Interim Management Statement

RNS Number : 0511Z

Speedy Hire PLC

15 July 2008

 



July 15, 2008

Speedy Hire Plc 

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

INTERIM MANAGEMENT STATEMENT

At the Annual General Meeting to be held at 11:00am today David Wallis, Chairman, will give the following update on the Group's progress since the start of the current financial year:

 

“I am pleased to report an encouraging start to the new financial year, with strong growth being achieved across both divisions. Overall first quarter (April-June 2008) revenue increased by 36.4% on the comparative quarter last year.

 

Both the Tool Hire and Equipment Hire divisions continue to perform well. Tool Hire revenue increased by 46.0% compared to the same period in the prior year (which did not include a contribution from the August 2007 acquisition of Hewden Tools). Equipment Hire revenue increased by 31.2%, including contributions from the Amec LSS and Carillion Asset Management (‘CAS’) acquisitions completed in February and May 2008 respectively. Excluding acquisition contributions, Equipment Hire revenue increased by 10.1%. In view of the successful integration of Hewden Tools’ depots, like for like comparisons in respect of Tool Hire cannot be provided until after the first anniversary of the Hewden Tools acquisition.

 

As reported recently in statements from major contractors such as Balfour Beatty, Carillion, Costain and Galliford Try, construction activity levels are being largely underpinned by infrastructure related spending in the public and regulated industry sectors. This has contributed to Speedy Hire enjoying a 53.6% increase in Q1 revenues from its top 50 contracting group customers compared to the prior year period (which did not include a contribution from Hewden Tools). Other factors contributing to this growth include a continued move towards outsourcing and greater focus by major customers on supply chain efficiency and quality. 

 

Asset turn (annualised hire revenue divided by average net book value of hire equipment), which is used internally as a key measure of the effectiveness of asset utilisation, has improved in both divisions. In the Tool Hire division the estimated Q1 figure was 1.35x (prior year period 1.32x) and in Equipment Hire it was 1.17x (0.97x).

 

Improved asset efficiency and cash management has ensured that net debt of £294.7m at June 30, 2008 was within budget, notwithstanding the payment of an initial £7m in May for the CAS acquisition. The end of Q1 typically marks the peak of the Group’s seasonal borrowing requirements. As a result, Speedy Hire continues to operate comfortably within the headroom and covenants of its £325m committed bank facility (which does not mature until June 2012). We also continue to anticipate a reduction in net debt from the opening position of £255.6m by the end of the financial year.

 

Specific sectors of the construction industry are seeing a slowdown in demand and construction related output in house building (to which the Group’s direct exposure is less than 5% of revenue), commercial office development and non-food retailing is likely to remain weak for the foreseeable future. In connection with this, the Group has recently seen a deterioration in spending from smaller trade customers and others more reliant on consumer and certain retail related construction output.

 

However, public sector spending on schools, health, prisons and defence remains resilient, with many of these projects being funded through committed PPP or PFI schemes. Regulated industries, such as water, electricity, gas, rail and airports, are also releasing significant workload. Additionally, in the private sector large infrastructure projects, such as the £250m Hutchinson Ports development at Felixstowe Docks, and food retailing remain positive.

 

The bulk of our major national contracting customers, the group with whom we have seen our strongest revenue growth, thus continue to report encouraging activity levels and order books on the back of on-going projects and continuing high levels of investment. In addition, non-construction related activity with major industrial groups, such as those within the petrochemical, pharmaceutical, steel, nuclear and rail sectors, which represents approximately 30% of turnover, also continues to provide growth opportunities.

 

The above position, together with the operational and financial flexibility that the Group enjoys, gives the Board confidence in another year of further growth, providing that there is no material change to our overall market view.”

 

Speedy Hire will announce its interim results on November 27, 2008 and expects to provide its next trading update on October 8, 2008.

 

 

 

Enquiries:

 

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

 

                                                    Website: www.speedyhire.plc.uk

 

 

Notes to editors:

 

Speedy is the UK’s No.1 provider of tools and equipment for hire. The Company operates from c. 500 depots throughout the UK. Speedy Hire also operates in the Republic of Ireland.

 

The Company’s activities are the provision for hire of tools, portable accommodation, compressed air, pumps, lifting, material handling, survey and measurement instrumentation and power generation equipment.

 

END

 

 

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