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City News: Progress maintained EHN’s financial analyst Catherine Stratton assesses the recently announced interim management statements from Speedy and Vp. On 18 February, both Speedy and Vp issued interim management statements for the nine months ended 31 December. Each was able to record sound progress and neither gave any indication of a downturn in the hire market. Speedy reported that revenues in the third quarter rose by 43% and were up by 39% in the nine months period (compared with a 36% increase in the first six months of the financial year). In recent times, Speedy’s less mature Equipment Division has tended to out-pace the long established Tool Hire Division, but the position was reversed at the last half year, when Tool Hire saw revenue growth of 38.2% (aided by two months figures from the ex-Hewden depots), compared with 32.9% for Equipment. Since then the growth of Tool Hire has accelerated, so that its revenues over the nine months were 47% ahead of the same period of 2006. Equipment Hire revenues rose 30%, indicating a slight deceleration in the growth rate, with revenue growth in the first half period having been boosted by contributions from LCH and LGH, acquired in May and October 2006 respectively. BENEFITS OF HEWDEN SYNERGIES Of the Hewden purchase, Speedy states that “integration has been achieved in line with the original plan and budget” and goes on to say that “the combined business is firmly on track to deliver the targeted synergies.” At the end of 2007, net debt was £271m, equating to gearing of 110%; as Speedy reaps the benefits of the synergies of the Hewden deal, gearing should begin to fall to reach around the 100% level at the year end. Trading continues to be strong. Finance Director Neil O’Brien comments that there has been no sign of any slowdown in the company’s invoicing and that trading resumed after Christmas at its normal pace. The company’s Irish operations are reported to be going well, with strong demand in both Belfast and Dublin. The Speedy statement affirmed that the company’s full year results, to be announced on 28 May, will come up to the city’s expectations. Speedy’s broker, Oriel Securities, is forecasting profits before tax of £48.1m (compared with £36.4m last year). Speedy’s reassurance of the Market saw the shares rise 29.5p to 811p on the day of the announcement and they have continued to recover, reaching 840p at the time of writing. This is well above the low of 688p in late January but, of course, significantly lower than the 1200p level at which they traded last May, before the Stock Market crash. POSITIVE Vp PERFORMANCE Vp also had a good story to tell. It reported that “the performance of the business has remained positive across the wide range of market sectors which it serves.” The company does, however, caution that “whilst we have seen no discernible impact from the problems in the wider financial markets, (it) remains alert to any changes.” Group Managing Director, Neil Stothart, says that Vp’s tool hire operation, Hire Station, is continuing to make “good progress on all fronts,” while the rail tool hire operation, Torrent Trackside, is seeing a pick up in business as rail activity has stabilised, making for a “slightly more positive feel” for trading at this division, which, like others serving that market, found conditions difficult when Network Rail conducted a review of its supply chain last year. Like Speedy, Vp is making good progress in Ireland. It has established new premises in Port Laoise, south of Dublin. Its Groundforce business is now operating from there and MEP, the pipe-threading hirer, which is part of Hire Station, will move its Irish business there shortly. Vp stated that it expects to report “earnings in line with market expectations.” The company’s broker, Brewin Dolphin, estimates profits before tax of £19m, compared with last year’s £14.5m. The Market’s response was to mark the shares down 5p to 315p and at the time of writing they continue to trade at close to that level, which compares to the 52 week low of 300p in mid-December; last September the shares peaked at 425p. Vp will report its full year results on 29 May. • Executive Hire News › Archives › March 2008 › City News › Progress maintained
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