Andrews Sykes Group plc Annual Report 2017

FY2017 Annual Report · Andrews Sykes Group plc
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Contents

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2
5
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8

17
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21

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28
29

Summary of Results
Chairman’s Statement
Strategic Report

Principal Objectives and Strategy
Future Development of the Business
2017 Operational Performance
Review of risks, uncertainties and financial 
performance
Directors’ Report
Directors and Advisors 
Statement of Directors’ Responsibilities in respect 
of the Annual Report and Financial Statements
Independent Auditor’s Report to the Members of 
Andrews Sykes Group plc
Consolidated Income Statement
Consolidated Statement of Comprehensive  
Total Income
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity
Group Accounting Policies

30
31
32
33
40 Notes to the Consolidated Financial Statements
68
69
70
76
77
79

Company Balance Sheet
Company Statement of Changes in Equity
Notes to the Company Financial Statements
Five Year History
Notice of Annual General Meeting
Form of Proxy

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Summary of Results

12 months
ended
31 December
2017
£’000

71,300

12 months
ended
31 December
2016
£’000

65,389

Revenue from continuing operations

EBITDA* from continuing operations

22,851

20,664

Operating profit

Profit after tax for the financial period

Basic earnings per share from total operations (pence)

Interim and final dividends paid per equity share (pence)

Proposed final dividend per equity share (pence)

Net cash inflow from operating activities

Total interim and final dividends paid

Net funds

17,589

14,101

33.37p

23.80p

11.90p

17,862

10,058

20,293

15,816

14,473

34.25p

23.80p

11.90p

15,133

10,058

17,673

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

statement.

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Chairman’s Statement
Overview and financial highlights

Summary
The group’s revenue for the year ended 31 December 2017 was £71.3 million, an increase of £5.9 million, or 9.0%, compared with 

the same period last year. This increase had a more than proportionate impact on operating proﬁt which increased by 11.2%, or £1.8 

million, from £15.8 million last year to £17.6 million in the year under review. This increase, which follows a 19.7% increase last year, 

reﬂects strong and improved performances from both our hire and sales businesses in the UK and Europe and a strong and stable 

performance from our business in the Middle East. 

Net ﬁnance costs were £0.3 million this year compared with an income of £1.7 million in 2016. This is largely attributable to a foreign 

exchange loss arising on the retranslation of inter-company balances of £0.3 million this year compared with a gain of £1.6 million 

in 2016. Last year’s gain was mainly due to the relative weakening of Sterling compared with overseas currencies, notably the Euro 

and the UAE Dirham. This year, movements in foreign exchange rates have been much smaller and mixed, Sterling weakening slightly 

against the Euro but strengthening against the UAE Dirham and the US Dollar, the combined effect of which has resulted in an 

exchange loss of £0.3 million in the current year.

Despite the increase in operating proﬁt, our basic earnings per share decreased by 2.6% from 34.25p in 2016 to 33.37p in 2017. 

However, last year’s result was signiﬁcantly impacted by the one-off foreign exchange gain on inter-company loans discussed above. 

The most important factor is that the group’s operating proﬁt improved again this year which has enhanced the quality of earnings. 

The basic EPS remains strong and is indicative of the underlying business performance and strength of the group.

The group continues to generate strong cash ﬂows. Net cash inﬂow from operating activities was £17.9 million compared with £15.1 

million last year. Despite shareholder related cash outﬂows of £10.1 million on ordinary dividends, net funds increased by £2.6 million 

from £17.7 million at 31 December 2016 to £20.3 million at 31 December 2017.

Our policy of returning affordable dividends to shareholders continues and, over the last ﬁve ﬁnancial years, the group has paid £47.8 

million in cash to shareholders. This has not been at the expense of our other obligations; the group pays its external creditors in 

accordance with their agreed credit terms, it operates well within its banking covenants and has paid nearly £1 million into the deﬁned 

beneﬁt pension scheme during 2017 to eliminate the funding deﬁcit of £0.7 million as at 31 December 2016. Therefore, in the light of 

the improved operating proﬁt and substantial net funds that are available, the Board is once again proposing a further ﬁnal dividend 

payment amounting to £5.0 million which, if approved at the forthcoming AGM, will be paid in June 2018. 

Cost control, cash and working capital management continue to be priorities for the group. Capital expenditure is concentrated 

on assets that give a good return and in total £6.9 million was invested in the hire ﬂeet this year, £0.7 million more than last year 

and signiﬁcantly more than the wasting depreciation charge of £5.1 million. In addition, the group invested a further £1.0 million in 

property, plant and equipment. These actions will ensure that the group’s infrastructure and revenue generating assets are sufﬁcient 

to support future growth and proﬁtability. Hire ﬂeet utilisation, condition and availability continue to be the subjects of management 

focus.

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Operating performance
The following table splits the results between the ﬁrst and second half years:

1st half 2017

1st half 2016

2nd half 2017

2nd half 2016

Total 2017

Total 2016

Turnover 
£’000

Operating profit 
£’000

35,334

30,287

35,966

35,102

71,300

65,389

8,171

6,395

9,418

9,421

17,589

15,816

The above table demonstrates that the successful performance in the ﬁrst half of the year continued into the second half. Turnover in 

the ﬁrst half of the year showed a 16.7% improvement over the same period in 2016 and operating proﬁt was 27.8% higher than the 
equivalent period last year. Such signiﬁcant improvements cannot be maintained indeﬁnitely, especially when compared to a strong 

second half result in the previous year. Consequently, turnover in the second half improved by a more modest 2.5% compared with 

2016 and operating proﬁt was virtually unchanged from the same period in last year. 

The above signiﬁcant improvement in operating proﬁt has been achieved despite any signiﬁcant extremes in climatic conditions. The 

operating proﬁt of our main business segment in the UK and Northern Europe increased from £13.8 million last year to £15.2 million in 

the year under review. The warmer than expected start to the summer in June 2017 was short-lived and in general the 2017 summer 

was cool and wet which didn’t stimulate demand for our air conditioning products. The pumping business again performed well 

following a successful year in 2016. Generally the underlying performance was better than last year across the business sector due to 

robust operational management. Our traditional businesses continue to be developed and supported by the expansion of non-weather 

dependent niche markets which beneﬁt the performance of our specialist hire divisions. This year’s result further demonstrates that 

with a diverse product range we are able to return a strong performance despite the absence of any signiﬁcant extreme weather 

conditions.

Our hire and sales business in the Middle East had another strong trading year. The operating proﬁt for this business segment was 

maintained at £2.9 million, the same result as that achieved in 2016. Trading was strong throughout the UAE and our climate rental 

division returned a positive contribution to the business results.

Our ﬁxed installation business sector in the UK returned a slightly improved operating proﬁt of £0.4 million this year compared with 

£0.3 million in 2016. The market continues to be fragmented with high levels of price competition. 

Central overheads decreased from £1.2 million in 2016 to £0.9 million in the current year.

Profit for the financial year
Proﬁt before tax was £17.3 million this year compared with £17.5 million last year. This is attributable to the above £1.8 million increase 

in operating proﬁt which was offset by a £2.0 million adverse swing in ﬁnance expenses from a credit of £1.7 million last year to a 

charge of £0.3 million this year. This was primarily due to foreign exchange rate movements as discussed above. 

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Chairman’s Statement
Overview and financial highlights (continued)

Tax charges increased slightly from £3.1 million in 2016 to £3.2 million this year. The overall effective tax rate increased from 17.5% in 

2016 to 18.4%, primarily due to a change in mix of proﬁts with a greater percentage of the group’s proﬁts being earned in Europe this 

year compared with the Middle East where corporation tax rates are very low. A detailed reconciliation of the theoretical corporation 

tax charge based on the accounts proﬁt multiplied by 19.25% and the actual tax charge is given in note 11 to the consolidated ﬁnancial 

statements. Proﬁt for the ﬁnancial year was £14.1 million compared with £14.4 million last year.

Equity dividends
The company paid two dividends during the year. On 26 June 2017, a ﬁnal dividend for the year ended 31 December 2016 of 11.9 pence 

per ordinary share was paid and this was followed on 3 November 2017 by the payment of an interim dividend for 2017, also of 11.9 

pence per share. Therefore, during 2017, a total of £10.1 million in cash dividends has been returned to our ordinary shareholders.

I am pleased to announce that, in view of the group’s ongoing proﬁtability and its signiﬁcant cash resources, the Board has proposed 

a ﬁnal dividend for 2017, also of 11.9 pence per ordinary share. If approved at the forthcoming Annual General Meeting this dividend, 

which in total amounts to £5.0 million, will be paid on 25 June 2018 to shareholders on the register as at 1 June 2018.

Net funds
At 31 December 2017, the group had net funds of £20.3 million compared with £17.7 million last year, an increase of £2.6 million despite 

the payment of the above equity dividends totalling £10.1 million during the year.

Bank loan facilities
On 30 April 2017, and in accordance with the agreed repayment proﬁle, the group repaid the ﬁnal instalment of £5 million that was 

due for repayment on that date. Subsequently, the group took out a new loan of £5 million which is repayable by four equal annual 

instalments of £0.5 million per annum followed by a ﬁnal balloon repayment of £3 million due in April 2022. The ﬁrst annual loan 

repayment of £0.5 million was made on 30 April 2018.

Share buybacks
During the current year the company did not purchase any ordinary shares for cancellation. However, in prior periods such purchases 

were made and these enhanced earnings per share and were for the beneﬁt of all shareholders.

The Board believes that it is in the best interests of shareholders if it has this authority in order that market purchases may be made 

in the right circumstances if the necessary funds are available. Accordingly, at the next Annual General Meeting, shareholders will be 

asked to vote in favour of a resolution to renew the general authority to make market purchases of up to 12.5% of the ordinary share 

capital in issue.

Outlook
The group’s policy to increase investments in new technologically advanced and environmentally friendly non-seasonal products will 

be continued into 2018. Investments will also continue in our traditional businesses to ensure we are ready to support our customers 

in times of extreme weather conditions. 

The group continues to face both challenges and opportunities in all of its geographical markets but our business remains strong, cash 

generative and well developed, with positive net funds. The Board is therefore cautiously optimistic for further success in 2018, always 

being mindful of the favourable or adverse impact that the weather can have on our business.

JG Murray 

Chairman

17 May 2018

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Strategic Report
Operational performance

Principal Objectives and Strategy

The Andrews Sykes Group is one of the market leaders in the rental of Pumping equipment and Specialist Climate Control products 

which include Air Conditioning and Chillers, Heating and Boilers, Dehumidiﬁers and Ventilation.

We aim to provide the most modern, technically advanced and environmentally friendly rental equipment in the market. Our products 

and services are supplied throughout the UK, Europe and the Middle East via a network of depots which are supported by regional 

agents. Having been originally established in the UK since 1857 we now have over 40 locations and employ around 550 staff 

worldwide. Our operations in mainland Europe began over 40 years ago in Rotterdam and now extend to depots located throughout 

Holland, Belgium, Luxembourg, France, Italy and Switzerland. In the Middle East we have been operating from Dubai since the 1970s 

and now have locations in Abu Dhabi and Sharjah, with agents and partners based in Saudi Arabia, Oman, Qatar, Kuwait and Bahrain. 

In addition to renting our products, we provide our equipment for sale along with a full service and repair back up. In the UK we also 

have a specialist Air Conditioning installation, service and maintenance subsidiary which covers the whole of the UK from a base in 
Manchester.

By providing a ﬁrst class level of service 24 hours per day 365 days per year we have become the preferred suppliers to many major 

businesses and operations spanning a huge range of industries and geographic locations. Our reputation for providing high levels of 

training to our staff whilst maintaining a strict health and safety workplace, within an environmentally conscious culture, makes us an 

employer of choice for our Industry.

Continual investment in new technology ensures that we provide our customers with new solutions to overcome their operational 

challenges. We constantly review and refresh our ﬂeet of rental equipment to ensure that we set the standards within the rental 

industry throughout the UK, Europe and the Middle East.

Future Development of the Business

Our success has been centred on providing technically advanced climate rental and pumping products to numerous geographic 

locations and market sectors. We plan to continue to develop new products and services within our specialist product line whilst 

continuing to expand our geographic coverage, both within existing territories and new markets. During 2017 we continued to develop 

new products and have a number of signiﬁcant new developments ready for launching in 2018 which will extend our product offering 

to both new and existing customers. 

Although our business beneﬁts from extreme climate conditions and is affected by regional economic inﬂuences, we aim to provide 

acceptable levels of success without relying on advantageous market conditions, whilst optimising favourable conditions when they 
arise. At the same time, the company continues to carefully control its cost base to ensure that satisfactory levels of proﬁt can be 

achieved, even during difﬁcult market conditions.

2017 Operational Performance

The group reported an increase in operating proﬁts from last year of £1.8 million; this increase was driven by improved trading levels 

throughout the UK, Europe and the Middle East. 

The UK produced an increase in revenue from the previous year, without beneﬁtting from any favourable weather conditions. Both 

hire revenue and sales revenue performed ahead of last year. The summer started well with some very high temperatures early in the 

season, however this was short-lived and in general the summer weather conditions were cool and wet, which did little to stimulate 
business for our air conditioning and chiller products. Despite this, the cooling products performed well. Pump hire performed well, 

following an excellent result in 2016, whilst our heating and ventilation products provided further growth. Boiler hire continued to 

perform well whilst beneﬁtting from the investment made in this product range during the year. 

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Strategic Report
Operational performance (continued)

In mainland Europe, both our total turnover and operating proﬁt increased compared with the previous year. Following the success of 

recent years our Dutch business continued to grow and provide further improvements, which was once again enhanced by a strong 

performance in Belgium. In Luxembourg, our relatively new business produced a strong result with signiﬁcant proﬁt growth on 

previous years. Our Italian subsidiary, Nolo Climat, continued to grow in 2017; a new depot in Bologna was established and assisted 

this subsidiary to produce additional revenue and proﬁt in the year. In France, our operations provided revenue growth in the year and 

ensured a proﬁt that was ahead of the previous year. Our Swiss subsidiary made a modest improvement and returned a reduced loss 

for the year.

Khansaheb Sykes produced a very similar revenue achievement to the previous year, which enabled a proﬁt result that was in line with 

the previous year. Trading in the Middle East was stable; the UAE performance remains strong although we did experience a slight 

drop off in other GCC territories.

The overall group operating proﬁt of £17.6 million is an increase of £1.8 million when compared to the 2016 results. Net funds 

increased by £2.6 million from £17.7 million last year to £20.3 million at 31 December 2017 despite shareholder related cash outﬂows of 
£10.1 million on equity dividends.

Hire and Sales Europe
Summary
Turnover of the European hire and sales business sector increased from £49.8 million last year to £55.0 million in the current year, an 

increase of £5.2 million or 10.5% compared with last year. Operating proﬁt increased by £1.4 million, or 10.6%, from £13.8 million in 

2016 to £15.2 million in 2017. A reconciliation of the result of this and other business sectors to the consolidated results for the year is 

given in note 5 to the ﬁnancial statements.

Andrews Sykes Hire Limited
Our main UK trading subsidiary, Andrews Sykes Hire, has 28 locations covering the UK and employing over 320 members of staff. 

During the year we continued to develop our product range and service offering with further investment in our hire ﬂeet, depots and 

infrastructure. The proﬁt for 2017 was ahead of the 2016 performance, with most products performing in line with or ahead of the 

previous year. Although the weather did little to provide any great opportunities for our products, revenue was ahead of the previous 

year.

Andrews Sykes BV
Andrews Sykes BV is our long established Hire business based in the Netherlands. With over 40 years of experience in the Dutch 

market, we currently have four depots strategically located to offer full coverage of the country as well as providing access into 

the German market. This subsidiary continues to operate in close co-operation with our UK business and prospers from this strong 

alliance. The hire ﬂeet equipment is almost identical throughout our European businesses, which enables us to stretch our resource 

and cover peak demands. Our Dutch business also provides back-up support to our newer operations in Belgium and Luxembourg. This 

subsidiary performed well and produced further growth in 2017, following the signiﬁcant increase in proﬁts achieved in the previous 

two years. 

Andrews Sykes BVBA
Our Belgian subsidiary is based in Brussels and provides the full range of Andrews Sykes climate rental products throughout Belgium. 

Trading in both French and Flemish languages, the business has dual language branding, literature and website for the Belgian market. 

Similar to the Dutch business, our Belgian subsidiary also produced a strong performance in the year. 

Andrews Sykes Sarl
Our operation in Luxembourg was opened in 2014 and is located within easy reach of the capital; this enables us to provide the full 

range of our climate rental products throughout the country. During the initial two years, this newly established operation produced 

small losses, however in 2016 we managed to move the business into a proﬁtable performance. This growth in proﬁts was continued 

throughout 2017. Our Luxembourg subsidiary works in conjunction with our Brussels operation, with administration and technical 

support provided from Belgium.

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Nolo Climat SRL
Nolo Climat is our Italian subsidiary which opened in 2011. Our business is strategically located close to the centre of Milan where 

it is well placed to cover the Lombardy region and the north of Italy. Following the progress made in recent years this business 

provided another record result in 2017 with signiﬁcant growth when compared to the previous year. During the year we extended our 

coverage by opening a new depot in Bologna. The new depot is based close to the international airport and strengthens our coverage 

throughout the Emilia- Romagna region.

Andrews Sykes Climat Location SAS
Our French subsidiary was established in 2012; we have since successfully developed our operations and now have depots in Lille, 

Paris and Lyon. During the prior years we have achieved signiﬁcant year-on-year revenue growth and this was continued in 2017. The 

operating proﬁt also grew in the year and this success provides a ﬁrm foundation for future growth supported by further investment 

and additional depots.

Climat Location SA
Climat Location SA is our Swiss subsidiary which opened in 2013; this operation was established to service the French cantons and 

works closely with our Lyon depot. This subsidiary remains loss-making, however the loss has reduced when compared to the previous 

year due to improvements in hire revenue.

UK Installation Business
Andrews Air Conditioning and Refrigeration Limited
Andrews Air Conditioning and Refrigeration (AAC&R) is our UK based ﬁxed air conditioning, service, maintenance and installation 

business. This subsidiary provides a specialist service to customers who have, or require, permanently installed air conditioning 

systems. The total revenue for this business is split between the sale of new systems and the service and maintenance of existing 

systems. Total revenue for the division increased by 8.7% in 2017 when compared to the previous year, this enabled a signiﬁcant 

improvement in operating proﬁt. 

Hire and Sales Middle East
Khansaheb Sykes LLC
Khansaheb Sykes is our long established pump hire and dewatering business, which is based in the UAE with locations in Sharjah, 

Dubai and Abu Dhabi. These centres also provide a base from which we cover other parts of the Middle East for both pump sales and 

hire. We have agents based in Oman, Kuwait, Bahrain and Qatar, which allows us to provide our products and services in these local 

markets. Following a very successful year in 2016, this subsidiary produced a very similar result in 2017. 

Group Summary

The overall group result for 2017 shows an increase in operating proﬁt of £1.8 million, or 11.2%, when compared to the previous year. 

This increase was driven by strong performances from our hire operations in the UK, mainland Europe and the Middle East.

The Andrews Sykes business remains strong: the experience of our senior management team, coupled with our development plans, 

provide optimism for further progress in 2018. The group continues to develop new sales channels and propositions which will enable 

the business to take advantage of favourable market conditions and opportunities as they arise. At the same time, the company 

continues to carefully control its cost base and ensure that satisfactory levels of proﬁt can be achieved, even during difﬁcult market 

conditions.

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Strategic Report
Review of risks, uncertainties  
and financial performance

Key Performance Indicators (KPIs)
The group’s principal KPIs are as follows:

Average revenue per employee
Operating cash flow(1) as a percentage of operating assets(1) employed
Net funds to equity percentage

Basic EPS from continuing operations (pence)

12 months ended 

12 months ended 

31 December 2017

31 December 2016

£131,100

69.7%

38.0%

33.37p

£124,600

60.4%

36.7%

34.25p

(1)  Cash generated from operations before defined benefit pension scheme contributions. Operating assets are net assets employed excluding pension assets and liabilities, loans, 

deferred and corporation tax balances, bank deposit accounts and cash.

Non-ﬁnancial KPIs monitored by the Board include asset utilisation and health and safety statistics.

The average revenue per employee and the operating cash ﬂow as a percentage of operating assets employed are indicative ratios 

used to monitor the revenue generation of the group relative to its ﬁxed resources. The average revenue per employee shows 

another improvement this year and indicates a strong underlying operating performance and high staff utilisation levels. Operating 

cash ﬂow as a percentage of operating assets also improved and continues to be strong, demonstrating both strong working capital 

management and high levels of asset utilisation.

The net funds-to-equity percentage is indicative of the group’s strength and capacity for taking on additional ﬁnance as and when the 

need arises. A reconciliation of the movement in net funds during the year is provided on page 62.

The basic earnings per share (EPS) is the traditional ratio used by the group to monitor its performance relative to its equity base. 

This, in the long term, ultimately drives the share price and gives a good indication of how well the directors and staff are delivering 

the success of the company for the beneﬁt of the members as a whole. Whilst the EPS decreased by 2.6% from 34.25p in 2016 to 

33.37p in 2017, last year’s result was signiﬁcantly impacted by the one-off foreign exchange gain on inter-company loans of £1,567,000. 

As discussed elsewhere in this report, the group’s operating proﬁt improved again this year which has enhanced the quality of 

earnings. The basic EPS is still strong which is indicative of the underlying business performance as the average number of shares in 

issue remained unchanged from the previous year.

Operating profit
The consolidated operating proﬁt was £17.6 million for the year under review, an increase of £1.8 million, or 11.2%, compared with last 

year’s operating proﬁt of £15.8 million which was itself 19.7% higher than the 2016 result. Note 5 to the ﬁnancial statements analyses 

these results by business segment and this can be summarised as follows:

Hire and sales Europe

Hire and sales Middle East

UK installation business

Sub total

Unallocated costs and eliminations

Consolidated operating profit

12 months ended 

12 months ended 

31 December 2017

31 December 2016

£’000

15,237

2,899

387

18,523

(934)

17,589

£’000

13,779

2,871

319

16,969

(1,153)

15,816

A review of the performance of each business sector is given in the operational performance section of this strategic report.

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Trade investments
For many years the group has held a trade investment in Oasis Sykes, a company based and operating in Saudi Arabia. No dividend 

income has been received since 2014 and accordingly, the directors performed a review of the operation in the current year. The 

directors now consider that the carrying value of the investment is not supported by underlying assets and there is no realistic 

prospect of a recovery in trading in the foreseeable future. Accordingly, the investment has been written off in the current year as its 

fair value is considered to be negligible.

Net interest charge
The net interest charge, including inter-company foreign exchange differences, for the current year is £304,000 compared with a 

credit of £1,725,000 in 2016. This can be analysed as follows:

Interest charge on bank loans and overdrafts

Finance lease interest charge

Interest receivable

Foreign exchange loss/(gain) on inter-company loans

Net IAS 19 pension interest credit

Total net interest charge/(credit)

12 months ended 

12 months ended 

31 December 2017

31 December 2016

£’000

89

4

(40)

293

(42)

304

£’000

122

28

(203)

(1,567)

(105)

(1,725)

The interest charge on bank loans and overdrafts and interest receivable both decreased compared with last year’s amounts. 

The weighted average interest rate charged on the bank loans decreased from 1.88% last year to 1.53% in 2017 and the weighted 

average capital amount of the gross outstanding loans also reduced from £5.3 million last year to £5.0 million in 2017, these two 

factors being the major reasons for the reduction in the interest charge this year.

Conversely, the average rate of interest receivable on short-term bank deposits decreased from last year’s level of 1.1% to 0.29%, this 

being the major reason for the decrease in interest receivable in the current year. 

There was a substantial foreign exchange gain on inter-company loans last year of £1,567,000 which was primarily due to the 

signiﬁcant weakening of Sterling compared with the Euro, the UAE Dirham and the US Dollar, being shortly after the result of the 

“Brexit” referendum. Since then, movements in foreign exchange rates have been much smaller and mixed, Sterling weakening 

slightly against the Euro but strengthening against the UAE Dirham and the US Dollar, the combined effect of which has resulted in an 

exchange loss of £293,000 in the current year. The group’s policy continues to be to not hedge its international assets with respect to 

foreign currency balance sheet translation exposure.

The net IAS 19 pension interest credit has been calculated by the group’s actuary based on the assumptions as set out in note 18 to the 

ﬁnancial statements. In accordance with IAS 19 (2011) the expected percentage return on assets has been limited to an equivalent rate 

used to discount the scheme’s liabilities. A net credit arises in both periods as the scheme has a surplus calculated in accordance with 

IAS 19 (2011) at the end of both the current and previous ﬁnancial years. The amount has decreased in the current year, reﬂecting a fall 

in the expected return on the pension scheme’s assets given the current market conditions.

.

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Strategic Report
Review of risks, uncertainties  
and financial performance (continued)

Tax on profit on ordinary activities
The group’s tax charge on ordinary activities was £3,184,000 (2016: £3,068,000) resulting in an overall effective tax rate of 18.4% 

(2016: 17.5%) which is below the standard effective tax rate in the UK for the current year of 19.25% (2016: 20.0%). A summary of the 

factors giving rise to this decrease is given in the table below:

Profit before taxation

Theoretical tax charge at the UK effective tax rate of 19.25% 

Effects of different tax rates of subsidiaries operating abroad

Movement in overseas trading losses not recognised in deferred tax

Non-tax deductible expenses

Effect of change of rate of tax in the UK and adjustments to prior periods

Total tax charge for the financial year

£’000

17,285

3,327

(225)

(9)

144

(53)

3,184

A detailed reconciliation of the theoretical corporation tax charge based on the accounts proﬁt multiplied by 19.25% and the actual 

tax charge is given in note 11 to the consolidated ﬁnancial statements.

A reduction in the UK corporation tax rate from 19% to 17% (effective from 1 April 2020) was substantively enacted on 6 September 

2016 and received Royal Assent on 15 September 2016. This reduction should further reduce the group’s current tax charge.

The deferred tax balances at both 31 December 2017 and 31 December 2016 have been calculated based on the rates that were 

substantively enacted at the balance sheet dates that the directors anticipate will apply when the timing differences are expected to 

reverse. Accordingly, a rate of 19% has been used as at 31 December 2017 and 31 December 2016. 

Profit for the financial year
Proﬁt after tax for the ﬁnancial year was £14,101,000 compared with £14,473,000 last year.

Basic earnings per share (EPS)
The basic earnings per share decreased by 0.88p, or 2.6%, from 34.25p last year to 33.37p in 2017. There were no dilutive instruments 

outstanding in either 2017 or 2016 and therefore there is no difference between the basic and diluted earnings per share ﬁgures.

Based on a year-end mid-market share price of 555p, the basic EPS gives a price to earnings ratio of 16.63.

Cash flow from operating activities
The table below summarises the group’s cash ﬂow from operating activities compared with the previous year:

Operating profit

Depreciation and profit on the sale of plant and equipment

EBITDA*

Write off of trade investment

Defined benefit pension scheme contributions in excess of pension scheme 

administration costs

Interest paid

Tax paid

Net working capital movements

Net cash inflow from operating activities

12 months ended 

12 months ended 

31 December 2017

31 December 2016

£m

17.6

5.3

22.9

0.2

(0.8)

(0.1)

(3.1)

(1.2)

17.9

£m

15.8

4.9

20.7

—

(0.8)

(0.2)

(2.4)

(2.2)

15.1

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

statement.

As demonstrated by the table above, the group continues to generate strong operating cash ﬂows.

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As well as cost control, management of working capital continues to be a priority. The net working capital increase of £1.2 million 

reﬂects an increase in stocks (£1.0 million) and a decrease in debtors (£0.5 million) and creditors (£0.7 million) compared with last 

year. Total outstanding debtor days at the year end remained unchanged from the previous year at 72 days. Although still high in UK 

terms, the debtor day statistic in both years includes our subsidiary in the Middle East whose debtor days were 155 days (2016: 130 

days) and this is typical for the region. The debtor days for our main hire and sales business in the UK fell from 62 days last year to 54 

days in 2017. Average debtor days for current unimpaired debts were a more respectable 37 days compared with 36 days last year.

Adequate provisions continue to be made for bad and doubtful debtors. In 2017, debts written off against the bad debt provision were 

£312,000 compared with £799,000 last year when the majority of which were in the Middle East, and there was a net charge of £451,000 

(2016: £568,000) to the income statement from the bad debt provision, which is calculated on a consistent basis each year. 

Employer pension contributions of £920,000 (2016: £936,000) have been made by the group to the pension scheme in 2017. 
Pension scheme administration costs charged to the income statement in accordance with IAS 19 (2011) amounted to £150,000  

(2016: £122,000). Pension contributions are discussed in more detail on page 15.

Net funds 
Despite shareholder related cash outﬂows of £10.1 million on ordinary dividends, net funds increased by £2.6 million from £17.7 million 
at 31 December 2016 to £20.3 million at 31 December 2017. The movement can be reconciled as follows:

Opening net funds

Significant inflows:

Cash inflow from operating activities 

Sale of plant and equipment

Significant outflows:

Capital expenditure 

Equity dividends paid

Significant non-cash movements:

Effect of foreign exchange rate changes

Closing net funds

Comprises:

Bank loans net of loan finance costs and finance lease obligations

Cash at bank

Total net funds

£m

17.7

17.9

0.9

(5.8)

(10.1)

(0.3)

20.3

(5.0)

25.3

20.3

The effect of the foreign exchange rate changes includes the loss on the conversion of the inter-company balances included in the 

proﬁt and loss account of £0.3 million and a virtual breakeven result on the reconversion of the group’s net external foreign currency 

denominated assets that arises on consolidation which has been taken to the translation reserve.

The bank loan repayment proﬁle is set out in note 24 to the ﬁnancial statements. Interest is charged based on the three-month LIBOR 
rate plus a margin of 1.1%. The weighted average interest rate charged in the year was 1.53% (2016: 1.88%). Costs of raising loan 
ﬁnance are being amortised to the income statement over the period of the loan.

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Strategic Report
Review of risks, uncertainties  
and financial performance (continued)

Management has been careful to ensure that the hire ﬂeet is up-to-date and well maintained in order to meet customer demand. Total 

cash spent on the hire ﬂeet, plant, equipment and vehicles amounted to £5.8 million (2016: £5.4 million). In addition, £2.1 million of 

items held in stock at 31 December 2016 have also been capitalised in the hire ﬂeet this year (2016: £1.5 million). Capital expenditure 

has been concentrated on hire ﬂeet assets with high levels of utilisation and good rates of return as well as business development 

opportunities. Savings continue to be made in non-essential areas and hire ﬂeet maintenance and utilisation have been prioritised.

Bank loan facilities
The group continues to operate within its bank covenants. In April 2013, a bank loan of £8 million was taken out with the group’s 

bankers, Royal Bank of Scotland and the ﬁnal loan repayment was made on 30 April 2017, ﬁnanced by a new ﬁve-year loan of 

£5 million, also with the Royal Bank of Scotland. This will be repaid by four equal annual instalments of £0.5 million per annum 

commencing on 30 April 2018 followed by a ﬁnal balloon repayment of £3 million due on 30 April 2022. Interest is being charged at 

the three-month LIBOR rate plus a margin of 1.1%.

Principal risks and uncertainties
The group’s principal risks are as follows:

Going concern
The Board remains satisﬁed with the group’s funding and liquidity position. The group has operated throughout the 2017 ﬁnancial year 

and until the date of signing these accounts within its ﬁnancial covenants as contained in the bank agreement. 

Both loan capital and interest payments have been made in accordance with the bank agreements. As noted above, a new loan was 

negotiated with the bank to ﬁnance the ﬁnal balloon repayment of £5 million due under the previous loan on 30 April 2017. The ﬁrst 

annual payment under the new loan agreement of £0.5 million was made in accordance with the agreement on 30 April 2018. The 

group’s proﬁt and cash ﬂow projections indicate that the ﬁnancial covenants included within the new bank loan agreement will be met 

for the foreseeable future.

The group continues to have substantial cash resources which at 31 December 2017 amounted to £25.3 million, compared 

with £22.8 million as at 31 December 2016. Proﬁt and cash ﬂow projections for 2018 and 2019, which have been prepared on a 

conservative basis taking into account reasonably possible changes in trading performance, indicate that the group will be proﬁtable 

and generate positive cash ﬂows after loan repayments. These forecasts and projections indicate that the group should be able to 

operate within the new bank facility agreement and that all associated covenants will be met.

The Board considers that the group has considerable ﬁnancial resources and a wide operational base. As a consequence, the Board 

believes that the group is well placed to manage its business risks successfully, as demonstrated by the current year’s result, despite 

some uncertain external inﬂuences.

After making enquiries, the Board has a reasonable expectation that the group has adequate resources to continue in operational 

existence for the foreseeable future. Accordingly, the Board continues to adopt the going concern basis when preparing this Annual 

Report and Financial Statements.

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Strategic risks
In common with all entities operating in a dynamic marketplace, the group faces a number of strategic risks. Management has 

developed long-term business plans to manage the impact of these risks to ensure that the group continues to deliver a satisfactory 

performance in future years. The main strategic risks faced by the business, together with the actions taken by management to 

mitigate their impact, are set out below.

The directors do not consider that the group has signiﬁcant cross border trading that may potentially be adversely affected by 

“Brexit”. In addition, the directors do not expect that the group’s performance will be impacted by changes to the mobility in the 

labour market as a consequence of this process. The group does have an investing relationship in its EU based subsidiaries but it is not 

envisaged that there will be any signiﬁcant barriers to investing imposed by any authority as a consequence of the UK leaving the EU.

Consequently, the directors consider that there are minimal speciﬁc risks to the group as a direct consequence of “Brexit”. There is a 

general risk that the UK and/or the EU economies may slow down thereby affecting the group’s future trading performance but at this 

stage any potential impact cannot be quantiﬁed with any degree of accuracy.

Competition, product innovations and industry changes are regarded as the main strategic risks. These are mitigated by investment in 

new environmentally friendly, technologically advanced products and equipment and providing service levels that are recognised as 

being among the best in the industry. Market research and customer satisfaction studies are undertaken to ensure that our products 

and services continue to meet the needs of our customers.

In order to remain competitive, management recognises the need to invest in appropriate IT equipment and software. Consequently, 

the communication network, website and data capture systems are all being constantly reviewed and updated to ensure they remain 

at the forefront of industry standards. The group has recently appointed a new head of Group IT to ensure that the appropriate 

developments and improvements continue to be made in this area. 

The potential impact of the weather has been reduced over the past few years by the expansion of our non-weather related business. 

The group also has a diverse product range of pumps, heaters and air conditioning and environmental control equipment which 

enables it to take maximum advantage of the opportunities presented by any extremes in weather conditions whenever they arise. 

This, combined with our policy of reducing ﬁxed costs and linking them to a sustainable level of turnover, enables the group to achieve 

a satisfactory level of proﬁts even in non-extreme weather conditions. 

Financial risks
There has been no change during the year, or since the year end, to the type of ﬁnancial risks faced by the group or the group’s 

management of those risks.

The key risks, which are discussed in more detail in note 30 to the consolidated ﬁnancial statements, are:

 ● Interest rate risk

 ● Market risk

 ● Credit risk

 ● Funding and liquidity risk

Pension scheme surplus 
As set out in note 18 to the consolidated ﬁnancial statements, as at 31 December 2017 the pension scheme assets were £45.7 million 

which, after deducting the present value of the pension scheme liabilities of £42.3 million, calculated in accordance with IAS 19, 

results in a pre-tax surplus of £3.4 million. When assessing the appropriateness of the recognition of this surplus, the directors have 
considered the guidance in IAS 19 and IFRIC 14 and have concluded that because of the rights upon wind-up it is appropriate to 

recognise this asset in the ﬁnancial statements.

Management continues to work with the pension scheme trustees to maximise the return from the pension scheme assets and 

to match that return with the pension scheme liabilities as they crystallise in order to minimise the exposure to the group. The 

net surplus or deﬁcit is sensitive to changes in assumptions, which are at least in part inﬂuenced by changes in external market 

conditions, and therefore this area continues to be subject to management focus.

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Strategic Report
Review of risks, uncertainties  
and financial performance (continued)

Andrews Sykes Group Pension Schemes
Defined benefit pension scheme
The group had for many years operated a deﬁned beneﬁt pension scheme for the beneﬁt of the majority of its UK employees. This 

scheme provided a pension based on the employee’s ﬁnal salary and length of service.

The Board reviewed the appropriateness of the scheme, taking into account the interests of both the employees and the shareholders. 

Accordingly, to minimise the impact on the group’s results in the future and with the agreement of the trustees, the scheme was 

closed to new entrants on 31 December 2002. Existing members are no longer eligible to make contributions to the scheme and no 

further pension liabilities accrue as a result of any future service.

The group has adopted the requirements of IAS 19 (2011) – Employee Beneﬁts and the scheme surplus has been calculated in 

accordance with the rules set out in the standard by an independent qualiﬁed actuary. The results were based on the last full actuarial 

valuation as at 31 December 2016 and have been rolled forward by an independent qualiﬁed actuary to 31 December 2017. The net 
surplus, before deferred tax, at the year end amounted to £3.4 million (2016: £1.2 million) and this has been recognised as a separate 
item, within non-current assets, on the face of the consolidated balance sheet. 

A reconciliation of the surplus at the beginning of the year of £1.2 million to the surplus as at 31 December 2017 of £3.4 million is as 

follows:

Opening IAS 19 surplus recognised in the financial statements

Contributions paid by the group into the scheme

Actual return less interest income on scheme assets

Actuarial loss on scheme liabilities

Administration expenses 

Net finance income

Closing IAS 19 surplus recognised in the financial statements

£m

1.2

0.9

2.1

(0.7)

(0.2)

0.1

3.4

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 changes on this pension scheme, the directors consider that future increases 

to all deferred pensions and 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 for the ﬁrst time as at 31 December 2010 and has 

continued to be applied in subsequent years.

Other assumptions adopted by the directors, including mortality assumptions and discount rates, used to arrive at the above surplus 

are set out in note 18 to the ﬁnancial statements.

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Defined benefit scheme funding valuation
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, the group made 

additional contributions in 2017 to remove the funding deﬁcit calculated as at 31 December 2016 of £710,000 and this has now been 

eliminated. 

Throughout 2016 and 2017, the group has continued to make a contribution towards expenses of £10,000 per month. In addition, the 

group made additional voluntary pension contributions of £30,000 per month for the three months ended March 2017 and these have 

now ceased. Accordingly, total employer pension contributions of £920,000 were made during 2017.

The next formal triennial funding valuation is due as at 31 December 2019. The group has agreed to continue to make the current level 

of monthly contributions towards expenses until such time as the next formal schedule of contributions is agreed with the trustees.

Defined contribution pension scheme and auto enrolment
The group operates the Andrews Sykes Stakeholder Pension Plan, for which the majority of UK employees are eligible. The scheme is 

managed on behalf of the group by Legal & General. Both the employer and employee contributions vary, generally based upon the 

individual’s length of service with the company.

The group has adopted the requirements of auto enrolment for all eligible UK employees. Until 1 October 2017, employee and employer 

contributions were made at the rate of 1% each of pensionable salary. These contributions increased on 1 October 2017 to 3% for 

employees and 2% for the employer and they will further increase on 1 October 2018 to 5% and 3% respectively.

Contributions for both existing members and members that have been auto enrolled are made to the same scheme. The employers’ 
contribution rates vary from 1% to 15%, the current average being 2.2% (2016: 2.2%). The current period charge in the income 
statement amounted to £262,000 (2016: £307,000). Employee contribution rates normally vary between 1% and 5% with the 

employees having the option of increasing their contributions after ﬁve years of membership. The contributions are used to purchase 

a speciﬁc fund for the individual employee with both gains and losses from changes in the fund’s market value accruing to that 

employee.

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Strategic Report
Review of risks, uncertainties  
and financial performance (continued)

Reconciliation of movement in group shareholders’ funds
Group shareholders’ funds have increased from £48.2 million at the beginning of the year to £53.4 million at 31 December 2017. The 

movement can be reconciled as follows:

Opening shareholders’ funds

Profit for the financial period

IAS 19 actuarial gain net of deferred tax

Dividends declared and paid during the year

Currency translation differences on foreign currency net investments

Closing shareholders’ funds

£m

48.2

14.1

1.1

(10.0)

—

53.4

Details of dividends paid and proposed during the year are given in the directors’ report on page 17.

An analysis of the net IAS 19 actuarial gain of £1.4 million, before an attributable deferred tax charge of £0.3 million, is given in note 18 

to the consolidated ﬁnancial statements.

The currency translation difference on foreign currency net investments arises on consolidation and is primarily due to movements in 

Sterling compared with the Euro and the UAE Dirham. During the current year, Sterling weakened against the Euro but strengthened 

against the UAE Dirham and the combined impact on the group’s foreign currency net investments was broadly neutral.

Share buybacks
During the current and preceding years, the company did not purchase any ordinary shares for cancellation. However, in prior periods 

such purchases were made and these enhanced earnings per share for the beneﬁt of all shareholders. So far, the company has not 

purchased any of its own shares for cancellation during 2018.

At the next Annual General Meeting, shareholders will be asked to vote in favour of a resolution to renew the general authority to 

make market purchases of up to 12.5% of the ordinary share capital in issue. Any purchases will only be made on the London Stock 

Exchange and they will only be bought back for cancellation provided they enhance earnings per share. If this resolution is passed it 

should not be taken to imply that shares will be purchased but the Board believes that it is in the best interest of shareholders if it has 

this authority in order that market purchases may be made in the right circumstances if the necessary funds are available.

Signed on behalf of the Board:

PT Wood 

Director 

17 May 2018 

St David’s Court

Union Street

Wolverhampton

WV1 3JE

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Directors’ Report

Principal activity
The principal activity of the group continues to be the hire, sale and installation of a range of equipment, including pumping, portable 

heating, air conditioning, drying and ventilation equipment. A review of the group’s activities and an indication of likely future 

developments are set out in the Chairman’s Statement and the Strategic Report on pages 2 to 16.

Financial management objectives and policies
Financial management objectives and policies are discussed in the strategic report on pages 8 to 16.

Results and equity dividends
The results for the ﬁnancial year are set out in the consolidated income statement on page 28.

The company paid two dividends during the year. On 26 June 2017 a ﬁnal dividend for the year ended 31 December 2016 of 11.9 pence 

per share was paid to shareholders on the register on 26 May 2017. This was followed by an interim dividend for 2017, also of 11.9 pence 

per share, which was paid on 3 November 2017 to shareholders on the register on 6 October 2017. Total dividend payments made 
during the year amounted to £10,058,376 (2016: £10,058,376).

The directors propose a ﬁnal dividend of 11.9 pence (2016: 1l.9 pence) per ordinary share. If approved at the forthcoming Annual 
General Meeting, this dividend, which in total amounts to £5,029,188 (2016: £5,029,188), will be paid on 25 June 2018 to shareholders 

on the register as at 1 June 2018.

Directors
The directors in ofﬁce at 17 May 2018 are shown on page 20.

On 5 March 2018 Michael Gailer passed away after a short illness. Michael had been a non-executive director of the company since 

June 1994 and his contribution and counsel will be sorely missed by the Board.

Michael had been the senior independent non-executive director and Chairman of the Audit Committee for a number of years. These 

posts are currently vacant and the Board is actively looking for a suitable person to ﬁll these roles. An announcement will be made 

once a suitable individual has been appointed.

In accordance with the Articles of Association, Messrs JG Murray and JP Murray retire by rotation and, being eligible, will offer 

themselves for re-election at the forthcoming Annual General Meeting.

Directors’ interests
Other than the beneﬁcial interests disclosed below, no director in ofﬁce at 31 December 2017 had any disclosable interests in share 

capital of the company or any subsidiary undertaking.

JG Murray

JJ Murray

JP Murray

PT Wood

Ordinary one pence shares

At 31 December 
2017

At 31 December 
2016

298,749

231,800

1,198,736

7,945

298,749

410,845

1,251,786

7,945

There were no changes to the above shareholdings between 31 December 2017 and 17 May 2018.

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Directors’ Report

Substantial shareholdings
At 17 May 2018, the company had been notiﬁed of the following interest of 3% or more in the company’s issued ordinary share capital:

EOI Sykes Sarl

Number

36,377,213

Percentage

86.08%

Directors’ share options
None of the directors in ofﬁce at 31 December 2017 held any options to subscribe for ordinary shares at either 31 December 2017 or 

31 December 2016. There have been no changes in the directors’ share options during the period from 31 December 2017 to 17 May 

2018.

The mid-market price of the company’s ordinary shares on 31 December 2017 was £5.55. The highest and lowest mid-market prices 

during the year ended 31 December 2017 were £6.15 and £4.27 respectively.

Health, safety and the environment
Andrews Sykes Group plc aims to achieve world class performance in health and safety by providing our staff with a safe environment 

in which to work, thereby helping to eliminate injuries and work-related ill health. Health and safety ofﬁcers are appointed at each 

location and receive periodic training to keep abreast of both legislative requirements and technological advances. This is further 

enhanced with regular internal audits by our own fully qualiﬁed health and safety managers, along with training, induction and 

awareness programmes for our staff.

The group aims to continually improve its performance in order to meet changing business and regulatory requirements, to minimise 

the effect of our activities on the environment and to provide products and services that fully and consistently meet the requirements 

of our customers, both now and in the future. In the UK, the group has met the mandatory requirements of the Energy Savings 

Opportunity Scheme (ESOS) and also has certiﬁcation to the ISO 9001:2015, ISO 14001:2015, OHSAS 18001:2007 and CEMARS (in 

accordance with ISO 14064-1:2006) standards. In the UAE, the group has certiﬁcation to ISO 9001:2015 and ISO 14001:2015.

Employment of disabled persons
The group makes every reasonable effort to give disabled applicants and existing employees who become disabled equal opportunities 

for work, training and career development in keeping with their individual aptitudes and abilities.

Employee development and involvement
The group operates a training and development programme for its employees. By improving employee skill levels the group aims to 

encourage staff retention and provide opportunities for internal promotion. Regular personal development reviews are conducted, 

with training and development plans being devised for each employee.

The group recognises the need to ensure effective communications with employees to encourage involvement in the group’s 

performance and achieve a common awareness of factors affecting that performance. Policies and procedures have been developed 

to suit the needs of each subsidiary undertaking, taking into account factors such as numbers employed and location, including 

newsletters and communication meetings.

Corporate governance
On 30 March 2018 revised “AIM Rules For Companies” were issued by the London Stock Exchange that require companies with shares 

admitted to trading on AIM to adopt a recognised formal corporate governance code by no later than 28 September 2018. Companies 

must also disclose how they comply and, if applicable, where they depart from, that code. The Board is currently updating its 

corporate governance procedures and currently intends to adopt the Quoted Companies Alliance (QCA) Corporate Governance Code 

2018 prior to 28 September 2018.

18

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Special business
Three resolutions are to be proposed at the Annual General Meeting as special business: resolutions 6 and 7 as ordinary resolutions 

and resolution 8 as a special resolution.

Two resolutions, numbered 6 and 8, will be proposed at the Annual General Meeting for the purpose of conferring powers on 
the directors to allot or grant options over ordinary shares up to a maximum nominal value of £63,393 (representing 15% of the 
company’s existing issued share capital) as they see ﬁt. If the resolutions are approved at the Annual General Meeting, the directors 

will then be able to allot or grant options as aforesaid, otherwise than pro rata to existing shareholders, to motivate key employees 

and to reinforce the link between their personal interest and those of the shareholders.

Resolution number 7 would, if approved at the Annual General Meeting, renew the powers of the directors to make market purchases 

of the company’s own shares of up to a maximum of 5,282,760 ordinary shares of one pence each representing 12.5% of the current 

ordinary issued share capital. This authority would then enable the directors to carry out the strategy of making own market 

purchases to increase shareholder value as set out in the Strategic Report on page 16.

Purchase of own shares 
The company did not purchase any of its own shares for cancellation during the period from 1 January 2017 to 17 May 2018. 

Accordingly, as at 17 May 2018, there remained an outstanding general authority for the directors to purchase 5,282,760 ordinary one 

pence shares that was granted at the Annual General Meeting held on 21 June 2017. The directors are seeking to renew the general 

authority in respect of 5,282,760 ordinary one pence shares as set out in resolution number 7. 

Financial calendar
The current ﬁnancial year will end on 31 December 2018.

Auditor
Grant Thornton UK LLP has expressed its willingness to continue in ofﬁce as auditor and a resolution to reappoint them will be 

proposed at the forthcoming Annual General Meeting.

In the case of each of the persons who are directors of the company at the date when this report was approved:

 ● So far as each director is aware, there is no relevant audit information (that is, information needed by Grant Thornton UK LLP in 

connection with preparing their audit report) of which the company’s auditor, Grant Thornton UK LLP, is unaware.

 ● Each director has taken all the steps that he/she ought to have taken as a director in order to make himself/herself aware of any 

relevant audit information and to establish that Grant Thornton UK LLP is aware of that information.

This conﬁrmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

Signed on behalf of the Board:

JJ Murray 

Vice Chairman 

17 May 2018 

St David’s Court

Union Street

Wolverhampton

WV1 3JE

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Directors and Advisors

Chairman

JG Murray

Company Secretary

MJ Calderbank ACA

Age 98. Chairman of London Security plc, Nu Swift Limited and 

Appointed  Company  Secretary  on  13  October  1999.  Formerly  a 

Ansul S.A. Mr Murray has a long successful history in the industrial 

senior manager at KPMG.

services sector.

Executive director

PT Wood

Registered Office and Company Number

St David’s Court

Union Street

Wolverhampton 

Age  55.  Managing  Director.  Industry  specialist,  having  joined 

West Midlands

the  group  in  August  1978.  Appointed  Director  of  Operations  on 

WV1 3JE

1 March 2006 and Group Managing Director on 5 December 2006.

Company number 00175912

Non-executive directors

JJ Murray MBA

Registrar

Equiniti Limited

Aspect House 

Age  52.  Non-executive  Vice-Chairman,  Chairman  of 

the 

Spencer Road 

Remuneration  Committee.  Executive  Vice-Chairman  of  London 

Lancing 

Security plc, Nu Swift Limited and Ansul S.A.

MC Leon BS

Age 55. Non-executive director of London Security plc.

X Mignolet (HEC-Economics)

Age 53. Director of London Security plc,

Ansul S.A. and Importe S.A.

JP Murray

West Sussex 

BN99 6DA

Nominated Advisor

GCA Altium Limited

Mansfield House

1 Southampton Street

London

WC2R OLR

Age 50. Non-executive director of London Security plc.

Stockbroker

EDOA Sebag MBA

Age 50. Director of London Security plc and Nu Swift Limited.

Arden Partners plc

125 Old Broad Street 

London

EC2N 1AR

Auditor 

Grant Thornton UK LLP

The Colmore Building

20 Colmore Circus

Birmingham

B4 6AT

Bankers

Royal Bank of Scotland plc

National Westminster Bank plc

20

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Statement of Directors’  
Responsibilities in respect of 
the Annual Report and Financial 
Statements

The directors are responsible for preparing the annual report and the group and parent company ﬁnancial statements in accordance 

with applicable law and regulations.

Company law requires the directors to prepare group and parent company ﬁnancial statements for each ﬁnancial year. As required 

by the ‘AIM Rules For Companies’ of the London Stock Exchange, they are required to prepare the group ﬁnancial statements in 

accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the parent company ﬁnancial statements 

in accordance with United Kingdom Accounting Standards (Financial Reporting Standard 102) and the Companies Act 2006.

Under company law, the directors must not approve the ﬁnancial statements unless they are satisﬁed that they give a true and fair 

view of the state of affairs of the group and parent company and of their proﬁt or loss for that period. In preparing each of the group 

and parent company ﬁnancial statements, the directors are required to:

 ● select suitable accounting policies and then apply them consistently;

 ● make judgements and estimates that are reasonable and prudent;
 ● for the group ﬁnancial statements, state whether applicable IFRSs as adopted by the European Union have been followed, subject 

to any material departures disclosed and explained in the ﬁnancial statements;

 ● for the parent company ﬁnancial statements, state whether applicable UK Accounting Standards have been followed, subject to any 

material departures disclosed and explained in the ﬁnancial statements; and

 ● prepare the ﬁnancial statements on the going concern basis unless it is inappropriate to presume that the group and the parent 

company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufﬁcient to show and explain the parent company’s 

transactions and disclose with reasonable accuracy at any time the ﬁnancial position of the parent company and enable them to 

ensure that its ﬁnancial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as 

are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and ﬁnancial information included on the company’s 

website. Legislation in the UK governing the preparation and dissemination of ﬁnancial statements may differ from legislation in other 

jurisdictions.

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Independent Auditor’s Report  
to the Members of Andrews Sykes 
Group plc

Opinion

Our opinion on the financial statements is unmodified 
We have audited the ﬁnancial statements of Andrews Sykes Group plc (the ‘parent company’) and its subsidiaries (the ‘group’) 

for the year ended 31 December 2017 which comprise the Consolidated Income Statement, the Consolidated Statement of 

Comprehensive Total Income, the Consolidated and Company Balance Sheets, the Consolidated and Company Statement of 

Changes in Equity, the Consolidated Cash Flow Statement and notes to the ﬁnancial statements, including a summary of signiﬁcant 

accounting policies. The ﬁnancial reporting framework that has been applied in the preparation of the group ﬁnancial statements is 

applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The ﬁnancial reporting 

framework that has been applied in the preparation of the parent company ﬁnancial statements is applicable law and United 

Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK 

and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice).

In our opinion:

 ● the ﬁnancial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 

December 2017 and of the group’s proﬁt for the year then ended;

 ● the group ﬁnancial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

 ● the parent company ﬁnancial statements have been properly prepared in accordance with United Kingdom Generally Accepted 

Accounting Practice; and

 ● the ﬁnancial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion 
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our 

responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the ﬁnancial statements 

section of our report. We are independent of the group and the parent company in accordance with the ethical requirements that are 

relevant to our audit of the ﬁnancial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we 

have fulﬁlled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have 

obtained is sufﬁcient and appropriate to provide a basis for our opinion. 

Who we are reporting to 
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. 

Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them 

in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to 

anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we  

have formed. 

Conclusions relating to going concern 
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

 ● the directors’ use of the going concern basis of accounting in the preparation of the ﬁnancial statements is not appropriate; or

 ● the directors have not disclosed in the ﬁnancial statements any identiﬁed material uncertainties that may cast signiﬁcant doubt 

about the group’s or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at 

least twelve months from the date when the ﬁnancial statements are authorised for issue.

22

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Overview of our audit approach
 ● Overall materiality: £864,000, which represents 5% of the group’s proﬁt before taxation;

 ● Key audit matters were identiﬁed as revenue recognition and valuation of deﬁned beneﬁt pension scheme  

for the group; and

 ● We performed full-scope procedures on all group entities in the United Kingdom and certain group entities 

in the Netherlands, Belgium and the United Arab Emirates (UAE). We performed analytical procedures over 

component locations in Italy, France, Luxembourg and Switzerland.

Key audit matters
The graph below depicts the audit risks identiﬁed and their relative signiﬁcance based on the extent of the ﬁnancial statement impact 

and the extent of management judgement.

High

Potential 

ﬁnancial 

statement 

impact

Low

Trade 
receivables 
existence

Management 
override of 
controls

Hire ﬂeet 
valuation

Existence of 
hire ﬂeet assets

Revenue 
recognition

Valuation of 
deﬁned beneﬁt 
pension scheme

Completeness 
of liabilities

Existence and 
valuation of 
stocks

Impairment 
of hire ﬂeet 
assets

Trade 
receivables 
recoverability

Low 

Extent of management judgement 

  High

Key audit matters are those matters that, in our professional judgement, were of most signiﬁcance in our audit of the ﬁnancial 

statements of the current period and include the most signiﬁcant assessed risks of material misstatement (whether or not due to 
fraud) that we identiﬁed. These matters included those that had the greatest effect on: the overall audit strategy; the allocation of 

resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit 

of the ﬁnancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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Independent Auditor’s Report  
to the Members of Andrews Sykes 
Group plc

Key Audit Matter – Group 

Risk 1 – Revenue recognition
Under International Standard on Auditing (UK) 240 ‘The 

auditor’s responsibilities relating to fraud in an audit of 

ﬁnancial statements’, there is a presumed risk of fraud in 

revenue recognition. 

How the matter was addressed in the  
audit – Group 

Our audit work included, but was not restricted to: 

 ● walkthroughs of each material source of revenue and assessing the 

design effectiveness of key controls;

 ● testing certain key controls over order authorisation, invoicing and 

Further, revenue is a key driver of the business and it 

customer collections;

represents the fair value of the consideration received 

 ● testing a sample of revenue items for hire, sales and installation 

and receivable for the hire, sale and installation of 

revenue, conﬁrming that the sale was made to a bona ﬁde customer 

environmental control products. Revenue recognised 

and agreeing the occurrence of the sale to supporting documentation;

from these sources are net of trade discounts and 
volume rebates, which increase the risk of error in 

 ● conﬁrming that the group’s revenue recognition policy has been 

correctly applied and that it is in accordance with IAS 18: ‘Revenue’.

revenue recognition. 

The group’s accounting policy on revenue recognition is shown in note 2 

Incomplete or inaccurate revenue recognition could 

and related disclosures are included in note 4.

have an adverse impact on the group’s net asset value, 

earnings per share, and its level of dividend cover. We 

therefore identiﬁed the recognition of revenue as a 

signiﬁcant risk, which was one of the most signiﬁcant 

assessed risks of material misstatement. 

Risk 2 – Valuation of defined benefit 
pension scheme
The group operates a deﬁned beneﬁt pension scheme 

that provides beneﬁts to a number of current and 

former employees. At 31 December 2017 the deﬁned 

beneﬁt pension schemes’ net surplus was £3.4 million. 

The gross value of pension scheme assets and liabilities 

which form the net liability amount to £45.7 million and 

£42.3 million respectively. 

Key observations 
Based on our audit work, we did not identify evidence of material 

misstatement in the revenue recognised in the year to 31 December 2017.

Our audit work included, but was not restricted to: 

 ● walkthrough of management’s process for valuing the deﬁned beneﬁt 

pension scheme and assessing the design effectiveness of key controls;

 ● using an actuarial specialist to challenge the assumptions  

used, including discount rates, growth rates, mortality rates  

and the calculation methods employed in the calculation of the 

pension liability;

The valuation of the pension liabilities and assets in 

 ● testing the accuracy of underlying membership data used by the 

accordance with IAS 19 Employee beneﬁts involves 

group’s actuaries for the purpose of calculating the scheme liabilities 

signiﬁcant judgement and is subject to complex 

by selecting a sample of employees and agreeing date of birth, gender 

actuarial assumptions. Small variations in those 

and date of membership to underlying records and by testing a 

actuarial assumptions can lead to a materially different 

sample of net movements in that data;

deﬁned beneﬁt pension scheme asset or liability being 

 ● directly conﬁrming the existence of pension scheme assets with 

recognised within the group ﬁnancial statements.

external asset managers;

We therefore identiﬁed valuation of deﬁned beneﬁt 

scheme as a signiﬁcant risk, which was one of the most 

 ● conﬁrming management’s conclusion that it is appropriate to 

recognise a pension surplus within the provisions of IFRIC 14.

signiﬁcant assessed risks of material misstatement.

The group’s accounting policy on the deﬁned beneﬁt pension scheme is 

shown in note 2 and related disclosures are included in note 18.

Key observations
Based on our audit work, we found the valuation methodologies including 

the inherent actuarial assumptions to be balanced and consistent with 

the expectation of our actuarial specialists. We consider that the group’s 

disclosures in note 18 appropriately describe the signiﬁcant degree of 

inherent imprecision in the assumptions and estimates and the potential 

impact on future periods of revisions to these estimates. We found no 

errors in calculations. 

24

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We did not identify any Key Audit Matters relating to the audit of the ﬁnancial statements of the parent company. 

Our application of materiality 
We deﬁne materiality as the magnitude of misstatement in the ﬁnancial statements that makes it probable that the economic 

decisions of a reasonably knowledgeable person would be changed or inﬂuenced. We use materiality in determining the nature, timing 

and extent of our audit work and in evaluating the results of that work. 

Materiality was determined as follows:

Materiality measure Group 

Parent

Financial statements  

£864,000 which is 5% of the group’s proﬁt 

The benchmark considered most appropriate 

as a whole

before taxation. This benchmark is considered 

is 2% of total assets as it most appropriately 

the most appropriate because this is a key 

reﬂects the company’s status as a non-

performance measure used by the directors 

trading holding company. This benchmark has 

to report to investors on the ﬁnancial 

subsequently been capped at £648,000, being 

performance of the group. 

75% of group materiality. 

Materiality for the current year is lower 

Materiality for the current year is higher than 

than the level that we determined for the 

the level that we determined for the year 

year ended 31 December 2016 to reﬂect the 

ended 31 December 2016 to reﬂect the group’s 

group’s decreased proﬁt before tax in the 

increased asset base in the current year.

current year.

Performance materiality  

Based on our risk assessment, including 

Based on our risk assessment, including the 

used to drive the extent  

the group’s overall control environment, we 

company’s overall control environment, we 

of our testing

determined a performance materiality of 75% 

determined a performance materiality of 75% 

of the ﬁnancial statement materiality. 

of the ﬁnancial statement materiality. 

Speciﬁc materiality

We determined a lower level of materiality 

We determined a lower level of materiality 

for directors’ remuneration and related party 

for directors’ remuneration and related party 

transactions. 

transactions. 

Communication of 

£43,200 and misstatements below that 

£32,400 and misstatements below that 

misstatements to the  

threshold that, in our view, warrant reporting 

threshold that, in our view, warrant reporting 

audit committee

on qualitative grounds. 

on qualitative grounds. 

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Independent Auditor’s Report  
to the Members of Andrews Sykes 
Group plc

An overview of the scope of our audit 
Our audit approach was a risk-based approach founded on a thorough understanding of the group’s business, its environment and risk 

proﬁle. The components of the group were evaluated by the group audit team based on a measure of materiality, considering each as 

a percentage of the group’s total assets, revenues and proﬁt before taxation, to assess the signiﬁcance of the component to determine 

the planned audit response. 

A full-scope audit approach for all components evaluated as signiﬁcant was determined based on their relative materiality to the 

group and our assessment of the audit risk. For signiﬁcant components requiring a full-scope approach we evaluated the controls 

over the ﬁnancial reporting system identiﬁed as part of our risk assessment, reviewed the ﬁnancial statement production process and 

addressed critical accounting matters. We sought, wherever possible, to rely on the effectiveness of the group’s internal controls in 

order to reduce substantive testing. We then undertook substantive testing on signiﬁcant transactions and material account balances. 

In order to address the described audit risks identiﬁed during our planning procedures, we performed a full-scope audit of the ﬁnancial 

statements of the parent company, Andrews Sykes Group plc, and of the group’s operations through the United Kingdom and certain 
group entities in the Netherlands, Belgium and the UAE. The operations that were subject to full-scope audit procedures totalled 93.4 

percent of consolidated revenues and 96.9 percent of consolidated proﬁt before taxation. Statutory audits of subsidiaries, where 

required by local laws, were performed at a lower materiality where applicable. 

The remaining operations of the group were subjected to analytical procedures with a focus on applicable risks identiﬁed above and 

the signiﬁcance to the group’s balances. 

Detailed audit instructions were issued to the auditors of the reporting components where a full-scope approach had been identiﬁed. 

The instructions highlighted the signiﬁcant risks to be addressed through the audit procedures and detailed the information that 

we required to be reported to the group audit team. The group audit team conducted a remote review of the work performed by the 

component auditors, and communicated with all component auditors throughout the planning, ﬁeldwork and concluding stages of the 

local audits. 

Other information 
The directors are responsible for the other information. The other information comprises the information included in the annual 

report set out on pages 1 to 21, other than the ﬁnancial statements and our auditor’s report thereon. Our opinion on the ﬁnancial 

statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express 

any form of assurance conclusion thereon. 

In connection with our audit of the ﬁnancial statements, our responsibility is to read the other information and, in doing so, consider 

whether the other information is materially inconsistent with the ﬁnancial statements or our knowledge obtained in the audit or 

otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are 

required to determine whether there is a material misstatement in the ﬁnancial statements or a material misstatement of the other 

information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we 

are required to report that fact. 

We have nothing to report in this regard.

Our opinion on other matters prescribed by the Companies Act 2006  
is unmodified 
In our opinion, based on the work undertaken in the course of the audit:

 ● the information given in the strategic report and the directors’ report for the ﬁnancial year for which the ﬁnancial statements 

are prepared is consistent with the ﬁnancial statements; and

 ● the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

26

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Matters on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of 

the audit, we have not identiﬁed material misstatements in the strategic report or the directors’ report. 

Matters on which we are required to report by exception 
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you 

if, in our opinion:

 ● adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received 

from branches not visited by us; or

 ● the parent company ﬁnancial statements are not in agreement with the accounting records and returns; or

 ● certain disclosures of directors’ remuneration speciﬁed by law are not made; or

 ● we have not received all the information and explanations we require for our audit

Responsibilities of directors for the financial statements 
As explained more fully in the directors’ responsibilities statement set out on page 21, the directors are responsible for the preparation 

of the ﬁnancial statements and for being satisﬁed that they give a true and fair view, and for such internal control as the directors 

determine is necessary to enable the preparation of ﬁnancial statements that are free from material misstatement, whether due to 

fraud or error.

In preparing the ﬁnancial statements, the directors are responsible for assessing the group’s and the parent company’s ability 

to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of 

accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic 

alternative but to do so. 

Auditor’s responsibilities for the audit of the financial statements 
Our objectives are to obtain reasonable assurance about whether the ﬁnancial statements as a whole are free from material 

misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a 

high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material 

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the 

aggregate, they could reasonably be expected to inﬂuence the economic decisions of users taken on the basis of these ﬁnancial 

statements. 

A further description of our responsibilities for the audit of the ﬁnancial statements is located on the Financial Reporting Council’s 

website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. 

Rebecca Eagle  

Senior Statutory Auditor  

for and on behalf of Grant Thornton UK LLP  

Statutory Auditor, Chartered Accountant  

Birmingham  

17 May 2018

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Consolidated Income Statement
For the 12 months ended 31 December 2017

Continuing operations

Revenue

Cost of sales

Gross profit

Distribution costs 

Administrative expenses

Operating profit

EBITDA*

Depreciation and impairment losses

Profit on the sale of plant and equipment

Operating profit

Finance income

Finance costs

Profit before taxation

Taxation

Profit for the financial period attributable to equity holders of the parent

There were no discontinued operations in either of the above periods.

Earnings per share from continuing and total operations

Basic (pence)

Diluted (pence)

Interim and final dividends paid per equity share (pence)

Proposed final dividend per equity share (pence)

12 months

ended

12 months

ended

31 December

31 December

2017

£’000

71,300 

(30,086)

41,214 

(11,571)

(12,054)

17,589 

22,851 

(5,917)

655 

17,589 

82 

(386)

17,285 

(3,184)

14,101 

2016

£’000

65,389 

(26,677)

38,712 

(11,512)

(11,384)

15,816 

20,664 

(5,310)

462 

15,816

1,875 

(150)

17,541 

(3,068)

14,473

33.37p 

33.37p 

23.80p

11.90p

34.25p 

34.25p 

23.80p

11.90p

Note

4

6

7

8

11

12

12

33

33

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

28

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Consolidated Statement of  
Comprehensive Total Income
For the 12 months ended 31 December 2017

Profit for the financial period

Other comprehensive income/(charges)

Items that may be reclassified to profit and loss:

12 months

ended

12 months

ended

31 December

31 December

2017

£’000

14,101

2016

£’000

14,473

Note

Currency translation differences on foreign currency net investments

(2)

1,924

Items that wlll never be reclassified to profit and loss:

Remeasurement of defined benefit assets and liabilities

Related deferred tax

Other comprehensive income for the period net of tax

Total comprehensive income for the period

18

11

1,391

(264)

1,125

15,226

(2,201)

418

141

14,614

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Consolidated Balance Sheet
As at 31 December 2017

31 December 2017

31 December 2016

Note

£’000

£’000

£’000

£’000

Non-current assets

Property, plant and equipment

Lease prepayments

Trade investments

Deferred tax asset

Retirement benefit pension surplus

Current assets

Stocks

Trade and other receivables

Cash and cash equivalents

Current liabilities

Trade and other payables

Current tax liabilities

Bank loans

Obligations under finance leases

Net current assets

Total assets less current liabilities

Non-current liabilities

Bank loans

Obligations under finance leases

Net assets

Equity

Called-up share capital

Share premium

Retained earnings

Translation reserve

Other reserves

13

14

16

17

18

19

20

21

22

23

24

25

24

25

26

27

27

27

27

Surplus attributable to equity holders of the parent

Non-controlling interests

Total equity

3,860 

17,852 

25,311 

47,023 

(12,358)

(1,696)

(493)

(43)

(14,590)

(4,475)

(7)

21,911 

47 

— 

102 

3,364 

25,424 

32,433 

57,857 

(4,482)

53,375 

423 

13 

48,789 

3,895 

245 

53,365 

10 

53,375 

4,994 

18,425 

22,819 

46,238 

(13,055)

(1,825)

(4,995)

(102)

(19,977)

— 

(49)

20,062 

49 

164 

559 

1,161 

21,995 

26,261 

48,256 

(49)

48,207

423 

13 

43,619 

3,897 

245 

48,197 

10 

48,207 

These consolidated financial statements of Andrews Sykes Group plc, company number 00175912, were approved and authorised for 

issue by the Board of directors on 17 May 2018 and were signed on its behalf by:

JJ Murray 
Vice-Chairman

30

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Consolidated Cash Flow Statement
For the 12 months ended 31 December 2017

Note

28

Cash flows from operating activities

Cash generated from operations

Interest paid

Net UK corporation tax paid

Overseas tax paid

Net cash flow from operating activities

Investing activities

Sale of property, plant and equipment

Purchase of property, plant and equipment

Interest received

Net cash flow from investing activities

Financing activities

Loan repayments

New loans raised

Finance lease capital repayments

Equity dividends paid

Net cash flow from financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Effect of foreign exchange rate changes

Cash and cash equivalents at the end of the period

21

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

Net increase/(decrease) in cash and cash equivalents

Cash outflow from the repayment of loans and finance leases

Cash inflow from the drawdown of new loans net of charges

Non-cash movements in respect of costs of raising loan finance

Non-cash movements re new finance lease and hire purchase agreements

Increase in net funds during the period

Opening net funds at the beginning of the period

Effect of foreign exchange rate changes

Closing net funds at the end of the period

29

12 months

ended

12 months

ended

31 December

31 December

2017

£’000

21,090 

(84)

(2,142)

(1,002)

17,862 

861 

(5,790)

51 

(4,878)

(5,000)

4,963 

(101)

(10,058)

(10,196)

2,788 

22,819 

(296)

25,311 

2,788 

5,101 

(4,963)

(10)

— 

2,916 

17,673 

(296)

20,293 

2016

£’000

17,693 

(136)

(1,846)

(578)

15,133 

673 

(5,392)

241 

(4,478)

(1,000)

— 

(116)

(10,058)

(11,174)

(519)

20,715 

2,623 

22,819

(519)

1,115 

— 

(20)

(84)

492 

14,558 

2,623 

17,673

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Consolidated Statement 
of Changes in Equity
For the 12 months ended 31 December 2017

Attributable to equity holders of the parent company

Share
capital
£’000

Share
premium
£’000

Retained
earnings
£’000

Note

Capital
redemp-
tion
reserve
£’000

Trans-
lation
reserve
£’000

UAE
legal
reserve
£’000

Nether-
lands
capital
reserve
£’000

Non-
controlling 
interests
£’000

Total 
equity
£’000

Total
£’000

At 31 December 2015

423 

13  40,987 

1,973 

157 

Profit for the financial period

—

— 

14,473 

— 

— 

79 

— 

9  43,641 

— 

14,473 

10 

— 

43,651

14,473

— 

— 

— 

1,924 

— 

— 

— 

1,924 

— 

1,924

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

13 

(2,201)

418 

— 

— 

(1,783)

1,924 

(10,058)

(10,058)

— 

— 

— 

— 

— 

— 

— 

43,619 

3,897 

157 

— 

— 

— 

— 

— 

79 

— 

— 

— 

— 

(2,201)

418 

141 

—  (10,058)

—  (10,058)

9  48,197 

— 

14,101 

— 

(2,201)

418 

141 

(10,058)

(10,058)

48,207

14,101

— 

— 

— 

— 

10 

— 

At 31 December 2016

423 

Profit for the financial period

— 

— 

14,101 

— 

— 

Other comprehensive income 
and (charges)

Items that may be reclassified  
to profit and loss:

Currency translation 
differences on foreign 
currency net investments
Items that will never be 
reclassified to profit and loss:

Remeasurement of defined 
benefit assets and liabilities

Related deferred tax
Total other comprehensive 
income and (charges)
Transactions with owners 
recorded directly in 
equity:

Dividends paid

33

Total transactions with owners

Other comprehensive income 
and (charges)

Items that may be reclassified  
to profit and loss:

Currency translation 
differences on foreign 
currency net investments

Items that will never be  
reclassified to profit and loss: 

Remeasurement of defined 
benefit assets and liabilities

Related deferred tax
Total other comprehensive 
income and (charges)
Transactions with owners 
recorded directly in equity:

Dividends paid

33

Total transactions with owners

— 

— 

— 

(2)

— 

— 

— 

(2)

— 

(2)

— 

— 

— 

— 

— 

— 

— 

— 

1,391 

(264)

— 

— 

1,127 

(2)

—  (10,058)

—  (10,058)

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

79 

— 

— 

1,391 

(264)

— 

— 

1,391 

(264)

— 

1,125 

— 

1,125

— (10,058)

— (10,058)

9  53,365 

—  (10,058)

—  (10,058)

10 

53,375

At 31 December 2017

423 

13  48,789  3,895 

157 

32

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Group Accounting Policies
For the 12 months ended 31 December 2017

1. General information
Legal status and country of incorporation

Andrews Sykes Group plc, company number 00175912, was incorporated in England and Wales under the Companies Act 1908-1917. The 

address of the registered office is given on page 20. The nature of the group’s operations and its principal activities are set out in note 

5 and in the directors’ report on page 17.

Basis of preparation

These financial statements have been prepared in accordance with International Accounting Standards (IAS) and International Financial 

Reporting  Standards  as  adopted  by  the  European  Union  (IFRS)  and  with  the  Companies  Act  2006.  Therefore,  the  group  financial 

statements comply with the ‘AIM Rules For Companies’.

The accounts are presented on the historical cost basis of accounting except for:

(a)  Properties held at the date of transition to IFRS which are stated at deemed cost;
(b)  Assets held for sale which are stated at the lower of (i) fair value less anticipated disposal costs and (ii) carrying value;

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

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

Going concern

The  directors  have  prepared  these  financial  statements  on  the  fundamental  assumption  that  the  group  is  a  going  concern  and  will 

continue to trade for at least 12 months following the date of approval of the financial statements.

Further information explaining why the directors believe that the group is a going concern is given in the strategic report on page 12.

Accounting period

The current period is for the 12 months ended 31 December 2017 and the comparative period is for the 12 months ended 31 December 

2016.

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’s primary trading subsidiaries operate. Foreign operations are included in accordance with the accounting policy as 

set out in note 2.

Adoption of International Financial Reporting Standards

On 1 January 2006 the group adopted IFRS for the first time when advantage was taken of the following exemptions as permitted by 

IFRS 1:

 ● The requirements of IFRS 3 - Business Combinations were not applied to business combinations that occurred before the date of 

transition to IFRS.

 ●  The carrying values of freehold and leasehold properties are based on previously adopted UK GAAP valuations and these were taken 

as deemed cost on transition to IFRS.

IFRS has only been applied to the group’s consolidated financial statements. The parent company’s financial statements, which are set 

out on pages 68 to 75, have been prepared in accordance with FRS 102 and the Companies Act 2006. The UK subsidiaries company 

financial statements will be prepared in accordance with FRS 101 or FRS 102 depending upon the individual circumstances applicable to 

each subsidiary. Advantage will continue to be taken, where applicable, of the reduced disclosure framework, as set out in paragraph 1.12 

of FRS 102, as no objections have been received from shareholders to this request.

International Financial Reporting Standards (IFRS) adopted for the first time in 2017

There were no new standards or amendments to standards adopted for the first time this year that had a material impact on the results 

of the group. The prior year comparatives have not been restated for any changes in accounting policies that were required due to the 

adoption of new standards this year.

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Group Accounting Policies
For the 12 months ended 31 December 2017

1. General information (continued)
Future adoption of International Financial Reporting Standards

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards 

have been published by the IASB but are not yet effective and have not been applied early by the group. Management anticipates that 

the following pronouncements relevant to the group’s operations will be adopted in the group’s accounting policies for the first period 

beginning after the effective date of the pronouncement, once adopted by the EU:

 ●  IFRS 9 Financial Instruments (IASB effective 1 January 2018, EU endorsed)

 ●  IFRS 14 Regulatory Deferral Accounts (IASB effective 1 January 2016, EU endorsement deferred until final standard released)

 ●  IFRS 15 Revenue from Contracts with Customers (IASB effective 1 January 2018, EU endorsed)

 ●  IFRS 16 Leases (IASB effective 1 January 2019, EU endorsed)

 ●  Sale or Contribution of Assets between an Investor and its Associate or Joint Venture – Amendments to IFRS 10 and IAS 28 (deferred 

indefinitely)

 ●  Clarifications to IFRS 15 Revenue from Contracts with Customers (IASB effective 1 January 2018, EU endorsed)
 ●  Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions (IASB effective 1 January 2018, EU 

endorsed)

 ●  Amendments to IFRS 4: Applying IFRS 9 to IFRS 4 Insurance Contracts (IASB effective 1 January 2018, EU endorsed)

 ●  Annual Improvements to IFRS 2014-2016 Cycle - Relating to IFRS 1 First time adoption of IFRS and IAS 28 Investment in Associates 

and Joint Ventures (IASB effective 1 January 2017, EU endorsed)

 ● Annual Improvements to IFRS 2014-2016 Cycle - Relating to IFRS 12 Disclosure of interest in other entities (IASB effective 1 January 

2018, not yet EU endorsed)

 ●  IFRIC Interpretation on foreign currency transactions and advance considerations (IASB effective 1 January 2018, not yet EU endorsed)

 ●  Amendments to IAS 40: Transfers of investment property (IASB effective date 1 January 2018, not yet EU endorsed)

Other than in respect of IFRS 16, the directors anticipate that the adoption of these Standards and Interpretations in future periods will 

have no material impact on the financial statements of the group. With regards to IFRS 16, the group is not yet in a position to state 

whether the impact will be material to the group’s reported results or financial position. 

The directors have assessed the potential impact of IFRS 15 on the group’s results when it is adopted for the first time on 1 January 

2018. The conclusion reached is that there will not be a material impact on the group’s results as a consequence of the transition to 

IFRS 15 and any restatement of the prior year comparatives, if the option to apply the standard retrospectively is taken, would also not 

be significant.

In 2017, 83.2% of the group’s revenue was derived from the hire of assets, primarily on short-term leases, which is out of the scope of 

IFRS 15. A further 10.5% of the group’s 2017 revenue was derived from the sale of goods which is treated in a consistent manner under 

IFRS 15 with revenue continuing to be recognised at a point in time when the transfer of risks and rewards occurs. The remaining revenue 
in 2017 of £4,501,000 was derived from the installation and maintenance of fixed air conditioning systems. Of this amount, £1,823,000 

relates to maintenance and the balance relates to installations.

The installation revenue derives from relatively short-term contracts and both the number of contracts and value of work in progress as 

at 31 December 2017, the revenue from which would potentially be recognised differently in accordance with IFRS 15, was not significant. 

Revenue from maintenance contracts is currently recognised over time as the work is performed, which is also in accordance with IFRS 15.

Certain  other  new  standards  and  interpretations  have  been  issued  but  are  not  expected  to  have  a  material  impact  on  the  group’s 

financial statements.

2. Significant accounting policies
Basis of consolidation

The consolidated financial statements incorporate the financial statements of the company and entities controlled by the company (its 

subsidiaries) made up to 31 December 2017. Control is achieved when the investor is exposed, or has rights, to variable returns from its 

involvement with the investee and has the ability to affect those returns through its power over the investee.

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity therein. Non-
controlling  interests  consist  of  the  amount  of  those  interests  at  the  date  of  the  original  business  combination  (see  below)  and  the 

minority’s share of changes in equity since the date of the combination.

34

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The  results  of  subsidiaries  acquired  or  disposed  of  during  the  period  are  included  in  the  consolidated  income  statement  from  the 

effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with 

those used by the group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Business combinations and goodwill

The acquisition of subsidiaries is accounted for using the acquisition method. The assets, liabilities and contingent liabilities that meet 

the conditions for recognition under IFRS 3 are recognised at their fair value at their acquisition date except for non-current assets (or 

disposal groups) that are classified as held for sale in accordance with IFRS 5, which are recognised and measured at fair value less costs 

to sell. Any excess of the cost over the asset valuation as calculated above is recognised as goodwill.

In accordance with the options that were available under IFRS 1 on transition to IFRS, the group elected not to apply IFRS 3 retrospectively 

to past business combinations that occurred before 1 January 2006, the date of transition to IFRS. Accordingly, goodwill amounting to 

£37,206,000 that had previously been offset against reserves under UK GAAP was not recognised in the opening IFRS balance sheet.

The interest of any non-controlling shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of 

the assets, liabilities and contingent liabilities recognised.

Investments in associates and trade investments

An associate is an entity over which the group is in a position to exercise significant influence, but not control, over its financial and 

operating policy decisions. Significant influence is defined as the power, whether or not it is exercised, to be able to participate in the 

financial and operating decisions of the investee.

The results and assets and liabilities of associates are incorporated into these financial statements using the equity method of accounting 

except when they are classified as held for sale (see below).

The results of entities over which the group is not in a position to be able to exercise significant influence despite holding a significant 

shareholding  are  not  accounted  for  as  associates  and  therefore  are  not  equity  accounted.  These  companies  are  classified  as  trade 

investments and are carried as available for sale financial assets which are measured at fair value at the end of the reporting period. 

Dividend income is recognised in the income statement on a receipts basis.

Property, plant and equipment

Property is carried at deemed cost at the date of transition to IFRS based on the previous UK GAAP valuations adopted in 1998. Plant 

and equipment held at the date of transition and subsequent additions to property, plant and equipment are stated at purchase cost 

including directly attributable costs. The group does not have a revaluation policy. 

Freehold land is not depreciated. Depreciation of other property, plant and equipment is provided on a straight-line basis using rates 

calculated to write down the cost of each asset to its estimated residual value over its estimated useful life as follows: 

Property:

Freehold and long leasehold buildings 

Short leasehold buildings 

Equipment for hire:

Heating, air conditioning and other environmental control equipment 

Pumping equipment 

Accessories 

Motor vehicles 

Plant and machinery 

Fixtures and fittings 

Annual reviews are made of estimated useful lives and material residual values.

Profit on the sale of plant and equipment is credited within operating profit.

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2%

Period of the lease

20%

10% to 33%

33%

20% to 25%

7.5% to 33%

20%

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Group Accounting Policies
For the 12 months ended 31 December 2017

2. Significant accounting policies (continued)
Leased assets

Lessor accounting

The group does not hold any assets for hire under finance leases.

Assets held for use under operating leases are recorded as hire fleet assets within property, plant and equipment and are depreciated 

over their useful lives to their estimated residual value. The group does not have any material non-cancellable operating leases.

Lessee accounting

Initial rental payments in respect of operating leases are included in current and non-current assets as appropriate and amortised to 

the income statement over the period of the lease. Ongoing rental payments are charged as an expense in the income statement on 

a straight-line basis over the lease term. Finance leases are capitalised and depreciated in accordance with the accounting policy for 

property, plant and equipment.

As permitted by IFRS 1 at the date of transition to IFRS, the carrying value of long leasehold properties is based on the previous UK GAAP 

valuations adopted in 1998 and this has been taken as deemed cost. 

Immaterial peppercorn rentals and ground rents in respect of all properties are expensed to the income statement on an accruals basis.

Plant and equipment held under finance leases is recognised as an asset at fair value or, if lower, at the present value of the minimum 

lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet 

as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to 

give a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.

Non-current assets held for sale

Non-current assets and disposal groups are reclassified as assets held for sale if they are immediately available for sale in their current 

condition  and  their  carrying  value  will  be  recovered  through  a  sale  transaction  which  is  highly  probable  to  be  completed  within  12 

months of the initial classification. Assets held for sale are valued at the lower of carrying amount at the date of initial classification and 

fair value less costs to sell.

Impairment of non-financial assets

Property, plant and equipment are assessed for impairment when events or changes in circumstances indicate that the carrying amount 

may not be recovered. If there are such indications then a test is performed on the asset affected to assess its recoverable amount 

against carrying value.

An impaired asset is written down to the higher of value in use and its fair value less costs to sell.

Deferred and current taxation

The  charge  for  taxation  is  based  on  the  taxable  profit  or  loss  for  the  period  and  takes  into  account  taxation  deferred  because  of 

differences between the treatment of certain items for taxation and for accounting purposes. Full provision is made for the tax effects 

of these differences.

Current  income  tax  assets  or  liabilities  comprise  those  claims  from,  or  obligations  to,  fiscal  authorities  relating  to  current  or  prior 

periods that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to fiscal periods 

to which they relate based on the taxable profit for the year.

Deferred tax is calculated using the liability method of temporary differences. This involves the comparison of the carrying amount of 

assets and liabilities in the consolidated financial statements with their respective tax bases.

The carrying amount of deferred tax assets is reviewed at each balance sheet date to ensure that it is probable that sufficient taxable 

profits will be available to allow the asset to be recovered. Assets and liabilities, in respect of both deferred and current tax, are only 

offset when there is a legally enforceable right to offset and the assets and liabilities relate to taxes levied by the same taxation authority.

Deferred and current tax are charged or credited in the income statement except when they relate to items charged directly to equity, 

in which case the associated tax is also dealt with in equity.

36

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Stocks

Stocks are valued at the lower of cost of purchase and net realisable value. Cost comprises actual purchase price and, where applicable, 

associated  direct  costs  incurred  bringing  the  stock  to  its  present  location  and  condition.  Net  realisable  value  is  based  on  estimated 

selling  price  less  further  costs  expected  to  be  incurred  to  completion  and  disposal.  Provision  is  made  for  obsolete,  slow-moving  or 

defective items where appropriate.

Financial instruments

Recognition criteria, classification and initial carrying value

Financial  assets  and  financial  liabilities  are  recognised  on  the  consolidated  balance  sheet  when  the  group  becomes  a  party  to  the 

contractual provisions of the instrument.

Financial assets are recognised and derecognised on a trade date where the purchase or sale of an asset is under a contract whose 

terms require delivery of the investment within the time frame established by the market concerned. Financial assets are classified as 

“loans and receivables”, “held to maturity” investments, “available for sale” investments or “assets at fair value through the profit and 

loss” depending upon the nature and purpose of the financial asset. The classification is determined at the time of the initial recognition.

Financial assets are generally classified as “loans and receivables” except for trade investments and are initially measured at fair value 

including transaction costs incurred. No financial assets are currently classified as “held to maturity” or as “assets at fair value through 

profit or loss”. The categories of financial assets are trade investments, trade receivables, other receivables and cash.

Financial  liabilities  and  equity  instruments  are  classified  according  to  the  substance  of  the  contractual  arrangements  entered  into. 

An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. 

Financial liabilities are normally classified as “other financial liabilities” and are initially measured at fair value, normally cost, net of 

transaction costs. There are currently no financial liabilities held at “fair value through profit or loss”.

Loans and receivables

Trade receivables, loans and other receivables (including cash held on ring-fenced deposit accounts) are measured on initial recognition 

at fair value and, except for short-term receivables where the recognition of interest would be immaterial, are subsequently remeasured 

at amortised cost using the effective interest rate method. Allowances for irrecoverable amounts, which are dealt with in the income 

statement,  are  calculated  based  on  the  difference  between  the  asset’s  carrying  amount  and  the  present  value  of  estimated  future 

cash flows, calculated based on past default experience, discounted at the effective interest rate computed at initial recognition where 

material.

Derivative financial instruments and hedge accounting

The  group’s  policy  is  not  to  hedge  its  international  assets  with  respect  to  foreign  currency  balance  sheet  translation  exposure,  nor 

against foreign currency transactions. Generally, the group does not enter into any forward exchange contracts and it does not use 

financial instruments for speculative purposes.

The group does not hold any derivative financial instruments or embedded derivative financial instruments at either period end.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, cash at bank and short-term highly liquid investments that are readily convertible into 

known amounts of cash within three months from the date of initial acquisition with an insignificant risk of a change in value. Cash held 

in ring-fenced bank deposit accounts to which the group does not have access within three months from the date of initial acquisition 

is classified within other financial assets.

Impairment of financial assets

Financial  assets  are  assessed  for  indicators  of  impairment  at  each  balance  sheet  date.  Financial  assets  are  impaired  where  there  is 

objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated 

future cash flows of the investment have been impacted. 

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Group Accounting Policies
For the 12 months ended 31 December 2017

2. Significant accounting policies (continued) 
For certain categories of financial asset, such as trade receivables, assets are assessed for impairment on a collective basis. Objective 
evidence  for  impairment  could  include  the  group’s  past  history  of  collecting  payments,  an  increase  in  the  number  of  days  taken  by 

customers  to  make  payment  as  well  as  observable  changes  in  national  or  local  economic  conditions  that  correlate  with  default  on 

receivables.

The carrying amount of all financial assets, except trade receivables, is reduced by the impairment loss directly. The carrying amount 

of trade receivables is reduced through the use of a bad debt provision account. If a trade receivable is considered uncollectable it is 

written off against the bad debt provision account. Subsequent recoveries of amounts written off are credited to the provision account. 

Changes to the carrying amount of the bad debt provision account are recognised in the income statement.

Other financial liabilities

Other financial liabilities, including trade payables, are measured on initial recognition at fair value and, except for short-term payables 

where  the  recognition  of  interest  would  be  immaterial,  are  subsequently  remeasured  at  amortised  cost  using  the  effective  interest 
rate method. 

Bank loans

Interest-bearing bank loans are recorded at the proceeds received less capital repayments made. Initial costs incurred entering into the 

bank loans are carried as an asset, presented as a deduction from the carrying value of the loans, which is amortised to the income 

statement over the period of the loans. Ongoing finance charges are accounted for on an accruals basis in the income statement using 

the  effective  interest  rate  method.  They  are  included  within  accruals  to  the  extent  that  they  are  not  settled  in  the  period  in  which 

they arise.

Provisions

Provisions are created where the group has a present obligation (legal or constructive) as a result of a past event where it is probable 

that  the  group  will  be  required  to  settle  that  obligation.  Provisions  are  measured  at  the  directors’  best  estimate  of  the  expenditure 

required to settle the obligation at the balance sheet date. Provisions are only discounted to present value where the effect is material.

Retirement benefit costs

Defined benefit scheme

As disclosed in note 18 the group previously operated a defined benefit pension scheme for the majority of its employees. This scheme 

was closed to new entrants and all existing members became deferred members on 29 December 2002.

Interest income on pension assets less interest on pension scheme liabilities is shown within finance income. The rate used to calculate 

the expected return on pension assets is capped at a rate equivalent to the rate used to discount the scheme’s liabilities. Settlement gains 

and losses and pension scheme administration expenses are also included within the income statement, either within administration 
expenses or as part of a separate disclosure where material. Actuarial remeasurement gains and losses are recognised immediately in 

other comprehensive income.

The defined benefit scheme is funded with the assets of the scheme held separately in trustee administered funds. Pension scheme 

assets are measured at fair value and liabilities are measured on an actuarial basis using the projected unit method and discounted at a 

rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency and term to the scheme liabilities. 

Full actuarial valuations are obtained triennially and are updated at each balance sheet date in accordance with IAS 19 (2011). 

Net defined benefit pension scheme surpluses and deficits are presented separately on the balance sheet within non-current assets and 

liabilities respectively before tax relief. The attributable deferred tax liability/asset is included within deferred tax and is subject to the 

recognition criteria as set out in the accounting policy on deferred and current taxation. Net defined benefit pension scheme surpluses 

are only recognised to the extent of any future refunds or reductions in future contributions to the scheme.

Defined contribution schemes

Employer’s contributions are charged to the income statement on an accruals basis.

38

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Net funds

Net  funds  are  defined  as  including  cash  and  cash  equivalents,  ring-fenced  deposit  accounts,  bank  and  other  loans,  finance  lease 

obligations and derivative financial instruments stated at current fair value.

Revenue recognition

Revenue

Revenue represents the fair value of the consideration received and receivable for the hire, sale and installation of environmental control 

products after deducting trade discounts and volume rebates. Revenue is recognised for sales on despatch of goods and for short-term 

hire items on a straight-line basis over the period of the hire. Compensation receipts revenue is recognised on an accruals basis and is 

credited within revenue. Installation revenue is recognised as the contract progresses on the basis of work completed. Revenue excludes 

Value Added Tax.

Investment and interest income

Dividend income is recognised in the income statement when the group’s right to receive payment has been established.

Interest income from bank deposit accounts is recognised on an accruals basis calculated by reference to the principal on deposit and 

the effective interest rate applicable.

Foreign currencies

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities in 

foreign currencies are translated into pounds Sterling at the financial year-end rates. Non-monetary items that are measured in terms 

of historical cost in a foreign currency are not retranslated.

The results of overseas subsidiary undertakings, associates and trade investments are translated into pounds Sterling at average rates 

for the period unless exchange rates fluctuate significantly during that period, in which case, exchange rates at the date of transactions 

are used. The closing balance sheets are translated at the year-end rates and the exchange differences arising are transferred to the 

group’s translation reserve as a separate component of equity and are reported within the CSOCTI. All other exchange differences are 

included within the consolidated income statement for the year. Inter-company foreign exchange gains and losses arising from financing 

activities are included within finance income and costs respectively. All other exchange differences are included in operating profit. 

In accordance with IFRS 1, the translation reserve was set to zero at 1 January 2006, the date of transition to IFRS. Cumulative translation 

differences that are included within the translation reserve at the date of disposal of the relevant overseas company are recognised in 

the consolidated income statement.

Operating profit

Operating  profit  is  defined  as  the  profit  for  the  period  from  continuing  operations  after  all  operating  costs  and  income  but  before 

investment income, income from trade investments, finance income, finance costs, other gains and losses and taxation. Operating profit 

is disclosed as a separate line on the face of the income statement.

Normalised operating profit is the same as the above but excludes non-recurring items, for example profit on the sale of property. When 

applicable, normalised operating profit is reconciled to operating profit on the face of the income statement.

Other gains and losses

Other gains and losses are material items that arise from unusual non-recurring events. They are disclosed separately, in aggregate, on 

the face of the income statement after operating profit where, in the opinion of the directors, such disclosure is necessary in order to 

fairly present the results for the financial period.

Finance costs

Finance costs are recognised in the income statement on an accruals basis in the period in which they are incurred. 

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Notes to the Consolidated  
Financial Statements
For the 12 months ended 31 December 2017

3. Use of critical accounting assumptions and estimates
Estimates  and  judgements  are  continually  evaluated  and  assessed  based  on  historical  experience  and  other  factors,  including 

expectations of future events that are believed to be reasonable given the circumstances prevailing when the accounts are approved. 

The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal 

the related actual results. The estimates and assumptions that have significant risk of causing a material adjustment to the carrying 

value of assets and liabilities are discussed below.

Pension scheme assumptions and mortality tables

As set out in note 18, the carrying value of the defined benefit pension scheme is calculated using actuarial valuations. These valuations 

are based on assumptions including the selection of the most appropriate mortality table for the profile of the members in the scheme 

and  the  financial  assumptions  concerning  discount  rates  and  inflation.  All  these  are  estimates  of  future  events  and  are  therefore 

uncertain. The choices are based on advice received from the scheme actuaries that are checked from time to time with benchmark 

surveys. Sensitivity analysis regarding assumptions concerning longevity, discount rates and inflation is provided in note 18 on page 55.

When assessing the appropriateness of the recognition of a surplus, the directors have considered the guidance in IAS 19 and IFRIC 

14 and have concluded that because of the rights upon wind-up it is appropriate to recognise the asset in the consolidated financial 

statements.

4 Revenue
An analysis of the group’s revenue by income stream is as follows:

Continuing operations

Hire

Sales

Installations

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

12 months

ended

12 months

ended

31 December

31 December

2017

£’000

59,314 

7,485 

4,501 

71,300 

2016

£’000

54,852 

6,386 

4,151 

65,389 

40

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5. Business and geographical segmental analysis
Explanation

The  group  operates  in  the  United  Kingdom,  Europe  (The  Netherlands,  Belgium,  Italy,  France,  Switzerland  and  Luxembourg)  and  the 

United Arab Emirates providing the hire and sale of a range of environmental control equipment. It also installs fixed air conditioning 

equipment within the United Kingdom.

The  group  operates  through  statutory  entities  that  are  based  in  each  of  the  above  locations.  In  the  case  of  the  main  UK  operation 

there are separate statutory entities for hire and sales (Andrews Sykes Hire Limited) and installation (Andrews Air Conditioning and 

Refrigeration Limited) as well as a separate property holding company. Each operating company has its own Divisional Director who is 

responsible to the Board for that company’s operating result.

All the group’s external loans are held in the parent company, Andrews Sykes Group plc. No attempt is made in the internal management 

accounts to allocate the interest charge to either individual entities or activities. Similarly, the internal management accounts provided to 

the Board do not include a balance sheet; cash flow information is provided only on an entity and consolidated basis. Capital expenditure 
and working capital movements are reviewed on an entity basis.

The directors therefore consider that the group’s revenue-generating operating segments that are reviewed on a regular basis by the 

Board (who is the Chief Operating Decision Maker), and for which discrete financial information is available, are:

Activity

Hire and sales

Entity

Andrews Sykes Hire Limited

Andrews Sykes BV

Andrews Sykes BVBA

Nolo Climat S.R.L.

Climat Location SAS

Climat Location SA

Khansaheb Sykes LLC

Installation

Andrews Air Conditioning and Refrigeration Limited

Andrews Sykes Luxembourg SARL

Location

United Kingdom

The Netherlands

Belgium

Italy

France

Switzerland

United Arab Emirates

Luxembourg

United Kingdom

The directors consider that the long-term economic characteristics of the hire and sales operations based in the United Kingdom, The 

Netherlands, Belgium, Italy, France, Luxembourg and Switzerland are similar. These entities have similar products and services, operate 

in the same manner providing services to a similar customer base and incur similar risks and rewards. However, the operation based in 

the United Arab Emirates, whilst similar in many ways, faces significantly different risks due to the local environment in which it operates. 

The installation business operates in a different manner and regulatory environment to the rest of the group.

The reportable segments are therefore:

Segment

Incorporating the following operating entities

Hire and sales Europe

Andrews Sykes Hire Limited

Andrews Sykes Properties Limited

Andrews Sykes BV

Andrews Sykes BVBA

Nolo Climat S.R.L.

Climat Location SAS

Climat Location SA

Hire and sales Middle East

Khansaheb Sykes LLC

Installation

Andrews Air Conditioning and Refrigeration Limited

Andrews Sykes Luxembourg SARL

Location

United Kingdom

United Kingdom

The Netherlands

Belgium

Italy

France

Switzerland

Luxembourg

United Arab Emirates

United Kingdom

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Notes to the Consolidated  
Financial Statements
For the 12 months ended 31 December 2017

5 Business and geographical segmental analysis (continued)
The property holding company, Andrews Sykes Properties Limited, has been included within the Hire and Sales Europe segment as it 

holds properties mainly for the use of Andrews Sykes Hire Limited. 

Transactions between the above reportable segments are made on an arm’s length basis after taking into account the reduced levels 

of risks incurred.

The above segments exclude the results of non-revenue earning holding companies including Andrews Sykes Group plc. These entities’ 

results have been included as unallocated items (overheads and expenses, corporate assets and corporate liabilities as appropriate) in 

the tables below.

The group has a diverse customer base with no single customer accounting for 10% or more of the group’s revenue in either the current 

or previous financial period.

Business segments

Income statement analysis

12 months ended 31 December 2017

Revenue

External sales

Inter-segment sales

Total revenue

Segment result

Unallocated overheads and expenses

Operating profit

Finance income 

Finance costs

Profit before taxation

Taxation

Profit for the period from continuing and total operations

Income statement analysis

12 months ended 31 December 2016

Hire & sales

Hire & sales

Consolidated

Europe

Middle East

Installation

Subtotal

Eliminations

£’000

£’000

£’000

£’000

£’000

54,918 

71 

54,989 

15,237 

11,881 

— 

11,881 

2,899 

4,501 

20 

4,521 

387 

71,300 

91 

71,391 

18,523 

— 

(91)

(91)

(14)

results

£’000

71,300 

— 

71,300 

18,509 

(920)

17,589 

82 

(386)

17,285 

(3,184)

14,101 

Hire & sales

Hire & sales

Consolidated

Europe

Middle East

Installation

Subtotal

Eliminations

£’000

£’000

£’000

£’000

£’000

49,708 

51 

49,759 

13,779 

11,530 

— 

11,530 

2,871 

4,151 

7 

4,158 

319 

65,389 

58 

65,447 

16,969 

— 

(58)

(58)

(9)

Revenue

External sales

Inter-segment sales

Total revenue

Segment result

Unallocated overheads and expenses

Operating profit

Finance income

Finance costs
Profit before taxation

Taxation

Profit for the period from continuing and total operations

42

results

£’000

65,389 

— 

65,389 

16,960 

(1,144)

15,816 

1,875 

(150)
17,541 

(3,068)

14,473 

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Balance sheet information

As at 31 December 2017

Segment assets

Deferred tax asset

Retirement benefit pension surplus

Unallocated corporate assets

Consolidated total assets

Segment liabilities

Current tax liabilities

Bank loans

Obligations under finance leases

Unallocated corporate liabilities

Consolidated total liabilities

Balance sheet information

As at 31 December 2016

Segment assets

Trade investments

Deferred tax asset

Retirement benefit pension surplus

Unallocated corporate assets

Consolidated total assets

Segment liabilities

Current tax liabilities

Bank loans

Obligations under finance leases

Unallocated corporate liabilities
Consolidated total liabilities

Other information

12 months ended 31 December 2017

Hire & sales

Hire & sales

Europe

Middle East

Installation

Subtotal

Eliminations

£’000

£’000

£’000

£’000

£’000

Consolidated

results

£’000

57,899 

10,015 

3,697 

71,611 

(2,836)

68,775 

(12,425)

(2,041)

(469)

(14,935)

2,836 

102 

3,364 

206 

72,447 

(12,099)

(1,696)

(4,968)

(50)

(259)

(19,072)

Hire & sales

Hire & sales

Europe

Middle East

Installation

Subtotal

Eliminations

£’000

£’000

£’000

£’000

£’000

Consolidated

results

£’000

55,326 

9,976 

4,055 

69,357 

(3,175)

66,182 

(13,337)

(2,210)

(517)

(16,064)

3,175 

164 

559 

1,161 

167 

68,233 

(12,889)

(1,825)

(4,995)

(151)

(166)
(20,026)

Consolidated

results

£’000

7,946 

5,917 

Hire & sales

Hire & sales

Europe

Middle East

Installation

Subtotal

Eliminations

£’000

£’000

£’000

£’000

£’000

Capital additions

Depreciation

6,361 

4,839 

1,524 

1,076 

61 

2 

7,946 

5,917 

— 

— 

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Notes to the Consolidated  
Financial Statements
For the 12 months ended 31 December 2017

5 Business and geographical segmental analysis (continued)
Other information

12 months ended 31 December 2016

Hire & sales

Hire & sales

Europe

Middle East

Installation

Subtotal

Eliminations

£’000

£’000

£’000

£’000

£’000

5,863 

4,275 

1,068 

1,034 

2 

1 

6,933 

5,310 

— 

— 

Consolidated

results

£’000

6,933 

5,310 

Capital additions

Depreciation

Geographical segments

The geographical analysis of the group’s revenue is as follows:

United Kingdom

Rest of Europe

Middle East and Africa

Rest of the World

By origin

By destination

12 months

12 months

12 months

ended

ended

ended

12 months

ended

31 December

31 December

31 December

31 December

2017

£’000

44,704

14,715

11,881

—

71,300

2016

£’000

41,754

12,105

11,530

—

65,389

2017

£’000

44,307

14,959

11,982

52

71,300

2016

£’000

41,451

12,401

11,534

3

65,389

The carrying amounts of segment assets and non-current assets (excluding trade investments and deferred tax) analysed by the entity’s 

country of origin are as set out below. There is no significant difference between the analysis by origin and that by physical location of 

the assets.

Segment assets

Non-current assets

31 December

31 December

31 December

31 December

2017

£’000

42,768

16,327

9,680

68,775

2016

£’000

43,053

13,500

9,629

66,182

2017

£’000

13,896

5,441

2,621

21,958

2016

£’000

12,624

5,154

2,333

20,111

United Kingdom

Rest of Europe

Middle East and Africa

6 Finance income

Net pension scheme interest income on pension scheme surplus (note 18)

Interest receivable on bank deposit accounts

Net inter-company foreign exchange gains

44

12 months

ended

12 months

ended

31 December

31 December

2017

£’000

42

40

—

82

2016

£’000

105

203

1,567

1,875

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7 Finance costs

Interest charge on bank loans and overdrafts

Finance lease interest charge

Inter-company foreign exchange losses

8 Profit before taxation
The following have been charged/(credited) in arriving at the profit before taxation:

Net foreign exchange trading losses and (gains)

Bank charges

Depreciation of property, plant and equipment

Write-off of trade investment

Net foreign exchange losses and (gains) on inter-company financing (notes 6 and 7)

Profit on the sale of plant and equipment

Compensation receipts from third parties for lost or damaged plant and equipment

Operating lease rental payments:

  Property

  Plant, machinery and motor vehicles 

Auditor's remuneration (see note 9)

Staff costs (see note 10)

12 months

ended

12 months

ended

31 December

31 December

2017

£’000

89

4

293

386

2016

£’000

122

28

—

150

12 months

ended

12 months

ended

31 December

31 December

2017

£’000

37

48

5,917

164

293

(655)

(2,336)

1,667

1,791

171

19,004

2016

£’000

(10)

47

5,310

—

(1,567)

(462)

(1,856)

1,595

1,841

162

18,463

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Notes to the Consolidated  
Financial Statements
For the 12 months ended 31 December 2017

9 Auditor’s remuneration
A more detailed analysis of the auditor’s remuneration on a worldwide basis is as follows:

Fees payable to the company's auditor in respect of audit services:

  The audit of the consolidated accounts

  The audit of the group's subsidiaries pursuant to legislation

Total audit fees

Fees payable to the company's auditor in respect of non-audit services:

  Tax compliance and advisory services

Total non-audit fees

12 months

ended

12 months

ended

31 December

31 December

2017

£’000

2016

£’000

19

119

138

33

33

171

19

114

133

29

29

162

Fees payable to the auditor and associates for non-audit services to the company are not disclosed because the consolidated financial 

statements are required to disclose such fees on a consolidated basis.

10 Employee information
Staff costs charged in the income statement

The average number of employees employed during the period was:

12 months

ended

12 months

ended

31 December

31 December

2017

Number

2016

Number

180

235

129

544

176

222

127

525

12 months

ended

12 months

ended

31 December

31 December

2017

£’000

16,554

82

1,891

477

19,004

2016

£’000

16,055

103

1,820

485

18,463

Sales and distribution

Engineers

Managers and administration

Staff costs, including directors’ remuneration, amounted to:

Wages and salaries

Redundancy

Social security costs

Other pension costs

46

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Key management compensation

Amounts paid to individuals, including directors, having authority and responsibility for planning, directing and controlling the group’s 

activities, were as follows:

Short-term employee benefits

Post employment benefits - Pensions

Other long-term benefits

12 months

ended

12 months

ended

31 December

31 December

2017

£’000

2,069

135

284

2,488

2016

£’000

1,930

166

255

2,351

Directors’ emoluments

Directors’ emoluments for the current and prior financial periods were as follows:

12 months ended 31 December 2017

12 months ended 31 December 2016

Pension 

scheme

Pension 

scheme

Emoluments

contributions

£’000

£’000

Total

£’000

Emoluments

contributions

£’000

£’000

Total 

£’000

31

20

34

20

508

613

—

—

—

—

38

38

31

20

34

20

546

651

30

20

32

20

374

476

—

—

—

—

37

37

30

20

32

20

411

513

Director

M Gailer

MC Leon

JJ Murray

JP Murray

PT Wood  

(highest paid director)

No directors were granted or exercised share options during either the current or previous financial periods.

The number of directors in office at the year end to whom retirement benefits are accruing are as follows:

Defined contribution

Defined benefit

12 months

ended

12 months

ended

31 December

31 December

2017

Number

2016

Number

1 

1 

1 

1 

The highest paid director had an accrued annual pension under the defined benefit pension scheme of £21,035 (2016: £20,768); the 
transfer value of the accumulated fund as at 31 December 2017 was £505,386 (2016: £478,606).

No contributions were paid during the current or preceding financial period.

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Notes to the Consolidated  
Financial Statements
For the 12 months ended 31 December 2017

11 Taxation

Current tax

UK corporation tax at 19.25% (2016: 20.00%)

based on the taxable profit for the period

Adjustments to corporation tax in respect of prior periods

Overseas tax based on the taxable profit for the period

Adjustments to overseas tax in respect of prior periods

Total current tax charge

Deferred tax

Deferred tax on the origination and reversal of temporary differences

Adjustments to deferred tax in respect of prior periods

Total deferred tax charge (note 17)

Total tax charge for the financial period attributable to continuing operations

12 months

ended

12 months

ended

31 December

31 December

2017

£’000

1,947

(62)

1,885

1,125

(19)

2,991

163

30

193

3,184

2016

£’000

2,253

(138)

2,115

838

(26)

2,927

38

103

141

3,068

The tax charge for the financial period can be reconciled to the profit before tax per the income statement multiplied by the standard 
effective corporation tax rate in the UK of 19.25% (2016: 20.00%) as follows:

Profit before taxation from continuing and total operations

Tax at the UK effective corporation tax rate of 19.25% (2016: 20.00%)

Effects of:

Expenses not deductible for tax purposes

Effects of different tax rates of subsidiaries operating abroad

Utilisation of overseas tax losses

Overseas tax losses not recognised

Effect of change in tax rate to 19%

Adjustments to tax charge in respect of previous periods

Total tax charge for the financial period

12 months

ended

12 months

ended

31 December

31 December

2017

£’000

17,285

3,327

144

(225)

(30)

21

(2)

(51)

3,184

2016

£’000

17,541

3,508

48

(337)

(87)

—

(3)

(61)

3,068

48

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Deferred tax recognised in other comprehensive income 

12 months

ended

12 months

ended

31 December

31 December

2017

£’000

2016

£’000

Deferred tax charge /(credit) on remeasurement of defined benefit liabilities and assets

264

(418)

Matters affecting future tax charges

A reduction in the UK corporation tax rate from 19% to 17% (effective from 1 April 2020) was substantively enacted on 6 September 2016 

and received Royal Assent on 15 September 2016. This reduction should further reduce the group’s current tax charge.

12 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  post-tax 

earnings as set out below. There were no discontinued operations in either period.

Basic earnings/weighted average number of shares

Basic earnings per ordinary share (pence)

Basic earnings/weighted average number of shares

Basic earnings per ordinary share (pence)

Diluted earnings per share

12 months ended 31 December 2017

Total

earnings

£’000

14,101

33.37p

Number of 

shares

42,262,082

12 months ended 31 December 2016

Total

earnings

£’000

14,473

34.25p

Number of 

shares

42,262,082

There  were  no  dilutive  instruments  outstanding  during  either  the  current  or  preceding  financial  period.  Consequently,  the  diluted 

earnings per share is the same as the basic earnings per share for both periods.

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Notes to the Consolidated  
Financial Statements
For the 12 months ended 31 December 2017

13 Property, plant and equipment

Property

£’000

Equipment

for hire

£’000

Motor

vehicles

£’000

Plant and

machinery

£’000

Cost

At 31 December 2015

Exchange differences

Additions

Disposals

At 31 December 2016

Exchange differences

Additions

Disposals

At 31 December 2017

Accumulated depreciation

At 31 December 2015

Exchange differences

Charge for the period

Disposals

At 31 December 2016

Exchange differences

Charge for the period

Disposals

At 31 December 2017

Carrying value

At 31 December 2017

At 31 December 2016

6,547

29

—

(14)

6,562

9

44

(1,190)

5,425

2,328

30

132

(14)

2,476

9

118

(1,162)

1,441

3,984

4,086

47,057

2,548

6,233

(3,057)

52,781

(41)

6,946

(3,663)

56,023

35,167

1,707

4,544

(2,878)

38,540

(77)

5,115

(3,513)

40,065

15,958

14,241

1,410

129

281

(179)

1,641

(17)

296

(320)

1,600

845

88

220

(146)

1,007

(3)

238

(300)

942

658

634

5,383

146

419

(948)

5,000

(8)

660

(162)

5,490

4,307

126

414

(948)

3,899

(12)

446

(154)

4,179

1,311

1,101

Total

£’000

60,397

2,852

6,933

(4,198)

65,984

(57)

7,946

(5,335)

68,538

42,647

1,951

5,310

(3,986)

45,922

(83)

5,917

(5,129)

46,627

21,911

20,062

The  carrying  value  of  plant  and  machinery  includes  £35,000 (2016: £63,000)  of  assets  subject  to  finance  lease  and  hire  purchase 
agreements. Depreciation amounting to £28,000 was charged on these assets during the year (2016: £21,000).

The  group  did  not  have  any  non-cancellable  contractual  commitments  for  the  acquisition  of  property,  plant  and  equipment  at 

either 31 December 2017 or 31 December 2016.

The carrying value of the group’s property is as follows:

Freehold land and buildings

Long leasehold buildings

Short leasehold buildings

31 December

31 December

2017

£’000

3,779

49

156

3,984

2016

£’000

3,878

50

158

4,086

As disclosed in note 24, the group’s bank loans are secured by fixed and floating charges over the group’s assets including property, 

plant and equipment.

50

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14 Lease prepayments

Long leasehold land prepayments:

Total

Split:

Non-current assets

Current assets

31 December

31 December

2017

£’000

2016

£’000

49

47

2

49

51

49

2

51

The current element of long leasehold land premiums is included within trade and other receivables in note 20.

15 Subsidiaries
A complete list of the investments in subsidiaries, including the name, country of incorporation and proportion of ownership interest, is 

given in note 3 to the company’s separate financial statements.

With the exception of Khansaheb Sykes LLC, the group holds 100% of the issued share capital of its subsidiaries. Whilst the group only 

holds 49% of the issued share capital of Khansaheb Sykes LLC, this shareholding entitles the group to 90% of the profits for the period 

and control of the company. The 51% shareholder has waived his right to receive the 10% profit share and therefore the group has 

consolidated 100% of the company’s result for the period.

16 Trade investments

Cost

At 31 December 2015 and 2016

Write off

As at 31 December 2017

Carrying amount (fair value)

At 31 December 2017

At 31 December 2016

£’000

164

(164)

—

—

164

The above investment represented a 40% interest in the ordinary share capital of Oasis Sykes Limited, a company incorporated in Saudi 

Arabia and having an issued share capital of £410,000. The investment was not accounted for as an associate as the group does not and 
is unable to exercise significant influence, including decisions concerning the declaration and payments of dividends. Dividends were 

accounted for on a receipts basis, no amounts were received in the current or preceding period.

During the current year, the directors performed a review of the operation and have formed the opinion that the carrying value in the 

books is not supported by underlying assets and there are no realistic prospects of a recovery in the future. Accordingly, the investment 

has been written off as its fair value is considered to be negligible.

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Notes to the Consolidated  
Financial Statements
For the 12 months ended 31 December 2017

17 Deferred tax asset
The deferred tax assets and liabilities recognised by the group and the movements thereon during the current and prior periods are as 

follows:

Asset/(liability) at 31 December 2015 at 19%

Charged to income statement (note 11)

Credited to equity (note 11)

Effect of pension payments in excess of service and 
administration expenses

Asset/(liability) at 31 December 2016 at 19%

Charged to income statement (note 11)

Charged to equity (note 11)

Effect of pension payments in excess of service and 

administration expenses

Asset/(liability) at 31 December 2017 at 19%

Capital 

allowances 

in excess of 

depreciation 

£’000

Provisions and

other short

term timing

differences

£’000

Pension

surplus

£’000

269

(8)

—

—

261

(193)

—

—

68

(464)

—

418

(175)

(221)

—

(264)

(154)

(639)

477

(133)

—

175

519

—

—

154

673

Total

£’000

282

(141)

418

—

559

(193)

(264)

—

102

Deferred  tax  has  been  calculated  using  the  substantively  enacted  tax  rate  that  is  expected  to  apply  when  the  temporary  timing 
differences reverse. Consequently, a deferred tax rate of 19% (2016: 19%) has been used.

The group does not have any unused capital losses or any unrecognised UK deferred tax assets or liabilities at either the current or 

preceding period end.

Deferred tax assets have not been recognised in respect of overseas tax losses because it is uncertain that future tax profits will be 

available, against which the group can utilise them.

The deferred tax asset as at 31 December 2017, excluding the liability on the pension surplus, is £741,000 (2016: £780,000). Of this 
amount, approximately £360,000 (2016: £480,000) is expected to be recovered after more than 12 months.

18 Retirement benefit pension schemes
Defined benefit pension scheme

The  group  operates  two  pension  arrangements  in  the  UK:  the  Andrews  Sykes  Group  Pension  Scheme  (“the  DB  Scheme”)  and  the 

Andrews Sykes Stakeholder Pension Plan (“the DC Plan”).

The group’s UK pension arrangements include defined benefit and defined contribution schemes. The DB Scheme is established under 

trust  law  and  complies  with  the  Pension  Scheme  Act  1993,  Pensions  Act  1995,  Pensions  Act  2004,  Pensions  Act  2014  and  all  other 

relevant UK legislation. Pension assets are held in separate trustee administered funds which have equal pension rights with respect to 

members of either sex in so far as this is required by current legislation.

The DB Scheme was closed to new members on 29 December 2002 and over recent years the group has taken steps to manage the 

ongoing risks associated with its defined benefit liabilities.

As at 31 December 2017, the group had a net defined benefit pension scheme surplus, calculated in accordance with IAS 19 using the 
assumptions as set out below, of £3,364,000 (2016: £1,161,000). This asset has been recognised in these 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 the year end.

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Throughout  2017,  the  group  continued  to  make  a  contribution  towards  expenses  of  £10,000  per  month  and  this  will  continue  until 

the  next  formal  schedule  of  contributions  is  agreed  with  the  pension  scheme  trustees.  The  group  made  total  pension  contributions 

of £920,000 during 2017 which comprised: (i) contributions of £710,000 to eliminate the funding deficit as at 31 December 2016; (ii) 

contributions of £120,000 towards expenses; and (iii) additional voluntary pension contributions of £30,000 per month for the three 

months from January to March 2017. These additional voluntary pension contributions have now ceased.

The next formal triennial funding valuation is due as at 31 December 2019. The group currently expects to make pension contributions 

of £120,000 during 2018 in accordance with the current schedule of contributions.

Principal risks

The following table summarises the principal risks associated with the group’s DB Scheme:

Investment 

The present value of defined benefit liabilities is calculated using a discount rate set by reference to high-quality 

risk

corporate bond yields. If scheme assets underperform corporate bonds, this will create a deficit. 

Interest 

rate risk

A fall in bond yields would increase the value of the liabilities. This would be only partially offset by an increase in 

the value of bond investments held.

Inflation 

An increase in inflation would increase the value of pension liabilities. The assets would be expected to also increase, 

risk

to the extent that they are linked to inflation, but this would not be expected to fully match the increase in liabilities.

Longevity 

The present value of the defined benefit liabilities is calculated having regards to a best estimate of the mortality of 

risk

scheme members. If members live longer than this mortality assumption, this will increase the liabilities.

Assumptions

The last full actuarial valuation was carried out as at 31 December 2016. A qualified independent actuary has updated the results of this 
valuation to calculate the surplus as disclosed below (2016 comparatives based on the 2013 funding valuation):

The major assumptions used in this valuation to determine the present value of the scheme’s defined benefit obligation were as follows:

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 for the first six years

Inflation assumption - CPI after the first six years

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

31 December

31 December

2017

2016

N/A

3.10%

2.50%

3.10%

2.10%

2.10%

75%

N/A

3.30%

2.70%

3.30%

2.30%

2.30%

90%

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 all deferred pensions and 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 current mortality 
table used is 110% S2NA CMI_2016 (2016: 110% S2NA CMI_2015) with a 1.25% per annum long-term improvement rate for both males and 
females (2016: 1% for both males and females).

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Notes to the Consolidated  
Financial Statements
For the 12 months ended 31 December 2017

18 Retirement benefit pension schemes (continued)
The assumed average life expectancy in years of a pensioner retiring at the age of 65 given by the above tables is as follows:

Male, current age 45

Female, current age 45

31 December

31 December

2017

2016

22.9 years

25.0 years

22.6 years

24.9 years

The assumptions used by the actuary are the best estimates chosen from a range of possible actuarial assumptions which, due to the 

timescales covered, may not necessarily be borne out in practice. The expected return on plan assets is based on market expectation at 

the beginning of the period for returns over the entire life of the benefit obligation.

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:

UK equities

Corporate bonds

Gilts

Cash

Total fair value of plan assets

Present value of defined benefit obligation

Pension scheme surplus recognised on the balance sheet

The movement in the fair value of the scheme’s assets during the period is as follows:

Fair value of plan assets at the start of the period

Interest income on pension scheme assets

Actual return less interest income on pension scheme assets

Administration expenses charged in the income statement

Employer contributions

Benefits paid

Fair value of plan assets at the end of the period

31 December

31 December

2017

£’000

17,126

18,840

9,492

199

45,657

(42,293)

3,364

2016

£’000

15,012

18,825

9,267

264

43,368

(42,207)

1,161

31 December

31 December

2017

£’000

43,368

1,159

2,047

(150)

920

(1,687)

45,657

2016

£’000

37,734

1,383

4,927

(122)

936

(1,490)

43,368

The above pension scheme assets do not include any investments in the parent company’s own shares or property occupied by the 

company or its subsidiaries at either period end.

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

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

Interest on defined benefit obligation

Actuarial gain/(loss) recognised in the CSOCTI* arising from:

  Demographic assumptions

  Financial assumptions

  Experience adjustments 

Benefits paid

31 December

31 December

2017

£’000

(42,207)

(1,117)

(501)

(315)

160

1,687

2016

£’000

(35,291)

(1,278)

—

(7,128)

—

1,490

Present value of defined benefit funded obligation at the end of the period

(42,293)

(42,207)

* Consolidated Statement of Comprehensive Total Income. 

The present value of the defined benefit closing obligation of £42,293,000 was comprised of approximately 47% relating to deferred 

participants and 53% relating to pensioners.

The expected average duration of the DB Scheme’s liabilities is around 15 years.

Key assumptions — sensitivity analysis

The key assumptions used to calculate the scheme’s liabilities are longevity, discount rate and the inflation assumptions (RPI and CPI). 

If the average actual longevity from the age of 65 years is one year greater than that assumed, the pension scheme liabilities would 
increase by approximately £1.9 million (2016: £1.8 million). If the actual longevity is one year less than that assumed, the pension scheme 
liabilities would reduce by a similar amount.

A 0.1% increase in the discount rate applied to the scheme liabilities and a 0.1% increase in the inflation assumptions would reduce/

increase the present value of the defined benefit obligation by approximately £0.6 million (2016: £0.6 million) and £0.5 million (2016: 

£0.5 million)  respectively.  A  0.1%  decrease  in  these  assumptions  would  increase/reduce  the  present  value  of  the  defined  benefit 

obligation by a similar amount.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, 

this is unlikely to occur and changes in some of the assumptions may be correlated. No allowance has been made for any change in 

assets that might arise under any of the scenarios set out above. When calculating the sensitivity of the deﬁned beneﬁt obligation 

to signiﬁcant assumptions, the same method has been applied as when calculating the pension liability recognised within the 

consolidated balance sheet. 

The sensitivities shown are just one possible outcome and should not be taken as an indication of the likelihood of a change occurring 

in the future. Economic markets are volatile and market metrics used to derive the discount rate and price inﬂation assumptions could 

increase or decrease in the future, by more or less than the change set out.

This methodology is unchanged from last year’s disclosures.

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Notes to the Consolidated  
Financial Statements
For the 12 months ended 31 December 2017

18 Retirement benefit pension schemes (continued)
Amounts recognised in the income statement

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

Interest income on pension scheme assets

Interest expense on pension scheme liabilities

Net pension scheme interest income on pension scheme surplus (note 6)

Administration expenses

Net pension charge

31 December

31 December

2017

£’000

2016

£’000

1,159

(1,117)

42

(150)

(108)

1,383

(1,278)

105

(122)

(17)

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

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

Actual return less interest income on pension scheme assets

Experience gains and losses arising on plan obligation

Changes in demographic and financial assumptions underlying the

present value of plan obligations

Net actuarial gain/(loss) recognised in the CSOCTI*

Cumulative actuarial loss recognised in the CSOCTI*

* Consolidated Statement of Comprehensive Total Income.

The actual return on plan assets can therefore be summarised as follows:

Interest income on pension scheme assets

Actuarial gain recognised in the CSOCTI* representing the difference between expected and actual 

return on assets

Actual return on plan assets

* Consolidated Statement of Comprehensive Total Income.

31 December

31 December

2017

£’000

2016

£’000

2,047

160

(816)

1,391

(5,691)

4,927

—

(7,128)

(2,201)

(7,082)

31 December

31 December

2017

£’000

2016

£’000

1,159

1,383

2,047

3,206

4,927

6,310

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The expected return on plan assets was determined by considering the expected returns available on the assets underlying the current 

investment policy as restricted to a rate equal to the assumed discount rate applied to the scheme’s liabilities. Expected yields on fixed 

interest  investments  are  based  on  gross  redemption  yields  as  at  the  balance  sheet  date.  Expected  returns  on  equity  and  property 

investments reflect long-term real rates of return experienced in the respective markets.

Defined contribution pension scheme and auto enrolment

The group operates the Andrews Sykes Stakeholder Pension Plan, to which the majority of UK employees are eligible. Both the employer 

and employee contributions vary, generally based upon the individual’s length of service with the company.

The group has adopted the requirements of auto enrolment for all eligible UK employees. Until 1 October 2017, employee and employer 

contributions  were  made  at  the  rate  of  1%  each  of  pensionable  salary.  These  contributions  increased  on  1  October  2017  to  3%  for 

employees and 2% for the employer and they will further increase on 1 October 2018 to 5% and 3% respectively.

Contributions for both existing members and members that have been auto enrolled are made to the same scheme. The employer’s 
contribution rates vary from 1% to 15%, the current average being 2.2% (2016: 2.2%). The current period charge in the income statement 
amounted to £262,000 (2016: £307,000).

Overseas defined contribution pension scheme arrangements
Overseas companies make their own pension arrangements, the charge for the period being £215,000 (2016: £178,000). No additional 
disclosure is given on the basis of materiality.

19 Stocks

Raw material and consumables

Work in progress

Finished goods

31 December

31 December

2017

£’000

185

57

3,618

3,860

2016

£’000

77

80

4,837

4,994

As disclosed in note 24, the group’s bank loans are secured by fixed and floating charges over the group’s assets including stocks.

The  cost  of  stock  recognised  as  an  expense  in  the  period  was  £15,286,000 (2016: £13,478,000)  and  the  net  charge  in  the  income 
statement for net realisable value provisions was £39,000 (2016: £130,000).

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Notes to the Consolidated  
Financial Statements
For the 12 months ended 31 December 2017

20 Trade and other receivables

Trade debtors:

Current unimpaired debtors

Overdue impaired debtors:

Gross

Less allowance for doubtful debts

Net overdue trade debtors

Net trade debtors

Amounts due from related parties

Lease prepayments — long leasehold land premiums

Prepayments and accrued income

Other debtors

No collateral is held in respect of overdue trade debtors.

31 December

31 December

2017

£’000

7,987

9,671

(2,327)

7,344

15,331

27

2

1,770

722

17,852

2016

£’000

8,204

10,676

(2,316)

8,360

16,564

27

2

1,543

289

18,425

Current unimpaired trade debtors represents amounts due from customers that are not overdue in accordance with the specific credit 

terms agreed with those customers. The average outstanding debtor days for current unimpaired trade debtors at 31 December 2017 is 
37 days (2016: 36 days).

The age profile of the trade debtors that are past due but not impaired is as follows:

Not more than 3 months overdue

More than 3 months and not more than 6 months overdue

More than 6 months and not more than 12 months overdue

More than 12 months overdue

Net overdue trade debtors

31 December

31 December

2017

£’000

5,240

1,059

704

341

7,344

2016

£’000

6,499

1,019

692

150

8,360

The  allowance  for  doubtful  debts  is  based  on  past  default  experience.  Debts  with  customers  in  liquidation  or  receivership  are  fully 

provided against. The movement in the provision during the period is as follows:

Balance at the beginning of the period

Foreign exchange difference

Net amounts written off during the period

Income statement charge

Balance at the end of the period

31 December

31 December

2017

£’000

2,315

(127)

(312)

451

2,327

2016

£’000

2,230

316

(799)

568

2,315

The  directors  consider  that  the  carrying  value  of  trade  debtors  approximates  to  fair  value  and  that  no  impairment  provisions  are 

required against other receivables.

Information concerning credit, liquidity and market risks together with an analysis of monetary assets held in currencies other than 

pounds Sterling is given in note 30.

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21 Cash and cash equivalents

Cash at bank

Deposit accounts

31 December

31 December

2017

£’000

6,140

19,171

25,311

2016

£’000

5,170

17,649

22,819

Cash at bank comprises cash held by the group in interest-free bank current accounts.

Deposit accounts comprise instant access interest-bearing accounts and other short-term bank deposits with an original maturity of 
three months or less. Interest was received at an average floating rate of approximately 0.2% (2016: 1.1%).

The carrying value of cash and cash equivalents approximates to their fair value.

Total cash balances and other monetary assets and liabilities denominated in foreign currencies are disclosed in note 30.

22 Trade and other payables

Trade creditors

Amounts due to related parties

Other tax and social security

Accruals and deferred income

Other creditors

31 December

31 December

2017

£’000

4,549

49

1,597

5,713

450

12,358

2016

£’000

4,675

48

1,599

6,328

405

13,055

Trade creditors, accruals and other creditors mainly comprise amounts outstanding from trade purchases and other normal business-
related costs. The average credit period taken for trade purchases is 47 days (2016: 45 days).   

Information concerning credit, liquidity and market risks together with an analysis of monetary liabilities held in currencies other than 

pounds Sterling is given in note 30.

The carrying value of trade and other payables approximates to their fair value.

23 Current tax liabilities

UK corporation tax 

Overseas tax (denominated in Euros)

31 December

31 December

2017

£’000

1,318

378

1,696

2016

£’000

1,575

250

1,825

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Notes to the Consolidated  
Financial Statements
For the 12 months ended 31 December 2017

24 Bank loans

The borrowings are repayable as follows:

On demand or within one year

In the second year

In the third to fifth years inclusive

Total

Disclosed:

Within current liabilities (on demand or within one year)

Within non-current liabilities

Total

Total bank loans may be further analysed as follows:

Gross bank loans

Unamortised costs of raising loan finance

Net carrying value of bank loans

31 December

31 December

2017

£’000

493

493

3,982

4,968

493

4,475

4,968

5,000

(32)

4,968

2016

£’000

4,995

—

—

4,995

4,995

—

4,995

5,000

(5)

4,995

The  group’s  Sterling  denominated  bank  loans  are  secured  by  fixed  and  floating  charges  over  the  assets  of  the  group  and  by  cross 

guarantees between group undertakings.

On 30 April 2017, the group repaid the final instalment of £5 million due on the previous bank loan and subsequently took out a new 

five-year bank loan of the same amount. The new loan is repayable in four annual instalments of £0.5 million commencing 30 April 2018 

followed by a balloon payment of £3 million on 30 April 2022. Costs incurred raising the loan are being amortised over the period of 

the loan.

Interest is charged on the group’s borrowings based on the three-month LIBOR rate plus a margin of 1.1%. The weighted average interest 
rate charged during the year was 1.53% (2016: 1.88%).

The directors consider that the fair value of the floating rate bank loans are not materially different from their book values. There are 

no fixed rate liabilities or undrawn borrowing facilities outstanding at either period end.

25 Obligations under finance leases

Amounts payable under finance leases:

Within one year

In the second to fifth years inclusive

Less future finance charges

Present value of lease obligations

Disclosed:

Within current liabilities (payable within one year)

Within non-current liabilities

Total

Present value of  

Minimum lease payments

minimum lease payments

31 December

31 December

31 December

31 December

2017

£’000

2016

£’000

2017

£’000

2016

£’000

44

7

51

(1)

50

107

51

158

(7)

151

43

7

50

43

7

50

102

49

151

102

49

151

It  is  the  group’s  policy  to  lease  certain  properties  and  the  present  value  of  the  minimum  lease  payments  includes  £15,000  
(2016: £88,000) in respect of properties. The weighted average lease term of these properties is less than one year (2016: one year). 

The present value of the minimum leased payments has been calculated based on the group’s historic weighted average cost of capital 

at the date of initial capitalisation as the interest rates implicit in the lease are not known. The group’s obligations under these leases 

are secured over the short leasehold assets being leased, the carrying values of which are disclosed in note 13.

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The remaining present value of minimum lease payments of £35,000 (2016: £63,000) relates to plant and machinery and the group’s 

obligations under these leases are secured on the equipment being leased, the carrying values of which are disclosed in note 13.

All  lease  obligations  are  denominated  in  Sterling  and  the  fair  value  of  the  group’s  lease  obligations  is  approximately  equal  to  their 

carrying value.

26 Called-up share capital

Issued and fully paid:

42,262,082 ordinary shares of one pence each

(2016: 42,262,082 ordinary shares of one pence each)

31 December

31 December

2017

£’000

2016

£’000

423

423

The company did not purchase any one pence ordinary shares for cancellation in either the current or preceding financial period.

The company has one class of ordinary shares which carries no right to fixed income.

No share options were exercised, granted, forfeited or expired during either the current or preceding financial period. There were no 

outstanding share options at the end of either the current or preceding financial period.

27 Share capital and reserves

Share

capital

£’000

Share

Retained

Translation

premium

earnings

£’000

£’000

reserve

£’000

Other

reserves

£’000

At 31 December 2015

Total comprehensive income for the period

Dividends paid

At 31 December 2016

Total comprehensive income for the period

Dividends paid

At 31 December 2017

423

—

—

423

—

—

423

13

—

—

13

—

—

13

40,987

12,690

(10,058)

43,619

15,228

(10,058)

48,789

1,973

1,924

—

3,897

(2)

—

3,895

245

—

—

245

—

—

245

Total

£’000

43,641

14,614

(10,058)

48,197

15,226

(10,058)

53,365

The translation reserve represents the cumulative translation differences on the foreign currency net investments held at the period 

end since the date of transition to IFRS.

Other reserves comprise:

Capital redemption reserve

UAE legal reserve

Netherlands capital reserve

31 December

31 December

2017

£’000

157

79

9

245

2016

£’000

157

79

9

245

Local legislation in the United Arab Emirates requires Khansaheb Sykes LLC to maintain a non-distributable reserve equal to 50% of its 

share capital.

There were no movements on any of the other reserves during either the current or preceding financial period.

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Notes to the Consolidated  
Financial Statements
For the 12 months ended 31 December 2017

28 Cash generated from operations

Profit for the period attributable to equity shareholders

Adjustments for:

Taxation charge

Finance costs

Finance income

Profit on the sale of property, plant and equipment

Depreciation

Write-off of trade investment

Excess of normal pension contributions compared with service and administration expenses

Cash generated from operations before movements in working capital

Movement in stocks

Movement in trade and other receivables

Movement in trade and other payables

Cash generated from operations

12 months

ended

12 months

ended

31 December

31 December

2017

£’000

14,101

3,184

386

(82)

(655)

5,917

164

(770)

22,245

(1,022)

563

(696)

21,090

2016

£’000

14,473

3,068

150

(1,875)

(462)

5,310

—

(814)

19,850

(2,251)

(1,876)

1,970

17,693

29 Analysis of net funds and movement in financing liabilities

31 December

31 December

Cash and cash equivalents per consolidated cash flow statement and note 21

Gross funds

Bank loans:

At the beginning of the period

Loans repaid

Loans drawn down

Other non-cash changes

At the end of the period

Finance lease liabilities:

At the beginning of the period

Leases repaid

Leases drawn down

At the end of the period

Gross debt

Net funds

2017

£’000

25,311

25,311

(4,995)

5,000

(4,963)

(10)

(4,968)

(151)

101

—

(50)

(5,018)

20,293

2016

£’000

22,819

22,819

(5,975)

1,000

—

(20)

(4,995)

(182)

116

(85)

(151)

(5,146)

17,673

62

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30 Financial instruments
Capital risk management

The group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders.

The capital structure of the group consists of net funds, which are analysed in note 29, and equity comprising issued share capital, 

reserves and retained earnings as disclosed in note 27. The net funds to equity percentage is:

Net funds per note 29

Equity attributable to equity holders of the parent company as per note 27

Net funds to equity percentage

Significant accounting policies

31 December

31 December

2017

£’000

20,293

53,365

38.0%

2016

£’000

17,673

48,197

36.7%

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and 

the basis on which income and expenses are recognised in respect of each class of financial asset and liability, are disclosed in note 2 

to the financial statements.

Categories of financial instruments

The carrying values of each category of financial instrument are as follows:

Financial assets

Available for sale assets - trade investments

Loans and receivables (including cash and cash equivalents):

  Trade debtors and amounts due by related parties

  Other debtors

  Cash and cash equivalents

Financial liabilities

Amortised cost:

  Trade creditors and amounts due to related parties

  Accruals and other creditors

  Loans

  Finance lease obligations

31 December

31 December

2017

£’000

—

15,358

722

25,311

41,391

41,391

4,598

6,163

4,968

50

15,779

15,779

2016

£’000

164

16,591

289

22,819

39,699

39,863

4,723

6,733

4,995

151

16,602

16,602

Financial risk management

The key risks that potentially impact on the group’s results are market risk, credit risk and liquidity and interest rate risks. The group’s 

exposure to each of these risks and the management of that exposure is discussed below. There has been no change in the period, or 
since the period end, to the type of financial risks faced by the group or to the management of those risks.

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Notes to the Consolidated  
Financial Statements
For the 12 months ended 31 December 2017

30 Financial instruments (continued)
Market risk

The group’s activities expose it primarily to the financial risks of changes in interest rates. When appropriate, the group enters into 

derivative financial instruments to manage its exposure to interest rate risk including interest rate caps that limit the group’s exposure 

to fluctuations in LIBOR on its bank loans. However, due to the current low interest rates and the indications that these will not increase 

substantially in the immediate future, the directors do not consider that interest rate caps are currently cost-effective. Accordingly, the 

group does not hold any interest rate caps or any other derivative financial instrument as at 31 December 2017 (2016: £Nil) although this 

position is constantly under review.

A 1% increase in the average bank loan agreement rate for the period would increase the net bank loan interest charge by £50,000 
(2016: £53,000); a 1% decrease would decrease it by a similar amount.

The  group’s  policy  is  not  to  hedge  its  international  assets  with  respect  to  foreign  currency  balance  sheet  translation  exposure,  nor 

against foreign currency transactions. The group generally does not enter into forward exchange contracts and it does not use financial 
instruments for speculative purposes.

The carrying amounts of the group’s foreign currency denominated financial assets and liabilities at the end of the financial period are 

as follows:

Financial assets (excluding cash) denominated in:

Euros

UAE Dirhams

Cash denominated in:

Euros

UAE Dirhams

Liabilities denominated in:

Euros

UAE Dirhams

31 December

31 December

2017

£’000

3,162

5,368

6,125

1,082

2,620

2,041

2016

£’000

3,394

4,786

2,605

1,437

2,783

2,210

A 10% increase in the Euro:Sterling exchange rate would reduce the consolidated operating profit by £325,000 (2016: £350,000). A 10% 
decrease would increase the consolidated operating profit by a similar amount. 

A 10% increase in the Dirham:Sterling exchange rate would reduce the consolidated operating profit by £300,000 (2016: £260,000). A 
10% decrease would increase the consolidated operating profit by a similar amount. 

Monetary assets and liabilities denominated in currencies other than Sterling, the Euro and UAE Dirhams were not significant at either 

period end.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the group. The 

group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from 

defaults. Creditworthiness is verified by independent rating agencies when available. The group’s exposure to and credit ratings of its 

counterparties  are  continuously  monitored.  Credit  exposure  is  controlled  by  counterparty  limits  that  are  reviewed  and  approved  by 

senior management on a regular basis. 

Trade receivables consist of a large number of customers spread across diverse industries and geographical locations. Ongoing credit 

evaluation is performed on the financial condition of accounts receivable. 

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The group does not have any significant credit risk exposure to any single counterparty or connected counterparties at the reporting 

date where “significant” is defined as 5% of gross financial assets. The credit risk on liquid funds and derivative financial instruments is 

limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. 

The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the group’s 

maximum exposure to credit risk. 

Liquidity risk management

The  group  manages  liquidity  risk  by  maintaining  adequate  cash  reserves,  which  at  31  December  2017  amounted  to  £25,311,000 

(2016: £22,819,000), by operating within its agreed banking facilities, by continuously monitoring forecast and actual cash flows, by 

matching the maturity profiles of monetary assets and liabilities and by monitoring and discussing its covenants with the bank.

In  view  of  the  significant  levels  of  net  funds  available  to  the  group  of  £20,293,000 (2016: £17,673,000),  the  directors  believe  that 
additional unutilised borrowing facilities are not required. 

Liquidity and interest risk tables

The  following  table  details  the  group’s  remaining  contractual  maturity  for  its  non-derivative  financial  liabilities.  The  table  has  been 

prepared  based  on  the  undiscounted  contractual  maturities  of  the  financial  instruments.  The  future  finance  charges  represent  the 

charges that will be charged to the income statement in future periods based on the current weighted average interest rates and have 

not been included within the carrying amount of the financial liability: 

31 December 2017

Weighted

average

Due 

Due 

1 year and

Future 

Due over

within

3 months

less than 

Non-interest bearing

Gross variable interest bank loans

Fixed interest finance leases

Total

31 December 2016

interest 

3 months

to 1 year

rate

£’000

£’000

5 years

£’000

N/A

1.53%

8.00%

9,669

4,385

—

12

503

32

9,681

4,920

—

4,747

7

4,754

Weighted

average

Due 

Due 

Due over
1 year and

within

3 months

less than 

interest 

3 months

to 1 year

rate

£’000

£’000

5 years

£’000

Non-interest bearing

Gross variable interest bank loans

Fixed interest finance leases

Total

N/A

1.88%

8.00%

10,091

—

34

10,125

4,789

5,033

73

9,895

—

—

51

51

finance

charges

£’000

—

(250)

(1)

(251)

Future 

finance

charges

£’000

—

(33)

(7)

(40)

Total

£’000

14,054

5,000

50

19,104

Total

£’000

14,880

5,000

151

20,031

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Notes to the Consolidated  
Financial Statements
For the 12 months ended 31 December 2017

31 Operating lease arrangements
At the balance sheet date the group had outstanding commitments for future minimum lease payments under non-cancellable operating 

leases which fall due as follows:

Amounts payable under operating leases:

Within one year

In the second to fifth years inclusive

After five years

Property

Plant, machinery and equipment

31 December

31 December

31 December

31 December

2017

£’000

1,053

3,089

2,869

7,011

2016

£’000

1,140

2,810

2,872

6,822

2017

£’000

1,632

2,371

5

4,008

2016

£’000

1,494

2,486

7

3,987

Property lease payments represent rentals payable by the group for certain of its operating locations and offices. Leases are negotiated 

over various terms to suit the particular requirements at that time. Break clauses are included wherever appropriate and the above 

liability has been calculated from the balance sheet date to either the end of the lease or the first break clause, whichever is the earlier.

Plant, machinery and equipment leases represent short-term leases for motor vehicles, office and general equipment.

32 Related party transactions
Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not 

disclosed in this note. 

Trading transactions

During the period, the group entered into the following transactions in the normal course of business with associated companies on an 

arm’s length basis: 

Sale of goods and services to associates within the London Security plc group

Sale of goods and services to Oasis Sykes

Purchase of goods and services from associates within the London Security plc group

Purchase of goods and services from Sweepax Pumps Limited

Amounts owed to the group by Sweepax Pumps Limited

Amount owed by the group to Sweepax Pumps Limited

31 December

31 December

2017

£’000

2016

£’000

2

29

113

—

27

47

—

—

223

1

27

48

The group did not hold any security and there were no impairment charges in respect of any of the above transactions. 

London Security plc is associated through common control. 50% of the share capital of Sweepax Pumps Limited is owned by Andrews 

Sykes Group plc; Sweepax Pumps Limited is not consolidated on the grounds of materiality. 

Transactions with key management personnel

Details of remuneration paid to directors and key management personnel are disclosed in note 10 above.

.

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33 Dividend payments
The directors declared and paid the following dividends during the 12 month periods ended 31 December 2017 and 31 December 2016:

12 months ended 

31 December 2017

12 months ended 

31 December 2016

Total

dividend 

Pence 

paid

Pence

per share

£’000

per share

Total

dividend 

paid

£’000

Final dividend for the 12 months ended 31 December 2016 paid to 

members on the register 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 at 6 October 2017 on 3 November 2017

11.90p 

5,029

—

—

—

—

Final dividend for the 12 months ended 31 December 2015 paid to 

members on the register at 27 May 2016 on 24 June 2016

Interim dividend declared on 28 September 2016 and paid to shareholders 

on the register at 7 October 2016 on 2 November 2016

—

—

—

—

23.80p 

10,058

11.90p 

5,029

11.90p 

23.80p 

5,029

10,058

The above dividends were charged against reserves as shown in the consolidated statement of changes in equity and in note 27 to these 

financial statements. 

The  directors  recommend  the  payment  of  a  final  dividend  of  11.90  pence (2016: 11.90 pence)  per  ordinary  share.  If  approved  at  the 
forthcoming Annual General Meeting, this dividend, which in total amounts to £5,029,000 (2016: £5,029,000), will be paid on 25 June 

2018 to shareholders on the register at 1 June 2018.

34 Ultimate parent company
As at 17 May 2018, EOI Sykes Sarl, which is incorporated in Luxembourg, held 86.08% of the share capital of Andrews Sykes Group plc 

and is therefore the immediate parent company. The ultimate holding company is the Tristar Corporation, a company incorporated in the 

Republic of Panama. The Tristar Corporation is held jointly, in equal proportions, by the Ariane Trust and the Eden Trust and controlled 

by the trustees of these trusts through a Trustees’ Committee. The directors therefore consider that the trustees of the Ariane and Eden 

Trusts are the ultimate controlling parties of Andrews Sykes Group plc.

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Company Balance Sheet
As at 31 December 2017

31 December 2017

31 December 2016

Note

£’000

£’000

£’000

£’000

Fixed assets

Investments

Current assets

Debtors

Cash at bank and in hand

Creditors: Amounts falling due within one year

Net current assets

Total assets less current liabilities

Creditors: Amounts falling due after more than 

one year

Net assets

Capital and reserves 

Called-up share capital

Share premium

Profit and loss account

Other reserves

Shareholders' funds

3

4

5

6

6

8

10

10

10

11

32,101

32,089

24,451

59

24,510

(7,932)

22,797

15

22,812

(13,202)

16,578

48,679

(4,475)

44,204

423

13

41,400

2,368

44,204

9,610

41,699

—

41,699

423

13

38,895

2,368

41,699

The profit for the financial period dealt with in the profit and loss account of the company was £12,563,000 (2016: £9,559,000).

These financial statements of Andrews Sykes Group plc, company number 00175912, were approved and authorised for issue by the 

Board of directors on 17 May 2018 and were signed on its behalf by:

JJ Murray 
Vice-Chairman

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Company Statement of  
Changes in Equity
For the 12 months ended 31 December 2017

Share 

capital

£’000

Share

Profit and

premium

loss account

£’000

£’000

At 31 December 2015

Profit for the financial period

Transactions with owners 

recorded directly in equity:

Dividends paid

Total transactions with owners

At 31 December 2016

Profit for the financial period

Transactions with owners 

recorded directly in equity:

Dividends paid

Total transactions with owners

At 31 December 2017

423

—

—

—

423

—

—

—

423

13

—

—

—

13

—

—

—

13

39,394

9,559

(10,058)

(10,058)

38,895

12,563

(10,058)

(10,058)

41,400

Other

reserves

£’000

2,368

—

—

—

2,368

—

—

—

2,368

Total

£’000

42,198

9,559

(10,058)

(10,058)

41,699

12,563

(10,058)

(10,058)

44,204

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Notes to the Company  
Financial Statements
For the 12 months ended 31 December 2017

1 Significant accounting policies
Basis of preparation

These separate ﬁnancial statements of Andrews Sykes Group plc (the company) have been prepared under the historical cost 

convention and in accordance with Financial Reporting Standard 102 (FRS 102) and the Companies Act 2006. 

Reduced disclosure framework

Advantage has been taken of paragraph 1.12 of FRS 102 and the company has applied the reduced disclosure framework as permitted 

by that paragraph. In accordance with paragraph 1.11, shareholders have been notiﬁed and did not object to the adoption of the 

reduced disclosure framework. Accordingly, these individual company ﬁnancial statements:

 ● do not contain a cash ﬂow statement as otherwise required by section 7 of FRS 102;

 ● do not contain accounting policies for ﬁnancial instruments, as otherwise required by sections 11 and 12 of FRS 102, as these have 

been disclosed in the consolidated accounts;

 ● do not disclose key management remuneration as otherwise required by section 33 of FRS 102;

 ● do not disclose a reconciliation of the number of shares outstanding from the beginning to the end of the period; and

 ● do not include the disclosures otherwise required by FRS 102.11 for basic and FRS 102.12 for other ﬁnancial instruments.

The company proposes to continue to adopt the reduced disclosure framework of FRS 102 in its next ﬁnancial statements.

Exemptions taken in the preparation of these financial statements on transition to FRS 102

The effective date of transition to FRS 102 was 1 January 2014. In accordance with paragraph 35.10 of FRS 102, in 2015 the company 

elected to take advantage of the following exemptions that were available on transition:

 ● Section 19 of FRS 102 was not applied retrospectively to business combinations that occurred before the date of transition to 

FRS 102; and

 ● Investments in subsidiaries are stated at cost less impairment provisions and not at fair value.

Company profit and loss account

As permitted by Section 408 of the Companies Act 2006, the company has elected not to present its own proﬁt and loss account for 

the period.

Principal accounting policies

The principal accounting policies, which have all been applied consistently throughout the current and preceding accounting periods, 

are summarised below.

Going concern

These ﬁnancial statements have been prepared on the fundamental assumption that the company is a going concern and will continue 

to trade for at least 12 months following the date of approval of the ﬁnancial statements.

Further information explaining why the directors believe that the group as a whole is a going concern is given in the strategic report 

on page 12.

Investments

Investments in subsidiary undertakings are stated at cost less provision for impairment. Cost is deﬁned as the aggregate of:

(a) the cash consideration;

(b) the nominal value of shares issued as consideration where Section 612 of the Companies Act 2006 applies;

(c) the market value of the company’s shares on the date they were issued where Section 612 does not apply;

(d) the fair value of any other consideration; and

(e) costs of acquisition.

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Deferred tax

Deferred tax is provided in full on timing differences that result in an obligation to pay more tax, or a right to pay less tax, at a future 

date, at rates expected to apply when they crystallise based on current tax law enacted or substantively enacted. Timing differences 

arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are 

included in ﬁnancial statements. Deferred tax is not provided on unremitted earnings where there is no binding commitment to remit 

these earnings. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. 

Deferred tax assets and liabilities are not discounted.

Current tax

Current tax payable and recoverable is based on the taxable proﬁt or loss for the year using tax rates enacted or substantively 

enacted at the reporting date. Taxable proﬁt differs from the proﬁt as reported in the proﬁt and loss account as it is adjusted for both 

items that will never be taxable or deductible and temporary timing differences.

Borrowing costs

All borrowing costs are recognised in the company’s proﬁt and loss account on an accruals basis.

Related party transactions

Under the provisions of FRS 102 paragraph 33.1A, the company has not disclosed details of intra-group transactions with wholly-owned 

subsidiary companies.

2. Employee information
The company has no employees other than the directors. The directors received no remuneration in 2016 or 2017 paid directly by 

Andrews Sykes Group plc.

3 Fixed asset investments

Cost

At the beginning and end of the period

Provisions

At the beginning of the period

Release for the period

At the end of the period

Net book value

At 31 December 2017

At 31 December 2016

Subsidiary 

undertakings

shares

£’000

40,748

8,659

(12)

8,647

32,101

32,089

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Notes to the Company  
Financial Statements
For the 12 months ended 31 December 2017

3 Fixed asset investments (continued)
The company’s subsidiary undertakings (* denotes directly owned by Andrews Sykes Group plc) as at 31 December 2017 were as follows:

Andrews Sykes Hire Limited *

Andrews Air Conditioning and Refrigeration Limited *

Sykes Pumps International Limited (overseas sales of specialist environmental control products)

Climate Contingency Services Limited *

Andrews Sykes Investments Limited * (intermediate holding company)

A.S. Group Management Limited * (intermediate holding company)

Andrews Sykes International Limited * (intermediate holding company)

Andrews Sykes Properties Limited * (property holding company)

Company 3533273 Limited * (non-trading)

Sykes Ground Water Control Limited * (non-trading)

Refrigeration Compressor Remanufacturers Limited * (non-trading)
Sykes Pumps Limited * (dormant)

Expert Hire Plant Limited * (dormant)

Plant Mart Limited * (dormant)

Andrews Accommodation Limited (dormant)

AAC&R Limited (dormant)

Andrews Industrial Equipment (Scotland) Limited * (Scotland, dormant)

Heat for Hire (Scotland) Limited * (Scotland, dormant)

AS Holding B.V. (Netherlands, Intermediate holding company)

Khansaheb Sykes LLC (49%, United Arab Emirates)

Andrews Sykes B.V. (Netherlands)

Andrews Sykes BVBA (Belgium)

Nolo Climat S.R.L. (Italy)

Andrews Sykes Climat Location SAS (France)

Andrews Sykes Climat Location SA (Switzerland)

Andrews Sykes Luxembourg SARL (Luxembourg)

Unless otherwise indicated, all are incorporated in England and Wales and undertake hire, sales, service and/or installation of specialist 

environmental control products, mainly in the country of incorporation. The group holds 100% of the ordinary share capital of all of the 

above, unless otherwise stated. 100% of the profits of Khansaheb Sykes LLC accrue to the group.

The movement in provisions relates to adjustments to the net carrying value of investments in non-trading subsidiaries to underlying 

net asset value.

4 Debtors

Amounts falling due within one year:

Amounts owed by group undertakings

Corporation tax and group relief

Other debtors

Deferred tax

Prepayments and accrued income

72

31 December

31 December

2017

£’000

23,129

1,150

125

43

4

2016

£’000

21,518

1,113

144

16

6

24,451

22,797

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The movements on the deferred tax asset during the year were as follows:

Asset at the beginning of the year at 19%

Credit to profit and loss account

Asset at the end of the period at 19%

There were no provided or unprovided deferred tax assets or liabilities at the end of either period.

5 Cash at bank and in hand

Cash at bank and in hand

6 Creditors

Amounts falling due within one year:

Bank loans and overdrafts

Amounts owed to group undertakings

Accruals and deferred income

Amounts falling due after more than one year:

Bank loans repayable between one and two years

Bank loans repayable between two and five years

Total bank loans may be further analysed as follows:

Gross bank loans

Unamortised costs of raising loan finance

Net carrying value of bank loans

Short-term 

timing 

differences

£’000

16

27

43

31 December

31 December

2017

£’000

59

2016

£’000

15

31 December

31 December

2017

£’000

493

7,195

244

7,932

2016

£’000

4,995

7,923

284

13,202

31 December

31 December

2017

£’000

493

3,982

4,475

2016

£’000

—

—

—

31 December

31 December

2017

£’000

5,000

(32)

4,968

2016

£’000

5,000

(5)

4,995

Total company bank loans and overdrafts of £5,000,000 (2016: £5,000,000) are secured by fixed and floating charges on the assets of 
the group and by cross guarantees between group undertakings. There are no unsecured bank loans at either period end.

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Notes to the Company  
Financial Statements
For the 12 months ended 31 December 2017

6 Creditors (continued)
Details of the bank loan facilities are given in note 24 to the consolidated financial statements.

All inter-company loans are repayable on demand, and accordingly, have been classified within current liabilities. Interest is charged on 

all inter-company loans at commercial rates of interest.

The company did not have any undrawn committed borrowing facilities at either period end.

7 Financial instruments
The  group’s  policies,  objectives  and  exposure  in  respect  of  capital  and  financial  (encompassing  market,  credit  and  liquidity)  risk 

management are set out in note 30 to the consolidated financial statements and these are also applicable to the company. The company 

did not hold any derivative financial instruments at either 31 December 2017 or 31 December 2016.

8 Called-up share capital

Issued and fully paid:

42,262,082 ordinary shares of one pence each 
(2016: 42,262,082 ordinary shares of one pence each)

31 December

31 December

2017

£’000

2016

£’000

423

423

The company did not purchase any one pence ordinary shares for cancellation in either the current or preceding ﬁnancial period.

The company has one class of ordinary shares which carries no right to ﬁxed income. 

No share options were exercised, granted, forfeited or expired during either the current or preceding ﬁnancial period. There were no 

outstanding share options at the end of either the current or preceding ﬁnancial period.

9 Capital commitments and guarantees
The  company  previously  guaranteed  certain  property  leases  of  subsidiary  undertakings  occupied  for  the  purposes  of  the  group’s 

trade. At 31 December 2016, the annual commitment under such leases totalled £62,138, all of which expired during 2017. There are no 

commitments or guarantees at 31 December 2017. 

10 Reserves

At the beginning of the period

Profit for the period

Dividends declared and paid

At the end of the period

Share

Profit and

premium

loss account

£’000

£’000

13

—

—

13

38,895

12,563

(10,058)

41,400

Other

reserves

£’000

2,368

—

—

2,368

Total

£’000

41,276

12,563

(10,058)

43,781

74

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Other reserves comprise:

Capital redemption reserve

Non-distributable dividends received from subsidiaries

31 December

2017

£’000

157

2,211

2,368

There were no movements on any of the other reserves during either the current or preceding financial period.

The non-distributable dividends were paid out of internally generated profits within the group and are therefore not payable outside the 

group to its shareholders.

Details of dividends declared and paid are given in note 33 to the consolidated financial statements.

11 Reconciliation of movements in shareholders’ funds

Profit for the financial period

Dividends declared and paid

Net increase/(decrease) in shareholders' funds

Shareholders' funds at the beginning of the period

Shareholders' funds at the end of the period

12 months

ended

12 months

ended

31 December

31 December

2017

£’000

12,563

(10,058)

2,505

41,699

44,204

2016

£’000

9,559

(10,058)

(499)

42,198

41,699

12 Related party transactions
Transactions  between  the  company  and  its  wholly-owned  subsidiaries,  which  are  related  parties,  are  not  disclosed  in  this  note  in 

accordance with paragraph 33.1A of FRS 102.

During the period, the company entered into the following transactions in the normal course of business with associated companies on 

an arm’s length basis:

Purchase of goods and services from associates within the London Security plc group

Amount owed by the group to Sweepax Pumps Limited

31 December

31 December

2017

£’000

88

47

2016

£’000

210

48

The company did not hold any security and there were no impairment charges in respect of any of the above transactions.

London Security plc is associated through common control. 50% of the share capital of Sweepax Pumps Limited is owned by Andrews 

Sykes Group plc. 

13 Ultimate parent company
As at 17 May 2018, EOI Sykes Sarl, which is incorporated in Luxembourg, held 86.08% of the share capital of Andrews Sykes Group plc 

and is therefore the immediate parent company. The ultimate holding company is the Tristar Corporation, a company incorporated in the 

Republic of Panama. The Tristar Corporation is held jointly, in equal proportions, by the Ariane Trust and the Eden Trust and controlled 

by the trustees of these trusts through a Trustees’ Committee. The directors therefore consider that the trustees of the Ariane and Eden 

Trusts are the ultimate controlling parties of Andrews Sykes Group plc. 

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Five Year History

12 months

12 months

12 months

12 months

12 months

ended

ended

ended

ended

ended

31 December

31 December

31 December

31 December

31 December

2017

£’000

2016

£’000

2015

£’000

2014

£’000

2013

£’000

Revenue

71,300

65,389

60,058

56,400

61,072

Operating profit from continuing activities*

Trading profit before exceptional items

17,589

15,816

13,208

Profit on the disposal of property

—

—

—

17,589

15,816

13,208

Income from trade investments

—

—

Inter-company foreign exchange (losses)/gains

(293)

1,567

Net interest (charge)/credit excluding inter-company 

11,311

—

11,311

517

(222)

150

11,756

14,683

—

14,683

194

(93)

180

14,964

—

43

116

13,367

forex

Profit before taxation

Taxation

(11)

17,285

158

17,541

(3,184)

(3,068)

(2,567)

(2,445)

(3,446)

Profit for the financial period

14,101

14,473

10,800

9,311

Dividends per share paid in the year

23.80p

23.80p

23.80p

23.80p

Dividends paid during the year

10,058

10,058

10,058

10,058

Basic earnings per share from continuing operations

33.37p

34.25p

25.55p

22.03p

Proposed ordinary final dividend per share

11.90p

11.90p

11.90p

11.90p

11,518

17.80p

7,523

27.25p

11.90p

* Defined at the end of each reporting period.

76

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Notice of Annual General Meeting

Notice is hereby given that the ninety-fifth Annual General Meeting of Andrews Sykes Group plc will be held at 2 Eaton Gate, London, 

SW1W 9BJ on 20 June 2018 at 10.30 a.m. for the following purposes:

As ordinary business:
Ordinary resolutions

1. 

That the ﬁnancial statements for the 12 months ended 31 December 2017, together with the strategic report, directors’ report and 

auditor’s report, be and they are hereby received and adopted.

2.  That Mr JG Murray, who retires by rotation and offers himself for re-election, be and is hereby re-elected.

3.  That Mr JP Murray, who retires by rotation and offers himself for re-election, be and is hereby re-elected.

Details of directors are set out on page 20 of the ﬁnancial statements.

4.  That a ﬁnal dividend of 11.9 pence per share for the 12 months ended 31 December 2017 be paid to shareholders on the register as 

at 1 June 2018 on 25 June 2018.

5.  That Grant Thornton UK LLP be and is hereby reappointed as auditor of the company, to hold ofﬁce from the conclusion of this 

meeting until the conclusion of the next general meeting at which the accounts are laid before the company, at a remuneration to 

be ﬁxed by the directors.

As special business:
Ordinary resolutions

6.  That the directors, in substitution for all authorities previously conferred upon them (save to the extent that such authorities 

shall have been exercised), be and they are hereby authorised generally and unconditionally for the purposes of Section 551 

of the Companies Act 2006 to allot or grant options over relevant securities (as therein deﬁned) up to a maximum aggregate 

nominal amount of £63,393, such authority to expire at the end of the Annual General Meeting of the company to be held in 2019 

save where the directors exercise such authority pursuant to an offer or agreement made prior to the date of such meeting.

7. 

That the company be given the general authority to make market purchases (as deﬁned by Section 693(4) of the Companies Act 

2006) of ordinary shares of one pence each in its capital, subject as follows:

7.1 

the maximum number of shares which may be so purchased is 5,282,760 ordinary shares of one pence each;

7.2  the minimum price which may be paid for such shares is the nominal value of such shares;

7.3  the maximum price which may be paid per share is a sum equal to 105% of the average of the market values of the ordinary 

shares of the company in the Daily Ofﬁcial List of the Stock Exchange on the ﬁve business days immediately preceding the 

date of purchase;

7.4  the authority conferred by this resolution shall expire on 30 June 2019 or the date of the Annual General Meeting of the 

company to be held in 2019, whichever is the earlier.

Special resolutions

8.  That, subject to the passing of resolution numbered 6 above, the directors be and they are hereby generally and unconditionally 

authorised to allot equity securities (as deﬁned in Section 560(1) of the Companies Act 2006) pursuant to the authority conferred 

by the resolution numbered 6 above as if Section 561(1) of the said Act did not apply to any such allotment of equity securities 

and so that references to allotment in this resolution shall be construed in accordance with Section 561(3) of the said Act, 

provided that the authority hereby conferred shall be limited (a) to the allotment of equity securities in connection with a rights 

issue in favour of the holders of equity securities in proportion to their respective holdings of such securities or (as the case may 

be) in accordance with the rights attached hereto, but subject to such exclusions or arrangements as the directors shall deem 

necessary in relation to fractional entitlements or pursuant to the laws of any territory or requirements of any regulatory body or 
any stock exchange in any territory, and (b) the allotment (otherwise than pursuant to (a) of this resolution) of equity securities 

up to an aggregate nominal amount of £63,393; this authority to expire at the end of the next Annual General Meeting of the 

company to be held in 2019 save to the extent that the directors exercise such authority pursuant to an offer or agreement made 

prior to the date of such meeting.

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Notice of Annual General Meeting

Recommendation

Your directors unanimously recommend the ordinary shareholders to vote in favour of the resolutions to be proposed at the Annual 

General Meeting of the company, as they intend to do in respect of their own beneficial holdings amounting to 1,737,230 ordinary shares, 

representing  approximately  4.11%  of  the  current  issued  ordinary  shares.  You  are  referred  to  the  directors’  report  on  page  19  for  an 

explanation for each resolution to be considered as special business.

In  respect  of  resolution  number  7  it  is  intended  that  any  share  purchases  by  the  company  will  only  be  made  on  the  London  Stock 

Exchange. This should not be taken to imply that shares will be purchased. The directors believe it is in the best interests of all the 

shareholders that the company should have the flexibility to make market purchases of its own shares. The effect of such purchases will 

be to reduce the number of shares in issue and the directors would accordingly only make such purchases after considering the effect 

on earnings per share and the benefit for shareholders.

By order of the Board 

MJ Calderbank ACA 
Company Secretary 

17 May 2018 

Notes:

St David’s Court
Union Street

Wolverhampton 

WV1 3JE

1. 

The following documents will be available at the registered ofﬁce of the company on any weekday during normal business hours 

and at the Annual General Meeting:

a. 

b. 

the register of directors’ share interests.

copies of the contracts of service between the company and its directors.

2.  a. 

 A member is entitled to appoint a proxy to attend and, on a poll, to vote on his or her behalf. A proxy need not be a member of 

the company.

b.  The appointment of the proxy does not preclude a member from attending the meeting and voting in person if he or she so 

wishes.

c.  A  form  of  proxy  is  enclosed  for  use  by  ordinary  shareholders  in  relation  to  the  meeting,  which,  to  be  effective,  must  be 

completed and deposited with the company’s registrars, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, 

BN99 6DA at least 48 hours before the time appointed for holding the meeting.

d.  To be entitled to attend and vote at the meeting (and for the purposes of the determination by the company of the votes they 

may cast), members must be entered on the register of members of the company by 6.30 p.m. on 18 June 2018. Changes to 

entries on the register of members after 6.30 p.m. on 18 June 2018 shall be disregarded in determining the rights of any person 

to attend or vote at the meeting.

e. 

For security reasons, the company will refuse admission to any individual who is not an invited guest and is unable to prove 

that they are a registered shareholder in the company by reference to either the current register of members or a letter of 

authority from their nominee account holder.

✄

✄

✄

78

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✄

Andrews Sykes Group plc
Form of Proxy
For use at the 2018 Annual General Meeting
I/We the undersigned, being member(s) of the company, hereby appoint the Chairman of the Meeting or (see note 2)
.................................................................................................................................................................. (Please use block letters)

 Tick box (if one of 
multiple proxy appointments)

Number of shares (if not full voting 
entitlement) (See note 2)

as my/our proxy to vote on my/our behalf as indicated below (or at his/her discretion in respect of any other matters arising)  
at the Annual General Meeting of the company to be held at 2 Eaton Gate, London, SW1W 9BJ on 20 June 2018 at 10.30 a.m.

Ordinary Resolutions

For 

Against

Withheld

1

2

3 

4

5 

6 

7 

8 

To receive and adopt the financial statements for the 12 months  
ended 31 December 2017

To re-elect Mr JG Murray as a director

To re-elect Mr JP Murray as a director

To declare a final ordinary dividend of 11.9 pence per share

To appoint Grant Thornton UK LLP as auditor and authorise the  
directors to fix their remuneration

To authorise the directors to allot or grant options over relevant  
securities up to a maximum nominal value of £63,393 as set out in  
the Annual Report and Financial Statements

To authorise the directors to make market purchases of up to a  
maximum of 5,282,760 of the company’s ordinary shares of one  
pence each as set out in the Annual Report and Financial Statements

Special Resolution

Subject to the passing of Ordinary Resolution 6 above, to authorise the 
directors to allot equity securities for cash disapplying pre-emption rights 
(in limited circumstances)

Dated ........................................................................................................................................................................................2018

Signatures(s) or common seal ..........................................................................................................................................................

Full name(s) .............................................................................................................................................(Please use block letters)

Address ............................................................................................................................................................................................

✄

..........................................................................................................................................................................................................
✄

Notes
1   Only holders of ordinary shares, or their duly appointed representatives, are entitled to attend and vote at the meeting. A member so entitled may appoint (a) proxy(ies), who need 

not be (a) member(s), to exercise all or any of his/her rights to attend, speak and vote on his/her behalf.

2   You can appoint the Chairman of the meeting or anyone else to be your proxy at the Annual General Meeting. You can also, if you wish, appoint more than one proxy provided that 

each proxy is appointed to exercise the rights attached to a different share or shares held by you.
•  To appoint more than one proxy, you should photocopy the Form of Proxy. Please indicate, in the box next to the proxy holder’s name, the number of shares in relation to which 
you authorise them to act as your proxy. If left blank your proxy will be deemed to be authorised in respect of your full voting entitlement (or if this Form of Proxy has been issued 
in respect of a designated account for a shareholder, the full voting entitlement for that designated account). Please also indicate, by marking the box on the Form of Proxy, if 
the proxy instruction is one of multiple instructions being given. All Forms of Proxy must be signed and should be returned together to the company’s Registrar, Equiniti, in the 
envelope provided.
•  To appoint the Chairman as your sole proxy in respect of all your shares, fill in any voting instructions and sign and date the Form of Proxy, but leave all other proxy 

appointment details blank.

•  To appoint a single proxy in respect of all your shares other than the Chairman, cross out only the words ‘the Chairman of the Meeting or’ and insert the name of your proxy (who 
need not be a member of the company). Then complete the rest of the Form of Proxy.

3   Please indicate with an ‘X’ in the boxes provided how you wish your vote to be cast. Unless otherwise instructed, the person appointed as proxy will exercise his/her discretion as to 
how he/she votes or whether he/she abstains from voting on any particular resolution and on any other business (including amendments to resolutions and any procedural business) 
which may come before the meeting.

4   The ‘Withheld’ option on the Form of Proxy is provided to enable you to abstain on any particular resolution. However, a vote withheld is not a vote in law and will not be counted 

in the calculation of the proportion of votes ‘For’ and ‘Against’ a resolution.

5   If you complete and return the Form of Proxy this will not prevent you from attending in person and voting at the Annual General Meeting should you subsequently decide to do so. 
6   If the Form of Proxy is signed by someone else on your behalf, their authority to sign must be returned with the Form of Proxy. In the case of a joint holding, any holder may sign. If 

the shareholder is a corporation, the Form of Proxy may be executed under its common seal or by the signature of a duly authorised officer or attorney.

7   In the case of joint holders, only one need sign this Form of Proxy, but the vote of the senior holder who tenders a vote, whether in person or by proxy, will be accepted to the 

exclusion of the votes of the other joint holders. For this purpose, seniority shall be determined by the order in which the names stand in the register of members in respect of the 
joint holding.

8   To be valid the Form of Proxy must reach the company’s Registrar, Equiniti, by no later than 10.30 a.m. on 18 June 2018.
Notes: attendance at the Annual General Meeting
•   If you are attending the Annual General Meeting please sign this card, bring it with you and hand it in on arrival. This will speed up your admission to the Annual General Meeting.
•   For your safety and security, there may be checks and bag searches of those attending the Annual General Meeting. We recommend you arrive a little early to allow time for these procedures. 
The company will refuse admission to any individual who is not an invited guest and is unable to prove that they are a registered shareholder in the company by reference to either the correct 
register of members or a letter of authority from their nominee account holder.

•   Cameras, recording equipment and other items which might interfere with the good order of the Annual General Meeting will not be permitted.

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2 Eaton Gate, London 
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