Amid regional construction weakness, Speedy Hire (SDY) generated just 1.4 per cent revenue growth in its UK and Ireland hire business in the year to 31 March. But the equipment rental group continued to make progress with small- and medium-sized enterprises (SMEs) – revenue from these customers surged by almost a third, lifting the hire gross margin by 0.4 percentage points to 77 per cent.
Last year’s acquisition of Geason Training and growth from testing business Lloyds British boosted UK and Ireland services revenue by 8.9 per cent. However, Geason has underperformed management’s expectations and a funding agency is also seeking £2.6m of repayments from the business for a three-year period from August 2017. These issues led to £12.2m of net exceptional charges, which was largely behind the decline in statutory pre-tax profit.
Excluding lease liabilities, net debt dropped more than a tenth last year to £79m, level with cash profits. It had fallen further to £67m by the end of May. With the average age of the fleet being just 3.4 years, Speedy can afford to defer capital expenditure to preserve cash amid the Covid-19 crisis. It also has over £100m of headroom on its committed borrowing facilities.
Peel Hunt forecasts adjusted pre-tax profit of £17m and EPS of 2.6p in 2021, versus £35m and 5.4p in 2020.
| SPEEDY HIRE (SDY) | ||||
| ORD PRICE: | 56.7p | MARKET VALUE: | £295m | |
| TOUCH: | 56.6-56.8p | 12-MONTH HIGH: | 88p | LOW: 35p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 40p | NET DEBT: | 73%* | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 329 | -57.6 | -10.2 | 0.70 |
| 2017 | 369 | 14.4 | 2.20 | 1.00 |
| 2018 | 373 | 18.0 | 2.71 | 1.65 |
| 2019 (restated) | 395 | 28.7 | 4.47 | 2.00 |
| 2020 | 407 | 20.7 | 3.23 | 0.70 |
| % change | +3 | -28 | -28 | -65 |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes lease liabilities of £73m | ||||
