, profit on sale of
property, plant and equipment, amortisation and non-recurring items.

 

Consolidated Statement of Comprehensive Total Income

for the six months ended 30 June 2022

 

 

 

                                                                               Unaudited          Unaudited          Year ended

six months ended
six months ended
31 December

 30 June
30 June
 2021

2022
2021
                                                                               £000               £000                      £000

 Profit for the period                                                         6,477              6,239                     15,540
 Other comprehensive income
 Currency translation differences on foreign currency operations               926                (640)                     (954)
 Net other comprehensive income/ (expense) that may be reclassified to profit  926                (640)                     (954)
 and loss
                                                                               2,567              2,476                     4,430

 Re-measurement of defined benefit pension assets and liabilities
 Related deferred tax                                                          (898)              (619)                     (1,551)

 Net other comprehensive income that will not be reclassified to profit and    1,669              1,857                     2,879
 loss
                                                                               2,595              1,217                     1,925

 Other comprehensive income for the period net of tax

 Total comprehensive income for the period attributable to equity holders of
 the Parent Company

                                                                               9,072              7,456                     17,465

 

 

 

 

 

Consolidated Balance Sheet

At 30 June 2022

 

 

 

                                                Unaudited      Unaudited      31 December

30 June
30 June
2021

2022
2021
                                                £000           £000           £000
 Non-current assets
   Property, plant and equipment                20,091         21,761         20,877
   Right-of-use assets                          12,125         11,594         12,423
   Prepayments                                  -              42             -
   Deferred tax assets                          -              7              -
   Defined benefit pension scheme surplus       9,392          3,606          6,137
                                                41,608         37,010         39,437
 Current assets
   Stocks                                       5,205          7,821          5,660
   Trade and other receivables                  18,749         18,584         19,796
   Current tax asset                            -              268            -
   Cash and cash equivalents                    34,430         24,717         32,443
                                                58,384         51,390         57,899

 Current liabilities
   Trade and other payables                     (14,178)       (14,726)       (13,587)
   Current tax liabilities                      (485)          -              (265)
   Bank loans                                   -              (2,995)        (3,000)
   Right-of-use lease obligations               (2,625)        (2,539)        (2,602)
                                                (17,288)       (20,260)       (19,454)
 Net current assets                             41,096         31,130         38,445
 Total assets less current liabilities          82,704         68,140         77,882

 Non-current liabilities
   Right-of-use lease obligations               (10,064)       (9,510)        (10,332)
   Deferred tax liability                       (3,124)        -              (1,959)
   Provisions                                   (2,096)        -              (1,971)
                                                (15,284)       (9,510)        (14,262)

 Net assets                                     67,420         58,630         63,620

 Equity
   Called up share capital                      422            422            422
   Share premium                                13             13             13
   Retained earnings                            62,845         54,667         59,971
   Translation reserve                          3,894          3,282          2,968
   Other reserve                                246            246            246
 Total equity                                   67,420         58,630         63,620

 

 Consolidated Cash Flow Statement

for the six months ended 30 June 2022

 

 

 

                                                                                  Unaudited              Unaudited              Year ended

six months ended
six months ended
31 December

30 June
30 June
2021

2022
2021
                                                                                  £000                   £000                   £000
 Operating activities
 Profit for the period                                                            6,477                  6,239                  15,540
 Adjustments for:
 Tax charge                                                                       2,050                  1,322                  3,959
 Finance costs                                                                    278                    401                    599
 Finance income                                                                   (316)                  (7)                    (24)
 Profit on disposal of property, plant and equipment and right-of-use assets

                                                                                  (280)                  (574)                  (867)
 Depreciation of property, plant and equipment                                    3,444                  3,399                  6,628
 Depreciation of right-of-use assets                                              1,528                  1,621                  3,111
 Difference between pension contributions paid and amounts recognised in the
 Income Statement

                                                                                  (628)                  (625)                  (1,194)
 Decrease/ (increase) in inventories                                              639                    65                     (635)
 Decrease/ (increase) in receivables                                              1,669                  (1,500)                (2,653)
 Increase in payables                                                             330                    2,534                  2,322
 Movement in provisions                                                           125                    -                      1,112
 Cash generated from continuing operations                                        15,316                 12,875                 27,898
 Interest paid                                                                    (278)                  (284)                  (574)
 Corporation tax paid                                                             (1,553)                (2,694)                (3,735)
 Net cash inflow from operating activities                                        13,485                 9,897                  23,589

 Investing activities
   Disposal of property, plant and equipment                                      302                    722                    1,173
   Purchase of property, plant and equipment                                      (2,380)                (2,794)                (2,530)
   Interest received                                                              256                    -                      9
 Net cash outflow from investing activities                                       (1,822)                (2,072)                (1,348)

 Financing activities
   Loan repayments                                                                (3,000)                (500)                  (500)
   Capital repayments for right-of-use lease

   Obligations                                                                    (1,471)                (1,547)                (2,951)
   Equity dividends paid                                                          (5,272)                (4,850)                (9,869)

 Net cash outflow from financing activities                                       (9,743)                (6,897)                (13,320)

 Net increase in cash and cash equivalents                                        1,920                  928                    8,921

 Cash and cash equivalents at the start of the period                             32,443                 24,012                 24,012

 Effect of foreign exchange rate changes                                          67                     (223)                  (490)

 Cash and cash equivalents at the end of the period                               34,430                 24,717                 32,443

 

Consolidated Statement of Changes in Equity

for the six months ended 30 June 2022

 

                                                                  Share capital                                                               UAE legal reserve  Netherlands capital reserve  Retained earnings  Attributable to equity holders of the parent

                                                                                                                       Capital

                                                                                 Share premium   Translation reserve    redemption reserve

                                                                  £000           £000            £000                  £000                   £000               £000                         £000               £000

 At 31 December 2020                                              422            13              3,922                 158                    79                 9                            51,421             56,024
 Profit for the period                                            -              -               -                     -                      -                  -                            6,239              6,239
 Other comprehensive (expense)/ income for the period net of tax  -              -               (640)                 -                      -                  -                            1,857              1,217
 Total comprehensive (expense)/ income                            -              -               (640)                 -                      -                  -                            8,096              7,456
 Dividends paid                                                   -              -               -                     -                      -                  -                            (4,850)            (4,850)
 Total of transactions with shareholders                          -              -               -                     -                      -                  -                            (4,850)            (4,850)

 At 30 June 2021                                                  422            13              3,282                 158                    79                 9                            54,667             58,630

 Profit for the period                                            -              -               -                     -                      -                  -                            9,301              9,301
 Other comprehensive (expense)/ income for the period net of tax  -              -               (314)                 -                      -                  -                            1,022              708
 Total comprehensive (expense)/ income                            -              -               (314)                 -                      -                  -                            10,323             10,009
 Dividends paid                                                   -              -               -                     -                      -                  -                            (5,019)            (5,019)
 Total of transactions with shareholders                          -              -               -                     -                      -                  -                            (5,019)            (5,019)

 At 31 December 2021                                              422            13              2,968                 158                    79                 9                            59,971             63,620

 Profit for the period                                            -              -               -                     -                      -                  -                            6,477              6,477
 Other comprehensive income for the period net of tax             -              -               926                   -                      -                  -                            1,669              2,595
 Total comprehensive income                                       -              -               926                   -                      -                  -                            8,146              9,072
 Dividends paid                                                   -              -               -                     -                      -                  -                            (5,272)            (5,272)
 Total of transactions with shareholders                          -              -               -                     -                      -                  -                            (5,272)            (5,272)

 At 30 June 2022                                                  422            13              3,894                 158                    79                 9                            62,845             67,420

 

 

 

 

 

 

 

 

Notes to the Interim Financial statements

 

1              General information and accounting policies

 

These interim financial statements have been prepared in accordance with the
recognition and measurement principles of international accounting standards
in conformity with the requirements of the Companies Act 2006.

 

The information for the 12 months ended 31 December 2021 does not constitute
the Group's statutory accounts for 2021 as defined in Section 434 of the
Companies Act 2006. Statutory accounts for 2021 have been delivered to the
Registrar of Companies. The auditor's report on those accounts was unqualified
and did not contain statements under Section 498(2) or (3) of the Companies
Act 2006. These interim financial statements, which were approved by the Board
of Directors on 27 September 2022, have not been audited or reviewed by the
auditors.

 

Basis of preparation

 

The interim financial statement has been prepared using the historical cost
basis of accounting except for:

(i)            Properties held at the date of transition to IFRS
which are stated at deemed cost;

(ii)           Assets held for sale which are stated at the lower of
(i) fair value less anticipated disposal costs and (ii) carrying value;

(iii)          Derivative financial instruments (including embedded
derivatives) which are valued at fair value; and

(iv)          Pension scheme assets and liabilities calculated at
fair value in accordance with IAS 19

 

The annual financial statements of the Group are prepared in accordance with
international accounting standards in conformity with the requirements of the
Companies Act 2006. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with the AIM
Rules issued by the London Stock Exchange.

 

Accounting policies

 

The principal accounting policies applied in preparing the interim Financial
Statements comply with international accounting standards in conformity with
the requirements of the Companies Act 2006 and are consistent with the
policies set out in the Annual Report and Accounts for the year ended 31
December 2021.

 

No new standards or interpretations issued since 31 December 2021 have had a
material impact on the accounting of the Group.

Functional and presentational currency

The financial statements are presented in pounds Sterling because that is the
functional currency of the primary economic environment in which the group
operates.

 

 

2              Revenue

An analysis of the Group's revenue is as follows:

                                                                                                         Unaudited    Unaudited

                                                                                                         six months   six months   Year ended

                                                                                                         ended        ended        31 December

                                                                                                         30 June      30 June      2021

                                                                                                         2022         2021

                                                                                                                                   £000

                                                                                                         £000         £000
 Continuing operations
 Revenue outside the scope of IFRS 15 and recognised as lease income in
 accordance with IFRS 16:
 Hire                                                                                                    33,772       31,627       67,734
 Revenue recognised at a point in time in accordance with IFRS 15:
 Sales                                                                                                   2,739        2,709        4,630
 Maintenance                                                                                             665          752          1,368
 Installation and sale of units                                                                          727          605          1,487
 Group consolidated revenue from the sale of goods and provision of services                             37,903       35,693       75,219

 The geographical analysis of the Group's revenue by origination is:
                                                                                                         Unaudited    Unaudited

                                                                                                         six months   six months   Year ended

                                                                                                         ended        ended        31 December

                                                                                                         30 June      30 June      2021

                                                                                                         2022         2021

                                                                                                                                   £000

                                                                                                         £000         £000
 United Kingdom                                                                                          23,225       22,743       47,917
 Rest of Europe                                                                                          10,365       8,874        19,442
 Middle East and Africa                                                                                  4,313        4,076        7,860
                                                                                                         37,903       35,693       75,219

 

The geographical analysis of the Group's revenue by destination is not
materially different to that by origination.

 

3              Finance income and costs

                                                      Unaudited          Unaudited          Year ended

six months ended
six months ended
31 December

30 June
30 June

                  2021
                                                      2022               2021
 Finance income                                       £000               £000               £000
 Net interest on net defined benefit pension surplus  60                 7                  15
 Intertest receivable on bank deposit accounts        31                 -                  9
 Inter-company foreign exchange gains                 225                -                  -
                                                      316                7                  24

 Finance costs
 Interest charge on bank loans and overdrafts         (25)               (20)               (44)
 Interest charge on right-of-use lease obligations    (253)              (264)              (530)
 Inter-company foreign exchange losses                -                  (117)              (25)
                                                      (278)              (401)              (599)

4              Income tax expense

 

The total effective tax charge for the financial period represents the best
estimate of the weighted average annual effective tax rate expected for the
full financial year applying tax rates that have been substantively enacted by
the balance sheet date. UK corporation tax has been provided at 19%. In the UK
budget on 15 March 2021, the chancellor announced that the rate of corporation
tax in the UK will increase from 19% to 25% with effect from 1 April 2023.
This increase will increase the amount of corporation tax payable in the UK.
Deferred tax has been calculated based on the rates that the directors
anticipate will apply when the temporary timing differences are expected to
reverse.

 

                                                          Unaudited          Unaudited

                                                          six months ended   six months ended   Year ended

                                                          30 June            30 June            31 December

                                                          2022               2021               2021
                                                          £000               £000               £000
 Current tax
 UK corporation tax at 19% (June and December 2021: 19%)  1,139              736                2,253
 Adjustments in respect of prior periods                  -                  (21)               (657)
                                                          1,139              715                1,596
 Overseas tax                                             644                530                1,251

 Total current tax charge                                 1,783              1,245              2,847

 Deferred tax
 Origination and reversal of timing differences           126                386                712
 Effect of tax rate change                                -                  (309)              (97)
 Adjustments in respect of prior periods                  141                -                  497
 Total deferred tax charge/ (credit)                      267                77                 1,112

 Total tax charge for the financial period                2,050              1,322              3,959

 

5              Earnings per share

 

Basic earnings per share

The basic figures have been calculated by reference to the weighted average
number of ordinary shares in issue and the earnings as set out below. There
are no discontinued operations in any period.

 

                                             Unaudited          Unaudited

                                             six months ended   six months ended   Year ended

                                             30 June            30 June            31 December

                                             2022               2021               2021

 Weighted average number of ordinary shares  42,174,359         42,174,359         42,174,359

                                             £000               £000               £000

 Basic earnings                              6,477              6,239              15,540

                                             pence              pence              pence

 Basic earnings per ordinary share           15.36              14.79              36.85

 

Diluted earnings per share

There were no dilutive instruments outstanding as at 30 June 2022 or either of
the comparative periods and therefore there is no difference in the basic and
diluted earnings per share for any of these periods. There were no
discontinued operations in any period.

 

 

6              Dividend payments

 

Dividends declared and paid on ordinary one pence shares during the 6 months
ended 30 June 2022 were as follows:

 

                                                                                 Paid during the six months ended 30 June 2022

                                                                                                          Total dividend paid

                                                                                                          £000

                                                                                 Pence per share
 Final dividend for the year ended 31 December 2021 paid on 17 June 2022 to
 members on the register as at 27 May 2022

                                                                                 12.50p                   5,272

 

The above dividend was charged against reserves during the 6 months ended 30
June 2022.

 

On 27 September 2022 the directors declared an interim dividend of 11.90 pence
per ordinary share which in total amounts to £5,019,000. In addition, a
special dividend of 16.60 pence per ordinary share which in total amounts to
£7,001,000 was also declared. These will be both be paid on 4 November 2022
to shareholders on the register as at 7 October 2022 and will be charged
against reserves in the second half of 2022.

 

Dividends declared and paid on ordinary one pence shares during the 6 months
ended 30 June 2021 were as follows:

 

                                                                                 Paid during the six months ended 30 June 2021

                                                                                                          Total dividend paid

                                                                                                          £000

                                                                                 Pence per share
 Final dividend for the year ended 31 December 2020 paid on 18 June 2021 to
 members on the register as at 28 May 2021

                                                                                 11.50p                   4,850

 

The above dividend was charged against reserves during the 6 months ended 30
June 2021.

 

Dividends declared and paid on ordinary one pence shares during the 12 months
ended 31 December 2021 were as follows:

                                                                                    Paid during the year ended 31 December 2021

                                                                                                            Total dividend paid

                                                                                                            £000

                                                                                    Pence per share
 Final dividend for the year ended 31 December 2020 paid on 18 June 2021 to
 members on the register as at 28 May 2021

                                                                                    11.50p                  4,850
 Interim dividend declared on 27 September 2021 and paid on 5 November 2021 to      11.90p                  5,019
 members on the register as at 8 October 2021
                                                                                    23.40p                  9,869

 

The above dividends were charged against reserves during the 12 months ended
31 December 2021.

 

7              Pensions

 

The Group closed the UK Group defined benefit pension scheme to future accrual
as at 29 December 2002. The assets of the defined benefit pension scheme
continue to be held in a separate trustee administered fund. Over recent years
the Group has taken steps to manage the ongoing risks associated with its
defined benefit liabilities.

 

As at 30 June 2022 the Group had a net defined benefit pension scheme surplus,
calculated in accordance with IAS 19  using the assumptions as set out below,
of £9,392,000 (30 June 2021: £3,606,000; 31 December 2021: £6,137,000). The
asset has been recognised in the financial statements as the directors are
satisfied that it is recoverable in accordance with IFRIC 14.

 

Following the triennial recalculation of the funding deficit as at 31 December
2019, a revised schedule of contributions and recovery plan was agreed with
the pension scheme trustees in March 2021 and was effective from 1 January
2021.  In accordance with this schedule of contributions and recovery plan,
the Group will be making regular contributions of £110,000 per month for the
period 1 January 2021 to 31 December 2022, and £10,000 per month for the
period 1 January 2023 to 31 December 2025 or until a revised schedule of
contributions is agreed, if earlier. Consequently, the Group expects to make
total contributions to the defined benefit pension scheme of £1,320,000
during 2022.

 

Assumptions used to calculate the scheme surplus

The IAS 19 figures are based on a number of actuarial assumptions as set out
below, which the actuaries have confirmed they consider appropriate.

 

 

                                                                       30 June  30 June  31 December

                                                                       2022     2021     2021

 Rate of increase in pensionable salaries                              n/a      n/a      n/a
 Rate of increase in pensions in payment                               3.2%     3.3%     3.5%
 Discount rate                                                         3.8%     1.8%     1.8%
 Inflation assumption - RPI                                            3.2%     3.3%     3.5%
 Inflation assumption - CPI                                            2.6%     2.7%     2.9%
 Percentage of members taking maximum tax-free lump sum on retirement

                                                                       75%      75%      75%

 

 

The demographic assumptions used for 30 June 2022, were the same as used in 31
December 2021, 30 June 2021 and the last full actuarial valuation performed as
at 1 April 2020.

 

Assumptions regarding future mortality experience are set based on advice in
accordance with published statistics. The mortality table used at 30 June
2022, 30 June 2021 and 31 December 2021 is 100% S3PA CMI2020 with a 1.25% per
annum long term improvement for both males and females, heavy tables for males
and medium tables for females.

 

Valuation

The defined benefit scheme funding has changed under IAS 19 as follows:

 

                                                  Unaudited                         Unaudited

                                        six months to                   six months to                      Year to

 Funding status                        30 June                         30 June                             31 December

                                       2022                            2021                                2021

                                       £000                            £000                                £000
 Scheme assets at end of period        40,648                          46,958                              48,475

 Benefit obligations at end of period  (31,256)                        (43,352)                            (42,338)

 Surplus in scheme                     9,392                           3,606                               6,137

 

The increase in the pension surplus since December 2021 is mainly due to a
decrease in the value of liabilities as a consequence of an increase in bond
yields increasing the discount rate.

 

 

8              Net funds and movement in financing liabilities

 

                                                                       Unaudited          Unaudited

                                                                       six months ended   six months ended   Year ended

                                                                       30 June            30 June            31 December

                                                                       2022               2021               2021
                                                                       £000               £000               £000

 Cash and cash equivalents per consolidated cashflow statement         34,430             24,717             32,443

 Bank loans at the beginning of the period                             (3,000)            (3,491)            (3,491)
 Loans repaid                                                          3,000              500                500
 Other non-cash changes                                                -                  (4)                (9)
 Bank loans at the end of the period                                   -                  (2,995)            (3,000)

 Right-of-use lease obligations at the beginning of the period         (12,934)           (12,849)           (12,849)
 Capital repayments for right-of-use lease obligations                 1,472              1,547              2,951
 New right-of-use leases entered into during the period                (1,204)            (963)              (3,325)
 Non-cash movements re: termination of right-of-use lease obligations  77                 36                 40
 Foreign exchange                                                      (100)              180                249
 Right-of-use lease obligations at the end of the period               (12,689)           (12,049)           (12,934)

 Gross debt                                                            (12,689)           (15,044)           (15,934)

 Net funds                                                             21,741             9,673              16,509

 

 

9              Distribution of interim financial statements

 

Following a change in regulations in 2008, the Company is no longer required
to circulate this half year report to shareholders. This enables us to reduce
costs associated with printing and mailing and to minimise the impact of these
activities on the environment. A copy of the interim financial statements is
available on the Company's website, www.andrews-sykes.com.

 

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