Speedy’s accommodation hire business, previously known as Speedy Space, provides temporary accommodation and storage units for hire or sale. As at 30 September 2010, the business had net assets of £52.4m and gross assets of £53.0m, excluding working capital which will be retained by Speedy (projected to be £3.6m on completion of the deal on 30 April).
In the financial year ended 31 March 2010 the business generated revenues of £40.6m, an operating loss (before recharges, central allocations, amortisation and exceptional items) of £2.1m and a loss before interest and tax of £5.3m. Unaudited financial highlights for the financial year ended 31 March 2011 include revenues of £35.5m and an operating loss of £4.5m.
The net cash proceeds from the sale will be used to reduce debt.
Speedy and Elliott, which is a subsidiary of Algeco Scotsman,will enter into a three-year partnering agreement in which both companies will work together to provide customers with an integrated service that combines the expertise each company has in their respective products and services.
Speedy will provide service and maintenance support to Elliott's c.1,650 power generation assets (which are integrated within its accommodation units), for an initial period of three years.
Speedy will take a hit of £16.0m on the sale in its 2011 accounts as an exceptional item.
Announcing the sale to the stock exchange, Speedy said that its accommodation hire business had experienced “particularly challenging trading conditions in recent years, where excess capacity has exerted significant downward price pressure, resulting in poor levels of profitability”.
Chief executive Steve Corcoran said:"I am very pleased to announce the disposal of the loss making Accommodation Hire business and the partnering agreement with Elliott. From a customer service perspective, the partnering agreement we have entered into will provide our customers with a comprehensive accommodation hire offering from the UK's leading businesses in this market. By working as partners with Elliott, our customers can continue to benefit from an integrated service. We look forward to developing this partnership and we see significant opportunities from working together closely in the future.
“Financially, the disposal delivers a pro-forma increase in both operating margin and return on capital. It also delivers a reduction in group borrowings and enables Speedy to focus on investing in our higher margin core operations and to develop further our non-hire services."
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