Final Results - Year Ended 2 April 2000

Allen PLC 26 June 2000 Allen Plc ('Allen') (Hire Services, Housebuilding, Utility Services & Civil Engineering, Building) PRELIMINARY RESULTS FOR THE 53 WEEKS ENDED 2 APRIL 2000 RECORD RESULTS PLANNED WITHDRAWAL FROM HOUSEBUILDING 2000 1999 Change Restated Turnover £347.95m £320.70m +8.5% Pre-exceptional pre-tax profit £20.63m £18.01m +14.5% Pre-exceptional earnings per share 34.66p 30.22p +14.7% Dividend per share 13.90p 12.10p +14.9% There was also a net exceptional profit of £6.84 million. * Future Strategy Funds and resources to be directed to Hire and Utility Services Building remains a 'cash generator' to fund acquisition and organic growth plans Planned withdrawal from housebuilding * Hire Services (63.0% of operating profits) National network of 175 depots 'Like for like' tool hire turnover increased by 14% New specialist operations launched Increased opportunities from interactive web site Prospects very encouraging * Housebuilding (17.3% of operating profits) Completions up 5.9% at 523 £7 million exceptional profit from Lymm site * Utility Services & Civil Engineering (10.6% of operating profits) £165m contracts for water and gas infrastructure over the next 5 years Record levels of work in hand Another sound performance expected * Building (9.1% of operating profits) Focus on higher margin business 99 active sites * Outlook Confident of another good year For further information: Ken Fox Monday only: 020 7786 9600 (Chief Executive) Neil O'Brien Tuesday onwards: 01204 699277 (Group Finance Director) Brian Coleman-Smith 020 7786 9600 Binns & Co Public Relations ALLEN PLC PRELIMINARY RESULTS FOR THE 53 WEEKS ENDED 2 APRIL 2000 CHAIRMAN'S STATEMENT Results The year ended 2nd April 2000 was yet another record, with the Group reporting its fourteenth successive rise in half yearly pre-tax profits. All Divisions have performed creditably with notable successes in the continued growth in Hire Services and the long term order book which we have secured in Utilities. Annual pre-exceptional profits before taxation rose by 14.5% to £20.63m. In addition we achieved a net exceptional profit of £6.84m. relating principally to the disposal of our Lymm site. Basic pre-exceptional earnings per share has risen from 30.22 pence to 34.66 pence. This underlying figure represents an increase of 14.7% on the previous year. I thank all employees for their contribution to this splendid performance. Dividends The Directors are recommending a final dividend of 8.3 pence per share which will be paid on 28th July 2000 to those shareholders on the register at 7th July 2000. This final dividend, together with the interim dividend of 5.6 pence per share, gives a total for the year of 13.9 pence. This is an increase of 14.9%. The dividend is covered 2.5 times by pre-exceptional earnings. Strategy The Board has been reviewing the position of the group and in particular focusing on our core activities to enhance shareholder value. We have decided to direct future funds and resources to the Hire and Utility Services businesses which provide higher returns on capital than Housebuilding. The Building division remains a valuable business, generating profits on minimal invested capital and will continue to be a 'cash generator' for our acquisition and organic growth plans in Hire and Utility Services. During the year we made four hire acquisitions, costing a total of £2.0m, the largest of which was for Construction Instruments Limited, which supplies and hires specialist surveying equipment. We intend to further expand our Hire product portfolio through acquisitions, organic growth and 'greenfield' site developments. We have already announced the disposal of our subcontracting operations in Scaffolding and Sheet Piling, both of which were sold after our year end. In total these two disposals raised £3.3 million. We have decided to exit Housebuilding. Whilst this market is strong and interest rates remain historically low, housing affordability will continue to attract buyers for new homes. However, as a regional housebuilder we do not have the purchasing advantages of our larger competitors who are also able to achieve higher selling prices for houses similar to those built by Allen Homes. We have several options open to us to achieve this exit, which may be via outright sale, or a build out of our present landbank. We will choose the option which in our opinion will achieve best value for shareholders. The Board will also be seeking increased powers in relation to share buy backs and would consider this option if we have surplus funds and if such a programme was value enhancing for shareholders. Board Changes After several years of little change our Board is shortly to take on a new look. Michael Wormald will be retiring from the Board at our AGM and we wish him well for the future. Michael joined Allen in 1997 on the acquisition of P S Turner (Constructions). He has been responsible for the activities of our Building Division since 1998. He will be replaced by Nick Davies, who joins us in the near future from Mansell Plc, where he has been Managing Director of a subsidiary and member of the Group Operating Board. Ian Hilton who joined the Group in 1967 and has been Managing Director of the Housebuilding Division since 1993 will be retiring at our AGM in July. We wish Ian every happiness in his retirement and thank him for his long period of loyal service with the Group. Magnus Mowat, a Non-Executive Director, will be retiring from the Board at our AGM after nine years with the company. Magnus, who has re-located to the South West, has provided an invaluable contribution to the growth of the Group and we thank him for this and wish him well. He will be replaced on the Board by David Wallis, aged 52, who was formerly Group Managing Director of Merchant Retail Group plc and is currently a Non-Executive Director of Geest PLC and Chairman of three venture capital backed companies. We welcome these new colleagues to our Board. Outlook The overall construction market in which we operate is expected to show further growth in the coming year, providing a supportive background for our activities. Our Hire operations have started the year well and we are excited by prospects for this division. Although we intend to exit from Housebuilding the division continues to trade well. The new contracts in Utility Services and satisfactory work in hand in Building leads us to expect another encouraging year from these divisions. We are focusing on our three core activities of Hire Services, Utility Services and Building and we look forward with confidence to another good year. Donald Greenhalgh Chairman 26 June 2000 CHIEF EXECUTIVE'S REVIEW I am pleased to report another excellent result for the year, in which the Group achieved record profits in our Hire Services, Housebuilding and Utility Services/Civil Engineering Divisions. Our staff have once again provided an outstanding performance and I thank them for their considerable efforts and contribution to these results. During the year we have continued our strategy of concentrating on our core activities, at the same time reducing exposure to the lower return or higher risk elements of our business so as to improve shareholder value. The disposals of our contract Scaffolding and Sheet Piling companies reflect the Board's intention to exit non core activities. Hire Services The excellent performance from our Hire Services Division continued, producing 63% of total Group operating profit, with margins within one percentage point of last year's record. In a tight market place we have maintained our underlying margin but the costs of opening of 19 'greenfield' sites has diluted this in the short term. Our dedication to service, and aggressive sales, linked to the incentivisation of our staff, has enabled us once again to outperform the majority of our competitors. Growth continues from our existing depots and we intend to expand the number of Hire Centres in the current year by both 'greenfield' openings and acquisitions at the right price. We confidently expect another excellent performance from this division. Housebuilding Our Housebuilding Division produced its highest ever profit from 523 completions, with a respectable 10% operating margin. As outlined by our Chairman we are exiting from this activity. Utility Services/Civil Engineering Ryan and Pearce have produced creditable performances with record results from both companies. The 3 - 5 year term contracts secured by Ryan from its key utility clients in the water and gas industries have enabled it to enter the current year with its strongest ever order book. Prospects are accordingly very encouraging and it is our intention to seek higher margin opportunities in this growth area where we have already demonstrated our expertise. Building The results in this Division have improved as predicted in my last year's review. We have continued to reduce our involvement in development activities which will be restricted to non-speculative schemes. This year because of the link between our property development and building activities we have reported on their combined performances with restatement of comparisons as appropriate. More detailed comment is provided on the results of each Division on the following pages. CHIEF EXECUTIVE'S OPERATING REVIEW HIRE SERVICES DIVISION Another outstanding performance has been produced by our Hire Services Division. The market place has remained highly competitive with minimal increase in our hire rates as our client base, predominantly in construction, has sought best value. Against this background we have produced record profits with the following notable achievements which are responsible for the year's result and our confidence in another excellent year to 2001. Speedy Hire Centres Like for like turnover increase 14%. Depots increased by 22 to 154, a 17% increase. - 19 'greenfield ' sites - three depots acquired Specialist operations extended - of the 22 additional depots 11 were specialist Lifting Depots. Preferred supplier agreements concluded which secures our work with 7 major contractors. Speedy Space Fleet increased by 699 units to 9,221. Utilisation maintained at over 90% average during the year. Increase in operating margin. New Specialist Operations Speedy Power - commenced March 2000. Hires compressors and generators to a broad range of customers. Speedy Survey - now a leading player for the hire of surveying equipment with 5 outlets. Call Centre Increased volumes achieved through Speedy Hire Direct as customers move to this 'one call' system. E-Business - 'B2B' The value of e-business, in particular 'internet shopping', will increase dramatically over the next few years. Aware of this potential, our Speedy Hire Centre companies have developed what we believe is the industry's first interactive Web Site. This gives customers a more efficient service in the business to business marketplace. The Future The Division continues to perform well and there has been a buoyant start to the current year. The trend towards preferred supplier agreements within the construction industry is a welcome move as we are able to offer an efficient service. We aim to increase the number of these agreements which we have with major players. We will continue to exploit the numerous exciting opportunities available to us, which will include the expansion of our newer specialist operations in Lifting, Power and Survey. Several new depots are already at appraisal stage and our target is to open twenty 'greenfield' outlets in the current year. Acquisitions will also feature but only if we can buy at the right prices. Prospects are very encouraging for another great year in this Division. HOUSEBUILDING Allen Homes had another record year with an 8.4% increase in pre-exceptional profit. This has been achieved on 523 completions which were up by 5.9%. In December 1999 we sold a site in Lymm, Cheshire, which contributed some £7m in exceptional profit and which is testament to our negotiating and land buying skills. Our average house price was £80,100 an increase of 5.4%, this being mainly related to the change in house types sold rather than price inflation. Market conditions have been buoyant for housebuilding but with considerable geographic variation. The land which was used in the year cost £13,306 per plot representing 16.6% of our average house price. Historically we have operated on a landbank far lower than industry average. At the year end our landbank amounted to 936 plots. Housebuilding is now considered a non-core activity and we are planning our exit from this sector. However, the market in our areas remains strong, and with relatively low interest rates, new house affordability will continue to attract buyers for the quality homes for which we have gained a reputation. UTILITY SERVICES & CIVIL ENGINEERING It is pleasing to report another record year with operating profit increased by 3.5% to £2.58m. Margins have declined predominately because of a fall in profitability in Sheet Piling (UK). This business has been sold since our year end. The major contribution to our result came from our utility services contractor Ryan which was responsible for 65% of the Division's turnover and 84% of operating profit. Ryan has performed well, and has confirmed its ability to compete in the growing market place of utility services, repair and replacement. In a typical year Ryan will be involved in the rehabilitation of some 400km of water mains and the replacement of 65km of gas mains. Their operation is now heavily I.T. reliant as they interface with client companies in the logistics associated with the repair of over 10,000 leaks per annum, the provision of multi-utility installations to over 3,000 new properties and the planning and co-ordination of over 80,000 individual jobs each year. Outsourcing by the service providers is increasing. In the year Ryan has won contracts totalling over £165m for work on water and gas infrastructures over the next five years, which has provided a sound platform for future growth. During 1999 Ryan won Severn Trent Water's 'Contractor of the Year Award' and in January this year it also received the BG Plc Chairman's Award for the Transco Health, Safety and Environment Award 2000 for the 'outstanding performance by a partner contractor'. Already a leader in the field of trenchless technology, Ryan has continued its development of equipment and products for use in pipeline rehabilitation. A new service bursting tool and a novel ceramic lining material for in situ use are at the development stage. Both have potential to lower the cost base and reduce disruption associated with traditional methods of pipeline maintenance. Ryan has entered the current year with its highest ever level of work in hand and another good year is confidently expected. Pearce, our civil engineering contractor operating in the South West has produced an improved result from its infrastructure, highway and bridge repair activities. It was a finalist in this year's Quality in Construction Awards for the design and construction of the Weston Island Bus Depot project in Bath. Work in hand at Pearce is at an acceptable level and another sound performance is expected this year. BUILDING As stated in last year's report we have focused on higher margin contracts. Our turnover has reduced and operating profit margin has improved. This year we have combined the result from our development activities with our building results and have restated the prior year. Our previously stated strategy to reduce involvement in development projects has continued with Penrith being our only active site. Our aim is to restrict ourselves to non-speculative developments, with the objective of achieving higher building margins. In the year we have sustained a small loss from developments. During the year we operated from seven locations covering Yorkshire, North East, North West, Midlands and the South East. During the year Allenbuild was presented with the Silver Award for the Considerate Constructors Scheme in the South East area, and in the North West it was winner of the Construction Safety Award. At the year end we had 99 active sites with an average value of only £1.33m. reflecting our risk spread approach to building. Whilst work in hand is healthy at £120m the market is very tight and we do not expect further margin improvement this year. Ken Fox Chief Executive 26 June 2000 ALLEN PLC PROFIT AND LOSS ACCOUNT FOR THE 53 WEEKS ENDED 2 APRIL 2000 Note Year Year to to 2 28 April March 2000 1999 £'000 £'000 £'000 £'000 Restated Turnover 1 Continuing operations 339,971 312,714 Discontinued operations 7,979 7,983 ----- ----- 347,950 320,697 Cost of sales (263,083) (246,127) ------ ------ Gross profit 84,867 74,570 Distribution costs (15,59 4) (11,741) Administration expenses (40,739) (35,865) Other operating charges (9,230) (8,140) Other operating income - Exceptional 7,034 - Other operating income - Ongoing 4,273 2,461 ------- ------- Operating profit 1 - Continuing operations 30,113 20,515 - Discontinued operations 498 770 ----- ----- 30,611 21,285 Provision against loss on disposal of a discontinued operation (197) - Interest payable (2,948) (3,276) ------ ------ Profit before taxation 1 27,466 18,009 Taxation (8,265) (5,419) ------ ------ Profit after taxation 19,201 12,590 Minority interests (24) (39) ------ ------ Profit attributable to the group 19,177 12,551 Dividends (5,773) (5,026) ------ ------ Retained profit for the 13,404 7,525 financial year ===== ===== Profit before taxation per share - basic 66.13p 43.36p - underlying 49.67p 43.36p - diluted 66.12p 43.35p Earnings per share 2 - basic 46.17p 30.22p - underlying 34.66p 30.22p - diluted 46.16p 30.21p Dividends per share 13.90p 12.10p ALLEN PLC BALANCE SHEET AS AT 2 APRIL 2000 As at As at 2 28 April March £'000 2000 £'000 1999 £'000 £'000 Fixed assets Intangible assets 696 234 Tangible assets 89,198 76,096 ------ ------ ----- ------ 89,894 76,330 Current assets Stocks and work in progress 38,438 37,632 Debtors 83,997 66,728 Cash 2,476 7,521 ------ ----- 124,911 111,881 Creditors due within one year (112,372) (91,959) ------ ----- Net current assets 12,539 19,922 ------ ------ Total assets less current 102,433 96,252 liabilities Creditors due after one year (16,230) (24,681) Provisions for liabilities and charges (5,564) (4,360) ------ ------ 80,639 67,211 ===== ===== Capital and reserves Called-up share capital 2,077 2,077 Share premium 30,119 30,119 Merger reserve 3,660 3,660 Revaluation reserve 390 390 Investment property revaluation reserve 675 675 Capital redemption reserve 26 26 Profit and loss account 43,544 30,140 Minority interests 148 124 ------ ------ 80,639 67,211 ===== ===== ALLEN PLC CASH FLOW STATEMENT FOR THE 53 WEEKS ENDED 2 APRIL 2000 Year to Year to 2 April 28 March 2000 1999 £'000 £'000 Cash flow from operating 33,629 28,455 activities --------- ---------- Returns on investments and servicing of finance Interest received 19 13 Interest paid (405) (629) Interest element of HP and (2,562) (2,660) finance lease payments ---------- ---------- (2,948) (3,276) --------- ---------- Tax paid (4,364) (4,053) --------- ---------- Purchase of tangible fixed assets (20,197) (4,698) Sale of tangible fixed assets 8,423 7,222 --------- ---------- (11,774) 2,524 ---------- ---------- Purchase of businesses (1,994) (1,386) --------- ---------- Dividends paid (5,234) (4,880) --------- ---------- Debt repaid 5,155 (1,447) Capital element of HP and finance lease payments (17,515) (12,520) ---------- ---------- (12,360) (13,967) --------- ---------- (Decrease) / Increase in cash (5,045) 3,417 --------- ---------- Notes to the Financial Statements 1. Turnover, Profit on Ordinary Activities before Taxation 2000 1999 £'000 % £'000 % Restated Turnover Hire Services 82,566 23.7 68,848 21.4 Housebuilding 41,893 12.0 37,536 11.7 Utility Services and Civil Engineering 63,088 18.1 48,353 15.1 Building 160,403 46.2 165,960 51.8 ------- ------ ------ 347,950 100.0 320,697 100.0 ------- ------ ------ Operating profit on ordinary activities Hire Services 15,366 63.0 13,582 61.8 Housebuilding 4,215 17.3 3,888 17.7 Utility Services and Civil Engineering 2,575 10.6 2,489 11.3 Building 2,246 9.1 2,035 9.2 ------- ------ ------ ---- Operating profit before exceptional item and central overheads 24,402 100.0 21,994 100.0 Exceptional Item 7,034 - Central overheads (825) (709) ------- ------ Operating profit before interest payable 30,611 21,285 Provision against loss on disposal of discontinued operation (197) - Net interest payable (2,948) (3,276) ------- ------ Profit on ordinary activities before taxation 27,466 18,009 ======= ====== 2. Earnings per Share Basic earnings per share have been calculated based on the profit after taxation and minority interests of £19,177,000 (1999: £12,551,000) and the weighted average number of shares in issue of 41,535,835 (1999: 41,535,835). Diluted earnings per share has been calculated based on the same profit after taxation and minority interests, and on the diluted weighted average number of shares of 41,540,813 (1999: 41,540,813). 3. Operating Cash Flow 2000 1999 £'000 £'000 Operating profit 30,611 21,285 Depreciation and amortisation 12,916 9,932 Profit on sale of fixed assets (1,853) (1,861) Increase in stocks (516) (1,268) Increase in debtors (17,003) (3,137) Increase in creditors 9,474 3,504 --------- ---------- 33,629 28,455 ===== ====== 4 The Board has proposed a final dividend of 8.30 pence per share to be paid on 28 July 2000 to shareholders on the register at 7 July 2000. This, together with an interim dividend of 5.60 pence per share paid on 28 January 2000, makes a total dividend for the year of 13.90 pence per share. 5 The financial information set out above does not comprise full accounts within the meaning of Section 240 of the Companies Act 1985. The financial information contained in this announcement in respect of the year ended 28 March 1999 has been extracted from the financial statements which have been audited and reported upon without qualification by Lathams and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985. 6 The Annual Report and Accounts for the year ended 2 April 2000 will be posted to shareholders on or about 3 July 2000.

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