Speedy Hire Regulatory News (SDY)

28 May 2009 07:00



28 May 2009

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL

Speedy Hire Plc announces a fully underwritten Rights Issue to raise net proceeds of approximately £100 million

The Board of Speedy Hire Plc today announces a fully underwritten 9 for 1 Rights Issue to raise proceeds of £100 million, net of expenses, through the issue of 458,658,900 New Ordinary Shares at 23 pence each. The Rights Issue is subject to approval by Shareholders at an Extraordinary General Meeting to be held on or around 24 June 2009.

David Wallis, Chairman of Speedy Hire, said: 

Highlights

9 for 1 Rights Issue of 458,658,900 New Ordinary Shares at a price of 23 pence per New Ordinary Share

Represents a 39% discount to the theoretical ex-rights price (adjusted for the proposed final dividend for the year ended 31 March 2009 which will not be paid on the New Ordinary Shares), and an 86% discount to the closing price of 176 pence per Ordinary Share on 27 May 2009, the last Business Day prior to announcement of the Rights Issue (also adjusted for the proposed final dividend)

The fundraising will:

Rothschild is acting as Financial Adviser and Sponsor. Oriel Securities is (in association with Scotiabank Europe plc) acting as Joint Broker, Joint Bookrunner and Joint Underwriter. KBC Peel Hunt is acting as Joint Broker, Joint Bookrunner and Joint Underwriter.

This summary should be read in conjunction with the full text of this Announcement.

The annual results for Speedy Hire for the financial year ended 31 March 2009 were released on 27 May 2009.

Enquiries 

General:

This Announcement is not for release, publication or distribution, directly or indirectly, in or into the United States, Australia, Canada, Japan or South Africa or any other jurisdiction into which the same would be unlawful. 

This Announcement does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, securities to any person in Australia, Canada, Japan or South Africa, or the United States or in any jurisdiction to whom or in which such offer or solicitation is unlawful. Subject to certain exceptions, the securities referred to herein may not be offered or sold in Australia, Canada, Japan or South Africa or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada, Japan or South Africa. The offer and sale of the securities referred to herein has not been and will not be registered under the Securities Act or under the applicable securities laws of Australia, Canada, Japan or South Africa. There will be no public offer of the securities in the United States. The availability of the Rights Issue to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Such persons should inform themselves about and observe any application requirements. 

The Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares and the Provisional Allotment Letters have not been and will not be registered under the Securities Act or under the securities laws of any state or other jurisdiction of the United States or under any securities laws of Australia, Canada, Japan or South Africa or any other jurisdiction where to do so would be unlawful and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States, or within any of Australia, Canada, Japan or South Africa or any other jurisdiction where to do so would be unlawful. There will be no public offer of the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares or the Provisional Allotment Letters in the United States. 

The distribution of this Announcement and the Provisional Allotment Letters and the offering of the Nil Paid Rights, the Fully Paid Rights or the New Ordinary Shares in jurisdictions other than the United Kingdom may be restricted by law. No action has been taken by the Company or any of Rothschild, Oriel Securities or KBC Peel Hunt that would permit an offering of such rights or shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company and each of Rothschild, Oriel Securities and KBC Peel Hunt to inform themselves about, and to observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This Announcement is for information only and does not constitute or form part of any offer or invitation to issue, acquire or dispose of any securities or investment advice in any jurisdiction. 

This Announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any New Ordinary Shares referred to in this Announcement in connection with Rights Issue except on the basis of information to be contained in the Prospectus expected to be published on or around 1 June 2009 by the Company in connection with the proposed Rights Issue. Copies of the Prospectus will be available from the Company's head office Ashton House, 1 The Parks, Newton-le-Willows, Merseyside, WA12 0JQ. 

This Announcement has been issued by and is the sole responsibility of the Company. No representation or warranty, express or implied is, or will be made as to, or in relation to, and no responsibility or liability is, or will be, accepted by any of Rothschild, Oriel Securities or KBC Peel Hunt or by any of their affiliates or agents as to, or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

Rothschild, which is authorised and regulated by the Financial Services Authority ("FSA") in the United Kingdom, is acting exclusively for the Company as Sponsor and Financial Adviser in connection with the Rights Issue and Admission and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Rights Issue or any other matters referred to in this Announcement. 

Oriel Securities, which is authorised and regulated by the FSA in the United Kingdom, is acting exclusively for the Company as Joint Broker, Joint Bookrunner and Joint Underwriter in connection with the Rights Issue and Admission and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Rights Issue or any other matters referred to in this Announcement. 

KBC Peel Hunt, which is authorised and regulated by the FSA in the United Kingdom, is acting exclusively for the Company as Joint Broker, Joint Bookrunner and Joint Underwriter in connection with the Rights Issue and Admission and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Rights Issue or any other matters referred to in this Announcement. 

All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause the Group's actual results to differ materially from those indicated in these statements. Any forward looking statements in this Announcement reflect the Group's current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the Group's operations, results of operations, growth strategy and liquidity. 

These forward-looking statements speak only as of the date of this Announcement. Subject to any obligations under the Prospectus Rules, the Disclosure and Transparency Rules or the Listing Rules and save as required by law, the Company undertakes no obligation to update publicly or to review any forward-looking statement, whether as a result of new information, future developments or otherwise. All subsequent written and oral forward-looking statements attributable to the Company or individuals acting for and on behalf of the Company are expressly qualified in their entirety by this paragraph. Prospective investors should specifically consider the factors identified in the Prospectus which could cause actual results to differ before making an investment decision. 

Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser. Any indication in this Announcement of the price at which the Ordinary Shares of the Company have been bought or sold in the past cannot be relied upon as a guide to future performance. No statement in this Announcement is intended to be a profit forecast.

  Speedy Hire Plc

Rights Issue to raise approximately £105 million (£100 million net of expenses)

Introduction

The Board of Speedy Hire today announces that it is proposing to raise approximately £105 million (£100 million net of expenses) by way of a Rights Issue. Under the Rights Issue, which is described further below, the New Ordinary Shares will be offered by way of rights on the basis of 9 New Ordinary Shares at 23 pence each for every 1 Existing Ordinary Share held at the Record Date.

The Rights Issue Price of 23 pence per New Ordinary Share represents:

a 39% discount to the theoretical ex-rights price (calculated by reference to the Closing Price of 176 pence per Existing Ordinary Share on 27 May 2009, being the last business day prior to the announcement of the Rights Issue, adjusted for the proposed final dividend for the financial year ended 31 March 2009 which will not be paid on the New Ordinary Shares); and

an 86% discount to the Closing Price of 176 pence per Ordinary Share on 27 May 2009, also adjusted for the 31 March 2009 final dividend.

The purpose of this Announcement is to provide Shareholders with details of the Rights Issue and to explain why the Board considers the Rights Issue to be in the best interests of the Company and its Shareholders as a whole.  The Rights Issue is subject to approval by Shareholders at the EGM. The Board unanimously recommends that Shareholders vote in favour of the Rights Issue Resolutions to be proposed at the EGM as each member of the Board has undertaken to do in respect of their own beneficial holdings of Existing Ordinary Shares. 

This Announcement is also intended to provide Shareholders with details of the proposed amendments to the Group's share scheme arrangements as described further below and to explain why the Board considers the proposed amendments to the share scheme arrangements, and the Share Scheme Resolution, to be in the best interests of the Company and its Shareholders as a whole, and why the Board unanimously recommends that Shareholders vote in favour of the Share Scheme Resolution to be proposed at the EGM as each member of the Board has undertaken to do in respect of their own beneficial holdings of Existing Ordinary Shares.

The Rights Issue and proposed amendments to the Group's share scheme arrangements are conditional upon, among other things, the approval of the Rights Issue Resolutions as described further below. The notice of the EGM will be set out in the Prospectus, which is expected to be published on or around 1 June 2009.

Background to the Rights Issue

Over recent years Speedy Hire has successfully achieved leading positions in its core markets of tool and equipment hire. A key element of this strategy has been the development of close, long-term strategic partnerships with major contractors, industrial groups and their respective supply chains. Speedy Hire currently has exclusive or preferred supplier relationships with 21 of the UK's top 25 major contractors.

Speedy Hire's alignment with these customers has enabled it to leverage their high quality order books, in turn providing more visible, predictable revenue streams and superior growth potential to the Company. In addition, the Group is taking steps to augment and enhance its service capability to offer a broader support services outsourcing role, encompassing higher margin and value-add activities such as testing/inspection, maintenance, asset management and training.

The Group has also focussed strategically on achieving leading market positions in more resilient sub-sectors of the UK construction industry which now represent over 70% of Speedy Hire's major clients' revenues. These sub-sectors include infrastructure related construction, regulated utilities and petrochemicals, sectors in which a number of the Group's customers (including its long term strategic partners) are active.

Trading environment

In the interim report for the Group for the six month period ended 30 September 2008 published on 26 November 2008, Speedy Hire reported a severe contraction in general construction activity funded by the private sector, particularly in areas of commercial, retail and residential construction serviced in particular by Speedy Hire's smaller trade customers.

More recently, the deterioration of national and global credit markets has resulted in a significant and far-reaching negative impact on the wider construction market with reduced activity, confidence and capital availability causing the cancellation of planned and projected spending. This has resulted in a significant weakening in construction, which current projections suggest will continue over the medium term.

The Company's strategic alignment with the UK's major building contractors and industrial construction groups, and its leading market position in resilient, predominantly publicly-funded sub-sectors, as outlined above, has afforded a degree of insulation against this increasingly challenging trading environment. However, facing lower levels of activity across the tool and equipment hire divisions, from July 2008 the Board took decisive and swift actions on cash management, cost savings and capital expenditure and, as announced on 1 April 2009, successfully negotiated amendments to the covenants in its bank facilities culminating in a new facility agreement.

Further detail regarding the actions taken by Speedy Hire to date is set out in the annual results announcement of the Group for the financial year ended 31 March 2009, released on 27 May 2009, and which included:

Cost reduction measures

In the interim results of the Group for the six month period ended 30 September 2008, which were announced on 26 November 2008, the Board advised of its programme to realise £24.4 million in annualised cost savings. It also announced the launch of a further plan to deliver an additional £18 million of annualised cost savings before the financial year ended 31 March 2009. As a result of these initiatives, from July 2008 to March 2009, 957 people (17%) left the Group, 82 depots (17%) have been closed and 470 vehicles (15%) have been returned to their lessors or sold.

These actions, together with other cost reduction initiatives ensured that cost savings with an annualised benefit in excess of £42 million were in place for the start of the current financial year. Exceptional costs of £21 million were expensed in the year ended 31 March 2009 to achieve these projected savings. Of this amount approximately £18 million represents a cash cost (of which approximately £12 million was paid in that financial period).

Capital expenditure and surplus asset disposal programme

Capital expenditure has been carefully managed, with the principal focus on assets necessary to maintain the operational integrity of the business, essential IT and property investment and in supporting customers, projects and business sectors. Capital expenditure for the second half of the year to 31 March 2009 was 59% lower than the level of expenditure in the first six months of the same year. This reduced run-rate of investment has continued into the new financial year.

The Group has engaged in a proactive disposal programme of under utilised and older assets which, together with the reduced capital expenditure, has contributed to a reduction of the net book value of hireable assets of £51.4 million or 15% over the second half of the financial year ended 31 March 2009. This continued careful management of net capital expenditure will continue in the current financial year, illustrating the flexibility of the Group's business model and its ability to instigate swift action to control capital outflow and generate cash.

Bank facility

On 1 April 2009, the Board announced that Speedy Hire had successfully negotiated terms with all of its banks to establish more appropriate covenants on its Existing Facility, albeit at significantly increased interest margins. The revised £300 million committed facility extends until June 2012 and incorporates modified covenants which are considered by the Board to be more appropriate for prevailing market conditions. 

Reasons for the Rights Issue

The actions taken by the Board as set out above have ensured that the business has a more appropriate cost structure for the current challenging market conditions. The Board believes that the strategy of alignment with major contractors and industrial groups, combined with leading market positions in resilient sub-sectors, should enable the Group successfully to withstand the current wider sector downturn, increase market share through natural consolidation as smaller competitors cease to trade and to emerge from this phase of the economic cycle in a stronger position. 

Nevertheless, in view of the continuing uncertain market outlook, the Board believes that it is in the best interests of the Group and its Shareholders as a whole to raise approximately £105 million (£100 million net of expenses) of new equity by way of the Rights Issue.

The proceeds of the Rights Issue will enable Speedy Hire to:

strengthen its balance sheet, reducing the ratio of net debt to EBITDA from 2.0x to 1.2x on a pro-forma basis as at 31 March 2009, and will provide financial and operational flexibility in the event that the Group's core markets continue to weaken over the medium term. The lower debt will also have the benefit of reducing the interest rate margin payable by the Group to 2% under the Existing Facility agreement;

create a resilient platform from which to consolidate and extend the Group's market leading position by: further developing new and existing customer relationships; enhancing its product offering; developing its international network; and supporting selective, targeted and opportunistic acquisitions of customer fleets; and

emerge from the current trading environment in a position of greater strength.

Use of proceeds

Although not specifically required to do so under the terms of the Group's financing arrangements, the Directors intend to use the entire net proceeds of the Rights Issue, amounting to approximately £100 million, to reduce the Group's financial indebtedness.

The impact of the Rights Issue would be to have improved the Group's ratio of net debt to EBITDA from 2.0x to 1.2x on a pro-forma basis as at 31 March 2009 and to have improved interest cover1 from 5.7x to 6.5x on a pro-forma basis as at 31 March 2009.

The Directors expect that the proceeds of the Rights Issue will make a positive contribution to total earnings in the financial year ending 31 March 2010 as a result of lower interest payments arising from reduced levels of net financial indebtedness and reduced margin due to the structure of the Existing Facility. However, even after this saving on interest expense, the Directors expect that the increased number of Ordinary Shares in issue following the Rights Issue will have a negative effect on Speedy Hire's reported earnings per share for the year ending 31 March 2010.2

The Rights Issue

The Company proposes to raise gross proceeds of approximately £105 million (£100 million net of expenses), by way of the Rights Issue.

The Company proposes to offer 458,658,900 New Ordinary Shares, in aggregate, by way of rights, to Qualifying Shareholders at 23 pence per share, payable in full on acceptance on the basis of:

9 New Ordinary Shares for every 1 Existing Ordinary Share

held by Qualifying Shareholders on the Record Date for the Rights Issue and otherwise on the terms and conditions to be set out in the Prospectus and, in the case of Qualifying non-CREST Shareholders only, the Provisional Allotment Letter.

The Rights Issue Price of 23 pence per New Ordinary Share represents:

a 39% discount to the theoretical ex-rights price (calculated by reference to the Closing Price of 176 pence per Existing Ordinary Share on 27 May 2009, being the last business day prior to the announcement of the Rights Issue, adjusted for the proposed final dividend for the financial year ended 31 March 2009 which will not be paid on the New Ordinary Shares); and

an 86% discount to the Closing Price of 176 pence per Ordinary Share on 27 May 2009, also adjusted for the 31 March 2009 final dividend.

The New Ordinary Shares will, when issued and fully paid, rank equally in all respects with the existing Ordinary Shares, including the right to receive all dividends or distributions made, paid or declared after the date of the Prospectus with the exception of the final dividend proposed to be paid for the year ended 31 March 2009 which was recommended by the Board in the announcement of the annual results made on 27 May 2009. If approved at the AGM this dividend will be paid on 25 August 2009 to Shareholders on the register at 26 June 2009. Fractional entitlements to New Ordinary Shares will be sold for the benefit of the Company. Holdings of Ordinary Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of calculating entitlements under the Rights Issue.

The Rights Issue is conditional, inter alia, upon the following:

(a) the passing of the Rights Issue Resolutions;

(b) Admission having become effective by not later than 8.00 a.m. on 25 June 2009 (or such later time and/or date as the Company, Rothschild, Oriel Securities and KBC Peel Hunt may agree, but such that the latest date for acceptance is not later than 24 July  2009); and

(c) the Underwriting Agreement having become unconditional in all respects (save for the condition relating to Admission) and not having been terminated prior to Admission or in accordance with its terms.

The Rights Issue has been fully underwritten by Oriel Securities and KBC Peel Hunt pursuant to the terms of the Underwriting Agreement, the principal terms and conditions of which will be summarised in the Prospectus.

The latest time and date for acceptance and payment in full under the Rights Issue is 11.00 a.m. on 9 July 2009.

The result of the Rights Issue, including the aggregate number of New Ordinary Shares issued and the aggregate amount raised, net of expenses, is expected to be announced by the Company to a Regulatory Information Service by 7.00 a.m. on 10 July 2009.

In setting the Issue Price, the Directors have considered the price at which the New Ordinary Shares need to be offered to investors to optimise the success of the Rights Issue and raise a very significant level of equity compared with the current market capitalisation of the Group. Having taken advice the Directors believe that both the Issue Price and the level of discount to the closing share price are appropriate.

Proposed share scheme amendments

In the light of the Group's trading in the year ended 31 March 2009 and the continuing challenging economic environment, the Remuneration Committee has reviewed the incentive arrangements of the senior management of Speedy Hire in order to determine an appropriate structure for the current financial year. The Remuneration Committee's principal objective in this review was to create a plan which would align senior executives' reward with the interests of shareholders, whilst continuing to incentivise them appropriately.

Background

Speedy Hire's long standing remuneration policy has been to set the basic salaries of the senior team at a level which is between median and lower quartile, as compared with a comparator group of companies, yet structure a package which allows them to earn a top quartile reward for top quartile performance. This has been achieved through the Speedy Hire 2004 Performance Share Plan (the ''PSP'') and the Speedy Hire 2004 Co-Investment Plan (the ''CIP''), which were established in 2004, and the annual bonus plan.

For the year ended 31 March 2009, the Executive Directors were granted, in addition to an award under the PSP over shares with a value equal to 100% of their basic salaries (vesting conditional on total shareholder return (''TSR'') performance and stretching earnings per share (''EPS'') targets), a bonus opportunity of a maximum of 120% of their basic salaries. The bonus was conditional on meeting certain financial targets, as to 75% of the award, and personal objectives, as to 25% of the award. Whilst the financial targets were not met in the year, the personal objectives largely were. Notwithstanding the achievement of personal objectives, the Executive Directors have waived any entitlement to a bonus for the year and, likewise, no bonus has been paid to any member of the senior management group. As a result, no Executive Director has been able to invest a bonus into the CIP for the year, which would otherwise have offered the potential to be awarded matching shares of up to twice their investment (subject to the attainment of required EPS growth rates).

Further, the Remuneration Committee has determined that there should be no basic salary increases for the Executive Directors or the senior management group in the year to 31 March 2010. Their basic salaries will next be reviewed in April 2010.

Proposal

In the light of the above and with a view to preserving cash in the business, whilst motivating the Executive Directors and senior management group to outperform in these challenging times, the Remuneration Committee proposes to cancel any bonus opportunity for the senior management group for the year to 31 March 2010, as a consequence of which no CIP award will be made in the financial year commencing on 1 April 2010, and substitute it, in part, with an award under the PSP that is larger than has previously been the practice. The Remuneration Committee proposes to make awards over an aggregate of up to 10,621,349 Shares, which have a face value of £4 million at the theoretical ex-rights price based on the Closing Price as derived from the London Stock Exchange's Daily Official List of 176 pence per Ordinary Share on 27 May 2009, being the last Business Day prior to the announcement of the terms of the Rights Issue, adjusted for the proposed final dividend for the financial year ended 31 March 2009 which will not be paid on the New Ordinary Shares, (''TERP''), to the Executive Directors and approximately 26 managers. The vesting condition for these awards would be that Speedy Hire's TSR over the 3 years following award is at least median, as compared to the performance of the FTSE 250 (excluding investment trusts), at which point 20% of an award would vest. Full vesting would only be at top quartile performance, with straight line vesting in between. There will also be a financial underpin which would allow the Remuneration Committee to reduce the number of Shares which would provisionally vest by reference to performance against the TSR target if it considered this performance not truly representative of the Company's underlying financial performance over the relevant period. When considering the Company's underlying financial performance, the Remuneration Committee will take account of performance against a range of financial metrics including operating cash flow, profit against targets, working capital management and share price progression.

The proposed awards are as follows:

an award over 1,323,697 Shares to Steve Corcoran (which have a value at TERP equal to 147% of basic salary);

an award over 973,307 Shares to Justin Read (which have a value at TERP equal to 147% of basic salary);

an award over 856,510 Shares to Michael McGrath (which have a value at TERP equal to 147% of basic salary);

an award over 788,378 Shares to Claudio Veritiero (which have a value at TERP equal to 147% of basic salary); and

awards over up to 6,679,457 Shares in aggregate to be made to approximately 26 managers, with the number of Shares subject to any award to any such manager to be determined by the Remuneration Committee.

Whilst these awards will be made within the dilution limits recommended by the Association of

British Insurers ("ABI"), Shareholder consent is required to amend the rules of the PSP to allow awards to be made over Shares with a value in excess of 100% of the relevant participant's basic salary. A resolution to effect this will be proposed at the EGM. The amendment to the PSP would be for the current year only and, whilst it is conditional on the Rights Issue proceeding, the Rights Issue is not conditional on the amendment to the PSP being approved. In the event that the Rights Issue does not proceed, or the resolution to amend the PSP is not approved, the Remuneration Committee will consult with Shareholders as to an alternative plan. 

Other

The Remuneration Committee intends that an offer under the Speedy Hire Sharesave Schemes should be made to all eligible employees in the normal way, once the Rights Issue has been completed. Again, this will be implemented within the dilution limits recommended by the ABI. The Remuneration Committee is also considering mechanisms by which the share awards under the PSP may be offered to participants in a tax efficient manner.

Current trading and prospects

Trading in the early part of the current financial year remains challenging. The difficult conditions which were prevalent in Q4 of FY09 have continued into early FY10, with activity to date being more subdued than anticipated, largely due to contracts being delayed or deferred.

More generally, the principal market in which Speedy Hire operates, construction, continues to polarise, with contractors increasingly reliant upon government and regulated spending while the private sector continues to withdraw from the market. This dynamic has had a further polarising effect as fewer larger contracts are awarded to fewer larger contractors. It is these larger construction and engineering groups that are continuing to secure an ever increasing proportion of the workload available. Speedy Hire's business is growing its revenues with these clients and thereby continues to increase market share, albeit from a smaller overall market. In addition, the Group does not believe this market will show any meaningful signs of growth for another twelve to eighteen months.

Recently, there have been a few early signs of encouragement which suggest that the market might be entering a relatively more stable phase, however it is premature to suggest that these can be relied upon. With trading remaining subdued the Board is more cautious about the Group's short term outlook.

Dividends and dividend policy

The Company's current dividend policy is to pay a dividend twice annually at a level which the Board considers (at the time of declaration or recommendation of such dividend as appropriate) to be reasonable having regard to the level of the Company's distributable reserves as at that date, together with its prospects for the future.

The Company paid an interim dividend in January 2009 and the Board has decided, in the light of the Group's financial results for the period, to recommend a final dividend of 6.4p for the year to 31 March 2009. If approved, total dividend for the year will therefore be 12.8p per Ordinary Share (the total dividend for the prior year was 19.8p per Ordinary Share). For the avoidance of doubt, the final dividend for the year to 31 March 2009 will (if approved by Shareholders) be paid on Ordinary Shares, but not on New Ordinary Shares.

The Board has announced its intention to pursue a progressive dividend policy when it is considered prudent to do so. The level of future dividend payments will take into account the Group's underlying earnings, cash flows, capital investment plans, distributable reserves, debt repayments and the need to maintain an appropriate level of dividend cover.

The New Ordinary Shares will, when issued and fully paid, rank equally in all respects with the Existing Ordinary Shares including the rights to receive all dividends or distributions made, paid or declared after the date of the Prospectus. This is with the exception of the final dividend that has been recommended by the Board for the year ended 31 March 2009 which was announced on 27 May 2009 and, subject to being approved by Shareholders at the AGM, shall be paid on 25 August 2009.

Extraordinary General Meeting

The combined circular and prospectus containing details of the Rights Issue and the notice of EGM is expected to be posted to Shareholders on or around 1 June 2009. For the purposes of effecting the Rights Issue and the proposed amendments to the Speedy Hire 2004 Performance Share Plan, the Resolutions will be proposed at an EGM, which is expected to be held at the offices of Pinsent Masons, CityPoint, One Ropemaker Street, London EC2Y 9AH at 11 a.m. on 24 June 2009.

If the Rights Issue Resolutions are not approved, the Rights Issue cannot proceed.

Directors' intentions

Each of the Directors holding Existing Ordinary Shares intends, to the extent that he or she is able, to take up his or her rights to subscribe for New Ordinary Shares under the Rights Issue in full. To the extent that he or she does not take up his or her rights in full, he or she will sell sufficient of his or her Nil Paid Rights during the nil paid dealing period to meet the costs of taking up the balance of his or her entitlements to New Ordinary Shares.

James Morley, who took up his appointment as a non-executive director on 2 April 2009, is unable to participate in the Rights Issue as he is not an existing holder of Ordinary Shares, however he intends to purchase Shares with a value equal to £40,000 in the market. These Shares will be purchased ex-rights. Alternatively, Mr. Morley may acquire rights in the market, and take up those rights to fulfil the £40,000 investment commitment.

  Expected timetable of principal events

Each of the times and dates in the table below is indicative only and may be subject to change.

About Speedy Hire

Speedy Hire is a leading business-to-business provider of equipment and support services to construction, manufacturing, industrial, rail and related industries. The Group operates a number of equipment rental businesses specialising in tools and general building equipment, portable accommodation and modular building systems, lifting and materials handling systems, surveying and measurement instruments, compressed air and portable power generation equipment and high performance pumps. In addition, the Group provides a range of support services, including customer training on safety awareness and equipment usage.

  Appendix

Definitions