City round-up: Renold; HSS Hire

The strong momentum of the previous financial year has carried through to current trading for Manchester manufacturer Renold, which said it boasts a record order book at the close of its interim period, ending September 30.

Renold, an international supplier of industrial chains and related power transmission products, achieved a 17% increase in turnover, of £95.3m for the reporting period, as well as a 121% boost in pre-tax profits of £6.2m.

Net debt was reduced by £4.5m to £13.9m.

In light of the widely reported economic headwinds, including the impact on its supply chain, raw material availability, inflation and continuing investment in equipment and revenue expenditure to improve the performance of the business, the board has decided not to declare an interim dividend.

The group said its markets recovered strongly during the first half, as activity levels rebounded from COVID impact, returning to 96% of pre-pandemic levels.

It managed strong cash generation, with continuing focus on working capital and cost control, but allowing for inventory increases due to lengthened supply chains and a gradual restoration of capital expenditure.

The group order intake in the period of £113.0m, was 48.8% up year-on-year, or 54.9% ahead at constant exchange rates.

Its orderbook at September 30, of £72.1m, is a record high for the group, and compares with £46.5m at the same point last year.

Renold completed the bolt-on acquisition of the conveyor chain business of Brooks, which it said is performing ahead of expectations.

Chief executive, Robert Purcell, said: “The strong trading momentum experienced in the fourth quarter of the last financial year has continued into the first half, resulting in growth of both revenues and profitability.

“Despite the widely reported global supply chain and inflationary pressures that remain present, particularly with respect to materials, transport and energy costs, Renold continues to benefit from geographic, customer and market sector diversity.

“With a record order book at the period end, coupled with the strategic initiatives previously implemented, we approach the second half with confidence, but cognisant of the very volatile and inflationary world we operate in.”

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HSS Hire

Manchester-based tool hire group, HSS Hire, announced today that it has entered into a new term loan facility of £70m and a revolving credit facility of £25m to refinance its existing corporate debt.

In the year ended December 26, 2020, the group’s senior finance facility interest charge was £16.3m. Alongside the successful change in operating model and equity placing in late 2020, the refinancing will materially reduce the ongoing annual interest charge to approximately £3.0m, driving a significant increase in earnings per share.

The facilities will be provided by HSBC Bank and National Westminster Bank and will mature in November 2025, with the opportunity to extend by a further year.

The facilities are at interest rates of between 275bps and 350bps above SONIA, dependent on the net debt leverage ratio of the group. The interest rate will be 300bps above SONIA at closing.

Closing of the new facilities is subject to customary conditions and is expected to take place by the end of November, together with repayment of the group’s existing term loan facility.

A repayment premium of around £4.5m will be payable at this time to the provider of the group’s existing term loan facility.

In a trading update today, HSS said that, since the group’s first half results update, announced on September 30, 2021, business continues to be strong and management now expects its full year EBITDA and EBITA, on a non-IFRS16 basis, to be slightly ahead of market expectations.

Chief executive, Steve Ashmore, said: “This new refinancing package is another significant development for HSS, adding to the very positive strategic and operational progress that we have delivered over the last few years.

“It materially reduces our interest costs and improves both our EPS and free cash flow. With a much stronger financial platform and continued trading momentum across our business, HSS is now well positioned to deliver our next exciting phase of growth.”