1st Jun 2005 07:00
Speedy Hire PLC01 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 UKcontractors and builders, industry, utilities and the public sector, operatingfrom 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 ToiletHire UK 2 Before goodwill amortisation, exceptional items and with an underlying taxrate 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 outlookfor their businesses, reporting strong order books for significant periods oftime into the future. Should there be any material change we are well placed toact quickly and appropriately and these circumstances may present furtherconsolidation opportunities. I look forward with confidence to reportingfurther progress in the year ahead." David Wallis - Chairman For further information:Speedy Hire Plc gcg hudson sandlerSteve Corcoran, Chief Executive Nick Lyon/James BenjaminNeil O'Brien, Group Finance Director Tel: 020 7796 4133Tel: 020 7796 4133 on Wednesday 1 June(thereafter tel: 01942 720000) High resolution images are available for the media to view and download free ofcharge 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 havemaintained good momentum with strong growth in turnover, profit and earnings pershare. As a result, the Board is proposing a final dividend of 8.0 pence pershare making a total of 12.3 pence per share for the year, a 17.1% increase over2004. Performance Turnover increased by 21.3% to £206.5 million, including like for like growth of12.3%, further increasing our market share. Before the loss on disposal ofToilet 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 at14.8% (2004: 15.0%) and earnings per share based on an underlying tax rate of26.4%, 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 inthe industry. The average age of our tool hire fleet is 2.1 years. Theproductivity 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 cancontinue to meet the demands and expectations of customers well into the future. In addition to strong organic growth, we acquired five businesses for a totalconsideration of £18.7 million. These acquisitions were spread across the rangeof Group activities and regions, increasing our national footprint and expandingour product and customer base. All five acquisitions have successfully beenintegrated into the Speedy Hire network. The excellent growth achieved by our tool hire businesses was augmented by someoutstanding performances from the four equipment rental businesses of Space,Survey, Power and Lifting. These young businesses had a turnover of £77.8million, exactly the same size as our tool hire division four years ago. Thisillustrates the potential of providing additional services and rentalopportunities to our customers. People I announced at the AGM in 2004 the succession plan for the position of ChiefExecutive, given John Brown's forthcoming retirement. Steve Corcoran wasappointed to that role in April 2005. Steve and John have worked closely overthe last 14 years and I am confident that in Steve we have a strong leader, witha 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 influenceon Speedy Hire over the last 27 years, incalculable. His drive, enthusiasm,integrity and wonderful sense of fun, together with his ability to surroundhimself with the very best people, have been an inspiration. John has handedover the business in first class shape and on behalf of all shareholders andemployees, I am sure you will join with me in expressing our thanks and wishinghim a long and happy retirement. John will step down from the board at the AGMin 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 anadditional independent director, with effect from 1 June. Peter is ChiefExecutive of Macfarlane Group PLC, the leading packaging solutions business. Hewas responsible for the US automotive and materials handling business ofBrambles Industries plc. Additionally, he has significant management experiencegained during his time at GKN Plc and its joint venture partners. Peter'sexperience will bring an additional dimension to the board. On behalf of shareholders, I would also like to pay tribute to Speedy Hire'speople. All successful businesses depend on the vision, skill, enthusiasm andcommitment of its people and at Speedy we are fortunate to have those inabundance. Whether being at the forefront of providing equipment dealing withlast year's floods in Cornwall and Carlisle, or making a special 4am delivery toKing's Cross, I never cease to be amazed by their drive and "can do" approachfor our customers. I extend our thanks to all of them. Strategy Our strategy remains unchanged. It is simple and straight forward and evolvesas new opportunities present themselves. We will continue to open new depots both in tool hire and equipment rental untilwe achieve the optimum geographic footprint to enable us to serve our customersto greatest effect. Speedy Hire is still under-represented in several majorconurbations 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 anddepth 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 opportunitiesfor Speedy Hire, such as the industrial, petro-chemical and utilities sectors,as well as offering wider services and products to our traditional constructioncustomers. 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, thusspreading risk and everyone taking responsibility for a profit centreappropriate to their skills. Training and development, an embracing IT systemand a sensible level of control are core to helping every employee maximise theopportunity available to them and will ensure we will continue to have asustainable business model. Outlook At present our major customers remain extremely positive regarding the outlookfor their businesses, reporting strong order books for significant periods oftime into the future. Nevertheless, there are signs that parts of the UKeconomy may be cooling, led by consumers who have adopted a more cautiousapproach as a result of higher interest rates, taxes and energy prices over thecourse of the last year. In due course this caution may feed through to thewider construction market. However, Speedy Hire's great strengths are the diversity of its customers, theincreasing number of markets which it serves, its range of activities andgeographical spread. We have no disproportionate exposure to any single one ofthese. We monitor activity very closely and should there be any material changewe are well placed to act quickly and appropriately. In fact, thesecircumstances may present further consolidation opportunities within the sectorsin which we operate. I therefore look forward with confidence to reporting further progress in theyear ahead. SPEEDY HIRE PlcCHIEF EXECUTIVE'S REVIEW Speedy Hire is pleased to announce another year of record results. We remaincommitted 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 propertyprofits on disposal of freehold sites. In addition we have mitigated higherenergy costs and increased investment in business development and operatingsystems. 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 growthpart of the Group, for a gross consideration of £1.1 million. This resulted ina £0.66 million loss on disposal. The Business The last year has seen a significant advance in the broadening of our hire offerand our turnover is now split 62% tool hire and 38% equipment hire. The growthof our traditional tool hire business is being mirrored by the success of ourfour equipment rental businesses, Space, Survey, Power and Lifting. These youngbusinesses offer exciting growth potential in their own right and have provedeffective in providing opportunities for cross-selling between Speedy Hirecompanies. Hire operations are supported centrally through shared services inpurchasing, property, fleet management, payroll, IT, marketing and businessdevelopment. During the year we added 34 new depots, 16 of which were greenfielddevelopments. In August 2004 we acquired the tool hire business of Multi GroupPlc and the UK onshore operations of Coates Hire Ltd adding a total of 12 depotsto our network. The acquisition in October 2004 of the internal hire operationsof Simons Construction was followed in February 2005 by the acquisition ofD.A.D. Hire Services and the six hire operations of Lloyds British Testing Plc. These businesses have been quickly and successfully integrated into the Speedynetwork. The disposal of Toilet Hire UK resulted in the removal of 12 operating centresfrom the Group's overall footprint. Hire Operations We have consolidated our position further as the undisputed leader in thegrowing UK tool hire market. Our 12.3% like for like turnover growthconsiderably outstripped market growth of 4% driving a further increase in ourmarket share. However, we recognise the need to continue to listen to ourcustomers 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 constructioncompanies such as Kier, Mowlem and Morgan Sindall who have selected Speedy Hireas preferred supplier. The last year saw a step change in the performance of our equipment rentalbusinesses. They operate in markets estimated to be worth £2 billion per annumand our strategy is to be the number one or two supplier in each of the sectorsin which we operate. All four businesses produced record results in the yearand 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 1,400following the acquisition post year end of The Cabin Company in April 2005. Weare the UK's number three in the wider accommodation market and number one forthe supply of anti-vandal units. Speedy Power provides portable generation, compressed air and lighting equipmentfrom 12 locations. Last year it continued to grow sales and profits rapidly.The business added two new greenfield depots and acquired five through theacquisition in August 2004 of Coates Rentair - establishing us as the UK leaderin compressed air and portable lighting. Speedy Lifting hires lightweight lifting and material handling equipment. Thebusiness has performed extremely strongly since it was established in 2003.This year our network expanded through one greenfield opening and theacquisition in February 2005 of five lifting depots from Lloyds British TestingPlc. It now operates from 33 locations. Speedy Survey continued to grow. The business focuses on the supply ofspecialist surveying and measurement instrumentation. Three new greenfield siteswere added to last year's acquisition of Leica Geosystems. The business nowoperates from 16 locations. People Our people are the public face of Speedy Hire. They represent Speedy Hire'sknowledge, brand and reputation. Our philosophy is founded on simpleprinciples: • 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-relatedbonuses account for a high proportion of total pay. Everybody participates in asingle bonus scheme. We set a minimum target of a specified level of acceptablereturn on capital employed and bonuses begin to be earned only when this targethas been exceeded. The Future We are not complacent about the future. Our historic growth has been impressiveand the hard work in the past provides a sound platform on which to build. Weare determined to continue our success and are therefore undertaking importantimprovements and investment to ensure the long-term profitability of thebusiness. Speedy Hire services markets that have positive and consistent growthcharacteristics, the talent and entrepreneurial spirit of our people, gives usconfidence to exploit these opportunities. We have the potential to increaseour operating network and to expand the range of products and services that weoffer. We are confident that our business strategy is one that will continue todeliver further success going forward. Group Profit and Loss Account For the year ended 31 March 2005 2005 2004 Note £'000 £'000Turnover 1 206,476 170,231Cost of sales 1 (58,232) (48,182)Gross profit 148,244 122,049Distribution costs (21,974) (18,494)Administrative expenses (97,112) (79,488)Other operating income 171 615Operating profit before goodwill amortisation 30,570 25,500Goodwill amortisation (1,241) (818)Operating profit 1 29,329 24,682Loss on disposal of discontinued operations (655) -Profit on ordinary activities before interest 28,674 24,682Net interest payable and other similar charges (4,825) (3,471)Profit on ordinary activities before taxation 1 23,849 21,211Taxation 6 (6,354) (3,601)Profit for the year attributable to the group 17,495 17,610Dividends on equity shares 7 (5,229) (4,371)Retained profit for the financial year 12,266 13,239 Pence PenceEarnings 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 38.66tax chargeDividends per share 7 12.30 10.50 Group Balance Sheet As at 31 March 2005 2005 2004 £'000 £'000 £'000 £'000Fixed assetsIntangible assets 10,211 4,988Tangible assets 187,929 156,685 198,140 161,673Current assetsStocks and work in progress 4,762 3,637Debtors: amounts falling due within one year 56,720 47,291Cash 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 211,973 174,100Creditors: 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 reservesCalled up share capital 2,132 2,132Share premium account 32,692 32,692Revaluation reserve 50 50Merger reserve 3,660 3,660Investment property revaluation reserve 22 122Capital redemption reserve 26 26Profit 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 £'000Cash inflow from operating activities 3 56,646 49,873Returns on investments and servicing of financeInterest received 19 163Interest 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 expenditurePurchase of tangible fixed assets (60,512) (51,999)Sale of tangible fixed assets 12,223 15,408Net cash outflow for capital expenditure (48,289) (36,591)Acquisitions and disposalsPurchase 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)FinancingIssue of share capital - 157New bank loans 21,660 67,000Capital 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) 10,961Cash 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 accountingpolicies set out in Speedy Hire Plc's annual report and accounts for the yearended 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 fullaccounts within the meaning of Section 240 of the Companies Act 1985. Thefinancial information contained in this announcement in respect of the yearended 31 March 2005 has been extracted from the financial statements which havebeen audited and reported upon without qualification by KPMG Audit Plc and didnot 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 ordinaryactivities before taxation are analysed by class of business as follows: - 2005 2004 £'000 £'000TurnoverHire services 206,468 170,046Central including property income 8 185 206,476 170,231 2005 2004 £'000 £'000Operating profit on ordinary activitiesHire services 33,981 27,729Central overheads net of property income (4,652) (3,047) Operating profit 29,329 24,682Loss on disposal of discontinued operations (655) - Profit on ordinary activities before interest 28,674 24,682Net 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) ofprofit 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 ofToilet 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 inissue during the year of 42,510,914 (2004: 41,594,923). The weighted average number of ordinary shares used for the diluted earnings pershare is calculated as follows: 2005 2004 Number Number Weighted average number of ordinary shares in issue during the year 42,510,914 41,594,923Diluting effect of options under Savings Related Share Option Schemes 1,814,877 260Diluting 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 sharepre-goodwill amortisation and exceptional items, and earnings per sharepre-goodwill amortisation and exceptional items with underlying tax charge. 2005 2004 Pence Pence Basic earnings per share 41.15 42.34Exceptional 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 38.66underlying tax charge 3. Reconciliation of operating profit to cash flow from operatingactivities 2005 2004 £'000 £'000Operating profit 29,329 24,682Depreciation charge 31,192 24,540Amortisation charge 1,241 818Profit 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 5,041Charge 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) - 5,894Debt 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. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Speedy Hire