CITY NEWS
HIRE NEWS STAYS POSITIVE Catherine Stratton discusses the recent Management Statements from Speedy and Vp.
Despite the UK economy’s negative growth rate of the final quarter of 2011, the opening weeks of 2012 have brought generally positive news from the quoted hirers. Both Speedy and Vp, Hire Station’s parent, issued Interim Management Statements in February, six or seven weeks before they reach their financial year end on 31 March.
Speedy achieved underlying revenue growth of 7.6% in the third quarter (i.e. October to December 2011), compared with the same period of 2010. This calculation excludes revenues from fleet sales and adjusts for the disposal of Speedy Space in April last year and the expiry of the company’s Network Rail maintenance contract in December 2010. It should, of course, also be remembered that the comparative 2010 period saw some severe weather conditions.
The Statement drew attention to the company’s continuing reconfiguration of its depot network, with three new superstores set to open by the end of February. It indicated that activity levels in early January had seen a slower than anticipated recovery from the Christmas holiday break, partly because of the mild weather, but this had subsequently been reversed with the onset of cold conditions bringing demand for heating equipment; there had also been an improvement in revenues from ‘non-weather related activity.’
Focus on regulated industries
Speedy confirmed that it was maintaining its strategy of focusing on ‘the regulated industries and private sector investment markets of water, waste, energy and transport.’ The Statement concluded with the assurance that it was making ‘steady progress despite the challenging market conditions and uncertain economic outlook.’ The Stock Market saw Speedy’s statement as a sign that the hirer’s core business is regaining some momentum and the shares have risen to 29p, a rise of 45% over the past three months. The company is currently capitalised at £147.4m. Analysts are forecasting pre-tax profits before taxation of approximately £13m in the year ending 31 March 2012, compared with a loss of £27m last year.
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More recently, Speedy announced the signing of a three year extension to its existing preferred supplier agreement with Carillion, so that the contract will now run until 2016 and is expected to be worth in excess of £50m over the next four years.
Good progress
Vp’s Interim Management Statement did not give any specific numbers in terms of revenue growth, but it did indicate that, despite the ‘difficult’ economic background, the company was continuing to make ‘good progress’, with most of its business operations experiencing stable trading conditions.
The company referred to ‘household, rail, infrastructure and oil and gas sectors’ as holding up well and Vp has continued its investment in those areas. It stated, however, that ‘the general construction environment has remained subdued.’
In the conclusion to its Statement, Vp indicated that, despite the uncertain economic outlook, the Group has traded well through the winter and it expected ‘to report full year profits moderately ahead of
current market predictions’. Analysts are forecasting pre-tax profits of just over £15m, compared with £12.2m in the year ended 31 March 2011.
Just a few days after that Statement, Vp announced a Tender Offer to purchase 1 in every 14 of its shares at 254p per share. This would result in £7.8m being paid to participating shareholders. The offer closes on 23 March. The Tender document states that, in recent years, the company has undertaken routine share re-purchases which have enhanced value to shareholders and the Tender Offer will enhance this further and deliver ‘a more optimal capital structure’.
Ackers P Investment Company, which is Vp’s holding company and is owned by the Pilkington family, will participate in the offer up to at least the level of its entitlement and has confirmed that it remains ‘a supportive long term shareholder’.
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