Final Results

Speedy Hire PLC 12 June 2002 12 June 2002 SPEEDY HIRE Plc PRELIMINARY RESULTS FOR THE 52 WEEKS ENDED 31 MARCH 2002 Speedy Hire is a leading provider of equipment hire services to UK contractors and builders, industry, utilities and the public sector, operating from 250 depots throughout the country. The Group is focused primarily on tool hire, with complementary businesses specialising in portable accommodation, surveying and power generation. HIGHLIGHTS • Turnover* £120.7m - up 20.7% • Hire Services operating profit £19.5m - up 13.2% • Pre-tax profit* £15.4m - up 14.5% • Earnings per share* 26.0p - up 26.0% • Dividends per share 8.0p • Transformation to focused hire services business completed • National coverage established: - 17 new depots opened - 37 Jewson depots acquired and integrated • UK market leader in tool hire to construction industry 'We have delivered against the objectives we set ourselves when the new management team was appointed 15 months ago. We remain encouraged by the strength of our markets. The current financial year has started well and, provided that there is no material change in the general economic outlook, we look forward to a year of continued progress.' - David Wallis - Chairman * Figures from continuing operations, before exceptional items For further information: Speedy Hire Plc Hudson Sandler John Brown (Chief Executive) Nick Lyon / Keith Hann Neil O'Brien (Group Finance Director) Tel: 020 7796 4133 Tel: 020 7796 4133 on Wednesday 12 June (thereafter tel: 01942 720000) Website: www.speedyhire.plc.uk CHAIRMAN'S STATEMENT I am pleased to report that we have delivered against the objectives we set ourselves when the new management team was appointed 15 months ago. The transformation from a diversified building conglomerate to a focused hire services business is now complete. Speedy Hire has built a powerful and sustainable position in its markets through a combination of organic growth from our existing sites, the opening of 17 new depots and the acquisition of 37 others. This has significantly expanded our national coverage. As a result of this expansion we estimate that over the last year our share of the UK tool hire market has grown to around 15%. The core tool hire business is supported by complementary businesses in adjacent markets, covering power generation, cabins, surveying apparatus and small lifting equipment, all of which continued to profitably grow. Financial Performance The continued momentum of our business is reflected in its financial performance. To make comparisons with the 2001 financial year meaningful, pro forma numbers for continuing operations have been used for each year. Turnover grew from £100.1 million to £120.7 million, an increase of 20.7% Operating profit after Central Overheads grew from £15.7 million to £17.7 million, an increase of 12.7% Continuing pre-exceptional earnings per share grew from 20.7 pence to 26.0p, an increase of 26.0% Group profit before tax including discontinued activities and after exceptional items was £7.7 million compared to a loss in 2001 of £13.9 million. We invested £41.2 million of capital in new equipment, continuing the high level of investment of recent years. Dividend The Board is proposing a final dividend of 5.0 pence per share, which together with the interim payment of 3.0 pence per share makes a total of 8.0 pence per share for the year (2001: 13.9 pence per share). This level of dividend is consistent with the policy outlined in both the 2001 Annual Report and the 2001/ 02 Interim Report in which I set out our intention to invest in the business for future growth and that future dividends would be covered not less than three times by earnings. We would expect to maintain this ratio into the foreseeable future. Business Highlights The year has been particularly busy for our people. We disposed of all our non-core activities in Building Contracting and Utility Services. These have been reported earlier in the 2001 Annual Report and 2001/02 Interim Statement. In January 2002, we acquired 37 depots from Jewson, a leading builders' merchant. These depots comprised all of their 'stand-alone' tool hire operations. This acquisition significantly expanded our presence in the West Country and in London and the South East. These have been integrated into the Speedy Hire network and are trading ahead of our expectations at the time of purchase. In March, we acquired the business and certain assets of Chichester Plant Contractors Limited and have entered into a five year supply agreement with the vendor which will bring benefits for all of Speedy Hire's businesses. As well as this disposal and acquisition activity, we added 17 new depots to our core estate. Depots opened over the last three years continued to grow towards maturity in line with the now well established trend. Like for like hire turnover (defined as relating only to depots which we owned and from which we operated for the whole of the last two financial years) increased by 8%. Excellent performances were recorded by our recently formed specialist divisions of Power and Survey. As a result of our acquisition and organic growth we are deriving benefits from being able, for the first time, to offer a full national service to the major contractors. People Being a relative newcomer to Speedy Hire, I have continued throughout the year to meet more of the people who operate the business on a day-to-day basis. Wherever I have gone, I have never failed to be impressed by their product knowledge and their clear commitment to providing excellent service for our customers. We have approximately 50% more depots than two years ago, with a corresponding increase in headcount; we now employ over 2,000 people. Our new employees have quickly embraced the Speedy culture and along with our many long-serving managers and employees have contributed to this result. I would like to extend the thanks of the Board and all our shareholders to each of them. Senior management is successfully completing the transition from being a divisional executive team to one running a publicly quoted company. They have embraced new ideas with enthusiasm and energy and I continue to be encouraged by their drive to make Speedy Hire the best in the sector. My two non-executive colleagues have made an outstanding contribution to the Board in helping to implement the best standards of corporate governance and I extend my personal thanks to them for their support and advice. Outlook Our customers cover every aspect of the construction and support services sector. They create, build, repair, or refurbish the infrastructure that supports our everyday lives such as roads and railways, pipelines, shopping centres, offices, factories, schools and hospitals and our homes. Our experience, almost without exception, from the major quoted construction groups to the local maintenance engineer, is that they remain busy with strong forward order books. Accordingly, we remain encouraged by the strength of our markets. Our key objectives for the current financial year are to ensure that we fully capitalise on this demand, successfully integrate our recent acquisitions and continue to open new sites where we are confident of achieving our required returns. Tool hire remains a very fragmented market and more opportunities may present themselves to further the consolidation of the industry and extend our market leadership. We shall investigate opportunities for further specialist divisions where we believe profitable growth can be achieved. The current financial year has started well and, provided there is no material change in the general economic outlook, we look forward to a year of continued progress. David Wallis Chairman 12 June 2002 CHIEF EXECUTIVE'S REVIEW This year Speedy Hire has passed a number of important milestones. It is 25 years since I opened our first tool hire depot in Wigan, and it is our tenth consecutive year of turnover and operating profit growth since we began to expand the business in earnest in 1993. At that stage we had just 12 depots in the North West of England and six in London. Today we have 250 throughout the UK, generating a turnover of well in excess of £100 million, and have achieved our goal of becoming the market leader in tool hire to the construction industry. Results For the purpose of my report I will focus solely on the hire business in each year. This was another record year for Speedy Hire. Turnover grew by 18.1% to £118.9 million, and operating profit by 13.2% to £19.5 million. Each of our five general tool hire companies performed strongly, and our specialist operations - Speedy Space, Speedy Survey and Speedy Power - all made good headway and contributed to the progress of the Group. Our underlying operating margins remain stable. I regard this as an excellent result in a year in which we achieved a step change in the size of our depot network, opening 17 new units on greenfield sites and writing off the costs of integrating the further 37 Jewson depots we acquired in January 2002. Since 1998, isolated from the other activities of the former Allen Plc, Speedy Hire has achieved annual compound growth in turnover of 21.8%, and in operating profit of 17.9%. Market background We have continued to operate in a positive climate, with industry statistics demonstrating that the UK construction market has now been in steady growth for more than three years. The high pay rates currently being commanded by key construction workers underline the skill shortages that this growth has produced. We believe that the Government's strong commitment to public infrastructure investment, and the benign economic climate for private sector construction, mean that demand for our products should remain strong for the foreseeable future. While the tool hire market is crowded, we have demonstrated our ability to gain market share. Our scale provides significant competitive advantages such as national coverage and service to customers and the resources to invest in high quality products. Tool hire Our core Speedy Hire business has expanded to 228 depots through 14 greenfield openings and the absorption of 37 Jewson units, which have all been re-branded and converted to our Speedy Hire systems. This acquisition was our largest to date and significantly strengthened our position in the South West and South East, making us the largest London Stock Exchange listed pure tool hire company in the UK. The ex-Jewson depots are already trading above the levels we anticipated in our acquisition business plan. Specialist companies Speedy Space, specialising in the provision of on-site accommodation and storage, has been expanded to 11 depots covering all of England and Wales. It now has over 11,000 units, with utilisation rates remaining consistently above 90%. We launched two new divisions in the previous financial year: Speedy Survey and Speedy Power. Our specialist surveying equipment hire business has already been expanded to eight depots and is trading very successfully. We expect to complete its national coverage during the current year. The power generation division has recently opened its third depot and also has clear potential to become a nationwide supplier. It is very encouraging to see these two new businesses progressing so well in only their second year. Investment The key to our continued success is our ability to offer customers the right product at the right price, backed by high standards of service. During the year we invested £41.2 million in new equipment for hire, compared with £38.5 million in the prior year. This underpins the quality of our hire fleet which we believe is the most modern in the country for large hirers. A further key element of our proposition is our up-to-date and efficient delivery vehicles, normally renewed on a two-year cycle; the vast majority of our hire products are delivered to our customers on their sites, and our modern fleet is designed to make a positive impression on our customers and to ensure that time-sensitive deliveries are made reliably. Infrastructure We pioneered electronic invoicing in the UK and also launched the first interactive website in Europe in our sector. We intend to build on this strong base through further investment in the current year, designed to ensure that our head office, marketing and data processing systems meet the needs of our customers. Training, health and safety Recognising that good service is the key to competitive advantage in tool hire, we continue to invest substantially in senior management coaching, training our people, and in bonus schemes to ensure that all our employees are highly incentivised to 'go the extra mile' to meet our customers' requirements. We also strive continually to improve the health and safety routines that are stringently enforced throughout the business. Each year we apply more resources to ensure that we comply with the ever-changing regulatory regime, and to maintain our position at the leading edge in this important area. We were the first national hire company to hold the Hire Association Europe's ('HAE') ' Safe-Hire' certificate, and last month we were named as the HAE's 'Hire Training Company of the Year'. Steve Palmer, who runs our workshops, was also chosen as HAE 'National Employee of the Year'. These successes reflect the importance that we attach to having the best equipment, the highest standards of maintenance and training, and the strictest compliance with all relevant health and safety procedures. The future We are now the number one tool hirer to the UK construction industry. We have a simple and proven growth strategy, strong management in depth, and the most highly motivated sales force in our industry, backed by excellent depot teams. Having expanded from 170 to 250 depots over the last two years, our immediate priority is to consolidate our market leadership by completing the integration of the Jewson acquisition and leveraging the full benefits it makes available. Once we have done this, I expect us to revert to a typical opening programme of around 20 new branches a year, with the ultimate potential to grow to some 400 depots across the UK. Our specialist companies continue to thrive and the two new divisions, Speedy Survey and Speedy Power, have great potential to mirror the success of Speedy Space. We shall continue to search out further opportunities with the potential to develop into specialist divisions. The fundamentals of both our market and our business are attractive, and I look forward with confidence to further development of the business in both the current year and the longer term. John Brown Chief Executive CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE 52 WEEKS ENDED 31 MARCH 2002 Note Year to Restated 31 March Year to 2002 1 April 2001 (52 wks) (52 wks) £'000 £'000 £'000 £'000 Turnover 1,3 Continuing Operations 118,023 100,079 Acquired Operations 2,726 - Discontinued Operations 59,891 221,399 ----------- ------------ 180,640 321,478 Cost of Sales (102,227) (253,506) ------------ ------------ Gross Profit 78,413 67,972 Distribution Costs (23,630) (21,993) Administrative Expenses (33,135) (40,627) Administrative Expenses - exceptional (495) (800) Other Operating Charges (4,696) (8,456) Other Operating Income 2,145 1,664 ------------ ------------ Operating Profit/(Loss) 2,3 - Continuing Operations 18,017 15,713 - Acquired Operations (343) - - Discontinuing Operations 928 (17,953) ----------- ------------ 18,602 (2,240) Loss on disposal of Discontinued Operations (8,090) (5,623) Provision against loss on disposal of a discontinued operation - (2,962) ------------ ------------ Profit/(Loss) on ordinary activities before interest 10,512 (10,825) Net Interest Payable (2,784) (3,074) ------------ ------------ Profit/(Loss) before taxation 2 7,728 (13,899) Taxation (5,150) 1,913 ------------ ------------ Profit/(Loss) after Taxation 2,578 (11,986) Minority Interest - (9) ------------ ------------ Profit/(Loss) attributable to the Group 2,578 (11,995) Dividends 6 (3,325) (5,773) ------------ ------------ Retained Loss for the Financial Year (747) (17,768) ====== ====== Earnings/(Loss) per share 4 - Basic 6.21p (28.88p) - Diluted 6.18p (28.88p) - Underlying (excluding all exceptionals) 27.58p (6.28p) - Continuing (excluding all exceptionals) 26.01p 20.65p CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2002 As at As at 31 March 2002 1 April 2001 £'000 £'000 £'000 £'000 Fixed Assets Intangible Assets 4,724 1,566 Tangible Assets 122,535 106,801 ------------ ------------ 127,259 108,367 Current Assets Stocks and work in progress 3,364 11,785 Debtors: amounts falling due within one year 46,932 83,622 ------------ ------------ 50,296 95,407 Creditors: amounts falling due within one year (74,026) (118,876) ------------ ------------ Net current liabilities (23,730) (23,469) Debtors: Amounts falling due after more than one year - 4,513 ----------- ----------- Total assets less current liabilities 103,529 89,411 Creditors: amounts falling due after more than one year (24,598) (21,249) Provisions for liabilities and charges (9,774) (8,087) ------------ ------------ 69,157 60,075 ======= ======= Capital and reserves Called-up share capital 2,129 2,077 Share Premium Account 32,487 30,119 Merger Reserve 3,660 3,660 Revaluation Reserve 390 390 Investment Property Revaluation Reserve 665 665 Capital Redemption Reserve 26 26 Profit and Loss Account 29,800 23,138 ------------ ------------ 69,157 60,075 ====== ====== CONSOLIDATED CASH FLOW STATEMENT FOR THE 52 WEEKS ENDED 31 MARCH 2002 Year to Year to 31 March 2002 1 April 2001 (52 Weeks) (52 Weeks) £'000 £'000 Cash Flow from Operating Activities (Note 5) 34,448 16,106 ------------ ------------ Returns on Investments and Servicing of Finance Interest Received - 14 Interest Paid (370) (836) Interest Element of HP and Finance Lease payments (2,414) (2,252) ------------- ------------ (2,784) (3,074) ------------- ------------ Tax Paid (3,321) (2,695) ------------- ------------ Capital expenditure and financial investment Purchase of Tangible Assets (9,407) (11,551) Sale of Tangible Fixed Assets 15,726 9,346 ------------ ------------ 6,319 (2,205) ------------ ------------ Acquisitions and disposals Purchase of Businesses (17,435) (5,535) Disposal of Subsidiary Undertakings 2,793 12,164 Overdrafts Disposed of with Subsidiary Undertakings 5,233 6,853 Professional fees in connection with Group Restructuring - (2,317) ------------ ------------ (9,409) 11,165 ------------ ----------- Dividends Paid (4,693) (5,773) ------------ ------------ Financing Issue of share capital 113 - Debt Repaid (18) (8,057) Capital Element of HP and Finance Lease Payments (21,199) (19,209) ------------ ------------ (21,104) (27,266) ------------ ------------ Decrease in Cash (544) (13,742) ------------ ------------ Analysis of Net Debt At Cash Disposal of Other At 31 March Subsidiaries Non-cash 2002 2 April 2001 Flow Changes £'000 £'000 £'000 £'000 £'000 Overdrafts (11,266) (544) - - (11,810) ------------ ------------ ------------ ---------- ---------- Debt due within one year (16) 18 - (2) - Debt due after one year (2) - - 2 - Hire-purchase and finance lease (39,257) 21,199 686 (27,346) (44,718) contracts ------------ ------------ ------------ ---------- ---------- (39,275) 21,217 686 (27,346) (44,718) ------------ ------------ ------------ ---------- ---------- (50,541) 20,673 686 (27,346) (56,528) ------------ ------------ ------------ ---------- ---------- NOTES TO THE FINANCIAL STATEMENTS 1. Turnover Restated 2002 2001 (52 Weeks) (52 Weeks) £'000 £'000 % % Turnover Hire Services 118,895 65.8 100,634 31.3 Housebuilding - - 10,878 3.4 Utility Services and Civil Engineering 36,616 20.3 60,217 18.7 Building 23,275 12.9 149,679 46.6 Central overheads net of property income 1,854 1.0 70 0.0 ------------ ------------ ------------ ------------ 180,640 100.0 321,478 100.0 ------------ ------------ ------------ ------------ Comparative information has been restated as necessary to show Utility Services and Civil Engineering as discontinued and to include property profits in the category of central overheads net of property income. 2. Profit/(Loss) on Ordinary Activities Restated 2002 2001 £'000 £'000 Hire Services 19,502 17,233 Housebuilding - 300 Utility Services and Civil Engineering 928 (5,249) Building - (13,084) Central overheads net of property income (1,828) (1,440) -------------- ------------ Operating Profit/(Loss) 18,602 (2,240) Loss on disposal of discontinued operations (8,090) (8,585) -------------- ------------ Operating Profit/(Loss) before interest 10,512 (10,825) payable Net Interest Payable (2,784) (3,074) -------------- ------------ Profit/(Loss) on ordinary activities before 7,728 (13,899) taxation ======== ======= 3. Turnover, Cost of Sales and Net Operating Costs 2002 2001 Discontinued Discontinued Continuing Acquisitions £'000 Total Continuing £'000 Total £'000 £'000 £'000 £'000 £'000 Turnover 118,023 2,726 59,891 180,640 100,079 221,399 321,478 ------------ ----------- ------------ ------------ ----------- ----------- ----------- Cost of Sales 48,448 754 53,025 102,227 32,769 220,737 253,506 ------------ ----------- ------------ ------------ ------------ ----------- ----------- Net Operating Costs Distribution costs 22,706 833 91 23,630 20,828 1,165 21,993 Administrative expenses 27,648 1,412 4,570 33,630 29,107 12,320 41,4278 Other operating charges 3,069 70 1,557 4,696 2,633 5,823 456 Other operating income (1,865) - (280) (2,145) (971) (693) (1,664) ------------ ----------- ------------ ------------ ------------ ------------ ------------ 51,558 2,315 5,938 59,811 51,597 18,615 70,212 ------------ ----------- ------------ ------------ ------------ ------------ ------------ Operating Profit/(loss) 18,017 (343) 928 18,602 15,713 (17,953) (2,240) ------------ ----------- ------------ ------------ ------------ ------------ ----------- 4. Earnings/(Loss) per Share Basic earnings/(loss) per share have been calculated based on the profit after taxation and minority interests of £2,578,000 (2001: loss of £11,995,000) and the weighted average number of shares in issue of 41,539,235 (2001: 41,535,835). Diluted earnings/(loss) per share has been calculated based on the same profit /(loss) after taxation and minority interests, and on the diluted weighted average number of shares of 41,695,344 (2001: 41,539,943). 5. Operating Cash Flow 2002 2001 (52 weeks) (52 weeks) £'000 £'000 Operating profit/(loss) 18,602 (2,240) Depreciation and amortisation 19,028 16,351 Profit on sale of fixed assets (4,747) (3,274) Increase in stocks (4,666) (8,424) Increase in debtors (2,575) (3) Increase in creditors 8,191 13,696 Long Term Incentive Plan Charge 615 - ----------- ---------- 34,448 16,106 ====== ====== 6. Dividend The Board has proposed a final dividend of 5.00 pence per share to be paid on 30 August 2002 to shareholders on the register at 2 August 2002. This, together with an interim dividend of 3.00 pence per share paid on 31 January 2002, makes a total dividend for the year of 8.00 pence per share. 7. The financial information set out above does not comprise full accounts within the meaning of Section 240 of the Companies Act 1985. The financial information contained in this announcement in respect of the year ended 31 March 2002 has been extracted from the financial statements which have been audited and reported upon without qualification by KPMG Audit Plc and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985. 8. The Annual Report and Accounts for the year ended 31 March 2002 will be posted to shareholders on or about 24 June 2002. This information is provided by RNS The company news service from the London Stock Exchange

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