Source - LSE Regulatory
RNS Number : 5787N
Andrews Sykes Group PLC
26 September 2023
 

 

26 September 2023                                                                                                                   

 

ANDREWS SYKES GROUP PLC

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

 

Half Year Results

Unaudited results for the six months ended 30 June 2023

 

Summary of Results

 

 

Unaudited
six months ended
30 June
2023

Unaudited
six months ended
30 June
2022


 

£000

 

£000


 


 


Revenue from continuing operations

 

38,843

 

37,903

EBITDA* from continuing operations

 

13,887

 

13,181

Operating profit

 

9,713

 

8,489

Profit for the financial period

 

7,534

 

6,477

Cash and cash equivalents

 

24,146

 

34,430

Net funds

 

24,803

 

21,741


 

 

 



 

(pence)

 

(pence)

Basic earnings per share

 

17.88

 

15.36

Interim dividend declared per equity share

 

11.90

 

11.90

Special dividend declared per equity share

 

59.40

 

16.60

 

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

 

Enquiries

 

Andrews Sykes Group plc

Carl Webb, Managing Director

Ian Poole, Group Finance Director and Company Secretary


T: +44 (0)1902 328 700

 




Houlihan Lokey UK Limited (Nominated Advisor)

Tim Richardson


T: +44 (0)20 7484 4040







CHAIRMAN'S STATEMENT

 

Overview

 

The Group's revenue for the 6 months ended 30 June 2023 (the "period") was £38.8 million, an increase of £0.9 million compared with the same period in 2022. Operating profit for the period was £9.7 million compared with £8.5 million in 2022, an increase of £1.2 million, reflecting the increased revenue and the absence of £0.5m France restructure costs which were incurred in 2022. The period turnover and operating profit are both record results. Overall, net funds decreased by £1.1 million from £25.9 million as at 31 December 2022 to £24.8 million as at 30 June 2023 largely as a result of £3.0 million additional right-of-use lease obligations arising from new property leases.

 

Operations review

 

Revenue at Andrews Sykes Hire in the UK continues to grow and improved by 5.6% compared with the same period in 2022. Our business in Europe continues to grow very strongly, with revenue growing 15.5% compared to the same period in 2022. This result was driven by an exceptional performance from our Luxembourg and Dutch subsidiaries, with revenues up 64.8% and 24.1% respectively on the same period in 2022 with a cold winter and the high early summer temperatures in June driving increasing demand in our heating and cooling products. Consequently, the combined operating profit for the UK and European hire businesses in the period was £1.1 million above the level achieved in 2022.

 

The previously announced restructure and depot closures in Climat Location, our France subsidiary, has contributed to a significantly reduced operating loss in France, with a loss of £0.1m being recognised in 2023. In addition, the group has further benefitted by not incurring any further restructure costs in the period whereas the same period in 2022 included £0.5m of restructure costs.

 

Andrews Air Conditioning and Refrigeration, our UK air conditioning installation business, continues to trade broadly in line with last few years but remains significantly down on 2019 levels. Whilst revenue decreased 11.7% in the period compared to the first six months of 2022, tight cost control meant operating profit increased by 1.8%.

 

Khansaheb Sykes, our business based in the UAE, continues to experience a difficult trading environment with revenue down 40.3% versus the first half of 2022. A restructure undertaken during the period has further reduced headcount in the UAE and rationalised our depots to one main trading depot in Sharjah. New senior management have recently been recruited and are having a positive impact. The reduced turnover in the UAE has resulted in operating profit being £0.4m lower to the first half of 2022.

 

Defined benefit pension scheme

 

Since the period end, the company has worked with the pension scheme Trustees and pension advisors, Hymans Robertson, to successfully de-risk its defined benefit scheme by completing a buy-in deal with Canada Life. This transaction, whilst significantly reducing the defined benefit pension scheme surplus recorded on the balance sheet, means that future liabilities are fully de-risked and the company will not be required to contribute significant cash payments into the pension scheme to fund adverse liability movements. During 2021 and 2022 the company contributed £2.6m of cash into the defined benefit pension scheme.

 

Profit for the financial period and Earnings per Share

 

Profit before tax for the period was £10.1 million compared with £8.5 million in the same period last year. This £1.6m increase is attributable to the £1.2 million improvement in operating profit, a reduced net foreign exchange gain on inter-company balances of £0.2 million due to the strengthening of Sterling compared with the Euro, and a net increase of £0.5 million in interest receivable resulting from the higher interest received on cash deposits.

 

The total tax charge for the period increased by £0.5 million to £2.6 million (2022: £2.1 million), an effective tax rate of 25.5% (2022: 24.0%). The increase in the overall effective rate of tax is driven by an increase in the UK corporation tax rate from 19% to 25% effective from April 2023, giving a blended rate of 23.5% for UK corporation tax in 2023.

 

Profit after tax in the period was £7.5 million (2022: £6.5 million). Basic earnings per share increased by 2.52 pence, or 16.4%, to 17.88 pence (2022: 15.36 pence) reflecting this increase in profit.

 

Dividends

 

The final dividend of 14.00 pence per ordinary share for the year ended 31 December 2022 was approved by members at the AGM held on 14 June 2023. Accordingly, on 16 June 2023 the Company made a total dividend payment of £5.9 million which was paid to shareholders on the register as at 26 May 2023.

 

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

 

In addition to the interim dividend, the board has assessed the company's ongoing cash requirements and has concluded that, as a result of the company's robust cash generation and de-risking of the defined benefit pension scheme, a portion of the current cash reserves are surplus to the company's requirements. The board has therefore decided to return this surplus capital to Andrews Sykes shareholders by way of a special dividend of 59.40 pence per ordinary share which in total amounts to £25.0 million. Both the interim and special dividends will be paid on 3 November 2023 to shareholders on the register as at 6 October 2023.

 

Outlook

 

Following the Company's strong first half performance, trading in the second half of the year to date has been more mixed. Whilst extreme summer temperatures in Southern Europe positively impacted demand for the Group's chillers in Italy, a more subdued summer season in the UK has limited the overall positive impact for the Group. Overall, Management remains confident of delivering full year results in line with the Board's expectations. In the longer term, management remains optimistic that the business will continue to improve but are mindful of the current economic climate and the impact that volatile energy prices and inflationary cost pressures can pose to the business and customer demand.  

 

 

 

JJ Murray

Chairman

25 September 2023



 

Consolidated Income Statement

for the six months ended 30 June 2023

 

 

 

Note

Unaudited
six months ended
30 June 2023

Unaudited
six months ended
30 June 2022

Year ended
31 December 2022



£000

£000

£000

Revenue

2

38,843

37,903

83,007

Cost of sales


(14,132)

(15,338)

(30,006)

Gross profit


24,711

22,565

53,001

Distribution costs


(7,321)

(6,846)

(14,936)

Administrative expenses


(7,677)

(7,230)

(16,535)

Operating profit


9,713

8,489

21,530

 


 



EBITDA*


13,887

13,181

30,616

Depreciation and impairment losses


(3,220)

(3,444)

(6,565)

Depreciation of right-of-use assets


(1,332)

(1,528)

(4,017)

Profit on the sale of property


-

-

866

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


378

280

630

Operating profit


9,713

8,489

21,530

Finance income

3

730

316

631

Finance costs

3

(332)

(278)

(610)

Profit before tax


10,111

8,527

21,551

Tax expense

4

(2,577)

(2,050)

(4,531)

Profit for the period from continuing operations attributable to equity holders of the Parent Company


7,534

6,477

17,020



 



Earnings per share from continuing operations:

 

 



Basic and diluted

5

17.88p

15.36p

40.36p

 

 

Dividend per equity share paid during the period


 

 

14.00p

 

 

12.50p

 

 

41.00p



 



Proposed dividend per equity share


11.90p

11.90p

14.00p

Proposed special dividend per equity share


59.40p

16.60p

-

 

 

* Earnings before interest, taxation, depreciation, profit on sale of property, plant and equipment and amortisation.

 



Consolidated Statement of Comprehensive Total Income

for the six months ended 30 June 2023

 

 

 

 

Unaudited
six months ended
 30 June
2023

Unaudited
six months ended
30 June
2022


Year ended
31 December
 2022


£000

£000

£000


 



Profit for the period

7,534

6,477

17,020

Other comprehensive income

 



Currency translation differences on foreign currency operations

(459)

926

1,222

Foreign exchange differences on IFRS 16 adjustments

16

-

(32)

Net other comprehensive (expense)/ income that may be reclassified to profit and loss

(443)

926

1,190

 

Re-measurement of defined benefit pension assets and liabilities

(17)

2,567

823

Related asset restriction

 

(49)

(898)

(735)

Net other comprehensive income that will not be reclassified to profit and loss

(66)

1,669

88

 

Other comprehensive (expense)/ income for the period net of tax

 

(509)

2,595

1,278

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

 

7,025

 

 

9,072

 

 

18,298

 

 

 

 



 

Consolidated Balance Sheet

At 30 June 2023

 

 

 

 

 

Unaudited
30 June
2023

 

Unaudited
30 June
2022

 

31 December
2022



£000


£000


£000



 


As restated



Non-current assets

 

 

 


 


  Property, plant and equipment

 

17,967

 

20,091

 

19,361

  Right-of-use assets

 

12,822

 

12,125

 

9,667

  Deferred tax assets

 

195

 

163

 

229

  Defined benefit pension scheme surplus

 

5,445

 

6,105

 

5,353


 

36,429

 

38,484

 

34,610

Current assets

 

 

 


 


  Stocks

 

3,208

 

5,205

 

4,434

  Trade and other receivables

 

20,012

 

18,749

 

19,535

  Current tax asset

 

188

 

-

 

423

  Other financial assets

 

15,000

 

-

 

16,700

  Cash and cash equivalents

 

24,146

 

34,430

 

20,518

 

 

62,554

 

58,384

 

61,610

 

 

 

 


 


Current liabilities

 

 

 


 


  Trade and other payables

 

(17,252)

 

(14,178)

 

(16,695)

  Current tax liabilities

 

-

 

(485)

 

(810)

  Right-of-use lease obligations

 

(2,555)

 

(2,625)

 

(2,505)

 

 

(19,807)

 

(17,288)

 

(20,010)

Net current assets

 

42,747

 

41,096

 

41,600

Total assets less current liabilities

 

79,176

 

79,580

 

76,210

 

 

 

 


 


Non-current liabilities

 

 

 


 


  Right-of-use lease obligations

 

(11,788)

 

(10,064)

 

(8,817)

  Provisions

 

(2,015)

 

(2,096)

 

(2,682)

 

 

(13,803)

 

(12,160)

 

(11,499)

 

 

 

 


 


Net assets

 

65,373

 

67,420

 

64,711

 

 

 

 


 


Equity

 

 

 


 


  Called up share capital

 

420

 

422

 

421

  Share premium

 

13

 

13

 

13

  Retained earnings

 

60,977

 

62,845

 

59,872

  Translation reserve

 

3,715

 

3,894

 

4,158

  Other reserve

 

248

 

246

 

247

Total equity

 

65,373

 

67,420

 

64,711



 

Consolidated Cash Flow Statement

for the six months ended 30 June 2023

 

 

 

 

 

Unaudited
six months ended
30 June
2023

 

Unaudited
six months ended
30 June
2022

 

Year ended
31 December
2022

 

 

£000

 

£000

 

£000

Operating activities

 

 

 

 

 


Profit for the period

 

7,534

 

6,477

 

17,020

Adjustments for:

 

 

 


 


Tax charge

 

2,577

 

2,050

 

4,531

Finance costs

 

332

 

278

 

610

Finance income

 

(730)

 

(316)

 

(631)

Profit on disposal of plant and equipment and right-of-use assets

 

 

(378)

 

 

(280)

 

 

(630)

Profit on disposal of property

 

-

 

-

 

(866)

Depreciation of property, plant and equipment

 

3,220

 

3,444

 

6,565

Depreciation of right-of-use assets

 

1,332

 

1,528

 

4,017

Difference between pension contributions paid and amounts recognised in the Income Statement

 

 

36

 

 

(628)

 

 

(1,152)

Decrease/ (increase) in inventories

 

1,155

 

639

 

(1,206)

(Increase)/ decrease in receivables

 

(791)

 

1,669

 

1,232

Increase in payables

 

766

 

330

 

2,492

Movement in provisions

 

(667)

 

125

 

711

Cash generated from continuing operations

 

14,386

15,316

32,693

Interest paid

 

(332)

(278)

(610)

Corporation tax paid

 

(3,185)

(1,553)

(4,487)

Net cash inflow from operating activities

 

10,869

13,485

27,596

 

 

 

 


 


Investing activities

 

 

 


 


  Disposal of property, plant and equipment

 

485

 

302

 

1,906

  Purchase of property, plant and equipment


(2,132)

 

(2,380)

 

(2,463)

  Cash on deposit with greater than 3 month     maturity


1,700

 

-

 

(16,700)

  Interest received


522

 

256

 

265

Net cash inflow/ (outflow) from investing activities


575

 

(1,822)

 

(16,992)



 

 


 


Financing activities


 

 


 


  Loan repayments


-

 

(3,000)

 

(3,000)

  Capital repayments for right-of-use lease

  Obligations


 

(1,402)

 

 

(1,471)

 

 

(2,849)

  Equity dividends paid


(5,898)

 

(5,272)

 

(17,292)

  Equity dividends forfeited


-

 

-

 

85

  Share repurchase


(465)

 

-

 

-

 

Net cash outflow from financing activities


 

(7,765)

 

 

(9,743)

 

 

(23,056)

 


 

 


 


 

 

Net increase in cash and cash equivalents


 

 

3,679

 

 

 

1,920

 

 

 

(12,452)

 


 

 


 


 

Cash and cash equivalents at the start of the period

 


 

20,518

 

 

32,443

 

 

32,443

Effect of foreign exchange rate changes


(51)

 

67

 

527

 

Cash and cash equivalents at the end of the period

 


 

24,146

 

 

34,430

 

 

20,518

 


 

 


 


 


 

 


 




 

Consolidated Statement of Changes in Equity

for the six months ended 30 June 2023

 


Share capital

 

 

Share premium

 

 

Translation reserve

 

Capital

 redemption reserve

UAE legal reserve

Netherlands capital reserve

Retained earnings

Attributable to equity holders of the parent











£000

£000

£000

£000

£000

£000

£000

£000










At 31 December 2021

422

13

2,968

158

79

9

59,971

63,620

Profit for the period

-

-

-

-

-

-

6,477

6,477

Other comprehensive income for the period net of tax

-

-

926

-

-

-

1,669

2,595

Total comprehensive income

-

-

926

-

-

-

8,146

9,072

Dividends paid

-

-

-

-

-

-

(5,272)

(5,272)

Total of transactions with shareholders

-

-

-

-

-

-

(5,272)

(5,272)










At 30 June 2022

422

13

3,894

158

79

9

62.845

67,420










Profit for the period

-

-

-

-

-

-

10,543

10,543

Other comprehensive (expense)/ income for the period net of tax

-

-

264

-

-

-

(1,581)

(1,317)

Total comprehensive (expense)/ income

-

-

264

-

-

-

8,962

9,226

Dividends paid

-

-

-

-

-

-

(12,020)

(12,020)

Share and dividend forfeiture

(1)

-

-

1

-

-

85

85

Total of transactions with shareholders

(1)

-

-

1

-

-

(11,935)

(11,935)










At 31 December 2022

421

13

4,158

159

79

9

59,872

64,711










Profit for the period

-

-

-

-

-

-

7,534

7,534

Other comprehensive income for the period net of tax

-

-

(443)

-

-

-

(66)

(509)

Total comprehensive income

-

-

(443)

-

-

-

7,468

7,025

Dividends paid

-

-

-

-

-

-

(5,898)

(5,898)

Share repurchase

(1)

-

-

1

-

-

(465)

(465)

Total of transactions with shareholders

(1)

-

-

1

-

-

(6,363)

(6,363)










At 30 June 2023

420

13

3,715

160

79

9

60,977

65,373

 

 

 

 

 

 

Notes to the Interim Financial statements

1              General information and accounting policies

 

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

 

The information for the 12 months ended 31 December 2022 does not constitute the Group's statutory accounts for 2022 as defined in Section 434 of the Companies Act 2006. Statutory accounts for 2022 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 26 September 2023, have not been audited or reviewed by the auditors.  

 

Basis of preparation

 

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

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

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

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

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

 

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

 

Accounting policies

 

The principal accounting policies applied in preparing the interim Financial Statements comply with international accounting standards in conformity with the requirements of the Companies Act 2006 and are consistent with the policies set out in the Annual Report and Accounts for the year ended 31 December 2022.

 

No new standards or interpretations issued since 31 December 2022 have had a material impact on the accounting of the Group.

Functional and presentational currency

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

 

 

 

 

 

 

 

 

 

 

 

 

 

2              Revenue

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


 

 


 



Unaudited

six months

ended

30 June

2023

 

£000

Unaudited

six months

ended

30 June

2022

 

£000

 

Year ended

31 December

2022

 

£000

Continuing operations







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




Hire

 



35,862

33,772

74,612

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

 



Sales

 



1,762

2,739

5,482

Maintenance

 



674

665

1,357

Installation and sale of units

 



545

727

1,556

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

38,843

37,903

83,007

 

 



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


 



Unaudited

six months

ended

30 June

2023

 

£000

Unaudited

six months

ended

30 June

2022

 

£000

 

Year ended

31 December

2022

 

£000

United Kingdom

 



24,111

23,225

50,018

Europe

 



12,148

10,365

24,204

Middle East and Africa




2,584

4,313

8,785





38,843

37,903

83,007

 

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

 

3              Finance income and costs


Unaudited
six months ended
30 June

2023

Unaudited
six months ended
30 June

2022

Year ended
31 December

2022

Finance income

£000

£000

£000

Net interest on net defined benefit pension surplus

194

60

124

Intertest receivable on bank deposit accounts

522

31

265

Inter-company foreign exchange gains

14

225

242


730

316

631


 



Finance costs

 



Interest charge on bank loans and overdrafts

-

(25)

(33)

Interest charge on right-of-use lease obligations

(332)

(253)

(577)

Inter-company foreign exchange losses

-

-

-


(332)

(278)

(610)

4              Income tax expense

 

The total effective tax charge for the financial period represents the best estimate of the weighted average annual effective tax rate expected for the full financial year applying tax rates that have been substantively enacted by the balance sheet date. In the UK budget on 15 March 2021, the chancellor announced that the rate of corporation tax in the UK will increase from 19% to 25% with effect from 1 April 2023. UK corporation tax has been provided at 23.5% being the weighted tax rate in the UK for 2023. Deferred tax has been calculated based on the rates that the directors anticipate will apply when the temporary timing differences are expected to reverse.

 


Unaudited

six months ended

30 June

2023

Unaudited

six months ended

30 June

2022

 

Year ended

31 December

2022


£000

£000

£000

Current tax

 



UK corporation tax at 23.5% (June and December 2022: 19%)

1,709

1,139

2,538

Adjustments in respect of prior periods 

-

-

(55)


1,709

1,139

2,483

Overseas tax

835

644

2,088

 

Total current tax charge

 

2,544

 

1,783

 

4,571


 



Deferred tax

 



Origination and reversal of timing differences

33

126

(173)

Adjustments in respect of prior periods 

-

141

133

Total deferred tax charge/ (credit)

33

267

(40)

 

Total tax charge for the financial period

 

2,577

 

2,050

 

4,531

 

5              Earnings per share

 

Basic earnings per share

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

 


Unaudited

six months ended

30 June

2023

Unaudited

six months ended

30 June

2022

 

Year ended

31 December

2022


 



Weighted average number of ordinary shares

42,135,823

42,174,359

42,172,124

 

 



 

£000

£000

£000

 

Basic earnings

 

7,534

 

6,477

 

17,020

 

 



 

pence

pence

pence

 

Basic earnings per ordinary share

 

17.88

 

15.36

 

40.36

 

Diluted earnings per share

There were no dilutive instruments outstanding as at 30 June 2023 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 2023 were as follows:

 


 

Paid during the six months ended 30 June 2023


 

 

 

 

Pence per share

 

Total dividend paid

£000

Final dividend for the year ended 31 December 2022 paid on 16 June 2023 to members on the register as at 26 May 2023

 

 

14.00p

 

5,898

 

The above dividend was charged against reserves during the 6 months ended 30 June 2023.

 

On 26 September 2023 the directors declared an interim dividend of 11.90 pence per ordinary share which in total amounts to £5,004,000. In addition, a special dividend of 59.40 pence per ordinary share which in total amounts to £24,977,000 was also declared. These will be both be paid on 3 November 2023 to shareholders on the register as at 6 October 2023 and will be charged against reserves in the second half of 2023.

 

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

 


 

Paid during the six months ended 30 June 2022


 

 

 

 

Pence per share

 

Total dividend paid

£000

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

 

 

12.50p

 

5,272

 

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

 

Dividends declared and paid on ordinary one pence shares during the 12 months ended 31 December 2022 were as follows:


 

Paid during the year ended 31 December 2022


 

 

 

 

Pence per share

 

Total dividend paid

£000

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

 

 

12.50p

 

5,272

Interim dividend declared on 27 September 2022 and paid on 4 November 2022 to members on the register as at 7 October 2022

 

11.90p

5,019

Special dividend declared on 27 September 2022 and paid on 4 November 2022 to members on the register as at 7 October 2022

 

16.60p

7,001


 

41.00p

17,292

 

The above dividends were charged against reserves during the 12 months ended 31 December 2022.

 

7              Pensions

 

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

 

As at 30 June 2023 the Group had a net defined benefit pension scheme surplus, calculated in accordance with IAS 19  using the assumptions as set out below, of £8,377,000 (30 June 2022: £9,392,000; 31 December 2022: £8,236,000). The asset has been recognised in the financial statements as the directors are satisfied that it is recoverable in accordance with IFRIC 14.

 

Following the triennial recalculation of the funding deficit as at 31 December 2019, a revised schedule of contributions and recovery plan was agreed with the pension scheme trustees in March 2021 and was effective from 1 January 2021.  In accordance with this schedule of contributions and recovery plan, the Group will be making regular contributions of £10,000 per month for the period 1 January 2023 to 31 December 2023, and £10,000 per month for the period 1 January 2024 to 31 December 2025 or until a revised schedule of contributions is agreed, if earlier. Consequently, the Group expects to make total contributions to the defined benefit pension scheme of £120,000 during 2023.

 

Assumptions used to calculate the scheme surplus

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

 

 


30 June

2023

30 June

2022

31 December

2022





Rate of increase in pensionable salaries

n/a

n/a

n/a

Rate of increase in pensions in payment

3.15%

3.15%

3.15%

Discount rate

5.20%

3.75%

4.75%

Inflation assumption - RPI

3.15%

3.15%

3.15%

Inflation assumption - CPI

2.55%

2.55%

2.55%

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

 

75%

 

75%

 

75%

 

 

The demographic assumptions used for 30 June 2023, were the same as used in 31 December 2022, 30 June 2022 and the last full actuarial valuation performed as at 1 April 2020.

 

Assumptions regarding future mortality experience are set based on advice in accordance with published statistics. The mortality table used at 30 June 2023, 30 June 2022 and 31 December 2022 is 100% S3PA CMI2021 with a 1.25% per annum long term improvement for both males and females, heavy tables for males and medium tables for females.

 

Valuation

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

 

 

 

Funding status

           Unaudited

 six months to

30 June

2023

£000

             Unaudited

 six months to

30 June

2022

£000

 

Year to

31 December

2022

£000

Scheme assets at end of period

 

35,096

40,648

36,809

Benefit obligations at end of period

(26,719)

(31,256)

(28,573)

 

 



Surplus in scheme

8,377

9,392

8,236

Impact of asset restriction

(2,932)

(3,287)

(2,883)

 

 



Net pension asset recognised on the balance sheet

5,445

6,105

5,353

 

 



 

The increase in the pension surplus since December 2022 is mainly due to a decrease in the value of liabilities as a consequence of an increase in bond yields increasing the discount rate.

 



 

8              Net funds and movement in financing liabilities

 

 

 

 

Unaudited

six months ended

30 June

2023

Unaudited

six months ended

30 June

2022

 

Year ended

31 December

2022


£000

£000

£000


 



Cash and cash equivalents per consolidated cashflow statement

24,146

34,430

20,518

Other financial assets

15,000

-

16,700

Gross funds

39,146

34,430

37,218


 



Bank loans at the beginning of the period

-

(3,000)

(3,000)

Loans repaid

-

3,000

3,000

Bank loans at the end of the period

-

-

-

 

 

 



Right-of-use lease obligations at the beginning of the period

(11,322)

(12,934)

(12,934)

Capital repayments for right-of-use lease obligations

1,402

1,472

2,849

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

(4,575)

(1,204)

(1,856)

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

87

77

796

Foreign exchange

65

(100)

(177)

Right-of-use lease obligations at the end of the period

(14,343)

(12,689)

(11,322)


 



Gross debt

(14,343)

(12,689)

(11,322)


 



Net funds

24,803

21,741

25,896


 



 

 

9              Distribution of interim financial statements

 

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

 

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