Underlying revenues were up 5.9% to £204m while pre-tax profits were up 21.5% to £16.4m thanks to higher margins from an increased share of service revenues.
Return on capital employed (ROCE), chief executive Russell Down’s preferred performance measure, increased to 12.7% from 12.3% a year ago and is well on the way towards his medium-term target of 15%.
The firm took a decision following the collapse of Carillion to focus more on the small and medium (SME) business segment to spread its revenue base and this has paid off handsomely.
‘I am particularly encouraged by the growth in higher-margin SME customer revenues and progress with our digital roll out where we have continued to make significant investment’, commented Down.
A younger fleet of equipment and much-improved customer service, through the introduction of apps and artificial intelligence which can predict levels of demand, have helped boost utilisation rates, while service revenues – which have higher profit margins – have grown to 40% of group turnover from 30% a few years ago.
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As well as the training business, which was boosted in the first half by the acquisition of Gleason, service revenues come from re-hires, fuel supply and the Lloyds British testing and certification division.
Lloyds British is a hidden gem within Speedy Hire, growing revenues at a 20% clip as it wins more contracts from competitors and cross-sells into key customers from the core hire business who typically need their equipment and facilities inspected and certified.
Although there is a nod to the ‘uncertain political backdrop’, there was no change to the firm’s full year sales or earnings guidance in today’s update.