Interim Results

Hill & Smith Hldgs PLC 10 September 2003 Hill & Smith Holdings PLC Interim results for the six months ended 30 June 2003 The Board of Hill & Smith Holdings PLC announces a further improvement in the Group's financial performance for the six months ended 30 June 2003. Highlights: - Profit before exceptional items, goodwill amortisation and tax up by 0.6% - Turnover up by 21.3% - Adjusted earnings per share up by 3.7% - Interim dividend increased to 2.15p per share, covered 2.8 times - Improved long-term banking facilities secured - Disposal of non-core business for £3.0 million Operating margin was 1% lower than last year as a result of higher raw material prices and an increase in pension costs of £0.7 million. Chairman David Winterbottom said: 'Our core businesses supplying the building, construction and transport infrastructure markets continued to make progress. The increased spending in public sector projects and the strength of the construction market has provided a healthy level of demand for our products. 'During the period, we benefited from the integration of the businesses that we acquired last year and from a number of major contracts including the supply of reinforced steel bar for London Heathrow's Terminal 5. We also completed the disposal of SI Pressure Instruments Limited and closed the loss-making Wombwell Foundry Limited as indicated in our 2002 Annual Report. 'We have recently replaced the bank facilities arranged three years ago to fund the acquisition of Ash & Lacy Plc, with new facilities for five years, on terms more advantageous to the Group. 'Subject to there being no adverse change in trading conditions, we look forward to another satisfactory outcome for the full year'. Ends Further information: Hill & Smith Holdings PLC David Grove Chief executive 0121 704 7430 07973 325667 Quantum PR plc Edward Carter Quantum PR plc 0121 633 7775 Chairman's Statement The results for the six months ended 30 June 2003 represent further progress in the Group's financial performance. Turnover of £121.1 million was 21% ahead of the comparable period in 2002. A substantial increase in steel prices between the two periods resulted in material increases in both selling prices and the cost of raw materials. This, plus an increase in pension costs of £0.7 million, led to a fall of 1% in our operating margins leaving a profit before exceptional items and goodwill amortisation of £5.1 million (2002: £5.0 million). Adjusted earnings per share of 5.93p were 3.7% ahead of the same period last year. Operations Our core businesses supplying the building, construction and transport infrastructure markets continued to make progress overall and benefited from the contribution of the acquisitions made in 2002. The increased spend in public sector projects has provided a healthy level of demand for our products. The Industrial Products division contributed 5% of our operating profits and continues to be managed as a portfolio of non-core businesses. The loss-making Wombwell Foundry Limited was closed during the period as indicated in the 2002 Annual Report. The disposal of SI Pressure Instruments Limited was completed during the period for a price approximately equivalent to turnover. Cash Flow and Gearing As anticipated, net debt increased moderately during the period to £47.8 million from £44.9 million at 31 December 2002. This represents gearing of 130% (December 2002: 125%) with interest cover of 3.6 times (year ended December 2002: 3.5 times). Cash absorbed from operating activities before exceptional items was £0.2 million. This was due primarily to the unwinding effect of a set of one-off factors mentioned in last year's Annual Report, including advance payments received in connection with our Terminal 5 Joint Venture and a special extended supplier payment situation due to a contractual dispute, which has since been satisfactorily resolved. In 2000 a bank facility was put in place to fund the acquisition of Ash & Lacy Plc. This facility has recently been replaced by a new five year facility on more advantageous terms. Dividend An interim dividend of 2.15p per share has been declared by the Board for the six month period ended 30 June 2003 (2002 2.10p). Based on adjusted earnings per share, this dividend is covered 2.8 times. In the absence of unforeseen circumstances, the Board expects to be in a position to sustain a prudently progressive dividend policy now that cover has been satisfactorily rebuilt. Outlook The second half of the current financial year has started in line with our expectations and our order intake remains steady. Subject to there being no adverse change in trading conditions, we look forward to another satisfactory outcome for the full year. DAVID WINTERBOTTOM Chairman 10 September 2003 Group Profit and Loss Account Notes 6 months ended 6 months ended Year ended 30 June 2003 30 June 2002 31 December 2002 Before Before Before exceptional exceptional exceptional items and Exceptional items and items and goodwill items and goodwill goodwill amortisation goodwill amortisation amortisation amortisation Total Total Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover 1 121,081 - 121,081 99,856 99,856 212,740 212,740 ------- ------- ------- ------- ------- ------- ------- Operating profit 1,2 7,020 (1,082) 5,938 6,981 6,202 14,008 11,348 Profit on sale of business 2 - 540 540 - - - - Profit on sale of fixed - 135 135 - 218 - 223 assets Loss on termination of 2 - (1,504) (1,504) - - - (1,098) operations ------- ------- ------- ------- ------- ------- ------- Profit on ordinary activities before interest 7,020 (1,911) 5,109 6,981 6,420 14,008 10,473 Net interest payable (1,965) - (1,965) (1,970) (1,970) (3,989) (3,989) ------- ------- ------- ------- ------- ------- ------- Profit before taxation 5,055 (1,911) 3,144 5,011 4,450 10,019 6,484 Tax on profit 3 (1,416) 360 (1,056) (1,523) (1,523) (2,809) (2,543) ------- ------- ------- ------- ------- ------- ------- Profit after taxation 3,639 (1,551) 2,088 3,488 2,927 7,210 3,941 Minority interest 10 - 10 1 1 3 3 ------- ------- ------- ------- ------- ------- ------- Profit for the period 3,649 (1,551) 2,098 3,489 2,928 7,213 3,944 ------- ------- ------- ------- Dividends 4 (1,324) (1,282) (2,760) ------- ------- ------- Retained profit for the 774 1,646 1,184 period ------- ------- ------- Earnings per share 5 5.93p (2.52p) 3.41p 5.72p 4.80p 11.79p 6.45p Diluted earnings per share 5 5.90p (2.51p) 3.39p 5.70p 4.78p 11.75p 6.42p Group Balance Sheet 30 June 2003 30 June 2002 31 December 2002 £'000 £'000 £'000 Fixed assets Intangible assets 27,771 27,651 30,350 Tangible assets 41,877 44,093 42,748 Investments 25 125 125 ------- ------- ------- 69,673 71,869 73,223 Current assets Properties held for resale 430 - 1,365 Stocks 24,461 17,700 23,410 Debtors 63,069 54,784 55,745 Cash and deposits 11,516 7,776 12,811 ------- ------- ------- 99,476 80,260 93,331 Creditors: amounts falling due within one year Borrowings and finance leases (10,300) (18,872) (10,377) Other creditors (67,017) (52,419) (65,774) ------- ------- ------- (77,317) (71,291) (76,151) Net current assets 22,159 8,969 17,180 Total assets less current liabilities 91,832 80,838 90,403 Creditors: amounts falling due after one year Borrowings and finance leases (48,971) (36,976) (47,304) Provisions for liabilities and charges (6,199) (7,771) (7,208) ------- ------- ------- Net assets 36,662 36,091 35,891 ------- ------- ------- Share capital and reserves Called up share capital 15,394 15,265 15,391 Share premium 3,371 3,370 3,367 Capital redemption reserve 238 238 238 Revaluation reserve 733 733 733 Other reserves 4,313 4,088 4,313 Profit and loss account 12,580 12,352 11,806 ------- ------- ------- Equity shareholders' funds 36,629 36,046 35,848 Equity minority interests 33 45 43 ------- ------- ------- 36,662 36,091 35,891 ------- ------- ------- Group Cash Flow Statement Notes 6 months ended 6 months ended Year ended 31 30 June 2003 30 June 2002 December 2002 £'000 £'000 £'000 Net cash (outflow)/inflow from operating activities 6i (366) 8,996 26,145 Returns on investments and servicing of finance (1,753) (1,287) (4,383) Taxation (818) 347 (432) Capital expenditure and financial investment 6ii (971) (2,762) (5,545) Acquisitions and disposals 2,732 - (5,455) Equity dividends paid (1,282) (1,281) (2,044) ------- ------- ------- Cash flow before financing (2,458) 4,013 8,286 Financing: Issue of new shares 7 51 49 Increase/(decrease) in borrowings 1,156 (952) (188) ------- ------- ------- 1,163 (901) (139) ------- ------- ------- Increase/(decrease) in cash in the period (1,295) 3,112 8,147 ------- ------- ------- Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash (1,295) 3,112 8,147 Cash (inflow)/outflow from borrowings (1,156) 952 188 ------- ------ ------- Change in net debt resulting from cash flows (2,451) 4,064 8,335 New finance leases (434) - (180) Loan notes issued as part of acquisition - - (889) ------- ------- ------- Movement in net debt in the period (2,885) 4,064 7,266 ------- ------- ------- Net debt at the start of the period (44,870) (52,136) (52,136) ------- ------- ------- Net debt at the end of the period (47,755) (48,072) (44,870) ------- ------- ------- Statement of Group Total Recognised Gains and Losses 6 months ended 6 months ended Year ended 31 30 June 2003 30 June 2002 December 2002 £'000 £'000 £'000 Profit for the period 2,098 2,928 3,944 Currency translation differences on overseas net - - (84) investments ------- ------- ------- Total recognised gains and losses relating to the 2,098 2,928 3,860 period ------- ------- ------- Reconciliation of Movement in Group Shareholders' Funds 6 months ended 6 months ended Year ended 31 30 June 2003 30 June 2002 December 2002 £'000 £'000 £'000 Profit for the period 2,098 2,928 3,944 Dividends (1,324) (1,282) (2,760) ------- ------- ------- 774 1,646 1,184 Other recognised net gains and losses relating to the - - (84) period New ordinary share capital issued 7 52 400 ------- ------- ------- Net increase in shareholders' funds 781 1,698 1,500 Opening shareholders' funds 35,848 34,348 34,348 ------- ------- ------- Shareholders' funds at the end of the period 36,629 36,046 35,848 ------- ------- ------- Notes to the Financial Statements 1. Segmental Information 6 months ended 30 June 2003 6 months ended 30 June 2002 Year ended 31 December 2002 Operating Net Operating Net Operating Net Profit* Assets Profit* Assets Profit* Assets Turnover Turnover Turnover £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Building and construction products 101,038 6,659 48,103 73,794 5,994 41,281 162,743 13,305 38,136 Industrial products 20,043 361 14,923 26,062 987 21,857 49,997 703 18,475 ------- ------- ------- ------- ------- ------- ------- ------- ------- Total operations 121,081 7,020 63,026 99,856 6,981 63,138 212,740 14,008 56,611 ------- ------- ------- ------- ------- ------- Tax and dividends (9,567) (7,874) (8,939) Long-term debtors and other provisions 3,187 1,248 2,739 Net borrowings (47,755) (48,072) (44,870) Goodwill 27,771 27,651 30,350 ------- ------- ------- Total Group 36,662 36,091 35,891 ------- ------- ------- * Operating profit is stated before exceptional items and goodwill amortisation. 2. Exceptional items and goodwill amortisation The charge against operating profit comprises £840,000 of goodwill amortisation and £242,000 for business reorganisation costs. The profit on sale of business relates to the sale of the business and certain assets and liabilities of SI Pressure Instruments Limited. The loss on termination of operations relates primarily to the closure of Wombwell Foundry Limited as announced in the annual report for 2002. 3. Taxation Tax has been provided on the profit before exceptional items and goodwill at the estimated effective rate for the full year. 4. Dividends The Directors have declared an interim dividend for the current year of 2.15p per share (six months to 30 June 2002: 2.1p) which will be paid on 9 January 2004 to shareholders on the register on 5 December 2003. 5. Earnings per share The weighted average number of shares in issue during the period was 61,573,940, diluted for the effect of outstanding share options 61,860,162 (six months ended 31 June 2002: 61,005,960 and 61,261,813 diluted). Earnings per share have been calculated on profits of £2,098,000 (six months ended 30 June 2002: £2,928,000) and earnings per share before exceptional items and goodwill amortisation on earnings of £3,649,000 (six months ended 30 June 2002: £3,489,000). 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. 6. Notes to the Cash Flow Statement i. Reconciliation of operating profit to net cash flow from operating activities 6 months ended 30 June 2003 6 months ended Year ended 30 June 2002 31 December 2002 Before Exceptional Total Before Total Before Total exceptional items and exceptional exceptional items and goodwill items and items and goodwill amortisation goodwill goodwill amortisation amortisation amortisation £'000 £'000 £'000 £'000 £'000 £'000 £'000 Operating profit 7,020 (1,082) 5,938 6,981 6,202 14,008 11,348 Income on investment properties - - - (130) (130) - - Depreciation 2,744 - 2,744 3,010 3,010 6,114 8,085 Amortisation of goodwill - 840 840 - 779 - 1,744 Payments on the termination of - - - - - - (193) business (Profit) on sale of fixed assets - - - - - (64) (64) Change in working capital: Stocks (1,721) 328 (1,393) (915) (915) (4,654) (4,696) Debtors (8,554) 1,166 (7,388) (754) (754) (299) (299) Creditors and provisions 331 (1,438) (1,107) 804 804 12,085 10,220 ------- ------- ------- ------- ------- ------- ------- (9,944) 56 (9,888) (865) (865) 7,132 5,225 ------- ------- ------- ------- ------- ------- ------- Net cash (outflow) / inflow from operating activities (180) (186) (366) 8,996 8,996 27,190 26,145 ------- ------- ------- ------- ------- ------- ------- ii. Capital expenditure Purchase of tangible fixed assets (2,141) (3,917) (7,146) Sale of fixed assets 1,170 1,155 1,601 ------- ------- ------- (971) (2,762) (5,545) ------- ------- ------- 7. Financial Information The results for the half years ended 30 June 2003 and 2002 are unaudited and do not constitute statutory accounts within the meaning of s240 of the Companies Act 1985. The financial information for the year ended 31 December 2002 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 interim report will be sent to shareholders and will be available from Hill & Smith Holdings PLC office at: 2 Highlands Court Cranmore Avenue Shirley Solihull, B90 4LE Directors and Financial Calendar Directors: D.S. Winterbottom FCA, FCT (Chairman) D.L. Grove BA, FCA (Deputy Chairman and Chief Executive) C.J. Burr FCA (Finance Director) H.C. Everett BSc, CA (Executive Director and Company Secretary) H.C. Marshall MSc, BSc (Non-Executive) R.E. Richardson FCMI (Non-Executive) Secretary: H.C. Everett BSc, CA Financial Calendar Payment of interim dividend (ex dividend date 3 December 2003) 9 January 2004 Preliminary announcement of results for the year to 31 December 2003 March 2004 Annual General Meeting 2004 May 2004 This information is provided by RNS The company news service from the London Stock Exchange

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