Final Results
Speedy Hire PLC
01 June 2005
1 June 2005
SPEEDY HIRE Plc
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2005
Speedy Hire is a leading provider of tool and equipment hire services to UK
contractors and builders, industry, utilities and the public sector, operating
from over 300 depots throughout the country.
HIGHLIGHTS
• Turnover up 21.3% to £206.5 million (2004: £170.2 million)
• Profit before tax, goodwill amortisation and exceptional items1 up 16.9%
to £25.7 million (2004: £22.0 million)
• Profit before tax up by 12.4% to £23.8 million (2004: £21.2 million)
• Basic earnings per share with underlying tax charge2 up 15.3% to 44.57p
(2004: 38.66p)
• Basic earnings per share3 41.15p (2004: 42.34p)
• Total dividend per share up 17.1% to 12.3p (2004: 10.5p)
• Like for like tool hire turnover up 12.3% - market share increased
• Return on capital employed (before goodwill amortisation and exceptional
items) of 17.8% (2004: 17.8%)
• Comfortable gearing level of 78.1% (2004: 65.3%)
1 Exceptional items of £0.66 million relate solely to the disposal of Toilet
Hire UK
2 Before goodwill amortisation, exceptional items and with an underlying tax
rate of 26.4% (2004: 27.0%)
3The tax rate in 2005 is 26.6% compared to an abnormally low tax rate of 17.0%
in 2004 arising from a prior year credit
Outlook
'At present our major customers remain extremely positive regarding the outlook
for their businesses, reporting strong order books for significant periods of
time into the future. Should there be any material change we are well placed to
act quickly and appropriately and these circumstances may present further
consolidation opportunities. I look forward with confidence to reporting
further progress in the year ahead.'
David Wallis - Chairman
For further information:
Speedy Hire Plc gcg hudson sandler
Steve Corcoran, Chief Executive Nick Lyon/James Benjamin
Neil O'Brien, Group Finance Director Tel: 020 7796 4133
Tel: 020 7796 4133 on Wednesday 1 June
(thereafter tel: 01942 720000)
High resolution images are available for the media to view and download free of
charge from www.vismedia.co.uk
Website: www.speedyhire.plc.uk
SPEEDY HIRE Plc
CHAIRMAN'S STATEMENT
I am delighted to report another successful year for Speedy Hire. We have
maintained good momentum with strong growth in turnover, profit and earnings per
share. As a result, the Board is proposing a final dividend of 8.0 pence per
share making a total of 12.3 pence per share for the year, a 17.1% increase over
2004.
Performance
Turnover increased by 21.3% to £206.5 million, including like for like growth of
12.3%, further increasing our market share. Before the loss on disposal of
Toilet Hire UK of £0.66 million and goodwill amortisation of £1.2 million,
pre-tax profits grew by 16.9% to £25.7 million, Group margins remain stable at
14.8% (2004: 15.0%) and earnings per share based on an underlying tax rate of
26.4%, increased by 15.3% to 44.6 pence. Shareholders' funds increased from
£93.5 million to £106.4 million.
During the year we continued to invest in equipment, with capital expenditure of
£60.5 million, ensuring that Speedy Hire maintains the most modern equipment in
the industry. The average age of our tool hire fleet is 2.1 years. The
productivity of our hire fleet has risen as measured by our asset turn ratio.
The size of our fleet and the quality of our products ensure that we can
continue to meet the demands and expectations of customers well into the future.
In addition to strong organic growth, we acquired five businesses for a total
consideration of £18.7 million. These acquisitions were spread across the range
of Group activities and regions, increasing our national footprint and expanding
our product and customer base. All five acquisitions have successfully been
integrated into the Speedy Hire network.
The excellent growth achieved by our tool hire businesses was augmented by some
outstanding performances from the four equipment rental businesses of Space,
Survey, Power and Lifting. These young businesses had a turnover of £77.8
million, exactly the same size as our tool hire division four years ago. This
illustrates the potential of providing additional services and rental
opportunities to our customers.
People
I announced at the AGM in 2004 the succession plan for the position of Chief
Executive, given John Brown's forthcoming retirement. Steve Corcoran was
appointed to that role in April 2005. Steve and John have worked closely over
the last 14 years and I am confident that in Steve we have a strong leader, with
a first class team of people, who will continue to drive growth into the future.
John's achievements within the Hire Industry are legendary and his influence
on Speedy Hire over the last 27 years, incalculable. His drive, enthusiasm,
integrity and wonderful sense of fun, together with his ability to surround
himself with the very best people, have been an inspiration. John has handed
over the business in first class shape and on behalf of all shareholders and
employees, I am sure you will join with me in expressing our thanks and wishing
him a long and happy retirement. John will step down from the board at the AGM
in July, but will remain in a full time role until the end of September 2005.
I am delighted to announce the appointment of Peter Atkinson to the Board, as an
additional independent director, with effect from 1 June. Peter is Chief
Executive of Macfarlane Group PLC, the leading packaging solutions business. He
was responsible for the US automotive and materials handling business of
Brambles Industries plc. Additionally, he has significant management experience
gained during his time at GKN Plc and its joint venture partners. Peter's
experience will bring an additional dimension to the board.
On behalf of shareholders, I would also like to pay tribute to Speedy Hire's
people. All successful businesses depend on the vision, skill, enthusiasm and
commitment of its people and at Speedy we are fortunate to have those in
abundance. Whether being at the forefront of providing equipment dealing with
last year's floods in Cornwall and Carlisle, or making a special 4am delivery to
King's Cross, I never cease to be amazed by their drive and 'can do' approach
for our customers. I extend our thanks to all of them.
Strategy
Our strategy remains unchanged. It is simple and straight forward and evolves
as new opportunities present themselves.
We will continue to open new depots both in tool hire and equipment rental until
we achieve the optimum geographic footprint to enable us to serve our customers
to greatest effect. Speedy Hire is still under-represented in several major
conurbations and has many other infill opportunities.
Speedy Hire is also focusing on capturing more revenue from existing customers.
It is increasingly apparent that customers are not aware of the breadth and
depth of the equipment which is available for hire across the Speedy Group.
We will continue to expand into new customer markets and product specialisms.
Acquisitions have been made over the last two years to open up new opportunities
for Speedy Hire, such as the industrial, petro-chemical and utilities sectors,
as well as offering wider services and products to our traditional construction
customers. This strategy will be continued.
To achieve this we will increase investment in our people, systems and controls.
One of the great strengths of Speedy Hire is its devolved nature, thus
spreading risk and everyone taking responsibility for a profit centre
appropriate to their skills. Training and development, an embracing IT system
and a sensible level of control are core to helping every employee maximise the
opportunity available to them and will ensure we will continue to have a
sustainable business model.
Outlook
At present our major customers remain extremely positive regarding the outlook
for their businesses, reporting strong order books for significant periods of
time into the future. Nevertheless, there are signs that parts of the UK
economy may be cooling, led by consumers who have adopted a more cautious
approach as a result of higher interest rates, taxes and energy prices over the
course of the last year. In due course this caution may feed through to the
wider construction market.
However, Speedy Hire's great strengths are the diversity of its customers, the
increasing number of markets which it serves, its range of activities and
geographical spread. We have no disproportionate exposure to any single one of
these. We monitor activity very closely and should there be any material change
we are well placed to act quickly and appropriately. In fact, these
circumstances may present further consolidation opportunities within the sectors
in which we operate.
I therefore look forward with confidence to reporting further progress in the
year ahead.
SPEEDY HIRE Plc
CHIEF EXECUTIVE'S REVIEW
Speedy Hire is pleased to announce another year of record results. We remain
committed to providing customers with the best service in the sector.
Our key competitive advantages are:
• Employing, incentivising and rewarding the best people in the industry
• Buying the best equipment from leading manufacturers
• Providing the widest possible range
• An improving national coverage
• Supplying the most modern, safe and reliable equipment
This focus is reflected in another successful year:
• Total turnover increased by 21.3% to £206.5 million
• Operating profits increased by 19.9% to £30.6 million
• Hire margins improved to 17.1% (2004: 16.8%)
• Number of depots increased to 302, employing 2,769 people
• Record bonus payment totalling £9.6 million
Although hire margins increased, the Group margin reflects lower property
profits on disposal of freehold sites. In addition we have mitigated higher
energy costs and increased investment in business development and operating
systems. Also £0.7 million of reorganisation costs, following acquisitions,
have been charged to trading profit.
During the year we disposed of Toilet Hire UK, an underperforming and low growth
part of the Group, for a gross consideration of £1.1 million. This resulted in
a £0.66 million loss on disposal.
The Business
The last year has seen a significant advance in the broadening of our hire offer
and our turnover is now split 62% tool hire and 38% equipment hire. The growth
of our traditional tool hire business is being mirrored by the success of our
four equipment rental businesses, Space, Survey, Power and Lifting. These young
businesses offer exciting growth potential in their own right and have proved
effective in providing opportunities for cross-selling between Speedy Hire
companies. Hire operations are supported centrally through shared services in
purchasing, property, fleet management, payroll, IT, marketing and business
development.
During the year we added 34 new depots, 16 of which were greenfield
developments. In August 2004 we acquired the tool hire business of Multi Group
Plc and the UK onshore operations of Coates Hire Ltd adding a total of 12 depots
to our network. The acquisition in October 2004 of the internal hire operations
of Simons Construction was followed in February 2005 by the acquisition of
D.A.D. Hire Services and the six hire operations of Lloyds British Testing Plc.
These businesses have been quickly and successfully integrated into the Speedy
network.
The disposal of Toilet Hire UK resulted in the removal of 12 operating centres
from the Group's overall footprint.
Hire Operations
We have consolidated our position further as the undisputed leader in the
growing UK tool hire market. Our 12.3% like for like turnover growth
considerably outstripped market growth of 4% driving a further increase in our
market share. However, we recognise the need to continue to listen to our
customers and to meet, if not exceed, their requirements.
A number of initiatives being undertaken include:
• Introducing better procurement procedures to drive down costs
• Eliminating administration and waste at depot level
• Investing further in information technology to provide greater customer
benefit and improve internal measurement and benchmarking
• Increasing our investment in training to ensure that we continue to
attract and develop the best people
• Expanding the product range by selective acquisitions and organic
development
These initiatives have helped us increase the number of major construction
companies such as Kier, Mowlem and Morgan Sindall who have selected Speedy Hire
as preferred supplier.
The last year saw a step change in the performance of our equipment rental
businesses. They operate in markets estimated to be worth £2 billion per annum
and our strategy is to be the number one or two supplier in each of the sectors
in which we operate. All four businesses produced record results in the year
and offer very attractive prospects for growth in the years ahead.
Speedy Space specialises in the hire of accommodation and storage units.
Operating from 15 depots with 14,500 units for hire, an increase of 1,400
following the acquisition post year end of The Cabin Company in April 2005. We
are the UK's number three in the wider accommodation market and number one for
the supply of anti-vandal units.
Speedy Power provides portable generation, compressed air and lighting equipment
from 12 locations. Last year it continued to grow sales and profits rapidly.
The business added two new greenfield depots and acquired five through the
acquisition in August 2004 of Coates Rentair - establishing us as the UK leader
in compressed air and portable lighting.
Speedy Lifting hires lightweight lifting and material handling equipment. The
business has performed extremely strongly since it was established in 2003.
This year our network expanded through one greenfield opening and the
acquisition in February 2005 of five lifting depots from Lloyds British Testing
Plc. It now operates from 33 locations.
Speedy Survey continued to grow. The business focuses on the supply of
specialist surveying and measurement instrumentation. Three new greenfield sites
were added to last year's acquisition of Leica Geosystems. The business now
operates from 16 locations.
People
Our people are the public face of Speedy Hire. They represent Speedy Hire's
knowledge, brand and reputation. Our philosophy is founded on simple
principles:
• Employ the best
• Devolve responsibility and authority within defined limits
• Allow people to get on with their job
• Reward well for success
Our reward structure provides great incentives to succeed. Performance-related
bonuses account for a high proportion of total pay. Everybody participates in a
single bonus scheme. We set a minimum target of a specified level of acceptable
return on capital employed and bonuses begin to be earned only when this target
has been exceeded.
The Future
We are not complacent about the future. Our historic growth has been impressive
and the hard work in the past provides a sound platform on which to build. We
are determined to continue our success and are therefore undertaking important
improvements and investment to ensure the long-term profitability of the
business.
Speedy Hire services markets that have positive and consistent growth
characteristics, the talent and entrepreneurial spirit of our people, gives us
confidence to exploit these opportunities. We have the potential to increase
our operating network and to expand the range of products and services that we
offer. We are confident that our business strategy is one that will continue to
deliver further success going forward.
Group Profit and Loss Account
For the year ended 31 March 2005
2005 2004
Note £'000 £'000
Turnover 1 206,476 170,231
Cost of sales 1 (58,232) (48,182)
Gross profit 148,244 122,049
Distribution costs (21,974) (18,494)
Administrative expenses (97,112) (79,488)
Other operating income 171 615
Operating profit before goodwill amortisation 30,570 25,500
Goodwill amortisation (1,241) (818)
Operating profit 1 29,329 24,682
Loss on disposal of discontinued operations (655) -
Profit on ordinary activities before interest 28,674 24,682
Net interest payable and other similar charges (4,825) (3,471)
Profit on ordinary activities before taxation 1 23,849 21,211
Taxation 6 (6,354) (3,601)
Profit for the year attributable to the group 17,495 17,610
Dividends on equity shares 7 (5,229) (4,371)
Retained profit for the financial year 12,266 13,239
Pence Pence
Earnings per share
- Basic 2 41.15 42.34
- Diluted 2 39.36 41.50
- Basic pre-goodwill amortisation and exceptional items with underlying 2 44.57 38.66
tax charge
Dividends per share 7 12.30 10.50
Group Balance Sheet
As at 31 March 2005
2005 2004
£'000 £'000 £'000 £'000
Fixed assets
Intangible assets 10,211 4,988
Tangible assets 187,929 156,685
198,140 161,673
Current assets
Stocks and work in progress 4,762 3,637
Debtors: amounts falling due within one year 56,720 47,291
Cash at bank and in hand 5,894 6,921
67,376 57,849
Creditors: amounts falling due within one year (53,543) (45,422)
Net current assets 13,833 12,427
Total assets less current liabilities 211,973 174,100
Creditors: amounts falling due after more than one year (88,660) (67,295)
Provisions for liabilities and charges (16,929) (13,313)
Net assets 106,384 93,492
Capital and reserves
Called up share capital 2,132 2,132
Share premium account 32,692 32,692
Revaluation reserve 50 50
Merger reserve 3,660 3,660
Investment property revaluation reserve 22 122
Capital redemption reserve 26 26
Profit and loss account 67,802 54,810
Equity Shareholders' funds 106,384 93,492
Group Cash Flow Statement
For the year ended 31 March 2005
Note 2005 2004 £'000
£'000
Cash inflow from operating activities 3 56,646 49,873
Returns on investments and servicing of finance
Interest received 19 163
Interest paid (4,739) (2,834)
Interest element of hire-purchase and finance lease rental payments (38) (713)
Net cash outflow from returns on investments and servicing of finance (4,758) (3,384)
Taxation (2,694) (824)
Capital expenditure
Purchase of tangible fixed assets (60,512) (51,999)
Sale of tangible fixed assets 12,223 15,408
Net cash outflow for capital expenditure (48,289) (36,591)
Acquisitions and disposals
Purchase of businesses (18,746) (8,964)
Disposal of subsidiary undertakings 500 -
Net cash outflow from acquisitions and disposals (18,246) (8,964)
Equity dividends paid (4,660) (3,910)
Cash outflow before financing (22,001) (3,800)
Financing
Issue of share capital - 157
New bank loans 21,660 67,000
Capital element of hire-purchase and finance lease rental payments (686) (52,396)
Net cash inflow from financing 20,974 14,761
(Decrease)/increase in cash in the year 4 (1,027) 10,961
Reconciliation of net cash flow to movement in net debt
For the year ended 31 March 2005
(Decrease)/increase in cash in the period 4 (1,027) 10,961
Cash inflow from increase in debt and hire-purchase and lease financing (20,974) (14,604)
Change in net debt resulting from cash flows (22,001) (3,643)
New hire-purchase and finance lease contracts - (4,327)
Movement in net debt in the year (22,001) (7,970)
Net debt at 31 March 2004 (61,052) (53,082)
Net debt at 31 March 2005 4 (83,053) (61,052)
Notes to the Financial Statements
For the year ended 31 March 2005
Preparation of preliminary results
The preliminary results have been prepared on the basis of the accounting
policies set out in Speedy Hire Plc's annual report and accounts for the year
ended 31 March 2005.
The preliminary results were approved by the board of directors on 27 May 2005.
The financial information contained in this announcement 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 2005 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.
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: -
2005 2004
£'000 £'000
Turnover
Hire services 206,468 170,046
Central including property income 8 185
206,476 170,231
2005 2004
£'000 £'000
Operating profit on ordinary activities
Hire services 33,981 27,729
Central overheads net of property income (4,652) (3,047)
Operating profit 29,329 24,682
Loss on disposal of discontinued operations (655) -
Profit on ordinary activities before interest 28,674 24,682
Net Interest payable and other similar charges (4,825) (3,471)
Profit on ordinary activities before taxation 23,849 21,211
Central overheads net of property income includes £171,000 (2004: £614,000) of
profit on disposal of properties.
Results include turnover of £4,142,000 (2004: £5,251,000) and an operating
(loss)/profit of (£68,000) (2004: £175,000) relating to the disposed business of
Toilet Hire UK.
2. Earnings per share
Basic earnings per share is based on the profit after taxation of £17,495,000
(2004: £17,610,000) and the weighted average number of 5p ordinary shares in
issue during the year of 42,510,914 (2004: 41,594,923).
The weighted average number of ordinary shares used for the diluted earnings per
share is calculated as follows:
2005 2004
Number Number
Weighted average number of ordinary shares in issue during the year 42,510,914 41,594,923
Diluting effect of options under Savings Related Share Option Schemes 1,814,877 260
Diluting effect of LTIP shares 124,160 839,700
Diluted weighted average number of ordinary shares 44,449,951 42,434,883
The table below reconciles basic earnings per share to both earnings per share
pre-goodwill amortisation and exceptional items, and earnings per share
pre-goodwill amortisation and exceptional items with underlying tax charge.
2005 2004
Pence Pence
Basic earnings per share 41.15 42.34
Exceptional items charge after tax per share 1.08 -
Goodwill amortisation charge after tax per share 2.53 1.87
44.76 44.21
Adjustment to tax charge per share to reflect underlying current year tax (0.19) (5.55)
rate of 26.4% (2004: 27.0%)
Earnings per share pre-goodwill amortisation and exceptional items with 44.57 38.66
underlying tax charge
3. Reconciliation of operating profit to cash flow from operating
activities
2005 2004
£'000 £'000
Operating profit 29,329 24,682
Depreciation charge 31,192 24,540
Amortisation charge 1,241 818
Profit on sale of tangible fixed assets (3,842) (4,200)
Increase in stocks (834) (173)
Increase in debtors (8,816) (1,536)
Increase in creditors 7,750 5,041
Charge in respect of share related awards 626 701
Net cash inflow from operating activities 56,646 49,873
4. Analysis of net debt
At 31 March Cash Other non- At 31 March
2004 Flow cash changes 2005
£'000 £'000 £'000 £'000
Cash at bank and in hand 6,921 (1,027) - 5,894
Debt due after one year (67,000) (21,660) - (88,660)
Hire-purchase and finance lease contracts (973) 686 - (287)
(61,052) (22,001) - (83,053)
5. Year end gearing (calculated as net debt as a percentage of shareholders' funds) stands at 78.1% (2004: 65.3%).
6. The charge for taxation for the year represents an effective tax rate of 26.6% (2004: 17.0%). The underlying
effective tax rate excluding adjustments in respect of prior years is 26.4% (2004: 27.0%).
7. The Board has proposed a final dividend of 8.0 pence per share to be paid on 30 August 2005 to shareholders on
the register at 1 July 2005. This, together with an interim dividend of 4.3 pence per share paid on 28 January
2005, makes a total dividend for the year of 12.3 pence per share.
8. The Annual Report and Accounts for the year ended 31 March 2005 will be posted to shareholders on or about 16
June 2005.
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