Interim Results

RNS Number : 3054W

Speedy Hire PLC

17 November 2010

 



17 November 2010

SPEEDY HIRE Plc

("Speedy" or "the Group")

Interim report for the six months to 30 September 2010

Trading and Operational Highlights

·      Three consecutive quarters since 1 January 2010 of incremental growth in UK revenues, volumes and average hire rates ·      UK volume of equipment on hire increased 5.4% in the quarter to 30 September 2010 (compared to quarter ended 30 June 2010) with average hire rates  up 2.8% in the same period (before the impact of customer and product mix on yield) ·      Recent major UK contract wins including Thames Water, Balfour Beatty and Babcock Group will contribute to second half revenues and to increased penetration of infrastructure, industrial and other non-construction markets

·      Top 50 UK construction companies now account for 27.0% of Group revenue (2009: 25.9%), equivalent to 51.0% of the Group's construction sector related revenues, reflecting the successful focus on key clients ·      New international contract wins with Costain Group and QMENA in the oil & gas sector will also assist second half revenues and demonstrate continued development of the new International division

·      Operational gearing continues to improve with the key operating costs of people, property and vehicles reduced by £6.0m/6.7% on the same period last year

Financial Highlights

·      Revenue of £177.3m down 4.1% (2009: £184.8m, down 27.9%)

·      Adjusted loss before tax* of £9.9m (2009: Loss £4.8m) (unadjusted loss £13.8m (2009: Loss £13.6m))

·      Cash generated from operations of £5.7m (2009: £25.6m). UK cash generation totalled £12.8m

·      Ongoing focus on cash has seen net debt of £123.0m (31 March 2010: £119.3m ) and net debt/net tangible fixed assets of 0.46x (31 March 2010: 0.42x) , despite a 73.7% increase in net capex in the period to £13.2m

·      Continued strong net debt/EBITDA* ratio (trailing 12 months) of 2.1x (2009: 1.5x)

·      Interim dividend maintained at 0.2 pence per share (2009: 0.2 pence per share)

*before amortisation and exceptional costs

Commenting on the results, David Wallis, Chairman, said:

"UK revenues, average hire rates and volume trends are now showing progressive improvement. Although market conditions remain challenging, with our strong balance sheet, market leading position and closer alignment with growth markets, the business continues to be well placed both to benefit from the actions taken to reduce operating costs and to capitalise on market recovery. In particular, the Group's on-site facilities on the Olympics project, recent contract wins in construction and non-construction markets, growing international presence and developing non-hire activities provide grounds for confidence for the future, especially as these are now supported from a more efficient operating base."

For further information:

Speedy Hire Plc	Hudson Sandler
Steve Corcoran, Chief Executive Justin Read, Group Finance Director Tel:  [phone] on Wednesday 25 November (thereafter Tel:  [phone])	Nick Lyon/ Kate Hough Tel: [phone]

Website:  www.speedyhire.plc.uk

There will be an analysts' meeting and conference call at 9.30am today. The presentation slides to accompany the conference call will be available at www.speedyhire.plc.uk from 9.30am this morning. For conference call and replay facility details please contact Sarah Hughes, Hudson Sandler on 020 7796 4133 or [e-mail].

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.

Business review

Overview 

The Group has maintained its focus on cash, costs and capex during the period, whilst ensuring that it has continued to develop its fledgling International and Branded & Advisory businesses. The UK & Ireland Asset Services business is still being managed cautiously, although work continues to ensure that it is well positioned for recovery. After weakness in the early part of the year, the recent UK trading environment is more encouraging, with quarter on quarter growth in revenues, volumes and average hire rates seen over the last three quarters.  It is not however without its challenges, particularly in respect of corporate failures in the construction sector. The Group's two other businesses, International and Branded & Advisory, delivered a significant increase in turnover in the first half, albeit from a low base and with an overhead investment which anticipates further significant growth.

Group revenue performance in the first half has shown progressive improvement, with underlying year on year turnover comparisons (excluding fleet equipment sales) on an improving trend.  Whilst the first half comparison shows a decline in year on year underlying revenue of 4.3%, August and September achieved year on year growth with this trend continuing more strongly into October, where the equivalent figure was up by over 5.0% over the prior year period. In addition to increasing penetration with major contractors and into industrial, infrastructure and other non-construction markets, this transition process has been assisted by a cautious increase in new hire fleet going into the business, with second quarter net capex being £7.1m/18.4% up on the first quarter. This increased investment in hire fleet has been facilitated by the bank facility renegotiation which was completed in June and is forecast to continue into the second half to take advantage of the additional opportunities that have been identified and to drive further revenue growth.

UK & Ireland Asset Services

The UK & Ireland Asset Services division is focused on developing strong relationships with its customers by fulfilling their equipment and site infrastructure needs through the provision of a range of hire and asset management services. The division comprises specialist depots providing a wide range of tools and equipment for hire in the UK and Ireland, plus consumables sales and an engineering services operation which combines our Industrial Services, Asset Management and Test & Inspection activities.

As infrastructure projects grow in scale and complexity, Speedy is increasingly well placed to advise and support both its existing and new customers. As advised in October, Speedy has won a number of important new infrastructure contracts, including a five year sole supplier agreement with Thames Water to supply their tier one contractors on their £5.5bn investment in the AMP5 programme.

Speedy has previously supported several Thames Water contractors directly under the AMP4 and other investment and renewal programmes; this latest award encompasses a more collaborative approach to a planned equipment management programme between client, contractor and equipment supplier.

Speedy has been awarded three of the five equipment lots available, including Pneumatic Tools, Materials Handling and Other Site Essentials (includes lighting, fencing and surveying equipment).As part of its service provision and continued extension of its managed services offering, Speedy will also act as a managing agent for a number of third party equipment providers. Speedy and Thames Water estimate that the value of the contract over the five year period is likely to be up to £45 million.

All contractors will benefit from a dedicated hire desk, specialist depots to provide products and services when required and access to Speedy's market leading customer extranet system to manage better their hire needs online, reducing administration and process costs for both the customers and Speedy.

During this period Speedy will also have the opportunity to support Thames Water in its capital projects, including the Thames Tideway Tunnel and the Crossness Sewage Treatment Works projects.

Speedy is also pleased to announce that it has been awarded a one year rolling contract granting Tier 1 preferred supplier status for non-operated plant with Balfour Beatty. Currently Balfour Beatty spends over £45m per annum on non-operated plant. This is a significant opportunity for Speedy to expand on its already successful working partnership with Balfour Beatty. Initial opportunities for new business will derive from the replacement of discontinued suppliers' equipment. 

In addition, we have recently secured some major contract wins from our engineering services' customers, including a three year framework agreement with Babcock International Group to support their marine, nuclear, networks and infrastructure divisions.

International and Branded & Advisory Services

International Asset Services

The International division aims to support Speedy's customers internationally on major oil & gas and infrastructure projects, with the first phase of this strategy being to build a hub in the Middle East, where there is a high concentration of our existing customers, attractive returns and long term opportunities in our target markets. During the period, the division has made good progress in delivering on the strategy.

In addition to its ongoing relationship with Al Futtaim Carillion, the International division has recently signed an initial three year supply agreement with Costain Group PLC for the provision of equipment services on Das Island, Abu Dhabi's major offshore oil and gas complex. Invoicing began in October. Also in the oil & gas sector, Speedy has recently secured a 12 month contract worth in excess of £1m to supply a package of equipment to QMENA for a Saudi Aramco project in the Kingdom of Saudi Arabia, invoicing for which started in November.

Since the period end, Speedy has opened an on-site facility to support Al Futtaim Carillion with its Cairo Festival City scheme in Egypt. Invoicing began in early November. The mixed-use US$3.2 billion, 4 year development spans nearly 10 million sq ft and a full range of Speedy equipment will be available on site.  Services from Speedy include asset management, Speedy-in-a-Box bar-coded tool distribution technology, training, and health and safety support and advice. An initial nine strong team from Speedy are already on-site in Cairo to facilitate the optimum use of equipment and services. Discussions are also well advanced with Carillion Alawi, Carillion plc's Omani joint venture, to provide them with managed site support services in Oman where they have recently announced major new infrastructure contract wins in excess of £100m.

Branded & Advisory Services

The Group's Branded & Advisory Services division aims to leverage the strength of the Speedy brand to build broader and deeper relationships with the Group's customers which go beyond the provision of hire related services. The division provides training and consultancy services based on Speedy's core brand values of safety, skills, compliance and innovation.

As part of this process, appointments have been made to the division during the period which will enable it to broaden its advisory services offering beyond compliance and product training into consultancy support in the areas of waste, environment and health and safety. Speedy aims to provide hands-on advice to its customers in these areas, not only in complying with regulation but in realising the financial benefits of driving through best practice. This is a key platform to move Speedy towards achieving full service company recognition. The first half did not benefit from these consultancy activities, although training now accounts for approximately 0.5% of Group revenues.

Board Change 

After serving for over 10 years on the board of Speedy, the majority of which as Chairman, David Wallis will retire from the board on 31 December 2010.  Ishbel Macpherson, Speedy's Senior Independent Director, who joined the board in 2007, will succeed him.

Steve Corcoran, Chief Executive, said: "I would like to take this opportunity to express the appreciation of all David's colleagues throughout Speedy for the great contribution he has made over the past decade, not only in terms of his tremendous leadership, but also in his incredible capacity always to ensure that matters are undertaken with dignity and humanity. We wish him well and thank him for his immense service to the group and to shareholders. We are delighted that Ishbel will be succeeding David and are certain that, like him, she will make a significant contribution to the continued recovery and progress of Speedy."

Outlook 

After three consecutive quarters of quarter on quarter growth in UK revenues, contract volumes and average hire rates, October's Group revenues continued this trend, up approximately 5% on the prior year. The outcome for the financial year is dependent on us continuing to build upon this momentum and a return to a more normal bad debt charge following the impact of recent corporate failures in the construction sector.  

With our strong balance sheet, market leading position and ever closer alignment to growth markets, the business continues to be well placed to benefit from the ongoing recovery in the hire market. In particular, the Group's on-site facilities on the Olympics project, recent contract wins in both construction and non-construction markets, growing international presence and developing non-hire activities provide grounds for confidence for the future, especially as these are now supported from a more efficient operating base. The Group will therefore continue to gradually increase its judicious investment in hire fleet.

Financial review

Results

Turnover of £177.3m was 4.1% below the prior year period (2009: £184.8m). Included within turnover are disposal proceeds relating to used equipment sales of £1.9m (2009: £1.5m).

Gross margin was 57.9% (2009: 60.2%) resulting in a gross profit of £102.6m (2009: £111.3m). Group gross margin was impacted by volatility in the mix and gross margin of secondary revenue streams within the UK & Ireland Asset Services business. Further dilution came from the International and Branded & Advisory divisions (gross margins of 52.7% and 27.0% respectively), which are still currently in their start-up phases. 

The Group's principal operating cost items are property, personnel, depreciation and vehicles/fuel. These totalled £112.8m in the period (2009: £120.8m), down 6.6%, representing 61.8% of total operating costs (2009: 66.1%).

The Group reported an operating loss before amortisation and exceptional items of £4.6m (2009: Profit £3.7m). Loss before taxation, amortisation and exceptional items was £9.9m (2009: Loss £4.8m). Loss after taxation, amortisation and exceptional items was £12.2m (2009: Loss £10.4m). Basic loss per share before amortisation and exceptional items was 1.87 pence (2009: Loss 1.55p). Basic loss per share after amortisation and exceptional items was 2.42 pence (2009: Loss 4.08p).

Segmental analysis

The Group's segmental reporting is based on UK & Ireland Asset Services and International & Advisory (combining International Asset Services and Branded & Advisory Services).

The figures in the tables below are presented before corporate costs. These costs amounted to £4.3m (before exceptional costs) (2009: £3.9m), equivalent to 2.4% of revenue (2009: 2.1%). The year on year increase results from a £1.0m charge related to share option costs (2009: £nil), partially offset by a reduction in other central costs.

UK & Ireland Asset Services	2010 £m	2009 £m
Revenue	172.8	184.0
EBITDA (pre-exceptional)	28.8	37.4
EBITA (pre-exceptional)	1.5	7.6

Revenue in the UK & Ireland Asset Services division totalled £172.8m (of which £3.0m relates to the Ireland operations), which was 6.1%/£11.2m down on the prior year period. Tools, lifting and survey products have performed well, with the overall result being impacted by low utilisation rates in accommodation products and a temporary shortage of equipment within the power product range. Included within the operating loss is a £1.7m charge taken in connection with the collapse of Connaught Plc. EBITA for the period benefits from a £5.9m reduction in overheads (before absorbing the £1.7m charge in respect of Connaught) reflecting the beneficial impact of ongoing cost reduction focus.

International & Advisory	2010 £m	2009 £m
Revenue	4.5	0.8
EBITDA (pre-exceptional)	(0.7)	0.1
EBITA (pre-exceptional)	(1.8)	-

The two businesses within the International & Advisory segment were both formed during the prior year period and the financial results reflect the start-up nature of these operations. Turnover increased by £3.7m to £4.5m. £3.7m of the turnover for the period relates to the International Asset Services division (2009: £0.3m) and derives principally from hire activity in Abu Dhabi and Dubai. The Branded & Advisory division reported turnover of £0.8m in the period (2009: £0.5m), largely derived from training services. The EBITDA splits £(0.3)m International and £(0.4)m Branded & Advisory, with all the depreciation charge relating to International. Incremental overhead cost in the period to support current and future growth initiatives totalled £3.4m.

Interest and taxation

Net interest expense (before exceptional items) in the period amounted to £5.3m (2009: £8.5m). Of this amount, £1.8m relates to the incremental cost to the Group of interest rate hedges in respect of debt which amounted to £60m at 30 September, 2010. These hedges have varying maturity dates out to July 2011.

The margin payable under the Group's bank facility (Facility B) was 250-300 basis points during the period and has subsequently fallen back to 250 basis points as a result of bettering thresholds contained in the agreement's leverage covenant. No drawings were made under Facility A during the period.

                The pre exceptional tax credit for the period (£1.3m) is an effective tax rate of 10.1% (2009: 19.9%). This has been calculated by reference to the projected credit for the full year ending 31 March 2011. A tax credit amounting to £0.3m has also been recognised in respect of the first half exceptional items. The principal reasons for the movement between the 2010 and 2009 effective tax rates are set out in note 6 to the interim financial statements.

Exceptional items

Exceptional items totalled £1.1m before taxation (2009: £6.0m). £0.6m (2009: £6.0m) relates principally to further restructuring and cost-saving initiatives that were undertaken during the period and which resulted in a number of non-recurring items of expense. This was consistent with the Group's focus on controlling costs and streamlining management layers. £0.5m (2009: £nil) relates to amortisation of bank and advisor fees incurred in connection with the bank facility amendment process that was completed earlier in the year.

The cash cost before taxation of these exceptionals is £4.1m, all of which was spent in the period. Of this amount, £3.0m of bank and advisor fees will be amortised over the remaining life of the bank facility.

Continuing restructuring and cost saving initiatives are expected to lead to further exceptional cost in the second half.

Dividend 

The Board remains committed to the payment of dividends when prudent to do so and therefore, subsequent to the period end, has declared an interim dividend of 0.2p per share, a total cash cost of approximately £1m. This is unchanged from the interim and final dividends paid in respect of the prior financial year. The 2010/11 interim dividend will be paid on 28 January 2011 to shareholders on the register on 7 January, 2011.

Capex and disposals

Gross capex during the period amounted to £19.7m (2009: £18.5m), of which £18.3m (2009: £11.7m) related to equipment for hire and the balance principally to investments in IT and property improvements. Compared to the prior year period, investment in hire equipment has increased 56.4% (2009: £11.7m). Investment in hire fleet for the International business totalled £1.1m (2009: nil). With disposal proceeds of £6.5m in the period (2009: £10.9m), Group net capex totalled £13.2m (2009: £7.6m). Asset disposals generated a gain of £1.0m (2009: nil) against their carrying value.

Cash flow and net debt

Cash from operations, at £5.7m (2009: £25.6m), remained positive despite investment in the International business (£(7.1)m operating cash flow) and increased net investment in hire fleet.

Free cash flow (i.e. before acquisitions, dividends and financing activities) amounted to £(2.7)m (2009: £17.1m). The principal reasons for this year on year movement relate to tax (£8.2m variance), increased net capex (£5.6m variance) and movement in provisions (£3.4m variance), together with an increased pre-tax loss (£1.0m variance). The provision movement includes the early surrender of 20 void property leases.

Despite the above, net debt only increased slightly from £119.3m at 31 March 2010 to £123.0m at 30 September 2010 and net debt to EBITDA (trailing 12 months, excluding exceptional items) has moved to 2.1x (1.7x at 31 March 2010). Gearing remains conservative at 52% (48% at 31 March 2010).

Headroom within the Group's committed £210m bank facility amounted to approximately £85m (including £8m of cash) at 30 September 2010 (£140m at 31 March 2010, including £12m of cash). The reduction in headroom since the beginning of the year is a result of the Group cancelling excess unutilised headroom in its bank facility in order to reduce ongoing non-utilisation fees. With increased net capex projected in the second half, the Group anticipates a small increase in net debt over the remainder of the financial year.

Balance sheet

Net assets at 30 September 2010 totalled £236.3m (31 March 2010: £246.6m). This is equivalent to a per share value of 46p.

As a result of our ongoing commitment to cash, cost and capex control, net capex in the period was £16.3m below the Group's depreciation charge  and net property, plant & equipment of £270.3m at 30 September 2010 is therefore £15.3m lower than at the beginning of the year. Equipment for hire continues to represent approximately 87% of net property, plant & equipment (of which £11.2m relates to the International Asset Services business).

Net debt/Net Tangible Fixed Assets of 0.46x at 30 September 2010 (31 March 2010: 0.42x) continues to underline the strong asset backing within the business.

Gross trade debtors totalled £100.5m at 30 September 2010 (31 March 2010: £101.1m). Bad debt and credit note provisions totalled £10.5m at 30 September 2010 (£10.7m at 31 March 2010), equivalent to 10.4% of the debtor book (10.6% at 31 March 2010). Cash collection remains strong, with DSO (calculated on a count-back basis) improving since the start of the year to 73.8 days (77.7 days at 31 March 2010).

Principal risks and uncertainties

The Group faces a number of risks and uncertainties which could have a material impact upon its long-term performance.  These risks are both internal and external.  The Board has an established set of processes which assists the identification, evaluation and management of these risks.

The principal risks and uncertainties facing the Group at 31 March 2010 were set out on page 24 of the 2010 Annual Report (a copy of which is available from the Group's website at www.speedyhire.plc.uk).  These risks remain valid as regards their potential to impact the Group during the second half of the current financial year.

Directors' responsibility statement in respect of the interim financial statements

We confirm that to the best of our knowledge:

·      The interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union;

·      The Business and Financial Review includes a fair review of the information required by:

(i)    DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(ii)   DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

For and on behalf of the Board of Directors

SJ Corcoran                           JR Read

Director                                 Director

17 November 2010

Interim condensed consolidated income statement

For the six months ended 30 September 2010

		Six months ended 30 September 2010			Six months ended 30 September 2009
		Before exceptional  items	Exceptional items	Total	Before exceptional  items	Exceptional items	Total
	Note	2010	2010	2010	2009	2009	2009
		£m	£m	£m	£m	£m	£m
Revenue	3	177.3	-	177.3	184.8	-	184.8
Cost of sales		(74.7)	-	(74.7)	(73.5)	-	(73.5)
Gross profit		102.6	-	102.6	111.3	-	111.3
Distribution costs		(18.7)	-	(18.7)	(24.8)	-	(24.8)
Administrative expenses		(91.3)	(0.6)	(91.9)	(85.6)	(6.0)	(91.6)
Analysis of operating (loss)/profit
Operating (loss)/profit before amortisation and exceptional items		(4.6)	-	(4.6)	3.7	-	3.7
Amortisation		(2.8)	-	(2.8)	(2.8)	-	(2.8)
Exceptional restructuring costs	4	-	(0.6)	(0.6)	-	(6.0)	(6.0)
Operating (loss)/profit		(7.4)	(0.6)	(8.0)	0.9	(6.0)	(5.1)
Financial expense	5	(5.3)	(0.5)	(5.8)	(8.5)	-	(8.5)
Loss before taxation		(12.7)	(1.1)	(13.8)	(7.6)	(6.0)	(13.6)
Taxation	4,6	1.3	0.3	1.6	1.5	1.7	3.2
Loss for the financial period		(11.4)	(0.8)	(12.2)	(6.1)	(4.3)	(10.4)
Attributable to:
Equity holders of the parent				(12.2)			(10.4)
				Pence			Pence
Earnings per share
- Basic	7			(2.42)			(4.08)
- Diluted	7			(2.42)			(4.08)

Interim condensed consolidated income statement (continued)

For the six months ended 30 September 2010

					Year ended 31 March 2010
					Before exceptional  items	Exceptional items	Total
	Note				2010	2010	2010
					£m	£m	£m
Revenue	3				351.1	-	351.1
Cost of sales					(142.7)	-	(142.7)
Gross profit					208.4	-	208.4
Distribution costs					(37.8)	-	(37.8)
Administrative expenses					(168.1)	(11.1)	(179.2)
Analysis of operating (loss)/profit
Operating profit before amortisation and exceptional items					8.0	-	8.0
Amortisation					(5.5)	-	(5.5)
Exceptional restructuring costs	4				-	(11.1)	(11.1)
Operating (loss)/profit					2.5	(11.1)	(8.6)
Financial expense	5				(14.2)	-	(14.2)
Loss before taxation					(11.7)	(11.1)	(22.8)
Taxation	4,6				1.8	2.7	4.5
Loss for the financial year					(9.9)	(8.4)	(18.3)
Attributable to:
Equity holders of the parent							(18.3)
							Pence
Earnings per share
- Basic	7						(4.37)
- Diluted	7						(4.37)

Interim condensed consolidated statement of comprehensive income

For the six months ended 30 September 2010

		Six months	Six months	Year
		ended	ended	ended
		30 September	30 September	31 March
		2010	2009	2010
		£m	£m	£m
Loss for the financial period		(12.2)	(10.4)	(18.3)
Other comprehensive income :
Effective portion of change in fair value of cash flow hedges		1.8	1.0	2.6
Exchange difference on retranslation of foreign operations		0.2	-	(0.5)
Other comprehensive income, net of tax		2.0	1.0	2.1
Total comprehensive income for the financial period		(10.2)	(9.4)	(16.2)
Attributable to equity holders of the parent		(10.2)	(9.4)	(16.2)

Interim condensed consolidated balance sheet

At 30 September 2010

			30 September	30 September	31 March
	Note		2010	2009	2010
			£m	£m	£m
ASSETS
Non-current assets
Intangible assets			62.9	68.4	65.7
Property, plant & equipment	9		270.3	298.9	285.6
			333.2	367.3	351.3
Current assets
Inventories			11.2	12.8	11.3
Trade and other receivables			103.4	112.7	103.4
Income tax			0.4	0.5	-
Cash and cash equivalents			8.0	11.7	12.5
			123.0	137.7	127.2
Total  assets			456.2	505.0	478.5
LIABILITIES
Current liabilities
Borrowings	11		(0.2)	(0.1)	(0.2)
Other financial liabilities	10		(1.3)	(4.7)	(3.2)
Trade and other payables			(67.1)	(70.0)	(70.9)
Provisions			(2.9)	(4.6)	(4.8)
Income tax			-	-	(1.7)
			(71.5)	(79.4)	(80.8)
Non-current liabilities
Borrowings	11		(130.8)	(146.4)	(131.6)
Provisions			(1.4)	(3.7)	(2.5)
Deferred tax liabilities			(16.2)	(21.6)	(17.0)
			(148.4)	(171.7)	(151.1)
Total liabilities			(219.9)	(251.1)	(231.9)
Net assets			236.3	253.9	246.6
EQUITY
Share capital			25.9	25.9	25.9
Share premium account			190.2	190.2	190.2
Merger reserve			3.7	3.7	3.7
Hedging reserve			(1.6)	(5.0)	(3.4)
Translation reserve			(0.3)	-	(0.5)
Retained earnings			18.4	39.1	30.7
Total equity attributable to equity holders of the parent			236.3	253.9	246.6

Interim condensed consolidated statement of cash flow

For the six months ended 30 September 2010

	30 September	30 September	31 March
	2010	2009	2010
	£m	£m	£m
Cash flow from operating activities
Loss before tax	(13.8)	(13.6)	(22.8)
Adjustments for:
Financial expense (including £0.5m of exceptional finance cost)	5.8	8.5	14.2
Exceptional impairment of property, plant and equipment	-	0.5	-
Amortisation	2.8	2.8	5.5
Depreciation	29.5	31.4	60.2
Loss on disposal of other property, plant and equipment	-	-	0.9
Disposal of hire equipment at net book value (profit on disposal of 1.0m,	5.5	10.9	19.9
2009:nil)
Equity-settled share-based payments	0.9	(0.7)	(0.1)
Purchase of hire equipment	(18.3)	(11.7)	(33.6)
	12.4	28.1	44.2
Decrease / (increase) in inventories	0.1	(0.6)	0.9
(Increase) / decrease in trade and other receivables	0.1	(8.3)	0.9
(Decrease) / increase in trade and other payables	(3.9)	6.0	6.5
Movement in provisions	(3.0)	0.4	(0.6)
Cash generated from operations	5.7	25.6	51.9
Interest paid	(5.7)	(8.6)	(14.3)
Tax (paid) / received	(1.3)	6.9	5.9
Net cash flow from operating activities	(1.3)	23.9	43.5
Cash flow from investing activities
Purchase of other property, plant & equipment	(1.4)	(6.8)	(10.2)
Disposal of other property, plant & equipment	-	-	0.4
Net cash flow from investing activities	(1.4)	(6.8)	(9.8)
Net cash flow before financing activities	(2.7)	17.1	33.7
Cash flow from financing activities
Finance lease payments	-	(0.1)	(0.1)
Movement in bank loans	(0.8)	(112.8)	(127.5)
Proceeds from rights issue	-	105.5	105.5
Rights issue costs	-	(5.8)	(5.8)
Dividends paid	(1.0)	(3.2)	(4.3)
Net cash flow from financing activities	(1.8)	(16.4)	(32.2)
(Decrease) / increase in cash	(4.5)	0.7	1.5
Cash at the start of the financial period	12.5	11.0	11.0
Cash at the end of the financial period	8.0	11.7	12.5

Interim condensed consolidated statement of changes in equity

      For the six months ended 30 September 2010

	Share	Share	Merger	Hedging	Translation	Retained	Total
	capital	premium	reserve	reserve	reserve	earnings	equity
	£m	£m	£m	£m	£m	£m	£m
At 1 April 2009	2.5	111.0	3.7	(6.0)	-	56.3	167.5
Loss for the financial period	-	-	-	-	-	(10.4)	(10.4)
Gains on cash flow hedges	-	-	-	1.0	-	-	1.0
Total comprehensive income	-	-	-	1.0	-	(10.4)	(9.4)
Transactions with owners:
Dividends	-	-	-	-	-	(3.2)	(3.2)
Equity settled share-based payments	-	-	-	-	-	(0.7)	(0.7)
Employee Benefits Trust allotment	0.5	2.4	-	-	-	(2.9)	-
Issue of ordinary shares	22.9	76.8	-	-	-	-	99.7
At 30 September 2009	25.9	190.2	3.7	(5.0)	-	39.1	253.9
Loss for the financial period	-	-	-	-	-	(7.9)	(7.9)
Gains on cash flow hedges	-	-	-	1.6	-	-	1.6
Translation reserve	-	-	-	-	(0.5)	-	(0.5)
Total comprehensive income	-	-	-	1.6	(0.5)	(7.9)	(6.8)
Transactions with owners:
Dividends	-	-	-	-	-	(1.1)	(1.1)
Equity settled share-based payments	-	-	-	-	-	0.6	0.6
At 31 March 2010	25.9	190.2	3.7	(3.4)	(0.5)	30.7	246.6
Loss for the financial period	-	-	-	-	-	(12.2)	(12.2)
Gains on cash flow hedges	-	-	-	1.8	-		1.8
Translation reserve	-	-	-	-	0.2	-	0.2
Total comprehensive income	-	-	-	1.8	0.2	(12.2)	(10.2)
Transactions with owners:
Dividends	-	-	-	-	-	(1.0)	(1.0)
Equity settled share-based payments	-	-	-	-	-	0.9	0.9
At 30 September 2010	25.9	190.2	3.7	(1.6)	(0.3)	18.4	236.3

Notes to the financial statements

1              Basis of preparation

Speedy Hire Plc ('the Company') is a company incorporated and domiciled in the United Kingdom. The interim financial statements of the Company as at and for the six months ended 30 September 2010 comprise the Company and its subsidiaries (together referred to as 'the Group').

The financial statements of the Group for the year ended 31 March 2010 are available from the Company's registered office, or from the website: www.speedyhire.plc.uk

The Group meets its day to day working capital requirements through operating cash flows, supplemented as necessary by borrowings. The Directors have prepared cash flow projections for the period to March 2012 which shows that the Group is capable of continuing to operate within its existing loan facilities and can meet the covenant tests set out within its bank facility agreement. The key assumptions on which the projections are based include an assessment of the impact of future market conditions on projected revenues and an assessment of the net capital investment required to support the expected level of revenues.

Whilst the Directors consider that there is a degree of subjectivity involved in their assumptions, on the basis of the above the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the interim financial statements.

Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union ("EU") and the Disclosure Transparency Rules (DTR) of the UK FSA. As required by the latter, the interim financial statements have been prepared applying the accounting policies and presentation that were applied in the Company's published consolidated financial statements for the year ended 31 March 2010 except as described below. They do not include all the information required for full annual financial statements, and should be read in conjunction with the Group's consolidated financial statements as at and for the year ended 31 March 2010.

The comparative figures for the financial year ended 31 March 2010 are not the Company's statutory accounts for that financial year. Those accounts which were prepared under IFRS as adopted by the EU (adopted IFRS) have been reported on by the Company's auditors and delivered to the Registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The interim report was approved by the Board of Directors on 17 November 2010.

Significant accounting policies

Except as described below, the accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 March 2010.

From 1 April 2010 the Group has applied IFRS 3 Business Combinations (2008) in accounting for business combinations and the amendment to IAS 27 Consolidated and separate financial statements.   The application of this standard and the amendment has not had any impact on the results of the Group.  There are no other new or revised standards in the period which have a material impact on the Group.

1              Basis of preparation (continued)

Seasonality

In addition to economic factors, revenues are subject to a small element of seasonal fluctuation largely driven by certain UK public holidays and their impact on the billing cycle, resulting in marginally fewer trading days in the second half of the year.  In this financial year, the Easter break fell into the first half of the year helping to balance the trading impact of the Christmas break in the second half.

Whilst construction activity tends to increase in the summer months, our product mix helps to mitigate the impact, specifically with heating, lighting and power generation products being more heavily required in the winter months.  Overall, the Directors do not feel that these factors have a material effect on the performance of the Group when comparing first half results to those achieved in the second half.

2              Changes in estimates

The preparation of interim financial statements requires management to make judgements, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing the interim financial statements, the significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 March 2010.

3              Segmental analysis

The Group's chief operating decision body is the Group Board. The Group Board reviews the Group's internal reporting which is structured "UK and Ireland Asset Services" and "International and Advisory Services" in order to monitor and assess performance for the purpose of making operating decisions.

UK and Ireland Asset Services are managed separately but have been aggregated into one operating segment as they have similar economic characteristics including the nature of the products and services, the type or class of customer for their products and services and the methods used to distribute their products or provide their services.

The International and Advisory Services segment contains the "International Asset Services" and "Branded and Advisory" divisions which commenced trading in April 2009 but are not currently individually material to the Group's operations.

	Six months ended 30 September 2010			Six months ended 30 September 2009
	UK & Ireland  Asset Services	International &  Advisory  Services	Total	UK & Ireland  Asset Services	International &  Advisory  Services	Total
	£m	£m	£m	£m	£m	£m
Analysis of segmental result
Segmental revenue	174.7	4.5	179.2	187.3	0.8	188.1
Intra-group revenue	(1.9)	-	(1.9)	(3.3)	-	(3.3)
Revenue	172.8	4.5	177.3	184.0	0.8	184.8
Operating result before depreciation, amortisation and exceptional costs	28.8	(0.7)	28.1	37.4	0.1	37.5
Amortisation	(2.8)	-	(2.8)	(2.8)	-	(2.8)
Depreciation	(27.3)	(1.1)	(28.4)	(29.8)	(0.1)	(29.9)
Exceptional restructuring costs	(0.5)	-	(0.5)	(3.8)	-	(3.8)
Reportable segment result	(1.8)	(1.8)	(3.6)	1.0	-	1.0
Corporate costs (including exceptional costs of £0.1m, (2009: £2.2m))			(4.4)			(6.1)
Operating loss			(8.0)			(5.1)
Net financial expense			(5.8)			(8.5)
Loss before tax			(13.8)			(13.6)
Taxation			1.6			3.2
Loss for the financial period			(12.2)			(10.4)

 

3              Segmental analysis (continued)

	For the year ended 31 March 2010
	UK & Ireland  Asset Services	International &  Advisory  Services	Total
	£m	£m	£m
Analysis of segmental result
Segmental revenue	353.4	3.7	357.1
Intra-group revenue	(6.0)	-	(6.0)
Revenue	347.4	3.7	351.1
Operating result before depreciation, amortisation and exceptional costs	72.0	1.0	73.0
Amortisation	(5.5)	-	(5.5)
Depreciation	(57.0)	(0.5)	(57.5)
Exceptional restructuring costs	(7.3)	-	(7.3)
Reportable segment result	2.2	0.5	2.7
Corporate costs (including exceptional costs of £3.8m)			(11.3)
Operating loss			(8.6)
Net financial expense			(14.2)
Loss before tax			(22.8)
Taxation			4.5
Loss for the financial year			(18.3)

Intra-group transactions are undertaken on an arm's length basis. Corporate costs comprise the costs of operating certain central activities. These are not directly related to the activities of the reportable operating segment.

3              Segmental analysis (continued)

	30 September 2010			30 September 2009
	UK & Ireland            Asset Services	International &  Advisory  Services	Total	UK & Ireland  Asset Services	International &  Advisory  Services	Total
	£m	£m	£m	£m	£m	£m
Analysis of segmental assets and liabilities
Segmental non-current assets
Intangible assets	62.9	-	62.9	68.4	-	68.4
Property, plant and equipment	259.1	11.2	270.3	297.9	1.0	298.9
	322.0	11.2	333.2	366.3	1.0	367.3
Segmental current assets	104.6	3.6	108.2	113.0	0.3	113.3
Segmental total assets	426.6	14.8	441.4	479.3	1.3	480.6
Cash			8.0			11.7
Unallocated assets			6.8			12.7
Total assets			456.2			505.0
Segmental liabilities	(74.3)	(2.4)	(76.7)	(87.4)	(0.2)	(87.6)
Borrowings			(130.4)			(145.9)
Unallocated liabilities			(12.8)			(17.6)
Total liabilities			(219.9)			(251.1)
Net assets			236.3			253.9
Analysis of capital expenditure
Property, plant and equipment	17.1	1.3	18.4	12.1	-	12.1
Segmental capital expenditure	17.1	1.3	18.4	12.1	-	12.1
Unallocated capital expenditure			1.3			6.4
Total capital expenditure			19.7			18.5

3              Segmental analysis (continued)

	For the year ended 31 March 2010
	UK & Ireland  Asset Services	International &  Advisory  Services	Total
	£m	£m	£m
Analysis of segmental assets and liabilities
Segmental non-current assets
Intangible assets	65.7	-	65.7
Property, plant and equipment	276.1	9.5	285.6
	341.8	9.5	351.3
Segmental current assets	106.0	1.8	107.8
Segmental total assets	447.8	11.3	459.1
Cash			12.5
Unallocated assets			6.9
Total assets			478.5
Segmental liabilities	(84.1)	(1.0)	(85.1)
Borrowings			(131.1)
Unallocated liabilities			(15.7)
Total liabilities			(231.9)
Net assets			246.6
Analysis of capital expenditure
Property, plant and equipment	26.4	7.8	34.2
Segmental capital expenditure	26.4	7.8	34.2
Unallocated capital expenditure			9.6
Total capital expenditure			43.8

The financing of the Group's activities is undertaken at head office level and consequently net financing costs cannot be analysed segmentally. The unallocated net assets comprise principally working capital balances arising from certain central activities and liabilities relating to dividends and taxation and are not directly attributable to the activities of operating segments.

3              Segmental analysis (continued)

Geographical information

	Six months ended 30 September 2010		Six months ended 30 September 2009		Year ended 31 March 2010
	Revenue	Non-current assets	Revenue	Non-current assets	Revenue	Non-current assets
	£m	£m	£m	£m	£m	£m
UK	170.6	316.5	181.2	359.0	342.9	335.3
Ireland	3.0	5.5	3.3	7.3	5.8	6.5
Other countries	3.7	11.2	0.3	1.0	2.4	9.5
	177.3	333.2	184.8	367.3	351.1	351.3

Major customers

No one customer represents more than 10% of revenue, reported profit or combined assets of all reporting segments.

4              Exceptional items

For the six months ended 30 September 2010

During the period the Group has undertaken further restructuring and cost-saving initiatives resulting in a number of non-recurring items of expense.  Items relate to cost saving initiatives and include redundancy and other costs (£0.6m).

Finance costs

In June 2010 the Group successfully completed amendments to enhance its banking facility in order to provide greater flexibility for future capital investment, particularly with regard to the International operations. Management have assessed the impact of this modification in line with the guidance contained within IAS 39 and have concluded that it does not represent a significant modification. As part of this process the group incurred fees and transaction costs of £3.5m.  These costs have been capitalised and are being amortised using the effective interest rate method. Costs incurred as a result of the increase in the effective interest rate, amounting to £0.5m have been treated as exceptional finance costs.

The resulting tax credit in relation to exceptional items amounts to £0.3m, all of which relates to current tax.

For the six months ended 30 September 2009

During the period, the Group undertook further restructuring and cost-saving initiatives resulting in a number of non-recurring items of expense.  Items included costs related to the creation of a new Shared Service Centre (£0.6m), provisions in respect of further property closures including provision for vacant property (£2.9m) and impairment of related fixtures & fittings (£0.5m), redundancy and related costs (£1.1m) and re-organisation costs associated with depot and back office restructuring (£0.9m).

For the year ended 31 March 2010

During the period, the Group undertook further restructuring and cost-saving initiatives resulting in a number of non-recurring items of expense.  Items included costs related to the creation of a new Shared Services Centre (£0.6m), provisions in respect of further property closures including provision for vacant property (£3.9m) and impairment of related fixtures & fittings (£0.7m), redundancy and related costs (£3.9m) and re-organisation costs associated with depot and back office restructuring (£2.0m).

The resulting tax credit in relation to exceptional items amounts to £2.7m, of which £2.5m relates to current tax and £0.2m relates to deferred tax.

5              Financial income and expense

 

	30 September	30 September	31 March
	2010	2009	2010
	£m	£m	£m
Financial expense
Interest on bank loans and overdrafts	(2.4)	(6.0)	(9.9)
Hedge interest payable	(1.8)	(1.7)	(3.7)
Amortisation of issue costs	(0.3)	(0.3)	-
Exceptional amortisation of bank fee (see note 4)	(0.5)	-	-
Other finance costs	(0.8)	(0.5)	(0.6)
	(5.8)	(8.5)	(14.2)

6              Taxation

The corporation tax charge for the six months ended 30 September 2010 is based on an effective rate of taxation (before exceptional items) of 10.1% (2009: 19.9 %). This has been calculated by reference to the projected charge for the full year ending 31 March 2011, applying the applicable UK corporation tax rate of 28%. Deferred tax is provided using the tax rate enacted at the balance sheet date, 30 September 2010, of 27%. Reduction in the rate applied for calculation of deferred tax balances have given rise to a reduction in the effective rate of taxation projected for the year.

7              (Loss) / earnings per share

The calculation of basic (loss) / earnings per share is based on the loss attributable to equity holders of the Parent of £12.2m (2009: loss £10.4m) and the weighted average number of 5 pence ordinary shares in issue during the six months ended 30 September 2010 calculated as follows:

	30 September	30 September	31 March
	2010	2009	2010
Loss (£m)
Loss for the period after tax - basic earnings	(12.2)	(10.4)	(18.3)
Intangible amortisation charge (after tax)	2.0	2.2	4.0
Exceptional items (after tax)	0.8	4.3	8.4
Adjusted (loss) / earnings (after tax)	(9.4)	(3.9)	(5.9)
Weighted average number of shares in issue (million)
At the beginning of the period	506.9	186.5	186.5
Issue of ordinary shares	-	69.9	232.4
Exercise of share options	-	-	0.2
At the end of the period - basic number of shares	506.9	256.4	419.1
Share options	-	-	-
Employee share scheme	-	-	-
At the end of the period - diluted number of shares	506.9	256.4	419.1
(Loss) / earnings per share (pence)
Basic (loss)/earnings per share	(2.42)	(4.08)	(4.37)
Amortisation	0.39	0.86	0.96
Exceptional costs	0.16	1.67	2.00
Adjusted (loss) / earnings per share	(1.87)	(1.55)	(1.41)
Basic (loss) / earnings per share	(2.42)	(4.08)	(4.37)
Share options	-	-	-
Employee share scheme	-	-	-
Diluted loss per share	(2.42)	(4.08)	(4.37)
Adjusted (loss)/earnings per share	(1.87)	(1.55)	(1.41)
Share options	-	-	-
Employee share schemes	-	-	-
Adjusted diluted (loss)/earnings per share	(1.87)	(1.55)	(1.41)

Total number of shares outstanding at 30 September 2010 amounted to 517,215,666 (31 March 2010: 517,215,666).

8              Dividends

The aggregate amount of dividend comprises:

	30 September	30 September	31 March
	2010	2009	2010
	£m	£m	£m
2009 final dividend (6.4 pence on 50.7m shares)	-	3.2	3.2
2010 interim dividend (0.2 pence on 517.2m shares)	-	-	1.1
2010 final dividend (0.2 pence on 517.2m shares)	1.0	-	-
	1.0	3.2	4.3

Subsequent to the end of the period, and not included in the results for the period, the Directors recommended an interim dividend of 0.2 pence (2010 interim dividend: 0.2 pence) per share, to be paid on 28 January 2011 to shareholders on the register on 7 January 2011. 

9              Property, plant and equipment

	Land &  buildings	Hire equipment	Other	Total
	£m	£m	£m	£m
Cost
At 1 April 2009	28.0	514.3	58.3	600.6
Additions	1.2	11.7	5.6	18.5
Disposals	-	(22.7)	-	(22.7)
Transfers to inventory	-	(7.8)	-	(7.8)
At 30 September 2009	29.2	495.5	63.9	588.6
Additions	1.4	21.8	2.1	25.3
Disposals	(3.9)	(26.4)	(9.6)	(39.9)
Transfers to inventory	-	(19.7)	-	(19.7)
At 31 March 2010	26.7	471.2	56.4	554.3
Additions	1.0	18.3	0.4	19.7
Disposals	-	(17.3)	-	(17.3)
Transfers to inventory	-	(4.5)	-	(4.5)
At 30 September 2010	27.7	467.7	56.8	552.2
Depreciation
At 1 April 2009	15.0	230.9	31.5	277.4
Charged in period	1.4	25.9	4.1	31.4
Disposals	-	(15.6)	-	(15.6)
Impairment	0.5	-	-	0.5
Transfers to inventory	-	(4.0)	-	(4.0)
At 30 September 2009	16.9	237.2	35.6	289.7
Charged in period	1.4	24.1	3.3	28.8
Disposals	(3.9)	(26.9)	(9.1)	(39.9)
Impairment	0.2	-	-	0.2
Transfers to inventory	-	(10.1)	-	(10.1)
At 31 March 2010	14.6	224.3	29.8	268.7
Charged in period	1.2	24.9	3.4	29.5
Disposals	-	(13.3)	-	(13.3)
Transfers to inventory	-	(3.0)	-	(3.0)
At 30 September 2010	15.8	232.9	33.2	281.9
Net book value
At 30 September 2010	11.9	234.8	23.6	270.3
At 31 March 2010	12.1	246.9	26.6	285.6
At 30 September 2009	12.3	258.3	28.3	298.9

 

10           Financial instruments

The Group holds and uses financial instruments to finance its operations and to manage its interest rate and liquidity risks. The Group primarily finances its operations using share capital, retained profits and borrowings. The main risks arising from the Group's financial instruments are credit, interest rate, foreign currency and liquidity risk.  The Board reviews and agrees the policies for managing each of these risks on an annual basis. A full description of the Group's approach to managing these risks is set out in the 2010 Annual Report on pages 91 - 94.

The notional contract amounts and the related fair value of the Group's derivative financial instruments can be analysed as follows:

	30 September 2010		30 September 2009		31 March 2010
	Fair Value	Notional Amount	Fair Value	Notional Amount	Fair Value	Notional Amount
	£m	£m	£m	£m	£m	£m
Designated as cash flow hedges
Fixed interest rate swaps	(1.1)	40.0	(2.4)	50.0	(1.9)	50.0
Interest rate collars	(0.2)	10.0	(1.8)	50.0	(1.0)	40.0
Interest rate caps	-	10.0	(0.5)	20.0	(0.3)	20.0
	(1.3)	60.0	(4.7)	120.0	(3.2)	110.0

The weighted average interest rate of the fixed interest rate swaps is 4.82% (31 March 2010: 5.026%) and the instruments are for a weighted average period of 6 months (31 March 2010: 11 months). The maximum contractual period is 10 months.

Collar instruments bear interest rates between 4.30% and 5.50% (31 March 2010: between 4.300% and 6.500%), for a weighted average period of 4 months (31 March 2010: 7 months). The maximum contractual period is 4 months.

Capped rate instruments bear a weighted average maximum interest rate of 6.25% (31 March 2010: 5.790%) for a weighted average period of 7 months (31 March 2010: 10 months). The maximum contractual period is 7 months.

Of the £1.8m recognised in the statement of comprehensive income in relation to cash flow hedges, £0.9m related to the net change in fair value of cash flow hedges transferred to profit or loss following the maturity of the related contract.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

The Group uses both short and long-term cash forecasts to assist in monitoring cash flow requirements. Typically, the Group uses short-term forecasting to ensure that it has sufficient cash on demand to meet operational expenses and to service financing obligations for a period of 12 weeks. Longer-term forecasts are performed on a regular basis to assess compliance with bank covenants on existing facilities, ensuring that activities can be managed within reason to ensure covenant breaches are avoided.

At 30 September 2010, the Group had available loan facilities amounting to £210m (31 March 2010: £260m). Of these facilities £76m remained unutilised at 30 September 2010. Details of the repayment profile of the drawn facilities at the period end, is included within note 11.

The Group monitors available facilities against forward requirements on a regular basis and where necessary, obtains additional sources of financing to provide the Group with the appropriate level of headroom against the required borrowing. The Group has obtained additional bank and equity funding in recent years as the business has grown, and maintains close contact with its syndicate of banks.

11           Borrowings

		30 September	30 September	31 March
		2010	2009	2010
		£m	£m	£m
Current borrowings
Finance leases		0.2	0.1	0.2
		0.2	0.1	0.2
Non-current borrowings
Maturing between one and five years
Term loan		-	84.4	69.5
Revolving credit facilities		130.4	61.5	61.6
Finance leases		0.4	0.5	0.5
Total non-current borrowings		130.8	146.4	131.6
Total borrowings		131.0	146.5	131.8
Less: cash at bank and in hand		(8.0)	(11.7)	(12.5)
Net debt		123.0	134.8	119.3

Both the overdraft and syndicated loan facility are secured by a fixed and floating charge over all the assets of the Group and are rated pari passu.

The term and revolving loan facility was originally entered into in June 2007, and was amended and restated in June 2008, March 2009 and June 2010. During June 2010, the term loan 'A facility' of £70m was repaid, and partially replaced with a revolving credit facility. At 30 September 2010, the current facility is sub-divided into:

(i)            A secured overdraft facility, provided by Barclays Bank Plc which secures by cross guarantees and debentures the bank deposits and overdrafts of the Parent and certain subsidiary companies up to a maximum of £5m.

(ii)           Syndicated multi-currency revolving facilities, made up of:

(i)            A revolving credit 'A facility' of £21.2m; and

(ii)           A revolving credit 'B facility' (including overdraft) of £188.8m.

The total facility is for £210m, but is reduced to the extent that ancillary facilities are provided and is repayable on the fifth anniversary of the issue date.

The revolving credit 'A facility' increases by £18.5 million in the year to March 2012. The revolving credit 'B facility' reduces by £18.5 million in the year to March 2012. 

The revolving credit facilities can be drawn for various periods specified by the Company, up to the maturity date, with interest being calculated for the drawn period by reference to the London Inter Bank Offer Rate applicable to the period drawn, plus a margin which during the period ranged from 250 to 300 basis points (2009: 300 to 400). At 30 September 2010, the margin was 300 basis points. During the period no drawings were made on facility A.

The effective interest rate applicable to cash deposits during the period was 0.42% (31 March 2010: 0.2%). The effective interest rates (before exceptional finance costs) on bank overdraft and revolving credit facilities were 3.00% and 3.40% (31 March 2010: 3.00% and 4.07%) respectively.

12           Contingent liabilities

The Group has given warranties (including taxation warranties and indemnities) to the purchasers of five businesses disposed of over the last eleven years. These warranties and indemnities expire at various dates up to twelve years from the date of disposal.

13           Commitments

The Group had contracted capital commitments amounting to £4.2m at the end of the financial period for which no provision has been made.

14           Related party disclosures

There has been no significant change to nature and size of related party transactions, including the remuneration provided to the key management, from that disclosed in the 2010 Annual Report.

 Independent Review Report by KPMG Audit Plc to Speedy Hire Plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2010 which comprises the interim condensed consolidated income statement, the interim  condensed consolidated statement of comprehensive income, the Interim condensed consolidated balance sheet, the interim condensed consolidated cash flow statement, the interim condensed consolidated statement of movements in equity and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2010 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

M Newsholme
for and on behalf of KPMG Audit Plc
Chartered Accountants

St James' Square, Manchester, M2 6DS

 

END

 

 

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