Transcript Document
The Equipment Rental Specialist Interim Results For the six months ended 30 September 2006 Rental and sale of specialist products and services to construction, civil engineering, rail, oil and gas exploration, events and industrial markets Introduction Jeremy Pilkington – Chairman Neil Stothard – Group Managing Director Mike Holt – Group Finance Director Financial Review Mike Holt Group Finance Director Financial Highlights H1 H1 30 Sep 06 30 Sep 05 Revenue £61.3m £47.4m +29% PBIT £8.8m £5.6m +56% Operating Margin 14.3% 11.9% +20% PBT £7.8m £5.5m +42% 31 Mar 06 ROCE 16.0% 15.4% Gearing 57% 54% Net Debt £34.7m £32.6m Earnings per Share and Dividend H1 H1 Full Year 30 Sep 06 30 Sep 05 31 Mar 06 Basic EPS 12.71p 8.96p +42% 17.49p Fully diluted EPS 12.16p 8.66p +40% 16.83p Dividend per share 2.25p 1.95p +15% 6.60p Tax Rate 30.0% 29.0% 28.8% Balance Sheet 30 Sep 06 31 Mar 06 30 Sep 05 £m £m £m Property, plant and equipment 69.6 66.1 51.3 Intangibles/Goodwill 33.8 33.6 9.8 Non Current Assets 103.4 99.7 61.1 Net Working Capital 7.7 8.3 7.8 Pension Obligations (2.7) (2.9) (3.7) Deferred Tax (4.7) (4.2) (2.9) Deferred Consideration (7.9) (7.9) - Capital Employed 95.7 92.9 62.3 Net Debt (34.7) (32.6) (5.7) Net Assets 61.0 60.3 56.6 Operating Cash Flow H1 H1 Full Year 30 Sep 06 30 Sep 05 31 Mar 06 £m £m Operating Profit 8.8 5.6 Depreciation 6.9 5.7 12.2 Profits on asset disposals (1.1) (1.0) (2.3) EBITDA 14.6 10.3 Change in net working capital (0.2) (0.6) 1.8 Share option provision 0.5 0.2 0.3 Operating cash flow 14.9 9.9 Cash to profit ratio 169% 177% 203% Cash flow per share 35p 23p 54p 69 days 70 days 68 days Debtor days £m +56% +42% +51% 11.5 21.4 23.5 Cash Flow H1 H1 Full Year 30 Sep 06 30 Sep 05 31 Mar 06 £m £m £m 14.9 9.9 23.5 (15.1) (8.3) (15.5) 3.3 2.7 6.2 Interest (0.6) (0.1) (0.6) Tax (0.9) (1.4) (3.1) 1.6 2.8 10.5 Pensions (0.2) (0.2) (0.9) Acquisitions (0.1) (4.8) (36.1) - - (2.6) Purchase of own shares (3.4) (1.1) (1.1) Movement in net debt (2.1) (3.3) (30.2) Fleet Investment 14.3 11.3 34.3 Operating cash flow Capex Asset disposals Free cash flow Dividend Net Debt 30 Sep 06 31 Mar 06 30 Sep 05 £m £m £m Bank loans 36.5 33.5 8.0 Loan notes 0.1 1.0 - HP leases 3.1 3.7 0.1 Cash (5.0) (5.6) (2.4) Net Debt 34.7 32.6 5.7 Interest Cover 9.0x 14.5x 41.9x Bank Facilities £55m £55m £15.5m Excellent Financial Health • Operating cash flows remain strong (1.7x profits) • Gearing remains relatively modest (57%) • Interest cover remains robust (9x) • Balance sheet capable of supporting further growth Business Review Neil Stothard Group Managing Director Vp’s Investment Case • Specialist business with diversified market exposure • Strong services element • Market leading positions • Excellent cash generation and financial strength • Proven management team with strength in depth • Consistent performer with good returns Vp Markets Exposure Construction 6% 4% Civil Engineering 8% 34% 8% Rail Housebuilding Oil and Gas 10% Other Events 12% 18% Transmission Markets Market Background Vp Division Construction / Housing Stable Hire Station, UK Forks, Groundforce, TPA Civil Engineering Water slow Groundforce, Hire Station, TPA, UK Forks Oil and Gas Strong global Airpac Bukom Oilfield Services Rail Less volatile Torrent Trackside, TPA, Groundforce Transmission £1bn 5 year plan TPA, Hire Station Events Strong, seasonal TPA, Hire Station Business Performance • Record operating profits up 56% to £8.8m • 30% of profit growth is organic • Substantial revenue growth • Operating margins improved by 20% • Fleet investment £14.3m (+26%) • ROCE 16% Segmental Analysis H1 Sales H1 Profits 30 Sep 06 30 Sep 05 30 Sep 06 30 Sep 05 £m £m £m £m Groundforce 13.0 11.5 +13% 2.8 2.6 +8% UK Forks 6.9 7.5 -8% 0.7 1.3 -49% Airpac Bukom 5.0 2.2 +127% 1.2 0.5 +146% Hire Station 21.2 19.4 +9% 1.6 0.9 +79% Torrent Trackside 6.6 6.2 +6% 0.9 0.8 +18% TPA 7.7 - 1.8 - Continuing Operations 60.4 46.8 9.0 6.0 Pivotal 0.9 0.6 (0.2) (0.4) TOTAL 61.3 47.4 8.8 5.6 14.3% 11.9% Operating Margin +29% +50% Main Influences This Period • Acquisitions integrated successfully • AMP4 activity remained quiet • Oil and gas buoyant • Construction and Housebuilding steady • Events market seasonality • Non-core training business sold to management Growth Strategy Progressing Well • Interim results endorse growth plan initiatives to date • Organic capital investment has been strong • Product diversification in most areas • New markets e.g. transmission, events • New activities e.g. formwork, pipe fitting • Acquisition post half year end – MEP Hire Maintaining Momentum 140 18 Revenue (£m) 121.5 120 80 75.5 83.5 11.5 12 90.0 10 8.4 9.0 10.2 8 60 6 40 4 20 2 0 0 2003 2004 2005 2006 25 2007 22.5 Earnings (pence per share) 20 16.31 15 15.8 PBIT (£m) 14 99.4 100 16 13.09 17.49 14.06 10 5 0 Actuals 2003 20 18 16 14 12 10 8 6 4 2 0 2004 ROCE (%) 2005 16.3 14.7 13.2 Brewin Forecast 2006 2007 15.4 16.0 Share Price VP Total Shareholder Return 700 600 Vp FTSE Small Cap 500 400 300 200 100 0 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Source: Bloomberg Outlook Jeremy Pilkington Chairman Future • Excellent organic growth opportunities for our businesses • Potential for further acquisitive expansion • Balance sheet very capable of further leverage • Consistent strategy to lead in our chosen markets • Overall the markets we serve are in robust health with good visibility • Our growth strategy remains on course The Equipment Rental Specialist Interim Results For the six months ended 30 September 2006 Rental and sale of specialist products and services to construction, civil engineering, rail, oil and gas exploration, events and industrial markets