Air conditioning group turns up the heat on investment to sustain growth

Heating and air conditioning group Andrews Sykes is to continue its policy of increasing investment in new technology as it looks to sustain growth through 2017.

The Wolverhampton-based group revealed in its full year results that revenue had increased almost 9% in 2016 to £55.4m, a rise of £5.3m.

In its full year statement, the group said it would also continue investment in its traditional businesses to ensure it was prepared for any extreme weather conditions.

“The group continues to face both challenges and opportunities in all of its geographical markets but our business remains strong, cash generative and well developed, with positive net funds,” it said.

“The board is therefore cautiously optimistic for further success in 2017, always being mindful of the favourable or adverse impact that the weather can have on our business.”

In summary, the group said the increase in revenue had a more than proportionate impact on operating profit, which increased by 19.7%, or £2.6m to £15.8m (2015: £13.2m).

“This increase, which follows a 16.8% increase last year, reflects strong performances from both our hire and sales businesses in the UK and Europe and the Middle East. Part of this increase, in sterling terms, is due to the relatively weak pound compared with overseas currencies but nevertheless the underlying trading performance in our overseas subsidiaries shows a significant improvement compared to last year,” it said.

Pre-tax profit rose to £17.5m (2015: £13.4m), largely attributable to the above £2.6m increase in operating profit and the £1.5m increase in net finance income.

The group continues to generate strong cash flows. Net cash inflow from operating activities was £15.1m (2015: £12.1m). Despite shareholder related cash outflows of £10.1m on ordinary dividends, net funds increased by £3.2m to £17.7m (2015: £14.5m).

The group said its policy of returning affordable dividends to shareholders would continue. Over the last four financial years the group has paid £37.7m in cash to shareholders. At the same time the level of external bank borrowings reduced from £6m to £5m as at Deecember 31, 2016.

The board is once again proposing a further final dividend payment of £5m which, if approved at the forthcoming AGM, would be paid in June.