£95m exceptional charge plunges Speedy into the red

Speedy Hire has been dragged into the red by exceptional charges despite seeing a growth in revenue.

Revenue increased 2.3% to £476m, but the group’s operating margin slid to 10.4% from 13.7% in the previous year although it still made an adjusted pre-tax profit of £34m. However a £95.3m exceptional charge was the main contributor in turning the operating profit into a £70.6m loss.

The biggest factors in the exceptional charge was a £48m write-down in goodwill and a £13m write-down on intangible assets. Disposal costs on surplus machines added another £7m and there was £5.3m of lease charges on closed depots while redundancy costs amounted to £4m and the purchase and integration of Amec LSS and Carillion Asset Management added another £1.9m.

Over the last seven months the company closed 82 depots with almost 1,000 employees leaving the business and 470 vehicles being returned to the lessors or sold. Speedy expects these actions will save £42m per year.

Capital expenditure in the second half of the year was cut by 60% to £22m and net debt was trimmed by 2.8% to £248.4m.

Chief executive Steve Corcoran expects the trough of the recession to be reached this autumn but said Speedy is now well placed to trade through the tough conditions.