REG - Ashtead Tech Hldgs - Full-Year Results 2023
16/04/2024 07:00
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RNS Number : 7111K Ashtead Technology Holdings plc 16 April 2024
16 April 2024
Ashtead Technology Holdings plc
("Ashtead Technology" or the "Company" or the "Group")
Full-Year Results 2023
Ashtead Technology Holdings plc (AIM: AT.), a leading subsea equipment rental
and solutions provider for the global offshore energy sector, announces its
full-year results for the period ended 31 December 2023.
Financial Performance (£'m)
2023 2022 % Movement
Revenue 110.5 73.1 51.1%
Gross profit 86.3 54.3 59.0%
Gross profit % 78.1% 74.2% 390bps
Adjusted EBITA(1) 36.2 19.9 82.5%
Adjusted EBITA % 32.8% 27.1% 570bps
Operating profit 31.2 17.7 76.2%
Profit before tax 27.5 16.3 68.9%
Basic earnings per share (pence) 27.0p 15.5p 74.2%
Adjusted basic earnings per share (pence)(2) 33.4p 19.3p 73.1%
Return on Invested Capital (ROIC) 27.6% 21.2% 640bps
Leverage(3) 1.3 1.0
· Group revenue up 51% to £110.5m (2022: £73.1m), driven by strong
organic growth (35%) and M&A (17%), including the full year impact of
WeSubsea and Hiretech acquisitions completed in 2022, and one-month impact of
ACE Winches acquisition completed on 30 November 2023.
· Gross profit of £86.3m (2022: £54.3m), representing a gross margin
of 78.1% (2022: 74.2%), benefitting from a combination of higher cost
utilisation and improved pricing.
· Adjusted EBITA(1) of £36.2m (2022: £19.9m), 82% growth on prior
year, with Adjusted EBITA margin of 32.8% (2022: 27.1%).
· Revenues from both the offshore renewables and the oil and gas
markets up 50% and 52%, respectively, with renewables revenue growth
representing 31% of total revenue.
· Adjusted earnings per share of 33.4p (2022: 19.3p) and basic earnings
per share of 27.0p (2022: 15.5p).
· ROIC of 28% for the period (2022: 21%), significantly ahead of cost
of capital.
· Reported net debt to Adjusted EBITDA leverage of 1.3x, 1.0x on a
proforma basis.
· Final dividend of 1.1p recommended.
Operational Highlights
· Continued focus on expansion of the business through investment in
equipment alongside further M&A activity and successful integration of
2022 acquisitions.
o Successful integration of Hiretech and WeSubsea acquisitions with both
performing ahead of their acquisition cases with combined revenue growth of
30% on LTM revenues at acquisition
o Completed acquisition of ACE Winches on 30(th) November 2023 to expand
equipment and service capability and market reach
o ACE Winches results for the 12 months to 31 December 2023 delivered on
expectations
· Significant investment in high-quality equipment, expanding the
breadth and depth of our fleet. £19.1m capex invested in rental fleet (2022:
£13.1m).
· Employee headcount grew by 25% organically to further support
business development and reach with an additional 203 joining via the ACE
Winches acquisition, taking total headcount to 527 at year end.
Outlook
· Market growth across both oil and gas, and renewables driving
continued customer backlog build with a combined CAGR of 11% across Ashtead
Technology's addressable markets to 2027.
o Growth in the offshore renewables market remains particularly significant,
with the Company's addressable market within offshore wind to increase at 25%
CAGR to 2027
· Targeting low double-digit organic revenue growth in the medium-term
with sustainable EBITA margins in the high 20%'s.
· Acquisition of ACE Winches has supported a c.30% expansion of total
accessible market (TAM) which is forecast to increase to $3.5bn by 2027 from
$1.2bn at IPO.
· Robust balance sheet, together with strong operational cash
generation, positions the Group to continue to pursue selective,
value-accretive M&A opportunities.
· The Board is encouraged by the Group's performance in Q1 2024 and our
full year 2024 expectation remains unchanged.
Allan Pirie, Chief Executive Officer, commented:
"2023 was another successful year for Ashtead Technology as we made great
progress in delivering our strategic goals and reported strong financial
growth during the period. We grew ahead of our markets in 2023, highlighting
the efficiencies and value add we provide our customers' offshore operations.
We are investing for the future, expanding our market reach through both
organic and inorganic investment as we continue to broaden our fleet and build
strength and depth of expertise which ensures we are well-positioned to
continue to capitalise on upcoming market opportunities in a sector supported
by long-term structural tailwinds."
Analyst Briefing
A conference call for sell-side analysts will be held on Tuesday 16(th) April
at 8.30am. If you would like to participate, please email
ashteadtechnology@vigoconsulting.com
(mailto:ashteadtechnology@vigoconsulting.com) .
Investor Presentation
Allan Pirie and Ingrid Stewart will provide a live presentation relating to
the full year results via the Investor Meet Company platform on Friday 19
April at 11.30am.
The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via the Investor Meet Company dashboard up until
9.00am the day before the meeting or at any time during the live
presentation. Investors can register for the presentation via the link
below:
https://www.investormeetcompany.com/ashtead-technology-holdings-plc/register-investor
(https://url.uk.m.mimecastprotect.com/s/66zBCKAG1UQrZouMPwGX?domain=investormeetcompany.com)
Investors who already follow ASHTEAD TECHNOLOGY HOLDINGS PLC on the Investor
Meet Company platform will automatically be invited.
For further information, please contact:
Ashtead Technology (Via Vigo Consulting)
Allan Pirie, Chief Executive Officer
Ingrid Stewart, Chief Financial Officer
Vigo Consulting (Financial PR) Tel: +44 (0)20 7390 0230
Patrick d'Ancona ashteadtechnology@vigoconsulting.com
(mailto:ashteadtechnology@vigoconsulting.com)
Finlay Thomson
Verity Snow
Numis Securities Limited (Nomad and Broker) Tel: +44 (0)20 7260 1000
Julian Cater
George Price
Kevin Cruickshank (QE)
1 Adjusted EBITA is calculated as earnings before interest, tax, amortisation
and items not considered part of underlying trading including foreign exchange
gains and losses, is an Alternative Profit Measure used by management and is
not an IFRS disclosure.
2 Adjusted Earnings per Share Tax is calculated as profit after tax for the
financial year adjusted for amortisation and items not considered part of
underlying trading including foreign exchange gains and losses, all adjusted
for tax, divided by weighted average number of shares.
3 Leverage is calculated as Net Debt divided by Adjusted EBITDA. Adjusted
EBITDA is calculated as earnings before interest, tax, depreciation,
amortisation and items not considered part of underlying trading including
foreign exchange gains and losses, is an Alternative Profit Measure used by
management and is not an IFRS disclosure.
See Note 28 to the financial statements for calculations.
Notes to editors:
Ashtead Technology is a leading subsea equipment rental and solutions provider
for the global offshore energy sector. Ashtead Technology's specialist
equipment, advanced-technologies and support services enable its customers to
understand the subsea environment and manage offshore energy production
infrastructure.
The Company's service offering is applicable across the lifecycle of offshore
wind farms and offshore oil and gas infrastructure.
In the fast-growing offshore wind sector, Ashtead Technology's specialist
equipment and services are essential through the project development,
construction and installation phase. Once wind farms are operational, Ashtead
Technology supports customers with inspection, maintenance and repair ("IMR")
equipment and services. In the more mature oil and gas sector, Ashtead
Technology's focus is on IMR and decommissioning.
Headquartered in the UK, the Group operates globally, servicing customers from
its twelve facilities located in key offshore energy hubs.
CEO Report
Continuing positive momentum
I am pleased with the Group's trading performance through 2023, delivering
another year of growth through strong execution of our organic and inorganic
strategy. We have continued to make great progress in delivering on our
strategic goals, broadening our fleet and building our strength and depth of
expertise with a focus on long-term growth and shareholder value.
We delivered 51% growth in revenues, 82% growth in Adjusted EBITA, and ROIC of
28%, as demand for our services continued to increase from both offshore
renewables and oil and gas, with our growth in both markets exceeding market
growth. Our statutory profit before tax of £27.5m was 69% ahead of prior year
(2022: £16.3m).
Our strategy for growth is centred on doing more for our customers by
providing a high quality, outsourced solution to support them in undertaking
an increasing range of subsea activities across the lifecycle of subsea
offshore energy infrastructure. It is differentiated through the breadth and
depth of equipment supply, coupled with in-house expertise and service.
Through both continued investment in our equipment and service offering, and
M&A, we are building out a unique offering, providing true efficiencies
and value add to our customers' offshore operations.
Responding to the market opportunity and in line with our strategy, we
continued to invest in our high-quality equipment rental fleet through 2023,
increasing the number of items from circa 19,000 to over 23,000 through both
organic investment (£19.1m rental equipment capex) and through the ACE
Winches acquisition. Through key strategic supply chain partnerships, and
in-house design capability, we continue to focus on plugging key technology
gaps to enhance our offering.
Acquisitions are an important element of our strategic ambition to deliver
long-term shareholder returns. Our results for 2023 included a full year's
trading from WeSubsea and Hiretech, the acquisitions completed in 2022, both
of which have been fully integrated into the Group and are trading ahead of
their acquisition cases. We also, in November 2023, completed our largest
acquisition to date, ACE Winches, adding a highly complementary lifting,
pulling and deployment capability to our broadening list of services. The
reaction from our stakeholders has been very positive and we are already
seeing significant cross-selling opportunities with our customers.
We finished the year with a robust balance sheet with leverage at 1.3x
(proforma 1.0x) and this, together with our strong operational cash
generation, leaves us well positioned to continue to invest in the business
and take a disciplined approach to pursuing selective value-accretive M&A
opportunities to build on our unique advantage through our growing mix of
equipment and services. We see a pipeline of opportunities across
complementary bolt-on acquisitions as well as larger opportunities that could
grow our geographical reach and service capability in a similar way to that
achieved through our recent strategic acquisitions.
Our business model is resilient, profitable and cash generative and we are
very focussed on building out a business that has a long-term, sustainable
future.
Sustainability
In an ever-evolving energy industry we continue to play our part in the energy
transition, supporting our customers in both the offshore oil and gas and
renewables markets. We continued to make good progress on our sustainability
journey by increasing our revenues from renewables by 50%. The majority of
our equipment is fungible across both end markets which creates robustness and
longevity as the world continues to transition to greener energy supplies.
Ashtead Technology remains committed to supporting the energy transition,
targeting 50% of our revenues from the offshore renewables market in the
medium term.
Our people are central to everything we do. Over the past couple of years, we
have grown our workforce substantially, increasing to over 520 people by the
end of 2023. People development and growth is paramount, as is safeguarding
the well-being of our employees. We strive to be a responsible employer and
are focussed on ensuring our employees' physical and mental health are well
looked after.
On governance, we pride ourselves on the way we do business and are always
focussed on doing the right thing. We are committed to complying with
applicable laws, working honestly, and applying the highest standards of
integrity and ethics in everything we do.
Market
The market has continued to see growth and momentum increase across both
offshore oil and gas, and renewables, as the world continues to wrestle with
the energy trilemma of sustainability, affordability, and security. There is a
heightened need for a balanced energy transition where all forms of energy are
required not only to support global demand, but also to deliver an orderly
transition. As a result, Rystad Energy forecast's growth across Ashtead
Technology's addressable market at 11% CAGR from 2023 to 2027.
While 2023 saw some headline project delays and cancellations in the offshore
wind market, the industry is still in its infancy and, growth was never
going to be a smooth journey. The market is growing quickly and investment
into the sector remains high, with Rystad Energy forecasting the addressable
offshore wind market size for Ashtead Technology to increase at 25% CAGR from
2023 to 2027. Beyond this, forecasts show continued investment, with Rystad
forecasting a 26% CAGR in cumulative global offshore wind installed capacity
through to 2030.
Within oil and gas, 2023 has seen a 61% increase in offshore greenfield
sanctioning committed capex compared to the average of the previous five
years, with many of the projects being sanctioned in Norway and South America.
Years of under investment in both existing and new developments have caught up
with the industry. As a source of reliable energy, the offshore hydrocarbon
industry will remain a key contributor to global oil and gas production under
all probable energy transition scenarios, with continued investment in this
industry being critical to supporting the demand for energy. Subsea
expenditure will play a significant part in this market, with Rystad Energy
forecasting Ashtead Technology's addressable market within the subsea oil and
gas space to increase at a healthy 7% CAGR from 2023 to 2027.
It is therefore no surprise that offshore contractors are continuing to report
increasing backlogs which have more than doubled since 2020. Whilst Ashtead
Technology is not a backlog business, the backlogs of our customer base give
us confidence in an increasing demand for our services for years to come.
The requirement for energy production from offshore sources is significant and
is set to remain so for the foreseeable future, and the fungibility of Ashtead
Technology's equipment and solutions across both the offshore wind and oil and
gas markets makes for a compelling and robust proposition, enabling the Group
to capture growth opportunities across both adjacent markets globally.
Our people
Credit for the 2023 financial results and progress in implementing our
strategy during the year lies with our people and I would like to personally
thank our fantastic team for their ongoing contribution to our growth and
success. The Group continues to grow at pace, and we have made a significant
investment in strengthening and developing the team over the last few years to
ensure we have the appropriate structure and resource to satisfy our global
growth ambitions.
In addition to recruitment, we are very focussed on employee retention. In a
buoyant market this is ever challenging and through 2023 we continued to
invest in our HR team to support this challenge. Through 2024 our focus is on
increasing the quality of our in-house learning and development capability to
ensure that we are giving our employees the best training and opportunities
available to them in our sector.
Whilst the business grows in depth and breadth, we continue to maintain and
champion our values of Agility, Collaboration, and Excellence. Within this we
ensure that we maintain an informal and open structure and culture that
enables all of our team to make a real difference to the business, whatever
their role or seniority.
Our culture is one of always wanting to do our best, ensuring that we are
delivering for our customers, maintaining strong relationships with both our
customers and suppliers, and looking after our employees. Our true strength
lies in the quality of service that we provide, and we continue to deliver on
this, as is proven by the longevity and strength of our customer
relationships.
Current trading and outlook
The trading result achieved in 2023 is testament to the strength of our
business and the people we employ. The structural growth drivers in our end
markets remain attractive and we are uniquely positioned to seize both organic
and acquisitive growth opportunities. Our trading momentum has continued into
the new financial year, and we are excited by the significant growth
opportunities that are being worked on across the Group. The Board is
encouraged by the Group's performance in Q1 2024 and our full year 2024
expectation remains unchanged.
Allan Pirie
Chief Executive Officer
15 April 2024
CFO Report
Continued strong growth
The Group continued to perform strongly during 2023, achieving significant
growth on the prior year as we continued to build on the strong foundations of
the business. We made good progress against all of our financial KPIs and
delivered well above the expectations set at the start of the year.
Revenue
The Group delivered revenue of £110.5m in the year, an increase of 51% from
£73.1m in 2022. The increase continued to come from both markets with a 50%
increase in revenues from offshore renewables and 52% increase in oil and
gas. Offshore renewables accounted for 31% of total revenue in 2023 (2022:
31%).
Our 51% revenue growth was derived from organic growth (35%), M&A (17%)
(being the full year impact of the WeSubsea and Hiretech acquisitions
completed in 2022 plus one-month trading from our most recent acquisition, ACE
Winches), with a small decrease from FX rates (-1%).
If ACE Winches had been acquired on 1 January 2023 rather than 30 November
2023, full year revenue would have been £149.6m.
Gross profit
Our gross profit for the year was £86.3m (2022: £54.3m) representing a gross
margin of 78.1% (2022: 74.2%). The increase in gross margin was the result
of a combination of increased pricing (increased by 13%), cost utilisation
(increased by 1%) and a reduction in the proportion of revenues from cross
hire as a result of both acquisition (Hiretech and WeSubsea) and capital
investment.
Administration costs
Administration expenses of £55.8m (including impairment loss on trade
receivables) compares to £37.4m in 2022. Excluding exceptional costs
(covered below), FX and amortisation, the total overheads were £50.7m
compared to £35.2m in 2022, an increase of 44%. Of the £15.5m increase,
£2.0m relates to the addition of ACE Winches (one-month impact), £6.6m
relates to payroll, £1.7m relates to LTIP and £3.3m relates to depreciation,
with the remaining £2.0m being additional facility, insurance, legal and
professional and other overhead costs associated with being a significantly
larger business.
On payroll, the increase of £6.6m (34%) on prior year total cost (excluding
LTIP increase of £1.7m) reflects our growing business. In addition to
implemented salary increases for all employees, we increased our headcount
(excluding ACE Winches) from 260 at end December 2022 to 324 by December 2023,
an increase of 25%. Including ACE Winches, our headcount at the year end was
527.
Profitability
Adjusted EBITA of £36.2m compares to £19.9m in 2022 and represents a higher
margin of 33% (2022: 27%), resulting in ROIC increasing to 27.6% (2022:
21.2%), significantly ahead of cost of capital. We expect EBITA margins in
the medium term to be high 20%s.
Our Adjusted EBITA growth of 82% can be split as 58% from organic growth, 25%
from M&A with a small decrease due to FX.
Where we have provided adjusted figures, they are after the add-back of
adjusting items which, with regard to 2023, predominantly related to
professional and other fees arising from the ACE acquisition. We also
incurred c. £0.3m of transaction fees (classified as 'other' in the table
below) in relation to a potential acquisition which we aborted during due
diligence.
Restructuring costs relate to one-off costs to remove surplus entities from
our group structure. During 2023 we liquidated three entities being WeSubsea
AS, WeSubsea UK Limited and Hiretech Limited and merged Aqua-Tech Solutions
LLC and Alpha Subsea LLC into Ashtead Technology Offshore Inc. The trade and
assets of these entities were hived up into other trading entities within the
Group prior to liquidation. In addition, £0.7m external software
development costs have been classed as one-off in nature.
Statutory profit before tax of £27.5m in 2023 compares to £16.3m in 2022, an
increase of 69%.
Net finance expense
Net finance costs were £3.7m in 2023 compared to £1.4m in 2022, with the
increase reflecting the higher net debt as a result of acquisitions completed
through 2022 and 2023, all of which were funded through available RCF
facilities. £0.5m of this cost related to the write off of deferred finance
costs which were written off as a result of the refinancing which completed in
April 2023.
Taxation
The total tax charge was £5.9m (2022: £3.9m). This equates to an effective
tax rate of 21.5% compared to 24.0% in 2022. Our expectation is that the
Group's effective tax rate will be close to the UK corporation tax rate,
although this will be impacted by the amount of profit the Group earns in its
overseas jurisdictions where, in some cases, corporation tax rates are higher
or lower than those in the UK.
EPS and dividend
Adjusted EPS was 33.4 pence (2022: 19.3 pence) with statutory EPS at 27.0
pence (2022: 15.5 pence). The adjusted figures exclude the impact of adjusting
items as set out in Note 28 of the accounts, foreign exchange profit/loss and
amortisation and the impact of the US deferred tax liability (2022 only).
The Board sees an opportunity to reinvest profits to expand the business both
organically and through M&A growth. At the same time, the Board
recognises the importance of dividends both to the Company's shareholders and
in maintaining capital discipline. In this regard, the Board has recommended
a full and final dividend of 1.1 pence per share for the year ended 31
December 2023, payable on 3 June 2024 to shareholders based on an ex-dividend
date of 2 May 2024 and record date of 3 May 2024.
Cash flow and balance sheet
Cash inflow from operations was £48.8m (2022: £35.3m). The Group increased
its investment in capital expenditure in the year to £19.5m (2022: £13.7m),
investing predominantly in rental equipment to capitalise on the continued
improvement in market conditions. As we do not invest in rental fleet for
resale, and have no plans to sell assets once they reach end of life, our
capital expenditure is classed as an investing activity rather than
operational activity in our cash flow statement.
Cash spent on acquisitions of £51.2m was funded through our RCF facility.
Acquisitions completed in the year resulted in an increase in both intangible
assets (£14.6m of additions) and goodwill (£11.9m of additions).
Net working capital at year end represented 3.7% of actual revenues and 2.7%
of proforma revenues.
Net cash flow from operating activities was £39.0m (2022: £32.1m)
representing an Adjusted EBITDA to operating cash flow conversion of 81%
(2022: 114%). Overall movement in cash was a positive inflow of £2.3m for
the year (2022: £3.9m) with the cash balance at £10.8m at year end (2022:
£9.0m).
Net debt increased from £28.7m to £61.7m as a result of the ACE Winches
acquisition being funded through the RCF. This represents leverage of 1.3x
at year end (2022: 1.0x). On a proforma basis, taking into account the full
year impact of ACE Winches, leverage was 1.0x.
Prior year restatement
The IFRS Interpretations Committee published an agenda decision in relation to
configuration and customisation expenditure relating to cloud computing
arrangements, including Software as a Service (SaaS) in 2021. At the time of
the decision the Group was reporting under UK GAAP and at the point of IFRS
conversion, the intangible balance in relation to software was immaterial.
In 2023 the Group has identified an error in application of IAS 38 "Intangible
Assets". The correction of this error has resulted in restating £0.7m of
expenditure in 2022 that was previously incorrectly capitalised as an
intangible asset, and expensing this to the Consolidated Income Statement as
administrative costs. There is an offsetting decrease to amortisation of
£0.3m. The impact on profit before tax for the year ended 31 December 2022
is a reduction in profit before tax of £0.4m and adjusted profit before tax
of £0.3m. In addition, the opening balance sheet at 1 January 2022 has been
restated to move £1.0m of net intangible assets to reserves. Comparatives
in the Strategic Report and the Financial Statements have been restated and
further details are given in Note 2.2 of the accounts.
Going concern
During 2023 the Group has continued to generate positive cash flow from
operating activities with a cash and cash equivalents balance of £10.8m
(2022: £9m). The Group has access to a multi-currency RCF and additional
accordion facility. After a refinance which completed on 5 April 2023, the RCF
and accordion facility have total commitments of £100m and £50m
respectively. The Company exercised its option to extend its existing
facility for a further 12 months through to April 2028, which was approved by
the lenders in March 2024. The accordion facility is subject to credit
approval. As at 31 December 2023 the RCF had an undrawn balance of £29.3m on
the £100m facility available at that time. Refer to Note 17 of the accounts
for details on the available facilities.
The Facility Agreement is subject to a leverage covenant of 3.0x and an
interest cover covenant of 4:1, which are both to be tested on a quarterly
basis. The Group has complied with all covenants from entering the Facility
Agreement until the date of these financial statements.
The Group monitors its funding and liquidity position throughout the year to
ensure it has sufficient funds to meet its ongoing cash requirements. Cash
forecasts are produced based on a number of inputs such as estimated revenues,
margins, overheads, collection and payment terms, capex requirements and the
payment of interest and capital on its existing debt facilities. Consideration
is also given to the availability of bank facilities. In preparing these
forecasts, the Directors have considered the principal risks and uncertainties
to which the business is exposed.
The Directors perform sensitivity analysis on the going concern assumption to
determine whether plausible downside scenarios would have a material impact.
Forecasts were flexed to incorporate a 5% downturn in forecast performance in
the year ending 31 December 2024 and a 10% downturn in forecast performance in
the year ending 31 December 2025. Under this downside scenario the peak
funding requirement over the forecast period would leave £96m headroom in the
available facilities with no threat to breach of covenants.
Taking account of reasonable changes in trading performance and bank
facilities available, the application of severe but plausible downside
scenarios to the forecasts, the cash forecasts prepared by management and
reviewed by the Directors indicate that the Group is cash generative and has
adequate financial resources to continue to trade for the foreseeable future
and meet its obligations as they fall due.
Reconciliation of adjusted and reported IFRS results
The Group uses certain measures that it believes assist a reader of the Annual
Report in understanding the business. These alternative performance measures
(APMs) are not defined under IFRS and, therefore, may not be directly
comparable with adjusted measures presented by other companies. The APMs are
not intended to be a substitute for, or superior to, any IFRS measures of
performance. However, they are considered by management to be important
measures used in the business for assessing performance.
In establishing Adjusted EBITDA, Adjusted EBITA and Adjusted Profit After Tax
(used for Adjusted EPS calculation), the Group has added back various costs,
deemed to be one-off in nature, which in 2023 predominantly relate to
acquisitions completed during the period and/or one-off restructuring costs.
In addition, amortisation of intangible assets is adjusted for in some of the
APMs as we are aware that certain analysts and investors treat this
differently in their analysis and this therefore allows a consistency of
approach. The definitions can be found in the definitions section of the
Annual Report and reconciliation to GAAP metrics included in Note 28 to the
accounts.
Table A - Results reconciliation / Adjusted figures
Results reconciliation Adjusted Amortisation FX Acquisition costs Restructuring costs Software costs Deferred finance costs Other** Reported
£'000
Revenue 110,466 - - - - - - - 110,466
Gross profit 86,298 - - - - - - - 86,298
Administrative expenses* (52,209) - (229) 2,533 216 683 - 380 (55,792)
Other operating income 704 - - - - - - - 704
Operating profit 34,793 - (229) 2,533 216 683 - 380 31,210
Depreciation 12,029 - - - - - - - 12,029
Amortisation 1,431 - - - - - - - 1,431
EBITDA 48,253 - (229) 2,533 216 683 - 380 44,670
Depreciation (12,029) - - - - - - - (12,029)
EBITA 36,224 - (229) 2,533 216 683 - 380 32,641
Amortisation - 1,431 - - - - - - (1,431)
Finance cost (net) (3,195) - - - - - 522 - (3,717)
Profit before tax 33,029 1,431 (229) 2,533 216 683 522 380 27,493
Tax (6,365) - - - (54) (171) (131) (95) (5,914)
Profit after tax 26,664 1,431 (229) 2,533 162 512 392 285 21,579
*includes impairment loss on trade receivables.
** other includes £0.3m of transaction fees relating to an aborted
acquisition.
Ingrid Stewart
Chief Financial Officer
15 April 2024
Consolidated Income Statement
For the year ended 31 December 2023
Notes 2023 2022
£000 (restated)*
£000
Revenue 4 110,466 73,120
Cost of sales 5 (24,168) (18,829)
Gross profit 86,298 54,291
Administrative expenses 5 (55,291) (36,567)
Impairment loss on trade receivables 5 (501) (810)
Other operating income 5 704 804
Operating profit 5 31,210 17,718
Finance income 7 283 21
Finance costs 7 (4,000) (1,459)
Profit before taxation 27,493 16,280
Taxation charge 8 (5,914) (3,906)
Profit for the financial year 21,579 12,374
Profit attributable to:
Equity shareholders 21,579 12,374
Earnings per share
Basic 9 27.0 15.5
Diluted 9 26.7 15.3
The below financial measures are Alternative Profit Measures used by
management and are not an IFRS disclosure:
Adjusted EBITDA** 28 48,253 28,282
Adjusted EBITA*** 28 36,224 19,851
Adjusted Profit After Tax**** 28 26,664 15,329
* See Note 2.2 for an explanation of the prior year restatement.
** Adjusted EBITDA is calculated as earnings before interest, tax,
depreciation, amortisation and items not considered part of underlying trading
including foreign exchange gains and losses, is an Alternative Profit Measure
used by management and is not an IFRS disclosure. See Note 28 to the financial
statements for calculations.
*** Adjusted EBITA is calculated as earnings before interest, tax,
amortisation and items not considered part of underlying trading including
foreign exchange gains and losses, is an Alternative Profit Measure used by
management and is not an IFRS disclosure. See Note 28 to the financial
statements for calculations.
**** Adjusted Profit After Tax is calculated as profit after tax for the
financial year adjusted for amortisation and items not considered part of
underlying trading including foreign exchange gains and losses, all adjusted
for tax, is an Alternative Profit Measure used by management and is not an
IFRS disclosure. See Note 28 to the financial statements for calculations.
All results derive from continuing operations.
The accompanying notes are an integral part of these consolidated financial
statements.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
2023 2022
£000 (restated)*
£000
Profit for the year 21,579 12,374
Other comprehensive (loss)/income:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations (554) 1,179
Other comprehensive (loss)/income for the year, net of tax (554) 1,179
Total comprehensive income 21,025 13,553
Total comprehensive income attributable to:
Equity shareholders of the Company 21,025 13,553
* See Note 2.2 for an explanation of the prior year restatement.
The accompanying notes are an integral part of these consolidated financial
statements.
Consolidated Balance Sheet
At 31 December 2023
Notes 2023 2022
£000 (restated)*
£000
Non-current assets
Property, plant and equipment 11 68,707 31,812
Goodwill 12 77,739 66,043
Intangible assets 12 17,709 4,582
Right-of-use assets 19 2,584 2,631
Deferred tax asset 8 52 -
166,791 105,068
Current assets
Inventories 13 4,064 1,865
Trade and other receivables 14 32,015 19,784
Cash and cash equivalents 15 10,824 9,037
46,903 30,686
Total assets 213,694 135,754
Current liabilities
Trade and other payables 16 32,021 19,134
Income tax payable 8 2,207 1,784
Loans and borrowings 17 23 -
Lease liabilities 19 1,154 865
35,405 21,783
Non-current liabilities
Loans and borrowings 17 69,673 34,865
Lease liabilities 19 1,656 1,991
Deferred tax liability 8 9,018 2,062
Provisions for liabilities 20 356 117
80,703 39,035
Total liabilities 116,108 60,818
Equity
Share capital 23 3,997 3,979
Share premium 23 14,115 14,115
Merger reserve 23 9,435 9,435
Share based payment reserve 23 2,538 827
Foreign currency translation reserve 23 (665) (111)
Retained earnings 23 68,166 46,691
Total equity 97,586 74,936
Total equity and liabilities 213,694 135,754
* See Note 2.2 for an explanation of the prior year restatement.
The accompanying notes are an integral part of these consolidated financial
statements.
The financial statements of Ashtead Technology Holdings plc (registered number
13424040) for the year ended 31 December 2023 were authorised by the Board of
Directors on 15 April 2024 and signed on its behalf by:
Allan
Pirie
Ingrid Stewart
Chief Executive
Officer
Chief Financial Officer
15 April
2024
15 April 2024
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Share Share Merger Share Foreign Retained Total
capital premium reserve based currency earnings £000
£000 £000 £000 payment translation £000
reserve reserve
£000 £000
At 1 January 2022 as originally presented 3,979 14,115 9,435 - (1,290) 34,893 61,132
Correction of error - - - - - (576) (576)
Restated balance at 1 January 2022* 3,979 14,115 9,435 - (1,290) 34,317 60,556
Profit for the year (restated)* - - - - - 12,374 12,374
Other comprehensive income - - - - 1,179 - 1,179
Total comprehensive income - - - - 1,179 12,374 13,553
Share based payment charge - - - 827 - - 827
At 31 December 2022 as originally presented 3,979 14,115 9,435 827 (111) 47,558 75,803
Correction of error - - - - - (867) (867)
Restated balance at 31 December 2022* 3,979 14,115 9,435 827 (111) 46,691 74,936
Profit for the year - - - - - 21,579 21,579
Other comprehensive income - - - - (554) - (554)
Total comprehensive income - - - - (554) 21,579 21,025
Share based payment charge - - - 1,711 - - 1,711
Tax on share based payment charge - - - - - 710 710
Issue of shares 18 - - - - (18) -
Dividends paid - - - - - (796) (796)
At 31 December 2023 3,997 14,115 9,435 2,538 (665) 68,166 97,586
* See Note 2.2 for an explanation of the prior year restatement.
The accompanying notes are an integral part of these consolidated financial
statements.
Consolidated Cash Flow Statement
For the year ended 31 December 2023
Notes 2023 2022
£000 (restated)*
£000
Cash generated from operating activities
Profit before taxation 27,493 16,280
Adjustments to reconcile profit before taxation to net cash from operating
activities
Finance income 7 (283) (21)
Finance costs 7 4,000 1,459
Depreciation 11, 19 12,029 8,431
Amortisation 12 1,431 878
Gain on sale of property, plant and equipment 5 (704) (804)
Share based payment charges 23 2,496 825
Provision for bad debts movement 514 -
Provision for liabilities 20 48 (4)
Cash generated before changes in working capital 47,024 27,044
(Increase)/decrease in inventories (157) 274
(Increase)/decrease in trade and other receivables (2,120) 734
Increase in trade and other payables 4,082 7,207
Cash inflow from operations 48,829 35,259
Interest paid (3,064) (1,132)
Tax paid (6,717) (1,998)
Net cash generated from operating activities 39,048 32,129
Cash flow used in investing activities
Purchase of property, plant and equipment (19,459) (13,728)
Proceeds from customer loss/damage of assets held for rental 1,428 1,518
Acquisition of subsidiary undertakings net of cash acquired (51,183) (23,999)
Interest received 283 21
Net cash used in investing activities (68,931) (36,188)
Cash flow generated from financing activities
Loans received 62,014 31,000
Transaction fees on loans received (1,241) (228)
Repayment of bank loans (26,587) (21,727)
Payment of lease liability (1,199) (1,064)
Payment of finance lease liability (2) -
Dividends paid (796) -
Net cash generated from financing activities 32,189 7,981
Net increase in cash and cash equivalents 2,306 3,922
Cash and cash equivalents at beginning of year 9,037 4,857
Net foreign exchange difference (519) 258
Cash and cash equivalents at end of year 10,824 9,037
* See Note 2.2 for an explanation of the prior year restatement.
The accompanying notes are an integral part of these consolidated financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2023
1. General information
1.1 Background
Ashtead Technology Holdings plc (the "Company") is a public limited company
incorporated in the United Kingdom under the Companies Act 2006, whose shares
are traded on AIM. The consolidated financial statements of the Company as at
and for the year ended 31 December 2023 comprise the Company and its interest
in subsidiaries (together referred to as the "Group"). The Company is
domiciled in the United Kingdom and its registered address is 1 Gateshead
Close, Sunderland Road, Sandy, Bedfordshire, SG19 1RS, United Kingdom.
1.2 Basis of preparation
These consolidated financial statements are for the year ended 31 December
2023 and have been prepared in accordance with UK-adopted International
Accounting Standards.
These consolidated financial statements have been prepared under the
historical cost convention.
The financial information does not constitute the Company's statutory accounts
for the years ended 31 December 2023 or 31 December 2022 but is derived from
those accounts. Statutory accounts for the year ended 31 December 2023 will be
delivered to the Registrar of Companies in due course. The Auditor has
reported on the 2023 accounts; his reports (i) were unqualified, (ii) did not
include a reference to any matters to which the Auditor drew attention by way
of emphasis without qualifying his report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
Subsidiary audit exemption
Ashtead Technology Holdings plc (company registration number 13424040) has
issued a parental company guarantee under s479A of the Companies Act 2006
dated 31 December 2023. As a result, for the year ended 31 December 2023,
Underwater Cutting Solutions Limited (company registration number 05031272) is
entitled to exemption from audit.
1.3 Presentational currency
The consolidated financial statements, unless otherwise stated, are presented
in sterling, to the nearest thousand.
1.4 Going concern
The consolidated financial statements of the Group are prepared on a going
concern basis. The Directors of the Group assert that the preparation of the
consolidated financial statements on a going concern basis is appropriate,
which is based upon a review of the future forecast performance of the Group
for a two-year period ending 31 December 2025.
During 2023 the Group has continued to generate positive cash flow from
operating activities with a cash and cash equivalents balance of £10,824,000
(2022: £9,037,000). The Group has access to a multi-currency RCF and
additional accordion facility. After a refinance which completed on 5 April
2023, the RCF and accordion facility have total commitments of £100,000,000
and £50,000,000 respectively, both of which expire in April 2028. The
accordion facility is subject to credit approval. As at 31 December 2023 the
RCF had an undrawn balance of £29,325,000 on the £100,000,000 facility
available at that time. Refer to Note 17 for details on the available
facilities.
The Facility Agreement is subject to a leverage covenant of 3.0x and an
interest cover covenant of 4:1, which are both to be tested on a quarterly
basis. The Group has complied with all covenants from entering the Facility
Agreement until the date of these financial statements.
The Group monitors its funding and liquidity position throughout the year to
ensure it has sufficient funds to meet its ongoing cash requirements. Cash
forecasts are produced based on a number of inputs such as estimated revenues,
margins, overheads, collection and payment terms, capex requirements and the
payment of interest and capital on its existing debt facilities. Consideration
is also given to the availability of bank facilities. In preparing these
forecasts, the Directors have considered the principal risks and uncertainties
to which the business is exposed.
The Directors perform sensitivity analysis on the going concern assumption to
determine whether plausible downside scenarios would have a material impact.
Forecasts were flexed to incorporate a 5% downturn in forecast performance in
the year ending 31 December 2024 and a 10% downturn in forecast performance in
the year ending 31 December 2025. Under this downside scenario the peak
funding requirement over the forecast period would leave £96,000,000 headroom
in the available facilities with no threat to breach of covenants.
Taking account of reasonable changes in trading performance and bank
facilities available, the application of severe but plausible downside
scenarios to the forecasts, the cash forecasts prepared by management and
reviewed by the Directors indicate that the Group is cash generative and has
adequate financial resources to continue to trade for the foreseeable future
and meet its obligations as they fall due.
1.5 Basis of consolidation
Subsidiaries are entities controlled by the Group. The Group controls an
entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its power over the entity. In assessing control, the Group takes into
consideration potential voting rights and rights to variable returns of the
subsidiaries. The acquisition date is the date on which control is transferred
to the acquirer. The financial information of subsidiaries is included in the
consolidated financial statements from the date that control commences until
the date that control ceases. Control is reassessed whenever facts and
circumstances indicate that there may be a change in any of these elements of
control.
The consolidated financial statements present the results of the Company and
its subsidiaries as if they formed a single entity. Intercompany transactions
and balances between Group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of the business
combinations using the acquisition method. In the balance sheet, the
acquiree's identifiable assets, liabilities and contingent liabilities are
initially recognised at their fair values at the acquisition date.
1.6 Business combinations
All business combinations are accounted for by applying the acquisition method
as at the acquisition date, which is the date on which control is transferred
to the Group.
The Group measures goodwill at the acquisition date as:
· the fair value of the consideration transferred; plus
· the recognised amount of any non-controlling interests in the
acquiree; plus
· the fair value of the existing equity interest in the acquiree;
less
· the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
Costs related to the acquisition, other than those associated with the issue
of debt or equity securities, are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent
consideration are recognised in the income statement.
The Group determines that it has acquired a business when the acquired set of
activities and assets include an input and a substantive process that together
significantly contribute to the ability to create outputs. The acquired
process is considered substantive if it is critical to the ability to continue
producing outputs, and the inputs acquired include an organised workforce with
the necessary skills, knowledge or experience to perform that process or it
significantly contributes to the ability to continue producing outputs and is
considered unique or scarce or cannot be replaced without significant cost,
effort or delay in the ability to continue producing outputs.
When the Group acquires a business, it assesses the financial assets and
liabilities assumed for appropriate classification and designation in
accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date. This includes the separation of
embedded derivatives in host contracts by the acquiree.
1.7 New and amended standards adopted by the Group
IFRS 17 Insurance Contracts and a number of amended standards became effective
for the financial year beginning on 1 January 2023; however, the Group did not
have to change its accounting policies or make retrospective adjustments as a
result of adopting these. Since IFRS 17 applies to all insurance contracts
issued by an entity (with limited scope exclusions), its adoption may have an
effect on non-insurers such as the Group. The Group carried out an
assessment of its contracts and operations and concluded that the adoption of
IFRS 17 has had no effect on the consolidated financial statements.
Future standards, amendments and interpretations
The following standards, amendments and interpretations are effective
subsequent to the year end, and have not been early adopted. The Directors
do not expect that the adoption of the standards and amendments listed below
will have a material impact on the financial statements of the Group in future
periods.
· IFRS S1 General Requirements for Disclosure of
Sustainability-related Financial Information*
· IFRS S2 Climate-related Disclosures*
· Amendment to IAS 1: Classification of Liabilities as Current or
Non-current Liabilities**
· Amendment to IAS 1: Non-current Liabilities with Covenants**
· Amendment to IAS 7 and IFRS 7: Supplier Financing Arrangements**
· Amendment to IFRS 16: Lease Liability in a Sale and Leaseback**
* Not yet endorsed by the UK as at the date of authorisation of the financial
statements.
** Mandatory adoption date and effective date for the Group is 1 January 2024.
1.8 Statement of compliance
The preparation of financial statements in compliance with adopted IFRS
requires the use of certain critical accounting estimates. It also requires
Group management to exercise judgement in applying the Group's accounting
policies. The areas where significant judgements and estimates have been made
in preparing the financial statements and their effect are disclosed in Note
2.
2. Summary of material accounting policies
2.1 IFRIC: Configuration or customisation costs in a cloud computing
arrangement (IAS 38 Intangible Assets)
The Group has a number of contracts for Software as a Service ("SaaS") Cloud
Computing Arrangements. These contracts permit the Group to access
vendor-hosted software and platform services over the term of the arrangement.
The Group does not control the underlying assets in these arrangements and
costs are expensed as incurred.
The Group also incurs implementation costs in respect of these contracts.
Implementation costs are capitalised as intangible assets where costs meet the
definition and recognition criteria of an intangible asset under IAS 38. Such
costs typically relate to software coding which is capable of providing
benefit to the Group on a standalone basis. Other implementation costs
primarily relate to the configuration and customisation of the Cloud software
solution and are assessed to determine whether the implementation activity
relating to these costs is distinct from the Cloud Arrangement, in which case
costs are expensed as the activity occurs. If the configuration and
customisation costs relate to activity which is integral to the Cloud
Arrangement such that the activity is received over the term of the Cloud
Arrangement, costs are recognised as a prepayment and expensed over the term
of the Cloud Arrangement.
2.2 Prior period adjustment
During 2023, management has re-evaluated the impact of the IFRIC guidance
released during the prior year relating to accounting for cloud-based Software
as a Service ("SaaS") arrangements. This guidance was incorrectly applied in
the prior year, resulting in costs associated with a cloud-based SaaS being
capitalised and not expensed as incurred in the consolidated income statement.
During 2021, £1,122,000 was capitalised and amortisation of £131,000 was
charged. During 2022 a further £725,000 was capitalised and amortisation of
£324,000 was charged. As a result of this error, the intangible assets as at
31 December 2021 were overstated by £991,000, prepayments were understated by
£273,000 and administrative expenses for the period understated by £718,000.
As at 31 December 2022, the intangible assets were overstated by £1,396,000,
prepayments were understated by £328,000 and administrative expenses were
understated by £350,000 for the year then ended. In addition, during the year
ended 31 December 2021 cash flows from operations were overstated by
£1,122,000 and investing cash flows understated by the same amount. Likewise,
for the year ended 31 December 2022 the operating cash flows were overstated
by £725,000 and the investing cash flows understated by the same amount. A
summary of the impact, including taxation, is included in the following
tables:
2022 (previously reported) Restatement 2022 Restated
£000 £000 £000
Consolidated income statement
Administrative expenses (36,217) (350) (36,567)
Operating profit 18,068 (350) 17,718
Profit before taxation 16,630 (350) 16,280
Taxation charge (3,965) 59 (3,906)
Profit for the financial year 12,665 (291) 12,374
Basic earnings per share (pence) 15.9 (0.4) 15.5
Diluted earnings per share (pence) 15.7 (0.4) 15.3
Consolidated balance sheet
Intangible assets 5,978 (1,396) 4,582
Trade and other receivables 19,456 328 19,784
Total assets 136,822 (1,068) 135,754
Income tax payable 1,820 (36) 1,784
Deferred tax liability 2,227 (165) 2,062
Total liabilities 61,019 (201) 60,818
Retained earnings 47,558 (867) 46,691
Total equity 75,803 (867) 74,936
Total equity and liabilities 136,822 (1,068) 135,754
Consolidated cash flow statement
Profit before taxation 16,630 (350) 16,280
Amortisation 1,202 (324) 878
Cash generated before changes in working capital 27,718 (674) 27,044
(Increase)/decrease in trade and other receivables 785 (51) 734
Cash inflow from operations 35,984 (725) 35,259
Net cash generated from operating activities 32,854 (725) 32,129
Purchase of computer software (725) 725 -
Net cash used in investing activities (36,913) 725 (36,188)
2021 (previously reported) Restatement 2021 Restated
£000 £000 £000
Consolidated balance sheet
Intangible assets 1,760 (991) 769
Deferred tax asset 1,010 24 1,034
Trade and other receivables 17,224 273 17,497
Total assets 99,035 (694) 98,341
Income tax payable 821 (118) 703
Total liabilities 37,903 (118) 37,785
Retained earnings 34,893 (576) 34,317
Total equity 61,132 (576) 60,556
Total equity and liabilities 99,035 (694) 98,341
2.3 Foreign currencies
Transactions in foreign currencies are translated to the respective functional
currencies of Group entities at the foreign exchange rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are retranslated to the functional
currency at the foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in the income statement.
Non-monetary assets and liabilities that are measured in terms of historical
cost in a foreign currency are translated using the exchange rate at the date
of the transaction.
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on consolidation, are translated to the Group's
presentational currency, sterling, at foreign exchange rates ruling at the
balance sheet date. The revenues and expenses of foreign operations are
translated at an average rate for each month where this rate approximates to
the foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign operations are
reported as an item of other comprehensive income and accumulated in the
translation reserve, within equity. When a foreign operation is disposed of,
such that control, joint control or significant influence (as the case may be)
is lost, the entire accumulated amount in the foreign currency translation
reserve is recycled to the income statement as part of the gain or loss on
disposal.
2.4 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and impairment losses. Cost comprises the purchase price or construction cost,
which includes cost of materials, direct labour costs and other directly
attributable costs, and any costs directly attributable to making the asset
capable of operating as intended, in the intended location. The purchase
price or construction cost is the aggregate amount paid and the fair value of
any other consideration given to acquire the asset. Depreciation is charged
to the income statement on a straight-line basis over the estimated useful
lives of each part of an item of property, plant and equipment.
The estimated useful lives are as follows:
Leasehold improvements - remaining lease
term
Freehold
property - 25-50
years
Fixtures and fittings
- 4-5 years
Motor
vehicles
- 4-5 years
Assets held for rental -
4-15 years
Assets under construction - not depreciated
Depreciation methods, useful lives and residual values are reviewed at each
balance sheet date.
Any gain or loss on disposal of an item of property, plant and equipment is
recognised in the income statement within other operating income.
Assets held for rental are held for rental until the end of their useful
economic lives and are subsequently scrapped for minimal or no value.
Disposals of assets held for rental primarily arise where customers lose or
damage equipment beyond repair and compensation is invoiced under the terms of
the rental contract. Assets held for rental are not subsequently held for
sale as described in paragraph 68A of IAS 16. Where assets held for rental
are derecognised, any gain or loss realised on disposal is not recognised as
revenue in accordance with IFRS 15. Rather, in accordance with paragraph 68
of IAS 16, the profit realised is included within other operating income in
the income statement.
In accordance with the circumstances described above, the cash flows for the
purchase and disposal of assets held for rental are not considered to be in
scope of the requirements in paragraph 14 of IAS 7. Accordingly, these cash
flows are classified in investing activities in line with the normal
requirements in paragraph 16 of IAS 7.
Subsequent expenditure is capitalised only if it is probable that the future
economic benefits associated with the expenditure will flow to the Group.
2.5 Intangible assets and goodwill
Goodwill
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is
allocated to cash-generating units and is not amortised but is tested annually
for impairment.
Other intangible assets
Expenditure on internally generated goodwill and brands is recognised in the
income statement as an expense as incurred.
Other intangible assets that are acquired by the Group are stated at cost less
accumulated amortisation and accumulated impairment losses.
Amortisation
Amortisation is charged to the income statement on a straight-line basis over
the estimated useful lives of intangible assets unless such lives are
indefinite. Intangible assets with an indefinite useful life and goodwill are
systematically tested for impairment at each balance sheet date. Other
intangible assets are amortised from the date they are available for use. The
estimated useful lives are as follows:
Non-compete arrangements - 3-5 years
Customer relationships - 3-7 years
Trade
names
- 2 years
Documented processes - 10 years
Computer software
- 5 years
Non-compete arrangements, customer relationships, trade names and documented
processes are intangible assets arising from business combinations. The fair
value of the non-compete arrangements at the acquisition date has been
determined using the 'with and without' method, an income approach which
considers the difference between discounted future cash flow models, with and
without the non-compete clause. The fair value of the customer relationships
at the acquisition date has been determined using the multi-period excess
earnings method. The fair value of trade names at the acquisition date has
been determined using the royalty relief methodology. The fair value of
documented processes has been identified and valued using a cost approach.
2.6 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
calculated using the FIFO (first-in, first-out) method.
2.7 Impairment of non-financial assets excluding inventories, deferred tax
assets and contract assets
The carrying amounts of the Group's non-financial assets, other than
inventories and deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such
indication exists, then the asset's recoverable amount is estimated. For
goodwill, and intangible assets that have indefinite useful lives or that are
not yet available for use, the recoverable amount is estimated each year at
the reporting date.
The recoverable amount of an asset or cash-generating unit is the greater of
its value in use and its fair value less costs to sell. In assessing value in
use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. For the purpose of
impairment testing, assets that cannot be tested individually are grouped
together into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of other
assets or groups of assets (the "cash-generating unit"). The goodwill acquired
in a business combination, for the purpose of impairment testing, is allocated
to groups of cash-generating units ("CGUs") that are expected to benefit from
the synergies of the combination. For the purposes of goodwill impairment
testing, CGUs to which goodwill has been allocated are aggregated so that the
level at which impairment is tested reflects the lowest level at which
goodwill is monitored for internal reporting purposes. This is subject to an
operating segment ceiling test.
An impairment loss is recognised if the carrying amount of an asset or its CGU
exceeds its estimated recoverable amount. Impairment losses are recognised in
the income statement. Impairment losses recognised in respect of CGUs are
allocated first to reduce the carrying amount of any goodwill allocated to the
units, and then to reduce the carrying amounts of the other assets in the unit
(group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other
assets, impairment losses recognised in prior periods are assessed at each
reporting date for any indications that the loss has decreased or no longer
exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
2.8 Employee benefits
Defined contribution plans
The Group pays contributions to selected employees' defined contribution
pension plans. The amounts charged to the income statement in respect of
pension costs are the contributions payable in the period. Differences between
contributions payable in the period and contributions actually paid are shown
as either accruals or prepayments on the balance sheet.
2.9 Revenue recognition
Revenue relates to the provision of services, rental of equipment and sale of
equipment. Revenues arising from the rental of equipment are recognised in
accordance with the requirements of IFRS 16: Leases. Revenues arising from
all other revenue streams are recognised in accordance with the requirements
of IFRS 15.
Revenue under IFRS 15
Revenue is recognised as performance obligations are satisfied when control of
promised goods or services is transferred to the customer and is measured at
the amount that reflects the consideration to which the Group expects to be
entitled in exchange for those goods or services.
For each performance obligation within a contract, the Group determines
whether it recognises revenue:
· Wholly at a single point in time when the Group has completed its
performance obligation; or
· Piecemeal over time during the period that control incrementally
transfers to the customer while the good is being manufactured or the service
is being performed.
The Group's activities that require revenue recognition at a point in time
comprise:
· The sale of goods that are not specifically designed for use by
one particular customer; and
· The manufacture of goods that are specifically designed for one
particular customer but for which the Group does not have an enforceable right
to payment for the work completed to date.
The events that trigger the recognition of revenue at a point in time are most
commonly: (i) delivery of the product in accordance with the contractual
terms; or (ii) when the product is made available to the customer for
collection; or (iii) when the customer notifies the Group that they have
accepted the product following a period of inspection. The Group utilises the
customer acceptance approach when the contract with the customer contains a
requirement for formal acceptance to be provided, that typically is required
to be received before the customer is obliged to pay for the products.
Revenue under IFRS 16
All contracts for leases of equipment entered into by the Group are classified
as operating leases. The contracts for equipment rentals do not transfer
substantially all of the risks and rewards incidental to ownership of the
underlying asset to the customer.
The Group recognises lease payments received under operating leases as revenue
on a straight-line basis over the lease term.
Where customers are billed in advance, deferred rental income is recognised,
which represents the portion of billed revenue to be deferred to future
periods. Where customers are billed in arrears for equipment rentals, accrued
rental income is recognised, which represents unbilled revenues recognised in
the period.
Performance obligations and timing of revenue recognition
Revenue derived from selling goods is recognised at a point in time when
control of the goods has transferred to the customer. This is generally when
the goods are delivered to the customer. However, for export sales, control
might also be transferred when delivered either to the port of departure or
port of arrival, depending on the specific terms of the contract with a
customer. There is limited judgement needed in identifying the point control
passes: once physical delivery of the products to the agreed location has
occurred, the Group no longer has physical possession, usually will have a
present right to payments (as a single payment on delivery) and retains none
of the significant risks and rewards of the goods in question.
2.10 Operating segments
The Group operates in the following four geographic regions, which have been
determined as the Group's reportable segments. The operations of each
geographic region are similar.
· Europe
· Americas
· Asia-Pacific
· Middle East
The Chief Operating Decision Maker (CODM) is determined as the Group's Board
of Directors. The Group's Board of Directors reviews the internal management
reports of each geographic region monthly as part of the monthly management
reporting. The operations within each of the above regional segments display
similar economic characteristics. There are no reportable segments which have
been aggregated for the purpose of the disclosure of segment information.
2.11 Taxation
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the temporary
difference can be utilised. Deferred tax assets are reviewed at each reporting
date and are reduced to the extent that it is no longer probable that the
related tax benefit will be realised; such reductions are reversed when the
probability of future taxable profits improves. Unrecognised deferred tax
assets are reassessed at each reporting date and recognised to the extent that
it has become probable that future taxable profits will be available against
which they can be used.
Current tax assets and current tax liabilities are offset only when:
· the Group has a legally enforceable right to set off current tax
assets against current tax liabilities; and
· the Group intends either to settle on a net basis or to realise
the asset and settle the liability simultaneously.
Deferred tax assets and liabilities are offset only if:
· the Group has a legally enforceable right to set off current tax
liabilities and assets; and
· the deferred tax liabilities and assets relate to income taxes
levied by the same tax authority.
2.12 Leases
At the inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration.
As a lessee
At commencement or on modification of a contract that contains a lease
component, along with one or more other lease or non-lease components, the
Group accounts for each lease component separately from the non-lease
components. The Group allocates the consideration in the contract to each
lease component on the basis of its relative stand-alone price and the
aggregate stand-alone price of the non-lease components.
The Group recognises a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle and remove the underlying
asset or to restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the end of the lease term, unless the
lease transfers ownership of the underlying asset to the Group by the end of
the lease term or the cost of the right-of-use asset reflects that the Group
will exercise a purchase option. In that case the right-of-use asset will be
depreciated over the useful life of the underlying asset, which is determined
on the same basis as those of property, plant and equipment. In addition, the
right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate.
The lease liability is measured at amortised cost using the effective interest
method. It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, there is a change in the Group's
estimate of the amount expected to be payable under a residual value
guarantee, if the Group changes its assessment of whether it will exercise a
purchase, extension or termination option or if there is a revised
in-substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment
is made to the carrying amount of the right-of-use asset, to the extent that
the right-of-use asset is reduced to nil, with any further adjustment required
from the remeasurement being recorded in the income statement.
The Group presents right-of-use assets and lease liabilities as separate line
items on the balance sheet.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease
liabilities for lease of low-value assets and short-term leases. The Group
recognises the lease payments associated with these leases as an expense on a
straight-line basis over the lease term.
As a lessor
Refer to the revenue accounting policy note for the Group's accounting policy
under IFRS 16, as a lessor.
2.13 Financial instruments
Financial assets and financial liabilities are recognised when the Group
becomes a party to the contractual provisions of the instrument.
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities.
Financial assets and liabilities
All financial assets and liabilities are initially measured at transaction
price (including transaction costs), except for those financial assets
classified as at fair value through profit or loss, which are initially
measured at fair value (which is normally the transaction price excluding
transaction costs).
Financial assets and liabilities are only offset in the balance sheet when,
and only when, there exists a legally enforceable right to set off the
recognised amounts and the Group intends either to settle on a net basis, or
to realise the asset and settle the liability simultaneously.
Commitments to make and receive loans which meet the conditions mentioned
above are measured at cost (which may be nil) less impairment.
The Group's business model for managing financial assets refers to how it
manages its financial assets in order to generate cash flows. The business
model determines whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both. Financial assets classified
and measured at amortised cost are held within a business model with the
objective to hold financial assets in order to collect contractual cash flows
while financial assets classified and measured at fair value through OCI are
held within a business model with the objective of both holding to collect
contractual cash flows and selling.
Financial liabilities are classified, at initial recognition, as financial
liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective
hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the
case of loans and borrowings and payables, net of directly attributable
transaction costs.
Non-derivative financial liabilities, including loans and borrowings, and
trade and other payables, are stated at amortised cost using the effective
interest method.
For purposes of subsequent measurement, financial liabilities are classified
in two categories:
· Financial liabilities at fair value through profit or loss
· Financial liabilities at amortised cost
Financial liabilities at fair value through profit or loss include financial
liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss.
Gains or losses on liabilities held for trading are recognised in the
statement of profit or loss.
Financial liabilities designated upon initial recognition at fair value
through profit or loss are designated at the initial date of recognition, and
only if the criteria in IFRS 9 are satisfied. The Group has not designated any
financial liability as at fair value through profit or loss.
Financial liabilities at amortised cost (loans and borrowings, trade payables,
other payables, accruals and lease liabilities) is the category most relevant
to the Group. After initial recognition, interest-bearing loans and borrowings
are subsequently measured at amortised cost using the EIR method. Gains and
losses are recognised in profit or loss when the liabilities are derecognised
as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in the statement of profit or loss.
This category generally applies to interest-bearing loans and borrowings. For
more information, refer to Note 17.
Financial assets are derecognised when and only when (a) the contractual
rights to the cash flows from the financial asset expire or are settled, (b)
the Group transfers to another party substantially all of the risks and
rewards of ownership of the financial asset, or (c) the Group, despite having
retained some, but not all, significant risks and rewards of ownership, has
transferred control of the asset to another party.
Financial liabilities are derecognised only when the obligation specified in
the contract is discharged, cancelled or expires.
Fair value measurement
The best evidence of fair value is a quoted price for an identical asset in an
active market. When quoted prices are unavailable, the price of a recent
transaction for an identical asset provides evidence of fair value as long as
there has not been a significant change in economic circumstances or a
significant lapse of time since the transaction took place. If the market is
not active and recent transactions of an identical asset on their own are not
a good estimate of fair value, the fair value is estimated by using a
valuation technique.
Impairment of financial assets
The Group recognises loss allowances for expected credit losses (ECLs) on
financial assets measured at amortised cost.
Loss allowances for trade receivables and accrued income are measured at an
amount equal to the lifetime ECL. Trade receivables do not contain a
significant financing component and typically have a short duration of less
than 12 months. The Group prepares a provision matrix when measuring its ECLs.
Trade receivables and accrued income are segmented on the basis of historic
credit loss experience, based on geographic region. Historical loss experience
is applied to trade receivables and accrued income, after being adjusted for:
· information about current economic conditions; and
· reasonable and supportable forecasts of future economic
conditions.
Write-offs
The gross carrying amount of a financial asset is written-off (either
partially or in full) to the extent that there is no realistic prospect of
recovery.
2.14 Borrowing costs
Borrowing costs are capitalised and amortised over the term of the related
debt. The amortisation of borrowing costs is recognised as finance expenditure
in the income statement.
2.15 Share based payments
The Group has equity settled compensation plans. Equity settled share based
payments are measured at fair value at the date of grant. The fair value
determined at the grant date of the equity settled share based payments is
expensed over the vesting period, based on the Group's estimate of awards that
will eventually vest. Fair value is measured by the use of the Black-Scholes
and Monte Carlo option pricing models.
The cost is recognised in staff costs (Note 6), together with a corresponding
increase in equity (share based payment reserve), over the period in which the
service and the performance conditions are fulfilled (the vesting period). The
cumulative expense recognised for equity-settled transactions at each
reporting date until the vesting date reflects the extent to which the vesting
period has expired and the Group's best estimate of the number of equity
instruments that will ultimately vest. The expense or credit in the statement
of profit or loss for a period represents the movement in cumulative expense
recognised as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when
determining the grant date fair value of awards, but the likelihood of the
conditions being met is assessed as part of the Group's best estimate of the
number of equity instruments that will ultimately vest. Non-vesting conditions
are reflected in the fair value of an award and lead to an immediate expensing
of an award unless there are also service and/or performance conditions.
Where an award is cancelled by the entity or by the counterparty, any
remaining element of the fair value of the award is expensed immediately
through profit or loss.
Employer's National Insurance contributions are treated as cash settled and
included in accruals.
The dilutive effect of outstanding options is reflected as additional share
dilution in the computation of diluted earnings per share (further details are
given in Note 9).
2.16 Critical estimates and judgements
In the application of the Group's accounting policies the Directors are
required to make judgements that have a significant impact on the amounts
recognised and to make estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and
other factors that are considered to be relevant. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The Directors have not identified any critical judgements that have a
significant effect on the amounts recognised in the consolidated financial
statements, apart from those involving estimations (which are explained
separately below).
2.17 Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation
uncertainty at the balance sheet date, that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are discussed below.
Provision for bad debts
The Group applies IFRS 9 to measure the lifetime expected credit loss of trade
receivables. The lifetime expected credit loss is based upon historic loss
experience, which is then adjusted for information about current economic
conditions and reasonable and supportable forecasts of future economic
conditions. The Group applies judgement to the adjustments to the expected
credit loss for information about current economic conditions and reasonable
and supportable forecasts of future economic conditions, and it considers all
relevant factors that impact future payment by customers. The expected credit
loss on trade receivables at the reporting date is estimated on the basis of
these underlying assumptions. Refer to Note 24(a) for the carrying value of
trade receivables to which the expected credit loss model is applied.
2.18 Adjusting items
Adjusting items are significant items of income or expense in revenue, profit
from operations, net finance costs and/or taxation which individually or, if
of a similar type, in aggregate, are relevant to an understanding of the
Group's underlying financial performance because of their size, nature or
incidence. In identifying and quantifying adjusting items, the Group
consistently applies a policy that defines criteria that are required to be
met for an item to be classified as an adjusting item. These items are
separately disclosed in the segmental analysis or in the notes to the accounts
as appropriate.
The Group believes that these items are useful to users of the consolidated
financial statements in helping to understand the underlying business
performance and are used to derive the Group's principal Alternative
Performance Measure of Adjusted EBITDA, which is before the impact of
adjusting items and which is reconciled from profit from operations.
3. Segmental analysis
For the year ended 31 December 2023
Europe Americas Asia Pacific Middle East Head Office Total
£000 £000 £000 £000 £000 £000
Total revenue 71,601 19,343 11,186 8,336 - 110,466
Cost of sales (13,730) (5,646) (2,140) (2,652) - (24,168)
Gross profit 57,871 13,697 9,046 5,684 - 86,298
Administrative expenses (18,909) (6,516) (3,950) (1,978) (11,208) (42,561)
Other operating income 374 53 208 69 - 704
Operating profit before depreciation, amortisation and foreign exchange 39,336 7,234 5,304 3,775 (11,208) 44,441
gain/(loss)
Foreign exchange gain 229
Depreciation (12,029)
Amortisation (1,431)
Operating profit 31,210
Finance income 283
Finance costs (4,000)
Profit before taxation 27,493
Taxation charge (5,914)
Profit for the financial year 21,579
Total assets 167,063 17,293 9,991 7,012 12,335 213,694
Total liabilities 30,051 5,966 2,413 1,853 76,342 116,625
For the year ended 31 December 2022
Europe Americas Asia Pacific Middle East Head Office Total
£000 £000 £000 £000 (restated)* (restated)*
£000 £000
Total revenue 42,827 13,912 10,874 5,507 - 73,120
Cost of sales (9,663) (4,867) (2,368) (1,931) - (18,829)
Gross profit 33,164 9,045 8,506 3,576 - 54,291
Administrative expenses (12,735) (5,274) (3,014) (1,563) (5,479) (28,065)
Other operating income 264 156 362 22 - 804
Operating profit before depreciation, amortisation and foreign exchange 20,693 3,927 5,854 2,035 (5,479) 27,030
gain/(loss)
Foreign exchange loss (3)
Depreciation (8,431)
Amortisation (878)
Operating profit 17,718
Finance income 21
Finance costs (1,459)
Profit before taxation 16,280
Taxation charge (3,906)
Profit for the financial year 12,374
Total assets 93,522 15,335 11,025 5,429 10,443 135,754
Total liabilities 17,500 2,755 2,310 723 37,530 60,818
* See Note 2.2 for an explanation of the prior year restatement.
Central administrative expenses represent expenditures which are not directly
attributable to any single operating segment. The expenditure has not been
allocated to individual operating segments.
The revenues generated by each geographic segment almost entirely comprise
revenues generated in a single country. Revenues in the Europe, Americas, Asia
Pacific and Middle East segments are almost entirely generated in the UK, USA,
Singapore and UAE respectively. Revenues generated outside of these
jurisdictions are not material to the Group. The basis for the allocation of
revenues to individual countries is dependent upon the facility from which the
equipment is provided.
No single customer or group of customers under common control account for 15%
or more of Group revenue.
The carrying value of non-current assets, other than deferred tax assets,
split by the country in which the assets are held is as follows:
As at As at
31 December 31 December
2023 2022
£000 (restated)*
£000
UK 141,745 80,941
USA 13,111 11,163
Singapore 7,665 8,885
UAE 4,218 4,079
* See Note 2.2 for an explanation of the prior year restatement.
4. Revenue
(a) Revenue streams
The Group's key revenue generating activity comprises equipment rental, sale
of equipment and provision of related services (non-rental revenue). The
revenue is attributable to the continuing activities of renting equipment,
selling equipment or providing a service. All rental income is expected to be
settled within 12 months.
2023 2022
£000 £000
Rental income (Note 19) 90,985 61,157
Non-rental revenue 19,481 11,963
Total revenue 110,466 73,120
(b) Disaggregation of revenue from contracts with customers
Revenue from contracts with customers from sale of equipment and provision of
related services is disaggregated by primary geographical market, major
products and services and timing of revenue recognition.
Primary geographical markets 2023 2022
£000 £000
Europe 12,930 7,812
Americas 2,808 1,859
Asia Pacific 1,565 1,037
Middle East 2,178 1,255
Non-rental revenue 19,481 11,963
Major products and services and timing of revenue recognition of non-rental
revenue:
2023 2022
£000 £000
Sale of equipment, transferred at a point in time 8,343 5,259
Provision of related services, transferred over time 11,138 6,704
Non-rental revenue 19,481 11,963
5. Operating profit
This is stated after charging/(crediting):
2023 2022
£000 (restated)*
£000
Cost of inventories recognised in cost of sales 6,757 4,956
Facilities costs 476 464
Depreciation on property, plant and equipment (Note 11) 10,939 7,501
Depreciation on right-of-use assets (Note 19) 1,090 930
Amortisation of intangible assets (Note 12) 1,431 878
Staff costs including share based payments (Note 6) 27,441 18,622
Transaction costs 2,292 787
Foreign exchange (gains)/losses (229) 3
Lease rentals 254 172
Impairment loss on trade receivables 501 810
Impairment loss on inventories 118 394
Other operating income
Gain on sale of property, plant and equipment^ 704 804
Fees payable to the auditor for the audit of the financial statements:
Total audit fees 358 202
Fees payable to the auditor and its associates for other services to the Group
Review of interim financial statements 5 5
Review of CRRT letter 5 -
Total non-audit fees 10 5
* See Note 2.2 for an explanation of the prior year restatement.
^ The gain on sale of property, plant and equipment arises from compensation
from third parties for items of property, plant and equipment that were lost,
given up or damaged beyond repair by customers in both 2023 and 2022. The
gross compensation proceeds are disclosed in the consolidated cash flow
statement.
6. Staff costs
2023 2022
£000 £000
Wages and salaries 22,625 16,190
Social security costs 2,231 1,097
Other pension costs (Note 22) 736 510
Share based payment expense 1,849 825
27,441 18,622
The average number of employees during the year was as follows:
No. No.
Operations 186 133
Sales and administrative 132 97
318 230
Full details of the Directors' remuneration and interests are set out in the
Directors' Remuneration Report on pages 47 to 50 of our Annual Report.
7. Finance income and costs
Finance income 2023 2022
£000 £000
Bank interest receivable 283 21
Finance costs 2023 2022
£000 £000
Interest on bank loans (held at amortised cost) 3,069 1,139
Amortisation of deferred finance costs 805 182
Interest expense on lease liability (Note 19) 124 138
Other interest and charges 2 -
4,000 1,459
8. Tax
(a) Tax on profit on ordinary activities
The tax charge is made up as follows:
2023 2022
£000 (restated)*
£000
Current tax:
UK corporation tax on profit for the year 6,956 2,637
Adjustment in respect of previous periods (216) (218)
Foreign tax reliefs (155) -
Foreign tax 205 94
Exchange rate differences - 3
Total current income tax 6,790 2,516
Deferred tax:
Origination and reversal of temporary differences (323) 981
Origination and reversal of temporary differences - prior periods (533) 320
Effect of changes in tax rates (20) 99
Exchange rate differences - (10)
Total deferred tax (876) 1,390
Tax charge in the profit and loss account (Note 8(b)) 5,914 3,906
* See Note 2.2 for an explanation of the prior year restatement.
(b) Factors affecting the current tax charge for the year
The tax assessed for the year differs from the standard rate of corporation
tax in the UK of 23.52% (2022: 19%). The differences are explained below:
2023 2022
£000 (restated)*
£000
Profit on ordinary activities before taxation 27,493 16,280
Profit on ordinary activities multiplied by standard rate of corporation tax 6,466 3,093
in the UK of 23.52% (2022: 19%)
Effects of:
Expenses not deductible for tax purposes 885 112
Income not taxable (64) (88)
Gains/rollover relief 50 16
Effects of overseas tax rates (972) 87
Adjustments in respect of previous periods (745) 102
Tax rate changes (21) 41
Share options 124 (17)
Movement in deferred tax not recognised (102) 525
Exchange rate difference (97) 47
Withholding taxes/State taxes 390 -
Super deduction relief - (12)
Tax charge 5,914 3,906
* See Note 2.2 for an explanation of the prior year restatement.
(c) Income tax payable
2023 2022
£000 (restated)*
£000
Income tax due 2,207 1,784
* See Note 2.2 for an explanation of the prior year restatement.
(d) Unrecognised tax losses
The Group has tax losses which arose in the UK, Canada and USA of £5,026,000
(2022: £11,447,000) that are available indefinitely for offset against future
taxable profits of the Group companies in which the losses arose.
Deferred tax assets have not been recognised in respect of these losses as
they may not be used to offset taxable profits elsewhere in the Group and they
have arisen in subsidiaries that are loss making.
(e) Deferred tax
Deferred tax included in the Group balance sheet is as follows:
2023 2022
£000 (restated)*
£000
Fixed asset timing differences (6,464) (2,088)
Short-term timing differences 1,321 376
Tax losses 546 1,071
Intangible asset timing differences (4,369) (1,421)
Deferred tax (liability)/asset (8,966) (2,062)
The recoverability of the deferred tax (liability)/asset is as follows:
Current - 85
Non-current (8,966) (2,147)
(8,966) (2,062)
Deferred tax is recognised on the balance sheet as follows:
Non-current asset 52 -
Non-current liability (9,018) (2,062)
(8,966) (2,062)
* See Note 2.2 for an explanation of the prior year restatement.
Deferred tax included in the balance sheet and income statement for each type
of temporary difference as at 31 December 2023, split by category:
Opening Prior year adjustment Revised opening Income statement Credited to equity Current year acquisition Foreign exchange Closing
(restated)* £000 £000 £000 £000 £000 £000 £000
£000
Fixed asset timing differences (2,088) 221 (1,867) 237 - (4,897) 63 (6,464)
Short-term timing differences 376 (13) 363 198 690 67 3 1,321
Tax losses 1,071 - 1,071 (481) - - (44) 546
Intangible asset timing differences (1,421) 324 (1,097) 369 - (3,640) (1) (4,369)
Total (2,062) 532 (1,530) 323 690 (8,470) 21 (8,966)
* See Note 2.2 for an explanation of the prior
year restatement.
Deferred tax included in the balance sheet and income statement for each type
of temporary difference as at 31 December 2022, split by category:
Income statement
Opening Prior year adjustment Revised opening US net deferred tax liability recognised Other Current year acquisition Foreign exchange Closing
(restated)* £000 £000 £000 (restated)* £000 £000 (restated)*
£000 £000 £000
Fixed asset timing differences 863 (18) 845 (1,642) (573) (692) (26) (2,088)
Short-term timing differences 63 - 63 57 256 - - 376
Tax losses 293 (83) 210 976 (115) - - 1,071
Intangible asset timing differences (185) - (185) (301) (935) - - (1,421)
Total 1,034 (101) 933 (910) (1,367) (692) (26) (2,062)
(2,227)
* See Note 2.2 for an explanation of the prior
year restatement.
9. Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of Ordinary Shares in
issue during the year.
Diluted earnings per share
For diluted earnings per share, the weighted average number of Ordinary Shares
in issue is adjusted to assume conversion of all dilutive potential Ordinary
Shares. The Group has dilutive potential ordinary shares arising from share
options granted to employees under the share schemes as detailed in Note 22 of
these financial statements.
Adjusted earnings per share
Earnings attributable to ordinary shareholders of the Group for the year,
adjusted to remove the impact of adjusting items and the tax impact of these,
divided by the weighted average number of Ordinary Shares outstanding during
the period.
Adjusted Statutory Adjusted Statutory
2023 2023 (restated)* (restated)*
2022 2022
Earnings attributable to equity shareholders of the Group:
Profit for the year (£000) 26,664^ 21,579 15,329^ 12,374
Number of shares:
Weighted average number of Ordinary Shares at year end 79,873,733 79,873,733 79,582,000 79,582,000
Add dilutive effect of share based payment plans 1,095,629 1,095,629 1,097,071 1,097,071
Weighted average number of Ordinary Shares for calculating diluted earnings 80,969,362 80,969,362 80,679,071 80,679,071
per share at year end
Earnings per share attributable to equity holders of the Group - continuing
operations:
Basic earnings per share (pence) 33.4 27.0 19.3 15.5
Diluted earnings per share (pence) 32.9 26.7 19.0 15.3
* See Note 2.2 for an explanation of the prior year restatement.
^ Refer to Note 28 for the reconciliation of Alternative Performance
Measures.
10. Dividends
The Board is pleased to propose a final dividend of 1.1p per share, which, if
approved at the Annual General Meeting to be held on 30 May 2024, will be paid
on 3 June 2024 with a record date of 3 May 2024. The shares will become
ex-dividend on 2 May 2024. No interim dividend was paid in 2023.
A final dividend for 2022 of 1.0p per share was paid on 23 June 2023 totalling
£796,000. The 2022 final dividend was approved at the Annual General
Meeting on 8 June 2023, with a record date of 26 May 2023. The shares became
ex-dividend on 25 May 2023. No interim dividend was paid in 2022.
11. Property, plant and equipment
Assets held Assets under construction Leasehold improvements Freehold property Fixtures Motor Total
for rental £000 £000 £000 and fittings vehicles £000
£000 £000 £000
Cost:
At 1 January 2022 104,867 - 1,739 197 3,683 305 110,791
Acquisitions 10,984 - 409 - 443 29 11,865
Fair value adjustment on acquisitions 467 - - - - - 467
Additions 13,098 - 208 - 295 - 13,601
Disposals (6,280) - (76) - (60) (30) (6,446)
Foreign exchange movements 5,937 - 85 - 170 35 6,227
At 31 December 2022 129,073 - 2,365 197 4,531 339 136,505
Accumulated depreciation:
At 1 January 2022 (85,621) - (1,219) (68) (2,867) (184) (89,959)
Acquisitions (5,920) - (338) - (267) (21) (6,546)
Fair value adjustment on acquisitions (1,118) - - - (81) - (1,199)
Charge for the year (6,892) - (253) (8) (311) (37) (7,501)
Disposals 5,613 - 43 - 46 29 5,731
Foreign exchange movements (5,018) - (62) - (117) (22) (5,219)
At 31 December 2022 (98,956) - (1,829) (76) (3,597) (235) (104,693)
Net book value:
At 31 December 2022 30,117 - 536 121 934 104 31,812
Assets held Assets under construction Leasehold improvements Freehold property Fixtures Motor Total
for rental £000 £000 £000 and fittings vehicles £000
£000 £000 £000
Cost:
At 1 January 2023 129,073 - 2,365 197 4,531 339 136,505
Acquisitions (Note 27) 25,870 1,356 - 3,432 446 61 31,165
Fair value adjustment on acquisitions (Note 27) (798) (909) - (486) 365 (16) (1,844)
Additions 19,137 59 42 - 386 - 19,624
Disposals (10,712) - (196) - (205) (9) (11,122)
Foreign exchange movements (1,908) - (31) 1 (56) 1 (1,993)
At 31 December 2023 160,662 506 2,180 3,144 5,467 376 172,335
Accumulated depreciation:
At 1 January 2023 (98,956) - (1,829) (76) (3,597) (235) (104,693)
Charge for the year (10,274) - (224) (26) (378) (37) (10,939)
Disposals 9,989 - 196 - 168 8 10,361
Foreign exchange movements 1,585 - 26 1 34 (3) 1,643
At 31 December 2023 (97,656) - (1,831) (101) (3,773) (267) (103,628)
Net book value:
At 31 December 2023 63,006 506 349 3,043 1,694 109 68,707
12. Goodwill and intangible assets
Goodwill Customer relationships Trade name Non-compete arrangements Documented processes Computer software Total
£000 £000 £000 £000 £000 (restated)* (restated)*
£000 £000
Cost:
Restated at 1 January 2022* 48,651 4,447 - 208 - 2,647 55,953
Acquisitions 16,852 4,414 - 274 - - 21,540
Additions* - - - - - - -
Foreign exchange movements 540 2 - - - - 542
At 31 December 2022 66,043 8,863 - 482 - 2,647 78,035
Amortisation:
Restated at 1 January 2022* - (3,710) - (176) - (2,647) (6,533)
Charge for the year* - (839) - (39) - - (878)
Foreign exchange movements - 1 - - - - 1
Restated at 31 December 2022* - (4,548) - (215) - (2,647) (7,410)
Net book value:
Restated at 31 December 2022* 66,043 4,315 - 267 - - 70,625
* See Note 2.2 for an explanation of the prior year restatement.
Goodwill Customer relationships Trade name Non-compete arrangements Documented processes Computer software Total
£000 £000 £000 £000 £000 (restated)* (restated)*
£000 £000
Cost:
Restated at 1 January 2023* 66,043 8,863 - 482 - 2,647 78,035
Acquisitions (Note 27) 11,900 8,503 544 4,134 1,377 - 26,458
Additions - - - - - - -
Foreign exchange movements (204) - - - - - (204)
At 31 December 2023 77,739 17,366 544 4,616 1,377 2,647 104,289
Amortisation:
At 1 January 2023 - (4,548) - (215) - (2,647) (7,410)
Charge for the year - (1,236) (23) (161) (11) - (1,431)
Foreign exchange movements - - - - - - -
At 31 December 2023 - (5,784) (23) (376) (11) (2,647) (8,841)
Net book value:
At 31 December 20223 77,739 11,582 521 4,240 1,366 - 95,448
* See Note 2.2 for an explanation of the prior year restatement.
Goodwill has arisen on the acquisition of the following subsidiaries: Amazon
Group Limited (the parent company of the existing Ashtead Technology Group at
the time of acquisition, in April 2016), TES Survey Equipment Services LLC,
Welaptega Marine Limited, Aqua-Tech Solutions LLC and its subsidiary Alpha
Subsea LLC, Underwater Cutting Solutions Limited, WeSubsea AS and its
subsidiary WeSubsea UK Limited, Hiretech Limited and Rathmay Limited and its
subsidiaries Alfred Cheyne Engineering Limited, ACE Winches Inc, ACE Winches
DMCC and ACE Winches Norge AS, as well as the acquisition of the trade and
assets of Forum Subsea Rentals, a division of Forum Energy Technologies (UK)
Limited, Forum Energy Asia Pacific PTE Ltd and Forum US, Inc.
Impairment testing for CGUs containing goodwill
For the purpose of impairment testing, goodwill has been allocated to the
Group's CGUs as follows. The groups of CGUs to which goodwill has been
allocated are consistent with the Group's operating segments.
2023 2022
£000 £000
Europe 64,173 52,271
Americas 6,390 6,591
Asia Pacific 5,346 5,351
Middle East 1,830 1,830
An impairment test has been performed in respect of each of the groups of CGUs
to which goodwill has been allocated on each reporting date.
For each of the operating segments to which goodwill has been allocated, the
recoverable amount has been determined on the basis of a value in use
calculation. In each case, the value in use was found to be greater than the
carrying amount of the group of CGUs to which the goodwill has been allocated.
Accordingly, no impairment to goodwill has been recognised. The value in use
has been determined by discounting future cash flows forecast to be generated
by the relevant regional segment.
A summary of the key assumptions on which management has based its cash flow
projections at each reporting date is as follows:
2023 2022
£000 £000
Europe:
Post-tax discount rate 11.2% 12.8%
Terminal value growth rate 2% 2%
Forecast period 2 years 2 years
Americas:
Post-tax discount rate 10.6% 12.8%
Terminal value growth rate 2% 2%
Forecast period 2 years 2 years
Asia Pacific:
Post-tax discount rate 10.6% 12.8%
Terminal value growth rate 2% 2%
Forecast period 2 years 2 years
Middle East:
Post-tax discount rate 11.2% 12.8%
Terminal value growth rate 2% 2%
Forecast period 2 years 2 years
Key assumptions used in value in use calculations
In determining the above key assumptions, management has considered past
experience together with external sources of information where available (e.g.
industry-wide growth forecasts).
The calculation is most sensitive to the following assumptions:
· Discount rates
· Growth rates used to extrapolate cash flows beyond the forecast
period
The discount rate applied to each CGU represents a post-tax rate that reflects
the market assessment of the time value of money as at 31 December 2023. The
discount rate calculation is based on the specific circumstances of the Group
and its operating segments and is derived from its weighted average cost of
capital (WACC), adjusted for the regional risk premium. The WACC takes into
account both debt and equity. The cost of equity is derived from the expected
return on investment by the Group's investors. The cost of debt is based on
the interest-bearing borrowings the Group is obliged to service. Adjustments
to the discount rate are made to factor in the specific amount and timing of
the future tax flows in order to reflect a post-tax discount rate.
Sensitivity analysis shows that a post-tax discount rate higher than 22.4%
would be required to start to indicate impairment.
Growth rate estimates are based on published industry research.
Sensitivity analysis shows that a terminal value growth rate lower than -15.8%
would be required to start to indicate impairment.
Sensitivity analysis has been performed in respect of the key assumptions
above with no impairment identified from the sensitivities performed.
13. Inventories
2023 2022
£000 £000
Raw materials and consumables 4,064 1,865
The cost of inventories recognised as an expense and included in cost of sales
during the year is disclosed in Note 5. The impairment loss recognised as an
expense during the year is disclosed in Note 5.
14. Trade and other receivables
2023 2022
£000 (restated)*
£000
Trade receivables (Note 24(a)) 23,139 16,494
Prepayments 2,815 1,725
Contract assets 473 -
Accrued income 5,588 1,565
32,015 19,784
* See Note 2.2 for an explanation of the prior year restatement.
The Directors consider that the carrying amount of trade receivables and
accrued income approximates to fair value.
Information about the Group's exposure to credit and market risks, and
impairment losses for trade receivables is included in Note 24.
15. Cash and cash equivalents
2023 2022
£000 £000
Cash at bank 10,818 9,031
Cash in hand 6 6
Cash and cash equivalents 10,824 9,037
Cash at bank earns interest at floating rates based on daily bank overnight
deposit rates. The Directors consider that the carrying amount of cash and
cash equivalents equates to fair value.
Foreign currency denominated balances within Group cash and cash equivalents
amount to:
2023 2022
£000 £000
US dollar denominated balances 2,399 1,819
Singapore dollar denominated balances 819 982
Canadian dollar denominated balances 121 170
AED denominated balances 117 319
Norwegian krone denominated balances 1,126 127
Euro denominated balances 138 -
4,720 3,417
All other balances are denominated in sterling.
16. Trade and other payables
2023 2022
£000 £000
Trade payables 9,721 5,896
Accruals 22,300 13,137
Amounts due to related parties (Note 25) - 101
32,021 19,134
The Directors consider that the carrying amount of trade and other payables
equates to fair value. The amounts due to related parties bear no interest,
and are due on demand.
The Group's exposure to currency and liquidity risks is included in Note 24.
17. Loans and borrowings
2023 2022
£000 £000
Current
Bank loans (held at amortised cost) - -
Finance lease liability 23 -
23 -
Non-current
Bank loans (held at amortised cost) 69,665 34,865
Finance lease liability 8 -
69,673 34,865
Until refinancing on 5 April 2023 the bank loans comprise a revolving credit
facility which carried interest at SONIA plus 2.2%. The lenders were HSBC Bank
plc and Clydesdale Bank plc. The Facility Agreement was subject to a leverage
covenant of 2.5x and an interest cover covenant of 4:1. The total commitments
was £60,000,000 for the RCF. A non-utilisation fee of 0.88% was charged on
the non-utilised element of the RCF facility. The revolving credit facility
was fully repayable by November 2025.
Due to refinancing on 5 April 2023, the revolving credit facility was
increased from £60,000,000 to £100,000,000 and the accordion facility was
increased from £nil to £50,000,000, and the repayment date was extended from
November 2025 to April 2027 with an option to extend the facilities by one
year. The accordion facility is subject to credit approval. ABN AMRO Bank
N.V. and Citibank N.A. joined HSBC UK Bank plc and Clydesdale Bank plc as
lenders. The interest rate increased from SONIA plus 2.2% to SONIA plus
2.25%, the non-utilisation rate decreased from 0.88% to 0.7875% and leverage
covenant increased from 2.5x to 3.0x. Due to the quantitative and
qualitative differences in the two facilities, the previous facility has been
treated as being extinguished and as a result unamortised deferred finance
costs of £522,000 were written off in 2023, as disclosed in Note 28, and
deferred finance costs of £1,241,000 were capitalised during 2023, as
disclosed in the consolidated cash flow statement. The cash flow does not
include the repayment of the previous facility or the drawdown of the new
facility as there were no cash flows associated with the refinance.
At 31 December 2023 the bank loans comprise a revolving credit facility of
£70,675,000 (2022: £35,438,000) which carried interest at SONIA plus 2.25%.
The lenders are ABN AMRO Bank N.V., Citibank N.A., Clydesdale Bank plc and
HSBC Bank plc. The Facility Agreement is subject to a leverage covenant of
3.0x and an interest cover covenant of 4:1. The total commitments are
£100,000,000 (2022: £60,000,000) for the RCF and an additional £50,000,000
(2022: £ nil) accordion facility. As at 31 December 2023 the RCF had an
undrawn balance of £29,325,000 (2022: £24,562,000) and the £50,000,000
accordion facility was undrawn (2022: fully drawn). The accordion facility is
subject to credit approval. A non-utilisation fee of 0.7875% is charged on the
non-utilised element of the RCF facility. On 20 March 2024 the revolving
credit facility was extended by 12 months and is fully repayable by April
2028.
Certain companies within the Group joined in cross guarantees with respect to
bank loans totalling £70,675,000 (2022: £35,438,000) advanced to Ashtead
Technology Limited and Ashtead Technology Offshore Inc. The lenders have a
floating charge over the assets of certain entities within the Group.
At 31 December 2023 the finance lease liability of £31,000 (2022: £nil)
relates to the financing of certain IT equipment and carried interest at a
fixed rate of 6.67%. The lender is Wesleyan Bank and will be repaid in full
by May 2025.
Bank loans are repayable as follows:
2023 2022
£000 £000
Within one year - -
Within one to two years - -
Within two to three years - 35,438
Within three to four years - -
Within four to five years 70,675 -
70,675 35,438
Deferred finance costs (1,010) (573)
69,665 34,865
During the year drawdowns totalling £62,014,000 (2022: £31,000,000) and
repayments totalling £26,587,000 (2022: £21,727,000) were made from/to the
RCF.
Finance lease liability is repayable as follows:
2023 2022
£000 £000
Within one year 23 -
Within one to two years 8 -
31 -
The weighted average interest rates on floating rate instruments during the
year was as follows:
2023 2022
Weighted average interest rates 8.11% 4.36%
The Group's exposure to interest rate, foreign currency and liquidity risks is
included in Note 24.
18. Financing liabilities reconciliation
1 January Cash Acquisitions Interest (paid)/received Other Changes 31 December 2022
2022 flows £000 £000 non-cash changes in exchange rates £000
£000 £000 £000 £000
Cash at bank and in hand 4,857 (3,918) 7,938 21 (21) 160 9,037
Bank loans (24,425) (9,045) - (1,132) 950 (1,213) (34,865)
Lease liabilities (3,134) 1,064 - - (433) (353) (2,856)
Net debt (22,702) (11,899) 7,938 (1,111) 496 (1,406) (28,684)
The non-cash movement relates to interest, the amortisation of deferred
finance costs, accrual of finance costs on lease liability and addition of new
leases during the year.
1 January Cash Acquisitions Interest (paid)/received Other Changes 31 December 2023
2023 flows £000 £000 non-cash changes in exchange rates £000
£000 £000 £000 £000
Cash at bank and in hand 9,037 (7,759) 10,065 283 (283) (519) 10,824
Bank loans (34,865) (34,186) - (3,062) 2,257 191 (69,665)
Lease liabilities (2,856) 1,199 (220) - (946) 13 (2,810)
Finance lease liability - 2 (33) (2) 2 - (31)
Net debt (28,684) (40,744) 9,812 (2,781) 1,030 (315) (61,682)
The non-cash movement relates to interest, the amortisation of deferred
finance costs, accrual of finance costs on lease liability and the addition of
new leases during the year.
19. Leases
Leases as lessee
The Group leases warehouses, offices and other facilities in different
locations (UK, UAE, Singapore, Canada, USA, Norway). The lease terms range
from 2 to 15 years with an option to renew available for some of the leases.
The Group has elected not to recognise right-of-use assets and lease
liabilities for leases that are short term and/or of low-value items. The
Group recognises the lease payments associated with these leases as an expense
on a straight-line basis over the lease term.
Further information about leases is presented below:
a) Amounts recognised in the consolidated balance sheet
Right-of-use assets Property leases
£000
Balance at 1 January 2022 2,923
Additions to right-of-use assets 571
Depreciation charge for the year (930)
Effects of movements in exchange rates 67
Balance at 31 December 2022 2,631
Additions to right-of-use assets 1,070
Depreciation charge for the year (1,090)
Effects of movements in exchange rates (27)
Balance at 31 December 2023 2,584
Lease liabilities: Property leases Property leases
2023 2022
£000 £000
Current 1,154 865
Non-current 1,656 1,991
Total lease liabilities 2,810 2,856
Refer to Note 24(b) for more information on maturity analysis of lease
liabilities.
b) Amounts recognised in the income statement
2023 2022
£000 £000
Depreciation charge 1,090 930
Interest expense on lease liability 124 138
Expenses relating to short-term leases 254 172
Total amount recognised in the income statement 1,468 1,240
c) Amounts recognised in the cash flow statement
2023 2022
£000 £000
Total cash payments for leases 1,323 1,202
Leases as a lessor
The Group leases out equipment to its customers. The lease period is short
term which ranges from weeks to multiple months. All leases are classified as
operating leases from a lessor perspective, because they do not transfer
substantially all of the risks and rewards incidental to the ownership of the
equipment.
The Group as a lessor recognises lease payments received from operating leases
as income on a straight-line basis. Increases (or decreases) in rental
payments over a period of time, other than variable lease payments, are
reflected in the determination of the lease income, which is recognised on a
straight-line basis (refer to Note 4).
Where leased equipment is lost, given up or damaged beyond repair by
third-party customers, they are invoiced for compensation under the rental
contract. The gross compensation proceeds are disclosed in the consolidated
cash flow statement and the gain on sale of property, plant and equipment is
disclosed in Note 5.
20. Provisions for liabilities
Warranty provision End of service benefits Total
£000 £000 £000
At 1 January 2022 - 108 108
Charge for the year - 30 30
Paid during the year - (34) (34)
Movement in foreign exchange - 13 13
At 31 December 2022 - 117 117
Acquired with acquisition 195 - 195
Charge for the year - 48 48
Paid during the year - - -
Movement in foreign exchange - (4) (4)
At 31 December 2023 195 161 356
Warranty provision
The provision relates to warranties provided to customers on certain
manufactured products for 12-24 months. The cost of the warranties is
accrued upon recognition of the sale of the product. The costs are estimated
based on actual historical expenses incurred and on estimated future expenses
related to current sales. Actual warranty costs are charged against the
warranty provision.
End of service benefits
The provision relates to end of service benefits for certain employees. The
actual amount payable is dependent on the length of service of the impacted
employees when their employment ceases and their salary at that time. The
provision is calculated on the impacted employees' length of service and
salary at the balance sheet date.
21. Capital commitments
2023 2022
£000 £000
Capital expenditure contracted for but not provided 4,307 689
22. Employee benefits
Share based payments
The IPO LTIP awards were granted on 5 September 2022 and comprise three equal
tranches, with the first tranche vested on the publication of the Annual
Report for the year ended 31 December 2022, the second tranche vesting on the
publication of the Annual Report for the year ended 31 December 2023 and the
third tranche vesting on the publication of the Annual Report for the year
ended 31 December 2024. Certain senior managers from various Group companies
are eligible for nil cost share option awards with Ashtead Technology Holdings
plc granting the awards and on exercise, the awards will be equity settled
with Ordinary Shares in Ashtead Technology Holdings plc. The IPO LTIP share
awards vesting is subject to the achievement of a target annual Adjusted EPS
and participants remaining employed by the Group over the vesting period.
The outstanding number of awards at 31 December 2023 is 1,011,329 (2022:
1,097,751).
Share based payments Tranche 1 Tranche 2 Tranche 3
Valuation model Black-Scholes Black-Scholes Black-Scholes
Weighted average share price (pence) 260.5 260.5 260.5
Exercise price (pence) 0 0 0
Expected dividend yield 0.76% 0.81% 0.85%
Expected volatility 41.93% 41.93% 41.93%
Risk-free interest rate 2.79% 3.14% 3.04%
Expected term (years) 0.67 1.67 2.67
Weighted average fair value (pence) 259.2 257.0 254.7
Attrition 5% 5% 5%
Weighted average remaining contractual life (years) 8.67 8.67 8.67
The expected volatility has been calculated using the Group's historical
market data history since IPO in 2021.
Share based payments Number Weighted average exercise price (£)
of shares
Outstanding at beginning of the year 1,097,751 -
Granted - -
Exercised (86,422) £3.756
Forfeited - -
Outstanding at the end of the year 1,011,329 -
Exercisable at the end of the year 279,497 -
Share based payments expense recognised in the consolidated income statement
for 31 December 2023 totals £1,997,000 (2022: £825,000), inclusive of
employer's national insurance contributions of £563,000 (2022: £84,000).
2023 LTIP awards
The 2023 LTIP awards were granted on 4 May 2023, with vesting on the
announcement of the annual results for the year ended 31 December 2025.
Certain senior managers from various Group companies are eligible for nil cost
share option awards with Ashtead Technology Holdings plc granting the awards
and on exercise, the awards will be equity settled with Ordinary Shares in
Ashtead Technology Holdings plc. The share awards vesting are subject to the
achievement of agreed Adjusted EPS, ROIC and Total Shareholder Return ("TSR")
targets and participants remaining employed by the Group over the vesting
period.
The outstanding number of awards at 31 December 2023 is 438,622 (2022: nil).
Share based payments EPS ROIC TSR
Valuation model Black-Scholes Black-Scholes Monte Carlo
Weighted average share price (pence) 379.0 379.0 379.0
Exercise price (pence) 0 0 0
Expected dividend yield 0.0% 0.0% 0.0%
Expected volatility 40.17% 40.17% 40.17%
Risk-free interest rate 3.71% 3.71% 3.71%
Expected term (years) 3.02 3.02 3.02
Weighted average fair value (pence) 379.0 379.0 298.0
Attrition 5% 5% 5%
Weighted average remaining contractual life (years) 9.34 9.34 9.34
The expected volatility has been calculated using the Group's historical
market data history since IPO in 2021.
Share based payments Number of shares Weighted average exercise price (£)
Outstanding at beginning of the period − −
Granted 438,622 −
Exercised − −
Forfeited − −
Outstanding at the end of the period 438,622 −
Exercisable at the end of the period − −
Share based payments expense recognised in the consolidated income statement
during the period was £499,000 (2022: £nil), inclusive of employer's
national insurance contributions of £84,000 (2022: £nil).
Defined contribution scheme
The Group operates defined contribution retirement benefit schemes for all
qualifying employees. The total expense charged to the income statement in the
year ended 31 December 2023 was £736,000 (2022: £510,000). There was a
balance outstanding of £171,000 in relation to pension liabilities at 31
December 2023 (2022: £134,000).
23. Share capital and reserves
The Group considers its capital to comprise its invested capital, called up
share capital, merger reserve, retained earnings and foreign exchange
translation reserve. Quantitative detail is shown in the consolidated
statement of changes in equity. The Directors' objective when managing capital
is to safeguard the Group's ability to continue as a going concern in order to
provide returns for the shareholders and benefits for other stakeholders.
Called up share capital
Allotted, called up and fully paid 31 December 2023 31 December 2022
No. £000 No. £000
Ordinary Shares of £0.05 each 79,947,919 3,997 79,582,000 3,979
3,997 3,979
Ordinary Share capital represents the number of shares in issue at their
nominal value. The holders of Ordinary Shares are entitled to receive
dividends as declared from time to time and are entitled to one vote per share
at meetings of the Company.
On 13 March 2023, the Company issued 365,919 newly authorised shares at a
subscription price of £0.05 (being nominal value) to the Employee Benefit
Trust in anticipation of the vesting of the first tranche of IPO LTIP share
options. The shares are held by the Employee Benefit Trust on the behalf of
certain option holders and are non-voting until each of the option holders
choose to exercise their options at which point they are transferred to the
option holder and become voting shares. As of 31 December 2023, 279,497 shares
(2022: nil) were held by the Company's Employee Benefit Trust.
Share premium
Share premium represents the amount over the par value which was received by
the Group upon the sale of the Ordinary Shares.
Merger reserve
The merger reserve was created as a result of the share-for-share exchange
under which Ashtead Technology Holdings plc became the parent undertaking
prior to the IPO. Under merger accounting principles, the assets and
liabilities of the subsidiaries were consolidated at book value in the Group
financial statements and the consolidated reserves of the Group were adjusted
to reflect the statutory share capital, share premium and other reserves of
the Company as if it had always existed, with the difference presented as the
merger reserve.
Share based payment reserve
The share based payment reserve is built up of charges in relation to equity
settled share based payment arrangements which have been recognised within the
consolidated income statement.
Foreign currency translation reserve
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on consolidation, are translated to the Group's
presentational currency, sterling, at foreign exchange rates ruling at the
balance sheet date. The revenues and expenses of foreign operations are
translated at an average rate for each month where this rate approximates to
the foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign operations are
reported as an item of other comprehensive income and accumulated in the
translation reserve, within invested capital. When a foreign operation is
disposed of, such that control, joint control or significant influence (as the
case may be) is lost, the entire accumulated amount in the foreign currency
translation reserve is recycled to the income statement as part of the gain or
loss on disposal.
Retained earnings
The movement in retained earnings is as set out in the consolidated statement
of changes in equity. Retained earnings represent cumulative profits or
losses, net of dividends and other adjustments.
24. Financial instruments
Financial risk management
Risk management framework
The Group's risk management policies are established to identify and analyse
the risks faced by the Group, to set appropriate risk limits and controls and
to monitor risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the Group's
activities.
The Group has exposure to the following risks arising from financial
instruments:
· Credit risk
· Liquidity risk
· Market risk
a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group's receivables from
customers. The Group has no significant concentration of credit risk, with
exposure spread over a large number of customers.
The credit risk on liquid funds held with HSBC, Bank of Montreal and The Royal
Bank of Scotland is considered to be low. The long-term credit rating for HSBC
is AA-/A+ per Fitch/Standard & Poor's. The long-term credit rating for
Bank of Montreal is AA-/A+ per Fitch/Standard & Poor's. The long-term
credit rating for The Royal Bank of Scotland is A+/A+ per Fitch/Standard &
Poor's.
The Group has established a credit policy under which each new customer is
analysed individually for creditworthiness before the Group's standard payment
and delivery terms and conditions are offered. The Group's review includes
external ratings, if they are available, financial statements, credit agency
information, industry information and in some cases bank references. Sale
limits are established for each customer and reviewed quarterly. Any sales
exceeding those limits require approval from management.
Trade receivables and accrued income
Customer credit risk is managed by each business unit subject to the Group's
established policy, procedures and control relating to customer credit risk
management. Credit quality of a customer is assessed based on a credit rating
scorecard and individual credit limits are defined in accordance with this
assessment. Outstanding customer receivables are regularly monitored and
action is taken through an escalation process in relation to slow or
non-payment of invoices. The Group has no significant concentration of credit
risk, with exposure spread over a large number of customers.
An impairment analysis is performed at each reporting date using a provision
matrix to measure expected credit losses. The provision rates are based on
days past due for groupings of various customer segments with similar loss
patterns (i.e. by geographical region, product type, customer type and
rating). The calculation reflects the probability-weighted outcome, the time
value of money and reasonable and supportable information that is available at
the reporting date about past events, current conditions and forecasts of
future economic conditions. Generally, trade receivables are written-off if
past due for more than one year and are not subject to ongoing enforcement
activity. The maximum exposure to credit risk at the reporting date is the
carrying value of each class of financial assets disclosed in Note 14. The
Group does not hold collateral as security. The Group evaluates the
concentration of risk with respect to trade receivables and accrued income as
low, as exposure is spread over a large number of customers.
The Group has used a practical expedient by computing the expected credit loss
allowance for trade receivables based on a provision matrix. The provision
percentage is determined for each subsidiary independently.
Trade receivables 2023 2022
£000 £000
Current (not past due) 9,087 6,955
Past due 0-90 days 14,823 9,738
Past due 91-180 days 723 427
Past due 181-270 days 54 153
Past due 271-365 days 179 625
More than 365 days 2,012 1,514
26,878 19,412
The following table details the risk profile of trade receivables based on
Group's provision matrix:
Trade receivables - Days Past Due
Not past due
90> 91-180 181-270 271-360 360< Total
£000 £000 £000 £000 £000 £000 £000
31 December 2023
Expected credit loss rate 0.8% 0.8% 2.9% 23.4% 53.9% 84.2% 7.5%
Estimated gross carrying amount at default 9,087 14,823 723 54 179 2,012 26,878
------- ------- ------- ------- ------- ------- -------
Life-time ECL 72 117 21 13 96 1,694 2,013
Specific provision 395 575 278 96 67 315 1,726
------- ------- ------- ------- ------- ------- -------
467 692 299 109 163 2,009 3,739
Trade receivables - Days Past Due
Not past due
90> 91-180 181-270 271-360 360< Total
£000 £000 £000 £000 £000 £000 £000
31 December 2022
Expected credit loss rate 1.1% 1.3% 5.6% 20.8% 58.5% 77.8% 9.3%
Estimated gross carrying amount at default 6,955 9,738 427 153 625 1,514 19,412
------- ------- ------- ------- ------- ------- -------
Life-time ECL 73 123 24 32 366 1,178 1,796
Specific provision 200 206 22 84 264 346 1,122
------- ------- ------- ------- ------- ------- -------
273 329 46 116 630 1,524 2,918
Accrued income is current and is fully invoiced within a month of year end,
once invoiced its original ageing is retained and provided for in line with
the above matrix.
Movements in the allowance for impairment in respect of trade receivables
The movement in the allowance for impairment in respect of trade receivables
during the year was as follows:
Movement in provision for doubtful debts £000
Balance at 1 January 2022 (1,824)
Increase in allowance recognised in profit or loss during the year (810)
Trade receivables written off during the year as uncollectible (284)
At 31 December 2022 (2,918)
Acquired with acquisition (421)
Increase in allowance recognised in profit or loss during the year (501)
Trade receivables written off during the year as uncollectible 101
At 31 December 2023 (3,739)
Cash and cash equivalents
The Group held cash and cash equivalents and other bank balances of
£10,824,000 at 31 December 2023 (2022: £9,037,000). The cash and cash
equivalents are held with the HSBC Bank plc, Bank of Montreal and The Royal
Bank of Scotland plc.
b) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
the obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset. The Group's objective when
managing liquidity is to ensure that it will have sufficient liquidity to meet
its liabilities when they are due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group's
reputation. The Group utilises both long and short-term borrowing facilities.
Cash flow forecasting is performed centrally with rolling forecasts of the
Group's liquidity requirements regularly monitored to ensure it has sufficient
cash to meet operational needs. The Group's revenue model results in a strong
level of cash conversion allowing it to service working capital requirements.
The Group has access to a multi-currency RCF facility which has total
commitments of £100,000,000 at 31 December 2023 plus an accordion facility of
£50,000,000. As at 31 December 2023 the RCF had an undrawn balance of
£29,325,000 and the accordion facility had an undrawn balance of
£50,000,000.
Maturities of financial liabilities
The table below analyses the Group's financial liabilities into relevant
maturity groupings based on their contractual maturities:
Contractual cash flows
As at 31 December 2022 Carrying total Total Within one year Between one to two years Between two to five years More than five years
£000 £000 £000 £000 £000 £000
Non-derivative financial liabilities
Bank loans 34,865 35,438 - - 35,438 -
Trade and other payables 19,134 19,134 19,134 - - -
Lease liabilities 2,856 3,031 955 722 1,290 64
56,855 57,603 20,089 722 36,728 64
Contractual cash flows
As at 31 December 2023 Carrying total Total Within one year Between one to two years Between two to five years More than five years
£000 £000 £000 £000 £000 £000
Non-derivative financial liabilities
Bank loans 69,665 70,675 - - 70,675 -
Trade and other payables 32,021 32,021 32,021 - - -
Lease liabilities 2,810 3,040 1,255 798 864 123
Finance lease liability 31 32 23 9 - -
104,527 105,768 33,299 807 71,539 123
Based on the RCF balance and the interest rate prevailing at 31 December 2023,
the outstanding balance would attract interest at £5,519,000 (2022:
£2,307,000) per annum until repaid.
c) Market risk
Market risk is the risk that changes in market prices - such as foreign
exchange rates, interest rates and equity prices - will affect the Group's
income or the value of its holdings of financial instruments. The Group's
exposure to market risk is primarily related to currency risk and interest
rate risk.
Currency risk
Currency risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in foreign exchange
rates. The Group's activities expose it primarily to the financial risks of
movements in foreign currency exchange rates. The Group monitors net currency
exposures and hedges as necessary.
The individual Group entities do not have significant financial assets and
liabilities denominated in currencies other than their functional currency
(2022: insignificant) and immaterial impact from the sensitivity analysis,
therefore disclosures relating regarding exposure to foreign currencies and
sensitivity analysis have not been included.
Interest rate risk
Interest rate risk can be either fair value interest rate risk or cash flow
interest rate risk. Fair value interest rate risk is the risk of changes in
fair values of fixed interest-bearing investments and loans. Cash flow
interest rate risk is the risk that the future cash flows of floating
interest-bearing investments and loans will fluctuate because of fluctuations
in the interest rates.
The Group is exposed to interest rate movements on its external bank
borrowing. Based on average loans and borrowings, an increase/(decrease) of
1.0% in effective interest rates would increase/(decrease) the interest
charged to the income statement by £707,000 (2022: £354,000).
d) Capital risk management
The Group's objectives when managing capital (defined as net debt plus equity)
are to safeguard the Group's ability to continue as a going concern in order
to provide returns to shareholders and benefits for other stakeholders, while
optimising returns to shareholders through an appropriate balance of debt and
equity funding. The Group manages its capital structure and makes adjustments
to it with respect to changes in economic conditions and strategic objectives.
As at 31 December 2023, the Group had gross borrowings of £70,675,000 through
its RCF and a cash and cash equivalents balance of £10,824,000. Currently
interest is payable on the RCF at a rate of SONIA plus 2.25%. The Group
remains in compliance with its banking covenants.
25. Related parties
Note 26 provides information about the entities included in the consolidated
financial statements as well as the Group's structure, including details of
the subsidiaries and the holding company.
Key managerial personnel
Allan Pirie
Ingrid Stewart
Bill Shannon
Joe Connolly (resigned 18 December 2023)
Tony Durrant
Thomas Thomsen
Jean Cahuzac (appointed 20 March 2024)
Transactions during the period with related parties:
2023 2022
£000 £000
Compensation to key management personnel
Short-term employee benefits 1,463 1,062
Share based payment charges 1,369 491
Full details of the Directors' remuneration and interests are set out in the
Remuneration Committee report on pages 47 to 50 of our Annual Report.
Directors' interests in the Ordinary Shares of the Group are included in the
Directors' Report on page 51 of our Annual Report.
Entity with significant influence over the Group
There are no entities with significant influence over the Group.
26. Group structure
A full list of subsidiary undertakings of Ashtead Technology Holdings plc as
defined by IFRS as at 31 December 2023 is disclosed below.
Equity interest at
Name of the Group company Country of incorporation 2023 2022
BP INV2 Pledgeco Limited(1) England & Wales 100% 100%
Ashtead US Pledgeco Inc(4) USA 100% 100%
Amazon Acquisitions Limited*(1) England & Wales 100% 100%
Ashtead Technology (South East Asia) PTE Limited*(2) Singapore 100% 100%
Ashtead Technology Limited*(3) Scotland 100% 100%
TES Survey Equipment Services LLC*(5) UAE 100% 100%
Ashtead Technology Offshore Inc*(4) USA 100% 100%
Ashtead Technology (Canada) Limited (formerly Welaptega Marine Limited)*(6) Canada 100% 100%
Aqua-Tech Solutions LLC*(4)^^^^ USA - 100%
Alpha Subsea LLC*(4)^^^^ USA - 100%
Underwater Cutting Solutions Ltd*(1) England & Wales 100% 100%
WeSubsea AS*(7)^ Norway - 100%
WeSubsea UK Limited*(3)^^ Scotland - 100%
Hiretech Limited*(3)^^^ Scotland - 100%
Rathmay Limited*(3^^^^^) Scotland 100% -
Alfred Cheyne Engineering Limited*(3^^^^^) Scotland 100% -
ACE Winches Inc*(8^^^^^) USA 100% -
ACE Winches DMCC*(9^^^^^) UAE 100% -
ACE Winches Norge AS*(10^^^^^) Norway 100% -
* Shares held by a subsidiary undertaking.
1 The registered address of the subsidiary is 1 Gateshead Close,
Sunderland Road, Sandy, Bedfordshire, SG19 1RS, United Kingdom.
2 The registered address of the subsidiary is 80 Raffles Place, #32-01
UOB Plaza 1, Singapore, 048624.
3 The registered address of the subsidiary is Ashtead House, Discovery
Drive, Arnhall Business Park, Westhill, AB32 6FG, United Kingdom.
4 The registered address of the subsidiary is 2711 Centerville Road,
Suite 400, Wilmington, Delaware, 19808, USA.
5 The registered address of the subsidiary is Warehouse B301, Plot M29,
ICAD III, Musaffah, Abu Dhabi, UAE.
6 The registered address of the subsidiary is 238 Brownlow Avenue, Unit
103, Dartmouth, Nova Scotia, B3B 1Y2, Canada.
7 The registered address of the subsidiary is Bryggegata 6, 0250 Oslo,
Norway.
8 The registered address of the subsidiary is 5151 San Felipe, Suite 800,
Houston, Texas, 77056, USA.
9 The registered address of the subsidiary is Unit No 3303, Mazaya
Business Avenue BB2, Jumeirah Lakes Towers, Dubai, UAE
10 The registered address of the subsidiary is Bekhuskaien 1, 4014 Stavanger,
Norway.
^ During 2023 the trade and assets of WeSubsea AS were hived up into
Ashtead Technology Limited and WeSubsea AS was liquidated on 14 December 2023.
^^ During 2023 the trade and assets of WeSubsea UK Limited were hived up
into Ashtead Technology Limited and WeSubsea UK Limited was liquidated on 19
September 2023.
^^^ During 2023 the trade and assets of Hiretech Limited were hived up into
Ashtead Technology Limited and Hiretech Limited was liquidated on 29 September
2023.
^^^^ On 10 March 2023, Alpha Subsea LLC was merged into
Aqua-Tech Solutions LLC and thereafter Aqua-Tech Solutions LLC was merged into
Ashtead Technology Offshore Inc.
^^^^^ On 30 November 2023, the Group acquired 100% of the issued
share capital of Rathmay Limited and its subsidiaries Alfred Cheyne
Engineering Limited, ACE Winches Inc, ACE Winches DMCC and ACE Winches Norge
AS, companies whose primary activity is the design, manufacture and hire of
lifting, pulling and deployment solutions to support the installation,
inspection, maintenance & repair and decommissioning of offshore energy
infrastructure.
27. Business combinations
Acquisition of Rathmay Limited
On 30 November 2023, the Group acquired 100% of the issued share capital of
Rathmay Limited and its subsidiaries Alfred Cheyne Engineering Limited, ACE
Winches Inc, ACE Winches DMCC and ACE Winches Norge AS (collectively "ACE
Winches"), companies whose primary activity is the design, manufacture and
hire of lifting, pulling and deployment solutions to support the installation,
inspection, maintenance & repair and decommissioning of offshore energy
infrastructure.
The acquisition has been accounted for under the acquisition method. The
following tables sets out the book values of the separately identifiable
assets and liabilities acquired and their fair value to the Group:
Book value Adjustments Fair value
£000 £000 to the Group
£000
Property, plant and equipment 30,916 (1,595) 29,321
Intangible assets - 14,558 14,558
Right of use assets 229 - 229
Inventories 2,069 - 2,069
Trade and other receivables 12,089 - 12,089
Cash 10,065 - 10,065
Total assets 55,368 12,963 68,331
Trade and other payables 6,659 - 6,659
Income tax payable 474 - 474
Loans and borrowings 33 - 33
Lease liabilities 220 - 220
Deferred tax liability 2,793 6,200* 8,993
Provisions for liabilities 195 - 195
Total liabilities 10,374 6,200 16,574
Net assets 44,994 6,763 51,757
Goodwill 11,900
63,657
Satisfied by:
Cash** 52,653
Loan repayment 11,004
63,657
Cash acquired (10,065)
Cash outflow on acquisition of subsidiary undertaking 53,592
* The adjustment to the deferred tax liability includes £2,519,000 related to
a revaluation of property, plant and equipment in 2021 that was not included
in the financial statements of Ace Winches.
** Of the cash consideration of £52,653,000, £48,570,000 was paid in 2023
and £4,083,000 due to be paid in 2024.
The Group incurred acquisition-related expenditure of £2,533,000 on legal
fees and due diligence costs. These costs have been expensed to the
consolidated income statement and included in 'Administrative expenses'.
In the year ended 31 December 2023, revenue of £3,825,000 and operating
profit of £1,133,000 was included in the Consolidated Income Statement in
respect of ACE Winches. If the acquisition had occurred on 1 January 2023,
management estimates that the consolidated revenue would have been
£149,613,000 and the consolidated operating profit for the year would have
been £40,948,000. In determining these amounts, management has assumed that
the fair value adjustments, determined provisionally, that arose on the date
of acquisition would have been the same if the acquisition had occurred on 1
January 2023.
The goodwill reflects the significant opportunity for future growth in
integrating ACE Winches, increasing rental equipment and solutions to both new
and existing customers through utilising ACE Winches' in-house technical
knowledge, and increasing cross selling opportunities to our combined customer
base. In addition, there is an opportunity to increase ACE Winches'
international presence and exposure through Ashtead Technology's existing
international network. The wider synergies for the Group will be achieved by
broadening the rental fleet, investing further in our people, and increasing
our service offering which will broaden our customer relationships and
increase customer retention.
28. Reconciliation of Alternative Performance Measures
Reconciliation of Adjusted EBITDA
For the year ended 31 December
Notes 2023 2022
£000 (restated)*
£000
Adjusted EBITDA 48,253 28,282
Cost associated with M&A 27 (2,533) (787)
Restructuring costs (216) (28)
Software development costs (683) (401)
Other exceptional costs (380) (36)
Operating profit before depreciation, amortisation and foreign exchange loss 44,441 27,030
Depreciation on property, plant and equipment 11 (10,939) (7,501)
Depreciation on right-of-use asset 19 (1,090) (930)
Operating profit before amortisation and foreign exchange loss 32,412 18,599
Amortisation of intangible assets 12 (1,431) (878)
Foreign exchange gain/(loss) 5 229 (3)
Operating profit 31,210 17,718
* See Note 2.2 for an explanation of the prior year restatement.
Reconciliation of Adjusted EBITA
For the year ended 31 December
Notes 2023 2022
£000 (restated)*
£000
Adjusted EBITA 36,224 19,851
Cost associated with M&A 27 (2,533) (787)
Restructuring costs (216) (28)
Software development costs (683) (401)
Other exceptional costs (380) (36)
Amortisation of intangible assets 12 (1,431) (878)
Foreign exchange gain/(loss) 5 229 (3)
Operating profit 31,210 17,718
* See Note 2.2 for an explanation of the prior year restatement.
Reconciliation of Adjusted Profit Before Tax
For the year ended 31 December
Notes 2023 2022
£000 (restated)*
£000
Adjusted Profit Before Tax 33,029 18,413
Cost associated with M&A 27 (2,533) (787)
Restructuring costs (216) (28)
Software development costs (683) (401)
Deferred finance cost write off (522) -
Other exceptional costs (380) (36)
Foreign exchange gain/(loss) 5 229 (3)
Amortisation of intangible assets 12 (1,431) (878)
Profit for the financial year 27,493 16,280
* See Note 2.2 for an explanation of the prior year restatement.
Reconciliation of Adjusted Profit After Tax
For the year ended 31 December
Notes 2023 2022
£000 (restated)*
£000
Adjusted Profit After Tax 26,664 15,329
Cost associated with M&A 27 (2,533) (787)
Restructuring costs (216) (28)
Software development costs (683) (401)
Deferred finance cost write off (522) -
Other exceptional costs (380) (36)
Foreign exchange gain/(loss) 5 229 (3)
Amortisation of intangible assets 12 (1,431) (878)
Tax impact of the adjustments above 451 88
Deferred tax arising from temporary timing differences on intangible assets - (910)
Profit for the financial year 21,579 12,374
* See Note 2.2 for an explanation of the prior year restatement.
Adjusted Profit After Tax is used to calculate the Adjusted basic earnings per
share and Adjusted diluted earnings per share in Note 9.
Throughout the annual report we use a range of financial and non-financial
measures to assess our performance. A number of the financial measures
including Adjusted EBITDA, Adjusted EBITA, Adjusted Profit Before Tax,
Adjusted Profit After Tax and Adjusted EPS are not defined under IFRS, so they
are considered alternative performance measures ("APMs").
Management uses these measures to monitor the Group's financial performance
alongside IFRS measures because they help illustrate the underlying financial
performance and position of the Group. We use these measures, which are common
across the industry, for planning and reporting purposes. These measures are
also used in discussions with the investment analyst community and credit
rating agencies. Where relevant, the APMs exclude non-recurring and
non-trading related items to aid comparability with prior year metrics. We
have explained the purpose of each of these measures throughout the strategic
report and included definitions on page 111 of our Annual Report. Management
uses APMs as they measure business performance in a more consistent way.
These APM's should be considered in addition to, and not as a substitute for,
or as superior to, measures of financial performance, financial position of
cash flows reported in accordance with IFRS. APM's are not uniformly defined
by all companies, including those in the Group's industry. Accordingly, APM's
may not be comparable with similarly titled measures and disclosures by other
companies.
29. Subsequent events
On 1 March 2024, the name of Ace Winches Norge AS was changed to Ashtead
Technology AS.
On 20 March 2024 the term of the revolving credit facility and accordion
facility was extended by 1 year and is fully repayable by April 2028.
Company Balance Sheet
At 31 December 2023
Notes 2023 2022
£000 £000
Non-current assets
Investments 4 44,851 43,140
Deferred tax asset 5 29 85
Trade and other receivables 6 16,726 15,287
61,606 58,512
Current assets
Trade and other receivables 6 7 -
7 -
Total assets 61,613 58,512
Current liabilities
Trade and other payables 7 32 16
32 16
Total liabilities 32 16
Equity
Share capital 8 3,997 3,979
Share premium 8 14,115 14,115
Merger reserve 8 38,318 38,318
Share based payment reserve 8 2,538 827
Retained earnings 8 2,613 1,257
Total equity 61,581 58,496
Total equity and liabilities 61,613 58,512
The accompanying notes are an integral part of the Company financial
statements.
As permitted by Section 408 of the Companies Act 2006, the profit and loss of
the Company has not been presented in these financial statements. The profit
for the year ended 31 December 2023 dealt with in the financial statements of
the Company was £2,152,000 (2022: £3,738,000).
The financial statements were approved by the Board of Directors of Ashtead
Technology Holdings plc (registered number 13424040) on 15 April 2024 and were
signed on its behalf by:
Allan Pirie Ingrid
Stewart
Chief Executive Officer Chief Financial
Officer
15 April 2024 15
April 2024
Company Statement of Changes in Equity
For the year ended 31 December 2023
Share Share premium Merger Share based payment reserve Retained earnings Total
capital £000 reserve £000 £000 £000
£000 £000
At 1 January 2022 3,979 14,115 38,318 - (2,481) 53,931
Profit for the year - - - - 3,738 3,738
Total comprehensive income - - - - 3,738 3,738
Share based payment charge - - - 827 - 827
At 31 December 2022 3,979 14,115 38,318 827 1,257 58,496
Profit for the year - - - - 2,152 2,152
Total comprehensive income - - - - 2,152 2,152
Share based payment charge - - - 1,711 - 1,711
Issue of shares 18 - - - - 18
Dividends paid - - - - (796) (796)
At 31 December 2023 3,997 14,115 38,318 2,538 2,613 61,581
The accompanying notes are an integral part of the Company financial
statements.
Notes to the Company Financial Statements
For the year ended 31 December 2023
1. Basis of preparation
Ashtead Technology Holdings plc ("the Company") is a public limited company
incorporated in the United Kingdom under the Companies Act 2006, whose shares
are traded on AIM. The financial statements of the Company as at and for the
year ended 31 December 2023 are presented under the Financial Reporting
Standard 101 Reduced Disclosure Framework ("FRS 101"). The prior year
comparatives are for the year ended 31 December 2022. The Company is domiciled
in the United Kingdom and its registered address is 1 Gateshead Close,
Sunderland Road, Sandy, Bedfordshire, SG19 1RS, United Kingdom.
The Company's financial statements are prepared under FRS 101 and take the
available exemptions from FRS 101 in conformity with Companies Act 2006 as
noted below:
· a cash flow statement and related notes;
· comparative period reconciliations;
· disclosures in respect of transactions with wholly-owned
subsidiaries;
· disclosures in respect of capital management;
· disclosures in respect of financial instruments;
· disclosures in respect of fair value measurement;
· the effects of new but not yet effective IFRSs; and
· disclosures in respect of the compensation of key management
personnel.
As the consolidated financial statements of the Group include equivalent
disclosures, the Company has also taken the exemptions under FRS 101 available
in respect of the disclosures under IFRS 2 related to Group-settled share
based payments.
The preparation of the financial statements requires the Directors to make
estimates and assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities, and the disclosure of contingent
liabilities.
The Company financial statements have been prepared in sterling, which is the
functional and presentational currency of the Company. All figures presented
are rounded to the nearest thousand (£000), unless otherwise stated.
The Directors have used the going concern principle on the basis that the
current profitable financial projections and facilities of the Company and the
consolidated Group, of which the Company is the ultimate parent, will continue
in operation for a period not less than 12 months from the date of this
report.
Subsidiary audit exemption
Ashtead Technology Holdings plc (company registration number 13424040) has
issued a parental company guarantee under s479A of the Companies Act 2006
dated 31 December 2023. As a result, for the year ended 31 December 2023,
Underwater Cutting Solutions Limited (company registration number 05031272) is
entitled to exemption from audit.
2. Accounting policies
Investments
Investments in subsidiaries are measured at cost less any provision for
impairment. Annually, the Directors consider whether any events or
circumstances have occurred that could indicate that the carrying amount of
fixed asset investments may not be recoverable. If such circumstances do
exist, a full impairment review is undertaken to establish whether the
carrying amount exceeds the higher of net realisable value or value in use. If
this is the case, an impairment charge is recorded to reduce the carrying
value of the related investment.
The cost of investments in subsidiaries is determined by the historical cost
of investments in the subsidiaries of the Group transferred from the previous
owning entities, including transaction costs.
Trade and other receivables
Trade and other receivables are non-derivative financial assets that are
primarily held in order to collect contractual cash flows and are measured at
amortised cost, using the effective interest rate method, and stated net of
allowances for credit losses.
Trade and other payables
Trade and other payables are non-derivative financial liabilities that are
stated at amortised cost using the effective interest method and are
derecognised only when the obligation specified in the contract is discharged,
cancelled or expires.
Share capital
Ordinary Shares are classified as equity. Incremental costs directly
attributable to the issue of new shares are shown in equity as a deduction
from the proceeds.
Taxation
UK corporation tax is provided at amounts expected to be paid or recovered
using the tax rates and laws that have been enacted or substantively enacted
by the balance sheet date.
Deferred tax is recognised in respect of all temporary differences that have
originated but not reversed at the balance sheet date, where transactions or
events that result in an obligation to pay more tax in the future or a right
to pay less tax in the future have occurred on the balance sheet date.
A net deferred tax asset is regarded as recoverable and therefore recognised
only when, on the basis of all evidence available, it can be regarded as more
likely than not that there will be suitable taxable profits against which to
recover carried-forward tax losses and from which the future reversal of
underlying temporary differences can be deducted.
Deferred tax is measured at the average rates that are expected to apply in
the periods in which the temporary differences are expected to reverse based
on the tax rates and laws that have been enacted or substantively enacted by
the balance sheet date. Deferred tax is measured on an undiscounted basis.
Share based payments
The Group has equity settled compensation plans. Equity settled share based
payments are measured at fair value at the date of grant. The fair value
determined at the grant date of the equity settled share based payments is
expensed over the vesting period, based on the Group's estimate of awards that
will eventually vest. Fair value is measured by the use of the Black-Scholes
option pricing model.
In the Company financial statements, the cost is recognised in investments
(Note 4), together with a corresponding increase in equity (share based
payment reserve), over the period in which the service and the performance
conditions are fulfilled (the vesting period). The cumulative expense
recognised for equity-settled transactions at each reporting date until the
vesting date reflects the extent to which the vesting period has expired and
the Group's best estimate of the number of equity instruments that will
ultimately vest. The increase or decrease to investments for a period
represents the movement in cumulative expense recognised as at the beginning
and end of that period.
Service and non-market performance conditions are not taken into account when
determining the grant date fair value of awards, but the likelihood of the
conditions being met is assessed as part of the Group's best estimate of the
number of equity instruments that will ultimately vest. Non-vesting conditions
are reflected in the fair value of an award and lead to an immediate expensing
of an award unless there are also service and/or performance conditions.
Where an award is cancelled by the entity or by the counterparty, any
remaining element of the fair value of the award is expensed immediately
through profit or loss.
Critical estimates and judgements
The Directors do not consider there to be any critical estimates or any
significant judgements in the carrying amounts of asset and liabilities of the
Company.
3. Staff costs
The Company has no employees. Full details of the Directors' remuneration and
interests are set out in the Directors' Remuneration Report on pages 47 to 50
of our Annual Report.
4. Investments
2023 2022
£000 £000
Cost:
At the beginning of the period 43,140 42,313
Additions 1,711 827
At the end of the year 44,851 43,140
There were no indicators of impairment noted under IAS 36 and accordingly, no
impairment charge has been recognised.
Subsidiary undertakings are disclosed within Note 26 of the consolidated
financial statements.
5. Deferred tax asset
Deferred tax included in the Company balance sheet is as follows:
2023 2022
£000 £000
Tax losses 32 85
6. Trade and other receivables
2023 2022
£000 £000
Amounts owed by Group companies 16,607 15,167
Group relief 119 120
Prepayments 7 -
16,733 15,287
Amounts owed by Group companies comprise intercompany balances with subsidiary
companies within the Group. The amounts owed by Group companies bear no
interest and are due on demand. IFRS 9 expected credit losses have been
assessed as immaterial in relation to this balance. Amounts owed by Group
companies are classified as non-current as the amounts are expected to be
repaid after more than 12 months of the reporting period.
7. Trade and other payables
2023 2022
£000 £000
Accruals 32 16
32 16
8. Share capital and reserves
Called up share capital
31 December 2023 31 December 2022
Allotted called up and fully paid No. £000 No. £000
Ordinary Shares of £0.05 each 79,947,919 3,997 79,582,000 3,979
3,997 3,979
Ordinary Share capital represents the number of shares in issue at their
nominal value. The holders of Ordinary Shares are entitled to receive
dividends as declared from time to time and are entitled to one vote per share
at meetings of the Company.
On 13 March 2023, the Company issued 365,919 newly authorised shares at a
subscription price of £0.05 (being nominal value) to the Employee Benefit
Trust in anticipation of the vesting of the first tranche of IPO LTIP share
options. The shares are held by the Employee Benefit Trust on the behalf of
certain option holders and are non-voting until each of the option holders
choose to exercise their options at which point they are transferred to the
option holder and become voting shares. As of 31 December 2023, 279,497 shares
(2022: nil) were held by the Company's Employee Benefit Trust.
Share premium
Share premium represents the amount over the par value which was received by
the Company upon the sale of the Ordinary Shares.
Merger reserve
The merger reserve was created as a result of the share-for-share exchange
under which Ashtead Technology Holdings plc became the parent undertaking
prior to the IPO. The Company investment in subsidiary undertakings is the
book value from predecessor shareholders in the Group, with the difference
over the statutory share capital issued by the Company presented as the merger
reserve. The Company has applied merger relief.
Share based payment reserve
The share based payment reserve is built up of charges in relation to equity
settled share based payment arrangements which have been recognised within
investments in subsidiaries in the Company balance sheet.
Retained earnings
The movement in retained earnings is as set out in the Company statement of
changes in equity. Retained earnings represent cumulative profits or losses,
net of dividends and other adjustments.
9. Subsequent events
On 20 March 2024 the term of the revolving credit facility and accordion
facility was extended by one year and is fully repayable by April 2028.
Company Information
Directors
W M F C Shannon
A W Pirie
I Stewart
A R C Durrant
T Hamborg-Thomsen
J Connolly (resigned 18 December 2023)
J Cahuzac (appointed 20 March 2024)
Company Secretary
I Stewart
Auditor
BDO LLP
Statutory Auditor
2 Atlantic Square
31 York Street
Glasgow G2 8NJ
Bankers
ABN AMRO Bank N.V.
Gustav Mahlerlaan 10
1082 PP Amsterdam
Netherlands
Citibank N.A.
Citigroup Centre
33 Canada Square
Canary Wharf
London E14 5LB
Clydesdale Bank plc
1 Queen's Cross
Aberdeen AB15 4XU
HSBC Bank plc
95-99 Union Street
Aberdeen AB11 6BD
Solicitors
White & Case LLP
5 Old Broad Street
London EC2N 1DW
Corporate broker
Numis Securities Ltd
45 Gresham Street
London EC2V 7BF
Registrar
Computershare Limited
The Pavilions
Bridgwater Road
Bristol BS13 8AE
Registered office
1 Gateshead Close
Sunderland Road
Sandy
Bedfordshire SG19 1RS
Registered number: 13424040
Website
www.ashtead-technology.com (http://www.ashtead-technology.com)
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