REG - Speedy Hire PLC - Final Results
30/05/2022 07:15
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RNS Number : 1579N Speedy Hire PLC 30 May 2022
Speedy Hire Plc
("Speedy", "the Company" or "the Group")
Results for the year ended 31 March 2022
Strong performance in line with strategic goals
Speedy, the UK's leading tools and equipment hire services company, operating
across the construction, infrastructure and industrial markets, announces
results for the year ended 31 March 2022.
Commenting on the results Russell Down, Chief Executive, said:
"I am pleased to report results that reflect the strong performance we have
achieved this year. We have continued to progress our strategic goals by
taking market share, developing a first class digital customer experience,
prioritising our people and leading on ESG. This performance is testament to
the hard work and dedication of all my colleagues.
"We have made an encouraging start to FY2023 with volume growth and price
increases more than offsetting cost pressures. Against a backdrop of positive
end-markets and our unique leading service and ESG customer propositions, the
Board remains confident that we will meet its FY2023 expectations."
Underlying results - continuing operations
Year ended Year ended Change
31 March 2022 31 March 2021 %
(£m)
(£m)
Revenue (excluding disposals) 381.7 328.1 16.3
Adjusted operating profit(1) 32.6 21.7 50.2
Adjusted profit before tax(1) 30.1 17.5 72.0
Adjusted earnings per share (pence)(2) 4.24 2.68 58.2
Statutory results
Year ended Year ended Change
31 March 2022 31 March 2021 %
(£m)
(£m)
Revenue 386.8 332.3 16.4
Operating profit 31.6 12.5 152.8
Profit before tax 29.1 8.3 250.6
Basic earnings per share (pence) 4.13 1.82 126.9
Other measures
Year ended Year ended Change
31 March 2022 31 March 2021 %
(£m)
(£m)
Net debt(3) 67.5 33.2 (103.3)
Return on Capital Employed(4) 13.1% 8.4% 4.7pp
Dividend for the year (pence per share) 2.20 1.40 57.1
Group highlights
· Significant revenue and profit growth:
o Year on year revenue growth with strong performance in hire up 17.9% (H1:
31.8%; H2: 6.8%)
o Adjusted profit before tax from continuing operations ahead of FY2021 and
FY2020
o Increased market activity with a number of new contracts and renewals with
key customers including Costain, the Home Office, MGroup and Redrow Homes
o Further improvement in asset utilisation, up to 57.0% on enlarged hire
fleet
o Strong performance from our JV in Kazakhstan
o Recommended final dividend of 1.45p; total dividend for the year 2.20p
represents c.50% of adjusted EPS
· Strong balance sheet and investment in capex:
o Significant investment in hire fleet of £68.4m to satisfy customer demand
o Cash and facility headroom of £110.8m (31 March 2021: £142.3m)
o Net debt(3) at £67.5m (31 March 2021: £33.2m), with leverage(5) of 0.9x
(31 March 2021: 0.5x)
o Share buyback programme of up to £30m commenced in January 2022
reflecting the Group's cash generative ability and strong balance sheet
· Further strategic and operational progress:
o Investment in developing a Retail business in partnership with B&Q;
now in 36 stores and on diy.com
o Enhanced our omni-channel customer proposition offering the choice of
online, app, phone, depot and B&Q store
o Costs tightly controlled; prior year efficiency initiatives reinvested in
growth priorities
o Science based targets set to provide clear pathway to net zero emissions
by 2050
o Modernising our depot footprint with the new carbon neutral Innovation
Centre in Milton Keynes acting as a blueprint for our network plans
· Current trading and outlook:
o Encouraging start to FY2023 with underlying revenue up c.8%
o Volume growth and pricing initiatives are more than offsetting
inflationary cost pressures
o Key end markets expected to deliver growth through demand-driven volume
improvements, particularly from major infrastructure and energy projects
including HS2 and nuclear
o The Board remains confident of achieving its FY2023 expectations
Enquiries:
Speedy Hire
Plc
Tel: 01942 720 000
Russell Down, Chief Executive
James Bunn, Chief Financial Officer
MHP
Communications
Tel: 0203 128 8147
Oliver Hughes
Andrew Jaques
Notes:
Explanatory notes:
(1) See note 9
(2) See note 7
(3) See note 13
(4) Return on Capital Employed: Profit before tax, 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.
(5) Leverage: Net debt(3) covered by EBITDA(1). This metric excludes the
impact of IFRS 16.
Inside Information: This announcement contains inside information.
Forward looking statements: The information in this release is based on
management information. This report includes statements that are forward
looking in nature. Forward looking statements involve known and unknown risks,
assumptions, uncertainties and other factors which may cause the actual
results, performance or achievements of the Group to be materially different
from any future results, performance or achievements expressed or implied by
such forward looking statements. Except as required by the Listing Rules and
applicable law, the Company undertakes no obligation to update, revise or
change any forward looking statements to reflect events or developments
occurring after the date of this report.
Notes to Editors: Founded in 1977, Speedy is the UK's leading provider of
tools and equipment hire services to a wide range of customers in the
construction, infrastructure and industrial markets, as well as to local trade
and industry. The Group provides complementary support services through the
provision of training, asset management and compliance services. Speedy is
certified nationally to ISO50001, ISO9001, ISO14001, ISO17020, ISO27001 and
ISO45001. The Group operates from c.200 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 show significant year on year profit
growth. In addition, I am pleased to report that both revenue and adjusted
profit before tax on continuing operations are ahead of FY2020, the last full
year pre-COVID-19. We have a strong balance sheet and have invested
significantly in the innovative, market leading sustainable products that our
customers demand while launching a share buyback programme during the year.
Results
Group revenue increased by 16.4% to £386.8m (FY2021: £332.3m) with a number
of new contract wins and renewals reflecting our market leading customer
service proposition. Our partnership with B&Q was formalised during the
year growing our market share with trade and retail customers both in stores
and through their website, diy.com.
The Group sold its operations in the Middle East in March 2021, continuing to
operate internationally through a joint venture in Kazakhstan. Share of
profits increased to £3.2m (FY2021: £1.2m), as a result of increased
activity following new contract awards.
We have invested c.£70m in our hire fleet this year to meet increased demand
and to mitigate the effect of increased supplier lead times. Notwithstanding
the increased investment utilisation rates have increased to 57.0% and our net
debt / EBITDA remains low.
We have enhanced our ESG proposition following the appointment of an ESG
Director in April 2021. Our new strategy 'The decade to deliver' sets out
plans to reduce our carbon footprint, as well as helping our customers reduce
their environmental impact through the operation of a sustainable fleet of
hire assets.
Dividend
In line with our capital allocation policy we will continue to invest in
organic growth and acquisitions whilst maintaining regular returns to
shareholders. Following a review of the medium-term capital needs of the Group
the Board implemented a £30 million share buyback programme in January 2022.
To date c£10m of shares have been purchased under this programme.
The Board is pleased with the strong performance of the business and has
therefore recommended a final dividend of 1.45pps for the year (FY2021:
1.40pps). If approved at the forthcoming Annual General Meeting the dividend
will be paid on 23 September 2022 to shareholders on the register at close of
business on 12 August 2022.
Board and people
As previously announced, Russell Down has advised the Board of his intention
to retire. Russell will remain with the business until a successor is in
place, to ensure a smooth and orderly transition. The recruitment process for
a replacement is underway.
I would like to thank Russell both personally and on behalf of the Board for
his significant contribution as Chief Executive over the last seven years.
Under his leadership, the business has been transformed and is now well
positioned for future growth with an ambitious management team. We wish him
well for the future.
Carol Kavanagh joined the Board and Remuneration Committee on 1 June 2021 as
an Independent Non-executive Director. After allowing time for Carol to settle
into her role, Rhian Bartlett stepped down from the Remuneration Committee on
16 November 2021 in keeping with the Company's current policy of staffing its
Board Committees with three Independent Non-executive Directors.
During March 2022 the Board agreed to set up a new Sustainability Committee to
assist the Board in its oversight of the Group's ESG strategy including the
Group's performance in reducing its carbon footprint.
On behalf of the Board I would like to take this opportunity to thank all of
my colleagues for their continued hard work and dedication, which has enabled
our performance over the last year.
Future
I am pleased with the Group's performance this year and that revenues are now
ahead of the pre-COVID-19 period. We have a strong market position allowing us
to take advantage of positive end markets and deliver continued sustainable
growth. The Board looks forward with confidence for the year ahead.
David Shearer
Chairman
Chief Executive's statement
Overview
I am pleased with the results that we have reported today which are in line
with our expectations. Our revenue and profits have grown significantly,
demonstrating the strength of our customer value proposition.
Revenues have recovered post COVID-19 and for the UK and Ireland business are
now ahead of the year ended 31 March 2020. Total revenue is 16.4% ahead of
FY2021 reflecting increased market activity and new customer wins and
renewals.
Whilst the macro-economic environment is uncertain, our end markets are
positive with significant growth projected in major infrastructure and energy
projects including HS2 and nuclear. Our rail business has continued to expand
through winning market share from new and existing customers on HS2, CP6 and
more widely. In the housebuilding market we continued to see strong demand and
growth in the year.
The Group has implemented price increases, following product and customer
reviews, to offset inflationary cost pressures on both overheads and new
equipment purchases. We have improved our governance and reporting in this
area which will facilitate improved margins and the ability to implement more
dynamic pricing models.
Our investment in developing a retail business in partnership with B&Q has
continued. We were pleased to formalise an agreement with B&Q in September
2021 and now have a presence in 36 of their stores and online at B&Q's
website, diy.com.
Asset utilisation was 57.0% after significant investment in the Group's hire
fleet to satisfy customer demand and mitigate longer supply chain lead times.
The strength of our supply chain relationships and advanced planning using
artificial intelligence have been key to achieving strong asset utilisation
rates on our enlarged hire fleet.
Service revenues increased by 13.7% with particularly strong performance in
our rehire business which had a record year. Following the phasing out of red
diesel supplies to the construction industry we have also seen strong growth
in our fuel management business and particularly for HVO fuel which now
accounts for 12.3% (FY2021: 1.3%) of our fuel sales.
The Group sold its Middle East equipment fleet, stock and other fixed assets
to its principal customer, ADNOC, in March 2021. The Group entered into a
Transitional Services Agreement with ADNOC, which was extended until 30
September 2021, to support the transfer of the assets, during which time the
Group's c.600 UAE-based employees' contracts were terminated and all
colleagues offered re-employment by ADNOC. Actions are now underway to
liquidate our trading entities in the region.
We are continuing to trade internationally through a joint venture in
Kazakhstan. During the year the JV has performed well with increased activity
levels and contract wins. A new temporary power contract, which is expected to
run throughout 2022, has increased revenue and profits significantly. Share of
profits from the JV increased to £3.2m (FY2021: £1.2m).
Financing and liquidity
The business generated operating cash flow of £28.6m (FY2021: £72.9m)
reflective of increased capital expenditure. At 31 March 2022 net debt,
excluding IFRS16 lease liabilities, increased to £67.5m (2021: £33.2m). The
Group has significant headroom against its committed banking facilities of
£180m; leverage at 31 March 2022 was 0.9 times.
Share buyback
The Board reviewed the capital allocation policy and medium-term capital needs
of the Group in January 2022 and considered that a £30 million share buyback
programme was appropriate. The buyback reflects the cash generative ability of
the Group and its strong balance sheet with significant facility headroom. To
date c.£10m of shares have been purchased under this programme.
Results
Results and commentary are presented on a continuing operations basis unless
otherwise noted, reflecting the disposal of the Middle East business in March
2021 which was treated as discontinued. Revenue increased by 16.4% to £386.8m
(FY2021: £332.3m) reflecting a strong performance in core and partnered
services hire and an improved H2 performance in services. Group revenues,
excluding disposals, increased by 16.3% to £381.7m (FY2021: £328.1m).
Adjusted profit before tax increased 72.0% to £30.1m (FY2021: £17.5m).
Adjusted earnings per share were 4.24 pence (FY2021: 2.68 pence). Profit
before tax increased to £29.1m (FY2021: £8.3m).
The Group has a 45% share in a joint venture in Kazakhstan servicing the oil
and gas market. Share of profits increased to £3.2m (FY2021: £1.2m),
following new contract wins and the resultant increase in activity.
Dividend
The Board is committed to a progressive dividend policy with a pay-out ratio
of between 33% and 50% of underlying profit after tax.
The Board is pleased with the performance of the business and given its strong
balance sheet has recommended a final dividend of 1.45pps for the year ended
31 March 2022 (FY2021: 1.40pps). The full year dividend will amount to 2.20pps
which represents c.50% of adjusted EPS (FY2021: 1.40pps).
Strategy and operational review
Our 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.
We serve approximately 57,000 customers in the UK and Ireland, including 88 of
the UK's 100 largest contractors. Our customers include major infrastructure
contractors, housebuilders, industrials, SMEs, and consumers. During the year
we have won and extended major contracts with large contractors operating
nationally including Costain, the Home Office, MGroup and Redrow Homes whilst
also growing our retail business in partnership with B&Q. We are further
penetrating our addressable markets through cross-selling products and
services to achieve a higher share of wallet. Customer service is key to our
value proposition, driving retention and loyalty whilst increasing market
share.
The Group implemented price increases in April 2022 on list prices and new
contract renewals to offset the effects of cost inflation on both overheads
and new equipment purchases. Customers have largely been receptive to the
price increases which will take effect as framework contracts and hire
contracts are renewed.
We have increased our share of the SME market through continued growth in our
Customer Relationship Centre (CRC) in South Wales. Our partnership with
B&Q has been extended to 36 B&Q stores across the UK, and with the
launch of our B2C website we are bringing the hire proposition to consumers
through a significant national marketing campaign. The in-store B&Q
outlets give retail and trade customers the option to hire tools and equipment
from Speedy as part of their B&Q shopping experience enabling customers to
order and collect Speedy products seven days a week for the first time. Hiring
a wide range of tools and equipment enables homeowners to be more confident
and ambitious with their DIY and provides them with a convenient and
accessible way of completing improvement projects where buying bigger ticket
DIY tools may not be feasible. To maximise sales opportunities, the Speedy
concessions are located next to the TradePoint areas so as to promote the
option of hire to both retail and trade customers.
Our customers' key priorities are quality, availability, speed and a first
class customer experience. We offer an industry leading guaranteed four-hour
delivery service on our most popular products nationally. This unique customer
value proposition is driven by our service-led culture and is made possible by
the strategic investment we have made in the tools and equipment our customers
demand, and the back-end digital systems and processes that enable it. During
the year we invested £10 million in new products for our four-hour guaranteed
delivery promise, to meet rising customer demand for quick site deliveries.
The investment added 25,000 new assets to the Company's most popular products.
We have enhanced our omni-channel proposition, which enables customers to
trade in the way it suits them; online, on the app, by phone, in-store or
through our retail concessions within selected B&Q stores, providing an
industry leading and unique set of trading channels. The developments we have
made in the last year within digital, on-boarding and customer experience have
made it easier to do business with us. We have introduced an online
availability checker which enables customers to check availability on a
product before going through the checkout process and makes it easier for them
to see if the products they want to hire are located nearby for collection.
The results include both Speedy Service Centres, as well as our retail
locations in B&Q. For customers with a MySpeedy account, we have made
significant back-end technical improvements which enable customers to combine
our digital ordering process with their own internal approval processes to
submit approved orders. These developments are attracting and retaining
customers whilst reducing the overall cost-to-serve. They represent a
significant step forward in our web and app functionality. We have recently
appointed a Chief Digital Officer and further enhancements are planned in
FY2023 to ensure we continue to provide an industry leading digital customer
experience.
Our use of artificial intelligence to optimise our asset holdings produces a
dynamic forecast. Optimal stocking levels are set to ensure we have the right
assets, at the right locations, at the right time to satisfy customer demand
in the most efficient way. Artificial intelligence is enabling better decision
making to further enhance our utilisation rates and service to customers.
During the year we successfully upgraded our ERP (Enterprise Resource
Planning) system, Microsoft AX12, to the cloud based Microsoft Dynamics365.
The new system simplifies some of our key business processes and significantly
improves the user experience, increasing productivity and improving the
customer experience.
Services revenues are less capital intensive, have greater visibility and are
more recurring in nature than hire revenues. As a result, they are ROCE
enhancing for the Group. Our Services categories consist of: rehire; training;
testing, inspection and certification; product and consumable sales; and fuel
management services. Services revenue has performed strongly due to our
ability to cross-sell our complete customer proposition to larger customers.
Our rehire business, Partnered Services, has grown strongly this year and
expanded the range of products on offer. We lead the market in the provision
of sustainable hydrotreated vegetable oil (HVO) fuel and fuel management
services and consequently revenues have increased significantly.
ESG
We are committed to reaching net zero emissions before 2050, aligned to the
new SBTi Net Zero Standard. During the year we have set science based targets
to reduce our Scope 1 and 2 emissions by 50% before 2030. Our Scope 3
emissions account for c.90% of our overall carbon footprint, largely due to
emissions from customer use of our hired assets. During FY2023 we will
undertake science based modelling to create a pathway for the reduction of our
Scope 3 emissions.
Our carbon emissions in the UK and Ireland have reduced from 22,309 tonnes, in
the baseline year of 2019, to 16,775 tonnes in FY2022. This reduction has been
achieved through the procurement of renewable energy, a more efficient vehicle
fleet and the use of HVO fuel in our larger vehicles. This equates to a 23%
reduction on a CO2 per employee basis to 4.94 tonnes (2019 continuing
operations: 6.45 tonnes).
Our principal carbon emissions are from our vehicle fleet which is used for
delivery and collection of hire assets and business travel. We aim to lead the
industry in running a low carbon vehicle fleet, with a target of ensuring that
the majority of our vehicles are electric or hybrid by 2025. This commitment
will play a key role in meeting our carbon reduction targets, and the
commitment to our customers as a key part of their supply chain.
In the last year we invested in 64 new hybrid transit vans and are trialling a
number of additional electric vehicles. We also launched the first
all-electric 27 tonne vehicle used in the construction industry to deliver our
powered access products.
Our company car list now comprises entirely electric and hybrid vehicles. We
have a fleet of c.500 company cars and estimate future savings of up to 260
tonnes of CO2 annually from replacing diesel and petrol models. Our aim is for
all company cars to be hybrid or electric by 2023. To support the transition
we have continued to install electric vehicle charging points across our UK
Regional Service Centre network.
We are modernising our depot footprint and in November 2021 we launched our
new Innovation Centre in Milton Keynes. It showcases net-zero equipment and
provides an extensive ECO hire range including electric, solar and hydrogen
powered technologies. All commercial vehicles operating out of the site are
electric or fuelled by HVO, which emits up to 90% less CO2e when compared to
diesel, minimising our environmental impact. The centre is powered by 670
solar panels and utilises pioneering bespoke energy efficient lighting and
climate control technology. It is also home to a wellbeing and wildflower
garden, an 18-metre living wall and beehives made from repurposed hard hats.
The site uses furniture, from desks to garden benches, made from recycled
materials to help further lower its environmental impact. We have been
delighted to welcome many of our major, regional and local customers for site
tours to demonstrate its sustainability credentials and inspire our customers
with ideas that they have taken back to their businesses. The Innovation
Centre acts as a blueprint for our network plans going forward, and adds to
the list of larger new Regional Service Centres launched during the year
including sites at Reading, Swindon, Doncaster, Leicester, Aberdeen and
Edinburgh. The brand new sites also create an improved experience for our
colleagues through an enhanced and technically optimised working environment.
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 FY2022 we invested £68.4m in
our hire fleet, of which 56% was on sustainable equipment. We anticipate
investing a significant proportion of capex during FY2023 in sustainable
products in line with customer demand to help drive down carbon emissions.
We have undertaken an initial evaluation of our Scope 3 emissions and during
FY2023 will be undertaking further detailed analysis and evaluating strategies
with our supply chain to reduce these as quickly as possible.
During FY2022 colleagues raised over £75,000 for charities and community
groups, contributing to a range of worthy causes. We supported a colleague led
'As One' challenge to raise money for charity Mind and raise awareness of
mental health issues. The distance-based challenge saw Speedy teams
collectively run, walk, swim or cycle over 63,000 miles, raising a total of
£25,000.
People
We launched our People First strategy during the year that 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 5 years as part of our
commitment to the '5% club'. To recognise the considerable experience and
expertise we have within the business, we have also introduced a 'late
careers' mentor programme. This ensures the skills we need for the future are
retained whilst passing them on to new colleagues.
The Board is committed to supporting colleagues, new and established who are
participating in the long-term success of the business.
I have recently advised the Board of my intention to retire. I am proud to
have been Chief Executive at Speedy for the last seven years and of all we
have achieved during this period. I would like to take this opportunity to
thank all of my exceptionally talented colleagues, our customers and suppliers
for their support and wish them well for the future.
Summary and outlook
I am pleased to report results that reflect the strong performance we have
achieved this year. We have continued to progress our strategic goals by
taking market share, developing a first class digital customer experience,
prioritising our people and leading on ESG. This performance is testament to
the hard work and dedication of all my colleagues.
We have made an encouraging start to FY2023 with volume growth and price
increases more than offsetting cost pressures. Against a backdrop of positive
end-markets and our unique leading service and ESG customer propositions, the
Board remains confident that we will meet its FY2023 expectations.
Russell Down
Chief Executive
Financial review
Our financial results for FY2022 demonstrate our strong performance over the
year, underpinned by a commitment to excellent customer service. Market
conditions remained positive and we delivered growth through demand driven
volume improvements and better rates.
Hire revenue has grown throughout the year and was 17.9% ahead of FY2021 and
5.0% ahead of FY2020, which is a more meaningful comparison. We continued to
increase our market share, with recent contract wins and renewals. The
revenue performance also benefited from our improved digital offering, as well
as the enhanced Retail proposition in B&Q stores.
The start to the new financial year has been encouraging, with underlying
revenue for the year to date c.8% ahead of the comparative period in FY2022.
Alongside our positive financial performance, we have invested in the hire
fleet with capex spend of £68.4m in FY2022. 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. Focus on asset management using
predictive demand tools has further improved utilisation up to 57.0%.
The Group entered FY2022 with net debt at an appropriate level given the
significant economic and market uncertainties caused by the COVID-19
pandemic. Increased capital expenditure and the return of dividend payments
increased net debt during the year but it remained below the business cycle
target of 1.5x leverage. As such, in January 2022 the Company commenced a
share buyback programme. Net debt at the end of FY2022 of £67.5m represents
0.9x leverage.
Group financial performance
Results and commentary are presented on a continuing operations basis unless
otherwise noted, reflecting the disposal of the Middle East business in March
2021. Comparative amounts in the income statement are to FY2021, which was
affected by the COVID-19 pandemic. To aid understanding of the underlying
performance, comparison to FY2020 is given where relevant.
Revenue (excluding disposals) for the year to 31 March 2022 increased by 16.3%
versus FY2021 to £381.7m and 3.9% versus FY2020. Revenue from disposals was
£5.1m (FY2021: £4.2m); total revenue for the year increased by 16.4% to
£386.8m (FY2021: £332.3m).
Gross profit was £221.1m (FY2021: £184.9m), an increase of 19.6%. The
gross margin increased to 57.2% (FY2021: 55.6%), reflecting the volume and
rate increase in hire revenue with a largely fixed depreciation charge, and
Service margin impacted by sales mix.
EBITA increased by 50.2% to £32.6m (FY2021: £21.7m) and profit before
taxation, amortisation and exceptional costs increased to £30.1m (FY2021:
£17.5m), reflecting the strong in year performance versus FY2021 which was
impacted by COVID-19.
The share of profit from the joint venture in Kazakhstan increased to £3.2m
(FY2021: £1.2m) as result of strong recovery following COVID-19 pandemic and
new contract wins.
The Group incurred no exceptional items in the year (FY2021: £8.4m).
After taxation, amortisation and exceptional items, the Group made a profit of
£21.6m, compared to of £9.5m in FY2021.
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
2022 2021
£m £m %
Hire:
Revenue 243.3 206.4 17.9%
Cost of sales (54.5) (50.3)
Gross profit 188.8 156.1 20.9%
77.6% 75.6%
Gross margin
Services:
Revenue 138.4 121.7 13.7%
Cost of sales (107.8) (93.5)
Gross profit 30.6 28.2 8.5%
22.1% 23.2%
Gross margin
Hire revenue increased by 17.9% compared to FY2021 which was significantly
impacted by the national lockdown imposed at the end of March 2020. Revenue
showed progressive growth throughout the year and was 5% ahead of the more
meaningful corresponding period in FY2020. A number of new and renewed
contracts with key customers were secured during the year, reflecting the
strength of our market position. The year closed strongly, with hire revenue
c.7% ahead of Q4 FY2021 which was less impacted by COVID-19.
Services revenues increased by 13.7% in the year, with a record performance
from our rehire business, reflecting an expansion of our product offering.
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,
particularly for HVO fuel. Services revenue for the year was affected by the
decision to cease the provision of NVQs and Apprenticeships from July 2021.
The Group implemented price increases in April 2022 to offset the effects of
cost inflation on both overheads and new equipment purchases. The price
increases will take effect as framework agreements and hire contracts are
renewed.
Gross margins increased from 55.6% to 57.2%. Hire margin increased to 77.6%
(FY2021: 75.6%) as volumes increased, utilisation improved further and other
direct costs remained tightly controlled. Asset utilisation for the year
increased to 57.0% on our enlarged hire fleet as a result of the continued use
of artificial intelligence and the asset replenishment programme to connect
customer demand with asset availability. Services margin was impacted by
sales mix with comparably stronger revenue performance in lower margin
services such as rehire and fuel and a reduction in higher margin training
revenues, reducing overall margin to 22.1% (FY2021: 23.2%).
Overheads
Overheads remain well controlled with the increase versus FY2021 supporting
growth across the business. Improvements have been made to simplify and
standardise our operating model, including the consolidation of a number of
depots into larger customer focused centres. The cost savings from these
initiatives have been reinvested in our people, ESG and omni-channel
capabilities.
The UK and Ireland headcount increased to 3,554, compared to 3,303 at 31 March
2021 to support business growth initiatives including 162 colleagues are now
employed in B&Q stores (31 March 2021: 50).
Inflationary pressures on overheads, particularly salaries, utilities and fuel
are expected in FY2023. The Group will continue to control overheads to help
reduce the impact of inflation on the Group's performance.
Interest
The Group's net financial expense, including interest on lease liabilities,
increased to £5.7m (FY2021: £5.4m) reflecting higher average gross
borrowings throughout the year.
Net debt, excluding lease liabilities, as at 31 March 2022 increased to
£67.5m (2021: £33.2m), reflecting increased capital expenditure, the return
of dividend payments and £6.0m for the recently commenced share buyback
programme.
The Group's main bank facilities were renewed in July 2021 for a three year
term. Borrowings under the facility are now priced based on SONIA (LIBOR prior
to renewal) 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 1.50% and 2.05% dependent on the weighting
of borrowings between receivables and plant and machinery. The effective
average margin in the period was 1.73% (FY2021: 1.80%).
The Group utilises interest rate hedges to manage fluctuations in SONIA with
varying maturity dates to November 2024. The fair value of these hedges was
not material at 31 March 2022.
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 £7.7m (FY2021: £2.2m), with an effective tax
rate of 26.5% (FY2021: 26.5%). An increase in the UK corporation tax rate to
25% for periods from 1 April 2023 was substantively enacted on 24 May 2021.
This rate has been used to calculate the deferred tax assets and liabilities
and has resulted in the effective rate of tax for the year being above the
current standard rate of 19%. The impact of the rate change is an increase of
£2.0m in the net deferred tax liability as at 31 March 2022; excluding the
impact of this change in tax rate, the effective rate would be 19.6%.
International segment
Following the disposal of the Middle East business on 1 March 2021, the Group
successfully concluded the transitional services arrangement in the year; the
Group is in the process of formally winding up its operations in the region.
Earnings per share
At 31 March 2022, 518,220,366 Speedy Hire Plc ordinary shares were
outstanding, of which 4,236,422 were held in the Employee Benefits Trust.
11,114,363 shares were re-purchased by 31 March 2022 and cancelled as part of
the share buyback programme. Shares repurchased after 6 April 2022 have been
placed in Treasury. As at 26 May 2022 19,343,119 shares have been repurchased
of which 6,776,342 are held in Treasury, following settlement of the
transactions to that date.
Adjusted earnings per share from continuing operations was 4.24 pence (FY2021:
2.68 pence), an increase of 58.2%. Based on a normalised tax rate (excluding
the impact on deferred tax of the increase in the UK corporation tax rate)
adjusted earnings per share was 4.62 pence. Basic earnings per share was 4.13
pence (FY2021: 1.82 pence).
Capital expenditure and disposals
Total capital expenditure during the year amounted to £82.1m (FY2021:
£43.7m), of which £68.4m (FY2021: £36.0m) related to equipment for hire.
Our hire fleet investment is biased towards carbon efficient ECO products. The
strength of our supply chain relationships and advanced planning have meant
that we received assets in a timely manner to support existing demand and
growth. Non-hire fleet capital expenditure increased to £13.7m (FY2021:
£7.7m) representing the investment in our properties and IT capabilities.
As a result of the increased hire fleet investment during the year, the
average age of the fleet remains young in comparison to the industry at 3.6
years. Proceeds from disposal of hire equipment were £13.6m (FY2021:
£12.2m).
During the year we further optimised our stockholdings across the network,
applying machine learning to inform decisions on returns and asset
utilisation, which highlighted those areas requiring investment.
The Group expects to invest further in its hire fleet to support revenue
growth in FY2023, albeit at a more normalised level than FY2022. Forward
demand planning will continue to help mitigate the potential risk from lead
time delays and price inflation.
Balance sheet
The Group continues to maintain a strong balance sheet, which reflects the
decisive action taken during COVID-19, proactive management of the asset fleet
and effective control over working capital.
Net assets at 31 March 2022 were £226.4m (2021: £220.8m), equivalent to 43.7
(2021: 41.8) pence per share.
Net property, plant and equipment (excluding IFRS 16 right of use assets) was
£257.7m as at 31 March 2022 (2021: £233.1m), of which equipment for hire
represents 88.0% (2021: 88.9%).
Intangibles increased to £25.9m (2021: £24.7m), due to increased IT
development expenditure and in particular the core system update to the latest
cloud-based ERP application from Microsoft Dynamics 365.
Right of use assets of £73.3m (2021: £59.1m) and corresponding lease
liabilities of £76.7m (2021: £63.2m) have increased in part due to new
vehicle leases to support the move to a lower carbon fleet.
Throughout the year the business has continued to 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 throughout the year. Gross trade receivables totaled
£104.9m at 31 March 2022 (2021: £93.4m). Bad debt provisions were £3.0m
as at 31 March 2022 (2021: £3.5m), equivalent to 2.9% of gross trade
receivables (2021: 3.8%). The FY2021 provision included specific provisions
for the training and international businesses which are no longer required.
Debtor days as at 31 March 2022 were 66.6, having returned to a more normal
level following a low of 58.9 at March 2021.
Trade payables as at 31 March 2022 were £45.3m (2021: £49.8m). Creditor
days were 55.9 (2021: 47.8).
Cash flow and net debt
Cash generation remained strong, with cash generated from operations for the
year of £28.6m reflecting increased capital expenditure (FY2021: £72.9m).
Free cash flow (being net cash flow before financing activities) decreased
to £5.5m (FY2021: £69.7m).
Net debt increased by £34.3m from £33.2m at the beginning of the year to
£67.5m at 31 March 2022. Excluding the impact of IFRS 16, leverage
increased to 0.9x (FY2021: 0.5x). The Group retained substantial headroom
within its bank facility throughout the year with cash and undrawn facility
availability of £110.8m as at 31 March 2022 (2021: £142.3m).
The Group's £180m asset based finance facility has been renewed for three
years, through to July 2024. In addition, uncommitted options exist for a
further two one-year extensions until July 2026. The additional uncommitted
accordion of £220m remains in place through to July 2024. The terms of the
facility are broadly similar to the expired facility and 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.
Dividend
The Board has proposed a final dividend for FY2022 of 1.45 pence per share
(FY2021: 1.40 pence per share) to be paid on 23 September 2022 to shareholders
on the register on 12 August 2022. The cash cost of this dividend is expected
to be c.£7.6m. This takes the total dividend for FY2022 to 2.20 pence per
share (FY2021: 1.40 pence per share) following an interim dividend of 0.75
pence per share (FY2021: nil pence per share).
Capital allocation policy
The Board intends to continue to invest in the business in order to grow
revenue, profit and ROCE. This investment is expected to include capital
expenditure within existing operations, as well as value enhancing
acquisitions that fit with the Group's strategy and are returns accretive.
The Board's objective is to maximise long term shareholder returns through a
disciplined deployment of cash generated, and it has adopted the following
capital allocation policy in support of this:
- Organic growth: the Board will invest in capital equipment to
support demand in our chosen markets. This investment will be in hire fleet
and IT systems to better enable us to serve our customers;
- Regular returns to shareholders: the Board intends to pay a
regular dividend to shareholders, with a policy of growing dividends through
the business cycle, and a payment in the range of between 33% and 50% adjusted
earnings per share;
- Acquisitions: the Board will continue to explore value
enhancing acquisition opportunities in specialist hire and services businesses
consistent with the Group's existing operations;
- Gearing and treatment of excess capital: the Board is committed
to maintaining an efficient balance sheet. The Board has adopted a target
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.
During FY2022 the Board reviewed the medium-term capital needs of the Group
and as a result commenced a share buyback programme from 28 January 2022, up
to a maximum aggregate consideration of £30 million. The programme is
expected to continue until the 2022 Annual General Meeting which is to be held
on 8 September 2022, when it will be reviewed.
Return on capital
ROCE is a key performance measure for the Group and increased to 13.1%, now
exceeding pre-COVID-19 levels for continuing operations (FY2020: 12.4%). We
are confident that our strong market position, underpinned by pricing
initiatives, operational efficiency and focus on asset management will enable
the Group to achieve its ROCE aspirations of c.15% over the medium term.
James Bunn
Chief Financial Officer
The responsibility statement below has been prepared in connection with the
Group's full annual report for the year ended 31 March 2022. Certain parts
of that report are not included within this announcement.
Directors' Responsibilities Statement
We confirm that to the best of our knowledge:
· the Financial Statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and
the undertakings included in the consolidation taken as a whole;
· the Strategic Report includes a fair review of the development
and performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
The names and functions of the Directors of the Company are:
Name Function
David Shearer Chairman
Russell Down Chief Executive
James Bunn Chief Financial Officer
David Garman Senior Independent Director
Rob Barclay Non-Executive Director
Rhian Bartlett Non-Executive Director
Shatish Dasani Non-Executive Director
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
COVID-19 pandemic Trading performance We continue to monitor Government guidance and take action to ensure the
safety of our colleagues, as we support customers.
Whilst the Group performed well during the UK & Ireland lockdown periods,
the uncertainty from COVID-19 leads to difficulty in forecasting. Although We have implemented COVID-19 safe ways of working and a flexible working
the restrictions imposed by Government have almost all been lifted, there policy for employees who can perform duties from home utilising our secure and
remains a risk of future restrictions in the event of new variants emerging. robust infrastructure and technology platforms.
There are risks that the people and supply chain risks described for the Group
below may also impact our customers' businesses and reduce our ability to Speedy operates one of the youngest hire fleets in the industry and is well
achieve revenue targets. placed to flex capital expenditure during this period, whilst maintaining
customer service.
People
Based on various revenue downturn scenarios, and the measures outlined above,
The COVID-19 pandemic has led to shortages in the workforce as a direct result the Board remains confident that the Group can withstand a prolonged period of
of illness or isolation measures, along with changes in holiday patterns. reduced trading activity, including in the event of a further national
These factors could result in an inability to effectively service our lockdown.
customers' requirements.
Supply chain
The supply of goods, services and assets (including the availability of
spares) may be disrupted or there may be delays introduced into the supply
chains. This may also result in an inability to effectively service our
customers' requirements.
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.
Environmental hazard We maintain systems that enable us to hold appropriate industry recognised
accreditations supported by a specialist software platform for managing data
The provision of such machinery includes handling, transport and dispensing of and reporting in relation to Health, Safety and Environment.
substances, including fuel, that are hazardous to the environment in the event
of spillage. 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 under "Trust Speedy
to Deliver" 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) and online based customer
feedback system are fully embedded into our business and these are used to
Back office services improve the on-site customer experience.
It is important that Speedy is able to provide timely and accurate management Speedy liaises with its customer base and takes into account feedback where
information to its customers, along with accurate invoices and supporting particular issues are noted, to ensure that work on resolving those issues is
documentation. prioritised accordingly. We have introduced a Net Promoter Score metric into
our business to drive improvement through dashboard reporting at depot level.
In both cases, a failure to provide such service could lead to a failure to
attract or retain customers, or to diminish the level of business such During the year we successfully concluded the implementation of a new ERP
customers undertake with Speedy. system; Microsoft Dynamics365. This provides opportunities for future
enhancements to customer service by utilising standard and bespoke modules
from the system.
Sustainability and climate change Climate change The Group has built on its strong position of embracing the ESG agenda with
the creation of the Board Sustainability Committee to oversee the development
There is a risk that climate change may impact Speedy's operations or ability of the sustainability and climate change response plan.
to trade. Conversely, there is a risk that Speedy will fail to meet internal
or external targets designed to reduce the Group's impact on climate change. Robust science-based targets have been set and a director has been appointed
to lead the programme, reporting directly to the Chief Executive.
This could arise from insufficient target setting, inadequate progress of
initiatives, or a failure to capture relevant data accurately. Speedy has incorporated hybrid and fully electric vehicles into both the
commercial and company car fleets to ensure we continue to reduce our
Sustainability emissions
There is a risk that the Group's business model may not be sustainable in the Further details of the risks, opportunities and mitigating actions in relation
long term, for example if assets reliant on fossil fuels are not replaced or to sustainability and climate change are detailed in the Taskforce for
if the distribution network continues to be similarly reliant on fossil fuels. Climate-Related Financial Disclosures (TCFD) section of the Annual Report and
Accounts.
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 We have opened 36 concessions within B&Q stores, which allows the Group to
larger customers be lost when such agreements may individually represent a directly access a marketplace that represents significant potential for
material element of our revenues. growth. This is supported by a link from B&Q's diy.com website directly
to the Speedy consumer online offering. The Group's operational management
team includes a managing director dedicated to retail based routes to market.
We have made a significant investment in the year to improve our web-based
offering to enable our customers to transact digitally with us, enhancing the
ease with which our customers can do business with Speedy.
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 Group's capabilities. The results of due
diligence are presented to the Board prior to formal approval being granted.
The use of a cross functional project team, including specialists where
necessary, will ensure effective integration into the Group. These teams work
with a blueprint plan, modified as needed to specifically address any risks
identified during the due diligence phase.
An established Programme Management Office function has clearly defined
governance in place to oversee all change initiatives. During the year this
capability has been improved with the adoption of a change management
methodology designed to increase the success rate of projects.
People Employee excellence The combined impacts of COVID-19 and BREXIT has resulted in short term
challenges, particularly in the recruitment and retention of drivers and
In order to achieve our strategic objectives, it is imperative that we are engineers. We have reviewed our reward packages for these colleagues and are
able to recruit, retain, develop and motivate employees who possess the right actively seeking alternative routes to meet the demand, such as our support
skills for the Group, whilst also demonstrating our commitment to equality, for the 5% Club and the Armed Services Covenant.
diversity and inclusivity.
Skill and resource requirements for meeting the Group's objectives are
Labour availability actively monitored and action is taken to address identified gaps. Succession
planning aims to identify talent within the Group and is formally reviewed on
There is a risk that with increased numbers of people leaving the labour an annual basis by the Nomination Committee, focusing on both short and
market, or salary inflation leading to increased staff turnover, there will be long-term successors for the key roles within the Group.
shortages of available employees for the Group, with greater requirements for
training. Programmes are in place for employee induction, retention and career
development, which are tailored to the requirements of the various business
units within the Group.
The Group regularly reviews remuneration packages and aims to offer
competitive reward and benefit packages, including appropriate short and
long-term incentive schemes.
Partner and supplier service levels Supply chain A dedicated and experienced supply chain function is in place to negotiate all
contracts and maximise the Group's commercial position. Supplier
Speedy procures assets and services from a wide range of sources, both UK and accreditations are recorded and tracked centrally through a supplier portal
internationally based. Within the supply chain there are risks of where relevant and set service related KPIs are included within standard
non-fulfilment. contract terms. Regular reviews take place with all supply chain partners.
The COVID-19 pandemic has resulted in some supply chain delays which may Where practical, agreements with alternative suppliers are in place for key
increase the likelihood of this risk impacting the Group. ranges, diluting reliance on individual suppliers.
It is possible that the war in Ukraine may result in disruption to the supply
chain.
Partner reputation
Significant revenues are generated from our rehire business, where the
delivery or performance is effected through a third party partner.
Speedy's ability to supply assets with the expected customer service is
therefore reliant on the performance of others with the risk that if this is
not effectively managed, the reputation of Speedy and hence future revenues
may be adversely impacted.
Operating costs Fixed cost base The Group has a purchasing policy in place to negotiate supply contracts that,
wherever possible, determine fixed prices for a period of time. In most 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 of specialists who manage the estate.
As a result of changes in the worldwide fuel supply chain, the Group faces We operate a dedicated fleet of commercial vehicles that are maintained to
risks of both low supply volumes and inflated prices for fuel. support our brand image. This includes a growing number of Electric and
hybrid vehicles. Fuel is purchased through agreements controlled by our supply
This may impact both our own cost base and our ability to supply fuel to our 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.
Our successful move to Microsoft's Dynamics365, a cloud based platform, has
Data accuracy reduced the likelihood of system unavailability and improved system
performance.
The quality of data held has a direct impact on how both strategic and
operational decisions are made. If decisions are made based on erroneous or Management information is provided in all key areas from dashboards that are
incomplete data there could be a direct impact on the performance of the based on real time data drawn from central systems. We have a dedicated data
Group. management team which is responsible for putting in place procedures to
maintain accuracy of the information provided by data owners across the
Data security business.
Speedy, as with any organisation, holds data that is commercially sensitive Mitigations for IT data recovery are described below under business continuity
and in some cases personal in nature. There is a risk that disclosure or loss as these risks are linked.
of such data is detrimental to the business, either as a reduction in
competitive advantage or as a breach of law or regulation. We have an established cyber security governance committee which meets
regularly to monitor our control framework and reports on a routine basis to
the Audit & Risk Committee.
Speedy's IT systems are protected against external unauthorised access.
These protections are tested regularly by an independent provider. All
mobile devices have access restrictions and, where appropriate, data
encryption is applied.
Funding Sufficient capital The Board has established a treasury policy regarding the nature, amount and
maturity of committed funding facilities that should be in place to support
Should the Group not be able to obtain sufficient capital in the future, it the Group's activities.
might not be able to take advantage of strategic opportunities or it might be
required to reduce or delay expenditure, resulting in the ageing of the fleet The £180m asset based finance facility, along with an additional uncommitted
and/or non-availability. This could disadvantage the Group relative to its accordion of £220m, is available through to July 2024, with two one-year
competitors and might adversely impact its ability to command acceptable extensions available.
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
There is a risk of inflationary pressure on both material and employee costs
impacting margins that the Group is able to generate, if customers resist Our close relationships with our customers, coupled with the differentiation
price rises or are in existing framework agreements for fixed terms. allows us to adopt a partnership approach to responding to cost inflation.
War The Group implemented price increases in April 2022 on list prices and new
contract renewals to offset the effects of cost inflation on both overheads
There is a risk that a prolonged war in Ukraine, or an increase in hostilities and new equipment purchases.
involving more countries, may impact 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 As described in the paragraph above, the Group has continued to operate
effectively throughout the COVID-19 pandemic. Management acted promptly in
Any significant interruption to Speedy's operational capability, whether IT line with our documented plan to establish a crisis management team which
systems, physical restrictions or personnel, could adversely impact current co-ordinated the activities required in a rapidly changing environment.
and future trading as customers could readily migrate to competitors.
Preventative controls, back-up and recovery procedures are in place for key IT
This could range from short-term impact in processing of invoices that would systems. Changes to Group systems are considered as part of wider change
affect cash flows to the loss of a major site. management programmes and implemented in phases wherever possible. The Group
has critical incident plans in place for all its sites. Insurance cover is
Joint venture reviewed at regular intervals to ensure appropriate coverage in the event of a
business continuity issue.
The Group's joint venture in Kazakhstan, Speedy Zholdas, may be impacted by
Russia's invasion of Ukraine. This may be a direct result of military We continue to monitor the situation in Kazakhstan through regular contact
activity in the wider region, or there may be politically motivated impacts as with the expat management team and will take action as may be necessary to
Kazakhstan has historically maintained strong links with Russia. The main ensure the safety of our colleagues.
impact that the Group has faced to date has been the impact of fluctuations in
exchange rates.
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.
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 in
place through to July 2024 with uncommitted extension options for a further
two years on the same terms. 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
and inflationary pressures on the 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 2025.
The going concern statement and further information can be found in Note 1 of
the financial statements.
Consolidated Income Statement
for the year ended 31 March 2022
Note Year ended Year ended
31 March 2022 31 March 2021
Restated*
£m £m
Revenue 2 386.8 332.3
Cost of sales (165.7) (147.4)
───── ─────
Gross profit 221.1 184.9
Distribution and administrative costs (185.7) (170.4)
Impairment losses on trade receivables (3.8) (2.0)
Analysis of operating profit
Operating profit before amortisation and exceptional items
32.6 21.7
Amortisation 10 (1.0) (0.8)
Exceptional items 4 - (8.4)
Operating profit 31.6 12.5
Share of results of joint venture 3.2 1.2
───── ─────
Profit from operations 34.8 13.7
Financial expense 5 (5.7) (5.4)
───── ─────
Profit before taxation 29.1 8.3
Taxation 6 (7.7) (2.2)
───── ─────
Profit for the financial year from continuing operations 21.4 6.1
───── ─────
Profit from discontinued operations, net of tax 0.2 3.4
───── ─────
Profit for the financial year 21.6 9.5
═════ ═════
Earnings per share
- Basic (pence) 7 4.13 1.82
- Diluted (pence) 7 4.07 1.79
═════ ═════
Non-GAAP performance measures
EBITDA before exceptional items 9 99.3 85.3
═════ ═════
Adjusted profit before tax 9 30.1 17.5
═════ ═════
Adjusted earnings per share (pence) 7 4.24 2.68
═════ ═════
(*) See Note 17
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2022
Year ended 31 March Year ended
2022 31 March
2021
£m £m
Profit for the financial year 21.6 9.5
───── ─────
Other comprehensive income that may be reclassified subsequently to the Income
Statement:
- Effective portion of change in fair value of cash flow hedges 0.8 0.2
- Exchange difference on translation of foreign operations (0.8) (1.4)
- Tax on items (0.2) -
───── ─────
Other comprehensive income, net of tax (0.2) (1.2)
───── ─────
Total comprehensive income for the financial year 21.4 8.3
═════ ═════
Consolidated Balance Sheet
at 31 March 2022
Note 31 March 31 March
2022 2021
Restated*
£m £m
ASSETS
Non-current assets
Intangible assets 10 25.9 24.7
Investment in joint venture 7.8 6.2
Property, plant and equipment
Hire equipment 11 226.9 207.2
Non-hire equipment 11 30.8 25.9
Right of use assets 12 73.3 59.1
Deferred tax asset 1.7 2.1
───── ─────
366.4 325.2
───── ─────
Current assets
Inventories 8.1 8.2
Trade and other receivables 108.7 93.3
Cash 13 2.5 11.7
Current tax asset - 1.1
───── ─────
119.3 114.3
───── ─────
Total assets 485.7 439.5
───── ─────
LIABILITIES
Current liabilities
Borrowings 13 (1.7) (0.5)
Lease liabilities 14 (20.6) (16.7)
Current tax creditor (1.0) -
Trade and other payables (96.6) (95.8)
Provisions 15 (2.8) (3.1)
───── ─────
(122.7) (116.1)
───── ─────
Non-current liabilities
Borrowings 13 (68.3) (44.4)
Lease liabilities 14 (56.1) (46.5)
Provisions 15 (1.2) (2.9)
Deferred tax liability (11.0) (8.8)
───── ─────
(136.6) (102.6)
───── ─────
Total liabilities (259.3) (218.7)
───── ─────
Net assets 226.4 220.8
═════ ═════
EQUITY
Share capital 16 25.9 26.4
Share premium 1.8 1.3
Capital redemption reserve 0.6 -
Merger reserve 1.0 1.0
Hedging reserve 0.1 (0.7)
Translation reserve (1.8) (1.0)
Retained earnings 198.8 193.8
───── ─────
Total equity 226.4 220.8
═════ ═════
* See Note 17
Consolidated Statement of Changes in Equity
for the year ended 31 March 2022
Share Share Capital redemption reserve Merger Hedging Retained Total
capital premium reserve reserve Translation Earnings Restated* Equity
reserve Restated*
£m £m £m £m £m £m £m £m
At 1 April 2020 Reported 26.4 0.8 - 1.0 (0.9) 0.4 182.2 209.9
Restatement* - - - - - - 1.6 1.6
───── ───── ───── ───── ───── ───── ───── ─────
At 1 April 2020 Restated* 26.4 0.8 - 1.0 (0.9) 0.4 183.8 211.5
Total comprehensive income - - - - 0.2 (1.4) 9.5 8.3
Equity-settled share-based payments - - - - - - 0.5 0.5
Issue of shares under the Sharesave Scheme
- 0.5 - - - - - 0.5
───── ───── ───── ───── ───── ───── ───── ─────
At 31 March 2021 Restated* 26.4 1.3 - 1.0 (0.7) (1.0) 193.8 220.8
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 and cancellation of shares (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 25.9 1.8 0.6 1.0 0.1 (1.8) 198.8 226.4
═════ ═════ ═════ ═════ ═════ ═════ ═════ ═════
*See Note 17
Consolidated Cash Flow Statement
for the year ended 31 March 2022
Note Year ended Year ended
31 March 2022 31 March
2021
Restated*
£m £m
Cash generated from operating activities
Profit before tax including discontinued operations 29.3 12.3
Financial expense 5.7 5.9
Amortisation 10 1.0 0.8
Depreciation 66.7 68.1
Share of profit from joint venture (3.2) (1.2)
Termination of lease contracts (0.2) (4.1)
(Profit)/Loss on disposal of hire equipment (0.5) 1.0
Loss on disposal of non-hire equipment 0.1 0.5
Decrease in inventories 0.1 0.5
(Increase)/decrease in trade and other receivables (15.5) 9.3
Increase in trade and other payables 3.8 3.6
Decrease in provisions 15 (2.0) (1.1)
Translation reserve recycled on disposal of Middle East assets - 1.0
Equity-settled share-based payments 1.2 0.5
───── ─────
Cash generated from operations before changes in hire fleet 86.5 97.1
Purchase of hire equipment (71.5) (36.4)
Proceeds from sale of hire equipment 13.6 12.2
───── ─────
Cash generated from operations 28.6 72.9
Interest paid (6.0) (6.0)
Tax paid (3.0) (0.8)
───── ─────
Net cash flow from operating activities 19.6 66.1
Cash flow from investing activities
Purchase of non-hire property, plant and equipment and IT development (16.0) (11.2)
Proceeds from sale of non-hire property, plant and equipment - 0.8
Proceeds from disposal of Middle East assets - 13.0
Dividends and loan repayments from joint venture 1.9 1.0
───── ─────
Net cash flow from investing activities (14.1) 3.6
───── ─────
Net cash flow before financing activities 5.5 69.7
───── ─────
Cash flow from financing activities
Payments for the principal element of leases (24.6) (23.6)
Drawdown of loans* 482.6 340.8
Repayment of loans* (457.2) (399.0)
Proceeds from the issue of Sharesave Scheme shares 0.6 0.5
Purchase of own shares for cancellation (6.0) -
Dividends paid 8 (11.3) -
───── ─────
Net cash flow from financing activities (15.9) (81.3)
───── ─────
Decrease in cash and cash equivalents (10.4) (11.6)
Net cash at the start of the financial year 13 11.2 22.8
───── ─────
Net cash at the end of the financial year 13 0.8 11.2
═════ ═════
Analysis of cash and cash equivalents
Cash 13 2.5 11.7
Bank overdraft 13 (1.7) (0.5)
───── ─────
0.8 11.2
═════ ═════
* See Note 17
Notes to the Financial Statements
1 Accounting policies
Speedy Hire Plc is a company incorporated and domiciled in the United Kingdom. The consolidated Financial Statements of the Company for the year ended 31 March 2022 comprise the Company and its subsidiaries (together referred to as the 'Group').
The Group and Parent Company Financial Statements were approved by the Board of Directors on 27 May 2022.
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
The Directors consider the going concern basis of preparation for the Group
and Company to be appropriate for the following reasons.
The Group has a £180m asset based finance facility ('the facility') which
matures in July 2024 and has no prior scheduled repayment requirements. The
total cash and undrawn availability on the facility as at 31 March 2022 was
£110.8m (2021: £142.3m) based on the Group's eligible hire equipment and
trade receivables.
The Group meets its day-to-day working capital requirements through operating
cash flows, supplemented as necessary by borrowings. The Directors have
prepared a going concern assessment up to 31 May 2023, which confirms that the
Group is capable of continuing to operate within its existing loan facility
and can meet the covenant requirements set out within the facility. The key
assumptions on which the projections are based include an assessment of the
impact of future market conditions on projected revenues and an assessment of
the net capital investment required to support those expected level of
revenues.
The Board has considered various possible downside scenarios to the base case,
which result in reduced levels of revenue across the Group, whilst also
reflecting inflationary pressures on the 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 2022 or
31 March 2021 but is derived from those accounts. Statutory accounts for
Speedy Hire Plc for the year ended 31 March 2021 have been delivered to the
Registrar of Companies, and those for the year ended 31 March 2022 will be
delivered in due course. The auditor has reported on those accounts; their
report was (i) unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under Section 498 (2) or (3) of
the Companies Act 2006.
Copies of full accounts will be available on the Group's corporate website in
due course. Additional copies will be available on request from Speedy Hire
Plc, 16 The Parks, Newton-le-Willows, Merseyside, WA12 0JQ.
2 Segmental analysis
The segmental disclosure presented in the Financial Statements reflects the
format of reports reviewed by the 'chief operating decision-maker'. UK and
Ireland 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
activities of the operating segments. The financing of the Group's activities
is undertaken at head office level and consequently net financing costs cannot
be analysed by segment. The unallocated net assets comprise principally
working capital balances held by the support services function that are not
directly attributable to the activities of the operating segments, together
with net corporate borrowings and taxation. The Middle East assets were
disposed of on 1 March 2021 and are now shown as discontinued operations.
For the year ended 31 March 2022
UK and Ireland Corporate Items Total
£m £m £m
Revenue 386.8 - 386.8
Segment result:
EBITDA before exceptional items 103.3 (4.0) 99.3
Depreciation (66.4) (0.3) (66.7)
───── ───── ─────
Operating profit/(costs) before amortisation and exceptional items 36.9 (4.3) 32.6
Amortisation (1.0) - (1.0)
───── ───── ─────
Operating profit/(costs) 35.9 (4.3) 31.6
Share of results of joint venture - 3.2 3.2
───── ───── ─────
Trading profit/(costs) 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 assets 19.5 6.4 25.9
Investment in joint venture - 7.8 7.8
Hire equipment 226.9 - 226.9
Non-hire equipment 30.8 - 30.8
Right of use assets 73.3 - 73.3
Taxation assets - 1.7 1.7
Current assets 112.7 4.1 116.8
Cash - 2.5 2.5
───── ───── ─────
Total assets 463.2 22.5 485.7
═════ ═════ ═════
Lease liabilities (76.7) - (76.7)
Other liabilities (92.1) (8.5) (100.6)
Borrowings - (70.0) (70.0)
Taxation liabilities - (12.0) (12.0)
───── ───── ─────
Total liabilities (168.8) (90.5) (259.3)
═════ ═════ ═════
For the year ended 31 March 2021
UK and Ireland Corporate Total- continuing operations Discontinued operations Total
items
£m £m £m £m £m
Revenue 332.3 - 332.3 31.3 363.6
Segment result:
EBITDA before exceptional items 89.5 (4.2) 85.3 5.2 90.5
Depreciation (63.2) (0.4) (63.6) (1.5) (65.1)
───── ───── ───── ───── ─────
Operating profit/(costs) before amortisation and exceptional items 26.3 (4.6) 21.7 3.7 25.4
Amortisation (0.8) - (0.8) - (0.8)
Exceptional items (8.4) - (8.4) 0.8 (7.6)
───── ───── ───── ───── ─────
Operating profit/(costs) 17.1 (4.6) 12.5 4.5 17.0
Share of results of joint venture - 1.2 1.2 - 1.2
───── ───── ───── ───── ─────
Trading profit/(costs) 17.1 (3.4) 13.7 4.5 18.2
═════ ═════
Financial expense (5.4) (0.5) (5.9)
───── ───── ─────
Profit before tax 8.3 4.0 12.3
Taxation (2.2) (0.6) (2.8)
───── ───── ─────
Profit for the financial year 6.1 3.4 9.5
═════ ═════ ═════
Intangible assets 20.1 4.6 24.7 - 24.7
Investment in joint venture - 6.2 6.2 - 6.2
Hire equipment 206.4 0.8 207.2 - 207.2
Non-hire equipment 25.9 - 25.9 - 25.9
Right of use assets 59.1 - 59.1 - 59.1
Taxation assets* - 3.2 3.2 - 3.2
Current assets 96.5 2.2 98.7 2.8 101.5
Cash - 11.7 11.7 - 11.7
───── ───── ───── ───── ─────
Total assets 408.0 28.7 436.7 2.8 439.5
═════ ═════ ═════ ═════ ═════
Lease liabilities* (63.2) - (63.2) - (63.2)
Other liabilities* (84.5) (8.8) (93.3) (8.5) (101.8)
Borrowings - (44.9) (44.9) - (44.9)
Taxation liabilities - (8.8) (8.8) - (8.8)
───── ───── ───── ───── ─────
Total liabilities (147.7) (62.5) (210.2) (8.5) (218.7)
*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 2022 Year ended 31 March 2021
──────────────────── ────────────────────
Revenue Total Total
assets Revenue assets
£m £m £m £m
UK 376.5 472.6 323.6 423.7
Ireland 10.3 13.1 8.7 13.4
───── ───── ───── ─────
386.8 485.7 332.3 437.1
═════ ═════ ═════ ═════
Revenue and assets relating to discontinued operations were based in the
Middle East.
Revenue by type
Revenue is attributed to the following activities:
2022 2021
£m £m
Hire and related activities 243.3 206.4
Services 138.4 121.7
Disposals 5.1 4.2
───── ─────
386.8 332.3
═════ ═════
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 during the year of £0.2m.
4 Exceptional items
There are no exceptional items for the year ended 31 March 2022.
During the year ended 31 March 2021, exceptional administrative items of
£8.4m were incurred in relation to continuing operations.
Action was taken to manage the Group's cost base following the COVID-19
pandemic, and consequently the network was restructured. A number of depots
were closed and the consolidation of depots took place to create larger,
customer focused service centres. As a result, £5.6m of property related
costs and £1.9m of redundancy costs was incurred during the year ended 31
March 2021.
The training business, Geason, which was acquired in December 2018, was
subject to an assurance visit from a funding agency in early 2020, and a
subsequent claim was received for amounts overpaid. The claim was settled in
October 2020, within the provision held at 31 March 2020. During the year
ended 31 March 2021, an additional provision was made for £0.9m to cover
legal and other costs.
5 Financial expense
2022 2021
£m £m
Interest on bank loans and overdrafts 2.6 2.6
Amortisation of issue costs 0.6 0.4
───── ─────
Total interest on borrowings 3.2 3.0
Interest on lease liabilities 2.5 2.4
───── ─────
Financial expense 5.7 5.4
═════ ═════
6 Taxation
2022 2021
£m £m
Tax charged in the Income Statement from continuing operations:
Current tax
UK corporation tax on profit at 19% (2021: 19%) 4.9 1.2
Adjustment in respect of prior years 0.5 (0.7)
Deferred tax
UK deferred tax at 25% (2021: 19%) 0.9 1.0
Adjustment in respect of prior years (0.6) 0.7
Effect of change in rates 2.0 -
───── ─────
Total deferred tax 2.3 1.7
───── ─────
Total tax charge from continuing operations 7.7 2.2
═════ ═════
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 tax rate of 26.2% (2021: 19.4%) is higher than the standard rate
of UK corporation tax of 19% (2021: 19%). The tax charge in the Income
Statement for the year of 26.5% (2021: 26.5%) is higher than the standard rate
of corporation tax in the UK and is explained as follows:
2022 2021
£m £m
Profit before tax 29.1 8.3
───── ─────
Accounting profit multiplied by the standard rate of corporation tax at 19% 5.5 1.6
(2021: 19%)
Expenses not deductible for tax purposes 0.7 0.8
Share-based payments 0.2 -
Share of joint venture income already taxed (0.6) (0.2)
Change in deferred tax rate 2.0 -
Adjustment to tax in respect of prior years (0.1) -
───── ─────
Tax charge for the year reported in the Income Statement 7.7 2.2
═════ ═════
An increase in the tax rate to 25% was substantively enacted on the 24 May
2021, consequently this rate has been used to calculate the deferred tax
assets and liabilities and has resulted in the increased effective rate of
taxation. The impact of the rate change is that the net deferred tax
liabilities have increased by £2.0m. Excluding the impact of the change, the
effective rate of taxation would be 19.6%.
7 Earnings per share
The calculation of basic earnings per share is based on the profit for the
financial year of £21.6m (2021: £9.5m) and the weighted average number of 5
pence ordinary shares in issue, and is calculated as follows:
2022 2021
( )
Weighted average number of shares in issue (m)
Number of shares at the beginning of the year 523.8 521.3
Exercise of share options 0.4 0.3
Movement in shares owned by the Employee Benefit Trust 0.1 0.8
Shares repurchased and subsequently cancelled (1.0) -
───── ─────
Weighted average for the year - basic number of shares 523.3 522.4
Share options 5.7 6.5
Employee share scheme 0.8 0.6
───── ─────
Weighted average for the year - diluted number of shares 529.8 529.5
═════ ═════
2022 2021
Profit (£m)
Profit for the period after tax - basic earnings 21.6 9.5
Intangible amortisation charge (after tax) 0.8 0.6
Exceptional items (after tax) - 7.3
Profit from discontinued operations (after tax) (0.2) (3.4)
───── ─────
Adjusted earnings (from continuing operations after tax) 22.2 14.0
═════ ═════
Earnings per share (pence)
Basic earnings per share* 4.13 1.82
Dilutive shares and options (0.06) (0.03)
───── ─────
Diluted earnings per share* 4.07 1.79
═════ ═════
Adjusted earnings per share (from continuing operations) 4.24 2.68
Dilutive shares and options (0.06) (0.03)
───── ─────
Adjusted diluted earnings per share (from continuing operations) 4.18 2.65
═════ ═════
Total number of shares outstanding at 31 March 2022 amounted to 518,220,366
(2021: 528,180,280), including 4,236,422 (2021: 4,413,516) shares held in the
Employee Benefit Trust, which are excluded in calculating earnings per share.
*Basic and diluted EPS include amounts relating to discontinued operations of
0.04p (FY21: 0.65p) and 0.04p (FY21: 0.64p) respectively.
8 Dividends
The aggregate amount of dividend paid in the year comprises:
2022 2021
£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 -
───── ─────
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 1.45 pence (2021: 1.40
pence) per share, bringing the total amount payable in respect of the 2022
year to 2.20 pence (2021: 1.40 pence), to be paid on 23 September 2022 to
shareholders on the register on 12 August 2022.
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 2022, the Trust held 4,236,422 ordinary shares (2021:
4,413,516).
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.
2022 2021
£m £m
Operating profit 31.6 12.5
Add back: amortisation 1.0 0.8
Add back: exceptional items - 8.4
───── ─────
Adjusted operating profit 32.6 21.7
Add back: depreciation 66.7 63.6
───── ─────
EBITDA before exceptional items 99.3 85.3
═════ ═════
Profit before tax 29.1 8.3
Add back: amortisation 1.0 0.8
Add back: exceptional items - 8.4
───── ─────
Adjusted profit before tax 30.1 17.5
═════ ═════
10 Intangible fixed assets
Goodwill Customer Brands IT development Total
lists
£m £m £m £m £m
Cost
At 1 April 2020 126.3 45.1 7.0 1.2 179.6
Additions - - - 3.5 3.5
───── ───── ───── ───── ─────
At 31 March 2021 126.3 45.1 7.0 4.7 183.1
Additions - - - 2.2 2.2
───── ───── ───── ───── ─────
At 31 March 2022 126.3 45.1 7.0 6.9 185.3
═════ ═════ ═════ ═════ ═════
Amortisation
At 1 April 2020 108.8 41.8 5.9 - 156.5
Charged in year - 0.4 0.4 - 0.8
Impairment - 1.1 - - 1.1
───── ───── ───── ───── ─────
At 31 March 2021 108.8 43.3 6.3 - 158.4
Charged in year - 0.3 0.2 0.5 1.0
───── ───── ───── ───── ─────
At 31 March 2022 108.8 43.6 6.5 0.5 159.4
═════ ═════ ═════ ═════ ═════
Net book value
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
═════ ═════ ═════ ═════ ═════
At 31 March 2020 17.5 3.3 1.1 1.2 23.1
═════ ═════ ═════ ═════ ═════
The remaining amortisation period of each category of intangible fixed asset
is the following; Customer lists 1-5 years (2021: 2-6 years), Brands 5 years
(2021: 6 years) and IT development 6 years.
Goodwill is not tax-deductible.
All goodwill has arisen from business combinations. On transition to IFRS, the
balance of goodwill as measured under UK GAAP was allocated to the
cash-generating unit (CGU). These are independent sources of income streams,
and represent the lowest level within the Group at which the associated
goodwill is monitored for management purposes. The Group's reportable CGUs
comprise of a single UK and Ireland CGU. All intangible assets are held in the
UK. Goodwill arising on business combinations after 1 April 2004 has been
allocated to the CGU that is expected to benefit from those business
combinations. The Group tests goodwill annually for impairment, or more
frequently if there are indications that goodwill might be impaired.
The recoverable amounts of the assets allocated to the CGU 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 FY2023 budget, and a subsequent four-year period using the Group's
business plan, together with a terminal value using long-term growth rates.
The resulting forecast cash flows are discounted back to present value, using
an estimate of the Group's pre-tax weighted average cost of capital, adjusted
for risk factors associated with the CGU and market-specific risks.
During the year ended 31 March 2021, the Training CGU was affected by market
conditions due to COVID-19 and the impact social distancing had on the
delivery of courses. The recoverable amount of the CGU was considered £nil
and the goodwill and intangible assets associated with the training business
were fully impaired, which resulted in an impairment of £1.1m in the year.
During the year ended 31 March 2022, the Geason business has been closed.
The pre-tax discount rates and terminal growth rates applied are as follows:
31 March 2022 31 March 2021
──────────────────── ────────────────────
Pre-tax Terminal value Pre-tax Terminal value
discount rate growth rate discount rate growth rate
UK and Ireland 11.4% 2.5% 12.3% 2.5%
═════ ═════ ═════ ═════
Impairment calculations are sensitive to changes in key assumptions of revenue growth and discount rate. At 31 March 2022, the headroom between value in use and carrying value of related assets for the UK and Ireland was £52.8m (2021: £27.6m). The increase in headroom is principally due to the decrease in discount rate at 31 March 2022 compared with previous years. There are no reasonable variations in these assumptions that would result in an impairment.
11 Property, plant and equipment
Land and Hire Total
buildings equipment Other
£m £m £m £m
Cost
At 1 April 2020 54.8 408.1 83.1 546.0
Foreign exchange (0.5) (1.1) 0.6 (1.0)
Additions 1.7 36.0 6.0 43.7
Disposals (5.4) (46.0) (1.2) (52.6)
Transfers to inventory - (10.4) - (10.4)
───── ───── ───── ─────
At 31 March 2021 50.6 386.6 88.5 525.7
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
═════ ═════ ═════ ═════
Depreciation
At 1 April 2020 36.5 181.0 70.9 288.4
Foreign exchange (0.3) (0.6) - (0.9)
Charged in year 3.6 33.7 6.1 43.4
Disposals (3.2) (27.4) (0.4) (31.0)
Transfers to inventory - (7.3) - (7.3)
───── ───── ───── ─────
At 31 March 2021 36.6 179.4 76.6 292.6
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
═════ ═════ ═════ ═════
Net book value
At 31 March 2022 15.6 226.9 15.2 257.7
═════ ═════ ═════ ═════
At 31 March 2021 14.0 207.2 11.9 233.1
( ) ═════ ═════ ═════ ═════
At 31 March 2020 18.3 227.1 12.2 257.6
( ) ═════ ═════ ═════ ═════
The net book value of land and buildings comprises improvements to short
leasehold properties. Included within depreciation charged in the year is
£nil (2021: £1.0m) relating to exceptional impairments (see Note 4). An
impairment review has been completed during the year on the basis set out in
Note 10.
12 Right of use assets
Land and Total
buildings Other
£m £m £m
Cost
At 1 April 2020 127.8 51.9 179.7
Foreign exchange (0.6) - (0.6)
Additions 13.7 8.9 22.6
Disposals (9.6) (12.6) (22.2)
───── ───── ─────
At 31 March 2021 131.3 48.2 179.5
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 143.5 55.6 199.1
═════ ═════ ═════
Depreciation
At 1 April 2020 80.6 34.4 115.0
Foreign exchange (0.4) - (0.4)
Charged in year 13.3 11.4 24.7
Disposals (6.9) (12.0) (18.9)
───── ───── ─────
At 31 March 2021 86.6 33.8 120.4
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
═════ ═════ ═════
Net book value
At 31 March 2022 51.2 22.1 73.3
═════ ═════ ═════
At 31 March 2021 44.7 14.4 59.1
═════ ═════ ═════
At 31 March 2020 47.2 17.5 64.7
═════ ═════ ═════
For the year ended 31 March 2021, included within depreciation charged is
£2.0m relating to exceptional impairments (see Note 4).
13 Borrowings
2022 2021 Restated*
£m £m
Current borrowings
Bank overdraft 1.7 0.5
Lease liabilities* 20.6 16.7
───── ─────
22.3 17.2
═════ ═════
Non-current borrowings
Maturing between two and five years
- Asset based finance facility 68.3 44.4
- Lease liabilities 56.1 46.5
───── ─────
Total non-current borrowings 124.4 90.9
───── ─────
Total borrowings 146.7 108.1
Less: cash (2.5) (11.7)
Exclude lease liabilities* (76.7) (63.2)
───── ─────
Net debt 67.5 33.2
═════ ═════
*See Note 17
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 hire equipment and trade receivables balance. The cash and
undrawn availability of this facility as at 31 March 2022 was £110.8m (2021:
£142.3m), 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 2024, with no prior
scheduled repayment requirements. Uncommitted options exist for a further two
one-year extensions until July 2026. 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 1.73% (2021: 1.80%).
The facility is secured by fixed and floating charges over the Group's assets.
Analysis of consolidated net debt
31 March Non-cash Cash flow 31 March
2021 movement 2022
£m £m £m £m
Cash at bank and in hand 11.7 - (9.2) 2.5
Bank overdraft (0.5) - (1.2) (1.7)
Bank borrowings (44.4) 0.6 (24.5) (68.3)
───── ───── ───── ─────
(33.2) 0.6 (34.9) (67.5)
═════ ═════ ═════ ═════
Cash flow relating to bank borrowings includes £0.9m of fees paid in respect
of the refinancing of the facility during the year.
14 Lease liabilities
Land and Total
buildings Other
£m £m £m
At 1 April 2020 Restated* 52.7 17.6 70.3
Foreign exchange (0.1) - (0.1)
Additions 13.7 8.9 22.6
Repayments (14.2) (12.0) (26.2)
Unwinding of discount rate 2.0 0.6 2.6
Terminations (5.3) (0.7) (6.0)
───── ───── ─────
At 31 March 2021 Restated* 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
═════ ═════ ═════
Included within terminations in the year ended 31 March 2021 is £3.7m
relating to exceptional terminations of property leases (see Note 4).
Amounts payable for lease liabilities (discounted at the incremental borrowing
rate of each lease) fall due as follows:
2022 2021 Restated*
£m £m
Payable within one year* 20.6 16.7
Payable in more than one year 56.1 46.5
───── ─────
At 31 March 76.7 63.2
═════ ═════
* See Note 17
15 Provisions
Dilapidations Training provision Total
£m £m £m
At 1 April 2020 4.1 3.0 7.1
Created in the year 3.2 0.9 4.1
Provision utilised in the year (2.5) (2.7) (5.2)
───── ───── ─────
At 31 March 2021 4.8 1.2 6.0
Provision utilised in the year (1.5) (0.5) (2.0)
───── ───── ─────
At 31 March 2022 3.3 0.7 4.0
═════ ═════ ═════
Of the £4.0m provision at 31 March 2022 (2021: £6.0m), £2.8m (2021: £3.1m)
is due within one year and £1.2m (2021: £2.9m) is due after one year. The
dilapidations provision is calculated based on estimated dilapidations at
current market rates. The total liability is discounted to current values. The
movement in the year is a part settlement of these costs from properties
exited.
In April 2020 Speedy were notified that a funding agency was seeking repayment
of £2.6m from Geason Training. In the year ended 31 March 2020, £3.0
million was provided as an exceptional charge. The claim was settled in
October 2020 within the provision held. An additional provision was recognised
in 2021 for £0.9m in relation to legal and other costs. The movement in the
year is a part settlement of those costs.
16 Share capital
2022 2021
Number Amount Number Amount
m £m m £m
Allotted, called-up and fully paid
At 1 April (ordinary shares of 5 pence each) 528.2 26.4 526.8 26.4
Exercise of Sharesave Scheme options 1.1 0.1 1.4 -
Purchase and cancellation of own shares (11.1) (0.6) - -
───── ───── ───── ─────
Total 518.2 25.9 528.2 26.4
═════ ═════ ═════ ═════
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. 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.
The average price paid was 54p with a total consideration (inclusive of all
costs) of £6.2m. 11,114,363 shares purchased were cancelled, nil held in
treasury and 401,186 held pending cancellation.
During the year, 1.1m ordinary shares of 5 pence were issued on exercise of
options under the Speedy Hire Sharesave Schemes (2021: 1.4m).
17 Prior year adjustments
On transition to IFRS 16 in FY20 the lease liabilities were overstated and
accruals understated. This has been corrected by restating each of the
affected financial statement line items in the balance sheet as at 1 April
2020 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
2021 is as follows:
Reported Adjustment Restated
£m £m £m
Assets
Deferred tax asset 2.5 (0.4) 2.1
═════ ═════ ═════
Liabilities
Lease liability (65.8) 2.6 (62.3)
Accruals (35.9) (0.6) (36.5)
───── ───── ─────
(101.7) 2.0 (98.8)
═════ ═════ ═════
Net assets 219.2 1.6 220.8
═════ ═════ ═════
Equity
Retained earnings as at 1 April 2020 182.2 1.6 183.8
Retained earnings as at 31 March 2021 192.2 1.6 193.8
═════ ═════ ═════
Impairment losses on trade receivables of £2.0m, as determined in accordance
with IFRS 9 Financial Instruments, were previously included in distribution
and administration expenses. These are now shown separately on the face of the
Income Statement and the comparative amounts restated.
Loan drawdowns and repayments previously shown net in the Cash Flow Statement
are now shown separately. The comparative net repayment of £58.2m has been
restated to show loan drawdowns of £340.8m and repayments of £399.0m.
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