Andrews Sykes Group plc Annual Report and Financial Statements 2024 Contents 01 Summary of Results 02-04 Chairman’s Statement 05-21 Strategic Report 05 Principal Objectives and Strategy 05 Future Development of the Business 06-07 2024 Operational Performance 08-10 Financial Review 11-16 Task Force on Climate-related Financial Disclosures 17-21 Review of Risks and Uncertainties 22-29 Directors’ Report 30 Directors and Advisers 31 Statement of Directors’ Responsibilities in Respect of the Annual Report and Financial Statements 32-36 Independent Auditor’s Report to the Members of Andrews Sykes Group plc 37 Consolidated Income Statement 38 Consolidated Statement of Comprehensive Income 39 Consolidated Balance Sheet 40 Consolidated Cash Flow Statement 41 Consolidated Statement of Changes in Equity 42-49 Group Accounting Policies 50-75 Notes to the Consolidated Financial Statements 76 Parent Company Balance Sheet 77 Parent Company Statement of Changes in Equity 78-83 Notes to the Company Financial Statements 84 Five–Year History 01 Strategic Report Summary of Results 12 months ended 31 December 2024 £'000 12 months ended 31 December 2023 £'000 Revenue from continuing operations 75,942 78,747 Adjusted EBITDA* from continuing operations 30,933 30,622 Operating profit 23,187 22,737 Profit after tax for the financial period 16,798 17,758 Net cash inflow from operating activities 20,323 24,946 Net funds 7,152 4,570 Cash and cash equivalents 23,181 19,967 Total interim and final dividends paid 10,841 35,743 Basic earnings per share from total operations (pence) 40.13p 42.24p Interim and final dividends paid per equity share (pence) 25.90p 85.30p Proposed final dividend per equity share (pence) 14.00p 14.00p * Earnings before interest, taxation, depreciation, profit on sale of plant and equipment and amortisation as reconciled on the consolidated income statement. 02 Chairman’s Statement Overview and financial highlights Overview and outlook Andrews Sykes’ trading remained strong during 2024 and we are pleased to report that the Group as a whole has again delivered a record level of operating profitability. We are thankful for and proud of our team members who have made this possible by continuing to provide our customers with an essential 24 hour service offering. 2024 was not without its challenges, with revenue opportunities being constrained by the unseasonally cool summer weather experienced in the UK and across much of Europe. However, our long-standing commitment to tight cost control and leveraging our strong relationships with customers have allowed us to not only maintain but increase our operating profitability over the previous year. The Group continued to develop its relationships with key customers throughout the UK and Europe which has underpinned the strong results reported. These key accounts provide a consistent revenue stream. Whilst turnover is down in the second half of the year as compared to the prior year, mainly due to reduced revenue opportunities presented by poor summer temperatures, the focus on our key accounts means the Group has still produced operating profit growth despite reporting a lower revenue. During the year we have been working on plans to enter the Saudi Arabian market which is currently experiencing a well publicised construction boom in an effort to diversify the Saudi Arabian economy. We are delighted to announce that a new subsidiary incorporated in Saudi Arabia opened in early 2025 and will be managed by our UAE management team who have done such a good job in turning around our existing business in the Middle East. This market represents a significant growth opportunity in 2025 and beyond. Our new German subsidiary, Klimamieten AS Gmbh, has experienced a difficult first year with limited revenue generated so far; undoubtedly impacted by the wider stagnant German economic situation. We remain hopeful of future growth in this large market. We remain encouraged by how our highly experienced management team has consistently adapted the business to overcome market and operational issues and take advantage of new revenue opportunities. Positive trading momentum has continued into the current year, with overall performance in the year to date in line with the Board’s expectations. The Group is confident in its core markets, its revenues and its profits. 2024 trading summary The Group’s revenue for the year ended 31 December 2024 was £75.9 million, a decrease of £2.8 million, or 3.6%, compared with last year. Of this £2.8 million decrease, £1.5 million was a result of the previously taken decision to cease operating within the French market. A further £0.9 million decrease was as a result of stronger Sterling exchange rates versus the Euro and the Dirham. Excluding these two factors, underlying turnover was down year on year just £0.4 million or 0.5%. Despite this decrease in revenue, through careful cost management and commercial negotiations for the early exit of previously vacated lease properties, operating profit has increased by 2.0%, or £0.5 million, from £22.7 million last year to £23.2 million in the year under review. Turnover for the second half of the year was down 5.9%, or £2.3 million, on the corresponding period last year and reflects the cooler weather experienced across the UK and Europe over the summer months in 2024 which limited revenue opportunities in comfort cooling. Decreasing interest rates in the UK and Europe over 2024 contributed to decreased returns on cash reserves which, coupled with an increased interest charge from the increased value of right-of-use lease obligations, has meant net finance income decreasing from £0.9 million last year to a net nil in the current year. Profit before taxation was £23.2 million (2023: £23.6 million) and profit after taxation was £16.8 million (2023: £17.8 million). The Group has reported a decrease in the basic earnings per share of 2.11p, or 5.0%, from 42.24p in 2023 to 40.13p in 2024. This is mainly attributable to the above decrease in the Group’s net finance income and increased tax charges. The Group continues to generate strong net cash inflows. Net cash inflow from operating activities was £20.3 million compared with £24.9 million last year. Cost control, cash generation and working capital management continue to be priorities for the Group, with stocks maintained at the same level as last year. Capital expenditure is concentrated on assets with strong returns; in total £5.5 million was invested in the hire fleet this year. In addition, the Group invested a further £1.1 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. 03 Strategic Report Operating performance The following table splits the results between the first and second half years: Turnover £’000 Operating profit £’000 1st half 2024 38,387 9,726 1st half 2023 38,843 9,713 2nd half 2024 37,555 13,461 2nd half 2023 39,904 13,024 Total 2024 75,942 23,187 Total 2023 78,747 22,737 The above table reflects the continued progress of the business, with second half profitability being improved on £2.3 million lower revenue. The turnover of our main business segment in the UK decreased from £44.4m last year to £43.1m with operating profit increasing from £15.0m to £15.4m. This result was reflective of the poor summer weather experienced with the UK having the lowest average summer temperature since 2015, mitigated by commercial successes in the early lease exit from previously vacated properties. Air conditioning hire was down £2.8m or 33.9% on the prior year. Pump hire continues to grow with revenues at record levels for the seventh year in a row and 2.0% higher than 2023. Our European businesses also recorded decreases in turnover, from £26.7 million last year to £23.6 million, and operating profit decreasing from £8.7 million to £8.2 million in 2024. £1.5 million of the revenue reduction was a result of ceasing our loss making French operations. Northern Europe in particular was impacted by the same cooler summer temperatures as seen in the UK and has been reflected in decreased chiller and air conditioning hire revenues. Each of our European subsidiaries reported lower turnover levels during 2024. Stronger Sterling exchange rates also negatively impacting our European subsidiaries reported revenues by £0.7 million as compared to 2023. The turnover of our hire and sales business in the Middle East has increased from £5.6 million last year to £7.7 million, and operating profit increased from £0.4 million to £1.1 million in the year under review. This result marks a strong turnaround driven by the new local management who were installed during the summer of last year. The increased operating profit is reflective of the increased revenue allied with expected credit losses remaining under control, with a charge of £0.1 million in 2024 compared to £0.2 million in 2023. It is pleasing that as the year progressed core hire revenues increased, with revenues in the second half of the year 11.8% up on the first half of the year. Management are confident of this trend continuing. Our fixed installation and maintenance business in the UK saw a decrease in turnover from £2.1m to £1.6m and returned a small operating profit, an increase of £0.1 million from the small operating loss reported in 2023. Central overheads were £1.5 million in the year compared with £1.3 million in 2023. Profit for the financial year Profit before tax was £23.2 million this year compared with £23.6 million last year; a decrease of £0.4 million. This is largely attributable to the £0.5 million increase in operating profit offset by net interest income reducing by £0.9 million due to lower interest receivable and higher interest charged on right-of-use lease obligations. Tax charges increased from £5.8 million in 2023 to £6.4 million this year. The overall effective tax rate increased from 24.7% in 2023 to 27.6% this year, primarily driven by the introduction of corporation tax for the first time in the United Arab Emirates and the full year impact of the increase in UK corporation tax from 19% to 25% in April 2023. A detailed reconciliation of the theoretical corporation tax charge based on the accounts profit multiplied by the applicable tax rate and the actual tax charge is given in note 10 to the consolidated financial statements. Profit for the financial year was £16.8 million compared with £17.8 million last year. 04 Chairman’s Statement Overview and financial highlights Defined benefit pension scheme As reported last year, the Company has successfully de-risked its defined benefit scheme by completing a buy-in deal. This transaction means that future liabilities are fully de-risked and the Company will not be required to contribute significant cash payments into the pension scheme to fund adverse liability movements. As such no cash contributions into the scheme were made during 2024. The defined benefit pension scheme surplus after the application of an asset restriction has increased from £1.6m as at 31 December 2023 to £1.8m at the year end primarily as a result of UK tax legislation introduced in April 2024 reducing the asset restriction charge levied on the defined benefit pensions scheme surplus. Equity dividends The Company paid two dividends during the year. On 21 June 2024, a final dividend for the year ended 31 December 2023 of 14.00 pence per ordinary share was paid. This was followed on 1 November 2024 by an interim dividend for 2024 of 11.90 pence per ordinary share. Therefore, during 2024, a total of £10.8 million in cash dividends was returned to our ordinary shareholders. The Board has decided to propose a final dividend of 14.0 pence per ordinary share. If approved at the forthcoming Annual General Meeting, this dividend, which in total amounts to £5.9 million, will be paid on 20 June 2025 to shareholders on the register as at 23 May 2025. Share buybacks As at 6 May 2025, there remained an outstanding general authority for the directors to purchase 5,232,343 ordinary shares, which was granted at last year’s Annual General Meeting. The Board believes that it is in the best interests of shareholders to have this authority in order that market purchases may be made in the right circumstances if the necessary funds are available. Accordingly, at the next Annual General Meeting, shareholders will be asked to vote in favour of a resolution to renew the general authority to make market purchases of up to 12.5% of the ordinary share capital in issue. Net funds Net funds increased by £2.6 million from £4.6 million at 31 December 2023 to £7.2 million at 31 December 2024. Net funds include cash and cash equivalents of £23.2 million (2023: £20.0 million) less right-of-use lease obligations of £16.0 million (2023: £15.4 million). JJ Murray Executive Chairman 6 May 2025 05 Strategic Report Strategic Report Operational performance Principal objectives and strategy The Andrews Sykes Group is one of the market leaders in the rental of specialist hire equipment, offering bespoke solutions to our customers for their temporary or emergency needs. Our product range includes pumping equipment, air conditioning, chillers, heaters, boilers, dehumidifiers and ventilation units. 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 in 1857, we now have over 30 locations and operate with around 450 staff worldwide. Our operations in mainland Europe began over 50 years ago in Rotterdam and now extend to depots located throughout the Netherlands, Belgium, Luxembourg, Italy, Germany and Switzerland. In the Middle East, we have been operating from Dubai since the 1970s and now have locations in Dubai, Abu Dhabi and Sharjah, with agents and partners based throughout the Middle East. 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 provides a nationwide coverage from a base in Birmingham. By providing a premium 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 portfolio whilst continuing to expand our geographic coverage both within existing territories and new markets. During 2024, we continued to develop new products and have a number of new developments ready for launching in 2025, 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. In 2024, the UK and Northern Europe summer temperatures were more subdued than previous years but the group controlled costs and produced a record operating profit. This reflects the flexibility in our group businesses and their ability to adapt to circumstances and service our markets safely and securely on a sustainable basis moving forward. 06 Strategic Report Operational performance (continued) Hire and sales UK Andrews Sykes Hire Limited Our main UK trading subsidiary, Andrews Sykes Hire, has 22 locations covering the UK and employing around 280 members of staff. During the year, we continued to develop both our product range and service offering, with further investments in our hire fleet, depots and infrastructure. The profit for 2024 of £15.4 million was an increase of £0.4 million, or 3%, on 2023. This result, we believe, shows the ability of the business to react to changing customer demands and market circumstances, and to flex the cost base of the business quickly to adapt to customer demand. Hire and sales Europe Summary Turnover of the European hire and sales business sector decreased from £26.7 million last year to £23.6 million in the current year; a decrease of £3.1 million or 12% compared with last year. Operating profit decreased by £0.5 million, or 5%, from 2023 to 2024. 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 BV With over 50 years of experience in the Dutch market, we currently have four depots strategically located throughout the Netherlands providing full coverage of the country. Our Dutch business also provides back-up support to our operations in Belgium and Luxembourg. This subsidiary experienced a solid performance with total revenue 3% below that of the previous record year. 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 three depots in both French and Flemish languages, the business has dual language branding, literature and website for the Belgian market. Turnover decreased 21% as compared to that of the previous record year. Andrews Sykes Sarl Our operation in Luxembourg was opened in 2014 and is strategically located to provide the full range of our climate rental products throughout the country. This subsidiary recorded a 28% decline in revenue during the year, heavily impacted by the negative economic situation in Luxembourg. Our Luxembourg subsidiary works in conjunction with our Belgian operation, with administration and technical support provided from Brussels. Nolo Climat SRL Nolo Climat is our Italian subsidiary, which opened in 2011. Our main depot is strategically located close to the centre of Milan where it is well placed to cover the Lombardy region and the North of Italy, with further depots located in Bologna, Verona and Toscana. Following the progress made in recent years, this business reported a 7% turnover reduction against the previous record year. Andrews Sykes Climat Location SAS Our French subsidiary was established in 2012 and, following the decision to cease trading during the previous year, is in the process of winding down operations and exiting from the remaining depot locations. Turnover for 2024 was £1.5 million adverse to 2023. Climat Location SA Climat Location SA is our Swiss subsidiary, which opened in 2013; this operation was established to service the French cantons. We are now exploring further opportunities within the German cantons. Our Swiss business experienced a subdued year with turnover decreasing 28% on the prior year. Klimamieten AS GmbH Klimamieten is our German subsidiary, which was incorporated during the previous year and started to trade in December 2023. Germany has experienced a difficult first year with limited revenue generated so far, undoubtedly impacted by the wider stagnant German economic situation. 07 Strategic Report 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, Abu Dhabi and Dubai. 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 throughout the Middle East, including Oman, Kuwait, Bahrain and Qatar, which allows us to provide our products and services in these local markets. The business has enjoyed a revival in fortunes under their new management with revenues increasing 37% compared to 2023 and operating profit increasing 166%. 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. In 2024, turnover decreased by 26% as compared to 2023. Group summary The overall group result for 2024 shows an increase in operating profit of £0.5 million, or 2%, when compared to 2023, which was a good result given the revenue challenges faced by the group during 2024. The Andrews Sykes business remains strong: the experience of our senior management team, coupled with our development plans, provide optimism for further progress in 2025 as we navigate through the current macroeconomic climate in which we operate. 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. 08 Strategic Report Review of risks, uncertainties and financial performance Key performance indicators (KPIs) The group’s principal KPIs are as follows: 12 months ended 31 December 2024 £’000 12 months ended 31 December 2023 £’000 Average revenue per employee £170 £164 Operating profit from continuing operations £23,187 £22,737 Operating cash flow as a percentage of operating assets employed (1) 95.5% 131.9% Net funds £7,152 £4,570 Net funds to equity percentage 15.5% 11.3% Basic EPS from continuing operations (pence) 40.13p 42.24p (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 internally by the Board include staff absenteeism and energy consumption. These are disclosed below: 12 months ended 31 December 2024 12 months ended 31 December 2023 Staff absenteeism as a % of total working days 1.64% 1.01% Energy consumption (MWh) 8,186 7,729 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 continues to be high and indicates a strong underlying operating performance and high staff utilisation levels. The increase in the year is the result of both decreased turnover and decreased headcount driven by operational efficiencies. Operating cash flow as a percentage of operating assets continues to demonstrate both strong working capital management and high levels of asset utilisation. The decreased percentage is driven by a decreased operating cash inflow largely driven by the cash settlement of amounts previously provided, thus producing a working capital outflow during the year. Net funds are monitored by the Board as being indicative of the long-term financial stability of the group and to assist in directing capital investment decisions. 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. 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. The EPS decreased this year by 5.0% from 42.24p in 2023 to 40.13p in 2024, primarily due to the decrease in net finance income and increased tax expense, partially offset by an increased operating profit. Achieving an EPS of 40.13p is regarded as a good result versus the record for the group achieved in the prior year. The group uses Bradford Factor scoring across all entities, a common means of measuring worker absenteeism. In using this measure to manage absenteeism, the group has managed to keep overall staff absenteeism low. The increased staff absenteeism metric during the year was due to several employees going on long-term sick. The Board are pleased with the overall level as, excluding the long- term sick, the staff absenteeism % was comparable to the prior year. The group would seek a reduction in 2025. The Board notes that the increase in energy consumption is due to a full year of occupying the new head office location and the increased litres of diesel used in delivering our products. The Board will continue in its efforts to operate in a more environmentally friendly way and seek to limit our energy consumption in the following year. 09 Strategic Report Operating profit The consolidated operating profit was £23.2 million for the year under review, an increase of £0.5 million, or 2%, compared with last year’s operating profit of £22.7 million. Note 5 to the financial statements analyses these results by business segment and this can be summarised as follows: 12 months ended 31 December 2024 £’000 12 months ended 31 December 2023 £’000 Hire and sales UK 15,417 15,009 Hire and sales Europe 8,194 8,663 Hire and sales Middle East 1,068 401 UK installation business 17 (48) Subtotal 24,696 24,025 Unallocated costs and eliminations (1,509) (1,288) Consolidated operating profit 23,187 22,737 A review of the performance of each business sector is given in the operational performance section of this Strategic Report. Adjusted EBITDA* as disclosed in these financial statements is reconciled to operating profit as below: 12 months ended 31 December 2024 £’000 12 months ended 31 December 2023 £’000 Adjusted EBITDA* 30,933 30,622 Depreciation and impairment losses (5,968) (6,002) Depreciation and impairment of right-of-use assets (2,929) (2,814) Profit on the sale of plant and equipment 869 673 Profit on the sale of right-of-use assets 282 258 Operating profit 23,187 22,737 * Earnings before interest, taxation, depreciation, profit on sale of plant and equipment and amortisation as reconciled on the consolidated income statement. Cash flow from operating activities The table below summarises the group’s cash flow from operating activities compared with the previous year: 12 months ended 31 December 2024 £’000 12 months ended 31 December 2023 £’000 Operating profit 23.2 22.7 Depreciation and profit on the sale of plant and equipment 5.1 5.3 Depreciation and profit on disposal of right-of-use assets 2.6 2.6 Adjusted EBITDA* 30.9 30.6 Pension scheme administration costs in excess of defined benefit pension scheme contributions 0.1 0.1 Interest paid (1.0) (0.8) Tax paid (6.6) (6.1) Net working capital movements (3.1) 1.1 Net cash inflow from operating activities 20.3 24.9 Reconciliation to operating cash flow as a percentage of operating assets employed KPI: Net cash inflow from operating activities 20.3 24.9 Pension scheme administration costs in excess of defined benefit pension scheme contributions (0.1) (0.1) Operating cash flow 20.2 24.8 Non-current assets (excluding deferred tax and retirement benefit pension surplus) 34.2 33.3 Current assets (excluding cash, other financial assets and taxation) 20.3 21.7 Current liabilities (excluding taxation) (18.4) (19.2) Non-current liabilities (15.0) (15.9) Operating assets 21.1 18.8 Operating cash flow as a percentage of operating assets employed KPI 95.5% 131.9% * Earnings before interest, taxation, depreciation, profit on sale of plant and equipment and amortisation as reconciled on the consolidated income statement. As demonstrated by the table above, the group continues to generate strong operating cash flows. As well as cost control, management of working capital continues to be a priority. Whilst trading activity levels have decreased, working capital has also increased by £3.1 million comparable to prior year, largely a result of the group cash settling during the year amounts previously provided for. Total outstanding debtor days at the year-end decreased slightly from 67 days at the end of 2023 to 61 days at the end of the current year. Although still high in UK terms, the debtor day statistic in both years includes our subsidiary in the Middle East, whose debtor days were 121 days (2023: 113 days). The decrease in the overall group debtor days is a result of the increased activity in the Middle East with the UK debtor days improving from 67 days in 2023 to 54 days in 2024, reflective of the focus on collecting cash. The group’s average debtor days for current unimpaired debts improved from 41 days last year to 29 days this year. Adequate provisions continue to be made for expected credit losses and impairment of trade debtors. In 2024, debts written off against the expected credit loss provision were £2,384,000 compared with £348,000 last year, and there was a net credit of £232,000 (2023: net charge of £959,000) to the income statement from the expected credit loss provision, which was calculated on a consistent basis each year. Of these figures, £2,270,000 (2023: £159,000) of the debts written off and £128,000 (2023: £201,000) of the expected credit loss charge related to external debtors of our subsidiary in the Middle East. Employer-defined benefit pension contributions of £Nil (2023: £120,000) have been made by the group to the pension scheme in 2024. Pension scheme costs charged within administration expenses in the income statement, in accordance with IAS 19 (2011), amounted to £166,000 (2023: £267,000). Pensions are discussed in more detail on page 18, and in note 16 to the financial statements. 10 Strategic Report Review of risks, uncertainties and financial performance (continued) Non-financial and sustainability information statement Task force on climate-related financial disclosures The Task Force on Climate-related Financial Disclosures (“TCFD”) provides a disclosure framework for companies to explain how they are responding to the risks and opportunities arising from climate change. The Companies Act 2006 s414, s414CA and 414CB requires AIM-listed companies with more than 500 employees to make disclosures consistent with the recommendations of the TCFD and provide an explanation including details of the steps being taken to ensure future compliance. Although the group’s headcount has dropped below 500 employees in the current year, this is expected to be reversed in future years so the group has decided to voluntarily comply with the TCFD requirements. Responding to the risks and opportunities arising from climate change is an integral part of our business and is embedded throughout the group. The statement below explains how the group has complied with the requirements of The Companies Act 2006 s414, s414CA and s414CB by including climate-related financial disclosures consistent with the TCFD recommendations and recommended disclosures. It addresses all the disclosure requirements of the TCFD and links to additional information located elsewhere within the Annual Report. Governance Board-level oversight The Group’s Board of directors is responsible for setting the group’s strategy, taking into account all relevant risks and opportunities, including those related to climate matters. As such, the Board will drive and be responsible for all climate-related risks and opportunities. The Board driving these climate-related risks and opportunities underlines the importance of addressing these issues. Whenever the Board meet, climate change will be on the agenda. In addition to the main Board, the group will make use of various Board Committees to support the gathering and embedding of climate impacts within the group as follows: ● The Audit Committee is responsible for overseeing and ensuring compliance with the group’s disclosure obligations. This Committee ordinarily meets twice a year. ● The Remuneration Committee integrates the Group’s climate performance metrics into the group’s key personnel variable remuneration where relevant and will ensure that climate targets are embedded into incentive schemes over time. Management-level oversight While the Board will retain oversight of all climate‑related issues, the group recognises the importance of creating a structure that enables the Board to make informed decisions. As such the group’s Executive Strategy Team, headed by the Group Managing Director, a full Board member, and including senior personnel from the UK and each overseas subsidiary, will have overall responsibility for the day-to-day operation of climate-related issues. The Executive Strategy Team meets on a monthly basis and allows the Group Managing Director to advise and inform the Board on how the group should adapt its business strategy by considering climate change risks and opportunities. 11 Strategic Report Strategic Report Task force on climate-related financial disclosures During the previous year, the group established a specific ESG Committee headed by the newly created role of Group Head of ESG, who reports into the Executive Strategy Team. The Group Head of ESG reports directly to the Executive Strategy Team. To ensure continuity of message and to underline the importance of climate-related issues, several members of the Executive Strategy Team are members of the ESG Committee. The ESG Committee receives direction from the Executive Strategy Team, oversees delivery of the ESG agenda, and reviews and reports back progress against key ESG priorities. The ESG Committee includes leaders from the following functions: Transport, Property, Operations Support, Finance, Commercial, Technical, Procurement and Operations. This Committee meets not less than quarterly. PLC Board Audit Committee Executive Strategy Team ESG Committee Remuneration Committee Strategy The Group undertook a material issues assessment to identify the significant risks and opportunities for the Group from an ESG perspective, the results of which are detailed on the following pages. The Group believes climate-related matters represent opportunities and pose certain risks for the Group. The Group believes that its market position and financial strength bring it a competitive advantage in responding to these risks and maximising the opportunities. Specifically, the Group has identified opportunities arising from the development of new products and services, which support the transition to a lower carbon economy, the shift in customer preference from ownership to rental and the overall benefits to the environment as a whole which arise from sharing assets over their life cycle. The Group considers the range of climate related risks and opportunities over the short, medium and long term. In assessing these time horizons, the Group has defined short term as being over the next two years, medium term as being three to five years and long term being five to 10 years. When considering the impacts of physical risks, a longer-term horizon of more than 10 years is used. These risks and opportunities are factored into the Group’s strategic planning. When determining future risks and exposure to the Group’s business, two future scenarios have been considered: A less than 2ºC emission scenario pathway and a 4ºC emissions scenario: ● Less than 2ºC emission scenario. This scenario represents a transition to the low-carbon economy. Risks and the associated timeframes are more immediate, with the potential for accelerated policy changes and changing technology demands in favour of this transition. ● 4ºC emissions scenario. In this scenario, there is an increased likelihood of more extreme weather events such as flooding, extreme summer temperatures and wildfires, meaning the impact of climate change on physical risks would start to have a much greater impact on possibly all of the Group’s global locations. 12 Strategic Report Task force on climate-related financial disclosures (continued) Transitional risks The below table details the principal transition risks identified by the Group split into four key areas; Policy and Legal, Technology, Market and Reputation for a less than 2ºC emission scenario. The timeframe over which these risks are considered to have a material impact, and details of the impacts, are also given below. Risk Type Risk Description Timeframe Impact Policy and Legal Not meeting compliance requirements of advancing climate regulation Medium Possible reputational damage and fines. Loss of customers if not complying with legislation. This would impact higher-emission areas of the business and associated revenue streams. This could also cause equipment and services to become obsolete such as diesel equipment, resulting in potential asset impairment. Technology Obsolescence of high-carbon equipment Long A significant proportion of our fleet contains a diesel engine. This could lead to this equipment becoming obsolete, resulting in potential asset impairment and accelerated capital expenditure to replace obsolete assets. Low-carbon equipment more expensive than high-carbon equipment Medium The shift to low- or zero-emission technologies will increase the initial capital cost of assets meaning gross margin deterioration unless rental prices can be increased. Technological changes may not keep up with customer demand Long The ability to replace high-carbon equipment with low-carbon equipment in isolated locations without power supply could be hindered, resulting in a loss of revenue. Market Customer demand for low-carbon equipment may outstrip supply Short Loss of revenue to competitor if demand for low-carbon equipment outstrips ability to supply. Increased energy/fuel prices adversely impacting fuel-based equipment demand Short Loss of revenue on fuel sales and lower unit hire unless low-carbon alternative available. Reputation The group not meeting science- based targets and net zero commitments on emissions Medium Possible reputational damage and fines. Loss of customers if not complying with legislation. Physical risks The group has operations based in UK, Europe and the Middle East. The majority of the group’s suppliers are also based in these regions. The impact of climate change has already been seen in many of these regions with increased flooding, the record summer temperatures in 2022 for the UK and Europe, and the extreme heat event in Southern Europe in 2023 as examples. Certain of the group’s locations will be more prone to the risks below, for instance the Middle East will be less prone to heat waves with temperatures being consistently high and a local infrastructure designed to cope for this scenario. A 4ºC emissions scenario considered for principal physical risks highlights the increased risks of climate change over the very long term. Risk Type Risk Description Timeframe Impact Acute Increased risk of floods/heatwaves in UK and Europe Very long This could negatively impact operating efficiency and increase costs as business operations and human capital may be significantly affected. Chronic Increased record temperatures Very long This could cause a health risk for employees making certain locations unsafe to work in for certain periods. Climate-related Opportunities The table below highlights the opportunities that the transition to a low-carbon economy and the physically changing environment may present to the Group: Risk Type Risk Description Timeframe Impact Products and services Increased demand for products with low-carbon emissions Medium Potential new revenue streams and growth Extreme weather events Increased flooding and record temperatures Long The group can provide climate-related specialist hire equipment generating additional revenue Climate leadership The group could become sector climate leaders Medium Reputational enhancement increasing the group’s ability to win new customers focused on low-emission transition 13 Strategic Report The group believes the diverse product offering and geographical spread of its locations present significant risk mitigation to the physical risks brought about by the extreme weather events or changing weather patterns. The group’s products are in high demand to respond to the consequences of extreme weather events, such as flooding or record summer temperatures. Climate change and the increased frequency of extreme weather events that it brings about could lead to increasing demand for the group’s products and services. In addition, the increasing complexity and cost of keeping pace with the latest regulatory legislation makes it more difficult for customers to maintain compliance. Low-carbon equipment has tended to be more complicated to maintain and has an increased initial capital cost than traditional high-carbon equipment. As such, the group believes there will be an increasing demand shift from customers purchasing a new asset to rental of that asset from an industry specialist such as Andrews Sykes, which will provide an additional economic push to move from direct ownership to rental of equipment. The group believes that this, coupled with the environmental benefits for customers of renting rather than owning assets, will contribute to a larger rental market. Given the group’s strong balance sheet and cash reserves, the group is well placed and confident in its ability to be able to capitalise on this increase in demand. Resilience of the group’s strategy The group, with its long history, has proved it has a business model that is both resilient and adaptable in the face of change. The group benefits from a geographically diversified operating structure such that it is not reliant on any one particular depot location for the continuation of its business. The group’s strategy seeks to take advantage of these benefits presented by the group’s business model, whilst also recognising the risks inherent in the business and the environment in which it operates, including the environmental considerations of climate change. The group discusses climate-related matters on a regular basis through the various Committees as previously described and assesses how changes may affect the group’s operations and how the business would respond under those circumstances. The group has outlined the thinking under two climate scenarios, an increase in average temperatures by 2ºC or less and an increase in average temperatures by more than 4ºC. 2°C or less scenario In a 2°C or less scenario, the group believes that the risks and opportunities faced will primarily be related to transition risks. In this scenario, as the group and our suppliers and customers look to reduce carbon emissions, the group is likely to face increasing costs whether that be through increased cost of our rental fleet or other operational costs from increased energy costs or property rates increasingly being tied to the efficiency of the property. In order to minimise these costs, we are working with our suppliers and other parties to move to newer more efficient technologies where possible and find operational savings that energy efficient products offer. In the near- to medium-term, production capacity will likely constrain the availability of new technology. The group expects to have sufficient time to be able to transition our rental fleet to the latest technology gradually under the normal economic replacement cycle of the fleet. The group believes there will be an increasing demand shift from customers purchasing a new asset to rental of that asset from an industry specialist such as Andrews Sykes which will provide an additional economic push to move from direct ownership to rental. We expect rental and transportation rates to reflect the increased cost of rental and transportation equipment, enabling us to maintain similar levels of gross margin. As the disposal of old rental fleet is not a significant driver of operating profit for the group, an anticipated reduction in the second-hand value of the group’s older, less environmentally friendly equipment is not anticipated to have a material impact on the group’s results. 4°C or more scenario In a 4°C scenario, we would expect to see an increase in physical risks (i.e. increased instances of extreme weather events) in addition to the transition risks discussed above. As previously discussed, the group benefits from a geographically diversified operating structure such that it is not reliant on any one particular depot location for the continuation of its business. This geographical diversification provides some mitigation to the immediate impact of physical risks on our operations and enables us to plan for the longer term. In a 4°C scenario, there is an increased likelihood of more extreme weather events such as flooding, extreme summer temperatures, wildfires and other natural disasters, which would cause damage to our operations resulting in lost revenue and higher rectification costs. In any scenario, the speed of the transition of assets from high carbon to low carbon will be constrained by the availability of new technologies and manufacturing capacity. The group believes that its long-standing supply relationships with key equipment suppliers will aid in this transition and allow for equipment to be transitioned within the group’s regular replacement cycle. 14 Strategic Report Task force on climate-related financial disclosures (continued) Risk management Identifying and assessing climate-related risks To establish the Group’s exposure to climate-related risk, a list of risks, including physical and transition risks, has been developed by the ESG Committee. Physical risks are either acute (for instance arising from flooding) or chronic (e.g. rising global temperatures). Transition risks can include policy and regulation, technological, market, reputation or legal risks. This list of risks has been assessed to evaluate the likelihood and materiality of impact and incorporates both financial and non-financial factors. This approach will be regularly reviewed and updated by the ESG Committee. Managing climate-related risks Having created a detailed climate-related risk list, the ESG Committee has identified and refined the risks according to their materiality and are then embedded into the ESG Committee’s risk management framework where climate-related controls and mitigation activities are sought from internal stakeholders, as well as any climate risk specialists as required. On at least a six-monthly basis, the Executive Strategy Team assess the Group’s comprehensive list of climate-related risks and opportunities for materiality based on their likelihood and impact. This approach is aligned with the Group’s risk management framework and based on current expectations of climate trajectories and global action. The Executive Strategy Team then decide whether to transfer, control or mitigate each risk and embed into the Group’s overall risk management framework. Integrating climate-related risk into overall risk management The process for identifying, assessing and managing climate-related risks is the same as for all the risks faced by the group. The Board has overall responsibility for risk management and implementation of the risk management policy; included within this is responsibility for climate-related risks. Climate-related risk management is integrated in our overall risk management. As described above, the group’s climate-related risks are integrated into the group’s overall risk register and used by the Board to assess the group’s principal risks. All risks and opportunities identified in this disclosure are, therefore, listed in the group’s risk register. The group’s risk management processes ensure that risks are promptly identified, assessed and responded to. The group’s Risk Committee monitors the actions taken across the group to manage its risks and ensure that adequate assurance is obtained over them. In addition, the group’s Risk Committee ensures that risks have been appropriately assessed in relation to risk rating. Metrics and targets The group has been disclosing Scope 1 and 2 emissions for the group’s UK subsidiaries since 2020 in accordance with Streamlined Energy and Carbon Reporting (“SECR”). This gives some trend analysis but does not include all the subsidiaries of the group. In FY23, the group has adopted the Greenhouse Gas (“GHG”) Protocol methodology to calculate the entire group’s GHG emissions. The use of this metric will allow for aggregation and comparison across organisations and jurisdictions. FY23 will be the first year of consolidated group GHG emissions and, as such, will form a baseline for the assessment of future years. The group has set the following metrics to reduce exposure to climate-related risks: 1 January 2024 to 31 December 2024 Tonnes CO2e 1 January 2023 to 31 December 2023 Tonnes CO2e Scope 1: Combustion of fuel and operation of facilities 2,300.21 2,237.19 Scope 2: Electricity, heat, steam and cooling purchased for own use 220.04 250.39 Total Scope 1 and Scope 2 emissions 2,520.24 2,487.58 Scope 3: Electricity 20.17 21.53 Scope 3: Waste 19.02 28.11 Scope 3: Transport – other business travel 102.52 234.00 Total Scope 3 emissions 141.71 283.64 Total Scopes 1, 2 and 3 2,661.95 2,771.22 Tonnes of CO2e per £m turnover 35.05 35.19 15 Strategic Report The group is working towards an estimate of the group’s Scope 3 emissions and to understand how these will evolve going forward. The most significant components of the group’s Scope 3 emissions relate to the group’s customers’ use of our assets during the rental period. Measuring Scope 3 emissions will involve a significant application of judgement. Accordingly, even when developed, the group’s Scope 3 emissions will always be subject to a significant degree of estimation uncertainty. During the year, the group achieved a 109.27 tonne CO2e reduction, or 3.9%, on the prior year (2013: 613.30 tonnes of CO2e reduction, or 18.1%). This was largely achieved due to the 141.93 tonne of CO2e reduction in the Scope 3 emissions as a result of reduced other business travel. The Scope 2 emissions have reduced by 30.35 tonnes of CO2e, or 12.1%, due to the reduction in the amount of UK depots operating following our amalgamation into fewer, larger regional hubs and the increasing use of energy-efficient lighting and heating methods used across the group. The Scope 1 emissions have increased by 63.02 tonnes of CO2e, primarily due to the increased delivery emissions in the UK as a result of operating from fewer depots meaning, on average, longer delivery journeys. The business is in the process of transitioning its fleet of vehicles away from internal combustion engines to those using hybrid and full electric technology. This shift will lead to a reduction in the future Scope 1 emissions. The business continues to promote video conferencing and a reduction in business travel in cars where possible. The group’s tonnes of CO2e per £m turnover has decreased 0.4% in the year, from 35.19 to 35.05. Whilst this is significantly below the annual 5% reduction targeted, the group is currently considering several projects that will reduce Scope 1 and 2 emissions. The group has set a near-term target to reduce Scope 1 and 2 emissions by 5% per year and to achieve a 35% reduction in the total CO2 from the 2023 baseline level by 2030. We will develop a long-term plan to reach net zero by 2050, in line with the UK commitments. Our road map will focus on Scope 1 and 2 emissions showcasing a full breakdown of all carbon-related activities. In order to achieve these targets, the group is working on creating detailed plans covering all aspects of the group’s operations, including, but not limited to, our product offering, vehicle fleet, properties, operations and supply chain, all over multi-year timeframes. Target areas include: ● near term: use of Hydrotreated Vegetable Oil (HVO) fuels, route optimisation, telematics, use of heat pump technology and sourcing renewable energy ● medium term: transition to lower carbon transport fleet and renewable energy generation ● long term: decarbonisation of hire fleet equipment The group’s pathway to reducing carbon will specifically focus on targets that cover our transport fleet, fuel usage, energy and waste consumption. Currently, 32% of our UK fleet is either full electric or hybrid, an increase of 2% on the prior year. As our vehicles are largely leased for, on average, 48–60 months, the group has an up to five-year replacement cycle. As reported last year, the group’s aim is that, by 2030, 80% of our car fleet is either full electric or hybrid and 30% of our commercial fleet is full electric or hybrid. Good progress is being made on the car fleet transition with the UK currently having 92% of cars as either full electric or hybrid, with 47% being full electric. To further support this, we aim to install electric charging points at all of the large hub depots throughout the group. In addition, by 2030, we aim to reduce our internal energy consumption by 30%. The group aims to reduce its electricity usage through the installation of LED lighting throughout our depot network along with various other energy-saving initiatives including the installation of Automated Meter Readings meters throughout our depots. Details of the group’s policies on its employees and social matters can be found on page 19 under the disclosures on directors’ duties and Section 172(1) statement. Details of the group’s policies and procedures in respect to human rights and anti-bribery matters can be found on page 23 within the Directors’ Report. 16 Strategic Report Task force on climate-related financial disclosures (continued) Principal risks and uncertainties The group’s principal risks are as follows: Going concern The directors are required to consider the application of the going concern concept when approving financial statements. Full details of these considerations are given in note 1 on page 42. The group has considerable financial resources and a wide operational base. Based on the detailed forecast prepared by management, the Board has a reasonable expectation that the group has adequate resources to continue to trade for the foreseeable future, at least 12 months from the date of approving these financial statements, even in the reasonable worst-case scenario identified by the group. Accordingly, the Board continues to adopt the going concern basis when preparing this Annual Report and Financial Statements. 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. Competitive risks 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. Our pricing is regarded as competitive to the market place. Technological risks In order to remain competitive, management recognises the need to invest in appropriate IT equipment and software to ensure we continue to meet the demands of customers and remain operationally efficient. Consequently, the communication network, website, data capture systems and customer relationship systems are all being constantly reviewed and updated to ensure they remain at the forefront of industry standards. The group is currently working through an upgrade of its existing IT systems. A new group-wide ERP system has been rolled out to the UK and Europe with the Middle East expected to go live during 2025. Climate risk 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. Further information can be found under the task force on climate related financial disclosures on pages 11 to 16. 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 27 to the consolidated financial statements, are: ● interest rate risk; ● market risk; ● credit risk; and ● funding and liquidity risk. 17 Strategic Report Strategic Report Review of risks and uncertainties 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. This scheme was closed to new entrants on 29 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 2022 (2023: 31 December 2022) and have been rolled forward by an independent qualified actuary to 31 December 2024. The net surplus, after asset restrictions for withholding taxes, at the year end amounted to £1.8 million (2023: £1.6 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 £1.6 million to the surplus as at 31 December 2024 of £1.8 million is as follows: £m Opening IAS 19 surplus less asset restriction recognised in the financial statements 1.6 Contributions paid by the group into the scheme – Actual loss on scheme assets (1.4) Actuarial gain on scheme liabilities 1.4 Net pension charge (0.1) Movement on asset restriction 0.3 Closing IAS 19 surplus less asset restriction recognised in the financial statements 1.8 The assumptions adopted by the directors, including mortality assumptions and discount rates, used to arrive at the above surplus are set out in note 16 to the financial statements. Defined benefit scheme funding valuation The last triennial funding valuation was as at 31 December 2022. The formal 2022 funding valuation, including a revised schedule of contributions, was agreed between the pension scheme trustees and the board of directors in December 2023 and was effective from 1 January 2024. In accordance with this schedule of contributions, and in line with the actions taken by the group during the year as already described, the group are not required to make any further regular contributions into the scheme. This replaces the agreed schedule of contributions from the previous triennial valuation as at 31 December 2019 which required the company to pay £10,000 per month for the period 1 January 2023 to 31 December 2025, or until a revised schedule of contributions is agreed, if earlier. Consequently, the group has made total contributions to the pension scheme of £Nil during 2024 (2023: £120,000) and expects to make no contributions to the pension scheme during 2025. 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. Contributions for both existing members and members that have been auto enrolled are made to the same scheme. The UK operates a salary sacrifice arrangement for pension contributions meaning the employer makes all pension contributions instead of the employee and employer making contributions. As such, the employers’ contribution rates vary from 8% to 15%. The current period charge in the income statement amounted to £1,198,000 (2023: £1,175,000). 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. 18 Strategic Report Review of risks and uncertainties (continued) Share buybacks The company did not repurchase any shares during the year. In the prior year, the company repurchased 289,301 shares at a price between 510p and 665p per share for each of these shares. The company has repurchased its own ordinary shares for cancellation and these purchases enhanced earnings per share and were for the benefit of all shareholders. At the forthcoming 2025 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 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. Directors’ duties and Section 172(1) statement The directors of the company, as those of all UK companies, must act in accordance with a set of general duties. These duties are detailed in Section 172 of the Companies Act 2006 and are summarised as follows: A director of a company must act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of the shareholders as a whole, and in doing so, to have regard, amongst other matters, to: ● the likely consequences of any decision in the long term; ● the interests of the company’s employees; ● the need to foster the company’s business relationships with suppliers, customers and others; ● the impact of the company’s operations on the community and environment; ● the desirability of the company maintaining a reputation for high standards of business conduct; and ● the need to act fairly as between shareholders of the company. As part of their induction, a director is briefed on his/her duties and he/she can access professional advice on these either from the company secretary or from an independent adviser. This support is available throughout the period a director holds office as well as on initial induction. The directors fulfil their duties partly through a governance framework. The company complies with the Quoted Companies Alliance (QCA) corporate governance code and details of compliance are set out in the corporate governance code on the company’s website. The following paragraphs summarise how the directors fulfil their duties: Risk management We aim to provide dependable high-quality services to our business partners in the UK, Northern Europe and the Middle East. We often provide business critical solutions to key businesses and are instrumental in helping our customers achieve their goals. As we expand our businesses, we face a number of challenges and risks, which the directors address on a daily basis. These risks, and how they are addressed, are summarised in the principal risks and uncertainties section of this Strategic Report on pages 17 to 18 and paragraph 4 of the corporate governance code on the company’s website. Our employees The company is committed to being a responsible employer. Our behaviour is aligned with the expectations of our employees and, together, we provide a first-class service to our clients, 24 hours per day, all year round. 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. Employees also have access to third-party assistance to provide them with support on personal issues. 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. Team talks are held regularly with departmental heads and any issues raised are noted, followed up and action taken as appropriate. 19 Strategic Report Business relationships Our business strategy prioritises organic growth. We regard customer relationships as being of the utmost importance and our key account customers, which account for, approximately, 50% of our business, are visited by a customer relationship manager on a quarterly basis to ensure we are meeting their expectations. The next largest 25% of customers are actively managed by desktop reviews supported by contact by telephone, and the remaining customers accounts are subject to periodic internal reviews to ensure no issues are apparent. We employ a supply chain manager who is responsible to the directors for ensuring that suppliers are aware of our requirements and have sufficient resources and abilities to meet our demands. Key suppliers are met regularly on a face-to-face basis and there is a non- conformance process in place. The company has certification to ISO 9001:2015. Externally, the group has strong relationships with a number of key suppliers, and many of these relationships have been in place for 10 years or more. Regular meetings are held with these suppliers to ensure that relationships are optimised, with new innovation high on the agenda. We communicate with our customers in many ways and channel feedback via a line-management structure, which is much flatter than many companies within our sector. Customer communication ranges from social media through to high-level contract reviews. Customer feedback is monitored by senior management on a regular basis. Executive and non-executive directors communicate with shareholders directly and make themselves available for such meetings. Community and the environment The group’s corporate policies are based on our ethical values and can be found on the “Our Policies” page on our website. In recent years, many of our product innovations have been focused on environmental improvements covering initiatives such as reduced emissions and fuel efficiency. We have a long list of accreditations, including ISO 9001, ISO 14001 and ISO 45001:2018, details of which can be found on the “Accreditations” page of the company’s website. We pride ourselves in providing our staff with a good working environment within a strong ethical culture. The group’s HR policies are regularly reviewed by the senior operations team, are provided to all staff both on commencement of employment and are available at all times via a company intranet site. The group has a large number of long-serving staff members, many with 30-plus years’ service, which is a testament to our working culture. We engage with a number of community trusts and charities to offer opportunities to those who have had difficulties finding employment. Business conduct Our business strategy is to differentiate our services from those of our competitors by providing our customers with a first-class level of service 24 hours per day, all year round. Our reputation is among the best in the industry and means we are the employer and service provider of choice for many individuals and businesses alike. Shareholders The company is committed to openly engaging with our shareholders. The company has a controlling shareholder that owns 86.90% of the shares in issue and this shareholder has a number of representatives on the Board. A relationship agreement has been entered into with this shareholder (originally dated 10 December 1999 and updated on 21 September 2018), which confirms that the company’s business and affairs will be managed for the benefit of shareholders as a whole. Further details of how the directors fulfil their obligations with shareholders are given in the corporate governance code on the company’s website. 20 Strategic Report Review of risks and uncertainties (continued) Principal decisions taken during the year During the year, the Board approved a significant capital expenditure for a new product range within the UK pump sector. A decision was made to invest £0.5 million within water treatment plant. In reaching this decision, the Board considered the group’s overall cash levels, the return on each asset along with its expected utilisation and the potential for expansion of the water treatment division. The Board concluded that the capital expenditure was within an acceptable amount and the expected returns would be earnings enhancing so the investment was made. During the year, the Board made the decision to enter the Saudi market and started the process of incorporating a new subsidiary based in the country, a process which was completed in early 2025. In making the decision, the Board considered the Saudi Vision 2030 and the efforts to diversify the Saudi economy, which is promoting significant growth of the construction sector within Saudi Arabia. The significant growth prospects within the Saudi market coupled with our local management’s prior experience of operating within Saudi Arabia have convinced the Board that by entering this option, this market will be a benefit for the group. Signed on behalf of the Board: CD Webb Unit 601, Axcess 10 Business Park Director Bentley Road South Wednesbury 6 May 2025 WS10 8LQ 21 Strategic 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 21. The principal activity of the company is that of an investment holding company. Financial management objectives and policies Financial management objectives and policies are discussed in the Strategic Report on page 8. Results and equity dividends The results for the financial year are set out in the consolidated income statement on page 37. The company paid two dividends during the year. On 21 June 2024, a final dividend for the year ended 31 December 2023 of 14.00 pence per ordinary share was paid. This was followed on 1 November 2024 by an interim dividend for 2024 of 11.90 pence per ordinary share. Total dividend payments made during the year amounted to £10,841,000 (2023: £35,743,000). The Board has decided to propose a final dividend of 14.00 pence per share. If approved at the forthcoming Annual General Meeting, this dividend, which, in total, amounts to £5.86 million, will be paid on 20 June 2025 to shareholders on the register as at 23 May 2025. Directors The directors in office at 6 May 2025 are shown on page 30. In accordance with the Company’s articles of association, Mr JJ Murray, Mr AJ Kitchingman and Mr EDOA Sebag will retire by rotation and, being eligible, will offer themselves for re-election at the forthcoming 2024 Annual General Meeting. Directors’ interests Other than the beneficial interests disclosed below, no director in office at 31 December 2024 had any disclosable interests in the share capital of the company or any subsidiary undertaking. Ordinary one pence shares At 31 December 2024 At 31 December 2023 JJ Murray 231,800 231,800 JP Murray 1,160,886 1,160,886 There were no changes to the above shareholdings between 31 December 2024 and 6 May 2025 or the date of resignation, if earlier. Substantial shareholdings At 6 May 2025, the company had been notified of the following interest of 3% or more in the company’s issued ordinary share capital: Number Percentage EOI Sykes Sarl 36,377,213 86.90% Directors’ share options None of the directors in office at 31 December 2024 held any options to subscribe for ordinary shares at either 31 December 2024 or 31 December 2023. There have been no changes in the directors’ share options during the period from 31 December 2024 to 6 May 2025. 22 Directors’ Report 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 has certification to the ISO 9001:2015, ISO 14001:2015, CEMARS (in accordance with ISO 14064- 1:2006) and ISO 45001:2018 standards. In the UAE, the group has certification to ISO 9001:2015 and ISO 14001:2015. Business ethics, modern slavery and human rights Senior employees across the group receive regular business ethics training to ensure they are aware of their obligations and responsibilities with regard to the UK Bribery Act. The group’s Anti-Bribery Committee monitors and overseas compliance with the UK Bribery Act. Anti-corruption and bribery policies are maintained and reviewed on a regular basis with relevant guidance incorporated into our employee handbooks and available on our website. Human rights and modern slavery are important aspects of our business ethics. We have group-wide policies in place covering these areas, all of which protect our employees, our business and our suppliers. These policies are embedded in our everyday business operations. Modern slavery is an abuse of human rights and we have a separate modern slavery policy that commits the group to ensuring there is no modern slavery in our business or our supply chain. Any suspicion that our policy is being breached, or is at risk of being breached, can be reported through our anonymous whistleblowing procedures. SECR disclosures These disclosures have been prepared in accordance with the requirements of the measure-step of the CEMARS programme, which is based on the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) and ISO 14064-1:2006 Specification with Guidance at the Organisation Level for Quantification and Reporting of Greenhouse Gas Emissions and Removals. Where relevant, the disclosures are aligned with industry or sector best practice for emissions measurement and reporting. The data reported is for Andrews Sykes Hire Limited. The parent company’s consumption is immaterial to the group and is, therefore, not disclosed separately in this Directors’ Report. 23 Governance GHG emissions and energy use for period 1 January 2023 to 31 December 2024 1 January 2024 to 31 December 2024 1 January 2023 to 31 December 2023 Emissions from activities for which the company own or control including combustion of fuel and operation of facilities tCO2e (Scope 1) 1,841.04 1,750.56 Emissions from purchase of electricity, heat, steam and cooling purchased for own use tCO2e (Scope 2, location-based) 157.47 154.16 Total gross Scope 1 and Scope 2 emissions tCO2e 1,998.51 1,904.72 Energy consumption used to calculate above emissions (kWh) 8,186,314.39 7,728,586.95 Gas (kWh) 292,208.96 174,937.00 Electricity (kWh) 760,533.80 744,445.00 Transport fuels (kWh) 7,133,571.63 6,809,204.95 Other energy sources (Scopes 1 & 2) N/A N/A Total gross Scope 1 and Scope 2 emissions by unit turnover/revenue (tCO2e/£M) 44.74 40.79 Methodology ISO14064 Part 1 2018 and CEMARS ISO14064 Part 1 2018 and CEMARS Emissions from other activities tCO2e (Scope 3): Electricity 13.92 13.34 Emissions from other activities tCO2e (Scope 3): Waste N/A N/A Emissions from other activities tCO2e (Scope 3): Transport – other 67.67 53.76 Total gross Scope 3 emissions tCO2e 81.59 67.10 Total gross Scope 1, Scope 2 and Scope 3 emissions tCO2e 2,080.10 1,971.82 Total gross GHG emissions per unit turnover/revenue (tCO2e/£M) 46.54 42.22 Third-party verification Verified to ISO14064 Part 1 2018 and CEMARS Verified to ISO14064 Part 1 2018 and CEMARS Energy efficiency action In accordance with our efforts to mitigate and control our emissions, we have the following initiatives in operation in the business. We continue to invest in hybrid and electric vehicles within our transport fleet where possible. Fuel consumption is constantly monitored by our internal transport department to measure performance throughout the businesses. Awareness training is given to all staff on driving behaviours, whilst vehicles are fitted with tracking software that enables the management of vehicle routes, idling times, and efficient driving style and behaviour in order to optimise fuel consumption. In our depots, we continue to fit LED lighting with PIR sensor technology as depots are refurbished and maintained to reduce energy consumption. Moving to newer, more efficient depot locations is also enabling the more efficient heating and lighting of our operations and reducing the level of gas and electricity usage. During 2024, the transition of our fleet of vehicles towards hybrids and full electric vehicles has continued with 47% of our car fleet fully electric and a further 45% hybrid. Whilst these have reduced the reduced carbon emissions, the move to fewer, larger depots has meant an additional 158 tCO2e has been emitted in the delivery of our products, offsetting the reduction form transmissions to electric cars. As vehicles come to the end of their lease period and are renewed with full electric vehicles, the business should see a reduction in the fuel consumption into next year and beyond, particularly when our commercial fleet move to hybrid or electric variants. In addition, the business carries out meetings via online conferences where possible, in order to reduce fuel consumption. In our hire fleet, continued investments in environmentally friendly equipment continues to be a feature of our product design and specification to drive investment in a fleet that is environmentally friendly. 24 Directors’ Report (continued) 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 and other stakeholder engagement 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. Employees also have access to third-party assistance to provide them with support on personal issues. 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. Team talks are held regularly with departmental heads and any issues raised are noted, followed up and action is taken as appropriate. Externally, the group has strong relationships with a number of key suppliers, and many of these relationships have been in place for 10 years or more. Regular meetings are held with these suppliers to ensure that relationships are optimised, with new innovation high on the agenda. We communicate with our customers in many ways and channel feedback via a line management structure, which is much flatter than many companies within our sector. Customer communication ranges from social media through to high-level contract reviews. Customer feedback is monitored by senior management on a regular basis. Executive and non-executive directors communicate with shareholders directly and make themselves available for such meetings. Corporate governance The group has chosen to apply the Quoted Companies Alliance (QCA) corporate governance code (the “code”) following the change to the AIM Rules for Companies in September 2018, which required AIM companies to comply with a recognised corporate governance code. The company’s corporate governance disclosures are included on the company’s website, www.andrews-sykes.com. Application of the code: Code Principle How Andrews Sykes applies the Principle 1. Establish a strategy and business model which promote long-term value for shareholders The principal activity of Andrews Sykes Group plc (the “company”) and its subsidiaries (the “group”) is the hire, sale and installation of a range of equipment, including pumping, portable heating and air conditioning. The group operates from depots in the UK, Italy, the Netherlands, Belgium, Luxembourg, Switzerland, Germany and the UAE. Shareholder value in the medium term to long term is intended to be delivered by driving operational excellence across the group and growing within selected markets and geographies. The Board believes that the presence and requirements of a longstanding controlling shareholder helps focus the company’s strategy on long-term shareholder value creation. The group’s strategy and business model is discussed, agreed and reviewed on a regular basis by the Board and is set out each year in the company’s Annual Report with updates (as appropriate) provided in the full- year and half-year financial results announcements. The group’s financial statements can be found in the “Corporate Publications” section of the company’s website. The presence and requirements of a longstanding majority shareholder has resulted in a strategy with the key aim of creating long–term shareholder value. 25 Governance Code Principle How Andrews Sykes applies the Principle 2. Embed effective risk management, considering both opportunities and threats, throughout the organisation The group’s principal risks, and plans to mitigate these risks, are identified and set out in the company’s Annual Report. The Board considers carefully the key risks impacting upon the group based on the information presented to it and makes key decisions taking into account a range of risks, both internal and external to the company, including its supply chain. Key elements of the group’s system of internal controls are: ● Control environment – the Board has put in place an organisational structure with clearly defined lines of responsibility and delegation of authority. This is under the direct supervision of the Managing Director, supported by appropriate policy statements. ● Risk management – the Managing Director is responsible for identifying risks facing the business and for putting in place procedures to mitigate and monitor risks. Risks are assessed and monitored at Board level on an ongoing basis, as well as during the annual business planning process. ● Information systems – the group has a comprehensive system of financial reporting. The annual budget is approved by the Board. Actual results and variances compared with the budget are reported to the Board monthly, supported by detailed management commentaries. Revised forecasts are regularly prepared and reported to the Board. ● Control procedures – policies and procedures manuals are maintained at all significant business locations. In particular, there are clearly defined policies for capital expenditure, including appropriate authorisation levels. Larger capital projects and major investments and divestment decisions require Board approval. ● Monitoring systems – internal controls are monitored by executive management. The Board routinely considers the effectiveness of the company’s system of internal controls. The Board has established an Audit Committee, further details of which are set out below. The Audit Committee considers risk and internal control as a fundamental part of its responsibilities. The Board reports upon internal financial controls in accordance with the ICAEW’s guidance “Internal Control and Financial Reporting”. 26 Directors’ Report (continued) Code Principle How Andrews Sykes applies the Principle 3. Maintain the Board as a well- functioning, balanced team led by a Chair The Board consists of seven members, led by Jean-Jacques Murray, the executive Chairman who manages and provides leadership to the Board to ensure that it is effective in its task of setting and implementing the Company’s direction and strategy. There is one other executive member of the Board – Carl Webb, the Group Managing Director, who develops and implements the group’s strategy, manages performance and ensures the Board is informed about business matters. Carl was appointed to the Board on 5 March 2021 to assume the day to day responsibilities, supported by the Andrews Sykes senior management team, and ensure the continuity of the company’s established strategy. Whilst not a full Board member, Ian Poole the company secretary and group finance director, provides financial reporting advice to the Board and is responsible for maintaining the group’s financial records. There are five non-executive directors of whom one, Andrew Kitchingman, is independent. The other non- executive directors Jean-Pierre Murray (vice Chairman), Marie-Claire Leon, Emmanuel Sebag and Xavier Mignolet, are all associated with EOI Sykes Sarl (the company’s 86.90 % shareholder) and are not considered independent. The non-executive directors provide oversight and scrutiny of the performance of the executive team to ensure that the company’s key strategic objectives are met, as well as representing the shareholders of the company. None of the non-executive directors participate in any performance-related remuneration/share option schemes. The company has only one independent non-executive director whereas the Code recommends that boards have at least two independent non-executive directors. The Board considers that there is sufficient independence on the Board taking into account the shareholder base of the company. For this reason the Board has no current plans to appoint an additional independent non-executive director but will keep the matter under review. Andrews Sykes and EOI have entered into a relationship agreement (originally dated 10 December 1999 and updated on 21 September 2018) in which EOI has provided certain assurances to Andrews Sykes with regard to its relationship with Andrews Sykes. The agreement confirms that the business and affairs of Andrews Sykes shall be managed by the Board in accordance with Andrews Sykes’ Memorandum and Articles of Association and with applicable laws and all relevant statutory provisions for the benefit of shareholders as a whole. Any transactions or other relationships between EOI and Andrews Sykes will be at arm’s length and on a normal commercial basis. Where appropriate, Board members associated with EOI must declare their interest and take no part in decisions. The managing director works full time in the business and is contracted to make such contribution and time commitment as is required for the fulfilment of his duties. The non-executive directors are required to prepare for and to attend Board meetings and meetings of such Board committees of which they are members. They are expected to commit sufficient time to enable them to fulfil their duties. Each director has access to the company secretary who is responsible to the Board for ensuring that all applicable procedures and regulations are complied with. Each director also has the right to take independent professional advice in connection with his or her duties at the company’s expense. Further details of the seven Board members and their experience are provided in the directors and advisers section of the Annual Report and on the Directors section of the company’s website. The directors maintain their knowledge through a combination of technical and market bulletins and attendance at seminars. 27 Governance Code Principle How Andrews Sykes applies the Principle 4. Ensure that, between them, the directors have the necessary up-to- date experience, skills and capabilities The Board is considered to comprise individuals with a good blend of relevant experience in the company’s sector, the financial and the public markets and with the necessary experience and strategic and operational skills required to drive the group forward. The directors’ biographies and skill sets are detailed in Annual Report and on the Directors section of the company’s website. Each director keeps up to date with their specialist experience and knowledge by following relevant information and publications. From time to time, this is supported by the company’s advisers and specialist consultants. 5. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement The Board’s performance is primarily measured by the financial performance of the group and its ability to meet key business objectives. In recent years, the financial performance of the group has been strong which has encouraged the Board to believe that its membership is appropriate. The Board also consider that the stability of its membership over recent years has been a major contributor to the company’s success. We do, however, recognise that, from time to time, new Board members will add value and bring fresh ideas. In addition to financial results, the Board is also measured on its ability to meet key business objectives, such as the group’s geographic growth within mainland Europe. The Chairman evaluates the Board performance informally on a regular basis and formally at least twice per year. The group reviews succession and contingency plans frequently and takes great care and consideration when selecting new Board members. 6. Promote a corporate culture that is based on ethical values and behaviours The group has a long-established heritage and reputation based on sound ethical values and the Board considers this to be of great ongoing value. Many companies within our market sector envy our reputation and we frequently optimise this commercially and by attracting new staff. The group’s corporate policies are based on our ethical values and can be found on the Our Policies page on our website. In recent years, many of our product innovations have been focussed on environmental improvements covering initiatives such as reduced emissions and fuel efficiency. We have a long list of accreditations, including ISO9001, ISO14001, OHSAS18001 and ISO45001:2018, details of which can be found on the Accreditations page of the company’s website. We pride ourselves in providing our staff with a good working environment within a strong ethical culture. The group’s HR policies are regularly reviewed by the senior operations team, are provided to all staff both on commencement of employment and are available at all times via a company intranet site. The group has a large number of long serving staff members, many with 30 years plus service, which is a testament to our working culture. We engage with a number of community trusts and charities to offer opportunities to those that have had difficulties finding employment. 7. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders The company reports on its financial performance and updates on its corporate governance at least two times each year, at the half-year and full-year financial results. The financial results are also communicated to the stock market via RNS announcements. These reports and announcements are available on the Corporate Publications and Announcements section of the company’s website. Copies of previous years’ reports since 2010 are also on the company’s website. The Board pays particular attention to the votes cast by the shareholders at the AGM. In the event that a significant proportion (>20% including proxies) of independent votes are cast against a resolution at a General Meeting of the Company, the Board intends, on a timely basis, to explain any action it has taken, or will take, as a result of that vote. 28 Directors’ Report (continued) Summary of attendance at meetings Director Board meetings Remuneration Committee Audit Committee Number of meetings in the year 2 1 1 JJ Murray 2 1 N/A AJ Kitchingman 2 1 1 MC Leon 2 N/A N/A X Mignolet 2 N/A 1 JP Murray 2 N/A N/A EDOA Sebag 2 N/A N/A C Webb 2 N/A N/A The remuneration committee comprises JJ Murray as chair and AJ Kitchingman. The committee reviews the performance of executive directors and sets the basis of their service agreements with due regard to the interest of the shareholders. Details of the directors’ remuneration are set out in note 9. Due to there only being one other executive director apart from the Chairman, the Directors consider the disclosures given in note 9 are adequate and a separate Remuneration Committee Report is not included in these financial statements. The Audit Committee comprises AJ Kitchingman as Chair and X Mignolet. The Audit Committee is responsible for ensuring that the financial performance of the group is properly monitored, controlled and reported on. In addition, during the year the Audit Committee were involved in the appointment of Crowe U.K. LLP as auditor. The Audit Committee considers risk and internal control as a fundamental part of its responsibilities. It meets the auditor to discuss the audit approach and the results of the audit. The Audit Committee considers the need to introduce an internal audit function each year. After taking into consideration the current size and complexity of the group, the Committee believes that it would not be cost effective to have an internal audit function and the Committee feels that sufficient control is obtained through the scope and quality of management’s ongoing monitoring of risks. As such, and given the inclusion of the independent Audit Report on pages 32 to 36, the directors consider no addition Audit Committee Report to be required. Directors’ and officers’ liability insurance Directors’ and officers’ third-party indemnity insurance is in place for all directors and officers in office as at 31 December 2024 and subsequently. Financial risks Financial risks are discussed in the Strategic Report under principal risk and uncertainties section on page 17. Post-balance sheet event The directors are not aware of any material post-balance sheet events. Foreign branches The company does not have any foreign branches outside the UK. Auditor Crowe U.K. LLP, appointed by the Board since the last Annual General Meeting, 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 of which the company’s auditor is unaware; and ● the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the company’s auditor 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 Unit 601, Axcess 10 Business Park Executive Chairman Bentley Road South Wednesbury 6 May 2025 WS10 8LQ 29 Governance Chairmen JJ Murray MBA – Executive Chairman Age 58. Chairman of the Remuneration Committee. Executive Chairman of London Security plc, LS UK Fire Group Limited and Ansul S.A. JP Murray- Non-Executive Vice Chairman Age 56. Non-executive Vice Chairman of London Security plc. Executive director CD Webb Age 58. Managing Director. Industry specialist, having managed the group’s UK hire and sales business for the last 20 years. Appointed Group Managing Director on 5 March 2021. Non-executive directors AJ Kitchingman FCA Age 60. Appointed senior independent non-executive director on 10 July 2018. Chairman of the Audit Committee and member of the Remuneration Committee. Chairman of Mpac Group plc and HC Slingsby plc. Non-executive director of London Security plc. MC Leon BS Age 61. Non-executive director of London Security plc. X Mignolet (HEC-Economics) Age 60. Director of London Security plc, Ansul S.A. and Importex S.A. Member of the Audit Committee. EDOA Sebag MBA Age 57. Director of London Security plc and LS UK Fire Group Limited . Member of the Remuneration Committee. Company Secretary IS Poole FCA Appointed Company Secretary on 25 June 2021. Group Finance Director. Registered Office and Company Number Unit 601, Axcess 10 Business Park Bentley Road South Wednesbury West Midlands WS10 8LQ Company number: 00175912 Registrar Equiniti Limited Highdown House Yeoman Way Worthing West Sussex BN99 3HH Nominated Advisor Houlihan Lokey UK Limited 1 Curzon Street London W1J 5HD Stockbroker Zeus Capital Ltd 82 King Street Manchester M2 4WQ Auditor Crowe U.K. LLP Black Country House Rounds Green Road Oldbury B69 2DG Bankers HSBC plc 30 Directors and Advisers The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law, the directors have to prepare the group financial statements in accordance with UK-adopted international accounting standards and the parts of the Companies Act 2006 that applies to companies applying UK-adopted international accounting standards and have elected to prepare the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law, including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’). 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 and profit or loss of the company and group for that period. In preparing these financial statements, the directors are required to: ● select suitable accounting policies and then apply them consistently; ● make judgements and accounting estimates that are reasonable and prudent; ● for the group financial statements, state whether applicable UK-adopted international accounting standards and the parts of the Companies Act 2006 that applies to companies applying UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; ● for the company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; ● prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy, at any time, the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and, hence, for taking reasonable steps for the prevention and detection of 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 United Kingdom, governing the preparation and dissemination of financial statements, may differ from legislation in other jurisdictions. 31 Governance Statement of Directors’ Responsibilities in respect of the Annual Report and Financial Statements Opinion We have audited the financial statements of Andrews Sykes Group plc (the “Company”) and its subsidiaries (the “Group”) for the year ended 31 December 2024, which comprise: ● the Consolidated income statement for the year ended 31 December 2024; ● the Consolidated statement of comprehensive income for the year ended 31 December 2024; ● the Consolidated and Company balance sheets as at 31 December 2024; ● the Consolidated cash flow statement for the year then ended; ● the Consolidated and Company statements of changes in equity for the year then ended; and ● the notes to the financial statements, including material accounting policies. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK-adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the 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 Company’s affairs as at 31 December 2024 and of the Group’s profit for the year then ended; ● the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards; ● the 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 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. Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group’s and Company’s ability to continue to adopt the going concern basis of accounting included ● Undertaking an initial assessment at the planning stage of the audit to identify events or conditions that may cast significant doubt on the group’s and the company’s ability to continue as a going concern; ● Obtaining an understanding of the relevant controls relating to the directors’ going concern assessment; ● Making enquiries of the directors to understand the period of assessment considered by them, the assumptions they considered and the implication of those when assessing the group’s and the company’s future financial performance; ● Reviewing the group budget provided by management and challenging the assumptions made; ● Checking the numerical accuracy of management’s budget; ● Challenging the key assumptions used in the budgets including downside sensitivities of reduced sales volumes; 32 Independent Auditor’s Report to the Members of Andrews Sykes Group plc ● Reviewing the availability of facilities and cash reserves in the context of both the budgets and downside scenarios, including an assessment of compliance with applicable covenants; ● Procedures to review and evaluate the historical accuracy of management’s past budgets. ● Reviewing the disclosures made in the financial statements relating to going concern and agreeing it is consistent with management’s assessment. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s and Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Overview of our audit approach Materiality In planning and performing our audit we applied the concept of materiality. An item is considered material if it could reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept of materiality to both focus our testing and to evaluate the impact of misstatements identified. Based on our professional judgement, we determined overall materiality for the Group financial statements as a whole to be £1,250,000, based on 5% of Group profit before tax. Materiality for the Company financial statements as a whole was set at £857,000 based on 2.4% of net assets. We use a different level of materiality (‘performance materiality’) to determine the extent of our testing for the audit of the financial statements. Performance materiality is set based on the audit materiality as adjusted for the judgements made as to the entity risk and our evaluation of the specific risk of each audit area having regard to the internal control environment. This is set at £875,000 for the group and £600,000 for the parent. Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party transactions and directors’ remuneration. We agreed with the Audit Committee to report to it all identified errors in excess of £63,000. Errors below that threshold would also be reported to it if, in our opinion as auditor, disclosure was required on qualitative grounds. Overview of the scope of our audit We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the financial statements as a whole. We used the outputs of our risk assessment, our understanding of the group and the parent company, their environment, controls, and critical business processes, to consider qualitative factors to ensure that we obtained sufficient coverage across all financial statement line items. Our group audit scope included an audit of the group and the company financial statements. Based on our risk assessment, two components including the company were subject to full scope audit performed by the group audit team. Under the direction and oversight of the group audit partner one component within the UAE was audited by a member firm of the Crowe Global network who undertook specified audit procedures for the UAE, A further seven components were subject to group audit risk assessment processes to identify specific material balances, disclosures and other specific audit areas requiring further testing to be performed by the group audit team. Additionally, the group audit team also tested the consolidation process and carried out analytical procedures to confirm our conclusion that there were no significant risks of material misstatement of the aggregated financial information. The component materialities applied in our group audit ranged from £63,000 to £735,000 33 Governance Key Audit Matters 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 which 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. This is not a complete list of all risks identified by our audit. Key audit matter How the scope of our audit addressed the key audit matter Useful economic lives Property, plant and equipment is depreciated over the economic lives of the assets. Useful economic lives (UELs) are based on management’s estimates of the period that the assets will generate revenue, which are reviewed annually for continued appropriateness. This estimation impacts the depreciation expense recorded in the financial statements and the carrying value of these assets. There are several points of judgement that management apply when setting the UELs and notably, due to various factors, there are a significant amount of hire assets held on the balance sheet at nil net book value but which are still generating revenue when required ● Performed a substantive analytical review over depreciation charges in the year to assess whether the depreciation rates have been correctly applied in accordance with the policies ● Challenged management’s assessment of useful economic lives by reviewing the fixed asset register for fully depreciated assets. Where assets were identified to still be held in reserve confirmed via testing that this is appropriate by reference to hire records ● Verified the existence and condition of assets to determine if UEL life is appropriate ● Review industry data to benchmark the UEL ● Reviewed accounting policies to determine if such policies align with accounting standards and these have been consistently applied across periods and similar asset classes. ● Reviewed fixed asset register to identify useful life assigned to each asset ● Checked for unusual or inconsistent useful life periods ● Considered whether the asset is impaired, and impairment testing has been performed in accordance with IAS 36. Reviewed the effect of impairment on the expected useful life of the assets. Our audit procedures in relation to these matters were designed in the context of our audit opinion as a whole. They were not designed to enable us to express an opinion on these matters individually and we express no such opinion. Other information The directors are responsible for the other information contained within the annual report. The other information comprises the information included in the annual report, 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. 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 this gives rise to a material misstatement in the financial statements themselves. 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. 34 Independent Auditor’s Report to the Members of Andrews Sykes Group plc (continued) Opinion on other matter prescribed by the Companies Act 2006 In our opinion based on the work undertaken in the course of our 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 directors’ report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In light of the knowledge and understanding of the Group and the Company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report. We have nothing to report in respect of the following matters where 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 the directors for the financial statements As explained more fully in the directors’ responsibilities statement set out on page 31, 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 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. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: The extent to which our procedures can detect irregularities, including fraud is detailed below. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. Based on our understanding of the group and the parent company, and the industry in which they operate, we considered non- compliance with the following laws and regulations to potentially have a material effect on the financial statements: compliance with AIM rules for companies, employment regulation, health and safety regulation and anti-money laundering regulation. We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as: tax legislation, pension legislation, the Companies Act 2006. 35 Governance To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to: ● Gaining an understanding of the legal and regulatory framework applicable to the group and the parent company, the industry in which they operate, and the structure of the group, and considering the risk of acts by the group and the company which were contrary to the applicable laws and regulations, including fraud; ● Inquiring of the financial directors, management and, where appropriate, those charged with governance, as to whether the group and the parent company are in compliance with laws and regulations. We also discussed their policies and procedures regarding compliance with laws and regulations; ● Reviewing minutes of directors’ meetings in the year, and until the date of this audit report; and ● Discussing the laws and regulations listed above amongst the engagement team, and remaining alert to any indications of non-compliance. In addition, we evaluated the directors’ and management’s incentives and opportunities for fraudulent manipulation of the financial statements. This included the risk of management override of controls. We determined that the principal risks related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, in particular in revenue recognition (which we pinpointed to the cut-off assertion) and manipulation of the Useful Economic Lives of assets, and significant one-off or unusual transactions. Our procedures in relation to fraud included but were not limited to: ● Making enquiries of both the financial and non-financial directors and management on whether they had knowledge of any actual, suspected or alleged fraud; ● Gaining an understanding of the internal controls management have established to mitigate fraud risks; ● Discussing the risks of fraud amongst the engagement team; ● Addressing the risks of fraud through management override of controls by performing journal entry testing; There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities, including fraud, rests with both those charged with governance and management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls. The risks of material misstatement that had the greatest effect on our audit are discussed in the “Key audit matters” section of this report. A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/ auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report 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. Mark Evans (Senior Statutory Auditor) for and on behalf of Crowe U.K. LLP Statutory Auditor Black Country House Rounds Green Road Oldbury B69 2DG 6 May 2025 36 Independent Auditor’s Report to the Members of Andrews Sykes Group plc (continued) Note Year ended 31 December 2024 £'000 Year ended 31 December 2023 £'000 Continuing operations £000 £000 Revenue 4 75,942 78,747 Cost of sales (26,743) (27,017) Gross profit 49,199 51,730 Distribution costs (11,335) (11,451) Administrative expenses (14,909) (16,583) Decrease/(increase) in credit loss provision 232 (959) Operating profit 23,187 22,737 Adjusted EBITDA* 30,933 30,622 Depreciation (5,968) (6,002) Depreciation of right-of-use assets (2,929) (2,814) Profit on the sale of plant and equipment 869 673 Profit on the sale of right-of-use assets 282 258 Operating profit 23,187 22,737 Finance income 6 1,060 1,618 Finance costs 7 (1,060) (759) Profit before tax 8 23,187 23,596 Tax expense 10 (6,389) (5,838) Profit for the year attributable to equity holders of the parent company 16,798 17,758 There were no discontinued operations in either of the above periods. Earnings per share from continuing and total operations: basic (pence) 11 40.13 42.24 diluted (pence) 11 40.13 42.24 Interim, final and special dividends paid per equity share (pence) 30 25.90 85.30 Proposed final dividend per equity share (pence) 30 14.00 14.00 * Earnings before interest, taxation, depreciation, profit on sale of plant and equipment, amortisation and other gains and losses. 37 Financials Consolidated Income Statement For the year ended 31 December 2024 Note Year ended 31 December 2024 £'000 Year ended 31 December 2023 £'000 Profit for the year 16,798 17,758 Other comprehensive income Currency translation differences on foreign operations (464) (421) Net other comprehensive expense that may be recycled to profit and loss (464) (421) Remeasurement of defined benefit pension assets and liabilities 16 (49) (5,988) Related asset restriction 275 2,012 Net other comprehensive income/(expense) that will not be recycled to profit and loss 226 (3,976) Other comprehensive expense for the year net of tax (238) (4,397) Total comprehensive income for the period attributable to equity holders of the parent company 16,560 13,361 38 Consolidated Statement of Comprehensive Income For the year ended 31 December 2024 Note 31 December 2024 £'000 31 December 2023 £'000 Non-current assets Property, plant and equipment 12 19,403 19,344 Right-of-use assets 13 14,874 13,959 Deferred tax asset 15 – 126 Retirement benefit pension surplus 16 1,786 1,618 36,063 35,047 Current assets Stock 17 2,394 2,405 Trade and other receivables 18 17,888 19,251 Current tax assets 19 769 904 Cash and cash equivalents 20 23,181 19,967 44,232 42,527 Total assets 80,295 77,574 Current liabilities Trade and other payables 21 15,865 17,858 Current tax liabilities 22 471 950 Right-of-use lease obligations 23 2,556 2,429 18,892 21,237 Non current liabilities Deferred tax liabilities 15 185 – Right-of-use lease obligations 23 13,473 12,968 Provisions 24 1,560 2,903 15,218 15,871 Total liabilities 34,110 37,108 Net Assets 46,185 40,466 Capital and reserves Share capital 25 419 419 Share premium 13 13 Retained earnings 42,231 36,048 Translation reserve 3,273 3,737 Other reserve 249 249 Total equity 46,185 40,466 These consolidated financial statements of Andrews Sykes Group plc, company number 00175912, were approved and authorised for issue by the Board of directors on 6 May 2025 and were signed on its behalf by: JJ Murray Executive Chairman 39 Financials Consolidated Balance Sheet At 31 December 2024 Note Year ended 31 December 2024 £'000 Year ended 31 December 2023 £'000 Operating activities Profit for the year after tax 16,798 17,758 Adjustments to reconcile profit for the year to net cash inflow from operating activities: Taxation charge 10 6,389 5,838 Finance costs 7 1,060 759 Finance income 6 (1,060) (1,618) Profit on sale of plant and equipment 8 (869) (673) Profit on disposal of right-of-use assets 8 (282) (258) Depreciation of property, plant and equipment 12 5,968 6,002 Depreciation and impairment of right-of-use assets 13 2,929 2,814 Difference between pension contributions paid and amounts recognised in the Consolidated Income Statement 16 166 147 Movements in stocks 17 (1,196) (550) Decrease in receivables 18 901 41 (Decrease)/increase in payables 21 (1,541) 1,289 Movement in provisions 24 (1,310) 221 Cash inflow from continuing operations 27,953 31,770 Interest paid 7 (1,015) (759) Corporation tax paid (6,615) (6,065) Net cash inflow from operating activities 20,323 24,946 Investing activities Disposal of plant and equipment 1,162 1,145 Purchase of property, plant and equipment (5,387) (4,060) Cash on deposit with greater than three month maturity – 16,700 Interest received excluding foreign exchange gains 6 952 1,202 Net cash (outflow)/inflow from investing activities (3,273) 14,987 Financing activities Capital repayments for right-of-use lease obligations (2,920) (2,759) Equity dividends paid 30 (10,841) (35,743) Share repurchase – (1,863) Net cash outflow from financing activities (13,761) (40,365) Net increase/(decrease) in cash and cash equivalents 3,289 (432) Cash and cash equivalents at the start of the year 19,967 20,518 Effect of foreign exchange rate changes (75) (119) Cash and cash equivalents at the end of the year 20 23,181 19,967 40 Consolidated Cash Flow Statement For the year ended 31 December 2024 Share capital £’000 Share premium account £’000 Retained earnings £’000 Translation reserve £’000 Capital redemption reserve £’000 UAE legal reserve £’000 Netherlands legal reserve £’000 Attributable to equity holders of the parent £’000 Balance at 31 December 2022 421 13 59,872 4,158 159 79 9 64,711 Profit for the year – – 17,758 – – – – 17,758 Other comprehensive income for the year net of tax – – (3,976) (421) – – – (4,397) Total comprehensive income – – 13,782 (421) – – – 13,361 Dividends paid* – – (35,743) – – – – (35,743) Share repurchase (2) – (1,863) – 2 – – (1,863) Total of transactions with shareholders (2) – (37,606) – 2 – – (37,606) Balance at 31 December 2023 419 13 36,048 3,737 161 79 9 40,466 Profit for the year – – 16,798 – – – – 16,798 Other comprehensive income/(expense) for the year net of tax – – 226 (464) – – – (238) Total comprehensive income/(expense) – – 17,024 (464) – – – 16,560 Dividends paid* – – (10,841) – – – – (10,841) Total of transactions with shareholders – – (10,841) – – – – (10,841) Balance at 31 December 2024 419 13 42,231 3,273 161 79 9 46,185 * See note 30 for further details. Translation reserve The translation reserve represents the cumulative translation differences on the foreign currency net investments held at the year end since the date of transition to IFRS. Capital redemption reserve The capital redemption reserve has arisen on the cancellation of previously issued shares and represents the nominal value of those shares cancelled. UAE legal reserve Local legislation in the United Arab Emirates requires Khansaheb Sykes LLC to maintain a non-distributable reserve equal to 50% of its share capital. Netherlands legal reserve The Netherlands legal reserve represents the required minimum aggregate share capital and capital reserve needed to be retained under Dutch law by Andrews Sykes BV. 41 Financials Consolidated Statement of Changes in Equity For the year ended 31 December 2024 1 General information Legal status and country of incorporation Andrews Sykes Group plc, company number 00175912, is a public company limited by shares incorporated in England and Wales. The Andrews Sykes Group is one of the market leaders in the rental of specialist hire equipment, offering bespoke solutions to our customers for their temporary or emergency needs. Our product range includes pumping equipment, air conditioning, chillers, heaters, boilers, dehumidifiers and ventilation units. The address of the registered office is Unit 601, Axcess 10 Business Park, Bentley Road South, Wednesbury, West Midlands, WS10 8LQ. Basis of preparation These financial statements have been prepared in accordance with UK-adopted international accounting standards and the parts of the Companies Act 2006 that applies to companies applying UK-adopted international accounting standards in conformity with the requirements of 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 that are stated at deemed cost; and b) Pension scheme assets and liabilities calculated at fair value in accordance with IAS 19. Going concern The Board remains satisfied with the group’s funding and liquidity position and have no external loans in place. The Group continues to make payments to suppliers in accordance with agreed terms and all fiscal payments to the UK and overseas government bodies have been and will continue to be made on time. The directors are required to consider the application of the going concern concept when approving financial statements. The principal element required to meet the test is sufficient liquidity for a period from the end of the year until at least 12 months subsequent to the date of approving the accounts. Management has prepared a detailed “bottom-up” budget, including profit and loss and cash flow for the financial year ending 31 December 2025, and has extrapolated this forward until the end of May 2026 in order to form a view of an expected trading and cash position for the required period. This base level forecast fully incorporates management’s expectations around the performance of the group and was prepared on a cautiously realistic basis. This forecast takes into account specific factors relevant in each of our businesses. These 2025 forecasts have been reviewed and approved by the Board. Whilst profitability and cash flow performance to the end of March 2025 have been close to expectation, in order to further assess the company’s ability to continue to trade as a going concern, management have performed an exercise to assess a reasonable but plausible downside scenario and the impact of this on profit and cash. For the purposes of the cash forecast, only the below assumptions have been incorporated into this forecast: ● Normal level of dividends will be maintained during the 12 months subsequent to the date of approving the accounts. ● No new external funding is sought. ● Hire turnover and product sales reduced by 18% versus budget – a variance level seen across any individual product class for 2025 and 2024 actual results versus budgets. ● All overheads continue at the base forecast level apart from overtime and commission and repairs and marketing, which are reduced by 5% and travel costs reduced by 2.5%. ● All current vacancies are filled immediately; and ● Capital expenditure is reduced by 5%. The above factors have all been reflected in the forecast for the period ending 12 months subsequent to the date of approving the accounts. The Board considers this scenario to be extremely unlikely. The headline numbers at a group level would be: ● group turnover for the 12 months ending 31 December 2025 is forecast to be adverse to the 31 December 2024 figures. Operating profit is below the profit for 2024; and ● closing net funds as at the end of May 2026 are forecast to be comparable to the level reported at 31 December 2024. Under this reasonable but plausible downside scenario, the group has sufficient net funds throughout 2025 and up to the end of May 2026, to continue to operate as a going concern. 42 Group Accounting Policies For the year ended 31 December 2024 A final sensitivity analysis was performed in order to assess by how much group turnover could fall before further external financing would need to be sought. Under this scenario it was assumed that: ● capital expenditure falls proportionately to turnover; ● temporary staff are removed from the group; and ● various overheads decrease proportionately with turnover. Given these assumptions, and for modelling purposes only, assuming dividends are maintained at normal levels, group turnover could fall to below £40 million on an annualised basis without any liquidity concerns. Due to the level of confidence the Board has in the future trading performance of the group, this scenario is considered highly unlikely to occur. The group has considerable financial resources and a wide operational base. Based on the detailed forecast prepared by management, the Board has a reasonable expectation that the group has adequate resources and management experience to continue to trade for the foreseeable future, and at least 12 months from the date of approving these financial statements, even in the reasonable but plausible downside scenario identified by the group. Management have also considered the risks previously identified around climate change and their potential impact on the forecasts produced and has not identified any significant risks that impact the going concern assumption. Accordingly, the Board continues to adopt the going concern basis when preparing this Annual Report and Financial Statements. Functional and presentational currency The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in Sterling, which is the functional currency of the company, and the presentation currency for the consolidated financial statements. 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; and ● 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 76 to 83, have been prepared in accordance with FRS 102 and the Companies Act 2006. The UK subsidiaries’ company financial statements will also be prepared in accordance with FRS 102 and the Companies Act 2006. 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 2024 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. Future adoption of International Financial Reporting Standards At the date of the authorisation of these financial statements, management are not aware of any new UK-adopted international accounting standards that would have a material impact on the group’s financial statements. 43 Financials 2 Material 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 2024. 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. 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. 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, which had previously been offset against reserves under UK GAAP, was not recognised in the opening IFRS balance sheet. Property, plant and equipment 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 and charged to cost of sales and administrative expenses in the income statement 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 2% Short leasehold buildings Period of the lease Equipment for hire: Heating, air conditioning and other environmental control equipment 14% to 33% Pumping equipment 10% to 33% Accessories 33% Motor vehicles 20% to 25% Plant and machinery 7.5% to 33% Annual reviews are made of estimated useful lives and material residual values. More substantial repairs, such as replacement parts, are capitalised, with the asset also removed from the fixed asset register. Profit on the sale of plant and equipment is credited within operating profit. Profit on the sale of plant and equipment are ad-hoc transactions and do not constitute a separate line of business. Leased assets Lessor accounting The group does not hold any assets for hire under finance leases. Assets held for hiring to customers 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. Further detail has been disclosed in the revenue note on page 50. 44 Group Accounting Policies For the year ended 31 December 2024 (continued) 2 Material accounting policies continued Lessee accounting All leases, other than those of a short-term nature, are capitalised and included on the balance sheet as a right-of-use asset and a right-of-use lease obligation. The amount capitalised is the net present value of the future expected minimum capital payments under the group’s lease obligations discounted at the group’s incremental borrowing rates. The right-of-use assets are then depreciated over the term of the lease. Interest is charged to the income statement and is calculated based on the incremental borrowing rate. For short-term leases, as defined by IFRS 16, lease payments are charged as an expense in the income statement on a straight-line basis over the lease term. This accounting policy applies for non-capital payments under all leases, for example, maintenance costs on vehicles. The commitments for such leases continue to be disclosed as operating lease obligations in note 28. 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. 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 on temporary differences. This involves the comparison of the carrying amount of assets and liabilities in the consolidated financial statements with their respective tax bases. Deferred tax is provided on the difference between the carrying value of the right-of-use asset and the associated lease liability, and their respective tax bases, both calculated in accordance with IFRS 16. 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. Stocks Stocks are valued at the lower of cost of purchase and net realisable value on a first in, first out basis. 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. Items of stock are periodically capitalised to property, plant and equipment and added to the hire fleet for rental out to external customers. These items of stock are transferred at cost price and capitalised within property, plant and equipment. 45 Financials 2 Material accounting policies continued 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 “assets at amortised cost, assets at fair value through profit or loss and fair value through other comprehensive income” 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 assets held at amortised cost and are, initially, measured at fair value, including transaction costs incurred. No financial assets are currently classified as assets measured at fair value through profit or loss or at fair value through other comprehensive income. The categories of financial assets are 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”. Assets held at amortised cost Trade receivables are recognised as transaction price on initial recognition. 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 as reduced by appropriate allowances for estimated irrecoverable amounts. The group makes use of a simplified approach in accounting for the expected credit losses on trade and other receivables and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. The group uses its historical experience, external indicators and forward-looking information to calculate the expected credit loss using a provision matrix. The group assesses impairment of trade receivables on a collective basis as they possess shared credit risk characteristics and they have been grouped based on the number of days overdue. See note 18 for an analysis of how the impairment requirements of IFRS 9 are applied. 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. 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. 46 Group Accounting Policies For the year ended 31 December 2024 (continued) 2 Material accounting policies continued Retirement benefit costs Defined benefit scheme As disclosed in note 16, 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 are presented separately on the balance sheet within non-current assets, respectively, after the withholding tax applicable to pension scheme surpluses in the UK of 35% has been included against them. An asset restriction is applied to the associated defined benefit surplus as it is expected that the defined benefit scheme would deduct withholding tax from any surplus before a net surplus is returned to the company. No deferred taxation is recognised for the timing difference on actuarial movements on the basis that the net surplus is expected to be recovered by way of a refund on wind-up. Net-defined benefit pension scheme surpluses are only recognised to the extent of any future refunds to the scheme. Defined contribution schemes Employer’s contributions are charged to the income statement on an accruals basis. Net funds Net funds are defined as including cash and cash equivalents, ring-fenced deposit accounts, bank and other loans, finance lease obligations, right-of-use lease obligations calculated in accordance with IFRS 16 and derivative financial instruments stated at current fair value. 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 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 Consolidated Statement of Changes in Equity. 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, which are included within the translation reserve at the date of disposal of the relevant overseas company, are recognised in the consolidated income statement. 47 Financials 2 Material accounting policies continued Revenue recognition Revenue Revenue is recorded at transaction price being the amount of consideration to which the group expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties, for example, some sales or value-added taxes. The group has the following categories of revenue: ● Rental or lease income that is recognised on a straight-line basis over the period of the hire in accordance with IFRS 16. Hire revenue includes compensation receipts for lost or damaged equipment, chargeable to the customer under the terms of the hire agreement, which is recognised on an accruals basis when the loss or damage is identified. Damage waiver elements entered into by the customers are treated as components of the underlying hire and, as such, are recognised in the same manner as the underlying lease. Any rebates are treated as variable lease income and are recognised in the income statement when it is earned. ● Hire-related activities including delivery, collection and labour charges and the provision of fuel management services are considered to be unbundled from the underlying rental lease and are recognised on a point-in-time basis in accordance with IFRS 15. These hire-related activities are disclosed in notes 4 and 5 within the same category as the underlying lease, despite them being recognised in accordance with a IFRS 15. ● Revenue for the sale of goods that is recognised at a point in time (i.e. on the delivery of goods) in accordance with IFRS 15. ● Maintenance revenue is recognised at a point in time when the service has been completed, which is normally within one day, in accordance with IFRS 15. ● Revenue relating to installation and sale of units is recognised at a point in time (i.e. when the installation is complete) in accordance with IFRS 15. Contracts are entered into with customers to provide one of the above goods or services on a standalone basis. The standalone selling price of the related performance obligation is, therefore, clearly determined from the contract. The total transaction price is estimated as the amount of the consideration to which the group expects to be entitled in exchange for transferring the promised goods or services after deducting trade discounts and volume rebates. Trade discounts and volume rebates are estimated based on the terms of the contractually agreed arrangements. Revenue recognised under IFRS 15 is recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. Therefore, the amount of revenue recognised is adjusted for any negotiated rebates, which are estimated based on historical data. Sales or revenue rebates are recognised as a separate liability to reflect the method of settlement and included as a component of accruals (see note 22). This balance also includes separate rebates for hire revenue whereby recognition and measurement criteria have been met under IFRS 16. The Group reviews its estimate at each reporting date and updates the liability accordingly. Payment terms are between 30 and 60 days for all types of sale and, therefore, the impact of the time value of money is minimal. 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. 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. Adjusted EBITDA Adjusted earnings before interest, taxation, depreciation, profit on the sale of plant and equipment, amortisation and non-recurring items (EBITDA) is disclosed as a separate line on the face of the consolidated income statement and reconciled to operating profit. Adjusted EBITDA is commonly used in the industry as a non-statutory measure of the ability of the group to generate cash and management considers that its disclosure provides useful information to shareholders in conjunction with the statutory indicators. Finance costs Finance costs are recognised in the income statement on an accruals basis in the period in which they are incurred. 48 Group Accounting Policies For the year ended 31 December 2024 (continued) 2 Material accounting policies continued Provisions Dilapidation costs expected to be settled at the end of the lease term for rectification of wear and tear damage of the group’s leasehold premises are provided for as an expense over the tenancy period as the wear and tear occurs. The cost of the remedial work required on the group’s properties is based upon the group’s previous dilapidation experience and quotes received from professional surveyors. Restructuring costs include those costs, including redundancy and associated move costs, expected to be incurred as a result of site relocation. France closure costs include those costs, including redundancy, legal and contractual exit costs expected to be incurred as a result of the decision to cease operations in France. 3 Use of critical accounting judgements 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. Judgements Pension scheme surplus recoverability 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 unconditional right to recover the related net surplus upon wind-up, and the expected manner of recovery of any surplus is via a refund, it is appropriate to recognise the asset in the consolidated financial statements. When assessing the valuation of the surplus, the directors have recognised any associated tax as an asset restriction. Disclosure of France ceasing to trade When assessing the disclosures required around the French subsidiary ceasing to trade during the year, the directors have considered IFRS 5 and have concluded that France is not to be classified and disclosed as a discontinued operation due to France not being disposed of or classified as held for sale. Estimates Pension scheme assumptions and mortality tables As set out in note 16, 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 16 on page 63. Useful economic life of hire fleet assets included within property, plant and equipment Management review their estimate of the useful lives of equipment for hire assets at each reporting date based on the expected utility of the assets. Uncertainties in these estimates include those relating to technological obsolescence that may change the utility of certain equipment. The group incurs maintenance spend in order to keep its fleet to a high level of repair, which often extends an individual asset’s life beyond its originally assessed useful economic life. During the year, the group incurred £2.0m of repair costs. More substantial repairs, such as replacement parts, are capitalised, with the asset also removed from the fixed asset register. To provide sufficient asset availability for periods of extreme weather, the group routinely keeps Nil net book value items rather than scrap them. The profits on the disposal of hire assets represent occasional requests to sell hire assets, often to an existing customer, and are not considered by management to indicate that there is positive residual value in the entire hire assets portfolio. The group also considers market-based evidence from other comparable industry competitors when assessing the useful economic life of its assets. Information on the estimated useful lives of equipment for hire is included in the accounting policies. Further details of property, plant and equipment are disclosed in note 12. 49 Financials Notes to the Consolidated Financial Statements For the year ended 31 December 2024 3 Use of critical accounting judgements and estimates continued If the economic life of each of the hire fleet assets was one year less than estimated, the depreciation charge would be increased by, approximately, £1.0 million. If the economic life was one year more than estimated, the depreciation charge would be reduced by, approximately, £1.2 million. Dilapidation estimates The group operates from a large number of leased premises in the UK that are subject to lease clauses for rectification of wear and tear damage incurred over time. Management consider the main factors in assessing the appropriate allowance for wear and tear are the length of the expired portion of any given property lease, the Group’s previous experiences of wear and tear damage and the size of each operating facility. In aiding the dilapidation assessment, the Group will make use of external professional surveyors. If the estimate of wear and tear damage, measured as an amount per square foot per year was increased by £1 per square foot per year, the dilapidation provision created in the year would increase by, approximately, £0.5m. Similarly, if the amount per square foot per year was decreased by £1 per square foot per year, the dilapidation provision created in the year would decrease by, approximately, £0.5m. Further disclosure is included in note 24 on page 70. 4 Revenue An analysis of the group’s revenue by income stream is as follows: 2024 £’000 2023 £’000 Continuing operations Hire and hire related 70,932 73,706 Sales 3,441 2,885 Maintenance 1,091 1,243 Installation including sales of units 478 913 Group consolidated revenue from the sale of goods and provision of services 75,942 78,747 50 Notes to the Consolidated Financial Statements For the year ended 31 December 2024 (continued) 5 Business and geographical segmental analysis The group operates in the United Kingdom, Europe (The Netherlands, Belgium, Italy, France, Germany, Switzerland and Luxembourg) and the United Arab Emirates providing the hire and sale of a range of environmental control equipment. It also installs and maintains 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 and maintenance (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. These Divisional Directors meet the IFRS 8 definition of segmental managers. The group holds no external loans. The internal management accounts provided to the Board include balance sheet and cash flow information provided on both an entity only and consolidated basis. Capital expenditure and working capital movements are reviewed on an entity basis. The Chief Operating Decision Maker is considered to be a subsection of the Board including the Chairman and Group Managing Director. The directors, therefore, consider that the group’s revenue-generating operating segments that are reviewed on a regular basis by the Board, and for which discrete financial information is available, are: Activity Entity Location Hire and sales Andrews Sykes Hire Limited United Kingdom Andrews Sykes BV The Netherlands Andrews Sykes BVBA Belgium Nolo Climat S.R.L. Italy Andrews Sykes Climat Location SAS France Klimamieten AS GmbH Germany Andrews Sykes Climat Location SA Switzerland Khansaheb Sykes LLC United Arab Emirates Andrews Sykes Luxembourg SARL Luxembourg Installation and maintenance Andrews Air Conditioning and Refrigeration Limited United Kingdom The directors consider that the long-term economic characteristics of the hire and sales operations based in the The Netherlands, Belgium, Italy, Germany, 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. Whilst there is a level of currency fluctuation between these entities, the directors do not consider the currencies themselves (Euro and Swiss Franc) to be particularly volatile when compared to the group’s presentational currency or to be exposed to significant fluctuations that would indicate the economic characteristics of those operations are not appropriate to be aggregated as reportable segments under IFRS 8. Whilst the operational activities of the hire and sales business in the UK are similar to those in Europe, the legal and monetary jurisdictions are distinctively different. 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. 51 Financials 5 Business and geographical segmental analysis continued The reportable segments are, therefore: Segment Entity Location Hire and sales UK Andrews Sykes Hire Limited United Kingdom Andrews Sykes Properties Limited United Kingdom Hire and sales Europe Andrews Sykes BV The Netherlands Andrews Sykes BVBA Belgium Nolo Climat S.R.L. Italy Andrews Sykes Climat Location SAS France Klimamieten AS GmbH Germany Andrews Sykes Climat Location SA Switzerland Andrews Sykes Luxembourg SARL Luxembourg Hire and sales Middle East Khansaheb Sykes LLC United Arab Emirates Installation and maintenance Andrews Air Conditioning and Refrigeration Limited United Kingdom The property holding company, Andrews Sykes Properties Limited, is considered immaterial to the Group as a whole. On this basis, and because it holds properties mainly for the use of Andrews Sykes Hire Limited, it has been included within the Hire and Sales UK segment. Transactions between the above reportable segments are made on an arm’s length basis. 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. (i) Business segment Income statement analysis for the 12 months ended 31 December 2024 Revenue Hire & sales UK £’000 Hire & sales Europe £’000 Hire & sales Middle East £’000 Installation and maintenance £’000 Subtotal £’000 Eliminations £’000 Consolidated results £’000 External sales: Hire and hire related 41,062 23,205 6,665 – 70,932 – 70,932 Sales 2,037 388 1,016 – 3,441 – 3,441 Maintenance 4 – – 1,087 1,091 – 1,091 Installations – – – 478 478 – 478 Total external sales 43,103 23,593 7,681 1,565 75,942 – 75,942 Inter-segment sales 31 496 – – 527 (527) – Total revenue 43,134 24,089 7,681 1,565 76,469 (527) 75,942 Segment result 15,417 8,194 1,068 17 24,696 24,696 Unallocated overheads and expenses (1,509) Operating profit 23,187 Finance income 1,060 Finance costs (1,060) Profit before Taxation 23,187 Taxation (6,389) Profit for the period from continuing and total operations 16,798 52 Notes to the Consolidated Financial Statements For the year ended 31 December 2024 (continued) 5 Business and geographical segmental analysis continued Income statement analysis for the 12 months ended 31 December 2023 Revenue Hire & sales UK £’000 Hire & sales Europe £’000 Hire & sales Middle East £’000 Installation and maintenance £’000 Subtotal £’000 Eliminations £’000 Consolidated results £’000 External sales: Hire and hire related 42,840 25,964 4,902 – 73,706 – 73,706 Sales 1,479 700 706 – 2,885 – 2,885 Maintenance – – – 1,243 1,243 – 1,243 Installations 47 4 – 862 913 – 913 Total external sales 44,366 26,668 5,608 2,105 78,747 – 78,747 Inter-segment sales 240 917 100 – 1,257 (1,257) – Total revenue 44,606 27,585 5,708 2,105 80,004 (1,257) 78,747 Segment result 15,009 8,663 401 (48) 24,025 24,025 Unallocated overheads and expenses (1,288) Operating profit 22,737 Finance income 1,618 Finance costs (759) Profit before Taxation 23,596 Taxation (5,838) Profit for the period from continuing and total operations 17,758 Balance sheet information as at 31 December 2024 Hire & sales UK £’000 Hire & sales Europe £’000 Hire & sales Middle East £’000 Installation and maintenance £’000 Subtotal £’000 Eliminations £’000 Consolidated results £’000 Segment assets 36,717 20,486 7,011 538 64,752 – 64,752 Retirement benefit pension surplus 1,786 Current tax asset 769 Unallocated corporate assets 12,988 Consolidated total assets 80,295 Segment liabilities (21,535) (7,958) (2,808) (427) (32,728) – (32,728) Current tax liabilities (471) Deferred tax liability (185) Unallocated corporate liabilities (726) Consolidated total liabilities (34,110) 53 Financials 5 Business and geographical segmental analysis continued Balance sheet information as at 31 December 2023 Hire & sales UK £’000 Hire & sales Europe £’000 Hire & sales Middle East £’000 Installation and maintenance £’000 Subtotal £’000 Eliminations £’000 Consolidated results as restated £’000 Segment assets 36,665 20,201 5,177 645 62,688 62,688 Retirement benefit pension surplus 1,618 Deferred tax asset 126 Current tax asset 904 Unallocated corporate assets 12,238 Consolidated total assets 77,574 Segment liabilities (24,171) (9,150) (1,478) (488) (35,287) – (35,287) Current tax liabilities (950) Unallocated corporate liabilities (871) Consolidated total liabilities (37,108) Other information for the 12 months ended 31 December 2024 Hire & sales UK £’000 Hire & sales Europe £’000 Hire & sales Middle East £’000 Installation and maintenance £’000 Consolidated results £’000 Capital additions 4,523 907 1,127 – 6,557 Right-of-use asset additions 2,544 1,132 439 95 4,210 Depreciation 3,276 1,934 758 – 5,968 Right-of-use asset depreciation 1,698 1,023 160 48 2,929 Other information for the 12 months ended 31 December 2023 Hire & sales UK £’000 Hire & sales Europe £’000 Hire & sales Middle East £’000 Installation and maintenance £’000 Consolidated results £’000 Capital additions 3,764 2,547 271 – 6,582 Right-of-use asset additions 7,020 707 8 137 7,872 Depreciation 3,078 2,155 769 – 6,002 Right-of-use asset depreciation 1,745 962 53 54 2,814 (ii) Geographical segments The geographical analysis of the group’s revenue is as follows: By origin By destination 2024 £’000 2023 £’000 2024 £’000 2023 £’000 United Kingdom 44,668 46,471 44,297 46,229 Europe 23,593 26,667 23,980 26,895 Middle East and Africa 7,681 5,609 7,665 5,614 Rest of the World – – – 9 75,942 78,747 75,942 78,747 54 Notes to the Consolidated Financial Statements For the year ended 31 December 2024 (continued) 5 Business and geographical segmental analysis continued The carrying amounts of segment assets and non-current assets (excluding retirement benefit pension surplus, current 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 2024 £’000 2023 £’000 2024 £’000 2023 £’000 United Kingdom 50,243 49,548 25,197 23,536 Europe 20,486 20,201 7,413 8,714 Middle East and Africa 7,011 5,177 1,667 1,053 77,740 74,926 34,277 33,303 6 Finance income 2024 £’000 2023 £’000 Net pension scheme interest on pension scheme surplus (note 16) 108 388 Interest receivable on bank deposit accounts 952 1,202 Inter-company foreign exchange gains – 28 1,060 1,618 7 Finance costs 2024 £’000 2023 £’000 Interest charge on right-of-use lease obligations 1,015 759 Inter-company foreign exchange losses 45 – 1,060 759 55 Financials 8 Profit before taxation The following have been charged/(credited) in arriving at the profit before taxation: Note 2024 £’000 2023 £’000 Net foreign exchange trading losses 86 85 Depreciation of property, plant and equipment 12 5,968 6,002 Depreciation of right-of-use assets 13 2,929 2,814 Profit on sale of plant and equipment 12 (869) (673) Profit on sale of right-of-use assets 13 (282) (258) Cost of stock recognised as an expense 17 8,480 7,680 Vehicle and travel costs 3,623 4,261 Property costs 3,169 5,462 Rehire costs 3,060 2,589 Professional services 2,049 2,710 IT and communication 1,490 1,629 Operating lease rental payments for short-term leases 292 287 Gross employment costs 9 22,481 23,113 Remuneration payable to the auditor and its associates: The audit of the consolidated accounts 96 98 The audit of the group's subsidiaries annual accounts 183 211 52,755 56,010 Representing functional costs of: Cost of sales 26,743 27,017 Distribution costs 11,335 11,451 Administrative expenses 14,909 16,583 (Decrease)/increase in credit loss provision (232) 959 52,755 56,010 No fees were payable to the company’s auditor in respect of non-audit services in the current or prior year. 9 Employee information The average number of people employed by the group during the year was: 2024 Number 2023 Number Sales and distribution 141 155 Engineers 167 191 Managers and administration 138 133 Total employees 446 479 56 Notes to the Consolidated Financial Statements For the year ended 31 December 2024 (continued) 9 Employee information continued The aggregate employment costs, including redundancy, of these employees were as follows: 2024 £’000 2023 £’000 Wages and salaries 18,788 19,206 Redundancy and termination payments 60 85 Social security costs 2,435 2,647 Other defined contribution pension costs (note 16) 1,198 1,175 Employment costs 22,481 23,113 Key management compensation Amounts paid to group individuals, including directors, having authority and responsibility for planning, directing and controlling the group’s activities were as follows: 2024 £’000 2023 £’000 Short-term employee benefits 2,596 2,855 Post employment benefits – pensions 116 134 Social security costs 411 438 3,123 3,427 Directors’ emoluments Directors’ emoluments for the current and prior financial year were as follows: 2024 2023 Director Emoluments £’000 Pension £’000 Total £’000 Emoluments £’000 Pension £’000 Total £’000 AJ Kitchingman 42 – 42 42 – 42 MC Leon 20 – 20 20 – 20 JJ Murray 44 – 44 44 – 44 JP Murray 20 – 20 20 – 20 CD Webb 516 7 523 514 – 514 642 7 649 640 – 640 No directors were granted or exercised share options during either the current or prior financial periods. For key management personnel purposes, £79,000 (2023: £78,000) of NI contributions should be included in the above totals. The number of directors in office at the year end to whom retirement benefits are accruing are as follows: 2024 Number 2023 Number Defined contribution 1 1 Defined benefit – – The total amount payable to the highest-paid director in respect of remuneration was £516,000 (2023: £514,000). Company pension contributions of £7,000 (2023: £Nil) were made to a money purchase pension scheme on his behalf. In the current and prior year, no director had an accrued annual pension under the defined benefit scheme. No contributions were paid during the current or prior period into the defined benefit scheme. 57 Financials 10. Taxation 2024 £’000 2023 £’000 Current tax: UK Corporation tax at 25% (2023: 23.5%) 3,288 3,457 Adjustments in respect of prior year (19) 3 3,269 3,460 Overseas tax based on the taxable profit for the period 2,223 2,275 Overseas tax adjustments in respect of prior years 586 – 2,809 2,275 Total current tax charge 6,078 5,735 Deferred tax: Origination and reversal of temporary differences 325 177 Adjustments in respect of prior years (14) (74) Total deferred tax charge 311 103 Tax expense reported in the consolidated income statement 6,389 5,838 The tax charge for the financial period can be reconciled to the profit before tax per the income statement multiplied by the standard effective tax rate in the UK of 25% (2023: 23.5%) as follows: 2024 £’000 2023 £’000 Reconciliation of total tax charge Profit on ordinary activities before tax 23,187 23,596 Corporation tax charge at standard rate of 25% (2023: 23.5%) 5,797 5,545 Adjusted by the effects of: Expenses not deductible for tax purposes 57 79 Effects of different tax rates of overseas subsidiaries (139) 42 Utilisation of overseas tax losses – (22) Overseas tax losses not recognised 121 265 Adjustments to tax charge in respect of prior periods 553 (71) Total tax expense reported in the consolidated income statement 6,389 5,838 58 Notes to the Consolidated Financial Statements For the year ended 31 December 2024 (continued) 11 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. 2024 Total earnings £’000 Number of shares Basic earnings/weighted average number of shares 16,798 41,858,744 Basic earnings per ordinary share (pence) 40.13 2023 Total earnings £’000 Number of shares Basic earnings/weighted average number of shares 17,758 42,043,715 Basic earnings per ordinary share (pence) 42.24 Diluted earnings per share 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. 59 Financials 12 Property, plant and equipment Property £’000 Equipment for hire £’000 Motor vehicles £’000 Plant and machinery £’000 Total £’000 Cost At 31 December 2022 4,602 71,306 1,694 4,878 82,480 Exchange differences (4) (654) (43) (33) (734) Additions – 3,735 286 39 4,060 Transferred from inventory – 2,522 – – 2,522 Disposals – (7,144) (281) (784) (8,209) At 31 December 2023 4,598 69,765 1,656 4,100 80,119 Exchange differences (11) (888) (27) (26) (952) Additions 92 4,328 45 922 5,387 Transferred from inventory – 1,170 – – 1,170 Disposals (1) (5,717) (608) (613) (6,939) At 31 December 2024 4,678 68,658 1,066 4,383 78,785 Depreciation At 31 December 2022 1,159 56,727 1,270 3,963 63,119 Exchange differences (3) (542) (35) (29) (609) Charge for year 89 5,488 124 301 6,002 Disposals – (6,796) (278) (663) (7,737) At 31 December 2023 1,245 54,877 1,081 3,572 60,775 Exchange differences (10) (666) (16) (23) (715) Charge for year 61 5,465 155 287 5,968 Disposals (1) (5,557) (480) (608) (6,646) At 31 December 2024 1,295 54,119 740 3,228 59,382 Net book value At 31 December 2024 3,383 14,539 326 1,155 19,403 At 31 December 2023 3,353 14,888 575 528 19,344 At 31 December 2022 3,443 14,579 424 915 19,361 The group did not have any non-cancellable contractual commitments for the acquisition of property, plant and equipment at either 31 December 2024 or 31 December 2023. The additions value attributed to hire fleet items is a combined amount of purchased fixed assets as well as items transferred from stock during the period. Net book value of land and buildings comprises: 2024 £’000 2023 £’000 Freehold 3,284 3,313 Long leasehold 99 40 3,383 3,353 60 Notes to the Consolidated Financial Statements For the year ended 31 December 2024 (continued) 13 Right-of-use assets Property £’000 Motor vehicles £’000 Plant and machinery £’000 Total £’000 Cost At 31 December 2022 12,396 6,937 790 20,123 Exchange differences (99) (37) (3) (139) Additions 6,397 1,470 5 7,872 Disposals (2,507) (1,312) (71) (3,890) At 31 December 2023 16,187 7,058 721 23,966 Exchange differences (74) (27) (3) (104) Additions 453 3,757 – 4,210 Disposals (1,207) (1,963) (437) (3,607) At 31 December 2024 15,359 8,825 281 24,465 Depreciation At 31 December 2022 5,666 4,160 630 10,456 Exchange differences (66) (29) (3) (98) Charge for year 1,378 1,342 94 2,814 Disposals (1,852) (1,242) (71) (3,165) At 31 December 2023 5,126 4,231 650 10,007 Exchange differences (50) (21) (2) (73) Charge for year 1,372 1,507 50 2,929 Disposals (1,007) (1,839) (426) (3,272) At 31 December 2024 5,441 3,878 272 9,591 Net book value At 31 December 2024 9,918 4,947 9 14,874 At 31 December 2023 11,061 2,827 71 13,959 At 31 December 2022 6,730 2,777 160 9,667 As disclosed in note 23, the right-of-use lease obligations are secured on the above assets. The nature of the group’s leasing activities are primarily around leasing property from which the entity can trade from and leasing vehicles for hire equipment transportation, servicing and general sales and administration staff. The expense relating to short-term leases for which the group has made the use of the short-term exemption is disclosed in note 8. The lease commitments for short-term leases is disclosed in note 28 and the maturity analysis of lease liabilities is in note 23. The interest expenses on lease liabilities is disclosed in note 7. The capital repayment cash outflow for leases is disclosed in the consolidated cashflow statement. The group has contractual asset hire revenue receivable of £663,000 due within less than one year after the year-end date (2023: £1,761,000). No amounts are contractually receivable after more than one year (2023: £Nil). 61 Financials 14 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 by virtue of the right to appoint the majority of the company’s directors. 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. 15 Deferred tax asset/(liability) The deferred tax assets and liabilities recognised separately by the group and the movements thereon, during the current and prior periods, are as follows: Temporary differences on lease assets and liabilities £’000 Temporary differences on property, plant and equipment £’000 Provisions and other short-term timing differences £’000 Total £’000 Asset at 31 December 2022 414 (26) (159) 229 Credited/(charged) to income statement (note 10) (78) 30 (55) (103) Asset/(liability) at 31 December 2023 336 4 (214) 126 Credited/(charged) to income statement (note 10) (47) (251) (13) (311) Asset/(liability) at 31 December 2024 289 (247) (227) (185) The deferred tax asset and liabilities in respect of lease assets and liabilities have been shown on a net basis in the above table. The deferred tax balances at both 31 December 2024 and 31 December 2023 have been calculated based on the rates that have been substantially enacted at the balance sheet date and which the directors anticipate will apply when the temporary differences are expected to reverse. Accordingly, a rate of 25% (2023: 25%) 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. A deferred tax asset relating to overseas tax losses has not been recognised totalling £1,131,000 (2023: £1,093,000). There is no expiry date on the utilisation of these losses. Of the above recognised deferred tax asset, approximately, £242,000 (2023: £237,000) is expected to be recovered after more than 12 months. 62 Notes to the Consolidated Financial Statements For the year ended 31 December 2024 (continued) 16 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”), as well as overseas 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 gender 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. During the previous year, the group completed an insurance buy-in of the scheme meaning the scheme has been derisked in terms of investment, interest rate, inflation and longevity risks. The buy-in secures an insurance asset that fully matches, subject to final price adjustments, the remaining pension liabilities of the scheme. As at 31 December 2024, the group had a net-defined benefit pension scheme surplus, calculated in accordance with IAS 19 using the assumptions as set out below, of £2,382,000 (2023: £2,489,000). It is assumed that the scheme surplus will be recovered through a refund; as such, the applicable withholding tax of 25% has been applied to the scheme surplus giving a net surplus recognised on the balance sheet of £1,786,000 (2023: £1,618,000). This asset has been recognised in these financial statements as the directors are satisfied that it is recoverable in accordance with IFRIC 14. The last formal triennial funding valuation was as at 31 December 2022. The valuation, including a revised schedule of contributions, was agreed between the pension scheme trustees and the Board of directors in December 2023 and was effective from 1 January 2024. In accordance with this schedule of contributions, and based on the actions take by the group during 2023 as already described, the group is no longer required to make any regular contributions into the scheme. This replaces the 31 December 2019 triennial valuation, which required the group to make regular contributions into the scheme of £10,000 per month for the period 1 January 2023 to 31 December 2024 and continuing through to 31 December 2025 or until a revised schedule of contributions was agreed, as was done in December 2023. Consequently, the group has made total contributions to the pension scheme of £Nil during 2024 (2023: £120,000) and expects to make contributions of £Nil during 2025. Principal risks Historically, the principal risks related to investment, interest rate, inflation and longevity risks. However, the DB Scheme has implemented a whole Scheme buy-in, essentially fully hedging all of these risks. The following table summarises the principal risks associated with the group’s DB scheme in the prior year: Investment risk The present value of defined benefit liabilities is calculated using a discount rate set by reference to high-quality 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 only be partially offset by an increase in the value of the bond investments held. Inflation risk An increase in inflation would increase the value of pension liabilities. The assets would be expected to also increase, to the extent they are linked to inflation, but this would not be expected to fully match the increase in liabilities. Longevity risk The present value of the defined benefit liabilities is calculated having regards to a best estimate of the mortality of scheme members. If members live longer than this mortality assumption, this will increase the liabilities. 63 Financials 16 Retirement benefit pension schemes continued The last full actuarial valuation was carried out as at 31 December 2022. A qualified independent actuary has updated the results of this valuation to calculate the surplus as disclosed below. The major assumptions used in this valuation to determine the present value of the scheme’s defined benefit obligation were as follows: 31 December 2024 31 December 2023 Rate of increase of pensions in payment 3.05% 3.10% Rate of increase of pensions in deferment 2.80% 2.65% Discount rate 5.45% 4.50% Inflation assumption – RPI 3.20% 3.10% Inflation assumption – CPI 2.80% 2.65% Percentage of deferred members taking maximum tax-free lump sum on retirement 0.00% 0.00% Assumptions regarding future mortality experience are set based on advice in accordance with published statistics. The current mortality table used is 100% S3PA CMI_2023 (2023: 100% S3PA CMI_2022), heavy tables for males and middle for females, with a 1.25% per annum long-term improvement rate for both males and females (2023: 1.25% for both males and females). The assumed average life expectancy in years of a pensioner retiring at the age of 65 given by the above tables is as follows: 2024 Years 2023 Years Current pensioners at 65 Male 21.4 19.2 Female 23.9 23.3 Future pensioners currently 45 Male 22.6 20.6 Female 25.3 24.9 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: 2024 £’000 2023 £’000 Listed investments: Gilts 686 735 686 735 Cash 2,496 2,612 Insurance asset (not listed investment) 25,148 27,199 Fair value of plan assets 28,330 30,546 Present value of liability (25,948) (28,057) Scheme surplus 2,382 2,489 Impact of withholding tax (596) (871) Net pension asset recognised on the balance sheet 1,786 1,618 64 Notes to the Consolidated Financial Statements For the year ended 31 December 2024 (continued) 16 Retirement benefit pension schemes continued Movement in scheme assets 2024 £’000 2023 £’000 Fair value at beginning of year 30,546 36,809 Interest income on scheme assets 1,329 1,700 Return on assets (excluding interest income) (1,416) (5,914) Administrative expenses charged to the income statement (166) (267) Employer contributions – 120 Benefits paid (1,963) (1,902) Fair value at end of year 28,330 30,546 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. The group did not hold any unlisted investments at either period end. Movement in scheme liabilities 2024 £’000 2023 £’000 Benefit obligation at start of year (28,057) (28,573) Interest cost (1,221) (1,312) Actuarial gain/(loss) arising from: Demographic assumptions (1,327) (819) Financial assumptions 2,759 726 Experience adjustments (65) 19 Benefits paid 1,963 1,902 Benefit obligation at end of year (25,948) (28,057) Benefit obligation at end of year The present value of the defined benefit obligation of £25,948,000 (2023: £28,057,000) comprised, approximately, 40% relating to deferred participants and 60% relating to pensioners (2023: 40% deferred participants and 60% pensioners). The weighted average duration of the pension scheme liabilities is 11 years (2023: 12 years). Key assumptions – sensitivity analysis Historically, the principal risks related to investment, interest rate, inflation and longevity risks. However, during the previous year, the scheme has implemented a whole Scheme buy-in, essentially fully hedging all of these risks and meaning the scheme is no longer impacted by discount rate, inflation or mortality assumptions. 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 net surplus would increase by, approximately, £Nil (2023: £Nil). If the actual longevity is one year less than that assumed, the pension scheme net surplus 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 pension scheme net surplus by £Nil (2023: £Nil) and £Nil (2023: £Nil), respectively. A 0.1% decrease in these assumptions would increase/reduce the pension scheme net surplus by a similar amount. The above sensitivity analyses are based on a change in an assumption whilst 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 net surplus to significant assumptions, the same method has been applied as when calculating the pension scheme net surplus recognised within the consolidated balance sheet. 65 Financials 66 16 Retirement benefit pension schemes continued 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. There are other plan assets held by the scheme to cover any potential increase in plan liabilities arising from the conclusion of Guaranteed Minimum Pension Equalisation. Changes to assumptions relating to these plan assets are not considered significant. This methodology is unchanged from last year’s disclosures. The directors have presented the disclosure in the same format in order to show prior year comparatives. Amounts recognised in the income statement 2024 £’000 2023 £’000 Administrative expenses: Pension scheme administrative expenses 166 267 166 267 Interest income on pension scheme assets (1,329) (1,700) Interest expense on pension scheme liabilities 1,221 1,312 Net interest income on pension surplus (note 6) (108) (388) Net pension charge/(income) 58 (121) Remeasurement (gains)/losses recognised in other comprehensive income 2024 £’000 2023 £’000 Return on assets (excluding interest income) 1,416 5,914 Experience adjustments 65 (19) Actuarial (gains)/losses arising from changes in financial assumptions (2,759) (726) Actuarial losses/(gains) arising from changes in demographic assumptions 1,327 819 Total remeasurement of the net-defined asset shown in other comprehensive income 49 5,988 Cumulative actuarial loss recognised in other comprehensive income 9,545 9,496 2024 £’000 2023 £’000 Interest income on pension scheme assets 1,329 1,700 Return on assets (excluding interest income) (1,416) (5,914) Actual return on plan assets (87) (4,214) 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. Movement in surplus during the year 2024 £’000 2023 £’000 Surplus in scheme at beginning of year 2,489 8,236 Movement in year: Employer contributions – 120 Net pension (charge)/income (58) 121 Actuarial gain (49) (5,988) Surplus in scheme at end of year 2,382 2,489 Related asset restriction movement (596) (871) Net pension asset recognised on the balance sheet 1,786 1,618 Notes to the Consolidated Financial Statements For the year ended 31 December 2024 (continued) 16 Retirement benefit pension schemes continued In July 2024, the Court of Appeal upheld a June 2023 High Court ruling in the case of Virgin Media Ltd v. NTL Pension Trustees II Ltd. Whilst there are continuing uncertainties in relation to the ruling, which, in turn, have created additional uncertainty over the measurement of the defined benefit obligation, the case could call into question the value of the defined benefit obligation. At this point, it is not currently clear whether a remeasurement of the defined benefit obligation will be needed and, if in the future it becomes necessary, how the liability will change as a result. As such, the defined benefit obligation has been stated without further reference to the High Court ruling. 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. The UK operates a salary sacrifice arrangement for pension contributions meaning the employer makes all pension contributions instead of the employee and employer making contributions. The amount varies, generally based upon the individual’s seniority and length of service with the company. Contributions for both existing members and members who have been auto enrolled are made to the same scheme. The employer’s contribution rates vary from 8% to 15%, the current average being 7.2% (2023: 7.7%). The current period charge in the income statement amounted to £912,000 (2023: £893,000). Overseas defined contribution pension scheme arrangements Overseas companies make their own pension arrangements, the charge for the period being £286,000 (2023: £282,000). No additional disclosure is given on the basis of materiality. 17 Stock 2024 £’000 2023 £’000 Raw materials and consumables 71 96 Finished goods 2,323 2,309 2,394 2,405 The cost of stock recognised as an expense in the period was £8,480,000 (2023: £7,680,000). In addition, a further £1,170,000 of items held in stock at 31 December 2023 (2023: £2,522,000 items held in stock at 31 December 2022) have been capitalised in the hire fleet this year. The net credit in the income statement for net realisable value provisions was £115,000 (2023: credit of £420,000), comprising write downs of £6,000 (2023: £252,000) and reversal of write downs of £121,000 (2023: £672,000). Inventory is stated net of impairment provisions totalling £762,000 (2023: £877,000). 18 Trade and other receivables 2024 £’000 2023 £’000 Trade receivables 14,245 16,633 Amounts due from related parties 580 407 Prepayments 2,797 1,729 Other receivables 266 482 17,888 19,251 The analysis of trade receivables that were past due is as follows: Total £’000 Not past due £’000 Past due <3 months £’000 3–6 months £000 6–12 months £000 > 12 months £000 2024 Gross debtor 16,179 7,061 5,427 1,829 1,260 602 Lifetime expected credit loss (1,934) (30) (169) (477) (656) (602) Net carrying amount 14,245 7,031 5,258 1,352 604 – Expected credit loss percentage 12.0% 0.4% 3.1% 26.1% 52.1% 100.0% 67 Financials 18 Trade and other receivables continued Total £’000 Not past due £’000 <3 months £’000 Past due 3–6 months £’000 6–12 months £’000 > 12 months £’000 2023 Gross debtor 21,188 10,765 4,887 1,904 1,199 2,434 Lifetime expected credit loss (4,555) (65) (335) (833) (888) (2,434) Net carrying amount 16,633 10,700 4,552 1,071 311 – Expected credit loss percentage 21.5% 0.6% 6.9% 43.8% 74.1% 100.0% Current trade receivables not considered to be overdue 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 trade receivables not considered to be overdue as at 31 December 2024 was 29 (2023: 41). The expected credit loss provision is based on past default experience, external indicators and forward-looking information performed on an entity-by-entity basis and not a collective basis. Debts with customers in liquidation or receivership are fully provided against and written off. The movement in the provision during the period is as follows: 2024 £’000 2023 £’000 Balance at the beginning of the year 4,555 4,100 Foreign exchange difference (5) (156) Charge for year 347 959 Amounts utilised (2,384) (348) Unused amounts reversed (579) – Balance at the end of the year 1,934 4,555 The directors consider that the carrying value of trade receivables approximates to fair value and that no impairment provisions are required against other receivables. 19 Current tax assets 2024 £’000 2023 £’000 UK corporation tax 515 484 Overseas tax (denominated in Euros) 254 420 769 904 20 Cash and cash equivalents 2024 £’000 2023 £’000 Cash at bank 4,892 7,290 Deposit accounts 18,289 12,677 23,181 19,967 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 a maturity of three months or less on inception. Interest was received at an average floating rate of, approximately, 4.4% (2023: 4.3%). 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 27. 68 Notes to the Consolidated Financial Statements For the year ended 31 December 2024 (continued) 21 Trade and other payables 2024 £’000 2023 £’000 Trade payables 3,931 4,482 Amounts due to related party 364 263 Other taxation and social security 1,891 2,284 Accruals 9,431 10,620 Other payables 248 209 15,865 17,858 Trade payables, accruals and other payables mainly comprise amounts outstanding from trade purchases and other normal business-related costs. The average credit period taken for trade purchases is 51 days (2023: 30 days), the increase relating to updated creditor terms with UK suppliers. 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 27. The carrying value of trade and other payables approximates to their fair value. 22 Current tax liabilities 2024 £’000 2023 £’000 UK corporation tax 15 75 Overseas tax (denominated in Euros) 456 875 471 950 23 Right-of-use lease obligations Financial liabilities Minimum lease payments Present value of minimum lease payments 2024 £’000 2023 £’000 2024 £’000 2023 £’000 Amounts payable under right-of-use lease obligations: Within one year 3,404 3,192 2,556 2,429 In the second to fifth years 8,884 7,911 6,633 5,714 After five years 9,683 10,507 6,840 7,254 21,971 21,610 16,029 15,397 Less future finance charges (5,942) (6,213) – – Present value of lease obligations 16,029 15,397 16,029 15,397 The group’s obligations under these leases are secured over the right-to-use assets to which they relate. Where extension options are included, an assessment of how likely it is for the option to extend the lease to be exercised is performed and, if it is determined that the lessee is reasonably certain to exercise the option, then the term covered by the option is included in the lease term. 69 Financials 24 Provisions 2024 £’000 France closure 2024 £’000 Restructuring 2024 £’000 Dilapidation 2024 £’000 Total 2023 £000 France closure 2023 £’000 Restructuring 2023 £’000 Dilapidation 2023 £’000 Total Balance at 1 January 599 477 1,827 2,903 – 672 2,010 2,682 Transferred from/(to) accruals – – – 135 – – 135 Provision created in the year – – 30 30 464 339 439 1,242 Utilised during the year (115) (126) (282) (523) – (408) (382) (790) Unused amounts reversed (48) (331) (471) (850) – (126) (240) (366) 436 20 1,104 1,560 599 477 1,827 2,903 Dilapidation costs expected to be settled at the end of the lease term, ranging from one year to 20 years, for rectification of wear and tear damage of the group’s leasehold premises, are provided for as an expense over the tenancy period as the wear and tear occurs. The cost of the remedial work required on the group’s properties is spread over a number of years and the provision is based upon the group’s previous dilapidation experience and quotes received from professional surveyors. The impact of discounting is considered immaterial to the amounts provided. The final actual cost is uncertain and based on future wear and tear, and the current provision is based on best estimates. Restructuring provision relates to the continuing property relocation within the UK. During 2022, four properties were vacated and merged into one large consolidated site. The associated costs involved included expected move costs and redundancy. The majority of these costs were incurred during 2023. During the previous year, three further property locations were vacated and merged into one larger facility. The associated costs involved included expected move costs and other associated landlord costs. The majority of these costs were incurred during 2024. The impact of discounting is considered immaterial to the amounts provided. The final actual cost is uncertain and based on discussions with landlords and final actual move costs. The current provision is based on best estimates. France closure provision relates to the decision taken during 2022 to cease trading of our French subsidiary, Andrews Sykes Climat Location, and wind the business up. The associated costs involved include redundancy, anticipated legal fees of the closure and defence of several legal claims being defended, and settlement of outstanding supplier contracts. It is anticipated that the majority of these costs will be incurred after 2024. The impact of discounting is considered immaterial to the amounts provided. The final actual cost is uncertain and based on the satisfactory settlement of the current legal claims. The current provision is based on best estimates. 25 Share capital 2024 £’000 2023 £’000 Allotted, called up and fully paid 41,858,744 (2023: 41,858,744) Ordinary shares of one pence each 419 419 During the year, the company purchased and cancelled Nil (2023: 289,301) ordinary shares of 1p each. The company paid a price between 510p and 665p per share for each of these shares purchased during 2023. The capital redemption reserve was increased by the amount by which the company’s share capital was diminished on cancellation of the shares. Following the current and previous year end, no further shares have been purchased or cancelled. As at 6 May 2025, there were 41,858,744 ordinary shares in issue. 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. 70 Notes to the Consolidated Financial Statements For the year ended 31 December 2024 (continued) 26 Analysis of net funds and movement in financing liabilities 2024 £’000 2023 £’000 Cash and cash equivalents per consolidated cash flow statement 23,181 19,967 Gross funds 23,181 19,967 Right-of-use lease obligations: At the beginning of the year (15,397) (11,322) Capital repayments for right-of-use lease obligations 2,920 2,759 Interest charged (1,015) (759) Interest paid 1,015 759 New right-of-use assets entered into during the year (4,210) (7,872) Termination of right-of-use obligations 616 983 Effect of foreign exchange rate changes on right-of-use leases 42 55 At the end of the year (16,029) (15,397) Gross debt (16,029) (15,397) Net funds 7,152 4,570 27 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 26, and equity comprising issued share capital, reserves and retained earnings as disclosed on the balance sheet. The net funds to equity percentage is: 2024 £’000 2023 £’000 Net funds per note 26 7,152 4,570 Equity attributable to equity holders of the parent company 46,185 40,466 Net funds to equity percentage 15.5% 11.3% Categories of financial instruments The carrying values of each category of financial instrument, shown at amortised cost, are as follows: 2024 £’000 2023 £’000 Financial assets Trade receivables and amounts due from related parties 14,825 17,040 Other debtors 266 482 Cash and cash equivalents 23,181 19,967 38,272 37,489 Financial liabilities Trade payables and amounts due to related parties 4,295 4,745 Accruals and other creditors 9,679 10,829 Right-of-use lease obligations 16,029 15,397 30,003 30,971 Surplus of financial assets over financial liabilities 8,269 6,518 71 Financials 27 Financial instruments continued In addition to managing the capital structure to ensure the ability of the group to continue as a going concern, the group also manages its cash and cash equivalent balances in view on the credit rating of the institutions in which funds are held. The Standard & Poor credit ratings of the institutions by geographical region where cash and cash equivalents are held are detailed below: Credit ratings of financial institutions Cash and cash equivalent Credit ratings of financial institutions Cash and cash equivalent UK A+ 15,212 A to A+ 14,017 Europe BBB to A+ 7,105 BBB to A+ 4,701 Middle East BAA to A+ 864 A– 1,249 23,181 19,967 The group monitors the credit ratings of counterparties regularly and, at the reporting date, does not expect any losses from non-performance by the counterparties. 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. 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/collars that limit the group’s exposure to fluctuations in any bank loans/treasury deposits. Due to the lack of external financing and favourable rates being available on treasury deposits, the group does not hold any interest rate caps/collars or any other derivative financial instrument as at 31 December 2024 (2023: £Nil), although this position is constantly under review. A 1% increase in the average bank deposit rate for the period would have increased the net bank deposit interest receivable by £214,000 (2023: £280,000); a 1% decrease would have decreased 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. Currency risk No entities within the group hold significant financial assets or financial liabilities in a currency that is different to their functional currency and, therefore, there is no material exposure to currency risk. Credit risk Credit risk refers to the risk that a counterparty will default, defined as not paying within a given period, 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. A review of all bad debt history was carried out to evaluate whether this was indicative of any expected future credit exposures. These historical rates of credit loss were then looked at in the context of current and future factors affecting customer creditworthiness. Trade receivables are written off when there is considered to be little likelihood of recovery of the debt. The group’s lifetime expected credit loss percentage analysed by age category of debt is disclosed in note 18. 72 Notes to the Consolidated Financial Statements For the year ended 31 December 2024 (continued) 27 Financial instruments continued 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 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 gross funds, which, at 31 December 2024, amounted to £23,181,000 (2023: £19,967,000), by continuously monitoring forecast and actual cash flows, by matching the maturity profiles of monetary assets and liabilities and by managing the funds held in deposit accounts to match when the group may need access to these funds. In view of the significant levels of net funds available to the group of £7,152,000 (2023: £4,570,000), 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. The following liquidity and interest risk tables include non-financial liabilities relating to current tax of £471,000 (2023: £950,00) and other tax and social security of £1,891,000 (2023: £2,284,000). These have been included in the maturity analysis provided as this is considered to be useful information for account users in regards to the timing of likely cash outflows. Weighted average interest rate Due within 3 months Due 3 months to 1 year Due 2–5 years Due after 5 years Total At 31 December 2024 Non-interest bearing N/A 11,497 4,840 – – 16,336 Right-of-use lease obligation 6.0% 851 2,553 8,884 9,683 21,971 Total 12,348 7,393 8,884 9,683 38,307 Weighted average interest rate Due within 3 months Due 3 months to 1 year Due 2–5 years Due after 5 years Total At 31 December 2023 Non-interest bearing N/A 13,394 5,415 – – 18,808 Right-of-use lease obligation 6.3% 798 2,394 7,911 10,507 21,610 Total 14,192 7,809 7,911 10,507 40,418 73 Financials 28 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: Plant, machinery and equipment 2024 £’000 2023 £’000 Future minimum payments due: Not later than one year 248 230 After one year, but not more than five years 703 395 After more than five years – – 951 625 Plant, machinery and equipment leases represent short-term leases for motor vehicles, office and general equipment also with a duration of 12 months or less. In addition, any non-capital payments under operating leases, for example, maintenance costs on vehicles, have not been capitalised and continue to be treated as off-balance-sheet operating leases and the commitments included within the table above. Leases with a duration of over 12 months have been included within right-of-use assets in accordance with IFRS 16; see note 13. 29 Related party transactions Group All transactions between the parent company and subsidiary companies and between subsidiary companies have been eliminated on preparation of the consolidated accounts. Trading transactions During the period, the group entered into the following transactions in the normal course of business with associated companies: 2024 £'000 2023 £'000 Sale of goods and services to associates within the London Security plc group – – Purchase of goods and services from associates within the London Security plc group 103 108 Amount owed by the group to associates within the London Security plc group – – Sales of goods and services to companies connected with Khansaheb Sykes LLC 1,397 635 Amounts owed to the group by companies connected with Khansaheb Sykes LLC 580 407 Purchase of goods and services from associates connected with Khansaheb Sykes LLC 452 337 Amounts owed by the group to companies connected with Khansaheb Sykes LLC 364 263 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. Khansaheb Sykes LLC, a company that is 49% owned by the group and 100% of the profits accrue to the group, trades in the normal course of business with its other shareholder and companies connected with that shareholder. Transactions with key management personnel Details of remuneration paid to directors and key management personnel are disclosed in note 9. 74 Notes to the Consolidated Financial Statements For the year ended 31 December 2024 (continued) 30 Dividend payments The directors declared and paid the following dividends during the 12-month periods ended 31 December 2024 and 31 December 2023: 2024 2023 pence per share Total dividend paid £’000 pence per share Total dividend paid ‘£’000 Final dividend for the 12 months ended 31 December 2023 paid to members on the register at 24 May 2024 on 21 June 2024 14.00 5,860 – – Interim dividend declared on 24 September 2024 and paid to shareholders on the register at 4 October 2024 on 1 November 2024 11.90 4,981 – – Final dividend for the 12 months ended 31 December 2022 paid to members on the register at 26 May 2023 on 16 June 2023 – – 14.00 5,898 Interim dividend declared on 25 September 2023 and paid to shareholders on the register at 6 October 2023 on 3 November 2023 – – 11.90 4,981 Special dividend declared on 25 September 2023 and paid to shareholders on the register at 6 October 2023 on 3 November 2023 59.40 24,864 25.90 10,841 85.30 35,743 The above dividends were charged against reserves as shown in the consolidated statement of changes in equity of these financial statements. The directors recommend the payment of a final dividend of 14.0 pence (2023: 14.0 pence) per ordinary share. If approved at the forthcoming Annual General Meeting, this dividend, which, in total, amounts to £5,860,000 (2023: £5,860,000), will be paid on 20 June 2025 to shareholders on the register at 23 May 2025. 31 Ultimate parent company As at 6 May 2025, EOI Sykes Sarl, which is incorporated in Luxembourg, held 86.90% of the share capital of Andrews Sykes Group plc and is, therefore, the immediate parent company. The intermediate holding company is SK Participation Limited, a company incorporated in Jersey, and 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 IS 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. The lowest level at which consolidated accounts are prepared is EOI Sykes Sarl and the highest level is SK Participation Limited. 75 Financials 31 December 2024 31 December 2023 Notes £’000 £’000 £’000 £’000 Fixed assets Investments 3 30,157 30,157 Current assets Debtors 4 661 852 Cash at bank and in hand 12,876 12,051 13,537 12,903 Creditors: Amounts falling due within one year 5 (6,584) (6,912) Net current assets 6,953 5,991 Total assets less current liabilities being net assets 37,110 36,148 Capital and reserves Share capital 7 419 419 Share premium 13 13 Profit and loss account 34,306 33,344 Capital redemption reserve 161 161 Other reserve 2,211 2,211 Shareholders' funds 37,110 36,148 The profit for the year dealt with in the accounts of the parent company was £11,803,000 (2023: £26,851,000). These consolidated financial statements of Andrews Sykes Group plc, company number 00175912, were approved and authorised for issue by the Board of directors on 6 May 2025 and were signed on its behalf by: JJ Murray Executive Chairman 76 Parent Company Balance Sheet At 31 December 2024 Share capital £’000 Share premium account £’000 Profit and loss account £’000 Capital redemption reserve £’000 Other reserve £’000 Attributable to equity holders of the company £’000 Balance at 31 December 2022 421 13 44,099 159 2,211 46,903 Profit for the year – – 26,851 – – 26,851 Dividends paid* – – (35,743) – – (35,743) Share repurchase (2) – (1,863) 2 – (1,863) Total of transactions with shareholders (2) – (37,606) 2 – (37,606) Balance at 31 December 2023 419 13 33,344 161 2,211 36,148 Profit for the year – – 11,803 – – 11,803 Dividends paid* – – (10,841) – – (10,841) Total of transactions with shareholders – – (10,841) – – (10,841) Balance at 31 December 2024 419 13 34,306 161 2,211 34,306 * See note 30 for further details. Share premium account The share premium account balance includes the proceeds that were above the nominal value from the issuance of the Company’s equity share capital comprising 1p shares. Profit and loss account Profit and loss include the accumulated profits and losses arising from the profit and loss attributable to equity shareholders, less distributions to shareholders. Capital redemption reserve The capital redemption reserve has arisen on the cancellation of previously issued shares and represents the nominal value of those shares cancelled. Other reserve The other reserve represents a non-distributable reserve, which arose following the historic receipt of dividends paid out of internally generated profits within the group and are, therefore, not considered payable outside the group to its shareholders. 77 Financials Parent Company Statement of Changes in Equity For the year ended 31 December 2024 1 Material 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. Accordingly, these individual company financial statements: ● do not contain a cash flow statement as otherwise required by section 7 of FRS 102; ● do not disclose key management remuneration as otherwise required by section 33 of FRS 102; and ● do not include the disclosures otherwise required by sections 11 and 12 of FRS 102 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. ● 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 note 1 of the group accounting policies. 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. Investments are assessed for indicators of impairment at each balance sheet date. If there is such an indication, the recoverable amount of the investment is compared to the carrying amount of the investment. If the recoverable amount of the investment is estimated to be lower than the carrying amount, the carrying amount is reduced to its recoverable amount. An impairment loss is recognised in the profit and loss account. 78 Notes to the Company Financial Statements For the year ended 31 December 2024 2 Material accounting policies If an impairment loss is subsequently reversed, the carrying amount of the investment is increased to the revised estimate of its recoverable amount, but only to the extent that the revised carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised in prior periods. A reversal of an impairment loss is recognised in the profit and loss account. Financial instruments The company only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities such as loans from banks and group undertakings and loans to group undertakings. Debt instruments (other than those wholly repayable or receivable within one year), including loans, are initially measured at the present value of the future cash flows and, subsequently, at amortised cost using the effective interest method. Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the statement of comprehensive income. For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset’s carrying amount and the present value of estimated cash flows discounted at the asset’s original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset’s carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the company would receive for the asset if it were to be sold at the reporting date. Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously. 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. 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. 79 Financials 3 Employee information The company has no employees other then the directors. Directors’ emoluments Directors’ emoluments for the current and prior financial year were as follows: 2024 2023 Director Emoluments £’000 Pension £’000 Total £’000 Emoluments £’000 Pension £’000 Total £’000 AJ Kitchingman 42 – 42 42 – 42 MC Leon 20 – 20 20 – 20 JJ Murray 44 – 44 44 – 44 JP Murray 20 – 20 20 – 20 126 – 126 126 – 126 CD Webb was remunerated through Andrews Sykes Hire Limited and received no employment benefits directly from the company. No directors were granted or exercised share options during either the current or prior financial periods. For key management personnel purposes, £9,000 (2023: £9,000). of NI contributions should be included in the above totals. No directors, in either the current or prior year, had any pension contributions or were members of either a defined contribution or defined benefit pension scheme. In the current and prior year, no director had an accrued annual pension under the defined benefit scheme. No contributions were paid during the current or prior period into the defined benefit scheme. 4 Fixed asset investments Subsidiary undertakings shares £’000 Cost At the beginning and end of the period 39,796 Provisions At the beginning and end of the period 9,639 Net book Value At 31 December 2024 30,157 At 31 December 2023 30,157 Directly owned by Andrews Sykes Group plc: Andrews Sykes Hire Limited Andrews Air Conditioning and Refrigeration Limited* A.S. Group Management Limited* (intermediate holding company) Andrews Sykes International Limited* (intermediate holding company) Andrews Sykes Investments Limited (dormant) Andrews Sykes Properties Limited* (property holding company) Sykes Ground Water Control Limited (dormant) Heat for Hire (Scotland) Limited (Scotland; dormant) Sykes Pumps Limited (dormant) 80 Notes to the Company Financial Statements For the year ended 31 December 2024 (continued) 4 Fixed asset investments continued Indirectly owned by Andrews Sykes Group plc: Andrews Sykes B.V. (Netherlands) Andrews Sykes BVBA (Belgium) Andrews Sykes Climat Location SA (Switzerland) Andrews Sykes Climat Location SAS (France) Andrews Sykes Luxembourg SARL (Luxembourg) AS Holding B.V. (Netherlands; intermediate holding company) Klimamieten AS GmbH (Germany) Khansaheb Sykes LLC (49%; United Arab Emirates) Nolo Climat S.R.L. (Italy) AAC&R Limited (dormant) Sykes Pumps International Limited (dormant) * Denotes that the directors have taken advantage of the exemption available under Section 479A of the Companies Act 2006 relating to the requirement for the audit of the individual accounts for the companies annotated as Andrews Sykes Group plc has provided these companies with a parental guarantee. Unless otherwise indicated, all are incorporated in England and Wales with a registered address of Unit 601, Axcess 10 Business Park, Bentley Road South, Wednesbury WV10 8LQ. Their principal activity is the hire, sales, service and/or installation of specialist environmental control products mainly in the country of incorporation. The registered office address of Heat for Hire (Scotland) Limited is West Mains Industrial Estate, Grangemouth, Stirlingshire, Scotland, FK3 8YE. The registered office address of AS Holding B.V. and Andrews Sykes B.V. is Marconistraat 32, Bleiswijk 2665 JE, The Netherlands. The registered office address of Khansaheb Sykes LLC is P.O. Box 1848, Industrial Area 10, Geeco Signal, Sharjah 1848, United Arab Emirates. The registered office address of Andrews Sykes BVBA is Industrialaan 35, Groot Bijgaarden, Dilbeek 1702, Belgium. The registered office address of Nolo Climat S.R.L. is 27 Via Giulini, Parabiago 20015, Italy. The registered office address of Andrews Sykes Climat Location SAS is 330 Rue Claude Chappe, 60530, Ecruis, France. The registered office address of Andrews Sykes Climat Location SA is Chemin de la Louve 15, 1196 Gland, Switzerland. The registered office address of Andrews Sykes Luxembourg SARL is 18 Route de Capellen, Holzem 8279, Luxembourg. The registered office address of Klimamieten AS GmbH is Europaallee 123, 50226, Nord Rhein Westfalen, Germany. 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. 5 Debtors 2024 £’000 2023 £’000 Amounts due from group undertakings 549 665 Other debtors 51 141 Prepayments 61 46 661 852 All inter-company loans are due on demand. Interest is charged on all inter-company loans at commercial rates of interest. No provisions are considered necessary against amounts owed by group undertakings. 81 Financials 6 Creditors Amounts due within one year 2024 £’000 2023 £’000 Amounts due to group undertakings 5,859 6,041 Trade creditors 100 127 Accruals and deferred income 625 744 6,584 6,912 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 27 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 2024 or 31 December 2023. 8 Share capital 2024 £’000 2023 £’000 Allotted, called up and fully paid 41,858,744 (2024: 41,858,744) Ordinary shares of one pence each 419 419 During the year, the company purchased and cancelled Nil (2023: 289,301) ordinary shares of 1p each. The company paid a price between 510p and 665p per share for each of these shares purchased during 2024. The capital redemption reserve was increased by the amount by which the company’s share capital was diminished on cancellation of the shares. Following the current and previous year end no further shares have been purchased or cancelled. As at 6 May 2025, there were 41,858,744 ordinary shares in issue. 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. 82 Notes to the Company Financial Statements For the year ended 31 December 2024 (continued) 9 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: 2024 £’000 2023 £’000 Purchase of goods and services from associates within the London Security plc group 103 108 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. 10 Ultimate parent company As at 6 May 2025, EOI Sykes Sarl, which is incorporated in Luxembourg, held 86.90% of the share capital of Andrews Sykes Group plc and is, therefore, the immediate parent company. The intermediate holding company is SK Participation Limited, a company incorporated in Jersey, and 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. The lowest level at which consolidated accounts are prepared is EOI Sykes Sarl and the highest level is SK Participation Limited. 83 Financials 84 2024 £’000 2023 £’000 2022 £’000 2021 £’000 2020 £’000 Revenue 75,942 78,747 83,007 75,219 67,259 Operating profit from continuing operations 23,187 22,737 21,530 20,074 16,386 Interest charge on right-of-use leases (1,015) (759) (577) (530) (530) Inter-company foreign exchange (losses)/gains (45) 28 242 (25) (75) Net interest credit/(charge) excluding inter-company foreign exchange and right-of-use lease interest 1,060 1,590 356 (20) 52 Profit before taxation 23,187 23,596 21,551 19,499 15,833 Taxation (6,389) (5,838) (4,531) (3,959) (2,813) Profit for the financial period 16,798 17,758 17,020 15,540 13,020 Dividends per share paid in the year 25.90p 85.30p 41.00p 23.40p 46.10p Dividends paid during the year 10,841 35,743 17,292 9,869 19,442 Basic earnings per share from continuing operations 40.13p 42.24p 40.36p 36.85p 30.87p Proposed ordinary final dividend per share 14.00p 14.00p 14.00p 12.50p 11.50p Five-Year History The production of this report supports the work of the Woodland Trust, the UK’s leading woodland conservation charity. Each tree planted will grow into a vital carbon store, helping to reduce environmental impact as well as creating natural havens for wildlife and people. 85 Financials Copyright © Andrews Sykes Group plc 2024. Other brand and product names are trademarks or registered trademarks of their respective companies. Unit 601, Axcess 10 Business Park, Bentley Road South, Wednesbury, WS10 8LQ Tel: 01902 328700 E-mail: info@andrews-sykes.com www.andrews-sykes.com GROUP PLC