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City News: Speedy on fast track Catherine Stratton reviews the latest full year results from Speedy, now the No.1 hirer in the UK. Speedy pleased the market with another set of impressive figures; the shares hit a new high of 1322p in anticipation of the results and have held just below that level since, with the Stock Market currently valuing the company at £594m. The latest annual results represent something of a milestone for Speedy. They confirm that it is not only the No.1 tool hirer, but it is now the UK’s No.1 hirer (in domestic revenue terms) with £335.5m turnover (compared with Hewden’s £282.5m in the year to 31 December 2006); of course both Ashtead and Aggreko are larger in global terms. The most striking feature of the results is the growth of the equipment hire side, which is now generating almost as much revenue as tools; indeed, unless there is a substantial acquisition by the tool hire division this year, which cannot be discounted, the Equipment division looks set to overtake tool hire in terms of revenue in the current year. The growth of the Equipment Hire division has been aided by two major acquisitions. The company states that the operational integration of LCH Generators, acquired last May for £54.6m, is now complete, and the integration of Lifting Gear Hire, acquired in October for £14.3m is proceeding according to plan. In addition to the acquisitions, this division opened ten new greenfield depots in the course of the year. The most recent addition to the equipment range, Speedy Pumps, expanded to five standalone depots. Speedy continues to develop its specialist businesses; all four have now achieved Investor in People status. Speedy Space has expanded its range to include modular accommodation and welfare facilities. The latest move is the establishment of three distinct businesses within Speedy Power, viz. compressed air, power generation and pumps. Chief Executive Steve Corcoran draws parallels between this move and the way in which Speedy has developed its specialist equipment range from its initial tool operations. He believes that the three separate Power businesses will be in a stronger position to enter new markets such as heavy industry, food processing and ports, docks and airports. Each business will have its own management and operational team, but will continue to operate within the Power division and benefit from its support and services. Clearly Speedy remains eager to expand further outside its traditional customer base. Of course the past year has also seen ‘pastures new’ for the company as it has established its presence in both Dublin and Belfast; the buoyancy of the construction market in southern Ireland has whetted the company’s appetite and we can expect to hear news of expansion there shortly. What of the original tool hire operations? They continue to perform well; ‘like-for-like’ growth was 7.3% last year, still ahead, Speedy contends, of the overall market growth rate which is estimated to be around 6%. The company says it is continuing to develop new product areas and to identify further growth opportunities within its existing product range, citing concreting, access and engineering as examples. In order to increase “specialisation, customer focus and operational efficiencies”, Speedy is establishing new ‘Centres of Excellence’ in Access, Concrete and Light Plant products. It has also continued to develop the Health & Safety aspects of the business with the provision of a new range of consumable safety products and the launch of its ‘Let’s clear the air’ dust campaign. The strong organic growth and the acquisitions of last year mean that the company’s debt rose to £176m from £103m at the end of the previous year, so that gearing at 31 March 2007 was 103%; while this is rather higher than historic levels for Speedy, it remains “comfortable” for a hire company. Capital expenditure in the current year is expected to exceed £100m, compared with £93.6m last year when there was a further £69m spend on the acquisitions of LCH and Lifting Gear Hire. Since the year end, Speedy has acquired the business and assets of Network Plant, the well established plant subsidiary of refurbishment specialist Mansell which was bought by Balfour Beatty last year. The deal includes a four-year supply agreement with Mansell. Commenting on the outlook for Speedy, Chairman David Wallis states, “momentum remains strong with indicators showing a positive and progressive level of economic and construction activity. Faced with favourable markets, a strong financial position and an outstanding team, and subject to no material change in the economic outlook, I am confident of reporting further progress in the year ahead.” OTHER NEWS IN BRIEF The Board of Andrews Sykes is not recommending a final dividend payment for 2006. The company stated that its main UK trading subsidiary Andrews Sykes Hire performed “exceptionally well” last year with turnover up 20% at £43m. Chairman JG Murray concluded his statement by indicating that overall trading in the first quarter of this year was “in line with expectations”. AGGREKO: AGM STATEMENT Chairman Philip Rogerson told Aggreko shareholders that the Group had made “a very strong start” to the year and that “profits for the year will be materially ahead of current market expectations.” • Executive Hire News › Archives › June 2007 › City News › Speedy on fast track
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