Final Results

Speedy Hire PLC 11 June 2003 11 June 2003 SPEEDY HIRE Plc PRELIMINARY RESULTS FOR THE 52 WEEKS ENDED 30 MARCH 2003 Year of Very Good Progress Speedy Hire is a leading provider of equipment hire services to UK contractors and builders, industry, utilities and the public sector, operating from over 250 depots throughout the country. The Group is focused primarily on tool hire, with complementary businesses specialising in portable accommodation, surveying and power generation equipment. HIGHLIGHTS • Continuing turnover up 22% to £147.2 million (2002: £ 120.7 million) • Continuing pre-tax profit* up 21% to £18.9 million (2002: £15.6 million) • Continuing earnings per share* up 27% to 33.5 pence (2002: 26.4 pence) • Dividend per share up 12.5% to 9.0 pence (2002: 8.0 pence) • Like for like tool hire turnover up 8% • Market share increased • Jewson acquisition successfully integrated • Strong cashflow: interest cover increased * before goodwill amortisation and exceptionals (see note 3) Outlook 'Speedy Hire has a strong track record of growing sales and profits by investing in its core business. Our people are well trained, highly motivated and passionate about understanding customers and their needs. Leaving aside those elements of the economy outside the control of management, the strength of the Speedy Hire culture has consistently delivered profitable growth and the company is well placed to make further progress in the year ahead.' - David Wallis - Chairman For further information: Speedy Hire Plc Hudson Sandler John Brown (Chief Executive) Nick Lyon / Wendy Baker Neil O'Brien (Group Finance Director) Tel: 020 7796 4133 Tel: 020 7796 4133 on Wednesday 11 June (thereafter tel: 01942 720000) Website: www.speedyhire.plc.uk High resolution photographs will be available to media at www.vismedia.co.uk CHAIRMAN'S STATEMENT I am delighted to report another year of very good progress for Speedy Hire. Our key customers in the construction, facilities management and support services sectors have remained busy throughout the year and everyone in the business has worked exceptionally hard to satisfy their tool hire requirements. This success is testimony to the commitment, skill and enthusiasm of the teams of Speedy Hire people which run the business on a day to day basis and I would like to extend the thanks of both the Board and shareholders to each of them. I also would like to extend my personal thanks to the executive management for their dynamic, enthusiastic and enjoyable approach to business and to my two independent directors who give freely of their time and make an outstanding contribution, as we seek to implement the highest standards of corporate governance. Financial Performance Continuing turnover grew from £120.7 million to £147.2m an increase of 22%. Continuing operating profit grew from £17.7 million to £21.1 million an increase of 19%. Continuing group profit before goodwill, exceptionals and tax grew from £15.6 million to £18.9 million, an increase of 21% (see note 3). Continuing earnings per share (pre goodwill and exceptionals) grew from 26.41p to 33.53p, an increase of 27% (see note 4). Capital expenditure on tools and equipment was £38 million (2002: £42 million), underlining our commitment to maintaining the most modern kit in the industry. Our tools and equipment have a balance sheet value of £123 million, of which £54 million is invested in long life items such as cabins and access towers. Capital expenditure of £120 million on tools and equipment over the last three years gives some indication of how modern our hire fleet is. Our Balance Sheet has continued to strengthen. Interest is now covered 7.3 times (2002: 6.7 times) by operating profits and gearing has reduced to 67% (2002: 82%). We consider this an excellent position given the increase in turnover during the year. It is also worthy of note that the group has no exposure to a defined benefit pension scheme. The Board is proposing a final dividend of 5.7 pence per share, an increase of 14%, making a total of 9.0 pence per share for the year as a whole (2002: 8.0 pence). This will be paid on 29 August 2003 to all those shareholders on the register on 1 August 2003. Business Highlights Following the opening of 54 depots in the last financial year through acquisition and organic growth, the opportunity was taken in 2002/03 to consolidate and re-organise the business. Speedy Hire now has a national network to support the major construction groups, backed up by specialist divisions, in order to meet all their needs for tools and equipment. Speedy Hire has preferred supplier status with many of these. As a result of the success of the specialist divisions of Space, Survey and Power, a new division for lifting equipment was formed, with its own dedicated management team. This absorbed the existing 24 Lifting depots and gives management a sound base from which to expand. Speedy Direct, our call centre operation has continued to go from strength to strength. At the year-end, Speedy Hire operated from a total of 257 depots, having opened 12 and closed or relocated five during the year. The benefit of this reorganisation is already becoming apparent. Like for like turnover growth for the year (defined as relating only to depots which have been owned and operated for the whole of the last two financial years) increased by 8.4% - ahead of the half year number of 5.5% and well ahead of market growth, thus further increasing our share of the market. We have continued to invest in and strengthen the infrastructure and control environment of the business. This is essential to enable us to grow the Group in a controlled fashion. Ongoing strategy Our primary customers are in the construction and support services industries. We can all be forgiven for thinking of construction revolving around large visible projects such as a new office block or an estate of new houses, but the markets we serve are large and diverse, and this broader construction market has shown consistent and constant growth. Our customers create, build, repair or refurbish the infrastructure which supports our lives, be it transport, shopping centres, offices, factories, schools, or our homes - in other words, essential needs of modern life. Speedy Hire's business is to service and support those who provide these necessities. We continue to see many infill opportunities within the UK both through greenfield development and acquisitions, the prices of which are returning to more acceptable levels. Speedy has completed 25 such bolt-on acquisitions over the last 10 years and has a good track record of successfully integrating the business and instilling the 'can do' Speedy Hire culture. During the year we commissioned external market research which highlighted that convenience of location is still one of the most important factors for a customer in choosing a tool hire company. This underpins our strategy and we will continue our drive towards 400 depots over the next five years. Outlook Although the outlook for the global economy remains uncertain, our customers tell us that they remain busy with solid forward order books, therefore we anticipate that the market will remain strong. Speedy Hire has a strong track record of growing sales and profits by investing in its core business. Our people are well trained, highly motivated and passionate about understanding customers and their needs. Leaving aside those elements of the economy outside the control of management, the strength of the Speedy Hire culture has consistently delivered profitable growth and the company is well placed to make further progress in the year ahead. David Wallis Chairman 11 June 2003 CHIEF EXECUTIVE'S REVIEW Our clear, simple and focused strategy has made us the number one tool hirer to the UK construction industry, and has driven another year of strong sales, profit and earnings growth. This is the eleventh consecutive year of record profits from our hire operations, and both turnover and operating profit have grown at a compound annual growth rate of around 20% per annum over the last five years. Results As the Chairman has reported, we enjoyed another very successful year with Hire turnover increasing by 24% to £147.0 million, despite adding a net increase of only seven new depots during the period, while hire services operating profit advanced by 22% to £23.8 million. This reflected the successful integration of the 37 Jewson depots acquired in January 2002 and strong like-for-like sales progress throughout our established branch network. The continued growth in our UK market share is based on the speed, quality and consistency of our service. National agreements with major contractors are an increasing contributor to our business, and we were pleased to agree a two year extension of our preferred supplier agreement with Kier Group during the year, as well as a new national agreement with Taylor Woodrow to meet their accommodation and storage requirements through Speedy Space. All of our regionally based general tool hire companies performed well during the year, and we enjoyed a growing contribution from our specialist operations - Speedy Space, Speedy Survey and Speedy Power. We were particularly pleased that the Survey and Power businesses, both of which have been created within the last three years, each contributed more than £1 million to group pre-tax profit for the first time. Underlying tool hire operating margins were maintained and our tight cash control resulted in a further reduction in our gearing, to 67% at the year end. Market background The market we serve is very large and diverse, and has shown remarkable resilience over the last two decades despite the well-publicised swings in new construction activity on flagship commercial projects. Key indicators such as pay rates for construction workers remain positive, pointing to continuing skill shortages based on high levels of activity and demand. We believe that the Government's commitment to further investment in the public infrastructure also provides strong underpinning to the prospects of the construction sector. Most principal industry commentators forecast that the market will continue to grow in the medium term. Despite these positive market characteristics and our own strong progress, it is undeniable that many of our competitors have struggled over the last year. The tool hire market is crowded and ripe for further consolidation, and we believe that we are well placed to participate in and benefit from this process. Our scale and focus both give us significant competitive advantages, notably the ability to provide nationwide service to our customers and the resources to invest in the most modern and reliable hire fleet. Tool hire Tool hire operates from 231 depots across the UK, having expanded by eight greenfield openings during the year. This planned reduction in greenfield development reflected our concentration on integrating the acquired Jewson depots and bringing them up to Speedy Hire standards of performance and profitability. I am happy to report that we are on track to accomplish this successfully. To ensure that we have the right management resources and infrastructure to continue the planned growth of our business, we created a new operating company at the beginning of the current year. Speedy Scotland, with 22 depots, will continue to develop our network north of the border and will also spearhead our expansion into Ireland in the medium term. Specialist companies Speedy Space, which hires accommodation and storage units enjoyed a record year. It continued to achieve utilisation of its assets at around 90%, which have again been augmented and now comprise over 12,000 units. These can be hired through 12 depots covering the whole of England and Wales. Speedy Survey, focused on the supply of specialist surveying equipment, met all our expectations and successfully expanded to offer national coverage from a network of 10 depots. Speedy Power, our power generation division, also performed very well, and now operates from four locations across the UK. Encouraged by the success of these specialist operations, we have created a further dedicated business, Speedy Lifting, to provide lightweight lifting equipment to a wide cross section of customers. This business operates from an initial 24 depots, with further scope for expansion. Investment Nothing is more important to our customers than that the tools they need are available when they require them, in good working order, and that deliveries are made when and where requested. We have accordingly maintained a high level of investment to ensure that our hire fleet and delivery vehicles remain the most modern and reliable of any national operator. Capital expenditure on tools and equipment totalled £37.8 million during the year, compared with £41.6 million in 2001/02, and we expect to maintain investment at around these levels in the years ahead. People Having the best-informed, most helpful and most highly motivated staff has always been central to the Speedy Hire philosophy, and has been a key driver of our successful expansion over the past 26 years. We have continued to invest in training our colleagues at all levels of the business, while our remuneration structure places considerable emphasis on performance-related bonuses to ensure that all employees are appropriately incentivised to anticipate and meet our customers' requirements. Bonuses earned by our 2,220 staff in the year totalled £6.3 million, and we believe that this is a critical factor in our ability to attract and retain the very best people in our industry. Once again we were delighted to receive a major award from the Hire Association of Europe, being named as their 'Hire Company of the Year' for 2003. Health and Safety Ever-increasing regulation and the drive to improve health and safety standards across the construction industry have been important drivers of outsourcing to hire businesses such as Speedy Hire. Our customers know that they can rely on us to provide modern tools, maintained to the highest standards, backed by appropriate labelling and instructions to ensure their safe use. We continue to place great emphasis on ensuring strict compliance with all relevant safety standards within the business, and work with our customers to promote the use of safer equipment and procedures on site. The future After a period of successful consolidation, we intend to return to a more normal pattern of expansion in the current year and are planning to add between 20 - 30 new depots either through greenfield openings or acquisitions. The difficulties of many of our competitors are creating a climate in which potential acquisitions are likely to become more readily available, and at more reasonable prices, than in the recent past, and we have the management and financial resources to exploit any suitable opportunities that may arise. This has the potential to complement and accelerate our well-established strategy of organic growth. Our vision remains rooted in our core skills in the tool hire market, where we see scope to expand our network to 400 Speedy Hire depots across the UK, complemented by a growing range of dedicated, specialist activities. We have achieved our leading position in the market simply by having the best people, offering the best service and the best equipment and we will adhere to these simple principles in the years ahead. I believe that the fundamentals of our market and business proposition remain as sound as ever, and I look forward to reporting on another year of progress for the group. John Brown Chief Executive 11 June 2003 Group Profit and Loss Account For the year ended 30 March 2003 Restated 2003 2003 2002 2002 Note £'000 £'000 £'000 £'000 Turnover Continuing operations 2 147,187 120,749 Discontinued operations 2 - 59,891 1,2 147,187 180,640 Cost of sales 2 (41,917) (88,943) Gross profit 105,270 91,697 Distribution costs 2 (15,612) (13,264) Administrative expenses 2 (68,751) (60,876) Other operating income 2 179 1,045 Operating profit Continuing operations - pre-goodwill amortisation 21,770 17,843 - goodwill amortisation (684) (169) 21,086 17,674 Discontinued operations - 928 1,2 21,086 18,602 Loss on disposal of discontinued operations - (8,090) Profit on ordinary activities before interest 21,086 10,512 Interest payable (net) (2,879) (2,784) Profit on ordinary activities before taxation 18,207 7,728 Taxation (4,946) (5,150) Profit for the financial year attributable to the group 13,261 2,578 Dividends on equity shares 7 (3,743) (3,325) Retained profit/(loss) for the financial year 9,518 (747) Earnings per share - Basic 4 31.89 6.21 - Diluted 4 31.44 6.18 - Continuing (pre- exceptionals and pre- goodwill amortisation) 4 33.53 26.41 Dividends per share 9.00 8.00 Group Balance Sheet As at 30 March 2003 2003 2002 £'000 £'000 £'000 £'000 Fixed assets Intangible assets 4,040 4,724 Tangible assets 129,466 122,535 133,506 127,259 Current assets Stocks and work in progress 3,217 3,364 Debtors: amounts falling due within one year 44,091 46,932 Cash at bank and in hand 7 - 47,315 50,296 Creditors: amounts falling due within one year (63,577) (74,026) Net current liabilities (16,262) (23,730) Total assets less current liabilities 117,244 103,529 Creditors: amounts falling due after more than one year (25,402) (24,598) Provisions for liabilities and charges (12,447) (9,774) Net assets 79,395 69,157 Capital and reserves Called up share capital 2,130 2,129 Share premium account 32,537 32,487 Merger reserve 3,660 3,660 Revaluation reserve 51 390 Investment property revaluation reserve 177 665 Capital redemption reserve 26 26 Profit and loss account 40,814 29,800 Equity Shareholders' funds 79,395 69,157 Group Cash Flow Statement For the year ended 30 March 2003 Total Total Note 2003 2002 £'000 £'000 Cash inflow from operating activities 5 39,066 35,063 Returns on investments and servicing of finance Interest received 76 - Interest paid (771) (370) Interest element of hire-purchase and finance lease rental payments (2,184) (2,414) Net cash outflow from returns on investments and servicing of finance (2,879) (2,784) Taxation (5,618) (3,321) Capital expenditure Purchase of tangible fixed assets (12,597) (9,407) Sale of tangible fixed assets 15,898 15,111 Net cash inflow for capital expenditure 3,301 5,704 Acquisitions and disposals Purchase of businesses - (17,435) Disposal of subsidiary undertakings - 2,793 Net overdrafts disposed of with subsidiary undertakings - 5,233 Net cash outflow from acquisitions and disposals - (9,409) Equity dividends paid (3,451) (4,693) Financing Issue of share capital 51 113 Decrease in debt due within one year - repayment of amounts - (18) borrowed Capital element of hire-purchase and finance lease rental 6 (22,700) (21,199) payments Net cash outflow from financing (22,649) (21,104) Increase/(decrease) in cash in the year 6 7,770 (544) Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash in the period 6 7,770 (544) Cash outflow from decrease in debt and hire-purchase and lease financing 6 22,700 21,217 Change in net debt resulting from cash flows 30,470 20,673 New hire-purchase and finance lease contracts 6 (27,024) (27,346) On disposal of subsidiaries - 686 Movement in net debt in the year 3,446 (5,987) Net debt at 31 March 2002 (56,528) (50,541) Net debt at 30 March 2003 6 (53,082) (56,528) Notes to the Financial Statements For the year ended 30 March 2003 1. Turnover and profit on ordinary activities before taxation Turnover (wholly derived from activities within the UK) and profit on ordinary activities before taxation are analysed by class of business as follows: - 2003 2002 £'000 % £'000 % Turnover Hire services 147,003 99.9 118,895 65.8 Utility services and Civil Engineering - - 36,616 20.3 Building - - 23,275 12.9 Central including property income 184 0.1 1,854 1.0 147,187 100.0 180,640 100.0 Operating profit on ordinary activities Hire services 23,753 19,502 Utility services and Civil Engineering - 928 Central overheads net of property income (2,667) (1,828) Operating profit 21,086 18,602 Loss on disposal of discontinued operations net of provisions - (8,090) Profit on ordinary activities before interest 21,086 10,512 Interest payable (net) (2,879) (2,784) Profit on ordinary activities before taxation 18,207 7,728 Central overheads net of property income includes £179,000 (2002: £873,000) of profit on disposal of properties. 2. Turnover, Cost of Sales and Net Operating Costs Restated Restated 2003 2002 2002 2002 Total Continuing Continuing Discontinued Total £'000 £'000 £'000 £'000 Turnover 147,187 120,749 59,891 180,640 Cost of sales (41,917) (35,918) (53,025) (88,943) Gross profit 105,270 84,831 6,866 91,697 Net operating costs Distribution costs (15,612) (13,173) (91) (13,264) Administrative expenses (68,751) (54,749) (6,127) (60,876) Other operating income 179 765 280 1,045 Operating profit 21,086 17,674 928 18,602 Cost of sales and operating expense categories have been re-classified to ensure a consistent classification of items within the group. The directors consider that the revised basis provides a more accurate reflection of the nature of costs incurred in the business. The comparative information has been restated accordingly. The effect of the reclassification is to increase gross profit and administrative expenses by £13,284,000 and £27,246,000 respectively and to decrease distribution costs, other operating charges and other operating income by £10,366,000, £4,696,000 and £1,100,000 respectively. There is no overall effect on turnover or operating profit. 3. Reconciliation of continuing operating profit to continuing group profit before goodwill amortisation, exceptionals and taxation. 2003 2002 £'000 £'000 Continuing operating profit 21,086 17,674 Goodwill amortisation 684 169 Exceptional items within operating profit - 495 Interest payable (net) (2,879) (2,784) Continuing group profit before goodwill amortisation, exceptionals and taxation 18,891 15,554 4. Earnings per Share Basic earnings per share is based on the profit after taxation of £13,261,000 (2002: £2,578,000) and the average number of 5 pence ordinary shares in issue during the year of 41,587,476 (2002: 41,539,235). The weighted average number of ordinary shares used for the diluted earnings per share is calculated as follows: 2003 2002 Number Number Weighted average number of ordinary shares in issue during the 41,587,476 41,539,235 year Diluting effect of options under Allen Plc Savings Related - - Share Option Scheme Diluting effect of LTIP shares 591,232 156,109 Diluted Weighted average number of ordinary shares 42,178,708 41,695,344 The reconciliation from continuing earnings per share pre-exceptionals and pre-goodwill amortisation to basic earnings per share is as follows: 2003 2002 Pence Pence Continuing earnings per share (pre-exceptionals and 33.53 26.41 pre-goodwill amortisation) Discontinued activities profit after taxation per share (pre-exceptionals) - 1.57 Goodwill amortisation charge after tax per share (1.64) (0.40) Exceptional items after taxation per share - (21.37) Basic earnings per share 31.89 6.21 5. Reconciliation of operating profit to cash flow from operating activities 2003 2002 £'000 £'000 Operating profit 21,086 18,602 Depreciation charge 21,109 18,859 Amortisation charge 684 169 Profit on sale of tangible fixed assets (4,263) (4,132) Decrease/(increase) in stocks 147 (4,666) Decrease/(increase) in debtors 235 (2,575) (Decrease)/increase in creditors (547) 8,191 Charge in respect of share related awards 615 615 Net cash inflow from operating activities 39,066 35,063 6. Analysis of net debt At 1 April 2002 Other non-cash At 30 March Cashflow changes £'000 2003 £'000 £'000 £'000 Cash at bank and in hand - 7 - 7 Overdrafts (11,810) 7,763 - (4,047) (11,810) 7,770 - (4,040) Hire Purchase and finance lease contracts (44,718) 22,700 (27,024) (49,042) (56,528) 30,470 (27,024) (53,082) Year end gearing (calculated as net debt as a percentage of shareholders funds) stands at 66.9% (31 March 2002: 81.7%) 7. The Board has proposed a final dividend of 5.70 pence per share to be paid on 29 August 2003 to shareholders on the register at 1 August 2003. This, together with an interim dividend of 3.30 pence per share paid on 31 January 2003, makes a total dividend for the year of 9.00 pence per share. 8. 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 30 March 2003 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. 9. The Annual Report and Accounts for the year ended 30 March 2003 will be posted to shareholders on or about 23 June 2003. This information is provided by RNS The company news service from the London Stock Exchange

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