Interim Results
Speedy Hire PLC
22 November 2006
22 November 2006
Speedy Hire Plc
Interim results for the six months ended 30 September 2006
Speedy Hire is the number one provider of tool and equipment hire services in
the UK
Financial Highlights
Unaudited Unaudited %
2006 2005 Change
Revenue £154.4m £120.0m +28.7%
Profit Before Taxation £15.5m £13.0m +19.3%
Profit Before Amortisation and Taxation £17.2m £13.8m +24.8%
Basic Earnings Per Share 24.94p 22.18p +12.4%
Basic Earnings Per Share Before Amortisation 27.55p 23.62p +16.6%
Dividend Per Share 5.5p 4.9p +12.2%
Return on Capital (before amortisation) 15.9% 17.4%
Gearing 111.6% 64.8%
• Tools like for like turnover growth of 8%
• Improved utilisation in Equipment Division
• LCH acquisition performing well, and integration going to plan
• New business start ups in Pumps and Ireland
• Market outlook remains buoyant
Outlook
'The key drivers of our business remain positive. Construction output forecasts
for the next few years are highly encouraging with PFI projects increasing once
again. Our key customers continue to be optimistic in the assessment of their
prospects and report full order books for some years ahead. With our strong
financial position we are very well placed to take advantage of the many
opportunities available to us.'
David Wallis - Chairman
For further information:
Speedy Hire Plc Hudson Sandler
Steve Corcoran (Chief Executive) Nick Lyon / Kate Hough
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 9.30am on Wednesday 22 November at the
offices
of Hudson Sandler, 29 Cloth Fair, London EC1A 7NN
High resolution photographs will be available to media from 11.00am at
www.vismedia.co.uk
Speedy Hire Plc
Interim results for the six months ended 30 September 2006
We are pleased to report another successful six months for your company. Our
financial performance has remained strong. In addition, we have made good
progress in building the support infrastructure necessary to achieve our long
term growth objectives, albeit a significant amount of further work remains to
be done.
Financial Performance
Revenue for the six months to 30 September 2006 was £154.4 million (2005: £120.0
million) an increase of 28.7%. Operating profit before amortisation was £21.5
million (2005: £17.3 million). Operating margins before amortisation were 13.9%
(2005: 14.4%). Profit before tax increased by 19.3% to £15.5 million (2005:
£13.0 million). Basic earnings per share increased by 12.4% to 24.94 pence
(2005: 22.18 pence), and underlying earnings per share increased to 27.55 pence,
a 16.6% improvement over the same period last year.
Underlying operating margins remain stable, despite the impact of challenging
cost conditions and the dilutive effect of the launch of our new Pumps business
and our expansion into Ireland. These businesses, whilst performing to plan,
are loss making in the short term.
The Board intends to pay an interim dividend of 5.5 pence per share (2005: 4.9
pps), an increase of 12.2%. The interim dividend will be paid on 26 January
2007 to those shareholders on the register as at 5 January 2007.
Speedy Hire is committed to maintaining and operating the most modern fleet in
the industry. Capital expenditure in the six months amounted to £47.5 million:
£25.5 million replaced equipment which had reached the end of its economic life
and £17.8 million was invested in new equipment to support further growth. In
addition, we completed the acquisition of LCH generators, at a cost of £59.0
million. Having received 20 weeks contribution from the acquisition of LCH,
together with the impact of start up costs in our new businesses, return on
capital in the half year was 15.9% (2005: 17.4%), still significantly ahead of
our cost of capital.
The LCH acquisition coupled with the underlying growth in the business have, as
expected, increased gearing to 111.6% (2005: 64.8%). Interest is covered 4.6
times by operating profit (2005: 4.8 times). We are comfortable with net debt
of £171.9 million (2005: £84.3 million), which is underpinned by strong cash
flow, with the group generating an EBITDA of £44.7 million over the six months
(2005: £35.7 million) representing 29.0% of revenue. The strength of our
balance sheet and cash flow continue to provide us with headroom for further
growth.
Business Review
Tools Hire revenues were £80.8 million (2005: £71.4 million) a 13.2% increase
over the same period last year. Operating profit amounted to £11.7 million
(2005: £10.4 million) and operating margins were 14.4% (2005: 14.6%). The
increase in like for like turnover was 8%, well ahead of market growth of around
3-4%, thus further increasing our market share. As well as organic growth, we
opened eight greenfield depots to establish the Speedy brand in those areas
where we were under-represented.
The Equipment division, consisting of Speedy Hire's Power, Lifting, Space,
Survey and newly formed Pumps business, produced turnover of £76.3 million
(2005: £51.0 million) an increase of 50%. Operating profit amounted to £14.1
million (2005: £9.6 million) and operating margins were 18.5% (2005: 18.8%).
Overall utilisation for the Division was 67.7% (2005: 66.4%).
Speedy Hire acquired LCH Generators, the UK's leading independent hirer of
temporary power systems in May 2006. Since acquisition it has produced turnover
of £9.5 million and £2.1 million operating profit. The integration plan is on
track to deliver the increase in revenue and profit anticipated.
Since the half year end we have announced the £13.5 million acquisition of
Lifting Gear Hire, a long established provider of Lifting equipment for hire,
along with associated services in testing, servicing, maintenance and repair.
The acquisition, which will be slightly earnings dilutive in the short term,
will be integrated into Speedy Hire's Lifting business over the next 18 months
by when margins and returns are expected to be comparable to those of the
existing business.
The existing Speedy team of some 3,400 people has grown by a further 400 through
growth and acquisitions. Their efforts, for which we extend the thanks of the
board and shareholders, are clearly visible within our financial performance,
but in addition, a considerable amount of work has been progressing behind the
scenes.
The board is committed to supporting the needs of the business for the long term
and will therefore continue to invest in the infrastructure of the organisation
to ensure that it has the foundations to support its future growth potential.
Major projects are underway in Information Systems, Training and Development,
property evaluation studies and in improving the business's knowledge and
understanding of our customers and their needs. All these projects have the
customer at their centre, to enable Speedy to continually provide them with
better service accompanied with a determination to improve the efficiency of the
business.
Outlook
The key drivers of our business remain positive. Construction output forecasts
for the next few years are highly encouraging with PFI projects increasing once
again. Our key customers continue to be optimistic in the assessment of their
prospects and report full order books for some years ahead.
Legislation continues to increase demand for an improved working environment
driven by safer working practices. Speedy Hire has actively supported the
Health and Safety agenda for many years, such as our approach to providing
solutions to and awareness of the Work at Height and Hand Arm Vibration
directives. Recent legislation will demand improvements in the management and
use of machinery and equipment with regard to noise and dust emissions. Our
determination to provide our customers with the most modern, up to date and
compliant equipment available augurs well for Speedy Hire.
We are winning business in new markets opened up to us through the Equipment
division. In addition, we are extending the group's ability to cross sell
services to our client base. We are continually identifying opportunities to
expand our product offering and to establish ourselves as a service and
solutions provider to our customers.
Speedy Hire has a strong financial position which enables us to pursue
opportunities for growing the business both organically and through suitable
acquisitions. We remain of the view that further consolidation is necessary and
desirable within the hire industry and intend to play a full part in that
process. With favourable market conditions in our sector, we are confident,
subject to any significant change in the economic outlook, of reporting further
progress.
David Wallis
Chairman
Steve Corcoran
Chief Executive
22 November 2006
Speedy Hire Plc
Consolidated income statement
for the six months ended 30 September 2006
Note Unaudited Unaudited Audited
30 September 30 September 31 March
2006 2005 2006
£m £m £m
Revenue 2 154.4 120.0 254.3
Cost of sales (51.5) (39.7) (81.8)
_______ _______ _______
Gross profit 102.9 80.3 172.5
Other operating income - - 0.1
Distribution expenses (17.1) (14.7) (23.5)
Administrative expenses (66.0) (49.1) (112.5)
Analysis of operating profit
Operating profit before amortisation 21.5 17.3 38.1
Intangible amortisation (1.7) (0.8) (1.5)
Operating profit 2 19.8 16.5 36.6
Financial income 0.1 - 0.2
Financial expenses (4.4) (3.5) (6.1)
_______ _______ _______
Profit before tax 15.5 13.0 30.7
Taxation 3 (4.3) (3.6) (8.4)
_______ _______ _______
Profit for the period 11.2 9.4 22.3
_______ _______ _______
Attributable to:
Equity holders of the parent 11.2 9.4 22.1
Minority Interests - - 0.2
_______ _______ _______
11.2 9.4 22.3
_______ _______ _______
Earnings per share (pence)
Basic 4 24.94 22.18 50.44
_______ _______ _______
Diluted 4 24.67 22.05 50.03
_______ _______ _______
Speedy Hire Plc
Consolidated statement of changes in equity
for the six months ended 30 September 2006
Unaudited Unaudited Audited
30 September 30 September 31 March
2006 2005 2006
£m £m £m
Profit for the period 11.2 9.4 22.3
Gains from cash flow hedges taken to reserves 0.2 - -
_______ _______ _______
Total recognised income and expense for the period 11.4 9.4 22.3
Dividends paid (4.2) (3.4) (5.6)
Issue of ordinary shares 4.4 14.8 14.8
Movement relating to share-based payments 0.8 0.6 0.9
Deferred tax on share-based payments taken to reserves 0.4 0.3 0.4
_______ _______ _______
Total changes in equity in the period attributable to
equity holders of the parent 12.8 21.7 32.8
_______ _______ _______
Equity at the start of the period attributable to:
Equity holders of the parent 141.1 108.5 108.5
Minority interests 0.2 - -
_______ _______ _______
141.3 108.5 108.5
_______ _______ _______
Equity at the end of the period attributable to:
Equity holders of the parent 153.9 130.2 141.1
Minority interests 0.2 - 0.2
_______ _______ _______
154.1 130.2 141.3
_______ _______ _______
Speedy Hire Plc
Consolidated balance sheet
at 30 September 2006
Unaudited Unaudited Audited
30 September 30 September 31 March
Note 2006 2005 2006
£m £m £m
Non-current assets
Property, plant and equipment 283.5 213.3 241.4
Intangible assets 60.4 14.7 22.7
_______ _______ _______
343.9 228.0 264.1
_______ _______ _______
Current assets
Inventories 9.3 5.1 6.9
Trade and other receivables 90.9 75.1 72.6
Cash and cash equivalents 4.2 1.1 6.4
_______ _______ _______
104.4 81.3 85.9
_______ _______ _______
Total assets 448.3 309.3 350.0
_______ _______ _______
Current liabilities
Interest-bearing loans and borrowings - (0.1) -
Trade and other payables (80.8) (68.1) (69.5)
Tax payable (8.4) (7.5) (6.7)
_______ _______ _______
(89.2) (75.7) (76.2)
_______ _______ _______
Non-current liabilities
Interest-bearing loans and borrowings 6 (176.1) (85.3) (109.4)
Deferred tax liabilities (28.9) (18.1) (23.1)
_______ _______ _______
(205.0) (103.4) (132.5)
_______ _______ _______
Total liabilities (294.2) (179.1) (208.7)
_______ _______ _______
Net assets 2 154.1 130.2 141.3
_______ _______ _______
Equity
Share capital 2.3 2.2 2.3
Share premium 55.4 47.4 51.0
Merger reserve 3.7 3.7 3.7
Retained earnings 92.5 76.9 84.1
_______ _______ _______
Total equity attributable to equity holders of the 153.9 130.2 141.1
Parent
Minority interests 0.2 - 0.2
_______ _______ _______
154.1 130.2 141.3
_______ _______ _______
Speedy Hire Plc
Consolidated cash flow statement
for the six months ended 30 September 2006
Unaudited Unaudited Audited
30 September 30 September 31 March
Note 2006 2005 2006
£m £m £m
Cash flows from operating activities
Profit before tax 15.5 13.0 30.7
Adjustments for:
Net financial expense 4.3 3.5 5.9
Depreciation 23.2 18.5 38.9
Amortisation of intangibles 1.7 0.8 1.5
Profit on sale of property, plant and equipment (2.9) (2.1) (5.8)
Equity settled share-based payment expense 0.8 0.6 0.9
_______ _______ _______
Operating profit before changes in working capital and
provisions 42.6 34.3 72.1
Increase in inventories (0.4) (0.3) (2.1)
Increase in trade and other receivables (12.0) (19.3) (15.8)
Increase in trade and other payables 6.0 20.4 22.4
_______ _______ _______
Cash generated from the operations 36.2 35.1 76.6
Interest received 0.1 - 0.2
Interest paid (4.3) (2.9) (5.6)
Corporation tax (paid) / received (1.6) 0.3 (1.4)
_______ _______ _______
Net cash from operating activities 30.4 32.5 69.8
_______ _______ _______
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 7.9 7.3 15.2
Acquisition of businesses (55.5) (14.6) (35.2)
Acquisition of property, plant and equipment (47.5) (37.5) (78.5)
_______ _______ _______
Net cash from investing activities (95.1) (44.8) (98.5)
_______ _______ _______
Cash flows from financing activities
Proceeds from the issue of share capital - 14.8 14.8
Proceeds from new loans 66.7 - 20.3
Repayment of borrowings - (3.8)
Payment of finance lease liabilities - (0.2) (0.3)
Dividends paid (4.2) (3.3) (5.6)
_______ _______ _______
Net cash from financing activities 62.5 7.5 29.2
_______ _______ _______
Net (decrease)/ increase in cash and cash equivalents (2.2) (4.8) 0.5
Cash and cash equivalents at the beginning of the period 6.4 5.9 5.9
_______ _______ _______
Cash and cash equivalents at the end of the period 7 4.2 1.1 6.4
_______ _______ _______
Speedy Hire Plc
Notes
(forming part of the interim financial statements)
1 Basis of preparation
The consolidated interim financial statements ('financial statements') of the
Group for the six months ended 30 September 2006 comprise the Company and its
subsidiaries (together referred to as the 'Group').
This interim financial information has been prepared applying the accounting
policies and presentation that were applied in the preparation of the company's
published consolidated accounts for the year ended 31 March 2006.
The comparative figures for the year ended 31 March 2006 are not the statutory
accounts for that financial year. Those accounts have been reported on by the
auditors and delivered to the registrar of companies. The report of the
auditors was unqualified and did not contain statements under section 237(2) or
(3) of the Companies Act 1985.
The results for the six months to 30 September 2006 and 2005 are un-audited, but
have been reviewed by the Group's auditors, whose report is set out below.
The financial statements were authorised for issuance on 22 November 2006.
2 Segmental information
Unaudited Unaudited Audited
30 September 30 September 31 March
2006 2005 2006
£m £m £m
Revenue
Tools 80.8 71.4 151.0
Equipment 76.3 51.0 107.8
_______ _______ _______
157.1 122.4 258.8
Intra-group revenue (2.7) (2.4) (4.5)
_______ _______ _______
154.4 120.0 254.3
_______ _______ _______
Operating profit
Tools - pre-amortisation 11.7 10.4 24.2
- amortisation (0.3) (0.3) (0.6)
_______ _______ _______
11.4 10.1 23.6
_______ _______ _______
Equipment - pre-amortisation 14.1 9.6 20.7
- amortisation (1.4) (0.5) (0.9)
_______ _______ _______
12.7 9.1 19.8
_______ _______ _______
Operating profit before corporate costs 24.1 19.2 43.4
Corporate costs (4.3) (2.7) (6.8)
_______ _______ _______
19.8 16.5 36.6
_______ _______ _______
Net assets
Tools 122.9 113.1 123.5
Equipment 200.6 98.0 111.2
_______ _______ _______
323.5 211.1 234.7
Unallocated net assets 2.5 3.4 9.6
Net debt (171.9) (84.3) (103.0)
_______ _______ _______
154.1 130.2 141.3
_______ _______ _______
Capital expenditure
Tools 20.7 18.6 41.1
Equipment 45.7 26.5 52.8
Intangible assets 35.1 4.7 13.5
Unallocated capital expenditure 4.8 6.0 7.6
_______ _______ _______
106.3 55.8 115.0
_______ _______ _______
3 Taxation
The tax charge for the six months ended 30 September 2006 is based on an
effective rate of taxation of 27.5% (2005: 27.5%), which has been calculated by
reference to the projected charge for the full year.
4 Earnings per share
The calculation of basic earnings per share for the six months ended 30
September 2006 was based on the profit attributable to equity holders of the
parent of £11.2m (six months ended 30 September 2005: £9.4m) and a weighted
average number of ordinary shares outstanding during the six months ended 30
September 2006 of 45.1m (six months ended 30 September 2005: 42.6m), calculated
as follows:
Unaudited Unaudited Audited
30 September 30 September 31 March
2006 2005 2006
Weighted average number of shares in issue (millions)
At the beginning of the period 43.7 42.5 42.5
Issue of ordinary shares 1.4 0.1 1.2
_______ _______ _______
At the end of the period - basic 45.1 42.6 43.7
Diluting effect of long term incentive plan share 0.3 0.2 0.2
options
Diluting effect of Save As You Earn share options 0.2 0.1 0.1
_______ _______ _______
At the end of the period - diluted 45.6 42.9 44.0
_______ _______ _______
Profit for the period (£m)
Profit for the period 11.2 9.4 22.1
Intangible amortisation charge 1.2 0.7 1.2
_______ _______ _______
Profit for the period before amortisation 12.4 10.1 23.3
_______ _______ _______
Basic earnings per share (pence) 24.94 22.18 50.44
Intangible amortisation 2.61 1.44 2.42
_______ _______ _______
Basic - adjusted for amortisation 27.55 23.62 52.86
_______ _______ _______
Diluted 24.67 22.05 50.03
_______ _______ _______
5 Acquisitions
During the period, the Group acquired the entire share capital of LCH Generators
Limited for a total consideration (including repayment of debt) of £59.0m
comprising cash of £54.5m and £4.5m shares. Tangible assets acquired (on a
debt-free basis) have been estimated at £18.2m, based on an initial assessment
of fair values. Intangible assets in respect of the customer list and brand
amounting to £14.4m have been identified based on an independent valuation.
Goodwill arising on the acquisition is estimated to be £26.4m. The acquisition
generated £9.5m of turnover and £2.1m operating profit (before amortisation)
during the period.
The group also acquired the trade and assets of Freeman Hire for a consideration
of £0.3m.
6 Interest-bearing loans and borrowings
The Group increased its revolving credit facility in May 2006 to £210m (31 March
2006: £150m) following the acquisition of LCH Generators Limited. The maturing
date of the facility is August 2010. The Group also has a £5m overdraft
facility. The group undertakes a number of interest rate hedging arrangements
in order to manage the risk of significant interest rate fluctuations. As at 30
September 2006, £94.5m of the Group's borrowings were covered by such
arrangements.
The profile of the borrowings is as follows:
Unaudited Unaudited Audited
30 September 30 September 31 March
2006 2005 2006
Fixed rate
Amount (£m) 50.0 20.0 35.0
Weighted average interest rate (%) 5.484 5.528 5.463
Weighted average period (months) 21 14 17
Capped rate
Amount (£m) 20.0 5.0 10.0
Maximum interest rate (%) 5.700 5.500 5.510
Weighted average period (months) 20 27 26
Collared rate
Amount (£m) 24.5 39.5 39.5
Interest rate range (%) 4.320 to 7.000 4.320 to 7.000 4.230 to 7.000
Weighted average period (months) 12 23 19
Floating rate
Amount (£m) 82.2 21.2 25.3
_______ _______ _______
176.7 85.7 109.8
Issue costs (0.6) (0.4) (0.4)
_______ _______ _______
Total borrowings 176.1 85.3 109.4
_______ _______ _______
The floating rate borrowings comprise bank loans bearing interest rates fixed
for a period of one month by reference to LIBOR.
7 Analysis of net debt
Unaudited Unaudited Audited
30 September 30 September 31 March
2006 2005 2006
£m £m £m
Cash at bank and in hand 4.2 1.1 6.4
Current borrowings - finance lease liabilities - (0.1) -
Non-current borrowings - Bank loans (176.1) (85.3) (109.4)
_______ _______ _______
Net debt at the end of the period (171.9) (84.3) (103.0)
_______ _______ _______
8 Dividends
Unaudited Unaudited Audited
30 September 30 September 31 March
2006 2005 2006
Total dividend (£m) 4.2 3.4 5.6
_______ _______ _______
Dividend per share (pence) 9.4 8.0 12.9
_______ _______ _______
The dividend for the period represents the final dividend on 9.4 pence per share
in respect of the year ended 31 March 2006. The Board has declared an interim
dividend of 5.5 pence per share to be paid on 26 January 2007 to shareholders on
the register on 5 January 2007.
9 Post balance sheet events
On 27 October 2006, the Group acquired the entire share capital of Lifting Gear
Hire Limited, a specialist provider for the hire of lifting equipment and
associated services. Total consideration, subject to completion accounts, was
£13.5 million. The consideration comprised £7.6 million in cash, the assumption
of estimated debt of £3.4 million on completion and £2.5 million satisfied by
the issue of 242,954 shares in Speedy Hire Plc. For the 10 months ended 30
April 2006 Lifting Gear Hire reported turnover of £16.2 million with net assets
as at 30 April 2006 of £2.3million.
10 Shareholder information
The interim report will be posted to all shareholders on or about 4 December
2006 and copies of this and the last published Annual Report & Accounts are
available from The Company Secretary, Speedy Hire Plc, Chase House, 16 The
Parks, Newton-le-Willows, Merseyside, WA12 0JQ.
Independent review report by KPMG Audit Plc to Speedy Hire Plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 September 2006 which comprises the Consolidated Income
Statement, Consolidated Statement of changes in equity, Consolidated Balance
Sheet, Consolidated Cash Flow Statement and the related notes. We have read the
other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the company
for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4, review of interim financial information, issued by the Auditing Practices
Board for the use in the UK. A review consists principally of making enquiries
of group management and applying analytical procedures to the financial
information and underlying financial data and, based thereon, assessing whether
the accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with
International Standards of Auditing (UK and Ireland) and therefore provides a
lower level of assurance than an audit. Accordingly, we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2006.
KPMG Audit Plc
Chartered accountants
Manchester
22 November 2006
This information is provided by RNS
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