Speedy to withdraw from Middle East

Mark Rogerson joined Speedy in December 2013 as chief operating officer but within three months he had taken over as CEO from Steve Corcoran after accounting irregularities were uncovered in the Middle East operation, throwing the company into crisis mode.

In his first six months in charge, Speedy has delivered 12% growth thanks to UK market improvements but problems remain in the Middle East. The board has now decided to withdraw.  Speedy will quit the general hire market in the Middle East and look to sell the profitable part of the operation that supports the oil & gas sector there. Speedy has offices in Dubai, Abu Dhabi, Qatar, Cairo and Oman.

“I was appointed chief executive officer in February this year and my immediate priorities were to stabilise the business, improve performance and regenerate growth. The first priority has been achieved and we are making significant progress on the second and third,” Mr Rogerson said.

“Having completed a review of our Middle East operations with a view to further de-risking the business and minimising losses, it is clear that the continued under-performance of the business is primarily the result of a legacy cost base and weak demand for general and spot hire. Conversely, we have identified value in our oil and gas services business which has delivered strong revenue growth from long term contracts, which will be fully mobilised by December.

“We have therefore begun implementing a strategy to stem the losses: Firstly, we are now exiting the general and spot hire market in the Middle East and, as existing contracts come to an end, will progressively dispose of or return assets to the UK. This programme will be completed by no later than the end of Q1 FY 2016 [i.e. June 2016] and we are working hard to bring this timetable forward.

“Secondly, we will complete the mobilisation of our largest oil and gas services contracts, and exploit further immediate opportunities from recently signed services contracts to build value in the short-term whilst concurrently looking at a number of strategic options for this part of the business.”

Speedy Hire saw its revenues rise 12.2% for the six months to 30 September 2014 to £189.3m (2013: £168.7m).

Profit before tax for the half-year was £5.3m, up from £3.0m for the first half of 2013 (restated to correct the previously bogus international numbers).

EBITDA before exceptional costs increased 23.4% to £37.5 million (2013: £30.4m). Profit before tax, amortisation and exceptional costs for the period increased by 129% to £10.3m (2013: £4.5m).

In the UK & Ireland, Speedy made a £16.7m operating profit on revenues of £176.3m. Overseas, it lost £2.9m on £13m revenues.

Mark Rogerson said: "While much remains to be done, not least in the Middle East, there are major opportunities ahead as the UK continues with a very significant infrastructure regeneration programme.  Having stabilised the business, we can now turn our attention to differentiating Speedy through service, quality and innovation, optimising our asset base and delivering sustainable profit growth.

“We are on-track to deliver results for the full year in line with the board’s expectations and our confidence for the future is underpinned by an increased interim dividend."

• * before amortisation and exceptional costs
• # adjusted for prior period International division accounting irregularities
• **excluding International losses and capital employed

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