Maintaining A Consistent Strategy Interim results for the six months - - PowerPoint PPT Presentation

Maintaining A Consistent Strategy

Interim results for the six months ended September 2013 Speedy Hire Plc

Legal Disclaimer

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This presentation has been prepared to inform investment professionals about Speedy Hire Plc (‘Speedy’), and does not constitute an offer of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in Speedy or any

• f its subsidiary companies.

The presentation and information communicated verbally to you may contain projections and other forward-looking statements that are necessarily subject to risks and uncertainties, because they relate to future events. Our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control and, consequently, actual results may differ materially from those expressed or implied by any forward- looking statements and projections. Although Speedy currently believes that the assumptions underlying these forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and therefore can be no assurance that any results contemplated in the forward-looking statements will actually be achieved. Nothing contained within this presentation or communicated verbally should be construed as a profjt forecast or profjt

• estimate. Speedy undertakes no obligation to publicly update
• r revise any forward-looking statement, whether as a result of

new information, future events or otherwise. Some of the factors which may adversely impact some of these forward-looking statements are discussed in Speedy’s audited results for the year ended 31 March 2013 under ‘Principal risks and uncertainties’. This presentation contains supplemental non-GAAP fjnancial and operating information that Speedy believes provides useful insight into the performance of the business. Whilst this information is considered as important, it should be viewed as supplemental to Speedy’s fjnancial results prepared in accordance with International Financial Reporting Standards and not as a substitute for them.

Agenda

Financial Performance Year to Date

Lynn Krige, Group Finance Director

Building Momentum for the Future

Steve Corcoran, Chief Executive

Network Reconfjguration Update

Lynn Krige, Group Finance Director

Questions and Answer Session

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Financial Performance Year to Date

Lynn Krige, Group Finance Director

Financial Highlights

Solid performance in a challenging UK environment

Six months to 30 September 2013 £m 2012 £m Change Revenue 169.8 169.1 0.4% EBITDA 32.7 33.6 (2.7%)

EBITDA % 19.3% 19.9%

EBITA 10.2 10.4 (1.9%)

EBITA % 6.0% 6.2%

PBT* 6.8 6.6 3.0% Adjusted earnings per share* 1.12p 1.10p 1.8% Dividend per share 0.26p 0.22p 18%

* Pre amortisation

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Financial Position

Strong balance sheet - Fit for the future

As at 30 September 2013 £m 2012 £m Change Property, plant & equipment 259.9 250.8 3.6% Debtor days – UK & Ireland 63.4 days 69.2 days Bad debt charge as a % of revenue 1.58% 1.51% Net debt 79.3 82.6 Gearing 32.9% 35.4% Net debt: EBITDA 1.09x 1.23x Shareholders’ funds 241.0 233.2 3.3% Net asset value per share 46.5p 45.0p 3.3% ROCE 7.6% 7.0%

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Segmental Analysis - UK & Ireland

30 Sept 2013 30 Sept 2013 30 Sept 2012 30 Sept 2012 EBITDA margin EBITA margin

20.7% 8.2% 21.3% 8.6%

Six months to 30 September 2013 £m 2012 £m Change Revenue 158.8 160.6 (1.1%) EBITDA 32.9 34.2 (3.8%)

EBITDA % 20.7% 21.3%

EBITA 13.1 13.8 (5.1%)

EBITA % 8.2% 8.6%

NBV of property, plant & equipment 225.9 220.7 2.4% Net capital expenditure 35.2 24.8 41.9% Depreciation 19.8 20.4 (2.9%) Average age of hire fleet (years) 4.2 4.1

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Operational effjciencies continue; Margins impacted by revenue mix

Segmental Analysis - International

30 Sept 2013 30 Sept 2013 30 Sept 2012 30 Sept 2012

23.6% 3.6% 28.2% 3.5%

Six months to 30 September 2013 £m 2012 £m Change Revenue 11.0 8.5 29.4% EBITDA 2.6 2.4 8.3%

EBITDA % 23.6% 28.2%

EBITA 0.4 0.3 33.3%

EBITA % 3.6% 3.5%

NBV of property, plant & equipment 34.0 30.1 13.0% Net capital expenditure 4.6 7.4 Depreciation 2.2 2.1 4.8% Average age of hire fleet (years) 2.1 1.5

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Secured contacts underpin long-term growth

EBITDA margin EBITA margin

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Cash Flow

1 ¡

To ¡update ¡ 72.4 73.6 79.3

• 35.8

4.2 5.1 2.4 6.2

29.2 6.8 7.9 2.7 0.2

10 20 30 40 50 60 70 80 90 Movement in net debt (£m)

Group excluding International International

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UK - cash generation funding investment; International - investing for growth

Building Momentum for the Future

Steve Corcoran, Chief Executive

H1 Momentum Driving H2

H1 Activity H2 Benefjt

Confjdent in achieving management expectations

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• No real improvement in general Construction market,

excluding Housing

• Improving trend in underlying Construction activity
• National Grid mobilisation programme underway
• Fully mobilised - benefjts due to fmow through in H2
• Several contracts due to be awarded in H1 ‘delayed’
• Six contracts awarded to a value of £9.6m pa at the end of

H1/beginning of H2. Benefjts will fmow through H2

• Tendering for two major on-site Construction contracts
• Secured on-sites at both projects: Carillion Battersea Power

Station (£450m) and Nova Victoria Phase 1 (£350m)

• Strong International growth in H1
• Annualised compound effect of increasing H1 growth, plus

mobilisation of Zadco Island 3

• Assessing sole supply agreement with a major

Industrial service provider

• Secured multi £m project in the Energy sector
• Executing further operational effjciencies
• Benefjts of reduced underlying cost base begin to be realised

Post Period End Contract Wins

Solid nucleus of new work on which to build new growth

Growth from:

Securing new and developing existing revenues in chosen markets:

• Clear market leader in the UK
• Growth from major contracts in the

Infrastructure and Industrial markets

• Particular success in the Utility market
• Continued growth in International markets
• Strong pipeline of future opportunities

30% revenue is now from service based income Increasing presence in international oil & gas

Gatwick Airport* Keepmoat Morrison Utilities* Northern Gas Networks* Perenco Siemens Kazakhstan Strong Pipeline Carillion May Gurney

*Joint Awards

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UK Contract Case Study - Perenco

Who Are Perenco?

Independent oil & gas company Operate in 16 countries across Northern Europe, Africa, South America & Southeast Asia Conduct both onshore and ofgshore operations Current production 375,000 barrels per day of oil equivalent In the UK operate ofgshore in the Southern North Sea and onshore at Bacton Gas Terminal; Wytch Farm, Kimmeridge and Wareham fjelds in Dorset

Our Contract

Integrated Services & Equipment, 3+2 years c£1.5m pa for rented asset support Supporting onshore oilfjeld operations in the South of England, UK Key activities of drilling, process and infrastructure maintenance

Next Steps – H2 benefjt

Fully mobilise and support contract Identify additional added value for Perenco Develop together a continual improvement and innovation program Ensure safety and effjciency are at the forefront of operations

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Further enhancement of our core industrial and energy capability

A Consistent Strategy

ROCE on track for 10% by end of CY14, and further growth beyond

A consistent focus on the right clients and markets

an effective cost base quality service the right proposition

sustainable profjt

Right Client & Market Focus Right Proposition Effective Cost Base Quality Service

Top 50 UK clients up 13.2% Hire : Non Hire 70 : 30 Overheads* down 4.3% Client Recommendations 97%

Year On Year

Growing sustainable profit:

! Revenues Up ! Utilisation Up ! Costs Down ! Recommendations Up

H1 14 : 13 (FY13 72 : 28) FY13: (2%) (FY13 96%)

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Growing sustainable profjt:

Strong growth with key clients in chosen markets Continued reduction in operational cost base Optimising assets and difgerentiated proposition ROCE – up to 7.6% from 7.0%, on a 12 month rolling basis PBT – up to £6.8m from £6.6m

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*Excludes expanding international operations.

Right Clients, Right Market

Outperforming in our chosen markets. Well positioned to benefjt from forecast recovery

Group Construction Industrial Infrastructure

Speedy 2011 Speedy Growth 2011 to 2013

Market2 +1.3% Market1

• 8.3%

Speedy Growth +0.3% Speedy Growth +11.9%

+1% +7.4%

Market Growth 2013 to 2015

% Change

FY11 - CY13 Actual Market Forecast CY13 - FY15

35% 30% 25% 20% 15% 10% 5% 0%

• 5%

18.5% 30.6% 3.6%

• 2.0%

Infrastructure & Industrial Construction

Strong performance in Infrastructure and Industrial markets, outstripping market growth Maintaining consistent performance in Construction despite poor market conditions Well placed to take advantage of Construction recovery in 2014/2015

Speedy Top 10 Customers by Market – Revenue Comparison - H1FY14 : H1FY13

Sources: Speedy Management Information; 1 Construction Products Association 2 CREDO

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Case Study - Speedy Zholdas JV, Kazakhstan

What is Speedy Zholdas?

50:50 JV between Speedy and Denholm The JV will support Denholm Zholdas, established for 20 years in Kazakhstan and one of the principal oil services companies in the Caspian region Active on three of the world’s Top 10 supergiant oil fjelds

The JV

Tier One Service Provider, incorporating full asset management & Partnered Services Back to back on site agreements Break-even in FY14, will enhance FY15 earnings and beyond

Next Steps

Undertake operational management Extend and leverage relationships - Tier One and 3rd party opportunities Introduce additional asset and service lines, to create value Support planned maintenance shutdowns and full outages - will require signifjcant equipment mobilisation

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Extends presence into expanding Caspian region

Management Team Further Strengthened

Chief Operating Offjcer Qualifjed engineer / accountant Strong service background 8 years experience at Serco, including international Strong construction and engineering experience with Costain Group PLC Previously MD, Natural Resources, Costain Group PLC Starts 2nd December 2013 Speedy MD, International Division Engineering background at Aggreko (MD Aggreko North Europe) Previously MD International Division at Lavendon Group PLC MBA (with distinction) from Leeds University 24 years industry experience Starts 12th November 2013

Mark Rogerson Andy Wright

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Enhanced knowledge and experience aligned to markets and strategy

Evolving a Business for the Future

Year on year growth in sustainable profjts

A sustainable business with sustainable earnings

Client Benefjt Investor Benefjt

End of CY14 Future Speedy Service Excellence

24 hour

• pening

Guaranteed delivery Service Quality Reliability Assurance

Clear market leadership Security of income and higher margins ROCE 10% EBIT 10% Self funding ROCE >10% EBIT >10% Contracted Revenues >50% Operational Efgectiveness Improved ROCE Better cashfmow Economies

• f scale

Maximise utilisation Reduce costs Improve logistics Supply chain consolidation Reduced administration

Difgerentiated Proposition Embedded client relationships Revenue visibility & security

More valued Stronger client relationships New & innovative solutions Satisfy bespoke customer needs

Market Focus Aligned to growth markets Springboard for future growth in UK and overseas

Multi sector Specialists Optimum product & service solutions Added value services provider

Year-

• n-year,

growth in sustainable profjt

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Network Reconfjguration Update

Lynn Krige, Group Finance Director

Operational efgectiveness Reduced working inventory Optimised asset holding National 24/7 cover

5 Year Network Reconfjguration Programme

Driving improvements in EBIT, EBITDA & ROCE

Improved asset utilisation, availability and quality Improved service excellence Improved cross selling

Benefjts

Multi Service Centre

• Regional hub
• Centralised logistics & asset management
• Full service ofgering inc. TRIM & training
• Centralised, enhanced repair facilities
• Consolidated Workshops

Superstore

• Area hub & logistics
• “Clean Trades”
• Tools, lifting & survey focus
• Full retail ofgering

Express + on-sites

• Local, walk-in trade
• Defjned range for local market
• Full retail ofgering
• Access to full service ofgering via MSC/SS

TOTAL

Sept 2013 2015 Complete

(+7 mini)

2 26 230 258 6 40 170 223

Multi Service Centre Superstore Superstore

Express Express Express Express Express Express

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Why Now?

Project completed to take full advantage of economic recovery

Source: Offjce for Budgetary Responsibility, March 2013 Sources: ONS, Construction Products Association, Autumn 2013 Forecast

Original Timeline New Project Timeline Accelerated Benefit

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Glasgow MSC Tamworth MSC Bristol MSC Teeseide MSC Accelerated Project completion Original Project target completion 2013 2014 2015 2016 2017 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%

• 1.0%

Forecast Construction Growth Y on Y Forecast GDP

Cost and Return

Costs

P&L non-recurring costs of £13-15m, primarily provisions against vacant properties Spread across H2 FY14, FY15 and H1 FY16 as vacated depots are incorporated into new MSCs and Superstores Cashfmow impact defered as property provisions unwind. Timing 20% H2 FY14, 30% FY15, 30% FY16 and balance unwinds as leases expire Capex cost of circa £10m for fjt-out funded by improved asset utilisation

Returns

Improved asset utilisation Net reduction in operating overhead Improved operational efgectiveness Net result:

• Improvement in ROCE
• Cash payback in 3.5 years
• Improvement in ‘drop through’ on future revenue growth

Improves return and enhances platform for growth

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Conclusion

Confjdent of full year expectations; confjdent of future growth

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Confjdent of momentum into H2 Strong growth with chosen clients in target markets Expanded International operations into Caspian region Strengthened Management Team Balance Sheet supports further growth Strongly positioned for market recovery

Questions & Answers

Appendices

Debt Structure & Headroom

£116.4m £92.3m £215.0m £5.0m £42.9m Total £159.3m £67.0m

unutilised facility

£186.2m £76.1m

Total Facility Book Value Borrowing Base Borrowings

Receivables 85% of eligible UK & Ireland debtors Plant & Machinery 85% of eligible UK & Ireland plant & machinery

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Growth with Major Clients in Chosen Markets

Strengthening the relationships we want, in the markets we want

57.5% 60.7% 65.6% 57.0% 33.8% 30.9%

(Top 50) (Top 50) (Top 50) (Top 50) (Top 50) (Top 50)

H1 FY14 H1 FY13

100 100

Construction Construction 48.1% 49.5% Infrastructure Infrastructure 29.0% 27.3% Industrial Industrial 12.6% 14.4% Other Other 10.4% 8.9%

Sources: Speedy Management Information

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Clear Market & Client Focus

Energy +7%

Speedy Revenue Growth HY14 v HY13

Sector Water

• 12%

Transport +10%

EDF Energy Hinkley Point £14bn (2014-2023) Dogger Bank Wind Farm £2bn (2016-2018) Race Bank Wind Farm £3bn (2015-2015) Sutton Bridge Power Station £450m (2014-2016) Rugeley Power Station Biomass Conversion £350m (2013-2015) Anglesey Biomass Power Plant £600m (2014-2017) RIIO-TI (Electricity Transmission) £13.6bn (2013-2021) Examples of future projects Northern Line extension £450m (2014-2020) Control Period 5: Rail Maintenance & Renewals £20bn (2014-2019) A9 Dualling Perth to Inverness £3bn (2016-2025) Bristol Airport expansion £150m (2013-2019) Manchester Airport City £550m (2015-2020) Avonmouth Docks Container Terminal £500m (2018-2022) Thames Tideway Tunnel £4.2bn (2015-2023) AMP6 £29bn (2015-2020) Q&S IV (Scottish Water) £1.5bn (2015-2021) Thames Estuary Flood Defences (Phase 1) £485m (2014-2024)

*NB declining spend due to AMP5 project cycle

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Government Infrastructure Investment Pipeline

Construction market is improving, but still challenging with lower returns Infrastructure and Industrial markets provide long term secured revenues at higher margins

350 300 250 200 150 100 50 200 180 160 140 120 100 80 60 40 20

£bn

E n e r g y No of projects Infrastructure Investment (£bn 2011-12 prices)

Source: National Infrastructure Plan: Update 2012

T r a n s p

• r

t F l

• d

W a s t e W a t e r I n t e l l e c t u a l C a p i t a l C

• m

m u n i c a t i

• n

s

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Service Company, Not Just a Hire Company

Integrated services company (full end-to-end asset management) Transactional, unsecured, price driven

Trusted partner (hire and some services)

eg BAE • Carillion • Costain • Exxon

• Galliford Try • Morgan Sindall
• National Grid

More visible, but still unsecured and reactive/transactional

Preferred supplier (hire and ad hoc services)

eg AMEC • Babcock

• Balfour Beatty • BAM
• Siemens • Valero

Secured income, trusted relationship, greater visibility

Ad hoc supplier (hire only) Fully secured, embedded, long term visibility

Low

Security of income Competitive threat Value to Client

Low Hign High Low High

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Speedy’s Leadership Message

Foundation

Our enablers

Spirit

Our values

As One Safe People Systems Brand Innovative

Darwin Pillars

Our activities

Service Excellence Operational Efgectiveness Difgerentiated Proposition Market Focus Driven

Year-on-year, we will grow sustainable profjt

Our Mission

To be the leading integrated services provider in our chosen markets

Our Purpose Our Vision

Optimise assets, reduce risk, enable delivery

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Multi Service Centre (MSC) 6 Mini MSC 7 Express 170 Superstore 40 On-Site As Required

Improving Margins & Returns

Property Plan Case Study – Post DP5

60,000 – 160,000 sq ft > 3 acre yard Modern, premises with high eaves Full product range, including fuel management & training facilities Regional transport management Super Workshop & regional asset servicing Regional distribution centre Integrated Superstore, where appropriate 20,000– 40,000 sq ft > 1 acre yard Modern premises with high eaves Wide product range, including fuel management & training facilities Power & Plant Workshop Integrated Superstore, where appropriate 10,000 – 30,000 sq ft < 1 acre yard Prominent customer facing location Modern premises with high eaves Wide product range, including Speedy Sales & training facilities Area Logistics and Test & Run Centre, if located >1hr from an MSC 3,000 – 8,000 sqft Prominent customer facing trade counter location Modern premises wit high eaves Daily collections and deliveries from an MSC Focus on Tools /Lifting/ Survey/Access products, aligned to the needs of the local market Speedy Sales and possibly training facilities Bespoke compound/ premises aligned to a specifjc customer contract Permanent or Modular accommodation, subject to availability Trade Counter Offjce/Welfare and Storage Workshop Daily collections and deliveries from an MSC Product range aligned to client & site specifjc requirements

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UK & Ireland Fleet

Utilisation by Product Group

80.0% 60.0% 40.0% 20.0% 0.0% (20.0%) (40.0%) (60.0%)

All Products Individual Product Lines

0.1%

Group 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 UK Total

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