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Andrews Sykes Group

Andrews Sykes Group - Half-year Report

RNS Number : 5019A
Andrews Sykes Group PLC
30 September 2020
 

Andrews Sykes Group plc

Interim Financial Statements 2020

 

Andrews Sykes Group plc announces unaudited results for the six months ended 30 June 2020.

 

Summary of results

 

 

(Unaudited)

 

6 months ended

 30 June 2020

 

6 months

Ended

30 June 2019

 

£'000

 

£'000

 

 

 

 

Revenue from continuing operations

33,480

 

34,974

EBITDA* from continuing operations

11,781

 

11,435

Operating profit

7,000

 

6,918

Profit for the financial period

6,070

 

5,449

Basic earnings per share (pence)

14.39p

 

12.92p

Special interim dividend declared per equity share (pence)

23.70p

 

-

Second interim dividend declared per equity share (pence)

11.90p

 

11.90p

Cash and cash equivalents

32,096

 

23,770

Net funds

16,770

 

8,329

 

 

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

 

Enquiries

 

Andrews Sykes Group plc

Paul Wood (MD)

+44 (0) 1902 328 700

 

 

GCA Altium (Nominated Adviser)

 

Tim Richardson

 

+44 (0) 20 7484 4040

 

 

Chairman's Statement

Overview

Andrews Sykes' trading continues to be resilient as sectors in which we trade show ongoing demand, despite the unprecedented challenge in the form of the coronavirus pandemic. We continue to be thankful and proud of our team members as they respond as essential service providers.

The group's revenue for the 6 months ended 30 June 2020 was £33.5 million, a decrease of £1.5 million compared with the same period in 2019. However, the operating profit for the period was £7.0 million compared with £6.9 million in 2019, an increase of £0.1 million, reflecting a favourable business mix. Overall, net funds increased by £4.7 million from £12.1 million as at 31 December 2019 to £16.8 million as at 30 June 2020.

Operations review

Our main hire and sales businesses in Europe had mixed fortunes. Turnover at Andrews Sykes Hire in the UK improved by 4.8% compared with the same period in 2019. However, our businesses in the rest of Europe were significantly affected by a combination of the coronavirus pandemic and mild weather. Consequently, the combined operating profit for these businesses in the first half was £1.0 million below the level achieved in 2019.

Andrews Air Conditioning and Refrigeration, our UK air conditioning installation business, was particularly affected by the coronavirus pandemic as our engineers were not allowed access to certain customer sites in order to carry out their work. This business returned a small operating loss in the first half, £0.2 million below the profit returned in 2019.

Khansaheb Sykes, our business based in the UAE, had a difficult start to the period due to the coronavirus pandemic and reduced demand during Ramadan. The operating profit of Khansaheb Sykes decreased by £0.1 million compared with the first half of 2019.

Unallocated overheads and central expenses reduced by £0.2 million in the period compared with 2019 resulting in an improvement of £0.1 million in operating profit to £7.0 million in 2020 (2019: £6.9 million).

Profit for the financial period and Earnings per Share

Profit before tax was £7.2 million compared with £6.8 million in the same period last year. This increase is attributable to the £0.1 million improvement in operating profit, a net foreign exchange gain on inter-company balances of £0.4 million (2019: £Nil) due to the weakening of Sterling compared with the Euro and the UAE Dirham, and a net increase of £0.1 million in interest charges.

The total tax charge for the period decreased by £0.2 million to £1.1 million (2019: £1.3 million), an effective tax rate of 16.1% (2019: 19.4%), mainly due to prior year tax credits and an overall lower effective tax rate applicable to subsidiaries operating abroad.

Profit after tax was £6.1 million (2019: £5.5 million). Basic earnings per share increased by 1.47 pence, or 11.4%, to 14.39 pence (2019: 12.92 pence) reflecting this increase in profit.

Dividends

The final dividend of 10.50 pence per ordinary share for the year ended 31 December 2019 was approved by members at the AGM held on 16 June 2020. Accordingly, on 19 June 2020 the company made a total dividend payment of £4.43 million which was paid to shareholders on the register as at 29 May 2020.

Post the period end, on 28 August 2020 the company paid a special interim dividend of 23.7 pence per ordinary share, or £10.0 million in total, to shareholders on the register as at 7 August 2020. This dividend was paid out of the group's substantial brought forward cash reserves accumulated from previous years trading, a proportion of which were surplus to the group's requirements and were therefore returned to shareholders.

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 a second interim dividend for 2020 of 11.90 pence per ordinary share which in total amounts to £5.0 million. This will be paid on 6 November 2020 to shareholders on the register as at 9 October 2020. The ordinary shares will go ex-dividend on 8 October 2020.

Outlook

Whilst certain of the group's business operations continue to be affected by the coronavirus pandemic, for example the performance of our air conditioning business in July and August suffered as occupation levels of our customers' offices remained low as people continued to work from home, demand for cooling equipment was buoyant and pumps in the UK continues to perform in line with last year's levels. Management remain optimistic that the business will improve as the economy recovers but are mindful that we live in uncertain times and circumstances can change very quickly.

 

JG Murray

Chairman

29 September 2020

 

 

 

Consolidated income statement

for the 6 months ended 30 June 2020 (unaudited)

 

 

6 months

ended

30 June

2020

£'000

 

6 months

ended

30 June

2019

£'000

 

         12 months

ended

31 December

2019

£'000

 

Continuing operations

 

 

 

 

 

 

 

 

 

 

 

Revenue

33,480

 

34,974

 

77,246

Cost of sales

(14,544)

 

(15,535)

 

(32,244)

 

 

 

 

 

 

Gross profit

18,936

 

19,439

 

45,002

 

 

 

 

 

 

Distribution costs

(5,541)

 

(5,762)

 

(11,996)

 

 

 

 

 

 

Administrative expenses

(6,395)

 

(6,759)

 

(13,708)

 

 

 

 

 

 

Operating profit

7,000

 

6,918

 

19,298

 

 

 

 

 

 

EBITDA*

11,781

 

11,435

 

28,519

Depreciation and impairment losses

(3,785)

 

(3,697)

 

(7,203)

Depreciation of right-of-use assets

(1,328)

 

(1,098)

 

(2,538)

Profit on the sale of plant and equipment and right-of-use assets

 

332

 

 

278

 

 

520

Operating profit

7,000

 

6,918

 

19,298

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

84

 

61

 

146

Finance costs

(38)

 

(46)

 

(88)

Interest charge on right-of-use lease obligations

(238)

 

(157)

 

(526)

Inter-company foreign exchange gains and losses

427

 

(16)

 

(270)

Profit before taxation

7,235

 

6,760

 

18,560

 

 

 

 

 

 

Taxation

(1,165)

 

(1,311)

 

(3,541)

 

 

 

 

 

 

Profit for the financial period

 

 

 

 

 

 

 

 

There were no discontinued operations in either of the above periods

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted (pence)

14.39p

 

12.92p

 

35.61p

 

 

 

 

 

 

Dividends per equity share paid during the period (pence)

10.5p

 

11.90p

 

23.80p

 

 

 

 

 

 

Dividends per equity share paid after the period end (pence)

 

23.70p

 

 

-

 

 

-

 

 

 

 

 

 

Proposed dividend per equity share (pence)

11.90p

 

11.90p

 

10.5p

 


* 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 2020 (unaudited)

 

 

30 June
                2020

 

30 June
2019

 

31 December 2019

 

         £'000

 

        £'000

 

         £'000

Non-current assets

 

 

 

 

 

Property, plant and equipment

24,092

 

24,046

 

24,561

Right-of-use assets

11,506

 

11,387

 

11,515

Prepayments

43

 

44

 

44

Deferred tax asset

660

 

435

 

254

Retirement benefit pension surplus

479

 

1,286

 

1,963

 

36,780

 

37,198

 

38,337

 

 

 

 

 

 

Current assets

 

 

 

 

 

Stocks

7,353

 

5,969

 

6,333

Trade and other receivables

19,126

 

20,115

 

21,333

Overseas tax (denominated in Euros)

187

 

278

 

-

Cash and cash equivalents

32,096

 

23,770

 

27,880

 

58,762

 

50,132

 

55,546

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

(14,882)

 

(11,444)

 

(12,942)

Current UK tax liabilities

(630)

 

(1,104)

 

(1,440)

Overseas tax (denominated in euros)

-

 

-

 

(234)

Bank loans

(493)

 

(493)

 

(493)

Right-of-use lease obligations

(2,411)

 

(2,141)

 

(2,279)

 

(18,416)

 

(15,182)

 

(17,388)

 

 

 

 

 

 

Net current assets

40,346

 

34,950

 

38,158

 

 

 

Total assets less current liabilities

77,126

 

72,148

 

76,495

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Bank loans

(2,994)

 

(3,487)

 

(3,490)

Right-of-use lease obligations

(9,427)

 

(9,320)

 

(9,482)

 

(12,421)

 

(12,807)

 

(12,972)

 

 

 

 

 

 

Net assets

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Called-up share capital

422

 

422

 

422

Share premium

13

 

13

 

13

Retained earnings

59,390

 

54,363

 

59,447

Translation reserve

4,634

 

4,297

 

3,395

Other reserves

246

 

246

 

246

 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

 

 

Consolidated cash flow statement

for the six months ended 30 June 2020 (unaudited)

 

 

6 months

ended

30 June

2020

£'000

 

6 months

ended

30 June

2019

£'000

 

         12 months

ended

31 December

2019

£'000

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

Cash generated from operations

14,448

 

7,530

 

22,917

Interest paid

(274)

 

(201)

 

(609)

Net UK corporation tax paid

(1,619)

 

(1,300)

 

(2,227)

Overseas tax paid

(814)

 

(1,233)

 

(1,559)

 

 

 

 

 

 

Net cash inflow from operating activities

11,741

 

4,796

 

18,522

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Sale of property, plant and equipment

382

 

382

 

685

Purchase of property, plant and equipment

(2,128)

 

(2,812)

 

(6,207)

Interest received

57

 

43

 

100

Net cash outflow from investing activities

(1,689)

 

(2,387)

 

(5,422)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Loan repayments

(500)

 

(500)

 

(500)

Capital repayments for right-of-use lease obligations

(1,245)

 

(1,030)

 

(2,296)

Equity dividends paid

(4,428)

 

(5,019)

 

(10,038)

Net cash outflow from financing activities

(6,173)

 

(6,549)

 

(12,834)

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

3,879

 

(4,140)

 

266

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the period

27,880

 

27,862

 

27,862

Effect of foreign exchange rate changes

337

 

48

 

(248)

 

 

 

 

 

 

Cash and cash equivalents at end of the period

32,096

 

23,770

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

3,879

 

(4,140)

 

266

Net cash outflow from the decrease in debt

1,745

 

1,530

 

2,796

Non-cash movements re new right-of-use lease obligations

(1,171)

 

(1,134)

 

(2,593)

Non-cash movements re costs of raising loan finance

(4)

 

(4)

 

(7)

Non-cash movements re termination of right-of-use lease obligations

 

160

 

 

-

 

 

-

Increase/(decrease) in net funds during the period

4,609

 

(3,748)

 

462

Opening net funds at the beginning of period

12,136

 

23,381

 

23,381

Transitional adjustment for right-of-use assets at start of period

-

 

(11,363)

 

(11,699)

Effect of foreign exchange rate changes

337

 

48

 

(248)

Effect of foreign exchange rate changes on right-of-use lease obligations

 

(312)

 

 

11

 

 

240

Closing net funds at the end of period

16,770

 

8,329

 

 

 

Consolidated statement of comprehensive total income (CSOCTI)

for the six months ended 30 June 2020 (unaudited)

 

 

6 months

ended

30 June

2020

£'000

 

6 months

ended

30 June

2019

£'000

 

         12 months ended

     31 December 

                  2019

                 £'000

 

 

 

 

 

 

Profit for the financial period

6,070

 

5,449

 

15,019

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified to profit and loss:

 

 

 

 

 

Currency translation differences on foreign currency operations

1,243

 

(2)

 

(906)

Foreign exchange differences on IFRS 16 adjustments

(5)

 

-

 

1

Related deferred tax

1

 

-

 

-

Items that will never be reclassified to profit and loss:

 

 

 

 

 

Remeasurement of defined benefit liabilities and assets

(2,098)

 

(96)

 

559

Related deferred tax

399

 

16

 

(106)

 

 

 

 

 

 

Other comprehensive income for the period net of tax

(460)

 

(82)

 

(452)

 

 

 

 

 

 

Total comprehensive income for the period

5,610

 

5,367

 

14,567

 

 

Notes to the consolidated interim financial statements

for the six months ended 30 June 2020 (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 2019 does not constitute the group's statutory accounts for 2019 as defined in Section 434 of the Companies Act 2006. Statutory accounts for 2019 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 29 September 2020, 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

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 2019.

3       Revenue

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

 

6 months

ended

30 June

2020

£'000

 

6 months

ended

30 June

2019

£'000

 

         12 months ended

     31 December

                  2019

                 £'000

Continuing operations

 

 

 

 

 

Revenue outside the scope of IFRS 15 and recognised as lease income in accordance with IFRS 16:

 

 

 

 

 

Hire

29,185

 

30,042

 

67,411

Revenue recognised at a point in time in accordance with IFRS 15:

 

 

 

 

 

Sales

3,161

 

2,863

 

5,782

Maintenance

560

 

957

 

1,876

Installation and sale of units

574

 

1,112

 

2,177

 

 

 

 

 

 

Group consolidated revenue from the sale of goods and provision of services

 

33,480

 

 

34,974

 

 

77,246

 

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

 

6 months

ended

30 June

2020

£'000

 

6 months

ended

30 June

2019

£'000

 

         12 months ended

     31 December

                  2019

                 £'000

 

 

 

 

 

 

United Kingdom

20,903

 

20,886

 

45,711

Rest of Europe

6,891

 

8,147

 

18,305

Middle East and Africa

5,686

 

5,941

 

13,230

 

 

 

 

 

 

 

33,480

 

34,974

 

77,246

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

 

4       Taxation

 

6 months

ended

30 June

2020

£'000

 

6 months

ended

30 June

2019

£'000

 

         12 months ended

     31 December

                  2019

                 £'000

Current tax

 

 

 

 

 

UK corporation tax at 19% (30 June 2019 and 31 December 2019: 19%)

 

901

 

 

731

 

 

2,020

Adjustments in respect of prior periods

(92)

 

(185)

 

(211)  

 

809

 

546

  

1,809

Overseas tax

382

 

508

 

1,390

Adjustments to overseas tax in respect of prior periods

(20)

 

(1)

 

25  

Total current tax charge

1,171

 

1,053

 

3,224

 

 

 

 

 

 

Deferred tax

 

 

 

 

 

Deferred tax on the origination and reversal of temporary differences

 

(6)

 

 

73

 

 

137

Adjustments in respect of prior periods

-

 

185

 

180

Total deferred tax (credit)/charge

(6)

 

258

 

317

 

 

 

 

 

 

Total tax charge for the financial period attributable to

continuing operations

 

1,165

 

 

1,311

 

 

3,541

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 2019 and 31 December 2019: 19%) as follows:

 

6 months

ended

30 June

2020

£'000

 

6 months

ended

30 June

2019

£'000

 

        12 months

ended

31 December

2019

£'000

 

 

 

 

 

 

Profit before taxation from continuing and total operations

7,235

 

6,760

 

18,560

 

 

 

 

 

 

Tax at the UK effective annualised corporation tax rate of 19%

  (30 June 2019 and 31 December 2019: 19%)

 

1,375

 

 

1,284

 

 

3,526

Effects of:

 

 

 

 

 

Expenses not deductible for tax purposes

64

 

72

 

150

Utilisation of overseas trading losses

(9)

 

(12)

 

-

Effects of different tax rates of subsidiaries operating abroad

(184)

 

(110)

 

(188)

Overseas tax losses not recognised

31

 

29

 

59

Effect of change in rate of corporation tax

-

 

49

 

-

Adjustments to tax charge in respect of previous periods

(112)

 

(1)

 

(6)

Total tax charge for the financial period

1,165

 

1,311

 

3,541

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%, the reduction in the UK corporation tax rate to 17% that was to be effective from 1 April 2020 was reversed on 11 March 2020. There are currently no plans announced to change the rate of UK corporation tax from its current rate.

Deferred tax has been calculated based on the rates that the directors anticipate will apply when the temporary timing differences are expected to 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 2020

 

Continuing

earnings

 

Number of

Shares

 

£'000

 

 

 

 

 

 

Basic earnings/weighted average number of shares

6,070

 

42,174,359

 

 

 

 

Basic earnings per ordinary share (pence)

14.39p

 

 

 

 

6 months ended 30 June 2019

 

Continuing

Earnings

 

Number of

Shares

 

£'000

 

 

 

 

 

 

Basic earnings/weighted average number of shares

5,449

 

42,174,359

 

 

 

 

Basic earnings per ordinary share (pence)

12.92p

 

 

 

 

12 months ended 31 December 2019

 

Continuing

Earnings

 

Number of

Shares

 

£'000

 

 

 

 

 

 

Basic earnings/weighted average number of shares

15,019

 

42,174,359

 

 

 

 

Basic earnings per ordinary share (pence)

35.61p

 

 

Diluted earnings per share

There were no dilutive instruments outstanding at 30 June 2020 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 2020 were as follows:

 

Paid during the 6 months ended

30 June 2020

 

Pence per
share

 

Total dividend
paid

 

 

 

£'000

 

 

 

 

Final dividend for the year ended 31 December 2019 paid to members on the register as at 29 May 2020 on 19 June 2020

 

10.50p

 

 

4,428

The above dividend was charged against reserves during the 6 months ended 30 June 2020.

On 23 July 2020 the directors declared a special interim dividend of 23.7 pence per ordinary share which in total amounts to £9,995,000. This was paid on 28 August 2020 to shareholders on the register as at 7 August 2020 and will be charged against reserves in the second half of 2020.

On 29 September 2020 the directors declared an interim dividend of 11.90 pence per ordinary share which in total amounts to £5,019,000. This will be paid on 6 November 2020 to shareholders on the register as at 9 October 2020 and will also be charged against reserves in the second half of 2020.

Dividends declared and paid on ordinary one pence shares during the 6 months ended 30 June 2019 were as follows:

 

Paid during the 6 months ended

30 June 2019

 

Pence per
share

 

Total dividend
paid

 

 

 

£'000

 

 

 

 

Final dividend for the year ended 31 December 2018 paid to members on the register as at 31 May 2019 on 21 June 2019.

 

11.90p

 

 

5,019

The above dividend was charged against reserves during the 6 months ended 30 June 2019.

Dividends declared and paid on ordinary one pence shares during the 6 months ended 31 December 2019 were as follows:

 

 

Paid during the 12 months ended

31 December 2019

 

Pence per
share

 

Total dividend
paid

 

 

 

£'000

 

 

 

 

Final dividend for the year ended 31 December 2018 paid to members on the register as at 31 May 2019 on 21 June 2019

 

11.90p

 

 

5,019

Interim dividend declared on 26 September 2019 and paid to shareholders on the register as at 11 October 2019 on 8 November 2019

 

11.90p

 

 

5,019

 

23.80p

 

10,038

The above dividends were charged against reserves during the 12 months ended 31 December 2019.

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 2020 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 £479,000 (30 June 2019: £1,286,000; 31 December 2019: £1,963,000). 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 2016, a revised schedule of contributions and recovery plan was agreed with the pension scheme trustees in October 2017.  In accordance with this schedule of contributions, which was backdated to be effective from 1 January 2017, the group made additional contributions during 2017 to remove the funding deficit in the group scheme calculated as at 31 December 2016 of £710,000 and this was eliminated by 31 December 2017.

The next formal triennial funding valuation is due as at 31 December 2019. This is currently being worked upon and, subject to unforeseen circumstances, should be presented to the board of directors in the Autumn. A draft funding valuation was presented for discussion in the Summer and the group made a one-off contribution of £600,000 in late May 2020 to largely eliminate the indicative funding deficit as at 31 December 2019. In addition, the group has continued to make regular monthly contributions of £10,000 per month during 2020 and therefore the group anticipates that total contributions to the defined benefit pension scheme during 2020 will be at least £720,000.

Assumptions used to calculate the scheme surplus

A qualified independent actuary has updated the results of the December 2016 (30 June 2019 and 31 December 2019: 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

2020

%

30 June

2019

%

31 December

2019

%

Rate of increase in pensionable salaries

Rate of increase in pensions in payment

Discount rate applied to scheme liabilities

Inflation assumption - RPI

Inflation assumption - CPI

Percentage of members taking maximum tax-free lump sum on retirement

N/A

2.90

1.40

2.90

1.90

 

75

N/A

3.20

2.20

3.20

2.20

 

75

N/A

3.00

2.00

3.00

2.00

 

75

 

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 2020 is 100% S3PA CMI2018 (30 June 2019: 110% S2NA CMI2017; 31 December 2019: 110% S2NA CMI2018) with a 1.25% per annum long term improvement for both males and females (30 June 2019 and 31 December 2019: 1.25% males and females), heavy tables for males and medium tables for 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

2020

30 June

2019

31 December

2019

 

 

 

 

Male, current age 45

Female, current age 45

21.0 years

25.0 years

22.8 years

24.9 years

22.8 years

25.2 years

Male, current age 65

19.6 years

21.4 years

21.5 years

Female, current age 65

23.5 years

23.4 years

23.7 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

2020

£'000

 

30 June

2019

£'000

 

31 December

2019

£'000

 

 

 

 

 

 

Total fair value of plan assets

43,769

 

44,060

 

43,995

Present value of defined benefit funded obligation calculated in accordance with stated assumptions

 

(43,290)

 

 

(42,774)

 

 

(42,032)

Surplus in the scheme calculated in accordance with stated assumptions recognised in the balance sheet

 

 

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

 

 30 June

 2020

  £'000

 

30 June

 2019

  £'000

 

31 December

 2019

£'000

 

 

 

 

 

 

Fair value of plan assets at the start of the period

43,995

 

41,036

 

41,036

Interest income on pension scheme assets

438

 

562

 

1,120

Actual return less interest income on pension scheme assets

(193)

 

3,343

 

3,925

Employer contributions

660

 

60

 

120

Benefits paid   

(1,062)

 

(888)

 

(2,096)

Administration expenses charged in the income statement

(69)

 

(53)

 

(110)

 

 

 

 

 

 

Fair value of plan assets at the end of the period

43,769

 

44,060

 

43,995

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

 

30 June

2020

 

30 June

2019

 

31 December 2019

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Present value of defined benefit funded at the beginning of the period

 

(42,032)

 

 

(39,680)

 

 

(39,680)

Interest on defined benefit obligation

(415)

 

(543)

 

(1,082)

Actuarial loss recognised in the CSOCTI calculated in

   accordance with stated assumptions

 

(1,905)

 

 

(3,439)

 

 

(3,366)

Benefits paid

1,062

 

888

 

2,096

 

 

 

 

 

 

Closing present value of defined benefit funded obligation calculated in accordance with stated assumptions

 

(43,290)

 

 

(42,774)

 

 

(42,032)

Amounts recognised in the income statement

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

 

            30 June

                 2020

 

           30 June

               2019

 

  31 December

               2019

 

                £'000

 

               £'000

 

               £'000

 

 

 

 

 

 

Interest income on pension scheme assets

438

 

562

 

1,120

Interest expense on pension scheme liabilities

(415)

 

(543)

 

(1,082)

Net pension interest credit included within finance income

23

 

19

 

38

Scheme administration expenses

(69)

 

(53)

 

(110)

Net pension charge in the income statement

(46)

 

(34)

 

(72)

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

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

 

            30 June

                 2020

 

           30 June

               2019

 

  31 December

               2019

 

                £'000

 

               £'000

 

               £'000

 

 

 

 

 

 

Actual return less interest income on pension scheme assets

(193)

 

3,343

 

3,925

Experience gains and losses arising on plan obligation

-

 

-

 

211

Changes in demographic and financial assumptions underlying the present value of plan obligations

 

(1,905)

 

 

(3,439)

 

 

(3,577)

Actuarial (loss) / gain calculated in accordance with stated assumptions recognised in the CSOCTI

 

(2,098)

 

 

(96)

 

 

559

8       Called up share capital

 

 30 June

 2020

 

30 June

 2019

 

31 December

 2019

 

                £'000

 

           £'000

 

             £'000

Issued and fully paid:

 

 

 

 

 

42,174,359 ordinary shares of one pence each (30 June 2019 and 31 December 2019: 42,174,359 ordinary shares of one pence each)



422

 



422

 

 

 

422

During the period the company did not buy back any shares for cancellation (June 2019 and December 2019: Nil shares).

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

ended

30 June

2020

 

6 months

ended

30 June

2019

 

12 months

ended

31 December 2019

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Profit for the period attributable to equity shareholders

6,070

 

5,449

 

15,019

Adjustments for:

 

 

 

 

 

Taxation charge

1,165

 

1,311

 

3,541

Finance costs

38

 

46

 

88

Finance income

(84)

 

(61)

 

(146)

Interest charge on right-of-use lease obligations

238

 

157

 

526

Inter-company foreign exchange (gains) and losses

(427)

 

16

 

270

Profit on the sale of property, plant and equipment and right-of-use assets

 

(332)

 

 

(278)

 

 

(520)

Depreciation

3,785

 

3,697

 

7,203

Depreciation of right-of-use assets

1,328

 

1,098

 

2,538

 

 

 

 

 

 

EBITDA*

11,781

 

11,435

 

28,519

 

 

 

 

 

 

Excess of pension contributions compared with service and

administration expenses

 

(591)

 

 

 

(7)

 

 

(10)

Workings capital movements:

 

 

 

 

 

Stocks

(1,355)

 

(2,324)

 

(3,834)

Trade and other receivables

2,942

 

(120)

 

(1,818)

Trade and other payables

1,671

 

(1,454)

 

60

Cash generated from operations

14,448

 

7,530

 

22,917

* 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

 2020

 

30 June

2019

 

31 December

 2019

 

£'000

 

                 £'000

 

               £'000

 

 

 

 

 

 

Cash and cash equivalents per consolidated cash flow statement

 

32,096

 

 

23,770

 

 

27,880

 

 

 

 

 

 

Bank loans:

 

 

 

 

 

At the beginning of the period

(3,983)

 

(4,476)

 

(4,476)

Loans repaid

500

 

500

 

500

Other non-cash changes

(4)

 

(4)

 

(7)

At the of the period

(3,487)

 

(3,980)

 

(3,983)

 

 

 

 

 

 

Finance lease liabilities:

 

 

 

 

 

At the beginning of the period

-

 

(5)

 

(5)

Leases repaid

-

 

5

 

5

At the end of the period

-

 

-

 

-

 

 

 

 

 

 

Right-of-use lease obligations:

 

 

 

 

 

At the beginning of the period

(11,761)

 

-

 

-

Transitional adjustment for obligations at start of period

-

 

(11,363)

 

(11,699)

Capital repayments for right-of-use lease obligations

1,245

 

1,025

 

2,291

New right-of-use leases entered into during the period

(1,171)

 

(1,134)

 

(2,593)

Non-cash movements re termination of right-of-use lease obligations

 

160

 

 

-

 

 

-

Foreign exchange

(312)

 

11

 

240

At the of the period

(11,839)

 

(11,461)

 

(11,761)

 

 

 

 

 

 

Gross debt

(15,326)

 

(15,441)

 

(15,744)

 

 

 

 

 

 

Net funds

16,770

 

8,329

 

12,136

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.

 

 

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