Interim Results
Hill & Smith Hldgs PLC
18 December 2001
Hill & Smith Holdings PLC
Second interim results to 30 September 2001
Hill & Smith Holdings PLC ('Hill & Smith' or the 'Group') is pleased to
announce its interim results for the 12 month period to 30 September 2001.
Highlights
* Turnover £194.4 million (2000: £58.9 million)
* Operating profit pre goodwill amortisation and exceptional items £13.2
million (2000: £4.8 million)
* Pre-tax profit prior to goodwill amortisation and exceptional items £8.5
million (2000: £4.1 million)
* Earnings per share prior to goodwill amortisation and exceptional items
10.1p (2000: 8.3p) - an increase of 21.7%
* Second interim dividend of 2.1p giving 4.2p for the 12 months to 30
September 2001 (2000: 4.2p)
* Acquisition, Ash & Lacy has been successfully integrated
* Net cash flow from operating activities before exceptional items £19.0m
Chairman of Hill & Smith, David Winterbottom, said: 'Once again, I am pleased
to report material progress and a further improvement in the financial
performance of the Group for the 12 month period ended 30 September 2001.'
'In order to realise the benefits of the takeover of Ash & Lacy plc a number
of closures, rationalisation measures and divestments have been implemented
resulting in net exceptional costs of £3.9m.'
'On 30 September 2001 net borrowings had been reduced to £55.7m, from the
£78.0m immediately following the acquisition of Ash & Lacy plc.'
For further information , please contact
Hill & Smith Holdings PLC
David Winterbottom , Chairman 0121 704 7430
David Grove , Chief Executive 0121 704 7430 (mobile: 07973 325 667)
Rawlings Financial PR
John Rawlings 01756 770 376
Catriona Valentine 01904 674 342
Chairman's Statement
Results
Once again I am pleased to report material progress and a further improvement
in the financial performance of the Group for the twelve month period ending
30 September 2001. As previously announced following the takeover of Ash &
Lacy plc we have extended our accounting date to 31 December 2001. Therefore
this statement is the second interim announcement of the current financial
period.
Sales for the twelve month period were £194.4m (2000: £58.9m). Profit before
exceptional items and goodwill amortisation was £8.5m (2000: £4.1m). The
adjusted earnings per share for the twelve month period increased to 10.1p
(2000: 8.3p) which is an improvement of 21.7%.
Acquisition of Ash & Lacy plc
This acquisition was completed on 1 November 2000 and the results of the Ash
and Lacy companies have been consolidated from that date. In order to realise
the benefits of the takeover a number of closures, rationalisation measures
and divestments have been implemented, affecting both continuing operations as
well as the acquired companies, resulting in net exceptional costs of £3.9m. I
am pleased to report that this acquisition has been integrated into the Group
successfully and the benefits of this major strategic move are being realised.
Operations
During the period capital expenditure approaching £2.0m was absorbed by the
Infrastructure Products Group. This included a new powder coat paint facility
for our palisade fencing business and further expansion of our temporary
barrier hire fleet. As a result of the above our trading profits were
significantly ahead of last year.
There has been some rationalisation of our galvanising activities following
the Ash & Lacy plc takeover which has resulted in the closure of two
locations. This market has seen some growth during the year and our major
sites have benefited from this increased level of demand.
The remaining businesses in the Building and Construction Products Division
have seen mixed performances and profit margins have seen some erosion due to
competitive pressures, particularly in the lintel and building products areas.
In the Industrial Products Division Ash and Lacy Perforators has responded
well to increased demands in the computer market. However the commodity based
businesses such as stockholding have been trading against deteriorating
conditions and falling prices.
Gearing and Cash Flow
On 30 September 2001 net borrowings had been reduced to £55.7m, from the
£78.0m immediately following the acquisition of Ash & Lacy plc. This represents
a reduction in gearing to the present level of 153% (198% at 31 March 2001).
The net cash flow from operating activities before exceptional items was
£19.0m for the period, of which £3.1m has been generated from our stock
reduction programme across the Group.
Dividends
A dividend of 2.1p is being declared for the six month period ending 30
September 2001. In the absence of unforeseen circumstances the final dividend
will be not less than 1.05p which, when added to the interim dividends
declared, will amount to a total dividend for the fifteen month period of
5.25p. When annualised this is equivalent to 4.2p (2000: 4.2p).
Outlook
We are now approaching the end of the final quarter of the current financial
period and except for the seasonal difficulties expected in a short December
the majority of our businesses, in the context of current market conditions
for our sector, are trading at satisfactory levels.
David S Winterbottom
Chairman
18 December 2001
Group Profit and Loss Account
12 months to 30 September 2001 Year to 30 September
2000
Before Before
exceptional exceptional
items and items and
goodwill goodwill
amortisation amortisation
Goodwill Exceptional
amortisation items*
Notes Total Total
£000 £000 £000 £000 £000 £000
Turnover
Continuing 1 61,670 - - 61,670 58,858 58,858
operations
Acquisitions 132,769 - - 132,769 - -
-------- -------- -------- -------- -------- --------
Total 194,439 - - 194,439 58,858 58,858
turnover
-------- -------- -------- -------- -------- --------
Operating
profit
Continuing 1 5,122 (187) (1,822) 3,113 4,770 4,620
operations
Acquisitions 8,043 (1,188) (3,304) 3,551 - -
-------- -------- -------- -------- -------- --------
Total 13,165 (1,375) (5,126) 6,664 4,770 4,620
operating
profit
Profit/ 3 - - 123 123 - (64)
(loss) on
sale of
business
Profit of 3 - - 1,143 1,143 - 464
sale of
fixed assets
-------- -------- -------- -------- -------- --------
Profit on 13,165 (1,375) (3,860) 7,930 4,770 5,020
ordinary
activities
before
interest
Net interest (4,639) - - (4,639) (668) (668)
payable
-------- -------- -------- -------- -------- --------
Profit/ 8,526 (1,375) (3,860) 3,291 4,102 4,352
(loss)
before
taxation
Tax on 4 (2,554) - 1,049 (1,505) (879) (879)
profit
-------- -------- -------- -------- -------- --------
Profit after 5,972 (1,375) (2,811) 1,786 3,223 3,473
taxation
Minority (9) -
interests
------- --------
Profit for 1,777 3,473
the period
Dividends 5 (3,029) (1,621)
paid and
proposed
-------- --------
Transfer to (1,252) 1,852
reserves
-------- ---------
Earnings per 6 10.1p (2.3p) (4.8p) 3.0p** 8.3p 9.0p**
share
Diluted 6 10.1p (2.3p) (4.8p) 3.0p 8.3p 8.9p
earnings per
share
* See note 3
** FRS3
Statement of Total Recognised Gains and Losses
12 months to Year to
30 September 30 September
2001 2000
£000 £000
Profit for the period 1,777 3,473
Realised gain on revaluation of properties - 126
Currency translation differences - (54)
Total recognised gains and losses for the period 1,777 3,545
Reconciliation of Movement in Group Shareholders' Funds
12 months to Year to
30 September 30 September
2001 2000
£000 £000
Profit for the period 1,777 3,473
Dividends (3,029) (1,621)
(1,252) 1,852
Other recognised gains and losses - (252)
New ordinary share capital issued 12,881 4
Net increase in shareholders' funds 11,629 1,604
Shareholders' funds at start of period 24,684 23,080
Shareholders funds' at end of period 36,313 24,684
Group Balance Sheet
30 September 2001 30 September 2000
£000 £000
Fixed assets
Intangible assets 28,094 3,213
Tangible assets 44,098 17,470
Investments 688 1,365
72,880 22,048
Current assets
Stocks 17,646 7,632
Debtors 55,555 17,689
Short-term deposits 2,819 -
Cash - 288
76,020 25,609
Creditors: amounts falling due
within one year
Borrowings and finance leases (3,149) (4,590)
Other creditors (51,985) (17,712)
(55,134) (22,302)
Net current assets 20,886 3,307
Total assets less current liabilities 93,766 25,355
Creditors: amounts falling due
after one year
Borrowings and finance leases (55,390) (287)
Other creditors - (18)
(55,390) (305)
Provisions for liabilities and charges (2,018) (330)
Net assets 36,358 24,720
Capital and reserves
Called up share capital 15,244 9,654
Share premium 3,338 135
Other reserves 4,088 -
Revaluation reserve 538 1,781
Capital redemption reserve 238 238
Profit & loss account 12,867 12,876
Equity shareholders' funds 36,313 24,684
Minority interest 45 36
36,358 24,720
Group Cash Flow Statement
12 months to Year to
30 September 30 September
2001 2000
Notes £000 £000
Net cashflow from operating activities 7i 13,989 4,213
Returns on investments and servicing (4,544) (669)
of finance
Taxation (1,107) (386)
Capital expenditure 7ii 11,768 (475)
Acquisitions and disposals (72,251) (729)
Equity dividends paid (2,092) (1,632)
Cashflow before financing (54,237) 322
Financing
Issue of ordinary shares 5,873 4
New loan advances 53,562 -
Loan repayments - (3,500)
Capital element of finance lease rentals (257) (378)
Purchase of own shares - (198)
59,178 (4,072)
Increase / (decrease) in cash 4,941 (3,750)
Reconciliation of net cash flow to
movement in net borrowings
Increase / (decrease) in cash 4,941 (3,750)
Cash (inflow) / outflow from borrowings (53,305) 3,878
Change in borrowings resulting from cash flows (48,364) 128
New finance leases (1,008) (284)
Loan notes issued as part of acquisition (1,759) -
Movement in net borrowings in the period (51,131) (156)
Net borrowings at the start of the period (4,589) (4,433)
Net borrowings at the end of the period (55,720) (4,589)
Notes to the Interim Financial Statements
1 Segmental Information
12 months to Year to
30 September 2001 30 September 2000
Operating Net Operating Net
Turnover Profit Assets Turnover Profit Assets
£000 £000 £000 £000 £000 £000
Building and
construction
products
Continuing 57,300 5,087 26,364 52,704 4,643 27,699
operations
Acquisitions 92,398 5,231 24,008 - - -
-------- -------- -------- -------- -------- --------
Total 149,698 10,318 50,372 52,704 4,643 27,699
-------- -------- -------- -------- -------- --------
Industrial
products
Continuing 4,370 35 1,195 6,154 127 871
operations
Acquisitions 40,371 2,812 19,433 - - -
-------- -------- -------- -------- -------- --------
Total 44,741 2,847 20,628 6,154 127 871
-------- -------- -------- -------- -------- --------
Total
operations
Continuing 61,670 5,122 27,559 58,858 4,770 28,570
operations
Acquisitions 132,769 8,043 43,441 - - -
-------- -------- -------- -------- -------- --------
Total 194,439 13,165 71,000 58,858 4,770 28,570
-------- -------- -------- -------- -------- --------
Tax and (7,016) (2,474)
dividends
Net (55,720) (4,589)
borrowings
Goodwill 28,094 3,213
---------- ----------
Total Group 36,358 24,720
---------- ----------
Operating profit is stated before exceptional items and goodwill amortisation
2 Acquisitions and disposals
During the period the Company completed the acquisitions of Ash & Lacy plc, and
the residential doors business of P.C.Henderson Limited to whom it sold its
Birtley garage doors operation.
Goodwill arising from these acquisitions amounted to £25.0m and is being
amortised over a period of 20 years. A provisional assessment has been made of
the fair value of the acquired assets. This will be finalised by the period-end.
3 Exceptional items
The exceptional items from continuing operations represent primarily the costs
of reorganising the business of Asset International and the lintel production
facility at Birtley Building Products.
The exceptional items from acquisitions represent the closure costs of the Ash &
Lacy head office, bank arrangement fees and related due diligence costs and
reorganisation costs of acquired businesses.
The profit on sale of business relates to the Birtley garage doors operation.
4 Taxation
Tax has been provided at the estimated effective rate for the full year.
5 Dividends
The Directors declared an interim dividend in respect of the first six months to
31 March 2001 of 2.1p per share (six months to 31 March 2000:2.1p) which was
paid on 8 October 2001. A second interim dividend of 2.1p per share has been
declared in respect of the six months to 30 September 2001 which will be paid on
8 April 2002 to shareholders on the register on 8 February 2002.
The dividend charge for the period includes £469,000 in respect of the
additional final dividend for the year ended 30 September 2000 which was paid on
the additional shares issued to Ash & Lacy shareholders as part of the
acquisition of that company.
6 Earnings per share
The weighted average number of shares in issue during the period was 59.07m,
diluted for the effect of outstanding share options £59.20m (year ended 30
September 2000: 38.77m, 38.90m diluted).
Earnings per share have been calculated on profits of £1,777,000 (year ended 30
September 2000; earnings £3,473,000) and earnings per share before exceptional
items and goodwill amortisation on earnings of £5,972,000 (year ended 30
September 2000: £3,223,000).
Earnings per share before exceptional items and goodwill amortisation have been
shown because the directors consider that this gives a more meaningful
indication of the underlying performance of the group.
7 Notes to the Cash Flow Statement
i. Reconciliation of operating profit to net cash flow from operating activities
12 months to Year to
30 September 2001 30 September 2000
£000 £000
Operating profit before 13,165 4,770
exceptional items
and goodwill
amortisation
Depreciation 5,781 1,822
Changes in
working
capital:
Stocks 3,141 (725)
Debtors 2,461 (3,145)
Creditors (5,569) 1,491
and
provisions ------------- ----------------
Net cash flow from operating 18,979 4,213
activities
before
exceptional
items
Cash element of operating (4,990) -
exceptional items
-------------- -------------
Net cash flow from operating 13,989 4,213
activities
------------- --------------
ii Capital expenditure
Purchase of (6,437) (1,989)
fixed assets
Sale of 18,205 1,514
fixed assets
------------- -------------
11,768 (475)
------------- ------------
8 Financial Information
The results for the 12 months to 30 September 2001 are unaudited and do not
constitute statutory accounts within the meaning of s240 of the Companies Act
1985. The financial information for the year to 30 September 2000 has been
extracted from the statutory accounts for that year which have been filed with
the Registrar of Companies and on which the auditors have given an unqualified
opinion.
Copies of the second interim report will be sent to shareholders and will be
available from Hill & Smith's office at 2 Highlands Court, Cranmore Avenue,
Shirley, B90 4LE.
End