Interim Results
Speedy Hire PLC
27 November 2002
27 November 2002
SPEEDY HIRE Plc
Interim results for six months ended 29 September 2002
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
Unaudited Unaudited
2002 2001
(26 Weeks) (26 Weeks)
Hire Services Turnover £68.9m £54.8m +26% increase
Hire Services Operating Profit £11.2m £9.4m +19% increase
Continuing Profit Before Taxation £8.5m £7.3m +16% increase
Continuing Earnings Per Share 14.5p 12.2p +19% increase
Dividends Per Share 3.3p 3.0p +10% increase
Gearing 73.6% 90.2%
Interest Cover x6.4 x5.7
• Good growth in turnover, operating profit and earnings per share
• Like for like growth of 5.5%
• Ex-Jewson depots now fully integrated
• Market remains strong
Outlook
'We have experienced good growth during the half-year which has continued over
the last few weeks. Subject to no unforeseen circumstances, we remain confident
of meeting our expectations.'
- David Wallis - Chairman
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
Wednesday only: 0207 796 4133
Thursday onwards: 01942 720000
SPEEDY HIRE Plc
Interim Results for the six months ended 29 September 2002
The first half of the 2002/03 financial year has been one of solid progress.
Our key objectives were to ensure that we capitalised on the strong demand being
experienced from all areas of the construction and facilities management market
which includes new build, maintenance, refurbishment, infrastructure and DIY;
that we successfully integrated the 54 new branches opened or acquired in the
last financial year; and that we continued to profitably win market share.
We are pleased to report that Speedy Hire has made progress on all counts with
Hire Services turnover up 25.7% including like for like tool hire growth of
5.5%, operating profits up by 19.2% and earnings per share by 18.9%.
Results
Hire Services turnover was £68.9 million, (2001: £54.8 million) an increase on
the same period last year of 25.7%. Hire Services operating profits, at £11.2
million (2001: £9.4 million) increased by 19.2%. Profit before tax on
continuing operations rose to £8.5 million (2001: £7.3 million) an increase of
16.4% and earnings per share on the same basis rose to 14.5 pence from 12.2
pence, an increase of 18.9%.
To make comparisons with the first half of 2001/02 more meaningful, pro forma
numbers for continuing operations for each period have been used, as last year's
figures contained £51.4 million of turnover and £0.8 million of operating profit
from non core businesses which have since been sold. When including these,
Group profit before tax increased to £8.5 million (2001: £8.0 million) and
earnings per share increased to 14.5 pence (2001: 13.5 pence).
As a result of last year's expansion, 22.8% of tool hire depots are classified
as being 'immature' i.e. have been opened within the last two financial years,
compared to 14.8% in the same period last year. A depot reaches maturity at the
end of its third year of trading when historically margins match those of
established depots. Not surprisingly, therefore, hire services' operating
margins eased from 17.1% to 16.2%. Selling prices remained stable albeit
operating margins in mature depots experienced some cost pressures notably in
insurance, property and certain labour costs. The specialist divisions of
Space, Power and Survey have continued to show strong growth in both sales and
profitability.
As indicated in the 2002 Annual Report, we have invested in the infrastructure
of the business in order to enhance the levels of control and help manage growth
over the coming years. As a result, the cost of central services in the half
year has increased from £0.4 million to £1.1 million, largely reflecting
increased investment in personnel and equipment in IT and marketing. It is
anticipated that the annualised cost of central services will stabilise around
this level.
Our Balance Sheet has continued to strengthen. In August 2002 the final
instalment of £4.9 million was received from the sale of the Housebuilding
division two years ago, and we continued to focus on the control of working
capital. Investment in new equipment was £16.2 million. Of the £122.9 million
of fixed assets on the balance sheet, £113.0 million consists of tools and
equipment, an increase of 9.9% over the same period last year. As these assets
have supported a 25.7% increase in turnover, utilisation rates have improved.
Interest was covered 6.4 times by operating profits and gearing fell to 73.6%
compared to 90.2% at the same time last year.
Dividend
The Board intends to pay a dividend of 3.3 pence per share, (2001: 3.0 pence) a
10.0% increase on the same period last year. Our policy on dividend remains
progressive, with the level covered not less than three times by earnings. The
interim dividend will be paid on 31 January 2003 to those shareholders on the
register on 6 January 2003.
Review of Operations
At the end of the half-year, Speedy Hire was operating from a national network
of 254 depots. During the half year ten greenfield depots were opened. Since
the acquisition of Jewson 'stand alone' tool hire depots in January 2002 six of
the 37 depots acquired have been closed, with the trade from these branches
being transferred to nearby Speedy Hire depots. The remaining 31 acquired
branches are now fully integrated within Speedy Hire, are meeting the targets
set at the time of acquisition and are matching the growth profile of a Speedy
Hire greenfield opening.
Like for like growth in tool hire turnover has averaged 5.5% over the half year,
resulting in a further increase in market share and clear market leadership in
the construction sector.
The success of the Space, Power and Survey divisions has encouraged us to set up
a further specialist division with its own dedicated management team. This will
cover Lifting activities, and will absorb the existing 24 Speedy Lift depots
currently managed on a generalist basis in Speedy Hire. We believe that the
market for light lifting equipment offers similar opportunities for growth to
those of our other specialist divisions.
As the tool hire market continues to consolidate we are being offered more
businesses for sale than in the recent past. Vendors' expectations on price are
still too high but show signs of returning to levels whereby we can meet our
required investment returns. We still have many infill opportunities within the
UK and believe that the market can support a national network of 400 Speedy Hire
depots.
Outlook
The outlook for the overall economy remains uncertain. Activity within the many
diverse construction markets which we serve remains strong and we believe, is
likely to do so for some years into the future supported by government funded
projects, with increased spending on building of schools and hospitals and
further investment in the transport system. We have previously stated that our
key strengths are our broad spread of customers covering a wide range of
activities and our ability to react quickly to changing market conditions.
Capital expenditure can be easily flexed as there are no long lead times for the
products which we buy. These factors remain as relevant today as in the past.
We have experienced good growth during the half-year which has continued over
the last few weeks. Subject to no unforeseen circumstances, we remain confident
of meeting our expectations.
David W Wallis John E Brown
Chairman Chief Executive
SPEEDY HIRE Plc
PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 29 SEPTEMBER 2002
Unaudited Unaudited Audited
26 Weeks 26 Weeks Year
to to to
29 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
TURNOVER
Continuing operations 69,290 54,930 120,749
Discontinued operations - 51,394 59,891
________ _______ _______
69,290 106,324 180,640
-------- ------- -------
OPERATING PROFIT
Continuing operations 10,047 8,955 17,674
Discontinued operations - 769 928
-------- ------- -------
10,047 9,724 18,602
Loss on disposal of discontinued operations - - (8,090)
Interest payable (1,581) (1,700) (2,784)
-------- ------- -------
Profit on ordinary activities before taxation 8,466 8,024 7,728
Taxation (2,424) (2,409) (5,150)
-------- ------- -------
Profit on ordinary activities after taxation 6,042 5,615 2,578
Dividends (1,372) (1,246) (3,325)
-------- ------- -------
Retained profit/(loss) for the period 4,670 4,369 (747)
======== ======= =======
Earnings per share (pence) 14.53 13.52 6.21
-------- ------- -------
Dividends per share (pence) 3.30 3.00 8.00
======== ======= =======
SPEEDY HIRE Plc
BALANCE SHEET
AS AT 29 SEPTEMBER 2002
Unaudited Unaudited Audited
As at As at As at
29 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Fixed assets
Intangible assets 4,382 1,362 4,724
Tangible assets 122,862 108,987 122,535
---------- ---------- ----------
127,244 110,349 127,259
---------- ---------- ----------
Current assets
Stocks and work in progress 3,174 3,821 3,364
Debtors 46,963 56,602 46,932
---------- ---------- ----------
50,137 60,423 50,296
Creditors: amounts falling due within one
year (60,291) (74,776) (74,026)
---------- ---------- ----------
Net current liabilities (10,154) (14,353) (23,730)
---------- ---------- ----------
Total assets less current liabilities 117,090 95,996 103,529
Creditors: amounts falling due after
more than one year (32,676) (22,658) (24,598)
Provisions for liabilities and charges (10,228) (8,587) (9,774)
---------- ---------- ----------
Net Assets 74,186 64,751 69,157
========== ========== ==========
Capital and reserves
Called-up share capital 2,130 2,127 2,129
Share premium account 32,537 32,376 32,487
Merger reserve 3,660 3,660 3,660
Revaluation reserve 390 390 390
Investment property revaluation reserve 665 665 665
Capital redemption reserve 26 26 26
Profit and loss account 34,778 25,507 29,800
---------- ---------- ----------
Equity shareholders' funds 74,186 64,751 69,157
---------- ---------- ----------
SPEEDY HIRE Plc
CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 29 SEPTEMBER 2002
Unaudited Unaudited Audited
26 Weeks 26 Weeks to Year to
to 29 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Cash inflow from operating activities 12,134 16,567 34,448
---------- ---------- ----------
Returns on investments and servicing of
finance
Interest paid (365) (509) (370)
Interest element of hire-purchase and
finance lease rental payments (1,216) (1,191) (2,414)
---------- ---------- ----------
Net cash outflow from returns on
investments and servicing of finance (1,581) (1,700) (2,784)
---------- ---------- ----------
Taxation 94 (1,448) (3,321)
---------- ---------- ----------
Capital expenditure and financial investment
Purchase of tangible fixed assets (3,686) (4,362) (9,407)
Sale of tangible fixed assets 7,926 7,864 15,726
---------- ---------- ---------
Net cash inflow for capital expenditure and
financial investment 4,240 3,502 6,319
---------- ---------- ----------
Acquisitions and disposals
Purchase of businesses - - (17,435)
Disposal of subsidiaries 1,597 (5,587) 8,026
---------- ---------- ----------
Net cash inflow/(outflow) from acquisitions
and disposals 1,597 (5,587) (9,409)
---------- ---------- ----------
Equity dividends paid (2,079) (3,447) (4,693)
---------- ---------- ----------
Cash inflow before financing 14,405 7,887 20,560
Financing
Issue of share capital 51 - 113
Decrease in debt due within one year
- repayments of amounts borrowed - - (18)
Capital element of hire-purchase and finance
lease rental payments (10,456) (10,275) (21,199)
---------- ---------- ----------
Net cash outflow from financing (10,405) (10,275) (21,104)
---------- ---------- ----------
Increase/(decrease) in cash in the period 4,000 (2,388) (544)
========== ========== ==========
NOTES
1. Basis of Accounting
The interim statement has been prepared on the basis of the accounting policies
as set out in the financial statements for the year ended 31 March 2002. The
financial information contained in this interim report does not constitute
statutory accounts for the Group for the relevant periods. Comparative
information has been restated as necessary to include property income in the
category of central overheads net of property income in accordance with the
treatment adopted in the audited financial statements for the year ended 31
March 2002.
2. Turnover and Operating Profit
Unaudited Unaudited Audited
26 Weeks 26 Weeks Year to
to 29 September to 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Turnover - Continuing Operations
Hire Services 68,926 54,818 118,895
Central including property income 364 112 1,854
---------- ---------- ----------
69,290 54,930 120,749
Turnover - Discontinued Operations
Utility Services - 28,119 36,616
Building - 23,275 23,275
---------- ---------- ----------
- 51,394 59,891
---------- ---------- ----------
Total 69,290 106,324 180,640
====== ====== ======
Operating Profit - Continuing Operations
Hire Services 11,179 9,375 19,502
Central overheads net of property income (1,132) (420) (1,333)
Exceptional items (Restructuring costs) - - (495)
---------- ---------- ----------
10,047 8,955 17,674
Operating Profit - Discontinued Operations
Utility Services - 777 928
Building - (8) -
---------- ---------- ----------
- 769 928
---------- ---------- ----------
Total 10,047 9,724 18,602
========== ========== ==========
3. Movement in shareholders' funds
Unaudited Unaudited Audited
26 Weeks 26 Weeks Year to
to 29 September to 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Profit for the period attributable to 6,042 5,615 2,578
the group
Dividends (1,372) (1,246) (3,325)
---------- ---------- ----------
4,670 4,369 (747)
Shares issued 51 - 113
Credit in respect of share related awards 308 307 615
Goodwill written back - - 9,101
---------- ---------- ----------
Net increase in shareholders' funds 5,029 4,676 9,082
Opening shareholders' funds 69,157 60,075 60,075
---------- ---------- ---------
Closing shareholders' funds 74,186 64,751 69,157
========== ========== =========
4. Reconciliation of operating profit to net cash flow from operating activities
Unaudited Unaudited Audited
26 Weeks 26 Weeks Year to
to 29 September to 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Operating profit 10,047 9,724 18,602
Depreciation 10,297 8,960 18,859
Amortisation 342 20 169
Profit on sale of tangible fixed assets (2,086) (1,939) (4,747)
Decrease/(increase) in stocks 190 (1,021) (4,666)
(Increase)/decrease in debtors (7,506) 4,834 (2,575)
Increase/(decrease) in creditors 542 (4,318) 8,191
Charge in respect of share related awards 308 307 615
---------- ---------- ----------
12,134 16,567 34,448
========== ========== ==========
5. Reconciliation of net cash flow to movement in net debt
Unaudited Unaudited Audited
26 Weeks 26 Weeks Year
to to to
29 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Increase/(decrease) in cash in the period 4,000 (2,388) (544)
Cash outflow from decrease in debt and
hire-purchase and lease financing 10,456 10,275 21,217
---------- ---------- ----------
Change in net debt resulting from cash flows 14,456 7,887 20,673
On disposal of subsidiary undertakings - (1,587) 686
New hire-purchase and finance lease contracts (12,528) (14,137) (27,346)
---------- ---------- ----------
Movement in net debt in the period 1,928 (7,837) (5,987)
Net debt at the start of the period (56,528) (50,541) (50,541)
---------- ---------- ----------
Net debt at the end of the period (54,600) (58,378) (56,528)
========== ========== ==========
6. The charge for taxation for the period is based on the estimated
effective rate for the year of 28.6% (2001: 30.0%).
7. The calculation of earnings per share is based upon earnings of
£6,042,000 (2001: £5,615,000) and the time weighted average number of shares in
issue during the period and ranking for dividends of 41,584,274 (2001:
41,535,835). The table below reconciles earnings per share and continuing
earnings per share.
Unaudited Unaudited
26 Weeks 26 Weeks
to 29 September to 30 September
2002 2001
Pence Pence
Continuing Earnings per share 14.53 12.23
Profit on ordinary activities on discontinued
operations per share - 1.85
Tax on profit on discontinued operations per share - (0.56)
---------- ----------
Earnings per share 14.53 13.52
---------- ----------
Continuing earnings per share is based upon the continuing hire services
operating profit after deducting all central overheads net of property income,
interest and taxation at the estimated effective rate for the year.
8. The Board has declared an interim dividend of 3.3 pence per share to be
paid on 31 January 2003 to shareholders on the register on 6 January 2003.
9. The net cash inflow from disposal of subsidiaries of £1,597,000
represents deferred consideration received of £4,870,000 in respect of the
disposal of the Group's Housebuilding division to Morris Homes in August 2000,
and payment of the promissory note for £3,273,000 in respect of the disposal of
the Group's Building and Property Development companies to Montpellier Group in
June 2001.
10. The results for the year ended 31 March 2002 are extracts from the
Annual Report and Accounts as filed with the Registrar of Companies. These were
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.
11. The interim report will be posted to all shareholders on or about 6
December 2002 and copies of this and the last published Annual Report and
Accounts are available from the Secretary, Speedy Hire Plc, Chase House, 16 The
Parks, Newton-le-Willows, Merseyside, WA12 0JQ
12. Approval
The interim statement for the six months ended 29 September 2002 was approved by
the Board of Directors on Monday 25 November 2002.
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