Interim Results

Hill & Smith Hldgs PLC 18 December 2001 Hill & Smith Holdings PLC Second interim results to 30 September 2001 Hill & Smith Holdings PLC ('Hill & Smith' or the 'Group') is pleased to announce its interim results for the 12 month period to 30 September 2001. Highlights * Turnover £194.4 million (2000: £58.9 million) * Operating profit pre goodwill amortisation and exceptional items £13.2 million (2000: £4.8 million) * Pre-tax profit prior to goodwill amortisation and exceptional items £8.5 million (2000: £4.1 million) * Earnings per share prior to goodwill amortisation and exceptional items 10.1p (2000: 8.3p) - an increase of 21.7% * Second interim dividend of 2.1p giving 4.2p for the 12 months to 30 September 2001 (2000: 4.2p) * Acquisition, Ash & Lacy has been successfully integrated * Net cash flow from operating activities before exceptional items £19.0m Chairman of Hill & Smith, David Winterbottom, said: 'Once again, I am pleased to report material progress and a further improvement in the financial performance of the Group for the 12 month period ended 30 September 2001.' 'In order to realise the benefits of the takeover of Ash & Lacy plc a number of closures, rationalisation measures and divestments have been implemented resulting in net exceptional costs of £3.9m.' 'On 30 September 2001 net borrowings had been reduced to £55.7m, from the £78.0m immediately following the acquisition of Ash & Lacy plc.' For further information , please contact Hill & Smith Holdings PLC David Winterbottom , Chairman 0121 704 7430 David Grove , Chief Executive 0121 704 7430 (mobile: 07973 325 667) Rawlings Financial PR John Rawlings 01756 770 376 Catriona Valentine 01904 674 342 Chairman's Statement Results Once again I am pleased to report material progress and a further improvement in the financial performance of the Group for the twelve month period ending 30 September 2001. As previously announced following the takeover of Ash & Lacy plc we have extended our accounting date to 31 December 2001. Therefore this statement is the second interim announcement of the current financial period. Sales for the twelve month period were £194.4m (2000: £58.9m). Profit before exceptional items and goodwill amortisation was £8.5m (2000: £4.1m). The adjusted earnings per share for the twelve month period increased to 10.1p (2000: 8.3p) which is an improvement of 21.7%. Acquisition of Ash & Lacy plc This acquisition was completed on 1 November 2000 and the results of the Ash and Lacy companies have been consolidated from that date. In order to realise the benefits of the takeover a number of closures, rationalisation measures and divestments have been implemented, affecting both continuing operations as well as the acquired companies, resulting in net exceptional costs of £3.9m. I am pleased to report that this acquisition has been integrated into the Group successfully and the benefits of this major strategic move are being realised. Operations During the period capital expenditure approaching £2.0m was absorbed by the Infrastructure Products Group. This included a new powder coat paint facility for our palisade fencing business and further expansion of our temporary barrier hire fleet. As a result of the above our trading profits were significantly ahead of last year. There has been some rationalisation of our galvanising activities following the Ash & Lacy plc takeover which has resulted in the closure of two locations. This market has seen some growth during the year and our major sites have benefited from this increased level of demand. The remaining businesses in the Building and Construction Products Division have seen mixed performances and profit margins have seen some erosion due to competitive pressures, particularly in the lintel and building products areas. In the Industrial Products Division Ash and Lacy Perforators has responded well to increased demands in the computer market. However the commodity based businesses such as stockholding have been trading against deteriorating conditions and falling prices. Gearing and Cash Flow On 30 September 2001 net borrowings had been reduced to £55.7m, from the £78.0m immediately following the acquisition of Ash & Lacy plc. This represents a reduction in gearing to the present level of 153% (198% at 31 March 2001). The net cash flow from operating activities before exceptional items was £19.0m for the period, of which £3.1m has been generated from our stock reduction programme across the Group. Dividends A dividend of 2.1p is being declared for the six month period ending 30 September 2001. In the absence of unforeseen circumstances the final dividend will be not less than 1.05p which, when added to the interim dividends declared, will amount to a total dividend for the fifteen month period of 5.25p. When annualised this is equivalent to 4.2p (2000: 4.2p). Outlook We are now approaching the end of the final quarter of the current financial period and except for the seasonal difficulties expected in a short December the majority of our businesses, in the context of current market conditions for our sector, are trading at satisfactory levels. David S Winterbottom Chairman 18 December 2001 Group Profit and Loss Account 12 months to 30 September 2001 Year to 30 September 2000 Before Before exceptional exceptional items and items and goodwill goodwill amortisation amortisation Goodwill Exceptional amortisation items* Notes Total Total £000 £000 £000 £000 £000 £000 Turnover Continuing 1 61,670 - - 61,670 58,858 58,858 operations Acquisitions 132,769 - - 132,769 - - -------- -------- -------- -------- -------- -------- Total 194,439 - - 194,439 58,858 58,858 turnover -------- -------- -------- -------- -------- -------- Operating profit Continuing 1 5,122 (187) (1,822) 3,113 4,770 4,620 operations Acquisitions 8,043 (1,188) (3,304) 3,551 - - -------- -------- -------- -------- -------- -------- Total 13,165 (1,375) (5,126) 6,664 4,770 4,620 operating profit Profit/ 3 - - 123 123 - (64) (loss) on sale of business Profit of 3 - - 1,143 1,143 - 464 sale of fixed assets -------- -------- -------- -------- -------- -------- Profit on 13,165 (1,375) (3,860) 7,930 4,770 5,020 ordinary activities before interest Net interest (4,639) - - (4,639) (668) (668) payable -------- -------- -------- -------- -------- -------- Profit/ 8,526 (1,375) (3,860) 3,291 4,102 4,352 (loss) before taxation Tax on 4 (2,554) - 1,049 (1,505) (879) (879) profit -------- -------- -------- -------- -------- -------- Profit after 5,972 (1,375) (2,811) 1,786 3,223 3,473 taxation Minority (9) - interests ------- -------- Profit for 1,777 3,473 the period Dividends 5 (3,029) (1,621) paid and proposed -------- -------- Transfer to (1,252) 1,852 reserves -------- --------- Earnings per 6 10.1p (2.3p) (4.8p) 3.0p** 8.3p 9.0p** share Diluted 6 10.1p (2.3p) (4.8p) 3.0p 8.3p 8.9p earnings per share * See note 3 ** FRS3 Statement of Total Recognised Gains and Losses 12 months to Year to 30 September 30 September 2001 2000 £000 £000 Profit for the period 1,777 3,473 Realised gain on revaluation of properties - 126 Currency translation differences - (54) Total recognised gains and losses for the period 1,777 3,545 Reconciliation of Movement in Group Shareholders' Funds 12 months to Year to 30 September 30 September 2001 2000 £000 £000 Profit for the period 1,777 3,473 Dividends (3,029) (1,621) (1,252) 1,852 Other recognised gains and losses - (252) New ordinary share capital issued 12,881 4 Net increase in shareholders' funds 11,629 1,604 Shareholders' funds at start of period 24,684 23,080 Shareholders funds' at end of period 36,313 24,684 Group Balance Sheet 30 September 2001 30 September 2000 £000 £000 Fixed assets Intangible assets 28,094 3,213 Tangible assets 44,098 17,470 Investments 688 1,365 72,880 22,048 Current assets Stocks 17,646 7,632 Debtors 55,555 17,689 Short-term deposits 2,819 - Cash - 288 76,020 25,609 Creditors: amounts falling due within one year Borrowings and finance leases (3,149) (4,590) Other creditors (51,985) (17,712) (55,134) (22,302) Net current assets 20,886 3,307 Total assets less current liabilities 93,766 25,355 Creditors: amounts falling due after one year Borrowings and finance leases (55,390) (287) Other creditors - (18) (55,390) (305) Provisions for liabilities and charges (2,018) (330) Net assets 36,358 24,720 Capital and reserves Called up share capital 15,244 9,654 Share premium 3,338 135 Other reserves 4,088 - Revaluation reserve 538 1,781 Capital redemption reserve 238 238 Profit & loss account 12,867 12,876 Equity shareholders' funds 36,313 24,684 Minority interest 45 36 36,358 24,720 Group Cash Flow Statement 12 months to Year to 30 September 30 September 2001 2000 Notes £000 £000 Net cashflow from operating activities 7i 13,989 4,213 Returns on investments and servicing (4,544) (669) of finance Taxation (1,107) (386) Capital expenditure 7ii 11,768 (475) Acquisitions and disposals (72,251) (729) Equity dividends paid (2,092) (1,632) Cashflow before financing (54,237) 322 Financing Issue of ordinary shares 5,873 4 New loan advances 53,562 - Loan repayments - (3,500) Capital element of finance lease rentals (257) (378) Purchase of own shares - (198) 59,178 (4,072) Increase / (decrease) in cash 4,941 (3,750) Reconciliation of net cash flow to movement in net borrowings Increase / (decrease) in cash 4,941 (3,750) Cash (inflow) / outflow from borrowings (53,305) 3,878 Change in borrowings resulting from cash flows (48,364) 128 New finance leases (1,008) (284) Loan notes issued as part of acquisition (1,759) - Movement in net borrowings in the period (51,131) (156) Net borrowings at the start of the period (4,589) (4,433) Net borrowings at the end of the period (55,720) (4,589) Notes to the Interim Financial Statements 1 Segmental Information 12 months to Year to 30 September 2001 30 September 2000 Operating Net Operating Net Turnover Profit Assets Turnover Profit Assets £000 £000 £000 £000 £000 £000 Building and construction products Continuing 57,300 5,087 26,364 52,704 4,643 27,699 operations Acquisitions 92,398 5,231 24,008 - - - -------- -------- -------- -------- -------- -------- Total 149,698 10,318 50,372 52,704 4,643 27,699 -------- -------- -------- -------- -------- -------- Industrial products Continuing 4,370 35 1,195 6,154 127 871 operations Acquisitions 40,371 2,812 19,433 - - - -------- -------- -------- -------- -------- -------- Total 44,741 2,847 20,628 6,154 127 871 -------- -------- -------- -------- -------- -------- Total operations Continuing 61,670 5,122 27,559 58,858 4,770 28,570 operations Acquisitions 132,769 8,043 43,441 - - - -------- -------- -------- -------- -------- -------- Total 194,439 13,165 71,000 58,858 4,770 28,570 -------- -------- -------- -------- -------- -------- Tax and (7,016) (2,474) dividends Net (55,720) (4,589) borrowings Goodwill 28,094 3,213 ---------- ---------- Total Group 36,358 24,720 ---------- ---------- Operating profit is stated before exceptional items and goodwill amortisation 2 Acquisitions and disposals During the period the Company completed the acquisitions of Ash & Lacy plc, and the residential doors business of P.C.Henderson Limited to whom it sold its Birtley garage doors operation. Goodwill arising from these acquisitions amounted to £25.0m and is being amortised over a period of 20 years. A provisional assessment has been made of the fair value of the acquired assets. This will be finalised by the period-end. 3 Exceptional items The exceptional items from continuing operations represent primarily the costs of reorganising the business of Asset International and the lintel production facility at Birtley Building Products. The exceptional items from acquisitions represent the closure costs of the Ash & Lacy head office, bank arrangement fees and related due diligence costs and reorganisation costs of acquired businesses. The profit on sale of business relates to the Birtley garage doors operation. 4 Taxation Tax has been provided at the estimated effective rate for the full year. 5 Dividends The Directors declared an interim dividend in respect of the first six months to 31 March 2001 of 2.1p per share (six months to 31 March 2000:2.1p) which was paid on 8 October 2001. A second interim dividend of 2.1p per share has been declared in respect of the six months to 30 September 2001 which will be paid on 8 April 2002 to shareholders on the register on 8 February 2002. The dividend charge for the period includes £469,000 in respect of the additional final dividend for the year ended 30 September 2000 which was paid on the additional shares issued to Ash & Lacy shareholders as part of the acquisition of that company. 6 Earnings per share The weighted average number of shares in issue during the period was 59.07m, diluted for the effect of outstanding share options £59.20m (year ended 30 September 2000: 38.77m, 38.90m diluted). Earnings per share have been calculated on profits of £1,777,000 (year ended 30 September 2000; earnings £3,473,000) and earnings per share before exceptional items and goodwill amortisation on earnings of £5,972,000 (year ended 30 September 2000: £3,223,000). Earnings per share before exceptional items and goodwill amortisation have been shown because the directors consider that this gives a more meaningful indication of the underlying performance of the group. 7 Notes to the Cash Flow Statement i. Reconciliation of operating profit to net cash flow from operating activities 12 months to Year to 30 September 2001 30 September 2000 £000 £000 Operating profit before 13,165 4,770 exceptional items and goodwill amortisation Depreciation 5,781 1,822 Changes in working capital: Stocks 3,141 (725) Debtors 2,461 (3,145) Creditors (5,569) 1,491 and provisions ------------- ---------------- Net cash flow from operating 18,979 4,213 activities before exceptional items Cash element of operating (4,990) - exceptional items -------------- ------------- Net cash flow from operating 13,989 4,213 activities ------------- -------------- ii Capital expenditure Purchase of (6,437) (1,989) fixed assets Sale of 18,205 1,514 fixed assets ------------- ------------- 11,768 (475) ------------- ------------ 8 Financial Information The results for the 12 months to 30 September 2001 are unaudited and do not constitute statutory accounts within the meaning of s240 of the Companies Act 1985. The financial information for the year to 30 September 2000 has been extracted from the statutory accounts for that year which have been filed with the Registrar of Companies and on which the auditors have given an unqualified opinion. Copies of the second interim report will be sent to shareholders and will be available from Hill & Smith's office at 2 Highlands Court, Cranmore Avenue, Shirley, B90 4LE. End

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