23rd Nov 2005 07:01
Speedy Hire PLC23 November 2005 23 November 2005 SPEEDY HIRE Plc INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005 Speedy Hire is the number one provider of tool and equipment hire services inthe UK. FINANCIAL HIGHLIGHTS Unaudited Unaudited % 2005 2004 Change Group Revenue £120.0m £98.9m +21.3Group Operating Profit £16.5m £13.4m +23.1Group Operating Profit Before Amortisation and Impairments £17.3m £13.7m +26.3Group Profit Before Taxation £13.0m £11.2m +16.1Group Profit Before Amortisation, Impairments and Before Taxation £13.9m £11.5m +20.9Earnings Per Share 22.2p 18.7p +18.7Earnings Per Share 1 (with underlying tax rate 2) 23.6p 19.8p +19.2Proposed Dividends Per Share 4.9p 4.3p +14.0Gearing 64.8% 82.2% - 1 Before amortisation 2 Estimated effective tax rate 27.5% (2004: 29.3%) and underlying tax rate 27.5%(2004: 27.2%) • Strong growth in turnover, operating profit and earnings per share. • Strong and stable operating margins and return on capital. • Strong financial position aided by new banking facilities and placing. • Markets remain buoyant and stable. • Business is in excellent shape. Outlook "Our strategy has ensured that we maintain a diverse range of customers, anincreasingly broad range of quality equipment and a national geographical spreadwith no reliance on one region or product. Our customer surveys show very highlevels of satisfaction generating a good level of repeat business which is atribute to our outstanding people. This powerful combination will ensure thatSpeedy Hire maintains its market leading position. Speedy Hire is in excellent shape. Subject to there being no significant changein the economic outlook, we are confident of reporting further progress." David Wallis - Chairman For further information: Speedy Hire Plc Hudson SandlerSteve Corcoran (Chief Executive) Nick Lyon / James BenjaminNeil O'Brien (Group Finance Director) Tel: 020 7796 4133Wednesday only: 020 7796 4133Thursday onwards: 01942 720000 There will be a meeting for analysts at 9.30am on Wednesday 23 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 2005 We are pleased to report another six months of excellent progress for SpeedyHire. Our strategy of hiring an unrivalled range of quality tools and equipmentto our customers, backed up with excellent service has enabled the Group tocontinue to grow strongly, with a mixture of Greenfield expansion, like-for-liketurnover increase and bolt-on acquisitions. These have combined to furtherincrease Speedy Hire's market share. Financial Performance Group turnover for the six months to 30 September was £120.0 million (2004:£98.9 million) an increase of 21.3%, while operating profit before amortisationand impairment was £17.3 million (2004: £13.7 million) an increase of 26%. Ouroperating margin remains strong and stable at 14.4% pre goodwill (2004: 13.9%)despite some cost pressure on fuel and energy. Profit before tax rose by 16.1%to £13.0 million (2004: £11.2 million) and underlying earnings per share were23.6 pence a 19.2% increase on the same period last year. Capital expenditure in the half-year was £37.5 million, which we believe resultsin the Group maintaining the best, most comprehensive and most modern fleet inthe market, a key competitive advantage. A further £14.6 million has beeninvested in acquisitions. These have enhanced our national network and positionus better to achieve market leadership in all sectors in which we operate.Return on capital for the half year was 17.4% (2004: 16.3%), significantly aheadof the cost of our capital. Net debt at 30 September was £84.3 million (2004: £81.9 million) producing agearing figure of 64.8% (2004: 82.2%). Interest payments were covered 4.8 times(2004: 6.1 times) by operating profit. In August, we negotiated a five year£150 million revolving credit facility with our syndicate of banks and inSeptember raised £14.8 million, after costs, by way of a Placing of 2.13 millionshares at 710p, the then prevailing mid-market price. The interest charge for the six months includes the accelerated amortisation of£405,000 of banking fees relating to the 2003 facility and costs associated withfair value adjustments on financial instruments accounted for underInternational Financial Standards. Adjusting for these items, interest coverfor the six months was 5.5 times. This very strong financial position allows us to continue with our businessdevelopment and acquisition programmes and ensures that we are able to takeadvantage of the growth opportunities which are available to us. The Board intends to pay an interim dividend of 4.9 pence per share (2004: 4.3pps) an increase of 14%. The interim dividend will be paid on 27 January 2006to those shareholders on the register as at 6 January 2006. The results for the six months to September and the comparative periods areprepared under International Financial Reporting Standards ('IFRS'). To helpunderstand the impact of the transition, an appendix is included within thisreport which reconciles the results previously reported under UK GAAP to thosereported under IFRS. Business Review For the first time we are reporting the results of the Tools and Equipmentdivisions separately. The Tools division provides national coverage through its four regionaloperating companies, and comprises 226 locations, which enable it to effectivelyservice both local and national markets. During the period 10 Greenfield depotswere added. Shortly after the end of the period, we acquired the four depots ofDelyn Tool Hire, expanding our presence into North Wales. In the six months to30 September, the division generated £71.4 million of turnover (2004: £61.2million) and £10.4 million operating profit (2004: £8.9 million). Like-for-likegrowth in turnover was 9%, which once again significantly outperforms themarket. The continued drive for improved working conditions and a safer workingenvironment bring ever increasing opportunities for hire. This year twospecific pieces of legislation were introduced that are having a dramatic impacton working practices and therefore the equipment used; the Working at Heightdirective and most recently the Hand Arm Vibration directive. These two actsdemand the use of safer, more capital intensive products which maintain themomentum to outsource equipment needs. The newly established Equipment division, consisting of Lifting, Power, Spaceand Survey, continues to expand quickly and operates through a smaller number ofdepots which service larger contracts for major clients. It is therefore notmeaningful to report like for like performance. In April, we acquired theaccommodation business and certain assets of The Cabin Company Ltd for £6.3million from Birse plc. A five year trading agreement was set up with thevendor. This was followed in June with the acquisition of certain plant andequipment from M J Gleeson plc for a cash consideration of £8.2 million, againwith a five year trading agreement. In October we opened our first depotdedicated to the hire of pumping equipment, which will operate in a market weestimate to be worth over £100 million. Turnover in the six months for the Equipment division amounted to £51.0 million(2004: £39.1 million), generated by 78 (2004: 76) locations. Operating profitfor the division amounted to £9.6 million (2004: £6.9 million). The total number of depots now operated by Speedy Hire at the 30 September was304 and we are delighted to welcome to Speedy all of the new people involved. As well as managing and growing the existing operations we are continuing toinvest in the Group's future; not only in the quality of the hire fleet, butalso in our people, systems and methods of working and controls. We have moreopportunities to grow the business than ever before as our customers becomelarger and more demanding in terms of service. Speedy Hire is at the forefront of an industry which is rapidly consolidatingand we need to ensure that we are in a position to continue to manage thegrowth. We currently have in train major projects in Customer Services andTraining, together with a significant investment in IT to develop our supplychain management, reduce administration and processing costs and improve ourasset management. These are designed to ensure that we remain ahead of ourpeers. These projects will undoubtedly place additional demands on the businessand we continue to put in place the appropriate resources and expertise todeliver them on time and on budget. Outlook Central or local government is the principal client for major new works in ourtraditional construction markets. These remain, by and large, strong and stableand have grown steadily and consistently over many years. Our key customerswithin that industry continue to report high levels of activity and many reportrecord order books. In addition, we continue to win more business in markets new to us, such as oil,steel, industrial services and specialist manufacturing. Our ability to crosssell our current range of services enabled us to secure the recent contractawarded by Fleet Support Limited to manage the entire hire requirements at theRoyal Naval Dockyard in Portsmouth. Our strategy has ensured that we maintain a diverse range of customers, anincreasingly broad range of quality equipment and a national geographical spreadwith no reliance on one region or product. Our customer surveys show very highlevels of satisfaction generating a good level of repeat business which is atribute to our outstanding people. This powerful combination will ensure thatSpeedy Hire maintains its market leading position. Speedy Hire is in excellent shape. Subject to there being no significant changein the economic outlook, we are confident of reporting further progress. David Wallis Steve CorcoranChairman Chief Executive SPEEDY HIRE Plc CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005 30 September 30 September 31 March Note 2005 2004 2005 £000 £000 £000 Revenue 2 119,994 98,903 206,476 Analysis of operating profit- Before amortisation and impairment 17,304 13,739 30,625- Intangible amortisation and impairment (843) (311) (635)Operating profit 2 16,461 13,428 29,990 Loss on disposal of operation 2 - - (655) Profit before financing costs 2 16,461 13,428 29,335 Financing costs 7 (3,425) (2,196) (4,846) Profit before tax 13,036 11,232 24,489 Income tax 3 (3,588) (3,292) (6,303) Profit for the period 9,448 7,940 18,186 Attributable to: Equity holders of the company 9,448 7,940 18,186 Minority interests - - - 9,448 7,940 18,186 Basic earnings per share (pence) 4 22.18 18.68 42.78 Diluted earnings per share (pence) 4 22.05 18.66 42.55 SPEEDY HIRE Plc CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005 30 September 30 September 31 March 2005 2004 2005 £000 £000 £000 Profit for the period 9,448 7,940 18,186Dividends (3,401) (2,832) (4,660)Issue of ordinary shares 14,794 - -Movement relating to share-based payments 608 222 558Deferred tax on share-based payments 231 - - 21,680 5,330 14,084 Equity at start of period 108,489 94,405 94,405 Equity at end of period 130,169 99,735 108,489 SPEEDY HIRE Plc CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2005 30 September 30 September 31 March Note 2005 2004 2005 £000 £000 £000AssetsProperty, plant and equipment 213,356 183,493 187,929Intangible assets 5 14,670 8,350 10,666Total non-current assets 228,026 191,843 198,595 Inventories 5,102 4,298 4,762Trade and other receivables 75,052 60,323 55,056Other financial assets - 48 65Cash and cash equivalents 1,101 1,299 5,894Assets classified as held for sale - - 1,664Total current assets 81,255 65,968 67,441 LiabilitiesTrade and other payables (67,938) (55,605) (47,389)Current income tax (7,511) (2,266) (2,588)Finance lease liabilities (118) (512) (287)Other financial liabilities (129) (38) (49)Total current liabilities (75,696) (58,421) (50,313) Interest-bearing loans and borrowings (85,273) (82,730) (88,660)Deferred tax liabilities (18,143) (16,925) (18,574)Total non-current liabilities (103,416) (99,655) (107,234) Net Assets 2 130,169 99,735 108,489 EquityIssued capital 6 2,239 2,132 2,132Share premium 6 47,379 32,692 32,692Merger reserve 3,660 3,660 3,660Revaluation reserve 50 50 50Investment property revaluation reserve 22 122 22Capital redemption reserve 26 26 26Retained earnings 76,793 61,053 69,907Total equity attributable to equity holders 130,169 99,735 108,489 SPEEDY HIRE Plc CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005 30 September 30 September 31 March Note 2005 2004 2005 £000 £000 £000 Cash generated from operations 8 35,075 29,414 56,646Interest paid (2,860) (1,741) (4,758)Income taxes paid 323 (1,699) (2,694)Net cash from operating activities 32,538 25,974 49,194 Cash flows from investing activitiesAcquisition of businesses (14,577) (14,707) (18,746)Purchase of property, plant and equipment (37,486) (34,279) (60,512)Proceeds from sale of business - - 500Proceeds from sale of property, plant and equipment 7,267 5,052 12,223Net cash from investing activities (44,796) (43,934) (66,535) Cash flows from financing activitiesProceeds from the issue of share capital 14,794 - -New bank loans - 15,631 21,660Repayment of borrowings (3,807) - -Payment of finance lease liabilities (169) (461) (686)Dividends paid (3,353) (2,832) (4,660)Net cash from financing activities 7,465 12,338 16,314Net increase/(decrease) in cash and cash equivalents (4,793) (5,622) (1,027) Cash and cash equivalents at beginning of period 5,894 6,921 6,921Cash and cash equivalents at end of period 9 1,101 1,299 5,894 NOTES TO THE INTERIM FINANCIAL STATEMENTS 1. Basis of preparation The consolidated interim financial statements of the Company for the six monthsended 30 September 2005 comprise the Company and its subsidiaries (togetherreferred to as the "Group"). The consolidated interim financial statements were authorised for issuance on 21November 2005. EU Law (IAS Regulation EC1606/2002) requires that the next annual consolidatedaccounts of the group for the year ending 31 March 2006 be prepared inaccordance with International Financial Reporting Standards ('IFRS') as adoptedfor use in the EU ('adopted IFRS'). Details of how the group's results andfinancial position are impacted by the change to IFRS are set out in the Group'sIFRS restatement report which was issued on 3 October 2005. The comparative figures for the year ended 31 March 2005 are not the statutoryaccounts for that financial year. Those accounts, which were prepared under UKGAAP, have been reported on by the auditors and delivered to the registrar ofcompanies. The report of the auditors was unqualified and did not containstatements under section 237(2) or (3) of the Companies Act 1985. This interim financial information has been prepared on the basis of therecognition and measurement requirements of adopted IFRSs that are effective (oravailable for early adoption) for the year ending 31 March 2006, the Group'sfirst annual reporting date at which it is required to use adopted IFRSs. Basedon these adopted IFRSs, the Directors have applied the accounting policies asset out in the financial statements for the year ended 31 March 2005 as amendedby the Group's IFRS restatement report issued on 3 October 2005 and referred toabove, which they expect to apply when the first annual IFRS financialstatements are prepared. The IFRSs that will be effective or available for voluntary early adoption inthe annual financial statements for the period ended 31 March 2006 are stillsubject to change and subject to the issue of additional interpretation(s) andtherefore cannot be determined with certainty. Speedy continues to review allof its accounting policies as consensus on the application of IFRS develops.Accordingly, the accounting policies for the annual period that are relevant tothis interim financial information will be determined only when the first IFRSfinancial statements are prepared at 31 March 2006. The accounting policies have been applied consistently throughout the Group forpurposes of these consolidated interim financial statements. 2. Segmental analysis Revenue 30 September 30 September 31 March 2005 2004 2005 £000 £000 £000Class of businessTool Hire 71,407 61,229 129,078Equipment Hire 51,002 39,140 80,748Central - - 8 122,409 100,369 209,834Intra-group revenue (2,415) (1,466) (3,358) 119,994 98,903 206,476 Profit before financing costs 30 September 30 September 31 March 2005 2004 2005 £000 £000 £000Class of businessTool Hire 10,427 8,888 20,457Equipment Hire 9,579 6,905 14,765Central (2,702) (2,054) (4,597) 17,304 13,739 30,625Intangible amortisation and impairment (843) (311) (635)Loss on disposal of business - - (655) 16,461 13,428 29,335 Net assets / (liabilities) 30 September 30 September 31 March 2005 2004 2005 £000 £000 £000Class of businessTool Hire 106,034 90,798 97,433Equipment Hire 90,317 78,069 77,687Central 3,438 4,461 5,756 199,789 173,328 180,876Intangible assets 14,670 8,350 10,666Net debt (84,290) (81,943) (83,053) 130,169 99,735 108,489 3. Income taxes Income tax on the profit before taxation for the six months ended 30 September2005 is based on an effective rate of 27.5%, which has been calculated byreference to the projected charge for the full year. 4. Earnings per share The calculation of basic earnings per share for the six months ended 30September 2005 was based on the profit attributable to ordinary shareholders of£9,448,000 (six months ended 30 September 2004: £7,940,000) and a weightedaverage number of ordinary shares outstanding during the six months ended 30September 2005 of 42,599,760 (six months ended 30 September 2004: 42,510,914),calculated as follows: 30 September 30 September 31 March 2005 2004 2005 No. No. No.Weighted average number of shares in issueAt the beginning of the period 42,510,914 42,510,914 42,510,914Effect of share issue in the period 88,846 - -Weighted average number of shares - basic 42,599,760 42,510,914 42,510,914 Diluting effect of options under the Long Term Incentive Plan 188,294 45,109 124,160Diluting effect of the Save As You Earn share option scheme 68,751 - 106,268Weighted average number of shares - diluted 42,856,805 42,556,023 42,741,342 30 September 30 September 31 March 2005 2004 2005Earnings per share (pence)Basic 22.18 18.68 42.78Diluted 22.05 18.66 42.55 5. Acquisitions During the period the Group acquired the business and certain assets of TheCabin Company Limited ("TCCL"), a wholly owned subsidiary of Birse Group Plc,for a maximum cash consideration of £6.3 million. The acquisition includes afive-year exclusive national supply and services agreement for temporaryaccommodation with Birse Group. The Group also acquired the internal plant hire operations of MJ Gleeson Groupplc ("MJG"), for a consideration of £8.2 million in cash. At the same time asthe purchase, the Group entered into a five year exclusive supply agreement withMJ Gleeson Group plc. Intangible assets of £4.5m relating to the supply agreements have beenrecognised, and are being amortised over the period of the agreements. 6. Capital and reserves On 14 September 2005 the Group completed a placing of 2,132,315 ordinary sharesat 710p each. The surplus proceeds (after costs) in excess of the sharesnominal value has been credited to the share premium account. 7. Interest-bearing loans and borrowings The Group completed a re-financing of its banking facilities in August 2005.Unamortised issue costs (amounting to £260,000) relating to the previous loanfacility agreed in August 2003 have been written off in the period. Costs of£463,000 relating to the new facility are being amortised over the life of theagreement. In addition, £145,000 has been charged to financing costs relatingto the change in fair value of financial instruments. 8. Reconciliation of profit before financing costs to net cash generatedfrom operations 30 September 30 September 31 March 2005 2004 2005 £000 £000 £000Cash flow from operating activitiesProfit before financing costs 16,461 13,428 29,335Profit on sale of property, plant and equipment (2,096) (2,341) (3,842)Loss on disposal of business - - 655Intangible amortisation and impairment 843 311 635Depreciation 18,442 15,291 31,192Increase in inventories (340) (333) (834)Increase in trade and other receivables (19,264) (13,032) (8,816)Decrease in trade and other payables 20,421 15,832 7,750Share based payments 608 258 571Cash generated from operations 35,075 29,414 56,646 9. Analysis of net debt 30 September 30 September 31 March 2005 2004 2005 £000 £000 £000 Cash at bank and in hand 1,101 1,299 5,894 HP and finance lease liabilities (118) (512) (287)Non-current bank loans (85,273) (82,730) (88,660)Net debt as at the end of the period (84,290) (81,943) (83,053) 10. IFRS reconciliations As stated in note 1, these are the Group's first consolidated interim financialstatements for part of the period covered by the first IFRS annual consolidatedfinancial statements prepared in accordance with IFRSs. The Group issued an explanation of how the transition from UK GAAP to IFRSs hasaffected the Group's financial position, financial performance and cash flows inthe restatement report published on 3 October 2005. A copy of the report can befound on the Group's website (www.speedyhire.plc.uk). The report contains areconciliation of equity as at the date of transition and at 31 March 2005,together with a reconciliation of profit for the year to 31 March 2005. Theseresults are accordingly not reproduced in this document. The analysis set out in the following tables summarises the impact of transitionon the comparative information for the period to 30 September 2004. Reconciliation of equity - at 30 September 2004 UK GAAP IFRS 2 IFRS 3 IAS 10 IAS 12 IAS 39 IFRS GAAP £000 £000 £000 £000 £000 £000 £000AssetsProperty, plant and equipment 183,493 - - - - - 183,493Intangible assets 8,296 - 54 - - - 8,350Total non-current assets 191,789 - 54 - - - 191,843Inventories 4,298 - - - - - 4,298Trade and other receivables 60,323 - - - - - 60,323Other financial assets - - - - - 48 48Cash and cash equivalents 1,299 - - - - - 1,299Total current assets 65,920 - - - - 48 65,968LiabilitiesTrade and other payables (57,442) 9 - - 1,828 - (55,605)Current income tax (2,266) - - - - - (2,266)HP and finance leases (512) - - - - - (512)Other financial liabilities - - - - - (38) (38)Total current liabilities (60,220) 9 - - 1,828 (38) (58,421) Interest-bearing loans and borrowings (82,730) - (82,730)Deferred tax liabilities (14,764) (5) 38 (2,191) - (3) (16,925)Total non-current liabilities (97,494) (5) 38 (2,191) - (3) (99,655) Net Assets 99,995 4 92 (2,191) 1,828 7 99,735 EquityIssued capital 2,132 - - - - - 2,132Share premium 32,692 - - - - - 32,692Reserves 3,858 - - - - - 3,858Retained earnings 61,313 4 92 (2,191) 1,828 7 61,053Total equity attributable toequity holders of the parent 99,995 4 92 (2,191) 1,828 7 99,735 Reconciliation of profit for the period to 30 September 2004 UK GAAP IFRS 2 IFRS 3 IAS 10 IAS 12 IAS 39 IFRS GAAP £000 £000 £000 £000 £000 £000 £000 Revenue 98,903 - - - - - 98,903 Analysis of operatingprofitPre-amortisation & impairment 13,660 79 - - - - 13,739Amortisation & impairment (516) - 205 - - - (311)Operating profit 13,144 79 205 - - - 13,428 Loss on disposal of business - - - - - - -Profit before financing costs 13,144 79 205 - - - 13,428 Financing costs (2,169) - - - - (27) (2,196)Profit before tax 10,975 79 205 - - (27) 11,232 Income tax expense (2,981) (5) 38 - (352) 8 (3,292)Profit for the period 7,994 74 243 - (352) (19) 7,940 Attributable to:Equity holders 7,994 74 243 - (352) (19) 7,940 Explanation of material adjustments to the cash flow statement There are no material differences between the cash flows presented under IFRSsand the cash flows presented under previous GAAP. INDEPENDENT REVIEW REPORT TO SPEEDY HIRE PLC Introduction We have been engaged by the company to review the financial information set outon pages 4 to 13 and we have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the company in accordance with the terms of ourengagement to assist the company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the company those matters we are required to state to itin this report and for no other purpose. To the fullest extent permitted bylaw, we do not accept or assume responsibility to anyone other than the companyfor our review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules which require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual financial statements except where any changes, and the reasonsfor them, are disclosed. As disclosed in note 1 to the financial information, the next annual financialstatements of the Group will be prepared in accordance with IFRSs adopted foruse in the European Union. The accounting policies that have been adopted inpreparing the financial information are consistent with those that the directorscurrently intend to use in the next annual financial statements. There ishowever a possibility that the Directors may determine that some changes tothese policies are necessary when preparing the full annual financial statementsfor the first time in accordance with those IFRSs adopted for use by theEuropean Union. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4Review of interim financial information issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data and, based thereon,assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review is substantially lessin scope than an audit performed in accordance with Auditing Standards andtherefore provides a lower level of assurance than an audit. Accordingly, we donot express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2005. KPMG Audit PlcChartered Accountants St James' Square Manchester M2 6DS 21 November 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Speedy Hire