Disposal of Accommodation Hire Business

RNS Number : 4107F

Speedy Hire PLC

26 April 2011

 



26 April 2011

Speedy Hire Plc

('Speedy', 'the Company' or 'the Group')

            DISPOSAL OF ACCOMMODATION HIRE BUSINESS FOR £34.9 MILLION & ENTRY INTO 3 YEAR JOINT SUPPLY AGREEMENT

Speedy Hire Plc, the UK's largest provider of tools and equipment for hire, is pleased to announce the sale of its Accommodation Hire business (previously known as Speedy Space) to Elliott Group Ltd ('Elliott'), a subsidiary of Algeco Scotsman, for a total consideration, on a debt and cash-free basis, of £34.9 million payable in cash on completion.

The Accommodation Hire business provides a range of temporary accommodation and storage units, both portable and modular, for hire or sale from 14 transferring leasehold trading depots throughout the UK. As at 30 September 2010, the business had net assets of £52.4 million and gross assets of £53.0 million (excluding working capital which will be retained by Speedy), and in the financial year ended 31 March 2010 the business generated revenues of £40.6 million, an operating loss (before recharges, central allocations, amortisation and exceptional items) of £2.1 million and a loss before interest and tax of £5.3 million. Unaudited financial highlights for the financial year ended 31 March 2011 include revenues of £35.5 million and an operating loss (before recharges, central allocations, amortisation and exceptional items) of £4.5 million.

Transaction highlights:

·      Gross cash proceeds of £34.9 million payable on completion;

·      Speedy retains the projected c.£3.6m working capital in the Accommodation Hire business at the date of completion;

·      The net cash proceeds (after transaction costs, reorganisation costs and any completion accounts adjustments) will be used to reduce debt, resulting in pro-forma net debt of approximately £80 million at 31 March 2011;

·      Speedy and Elliott will enter into a three-year partnering agreement in which both companies will work together to provide customers with an integrated service that combines the expertise each company has in their respective products and services.  As part of this partnering agreement, Speedy and Elliott will make the full range of their products and services available to each other's customers on an exclusive basis;

·      Continuity of customer service will be provided through dedicated hire desks within each other's respective operations;

·      As part of the transaction, Speedy will provide service and maintenance support to Elliott's c.1,650 power generation assets (which are integrated within its accommodation units), for an initial period of 3 years;

·      The disposal will result in an approximate £16.0 million exceptional loss on sale (of which approximately £12.5 million is non-cash), which will principally be reflected in the Group's FY11 financial results;

·      The disposal will deliver a pro-forma increase in Speedy's operating margin and return on capital;

·      Completion will occur on 30 April 2011.

Speedy has experienced particularly challenging trading conditions in the Accommodation Hire business in recent years, where excess capacity has exerted significant downward price pressure, resulting in poor levels of profitability. The disposal is consistent with the Group's strategy of focusing on its core operations and improving its operating margin and return on capital. The disposal will realise significant value for Speedy and the net proceeds will be used to strengthen further the Group's balance sheet.

Commenting on the disposal, Steve Corcoran, Chief Executive of Speedy, said:

"I am very pleased to announce the disposal of the loss making Accommodation Hire business and the partnering agreement with Elliott.

From a customer service perspective, the partnering agreement we have entered into will provide our customers with a comprehensive accommodation hire offering from the UK's leading businesses in this market. By working as partners with Elliott, our customers can continue to benefit from an integrated service. We look forward to developing this partnership and we see significant opportunities from working together closely in the future.

Financially, the disposal delivers a pro-forma increase in both operating margin and return on capital. It also delivers a reduction in Group borrowings and enables Speedy to focus on investing in our higher margin core operations and to develop further our non-hire services."

There will be a conference call for analysts at 08.30 this morning, the details of which can be obtained from Hudson Sandler (020 7796 4133).

For further information:

Speedy Hire Plc
Steve Corcoran, Chief Executive Justin Read, Group Finance Director Tel: [phone] Hudson Sandler Nick Lyon/Kate Hough Tel: [phone]

Note - Forward looking statements

The information in this release is based on management information.

This report includes statements that are forward looking in nature. Forward looking statements involve known and unknown risks, assumptions, uncertainties and other factors which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Except as required by the Listing Rules and applicable law, the Company undertakes no obligation to update, revise or change any forward looking statements to reflect events or developments occurring after the date of this report.

Notes to Editors:

Founded in 1977, Speedy is the leading UK provider of equipment rental and support services to a wide range of clients across the construction, infrastructure, industrial, manufacturing and facilities management sectors - as well as to local trades and industry.

Operating from over 300 fixed sites - together with a number of on-site facilities at client locations throughout the UK, Ireland and an international hub based in the Middle East - the Group supplies a range of services including:

·      the provision of small tools and equipment

·      surveying and measurement instrumentation

·      lifting and materials handling equipment

·      powered and non-powered access equipment

·      compressed air

·      temporary power generation

·      mechanical pumps

·      temporary site communications

The Group also provides associated services through the provision of training, asset management and testing, repair, inspection and maintenance (TRIM), as well as offering advisory services in areas such as health and safety, environmental and regulatory compliance.

Website:  www.speedyhire.plc.uk

 

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