Interim Management Statement

RNS Number : 1225H

Speedy Hire PLC

15 February 2010

 



15 February, 2010

SPEEDY HIRE PLC

Interim Management Statement

Speedy Hire Plc ('Speedy' or the 'Group'), the UK's largest provider of tools and equipment for hire, is releasing its interim management statement in respect of the period from 1 October, 2009 to 15 February, 2010.

Trading

Whilst the challenging conditions prevalent in the first half of the year have continued, the Group is encouraged that in the third quarter (October-December) trading increasingly stabilised compared to earlier quarters and early fourth quarter (January-March) trading has progressively recovered following the annual Christmas/New Year shutdown.

Although management's revenue expectations for the fourth quarter are dependent on the business maintaining a strong finish to the year, the quarter has so far shown an encouraging level of activity. January revenues were broadly in line with management expectations and were 24% below the January 2009 level (compared to year on year declines of 36% in October and 28% in December), notwithstanding the difficult weather conditions which significantly disrupted construction activity in early January.

The latest UK weekly hire revenue figure has now recovered to pre-Christmas trading levels and is tracking slightly ahead of the normal recovery rate, as the Group continues to exploit its market leading position to win new business across a range of market sectors including petrochemical, infrastructure and mainstream construction. 

Despite the purchasing managers' index of construction activity declining for the 23^rd month in a row in December 2009 (source: Markit Economics, Jan 2010), the Group's major domestic construction clients continue to benefit from spending in support of UK infrastructure, especially in the areas of education, transport and social housing, together with the regulated water and energy industries.  As a result, Group turnover from the top 50 UK contractors has proved more resilient than the wider market and these customers now account for approximately 28% of turnover (vs. 24% a year ago) for the nine months to 31 December, 2009.

Financial Position

Net debt at 31 January, 2010 has been reduced to approximately £141m, compared to £248m at the start of the financial year, with the result that gearing at 31 January, 2010 was approximately 55%. This is despite FY 09/10 capex totalling approximately £8m having been invested to date in the new Middle East operations, of which approximately 50% was incurred in the 10 months to 31 January, 2010.

Net debt to EBITDA (trailing 12 months to December 31, 2009, excluding exceptional items) was approximately 2x, which is significantly better than Speedy's nearest major quoted peers.

As anticipated, the interest rate margin on the Group's bank facility fell to 2.5% in February following achievement of reduced leverage targets contained within the facility agreement.

With continued improvement in the Group's financial position anticipated over the remainder of the financial year, as Speedy uses its positive cash flow to reduce bank debt further to approximately £125m, the financial strength of the Group positions it well for the future.

Business Development

The Group continues to take advantage of its market leading position in the UK, where it enjoys a market share more than twice that of its nearest competitors (source: Executive Hire News, Jan/Feb 2010).

In addition to the recently announced contract awards with BT Group plc, Tube Lines, ExxonMobil and Osborne, the Group is pleased to announce that it has further strengthened its position in the UK market through the signing of a new two year preferred trading agreement with Costain Group PLC, the international engineering and construction group .

The Costain agreement will see Speedy supply a comprehensive range of tools and equipment, together with the provision of training services, building on a tools only supply agreement which was put in place in 2006. Speedy will also provide a dedicated central hire desk, providing Costain with one national point of contact for ordering, administration, management information and payments. This exciting new contract further endorses the Group's strategy of leveraging its position with existing customers to build secure relationships and develop incremental revenue opportunities through the delivery of extended services.   

Speedy has also recently extended its exclusive UK trading agreement with AMEC plc, the international engineering and project management company. The contract will now run until 2014. Speedy will be supplying its complete range of tools, equipment and complementary services.

Within the Group's International division, the five year strategic services agreement with Al Futtaim Carillion ('AFC') is now formally completed and Speedy has become AFC's exclusive provider of light plant and equipment across the Middle East, as well as providing a full range of asset management and logistical services. Discussions are already taking place as to how this relationship can be extended across AFC's operations in North Africa.

Other achievements during the period include the completion in January of the three year project to move the entire business onto the same IT platform. Together with the single shared service centre which was opened in September last year and the creation of a single UK operating entity, this highlights the successful achievement of the 'One Speedy' objective. 

Outlook

Given the Group's operational and financial flexibility, together with the aggressive actions already taken to reduce costs, the business is well placed both to take advantage of the eventual upturn in the market and to capitalise on the relative weakness of some of its competitors.

Overall activity appears to be stabilising and Speedy is thus able to look forward with cautious optimism. Whilst short term visibility remains challenging, assuming the pattern of the recovery seen since the Christmas/New Year shutdown is maintained, the Board considers that results for the year will be in line with its expectations

The Group expects to announce its final results for the year ended 31 March 2010, on Wednesday 19 May, 2010.

Enquiries:

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

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, Disclosure and Transparency 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.

 

END

 

 

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