Share Name Share Symbol Market Type Share ISIN Share Description
Andrews Sykes LSE:ASY London Ordinary Share GB0002684552 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +15.00p +2.75% 560.00p 520.00p 600.00p - - - 0 07:39:45
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Support Services 71.3 17.3 33.4 16.8 236.67

Andrews Sykes Group PLC Interim Financial Statements 2018

28/09/2018 7:00am

UK Regulatory (RNS & others)


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Andrews Sykes Group PLC

28 September 2018

28 September 2018

Andrews Sykes Group plc

Interim Financial Statements 2018

Andrews Sykes Group plc ("Andrews Sykes" or the "Company" or the "Group") announces unaudited results for the six months ended 30 June 2018.

Summary

 
                                                                (Unaudited) 
                                                      6 months ended   6 months ended 
                                                        30 June 2018     30 June 2017 
                                                             GBP'000          GBP'000 
 
Revenue from continuing operations                            37,815           35,334 
EBITDA* from continuing operations                            12,429           10,892 
Operating profit                                               9,280            8,171 
Profit for the financial period                                7,528            6,570 
Basic earnings per share (pence)                              17.82p           15.55p 
Interim dividends declared per equity share (pence)           11.90p           11.90p 
Net funds                                                     16,991           17,403 
                                                      ==============   ============== 
 
 

* Earnings Before Interest, Taxation, Depreciation, profit on the sale of property, plant and equipment, Amortisation and non-recurring items.

Enquiries:

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

Andy Phillips (CFO)

Mark Calderbank (Company Secretary)

GCA Altium (Nominated Adviser) +44 (0) 20 7484 4040

Tim Richardson

Chairman's Statement

Overview

The Group produced a successful result for the first half of 2018, once again the winter months created some good opportunities for our heating and boiler hire products. Overall, the Group's revenue for the six months ended 30 June 2018 was GBP37.8 million, an increase of GBP2.5 million compared with the same period last year. As a consequence operating profit increased by GBP1.1 million from GBP8.2 million in the first half of 2017 to GBP9.3 million for the six months ended 30 June 2018.

The Group continues to be profitable and cash generative. Cash generated from operations was GBP7.6 million (2017: GBP8.6 million) but net funds decreased by GBP3.3 million from GBP20.3 million as at 31 December 2017 to GBP17.0 million as at 30 June 2018, partly due to an increase in working capital of GBP4.8 million. This was also after paying the 2017 final dividend of 11.9 pence per share, or GBP5.0 million in total, during the period.

Management continue to safeguard the operational structure of the business. Cash spent on new plant and equipment, primarily hire fleet assets, amounted to GBP4.0 million and a further GBP0.9 million from stock was also added to the hire fleet. We have continued our policy of pursuing organic growth within our market sectors and start up costs of the new businesses discussed in previous Strategic Reports continue to be expensed as incurred. Continuing investment in both our existing core businesses and the ongoing development of new operations and income streams will ensure that we remain in a strong position and will safeguard profitability into the future.

Operations review

Our main hire and sales business segment in the UK and Europe continued to expand during first half of 2018. Our pumping activity has stayed in line with expectation and our heating products have increased revenue levels by 21%. Demand for our air conditioning products has increased by 14%.

Our operations across the Benelux region have experienced continued strong growth. Our recently established businesses in France and Switzerland continue to trade in line with our expectations. In Italy we have had a strong trading result driven by a 39% increase in revenues.

Andrews Air Conditioning & Refrigeration, our UK air conditioning installation business, produced an operating profit in line with previous periods.

Khansaheb Sykes, our business based in the UAE, had a challenging start to the year, maintaining similar hire revenue levels to 2017 whilst sales revenues have fallen back against expectation. As a result, the operating profit of Khansaheb Sykes has reduced to GBP1.0 million from GBP1.2 million in the first half of the year.

Profit for the financial period and Earnings per Share

Profit before tax was GBP9.3 million (2017: GBP8.1 million) reflecting the above GBP1.1 million increase in operating profit. The total tax charge was increased by GBP0.3 million from GBP1.5 million for the six months ended 30 June 2017 to GBP1.8 million for the current six month period. The effective tax rate increased from 19.0% for the six months ended 30 Jun 2017 to 19.4% in the current period. The rate for the current period is slightly higher than the standard effective UK corporation tax rate of 19% which is mainly due to the effect of profits being made in overseas regions with different tax rates to those in the UK and non-tax deductible expenses. A reconciliation of the theoretical corporation tax charge based on the accounts profit multiplied by the UK annualised corporation tax rate of 19% and the actual tax charge is given in note 4 of these interim financial statements.

Profit after tax was GBP7.5 million (2017: GBP6.6 million), an increase of GBP0.9 million or 14.58% (2017: GBP0.4 million or 6.05%) compared with the same period last year. The basic earnings per share increased by 2.27 pence, or 14.59%, from 15.55 pence for the first half of 2017 to 17.82 pence for the period under review reflecting both the increase in profit and shares purchased for cancellation during the period.

Share buybacks

The board continues to believe that shareholder value will be optimised by the purchase by the Company, when appropriate, of its own shares.

During the current period, on 31 May 2018, a total of 87,723 ordinary shares were purchased for cancellation for a total consideration of GBP438,000. These purchases enhanced earnings per share and were for the benefit of all shareholders.

Dividends

The final dividend of 11.90 pence per ordinary share for the year ended 31 December 2017 was approved by members at the AGM held on 20 June 2018. Accordingly on 25 June 2018 the Company made a total dividend payment of GBP5,029,000 which was paid to shareholders on the register as at 1 June 2018.

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 for 2018 of 11.90 pence per share which in total amounts to GBP5,019,000. This will be paid on 9 November 2018 to shareholders on the register as at 12 October 2018. The shares will go ex-dividend on 11 October 2018.

Outlook

Trading in the third quarter to date has continued to be positive. Europe has experienced strong trading results through the summer months as a result of continued high demand for air conditioning products. Once again activity in the Middle East has remained consistent through the summer period.

The board remains cautiously optimistic that the Group will have further success in the remainder of the year.

 
 JG Murray   27 September 2018 
  Chairman 
 
 

Consolidated income statement

for the 6 months ended 30 June 2018 (unaudited)

 
                                          6 months   6 months        12 month 
                                             ended      ended           ended 
                                           30 June    30 June     31 December 
                                              2018       2017            2017 
                                           GBP'000    GBP'000         GBP'000 
 Continuing operations 
 
 Revenue                                    37,815     35,334          71,300 
 Cost of sales                            (16,256)   (15,328)        (30,086) 
 
 Gross profit                               21,559     20,006          41,214 
 
 Distribution costs                        (5,987)    (5,917)        (11,571) 
 
 Administrative expenses                   (6,292)    (5,918)        (12,054) 
 
 Operating profit                            9,280      8,171          17,589 
 
 EBITDA*                                    12,429     10,892          22,851 
 Depreciation and impairment losses        (3,399)    (3,013)         (5,917) 
 Profit on the sale of plant and 
  equipment                                    250        292             655 
                                         ---------  ---------  -------------- 
 Operating profit                            9,280      8,171          17,589 
                                         ---------  ---------  -------------- 
 
 
 Finance income                                 60         49              82 
 Finance costs                                (47)       (59)            (93) 
 Intercompany foreign exchange 
  gains and losses                              52       (51)           (293) 
 Profit before taxation                      9,345      8,110          17,285 
 
 Taxation                                  (1,817)    (1,540)         (3,184) 
 
 Profit for the financial period             7,528      6,570          14,101 
                                         ---------  ---------  -------------- 
 
 There were no discontinued operations 
  in either of the above periods 
 
 Earnings per share from continuing 
  operations 
 
 Basic and diluted (pence)                  17.82p     15.55p          33.37p 
 
 Dividends paid during the period 
  per equity share (pence)                  11.90p     11.90p          23.80p 
 
 Proposed dividend per equity 
  share (pence)                             11.90p     11.90p          11.90p 
 

* Earnings Before Interest, Taxation, Depreciation, profit on the sale of property, plant and equipment, Amortisation and non-

recurring items.

Consolidated balance sheet

as at 30 June 2018 (unaudited)

 
                                                  30 June          30 June       31 December 
                                                     2018             2017              2017 
                                                  GBP'000          GBP'000           GBP'000 
 Non-current assets 
 Property, plant and equipment                     23,186           20,756            21,911 
 Lease prepayments                                     46               48                47 
 Trade investments                                      -              164                 - 
 Deferred tax asset                                   176              326               102 
 Retirement benefit pension surplus                 3,354            2,575             3,364 
                                         ----------------  ---------------  ---------------- 
                                                   26,762           23,869            25,424 
                                         ----------------  ---------------  ---------------- 
 
 Current assets 
 Stocks                                             5,807            4,542             3,860 
 Trade and other receivables                       20,100           18,817            17,852 
 Overseas tax (denominated in                          47                -                 - 
  Euros) 
 Cash and cash equivalents                         21,489           22,453            25,311 
                                                   47,443           45,812            47,023 
                                         ----------------  ---------------  ---------------- 
 
 Current liabilities 
 Trade and other payables                        (12,598)         (12,354)          (12,358) 
 Current tax liabilities                          (1,624)          (1,375)           (1,318) 
 Overseas tax (denominated in 
  euros)                                                -            (404)             (378) 
 Bank loans                                         (493)            (493)             (493) 
 Obligations under finance leases                    (26)             (61)              (43) 
                                                 (14,741)         (14,687)          (14,590) 
                                         ----------------  ---------------  ---------------- 
 
 Net current assets                                32,702           31,125            32,433 
 
 Total assets less current liabilities             59,464           54,994            57,857 
 
 Non-current liabilities 
 Bank loans                                       (3,979)          (4,471)           (4,475) 
 Obligations under finance leases                       -             (25)               (7) 
                                                  (3,979)          (4,496)           (4,482) 
                                         ----------------  ---------------  ---------------- 
 
 Net assets                                        55,485           50,498            53,375 
                                         ----------------  ---------------  ---------------- 
 
 Equity 
 Called-up share capital                              422              423               423 
 Share premium                                         13               13                13 
 Retained earnings                                 50,789           45,917            48,789 
 Translation reserve                                4,005            3,890             3,895 
 Other reserves                                       246              245               245 
 
 Surplus attributable to equity 
  holders of the parent                            55,475           50,488            53,365 
 
 Minority interest                                     10               10                10 
 
 Total equity                                      55,485           50,498            53,375 
                                         ----------------  ---------------  ---------------- 
 

Consolidated cash flow statement

for the six months ended 30 June 2018 (unaudited)

 
                                          6 months   6 months            12 months 
                                             ended      ended                ended 
                                           30 June    30 June          31 December 
                                              2018       2017                 2017 
                                           GBP'000    GBP'000              GBP'000 
 
 Cash flows from operating activities 
 Cash generated from operations              7,600      8,606               21,090 
 Interest paid                                (42)       (56)                 (84) 
 Net UK corporation tax paid                 (946)    (1,208)              (2,142) 
 Overseas tax paid                         (1,052)      (340)              (1,002) 
 
 Net cash inflow from operating 
  activities                                 5,560      7,002               17,862 
                                         ---------  ---------  ------------------- 
 
 Investing activities 
 Sale of property, plant and equipment         472        392                  861 
 Purchase of property, plant and 
  equipment                                (4,031)    (2,594)              (5,790) 
 Interest received                              16         38                   51 
                                         ---------  --------- 
 Net cash outflow from investing 
  activities                               (3,543)    (2,164)              (4,878) 
                                         ---------  ---------  ------------------- 
 
 Financing activities 
 Loan repayments                             (500)    (5,000)              (5,000) 
 New loans raised net of arrangement 
  fees                                           -      4,963                4,963 
 Finance lease capital repayments             (24)       (65)                (101) 
 Equity dividends paid                     (5,029)    (5,029)             (10,058) 
 Purchase of own shares                      (438)          -                    - 
                                         ---------  --------- 
 Net cash outflow from financing 
  activities                               (5,991)    (5,131)             (10,196) 
                                         ---------  ---------  ------------------- 
 
 Net (decrease) / increase in 
  cash and cash equivalents                (3,974)      (293)                2,788 
 
 Cash and cash equivalents at 
  the beginning of the period               25,311     22,819               22,819 
 Effect of foreign exchange rate 
  changes                                      152       (73)                (296) 
 
 Cash and cash equivalents at 
  end of the period                         21,489     22,453               25,311 
                                         ---------  ---------  ------------------- 
 
 Reconciliation of net cash flow to movement in net 
  funds in the period 
 
 Net (decrease)/increase in cash 
  and cash equivalents                     (3,974)      (293)                2,788 
 Net cash outflow from the decrease 
  in debt                                      524        102                  138 
 Non-cash movements re costs of 
  raising loan finance                         (4)        (6)                 (10) 
                                         ---------  ---------  ------------------- 
 (Decrease)/increase in net funds 
  during the period                        (3,454)      (197)                2,916 
 Opening net funds at the beginning 
  of period                                 20,293     17,673               17,673 
 Effect of foreign exchange rate 
  changes                                      152       (73)                (296) 
                                         ---------  ---------  ------------------- 
 Closing net funds at the end 
  of period                                 16,991     17,403               20,293 
                                         ---------  ---------  ------------------- 
 

Consolidated statement of comprehensive total income (CSOCTI)

for the six months ended 30 June 2018 (unaudited)

 
                                                                       6 months  6 months        12 months ended 
                                                                          ended     ended            31 December 
                                                                        30 June   30 June                   2017 
                                                                           2018      2017                GBP'000 
                                                                        GBP'000   GBP'000 
 
Profit for the financial period                                           7,528     6,570                 14,101 
                                                                       --------  --------  --------------------- 
 
Other comprehensive income: 
 
Items that may be reclassified to profit and loss: 
 
Currency translation differences on foreign currency net investments        110       (7)                    (2) 
 
Items that will never be reclassified to profit and loss: 
Remeasurement of defined benefit liabilities and assets                    (75)       935                  1,391 
Related deferred tax                                                         14     (178)                  (264) 
                                                                       --------  --------  --------------------- 
 
Other comprehensive income for the period net of tax                         49       750                  1,125 
                                                                       --------  --------  --------------------- 
 
Total comprehensive income for the period                                 7,577     7,320                 15,226 
                                                                       --------  --------  --------------------- 
 

Notes to the consolidated interim financial statements

for the six months ended 30 June 2018 (unaudited)

   1       General information 

Basis of preparation

These interim financial statements have been prepared in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as adopted by the European Union and with the Companies Act 2006.

The information for the 12 months ended 31 December 2017 does not constitute the Group's statutory accounts for 2017 as defined in Section 434 of the Companies Act 2006. Statutory accounts for 2017 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 2018, have not been audited or reviewed by the auditors.

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. 

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       Accounting policies 

With the exception of the adoption of IFRS 15 on 1 January 2018, these interim financial statements have been prepared on a consistent basis and in accordance with the accounting policies set out in the Group's Annual Report and Financial Statements 2017. There was no material impact on the Group's results as a consequence of the transition to IFRS 15 as the Group's activities are primarily (i) the hire of assets, mainly on short term leases, and (ii) the sale of goods the revenue for which was previously recognised at a point in time when the transfer of risks and rewards occurs which is consistent with IFRS 15. The comparative figures in these interim financial statements have not been restated as a consequence of adopting IFRS 15 for the first time this period.

   3       Revenue 

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

 
                                   6 months  6 months           12 months 
                                      ended     ended               ended 
                                    30 June   30 June         31 December 
                                       2018      2017                2017 
                                    GBP'000   GBP'000             GBP'000 
Continuing operations 
Hire                                 32,847    29,405              59,314 
Sales                                 3,152     3,906               7,485 
Installations                         1,816     2,023               4,501 
 
Group consolidated revenue from 
 the sale of goods and provision 
 of services                         37,815    35,334              71,300 
                                   --------  --------  ------------------ 
 

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

 
                         6 months  6 months           12 months 
                            ended     ended               ended 
                          30 June   30 June         31 December 
                             2018      2017                2017 
                          GBP'000   GBP'000             GBP'000 
 
United Kingdom             23,993    22,624              44,704 
Rest of Europe              8,664     7,067              14,715 
Middle East and Africa      5,158     5,643              11,881 
 
                           37,815    35,334              71,300 
                         --------  --------  ------------------ 
 

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

   4       Taxation 
 
                                         6 months  6 months             12 months 
                                            ended     ended                 ended 
                                          30 June   30 June           31 December 
                                             2018      2017                  2017 
                                          GBP'000   GBP'000               GBP'000 
Current tax 
UK corporation tax at 19% (30 June 
 2017 and 31 December 2017: 19.25%)         1,252     1,008                 1,947 
Adjustments in respect of prior 
 periods                                        -         -                  (62) 
                                         --------  --------  -------------------- 
                                            1,252     1,008                 1,885 
Overseas tax                                  618       474                 1,125 
Adjustments to overseas tax in 
 respect of prior periods                       7         3                  (19) 
Total current tax charge                    1,877     1,485                 2,991 
                                         --------  --------  -------------------- 
 
Deferred tax 
Deferred tax on the origination 
 and reversal of temporary differences       (60)        55                   163 
Adjustments in respect of prior 
 periods                                        -         -                    30 
Total deferred tax (credit) / charge         (60)        55                   193 
                                         --------  --------  -------------------- 
 
Total tax charge for the financial 
 period attributable to 
 continuing operations                      1,817     1,540                 3,184 
                                         --------  --------  -------------------- 
 

The tax charge for the financial period can be reconciled to the profit before tax per the income statement multiplied by the effective standard annualised corporation tax rate in the UK of 19% (30 June 2017 and 31 December 2017: 19.25%) as follows:

 
                                                                  6 months  6 months          12 months ended 
                                                                     ended     ended              31 December 
                                                                   30 June   30 June                     2017 
                                                                      2018      2017                  GBP'000 
                                                                   GBP'000   GBP'000 
 
Profit before taxation from continuing and total operations          9,345     8,110                   17,285 
                                                                  --------  --------  ----------------------- 
 
Tax at the UK effective annualised corporation tax rate of 19% 
 (30 June 2017 and 31 December 2017: 19.25%)                         1,776     1,561                    3,327 
Effects of: 
Expenses not deductible for tax purposes                                50        57                      144 
Utilisation of overseas trading losses                                (24)       (3)                     (30) 
Effects of different tax rates of subsidiaries operating abroad       (22)      (93)                    (225) 
Overseas tax losses not recognised                                      30        16                       21 
Effect of change in rate of corporation tax                              -       (1)                      (2) 
Adjustments to tax charge in respect of previous periods                 7         3                     (51) 
Total tax charge for the financial period                            1,817     1,540                    3,184 
                                                                  --------  --------  ----------------------- 
 

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. Accordingly UK corporation tax has been provided at 19%; the rate of 19% for the tax year ending 31 March 2019 having been substantially enacted in October 2015. UK deferred tax has been provided at 19% being the rate substantially enacted at the balance sheet date at which the timing differences are expected to substantially reverse.

   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.

 
                                                    6 months ended 30 June 2018 
                                                   ----------------------------- 
                                                       Continuing      Number of 
                                                         earnings         Shares 
                                                          GBP'000 
 
Basic earnings/weighted average number of shares            7,528     42,251,117 
                                                   -------------- 
 
Basic earnings per ordinary share (pence)                  17.82p 
 
 
                                                    6 months ended 30 June 2017 
                                                   ----------------------------- 
                                                       Continuing      Number of 
                                                         earnings         Shares 
                                                          GBP'000 
 
Basic earnings/weighted average number of shares            6,570     42,262,082 
                                                   -------------- 
 
Basic earnings per ordinary share (pence)                  15.55p 
 
 
                                                    12 months ended 31 December 2017 
                                                   ---------------------------------- 
                                                         Continuing         Number of 
                                                           earnings            Shares 
                                                            GBP'000 
 
Basic earnings/weighted average number of shares             14,101        42,262,082 
                                                   ---------------- 
 
Basic earnings per ordinary share (pence)                    33.37p 
 

Diluted earnings per share

There were no dilutive instruments outstanding at 30 June 2018 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 2018 were as follows:

 
                                                                                      Paid during the 6 months ended 
                                                                                                        30 June 2018 
                                                                                    -------------------------------- 
                                                                                       Pence per      Total dividend 
                                                                                           share                paid 
                                                                                                             GBP'000 
 
Final dividend for the year ended 31 December 2017 paid to members on the register 
 as at 1 
 June 2018 on 25 June 2018                                                                11.90p               5,029 
                                                                                    ------------  ------------------ 
 

The above dividend was charged against reserves during the 6 months ended 30 June 2018.

On 27 September 2018 the directors declared an interim dividend of 11.90 pence per ordinary share which in total amounts to GBP5,019,000. This will be paid on 9 November 2018 to shareholders on the register as at 12 October 2018 and will be charged against reserves in the second half of 2018.

Dividends declared and paid on ordinary one pence shares during the 6 months ended 30 June 2017 were as follows:

 
                                                                                      Paid during the 6 months ended 
                                                                                                        30 June 2017 
                                                                                    -------------------------------- 
                                                                                       Pence per      Total dividend 
                                                                                           share                paid 
                                                                                                             GBP'000 
 
Final dividend for the year ended 31 December 2016 paid to members on the register 
 as at 26 
 May 2017 on 26 June 2017                                                                 11.90p               5,029 
                                                                                    ------------  ------------------ 
 

The above dividend was charged against reserves during the 6 months ended 30 June 2017.

Dividends declared and paid on ordinary one pence shares during the 6 months ended 31 December 2017 were as follows:

 
                                                                                     Paid during the 12 months ended 
                                                                                                    31 December 2017 
                                                                                   --------------------------------- 
                                                                                       Pence per      Total dividend 
                                                                                           share                paid 
                                                                                                             GBP'000 
 
Final dividend for the year ended 31 December 2016 paid to members on the 
 register as at 26 
 May 2017 on 26 June 2017                                                                 11.90p               5,029 
Interim dividend declared on 28 September 2017 and paid to shareholders on the 
 register as 
 at 6 October 2017 on 3 November 2017                                                     11.90p               5,029 
                                                                                   -------------  ------------------ 
                                                                                          23.80p              10,058 
                                                                                   -------------  ------------------ 
 

The above dividends were charged against reserves during the 12 months ended 31 December 2017.

   7       Retirement benefit obligations - Defined benefit pension scheme 

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.

As at 30 June 2018 the Group had a net defined benefit pension scheme surplus, calculated in accordance with IAS 19 (revised) using the assumptions as set out below, of GBP3,354,000 (30 June 2017: GBP2,575,000; 31 December 2017: GBP3,364,000). 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 2016 triennial recalculation of the funding deficit, a revised schedule of contributions was agreed with the pension scheme trustees. In accordance with this schedule of contributions the group made additional contributions in 2017 to remove the funding deficit as at 31 December 2016 of GBP710,000 and this was eliminated by 31 December 2017.

The next formal triennial funding valuation is due as at 31 December 2019. The Group currently expects to make pension contributions of GBP120,000 during 2018 in accordance with the current schedule of contributions of which GBP60,000 was paid in the first half year.

Assumptions used to calculate the scheme surplus

A qualified independent actuary has updated the results of the 31 December 2016 (30 June 2017and 31 December 2017: 31 December 2016) full actuarial valuation to calculate the surplus as disclosed below:

The major assumptions used to determine the present value of the scheme's defined benefit obligation were:

 
                                               30 June     30 June     31 December 
                                                  2018        2017            2017 
                                                     %           %               % 
      Rate of increase in pensionable salaries               N/A             N/A       N/A 
       Rate of increase in pensions in payment              3.10            3.20      3.10 
       Discount rate applied to scheme liabilities          2.60            2.60      2.50 
       Inflation assumption - RPI                           3.10            3.20      3.10 
       Inflation assumption - CPI                           2.10            2.20      2.10 
       Percentage of members taking maximum                   75              90        75 
        tax free lump sum on retirement 
 
 

From 1 January 2011, the government amended the basis for statutory increases to deferred pensions and pensions in payment. Such increases are now based on inflation measured by the Consumer Price Index (CPI) rather than the Retail Price Index (RPI). Having reviewed the scheme rules and considered the impact of the change on this pension scheme, the directors consider that future increases to (i) all deferred pensions and (ii) Guaranteed Minimum Pensions accrued between 6 April 1988 and 5 April 1997 and currently in payment will be based on CPI rather than RPI. Accordingly, this assumption was adopted as at 31 December 2010 and subsequently.

Assumptions regarding future mortality experience are set based on advice in accordance with published statistics. The mortality table used at 30 June 2018 is 110% S2NA CMI2016 (30 June 2017: 110% S2NA CMI2015; 31 December 2017: 110% S2NA CMI2016) with a 1.25% per annum long term improvement for both males and females (30 June 2017: 1% males and females; 31 December 2017: 1.25% males and females).

The assumed average life expectancy in years of a pensioner retiring at the age of 65 given by the above tables is as follows:

 
                               30 June       30 June   31 December 
                                  2018          2017          2017 
 
 Male, current age 45       22.9 years    22.6 years    22.9 years 
  Female, current age 45    25.0 years    24.9 years    25.0 years 
 

Valuations

The fair value of the scheme's assets, which are not intended to be realised in the short term and may be subject to significant change before they are realised, and the present value of the scheme's liabilities, which are derived from cash flow projections over long periods and are inherently uncertain, were as follows:

 
                                       30 June                 30 June   31 December 
                                          2018                    2017          2017 
                                       GBP'000                 GBP'000       GBP'000 
 
  Total fair value of plan assets                   43,968      44,403          45,657 
  Present value of defined benefit 
  funded obligation calculated 
  in accordance with stated assumptions           (40,614)    (41,828)        (42,293) 
                                                ----------  ----------  -------------- 
  Surplus in the scheme calculated 
  in accordance with stated assumptions 
  recognised in the balance sheet                    3,354       2,575           3,364 
                                                ----------  ----------  -------------- 
 
 

The movement in the fair value of the scheme's assets during the period was as follows:

 
                                       30 June   30 June  31 December 
                                          2018      2017         2017 
                                       GBP'000   GBP'000      GBP'000 
 
Fair value of plan assets at the 
 start of the period                    45,657    43,368       43,368 
Interest income on pension scheme 
 assets                                    551       580        1,159 
Actual return less interest income 
 on pension scheme assets                (671)       848        2,047 
Employer contributions                      60       540          920 
Benefits paid                          (1,592)     (851)      (1,687) 
Administration expenses charged 
 in the income statement                  (37)      (82)        (150) 
 
Fair value of plan assets at the 
 end of the period                      43,968    44,403       45,657 
                                     ---------  --------  ----------- 
 

The movement in the present value of the defined benefit obligation during the period was as follows:

 
                                           30 June    30 June  31 December 
                                              2018       2017         2017 
                                           GBP'000    GBP'000      GBP'000 
 
Present value of defined benefit 
 funded at the beginning of the 
 period                                   (42,293)   (42,207)     (42,207) 
Interest on defined benefit obligation       (509)      (559)      (1,117) 
Actuarial gain/(loss) recognised 
 in the CSOCTI calculated in 
 accordance with stated assumptions            596         87        (656) 
Benefits paid                                1,592        851        1,687 
 
Closing present value of defined 
 benefit funded obligation calculated 
 in accordance with stated assumptions    (40,614)   (41,828)     (42,293) 
                                         ---------  ---------  ----------- 
 

Amounts recognised in the income statement

The amounts credited / (charged) in the income statement were:

 
                                                      30 June                30 June            31 December 
                                                         2018                   2017                   2017 
                                                      GBP'000                GBP'000                GBP'000 
 
Interest income on pension scheme 
 assets                                                   551                    580                  1,159 
Interest expense on pension scheme 
 liabilities                                            (509)                  (559)                (1,117) 
                                       ----------------------  ---------------------  --------------------- 
Net pension interest credit included 
 within finance income                                     42                     21                     42 
Scheme administration expenses                           (37)                   (82)                  (150) 
Net pension credit / (charge) 
 in the income statement                                    5                   (61)                  (108) 
                                       ----------------------  ---------------------  --------------------- 
 

Actuarial gains and losses recognised in the consolidated statement of comprehensive total income (CSOCTI)

The amounts (charged) / credited in the CSOCTI were:

 
                                                        30 June                30 June            31 December 
                                                           2018                   2017                   2017 
                                                        GBP'000                GBP'000                GBP'000 
 
Actual return less interest income 
 on pension scheme assets                                 (671)                    848                  2,047 
Experience gains and losses arising 
 on plan obligation                                           -                    210                    160 
Changes in demographic and financial 
 assumptions underlying the present 
 value of plan obligations                                  596                  (123)                  (816) 
Actuarial (loss) / gain calculated 
 in accordance with stated assumptions 
 recognised in the CSOCTI                                  (75)                    935                  1,391 
                                         ----------------------  ---------------------  --------------------- 
 
   8       Called up share capital 
 
                                                        30 June            30 June          31 December 
                                                           2018               2017                 2017 
                                                        GBP'000            GBP'000              GBP'000 
Issued and fully paid: 
42,174,359 ordinary shares of 
 one pence each (30 June 2017 and 
 31 December 2017: 42,262,082 ordinary 
 shares of one pence each)                                  422                423                  423 
                                         ----------------------  -----------------  ------------------- 
 

During the period the Company bought back 87,723 shares for cancellation for a total consideration of GBP437,689 (June 2017 and December 2017: Nil shares bought back).

The Company did not issue any shares in the period or either of the comparative periods. No share options were granted, forfeited or expired during the periods and there were no share options outstanding at any period end.

The Company has one class of ordinary shares which carry no right to fixed income.

   9       Cash generated from operations 
 
                                                   6 months  6 months     12 months 
                                                      ended     ended         ended 
                                                    30 June   30 June   31 December 
                                                       2018      2017          2017 
                                                    GBP'000   GBP'000       GBP'000 
 
Profit for the period attributable 
 to equity shareholders                               7,528     6,570        14,101 
Adjustments for: 
Taxation charge                                       1,817     1,540         3,184 
Finance costs                                            47        59            93 
Finance income                                         (60)      (49)          (82) 
Inter-company foreign exchange 
 gains and losses                                      (52)        51           293 
Profit on the sale of property, 
 plant and equipment                                  (250)     (292)         (655) 
Depreciation                                          3,399     3,013         5,917 
 
EBITDA*                                              12,429    10,892        22,851 
 
Excess of pension contributions 
 compared with service and 
 administration expenses                               (23)     (458)         (770) 
Write off of trade investments                            -         -           164 
Workings capital movements: 
Stocks                                              (2,799)     (728)       (1,022) 
Trade and other receivables                         (2,245)     (402)           563 
Trade and other payables                                238     (698)         (696) 
Cash generated from operations                        7,600     8,606        21,090 
                                     ----------------------  --------  ------------ 
 

* Earnings Before Interest, Taxation, Depreciation, profit on the sale of property, plant and equipment, Amortisation and non-recurring items.

   10     Analysis of net funds and movement in financing liabilities 
 
                                     30 June                  30 June            31 December 
                                        2018                     2017                   2017 
                                     GBP'000                  GBP'000                GBP'000 
 
Cash and cash equivalents per 
 consolidated cash flow statement     21,489                   22,453                 25,311 
                                    --------  -----------------------  --------------------- 
 
Bank loans: 
At the beginning of the period       (4,968)                  (4,995)                (4,995) 
Loans repaid                             500                    5,000                  5,000 
Loans drawn down                           -                  (4,963)                (4,963) 
Other non-cash changes                   (4)                      (6)                   (10) 
                                    --------  -----------------------  --------------------- 
At the of the period                 (4,472)                  (4,964)                (4,968) 
                                    --------  -----------------------  --------------------- 
 
Finance lease liabilities: 
At the beginning of the period          (50)                    (151)                  (151) 
Leases repaid                             24                       65                    101 
                                    --------  -----------------------  --------------------- 
At the end of the period                (26)                     (86)                   (50) 
                                    --------  -----------------------  --------------------- 
 
Gross debt                           (4,498)                  (5,050)                (5,018) 
                                    --------  -----------------------  --------------------- 
 
Net funds                             16,991                   17,403                 20,293 
                                    --------  -----------------------  --------------------- 
 
   11     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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

IR FKODKABKDFCB

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September 28, 2018 02:00 ET (06:00 GMT)

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