Speedy losses hit £13.8m as contractor bad debt bites

Aaron Morby 12 years ago

Rising numbers of contractors going bust has hit plant hirer Speedy pushing up losses in the first half of the year.

The UK’s biggest hirer said it had now seen three consecutive quarters of growth in hire volumes and margins but it was also counting the cost of bad debt because of a spate company failures.

Pre-tax losses for the first half to the end of September hit £13.8m, the same scale of loss as the same period in 2009.

Connaught’s collapse alone left Speedy nursing a £1.7m loss and the impact of Rok is still not known.

David Wallis, chairman, said: “After weakness in the early part of the year, the recent UK trading environment is more encouraging, with quarter on quarter growth in revenues, volumes and average hire rates seen over the last three quarters.”

October revenues continued this trend, up approximately 5% on the prior year.

But he warned: “It is not however without its challenges, particularly in respect of corporate failures in the construction sector.

“The outcome for the financial year is dependent on us continuing to build upon this momentum and a return to a more normal bad debt charge following the impact of recent corporate failures in the construction sector.”

A series of new orders and deals secured in the last month is expected to put Speedy on a better footing for the full year.

These include a five year sole supplier agreement to supply Thames Water Tier 1 contractors on the £5.5bn AMP4, a one year agreement to supply non-operated plant to Balfour Beatty worth £45m per annum and a three-year framework agreement with Babcock International Group to support its marine, nuclear, networks and infrastructure divisions.

Overseas, Speedy has also just opened an on-site facility to support Al Futtaim Carillion with its Cairo Festival City scheme in Egypt and invoicing began in early November. The mixed-use £2bn, 4 year development spans nearly 10m sq ft and a full range of Speedy equipment will be available on site.

Turnover in the first half was slightly down on last year at £177m although operating costs also fell 6.6% after a round of job cuts and a business restructure.

Over the first half of the year Speedy stepped up investment in its hire fleet spending £18.3m, nearly double last year’s comparable figure.

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