Speedy Hire Share Discussion Threads

[immokalee] 15/1/2018 19:06

SDY as well as other Hire companies can have their stuff nicked at any time and often do, larger equipment will be insured. We lease from Hilti, all handheld equipment, if it goes walkabout we are liable for a third of the cost. It’s built into contract as its probable... all depending on whose site you are on.
As for JV contracts the load will be taken up by partners, ideas you check out BBY etc they will take a knock on these projects. Interesting BILN only Co to say no effect from CLLN, Yet KIE has some exposure although unknown £ and finish the day up. My question would be, looking forward how will lost revenue be replaced?

[derwent4] 15/1/2018 16:49

there you go mrf.any bad news is now out we carry on and its onwards and upwards
expect s p in northern territory tomorrow

[brummy_git] 15/1/2018 14:25

In terms of materiality, MRF is probably correct. That said, I would guess Speedy have bought some form of credit insurance against their £45 million three-year contract. Worth £15 million per year, or broadly equivalent to £5 million for four months outstanding invoices.

[my retirement fund] 15/1/2018 13:26

Deafening silence from the board. 120 days of invoices will now never be paid and a shed load of plant never be returned.Then theres the delay to all the present projects as they get divided up .Judging by Connought this has got to end up costing Speedy at least 4 million at best and 8 million at worst.

[derwent4] 15/1/2018 13:03

we all knew we had problems re carrillio I believe all the bad news is out of the way share price not down much so will be back to its highs and more soon

[cc2014] 15/1/2018 12:30

Hi Rounder,

I need to do some proper research but I can perhaps hazard a guess at how things have evolved.

When you supply a company like Carillion and things start to go wrong you have two choices

1. simply stop supplying and accept it will take forever to get your money and you probably won't get what you are genuinely due

2. attempt to slowly wind down the exposure by getting aggressive on payment terms and putting prices up.

If you can do enough of 2, then you can run with 1 later.


My complete guess based on CLLN only being 3% of their business is that the management have been managing down the exposure through option 2 for some considerable time.

[rounder2] 15/1/2018 11:04

MRF

Nice post

ROK bankrupt 2010
Connaught bankrupt 2011

Live and learn maybe ??

[my retirement fund] 15/1/2018 10:50

Hmm interesting because if you look at the impact of previous insolvencies which have impacted Speedy such as ROK or larger ones such as Connaught, the impact was most certainly significant. Hers what Speedy reported about Connaught and for those who dont know Connaught were less than half the size of Carrilion !

Connaught plc
Following the recent appointment of joint administrators to Connaught plc, to
which Speedy was an exclusive provider of tool and equipment hire, it is
anticipated that Speedy will take a charge of GBP1.7m in the first half of the
current financial year. This includes a sum for debtors which are likely to
remain unpaid, together with an assessment of the value of equipment on hire
which may not be returned and a write-off of the unamortised portion of a
premium to net asset value paid to Connaught earlier in the current financial
year following an acquisition of assets from Connaught's ground care business.

The charge referred to above does not include the potential impact of lost
future revenues. Speedy's forecasts had included an assumption of approximately
GBP1.7m in revenue from the Connaught group over the remainder of the current
financial year (net of rebates). Whilst Speedy has close relationships with the
two companies that have taken on the bulk of Connaught's contracts from the
joint administrators, it is currently too early to indicate how much of this
revenue will be retained.

[rumbers2] 15/1/2018 10:40

Liberum have just said although this news is "unhelpful it is not as bad as first feared. Despite the potential write-down of receivables that will result we believe the long-term impact on financials will be limited. This reflects the likelihood of JV Partners and other third parties taking on much of Carillion's workload, as well as the flexibility within Speedy's own operations" the broker adds.
The broker added it sees Speedy's immediate share price reaction as overdone.

[albanyvillas] 15/1/2018 10:33

How much does carillion owe them

[cc2014] 15/1/2018 10:27

Rounder,

In the construction industry things go missing all the time. It's a cost of doing business.

For SDY thousands of items will not be returned to them every day. The sheer cost of the administration would not be worth it.


It would be fraudulent to claim for insurance on an item where you haven't actually incurred a loss because they customer has covered the loss.

I would concur the very high value items may be insured but I don't know that for sure.

[rounder2] 15/1/2018 10:23

For anybody that's interested here's my take on what's happened today , in a nutshell :

Ultimately the doom merchants are not giving the management at Speedy due credit

1. Any higher value kit is fully insured , one way or the other

2. The debt is much less than it used to be circa 3-4million as we stand today

3. The contract didn't return much profit

4. The debt WASN'T insured ( cost prohibitive ) but it has been tightly managed

5. Carillion will have to continue to trade and SDY will up its prices accordingly and get some / most of the money back

6. Carillion was circa 3-4 % of SDY's overall annual turnover which isn't the end of the world and will no doubt be replaced with other , better paying work , over time .

7. The share price move down today is NOT institutional investors bailing , it's PI's who are more susceptible to shocks of this kind and triggered stop losses on derivative CFD's being hit

8. SDY will fairly quickly release a relatively reassuring statement to put market jitters at ease , institutional buyers will return " in force "

9. A couple weeks from now , concurrent to the early Feb trading update , this will all pretty much be forgotten and the share price will revert to " pre shock " levels



For what it's worth

[my retirement fund] 15/1/2018 10:09

Whilst I know they will have varying degrees of insurance, in the main these giant companies often end up self insuring against run of the mill theft damage etc.The poster who suggested Carillion were blood sucking needs to ask himself if this were the case why an earth did they go bust.

[rounder2] 15/1/2018 09:55

CC2014

Respectfully , why would you say that the kit is uninsurable ? Just because SDY might perhaps ask the customer to pay in full for lost / stolen / damage , does that mean that it doesn't insure its own kit separately ?

[brummy_git] 15/1/2018 09:52

CEO Russell Down hailed the new £45 million three-year CLLN contract renewal as a major coup in last year's annual report. Maybe not such a smart move after all - albeit he is financially trained/acute, so has probably hedged most of the risk with other parties. If not then credibility may take a bruising?

[rumbers2] 15/1/2018 09:44

Also it may give Speedy the opportunity to retender at higher margin too . Carillion was a life-sucking jinx to the industry and i think after the initial shock many will be privately celebrating its demise. I

[cc2014] 15/1/2018 09:41

If CLLN are really SDY's biggest customer a 10% fall is just the start. Maybe they have credit insurance, maybe not, but either way the kit is going to go missing.

The kit is un-insurable Rounder. When it goes missing the customer pays for it in full

[rounder2] 15/1/2018 09:33

Would it not make sense for a hire company to insure its kit " in the field " against damage / theft ? At the same time one would reasonably expect the management at SDY to have kept a rather tight rein ( whilst nevertheless outwardly showing support for one of their larger corporate clients ) on the credit terms extended to a customer who was obviously struggling ? Its a knock , no doubt , its lost revenue going forward and therefore profits but a bit of a storm in a teacup methinks !! BUYING opportunity

[brummy_git] 15/1/2018 09:22

I understand from the trade that Carillion may have been Speedy hire's biggest UK customer. What that means though in terms of pounds, shillings and pence is anyone's guess.

[my retirement fund] 15/1/2018 09:17

HICL and many others have made public statements in the last several weeks about what theve done to derisk a Carrilion bankruptcy. What have Speedy done or said ?

[my retirement fund] 15/1/2018 09:10

Prokarface you clearly don't know the building trade do you, read the RNS it's in administration. No one's going to get paid. Even the banks and debt investors are going to have to work overtime to get anything back.You honestly believe hundreds of white van man's and their subbies are going to down tools and leave the job with nothing?Serial numbers on most of this plant can be removed in seconds with an angle grinder. Only the big stuff like JCBs will have trackers in them.However I would imagine thousands of items from generators to lighting and from diamond cutters to acroprops are simply never going to be returned now.

[cc2014] 15/1/2018 08:40

Interesting.

CLLN had to be getting supplies from somewhere and AHT and TPK haven't reacted at all to the news.

Who knows. I don't have enough information to place a trade either way

[prokartace] 15/1/2018 08:40

You really think that MRF? Surely that is a crimianl offence and surely all the equipment has serial numbers and company logos on it. It may take time to recover but I dont think contractors would risk prosecution