RNS Number:1344D
Hill & Smith Hldgs PLC
03 September 2007
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
The Board of Hill & Smith Holdings PLC announces increased profits for the six
months ended 30 June 2007, reflecting a further significant improvement in the
Group's trading performance.
FINANCIAL HIGHLIGHTS:
6 months ended 6 months ended Change
30 June 2007 30 June 2006
Revenue ?176.1m ?147.4m 19.5%
Underlying operating profit* ?16.2m ?11.8m 36.9%
Profit before taxation ?14.2m ?10.9m 30.2%
Underlying profit before taxation* ?14.5m ?9.9m 47.0%
Underlying earnings per share* 14.4p 11.3p 27.4%
Dividend per share 3.6p 3.0p 20.0%
Net debt ?46.6m ?61.2m -23.9%
* based on profits before reorganisation and property items
Commenting on the results, Chairman David Grove said: "I am pleased to be able
to report another substantial improvement in the financial performance of the
Group in the six months ended 30th June 2007. All of the Group's divisions
increased underlying operating profits by in excess of 20% compared to the same
period last year. Since 30th June the Group has continued to trade in line with
the Board's expectations and I look forward to reporting to you another
satisfactory full year result in March 2008."
Copies of the interim report will be posted to shareholders shortly.
Further information:
Hill & Smith Holdings PLC
David Grove, Chairman
Tel: 0121 704 7430
Mobile: 07973 325667
Freshwater UK
Edward Carter
Tel: 0121 633 7775
Mobile: 07770 378097
CHAIRMAN'S STATEMENT
I am pleased to be able to report another substantial improvement in the
financial performance of the Group in the six months ended 30th June 2007.
Revenue in the current period was ?176.1m which represents a 19.5% increase on
the same period in 2006 (?147.4m). Underlying operating profits increased by
36.9% to ?16.2m compared with last year (?11.8m). This resulted in a 9.2%
underlying operating margin compared with 8.0% last year. Underlying profit
before taxation improved by 47.0% to ?14.5m (2006: ?9.9m). The underlying
earnings per share grew by 27.4% to 14.4p (2006: 11.3p).
All the divisions increased underlying operating profits by in excess of 20%
compared to the same period last year.
With the acquisition of a majority stake in Zinkinvent GmbH on 2nd July 2007,
the presentation of the segmental information has been amended to reflect the
changed size and focus of the Group's activities, which now comprise three
divisions: Infrastructure Products, Galvanizing Services and Building and
Construction.
Infrastructure Products
Operating profits of ?7.3m were materially ahead of last year (?5.9m) with all
business units making a contribution. During the period the Mallatite lighting
column business was relocated onto a new site adjacent to our recent galvanizing
acquisition, Metnor, thus reducing our operating costs. Also the Group's largest
ever order was secured when the Highways Agency awarded Techspan an approximate
one third share of a four year ?185m contract for the supply and installation of
motorway and trunk road variable message signs across England. Ordering against
this contract is expected to commence in 2008. Our product development programme
continues to launch new solutions for transport systems, homeland security and
the general infrastructure spend, such as flood prevention.
Galvanizing Services
Operating profits of ?5.4m were well ahead of last year (?3.4m) with a major
contribution from our associated company Zinkinvent GmbH. After the period end
we increased our investment in Zinkinvent GmbH as reported below. The Zinkinvent
GmbH performance was boosted by the benefit from the forward buying of zinc,
which may not be repeatable in the future. Fluctuations in the price of zinc
will continue to be a challenge for the whole of the galvanizing industry. The
Metnor acquisition in October 2006 has now been fully integrated into the Joseph
Ash operation and it made an excellent contribution during the period.
Building & Construction
Operating profits of ?3.5m compared very favourably with last year's performance
of ?2.6m. In 2006 we suffered losses in our steel reinforcement operation and it
is pleasing to report that this business has made a positive contribution in the
current period. The remaining businesses in this division continued to make
progress on the back of healthy demand in the construction market.
Finance
The Group's net debt position of ?46.6m at 30th June 2007 was ?0.5m higher than
at 31st December 2006 due in part to the increase in working capital (?5.8m)
required to finance the increased level of revenue. Funds were also absorbed by
our vigorous capital expenditure and product development programmes (?7.7m)
which was more than double our depreciation charge during the period. This is a
continuing feature of our business as we continue with our strategic aim of
generating organic growth from our core businesses.
The Group has also reorganised its main banking arrangements by way of a new
five year unsecured ?150 million Term and Revolving Credit Facility, with
funding provided by a group of six major banks on improved terms.
Dividend
Your Board has declared an interim dividend of 3.6p (2006: 3.0p) which
represents an increase of 20% over the corresponding period last year. The
dividend is covered 4.0 times (2006: 3.8 times) by underlying earnings per
share.
Acquisitions
On 2nd July shareholder approval was obtained to acquire the whole of the
Schweitzer family stake in Zinkinvent GmbH for ?26.1m, thus increasing our
overall holding from 33.3.% to 68.2%. In the period to 30th June 2007 the
investment has been accounted for as an associated company, whereas from 2nd
July its results will be fully consolidated as a subsidiary. We are currently
reviewing our options for further increasing our investment in this business.
Disposals
On 13th August 2007 we disposed of one of our non-core businesses, Ash & Lacy
Pressings Limited, for its net asset value of approximately ?600k, subject to
the finalisation of completion accounts.
Management
David Winterbottom retired from the Board at the AGM on 11th May 2007. David had
spent 10 years with Hill & Smith as the Non-Executive Chairman and we wish him a
happy retirement. On the same date Clive Snowdon, Chief Executive of Umeco plc,
joined the Board as a Non-Executive Director and I would like to extend a warm
welcome to him.
Chris Burr will retire from the Board at the next AGM in May 2008. Our
recruitment consultants are currently at an advanced stage in sourcing a new
Group Finance Director for the enlarged group.
I would like to personally congratulate all the staff in the Hill & Smith
Holdings PLC Group on an outstanding first half performance.
Outlook
I am confident that our highly focused capital expenditure and product
development programme, in conjunction with our selective bolt-on acquisition
policy, will continue to deliver growth and enhance shareholder value.
Since 30th June the Group has continued to trade in line with the Board's
expectations and I look forward to reporting to you another satisfactory full
year result in March 2008.
D L Grove
Chairman
3 September 2007
Consolidated Income Statement
6 months ended 30 June 2007
6 months ended 6 months ended Year ended
30 June 2007 30 June 2006 31 December 2006
Reorganisation
Underlying and property Underlying Underlying
results items Total results Total results Total
Notes ?000 ?000 ?000 ?000 ?000 ?000 ?000
________________________________________________________________________________________________________________________
Revenue 1 176,132 - 176,132 147,449 147,449 306,042 306,042
________________________________________________________________________________________________________________________
Trading profit 13,081 - 13,081 10,458 10,458 19,464 19,464
Income from associated company 3,105 - 3,105 1,361 1,361 3,191 3,191
Business reorganisation costs 2 - (859) (859) - - - (2,175)
Profit on sale of properties 2 - 527 527 - 1,015 - 1,025
________________________________________________________________________________________________________________________
Operating profit 1 16,186 (332) 15,854 11,819 12,834 22,655 21,505
Financial income 3 2,996 - 2,996 2,032 2,032 4,413 4,413
Financial expense 3 (4,657) - (4,657) (3,968) (3,968) (8,602) (8,602)
________________________________________________________________________________________________________________________
Profit before taxation 14,525 (332) 14,193 9,883 10,898 18,466 17,316
Taxation 4 (3,629) 258 (3,371) (2,727) (2,727) (4,861) (4,256)
________________________________________________________________________________________________________________________
Profit for the period 10,896 (74) 10,822 7,156 8,171 13,605 13,060
________________________________________________________________________________________________________________________
Attributable to:
Equity holders of the parent - - 10,812 - 8,169 - 13,056
Minority interest - - 10 - 2 - 4
________________________________________________________________________________________________________________________
Profit for the period - - 10,822 - 8,171 - 13,060
________________________________________________________________________________________________________________________
Basic earnings per share 5 - - 14.3p - 12.9p - 19.8p
Diluted earnings per share 5 - - 13.9p - 12.5p - 19.3p
________________________________________________________________________________________________________________________
Dividend per share - Interim - - 3.6p - 3.0p - -
________________________________________________________________________________________________________________________
Consolidated Statement of Recognised Income and Expense
6 months ended 30 June 2007
6 months ended 6 months ended Year ended
30 June 2007 30 June 2006 31 December 2006
?000 ?000 ?000
________________________________________________________________________________________________________________________
Exchange differences on translation of foreign operations 102 8 110
Share of exchange differences on translation of foreign
operations from associate (102) - (275)
Actuarial profit on defined benefit pension schemes - - 1,522
Taxation on items taken directly to equity (218) - (318)
________________________________________________________________________________________________________________________
Net (expense)/income recognised directly in equity (218) 8 1,039
Profit for the period 10,822 8,171 13,060
________________________________________________________________________________________________________________________
Total recognised income and expense for the period 10,604 8,179 14,099
________________________________________________________________________________________________________________________
Attributable to:
Equity holders of the parent 10,594 8,177 14,095
Minority interest 10 2 4
________________________________________________________________________________________________________________________
Total recognised income and expense for the period 10,604 8,179 14,099
________________________________________________________________________________________________________________________
Consolidated Balance Sheet
As at 30 June 2007
30 June 2007 30 June 2006 31 December 2006
Notes ?000 ?000 ?000
________________________________________________________________________________________________________________________
Non-current assets
Intangible assets 40,388 34,276 39,845
Property, plant and equipment 54,007 45,792 51,007
Investment in associated company 29,167 26,488 27,163
Deferred tax asset 379 2,411 572
________________________________________________________________________________________________________________________
123,941 108,967 118,587
Current assets
Inventories 34,854 31,793 33,248
Trade and other receivables 85,330 74,003 72,935
Cash and cash equivalents 6 14,874 15,317 14,176
________________________________________________________________________________________________________________________
135,058 121,113 120,359
________________________________________________________________________________________________________________________
Total assets 1 258,999 230,080 238,946
________________________________________________________________________________________________________________________
Current liabilities
Trade and other liabilities (95,361) (87,476) (87,142)
Current tax liabilities (6,334) (4,539) (2,798)
Interest bearing borrowings 6 (11,166) (22,002) (7,893)
________________________________________________________________________________________________________________________
(112,861) (114,017) (97,833)
________________________________________________________________________________________________________________________
Net current assets 22,197 7,096 22,526
________________________________________________________________________________________________________________________
Non-current liabilities
Trade and other liabilities (463) (409) (420)
Provisions for liabilities and charges (802) (1,221) (810)
Retirement benefit obligation (9,921) (13,451) (10,503)
Interest bearing borrowings 6 (50,287) (54,511) (52,341)
________________________________________________________________________________________________________________________
(61,473) (69,592) (64,074)
________________________________________________________________________________________________________________________
Total liabilities 1 (174,334) (183,609) (161,907)
________________________________________________________________________________________________________________________
Net assets 84,665 46,471 77,039
________________________________________________________________________________________________________________________
Equity
Share capital 18,891 15,814 18,887
Share premium 27,814 4,060 27,803
Capital redemption reserve 238 238 238
Other reserves 4,313 4,313 4,313
Translation reserve (203) (30) (203)
Equity reserves 33,590 22,066 25,989
________________________________________________________________________________________________________________________
Equity attributable to equity holders of the parent 84,643 46,461 77,027
Minority interest 22 10 12
________________________________________________________________________________________________________________________
Total equity 84,665 46,471 77,039
________________________________________________________________________________________________________________________
Consolidated Statement of Cash Flows
6 months ended 30 June 2007
6 months ended 6 months ended Year ended
30 June 2007 30 June 2006 31 December 2006
Notes ?000 ?000 ?000
________________________________________________________________________________________________________________________
Profit before tax 14,193 10,898 17,316
Add back net financing costs 3 1,661 1,936 4,189
________________________________________________________________________________________________________________________
Operating profit 15,854 12,834 21,505
________________________________________________________________________________________________________________________
Adjustments for non-cash items:
Income from associated company (3,105) (1,361) (3,191)
Share-based payments 92 57 152
Fair value on forward contracts - - 145
Loss on disposal of subsidiaries - - 144
Gain on disposal of property, plant and equipment (530) (1,026) (1,137)
Depreciation 3,417 3,154 6,404
Amortisation of intangible assets 252 151 395
________________________________________________________________________________________________________________________
126 975 2,912
________________________________________________________________________________________________________________________
Operating cash flows before movement in working capital 15,980 13,809 24,417
________________________________________________________________________________________________________________________
Increase in inventories (1,606) (6,562) (8,406)
Increase in receivables (10,871) (12,994) (11,351)
Increase in payables 6,937 7,527 7,783
Increase/(decrease) in provisions and employee benefits (253) 106 (1,549)
________________________________________________________________________________________________________________________
Net movement in working capital (5,793) (11,923) (13,523)
________________________________________________________________________________________________________________________
Cash generated by operations 10,187 1,886 10,894
Income taxes paid (305) (800) (2,720)
Interest paid (2,425) (2,269) (3,848)
________________________________________________________________________________________________________________________
Net cash from/(used in) operating activities 7,457 (1,183) 4,326
________________________________________________________________________________________________________________________
Interest received 768 212 684
Proceeds on disposal of property, plant and equipment 1,161 2,166 3,129
Purchase of property, plant and equipment (7,007) (8,199) (17,456)
Purchase of intangible assets (649) (366) (1,559)
Disposal of subsidiaries - - 359
Acquisitions of minority interests - - (59)
Acquisitions of subsidiaries and associates - (5,278) (10,452)
________________________________________________________________________________________________________________________
Net cash used in investing activities (5,727) (11,465) (25,354)
________________________________________________________________________________________________________________________
Issue of new shares 15 39 26,855
Dividends paid (2,266) (1,643) (3,793)
New loans raised 5,026 16,612 4,812
Repayments of loans (2,750) (2,500) (7,250)
Repayment of loan notes (47) (40) (40)
Repayment of obligations under finance leases (1,010) (816) (1,693)
________________________________________________________________________________________________________________________
Net cash (used in)/from financing activities (1,032) 11,652 18,891
________________________________________________________________________________________________________________________
Net increase/(decrease) in cash 698 (996) (2,137)
Cash at the beginning of the period 14,176 16,313 16,313
________________________________________________________________________________________________________________________
Cash at the end of the period 6 14,874 15,317 14,176
________________________________________________________________________________________________________________________
Notes to the Consolidated Interim Financial Information
1. Segmental information
The acquisition of a controlling interest in Zinkinvent GmbH and the continuing disposal of the Group's non-core
Industrial Products businesses has led to a fundamental change in the focus and scope of its operations. Accordingly
the basis of the Group's segmental information has been revised in order to reflect this change and to provide a
more relevant analysis of its operational performance. Comparatives have been restated accordingly. All operations
are continuing.
Income Statement 6 months ended 6 months ended Year ended
30 June 2007 30 June 2006 31 December 2006
Underlying Underlying Underlying
Segment Segment Segment Segment Segment Segment
revenue result* revenue result* revenue result*
?000 ?000 ?000 ?000 ?000 ?000
_____________________________________________________________________________________________________________________
Infrastructure Products 63,722 7,253 49,601 5,891 102,255 11,840
Galvanizing Services 21,561 5,416 13,959 3,378 31,036 6,807
Building and Construction 90,849 3,517 83,889 2,550 172,751 4,008
_____________________________________________________________________________________________________________________
Total Group 176,132 16,186 147,449 11,819 306,042 22,655
_______________________________________________________________ _______ _______
Net financing costs (1,661) (1,936) (4,189)
_____________________________________________________________________________________________________________________
Underlying profit before taxation 14,525 9,883 18,466
_____________________________________________________________________________________________________________________
* Underlying segment result is stated before reorganisation and property items.
Includes income from associated company
Balance Sheet 30 June 2007 30 June 2006 31 December 2006
Total Total Total Total Total Total
assets liabilities assets liabilities assets liabilities
?000 ?000 ?000 ?000 ?000 ?000
_____________________________________________________________________________________________________________________
Infrastructure Products 83,956 (25,034) 66,288 (18,598) 65,147 (16,648)
Galvanizing Services 75,315 (9,730) 58,386 (9,292) 75,149 (11,351)
Building and Construction 84,475 (57,875) 87,678 (57,846) 83,902 (57,296)
_____________________________________________________________________________________________________________________
Total operations 243,746 (92,639) 212,352 (85,736) 224,198 (85,295)
Tax and dividends 379 (9,519) 2,411 (6,688) 572 (5,065)
Non-current items - (10,723) - (14,672) - (11,313)
Net debt (note 6) 14,874 (61,453) 15,317 (76,513) 14,176 (60,234)
_____________________________________________________________________________________________________________________
Total Group 258,999 (174,334) 230,080 (183,609) 238,946 (161,907)
_____________________________________________________________________________________________________________________
Net assets 84,665 46,471 77,039
_____________________________________________________________________________________________________________________
Includes investment in associated company
2. Business reorganisation and property items
The business reorganisation costs relate principally to the reorganisation of the manufacturing operations of Ash &
Lacy Perforators Limited, including the costs of the closure of its Hayle factory.
The profit on sale of properties relates to the sale of the vacant Levenshulme site of Mallatite Limited, following
the relocation of this business to a new site at Chesterfield, as reported in the 2006 Annual Report.
3. Net financing costs
6 months ended 6 months ended Year ended
30 June 2007 30 June 2006 31 December 2006
?000 ?000 ?000
_____________________________________________________________________________________________________________________
Financial income
Interest on bank deposits 213 99 681
Interest on loans to associated company 594 - -
Net change in fair value of financial assets and liabilities - 68 -
Expected return on pension scheme assets 2,189 1,865 3,732
_____________________________________________________________________________________________________________________
2,996 2,032 4,413
_____________________________________________________________________________________________________________________
Financial expense
Interest on loans, overdrafts and hire purchase contracts 2,415 2,086 4,835
Amortisation of arrangement fees 109 187 374
Net change in fair value of financial assets and liabilities 238 - 2
Expected interest cost on pension scheme obligations 1,895 1,695 3,391
_____________________________________________________________________________________________________________________
4,657 3,968 8,602
_____________________________________________________________________________________________________________________
Net financing costs 1,661 1,936 4,189
_____________________________________________________________________________________________________________________
4. Taxation
Tax has been provided on the underlying profit at the estimated effective rate for existing operations for the full
year.
5. Earnings per share
The weighted average number of shares in issue during the period was 75,555,306, diluted for the effect of
outstanding share options 77,609,916 (6 months ended 30 June 2006: 63,227,430, and 65,118,450 diluted).
Earnings per share have been calculated on profits of ?10,822,000 (6 months ended 30 June 2006: earnings of
?8,171,000) and underlying earnings per share on earnings of ?10,896,000 (6 months ended 30 June 2006:earnings of
?7,156,000). Underlying earnings per share are as shown below. The Directors consider that this measurement of
earnings gives valuable information on the underlying performance of the Group:
6 months ended 6 months ended Year ended
30 June 2007 30 June 2006 31 December 2006
?000 ?000 ?000
_____________________________________________________________________________________________________________________
Basic earnings per share 14.3p 12.9p 19.8p
Effect of reorganisation and property items 0.1p (1.6p) 0.8p
_____________________________________________________________________________________________________________________
Underlying earnings per share 14.4p 11.3p 20.7p
_____________________________________________________________________________________________________________________
Diluted earnings per share 13.9p 12.5p 19.3p
Effect of reorganisation and property items 0.1p (1.6p) 0.8p
_____________________________________________________________________________________________________________________
Underlying diluted earnings per share 14.0p 11.0p 20.1p
_____________________________________________________________________________________________________________________
6. Analysis of net debt
30 June 2007 30 June 2006 31 December 2006
?000 ?000 ?000
_____________________________________________________________________________________________________________________
Cash and cash equivalents 14,874 15,317 14,176
Debt due within one year (11,166) (22,002) (7,893)
Debt due after one year (50,287) (54,511) (52,341)
_____________________________________________________________________________________________________________________
Net debt (46,579) (61,196) (46,058)
_____________________________________________________________________________________________________________________
7. Post balance sheet events
a) On 2 July 2007 the Group invested ?26.1m (?17.4m) in acquiring a further 34.9 per cent of Zinkinvent GmbH as a
result of which its total shareholding is now 68.2 per cent.
b) On the same date the Group reorganised its main banking arrangements by way of a new five year ?150m unsecured
Term and Revolving Credit Facility, with funding provided by a group of six major banks.
c) On 13 August the Group disposed of its subsidiary, Ash & Lacy Pressings Limited, for approximately ?600,000 in
cash, subject to completion accounts, an amount that equates to the net asset value.
8. Financial information
The comparative figures for the financial year ended 31 December 2006 are not the company's statutory accounts for
that financial year. Those accounts have been reported on by the company's auditors and delivered to the registrar
of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a
statement under section 237(2) or (3) of the Companies Act 1985.
The accounting policies as disclosed in the previous Annual Report have been applied in the results for the half
year ended 30 June 2007.
Directors and Financial Calendar
? Directors
D.L. Grove BA, FCA (Chairman)
D.W. Muir BSc, CEng, MICE (Chief Executive)
C.J. Burr FCA (Finance Director)
H.C. Marshall MSc, BSc (Non-Executive)
R.E. Richardson FCMI (Non-Executive)
C.J. Snowdon BA, FCA (Non-Executive)
? Secretary
J.C. Humphreys FCIS
Financial Calendar
Payment of interim dividend (ex dividend date 12 December 2007) 14 January 2008
Preliminary announcement of results for the year to 31 December 2007 March 2008
Annual General Meeting 2008 May 2008
This information is provided by RNS
The company news service from the London Stock Exchange
END
