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Hirequip Announces Profit Of $5.12 Million

23 February 2005

Hirequip Announces Profit Of $5.12 Million For Half Year To December 31

Listed hire company Hirequip has posted a net profit after tax for the group of $5.12 million for the six months to 31 December, an increase of 35.8% over the same period last year after providing $4.08 million for taxation.

Hirequip’s Executive Chairman Graeme Wong said, “The half year result was ahead of forecast and a fully imputed dividend of 1.25 cents per share (up 25%) will be paid to shareholders on 18 March 2005. This is the first report which includes the full six months of the earnings of the major acquisitions, Ready Hire and Power Hire, which were completed during 2004.”

EBITDA for the company’s core hire business was up 60.9% at $12.29 million, compared with $7.64 million for the six months to December 2003. With Ready Hire now fully integrated into the Hirequip branch network and including its pre-acquisition profits, EBITDA for the company’s hire business has increased by 22% over the comparable period last year.

The sale of the Pegasus Bay Town development was partially brought to account in the current period reflecting the part settlement nature of the transaction - $10m out of a total $30m to be received, as outlined in last years Annual Report.

“During the period we have continued our aggressive equipment upgrade programme by investing $14 million in new equipment for the hire fleet. This brings the value of the Hirequip fleet to over $80 million. Further funds were invested in expanding and upgrading the branch network,” said Stuart McKinlay, Hirequip’s Managing Director.

Branch expansion included a new 15,000 m2 flagship Mega Hire Centre, a New Zealand first near Auckland International Airport in Manakau, and a new branch in Warkworth bringing the number of Hirequip branches north of the harbour bridge to three.

In the lower North Island, the upgrading of the Lower Hutt branch is now nearly complete and construction of a new Wellington workshop facility is about to commence.

Planning for further new locations is underway with $6.2 million of land having been bought in four locations. This will see the creation of a new branch and enable the expansion of three existing branches.

“When the current phase of the branch expansion programme that commenced two years ago is complete, Hirequip’s national network will comprise 54 well-located branches. We are the only general hire company providing full national coverage,” Mr McKinlay said.
“Some cost pressures also became evident during the period, most notably in the labour market. Other businesses have noted this trend and fortunately turnover of Hirequip’s skilled staff is relatively low, as the investment-driven growth of the company helps provide a career path for staff within Hirequip,” Mr Wong said.

Of the company’s residual investment assets, Omaha Beach sales remained buoyant and Tasman Farms is now performing well after a disappointing 2004 financial year. The resource consent process for Clifford Bay Marine Farms has proved protracted; however the directors remain confident that the return on this project should still prove attractive.

During the period, some further Botry-Zen shares were sold and the majority of the company’s biotech investment is now held in BLIS Technologies which is making good progress.

“Looking ahead, economic and business activity has been strong within the sectors that Hirequip is invested and this is expected to continue. Although some business segments could weaken in the next 12-18 months, such as residential construction, there are many new projects in a wide range of areas, which will underpin activity.

“Hirequip is looking forward to the balance of the 2005 financial year with confidence and considerable optimism,” Mr Wong said.

ENDS

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