22nd Nov 2006 07:01
Speedy Hire PLC22 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 forecastsfor the next few years are highly encouraging with PFI projects increasing onceagain. Our key customers continue to be optimistic in the assessment of theirprospects and report full order books for some years ahead. With our strongfinancial position we are very well placed to take advantage of the manyopportunities available to us." David Wallis - Chairman For further information: Speedy Hire Plc Hudson SandlerSteve Corcoran (Chief Executive) Nick Lyon / Kate HoughNeil 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 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. Ourfinancial performance has remained strong. In addition, we have made goodprogress in building the support infrastructure necessary to achieve our longterm growth objectives, albeit a significant amount of further work remains tobe done. Financial Performance Revenue for the six months to 30 September 2006 was £154.4 million (2005: £120.0million) an increase of 28.7%. Operating profit before amortisation was £21.5million (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 challengingcost conditions and the dilutive effect of the launch of our new Pumps businessand 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: 4.9pps), an increase of 12.2%. The interim dividend will be paid on 26 January2007 to those shareholders on the register as at 5 January 2007. Speedy Hire is committed to maintaining and operating the most modern fleet inthe 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 lifeand £17.8 million was invested in new equipment to support further growth. Inaddition, we completed the acquisition of LCH generators, at a cost of £59.0million. Having received 20 weeks contribution from the acquisition of LCH,together with the impact of start up costs in our new businesses, return oncapital in the half year was 15.9% (2005: 17.4%), still significantly ahead ofour cost of capital. The LCH acquisition coupled with the underlying growth in the business have, asexpected, increased gearing to 111.6% (2005: 64.8%). Interest is covered 4.6times by operating profit (2005: 4.8 times). We are comfortable with net debtof £171.9 million (2005: £84.3 million), which is underpinned by strong cashflow, 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 ourbalance sheet and cash flow continue to provide us with headroom for furthergrowth. Business Review Tools Hire revenues were £80.8 million (2005: £71.4 million) a 13.2% increaseover 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%). Theincrease in like for like turnover was 8%, well ahead of market growth of around3-4%, thus further increasing our market share. As well as organic growth, weopened eight greenfield depots to establish the Speedy brand in those areaswhere 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 £14.1million (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 oftemporary power systems in May 2006. Since acquisition it has produced turnoverof £9.5 million and £2.1 million operating profit. The integration plan is ontrack to deliver the increase in revenue and profit anticipated. Since the half year end we have announced the £13.5 million acquisition ofLifting 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 monthsby when margins and returns are expected to be comparable to those of theexisting business. The existing Speedy team of some 3,400 people has grown by a further 400 throughgrowth and acquisitions. Their efforts, for which we extend the thanks of theboard and shareholders, are clearly visible within our financial performance,but in addition, a considerable amount of work has been progressing behind thescenes. The board is committed to supporting the needs of the business for the long termand will therefore continue to invest in the infrastructure of the organisationto 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 andunderstanding of our customers and their needs. All these projects have thecustomer at their centre, to enable Speedy to continually provide them withbetter service accompanied with a determination to improve the efficiency of thebusiness. Outlook The key drivers of our business remain positive. Construction output forecastsfor the next few years are highly encouraging with PFI projects increasing onceagain. Our key customers continue to be optimistic in the assessment of theirprospects and report full order books for some years ahead. Legislation continues to increase demand for an improved working environmentdriven by safer working practices. Speedy Hire has actively supported theHealth and Safety agenda for many years, such as our approach to providingsolutions to and awareness of the Work at Height and Hand Arm Vibrationdirectives. Recent legislation will demand improvements in the management anduse of machinery and equipment with regard to noise and dust emissions. Ourdetermination to provide our customers with the most modern, up to date andcompliant equipment available augurs well for Speedy Hire. We are winning business in new markets opened up to us through the Equipmentdivision. In addition, we are extending the group's ability to cross sellservices to our client base. We are continually identifying opportunities toexpand our product offering and to establish ourselves as a service andsolutions provider to our customers. Speedy Hire has a strong financial position which enables us to pursueopportunities for growing the business both organically and through suitableacquisitions. We remain of the view that further consolidation is necessary anddesirable within the hire industry and intend to play a full part in thatprocess. With favourable market conditions in our sector, we are confident,subject to any significant change in the economic outlook, of reporting furtherprogress. David WallisChairman Steve CorcoranChief Executive 22 November 2006 Speedy Hire Plc Consolidated income statementfor 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 - - 0.1Distribution 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 - 0.2Financial 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 22.1Minority 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 equityfor 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 22.3Gains 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 14.8Movement relating to share-based payments 0.8 0.6 0.9Deferred 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 sheetat 30 September 2006 Unaudited Unaudited Audited 30 September 30 September 31 March Note 2006 2005 2006 £m £m £mNon-current assetsProperty, plant and equipment 283.5 213.3 241.4Intangible assets 60.4 14.7 22.7 _______ _______ _______ 343.9 228.0 264.1 _______ _______ _______Current assetsInventories 9.3 5.1 6.9Trade and other receivables 90.9 75.1 72.6Cash and cash equivalents 4.2 1.1 6.4 _______ _______ _______ 104.4 81.3 85.9 _______ _______ _______Total assets 448.3 309.3 350.0 _______ _______ _______Current liabilitiesInterest-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 liabilitiesInterest-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 _______ _______ _______EquityShare capital 2.3 2.2 2.3Share premium 55.4 47.4 51.0Merger reserve 3.7 3.7 3.7Retained earnings 92.5 76.9 84.1 _______ _______ _______Total equity attributable to equity holders of the 153.9 130.2 141.1ParentMinority interests 0.2 - 0.2 _______ _______ _______ 154.1 130.2 141.3 _______ _______ _______ Speedy Hire Plc Consolidated cash flow statementfor the six months ended 30 September 2006 Unaudited Unaudited Audited 30 September 30 September 31 March Note 2006 2005 2006 £m £m £mCash flows from operating activitiesProfit before tax 15.5 13.0 30.7Adjustments for:Net financial expense 4.3 3.5 5.9Depreciation 23.2 18.5 38.9Amortisation of intangibles 1.7 0.8 1.5Profit 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 andprovisions 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 - 0.2Interest 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 activitiesProceeds from sale of property, plant and equipment 7.9 7.3 15.2Acquisition 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 activitiesProceeds from the issue of share capital - 14.8 14.8Proceeds from new loans 66.7 - 20.3Repayment 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) 0.5Cash 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 theGroup for the six months ended 30 September 2006 comprise the Company and itssubsidiaries (together referred to as the "Group"). This interim financial information has been prepared applying the accountingpolicies and presentation that were applied in the preparation of the company'spublished consolidated accounts for the year ended 31 March 2006. The comparative figures for the year ended 31 March 2006 are not the statutoryaccounts for that financial year. Those accounts have been reported on by theauditors and delivered to the registrar of companies. The report of theauditors 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, buthave 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 £mRevenueTools 80.8 71.4 151.0Equipment 76.3 51.0 107.8 _______ _______ _______ 157.1 122.4 258.8Intra-group revenue (2.7) (2.4) (4.5) _______ _______ _______ 154.4 120.0 254.3 _______ _______ _______Operating profitTools - 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 assetsTools 122.9 113.1 123.5Equipment 200.6 98.0 111.2 _______ _______ _______ 323.5 211.1 234.7Unallocated net assets 2.5 3.4 9.6Net debt (171.9) (84.3) (103.0) _______ _______ _______ 154.1 130.2 141.3 _______ _______ _______Capital expenditureTools 20.7 18.6 41.1Equipment 45.7 26.5 52.8Intangible assets 35.1 4.7 13.5Unallocated 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 aneffective rate of taxation of 27.5% (2005: 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 2006 was based on the profit attributable to equity holders of theparent of £11.2m (six months ended 30 September 2005: £9.4m) and a weightedaverage number of ordinary shares outstanding during the six months ended 30September 2006 of 45.1m (six months ended 30 September 2005: 42.6m), calculatedas 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 42.5Issue 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 0.2optionsDiluting 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 22.1Intangible 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 GeneratorsLimited for a total consideration (including repayment of debt) of £59.0mcomprising cash of £54.5m and £4.5m shares. Tangible assets acquired (on adebt-free basis) have been estimated at £18.2m, based on an initial assessmentof fair values. Intangible assets in respect of the customer list and brandamounting to £14.4m have been identified based on an independent valuation.Goodwill arising on the acquisition is estimated to be £26.4m. The acquisitiongenerated £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 considerationof £0.3m. 6 Interest-bearing loans and borrowings The Group increased its revolving credit facility in May 2006 to £210m (31 March2006: £150m) following the acquisition of LCH Generators Limited. The maturingdate of the facility is August 2010. The Group also has a £5m overdraftfacility. The group undertakes a number of interest rate hedging arrangementsin order to manage the risk of significant interest rate fluctuations. As at 30September 2006, £94.5m of the Group's borrowings were covered by sucharrangements. 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 85.7 109.8Issue 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 fixedfor 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 6.4Current 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 sharein respect of the year ended 31 March 2006. The Board has declared an interimdividend of 5.5 pence per share to be paid on 26 January 2007 to shareholders onthe register on 5 January 2007. 9 Post balance sheet events On 27 October 2006, the Group acquired the entire share capital of Lifting GearHire Limited, a specialist provider for the hire of lifting equipment andassociated services. Total consideration, subject to completion accounts, was£13.5 million. The consideration comprised £7.6 million in cash, the assumptionof estimated debt of £3.4 million on completion and £2.5 million satisfied bythe issue of 242,954 shares in Speedy Hire Plc. For the 10 months ended 30April 2006 Lifting Gear Hire reported turnover of £16.2 million with net assetsas at 30 April 2006 of £2.3million. 10 Shareholder information The interim report will be posted to all shareholders on or about 4 December2006 and copies of this and the last published Annual Report & Accounts areavailable from The Company Secretary, Speedy Hire Plc, Chase House, 16 TheParks, 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 forthe six months ended 30 September 2006 which comprises the Consolidated IncomeStatement, Consolidated Statement of changes in equity, Consolidated BalanceSheet, Consolidated Cash Flow Statement and the related notes. We have read theother information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial 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 directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, 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 PracticesBoard for the use in the UK. A review consists principally of making enquiriesof group management and applying analytical procedures to the financialinformation and underlying financial data and, based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance withInternational Standards of Auditing (UK and Ireland) and therefore provides alower level of assurance than an audit. Accordingly, we do not express an auditopinion 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 2006. KPMG Audit PlcChartered accountantsManchester22 November 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Speedy Hire