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City News: Hire shares stay strong Catherine Stratton rounds up all the latest Stock Market news. As Stock Markets recover from their recent turbulence, the overall performance of hire shares continues to be sound. Particularly noteworthy are the new all-time ‘highs’ for Aggreko, on the back of record half year profits (see EHN City News October), and for Vp, which has seen its market capitalisation rise to over the benchmark £200m. Recent days have seen a re-surfacing of bid rumours surrounding Ashtead with a suggested 175p a share price tag; many analysts are sceptical of such a premium. The only results last month came from Andrews Sykes; its half year figures are rather disappointing. The profits shown in our results table are after a pension curtailment charge of £934,000 as the company sets about resolving its pension fund deficit. Andrews Sykes has offered all deferred members of its pension scheme to transfer their accrued rights to an alternative scheme provider of their choice, and to increase each transfer value by 40%. This charge covers the estimated cost but, as the process is continuing, the estimated liabilities will be re-calculated in the full year accounts. In total the cash cost to the company is expected to be approximately £4.6m, which is to be financed largely by new bank borrowings. Overall, the Andrews Sykes pension fund deficit before deferred tax is estimated to fall from £6.6m at the beginning of this year to £2.2m. Chairman Jacques Murray said that underlying Group trading profit had been maintained at a similar level to that of the first six months of 2006 “despite unfavourable weather conditions.” The low temperatures of the early summer clearly affected the air conditioning operation, but the July floods, with the resulting high activity levels for the company’s heating and pumping equipment, should make a positive impact on the second half figures. The Chairman’s statement concludes: “I am confident that I will still be able to report a reasonable result for the second half of 2007.” Although overall group revenues declined slightly, hire revenues at Andrews Sykes rose 2.8% to £19.7m to account for 72% of the total. Andrews Sykes has now opened new depots in Belgium and Holland and started a company specialising in air conditioning in Florida. Initial results from these new ventures are described as “encouraging”. Speedy has issued a trading update in advance of its interim results due at the end of November. Business at both the Tool Hire and the Equipment Hire divisions has sustained its momentum with a 33% increase in overall turnover in the five months to the end of August. Tool Hire revenues rose 28% with a one month contribution from the Hewden acquisition; Equipment Hire revenues grew 37%. The integration of Hewden, now in train and progressing well, means that Speedy is unable to give a reliable like-for-like growth figure for its Tool Hire division; the company says it will re-commence reporting that after the first anniversary of the acquisition. Prior to the acquisition, like-for-like growth had been running at over 10% - an impressive figure for the market leader - indicating that it is continuing to gain market share. Finance Director Neil O’Brien comments that all Speedy’s regional tool hire companies have performed well and, within a strong overall performance from the Equipment Division, he singles out Speedy Lifting and Speedy Survey as doing “remarkably well.” The trading update concludes, “although mindful of the current uncertainty in the financial markets, at present there appears to be no sign of this impacting on our market and the Group continues to trade well and in line with market expectations. The Board remains optimistic of reporting further good progress.” Vp continues to strengthen its specialist businesses by strategic acquisition; the latest is the £1.2m purchase by its Torrent Trackside subsidiary of the business and assets of First Engineering’s small plant division. First Engineering is a subsidiary of Babcock International (from which Vp has previously acquired Shorco, ESS Safety Services and Pivotal). As part of the latest acquisition, Torrent has entered into a three year supply agreement with First Engineering for the hire of rail portable plant, trackside lighting and equipment. Vp chairman Jeremy Pilkington describes the acquisition as “a significant development for Torrent Trackside”, which further enhances the company’s strategic alliance that has been established with the First Engineering operation. • Executive Hire News › Archives › November 2007 › City News › Hire shares stay strong
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