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. This information is provided by RNS The company news service from the London Stock Exchange

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