Speedy ahead in spite of Allen

Mismanagement problems in the Allen Group sent it plunging to a loss of almost £14m, according to the group's latest financial results, published last week. Newly appointed chairman David Wallis described the financial performance as "totally unacceptable".

A spokesman for Allen said: "Control got out of sorts. People at the sharp end lapsed."

However, within all the turmoil and gloom there was one glimmer of hope as Speedy Hire, the hire division, which will be the future focus of the business, pushed its turnover ahead to £101m (£83m) and inched its operating profit forward to £17m (£15m).

But elsewhere, Allen resembled a whirlpool. Donald Greenhalgh, chairman, resigned. Chief executive Ken Fox also stood down and John Brown, formerly MD of Speedy Hire, took over Fox's post.

Simultaneously, KPMG was appointed as auditor and the building contracting division was immediately put up for sale. The move, however, simply continued the changing face of the group, which Wallis described as being "too diversified".

In May last year the scaffolding business was sold to its management for £2.1m. Sheet piling followed in June, again being sold to its management, this time for £1.2m. In August 2000 Allen sold its housebuilding division to Morris Homes, a move that brought in £22m.

Last November it was announced that Pearce, a non-specialist civil engineering contractor, would be sold or closed. In fact, it was sold for a nominal sum in March 2001, but losses of £4.6m were incurred in trading and exiting the business.

This was the moment when Allen started looking at demerging Speedy Hire and floating it off as a separate public company.

But in October 2000 that plan fell flat after the newly appointed MD of Building Contracting, Nick Davies, started a review of his division. This was completed in February, by which time it was clear that several large contracts undertaken by PS Turner, a subsidiary acquired in 1997, were flawed. Projected losses ran to £13m.

Simultaneously Mike Rowan, recently appointed as MD of Ryan Utility Services, carried out a similar review of his division. Ryan provides pipeline rehabilitation and replacement services for the main utility companies.

One of its contracts also looked rocky and was likely to result in further losses.

When the building contracting was off-loaded last month to Montpellier, the buyer paid £1m only after Allen had injected a £5.6m dowry.

Wallis said: "As painful as this process has been, a major area of risk has been removed. The remaining non-core company is Ryan Utility Services. A contractual issue with a major customer is currently being resolved through mediation."Once completed, we will be in a position to establish Ryan's value and will be looking to dispose of it."

"The future focus, therefore, will be on Speedy Hire. A resolution proposing a change of name of the company to Speedy Hire plc, to reflect this position, will be put to the annual meeting."