REG - Speedy Hire PLC - Unaudited results for the year ended 31 March 2023
22/06/2023 07:00
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RNS Number : 5726D Speedy Hire PLC 22 June 2023
Speedy Hire Plc
("Speedy", "the Company" or "the Group")
22 June 2023
Unaudited results for the year ended 31 March 2023
Strong foundations, launching our new growth strategy, Velocity
Speedy Hire Plc, the UK and Ireland's leading provider of tools, specialist
equipment and services, announces its unaudited preliminary results for the
year ended 31 March 2023.
Statutory results
Year ended Year ended Change
31 March 2023 31 March 2022 %
(£m) (£m)
Revenue 440.6 386.8 13.9
Operating profit 3.8 31.6 (88.0)
Profit before tax 1.8 29.1 (93.8)
Basic earnings per share (pence) 0.25 4.13 (93.9)
Underlying results
Year ended Year ended Change
31 March 2023 31 March 2022 %
(£m) (£m)
Revenue (excluding disposals)(0) 434.3 381.7 13.8
EBITDA(1) 103.7 99.3 4.4
Adjusted profit before tax(1) 32.1 30.1 6.6
Adjusted earnings per share (pence)(2) 5.25 4.24 23.8
Other measures
Year ended Year ended Change
31 March 2023 31 March 2022
(£m) (£m)
Free cash in/(out) flow(3) 10.6 (18.5) £29.1m
Net debt(4) 92.4 67.5 £24.9m
Return on Capital Employed(5) 14.5% 13.6% 0.9pp
Dividend for the year (pence per share) 2.60 2.20 18.2%
Highlights
Financial highlights
· Strong revenue growth of 13.9%
o Record year in Customer Solutions (previously branded Partnered Services)
· Adjusted profit before tax up 6.6% and adjusted earnings per
share up 23.8%
· Profit before tax of £1.8m significantly impacted by the £20.4m
asset write off in the year, resulting in basic EPS of 0.25pps
· Significant free cash flow of £10.6m (FY2022: outflow of
£18.5m) driven by improved working capital management
· Net debt at £92.4m after spending £24m in year completing the
share buyback, leverage(6) of 1.3x
Operational highlights
· New five year transformation and growth strategy 'Velocity'
launched with clear focus on revenue growth and margin improvement
· Trade and retail opportunity enhanced through new arrangements
with B&Q
· Target to be net zero business by 2040, 10 years before the
government target
Outlook
· Recent key contract wins and extensions, as well as strong
pipeline, gives confidence in meeting our expectations for the coming year
· We remain vigilant to the continuing challenges of the
macro-economic climate
· Capital Markets Event to be held on 11 July 2023 at Speedy's
Innovation Centre in Milton Keynes
Commenting on the results Dan Evans, Chief Executive, said:
"I am pleased to report results that reflect the strong performance we have
achieved this year. We are excited about executing on our new growth strategy,
Velocity, which provides clear direction for the business and we expect it to
deliver long term benefits to our customers, our people and our investors. We
have made an encouraging start to FY2024 with a strong pipeline of new
customer and project based opportunities."
Enquiries:
Speedy Hire
Plc
Tel: 01942 720 000
Dan Evans, Chief Executive
Paul Rayner, Chief Financial Officer
MHP
Tel: 0203 128 8540
Oliver Hughes
Charlie Barker
Notes:
Explanatory notes:
(0) See note 2
(1) See note 9
(2) See note 7
(3) Free cash flow: net cash flow before movement in loan balances and returns
to shareholders
(4) See note 13
(5) Return on Capital Employed: Profit before tax, interest, 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.
See note 9
(6) Leverage: Net debt(3) covered by EBITDA(1). This metric excludes the
impact of IFRS 16.
(7) Before exceptional items (see note 4)
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 and equipment hire services to a wide range of customers in the
construction, infrastructure, industrial, and support services markets, as
well as to local trade, and retail. 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.
Chairman's statement
Overview
The results we are reporting today demonstrate the strength and resilience of
our business model in generating year on year profitable growth during what
has been a challenging time for the UK economy. We continue to maintain a
strong balance sheet, we have invested significantly in innovative, market
leading sustainable products and have concluded a £30 million share buyback
programme launched in the prior year. Since his appointment on 1 October our
new CEO Dan Evans has developed an ambitious new growth strategy which has
been launched under the name 'Velocity' and aims to position the Group at the
forefront of the industry in the years ahead.
Results
Group revenue increased by 13.9% to £440.6m (FY2022: £386.8m) with adjusted
PBT up 6.6%, contributing to a 24% increase in adjusted EPS. We have achieved
a number of new contract wins and renewals, reflecting our market leading
customer service proposition. Our partnership with B&Q has been extended
to launch tool hire on both diy.com and trade-point.co.uk in 2023, providing
home delivery tool hire digitally in-store from over 300 B&Q stores
nationwide to a wide ranging customer base.
The Group continues to operate internationally through a joint venture in
Kazakhstan. Our share of profits increased to £6.6m (FY2022: £3.2m)
resulting from a continuation of a significant contract win in FY2022.
We have invested c.£52.1m in our hire fleet, ensuring it is commercially the
right investment to support our strategy. Using data and analytics to target
products that our customers require, just over half of that investment was
placed in sustainable products to meet increased demand.
The Group announced on 8 February 2023 it had identified a shortfall in the
quantity of non-itemised assets of c.£20.4m, recognised as an exceptional
cost in the year. The investigation into the causes was completed and the
findings announced on 18 May 2023, concluding that the issue had resulted from
problems with the Company's controls and accounting procedures for
non-itemised assets over a number of years, and in particular the
reconciliation of such counts to the Group's fixed asset register. The
investigation concluded it was not the result of underlying systemic fraud
perpetrated by the Company's staff or third parties. In addition to corrective
actions and new controls implemented by management, the Board has agreed a
remedial plan to further strengthen the financial control environment for
managing non-itemised assets and to provide assurance for the relevant
accounting values, which remains in progress.
We have launched our ESG roadmap and enhanced our proposition by setting a
target of becoming a net zero carbon business by 2040, ten years ahead of the
Government's target and supported by science based targets. Our ESG strategy
'The Decade to Deliver' is already demonstrating a positive impact on reducing
our carbon footprint, while enabling our customers to make choices that reduce
their environmental impact through increasing our percentage of sustainable
products for hire.
Dividends and returns to shareholders
In view of the continuing strong performance of the business and with
confidence in the future, the Board has recommended a final dividend of
1.80pps for the year (FY2022: 1.45pps), making the full year dividend 2.60pps
(FY2022: 2.20pps) and an increase of 18% on the prior year. If approved at the
forthcoming Annual General Meeting the dividend will be paid on 22 September
2023 to shareholders on the register at close of business on 11 August 2023.
The Group completed its £30 million share buyback programme on 8 March 2023.
In line with the capital allocation policy we will continue to prioritise
investment in organic growth and maintaining regular returns to shareholders,
whilst remaining open to potential bolt on acquisition opportunities with a
strong strategic rationale. In view of the new growth strategy which has been
implemented there is presently no plan to engage in a further share buyback
programme, but the Board will continue to keep this under review.
Board and people
During the year I was pleased to welcome Dan Evans as Chief Executive. Dan was
formerly Chief Operating Officer, responsible for the Group's operational
performance in the UK and Ireland including sales, business development and
marketing, and has been with Speedy for over 14 years. Dan knows our customers
and operations very well and performed exceptionally as Chief Operating
Officer. Under his leadership he has led the development of our exciting new
strategy 'Velocity' and I look forward to working closely with him as the
business delivers on its growth ambitions.
On 1 November 2022 James Bunn stepped down as Chief Financial Officer ("CFO")
to pursue an opportunity in an unrelated sector. The Board appointed an
external head-hunter to start the process to find a permanent successor and in
the intervening period was pleased to announce the appointment of Paul Rayner
who assumed the role of interim CFO with effect from 1 November 2022, for a
period of up to 12 months. This allows time for the Board to complete the
recruitment process. After undertaking a comprehensive search process, the
Board offered Paul the role on a permanent basis and he will join the Board as
CFO with effect from 1 July 2023. Paul is an experienced CFO and since joining
the business as interim he has established strong relationships with the
Board, Dan Evans and the senior team and has worked closely with them in the
development of the Velocity strategy. I am delighted that he has accepted the
position and look forward to continuing to work with him.
On behalf of the Board I would like to take this opportunity to thank all of
my colleagues for their continuing hard work and dedication, which has enabled
the Group to deliver a strong performance over the last year.
Future
We have a resilient business model with an ambitious growth strategy,
Velocity, which positions the Group strongly to accelerate sustainable
profitable growth despite the challenging macro-economic environment. The
continued capital investment in recent years and a robust balance sheet will
allow the business to capitalise on market opportunities and the Board looks
forward with confidence to the year ahead.
David Shearer
Chairman
Chief Executive's statement
Overview and results
I am pleased to present our results for the financial year ended 31 March
2023. Growth in our revenue and underlying profits demonstrate the strength
and resilience of our business, and the value our unique hire and services
proposition delivers to customers in an uncertain and fast changing
macro-economic environment.
Revenue increased by 13.9% to £440.6m (FY2022: £386.8m) reflecting a strong
performance in core hire and Customer Solutions. This improved performance is
the result of new national customer wins and renewals and further penetration
into the trade and SME market. Group revenues, excluding disposals, increased
by 13.8% to £434.3m (FY2022: £381.7m). Adjusted profit before tax increased
6.6% to £32.1m (FY2022: £30.1m). Adjusted earnings per share were 5.25 pence
(FY2022: 4.24 pence). Profit before tax after exceptional items decreased to
£1.8m (FY2022: £29.1m).
Whilst the macro-economic environment is challenging, our end markets remain
positive, with a strong pipeline of major infrastructure, construction and
energy projects including HS2, nuclear new build and decommissioning and the
rail network. Our largest customers continue to demand sustainable solutions
to complex problems and, as a result, our newly branded Customer Solutions
business, combining rehire and our services categories, has experienced record
growth during the year, increasing revenues by 27.4%. Customer Solutions
reflects the value we offer in providing both core and re-hired products and
services seamlessly to customers. We also saw strong growth in our fuel and
energy management business, where we proactively promote low-emission HVO fuel
which now accounts for 29.9% (FY2022: 12.3%) of our fuel sales.
We have continued to develop our trade and retail business in partnership with
B&Q, announcing that we have extended our offering to launch tool hire on
both trade-point.co.uk and diy.com in 2023, fulfilled exclusively by Speedy.
We also announced that during FY2024 we will be able to extend our service to
digitally hire in-store a selected number of products from c.300 B&Q
stores nationally.
The Group has implemented price increases to offset inflationary cost
pressures on both overheads and new equipment purchases. Our pricing strategy
is designed to give customers the very best value for the high-quality
products and services we deliver.
Itemised asset utilisation was 54.4% (FY2022: 57.0%) reflecting the targeted
investment in the Group's hire fleet to satisfy customer demand and improve
availability, whilst also being in place to maximise the strong pipeline of
opportunity visible to the Group. As a result of the improved controls around
all assets, specifically non itemised, we anticipate being able to give
greater detail moving forward.
We are continuing to trade internationally through our 45% share in a joint
venture in Kazakhstan which I was pleased to visit in February. During the
year the joint venture has performed well. The share of profit increased to
£6.6m (FY2022: £3.2m), representing a record performance.
Strategy and operational review
During H2 FY2023 we launched a new strategy into the business that we call
'Velocity', which is designed to accelerate sustainable profitable growth.
Velocity provides a clear focus on measurable medium and long-term growth and
performance objectives, building on the Simplify, Standardise, Grow programme
launched in 2020. The Velocity growth strategy is underpinned by a five-year
transformation programme with two defined stages: enable growth through
creating foundational improvements across technology and operational
efficiency; and deliver growth by becoming the most efficient and sustainable
UK hire business.
Our new vision is to inspire and innovate the future of hire. As the UK and
Ireland's leading provider of tools, specialist equipment and services, we
provide exceptional customer experience, accelerating mutual success with our
customers working towards a sustainable future. Our mission, is to be the most
efficient and sustainable UK hire business: digital and data driven, optimised
through operational excellence, and powered by our people.
We serve approximately 68,000 customers in the UK and Ireland, including a
significant number of the UK's 100 largest contractors*. Our customers include
major infrastructure contractors working across Highways, Rail, Energy,
Harbours and Airports, as well as frameworks in Water and Sewerage (AMP7),
Roads (National Highways), Rail (CP6) and Tele-communications. We also serve
thousands of regional customers and trade and retail customers through our
network of service centres, B&Q stores, by phone and online through our
click and collect, or unique 4-hour delivery service. During the year we have
won and extended major contracts with large contractors operating nationally
including Cadent Gas, Renew Group and Babcock.
We have increased our focus on growing share of the regional customers and
trade and retail market. This is achieved through continued growth in our
Customer Relationship Centre, a telesales division located in South Wales
primarily geared to activate lapsed and dormant accounts through a targeted
approach across the UK, as well as remote customer support for these customers
to ensure they enjoy their customer experience.
Our customers' key priorities are quality, availability, speed and a first
class customer experience. We are the only company in our sector to offer an
industry leading guaranteed four-hour delivery service which is driven by our
service-led culture and is made possible by the strategic targeted investment
we have made in the tools and equipment our customers need. This unique value
proposition is available on our 350 most popular products, and creates a
significant differentiator, presenting an enhanced level of value as we
amplify our presence in the retail market during FY2024. We expect to develop
this proposition and its availability as part of our new strategy.
We have developed our digital proposition, which enables customers to trade
online or via our mobile app. In the past year we have increased our digital
marketing activity to attract and retain customers who want to trade with us
online through a number of new initiatives and promotions around key retail
dates such as Black Friday, and new year sales periods. Digital revenue has
increased driven by improved online conversion rates through developments that
are enhancing the digital buying experience for customers. In addition we
significantly increased and retained new accounts online, underpinning our
growth ambitions as we move into a digital transformation period.
Our customers increasingly require sustainable products and services that
drive down carbon and reduce waste, supporting their commitments to achieving
net zero. With our own extensive range of ECO products, alongside the
provision of HVO fuel sales and partner products, our Customer Solutions
business is perfectly placed to meet that growing demand. Services revenue has
performed strongly as a result of being able to combine these services and
cross-sell our complete customer proposition to larger customers. By
penetrating our addressable markets in this way, we can achieve a higher share
of wallet. Customer service is key to this value proposition, driving
retention and loyalty whilst increasing market share.
Our operations are increasingly data and Artificial Intelligence driven (AI)
driven in support of our strategy to deliver sustainable profitable growth. 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. To accelerate
progress in this area, we have agreed a strategic collaboration with Peak in a
5-year contract. Peak is the market leading AI Platform company and a leader
in providing technology and expertise AI adoption in business. Their software
drives revenue and profit growth, efficiency, and optimisation across the
value chain. The successful use of AI is key in further enhancing our ability
to optimise our asset holdings through dynamic forecasting and continuing to
achieve strong asset utilisation rates on our hire fleet in association with
our logistics and property network.
Creating a modern workplace is a strategic pillar in achieving our growth
ambitions and integrating a world-class ERP (Enterprise Resource Planning)
system is a foundational building block to enable this. Throughout the past
year we have deepened our longstanding and strategic collaboration with
Microsoft to upgrade our ERP to the cloud based Microsoft Dynamics 365
Platform. During FY2023 we have made a number of upgrades through the enhanced
opportunities this platform presents to us, simplifying some of our key
business processes and significantly improving the user experience. This has
resulted in increased productivity through efficiency, and in the process
improves the customer experience. Our continued collaboration with Microsoft
will be a key pillar in enabling our profitable growth ambitions as we
accelerate our Velocity strategy over the near term.
Trade and Retail
The trade and retail consumer market represents an attractive opportunity for
the business. As an already established hire provider in the trade market, we
have identified significant growth opportunities in penetrating this further,
growing market share and developing loyalty and repeat purchase. To enable the
accelerated growth in these markets, during FY2023 we announced that we will
be developing our partnership with TradePoint and B&Q by implementing a
national tool and equipment hire offer specifically for these customers.
During FY2024 we will extend our service to digitally hire a selected number
of products from c.300 B&Q stores nationally. Trade and retail customers
will be able to order products at the TradePoint and B&Q tills, meaning
they can shop the entire TradePoint or B&Q range and hire the tools and
equipment they need at the same time. This low cost-to-serve retail model
represents added value for trade and retail customers and an efficient
seamless process of fulfilment.
In addition, we will launch tool hire on both trade-point.co.uk and diy.com,
hosted by B&Q and fulfilled exclusively by Speedy, exposing our hire
proposition to millions of trade and retail customers online. This combined
and efficient in-store and digital offering means that Speedy will have a
national home delivery service through TradePoint and B&Q. Our aim is to
continue to innovate in this space and we will look to expand the in-store
offer further with an increased range of in-store products, and potential
national Click and Collect opportunities within B&Q locations.
ESG
During the year we upgraded our original commitment of becoming a net zero
business by 2050 in pledging to reach that goal by 2040; ten years ahead of
the government's target.
Our carbon emissions in the UK and Ireland have reduced by 19.7% from 16,690
tonnes, in FY2022, to 13,397 tonnes in FY2023. This reduction has been
achieved through the procurement and organic generation of renewable energy, a
more efficient vehicle fleet and the use of HVO fuel in our larger vehicles.
During the year we conducted an industry first London Light Freight River
Trial in conjunction with a number of partners including the Cross River
Partnership, DEFRA, Port of London Authority and Thames Clippers. By utilising
the river Thames for the transportation of freight in the centre of London,
the trial's aims were to remove congestion on London's roads and cut the time
deliveries spend on the road by 50%.
In taking action to minimise our carbon footprint we are actively procuring
more sustainable assets into our hire fleet including those with solar,
hybrid, electric and hydrogen technology. During FY2023 we invested £52.1m in
our hire fleet, of which 51% was on sustainable equipment. We have a target to
ensure that ECO products account for 70% of our itemised equipment fleet by
2027.
People
We recognise that our people are the most important component of our business,
from developing long term high value relationships with our customers, through
to delivering products and services through our network.
Our People First strategy prioritises personal and professional development,
wellbeing and equality, diversity and inclusion within the workplace. We have
increased the number of graduates and apprentices within the business and are
working towards having 5% of our employees on earn and learn programmes within
4 years. To enhance our capability to affect this, during the year we were
successful in becoming a Youth Verified Business by Youth Group, the UK's
largest community of young people, after successfully completing the youth
verification challenge.
The Board is committed to supporting colleagues, new and established who are
participating in the long-term success of the business.
Summary and outlook
I am pleased to report results that reflect the strong performance we have
achieved this year. Our new strategy, Velocity, is exciting, provides clear
direction and we expect it to deliver long term benefits to our customers, our
people and our investors. Our strategic goal is to accelerate sustainable
growth, leveraging our leading position in our addressable markets, through
innovation, an action focused and ambitious ESG strategy, and developing a
first class omni-channel customer experience. I would like to thank our people
for their continued hard work and commitment that have enabled us to report
this strong performance and develop our new strategy, Velocity, which we look
forward to providing more detail on in our upcoming capital markets day.
We have made an encouraging start to FY2024 with a strong pipeline of new
customer and project based opportunities. In Peak and Microsoft we are
collaborating with experts in their field, to ensure we have the best
support available to deliver our strategy. Whilst we acknowledge the
continuing challenges of the macro-economic climate, we are excited by the
opportunities for success we have in front of us, the key role we play in our
customers success and the continued development of our amazing team of
people.
Dan Evans
Chief Executive
* Based on figures from Glennigan - largest UK contractors by turnover FY2023.
Financial review
Our financial results for FY2023 demonstrate we have continued to deliver
sustainable growth, underpinned by a commitment to excellent customer service.
Despite underlying cost pressures and macro-economic uncertainty, revenue grew
by 13.9%, with rate increases mitigating the impact of cost inflation.
Hire revenue has grown throughout the year and was 6.0% ahead of FY2022. We
continued to increase our market share, with recent major contract wins and
renewals.
We have continued to invest in the hire fleet with capex spend of £52.1m in
FY2023. In response to increasing demand from our major customers and in line
with our ESG strategy, our investment is focused on carbon efficient ECO
products. A decline in utilisation on itemised assets to 54.4% (FY2022:
57.0%) was mitigated by effective rate increases.
Increased capital expenditure and the completion of the £30m share buyback
programme in the year has increased net debt to £92.4m as at 31 March 2023
representing leverage of 1.3 times (FY2022: £67.5m, 0.9x leverage). The
Group has benefited from increased dividends from the Kazakhstan JV and has
placed an increased focus on cash generation and active working capital
management resulting in improved free cash flow for the year to £10.6m,
versus a free cash outflow of £18.5m in FY2022.
Group financial performance
Total revenue for the year ended 31 March 2023 increased by 13.9% versus
FY2022 to £440.6m; revenue (excluding disposals) increased by 13.8% to
£434.3m and revenue from disposals was £6.3m (FY2022: £5.1m).
Gross profit(7) was £239.4m (FY2022: £221.1m), an increase of 8.3%. The
gross margin decreased to 54.3% (FY2022: 57.2%), reflecting rate increase in
hire revenue offset by the mix impact from increased resale fuel and a strong
performance in the Customer Solutions business.
The share of profit from the joint venture in Kazakhstan increased to £6.6m
(FY2022: £3.2m), representing a record performance from a continuation of a
significant contract win in FY2022.
EBITDA before exceptional items increased by 4.4% to £103.7m (FY2022:
£99.3m) and profit before taxation, amortisation and exceptional items
increased to £32.1m (FY2022: £30.1m).
The Group incurred exceptional items before taxation of £28.5m (FY2022: nil).
Further details are included below.
After taxation, amortisation and exceptional items, the Group made a profit of
£1.2m, compared to £21.6m in FY2022.
Revenue and margin analysis
The Group generates revenue through two categories, Hire and Services.
Revenue and margin by type Year ended Year ended Change
31 March 31 March
2023 2022
£m £m %
Hire:
Revenue 258.0 243.3 6.0%
Cost of sales(7) (54.8) (54.5)
Gross profit 203.2 188.8 7.6%
78.8% 77.6%
Gross margin
Services:
Revenue 176.3 138.4 27.4%
Cost of sales (142.9) (107.8)
Gross profit 33.4 30.6 9.2%
18.9% 22.1%
Gross margin
Hire revenue increased by 6.0% compared to FY2022 reflecting rate increases
and improved damage recovery and delivery charges to customers. A number of
new and renewed contracts with key customers were secured during the year,
reflecting the strength of our market position. The Group implemented rate
increases during FY2023 to offset the effects of cost inflation on both
overheads and new equipment purchases. The rate increases take effect as
framework agreements and hire contracts are renewed resulting in the benefits
of those increases building throughout the year.
Customer Solutions is our growing and diversified services business which is
now led by one managing director. Services revenues increased by 27.4% in
the year. Following the phasing out of red diesel supplies to the
construction industry on 1 April 2022, we have seen strong growth in our fuel
management business, in terms of volumes and higher average selling price for
both diesel and HVO fuels.
Gross margins(7) decreased from 57.2% to 54.3%, resulting from a shift in
sales mix. Hire margin(7) increased to 78.8% (FY2022: 77.6%) through rate
increases and diligent control of other direct costs. Asset utilisation on
itemised assets for the year decreased to 54.4%. Services margin of 18.9%
was impacted by sales mix with comparably stronger revenue performance in
lower margin fuel (FY2022: 22.1%).
Overheads
The overheads as disclosed in the income and expenditure account can be
further analysed as follows:
Year ended Year ended
31 March 31 March
2023 2022
£m £m
Distribution and administrative costs(7) 203.1 185.7
Amortisation (1.8) (1.0)
Underlying Overheads 201.3 184.7
Inflationary pressures on overheads, particularly pay increases, utility costs
and fuel were experienced as expected, resulting in a 9.0% increase in
underlying overheads(7) to £201.3m (FY2022: £184.7m), mitigated by certain
cost measures outlined below. To protect against further inflationary
increases utility prices have been fixed for the period to September 2024 and
fuel hedges are in place on a nine to 12 month rolling basis. Overhead
investment to support growth continued, in particular, in trade and retail
with a significant marketing campaign in Spring 2022 including TV adverts to
bring awareness to consumers of the benefits of hire versus buy.
In the second half of FY2023, an operational review has included further
progress in the evolution of the depot network towards larger, more energy
efficient low-carbon facilities, located and designed to create a better
experience for all customers and an enhanced working environment for our
colleagues. This has resulted in a net 20 depot reduction going into FY2024.
The cost of these closures, related redundancies and with costs associated
with improved logistics across the depot network are estimated to be c.£6.7m
and have been taken as an exceptional cost in the financial year. The
associated benefits are expected to be in the region of £5m per annum. The
cost savings from these initiatives have been reinvested in our people, ESG
and omni-channel capabilities.
The headcount decreased to 3,375, compared to 3,554 at 31 March 2022 as a
result of the rationalisation of our depot network.
Exceptional items
During FY23, exceptional costs were incurred as follows:
Exceptional costs Year ended Year ended
31 March 31 March
2023 2022
£m £m
Asset impairment 20.4 -
Other - Legal & Professional 1.4 -
Restructuring 6.7 -
Total 28.5 -
During the final quarter of FY23, the Group undertook a comprehensive count of
all hire equipment in preparation for the year end.
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), 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).
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.
The Board instigated an investigation into the issue identified with
non-itemised assets, including a review of controls and accounting procedures.
The investigation into the causes was completed and announced on 18 May 2023,
concluding that the issue resulted from problems with the Company's controls
and accounting procedures for non-itemised assets over a number of years, and
in particular the reconciliation of such counts to the Group's fixed asset
register. It was not the result of underlying systemic fraud perpetrated on
the Company by its staff or third parties. In addition to corrective action
and new controls implemented by management, the Board has agreed a remedial
plan to further strengthen the financial control environment for managing
non-itemised assets and provide assurance for the relevant accounting values.
This includes additional counts of the assets and new procedures for
reconciling those against its fixed asset register.
Due to the issues identified in the year and the surrounding control
environment, our external auditors will issue a limitation in scope
qualification in the Annual Report and Accounts audit opinion in relation to
property, plant and equipment as they have been unable to obtain sufficient
appropriate audit evidence in relation to these assets. The Group is satisfied
that there is no impact on the financing facilities.
As previously announced, as part of the new controls, the asset count at the
end of March 2023 did not identify the need to increase the existing
provision. The associated professional and other support fees amounted to
£1.4m, which are also presented within exceptional items.
Whilst the issue identified is not isolated to FY2023, it is not possible to
quantify the financial impact on prior periods, therefore the prior year
comparatives are not restated and an exceptional charge is recognised in the
year.
An operational efficiency review has resulted in restructure costs and a net
20 depot reduction at the
end of March 2023. The cost of these closures, and other restructure costs
across the business, are estimated to be c.£6.7m.
Interest and bank borrowings
The Group's net financial expense, including interest on lease liabilities,
increased to £8.6m (FY2022: £5.7m) 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.
Net debt, excluding lease liabilities, as at 31 March 2023 increased to
£92.4m (FY2022: £67.5m), reflecting increased capital expenditure, dividend
payments and £24.0m for the recently completed share buyback programme.
The Group's main bank facilities were renewed in July 2021 for a three year
term, with options to extend by a further two years. On 26 May 2023 these
options were exercised and the facility now expires in July 2026. The
additional uncommitted accordion of £220m remains in place through to July
2026. There were no changes to the terms of the facility following the
extension facility and it continues to give the Group headroom with which to
support organic growth and acquisition opportunities.
The facility includes quarterly leverage and fixed charge cover covenant tests
which are only applied if headroom in the facility falls below £18m. No
covenant test was required during the year, and the Group maintained
significant headroom against these measures throughout the year.
Borrowings under the facility are now priced based on SONIA plus a variable
margin, while any unutilised commitment is charged at 35% of the applicable
margin. During the year, the margin payable on the outstanding debt fluctuated
between 1.55% and 2.15% dependent on the weighting of the asset base on which
borrowings are based between receivables and plant and machinery. The
effective average margin in the period was 1.84% (FY2022: 1.73%).
The Group utilises interest rate hedges to manage fluctuations in SONIA with
varying maturity dates to November 2025. The fair value of these hedges was
£1.0m at 31 March 2023 (FY2022: £0.4m).
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 tax charge for the year was £0.6m (FY2022: £7.7m), with an effective tax
rate of 28.6% (FY2022: 26.5%). Adjusting for the impact of exceptional items,
the effective tax rate for FY2023 was 20.2%. An increase in the UK corporation
tax rate to 25% for periods from 1 April 2023 was substantively enacted on 24
May 2021 thereby impacting the FY2022 effective rate; excluding the impact of
this change in tax rate, the effective rate for FY2022 would have been
19.6%.
Share buyback
In January 2022 the Board commenced a £30m share buyback programme, which was
completed in full on 8 March 2023. Under the programme 67.7m shares have
been purchased, of which 12.6m have been cancelled and 55.1m purchased after 6
April 2022 have been placed in Treasury.
At 31 March 2023, 516,983,637 Speedy Hire Plc ordinary shares were outstanding
(FY2022: 518,220,366), of which 4,162,452 were held in the Employee Benefit
Trust (FY2022: 4,236,422) and 55,146,281 were held in Treasury (FY2022: nil).
Earnings per share
Adjusted earnings per share(7) was 5.25 pence (FY2022: 4.24 pence from
continuing operations), an increase of 24%. Basic earnings per share was 0.25
pence (FY2022: 4.13 pence) as a result of the exceptional items in the year.
Capital expenditure and disposals
Total capital expenditure during the year amounted to £60.9m (FY2022:
£82.1m), of which £52.1m (FY2022: £68.4m) related to equipment for hire.
Our hire fleet investment is biased towards carbon efficient ECO products in
line with the increasing relevance of sustainable solutions including
customers mandating zero site emissions on some projects. The strength of our
supply chain relationships and advanced planning have meant that we mitigated
the impact of supply chain pressures. Non-hire fleet capital expenditure of
£8.8m (FY2022: £13.7m) represents the investment in our properties and IT
capabilities.
Proceeds from disposal of hire equipment were £17.4m (FY2022: £13.6m). The
increase driven primarily by improved loss recovery and a divestment in
certain powered access equipment in March 2023.
The Group expects to invest further in its hire fleet to support revenue
growth in FY2024 with budgeted capex of c.£50m.
Balance sheet
The Group strives to achieve an efficient balance sheet, which reflects the
share buyback programme, proactive management of the asset fleet and effective
control over working capital.
Net assets at 31 March 2023 were £184.6m (FY2022: £216.4m).
Net property, plant and equipment (excluding IFRS 16 right of use assets) was
£237.7m as at 31 March 2023 (FY2022: £257.7m), of which equipment for hire
represents 87.5% (FY2022: 88.0%).
Intangibles decreased to £25.0m (FY2022: £25.9m), primarily due to
amortisation, offset by continuing IT development expenditure.
Right of use assets of £83.2m (FY2022: £74.2m) and corresponding lease
liabilities of £86.1m (FY2022: £76.7m) have increased in part due to new
vehicle leases to support the move to a lower carbon fleet and property lease
renewals, offset in part by depot closures and consolidations.
The business has increased its focus on cash, in particular customer
collections. The successful collaboration between sales and credit control
functions, leveraging strong customer relationships, resulted in strong cash
collections particularly in the second half of the year. Gross trade
receivables totaled £102.2m at 31 March 2023 (FY2022: £104.9m). Bad debt
provisions were £3.2m as at 31 March 2023 (FY2022: £3.0m), equivalent to
3.1% of gross trade receivables (FY2022: 2.9%). Debtor days as at 31 March
2023 were 61, reduced significantly from 67 days at March 2022.
Trade payables as at 31 March 2023 were £39.1m (FY2022: £42.8m). Due to a
significant improvement in debtor days, the Group improved its creditor days
to 37 (FY2022: 56).
In conjunction with its external auditors, the Group has reviewed its position
in respect of dilapidation provisions, assessing a more comprehensive view of
the future liability on all leases, in line with accounting standards. This
change has resulted in an increase in opening provisions of £10.9m,
recognised as a restatement of the balance sheet as at 1 April 2021. There is
no impact on the amounts presented in the income statement for the current or
prior period.
Cash flow and net debt
Cash generation from operations (before changes in hire fleet) for the year of
£88.7m represents 85.5% conversion from EBITDA, reflecting greater focus on
working capital improvements. Free cash flow (being net cash flow before
returns to shareholders and movement in loan balances) increased to £10.6m
(FY2022: £18.5m outflow) as cash disciplines across the business are
reinforced.
Net debt increased by £24.9m from £67.5m at the beginning of the year to
£92.4m at 31 March 2023. Excluding the impact of IFRS 16, leverage
increased to 1.3 times (FY2022: 0.9 times). The Group retained substantial
headroom within its bank facility throughout the year with cash and undrawn
facility availability of £83.5m as at 31 March 2023 (FY2022: £110.8m).
Dividend
The Board has proposed a final dividend for FY2023 of 1.80 pence per share
(FY2023: 1.45 pence per share) to be paid on 22 September 2023 to shareholders
on the register on 11 August 2023. The cash cost of this dividend is expected
to be c.£8.3m. This takes the total dividend for FY2023 to 2.60 pence per
share (FY2022: 2.20 pence per share) following an interim dividend of 0.80
pence per share (FY2022: 0.75 pence per share).
Capital allocation policy
The Board's objective is to maximise long term shareholder returns through a
disciplined deployment of capital resources, 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 leverage of 1.5x 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.
Paul Rayner
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 2023. 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
Dan Evans Chief Executive
David Garman Senior Independent Director
Rob Barclay Non-Executive Director
Rhian Bartlett Non-Executive Director
Shatish Dasani Non-Executive Director
Carol Kavanagh 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
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 environmental
Without rigorous safety regimes in place there is a risk of injury or death to teams measuring and promoting employee understanding of, and compliance with,
employees, customers or members of the public. procedures that affect safety and protection of the environment. All
management grade employees are enrolled on safety related training courses and
Environmental hazard are expected to champion safety awareness within the Group's culture.
The provision of such machinery includes handling, transport and dispensing of We maintain systems that enable us to hold appropriate industry recognised
substances, including fuel, that are hazardous to the environment in the event accreditations supported by a specialist software platform for managing data
of spillage. and reporting in relation to Health, Safety and Environment.
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 We operate an industry leading four-hour service promise which covers a wide
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) is fully embedded into our
business and these are used to improve the on-site customer experience.
Back office services
Speedy liaises with its customer base and takes into account feedback where
It is important that Speedy is able to provide timely and accurate management particular issues are noted, to ensure that work on resolving those issues is
information to its customers, along with accurate invoices and supporting prioritised accordingly.
documentation.
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
customers undertake with Speedy.
Sustainability and Climate Change Climate change The Board has created the Sustainability Committee to oversee the development
of the sustainability and climate change response plan.
There is a risk that climate change may impact Speedy's operations or ability
to trade. Conversely, there is a risk that Speedy will fail to meet internal The Group has set industry leading science-based targets to measure its
or external targets designed to reduce the Group's impact on climate change. progress against.
This could arise from insufficient target setting, inadequate progress of Further details of the risks, opportunities and mitigating actions in relation
initiatives, or a failure to capture relevant data accurately. to sustainability and climate change are detailed in the Taskforce for
Climate-Related Financial Disclosures (TCFD) section of the Annual Report and
Sustainability Accounts.
There is a risk that the Groups business model may not be sustainable in the
long term, for example if assets reliant on fossil fuels are not replaced or
if the distribution network continues to be similarly reliant on fossil fuels.
The result from either of the above may include loss of customer confidence
impacting revenue, or investor and bank confidence leading to difficulty in
obtaining future funding.
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. There is a risk that offerings, supplemented by its rehire division for specialist equipment. The
customers can readily change provider, with minimal disruption to their own Group monitors the performance of its major accounts against forecasts,
business activity. 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.
There is a risk that cost inflation may reduce margins if customers resist
price increases. This risk is higher in a small number of cases where larger Whilst we develop and maintain strategic relationships with larger customers,
customers may be on fixed term agreements with no inflation clause. no single customer currently accounts for more than 10% of revenue or
receivables. We have been successful in growing our SME and retail customer
Reliance on high value customers base, which helps to mitigate this risk.
There is a risk to future revenues should preferred supplier status with The Group's operational management team includes a managing director dedicated
larger customers be lost when such agreements may individually represent a to retail based routes to market.
material element of our revenues.
We have a team dedicated to responding to bids and tenders, with a clear
Bids and Tenders approval process to ensure opportunities are maximised.
There is a risk to future revenue growth if the Group is unsuccessful in its
ambition to win new contracts using innovative solutions that appropriately
balance the available reward with potential increases in risk.
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 value enhancing 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. This will include the use of
specialists to supplement the Groups capabilities. The results of due
diligence are presented to the Board prior to formal approval being granted.
We have strengthened the capability of the Group to manage this transformation
with the appointment of a dedicated transformation director who reports
Transformation directly to the Chief Digital Officer. The Transformation Office will
operate with clearly defined governance structures, sponsored by the executive
The Velocity strategy represents an ambition to transform the Group. There team. This process is designed to mitigate risk and increase the success
are risks that this might be unsuccessful in respect of new initiatives or rate of the programme.
that the transformation activity may distract from or harm our established
businesses.
People Colleague excellence The Group regularly reviews remuneration packages and aims to offer
competitive reward and benefit packages, including appropriate short and
In order to achieve our strategic objectives, it is imperative that we are long-term incentive schemes. We have reviewed the reward packages for
able to recruit, retain, develop and motivate colleagues who possess the right colleagues with skills in disciplines with particularly high turnover such as
skills for the Group, whilst also demonstrating our commitment to diversity, drivers and engineers. We have a medium term forecast to offer market
equality and inclusivity. competitive rewards to all colleagues as we strive to become recognised as an
employer of choice. We have set targets to improve our diversity, equality
Labour availability and inclusivity which are designed to attract individuals with the right
talent from across the population. Skill and resource requirements for meeting
There is a risk that with increased numbers of people leaving the labour the Group's objectives are actively monitored and action is taken to address
market, or salary inflation leading to increased staff turnover, there will be identified gaps. Succession planning aims to identify talent within the Group
shortages of available employees for the Group, with greater requirements for and is formally reviewed on an annual basis by the Nomination Committee,
training. focusing on both short and long-term successors for the key roles within the
Group. We actively consider promotion opportunities in preference to
external hiring where possible.
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.
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.
BREXIT, the COVID-19 pandemic and the war in Ukraine all resulted in some Where practical, agreements with alternative suppliers are in place for key
supply chain challenges that may now be considered permanent. ranges, diluting reliance on individual suppliers.
Partner reputation
Significant revenues are generated from our rehire business, where the
delivery or performance is affected 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 cases,
Speedy has a fixed cost base including people, transport and property. When 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 significant
financial results. purchase decisions are overseen by a dedicated supply chain team with
structured supplier selection procedures in place. Property costs are managed
Fuel management by an in-house team who manage the estate, supported where appropriate by
external specialists.
As a result of changes in the worldwide fuel supply chain, the Group faces
risks of both low supply volumes and inflated prices for fuel. We operate a dedicated fleet of commercial vehicles that are maintained to
support our brand image. This includes electric and hybrid vehicles. Fuel is
This may impact both our own cost base and our ability to supply fuel to our purchased through agreements controlled by our supply chain processes.
customers.
The growth of our services offering will help to mitigate this risk as these
activities have a greater proportion of variable overheads.
Cyber Security and data integrity IT system availability Annual and medium-term planning provides visibility as to the level and type
of IT infrastructure and services required to support the business strategy.
Speedy is increasingly reliant on IT systems to support our business Business cases are prepared for any new/upgraded systems, and require formal
activities. Interruption in availability or a failure to innovate will reduce approval.
current and future trading opportunities respectively.
Management information is provided in all key areas from dashboards that are
Data accuracy 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
The quality of data held has a direct impact on how both strategic and maintain accuracy of the information provided by data owners across the
operational decisions are made. If decisions are made based on erroneous or business.
incomplete data there could be a negative effect on the performance of the
Group. Mitigations for IT data recovery are described below under business continuity
as these risks are linked.
Data security
We have an established cyber security governance committee which meets
Speedy, as with any organisation, holds data that is commercially sensitive regularly to monitor our control framework and reports on a routine basis to
and in some cases personal in nature. There is a risk that disclosure or loss the Audit & Risk Committee.
of such data is detrimental to the business, either as a reduction in
competitive advantage or as a breach of law or regulation. 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, along with an additional uncommitted
and/or non-availability. accordion of £220m, is available through to July 2026.
This could disadvantage the Group relative to its competitors and might
adversely impact its ability to command acceptable levels of pricing. We have a defined capital allocation policy. This ensures that 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 change
Any changes in construction/industrial market conditions could affect activity is assessed as part of the ongoing financial and operational budgeting and
levels and consequently the Group's revenue. forecasting process.
As markets change and evolve, there is a risk that the Group strategy will Our strategy is to develop a differentiated proposition in our chosen markets
need to be aligned accordingly. and to ensure that we are well positioned with clients and contractors. The
Board oversees the importance of strategic clarity and alignment, which is
There is a risk of recession in the UK which could affect the Group's revenue. seen as essential for the setting and execution of priorities, including
resource allocation.
Inflation
Our close relationships with our customers, coupled with the differentiation
There is a risk of inflationary pressure on both material and employee costs allows us to adopt a partnership approach to responding to cost inflation.
impacting margins that the Group is able to generate, if customers resist
price rises or are in existing framework agreements for fixed terms. We consistently monitor our share in each market segment and seek to balance
our risk between cyclical areas and those which are more predictable.
War
There is a risk that an escalation of the war in Ukraine such as an increase
in hostilities involving more countries, may have a further impact on the
global economy. This may result in a range of impacts for the Group, including
cost inflation, labour availability and disruption to the supply chain.
Business continuity Business interruption Preventative controls, back-up and recovery procedures are in place for key IT
systems. Changes to Group systems are considered as part of wider change
Any significant interruption to Speedy's operational capability, whether IT management programmes and implemented in phases wherever possible. The Group
systems, physical restrictions or personnel, could adversely impact current has critical incident plans in place for all its sites. Insurance cover is
and future trading as customers could readily migrate to competitors. reviewed at regular intervals to ensure appropriate coverage in the event of a
business continuity issue.
This could range from short-term impact in processing of invoices that would
affect cash flows to the loss of a major site. Speedy has a documented plan to establish a crisis management team when events
occur that interrupt business. This includes detailed plans for all critical
Joint venture trading sites and head office support. These plans are regularly tested by
both management and third-party advisors. They have proven to be effective
The Group's joint venture in Kazakhstan, Speedy Zholdas, may be impacted by in both the significant event of a global pandemic and more localised events
Russia's invasion of Ukraine. This may be a direct result of military activity such as extreme weather closing a number of our trading locations.
in the wider region, or there may be politically motivated impacts as
Kazakhstan has historically maintained strong links with Russia. The main We continue to monitor the situation in Kazakhstan through regular contact
impact that the Group has faced to date has been the impact of fluctuations in with the expat management team and will take action as may be necessary to
exchange rates. ensure the safety of our colleagues.
Asset holding and integrity Asset range and availability We regularly monitor the status of our assets and use this information to
optimise our asset holdings.
Speedy's business model relies on providing assets for hire to customers, when
they want to hire them. In order to maximise profitability and returns on This is based on our knowledge of customer expectations of delivery
deployed capital, demand is balanced with the requirement to hold a range of timescales, which vary by asset class. By structuring our depot network
assets that is optimally utilised. accordingly, we can centralise low volumes of holdings of specialist assets.
We constantly review our range of assets and introduce innovative solutions to
our customers as new products come to market.
A proportion of Speedy's assets that are hired to customers do not have unique
identifiers, and therefore there is a risk of loss and/or misappropriation. Following the identification of a shortfall in the quantity of non-itemised
This could impact the Group's ability to meet customer demands. assets amounting to c.£20.4m during FY2023, the Group has undertaken a full
review of the control framework for non-itemised assets. Improvements have
been implemented across all stages of the asset lifecycle, across the three
lines of defence of operational management (including delivery / collection
processes and perpetual inventory counts), financial control (including
routine asset register reconciliations) and internal audit assurance
(including standalone asset counts).
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 strategic plan is 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,
which has been extended for a further two years, through to July 2026. The
Strategic Plan assumes the facility will be extended 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 and the effectiveness of any mitigating
actions. These scenarios include reduced levels of revenue across the Group,
while maintaining a consistent cost base. Mitigations applied in these
downturn scenarios include a reduction in planned capital expenditure.
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 2026.
The going concern statement and further information can be found in Note 1 of
the financial statements.
Unaudited Consolidated Income Statement
for the year ended 31 March 2023
Year ended 31 March 2023 Year ended 31 March 2022
───────────────────── ─────────────────────
Before exceptional items Before exceptional items
Exceptional items¹ Exceptional items¹
Total Total
Note £m £m £m £m £m £m
Revenue 2 440.6 - 440.6 386.8 - 386.8
Cost of sales (201.2) (20.4) (221.6) (165.7) - (165.7)
───── ───── ───── ───── ───── ─────
Gross profit 239.4 (20.4) 219.0 221.1 - 221.1
Distribution and administrative costs (203.1) (8.1) (211.2) (185.7) - (185.7)
Impairment losses on trade receivables (4.0) - (4.0) (3.8) - (3.8)
───── ───── ───── ───── ───── ─────
Operating profit 32.3 (28.5) 3.8 31.6 - 31.6
Share of results of joint venture 6.6 - 6.6 3.2 - 3.2
───── ───── ───── ───── ───── ─────
Profit from operations 38.9 (28.5) 10.4 34.8 - 34.8
Financial expense 5 (8.6) - (8.6) (5.7) - (5.7)
───── ───── ───── ───── ───── ─────
Profit before taxation 30.3 (28.5) 1.8 29.1 - 29.1
Taxation 6 (6.5) 5.9 (0.6) (7.7) - (7.7)
───── ───── ───── ───── ───── ─────
Profit for the financial year from continuing operations 21.4 21.4
23.8 (22.6) 1.2 -
───── ───── ───── ───── ───── ─────
Profit from discontinued operations, 0.2 0.2
net of tax - - - -
───── ───── ───── ───── ───── ─────
Profit for the financial year 23.8 (22.6) 1.2 21.6 - 21.6
═════ ═════ ═════ ═════ ═════ ═════
Earnings per share
- Basic (pence) 7 0.25 4.13
- Diluted (pence) 7 0.24 4.07
═════ ═════
Non-GAAP performance measures
EBITDA before exceptional items 9 103.7 99.3
═════ ═════
Adjusted profit before tax 9 32.1 30.1
═════ ═════
Adjusted earnings per share* (pence) 7 5.25 4.24
Adjusted diluted earnings per share* (pence) 7 5.21 4.18
═════ ═════
* earnings per share from continuing operations
¹ Detail on exceptional items is provided in Note 4.
The accompanying notes form part of the financial statements.
Unaudited Consolidated Statement of Comprehensive Income
for the year ended 31 March 2023
Note Year ended 31 March Year ended 31 March
2023 2022
£m £m
Profit for the financial year 1.2 21.6
───── ─────
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 0.8
- Exchange difference on translation of foreign operations 0.5 (0.8)
- Tax on items 6 - (0.2)
───── ─────
Other comprehensive income 0.7 (0.2)
───── ─────
Total comprehensive income for the financial year 1.9 21.4
═════ ═════
The accompanying notes form part of the financial statements.
Unaudited Consolidated Balance Sheet
as at 31 March
2023
Note 31 March 31 March
2023 2022
Restated*
ASSETS £m £m
Non-current assets
Intangible assets 10 25.0 25.9
Investment in joint venture 9.2 7.8
Property, plant and equipment
Land and buildings 11 13.9 15.6
Hire equipment 11 207.9 226.9
Other 11 15.9 15.2
Right of use assets 12 83.2 74.2
Deferred tax asset - 1.7
───── ─────
355.1 367.3
Current assets ───── ─────
Inventories 12.7 8.1
Trade and other receivables 106.0 108.7
Cash 1.1 2.5
Current tax asset 0.3 -
Derivative financial assets 1.2 -
───── ─────
121.3 119.3
───── ─────
Total assets 476.4 486.6
───── ─────
LIABILITIES
Current liabilities
Bank overdraft 13 (1.3) (1.7)
Lease liabilities 14 (22.1) (20.6)
Current tax creditor - (1.0)
Trade and other payables (88.6) (96.6)
Derivative financial liabilities (0.6) -
Provisions 15 (3.6) (2.8)
───── ─────
(116.2) (122.7)
Net current assets/(liabilities) 5.1 (3.4)
Non-current liabilities
Borrowings 13 (92.2) (68.3)
Lease liabilities 14 (64.0) (56.1)
Provisions 15 (12.0) (12.1)
Deferred tax liability (7.4) (11.0)
───── ─────
(175.6) (147.5)
───── ─────
Total liabilities (291.8) (270.2)
───── ─────
Net assets 184.6 216.4
═════ ═════
EQUITY
Share capital 16 25.8 25.9
Share premium 1.9 1.8
Capital redemption reserve 0.7 0.6
Merger reserve 1.0 1.0
Hedging reserve 0.3 0.1
Translation reserve (1.3) (1.8)
Retained earnings 156.2 188.8
───── ─────
Total equity 184.6 216.4
═════ ═════
*See note 17
Unaudited Consolidated Statement of Changes in Equity
for the year ended 31 March 2023
Share Share Capital redemption reserve Merger Hedging Retained Total
capital premium reserve reserve Translation Earnings equity
reserve
Note £m £m £m £m £m £m £m £m
At 1 April 2021 reported 26.4 1.3 - 1.0 (0.7) (1.0) 193.8 220.8
Restatement* - - - - - - (10.0) (10.0)
───── ───── ───── ───── ───── ───── ───── ─────
At 1 April 2021 restated* 26.4 1.3 - 1.0 (0.7) (1.0) 183.8 210.8
Profit for the year - - - - - - 21.6 21.6
Other comprehensive income - - - - 0.8 (0.8) (0.2) (0.2)
───── ───── ───── ───── ───── ───── ───── ─────
Total comprehensive income - - - - 0.8 (0.8) 21.4 21.4
Dividends - - - - - - (11.3) (11.3)
Equity-settled share-based payments - - - - - - 1.2 1.2
Purchase of own shares for cancellation or placement in treasury 16 (0.6) - 0.6 - - - (6.2) (6.2)
Tax on items taken directly to equity - - - - - - (0.1) (0.1)
Issue of shares under the Sharesave Scheme
0.1 0.5 - - - - - 0.6
───── ───── ───── ───── ───── ───── ───── ─────
At 31 March 2022 restated* 25.9 1.8 0.6 1.0 0.1 (1.8) 188.8 216.4
Profit for the year - - - - - - 1.2 1.2
Other comprehensive income - - - - 0.2 0.5 - 0.7
────── ───── ───── ───── ───── ───── ───── ─────
Total comprehensive income - - - - 0.2 0.5 1.2 1.9
Dividends - - - - - - (10.9) (10.9)
Equity-settled share-based payments - - - - - - 1.1 1.1
Purchase of own shares for 16 (0.1) - 0.1 - - - (24.0) (24.0)
cancellation or placement in treasury
Issue of shares under the Sharesave Scheme - 0.1 - - - - - 0.1
-─── ───── ───── ───── ───── ───── ───── ─────
At 31 March 2023 25.8 1.9 0.7 1.0 0.3 (1.3) 156.2 184.6
═══ ═════ ═════ ═════ ═════ ═════ ═════ ═════
*See note 17
The accompanying notes form part of the financial statements.
Unaudited Consolidated Cash Flow Statement
for the year ended 31 March 2023
Note Year ended 31 March 2023 Year ended 31 March 2022
£m £m
Cash generated from operating activities
Profit before tax including discontinued operations 2.1 29.3
Net financial expense 5 8.6 5.7
Amortisation 10 1.8 1.0
Depreciation 69.6 66.7
Share of profit from joint venture (6.6) (3.2)
Termination of lease contracts (0.4) (0.2)
Profit on disposal of hire equipment (1.7) (0.5)
Exceptional write -off 4 20.4 -
Loss on disposal of non-hire equipment - 0.1
(Increase)/decrease in inventories (4.6) 0.1
Decrease/(increase) in trade and other receivables 1.5 (15.5)
(Decrease)/increase in trade and other payables (3.8) 3.8
Increase/(decrease) in provisions 15 0.7 (2.0)
Equity-settled share-based payments 1.1 1.2
───── ─────
Cash generated from operations before changes in hire fleet 88.7 86.5
Purchase of hire equipment (54.2) (71.5)
Proceeds from planned sale of hire equipment* 6.3 4.8
Proceeds from customer loss/damage of hire equipment* 11.1 8.8
───── ─────
Cash generated from operations 51.9 28.6
Interest paid (8.4) (6.0)
Tax paid (3.1) (3.0)
───── ─────
Net cash flow from operating activities 40.4 19.6
Cash flow used in investing activities
Purchase of non-hire property, plant and equipment (8.7) (13.8)
Capital expenditure on IT development* (0.9) (2.2)
Proceeds from sale of non-hire property, plant and equipment 0.6 -
Dividends and loan repayments from joint venture 5.6 1.9
───── ─────
Net cash flow used in investing activities (3.4) (14.1)
───── ─────
Net cash flow before financing activities 37.0 5.5
───── ─────
Cash flow from financing activities
Payments for the principal element of leases (26.5) (24.6)
Drawdown of loans 595.6 482.6
Repayment of loans (572.3) (457.2)
Proceeds from the issue of Sharesave Scheme shares 0.1 0.6
Purchase of own shares for cancellation or placement in treasury 16 (24.0) (6.0)
Dividends paid 8 (10.9) (11.3)
───── ─────
Net cash flow used in financing activities (38.0) (15.9)
───── ─────
Decrease in cash and cash equivalents (1.0) (10.4)
Net cash at the start of the financial year 0.8 11.2
───── ─────
Net cash at the end of the financial year (0.2) 0.8
═════ ═════
Analysis of cash and cash equivalents
Cash 13 1.1 2.5
Bank overdraft 13 (1.3) (1.7)
───── ─────
(0.2) 0.8
═════ ═════
*Prior year restated to present proceeds from the disposal of hire equipment
separately for the two types of transactions and to separate capital
expenditure on IT development from other purchases of non-hire property, plant
and equipment.
Notes to the Unaudited Financial Statements
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 consolidated
Financial Statements of the Company for the year ended 31 March 2023 comprise
the Company and its subsidiaries (together referred to as the 'Group').
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in these consolidated Financial
Statements.
Basis of preparation
These 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 31 March 2023 was £83.5m (2022: £110.8m) 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 the 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 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 2023 or
31 March 2022 but is derived from those accounts. Statutory accounts for
Speedy Hire Plc for the year ended 31 March 2022 have been delivered to the
Registrar of Companies, and those for the year ended 31 March 2023 will be
delivered in due course. The Group's predecessor auditor has reported on the
accounts for 31 March 2022; 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.
Due to the issues identified in the year and the surrounding control
environment, our external auditors will issue a limitation in scope
qualification in the Annual Report and Accounts audit opinion in relation to
property, plant and equipment as they have been unable to obtain sufficient
appropriate audit evidence in relation to these assets. The Group is satisfied
that there is no impact on the financing facilities.
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 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. The Middle East assets were presented as
discontinued operations in FY22 as the assets were disposed of on 1 March
2021.
For the year ended 31 March 2023 / As at 31 March 2023
Hire excluding disposals Services UK and Ireland¹ Corporate items Total
£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:
EBITDA 105.6 (1.9) 103.7
Depreciation² (69.3) (0.3) (69.6)
───── ───── ─────
Operating profit/(costs) before amortisation 36.3 (2.2) 34.1
Amortisation² (1.8) - (1.8)
Exceptional items (25.6) (2.9) (28.5)
───── ───── ─────
Operating profit/(costs) 8.9 (5.1) 3.8
Share of results of joint venture - 6.6 6.6
───── ───── ─────
Profit 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 from continuing operations
1.2
═════
Profit from discontinued operations, net of tax -
─────
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
Other 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.
For the year ended 31 March 2022 / As at 31 March 2022 Restated*
Hire excluding disposals Services UK and Ireland¹ Corporate items Total
£m £m £m £m £m
Revenue 243.3 138.4 386.8 - 386.8
Cost of sales (54.5) (107.8) (165.7) - (165.7)
───── ───── ───── ───── ─────
Gross Profit 188.8 30.6 221.1 - 221.1
═════ ═════ ════ ═════ ═════
Segment result:
EBITDA 103.3 (4.0) 99.3
Depreciation² (66.4) (0.3) (66.7)
───── ───── ─────
Operating profit/(costs) before amortisation 36.9 (4.3) 32.6
Amortisation² (1.0) - (1.0)
Exceptional items - - -
───── ───── ─────
Operating profit/(costs) 35.9 (4.3) 31.6
Share of results of joint venture - 3.2 3.2
───── ───── ─────
Profit from operations 35.9 (1.1) 34.8
═════ ═════ ═════
Financial expense (5.7)
─────
Profit before tax 29.1
Taxation (7.7)
─────
Profit for the financial year from continuing operations
21.4
═════
Profit from discontinued operations, net of tax 0.2
─────
Profit for the financial year 21.6
═════
Intangible assets² 19.5 6.4 25.9
Investment in joint venture - 7.8 7.8
Land and buildings 15.6 - 15.6
Hire equipment 226.9 - 226.9
Non-hire equipment 15.2 - 15.2
Right of use assets 74.2 - 74.2
Taxation assets - 1.7 1.7
Other current assets 112.7 4.1 116.8
Cash - 2.5 2.5
───── ───── ─────
Total assets 464.1 22.5 486.6
═════ ═════ ═════
Lease liabilities (76.7) - (76.7)
Other liabilities(3) (103.0) (8.5) (111.5)
Borrowings - (70.0) (70.0)
Taxation liabilities - (12.0) (12.0)
───── ───── ─────
Total liabilities (179.7) (90.5) (270.2)
═════ ═════ ═════
*Prior year restated above to reflect what is reported to the chief operating
decision maker. Change made to split out the UK and Ireland between Hire and
Services.
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 17.
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 2023 Year ended 31 March 2022
──────────────────── ────────────────────
Revenue Non-current Non-current
assets* Revenue assets*
£m £m £m £m
UK 431.8 345.3 376.5 355.7
Ireland 8.8 9.8 10.3 9.9
───── ───── ───── ─────
440.6 355.1 386.8 365.6
═════ ═════ ═════ ═════
*Non-current assets excluding financial instruments and deferred tax assets.
Revenue by type
Revenue is attributed to the following activities:
Year ended Year ended
31 March 31 March
2023 2022
£m £m
Hire and related activities 258.0 243.3
Services 176.3 138.4
Disposals 6.3 5.1
───── ─────
440.6 386.8
═════ ═════
Major customers
No one customer represents more than 10% of revenue, reported profit or
combined assets of the Group.
3 Discontinued operations
During the year ended 31 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.
As part of this sale, a transitional services agreement was agreed for the
first half of the year ended 31 March 2022, resulting in a profit from
discontinued operations of £0.2m in that year.
4 Exceptional items
During the year ended 31 March 2023, exceptional costs were incurred as
follows:.
Year ended Year ended
31 March 31 March
2023 2022
£m £m
Asset write-off 20.4 -
Other professional and support costs 1.4 -
Restructuring costs 6.7 -
───── ─────
28.5 -
═════ ═════
Asset write-off
During the year, 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), 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). 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.
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 has 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.
There were no exceptional items for the year ended 31 March 2022.
5 Financial expense
Year ended Year ended
31 March 31 March
2023 2022
£m £m
Interest on bank loans and overdrafts 4.4 2.6
Amortisation of issue costs 0.7 0.6
───── ─────
Total interest on borrowings 5.1 3.2
Interest on lease liabilities 3.5 2.5
───── ─────
Financial expense 8.6 5.7
═════ ═════
6 Taxation
Year ended Year ended
31 March 31 March
2023 2022
£m £m
Tax charged in the Income Statement from continuing operations
Current tax
UK corporation tax on profit at 19% (2022: 19%) 3.8 4.9
Adjustment in respect of prior years (1.0) 0.5
Deferred tax
UK deferred tax at 25% (2022: 25%) (3.8) 0.9
Adjustment in respect of prior years 1.6 (0.6)
Effect of change in rates - 2.0
───── ─────
Total deferred tax (2.2) 2.3
───── ─────
Total tax charge from continuing operations 0.6 7.7
═════ ═════
Tax charged in other comprehensive income
Deferred tax on effective portion of changes in fair value of cash flow hedges - 0.2
═════ ═════
Tax charged in equity
Deferred tax - 0.1
═════ ═════
The adjusted effective tax rate of 20.2% (2022: 26.2%) is higher than the
standard rate of UK corporation tax of 19%. The tax charge in the Income
Statement for the year of 28.6% (2022: 26.5%) is higher than the standard rate
of corporation tax in the UK and is explained as follows:
Year ended Year ended
31 March 31 March
2023 2022
£m £m
Profit before tax 1.8 29.1
───── ─────
Accounting profit multiplied by the standard rate of corporation tax at 19% 0.3 5.5
(2022: 19%)
Expenses not deductible for tax purposes 0.9 0.7
Share-based payments 0.1 0.2
Share of joint venture income already taxed (1.3) (0.6)
Change in tax rates - 2.0
Adjustment to tax in respect of prior years 0.6 (0.1)
───── ─────
Tax charge for the year reported in the Income Statement 0.6 7.7
═════ ═════
7 Earnings per share
The calculation of basic earnings per share is based on the profit for the
financial year of £1.2m (2022: £21.6m) and the weighted average number of 5
pence ordinary shares in issue, and is calculated as follows:
Year ended Year ended
31 March 31 March
2023 2022
Weighted average number of shares in issue (m)
Number of shares at the beginning of the year 514.0 523.8
Shares issued 0.2 -
Exercise of share options - 0.4
Movement in shares owned by the Employee Benefit Trust 2.7 0.1
Shares repurchased and subsequently cancelled (28.9) (1.0)
───── ─────
Weighted average for the year - basic number of shares 488.0 523.3
Share options 3.5 5.7
Employee share scheme 0.2 0.8
───── ─────
Weighted average for the year - diluted number of shares 491.7 529.8
═════ ═════
Year ended Year ended
31 March 31 March
2023 2022
Profit (£m)
Profit for the year after tax - basic earnings 1.2 21.6
Intangible amortisation charge (after tax) 1.8 0.8
Exceptional items (after tax) 22.6 -
Profit from discontinued operations (after tax) - (0.2)
───── ─────
Adjusted earnings (from continuing operations after tax) 25.6 22.2
═════ ═════
More detail on adjusted earnings is provided in Note 9.
Earnings per share (pence)
Basic earnings per share* 0.25 4.13
Dilutive shares and options (0.01) (0.06)
───── ─────
Diluted earnings per share* 0.24 4.07
═════ ═════
Adjusted earnings per share (from continuing operations) 5.25 4.24
Dilutive shares and options (0.04) (0.06)
───── ─────
Adjusted diluted earnings per share (from continuing operations) 5.21 4.18
═════ ═════
*2022 Basic and diluted EPS includes amounts relating to discontinued
operations of 0.04p and 0.04p respectively.
More detail on adjusted earnings is provided in note 9.
Total number of shares outstanding at 31 March 2023 amounted to 516,983,637
(2022: 518,220,366), including 4,162,452 (2022: 4,236,422) shares held in the
Employee Benefit Trust and 55,146,281 (2022: nil) shares held in treasury,
which are excluded in calculating basic earnings per share.
8 Dividends
The aggregate amount of dividend paid in the year comprises:
Year ended Year ended
31 March 31 March
2023 2022
£m £m
2021 final dividend (1.40 pence on 522.9m ordinary shares) - 7.3
2022 interim dividend (0.75 pence on 524.2m ordinary shares) - 4.0
2022 final dividend (1.45 pence on 489.5m ordinary shares) 7.1 -
2023 interim dividend (0.80 pence on 474.7m ordinary shares) 3.8 -
───── ─────
10.9 11.3
═════ ═════
Subsequent to the end of the year and not included in the results for the
year, the Directors recommended a final dividend of 1.80 pence per share
(2022: 1.45 pence per share), bringing the total amount payable in respect of
the 2023 year to 2.60 pence per share (2022: 2.20 pence per share), to be paid
on 22 September 2023 to shareholders on the register on 11 August 2023.
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 2023, the Trust held 4,162,452 ordinary shares (2022:
4,236,422).
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.
£m £m
Operating profit 3.8 31.6
Add back: amortisation 1.8 1.0
Add back: exceptional items 28.5 -
───── ─────
Adjusted operating profit 34.1 32.6
Add back: depreciation 69.6 66.7
───── ─────
EBITDA before exceptional items 103.7 99.3
═════ ═════
Profit before tax 1.8 29.1
Add back: amortisation 1.8 1.0
Add back: exceptional items 28.5 -
───── ─────
Adjusted profit before tax 32.1 30.1
═════ ═════
Return on capital employed (ROCE)
Adjusted profit before tax 32.1 30.1
Interest 8.6 5.7
───── ─────
Profit before tax, interest amortisation and exceptional items 40.7 35.8
Average gross capital employed(1) 280.5 264.0
ROCE 14.5% 13.6%
(1)Average gross capital employed (where capital employed equals shareholders'
funds and net debt) based on a two-point average between opening and closing
for the financial year.
10 Intangible fixed assets
Goodwill Customer Brands IT development Total
lists
£m £m £m £m £m
Cost
At 1 April 2021 reported* 126.3 45.1 7.0 4.7 183.1
Restatement* (96.4) (36.8) (4.4) - (137.6)
───── ───── ───── ───── ─────
At 1 April 2021 restated* 29.9 8.3 2.6 4.7 45.5
Additions - - - 2.2 2.2
───── ───── ───── ───── ─────
At 31 March 2022 29.9 8.3 2.6 6.9 47.7
Additions - - - 0.9 0.9
Disposals (12.4) (5.4) (1.3) - (19.1)
───── ───── ───── ───── ─────
At 31 March 2023 17.5 2.9 1.3 7.8 29.5
═════ ═════ ═════ ═════ ═════
Accumulated Amortisation
At 1 April 2021 reported* 108.8 43.3 6.3 - 158.4
Restatement* (96.4) (36.8) (4.4) - (137.6)
───── ───── ───── ───── ─────
At 1 April 2021 restated* 12.4 6.5 1.9 - 20.8
Charged in year - 0.3 0.2 0.5 1.0
───── ───── ───── ───── ─────
At 31 March 2022 restated* 12.4 6.8 2.1 0.5 21.8
Charged in year - 0.3 0.1 1.4 1.8
Disposals (12.4) (5.4) (1.3) - (19.1)
───── ───── ───── ───── ─────
At 31 March 2023 - 1.7 0.9 1.9 4.5
═════ ═════ ═════ ═════ ═════
Net book value
At 31 March 2023 17.5 1.2 0.4 5.9 25.0
═════ ═════ ═════ ═════ ═════
At 31 March 2022 17.5 1.5 0.5 6.4 25.9
═════ ═════ ═════ ═════ ═════
At 31 March 2021 17.5 1.8 0.7 4.7 24.7
═════ ═════ ═════ ═════ ═════
*Prior years restated to eliminate items with nil net book value
The remaining amortisation period of each category of intangible fixed asset
is the following; Customer lists 1-4 years (2022: 1-5 years), Brands 4 years
(2022: 5 years) and IT development 5 years (2022: 6 years).
During the year ended 31 March 2022, the Geason business was closed. The
associated goodwill and intangible assets were fully impaired in 2021. Geason
was put into liquidation in the year ended 31 March 2023, resulting in the
disposal of the related goodwill and intangibles, as shown in the table above.
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 0.5 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
═════ ═════ ═════ ═════ ═════
Allocated to
Hire 16.5 0.7 0.4 5.8 23.4
Services 1.0 0.8 0.1 0.6 2.5
───── ───── ───── ───── ─────
At 31 March 2022 17.5 1.5 0.5 6.4 25.9
═════ ═════ ═════ ═════ ═════
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 and considers at each
reporting date whether there are indicators that impairment may have occurred.
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. Previously analysed
segments were UK and Ireland and Corporate items only.
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:
31 March 2023 31 March 2022
──────────────────── ────────────────────
Pre-tax Terminal value Pre-tax Terminal value
discount rate growth rate discount rate growth rate
UK and Ireland 12.0% 2.5% 11.4% 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. Sensitivity analysis was undertaken on both these
key assumptions, with no resulting impairment charge being identified for
either CGU. There are no reasonable variations in these assumptions that would
be sufficient to result in an impairment at the 31 March 2023.
It is noted that the market capitalisation of the Group at 31 March 2023 was
below the consolidated net asset position - one indicator that an impairment
may exist. In considering various factors, including the share buyback
programme and recent investor activity, it is determined that no impairment is
required in this regard.
At 31 March 2023, the headroom between value in use and carrying value of
related assets for the UK and Ireland was £99.2m (2022: £52.8m) - £50.7m
for Hire and £48.5m for Services. The increase from prior year is largely due
to a reduction in the value of hire equipment assets. If the lower prior year
WACC was used, the combined headroom would increase significantly to £131.6m.
11 Property, plant and equipment
Land and Hire Total
buildings equipment Other
£m £m £m £m
Cost
At 1 April 2021 50.6 386.6 88.5 525.7
Foreign exchange - (1.0) (0.3) (1.3)
Additions 6.1 68.4 7.6 82.1
Disposals (3.5) (15.8) (4.1) (23.4)
Transfers to inventory - (15.5) - (15.5)
───── ───── ───── ─────
At 31 March 2022 53.2 422.7 91.7 567.6
Foreign exchange - (0.1) - (0.1)
Additions 3.3 52.1 5.5 60.9
Disposals (2.0) (45.2) (0.6) (47.8)
Exceptional write-off* - (33.0) - (33.0)
Transfers to inventory - (23.6) - (23.6)
───── ───── ───── ─────
At 31 March 2023 54.5 372.9 96.6 524.0
═════ ═════ ═════ ═════
Accumulated Depreciation
At 1 April 2021 36.6 179.4 76.6 292.6
Foreign exchange - (0.1) (0.2) (0.3)
Charged in year 3.9 35.2 4.1 43.2
Disposals (2.9) (7.2) (4.0) (14.1)
Transfers to inventory - (11.5) - (11.5)
───── ───── ───── ─────
At 31 March 2022 37.6 195.8 76.5 309.9
Foreign exchange - 0.2 - 0.2
Charged in year 4.4 33.9 4.7 43.0
Disposals (1.4) (34.9) (0.5) (36.8)
Exceptional write-off* - (12.6) - (12.6)
Transfers to inventory - (17.4) - (17.4)
───── ───── ───── ─────
At 31 March 2023 40.6 165.0 80.7 286.3
═════ ═════ ═════ ═════
Net book value
At 31 March 2023 13.9 207.9 15.9 237.7
═════ ═════ ═════ ═════
At 31 March 2022 15.6 226.9 15.2 257.7
═════ ═════ ═════ ═════
At 31 March 2021 14.0 207.2 11.9 233.1
═════ ═════ ═════ ═════
*See Note 4
The net book value of land and buildings comprises improvements to short
leasehold properties.
Of the £207.9m (2022: £226.9m) net book value of hire equipment, £32.1m
(2022: 49.3m) 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
£6.7m (2022: £6.0m) is also included in other property, plant and equipment.
At 31 March 2023, no indicators of impairment were identified in relation to
property, plant and equipment.
12 Right of use assets
Land and Total
buildings Other
£m £m £m
Cost
At 1 April 2021 restated* 132.2 48.2 180.4
Additions 6.6 15.9 22.5
Remeasurements 12.8 5.7 18.5
Disposals (7.2) (14.2) (21.4)
───── ───── ─────
At 31 March 2022 restated* 144.4 55.6 200.0
Additions 2.1 28.1 30.2
Remeasurements 4.1 3.5 7.6
Disposals (5.3) (22.4) (27.7)
───── ───── ─────
At 31 March 2023 145.3 64.8 210.1
═════ ═════ ═════
Accumulated Depreciation
At 1 April 2021 86.6 33.8 120.4
Charged in year 12.2 11.3 23.5
Disposals (6.5) (11.6) (18.1)
───── ───── ─────
At 31 March 2022 92.3 33.5 125.8
Charged in year 13.1 13.5 26.6
Disposals (5.1) (20.4) (25.5)
───── ───── ─────
At 31 March 2023 100.3 26.6 126.9
═════ ═════ ═════
Net book value
At 31 March 2023 45.0 38.2 83.2
═════ ═════ ═════
At 31 March 2022 52.1 22.1 74.2
═════ ═════ ═════
At 31 March 2021 45.6 14.4 60.0
═════ ═════ ═════
*See note 17
Included within disposals for the year ended 31 March 2023 is £1.7m relating
to exceptional disposals following the restructure undertaken in the year (see
Note 4).
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
2023 2022
£m £m
Current borrowings
Bank overdraft 1.3 1.7
Lease liabilities 22.1 20.6
───── ─────
23.4 22.3
═════ ═════
Non-current borrowings
Maturing between two and five years
- Asset based finance facility 92.2 68.3
- Lease liabilities 64.0 56.1
───── ─────
Total non-current borrowings 156.2 124.4
───── ─────
Total borrowings 179.6 146.7
Less: cash (1.1) (2.5)
Exclude lease liabilities (86.1) (76.7)
───── ─────
Net debt(1) 92.4 67.5
═════ ═════
(1) Key performance indicator - excluding lease liabilities
Reconciliation of financing liabilities and net debt
1 April Non-cash Cash flow 31 March
2022 movement 2023
£m £m £m £m
Bank borrowings (68.3) 0.5 (24.4) (92.2)
Lease liabilities (76.7) (39.4) 30.0 (86.1)
───── ───── ───── ─────
Liabilities arising from financing activities (145.0) (38.9) 5.6 (178.3)
Cash at bank and in hand 2.5 - (1.4) 1.1
Bank overdraft (1.7) - 0.4 (1.3)
───── ───── ───── ─────
Net debt (144.2) (38.9) 4.6 (178.5)
═════ ═════ ═════ ═════
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. The cash
and undrawn availability of this facility as at 31 March 2023 was £83.5m
(2022: £110.8m), 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 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 year, the effective margin was 1.82% (2022: 1.73%).
The facility is secured by fixed and floating charges over the Group's
itemised hire fleet assets and trade receivables.
The facility has the following covenants:
Minimum Excess Availability: 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.
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 Lease liabilities
Land and Total
buildings Other
£m £m £m
At 1 April 2021 48.8 14.4 63.2
Additions 6.6 15.9 22.5
Remeasurements 12.8 5.7 18.5
Repayments (15.0) (12.1) (27.1)
Unwinding of discount rate 1.9 0.6 2.5
Terminations (1.9) (1.0) (2.9)
───── ───── ─────
At 31 March 2022 53.2 23.5 76.7
Additions 2.1 28.1 30.2
Remeasurements 4.1 3.5 7.6
Repayments (15.5) (14.5) (30.0)
Unwinding of discount rate 1.8 1.7 3.5
Terminations (0.5) (1.4) (1.9)
───── ───── ─────
At 31 March 2023 45.2 40.9 86.1
═════ ═════ ═════
Included within terminations in the year ended 31 March 2023 is £0.8m
relating to exceptional terminations of property leases, as described in Note
4.
Amounts payable for lease liabilities (discounted at the incremental borrowing
rate of each lease) fall due as follows:
31 March 31 March
2023 2022
£m £m
Payable within one year 22.1 20.6
Payable in more than one year 64.0 56.1
───── ─────
At 31 March 86.1 76.7
═════ ═════
15 Provisions
Dilapidations Training provision Total
£m £m £m
At 1 April 2021 restated* 15.7 1.2 16.9
Additional provision recognised 0.3 - 0.3
Provision utilised in the year (2.0) (0.5) (2.5)
Unwinding of the discount 0.2 - 0.2
───── ───── ─────
At 31 March 2022 restated* 14.2 0.7 14.9
Additional provision recognised 2.9 - 2.9
Provision utilised in the year (1.6) (0.7) (2.3)
Unwinding of the discount 0.1 - 0.1
───── ───── ─────
At 31 March 2023 15.6 - 15.6
═════ ═════ ═════
*See note 17
Of the £15.6m provision at 31 March 2023 (2022: £14.9m restated*), £3.6m
(2022: £2.8m) is due within one year and £12.0m (2022: £12.1m restated*) is
due after one year.
The dilapidations provision relates to amounts payable to restore leased
premises to their original condition upon the Group's exit of the lease for
the site and other committed costs. Dilapidations may not be settled for some
months following the Group's exit of the lease and are calculated based on
estimated expenditure required to settle the landlord's claim at current
market rates. The total liability is discounted to current values. The
additional provision recognised in the year relates to exceptional
restructuring of depots as described in Note 4.
The movement in the year on the training provision is settlement of the costs
within the provision previously set up relating to the Geason Training
business.
16 Share capital
31 March 2023 31 March 2022
Number Amount Number Amount
m £m m £m
Allotted, called-up and fully paid
Opening balance (ordinary shares of 5 pence each) 518.2 25.9 528.2 26.4
Exercise of Sharesave Scheme options 0.2 - 1.1 0.1
Purchase and cancellation of own shares (1.4) (0.1) (11.1) (0.6)
───── ───── ───── ─────
Total 517.0 25.8 518.2 25.9
═════ ═════ ═════ ═════
In January 2022 the Company commenced a share buyback programme. By
resolutions passed at the 9 September 2021 AGM, the Company's shareholders
generally authorised the Company to make market purchases of up to 52,831,110
of its ordinary shares. A further resolution was then passed in June 2022,
authorising the Company to make further market purchases up to a maximum of
50,613,543 of its ordinary shares.
In the year ended 31 March 2022, a total of 11,114,363 ordinary shares were
purchased and cancelled. A further 401,186 shares were acquired immediately
prior to the year ended 31 March 2022 and cancelled in April 2022. In the year
ended 31 March 2023, a total of 1,051,228 ordinary shares were purchased and
subsequently cancelled, with a further 55,146,281 shares repurchased and
placed in treasury.
The share buyback programme was completed on 8 March 2023, at which point all
shares for which there was an obligation to buyback from the broker had been
repurchased by Speedy. In the year ended 31 March 2023, the average price paid
was 42p (2022: 54p) with a total consideration (inclusive of all costs) of
£24.0m (2022: £6.2m). Related costs incurred totalled £0.2m.
During the year, 0.2m ordinary shares of 5 pence were issued on exercise of
options under the Speedy Hire Sharesave Schemes (2022: 1.1m).
An Employee Benefits Trust was established in 2004 (the 'Trust'). The Trust
holds shares issued by the Company in connection with the Performance Share
Plan. No shares were acquired by the Trust during the year and 73,970 (2022:
177,094) shares were transferred to employees during the year. At 31 March
2023, the Trust held 4,162,452 (2022: 4,236,422) shares.
17 Prior year 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. This has been reviewed to assess a more
comprehensive view of the future liability on all leases in line with
accounting standards, and is a change from 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 2021, 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 31 March
2022 is as follows:
Reported Adjustment Restated
£m £m £m
Assets:
Right of use asset 73.3 0.9 74.2
Liabilities:
Provisions (4.0) (10.9) (14.9)
Net assets 226.4 (10.0) (216.4)
Equity:
Retained earnings as at 1 April 2021 193.8 (10.0) 183.8
Retained earnings as at 31 March 2022 198.8 (10.0) 188.8
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