Interim Management Statement

RNS Number : 1432B

Speedy Hire PLC

14 February 2011

 



14 February 2011

Speedy Hire Plc

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

INTERIM MANAGEMENT STATEMENT

Speedy Hire Plc, the UK's largest provider of tools and equipment for hire, is releasing this interim management statement in respect of the period from 1 October 2010 to 13 February 2011.

Trading

Despite the harsh weather conditions in December and the Office of National Statistics' estimate of a 3.3% fall in UK construction sector output in the quarter ended December 2010, Group revenues (excluding fleet equipment sales) in the three months to 31 December 2010 improved by 8.8% on the prior year period. This increase reverses the declines witnessed in each of the first two quarters of the current financial year. Fleet equipment sales revenue totalled £1.3m in the quarter ended 31 December 2010, up 23.1% on the prior year.

January trading was also encouraging, with Group revenues (excluding fleet equipment sales) up 2.1% compared to January 2010.

Continued progress has been made in the UK, reflecting the benefit of both earlier restructuring and the increasing focus on growth markets such as water, waste, energy and transport. In particular, the Tools, Lifting & Survey products operations had a strong quarter, with revenues (excluding fleet equipment sales) in the three months to 31 December 2010 up 9.0% on the prior year period. Performance in the UK Power and Space operations, however, continues to lag other product areas.

Consistent with traditional seasonal patterns, the UK Hire business saw the volume of equipment on hire fall 6.2% in the December quarter compared to the quarter ending 30 September 2010. However, equivalent quarter on quarter yields increased 3.9%, principally reflecting a third consecutive quarter's rise in average hire rates.

Trading in the start-up International and Branded & Advisory Services businesses demonstrates the potential of these new business areas, with combined turnover of £2.6m in the three months to 31 December 2010, up 225% compared to the prior year period. Revenue growth in the final quarter should enable these operations to reduce significantly their combined first half operating loss in the second half of the year.

Financial Position

Net debt at 31 January 2011 was better than forecast, at approximately £126m (31 January 2010 approximately £141m). Prudent cash management and a reduction in forecast net capex for the full year, to around £35m, should ensure that net debt at the year-end will be broadly in line with the prior year (31 March 2010 £119.3m). The benefit of investment in improved IT systems and asset management controls are now positively impacting on capex requirements.

The Group continues to operate within its banking covenants. At 31 December 2010, headroom within the cash flow cover test (the ratio of LTM cash flow before debt service to debt service), which had been the tightest test at the previous test date, increased by £20m to £41m and the headroom range for all tests was £25-41m. The required ratio for the cash flow cover test was to be not less than (0.2)x at 31, December 2010.

Based on the current age profile of the Group's hire fleet, it is estimated that the replacement cost of fleet reaching their UEL's (useful economic lives) over the next three years is approximately £120m, equivalent to approximately 51% of the current net book value of the hire fleet. In the context of gross hire fleet capex of approximately £130m over the three year period FY09-11, the Group believes that it has the financial resources to meet its capex requirements.

Outlook

The Board confirms that the business is currently trading in line with its expectations for the full year in respect of adjusted profit before tax (before amortisation and exceptional items). This implies a return to operating profit (before amortisation and exceptional items) in the second half of the year, following an operating loss (before amortisation and exceptional items) of £4.6m in the first half. These expectations continue, however, to be dependent on a continued strong finish to the year. 

The Board continues to take a cautious view about short term recovery prospects in the UK and therefore will maintain its concentration on cash, margins and capex, all of which have demonstrated further progress during the period. However, with its strong balance sheet, improving trading performance, market leading position and ever closer alignment to growth markets, the Board considers that Speedy is well placed to benefit from the market recovery when it comes.

For further information:

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

·      temporary accommodation

·      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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