REG - Speedy Hire PLC - Half Year Results
22/11/2023 07:15
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RNS Number : 2037U Speedy Hire PLC 22 November 2023
Speedy Hire Plc
("Speedy", "the Company" or "the Group")
22 November 2023
FY2024 Interim Results
Results for the six months to 30 September 2023
Resilient performance and strong strategic progress
Speedy, the UK's leading tools and equipment hire services company, operating
across the construction, infrastructure and industrial markets, announces
results for the six months to 30 September 2023.
Financial Highlights
6 months ended 6 months ended Change
30 September 2023 (£m) 30 September 2022 (£m) %
Revenue 208.5 214.8 (2.9%)
Adjusted EBITDA(1 2) 46.2 47.4 (2.5%)
Adjusted EBTDA(1 2) margin 22.2% 22.1% 10 bps
Adjusted profit before tax(1 2) 5.9 13.4 (56.0%)
Adjusted earnings per share (pence)(2 3) 0.98 2.19 (55.3%)
Operating profit 9.4 12.9 (27.1%)
Profit before tax 5.6 13.2 (57.6%)
Basic earnings per share (pence)(2 3) 0.91 2.13 (57.3%)
Free cash flow(4) £10.6m £0.7m -
Net debt(5) £89.6m £86.7m 3.3%
Dividend per share 0.80p 0.80p -
Trading and operations update:
· Resilient UK hire revenue performance, down 1.2% versus H1
FY2023:
o Challenging but manageable market backdrop
o Benefitting from diverse customer mix, including strong national customer
performance that mitigates some softening with regional customers
o Recent national key contract wins and extensions, as well as strengthening
pipeline
· Service revenue decrease of 5.2% versus H1 FY2023:
o Strong performance in our Customer Solutions business
o Decline in wholesale fuel prices impacting pass through revenue by £6.9m,
however, margin maintained
· Executing well on our Velocity transformation and growth
strategy:
o Investing in the transformation of the business
o Investing in specialist business growth engine including:
§ £0.5m in hydrogen electric powered access with Niftylift, supporting clean
energy transition and commercial sustainability for our customers
§ Entered into a joint venture agreement with AFC Energy to provide
sustainable power solutions - called Speedy Hire Solutions Limited
§ Acquisition of Green Power Hire Limited on 9 October 2023. Integrating
well, with good first month of trading and significant interest from customers
· Digital evolution of our partnership with B&Q:
o Launch of online, home delivery tool hire proposition on DIY.com and
Trade-point.co.uk
o Extend into over 310 B&Q stores nationally for digital hire in-store
commencing before Christmas
o Low cost-to-serve digital in-store and online hire proposition
· Continued investment in our People First strategic pillar
o Average increase in base pay to colleagues of c.7% in April
o 5.5pp improvement in voluntary attrition to prior year
Financial Performance
· Revenue of £208.5m in the first half (H1 FY2023: 214.8m)
· Resilient Adjusted EBITDA performance, down 2.5% but margin
maintained at 22% with the shortfall in Revenue offset by disciplined cost
control
· Adjusted profit before tax in H1 of £5.9m, down 56.0% on H1
FY2023 due to:
o Investment in transformation to support Velocity strategy
o Kazakhstan joint venture performing behind the record performance in FY23,
also
impacted by dollar exchange rate movements
o Higher interest rates
· Profit after tax has decreased by 61.1% to £4.2m, impacted by
the increase in the corporation tax rate
· Strong cash flow generation, with free cash flow up to £10.6m
versus £0.7m in H1 FY2023
· Investment in hire fleet of £17.6m primarily in strategic
purchases; H1 itemised utilisation was 50.5%, improving to 58.0% currently.
· Cash and facility headroom of £70.5m (31 March 2023: £83.5m)
· Net debt at £89.6m, leverage(6) of 1.3 times (31 March 2023:
£92.4m, 1.3 times)
· Proposed interim dividend of 0.80 pence per share
Commenting on the results Dan Evans, Chief Executive, said:
"This set of results demonstrates our ability to perform resiliently against
challenging but manageable market conditions, by maintaining price and cost
discipline whilst investing in and executing on our Velocity Strategy.
The recent acquisition of Green Power Hire Limited and the launch of Speedy
Hydrogen Solutions Limited in joint venture with AFC Energy to deliver market
leading clean energy power generation and storage solutions for our customers,
further demonstrates our Velocity strategy in action.
I am pleased to confirm the digital evolution of our partnership with B&Q,
launching our online, home delivery tool hire proposition on diy.com and
trade-point.co.uk. This will then be extended into over 310 B&Q stores
nationally for digital hire in-store, in an overall lower cost to serve
operating model.
The Group has a promising pipeline of opportunities to deliver revenue growth
in the second half and beyond. As in prior years, the Group expects a second
half weighting to its revenues and profits, as the winter programmes commence
and new contracts fully mobilise in the period, including those communicated
at year end. We expect to see the benefits of our investments in our Velocity
strategy including operational efficiency and supply chain optimisation, in
the second half and beyond. Whilst the macroeconomic outlook is uncertain,
we remain confident of delivering results, albeit towards the lower end of the
Board's expectations".
Enquiries:
Speedy Hire Plc
Tel: 01942 720
000
Dan Evans, Chief Executive
Paul Rayner, Chief Financial Officer
MHP
Communications
Tel: 0203 128 8540
Oliver Hughes
Katie Hunt
Notes:
Explanatory notes:
The Group believes that the non-GAAP performance measures presented in this
announcement provide valuable additional information for readers. Further
details can be found in notes 7, 9 and 13.
(1) See note 9.
(2) Revised, see note 19.
(3) See note 7.
(4) Free cash flow: net cash flow before movement in loan balances and returns
to shareholders.
(5) See note 13. This metric excludes lease liabilities.
(6) Leverage: Net debt(5) covered by EBITDA(1). This metric excludes the
impact of IFRS 16.
Inside Information: This announcement contains inside information for the
purposes of article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms
part of domestic law by virtue of the European Union (Withdrawal) Act 2018.
Upon the publication of this announcement via Regulatory Information Service,
this inside information is now considered to be in the public domain.
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 and equipment 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
ISO45001. The Group operates from c.180 fixed sites and selected B&Q
stores across the UK and Ireland together with a number of on-site facilities
at client locations and through a joint venture in Kazakhstan.
Chief Executive's statement
Overview
I am pleased to present our results for the first six months of the financial
year. The business is performing resiliently in the face of cost inflation
and well-documented macroeconomic uncertainty. Our focus is on delivering
growth opportunities as well as operational efficiencies through exceptional
customer service, excellent supplier and customer relationships.
Velocity, the Company's five year growth and transformation strategy, was
launched earlier in the year at our Capital Markets Event and is progressing
well. We have continued to invest in its early implementation as planned. Our
Velocity strategy has included a clear focus on supply chain optimisation and
is anticipated to deliver benefits in the second half of the current financial
year and beyond.
Our strong balance sheet enables us to invest further in our business and
build on the Group's successful track record of leading on innovation. This is
evidenced by our recent acquisition of Green Power Hire Limited ('GPH') and
the launch of Speedy Hydrogen Solutions Limited ("SHS") a 50:50 joint venture
with AFC Energy designed to deliver market leading sustainable power
generation and storage solutions for our customers. These are complemented by
our partnership with Niftylift on bringing the UK&I's first Hydrogen
Electric powered access machines to market. The digital evolution of our
partnership with B&Q, launching our online, home delivery tool hire
proposition on diy.com and trade-point.co.uk is a great step forward. This
will then be extended into over 310 B&Q stores nationally for digital hire
in-store as the financial year develops, through a low cost to serve, digital,
in-store and online proposition.
Trading performance
Our interim results for the six months to 30 September 2023 demonstrate the
Group's ability to perform in challenging market conditions. Building on the
momentum from FY2023, revenue with our national customer base has continued on
its growth trajectory, up 5%, offset by softening of demand from our regional
customers down 6%. Our services business continues to perform well and,
although its pass through revenues were impacted by £6.9m through the effect
of a decrease in wholesale fuel prices, margins were maintained.
Group hire revenue in the first half was resilient. Within our national
customer segment, we have won and renewed contracts during the period,
strengthening the pipeline of opportunities expected to contribute further
growth in the second half of the year and beyond. We continue to maximise our
revenue with existing customers working on major UK projects through offering
our unique holistic site solutions across our core and re-hire range (Customer
Solutions). This has been offset by softening demand from our regional
customers in the first half and overall hire revenue was 1.2% behind the first
half of last year.
Our diversified services businesses ensure we are resilient to an economic
downturn. Services revenue performed well, although is 5.2% down on the
first half of the last year due to the decrease in wholesale fuel prices,
offset by a strong performance in our Customer Solutions business. The
decrease has not impacted gross margin, as direct costs fall proportionately.
We recognise that wider market conditions are uncertain, with sustained high
interest rates, and inflationary pressures. We have observed some softening in
demand as our customers review their use of assets with a view to operational
efficiency. In order to deliver profitable growth, and whilst the market
remains competitive, we are focused on tendering for and winning national
contracts that bring value and collective success for both us and our
customers. With this in mind, we have maintained strong hire fleet capex
discipline to ensure we remain well balanced with our investment decisions,
supported by our AI partnership with PEAK.
Supporting a key pillar in our Velocity growth strategy we are extending our
partnership with B&Q by launching an online home delivery tool hire
proposition on DIY.com and Trade-point.co.uk. This proposition will soon be
live to B&Q and TradePoint customers and provides mass-market national
exposure of our hire proposition to millions of trade and retail customers.
Following the online launch, before Christmas we will start to extend this
proposition into over 310 B&Q stores nationally, enabling customers to
digitally hire in-store our most popular products for home delivery and
collection. This low cost-to-serve combination of in-store and online hire,
combined with our existing digital propositions and service centre network,
will accelerate our strategic aim of increasing share within the trade and
retail markets.
Operational efficiency and cost control
Operational efficiency continues to be a key part of our Velocity strategy.
Our strategic collaboration with Peak has supported our progression in the use
of data and Artificial Intelligence ('AI') in decision making. AI is helping
us ensure we have the right products to meet customer demand, in the right
place, at the right time, in the most efficient way; linking our service
centre network with our logistics and asset intelligence.
We have continued to develop our future state property programme. This
programme is modernising our network with energy efficient, low carbon
facilities that optimise efficiencies and reduce operational costs whilst
creating better working environments for our people and a market leading
experience for our customers.
Cost control remains a key ingredient in delivering sustainable profitable
growth. The significant macro inflationary pressures are impacting all
businesses at this time. We are controlling costs and focusing on initiatives
to improve operational efficiency and the effective management of our supply
chain. These initiatives are expected to generate further benefit in the
second half of the year and beyond, allowing continued investment in the
transformational aspect of our Velocity strategy, in support of our five year
plan.
ESG
We continue to lead the hire industry in sustainability and are embracing
product innovation in areas that are increasingly in demand from our customer
base. We are working with partners to deliver award winning, sustainable
solutions for customers and to accelerate our own carbon reduction pathway.
Earlier this year we were delighted to announce our partnership with Niftylift
to launch the world-first hydrogen-electric powered access platform;
complemented by our acquisition of GPH and formation of SHS with AFC Energy.
These collaborations further solidify our position as industry leader.
We were the first company in hire to commit to Science Based Targets (SBTi's)
to achieve net zero carbon before 2040 and have now had those targets
validated for both near and long term emission reduction by SBTi.
During the period we invested £17.6m in our hire fleet, of which 42% was in
carbon efficient ECO products. The proportion of our revenue from carbon
efficient ECO products has increased from c.32% in the comparative period to
50% in the first half of FY2024.
Our colleagues are central to achieving our ambitions for growth. We have a
unique culture at Speedy, it's what we call our Speedy Spirit. It is something
our customers and supply chain partners have come to know, as we strive, on a
daily basis, to create solutions for our customers' needs. During the period
we accelerated our People First agenda including an investment in base pay of
£3.5m in the first half of the year.
Group financial performance
Total revenue for the period to 30 September 2023 decreased by 2.9% to
£208.5m (H1 FY2023 £214.8m) with hire rate increases and strong performance
with our national customers mitigating softening of revenues with our regional
customers. Revenue from disposals was £2.0m (H1 FY2023: £2.4m).
Gross profit was £112.7m (H1 FY2023: £116.9m), a decrease of 3.6%. The
gross margin decreased to 54.1% (H1 FY2023: 54.4%), with gross profit also
reflecting higher depreciation charged against non-itemised equipment (£1.1m)
and additional provisions recognised to cover asset write offs (£1.0m). The
higher depreciation charge is the result of reducing the useful economic lives
and residual values for certain asset categories.
Adjusted EBITDA was broadly flat year on year at £46.2m (H1 FY2023: £47.4m).
The decrease in gross profit has been offset by disciplined cost management,
with overheads £0.7m favourable to H1 FY2023 after absorbing £1.0m of
Velocity transformation costs. The net result is a £3.5m decrease in
operating profit to £9.4m (H1 FY2023: £12.9m). Adjusted profit before tax
decreased by £7.5m to £5.9m (H1 FY2023: £13.4m), the result of higher
interest costs and a record prior year for the joint venture.
Profit after taxation decreased to £4.2m (H1 FY2023: £10.8m), impacted by
the increase in corporation tax rates.
Revenue and margin analysis
The Group generates revenue through two key categories, Hire and Services.
Revenue and margin by type Change
Six Months ended Six Months ended Year ended
30 September 30 September 31 March
2023 2022 2023
£m £m % £m
Hire:
Revenue 125.6 127.1 (1.2)% 258.0
Cost of sales (28.8) (27.1) (54.8)
Gross profit 96.8 100.0 (3.2)% 203.2
77.1% 78.7% 78.8%
Gross margin
Services:
Revenue 80.9 85.3 (5.2)% 176.3
Cost of sales (65.1) (69.5) (142.9)
Gross profit 15.8 15.8 0.0% 33.4
19.5% 18.5% 18.9%
Gross margin
Hire revenues decreased by 1.2%, reflecting price increases and strong
performance with our national customers, offsetting a softening in volume
demand from our regional customers. A number of new and renewed contracts
with key customers have been secured in the period and the Group has a
promising pipeline of opportunities expected to contribute in H2 FY2024.
Services revenues (including fuel) decreased by 5.2% compared to H1 FY2023.
Excluding fuel, services revenues were up 4.2% versus H1 FY2023 (£60.0m),
with continued growth in Customer Solutions. Fuel revenue decreased 27.3%
versus H1 FY2023 as a result of the decline in the wholesale price of both
diesel and hydrogenated vegetable oil (HVO), which doesn't impact gross
margin.
The Group implemented price increases in January 2023 to offset the effects of
cost inflation on both overheads and new equipment purchases. The price
increases take effect as framework agreements and hire contracts are renewed
resulting in the benefit of those increases building throughout the year.
Gross margins decreased from 54.4% in H1 FY2023 to 54.1%. Hire margin
decreased to 77.1% (H1 FY2023: 78.7%) due to pricing increases offset by lower
utilisation and the impact of higher depreciation on non-itemised assets and
additional provisions recognised in the period. Services margin improved from
18.5% in H1 FY2023 to 19.5% due to the change in sales mix weighted less
toward lower margin fuel revenue.
Overheads
Inflationary pressures on overheads, particularly a pay increase in April 2023
along with utilities, were expected in FY2024. Disciplined cost management,
with savings realised from our operational and management restructuring in the
last financial year, has meant that we have reduced our underlying cost base
even whilst implementing salary increases (c.£7.0m annual investment) and
investing £1.0m in our transformation programme. To ensure we can continue to
invest in our growth strategy, we are continuing to control costs through
initiatives to improve operational efficiency and build on the effective
management of our supply chain in H1 FY2024.
The UK and Ireland headcount at 30 September 2023 was 3,435 (31 March 2023:
3,375), an increase of 1.8%.
Interest
The Group's net financial expense increased to £5.7m (H1 FY2023: £3.6m)
reflecting higher average gross borrowings throughout the year following the
share buyback programme and the impact of increased interest rates on
borrowings and on lease liabilities.
The Group's main bank facilities were extended for two years in May 2023, now
expiring in July 2026. There were no changes to the terms of the facility
following the extension and it continues to give the Group headroom with which
to support organic and inorganic growth opportunities. Borrowings under the
facility are priced based on SONIA plus a variable margin, while any
unutilised commitment is charged at 35% of the applicable margin. During the
period, the margin payable on the outstanding debt fluctuated between 1.55%
and 2.15% dependent on the weighting of borrowings between receivables and
plant and machinery. The effective average margin in the period was 1.89% (H1
FY2023: 1.80%).
The Group utilises interest rate hedges to manage fluctuations in rates. The
fair value of these hedges was £1.5m at 30 September 2023. The hedges have
varying maturity dates, notional amounts and rates and provide the Group with
mitigation against interest rate rises. Over the next 12 months c.50% of the
expected net debt is hedged. As of October 2023, 65% of the Group' net debt is
hedged with a weighted average hedge rate of 2.68%. Subsequent to the balance
sheet date, a further £15m of debt was hedged in respect of the acquisition
of Green Power Hire Limited.
Interest on lease liabilities of £2.3m (H1 FY2023: £1.6m) was charged during
the period, impacted by the rise in interest rates which are used to calculate
the incremental borrowing rate.
Taxation
The tax charge for the period was £1.4m (H1 FY2023: £2.4m), reflecting a
projected full year effective tax rate before amortisation and exceptional
items of 25.0% (H1 FY2023: 17.2%²). The effective rate has increased year
on year due to the increase in the UK corporation tax rate to 25% for periods
from 1 April 2023 which was substantively enacted on 24 May 2021.
Shares and earnings per share
At 30 September 2023, 516,983,637 (31 March 2023: 516,983,637) Speedy Hire Plc
ordinary shares were in issue, of which 55,146,281 were held in treasury and
4,106,820 were held in the Employee Benefit Trust. Adjusted earnings per share
was 0.98 pence (H1 FY2023: 2.19 pence²), a decrease of 1.21p (55.3%). Basic
earnings per share was 0.91 pence (H1 FY2023: 2.13 pence).
Capital expenditure and disposals
Total capital expenditure during the period amounted to £22.4m (H1 FY2022:
£34.4m), of which £17.6m (H1 FY2023: £30.5m) related to equipment for hire,
and £4.8m related to non-hire property, plant and equipment (H1 FY2023:
£3.9m).
Our hire fleet investment included a significant proportion of carbon
efficient ECO products, in line with the increasing relevance of sustainable
solutions including customers mandating zero site emissions in some instances.
Asset count update
At the end of September, a full count of all itemised and non-itemised hire
equipment was undertaken and the results of the count have not identified the
need for any increased asset provisions. Blended count accuracy across the
entire fleet was 99.3%, with, at least, the same level of accuracy targeted
for the second half. A further full count will be undertaken in March 2024, in
addition to other targeted counts during the remainder of the financial year.
The Group remains committed to continual improvement of processes and controls
in this area. The actions taken by the Group over the past nine months to
improve asset controls continue to demonstrate benefits with digital
technology being trialled to further assist in the control and counting of
hire equipment.
Balance sheet
The Group has maintained a strong balance sheet and is well placed to continue
to pursue financial and strategic objectives despite the macroeconomic
uncertainties.
Net assets at 30 September 2023 were £181.9m (31 March 2023: £184.6m). ROCE
was 11.9% for the 12 months to September 2023 (12 months to 30 September 2022:
12.5%²).
Net property, plant and equipment (excluding IFRS 16 right of use assets)
decreased to £229.6m at 30 September 2023 (31 March 2023: £237.7m). The
net book value of equipment for hire has decreased from £207.9m to £200.1m,
representing 87.2% (31 March 2023: 87.5%) of the total property, plant and
equipment balance.
Intangible assets decreased marginally to £24.1m (31 March 2023: £25.0m),
with investment in software development offset by amortisation charged.
Right of use assets of £83.4m (31 March 2023: £83.2m) and corresponding
lease liabilities of £86.6m (31 March 2023: £86.1m) were recognised at 30
September 2023. New leases and renewals entered into during the period have
been broadly offset by exits in the period.
Gross trade receivables totalled £100.5m at 30 September 2023 (31 March 2023:
£102.2m), benefiting from continued strong cash collections and a focus on
overdue debt. Bad debt and credit note provisions were £3.7m at 30
September 2023 (31 March 2023: £4.3m), equivalent to 3.7% of gross trade
receivables (31 March 2023: 4.2%). In setting the provisions the Directors
have given specific consideration to the impact of macroeconomic
uncertainties. Whilst the Group has not experienced a significant worsening of
debt collections or debt write-offs in H1 FY2024, there are indications of
economic vulnerability and increasing insolvencies and therefore we continue
to monitor the situation closely. In light of this, the Group expects to take
a prudent position and increase provisions in the second half.
Debtor days were 67 days (31 March 2023: 61 days), broadly consistent with
September 2022 (68 days). Trade payables were £42.9m (31 March 2023:
£39.1m). Creditor days were 47 days (31 March 2023: 37 days) a significant
improvement on September 2022 (56 days), arising from effective working
capital management.
Cash flow and net debt
Cash generated from operations (before changes in hire fleet) for the period
was £42.4m (H1 FY2023: £40.2m), representing 91.7% conversion from adjusted
EBITDA (H1 FY2023: 84.8%²), reflecting the continued focus on working capital
improvements. Free cash flow⁴ increased to £10.6m (H1 FY2023: £0.7m), as
cash disciplines across the business were reinforced.
Net debt decreased by £2.8m from £92.4m at the beginning of the period to
£89.6m at 30 September 2023. Net debt to adjusted EBITDA (rolling 12 months
basis) remained flat at 1.3 times (31 March 2023: 1.3 times).
The Group's continued strong cash position resulted in cash and facility
headroom of £70.5m within the Group's committed bank facility (31 March 2023:
£83.5m).
Post balance sheet acquisitions and business developments
On October 9 2023, we acquired sustainable power solutions specialist, GPH,
for an enterprise value of £20.2m. The total consideration, which was funded
from the Company's existing debt facilities, represented £10m of equity value
and assumed debt of £10.2m which was settled at completion. Integration is
progressing well, post acquisition trading has been positive and in line with
the Group's business plan, and we have observed significant interest from
existing and new customers.
On November 15 2023, we announced the formation of a 50:50 joint venture
company SHS with AFC Energy, a leading provider of hydrogen powered generator
technologies. SHS will be a dedicated hydrogen powered generator plant hire
business promoting sustainable, zero emission, temporary power solutions
designed specifically for the off-grid generation market. SHS will initially
be jointly funded by AFC Energy and Speedy by up to £2.5m each through
initial equity subscription and subsequent shareholder loans subject to SHS
performance.
Dividend
The Board is committed to maintaining an efficient balance sheet and regularly
reviews the Group's capital resources in light of the medium-term investment
requirements and in accordance with the capital allocation policy.
The Board has declared an interim dividend of 0.80 pence per share (H1
FY2023 interim dividend: 0.80 pence per share), to be paid on 19
January 2024 to shareholders on the register on 8 December 2023.
A Dividend Reinvestment Plan ("DRIP") is provided by Equiniti Financial
Services Limited. The DRIP enables the Company's shareholders to elect to have
their cash dividend payments used to purchase the Company's shares. More
information can be found at www.shareview.co.uk/info/drip.34
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 as highlighted as part of our
Velocity strategy:
- 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 markets adjacent to, and consistent
with its Velocity strategy;
- Gearing and treatment of excess capital: the Board is
committed to maintaining an efficient balance sheet. The Board has adopted a
target leverage 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 continues to believe that a strong balance sheet is appropriate for
the current stage of the cycle to allow the company take full advantage of
opportunities that arise.
Board
As announced in June 2023, Paul Rayner was appointed as Chief Financial
Officer and executive director with effect from 1 July 2023 following an
initial interim period and comprehensive recruitment process supported by
external consultants.
Outlook
We have delivered resilient results for the first half of 2023 against a
challenging but manageable market backdrop. We have also maintained investment
in our Velocity Strategy. The Group has a promising pipeline of opportunities
to deliver revenue growth in the second half and beyond and we will continue
our strategic investment in growth initiatives including Transformation, Trade
and Retail and ESG.
Whilst the macroeconomic outlook is uncertain and inflationary pressures
remain high, the business is resilient and well positioned to manage these
challenging market conditions. As in prior years, the Group expects a strong
second half weighting to its hire revenues and profits, as the winter
programmes commence and new contracts extended and won fully mobilise in the
period, including those communicated at year end. We expect to see the
benefits of our investments in our Velocity strategy including operational
efficiency and supply chain optimisation, in the second half and beyond.
The Board remains confident of delivering results for the full year, albeit at
the lower end of its expectations.
Dan Evans
Chief Executive
Interim condensed consolidated income statement
Year ended 31 March 2023
Six months ended 30 September Six months ended 30 September Before exceptional items
2023 2022 Exceptional items¹
Total
Note £m £m £m £m £m
Revenue 3 208.5 214.8 440.6 - 440.6
Cost of sales (95.8) (97.9) (201.2) (20.4) (221.6)
───── ───── ───── ───── ─────
Gross profit 112.7 116.9 239.4 (20.4) 219.0
Distribution and administrative costs (101.4) (102.1) (203.1) (8.1) (211.2)
Impairment losses on trade receivables (1.9) (1.9) (4.0) - (4.0)
Operating profit 9.4 12.9 32.3 (28.5) 3.8
Share of results of joint venture 1.9 3.9 6.6 - 6.6
───── ───── ───── ───── ─────
Profit from operations 11.3 16.8 38.9 (28.5) 10.4
Financial expense 5 (5.7) (3.6) (8.6) - (8.6)
───── ───── ───── ───── ─────
Profit before taxation 5.6 13.2 30.3 (28.5) 1.8
Taxation 6 (1.4) (2.4) (6.5) 5.9 (0.6)
───── ───── ───── ───── ─────
Profit for the financial period 4.2 10.8 23.8 (22.6) 1.2
═════ ═════ ═════ ═════ ═════
Earnings per share
- Basic (pence) 7 0.91 2.13 0.25
═════ ═════ ═════
- Diluted (pence) 7 0.91 2.07 0.24
═════ ═════ ═════
Non-GAAP performance measures (continuing operations)
EBITDA before exceptional items² 9 46.2 47.4 102.0
═════ ═════ ═════
Adjusted profit before tax² 9 5.9 13.4 30.7
═════ ═════ ═════
Adjusted earnings per share (pence)³ 7 0.98 2.19 4.96
Adjusted diluted earnings per share (pence)³ 7 0.97 2.13 4.92
═════ ═════ ═════
¹ See note 4.
² See notes 9 and 19.
³ See notes 7 and 19.
All activities in each period presented related to continuing operations.
Interim condensed consolidated statement of comprehensive income
Six months ended Six months
30 September ended Year ended
2023 30 September 31 March
2022 2023
£m £m £m
Profit for the financial period 4.2 10.8 1.2
───── ───── ─────
Other comprehensive income that may be reclassified subsequently to the Income
Statement:
- Effective portion of change in fair value of cash flow hedges 0.8 1.7 0.2
- Exchange difference on retranslation of foreign operations (0.1) 2.2 0.5
- Tax on items - (0.2) -
───── ───── ─────
Other comprehensive income, net of tax 0.7 3.7 0.7
───── ───── ─────
Total comprehensive income for the financial period 4.9 14.5 1.9
═════ ═════ ═════
Interim condensed consolidated balance sheet
30 September 30 September 31 March
2023 2022 2023
Restated* Restated*
Note £m £m £m
ASSETS
Non-current assets
Intangible assets 10 24.1 25.4 25.0
Investment in joint venture 8.4 10.2 9.2
Property, plant and equipment
- Land and buildings 11 14.3 13.9 13.9
- Hire equipment 11 200.1 234.4 207.9
- Other 11 15.2 16.3 15.9
Right of use assets 12 83.4 80.5 83.2
Deferred tax assets - 1.5 -
───── ───── ─────
345.5 382.2 355.1
───── ───── ─────
Current assets
Inventories 12.5 12.3 12.7
Trade and other receivables 108.4 117.0 106.0
Cash 13 1.8 0.9 1.1
Current tax asset 1.2 1.1 0.3
Derivative financial assets 14 1.5 2.2 1.2
───── ───── ─────
125.4 133.5 121.3
───── ───── ─────
Total assets 470.9 515.7 476.4
───── ───── ─────
LIABILITIES
Current liabilities
Borrowings 13 (0.8) (1.5) (1.3)
Lease liabilities 13 (20.0) (20.4) (22.1)
Trade and other payables (89.0) (107.9) (88.6)
Derivative financial liabilities 14 - - (0.6)
Provisions (7.5) (7.2) (9.3)
───── ───── ─────
(117.3) (137.0) (121.9)
───── ───── ─────
Net current assets/(liabilities) 8.1 (3.5) (0.6)
Non-current liabilities
Borrowings 13 (90.6) (86.1) (92.2)
Lease liabilities 13 (66.6) (62.3) (64.0)
Provisions (7.0) (6.7) (6.3)
Deferred tax liabilities (7.5) (11.8) (7.4)
───── ───── ─────
(171.7) (166.9) (169.9)
───── ───── ─────
Total liabilities (289.0) (303.9) (291.8)
───── ───── ─────
Net assets 181.9 211.8 184.6
═════ ═════ ═════
EQUITY
Share capital 25.8 25.8 25.8
Share premium 1.9 1.9 1.9
Capital redemption reserve 0.7 0.7 0.7
Merger reserve 1.0 1.0 1.0
Hedging reserve 1.1 1.8 0.3
Translation reserve (1.4) 0.4 (1.3)
Retained earnings 152.8 180.2 156.2
───── ───── ─────
181.9 211.8 184.6
═════ ═════ ═════
*See note 19.
Interim condensed consolidated statement of changes in equity
Share Share Capital redemption Merger Hedging Translation Retained Total
Capital premium reserve reserve reserve reserve earnings equity
£m £m £m £m £m £m £m £m
At 1 April 2022 reported 25.9 1.8 0.6 1.0 0.1 (1.8) 198.8 226.4
Restatement* - - - - - - (10.0) (10.0)
───── ───── ───── ───── ───── ───── ───── ─────
At 1 April 2022 restated* 25.9 1.8 0.6 1.0 0.1 (1.8) 188.8 216.4
Profit for the period - - - - - - 10.8 10.8
Other comprehensive income - - - - 1.7 2.2 (0.2) 3.7
───── ───── ───── ───── ───── ───── ───── ─────
Total comprehensive income - - - - 1.7 2.2 10.6 14.5
Dividends - - - - - - (7.1) (7.1)
Equity-settled share-based payments - - - - - - 0.6 0.6
Purchase of own shares for cancellation or placement in treasury (0.1) - 0.1 - - - (12.6) (12.6)
Tax on items taken directly to equity - - - - - - (0.1) (0.1)
Issue of shares under the Sharesave Scheme - 0.1 - - - - - 0.1
───── ───── ───── ───── ───── ───── ───── ─────
At 30 September 2022 restated* 25.8 1.9 0.7 1.0 1.8 0.4 180.2 211.8
Profit for the period - - - - - - (9.5) (9.5)
Other comprehensive income - - - - (1.5) (1.7) 0.2 (3.0)
───── ───── ───── ───── ───── ───── ───── ─────
Total comprehensive income - - - - (1.5) (1.7) (9.3) (12.5)
Dividends - - - - - - (3.8) (3.8)
Equity-settled share-based payments - - - - - - 0.5 0.5
Purchase of own shares for cancellation or placement in treasury - - - - - - (11.4) (11.4)
───── ───── ───── ───── ───── ───── ───── ─────
At 31 March 2023 25.8 1.9 0.7 1.0 0.3 (1.3) 156.2 184.6
Profit for the period - - - - - - 4.2 4.2
Other comprehensive income - - - - 0.8 (0.1) - 0.7
───── ───── ───── ───── ───── ───── ───── ─────
Total comprehensive income - - - - 0.8 (0.1) 4.2 4.9
Dividends - - - - - - (8.2) (8.2)
Equity-settled share-based payments - - - - - - 0.6 0.6
───── ───── ───── ───── ───── ───── ───── ─────
At 30 September 2023 25.8 1.9 0.7 1.0 1.1 (1.4) 152.8 181.9
═════ ═════ ═════ ═════ ═════ ═════ ═════ ═════
*See note 19.
Interim condensed consolidated statement of cash flows
Six months ended Six months ended
30 September 30 September Year ended
2023 2022 31 March
2023
£m £m £m
Cash generated from operating activities
Profit before tax 5.6 13.2 1.8
Net financial expense 5.7 3.6 8.6
Amortisation 1.0 0.9 1.8
Depreciation 34.6 34.5 69.6
Share of profit from joint venture (1.9) (3.9) (6.6)
Termination of lease contracts (0.1) 0.1 (0.4)
Loss / (profit) on disposal of hire equipment 1.2 (0.8) (1.7)
Exceptional write-off 4 - - 20.4
Profit on disposal of non-hire equipment - (0.1) -
Decrease/(increase) in inventories* 0.2 (4.2) (4.6)
(Increase)/decrease in trade and other receivables* (1.3) (11.6) 1.5
(Decrease)/increase in trade and other payables* (2.1) 8.9 (3.5)
(Decrease)/increase in provisions (1.1) (1.0) 0.7
Equity-settled share-based payments 0.6 0.6 1.1
───── ───── ─────
Cash generated from operations before changes in hire fleet 42.4 40.2 88.7
Purchase of hire equipment (16.0) (25.1) (54.2)
Proceeds from planned sale of hire equipment* 2.0 2.4 6.3
Proceeds from customer loss/damage of hire equipment* 5.1 5.0 11.1
───── ───── ─────
Cash generated from operations 33.5 22.5 51.9
Interest paid (5.7) (4.6) (8.4)
Tax paid (2.3) (2.8) (3.1)
───── ───── ─────
Net cash flow from operating activities 25.5 15.1 40.4
───── ───── ─────
Cash flow used in investing activities
Purchase of non-hire property, plant and equipment (4.8) (3.9) (8.7)
Capital expenditure on IT development* (0.2) (0.4) (0.9)
Proceeds from sale of non-hire property, plant and equipment 0.1 0.6 0.6
Dividends and loan repayments from joint venture 2.7 2.3 5.6
───── ───── ─────
Net cash flow used in investing activities (2.2) (1.4) (3.4)
───── ───── ─────
Net cash flow before financing activities 23.3 13.7 37.0
───── ───── ─────
Cash flow from financing activities
Payments for the principal element of leases (12.7) (13.1) (26.5)
Drawdown of loans 263.2 295.2 595.6
Repayment of loans (264.4) (277.7) (572.3)
Proceeds from the issue of Sharesave Scheme shares - 0.1 0.1
Purchase of own shares for cancellation or placement in treasury - (12.6) (24.0)
Dividends paid (8.2) (7.1) (10.9)
───── ───── ─────
Net cash flow from financing activities (22.1) (15.2) (38.0)
───── ───── ─────
Increase/(decrease) in cash and cash equivalents 1.2 (1.5) (1.0)
Cash and cash equivalents at the start of the period (0.2) 0.9 0.8
───── ───── ─────
Cash and cash equivalents at the end of the period 1.0 (0.6) (0.2)
═════ ═════ ═════
Analysis of cash and cash equivalents
Cash 13 1.8 0.9 1.1
Bank overdraft 13 (0.8) (1.5) (1.3)
───── ───── ─────
1.0 (0.6) (0.2)
═════ ═════ ═════
*Prior period restated to present working capital movements separately, to
split proceeds from the disposal of hire equipment between planned and
customer loss/damage, and to separate capital expenditure on IT development
from other purchases of non-hire property, plant and equipment.
1 Accounting policies
Speedy Hire Plc is a public limited company listed on the London Stock
Exchange, incorporated and domiciled in the United Kingdom. The interim
condensed consolidated financial statements of the Company for the six months
ended 30 September 2023 comprise the Company and its subsidiaries (together
referred to as the 'Group').
The financial statements of the Group for the year ended 31 March 2023 are
available from the Company's registered office, or from the website:
www.speedyservices.com (http://www.speedyservices.com) .
Basis of preparation
These interim condensed consolidated financial statements have been prepared
under the historical cost convention, with the exception of certain financial
assets and liabilities (including derivative instruments) which are measured
at fair value through profit or loss.
The Directors consider the going concern basis of preparation for the Group
and Company to be appropriate for the following reasons.
The Group's £180m asset based finance facility was entered into in July 2021
on a three year tenure. On 26 May 2023 options for a further two one-year
extensions were exercised and the facility now terminates in July 2026. There
are no prior scheduled repayment requirements. The additional uncommitted
accordion of £220m remains in place through to July 2026. Cash and facility
headroom as at 30 September 2023 was £70.5m (31 March 2023: £83.5m) 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 covering at least 12 months from the date
on which these interim condensed consolidated financial statements were
authorised for issue, 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 current and
future market conditions on projected revenues and an assessment of the net
capital investment required to support those expected level of revenues.
The Board has considered severe but plausible downside scenarios to the base
case, which result in reduced levels of revenue across the Group, whilst also
maintaining a consistent 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 interim condensed consolidated financial
statements. Accordingly, they continue to adopt the going concern basis of
accounting in preparing the interim condensed consolidated financial
statements.
Statement of compliance
These interim condensed consolidated financial statements for the six months
ended 30 September 2023 have been prepared in accordance with the UK-adopted
International Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
The interim report does not include all of the notes of the type normally
included in an annual financial report. Accordingly, this report is to be read
in conjunction with the annual report for the year ended 31 March 2023, which
has been prepared in accordance with UK-adopted international accounting
standards and the requirements of the Companies Act 2006, and any public
announcements made by Speedy Hire Plc during the interim reporting period.
These interim condensed consolidated financial statements do not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 March 2023 were approved by the
board of directors on 30 June 2023 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was qualified in
respect of the Group's property, plant and equipment balance, however did not
contain any statement under section 498 of the Companies Act 2006.
These interim condensed consolidated financial statements have been reviewed,
not audited.
The interim report was approved by the Board of Directors on 21 November 2023.
Significant accounting policies
Other accounting policies
There have been no new standards or interpretations issued or endorsed by the
International Accounting Standards Board (IASB) or IFRIC since the date of the
FY2023 year end financial statements that materially impact the Group.
The accounting policies applied by the Group in these interim condensed
consolidated financial statements are the same as those applied by the Group
in its consolidated financial statements for the year ended 31 March 2023.
The carrying amount of goodwill is tested annually for impairment and, along
with other non-financial assets, at each reporting date to the extent that
there are any indicators of impairment. Due to the market capitalisation of
the Group at 30 September 2023 being below the consolidated net asset
position, a full impairment test has been undertaken at the interim reporting
date, detail on which can be found in note 10.
Seasonality
In addition to economic factors, revenue is subject to an element of seasonal
fluctuation. Whilst construction activity tends to increase in the summer
months, the equipment range helps to mitigate the impact, specifically with
heating, lighting and power generation products being more in demand during
the winter months. Overall, the Directors do not feel that these factors
have a material effect on the performance of the Group when comparing first
half results to those achieved in the second half.
2 Changes in estimates
The preparation of interim condensed consolidated financial statements
requires management to make judgements, estimates, and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these
estimates.
In preparing the interim condensed consolidated financial statements, the
significant judgements made by management in applying the Group's accounting
policies and key sources of estimation uncertainty for the consolidated
financial statements for the year ended 31 March 2023 continued to apply.
3 Segmental analysis
The segmental disclosure presented in these interim condensed consolidated
financial statements reflects the format of reports reviewed by the 'chief
operating decision-maker'. UK and Ireland business delivers asset
management, with tailored services and a continued commitment to relationship
management. Corporate items comprise certain central activities and costs
that are not directly related to the activity of the operating segment. 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
activity of the operating segment, together with net corporate borrowings and
taxation.
For the six months ended 30 September 2023
Hire excluding disposals Services UK and Ireland¹ Corporate items Total
£m £m £m £m £m
Revenue 125.6 80.9 208.5 - 208.5
Cost of sales (28.8) (65.1) (95.8) - (95.8)
───── ───── ───── ───── ─────
Gross Profit 96.8 15.8 112.7 - 112.7
═════ ═════ ═════ ═════ ═════
Segment result:
Adjusted EBITDA 47.0 (0.8) 46.2
Depreciation² (34.4) (0.2) (34.6)
Loss on disposal (1.2) - (1.2)
───── ───── ─────
Operating profit/(loss) before amortisation 11.4 (1.0) 10.4
Amortisation² (1.0) - (1.0)
───── ───── ─────
Operating profit/(loss) 10.4 (1.0) 9.4
Share of results of joint venture - 1.9 1.9
───── ───── ─────
Profit from operations 10.4 0.9 11.3
═════ ═════
Financial expense (5.7)
─────
Profit before tax 5.6
Taxation (1.4)
─────
Profit for the financial period 4.2
═════
Intangible assets² 18.8 5.3 24.1
Investment in joint venture - 8.4 8.4
Land and buildings 14.3 - 14.3
Hire equipment 200.1 - 200.1
Non-hire equipment 15.2 - 15.2
Right of use assets 83.4 - 83.4
Taxation assets - 1.2 1.2
Current assets 116.0 6.4 122.4
Cash - 1.8 1.8
───── ───── ─────
Total assets 447.8 23.1 470.9
═════ ═════ ═════
Lease liabilities (86.6) - (86.6)
Other liabilities (85.7) (17.8) (103.5)
Borrowings - (90.6) (90.6)
Taxation liabilities - (7.5) (7.5)
───── ───── ─────
Total liabilities (172.3) (115.9) (288.2)
═════ ═════ ═════
¹ UK and Ireland also includes revenue and costs relating to the disposal of
hire assets.
² Intangible assets in Corporate items relate to the Group's ERP system,
amortisation is charged to the UK and Ireland segment as this is fundamental
to the trading operations of the Group. Depreciation in Corporate items
relates to computers and is recharged from the UK and Ireland based on
proportional usage.
For the six months ended 30 September 2022 restated³
Hire excluding disposals Services UK and Ireland¹ Corporate items Total
£m £m £m £m £m
Revenue 127.1 85.3 214.8 - 214.8
Cost of sales (27.1) (69.5) (97.9) - (97.9)
───── ───── ───── ───── ─────
Gross Profit 100.0 15.8 116.9 - 116.9
═════ ═════ ═════ ═════ ═════
Segment result:
Adjusted EBITDA³ 48.9 (1.5) 47.4
Depreciation² (34.4) (0.1) (34.5)
Profit on disposal 0.9 - 0.9
───── ───── ─────
Operating profit/(loss) before amortisation 15.4 (1.6) 13.8
Amortisation² (0.9) - (0.9)
───── ───── ─────
Operating profit/(loss) 14.5 (1.6) 12.9
Share of results of joint venture - 3.9 3.9
───── ───── ─────
Profit from operations 14.5 2.3 16.8
═════ ═════
Financial expense (3.6)
─────
Profit before tax 13.2
Taxation (2.4)
─────
Profit for the financial period 10.8
═════
Intangible assets² 19.3 6.1 25.4
Investment in joint venture - 10.2 10.2
Land and buildings 13.9 - 13.9
Hire equipment 234.4 - 234.4
Non-hire equipment 16.3 - 16.3
Right of use assets³ 80.5 - 80.5
Taxation assets - 2.6 2.6
Current assets 124.4 7.1 131.5
Cash - 0.9 0.9
───── ───── ─────
Total assets 488.8 26.9 515.7
═════ ═════ ═════
Lease liabilities (82.7) - (82.7)
Other liabilities³ (116.8) (5.0) (121.8)
Borrowings - (87.6) (87.6)
Taxation liabilities - (11.8) (11.8)
───── ───── ─────
Total liabilities (199.5) (104.4) (303.9)
═════ ═════ ═════
¹ UK and Ireland also includes revenue and costs relating to the disposal of
hire assets.
² Intangible assets in Corporate items relate to the Group's ERP system,
amortisation is charged to the UK and Ireland segment as this is fundamental
to the trading operations of the Group. Depreciation in Corporate items
relates to computers and is recharged from the UK and Ireland based on
proportional usage.
³ See note 19.
For the year ended 31 March 2023 revised³
Hire excluding disposals Services UK and Ireland¹ Corporate Total
items
£m £m £m £m £m
Revenue 258.0 176.3 440.6 - 440.6
Cost of sales (54.8) (142.9) (201.2) - (201.2)
───── ───── ───── ───── ─────
Gross Profit 203.2 33.4 239.4 - 239.4
═════ ═════ ═════ ═════ ═════
Segment result:
Adjusted EBITDA³ 103.9 (1.9) 102.0
Depreciation² (69.3) (0.3) (69.6)
Profit on disposal 1.7 - 1.7
───── ───── ─────
Operating profit/(loss) before amortisation 36.3 (2.2) 34.1
Amortisation² (1.8) - (1.8)
Exceptional items (25.6) (2.9) (28.5)
───── ───── ─────
Operating profit/(loss) 8.9 (5.1) 3.8
Share of results of joint venture - 6.6 6.6
───── ───── ─────
Profit/(costs) from operations 8.9 1.5 10.4
═════ ═════
Financial expense (8.6)
─────
Profit before tax 1.8
Taxation (0.6)
─────
Profit for the financial year 1.2
═════
Intangible assets² 19.1 5.9 25.0
Investment in joint venture - 9.2 9.2
Land and buildings 13.9 - 13.9
Hire equipment 207.9 - 207.9
Non-hire equipment 15.9 - 15.9
Right of use assets 83.2 - 83.2
Taxation assets - 0.3 0.3
Current assets 115.2 4.7 119.9
Cash - 1.1 1.1
───── ───── ─────
Total assets 455.2 21.2 476.4
═════ ═════ ═════
Lease liabilities (86.1) - (86.1)
Other liabilities (98.5) (7.6) (106.1)
Borrowings - (92.2) (92.2)
Taxation liabilities - (7.4) (7.4)
───── ───── ─────
Total liabilities (184.6) (107.2) (291.8)
═════ ═════ ═════
¹ UK and Ireland also includes revenue and costs relating to the disposal of
hire assets.
² Intangible assets in Corporate items relate to the Group's ERP system,
amortisation is charged to the UK and Ireland segment as this is fundamental
to the trading operations of the Group. Depreciation in Corporate items
relates to computers and is recharged from the UK and Ireland based on
proportional usage.
³ See note 19.
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.
Six months ended Six months ended Year ended
30 September 2023 30 September 2022 31 March 2023
───────────── ───────────── ─────────────
Revenue Non-current Non-current Non-current
assets¹ Revenue assets¹ Revenue assets¹
£m £m £m £m £m £m
UK 205.0 336.5 210.0 370.4 431.8 345.3
Ireland 3.5 9.0 4.8 10.3 8.8 9.8
───── ───── ───── ───── ───── ─────
208.5 345.5 214.8 380.7 440.6 355.1
═════ ═════ ═════ ═════ ═════ ═════
( )
¹ Non-current assets excluding financial instruments and deferred tax assets.
² See note 19. Non-current assets as at 30 September 2022 restated for a
prior period adjustment to dilapidations.
Revenue by type
Revenue is attributed to the following activities:
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
Hire and related activities 125.6 127.1 258.0
Services 80.9 85.3 176.3
Disposals 2.0 2.4 6.3
───── ───── ─────
208.5 214.8 440.6
═════ ═════ ═════
Major customer
No one customer represents more than 10% of revenue, reported profit or
combined assets of all reporting segments.
4 Exceptional items
Six months Six months Year
ended ended ended
30 September 2023 30 September 2022 31 March
2023
£m £m £m
Asset write-off - - 20.4
Other professional and support costs - - 1.4
Restructuring costs - - 6.7
───── ───── ─────
- - 28.5
═════ ═════ ═════
There were no exceptional items for the six months ended 30 September 2023 nor
the six months ended 30 September 2022.
The following exceptional items occurred in H2 FY2023:
Asset write-off
During FY2023, the Group undertook a comprehensive count of all hire
equipment. As at 31 March 2022, the reported net book value of the Group's
hire equipment assets was £226.9m. The Company categorises hire equipment
into two groups: those that are individually identifiable by a unique serial
number to the asset register ("itemised assets", representing 78%, or
£177.0m, of the total reported net book value at 31 March 2022), and other
equipment such as scaffolding towers, fencing and non-mechanical plant which
does not have a unique serial identifier and is not tracked on an individual
asset basis ("non-itemised assets", representing 22%, or £49.9m, of the total
reported net book value at 31 March 2022). The comprehensive count covered
both itemised and non-itemised assets. Whilst this count validated the
previously disclosed net book value of itemised assets, it identified a
shortfall in the quantity of non-itemised assets, resulting in a write-off of
c.£20.4m in FY2023.
Other professional and support costs
The Board commissioned an external investigation into the issue identified
with non-itemised assets, including a review of controls and accounting
procedures. The Group has strengthened the control environment for managing
its non-itemised asset fleet, including additional counts, increased internal
audit focus, enhanced control over purchases and disposals, and new procedures
for reconciliation to the fixed asset register, which also incorporate
recommendations from the investigation. The associated professional and
support fees amounted to £1.4m, which are also presented within exceptional
items. These fees include a further £310k of auditor remuneration,
specifically in relation to increased work over assets, including additional
auditor attendance at asset counts across the business.
Restructuring
An operational efficiency review resulted in restructuring costs and a net
depot reduction at the end of March 2023. The cost of these closures and other
restructuring costs across the business were £6.7m.
5 Financial expense
Six months Six months Year
ended ended ended
30 September 2023 30 September 2022 31 March
2023
£m £m £m
Interest on bank loans and overdrafts 3.6 1.7 4.4
Amortisation of issue costs 0.3 0.4 0.7
───── ───── ─────
Total interest on borrowings 3.9 2.1 5.1
Interest on lease liabilities 2.3 1.6 3.5
Other finance income (0.5) (0.1) -
───── ───── ─────
5.7 3.6 8.6
═════ ═════ ═════
6 Taxation
The corporation tax charge for the six months ended 30 September 2023 is based
on an estimated full year effective rate of taxation of 25.0% before
exceptional items and amortisation (2022: 17.2% restated*) and 24.4% (2022:
18.2%) after exceptional items and amortisation. This has been calculated by
reference to the projected charge for the full year ending 31 March 2024,
applying the applicable UK corporation tax rate of 25% (2022: 19%). Deferred
tax is provided using the tax rates that are expected to apply to the period
in which the liability is settled, based on the tax rates that have been
substantively enacted at the balance sheet date.
*See note 19.
7 Earnings per share
The calculation of basic earnings per share is based on the earnings
attributable to equity holders of the Company of £4.2m (2022: £10.8m) and
the weighted average number of 5 pence ordinary shares in issue and is
calculated as follows:
Six months ended Six months
30 September ended Year ended
2023 30 September 31 March
2022 2023
Weighted average number of shares in issue (m)
Number of shares at the beginning of the period 457.7 513.6 514.0
Exercise of share options - - 0.2
Movement in shares owned by the Employee Benefit Trust - 0.1 -
Vested shared not yet exercised 2.1 - 2.7
Shares repurchased and subsequently cancelled - (7.4) (28.9)
───── ───── ─────
Weighted average for the period - basic number of shares 459.8 506.3 488.0
Share options 2.9 6.4 3.5
Employee share schemes - 8.4 0.2
───── ───── ─────
Weighted average for the period - diluted number of shares 462.7 521.1 491.7
═════ ═════ ═════
Profit (£m)
Profit for the period after tax - basic and diluted earnings 4.2 10.8 1.2
Intangible amortisation charge (after tax) 0.3 0.7 1.8
Exceptional items (after tax) - - 22.6
───── ───── ─────
Adjusted earnings (after tax) 4.5 11.5 25.6
═════ ═════ ═════
Earnings per share (pence)
Basic earnings per share 0.91 2.13 0.25
Dilutive shares and options - (0.06) (0.01)
───── ───── ─────
Diluted earnings per share 0.91 2.07 0.24
═════ ═════ ═════
Adjusted earnings per share (from continuing operations)¹ 0.98 2.19 4.96
Dilutive shares and options (0.01) (0.06) (0.04)
───── ───── ─────
Adjusted diluted earnings per share¹ 0.97 2.13 4.92
═════ ═════ ═════
¹ Prior periods revised, see note 19.
The total number of shares outstanding at 30 September 2023 amounted to
516,983,637 (30 September 2022: 490,449,192), including 4,106,820 (30
September 2022: 4,215,142) shares held in the Employee Benefit Trust, which
are excluded in calculating the earnings per share.
8 Dividends
The aggregate amount of dividend comprises:
Six months ended Six months
30 September ended Year ended
2023 30 September 31 March
2022 2023
£m £m £m
2022 final dividend (1.45 pence on 489.5m ordinary shares) - 7.1 7.1
2023 interim dividend (0.80 pence on 474.7m ordinary shares) - - 3.8
2023 final dividend (1.80 pence on 452.9m ordinary shares) 8.2 - -
───── ───── ─────
8.2 7.1 10.9
═════ ═════ ═════
Subsequent to the end of the period, the Directors have declared a 0.80 pence
per share interim dividend payable (2023 interim dividend: 0.80 pence per
share).
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. The
measures on a continuing basis are as follows.
Six months ended Six months ended
30 September 30 September Year ended
2023 2022 31 March
2023
£m £m £m
Operating profit 9.4 12.9 3.8
Add back: amortisation 1.0 0.9 1.8
Add back: exceptional items - - 28.5
───── ───── ─────
Adjusted operating profit 10.4 13.8 34.1
Add back: depreciation 34.6 34.5 69.6
Add back: profit or loss on disposal of hire and non-hire equipment¹ 1.2 (0.9) (1.7)
───── ───── ─────
Adjusted EBITDA 46.2 47.4 102.0
═════ ═════ ═════
Profit before tax 5.6 13.2 1.8
Add back: amortisation of acquired intangibles² 0.3 0.2 0.4
Add back: exceptional items - - 28.5
───── ───── ─────
Adjusted profit before tax 5.9 13.4 30.7
═════ ═════ ═════
Return on capital employed (ROCE)
Adjusted profit before tax 5.9 13.4 30.7
Interest 5.7 3.6 8.6
───── ───── ─────
Profit before tax, interest, amortisation and exceptional items 11.6 17.0 39.3
Profit for the six months prior 22.3 17.9 -
───── ───── ─────
Annualised profit before tax, interest, amortisation and exceptional items³ 33.9 34.9 39.3
Average gross capital employed⁴ 285.0 279.7 280.5
ROCE 11.9% 12.5% 14.0%
( )
¹ See note 19. Prior periods revised to add profit or loss on disposal of
hire and non-hire equipment in the calculation of adjusted EBITDA.
² See note 19. Prior periods revised to add back only acquired intangible
amortisation in the calculation of adjusted profit.
³ Profit before tax, interest, amortisation and exceptional items for the
last 12 months.
⁴ Average gross capital employed (where capital employed equals
shareholders' funds and net debt) based on a two-point average for the last 12
months.
10 Intangible assets
Internally generated
Acquired
Goodwill Customer lists Brands Total acquired intangibles IT development Total intangible assets
£m £m £m £m £m £m
Cost
At 1 April 2022 restated* 29.9 8.3 2.6 40.8 6.9 47.7
Additions - - - - 0.4 0.4
───── ───── ───── ───── ───── ─────
At 30 September 2022 restated* 29.9 8.3 2.6 40.8 7.3 48.1
Additions - - - - 0.5 0.5
Disposals (12.4) (5.4) (1.3) (19.1) - (19.1)
───── ───── ───── ───── ───── ─────
At 31 March 2023 17.5 2.9 1.3 21.7 7.8 29.5
Additions - - - - 0.1 0.1
───── ───── ───── ───── ───── ─────
At 30 September 2023 17.5 2.9 1.3 21.7 7.9 29.6
═════ ═════ ═════ ═════ ═════ ═════
Accumulated amortisation
At 1 April 2022 restated* 12.4 6.8 2.1 21.3 0.5 21.8
Charged in period - 0.2 - 0.2 0.7 0.9
───── ───── ───── ───── ───── ─────
At 30 September 2022 restated* 12.4 7.0 2.1 21.5 1.2 22.7
Charged in period - 0.1 0.1 0.2 0.7 0.9
Disposals (12.4) (5.4) (1.3) (19.1) - (19.1)
───── ───── ───── ───── ───── ─────
At 31 March 2023 - 1.7 0.9 2.6 1.9 4.5
Charged in period - 0.2 0.1 0.3 0.7 1.0
───── ───── ───── ───── ───── ─────
At 30 September 2023 - 1.9 1.0 2.9 2.6 5.5
═════ ═════ ═════ ═════ ═════ ═════
Net book value
At 30 September 2023 17.5 1.0 0.3 18.8 5.3 24.1
═════ ═════ ═════ ═════ ═════ ═════
At 31 March 2023 17.5 1.2 0.4 19.1 5.9 25.0
═════ ═════ ═════ ═════ ═════ ═════
At 30 September 2022 17.5 1.3 0.5 19.3 6.1 25.4
═════ ═════ ═════ ═════ ═════ ═════
*Prior years restated to eliminate items with nil net book value.
Analysis of goodwill, customer lists, brands and IT development by cash
generating unit:
Goodwill Customer Brands IT development Total
lists
£m £m £m £m £m
Allocated to
Hire 16.5 0.4 0.2 4.6 21.7
Services 1.0 0.6 0.1 0.7 2.4
───── ───── ───── ───── ─────
At 30 September 2023 17.5 1.0 0.3 5.3 24.1
═════ ═════ ═════ ═════ ═════
Allocated to
Hire 16.5 0.5 0.3 5.4 22.7
Services 1.0 0.7 0.1 0.5 2.3
───── ───── ───── ───── ─────
At 31 March 2023 17.5 1.2 0.4 5.9 25.0
═════ ═════ ═════ ═════ ═════
All goodwill has arisen from business combinations and has been allocated to
the cash-generating unit (CGU) 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. All
intangible assets are held in the UK.
The Group tests goodwill for impairment annually, however consideration is
made at each reporting date whether there are indicators that impairment may
have occurred, with additional impairment tests performed as necessary. Other
assets are assessed at each reporting date for any indicators of impairment
and tested if an indicator is identified. The Group's reportable CGUs comprise
the UK&I Hire business (Hire) and UK&I Services business (Services),
representing the lowest level within the Group at which the associated assets
are monitored for management purposes.
It is noted that the market capitalisation of the Group at 30 September 2023
was below the consolidated net asset position - one indicator that an
impairment may exist. Based on the full impairment test performed, it is
determined that no impairment is required in this regard. At 30 September
2023, the headroom between value in use and carrying value of related assets
for the UK and Ireland was £101.1m (31 March 2023: £99.2m) - £48.6m for
Hire and £52.6m for Services.
The recoverable amounts of the assets allocated to the 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 Board approved FY24 budget, and a subsequent four-year period using
the Group's strategic plan, together with a terminal value into perpetuity
using long-term growth rates. The resulting forecast cash flows are discounted
back to present value, using an estimate of the Group's pre-tax weighted
average cost of capital, adjusted for risk factors associated with the CGUs
and market-specific risks.
The impairment model is prepared in nominal terms. The future cash flows are
based on current price terms inflated into future values, using general
inflation and any known cost or sales initiatives. The discount rate is
calculated in nominal terms, using market and published rates. The pre-tax
discount rates and terminal growth rates applied are as follows:
30 September 2023 31 March 2023
──────────────────────── ──────────────────────────
Pre-tax Terminal value Pre-tax Terminal value
discount rate growth rate discount rate growth rate
UK and Ireland 12.0% 2.5% 12.0% 2.5%
A single discount rate is applied to both CGUs as they operate in the same
market, with access to the same shared Group financing facility, with no
additional specific risks applicable to either CGU.
Impairment calculations are sensitive to changes in key assumptions of revenue
growth and discount rate. The table below shows the reduction in headroom
created by a change in assumptions:
Reduction in headroom at 30 September 2023 (£m)
──────────────────────── ──────────────────────────
Revenue growth - 1% decrease Pre-tax discount rate - 0.5% increase
Hire 31.0 19.3
Services 4.7 3.2
There are no reasonable variations in these assumptions that would be
sufficient to result in an impairment of either CGU at 30 September 2023. A 2%
decline in forecast revenue cash flows for Hire and an 11% decline in forecast
revenue cash flows for Services would reduce headroom to nil for each CGU
respectively, assuming no cost mitigation plans. The position will be
reassessed at the next reporting date.
11 Property, plant and equipment
Land and Hire
buildings equipment Other Total
£m £m £m £m
Cost
At 1 April 2022 reported 53.2 422.7 91.7 567.6
Foreign exchange 0.1 1.0 0.3 1.4
Additions 0.8 30.5 3.1 34.4
Disposals (0.5) (12.1) (0.2) (12.8)
Transfers to inventory - (9.0) - (9.0)
───── ───── ───── ─────
At 30 September 2022 53.6 433.1 94.9 581.6
Foreign exchange (0.1) (1.1) (0.3) (1.5)
Additions 2.5 21.6 2.4 26.5
Disposals¹ (1.5) (10.1) (0.4) (12.0)
Exceptional write-off² - (33.0) - (33.0)
Transfers to inventory - (14.6) - (14.6)
───── ───── ───── ─────
At 31 March 2023 restated¹ 54.5 395.9 96.6 547.0
Foreign exchange - (0.2) - (0.2)
Additions 2.4 17.6 2.4 22.4
Disposals (1.1) (22.9) (4.4) (28.4)
Transfers to inventory - (9.0) - (9.0)
───── ───── ───── ─────
At 30 September 2023 55.8 381.4 94.6 531.8
═════ ═════ ═════ ═════
Accumulated depreciation
At 1 April 2022 37.6 195.8 76.5 309.9
Foreign exchange 0.1 0.5 - 0.6
Charged in period 2.2 16.9 2.1 21.2
Disposals (0.2) (7.7) - (7.9)
Transfers to inventory - (6.8) - (6.8)
───── ───── ───── ─────
At 30 September 2022 39.7 198.7 78.6 317.0
Foreign exchange (0.1) (0.3) - (0.4)
Charged in period 2.2 17.0 2.6 21.8
Disposals¹ (1.2) (4.2) (0.5) (5.9)
Exceptional write-off² - (12.6) - (12.6)
Transfers to inventory - (10.6) - (10.6)
───── ───── ───── ─────
At 31 March 2023 restated¹ 40.6 188.0 80.7 309.3
Charged in period 2.1 16.8 2.8 21.7
Disposals (1.2) (16.7) (4.1) (22.0)
Transfers to inventory - (6.8) - (6.8)
───── ───── ───── ─────
At 30 September 2023 41.5 181.3 79.4 302.2
═════ ═════ ═════ ═════
Net book value
At 30 September 2023 14.3 200.1 15.2 229.6
═════ ═════ ═════ ═════
At 31 March 2023 13.9 207.9 15.9 237.7
═════ ═════ ═════ ═════
At 30 September 2022 13.9 234.4 16.3 264.6
═════ ═════ ═════ ═════
( )
¹ Disposals in the six months to 31 March 2023 incorrectly included an
element of the Exceptional write-off. This has been restated to correctly
present cost and accumulated depreciation.
² See note 4.
The net book value of land and buildings is made up of improvements to short
leasehold properties.
Of the £200.1m (2022: 234.4m) net book value of hire equipment, £29.8m
(2022: £55.0m) relates to non-itemised assets.
The net book value of other - non-hire equipment - comprises fixtures,
fittings, office equipment and IT equipment. Software with a net book value of
£7.3m (2022: £7.1m) is also included in other property, plant and
equipment.
12 Right of use assets
Land and
buildings Other Total
£m £m £m
Cost
At 1 April 2022 restated* 144.4 55.6 200.0
Additions 1.9 15.3 17.2
Remeasurements 1.7 2.5 4.2
Disposals (2.3) (11.4) (13.7)
───── ───── ─────
At 30 September 2022 restated* 145.7 62.0 207.7
Additions 0.2 12.8 13.0
Remeasurements 2.4 1.0 3.4
Disposals (3.0) (11.0) (14.0)
───── ───── ─────
At 31 March 2023 145.3 64.8 210.1
Additions 1.0 3.9 4.9
Remeasurements 8.9 0.5 9.4
Disposals (5.4) (8.0) (13.4)
───── ───── ─────
At 30 September 2023 149.8 61.2 211.0
═════ ═════ ═════
Depreciation
At 1 April 2022 92.3 33.5 125.8
Charged in period 6.8 6.5 13.3
Disposals (1.9) (10.0) (11.9)
───── ───── ─────
At 30 September 2022 97.2 30.0 127.2
Charged in period 6.3 7.0 13.3
Disposals (3.2) (10.4) (13.6)
───── ───── ─────
At 31 March 2023 100.3 26.6 126.9
Charged in period 6.2 6.7 12.9
Disposals (4.2) (8.0) (12.2)
───── ───── ─────
At 30 September 2023 102.3 25.3 127.6
═════ ═════ ═════
Net book value
At 30 September 2023 47.5 35.9 83.4
═════ ═════ ═════
At 31 March 2023 45.0 38.2 83.2
═════ ═════ ═════
At 30 September 2022 48.5 32.0 80.5
═════ ═════ ═════
* See note 19.
Land and buildings leases comprise depots and associated ancillary leases such
as car parks and yards.
Other leases consist of cars, lorries, vans and forklifts.
13 Borrowings
30 September 30 September 31 March
2023 2022 2023
£m £m £m
Current borrowings
Bank overdraft 0.8 1.5 1.3
Lease liabilities* 20.0 20.4 22.1
───── ───── ─────
20.8 21.9 23.4
Non-current borrowings
Maturing between two and five years
- Asset based finance facility 90.6 86.1 92.2
- Lease liabilities* 66.6 62.3 64.0
───── ───── ─────
157.2 148.4 156.2
Total borrowings 178.0 170.3 179.6
Less: Cash (1.8) (0.9) (1.1)
Exclude lease liabilities* (86.6) (82.7) (86.1)
───── ───── ─────
Net debt¹ 89.6 86.7 92.4
═════ ═════ ═════
¹ Key performance indicator - excluding lease liabilities.
* See note 19.
Reconciliation of financing liabilities and net debt
Non-cash movement 30 September
1 April 2023 Cash flow 2023
£m £m £m £m
Bank borrowings (92.2) 0.3 1.3 (90.6)
Lease liabilities (86.1) 9.9 (10.4) (86.6)
───── ───── ───── ─────
Liabilities arising from financing activities (178.3) 10.2 (9.1) (177.2)
Cash at bank and in hand 1.1 - 0.7 1.8
Bank overdraft (1.3) - 0.5 (0.8)
───── ───── ───── ─────
Net debt (178.5) 10.2 (7.9) (176.2)
═════ ═════ ═════ ═════
The Group has a £180m asset based finance facility, which was renewed in July
2021, which is sub divided into:
(a) A secured overdraft facility 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 itemised hire equipment and trade receivables balance. Cash and
facility headroom as at 30 September 2023 was £70.5m (31 March 2023: £83.5m)
based on the Group's eligible hire equipment and trade receivables.
The facility is for £180m, reduced to the extent that any ancillary
facilities are provided, and is repayable in July 2026, with no prior
scheduled repayment requirements. An additional uncommitted accordion of
£220m is in place.
Interest on the facility is now calculated by reference to SONIA (previously
LIBOR) applicable to the period drawn, plus a margin of 155 to 255 basis
points, depending on leverage and on the components of the borrowing base.
During the period, the effective margin was 1.89% (2022: 1.80%).
The facility is secured by fixed and floating charges over the Group's
itemised hire fleet assets and trade receivables.
The facility has a Minimum Excess Availability covenant: At any time, 10 per
cent of the Total Commitments.
Where availability falls below the Minimum Excess Availability, the financial
covenants (below) are required to be tested. Covenants are not required to be
tested where availability is above Minimum Excess Availability.
Leverage in respect of any Relevant Period shall be
less than or equal to 3:1;
Fixed Charge Cover in respect of any Relevant Period
shall be greater than or equal to 2.1:1
14 Fair value measurement of financial instruments
The Group holds and uses financial instruments to finance its operations and
to manage its interest rate and liquidity risks.
Fair value hierarchy
The Group's financial assets and liabilities are principally short-term in
nature and therefore their fair value is not materially different from their
carrying value. The valuation method for the Group's financial assets and
liabilities can be defined as follows in accordance with IFRS 13:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3: Techniques which use inputs that have a significant effect on the
recorded fair value that are not based on observable market data.
Basis for determining fair values
The following summarises the principal methods and assumptions used in
estimating the fair value of Group's financial instruments, in line with the
fair value hierarchy above:
a) Derivatives - Broker quotes are used for all interest rate swaps and
fuel hedges (Level 1).
b) Interest-bearing loans and borrowings - Fair value is calculated based
on discounted expected future principal and interest cash flows at a market
rate of interest (Level 2).
c) Trade and other receivables and payables - For receivables and payables
with a remaining life of less than one year, the notional amount is deemed to
reflect the fair value. All other receivables and payables are discounted to
determine the fair value.
d) Lease liabilities - not within the scope of IFRS 13; accounted for in
accordance with IFRS 16.
Fair value of financial assets and liabilities
The carrying value of the Group's financial assets and financial liabilities
at 30 September 2023 are set out below:
Fair value through other comprehensive income
Amortised
Cost Total
£m £m £m
Financial assets
Trade and other receivables¹ 97.8 - 97.8
Cash² 1.8 - 1.8
Derivative financial assets - 1.5 1.5
───── ───── ─────
99.6 1.5 101.1
═════ ═════ ═════
Financial liabilities
Bank overdraft² (0.8) - (0.8)
Borrowings² (90.6) - (90.6)
Lease liabilities - Current (20.0) - (20.0)
Lease liabilities - Non-current (66.6) - (66.6)
Trade and other payables³ (42.9) - (42.9)
Accruals (23.7) - (23.7)
Customer rebates (12.6) - (12.6)
───── ───── ─────
(257.2) - (257.2)
═════ ═════ ═════
¹ Trade and other receivables excluding prepayments and accrued income
² Under the terms of the Group's banking facilities, net indebtedness is
permitted up to the net limit of £5m. There have been no changes to the
offsetting arrangements in the six months ending 30 September 2023.
³ Trade and other payables excluding non-financial liabilities.
Impairment reviews did not identify any material impairment of financial
assets from carrying values as reported at the balance sheet date and, as
such, no material impairments are included in the interim condensed
consolidated statement of profit or loss.
15 Contingent liabilities
In the normal course of business, the Company has given parental guarantees in
support of the contractual obligations of Group companies on both a joint and
a several basis.
The Directors do not consider any provision is necessary in respect of the
guarantees.
16 Related party disclosures
There has been no significant change to the nature and size of related party
transactions, including the remuneration provided to the key management, from
that disclosed in the FY2023 Annual Report.
17 Principal risks and uncertainties
The principal risks and uncertainties which could have a material impact upon
the Group's performance over the remaining six months of the 2024 financial
year have not changed from those set out on pages 76 to 82 of the Group's 2023
Annual Report, which is available at www.speedyservices.com
(http://www.speedyservices.com) . These risks and uncertainties include the
following:
· Safety, health and environment;
· Service;
· Sustainability and climate change;
· Revenue and trading performance;
· Project and change management;
· People;
· Partner and supplier service levels;
· Operating costs;
· Cyber security and data integrity;
· Funding;
· Economic vulnerability;
· Business continuity; and
· Asset holding and integrity.
18 Post balance sheet events
On 9 October 2023, the Group acquired the entire issued share capital of
sustainable power solutions specialist, Green Power Hire Limited ("GPH"), for
an enterprise value of £20.2m. The total consideration, which was funded from
the Group's existing debt facilities, represented £10m of equity value and
assumed debt of £10.2m which was settled at completion. Speedy acquired GPH
from its principal shareholder, Russell's (Kirbymoorside) Limited, and four
other shareholders.
On 15 November 2023, Speedy and AFC Energy plc (AIM: AFC) ("AFC Energy"), a
leading provider of hydrogen powered generator technologies, announced the
launch of Speedy Hydrogen Solutions Limited ("SHS"), a 50:50 joint venture
company, being a dedicated hydrogen powered generator plant hire business
promoting sustainable, zero emission, temporary power solutions designed
specifically for the off-grid generation market. AFC and Speedy have agreed to
initially jointly fund SHS up to £2.5m each, subject to JV performance,
through initial equity subscriptions and subsequent shareholder loans.
19 Prior period adjustment
The Group has previously recognised dilapidation provisions upon exit - or
notification of exit - of a leased property, together with an ongoing
assessment of property conditions. At 31 March 2023, this was reviewed to
assess a more comprehensive view of the future liability on all leases in line
with accounting standards, and a change made to prior years.
Dilapidations are now assessed at the earliest point, being the start of the
lease or due to an obligating event. This has been corrected by restating each
of the affected financial statement line items in the balance sheet as at 1
April 2022, in line with IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors. There is no impact on the amounts recognised in the
income statement.
A summary of the affected accounts and the restatements made as at 30
September 2022 is as follows:
Reported Adjustment Restated
£m £m £m
Non-Current Assets:
Right of use asset 79.6 0.9 80.5
Current liabilities:
Provisions (2.1) (5.1) (7.2)
Non-current liabilities:
Provisions (0.9) (5.8) (6.7)
Net assets 221.8 (10.0) 211.8
Equity:
Retained earnings as at 1 April 2022 198.8 (10.0) 188.8
Retained earnings as at 30 September 2022 190.2 (10.0) 180.2
═════ ═════ ═════
In addition to this, the presentation of the restated provision at 31 March
2023, between current and non-current liabilities, has been reassessed.
Provisions have been classified as current where the end of the lease term is
within 12 months of the balance sheet date. A summary of the affected accounts
and the restatements made as at 31 March 2023 is as follows:
Reported Adjustment Restated
£m £m £m
Current liabilities:
Provisions (3.6) (5.7) (9.3)
Non-current liabilities:
Provisions (12.0) 5.7 (6.3)
Net assets 184.6 - 184.6
The definition of adjusted profit has been amended to profit before tax,
amortisation of acquired intangible assets and exceptional items. This is a
change from all intangible asset amortisation having been previously added
back in the calculation of adjusted profit. Prior period comparatives have
been revised for both the six months ended 30 September 2022 (from £14.1m to
£13.4m) and the year ended 31 March 2023 (from £32.1m to £30.7m) for
consistency.
The definition of adjusted EBITDA has been amended to operating profit before
depreciation, amortisation and exceptional items, where depreciation includes
the net book value of hire and non-hire equipment disposals, less the proceeds
on those disposals (profit or loss on disposal). Adjusted EBITDA has been
revised for both the six months ended 30 September 2022 (from £48.3m to
£47.4m) and the year ended 31 March 2023 (from £103.7m to £102.0m) for
consistency.
Both these measures have been revised to more accurately reflect the
underlying performance of the business.
Statement of directors' responsibilities
The directors confirm that these interim condensed consolidated financial
statements have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority and that the interim management report includes a fair
review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
• an indication of important events that have occurred during the first
six months and their impact on the condensed set of financial statements, and
a description of the principal risks and uncertainties for the remaining six
months of the financial year; and
• material related-party transactions in the first six months and any
material changes in the related-party transactions described in the last
annual report.
The maintenance and integrity of the Speedy Hire Plc website is the
responsibility of the directors; the work carried out by the authors does not
involve consideration of these matters and, accordingly, the auditors accept
no responsibility for any changes that might have occurred to the interim
financial statements since they were initially presented on the website.
The directors of Speedy Hire Plc are listed in the Speedy Hire Plc annual
report for 31 March 2023, with the exception of the following change in the
period:
· Paul Rayner (appointed 1 July 2023)
A list of current directors is maintained on the Speedy Hire Plc's website:
www.speedyservices.com
Dan Evans
Director
21 November 2023
Independent Review Report to Speedy Hire Plc
Report on the interim condensed consolidated financial statements
Qualified conclusion
We have reviewed Speedy Hire plc's condensed consolidated interim financial
statements (the "interim financial statements") in the FY2024 Interim results
of Speedy Hire plc for the 6 month period ended 30 September 2023 (the
"period").
Except for any adjustments to the interim financial statements that we might
have become aware of had it not been for the situation described in the Basis
for qualified conclusion paragraph below, based on our review, nothing has
come to our attention that causes us to believe that the interim financial
statements are not prepared, in all material respects, in accordance with UK
adopted International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
● the Interim condensed consolidated balance sheet as at
30 September 2023;
● the Interim condensed consolidated income statement and Interim condensed
consolidated statement of comprehensive income for the period then ended;
● the Interim condensed consolidated statement of cash flows for the
period then ended;
● the Interim condensed consolidated statement of changes in equity
for the period then ended; and
● the explanatory notes to the interim financial statements.
The interim financial statements included in the FY2024 Interim results of
Speedy Hire plc have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Basis for qualified conclusion
The Group had Property, plant and equipment of £237.7m recorded on the
balance sheet as at 31 March 2023 and recorded an exceptional asset write-down
of £20.4m in the FY23 annual financial statements relating to hire assets
that could not be located. As a result of weaknesses in the Group's historical
record-keeping, we were unable to satisfactorily complete our testing of
assets between physical asset counts and the Group's asset registers as at 31
March 2023. Consequently, we were unable to obtain sufficient appropriate
audit evidence in respect of these assets, and we were therefore unable to
determine whether any further adjustments were necessary to Property, plant
and equipment as at 31 March 2023, and the related asset write-down,
depreciation charges and any associated tax impact recorded in the year. Due
to the nature of our review procedures, which are substantially less than
those that would be performed in an audit, we have been unable to determine if
the weaknesses in the Group's historical record-keeping described above have
been remediated as at 30 September 2023. Consequently, we were unable to
determine whether any further adjustments were necessary to Property, plant
and equipment as at 30 September 2023, deprecation and any associated tax
impact recorded in the period.
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the FY2024 Interim results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for qualified conclusion section of this
report, nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The FY2024 Interim results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the FY2024 Interim results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the FY2024 Interim results,
including the interim financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the FY2024 Interim results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
qualified conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the company for the purpose of
complying with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in
writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Manchester
21 November 2023
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