REG - Speedy Hire PLC - Full Year Results
25/05/2021 07:00
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RNS Number : 6516Z Speedy Hire PLC 25 May 2021
Speedy Hire Plc
("Speedy", "the Company" or "the Group")
Results for the year ended 31 March
2021
Strong performance; well positioned for sustainable growth
Speedy, the UK's leading tools, equipment and plant hire services company,
operating across the construction, infrastructure and industrial markets,
announces results for the year ended 31 March 2021.
Commenting on the results Russell Down, Chief Executive, said:
"I am pleased to report results that are ahead of our expectations in what has
been an exceptionally challenging year for customers and colleagues alike.
The resilient performance of our business during this unprecedented period
is testament to the strength of our model, hard work of all my colleagues and
strong operational delivery. Our excellent customer service, including our
four-hour delivery commitment, has facilitated a strong recovery in the second
half.
"We have had an encouraging start to FY2022 with revenue in April and May c.2%
ahead of the equivalent period in 2019. Our strong balance sheet and the
actions we have taken to develop our digital and ESG offerings give us
confidence for the future."
Underlying results
Year ended 31 March 2021 Year ended 31 March 2020 Change
(£m)
(£m) %
Revenue (excluding disposals) 359.4 402.5 (10.7)
Adjusted operating profit(1) 25.4 39.1 (35.0)
Adjusted profit before tax(1) 20.7 34.9 (40.7)
Adjusted earnings per share (pence)(2) 3.22 5.54 (41.9)
Statutory results
Year ended 31 March 2021 Year ended 31 March 2020 Change
(£m)
(£m) %
Revenue 363.6 406.7 (10.6)
Operating profit 17.0 14.0 21.4
Profit before tax 12.3 20.7 (40.6)
Basic earnings per share 1.82 3.23 (43.7)
Other measures
Year ended 31 March 2021 Year ended 31 March 2020 Change
(£m)
(£m) %
Net debt(3) 33.2 79.3 (58.1)
Return on Capital Employed(4) 7.6% 12.0% (4.4)pp
Dividend (pence per share) 1.40 0.70 100
Group highlights
· Progressive revenue recovery throughout the year:
o Hire revenue up 4% on a like for like basis in Q4
o Improved utilisation in the second half at 58.8% (2020: 55.9%)
o Increased market share following significant new contract wins including
Network Plus and MWH
o SME revenue has continued to grow, up 10% on the prior year in the second
half
· Decisive and swift action taken to manage costs and preserve cash
in response to COVID-19:
o Prioritised customer and colleague wellbeing
o Utilised Government support schemes in the first half
o Capex managed tightly in the first half; fleet age remains young at 3.6
years (2020: 3.4 years)
o 13 depots closed and a further 22 being consolidated into six improved
locations
o Following restructure headcount in UK and Ireland reduced to 3,303 (2020:
3,464)
· Disposal of Middle East assets to the principal customer on 1
March 2021 for $18m
· Strong balance sheet and cash generation:
o Business model provided strong cash generation and improved liquidity
during the pandemic
o Middle East disposal generated $30m including working capital settled on
31 March 2021
o Net debt materially reduced to £33.2m (2020: £79.3m); leverage(5) of
0.5x (2020: 1.0x)
o Cash and facility headroom of £142.3m (2020: £99.0m)
o UK and Ireland debtor days reduced to 59 from 66
· Continued strategic and operational progress:
o Extended our industry leading four-hour delivery promise to the top 350
products
o Entered B2C market through trial with B&Q
o Continuous improvements to the digital customer journey
o Commitment to reaching net zero emissions before 2050, setting
science-based targets in FY2022 to provide a clearly defined pathway on how we
will achieve this
o Significant investment in sustainable hybrid and electric equipment in
support of our ESG strategy "Energise"
· Dividend payments resumed with final dividend of 1.40p per share
proposed which recognises the strong recovery in the second half
· Board strengthened and diversity enhanced following recent
changes
Enquiries:
Speedy Hire Plc Tel: 01942 720 000
David Shearer, Chairman
Russell Down, Chief Executive
James Bunn, Chief Financial Officer
MHP Communications Tel: 0203 128 8147
Oliver Hughes
Andrew Jaques
Notes:
Explanatory notes:
(1 )See note 9
(2) See note 7
(3) See note 13
(4) Return on Capital Employed: Profit before tax, amortisation and
exceptional items divided by the average capital employed (where capital
employed equals shareholders' funds and net debt(3)), for the last 12 months.
(5) Leverage: Net debt(3) covered by EBITDA(1). This metric excludes the
impact of IFRS 16.
Inside Information: This announcement contains inside information.
Forward looking statements: The information in this release is based on
management information. This report includes statements that are forward
looking in nature. Forward looking statements involve known and unknown risks,
assumptions, uncertainties and other factors which may cause the actual
results, performance or achievements of the Group to be materially different
from any future results, performance or achievements expressed or implied by
such forward looking statements. Except as required by the Listing Rules and
applicable law, the Company undertakes no obligation to update, revise or
change any forward looking statements to reflect events or developments
occurring after the date of this report.
Notes to Editors: Founded in 1977, Speedy is the UK's leading provider of
tools, equipment and plant hire services to a wide range of customers in the
construction, infrastructure and industrial markets, as well as to local trade
and industry. The Group provides complementary support services through the
provision of training, asset management and compliance services. Speedy is
certified nationally to ISO50001, ISO9001, ISO14001, ISO17020, ISO27001 and
OHSAS18001. The Group operates from c.200 fixed sites across the UK and
Ireland together with a number of on-site facilities at client locations and
through a joint venture in Kazakhstan.
Chairman's statement
Overview
I am pleased with these results which demonstrate a strong performance in the
second half of the year following the challenges in the first half dealing
with the impact of the pandemic. The Group has adapted well this year
continuing to support customers and colleagues in what have been very
challenging conditions. We close the year with both revenue and asset
utilisation ahead of the corresponding period in 2019 and positioned strongly
in both financial and operational terms to meet the needs of our customers as
we move into a post COVID world.
COVID-19
The Group managed its cost base and cash resources throughout the COVID-19
pandemic, reducing staff costs through the use of Government support schemes.
We froze all capital expenditure unless specifically needed to meet customer
requirements and managed working capital tightly. As customers returned to
work we resumed our capital expenditure to meet increasing customer demand,
taking the opportunity to make significant investments in new sustainable
hybrid and electric equipment. We initially closed two thirds of our network
in April 2020, by September the network was operating once again at full
capacity following a review of our depot footprint. This resulted in the
permanent closure of 13 depots and the consolidation of a further 22 depots
into larger scale units to meet our customer requirements.
Results
Group revenue, excluding disposals, fell to £359.4m (2020: £402.5m).
Whilst revenue declined in the first half of the year, it recovered strongly
in the second half as customers returned to work. We have secured new work
and contract renewals from larger customers and are growing revenue in the SME
market. We are trialling outlets in B&Q stores around the UK with the
objective of increasing our exposure to the B2C market.
The Group sold its Middle East assets to our major customer ADNOC Logistics
and Services LLC (ADNOC), for a consideration of $18m in March 2021, after
successfully turning round that business over the last few years during which
time it has been a positive contributor to Group profits. On conclusion of a
Transitional Services Agreement (TSA) with ADNOC the Group's operations in the
Middle East will be terminated. The Group continues to operate
internationally through the Kazakhstan JV.
Our net debt position remains historically low with significant headroom
against our committed banking facilities. The strength of our balance sheet
and available financial resources will allow us to invest to meet increasing
demand and capitalise on growth opportunities as activity levels continue to
recover.
Dividend
As a result of the COVID-19 pandemic the Group utilised Government support
schemes and implemented cost reduction measures across the business that
affected colleagues and other stakeholders. As a consequence the Board
resolved not to pay a final dividend for FY2020 nor an interim dividend for
FY2021. Following the strong performance in the second half of the year and
the robust balance sheet, the Board is recommending a final dividend of 1.40
pence per share for the year ended 31 March 2021. If approved at the
forthcoming Annual General Meeting the dividend will be paid on 24 September
2021 to shareholders on the register at close of business on 13 August 2021.
Board and people
During the course of the last year we have made a number of changes to the
Board which have enhanced its diversity, broadened its skill base and improved
the average tenure of the Board to manage future succession.
Chris Morgan resigned from the Board on 31 July 2020 and we welcomed James
Bunn as Chief Financial Officer with effect from 14 September 2020. James
has extensive experience in senior finance positions with a particular focus
on digital business.
Bob Contreras stepped down from the Board on 17 February 2021, to allow him to
exclusively pursue his full-time executive role. On behalf of the Board I
would like to express my thanks to both Chris and Bob for their contributions
over the last few years and wish them every success in the future.
Shatish Dasani was appointed as a Non-Executive Director and Chairman of the
Audit and Risk Committee and a member of the Nomination Committee on 1
February 2021. Shatish has significant experience in senior public company
finance roles and will add to the Board's skillset as we implement the next
stage of our growth strategy.
Carol Kavanagh will join the Board as a Non-Executive Director and member of
the Remuneration Committee with effect from 1 June 2021. Carol has extensive
experience in business transformation and people related matters across
relevant sectors which will further strengthen the expertise of the Board and
broaden its diversity. I am delighted to welcome both Shatish and Carol to
the Board.
This year has proved challenging for all of my colleagues, including many who
were on furlough leave for a period. I would like to take this opportunity
to thank each and every one of the Speedy family for their hard work,
dedication, support to the business and each other, and positive spirit
throughout this challenging time.
Future
I am pleased that the business has responded well to the challenges of the
past year. Through strong leadership, effective management, dedication and
resilience the business is able to move forward from a position of strength to
take advantage of opportunities as the UK emerges from the pandemic and
markets continue to recover.
David Shearer
Chairman
Chief Executive's statement
Overview
I am pleased to report results that are ahead of our expectations in what has
been an exceptionally challenging year for customers and colleagues alike.
These results are testament to the hard work of all our colleagues in
supporting us throughout this period whilst maintaining excellent service
levels to our customers.
The Group continued to serve customers through the pandemic supporting the NHS
and other essential services whilst prioritising the safety and wellbeing of
all stakeholders. In April 2020 up to 50% of staff were placed on furlough
leave and, whilst we maintained our national coverage, 66% of our depots were
initially closed. Following a detailed operational review of trading during
the first lockdown, 13 depots were permanently closed and a further 22 depots
are being consolidated into six larger improved locations. No colleagues
were on furlough beyond 30 September, although c.200 roles were regrettably
made redundant during the year.
Our revenues declined initially, falling by 35% in April 2020, but recovered
strongly following the first lockdown as existing customers returned to work
and we secured work from new customers. In the fourth quarter UK and Ireland
core hire revenue was 4% ahead of the prior year. In April and May 2021 core
hire revenue was c.2% higher than the comparative period in 2019. The young
age profile of the Group's hire fleet allowed us to significantly reduce
capital expenditure in the first half year; asset utilisation for the second
half year increased to 58.8% (2020: 55.9%).
Infrastructure spending has grown and prospects are strong, particularly on
major projects including HS2; our investment in equipment and new colleagues
in the rail sector resulted in revenues growing significantly. Our SME
revenue has continued to grow, up 10% on the prior year in the second half.
We have entered into a trial with B&Q to grow this segment further and
are currently trading out of 16 B&Q stores with significant opportunities
for growth. Revenue from regional customers has declined slightly, primarily
due to pricing pressure in this competitive segment.
The Group sold its Middle East equipment fleet, stock and other fixed assets
to its principal customer, ADNOC, on 1 March 2021 for $18m. Outstanding
trade receivables of c.$12m were paid in full on 31 March 2021. The Group
entered into a Transitional Services Agreement (TSA) with ADNOC, which will
expire on 30 June 2021, to support the transfer of the assets, during which
time it is anticipated that the Group's c.600 UAE-based employees' contracts
will be terminated and all colleagues offered re-employment by ADNOC. The
successful exit from the Middle East operations is an important strategic step
for the Group leaving us well positioned to take advantage of the market
opportunities in the UK and Ireland as activity levels continue to improve.
Financing and liquidity
Our business model provided strong cash generation and improved liquidity
during the pandemic; operating cash flow of £72.9m was 13.0% ahead of prior
year (2020: £64.5m). Net debt, excluding lease liabilities, as at 31 March
2021 reduced to £33.2m (2020: £79.3m), following the sale of our operations
in the Middle East and excellent cash collections. The Group has significant
headroom against its committed banking facilities totalling £180m; leverage
at 31 March 2021 was 0.5 times.
Results
Group revenue fell by 10.6% to £363.6m (2020: £406.7m) reflecting the impact
of the first lockdown in April and May 2020 and the recovery in activity
levels thereafter. Group revenues, excluding disposals, fell by 10.7% to
£359.4m (2020: £402.5m).
In the UK and Ireland core hire revenue fell by 11.0%, with first half
revenues down 20.5%. In the second half core hire revenue was broadly flat.
Services revenue fell by 10.2% reflecting a strong performance from our
rehire business offset by lower training revenue due to COVID-19 restrictions.
Gross margin decreased to 53.0% (2020: 55.1%), primarily as a result of lower
core hire revenues in the first half year and services mix. Overheads
remained tightly controlled reducing in the year as a result of lower activity
levels and Government support. EBITA decreased by 35.0% to £25.4m (2020:
£39.1m). EBITDA decreased by 15.7% to £90.5m (2020: £107.4m).
There were £7.6m of net exceptional expenses incurred during the year (2020:
£12.9m) principally in relation to the depot realignment programme and costs
associated with Geason Training.
Adjusted profit before tax decreased to £20.7m (2019: £34.9m). Adjusted
earnings per share decreased to 3.22 pence (2020: 5.54 pence).
The Group has a 45% share in a joint venture in Kazakhstan serving the oil and
gas market. Share of profits fell to £1.2m (2020: £2.8m) reflecting
reduced activity levels in the year due to COVID-19.
The net book value of the Group's hire fleet decreased to £207.2m (2020: £
227.1m). The reduction in the size of the fleet reflects the disposal of the
Middle East equipment in March 2021 and lower capital expenditure in the first
half year. The average fleet age remains low, increasing slightly to 3.6
years (2020: 3.4 years). Asset utilisation in the second half in the UK and
Ireland was 58.8% (2020: 55.9%), reflecting continued use of artificial
intelligence to manage stocking levels and lower capital expenditure in the
first half year. The Group will continue to invest in sustainable products
in line with its strategy to reduce the carbon output of the hire fleet
through investment in solar, hybrid, electric and hydrogen technology.
Dividend
The Board is committed to a progressive dividend policy with a pay-out ratio
of between 33% and 50% of underlying profit after tax.
The Group utilised Government support during the first half year including use
of the Coronavirus Job Retention Scheme and the deferral of tax payments and
has benefitted from rates relief. In addition, substantial cost reduction
measures were implemented during the first half which affected colleagues,
landlords and other stakeholders. The Group has no intention of further
utilising Government COVID-19 support schemes, no staff were on furlough post
30 September 2020, and all tax deferrals were paid by 30 September 2020.
Nevertheless the Board resolved not to pay a final dividend for FY2020 or an
interim dividend for FY2021.
The Board is pleased with the recovery of the business post the initial
lockdown and has therefore recommended a final dividend of 1.40 pence per
share for the year ended 31 March 2021.
Strategy and operational review
Our vision is to be the best company in our sector to do business with and the
best to work for. We have continued to win new customers and renew contracts
with our existing customers over the past year which is testament to the
excellent customer service we provide. We are constantly striving to improve
the customer journey and further differentiate our service offering. We are
actively listening and communicating with our people and enhancing the
employee value proposition in order to attract and retain the best talent.
UK and Ireland
We serve approximately 50,000 customers in the UK and Ireland, including 86 of
the UK's 100 largest contractors. Our customers include major infrastructure
contractors, housebuilders, industrials and SMEs. More recently we have
entered the B2C market through our partnership with B&Q where we are
currently trading through 16 stores across the UK. During the year we have
extended our contracts with Murphy, Osborne and Balfour Beatty, and won a
number of significant new contracts including with Network Plus and MWH. We
have also further grown our SME revenues by over 20% in the fourth quarter
compared with the same period last year through continued growth in our
Customer Relationship Centre (CRC) in South Wales. We have restructured our
sales teams and their ways of working to better address customers' needs
following the pandemic.
Our customers' key priority is the prompt availability of products for hire.
We offer an industry leading unique four-hour delivery service on our most
popular products, 'Capital Commitment'. This four-hour promise was
originally launched within the M25 in November 2018, has subsequently been
extended nationally and now covers our 350 most popular products. The
success of Capital Commitment reflects our customer service culture, and the
investment we have made in equipment, systems and processes. We will
continue to evolve this service promise to ensure that we remain the best
company in our sector to do business with.
Services revenues are less capital intensive, have greater visibility and are
more recurring in nature than hire revenues. As a result, they are ROCE
enhancing for the Group. Our Services categories consist of: rehire;
training; testing, inspection and certification; product and consumable sales;
and fuel management services. Services revenue has been less affected by the
pandemic than our hire business primarily due to an increase in rehire of
accommodation and consumable sales including of PPE. Geason Training has
performed below expectations during the year due to lower than expected
learner enrolments as a result of the pandemic. During the year we resolved
the claim from the funding agency and implemented a number of management
changes. We are reviewing further initiatives to improve the Group's
financial position.
We have extended the use of artificial intelligence to optimise our asset
holdings and now produce a dynamic forecast which is updated monthly.
Optimal stocking levels are set to ensure we have the right assets, at the
right locations, at the right time to satisfy customer demand in the most
efficient way. Utilisation rates have consequently increased to record
levels with specialist products yet to be added into the system. Our aim is
to optimise all elements of the operational support process through data led
intelligence.
During the year significant improvements were made to the digital customer
journey including more accurate allocation of orders to locations, better
online pricing capability, Hand Arm Vibration (HAV) product selector
enhancements, online inspection, and the ability to place digital orders for
collection from our B&Q locations (including at weekends). We also
launched a new cross platform App which makes development quicker and provides
a single code base to maintain. Functionality available on the App now
includes a mini "MySpeedy" customer dashboard, the ability to view and
download invoices, and pay through the App, off hire by scanning the barcode
on the asset, and delivery and collection tracking capability.
We anticipate further increases in digital take up following the
implementation of automated on-boarding for pay as you go customers (primarily
SME and B2C customers) and order approval workflow for customers requiring
transaction approvals (regional and major customers).
Our online capability is supported by an omni-channel approach to servicing
customers. During the year we completed the rollout of VOIP telephony across
our network which provides additional customer facing capability.
ESG
We are committed to reaching net zero emissions before 2050 and during the
current financial year will set science-based targets to provide a clearly
defined pathway on how we will achieve this. Our Energise programme, which
was launched in October 2019, encompasses our objectives to reduce
environmental impacts, improve social responsibility and operate robust
governance programmes. A new ESG Director, and an Innovation Director were
appointed in April 2021, both of whom are working alongside our HR Director
who joined in October 2020 to progress our ESG strategy.
Our principal objective is to reduce the carbon output of our hire and vehicle
fleet through the use of solar, hybrid, electric and hydrogen technology. We
are working with equipment manufacturers to increase the volume of sustainable
products within our hire fleet with this year's capital expenditure budget
being weighted towards such products; sustainable products already generate
more than 25% of our revenue. Our company car list now consists almost
entirely of hybrid and electric vehicles and we are working closely with
commercial vehicle manufacturers to introduce hybrid and electric vehicles as
soon as practicable. We are already operating a number of electric delivery
vehicles on a trial basis including two converted electric London taxis. The
carbon output of our equipment fleet is affected by the use of fossil fuels.
We are working closely with customers and suppliers to trial the use of
hydrogenated vegetable oil (HVO) within our products as a substitute for
diesel. Initial trials have shown carbon output to be reduced by up to 90%
from the use of HVO and hence we are working with customers to further roll
out this product within our network.
We are progressing the people agenda with a focus on wellbeing as well as
prioritising equality, diversity and inclusion within the workplace. A
significant investment is planned this financial year on graduates and
apprentices and we are proud to have joined the 5% club; working towards
having 5% of our employees on earn and learn programmes within 5 years.
People
The Group's headcount at 31 March 2021 was 3,843 (2020: 4,065). In the UK
and Ireland underlying headcount reduced to 3,253 following c.200 redundancies
in the first half year resulting from the operational review undertaken during
the first lockdown (2020: 3,464); in addition a further 50 colleagues joined
our B&Q instore offering during the year. Modest increases in colleague
numbers are expected during the current year as revenue growth continues.
The Middle East headcount at 31 March 2021 was 540; it is anticipated that
all colleagues will be transferred to ADNOC by the conclusion of the TSA
period on 30 June 2021.
We undertook a full survey of all colleagues in March and April 2021. I am
pleased to report that once again our response rate (74%) and engagement
scores (77%) were strong. Detailed action plans to address the results of
the survey are being prepared and will be communicated to colleagues during
May. Our web and App based communications tool, 'The Hub', was introduced
following previous surveys and has proved invaluable for communicating with
staff during the pandemic. Regional employee forums have been held during
the year, with the Chairpersons meeting me and the HR Director in order to
address any matters raised.
The Board is committed to ensuring there is regular communication with, and
support for colleagues who are participating in the long-term success of the
business. I would like to take this opportunity to thank all my colleagues
for their ongoing support and dedication during this most challenging of
years.
Summary and outlook
I am pleased to report results that are ahead of our expectations in what has
been an exceptionally challenging year for customers and colleagues alike.
The resilient performance of our business during this unprecedented period
is testament to the strength of our model, hard work of all my colleagues and
strong operational delivery. Our excellent customer service, including our
four-hour commitment, has facilitated a strong recovery in the second half.
We have had an encouraging start to FY2022 with revenue in April and May c.2%
ahead of the equivalent period in 2019. Our strong balance sheet and the
actions we have taken to develop our digital and ESG offerings give us
confidence for the future.
Russell Down
Chief Executive
Financial review
Overview
It has been a challenging year for the business as we responded to COVID-19.
The financial results have been heavily impacted by the pandemic; however
they are testament to the hard work of all our colleagues in supporting the
business throughout this period. The start to the new financial year is
encouraging; in April and May 2021 revenue is c.2% ahead of the comparative
period (April 2019).
Revenues declined initially during the first lockdown, recovering strongly as
our customers returned to work. Despite revenue falling by as much as 35% in
April 2020, by the fourth quarter like for like core hire revenue was trading
ahead of prior year by 4%. Activity recovered across our Major accounts and
the mobilisations of recent contract wins including Network Plus, MWH and
Horbury increased our market share. Our SME customer base has continued to
grow, with revenue up 10% in the second half; we continue to explore further
opportunities to grow in this sector which includes a trial with B&Q.
We proactively managed our cost base in the first half with decisive actions
including a freeze on discretionary spend, the use of Government support
schemes, as well as reducing capital expenditure to the level necessary to
meet customer demand. Investment in hire fleet resumed as activity levels
recovered during the second half. Following a detailed operational review
during the first lockdown 13 depots have been permanently closed and c.200
roles made redundant.
The Group entered FY2021 with conservative debt levels. The cautious action
taken to preserve cash, including reduced capex and no dividend payments
combined with strong cash collections from customers, the Group has operated
throughout the year well within existing banking facilities and without any
covenant tests being triggered. The disposal of the Middle East assets on 1
March 2021 has further strengthened the Group's net debt position.
We continue to monitor the COVID-19 situation and will respond accordingly.
The Group's strong balance sheet and the encouraging trading at the start of
the new financial year allows us to take advantage of strategic opportunities
as markets emerge from the pandemic.
Group financial performance
Revenue (excluding disposals) for the year to 31 March 2021 decreased by 10.7%
to £359.4m (2020: £402.5m). Revenue from disposals was £4.2m (2020:
£4.2m); total revenue for the period decreased by 10.6% to £363.6m (2020:
£406.7m).
Gross profit was £192.6m (2020: £224.2m), a decrease of 14.1%. The gross
margin fell to 53.0% (2020: 55.1%), reflecting reduced hire revenue with
largely fixed depreciation charge, the mix impact from reductions in training
revenues, and competitive price pressures.
EBITA(1) decreased by 35.0% to £25.4m (2020: £39.1m) and profit before
taxation, amortisation and exceptional costs decreased to £20.7m (2020:
£34.9m).
The share of profit from the joint venture in Kazakhstan decreased to £1.2m
(2020: £2.8m) as result of COVID-19 related reductions in activity.
The Group incurred net exceptional expenses before taxation of £7.6m (2020:
£12.9m). Further details are included below.
After taxation, amortisation and exceptional items, the Group made a profit of
£9.5m, compared to a profit of £16.8m in 2020.
Segmental analysis
The Group's segmental reporting is split into continuing operations - UK and
Ireland, and discontinued operations - International. The figures in the
tables below are presented before corporate costs of £4.6m (2020: £3.9m),
which have increased 17.9% due to management compensation payments and
additional audit fees.
UK and Ireland Year ended Year ended Change
31 March 31 March
2021 2020
£m £m %
Revenue (excluding disposals) 328.1 367.3 (10.7)
EBITDA(1) 89.5 102.7 (12.9)
EBITA(1) 26.3 37.3 (29.5)
Excluding disposals, revenue decreased by 10.7% to £328.1m (2020: £367.3m)
with a fall across both Hire and Services.
Hire revenue decreased by 11.0%. Hire revenue was significantly impacted by
the national lockdown imposed at the end of March 2020, initially falling by
35% in April. Activity levels then progressively recovered as the
construction sector reopened with trading ahead of prior year by the fourth
quarter. Major and Local sectors both now exceed prior year levels following
contract renewals and new contract wins. The Regional sector remains
challenging, with competitive pricing.
Services revenues declined by 10.2% in the year as all areas of the business
were initially impacted by the first lockdown. A strong performance from the
rehire, fuel and consumables businesses throughout the second half resulted in
Services revenue for that period being ahead of prior year.
Our training business Geason has continued to perform below expectations
during the year due to lower than expected learner enrolments as a result of
the pandemic and social distancing impacting course delivery. During the
year we resolved the claim from the funding agency and implemented a number of
management changes. We are reviewing further initiatives to improve the
Group's financial position.
Gross margins reduced from 57.7% to 55.6%. Hire margin decreased to 75.7%
(2020: 77.0%) due to reduced activity in the first half with a largely fixed
depreciation charge; margin in the first half was 74.8%, increasing to 76.4%
in the second half. Expansion of our powered access fleet has improved the
national offering to major customers and reduced reliance on lower margin
rehire partners. Services margin was impacted by sales mix with strong
revenue performance in lower margin services such as rehire and fuel reducing
overall margin to 23.2% (2020: 26.0%).
Overheads have reduced due to the mitigating actions taken to manage the cost
base in response to the COVID-19 pandemic including the permanent closure of
13 depots and c.200 roles being made redundant, temporary freezing of
discretionary spend, alongside Government support received from furlough
schemes in the first half (£8.9m) and rates relief (£4.8m). As a result of
these actions, there has been an overall 10.0% reduction in overheads compared
to the prior year.
Headcount has reduced to 3,303, compared to 3,464 at 31 March 2020 with
redundancies from the operational restructure in the first half year and 50
colleagues joining our B&Q instore offering during the year.
Asset utilisation in the second half has increased to 58.8% (2020: 55.9%), as
a result of continued use of artificial intelligence to connect customer
demand with asset availability and lower capex in the first half.
Utilisation rates for the core range of products have improved on prior year
as the replenishment and asset rebalancing programme that uses machine
learning was launched across the entire network during the first half. Our
strategy to simplify and standardise processes within the depot network has
enabled utilisation improvement and the expansion of our four-hour customer
promise.
The business recovered well in the second half with EBITA for that period of
£17.9m, 5.3% down on prior year. It continues to perform well into FY2022
in a competitive market despite the pandemic related disruptions associated
with COVID-19.
International Year ended Year ended Change
31 March 31 March
2021 2020
£m £m %
Revenue 31.3 35.2 (11.1)
EBITDA(1) 5.2 8.2 (36.6)
EBITA(1) 3.7 5.7 (35.1)
The Group sold its equipment fleet, stock and other fixed assets relating to
its Middle East business to its principal customer ADNOC Logistics and
Services LLC (ADNOC), on 1 March 2021, for consideration of $18m. The
consideration was paid in cash in full on completion with trade receivables
from ADNOC of c.$12m subsequently paid on 31 March. The net proceeds, after
working capital payments, have reduced Group borrowings. The transaction
included the Group entering into a Transitional Services Agreement (TSA) with
ADNOC to 30 June 2021, to support the transfer of the assets, during which
time it is anticipated that the Group's c.600 UAE-based employees' contracts
will be terminated and all colleagues offered re-employment by ADNOC. On
conclusion of the TSA the Group intends to wind up its operations in the
Middle East.
International revenue in the Middle East decreased by 11.1% due to the
disposal of the assets, COVID-19 related disruptions and the full year effect
of contract negotiations in the prior year. Consequently, EBITA fell by
35.1%.
Exceptional items
There were £7.6m net exceptional items incurred during the year (2020:
£12.9m).
Total
───────
£m
Property related costs (5.6)
Restructuring costs (1.9)
Disposal of Middle East assets 0.8
Training provision (0.9)
─────
(7.6)
═════
Action has been taken to manage the Group's cost base following the COVID-19
pandemic, and consequently the network has been restructured; 13 depots have
been closed and further consolidation of 22 depots is underway to create six
larger, customer focused service centres. As a result, £5.6m of property
related costs and £1.9m redundancy costs have been incurred during the year.
As noted above, the Group sold its equipment fleet, stock and other fixed
assets relating to its Middle East business to its principal customer ADNOC,
for a consideration of $18m (£13.0m). The transaction resulted in a gain on
disposal of £0.8m.
The training business, Geason, which was acquired in December 2018, was
subject to an assurance visit from a funding agency in early 2020, and a
subsequent claim was received for amounts overpaid. The claim was settled in
October 2020, within the provision held at 31 March 2020. An additional
provision has been made for £0.9m to cover legal and other costs associated
with ongoing initiatives to improve the Group's financial position.
Interest
The Group's net financial expense, including interest on lease liabilities and
before exceptional items, decreased to £5.9m (2020: £7.0m) reflecting lower
average gross borrowings throughout the year.
Net debt, excluding lease liabilities, as at 31 March 2021 reduced to £33.2m
(2020: £79.3m), following the sale of the Middle East assets and excellent
cash collections. Borrowings under the Group's bank facility are priced on
the basis of LIBOR plus a variable margin, while any unutilised commitment is
charged at 35% of the applicable margin. During the year, the margin payable
over LIBOR on the outstanding debt fluctuated between 1.50% and 2.00%
dependent on the Group's performance in relation to leverage and the weighting
of borrowings between receivables and plant and machinery. The effective
average margin in the period was 1.80% (2020: 1.84%).
The Group utilises interest rate hedges to manage fluctuations in LIBOR with
varying maturity dates to October 2022. The fair value of these hedges was
not material at 31 March 2021.
Taxation
The Group seeks to protect its reputation as a responsible taxpayer, and
adopts an appropriate attitude to arranging its tax affairs, aiming to ensure
effective, sustainable and active management of tax matters in support of
business performance. The Group utilised Government deferral schemes for tax
payments of £7.6m during the first half; all amounts deferred were paid prior
to 30 September 2020.
The tax charge for the period was £2.8m (2020: £3.9m), with an effective tax
rate of 22.7% (2020: 18.8%); the increase in the effective rate includes the
impact of exceptional items in the year. The underlying effective tax rate
for the continuing operations is 19.6% (2020: 19.7%).
Shares, earnings per share and dividends
At 31 March 2021, 528,180,280 Speedy Hire Plc ordinary shares were
outstanding, of which 4,413,516 were held in the Employee Benefits Trust.
Adjusted earnings per share was 3.22 pence (2020: 5.54 pence), a decrease of
41.9%. Basic earnings per share was 1.82 pence (2020: 3.23 pence).
The decision to not pay a FY2020 final dividend reflected our priority at that
time of preserving cash. No interim dividend was declared during FY2021
(2020: 0.70 pence). In light of the improvement in trading in the second
half of the year, and in recognition of the strength of the balance sheet and
cash position at the year end, the Board is recommending a 2021 final dividend
of 1.40p per share. The cash cost of this dividend is expected to be
c.£7.4m.
Capital expenditure and disposals
Total capital expenditure during the year amounted to £43.7m (2020: £63.2m),
of which £36.0m (2020: £55.3m) related to equipment for hire, and £7.7m to
other property, plant and equipment (2020: £7.9m).
The Group entered the pandemic with a young fleet age, which allowed for
immediate cut-back on discretionary spend without impacting service
delivery. Capital expenditure on hire fleet was reduced initially to £7.2m,
a level necessary to meet customer demand. The investment in fleet increased
to £28.8m in the second half in response to increases in customer activity.
This expenditure reflects further investment in the core range ensuring the
UK and Ireland business can continue to execute our four-hour delivery
promise. Throughout the year the Group has continued to invest in
sustainable products in line with its strategy to reduce the carbon output of
the hire fleet through investment in solar, hybrid, electric and hydrogen
technology.
Despite the capital expenditure constraints during the year, the average age
of the fleet remains young in comparison to the industry; 3.6 years (2020: 3.4
years). Total disposal proceeds were £12.2m (2020: £11.7m). During the
year we further optimised our stockholdings across the network, applying
machine learning to inform decisions on returns and asset utilisation, which
highlighted those areas requiring investment. The number of product lines
has further reduced, and this has enabled us to continually improve the
efficiency of our supply chain. This forward demand planning will help
mitigate the potential risk from lead time delays and price inflation.
Balance sheet
The Group continues to have a strong balance sheet, which reflects the
decisive action taken during COVID-19, proactive management of the asset fleet
and effective control over working capital.
Net assets at 31 March 2021 were £219.2m (2020: £209.9m), equivalent to 41.5
pence per share.
Net property, plant and equipment (excluding IFRS 16 right of use assets) was
£233.1m at 31 March 2021 (2020: £257.6m), of which equipment for hire
represents 88.9% (2020: 88.2%). Following the disposal of the Middle East
assets, the International hire fleet is £nil at 31 March 2021, (2020:
£11.4m).
Intangibles increased to £24.7m (2020: £23.1m), due to increased IT
development expenditure.
Right of use assets of £59.1m (2020: £64.7m) and corresponding lease
liabilities of £65.8m (2020: £72.9m) are recognised at 31 March 2021
following the implementation of IFRS 16 in the prior year.
Throughout the year the business has had a clear focus on cash, in particular
customer collections. The successful collaboration between sales and credit
control functions, leveraging strong customer relationships, resulted in
excellent cash collections. Gross trade receivables totaled £93.3m at 31
March 2021 (2020: £100.7m). Bad debt provisions were £3.5m at 31 March
2021 (2020: £3.9m), equivalent to 3.8% of gross trade receivables (2020:
3.9%). Debtor days were 58.9 (2020: 69.6), of which UK and Ireland were 59.4
(2020: 66.0). Overdue debt has reduced by 26% over the year.
Trade payables were £49.6m (2020: £52.3m). Creditor days were 86.6 (2020:
103.7).
Cash flow and net debt(3)
Cash generated from operations for the year was £72.9m (2020: £64.5m).
Free cash flow (being net cash flow before financing activities) increased
to £69.7m (2020: £45.2m).
Net debt decreased by £46.1m from £79.3m at the beginning of the year to
£33.2m at 31 March 2021. Excluding the impact of IFRS 16, leverage reduced
to 0.5x (2020: 1.0x).
The Group's strong cash position resulted in substantial headroom within the
Group's bank facility throughout the year with cash and undrawn facility
availability of £142.3m at 31 March 2021 (2020: £99.0m). Discussions with
a syndicate of banks are at an advanced stage in relation to renewing the
facility, which expires in October 2022, on largely similar terms.
Capital allocation policy
The Board intends to continue to invest in the business in order to grow
revenue, profit and ROCE. This investment is expected to include capital
expenditure within existing operations, as well as value enhancing
acquisitions that fit with the Group's strategy and are returns accretive.
The Board's objective is to maximise long term shareholder returns through a
disciplined deployment of cash generated, and it has adopted the following
capital allocation policy in support of this:
- Organic growth: the Board will invest in capital
equipment to support demand in our chosen markets. This investment will be
in hire fleet and IT systems to better enable us to serve our customers;
- Regular returns to shareholders: the Board intends to
pay a regular dividend to shareholders, with a policy of growing dividends
through the business cycle, and a payment in the range of between 33% and 50%
adjusted earnings per share;
- Acquisitions: the Board will continue to explore value
enhancing acquisition opportunities in specialist hire and services businesses
consistent with the Group's existing operations;
- Gearing and treatment of excess capital: the Board is
committed to maintaining an efficient balance sheet. The Board has adopted a
target gearing in the region of 1.5x net debt to EBITDA through the business
cycle, although it is prepared to move outside this if circumstances warrant.
The Board will continue to review the Group's balance sheet in light of the
policy, and medium term investment requirements, and will return excess
capital to shareholders if and when appropriate.
The Group has a strong pipeline of organic growth and acquisition
opportunities, which it continues to evaluate on an ongoing basis.
Capital structure and treasury
Speedy's long term funding is provided through a combination of shareholders'
funds and bank debt.
The Group's £180m asset based finance facility and uncommitted accordion of
£220m, expire in October 2022. Discussions with a syndicate of banks are at
an advanced stage in relation to renewing the facility on largely similar
terms.
The average gross borrowings under the facility during the year ended 31 March
2021 decreased to £79.5m (2020: £110.2m). The facility includes leverage
and fixed charge cover covenant tests which are only applied if headroom in
the facility falls below £18m. The Group had significant headroom against
these tests throughout the year.
Return on capital
ROCE(4) is a key performance measure for the Group and decreased to 7.6%
(2020: 12.0%) due to the impact of COVID-19 partially offset with lower levels
of net debt. The strength of the balance sheet and available financial
resources will allow us to invest in growth opportunities as markets continue
to recover.
James Bunn
Chief Financial Officer
The responsibility statement below has been prepared in connection with the
Group's full annual report for the year ended 31 March 2021. Certain parts
of that report are not included within this announcement.
Directors' Responsibilities Statement
We confirm that to the best of our knowledge:
· the Financial Statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and
the undertakings included in the consolidation taken as a whole;
· the Strategic Report includes a fair review of the development
and performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
The names and functions of the Directors of the Company are:
Name Function
David Shearer Chairman
Russell Down Chief Executive
James Bunn Chief Financial Officer
David Garman Senior Independent Director
Rob Barclay Non-Executive Director
Rhian Bartlett Non-Executive Director
Shatish Dasani Non-Executive Director
Principal risks and uncertainties
The business strategy in place and the nature of the industry in which we
operate expose the Group to a number of risks. As part of the risk
management framework in place, the Board considers on an ongoing basis the
nature, likelihood and potential impact of each of the significant risks it is
willing to accept in achieving its strategic objectives.
The Board has delegated to the Audit & Risk Committee responsibility for
reviewing the effectiveness of the Group's internal controls, including the
systems established to identify, assess, manage and monitor risks. These
systems, which ensure that risk is managed at the appropriate level within the
business, can only mitigate risk rather than eliminate it completely.
Direct ownership of risk management within the Group lies with the senior
management teams. Each individual is responsible for maintaining a risk
register for their area of the business and is required to update this on a
regular basis. The key items are consolidated into a Group risk register which
has been used by the Board to carry out a robust assessment of the principal
risks.
The principal risks and mitigating controls in place are summarised below.
Risk Description and potential impact Strategy for mitigation
COVID-19 pandemic Trading performance As a supplier to industries that have continued to operate, the Group has also
continued to trade. Entering the new financial year a significant proportion
The UK and Ireland lockdowns have reduced economic activity. The first of of revenues have been retained, with trading through the Group's digital
these in 2020 affected Group revenues. Whilst the indications for the future platform and by telephone. During the lockdown we suspended hire charges for
are promising in the UK, the uncertainty leads to difficulty in forecasting. equipment not in use in order that the impact was minimised.
People We acted quickly to contain costs and preserve cash, including halting all
discretionary spend and consolidating our depot network, temporarily closing
The COVID-19 pandemic may lead to shortages in the workforce as a direct sites and servicing our clients from alternative locations, thus ensuring we
result of illness, social shielding or isolation measures, along with depot maintain a national coverage.
closures. This may result in an inability to effectively service our
customers' requirements. We previously utilised the Government's coronavirus job retention scheme,
furloughing up to 50% of our workforce.
Supply chain
We continue to monitor Government guidance and take action to ensure the
The supply of goods, services and assets (including the availability of safety of our colleagues, as we support customers continuing to operate.
spares) may be disrupted. This may also result in an inability to
effectively service our customers' requirements. We have introduced COVID-19 safe ways of working, restricting access to our
premises and maintaining social distance. We have increased opportunity for
employees who can perform duties from home doing so and intend for this to be
offered as a flexible working option where appropriate. This involves the
utilisation of our secure and robust infrastructure and technology platforms.
Speedy operates one of the youngest hire fleets in the industry and is well
placed to provide asset availability as a result of better reliability. The
age profile also allows us to optimise capital expenditure management during
this period, whilst maintaining customer service.
Based on various revenue downturn scenarios, and the measures outlined above,
the Board remains confident that the Group can operate within its existing
debt facilities and covenant tests during a prolonged period of reduced
trading activity, including in the event of a further national lockdown.
Safety, health and environment Serious injury or death The Group is recognised for its industry-leading position in promoting
enhanced health and safety compliance, together with a commitment to product
Speedy operates, transports and provides for rental a wide range of machinery. innovation. This is achieved by the Group's health, safety, and
Without rigorous safety regimes in place there is a risk of injury or death environmental teams measuring and promoting employee understanding of, and
to employees, customers or members of the public. compliance with, procedures that affect safety and protection of the
environment.
Environmental hazard
We maintain systems that enable us to hold appropriate industry recognised
The provision of such machinery includes handling, transport and dispensing of accreditations which have been enhanced further this year with the
substances, including fuel, that are hazardous to the environment in the event introduction of a specialist platform for managing data and reporting in
of spillage. relation to Health, Safety and Environment.
Climate change The Group has built on its strong position by embracing the ESG agenda with
the creation of our Energise programme demonstrating our firm commitment to
There is a risk that Speedy will fail to meet climate change targets generally our responsibility in each of these areas. Robust targets have been set and
which in turn may limit our ability to trade with some of our customers. a director has been appointed to lead the programme, reporting to the Chief
Specifically, the delivery locations for many of our customers require Speedy Executive.
to operate in designated low emission zones.
Speedy has incorporated hybrid and fully electric vehicles into the commercial
fleet to ensure we meet and in some cases exceed emission requirements.
All operatives who handle hazardous substances are trained and provided with
appropriate equipment to manage small scale spills. In the case of more
serious accidents, we have a contract with a third party specialist who would
undertake any clean-up operation as necessary.
Service Provision of equipment During the year we have successfully extended our nationwide four-hour service
promise under "Trust Speedy to Deliver" to cover a wider range of our assets
Speedy's commitment is to provide well maintained equipment to its customers
on a consistent and dependable basis. Our use of personal digital assistants (PDAs) and online based customer
feedback system are fully embedded into our business and these are used to
Back office services improve the on-site customer experience.
It is important that Speedy is able to provide timely and accurate management Speedy liaises with its customer base and takes into account feedback where
information to its customers, along with accurate invoices and supporting particular issues are noted, to ensure that work on resolving those issues is
documentation. prioritised accordingly. We have introduced a Net Promoter Score metric into
our business to drive improvement through dashboard reporting at depot level.
In both cases, a failure to provide such service could lead to a failure to
attract or retain customers, or to diminish the level of business such During the year we have actively progressed our Enable project to upgrade our
customers undertake with Speedy. AX12 ERP system and plan to move to Microsoft's Dynamics365. This will
strengthen our customer service functionality, our back office services and
also provides a range of opportunities for future enhancements.
Revenue and trading performance Competitive pressure The Group monitors its competitive position closely, to ensure that it is able
to offer customers the best solution. The Group provides a wide breadth of
The hire market is fragmented and highly competitive. We are continuing to offerings, supplemented by its rehire division for specialist equipment. The
develop strategic relationships with larger customers and also working hard to Group monitors the performance of its major accounts against forecasts,
grow our local and regional accounts. strength of client future order books and individual expectations with a view
to ensuring that the opportunities for the Group are maximised. Market share
There is a risk that the Group does not have an effective route to market for is measured and competitors' activities are reported on and addressed where
consumer rentals and this could lead to a missed opportunity that is appropriate. The Group's integrated services offering further mitigates
capitalised upon by our competition. against this risk as it demonstrates value to our customers, setting us apart
from purely asset hire companies.
Reliance on high value customers
No single customer currently accounts for more than 10% of revenue or
There is a risk to future revenues should preferred supplier status with receivables. We have been successful in growing our SME customer base, which
larger customers be lost when such agreements may individually represent a also helps to mitigate this risk.
material element of our revenues.
We have entered a trial within B&Q stores which allows the Group to
directly access a marketplace that provides significant potential for
growth. The Group has restructured its operational management team to
include a managing director dedicated to retail based routes to market.
Project and change management Acquisitions The Group has a defined process for monitoring and filtering potential
targets, with input from advisors and other third parties.
Our strategy includes selective acquisitions that complement or extend our
existing business in specialised markets. There is a risk that suitable All potential business combinations are presented to the Board, with an
targets are not identified, that acquired businesses do not perform to associated business case, for approval.
expectations or they are not effectively integrated into the existing Group.
Once a decision in principle is made, a detailed due diligence process
covering a range of criteria is undertaken. Where necessary, this includes
the use of specialist external support. The results of due diligence are
presented to the Board prior to formal approval being granted.
The use of a cross functional project team ensures effective integration into
the Group. These teams work with a blueprint plan, modified as needed to
specifically address any risks identified during the due diligence phase.
A Programme Management Office function is established with clearly defined
governance in place to oversee all change initiatives.
People Employee excellence Skill and resource requirements for meeting the Group's objectives are
actively monitored and action is taken to address identified gaps.
In order to achieve our strategic objectives, it is imperative that we are Succession planning aims to identify talent within the Group and is formally
able to recruit, retain, develop and motivate employees who possess the right reviewed on an annual basis by the Nomination Committee, focusing on both
skills for the Group. short and long-term successors for the key roles within the Group.
Programmes are in place for employee induction, retention and career
development, which are tailored to the requirements of the various business
units within the Group.
The Group regularly reviews remuneration packages and aims to offer
competitive reward and benefit packages, including appropriate short and
long-term incentive schemes.
Partner and supplier service levels Supply chain A dedicated and experienced supply chain function is in place to negotiate all
contracts and maximise the Group's commercial position. Supplier
Speedy procures assets and services from a wide range of sources, both UK and accreditations are recorded and tracked centrally through a supplier portal
internationally based. Within the supply chain there are risks of where relevant and set service related KPIs are included within standard
non-fulfilment. contract terms. Regular reviews take place with all supply chain partners.
Partner reputation Where practical, agreements with alternative suppliers are in place for key
ranges, diluting reliance on individual suppliers.
A significant amount of our revenues come from our rehire offering, where the
delivery or performance is effected through a third party partner.
Speedy's ability to supply assets with the expected customer service is
therefore reliant on the performance of others with the risk that if this is
not effectively managed, the reputation of Speedy and hence future revenues
may be adversely impacted.
Operating costs Fixed cost base The Group has a purchasing policy in place to negotiate supply contracts that,
wherever possible, determine fixed prices for a period of time. In most
Speedy has a fixed cost base including people, transport and property. When cases, multiple sources exist for each supply, decreasing the risk of supplier
revenues fluctuate this can have a disproportionate effect on the Group's dependency and creating a competitive supply-side environment. All
financial results. significant purchase decisions are overseen by a dedicated supply chain team
with structured supplier selection procedures in place. Property costs are
managed by an in-house team of specialists who manage the estate.
We operate a dedicated fleet of commercial vehicles that are maintained to
support our brand image. Fuel is purchased through agreements controlled by
our supply chain processes.
The growth of our services offering will help to mitigate this risk as these
activities have overheads that are more flexible.
Cyber Security and data integrity IT system availability Annual and medium-term planning processes are in place to provide visibility
as to the level and type of IT infrastructure and services required to support
Speedy is increasingly reliant on IT systems to support our business the business strategy. Business cases are prepared for any new/upgraded
activities. Interruption in availability or a failure to innovate will systems, and require formal approval.
reduce current and future trading opportunities respectively.
Our planned move to Microsoft's Dynamics 365 cloud based platform reduces the
Data accuracy likelihood of system unavailability and will also improve system performance
levels.
The quality of data held has a direct impact on how both strategic and
operational decisions are made. If decisions are made based on erroneous Management information is provided in all key areas from dashboards that are
data there could be a direct impact on the performance of the Group. based on real time data drawn from central systems. We have a dedicated data
management team which is responsible for putting in place procedures to
Data security maintain accuracy of the information provided by data owners across the
business.
Speedy, as with any organisation, holds data that is commercially sensitive
and in some cases personal in nature. There is a risk that disclosure or Mitigations for IT data recovery are described below under business continuity
loss of such data is detrimental to the business, either as a reduction in as these risks are linked.
competitive advantage or as a breach of law or regulation.
We have formed a data security governance committee which meets regularly to
monitor our control framework and reports on a routine basis to the Audit
& Risk Committee.
Speedy's IT systems are protected against external unauthorised access.
These protections are tested regularly by an independent provider. All
mobile devices have access restrictions and, where appropriate, data
encryption is applied.
Funding Sufficient capital The Board has established a treasury policy regarding the nature, amount and
maturity of committed funding facilities that should be in place to support
Should the Group not be able to obtain sufficient capital in the future, it the Group's activities.
might not be able to take advantage of strategic opportunities or it might be
required to reduce or delay expenditure, resulting in the ageing of the fleet The £180m asset based finance facility including an additional uncommitted
and/or non-availability. This could disadvantage the Group relative to its accordion of £220m, is available through to October 2022. Discussions with
competitors and might adversely impact its ability to command acceptable a syndicate of banks are at an advanced stage in relation to renewing the
levels of pricing. facility on largely similar terms.
In line with the treasury policy, the Group's capital requirements, forecast
and actual financial performance and potential sources of finance are reviewed
at Board level on a regular basis in order that its requirements can be
managed with appropriate levels of spare capacity.
Economic vulnerability Economy The Group assesses changes in both Government and private sector spending as
part of its wider market analysis. The impact on the Group of any such
Any changes in construction/industrial market conditions could affect activity change is assessed as part of the ongoing financial and operational budgeting
levels and consequently the prices that the Group can charge for its services. and forecasting process.
Any reduction in Government expenditure which is not offset by an increase
in private sector expenditure could adversely affect the Group. Our strategy is to develop a differentiated proposition in our chosen markets
and to ensure that we are well positioned with clients and contractors who are
likely to benefit from those areas in which increased activity is forecast.
We consistently monitor our share in each market segment and seek to balance
our risk between cyclical areas and those which are more predictable.
Business continuity Business interruption As described in the paragraph above, the Group has continued to operate
effectively throughout the COVID-19 pandemic. Management acted promptly in
Any significant interruption to Speedy's operational capability, whether IT line with our documented plan to establish a crisis management team which
systems, physical restrictions or personnel, could adversely impact current co-ordinated the activities required in a rapidly changing environment.
and future trading as customers could readily migrate to competitors.
Preventative controls, back-up and recovery procedures are in place for key IT
This could range from short-term impact in processing of invoices that would systems. Changes to Group systems are considered as part of wider change
affect cash flows to the loss of a major site. management programmes and implemented in phases wherever possible. The Group
has critical incident plans in place for all its sites. Insurance cover is
reviewed at regular intervals to ensure appropriate coverage in the event of a
business continuity issue.
Asset holding and integrity Asset range and availability Our understanding of customer expectation of the relative timescales for
delivery across our range of assets allows us to reduce holdings of less time
Speedy's business model relies on providing assets for hire to customers, when critical assets by centralising the storage locations, whilst at the same time
they want to hire them. In order to maximise profitability and returns on increasing the breadth of holding across our customer trading locations of
deployed capital, demand is balanced with the requirement to hold a range of those assets most likely to be required on a short notice basis.
assets that is optimally utilised.
We regularly monitor our asset status information and use this to optimise our
asset holdings.
We constantly review our range of assets and introduce innovative solutions to
our customers as new products come to market, under our Energise programme.
Viability Statement
The Group operates an annual planning process which includes a five year
strategic plan and a one year financial budget. These plans, and risks to
their achievement, are reviewed by the Board as part of its strategy review
and budget approval processes. The Board has considered the impact of the
principal risks to the Group's business model, performance, solvency and
liquidity as set out above.
The Directors have determined that three years is an appropriate period over
which to assess the Viability statement. The projections for the first three
years of the strategic plan are based on detailed action plans developed by
the Group with specific initiatives and accountabilities. There is
inherently less certainty in the projections for years four and five. The
Group has a £180m asset-based finance facility in place through to October
2022. The Strategic Plan makes certain assumptions about the adequacy of
facilities and expected renewal on broadly similar terms to meet the Group's
capital investment and acquisition strategies.
In making this statement, the Directors have considered the resilience of the
Group, its current position, the principal risks facing the business in
distressed but reasonable scenarios, including various risks associated with
additional global pandemics as set out above, and the effectiveness of any
mitigating actions.
Based on this assessment, the Directors have a reasonable expectation that the
Company will be able to continue in operation and meet its liabilities as they
fall due over the period to March 2024.
The going concern statement and further information can be found in Note 1 of
the financial statements.
Consolidated Income Statement
for the year ended 31 March 2021
Year ended March 2021 Year ended March 2020
─────────────────────── ─────────────────────
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
Note £m £m £m £m £m £m
Revenue 2 332.3 31.3 363.6 371.5 35.2 406.7
Cost of sales (147.4) (23.6) (171.0) (157.2) (25.3) (182.5)
───── ───── ───── ───── ───── ─────
Gross profit 184.9 7.7 192.6 214.3 9.9 224.2
Distribution and administrative costs
(172.4) (3.2) (175.6) (205.7) (4.5) (210.2)
Analysis of operating profit
Operating profit before amortisation and exceptional items
21.7 3.7 25.4 33.4 5.7 39.1
Amortisation 10 (0.8) - (0.8) (1.3) - (1.3)
Exceptional items 4 (8.4) 0.8 (7.6) (23.5) (0.3) (23.8)
Operating profit 12.5 4.5 17.0 8.6 5.4 14.0
Share of results of joint venture
1.2 - 1.2 2.8 - 2.8
───── ───── ───── ───── ───── ─────
Profit from operations 13.7 4.5 18.2 11.4 5.4 16.8
Net financial expense 5 (5.4) (0.5) (5.9) (6.2) (0.8) (7.0)
Exceptional financial income 5 - - - 10.9 - 10.9
───── ───── ───── ───── ───── ─────
Profit before taxation 8.3 4.0 12.3 16.1 4.6 20.7
Taxation 6 (2.2) (0.6) (2.8) (3.9) - (3.9)
───── ───── ───── ───── ───── ─────
Profit for the financial year 6.1 3.4 9.5 12.2 4.6 16.8
═════ ═════ ═════ ═════ ═════ ═════
Earnings per share
- Basic (pence) 7 1.17 0.65 1.82 2.35 0.88 3.23
═════ ═════ ═════ ═════ ═════ ═════
- Diluted (pence) 7 1.15 0.64 1.79 2.32 0.87 3.19
═════ ═════ ═════ ═════ ═════ ═════
Non-GAAP performance measures 9 85.3 5.2 90.5 99.2 8.2 107.4
═════ ═════ ═════ ═════ ═════ ═════
9 17.5 3.2 20.7 30.0 4.9 34.9
Adjusted profit before tax
═════ ═════ ═════ ═════ ═════ ═════
Adjusted earnings per share (pence) 7 2.68 0.54 3.22 4.60 0.94 5.54
═════ ═════ ═════ ═════ ═════ ═════
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2021
Year ended 31 March Year ended
2021 31 March
2020
£m £m
Profit for the financial year 9.5 16.8
───── ─────
Other comprehensive income that may be reclassified subsequently to the Income
Statement:
- Effective portion of change in fair value of cash flow hedges 0.2 (0.2)
- Exchange difference on translation of foreign operations (1.4) 0.9
- Tax on items - 0.1
───── ─────
Other comprehensive income, net of tax (1.2) 0.8
───── ─────
Total comprehensive income for the financial year 8.3 17.6
═════ ═════
Consolidated Balance Sheet
at 31 March 2021
Note 31 March 31 March
2021 2020
£m £m
ASSETS
Non-current assets
Intangible assets 10 24.7 23.1
Investment in joint venture 6.2 7.3
Property, plant and equipment
Hire equipment 11 207.2 227.1
Non-hire equipment 11 25.9 30.5
Right of use assets 12 59.1 64.7
Deferred tax asset 2.5 2.8
───── ─────
325.6 355.5
───── ─────
Current assets
Inventories 8.2 8.7
Trade and other receivables 93.3 102.3
Cash 13 11.7 22.8
Current tax asset 1.1 1.5
───── ─────
114.3 135.3
───── ─────
Total assets 439.9 490.8
───── ─────
LIABILITIES
Current liabilities
Borrowings 13 (0.5) -
Lease liabilities 14 (19.3) (20.2)
Other financial liabilities (0.4) (0.5)
Trade and other payables (94.8) (90.9)
Provisions 15 (3.1) (5.9)
───── ─────
(118.1) (117.5)
───── ─────
Non-current liabilities
Borrowings 13 (44.4) (102.1)
Lease liabilities 14 (46.5) (52.7)
Provisions 15 (2.9) (1.2)
Deferred tax liability (8.8) (7.4)
───── ─────
(102.6) (163.4)
───── ─────
Total liabilities (220.7) (280.9)
───── ─────
Net assets 219.2 209.9
═════ ═════
EQUITY
Share capital 26.4 26.4
Share premium 1.3 0.8
Merger reserve 1.0 1.0
Hedging reserve (0.7) (0.9)
Translation reserve (1.0) 0.4
Retained earnings 192.2 182.2
───── ─────
Total equity 219.2 209.9
═════ ═════
( )
( )
( )
Consolidated Statement of Changes in Equity
for the year ended 31 March 2021
Share Share Merger Hedging Retained Total
capital premium reserve reserve Translation earnings equity
reserve
£m £m £m £m £m £m £m
At 1 April 2019 26.3 0.4 1.0 (0.7) (0.5) 175.5 202.0
Total comprehensive income - - - (0.2) 0.9 16.9 17.6
Dividends - - - - - (10.9) (10.9)
Tax on items taken directly to equity - - - - - 0.2 0.2
Equity-settled share-based payments - - - - - 0.5 0.5
Issue of shares under the Sharesave Scheme 0.1 0.4 - - - - 0.5
───── ───── ───── ───── ───── ───── ─────
At 31 March 2020 26.4 0.8 1.0 (0.9) 0.4 182.2 209.9
Total comprehensive income - - - 0.2 (1.4) 9.5 8.3
Equity-settled share-based payments - - - - - 0.5 0.5
Issue of shares under the Sharesave Scheme - 0.5 - - - - 0.5
───── ───── ───── ───── ───── ───── ─────
At 31 March 2021 26.4 1.3 1.0 (0.7) (1.0) 192.2 219.2
═════ ═════ ═════ ═════ ═════ ═════ ═════
Consolidated Cash Flow Statement
for the year ended 31 March 2021
Note Year ended 31 March 2021 Year ended 31 March 2020
£m £m
Cash generated from operating activities
Profit before tax 12.3 20.7
Financial expense 5.9 7.0
Exceptional intangible asset impairment - 18.5
Exceptional financial income - (10.9)
Amortisation 0.8 1.3
Depreciation 68.1 69.4
Share of profit from joint venture (1.2) (2.8)
Termination of lease contracts (4.1) (2.4)
Loss/(Profit) on disposal of hire equipment 1.0 (0.8)
Loss/(Profit) on disposal of non-hire equipment 0.5 (3.9)
Decrease in inventories 0.5 0.4
Decrease /(increase)in trade and other receivables 9.3 (0.6)
Increase in trade and other payables 3.6 5.4
Movement in provisions (1.1) 4.6
Translation reserve recycled on disposal of Middle East assets 1.0 -
Equity-settled share-based payments 0.5 0.5
───── ─────
Cash generated from operations before changes in hire fleet 97.1 106.4
Purchase of hire equipment (36.4) (53.6)
Proceeds from sale of hire equipment 12.2 11.7
───── ─────
Cash generated from operations 72.9 64.5
Interest paid (6.0) (6.5)
Tax paid (0.8) (9.3)
───── ─────
Net cash flow from operating activities 66.1 48.7
Cash flow from investing activities
Purchase of non-hire property, plant and equipment and IT development (11.2) (9.0)
Proceeds from sale of non-hire property, plant and equipment 0.8 4.2
Proceeds from disposal of Middle East assets 13.0 -
Investment in joint venture 1.0 1.3
───── ─────
Net cash flow from investing activities 3.6 (3.5)
───── ─────
Net cash flow before financing activities 69.7 45.2
───── ─────
Cash flow from financing activities
Payments for the principle element of leases (23.6) (24.5)
Net loan (repayment)/drawdown (58.2) 2.1
Proceeds from the issue of Sharesave Scheme shares 0.5 0.5
Dividends paid - (10.9)
───── ─────
Net cash flow from financing activities (81.3) (32.8)
───── ─────
(Decrease)/increase in cash and cash equivalents (11.6) 12.4
Net cash at the start of the financial year 22.8 10.4
───── ─────
Net cash at the end of the financial year 11.2 22.8
═════ ═════
Analysis of cash and cash equivalents
Cash 13 11.7 22.8
Bank overdraft 13 (0.5) -
───── ─────
11.2 22.8
═════ ═════
Notes to the Financial Statements
1 Accounting policies
Speedy Hire Plc is a company incorporated and domiciled in the United Kingdom.
The consolidated Financial Statements of the Company for the year ended 31
March 2021 comprise the Company and its subsidiaries (together referred to as
the 'Group').
The Group and Parent Company Financial Statements were approved by the Board
of Directors on 24 May 2021.
The accounting policies set out in the audited Financial Statements for the
year ended 31 March 2021 have, unless otherwise stated, been applied
consistently to all periods presented in these consolidated Financial
Statements. In accordance with IFRS 5 'Non-current Assets Held for Sale and
Discontinued Operations', the comparative income statement has been
re-presented for the disclosures of discontinued operations relating to all
operations that have been discontinued by the balance sheet date (see Note
3).
Discontinued operations
A discontinued operation is a component of the Group's business that
represents a separate major line of business or geographical area of
operations that has been disposed of or is held for sale, or is a subsidiary
acquired exclusively with a view to resale. Classification as a discontinued
operation occurs upon disposal or when the operation meets the criteria to be
classified as held for sale, if earlier. When an operation is classified as
a discontinued operation, the comparative income statement is restated as if
the operation has been discontinued from the start of the comparative period.
Basis of preparation
The Directors consider the going concern basis of preparation for the Group
and Company to be appropriate for the following reasons.
The Group has a £180m asset based finance facility ('the facility') which
expires in October 2022 and has no prior scheduled repayment requirements. The
total cash and undrawn availability on the facility as at 31 March 2021 was
£142.3m (2020: £99.0m) based on the Group's eligible hire equipment and
trade receivables.
The Group meets its day-to-day working capital requirements through operating
cash flows, supplemented as necessary by borrowings. The Directors have
prepared a going concern assessment up to 31 May 2022, which confirms that the
Group is capable of continuing to operate within its existing loan facility
and can meet the covenant requirements set out within the facility. The key
assumptions on which the projections are based include an assessment of the
impact of future market conditions on projected revenues and an assessment of
the net capital investment required to support the expected level of revenues,
including a continuation of the impact of the increased economic uncertainty
resulting from COVID-19.
The Board has considered various possible downside scenarios to the base case,
which result in reduced levels of revenue across the Group, whilst maintaining
the same cost base. Mitigations applied in these downturn scenarios include a
reduction in planned capital expenditure. Despite the significant impact of
the assumptions applied in these scenarios, the Group maintains sufficient
headroom against its available facility and covenant requirements.
Whilst the Directors consider that there is a degree of subjectivity involved
in their assumptions, on the basis of the above the Directors have a
reasonable expectation that the Company and the Group have adequate resources
to continue in operational existence for a period of at least 12 months from
the date of approval of these Financial Statements. Accordingly, they continue
to adopt the going concern basis of accounting in preparing the Financial
Statements.
The financial information set out in this final results announcement does not
constitute the Group's statutory accounts for the year ended 31 March 2021 or
31 March 2020 but is derived from those accounts. Statutory accounts for
Speedy Hire Plc for the year ended 31 March 2020 have been delivered to the
Registrar of Companies, and those for the year ended 31 March 2021 will be
delivered in due course. The auditor has reported on those accounts; their
report was (i) unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under Section 498 (2) or (3) of
the Companies Act 2006.
Copies of full accounts will be available on the Group's corporate website in
due course. Additional copies will be available on request from Speedy Hire
Plc, 16 The Parks, Newton-le-Willows, Merseyside, WA12 0JQ.
2 Segmental analysis
The segmental disclosure presented in the Financial Statements reflects the
format of reports reviewed by the 'chief operating decision-maker'. UK and
Ireland delivers asset management, with tailored services and a continued
commitment to relationship management. International principally delivers
projects and facilities management contracts by providing a managed site
support service. During the year, the Middle East assets which were previously
classified as part of the international segment have been disposed of (see
Note 3) and are now shown as discontinued operations. As a consequence of this
change, the results from the joint venture in Kazakhstan have been reallocated
to 'Corporate items'. The comparative period has been restated to reflect this
change.
For the year ended 31 March 2021
UK and Ireland Corporate Total - continuing operations Discontinued operations Total
items
£m £m £m £m £m
Revenue 332.3 - 332.3 31.3 363.6
Segment result:
EBITDA before exceptional items 89.5 (4.2) 85.3 5.2 90.5
Depreciation (63.2) (0.4) (63.6) (1.5) (65.1)
───── ───── ───── ───── ─────
Operating profit/(costs) before amortisation and exceptional items 26.3 (4.6) 21.7 3.7 25.4
Amortisation (0.8) - (0.8) - (0.8)
Exceptional items (8.4) - (8.4) 0.8 (7.6)
───── ───── ───── ───── ─────
Operating profit/(costs) 17.1 (4.6) 12.5 4.5 17.0
Share of results of joint venture - 1.2 1.2 - 1.2
───── ───── ───── ───── ─────
Trading profit/(costs) 17.1 (3.4) 13.7 4.5 18.2
═════ ═════
Financial expense (5.4) (0.5) (5.9)
───── ───── ─────
Profit before tax 8.3 4.0 12.3
Taxation (2.2) (0.6) (2.8)
───── ───── ─────
Profit for the financial year 6.1 3.4 9.5
═════ ═════ ═════
Intangible assets 20.1 4.6 24.7 - 24.7
Investment in joint venture - 6.2 6.2 - 6.2
Hire equipment 206.4 0.8 207.2 - 207.2
Non-hire equipment 25.9 - 25.9 - 25.9
Right of use assets 59.1 - 59.1 - 59.1
Taxation assets - 3.6 3.6 - 3.6
Current assets 96.5 2.2 98.7 2.8 101.5
Cash - 11.7 11.7 - 11.7
───── ───── ───── ───── ─────
Total assets 408.0 29.1 437.1 2.8 439.9
═════ ═════ ═════ ═════ ═════
Lease liabilities (65.8) - (65.8) - (65.8)
Other liabilities (83.9) (8.8) (92.7) (8.5) (101.2)
Borrowings - (44.9) (44.9) - (44.9)
Taxation liabilities - (8.8) (8.8) - (8.8)
───── ───── ───── ───── ─────
Total liabilities (149.7) (62.5) (212.2) (8.5) (220.7)
═════ ═════ ═════ ═════ ═════
Corporate items comprise certain central activities and costs that are not
directly related to the activities of the operating segments. The financing
of the Group's activities is undertaken at head office level and consequently
net financing costs cannot be analysed by segment. The unallocated net assets
comprise principally working capital balances held by the support services
function that are not directly attributable to the activities of the operating
segments, together with net corporate borrowings and taxation.
For the year ended 31 March 2020
UK and Ireland Corporate Total - continuing operations Discontinued operations
items
Total
£m £m £m £m £m
Revenue 371.5 - 371.5 35.2 406.7
Segment result:
EBITDA before exceptional items 102.7 (3.5) 99.2 8.2 107.4
Depreciation (65.4) (0.4) (65.8) (2.5) (68.3)
───── ───── ───── ───── ─────
Operating profit/(costs) before amortisation and exceptional items 37.3 (3.9) 33.4 5.7 39.1
Amortisation (1.3) - (1.3) - (1.3)
Exceptional items (23.5) - (23.5) (0.3) (23.8)
───── ───── ───── ───── ─────
Operating profit/(costs) 12.5 (3.9) 8.6 5.4 14.0
Share of results of joint venture - 2.8 2.8 - 2.8
───── ───── ───── ───── ─────
Trading profit/(costs) 12.5 (1.1) 11.4 5.4 16.8
Financial expense (6.2) (0.8) (7.0)
Exceptional financial income 10.9 - 10.9
───── ───── ─────
Profit before tax 16.1 4.6 20.7
Taxation (3.9) - (3.9)
───── ───── ─────
Profit for the financial year 12.2 4.6 16.8
═════ ═════ ═════
Intangible assets 21.9 1.2 23.1 - 23.1
Investment in joint venture - 7.3 7.3 - 7.3
Hire equipment 215.7 - 215.7 11.4 227.1
Non-hire equipment 28.4 - 28.4 2.1 30.5
Right of use assets 62.2 - 62.2 2.5 64.7
Taxation assets - 4.3 4.3 - 4.3
Current assets 94.5 1.6 96.1 14.9 111.0
Cash - 22.8 22.8 - 22.8
───── ───── ───── ───── ─────
Total assets 422.7 37.2 459.9 30.9 490.8
═════ ═════ ═════ ═════ ═════
Lease liabilities (68.8) - (68.8) (4.1) (72.9)
Other liabilities (82.4) (4.0) (86.4) (12.1) (98.5)
Borrowings - (102.1) (102.1) - (102.1)
Taxation liabilities - (7.4) (7.4) - (7.4)
───── ───── ───── ───── ─────
Total liabilities (151.2) (113.5) (264.7) (16.2) (280.9)
═════ ═════ ═════ ═════ ═════
Geographical information
In presenting geographical information, revenue is based on the geographical
location of customers. Assets are based on the geographical location of the
assets.
Year ended 31 March 2021 Year ended 31 March 2020
──────────────────── ────────────────────
Revenue Total Total
assets Revenue assets
£m £m £m £m
UK 323.6 423.7 361.3 438.4
Ireland 8.7 13.4 10.2 14.2
Discontinued operations - Middle East 31.3 2.8 35.2 38.2
───── ───── ───── ─────
363.6 439.9 406.7 490.8
═════ ═════ ═════ ═════
Revenue by type
Revenue is attributed to the following activities:
Year ended 31 March 2021 Year ended 31 March 2020
─────── ───────
£m £m
Hire and related activities 213.3 240.5
Services 146.1 162.0
Disposals 4.2 4.2
───── ─────
363.6 406.7
═════ ═════
Major customers
No one customer represents more than 10% of revenue, reported profit or
combined assets of the Group.
3 Discontinued operations
On 1 March 2021, the Group sold the assets relating to its Middle East
operations. The transaction comprised of the disposal of its equipment fleet,
stock and other fixed assets relating to its Middle East business to its
principal customer ADNOC Logistics and Services LLC (ADNOC), for a
consideration of $18m. At the date of sale, this translated to proceeds of
£13.0m, on which a pre-tax gain of £0.8m was recognised. The attributable
tax was £0.2m, resulting in a gain after tax of £0.6m.
Cash flows from/(used in) discontinued operations
2021 2020
£m £m
Net cash from/(used in) operating activities 13.8 (0.2)
Net cash from investing activities 13.0 -
Net cash used in financing activities (0.8) (0.7)
Net cash from/(used in) discontinued operations 26.0 (0.9)
4 Exceptional items
For the year ended 31 March 2021
Continuing operations Discontinued operations Total
£m £m £m
Property related costs 5.6 - 5.6
Restructuring costs 1.9 - 1.9
Disposal of Middle East assets (see Note 3) - (0.8) (0.8)
Training provision 0.9 - 0.9
───── ───── ─────
8.4 (0.8) 7.6
═════ ═════ ═════
During the year, exceptional administrative items of £7.6m were incurred.
Action has been taken to manage the Group's cost base following the COVID-19
pandemic, and consequently the network has been restructured. A number of
depots have been closed and further consolidation of depots is underway to
create larger, customer focused service centres. As a result, £5.6m of
property related costs and £1.9m of redundancy costs have been incurred
during the year.
On 1 March 2021 the Group sold its equipment fleet, stock and other fixed
assets relating to its Middle East business to its principal customer ADNOC,
for a consideration of $18m. The transaction results in a gain on disposal
of £0.8m.
The training business, Geason, which was acquired in December 2018, was
subject to an assurance visit from a funding agency in early 2020, and a
subsequent claim was received for amounts overpaid. The claim was settled in
October 2020, within the provision held at 31 March 2020. An additional
provision has been made for £0.9m to cover legal and other costs associated
with the ongoing initiatives to improve the Group's financial position
For the year ended 31 March 2020
Recognised in distribution and admin expenses Recognised in Total
net financial expenses
£m £m £m
Changes to fair value of contingent consideration - (10.9) (10.9)
Impairment of Training CGU 20.1 - 20.1
Training provision 3.0 - 3.0
───── ───── ─────
Exceptional items relating to Training 23.1 (10.9) 12.2
Sale of surplus land (3.9) - (3.9)
Acquisition integration costs 1.7 - 1.7
Property related costs 2.0 - 2.0
COVID-19 related costs 0.6 - 0.6
International contract costs 0.3 - 0.3
───── ───── ─────
23.8 (10.9) 12.9
═════ ═════ ═════
Exceptional items of £12.6m relate to continuing operations with £0.3m
relating to discontinued operations.
In the year ended 31 March 2020, an exceptional financial credit of £10.9m
had been recognised in relation to changes in the fair value of contingent
consideration no longer expected to be paid in respect of Geason Training. An
exceptional impairment charge of £20.1m for the Speedy Training cash
generating unit had also been recognised
In April 2020 Speedy were notified that a funding agency was suspending
payments, and seeking repayment of funding from Geason Training; £3.0 million
was provided as an exceptional charge including legal and verification costs.
As referred to above, the claim was settled within the amount provided.
Further detail is provided in Note 15.
On 29 October 2019, the Group sold a plot of surplus land. Consideration of
£4.0m was paid in cash in full at completion. The land had a book value
£0.1m and the resultant profit of £3.9m was recognised as an exceptional
item.
Following the acquisitions of Geason Training and Lifterzin the year ended 31
March 2019, integration expenses of £1.7m were incurred in the year ended 31
March 2020, relating to property provisions, redundancy and project management
costs. An exceptional provision of £2.0m was made for specific non-recurring
identified repairs required to properties within the depot network as a result
of potential landlord claims. Exceptional costs of £0.6m related to COVID-19,
including bad debt and staff related costs were provided for at 31 March 2020.
Exceptional costs of £0.3m incurred relating to the extension of the major
contract in the International division were also recognised in the prior year.
5 Financial expense
2021 2020
£m £m
Interest on bank loans and overdrafts 2.9 3.4
Amortisation of issue costs 0.4 0.4
───── ─────
Total interest on borrowings 3.3 3.8
Interest on lease liabilities 2.6 3.2
Hedge interest payable - 0.1
Other finance income - (0.1)
───── ─────
Net financial expense before exceptional items 5.9 7.0
Exceptional financial income (see Note 4) - (10.9)
───── ─────
Net financial expense 5.9 (3.9)
═════ ═════
6 Taxation
The adjusted tax rate of 18.9% (2020: 17.2%) is lower (FY20: lower) than the
standard rate of UK corporation tax of 19% (2020: 19%). The tax charge in the
Income Statement for the year of 22.8% is higher (2020: lower) than the
standard rate of corporation tax in the UK of 19% (2020: 19%) and is explained
as follows:
2021 2020
£m £m
Profit before tax 12.3 20.7
───── ─────
Accounting profit multiplied by the standard rate of corporation tax at 19% 2.3 3.9
(2020: 19%)
Expenses not deductible for tax purposes 0.7 0.9
Share-based payments - 0.1
Overseas profits not subject to tax - (0.6)
Share of joint venture income already taxed (0.2) (0.5)
Change in deferred tax rates - 0.5
Adjustment to tax in respect of prior years - (0.4)
───── ─────
Tax charge for the year reported in the Income Statement 2.8 3.9
═════ ═════
Tax (credited)/charged in equity
Current tax - (0.2)
Deferred tax - 0.1
───── ─────
Tax credited to equity - (0.1)
═════ ═════
In the March 2021 Budget it was announced that the UK tax rate will increase
to 25% from 1 April 2023. This will have a consequential effect on the Group's
future tax charge. If this rate change had been substantively enacted at the
current balance sheet date the deferred tax liability would have increased by
£2.0m.
7 Earnings per share
The calculation of basic earnings per share is based on the profit for the
financial year of £9.5m (2020: £16.8m) and the weighted average number of 5
pence ordinary shares in issue, and is calculated as follows:
2021 2020
Weighted average number of shares in issue (m)
Number of shares at the beginning of the year 521.3 519.5
Exercise of share options 0.3 0.3
Movement in shares owned by the Employee Benefit Trust 0.8 0.2
───── ─────
Weighted average for the year - basic number of shares 522.4 520.0
Share options 6.5 5.2
Employee share scheme 0.6 1.1
───── ─────
Weighted average for the year - diluted number of shares 529.5 526.3
═════ ═════
2021 2020
Continuing operations Discontinued operations Total Continuing operations Discontinued operations Total
£m
£m
£m
£m
£m
£m
Profit for the year after tax 6.1 3.4 9.5 12.2 4.6 16.8
Amortisation charge (after tax) 0.6 - 0.6 1.1 - 1.1
Exceptional items (after tax) 7.3 (0.6) 6.7 10.6 0.3 10.9
───── ───── ───── ───── ───── ─────
Adjusted earnings (after tax) 14.0 2.8 16.8 23.9 4.9 28.8
═════ ═════ ═════ ═════ ═════ ═════
Pence Pence Pence Pence Pence Pence
Basic earnings per share 1.17 0.65 1.82 2.35 0.88 3.23
Dilutive options and shares (0.02) (0.01) (0.03) (0.03) (0.01) (0.04)
───── ───── ───── ───── ───── ─────
Diluted earnings per share 1.15 0.64 1.79 2.32 0.87 3.19
═════ ═════ ═════ ═════ ═════ ═════
Adjusted earnings per share 2.68 0.54 3.22 4.60 0.94 5.54
Dilutive options and shares (0.03) (0.01) (0.04) (0.06) (0.01) (0.07)
───── ───── ───── ───── ───── ─────
Diluted adjusted earnings per share 2.65 0.53 3.18 4.54 0.93 5.47
═════ ═════ ═════ ═════ ═════ ═════
Total number of shares outstanding at 31 March 2021 amounted to 528,180,280
(2020: 526,773,177), including 4,413,516 (2020: 5,472,206) shares held in the
Employee Benefit Trust, which are excluded in calculating earnings per share.
8 Dividends
The aggregate amount of dividend comprises:
2021 2020
£m £m
2019 final dividend (1.40 pence on 525.3m shares) - 7.3
2020 interim dividend (0.70 pence on 525.4m shares) - 3.6
───── ─────
- 10.9
═════ ═════
Subsequent to the end of the year and not included in the results for the
year, the Directors recommended a final dividend of 1.40 pence (2020: nil
pence) per share, bringing the total amount payable in respect of the 2021
year to 1.40 pence (2020: 0.70 pence), to be paid on 24 September 2021 to
shareholders on the register on 13 August 2021.
The Employee Benefit Trust, established to hold shares for the Performance
Share Plan and other employee benefits, waived its right to the interim
dividend. At 31 March 2021, the Trust held 4,413,516 ordinary shares (2020:
5,472,206).
9 Non-GAAP performance measures
The Group believes that the measures below provide valuable additional
information for users of the Financial Statements in assessing the Group's
performance by adjusting for the effect of exceptional items and significant
non-cash depreciation and amortisation. The Group uses these measures for
planning, budgeting and reporting purposes and for its internal assessment of
the operating performance of the individual divisions within the Group.
2021 2020
Continuing operations Discontinued operations Total Continuing operations Discontinued operations Total
£m £m £m £m £m £m
Operating profit 12.5 4.5 17.0 8.6 5.4 14.0
Add back: amortisation 0.8 - 0.8 1.3 - 1.3
Add back/(deduct): exceptional items 8.4 (0.8) 7.6 23.5 0.3 23.8
───── ───── ───── ───── ───── ─────
Adjusted operating profit ('EBITA') 21.7 3.7 25.4 33.4 5.7 39.1
Add back: depreciation 63.6 1.5 65.1 65.8 2.5 68.3
───── ───── ───── ───── ───── ─────
EBITDA before exceptional items 85.3 5.2 90.5 99.2 8.2 107.4
═════ ═════ ═════ ═════ ═════ ═════
Profit before tax 8.3 4.0 12.3 16.1 4.6 20.7
Add back: amortisation 0.8 - 0.8 1.3 - 1.3
Add back/(deduct): exceptional items 8.4 (0.8) 7.6 12.6 0.3 12.9
───── ───── ───── ───── ───── ─────
Adjusted profit before tax 17.5 3.2 20.7 30.0 4.9 34.9
═════ ═════ ═════ ═════ ═════ ═════
10 Intangible fixed assets
Goodwill Customer Brands IT development Total
lists
£m £m £m £m £m
Cost
At 1 April 2019 126.3 45.1 7.0 - 178.4
Additions - - - 1.2 1.2
───── ───── ───── ───── ─────
At 31 March 2020 126.3 45.1 7.0 1.2 179.6
Additions - - - 3.5 3.5
───── ───── ───── ───── ─────
At 31 March 2021 126.3 45.1 7.0 4.7 183.1
═════ ═════ ═════ ═════ ═════
Amortisation
At 1 April 2019 95.1 37.2 4.4 - 136.7
Charged in year - 0.9 0.4 - 1.3
Impairment 13.7 3.7 1.1 - 18.5
───── ───── ───── ───── ─────
At 31 March 2020 108.8 41.8 5.9 - 156.5
Charged in year - 0.4 0.4 - 0.8
Impairment - 1.1 - - 1.1
───── ───── ───── ───── ─────
At 31 March 2021 108.8 43.3 6.3 - 158.4
═════ ═════ ═════ ═════ ═════
Net book value
At 31 March 2021 17.5 1.8 0.7 4.7 24.7
═════ ═════ ═════ ═════ ═════
At 31 March 2020 17.5 3.3 1.1 1.2 23.1
═════ ═════ ═════ ═════ ═════
At 31 March 2019 31.2 7.9 2.6 - 41.7
═════ ═════ ═════ ═════ ═════
The amount of goodwill that is tax-deductible is £nil (2020: £nil).
All goodwill has arisen from business combinations. On transition to IFRS, the
balance of goodwill as measured under UK GAAP was allocated to cash-generating
units (CGUs). These are independent sources of income streams, and represent
the lowest level within the Group at which the associated goodwill is
monitored for management purposes. The Group's reportable CGUs comprise UK and
Ireland (excluding Training) and Training. All intangible assets are held in
the UK. Goodwill arising on business combinations after 1 April 2004 has been
allocated to the CGU that is expected to benefit from those business
combinations. The Group tests goodwill annually for impairment, or more
frequently if there are indications that goodwill might be impaired. No
impairment test has been performed in respect of the International CGU as
there are no intangible assets allocated to the CGU.
The recoverable amounts of the assets allocated to the UK and Ireland
(excluding Training) and Training CGUs are determined by a value-in-use
calculation. The value-in-use calculation uses cash flow projections based on
five-year financial forecasts approved by management. The key assumptions for
these forecasts are those regarding revenue growth and discount rate, which
management estimates based on past experience adjusted for current market
trends and expectations of future changes in the market. To prepare the
value-in-use calculation, the Group uses cash flow projections from the FY2022
budget, and a subsequent four-year period using the Group's business plan,
together with a terminal value using long-term growth rates. The resulting
forecast cash flows are discounted back to present value, using an estimate of
the Group's weighted average cost of capital, adjusted for risk factors
associated with each individual CGU and market-specific risks.
The Training CGU performed below expectations during the year ended 31 March
2020 due to lower than expected learner enrolments, the setup of a number of
regional training centres which had yet to reach critical mass and compliance
related issues. During the year, the business has been further affected by
market conditions due to COVID-19 and the impact social distancing has had on
the delivery of courses. The recoverable amount of the CGU is considered £nil
and the goodwill and intangible assets associated with the training business
have been fully impaired, which resulted in an impairment of £1.1m in the
year.
The pre-tax discount rates and terminal growth rates applied are as follows:
31 March 2021 31 March 2020
──────────────────── ────────────────────
Pre-tax Terminal value Pre-tax Terminal value
discount rate growth rate discount rate growth rate
UK and Ireland (excluding Training) 12.3% 2.5% 9.2% 2.5%
═════ ═════ ═════ ═════
Impairment calculations are sensitive to changes in key assumptions of revenue
growth and discount rate. At 31 March 2021, the headroom between value in use
and carrying value of related assets for the UK and Ireland was £27.6m (2020:
£45.1m). The reduction in headroom is due to the rise in discount rate at 31
March 2021 compared with previous years. There are no reasonable variations
in these assumptions that would result in an impairment.
11 Property, plant and equipment
Land and Hire Total
buildings equipment Other
£m £m £m £m
Cost
At 1 April 2019 52.2 385.8 77.8 515.8
Foreign exchange 0.3 0.7 - 1.0
Additions 2.4 55.3 5.5 63.2
Disposals (0.1) (21.6) (0.2) (21.9)
Transfers to inventory - (12.1) - (12.1)
───── ───── ───── ─────
At 31 March 2020 54.8 408.1 83.1 546.0
Foreign exchange (0.5) (1.1) 0.6 (1.0)
Additions 1.7 36.0 6.0 43.7
Disposals (5.4) (46.0) (1.2) (52.6)
Transfers to inventory - (10.4) - (10.4)
───── ───── ───── ─────
At 31 March 2021 50.6 386.6 88.5 525.7
═════ ═════ ═════ ═════
Depreciation
At 1 April 2019 33.1 168.9 64.7 266.7
Charged in year 3.4 34.9 6.2 44.5
Disposals - (14.3) - (14.3)
Transfers to inventory - (8.5) - (8.5)
───── ───── ───── ─────
At 31 March 2020 36.5 181.0 70.9 288.4
Foreign exchange (0.3) (0.6) - (0.9)
Charged in year 3.6 33.7 6.1 43.4
Disposals (3.2) (27.4) (0.4) (31.0)
Transfers to inventory - (7.3) - (7.3)
───── ───── ───── ─────
At 31 March 2021 36.6 179.4 76.6 292.6
═════ ═════ ═════ ═════
Net book value
At 31 March 2021 14.0 207.2 11.9 233.1
═════ ═════ ═════ ═════
At 31 March 2020 18.3 227.1 12.2 257.6
═════ ═════ ═════ ═════
At 31 March 2019 19.1 216.9 13.1 249.1
═════ ═════ ═════ ═════
The net book value of land and buildings comprises freehold properties of
£nil (2020: £nil) and improvements to short leasehold properties of £14.0m
(2020: £18.3m).
Included within depreciation charged in the year is £1.0m relating to
exceptional impairments (see Note 4).
An impairment review has been completed during the year on the basis set out
in Note 10.
11 Right of use assets
Land and Total
buildings Other
£m £m £m
Cost
At 1 April 2019 128.0 49.9 177.9
Foreign exchange 0.4 - 0.4
Additions 9.5 8.5 18.0
Disposals (10.1) (6.5) (16.6)
───── ───── ─────
At 31 March 2020 127.8 51.9 179.7
Foreign exchange (0.6) - (0.6)
Additions 13.7 8.9 22.6
Disposals (9.6) (12.6) (22.2)
───── ───── ─────
At 31 March 2021 131.3 48.2 179.5
═════ ═════ ═════
Depreciation
At 1 April 2019 77.2 28.5 105.7
Foreign exchange 0.2 - 0.2
Charged in year 13.2 11.7 24.9
Disposals (10.0) (5.8) (15.8)
───── ───── ─────
At 31 March 2020 80.6 34.4 115.0
Foreign exchange (0.4) - (0.4)
Charged in year 13.3 11.4 24.7
Disposals (6.9) (12.0) (18.9)
───── ───── ─────
At 31 March 2021 86.6 33.8 120.4
═════ ═════ ═════
Net book value
At 31 March 2021 44.7 14.4 59.1
═════ ═════ ═════
At 31 March 2020 47.2 17.5 64.7
═════ ═════ ═════
At 31 March 2019 50.8 21.4 72.2
═════ ═════ ═════
Included within depreciation charged in the year is £2.0m relating to
exceptional impairments (see Note 4).
13 Borrowings
2021 2020
£m £m
Current borrowings
Bank overdraft 0.5 -
Lease liabilities 19.3 20.2
───── ─────
19.8 20.2
═════ ═════
Non-current borrowings (excluding lease liabilities)
Maturing between two and five years
- Asset based finance facility 44.4 102.1
- Lease liabilities 46.5 52.7
───── ─────
Total non-current borrowings 90.9 154.8
───── ─────
Total borrowings 110.7 175.0
Less: cash (11.7) (22.8)
Exclude lease liabilities (65.8) (72.9)
───── ─────
Net debt 33.2 79.3
═════ ═════
The Group has a £180m asset based finance facility which is sub divided into:
(a) A secured overdraft facility, provided by Barclays Bank
Plc, which secures by cross guarantees and debentures the bank deposits and
overdrafts of the Company and certain subsidiary companies up to a maximum of
£5m.
(b) An asset based finance facility of up to £175m, based
on the Group's hire equipment and trade receivables balance. The cash and
undrawn availability of this facility as at 31 March 2021 was £142.3m (2020:
£99.0m), based on the Group's eligible hire equipment and trade receivables.
The facility amounts to £180m and is based on the Group's hire equipment and
trade receivables balance, reduced to the extent that any ancillary facilities
are provided, and is repayable in October 2022, with no prior scheduled
repayment requirements. An additional uncommitted accordion of £220m remains
in place through to October 2022.
Interest on the facility is calculated by reference to the LIBOR applicable to
the period drawn, plus a margin of 150 to 250 basis points, depending on
leverage and on the components of the borrowing base. During the year, the
effective margin was 1.81% (2020: 1.84%).
The facility is secured by fixed and floating charges over the UK and Ireland
assets.
Analysis of consolidated net debt
31 March Non-cash Cash flow 31 March
2020 movement 2021
£m £m £m £m
Cash at bank and in hand 22.8 - (11.1) 11.7
Bank overdraft - - (0.5) (0.5)
Bank borrowings (102.1) 0.6 57.1 (44.4)
───── ───── ───── ─────
(79.3) 0.6 45.5 (33.2)
═════ ═════ ═════ ═════
14 Lease liabilities
Land and Total
buildings Other
£m £m £m
At 1 April 2019 60.8 21.6 82.4
Foreign exchange 0.2 - 0.2
Additions 9.5 8.4 17.9
Repayments (15.1) (12.6) (27.7)
Unwinding of discount rate 2.4 0.8 3.2
Terminations (2.5) (0.6) (3.1)
───── ───── ─────
At 31 March 2020 55.3 17.6 72.9
Foreign exchange (0.1) - (0.1)
Additions 12.7 8.9 21.6
Repayments (14.2) (12.0) (26.2)
Unwinding of discount rate 2.0 0.6 2.6
Terminations (4.3) (0.7) (5.0)
───── ───── ─────
At 31 March 2021 51.4 14.4 65.8
═════ ═════ ═════
Included within terminations in the year is £3.7m (2020: £0.7m) relating to
exceptional terminations of property leases (see Note 4).
Amounts payable for lease liabilities (discounted at the incremental borrowing
rate of each lease) fall due as follows:
2021 2020
£m £m
Payable within one year 19.3 20.2
Payable in more than one year 46.5 52.7
───── ─────
At 31 March 65.8 72.9
═════ ═════
15 Provisions
Dilapidations Contingent Training provision Total
consideration
£m £m £m £m
At 1 April 2019 2.5 10.9 - 13.4
Created in the year 3.1 - 3.0 6.1
Provision utilised in the year (1.5) - - (1.5)
Net changes in fair value - (10.9) - (10.9)
───── ───── ───── ─────
At 31 March 2020 4.1 - 3.0 7.1
Created in the year 3.2 - 0.9 4.1
Provision utilised in the year (2.5) - (2.7) (5.2)
───── ───── ───── ─────
At 31 March 2021 4.8 - 1.2 6.0
═════ ═════ ═════ ═════
Of the £6.0m provision at 31 March 2021, £3.1m (2020: £5.9m) is due within
one year and £2.9m (2020: £1.2m) is due after one year. The dilapidations
provision is calculated based on estimated dilapidations at current market
rates. The total liability is discounted to current values.
In April 2020 Speedy were notified that a funding agency was suspending
payments, and seeking repayment of £2.6m from Geason Training, based on an
extrapolation of errors found in a small sample of learner documentation over
a three year period from August 2017. In the year ended 31 March 2020, £3.0
million was provided as an exceptional charge. The claim was settled in
October 2020 within the provision held. An additional provision has been
recognised for £0.9m in relation to legal and other costs associated with
ongoing initiatives to improve the Group's financial position.
Contingent consideration of between £nil and £26.0m may be payable by the
Group in relation to the acquisition of Geason Training. The consideration
depends on the combined performance of the acquired business and the Group's
training business in the three years post acquisition. The fair value of
contingent consideration as at year end is £nil.
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