Speedy could also lose another £1.7m in hire fees for the rest of the year unless it negotiates new deals with Morgan Sindall and Mears who took over the bulk of Connaught’s contracts.
Speedy revealed the extent of its Connaught losses in a trading update to the Stock Exchange this morning.
It said: “Following the recent appointment of joint administrators to Connaught plc, to which Speedy was an exclusive provider of tool and equipment hire, it is anticipated that Speedy will take a charge of £1.7m in the first half of the current financial year.
“This includes a sum for debtors which are likely to remain unpaid, together with an assessment of the value of equipment on hire which may not be returned.
“The charge referred to above does not include the potential impact of lost future revenues.
“Speedy’s forecasts had included an assumption of approximately £1.7m in revenue from the Connaught group over the remainder of the current financial year.
“Whilst Speedy has close relationships with the two companies that have taken on the bulk of Connaught’s contracts from the joint administrators, it is currently too early to indicate how much of this revenue will be retained.”
Speedy also announced a senior management cull to cut costs due to the “subdued outlook for the UK hire” which included the departure of UK & Ireland Asset Services managing director Claudio Veritiero.
The firm has maintained turnover levels and has recently won a number of new infrastructure contracts, including a five year sole supplier agreement with Thames Water to supply their tier one contractors on the £5.5bn AMP5 programme.
Other contract wins include a three year framework agreement with Babcock International Group to support their marine, nuclear, networks and infrastructure divisions.
Speedy is continuing to strike deals with major contractors “who are increasingly accounting for a greater share of the overall construction market and who operate in growth areas such as the water, waste, energy and transport”.