TIDMASY
RNS Number : 1758Y
Andrews Sykes Group PLC
03 May 2023
3 May 2023
ANDREWS SYKES GROUP PLC
("Andrews Sykes" or "the Company" or "the Group")
Final Results
for the year ended 31 December 2022
Summary of Results
Year ended Year ended
31 December 31 December
2022 2021
GBP000 GBP000
Revenue from continuing operations 83,007 75,219
Adjusted EBITDA* from continuing operations 30,616 28,946
Operating profit 21,530 20,074
Profit after tax for the financial period 17,020 15,540
Net cash inflow from operating activities 28,462 23,589
Net funds 25,896 16,509
Total interim, special and final dividends
paid 17,292 9,869
(pence) (pence)
Basic earnings per share 40.36 36.85
Interim, special and final dividends
paid per share 41.00 23.40
Proposed final dividend per share 14.00 12.50
* Earnings before interest, taxation, depreciation, profit on
the sale of property, plant and equipment and amortisation
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 T: +44 (0)20 7484 4040
Advisor)
Tim Richardson
CHAIRMAN'S STATEMENT
Overview and outlook
Andrews Sykes' trading has been robust, with record revenues and
profits being delivered by several of our subsidiaries and we are
pleased to report that the group as a whole has delivered a record
level of profitability during 2022. We are thankful and proud of
our team members who have made this possible by continuing to
provide our customers with an essential 24 hour service
offering.
The group has faced many challenges over the past few years, and
this year has been no different with Andrews Sykes not being immune
from the well publicised inflationary pressures that are impacting
the UK and European economies. Fortunately our strong relationships
with customers and long standing relationships with key suppliers,
coupled with our highly experienced management team are allowing us
to once again not only navigate our way through these
circumstances, but thrive. We are encouraged by how the business
has consistently adapted to overcome operational issues and take
advantage of new revenue opportunities.
The group was well placed to take advantage of the record summer
temperatures seen this year and our core traditional market of
"comfort" cooling had a stand out year as a result. This year was
once again supported by another strong year for our UK pump hire
business, which continues the recent history of setting record
levels of revenue yearly.
Trading momentum has continued into the current year, with
overall performance in the year to date in line with the Board's
expectations. The group is confident in its core markets, its
revenues and its profits.
2022 trading summary
The group's revenue for the year ended 31 December 2022 was
GBP83.0 million, an increase of GBP7.8 million, or 10.4%, compared
with the same period last year. This increase positively impacted
on operating profit which increased by 7.3%, or GBP1.5 million,
from GBP20.1 million last year to GBP21.5 million in the year under
review. Turnover for the second half of the year was up 19.0% on
the first half and reflects the exceptional weather experienced
across the UK and Europe over the summer months.
The increasing interest rates in the UK has enabled the company
to generate increased returns on its cash reserves and has
contributed to net finance costs decreasing from GBP0.6 million
last year to a small net interest income this year. Profit before
taxation was GBP21.6 million (2021: GBP19.5 million) and profit
after taxation was GBP17.0 million (2021: GBP15.5 million).
The group has reported an increase in the basic earnings per
share of 3.51p, or 9.5%, from 36.85p in 2021 to 40.36p in the
current year. This is mainly attributable to the above increase in
the group's operating profit.
The group continues to generate strong cash flows. Net cash
inflow from operating activities was GBP28.5 million compared with
GBP23.6 million last year reflecting strong cash management.
Cost control, cash and working capital management continue to be
priorities for the group with stocks reduced by GBP1.2m during the
year. Capital expenditure is concentrated on assets with strong
returns; in total GBP4.4 million was invested in the hire fleet
this year. In addition, the group invested a further GBP0.7 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:
Operating
Turnover profit
GBP'000 GBP'000
-------------- -------- ---------
1st half 2022 37,903 8,489
1st half 2021 35,693 7,955
2nd half 2022 45,104 13,041
2nd half 2021 39,526 12,119
Total 2022 83,007 21,530
Total 2021 75,219 20,074
-------------- -------- ---------
The above table reflects the continued growth of the business,
with second half revenues being 19.0% up on first half revenues and
second half profitability returning a record GBP13.0m.
The turnover of our main business segment in the UK increased
from GBP45.2m last year to GBP47.2m with operating profit
increasing from GBP15.4m to GBP16.4m. This result was supported by
an exceptional year for our air conditioning hire, up 36.2% on
2021, aided by the record temperatures experienced in the UK during
2022. Pump hire continues to perform strongly with revenues
achieving record levels for the fifth year in a row and are 3.9%
higher than 2021.
Our European businesses recorded similar increases in turnover,
increasing from GBP19.4 million last year to GBP24.2 million, and
operating profit increasing from GBP5.2 million to GBP6.9 million
in 2022. Similarly to the UK, the record temperatures seen in
Europe during the summer has been reflected in increased chiller
and air conditioning hire revenues. Our Dutch, Belgian and Italian
subsidiaries each reported record turnover levels during 2022.
The turnover of our hire and sales business in the Middle East
has pleasingly increased from GBP7.9 million last year to GBP8.8
million, however operating profit decreased from GBP0.3 million to
a loss of GBP0.4 million in the year under review. The operating
climate continues to be tough in the Middle East with a lack of
significant infrastructure projects still depressing turnover in
the pumps division to below what was being generated a few years
previous. The operating loss during 2022 is entirely down to
increased expected credit losses against historic debts which are
no longer considered recoverable. The credit loss charge in 2022
for the Middle East was GBP1.9m. Management are confident all
historic credit losses are captured in the expected credit loss
provision and that 2023 will see a significantly reduced credit
loss and thus a return to profitability in the Middle East.
Our fixed installation and maintenance business sector in the UK
saw a small increase in turnover from GBP2.7m to GBP2.8m and
returned an operating profit of GBP33,000 this year, a decrease
from the GBP0.2m achieved in 2021 and largely driven by
restructuring costs incurred during the current year.
Central overheads were GBP1.5 million in the current year
compared with GBP1.1 million in 2021.
Profit for the financial year
Profit before tax was GBP21.6 million this year compared with
GBP19.5 million last year; an increase of GBP2.1 million. This is
largely attributable to the above GBP1.5 million increase in
operating profit with net interest costs also contributing GBP0.6
million to increased profit before tax.
Tax charges increased from GBP4.0 million in 2021 to GBP4.5
million this year. The overall effective tax rate increased
slightly from 20.3% in 2021 to 21.0% this year. A detailed
reconciliation of the theoretical corporation tax charge based on
the accounts profit multiplied by 19% and the actual tax charge is
given in note 10 to the consolidated financial statements. Profit
for the financial year was GBP17.0 million compared with GBP15.5
million last year.
Defined benefit pension scheme
The increased GILT yields seen in the UK during the year has
significantly enhanced the defined benefit pension scheme surplus
after the application of an asset restriction from GBP4.0m as at 31
December 2021 to GBP5.4m at the year end. During the year the group
contributed GBP1.3 million into the pension scheme. In line with
the agreed schedule of contributions this will decrease to a
contribution of GBP0.1m during 2023.
Equity dividends
The company paid three dividends during the year. On 17 June
2022, a final dividend for the year ended 31 December 2021 of 12.50
pence per ordinary share was paid. This was followed on 4 November
by an interim dividend for 2022 of 11.90 pence per ordinary share,
and a special dividend of 16.60 pence per ordinary share.
Therefore, during 2022, a total of GBP17.3 million in cash
dividends has been returned to our ordinary shareholders.
The Board has decided to propose a final dividend of 14.00 pence
per share. If approved at the forthcoming Annual General Meeting,
this dividend, which in total amounts to GBP5.90 million, will be
paid on 16 June 2023 to shareholders on the register as at 26 May
2023.
Share buybacks
During the year the company repurchased and cancelled 26,314
ordinary shares at nominal value belonging to untraced
shareholders, being shareholders who had not claimed or cashed any
dividend payments from the Company over a period of at least 12
years. The repurchase, which was undertaken in accordance with the
Company's Articles of Association, only took place after an
extensive shareholder identification and share forfeit notification
process by the Company .
As at 2 May 2023, there remained an outstanding general
authority for the directors to purchase 5,260,138 ordinary shares,
which was granted at last year's Annual General Meeting.
The Board believes that it is in the best interests of
shareholders to have 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.
Net funds
Net funds increased by GBP9.4 million from GBP16.5 million at 31
December 2021 to GBP25.9 million at 31 December 2022; this increase
is after the cash distribution of GBP17.3m in dividend payments
during 2022.
Bank loan facilities
In April 2017, a bank loan of GBP5 million was taken out with
the group's bankers, Royal Bank of Scotland. The remaining balance
of GBP3.0 million, outstanding as at 31 December 2021, was repaid
by a final balloon repayment on 30 April 2022. The group now has no
external bank loans.
JG Murray
Chairman
2 May 2023
Consolidated Income Statement
for the year ended 31 December 2022
Year ended Year ended
31 December 31 December
2022 2021
GBP000 GBP000
Revenue 83,007 75,219
Cost of sales (30,006) (29,001)
------------- -------------
Gross profit 53,001 46,218
Distribution costs (14,936) (14,066)
Administrative expenses (14,402) (10,759)
Increase in credit loss provision (2,133) (1,470)
Other operating income - 151
------------- -------------
Operating profit 21,530 20,074
Adjusted EBITDA* 30,616 28,946
Depreciation and impairment losses (6,565) (6,628)
Depreciation of right-of-use
assets (4,017) (3,111)
Profit on the sale of property,
plant and equipment and right-of-use
assets 1,496 867
------------- -------------
Operating profit 21,530 20,074
------------- -------------
Finance income 631 24
Finance costs (610) (599)
Profit before tax 21,551 19,499
Tax expense (4,531) (3,959)
------------- -------------
Profit for the period from continuing
operations attributable to equity
holders of the Parent Company 17,020 15,540
------------- -------------
Earnings per share from continuing
operations:
Basic and diluted 40.36p 36.85p
Dividend per equity share paid
during the period 41.00p 23.40p
Proposed dividend per equity
share 14.00p 12.50p
(*) Earnings before interest, taxation, depreciation, profit on
sale of property, plant and equipment and amortisation.
Consolidated Statement of Comprehensive Total Income
for the year ended 31 December 2022
Year ended Year ended
31 December 31 December
2022 2021
GBP000 GBP000
Profit for the period 17,020 15,540
Other comprehensive income
Currency translation differences on foreign
currency operations 1,222 (954)
Foreign exchange difference on IFRS 16 adjustments (32) -
Net other comprehensive income/ (expense)
that may be reclassified to profit and loss 1,190 (954)
Re-measurement of defined benefit pension
assets and liabilities 823 4,430
Related asset restriction (735) (1,551)
Net other comprehensive income that will
not be reclassified to profit and loss 88 2,879
------------- -------------
Other comprehensive income for the period
net of tax 1,278 1,925
------------- -------------
Total comprehensive income for the period
attributable to equity holders of the Parent
Company 18,298 17,465
------------- -------------
Consolidated Balance Sheet
At 31 December 2022
31 December 31 December
2022 2021
GBP000 GBP000
As restated
Non-current assets
Property, plant and equipment 19,361 20,877
Right-of-use assets 9,667 12,423
Deferred tax assets 229 189
Defined benefit pension scheme
surplus 5,353 3,989
------------ ------------
34,610 37,478
Current assets
Stocks 4,434 5,660
Trade and other receivables 19,535 19,796
Current tax assets 423 -
Other financial assets 16,700 -
Cash and cash equivalents 20,518 32,443
61,610 57,899
------------ ------------
Total assets 96,220 95,377
------------ ------------
Current liabilities
Trade and other payables (16,695) (13,587)
Current tax liabilities (810) (265)
Bank loans - (3,000)
Right-of-use lease obligations (2,505) (2,602)
(20,010) (19,454)
------------ ------------
Non-current liabilities
Right-of-use lease obligations (8,817) (10,332)
Provisions (2,682) (1,971)
(11,499) (12,303)
Total liabilities 31,509 31,757
------------ ------------
Net Assets 64,711 63,620
Equity
Called up share capital 421 422
Share premium 13 13
Retained earnings 59,872 59,971
Translation reserve 4,158 2,968
Other reserve 247 246
------------ ------------
Total equity 64,711 63,620
------------ ------------
Consolidated Cash Flow Statement
for the year ended 31 December 2022
Year ended Year ended
31 December 31 December
2022 2021
GBP000 GBP000
Operating activities
Profit for the period 17,020 15,540
Adjustments for:
Tax charge 4,531 3,959
Finance costs 610 599
Finance income (631) (24)
Profit on disposal of plant and
equipment and right-of-use assets (630) (867)
Profit on sale of property (866) -
Depreciation of property, plant
and equipment 6,565 6,628
Depreciation and impairment of
right-of-use assets 4,017 3,111
Difference between pension contributions
paid and amounts recognised in
the Income Statement (1,152) (1,194)
Increase in inventories (1,206) (635)
Decrease/ (increase) in receivables 1,232 (2,653)
Increase in payables 2,491 2,322
Movement in provisions 711 1,112
Cash generated from continuing
operations 33,559 27,898
Interest paid (610) (574)
Corporation tax paid (4,487) (3,735)
Net cash inflow from operating
activities 27,596 23,589
Investing activities
Disposal of property, plant and
equipment 1,906 1,173
Purchase of property, plant and
equipment (2,463) (2,530)
Cash on deposit with greater than (16,700) -
three month maturity
Interest received 265 9
Net cash outflow from investing
activities (16,992) (1,348)
Financing activities
Loan repayments (3,000) (500)
Capital repayments for right-of-use
lease
obligations (2,849) (2,951)
Equity dividends paid (17,292) (9,869)
Equity dividends forfeited 86 -
Net cash outflow from financing
activities (23,056) (13,320)
------------- -------------
Net increase in cash and cash
equivalents (12,452) 8,921
Cash and cash equivalents at the
start of the period 32,443 24,012
Effect of foreign exchange rate
changes 527 (490)
------------- -------------
Cash and cash equivalents at the
end of the period 20,518 32,443
------------- -------------
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
Attributable
Capital to equity
Share Translation redemption UAE Netherlands holders
Share premium reserve reserve legal capital Retained of the
capital reserve reserve earnings parent
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 31 December
2020 422 13 3,922 158 79 9 51,421 56,024
Profit for the
period - - - - - - 15,540 15,540
Other
comprehensive
income/
(expense)
for the
period
net of tax - - (954) - - - 2,879 1,925
Total
comprehensive
income - - (954) - - - 18,419 17,465
Dividends paid - - - - - - (9,869) (9,869)
Total of
transactions
with
shareholders - - - - - - (9,869) (9,869)
At 31 December
2021 422 13 2,968 158 79 9 59,971 63,620
Profit for the
period - - - - - - 17,020 17,020
Other
comprehensive
income for
the
period net of
tax - - 1,190 - - - 88 1,278
Total
comprehensive
income - - 1,190 - - - 17,108 18,298
Dividends paid - - - - - - (17,292) (17,292)
Share and
dividend
forfeiture (1) - - 1 - - 85 85
Total of
transactions
with
shareholders (1) - - 1 - - (17,207) (17,207)
At 31 December
2022 421 13 4,158 159 79 9 59,872 64,711
-------- --------- ------------- ------------ --------- ------------ ---------- --------------
Notes to the Interim Financial statements
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 2022 or 31
December 2021 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 repaid in full the GBP3.0 million
bank loan outstanding as at 31 December 2021. We continue to make
payments to our suppliers in accordance with our agreed terms and
all fiscal payments to the UK and overseas government bodies have
been and will continue to be made on time.
The directors are required to consider the application of the
going concern concept when approving financial statements. The
principal element required to meet the test is sufficient liquidity
for a period from the end of the year until at least 12 months
subsequent to the date of approving the accounts. Management has
prepared a detailed "bottom-up" budget including profit and loss
and cash flow for the financial year ending 31 December 2023, and
has extrapolated this forward until the end of May 2024 in order to
form a view of an expected trading and cash position for the
required period. This base level forecast fully incorporates
management's expectations around the continued recovery of the
group and was prepared on a cautiously realistic basis. This
forecast takes into account specific factors relevant in each of
our businesses. These 2023 forecasts have been reviewed and
approved by the Board.
Whilst profitability and cash flow performance to the end of
February 2023 has been close to expectation, in order to further
assess the company's ability to continue to trade as a going
concern, management have performed an exercise to assess a
reasonable worst-case trading scenario and the impact of this on
profit and cash. For the purposes of the cash forecast, only the
below assumptions have been incorporated into this forecast:
-- Normal level of dividends will be maintained during the 12
months subsequent to the date of approving the accounts;
-- No new external funding sought;
-- Hire turnover and product sales reduced by 12% versus budget-
a variance level seen across any individual product class for 2022
and 2021 actual results versus budgets;
-- All overheads continue at the base forecast level apart from
overtime and commission and repairs and marketing, which are
reduced by 5% and travel costs reduced by 2.5%;
-- All current vacancies are filled immediately; and
-- Capital expenditure is reduced by 5%.
The above factors have all been reflected in the forecast for
the period ending 12 months subsequent to the date of approving the
accounts. The headline numbers at a group level are as follows:
-- Group turnover for the 12 months ending 31 December 2023 is
forecast to be adverse to the 31 December 2022 figures. Operating
profit is below the profit for 2022.
-- Closing net funds as at the end of May 2024 are forecast to
be below the level reported at 31 December 2022.
Under this reasonable worst-case scenario, the group has
sufficient net funds throughout 2023 and up to the end of May 2024,
to continue to operate as a going concern.
A final sensitivity analysis was performed in order to assess by
how much group turnover could fall before further external
financing would need to be sought. Under this scenario it was
assumed that:
-- Capital expenditure falls proportionately to turnover;
-- Temporary staff are removed from the group; and
-- Various overheads decrease proportionately with turnover.
Given these assumptions, and for modelling purposes only,
assuming dividends are maintained at normal levels, group turnover
could fall to below GBP50 million on an annualised basis without
any liquidity concerns. Due to the level of confidence the Board
has in the future trading performance of the group, this scenario
is considered highly unlikely to occur.
The group has considerable financial resources and a wide
operational base. Based on the detailed forecast prepared by
management, the Board has a reasonable expectation that the group
has adequate resources to continue to trade for the foreseeable
future even in the reasonable worst-case scenario identified by the
group. Accordingly, the Board continues to adopt the going concern
basis when preparing this Annual Report and Financial
Statements.
3 International Financial Reporting Standards (IFRS) adopted for
the first time in 2022
There were no new standards or amendments to standards adopted
for the first time this year that had a material impact on the
results of the group. The prior year comparatives have not been
restated for any changes in accounting policies that were required
due to the adoption of new standards this year.
4 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 18 May 2023
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 2021 have been delivered to the
Registrar of Companies and those for the 12 months ended 31
December 2022 will be filed at Companies House following the
company's Annual General Meeting. The auditor has reported on those
financial statements; the 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.
5 Date of Annual General Meeting
The group's Annual General Meeting will be held at 3.00 p.m. on
Wednesday, 14 June 2023 at Unit 5, Peninsular Park Road, London,
SE7 7TZ.
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