Interim Results

Speedy Hire PLC 24 November 2004 24 November 2004 SPEEDY HIRE Plc Interim results for the six months ended 30 September 2004 Speedy Hire is the number one provider of equipment hire services in the UK. FINANCIAL HIGHLIGHTS Unaudited Unaudited 2004 2003 (6 Months) (26 Weeks) Change Restated Group Turnover Â£98.9m Â£79.8m +23.9% Group Operating Profit Â£13.1m Â£10.7m +23.2% Group Operating Profit Before Goodwill Amortisation Â£13.7m Â£11.0m +23.8% Group Profit Before Taxation Â£11.0m Â£9.0m +21.4% Group Profit Before Goodwill Amortisation and Before Taxation Â£11.5m Â£9.4m +22.2% Earnings Per Share 18.8p 17.1p +10.1% Earnings Per Share 1 (with underlying tax rate 2) 19.7p 16.7p +18.0% Dividends Per Share 4.3p 3.7p +16.2% Gearing 81.8% 74.5% Interest Cover 6.1x 6.6x 1 Before goodwill amortisation 2 Estimated effective tax rate 27.2% (2003: 21.5%) and underlying tax rate 27.2% (2003: 27.2%) â€¢ Like for like turnover in tool hire up 14.5% â€¢ Speedy continues to increase market share in each of its five key rental sectors â€¢ 17 new depots added, bringing the total to 303 â€¢ Speedy's banking facility increased from Â£100m to Â£125m â€¢ Recent acquisitions create opportunities in new markets such as the oil, industrial and specialist manufacturing sectors Outlook 'We are increasingly encouraged by the long term growth prospects of Speedy Hire. Our key strengths are diversity of customers, a broad breadth of activities and an ability to react quickly to changes in local and national conditions. The outlook for the key markets which we serve is stable and subject to no unforeseen circumstances, we remain confident of reporting further progress for the business over the next half year and beyond.' - David Wallis - Chairman For further information: Speedy Hire Plc gcg hudson sandler John Brown (Chief Executive) Nick Lyon / James Benjamin Neil O'Brien (Group Finance Director) Tel: 020 7796 4133 Wednesday only: 020 7796 4133 Thursday onwards: 01942 720000 There will be a meeting for analysts at 10.00am on Wednesday 24 November at the offices of gcg hudson sandler, 29 Cloth Fair, London EC1A 7NN SPEEDY HIRE Plc Interim Results for the six months ended 30 September 2004 We are pleased to report another six months of excellent progress for your Company. Turnover increased through a combination of strong like for like growth from the established depots, organic growth from newly opened depots and the successful integration of last year's acquisitions. As a result, Speedy Hire continues to increase market share in each of its five key rental sectors - tool hire, portable accommodation, lifting equipment, surveying and measurement instruments and compressed air and power generating equipment. Financial Results and Dividend Turnover for the half year to 30 September was Â£98.9 million (2003: Â£79.8 million), an increase of 23.9%, while operating profit before goodwill was Â£13.7 million up from Â£11.0 million in the same period last year, an increase of 23.8%. Profit before tax rose 21.4% to Â£11.0 million from Â£9.0 million and underlying earnings per share were 19.7 pence, an 18.0% increase on the same period last year. Operating margins pre central costs and pre goodwill remained stable at 16.0%. Capital expenditure was Â£34.3 million with a further Â£14.7 million invested in the acquisition of businesses. Debt was Â£82 million (2003: Â£64 million). This produced gearing of 82% (2003: 75%) with interest well covered at 6.1 times. Speedy Hire's banking syndicate has increased our committed banking facility from Â£100.0 million to Â£125.0 million until June 2006, leaving headroom for further expansion of the business. Return on capital was 16% and remains well ahead of our cost of capital. The Group is making good progress in preparing for the requirement to adopt International Financial Reporting Standards ('IFRS') with effect from 1 April 2005. The Group has completed a review of IFRS and its financial statements which indicates the principle impacts on the Group's accounts are expected to be in relation to goodwill, deferred taxation and the accrual of dividends. Our initial understanding is that there will be no significant change to the Group's net assets. The Board intends to pay an interim dividend of 4.3 pence per share (2003: 3.7 pence) an increase of 16.2%. The interim dividend will be paid on 28 January 2005 to all those shareholders on the register on 4 January 2005. Business Review In August 2004, we acquired the tool hire business of Multi Group PLC for Â£7.65 million (including fees), extending our coverage in Birmingham, Greater London, Leeds, Liverpool and Manchester. This acquisition brought in a further 10 depots which have been re-branded and integrated into the Speedy network, as well as 23 temporary on-site tool hire facilities on large, long-term construction projects. In addition, we have now opened five greenfield sites, and depot numbers now total 303 a net increase of 17 over the six month period. We also acquired the UK onshore operations of Coates Rentair for Â£7.06 million (including fees), the market leader for the provision of specialist air compressors, power generation equipment and lighting towers. This acquisition brought in eight new depots together with two on-site facilities servicing industrial service contracts. This acquisition has extended the reach of the Group by providing access to new customers and new areas of business. Following these acquisitions, we are delighted to welcome over 200 new people to the Group. These businesses have quickly and successfully been integrated into the Speedy network, and as anticipated, costs of approximately Â£0.5 million have been charged against profit in this respect. Given the timing of the acquisition of these businesses they have had a limited impact on turnover in the half year. Like for like hire turnover growth was a robust 14% and reflected high levels of activity in all business divisions and across all regions. Speedy Hire continues to capitalise on its leading market position, national coverage and its ability to serve an increasingly broad customer base. We have continued to invest in our central support functions, to improve measurement and business intelligence and to provide a platform for further growth and expansion. Management At the AGM in July 2004, we announced the appointment of Steve Corcoran, currently Chief Operating Officer, as Chief Executive with effect from 1 April 2005. John Brown, Speedy Hire's current Chief Executive will retire from the Board at the AGM in July 2005. John and Steve are working closely together to ensure a seamless transition. As well as having an excellent top team, we have further strengthened our operating management, providing valuable support to our experienced Managing Directors. Strategy Our aim is to grow our existing business, both traditional tool hire and specialist equipment rental divisions, through organic expansion, and to improve our share of equipment hire in non-construction markets. The markets which we serve are resilient and have grown steadily and consistently over many years. Speedy Hire has capitalised on these trends by improving market share, turnover and profitability. We are market leader in most of the sectors which we serve and have the clear objective of stretching this lead even further. Recent acquisitions have given Speedy opportunities to service new markets such as the Oil, Industrial and Specialist Manufacturing sectors, which then creates opportunities for cross-selling other group services. We are only at the start of this process. Outlook We are increasingly encouraged by the long term growth prospects of Speedy Hire. Our key strengths are diversity of customers, a broad breadth of activities and an ability to react quickly to changes in local and national conditions. This, when coupled with high quality equipment supplied by first class people, gives Speedy clear differentiation. The outlook for the key markets which we serve is stable and subject to no unforeseen circumstances, we remain confident of reporting further progress for the business over the next half year and beyond. David W Wallis John E Brown Chairman Chief Executive PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2004 Unaudited Unaudited Audited Note 6 Months to 26 Weeks to Year to 30 September 27 September 31 March 2004 2003 2004 Restated Â£'000 Â£'000 Â£'000 Turnover 2 98,903 79,836 170,231 Operating profit - Before goodwill amortisation 13,660 11,034 25,500 - Goodwill amortisation 2 (516) (369) (818) ---------- ---------- ---------- 2 13,144 10,665 24,682 Interest payable (net) (2,169) (1,627) (3,471) ---------- ---------- ---------- Profit on ordinary activities before taxation 10,975 9,038 21,211 Taxation 6 (2,981) (1,940) (3,601) ---------- ---------- ---------- Profit on ordinary activities after taxation 3 7,994 7,098 17,610 Dividends on equity shares 3, 8 (1,828) (1,539) (4,371) ---------- ---------- ---------- Retained profit for the period 3 6,166 5,559 13,239 ========== ========== ========== All turnover and operating profit has arisen from continuing operations. Earnings per share - Basic (pence) 7 18.80 17.07 42.34 ========== ========== ========== - Diluted (pence) 18.78 16.78 41.50 ========== ========== ========== - Pre-goodwill amortisation with underlying tax 7 19.69 16.69 38.66 rate (pence) ========== ========== ========== Dividend per share (pence) 8 4.30 3.70 10.50 ========== ========== ========== BALANCE SHEET AS AT 30 SEPTEMBER 2004 Unaudited Unaudited Audited Note As at As at As at 30 September 27 September 31 March 2004 2003 2004 Â£'000 Â£'000 Â£'000 Fixed assets Intangible assets 8,296 5,162 4,988 Tangible assets 183,493 146,941 156,685 ---------- ---------- ---------- 191,789 152,103 161,673 ---------- ---------- ---------- Current assets Stocks 4,298 3,477 3,637 Debtors 60,323 50,939 47,291 Cash at bank and in hand 1,299 3,631 6,921 ---------- ---------- ---------- 65,920 58,047 57,849 Creditors: amounts falling due within one year (60,220) (45,297) (45,422) ---------- ---------- ---------- Net current assets 5,700 12,750 12,427 ---------- ---------- ---------- Total assets less current liabilities 197,489 164,853 174,100 Creditors: amounts falling due after more than (82,730) (66,440) (67,295) one year Provisions for liabilities and charges (14,764) (13,151) (13,313) ---------- ---------- ---------- Net assets 99,995 85,262 93,492 ========== ========== ========== Capital and reserves Called-up share capital 2,132 2,130 2,132 Share premium account 32,692 32,537 32,692 Merger reserve 3,660 3,660 3,660 Revaluation reserve 50 51 50 Investment property revaluation reserve 122 140 122 Capital redemption reserve 26 26 26 Profit and loss account 61,313 46,718 54,810 ---------- ---------- ---------- Equity shareholders' funds 3 99,995 85,262 93,492 ========== ========== ========== CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2004 Unaudited Unaudited Audited Note 6 Months to 26 Weeks to Year to 30 September 27 September 31 March 2004 2003 2004 Â£'000 Â£'000 Â£'000 Cash inflow from operating activities 4 27,787 23,259 49,873 ----------- ----------- ----------- Returns on investments and servicing of finance Interest received - - 163 Interest paid (1,715) (804) (2,834) Interest element of hire-purchase and finance lease rental (26) (530) (713) payments ----------- ----------- ----------- Net cash outflow from returns on investments and servicing (1,741) (1,334) (3,384) of finance ----------- ----------- ----------- Taxation (1,699) (1,373) (824) ----------- ----------- ----------- Capital expenditure Purchase of tangible fixed assets (34,279) (23,219) (51,999) Sale of tangible fixed assets 6,679 6,769 15,408 ----------- ----------- ----------- Net cash outflow for capital expenditure (27,600) (16,450) (36,591) ----------- ----------- ----------- Acquisitions and disposals Purchase of businesses 9 (14,707) (7,269) (8,964) ----------- ----------- ----------- Net cash outflow from acquisitions and disposals (14,707) 7,269) (8,964) ----------- ----------- ----------- Equity dividends paid (2,832) (2,371) (3,910) ----------- ----------- ----------- Cash outflow before financing (20,792) (5,538) (3,800) Financing Issue of share capital - - 157 New bank loans 5 15,631 65,399 67,000 Capital element of hire-purchase and finance lease rental 5 (461) (52,190) (52,396) payments ----------- ----------- ----------- Net cash inflow from financing 15,170 13,209 14,761 ----------- ----------- ----------- (Decrease)/increase in cash in the period 5 (5,622) 7,671 10,961 =========== ========== =========== 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 2004. The financial information contained in this interim report does not constitute statutory accounts for the Group for the relevant periods. 2. Turnover and Operating Profit Unaudited Unaudited Audited 6 Months to 26 Weeks to Year to 30 September 27 September 31 March 2004 2003 2004 Restated Â£'000 Â£'000 Â£'000 Turnover Hire Services 98,903 79,813 170,046 Central including property income - 23 185 ---------- ---------- ---------- Total 98,903 79,836 170,231 ========== ========== ========== Turnover is derived from activities within the UK. Following the introduction of FRS 5 Application note G for the year ended 31 March 2004, the comparative information for turnover and cost of sales has been restated accordingly. The net effect of the reclassification is to decrease the comparative information for turnover and cost of sales by Â£1,865,000. There is no effect on the comparative operating profit. Operating Profit Unaudited Unaudited Audited 6 Months to 26 Weeks to Year to 30 September 27 September 31 March 2004 2003 2004 Â£'000 Â£'000 Â£'000 Hire Services - Before goodwill amortisation 15,794 12,616 28,547 - Goodwill amortisation (516) (369) (818) ------------ ------------ ------------ 15,278 12,247 27,729 Central overheads net of property income (2,134) (1,582) (3,047) ------------ ------------ ------------ Total 13,144 10,665 24,682 ============ ============= ============ Central overheads net of property income includes Â£nil (2003: Â£202,000) of profit on disposal of properties. 3. Movement in shareholders' funds Unaudited Unaudited Audited 6 Months to 26 Weeks to Year to 30 September 27 September 31 March 2004 2003 2004 Â£'000 Â£'000 Â£'000 Profit for the period attributable to the Group 7,994 7,098 17,610 Dividends (1,828) (1,539) (4,371) ----------- ---------- ---------- 6,166 5,559 13,239 Shares issued - - 157 Credit in respect of share related awards 337 308 701 ----------- ---------- --------- Net increase in shareholders' funds 6,503 5,867 14,097 Opening shareholders' funds 93,492 79,395 79,395 ---------- ---------- ---------- Closing shareholders' funds 99,995 85,262 93,492 ========== ========== ========== 4. Reconciliation of operating profit to net cash flow from operating activities Unaudited Unaudited Audited 6 Months to 26 Weeks to Year to 30 September 27 September 31 March 2004 2003 2004 Â£'000 Â£'000 Â£'000 Operating profit 13,144 10,665 24,682 Depreciation charge 13,664 11,918 24,540 Amortisation charge 516 369 818 Profit on sale of tangible fixed assets (2,341) (2,389) (4,200) Increase in stocks (333) (13) (173) Increase in debtors (13,032) (6,848) (1,536) Increase in creditors 15,832 9,249 5,041 Charge in respect of share related awards 337 308 701 ---------- ---------- ---------- Net cash inflow from operating activities 27,787 23,259 49,873 ========== ========== ========== 5. Reconciliation of net cash flow to movement in net debt Unaudited Unaudited Audited 6 Months to 26 Weeks to Year to 30 September 27 September 31 March 2004 2003 2004 Â£'000 Â£'000 Â£'000 (Decrease)/increase in cash in the period (5,622) 7,671 10,961 Cash inflow from increase in debt (15,631) (65,399) (67,000) Cash outflow from decrease in hire-purchase and lease 461 52,190 52,396 financing ---------- ---------- ---------- Change in net debt resulting from cash flows (20,792) (5,538) (3,643) New hire-purchase and finance lease contracts - (4,932) (4,327) ---------- ---------- ---------- Movement in net debt in the period (20,792) (10,470) (7,970) Net debt at the start of the period (61,052) (53,082) (53,082) ---------- ---------- ---------- Net debt at the end of the period (81,844) (63,552) (61,052) ========== ========== ========== 6. The charge for taxation for the period is based on the estimated effective tax rate for the year of 27.2% (2003: 21.5%). The underlying effective tax rate excluding adjustments in respect of prior years is estimated at 27.2% (2003: 27.2%). 7. The calculation of basic earnings per share is based on the profit after taxation of Â£7,994,000 (2003: Â£7,098,000) and the time weighted average number of shares in issue during the period and ranking for dividends of 42,510,840 (2003: 41,590,678). The weighted average number of shares used for the diluted earnings per share is calculated as follows: Unaudited Unaudited Audited 6 Months to 26 Weeks to Year to 30 September 2004 27 September 2003 31 March 2004 Number Number Number Weighted average number of ordinary shares in issue during 42,510,840 41,590,678 41,594,923 the period Diluting effect of options under Allen Plc Savings Related - 9,260 260 Share Option Scheme Diluting effect of LTIP shares 44,427 712,659 839,700 Diluted weighted average number of ordinary shares ---------------- ---------------- --------------- 42,555,267 42,312,597 42,434,883 ================ ================ =============== The table below reconciles basic earnings per share to both earnings per share pre-goodwill amortisation, and earnings per share pre-goodwill amortisation with underlying tax rate. Unaudited Unaudited Audited 6 Months to 26 Weeks to Year to 30 September 2004 27 September 2003 31 March 2004 Pence Pence Pence Basic earnings per share 18.80 17.07 42.34 Goodwill amortisation charge after tax per share 1.10 0.86 1.87 Adjustment to tax charge per share to reflect underlying (0.21) (1.24) (5.55) current year tax rate ---------- ---------- ---------- Earnings per share pre-goodwill amortisation with underlying 19.69 16.69 38.66 tax rate ========== ========== ========== 8. The Board has declared an interim dividend of 4.3 pence per share to be paid on 28 January 2005 to shareholders on the register on 4 January 2005. 9. Acquisitions during the period totalled Â£14,707,000 including provisional goodwill of Â£3,824,000. The acquisitions have been fully integrated into the existing operations and it is impractical to attribute turnover and operating profit to the acquired operations. 10. The results for the year ended 31 March 2004 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 2004 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. The interim financial statements for the six months ended 30 September 2004 were approved by the Board of Directors on Monday 22 November 2004. This information is provided by RNS The company news service from the London Stock Exchange

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