Trading Update

RNS Number : 0853U

Speedy Hire PLC

08 October 2010

 



8 October, 2010

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

TRADING UPDATE AND MANAGEMENT CHANGE

Speedy is issuing this regular trading update ahead of the announcement on 17 November, 2010 of its interim results for the period to 30 September, 2010.

Trading

Total second quarter Group turnover (July-September) is expected to be approximately £5m higher than that recorded in the first quarter. Underlying year on year quarterly turnover comparisons (excluding fleet equipment sales) also show an improving trend, with the first quarter down 0.7% and the second quarter up approximately 1.2%. However, reflecting the timing of equipment sales between this year and last, total first half turnover (including fleet equipment sales) is expected to be approximately 4% below the prior year (6 months to 30 September, 2009: £184.8m).

In recent weeks 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 the £5.5bn AMP5 programme. Other contract wins include a three year framework agreement with Babcock International Group to support their marine, nuclear, networks and infrastructure divisions.

In line with its stated strategy, Speedy continues to deepen its penetration of the major contractors, who are increasingly accounting for a greater share of the overall construction market and who operate in growth areas such as the water, waste, energy and transport sectors, as well as extending its reach into manufacturing, oil & gas and infrastructure.

Good progress continues to be made in both of our new operating activities, the International Asset Services ('International') and Branded & Advisory divisions. In particular, 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. First half turnover from these two divisions is expected to exceed £4.5m (6 months to 30 September, 2009: £0.8m), with a substantial increase in both businesses' revenues being anticipated to occur in the second half of the year. Although both divisions are expected to be profitable over the full year, first half operating losses totalling approximately £2m will be reported, reflecting the investment in overhead that has been made in these start-up operations.

Management changes

Despite the current more stable trading environment, in view of the continuing subdued outlook for the UK hire and related services market, the Group, as part of its ongoing focus on controlling costs, has decided to streamline its senior management structure. As a consequence, it has removed a small number of roles, including that of Managing Director, UK & Ireland Asset Services. Claudio Veritiero, an Executive Director, will therefore leave the Group on 31 October, 2010. He leaves with the Board's respect and gratitude for all that he has achieved in his six years at Speedy. An exceptional charge relating to these changes will be taken in the second half of the financial year.

Connaught plc

Following the recent appointment of joint administrators to Connaught plc, to which Speedy was an exclusive provider of tool and equipment hire, it is anticipated that Speedy will take a charge of £1.7m in the first half of the current financial year. This includes a sum for debtors which are likely to remain unpaid, together with an assessment of the value of equipment on hire which may not be returned and a write-off of the unamortised portion of a premium to net asset value paid to Connaught earlier in the current financial year following an acquisition of assets from Connaught's ground care business.

The charge referred to above does not include the potential impact of lost future revenues. Speedy's forecasts had included an assumption of approximately £1.7m in revenue from the Connaught group over the remainder of the current financial year (net of rebates). Whilst Speedy has close relationships with the two companies that have taken on the bulk of Connaught's contracts from the joint administrators, it is currently too early to indicate how much of this revenue will be retained.  

Net debt

Net debt at 30 September, 2010 was approximately £125m (31 March, 2010: £119.3m). As previously advised, during the period the Group has 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. The one-off cash cost of this exercise has been capitalised and is being amortised over the remaining life of the facility. As a consequence, net interest expense in the first half of the 2010/11 financial year will include an exceptional element of approximately £1.3m.

Outlook

Although now trading profitably, the Group expects to report a first half operating loss (before amortisation and exceptional items), The Board confirms that the Group is currently trading in line with its expectations for the full year in respect of adjusted profit before tax (before amortisation and exceptional items). These expectations are however dependent on the business maintaining momentum into the traditionally stronger second half of the year and, in particular, delivering a strong recovery in the last quarter of the financial year, following the traditional shut down over the Christmas period.

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 any market recovery. In particular, the Group's on-site facilities on the Olympics site, growing international presence and developing non-hire activities provide grounds for confidence for the future.

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]

Forward looking statements:

This release includes statements that are forward looking in nature and is based on management information. 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 release.

Notes to Editors

Founded in 1977, Speedy is the leading 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 325 fixed sites - together with a number of on-site facilities at client locations throughout the UK, Ireland and the Middle East - the company supplies a range of services including:

·      the hire 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

 

END

 

 

TSTEASEPEANEFEF