Seeing the Benefits
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Speedy Hire Plc Speedy Hire Annual Report and Accounts 2011 Seeing the benefits www.speedyhire.plc.uk Annual Report and Accounts 2011 Accreditations and memberships Speedy contents ISO Accreditations Professional body and trade association memberships ISO 9001 HAE: Hire Association of Europe Speedy Asset Services Limited† Speedy Engineering Services Limited PASMA: Prefabricated Access Suppliers and Manufacturers Association Overview ISO 14001 Overview Speedy Asset Services Limited* LEEA: Lifting Equipment Engineers Association 01 Seeing the benefits Speedy Engineering Services Limited 14 Speedy at a glance OPERC: Off-Highway Plant and Equipment Research Centre 16 Speedy figures ISO 18001 18 Understanding our markets Speedy Asset Services Limited* ERA: European Rental Association Speedy Engineering Services Limited BSC: British Safety Council (International Asset Services) ISO 17020 Speedy Asset Services Limited* CBI: Confederation of British Industry (Steve Corcoran member of Construction Council) Industry supplier accreditations Business review FTSE4Good Achilles Link-up – rail supplier qualification and verification scheme Business review 20 Chairman’s statement BITC: Business in the Community Achilles UVDB – utilities pre-qualification scheme 22 Chief Executive’s review 26 Principal risks and uncertainties CPA: Contractors Plant Association Achilles Building Confidence – construction pre-qualification scheme 28 UK & Ireland Asset Services 30 International & Advisory Services British Water Authority Constructionline – UK register of pre-qualified construction services 32 Group financial review 36 Corporate responsibility Federation of Communication Services CHAS – The Contractors Health and Safety Scheme MPBA: Modular and Portable Building Association SAFEcontractor – the contractor accreditation scheme for business RoSPA: The Royal Society for the Prevention of Accidents Governance SafeHire – HAE Hire and Rental certification scheme Governance 44 Board of Directors 46 Directors’ report * Partial accreditation only. † 49 Corporate governance All UK locations accredited. 54 Remuneration report 64 Audit Committee report 65 Nomination Committee report 66 Independent auditor’s report Financial statements Financial statements 68 Consolidated income statement 69 Consolidated statement of comprehensive income 70 Consolidated balance sheet 71 Consolidated cash flow statement 72 Consolidated statement of changes in equity 73 Notes to the consolidated financial statements 98 Company balance sheet 99 Company cash flow statement 100 Company statement of changes in equity 101 Notes to the Company financial statements 105 Five-year summary Investor information Investor information 106 Shareholder information Printing and paper: this report has been printed in the UK by The Colourhouse. Our printers 107 Registered office and advisers are accredited with the ISO14001 and hold full FSC chain of custody, they are also carbon 108 Awards neutral. All inks used are vegetable-based. The paper used is Heaven 42 which is fully IBC Accreditations and memberships recyclable and biodegradable and is an FSC mixed sources accredited material, using an Elemental Chlorine Free (ECF) process and partly bleached using a Totally Chlorine Free (TCF) process. If you have finished reading this report and no longer wish to retain it, please pass it on to other interested readers, return it to Speedy Hire Plc or recycle it. Thank you. This annual report is available at www.speedyhire.plc.uk Designed and produced by The College www.thecollege.uk.com Overview 01 We are now seeing the benefits of Overview our operating rigour and disciplined action, which have demonstrated our ability to work through challenging economic cycles. It has been a difficult period and the outlook remains challenging in 2011. At Speedy we are building a long-term service based proposition which will provide a sustainable platform in hire and value added services to drive our performance every day, every quarter and every year. Steady, sustained recovery is underway. We are well positioned to take advantage of the eventual upturn in trading conditions. We have a solid base on which to build our business and this report aims to define and explain the factors that are important in our pursuit of growth and future success. Seeing the benefits Ready for the future Consolidating our Building relationships No.1 position with major customers Managing capital Managing our network Providing a stable income expenditure on Developing our service stream our assets offering Access to subcontractor Focusing on cash and costs market Speedy Hire Plc Annual Report and Accounts 2011 02 Overview / Seeing the benefits Readyfor the future Seeing the benefits Cost: continual drive for Cash flow: maintaining Asset management: the value efficiencies & savings a stable financial base of a diverse fleet We continue to focus on right-sizing our Our cash generation has remained strong Hire fleet investment has increased and cost base and have been streamlining our and is a big contributor to paying down as a result there has only been a slight senior management and depot structure, debt. As a result net debt continues to fall, increase in the average age of the hire fleet. seeking efficiencies wherever possible. contributing to a strong balance sheet. Hire fleet investment has been consistently proportional to revenue. We have invested in new equipment using the funds from the disposal of under utilised older assets. £110m £113.9m 40% reduction in costs from peak net debt down a further £5.4m by NBV of the UK’s itemised hire costs during 2008 on last year fleet is less than three years old Speedy Hire Plc Annual Report and Accounts 2011 Overview / Seeing the benefits 03 Managing capital expenditure Overview Net debt and Overheads* 300 7 250 200 150 7 100 50 0 H1 FY07 H2 FY07 H1 FY08 H2 FY08 H1 FY09 H2 FY09 H1 FY10 H2 FY10 H1 FY11 H2 FY11 Net debt Overheads ✗ Peak annualised overheads estimated at c£137m for the half year ✗ Peak debt of £303m in July 2008 * Overheads are shown for Group less new businesses (International & Advisory) and are before amortisation and exceptional costs Hire fleet 700 500 Revenue (£m) Hire fleet (£m) Hire 0 0 H1 FY07 H2 FY07 H1 FY08 H2 FY08 H1 FY09 H2 FY09 H1 FY10 H2 FY10 H1 FY11 H2 FY11* Hire fleet cost (LHS) Hire fleet NBV (LHS) Revenue (RHS) * Adjusted to include Accommodation assets in hire fleet at net book value before exceptional write down Speedy Hire Plc Annual Report and Accounts 2011 04 Overview / Seeing the benefits Consolidating our No.1Position Seeing the benefits Developing our service offering Transforming the market Outperforming the market The core of our business is providing safe Sustainable seems to be the word in 2011 The tools, lifting & survey business and compliant equipment for hire but with both customers and suppliers looking performed 1.6% better than the market we now support this with comprehensive to build stable working relationships. when comparing Q3 v Q4 in 2010. safety and skills training, advisory services We have also seen considerable growth in and test, repair, inspection With Government budget cuts, it’s likely International which established a strong and maintenance services. in 2011 that the private sector will fund foothold overseas. This combined with our a larger percentage of construction Training & Advisory Services division has projects, changing, even transforming, seen an increase in revenue of over 280%. parts of the market. Speedy Hire Plc Annual Report and Accounts 2011 Overview / Seeing the benefits 05 Consolidating our networks Overview In order to extend our service capability we have embarked upon a depot network plan that will see us change the format of our national network of depots over the course of the next few years. This involves the creation of more multi-service centres (MSC’s) to expand on the first, which opened in Warrington; the creation of more superstores to add to those now operational in Stoke, Edinburgh and Bristol, and a consolidation of our local depots into an express format. Multi-Service Centres Size: 6-10 acres Service: Full service 24/7 Market Sectors: Construction, Industrial, Infrastructure Customer Base: Heavy Construction, Mainstream Construction, Civil Engineering Superstores Size: 25,000 sq. ft. Service: Rapid response Market Sectors: Clean trades, Fit Out Customer Base: Electrician/ Electrical Engineers, Dry Liners/ Ceiling Fixers, Fit-Out Contractors, Shop/Store Fitters, Service/ Maintenance Engineers. Express Depot Size: 5,000 sq. ft. Service: Principally customer collect Market Sectors: Local trades, Local Industry Customer Base: Local trades/ builders, Local industry, Service Maintenance Engineers Speedy Hire Plc Annual Report and Accounts 2011 06 Overview / Seeing the benefits Building relationships with major customers Seeing the benefits Going for long term contracts Value in supply chain Stable income stream Whilst hire rates may be lower, the average Major contractors will increasingly win As major contractors increasingly duration of hire is twice as long with major more of the projects in the market and move towards winning work in the contractors and, with higher volumes will be key to accessing the marketplace more sustainable and regulated generally, this results in yielding higher by having framework agreements that market areas to secure their own revenue per contract. then cascade to their subcontractors. revenue streams, this in return provides a more stable revenue stream