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SOME SUMMER SUNSHINE Catherine Stratton considers the latest news from several of the Tool Hire Top Ten.

SHARE PRICE PERFORMANCE Price 12 month 12 month ‘High’ 1639p 128.5p

Aggreko Ashtead

16.08.10 1512p 89.7p

Speedy 22.75p 48.5p Vp

155p Andrews Sykes 110p

213p 135p


583.5p 61.25p 22.25p 145p 70p

‘Low’ Capitalisation £4.13billion £460.06m £118.96m £71.59m £47.69m

Like this summer’s weather, there have been some fitful bursts of sunshine in the recent financial reports coming from hirers, but clouds still hover and the possibility of further storms has not entirely receded. Nevertheless the overall impression is that, while the outlook is overcast, it should not deteriorate further.

Tool Hire Top Ten No.1 player, Speedy, held its AGM in late July when Chairman David Wallis told shareholders that Group revenues in the three months to the end of June were just 0.7% below those of the same period of 2009, whereas there had been a 13.7% decline in revenues in the opening quarter of 2010, compared with the first three months of 2009. He added that the underlying improvement had continued into July.

Speedy has recently completed amendments to its banking facility to give greater flexibility for capital investment; this is seen as significant for the development of its Middle East operations. These changes will result in a one-off cash cost of approximately £3.5m for bank and professional fees and this will be reflected in the company’s half year results due to be announced on 7 November. The statement made it clear that the company is taking a cautious view about recovery prospects in the UK well into next year, saying that Speedy’s priorities will continue to focus on the ‘3 C’s of cash, costs and cap-ex’. Speedy’s share price continues to be depressed and the company has recently announced that it is changing its Corporate Broker to Evolution Securities from KBC Peel Hunt and Oriel Securities. Former Speedy Chief Executive John Brown is a director of the latter, which had been Speedy’s broker for some years.

Cash conservation

Vp, whose specialist hire activities include No.5 player, Hire Station, issued an Interim Management Statement in August, indicating that, since the beginning of June, when the company announced its Annual Results, it had experienced ‘a period of stability in its markets’. Some areas of the business had seen improvements as a result of a ‘tentative’ recovery in house building and a ‘modest’

upturn in rail activity. Like Speedy, Vp is focused on cash conservation and says that, while it is continuing to invest in support of ‘secured opportunities’, borrowings are expected to fall further in this financial year.

It is rare for unquoted hire companies to put their half year results into the public domain, but No.2 hirer, HSS, did so at the end of July. The figures are impressive and must give food for thought to some of its competitors.

In the first half of this year, the tool hirer has achieved a 13% growth in revenues to £81.9m and a 27% rise in EBITDA to £17.7m. Revenue growth and profitability continue to be on a rising trend, with the company indicating that revenues rose by 15% in the second quarter to £40.0m and EBITDA by 29% to £8.4m.

Among the key factors the company highlights are that it has accelerated investment in its hire fleet and it has continued to focus on key accounts, with new preferred supplier agreements with VolkerWessels and with BAA at Heathrow. The company says that HSS Training, which has recently acquired the rail-oriented training business of Hydrex, has continued to grow strongly.

HSS Chief Executive Chris Davies described the company’s performance as ‘resilient…in the face of difficult market conditions’; the results were ‘a testament to the strength of the Group and the people who work within it’. He concluded that the company’s investment in ‘market leading systems’, such as Livehire, is ‘helping drive efficiencies through the business and the diversity of the sectors that we serve help insulate us from the trends of any particular industry sector.’

As we go to press, the speculation about the future ownership of No.3 hirer, Brandon is on-going. We believe that parent company Wolseley is soon to announce the sale of its subsidiary to a private equity house.

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