TIDMSDY
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 %
(GBPm) (GBPm)
Revenue (excluding disposals) 381.7 328.1 16.3
---------------- --------------- -------
Adjusted operating profit(1) 32.6 21.7 50.2
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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 %
(GBPm) (GBPm)
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
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Other measures
Year ended Year ended Change
31 March 2022 31 March 2021 %
(GBPm) (GBPm)
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 GBP68.4m to satisfy
customer demand
o Cash and facility headroom of GBP110.8m (31 March 2021:
GBP142.3m)
o Net debt(3) at GBP67.5m (31 March 2021: GBP33.2m), with
leverage(5) of 0.9x (31 March 2021: 0.5x)
o Share buyback programme of up to GBP30m 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 announceme nt 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 GBP386.8m (FY2021:
GBP332.3m) 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 GBP3.2m (FY2021:
GBP1.2m), as a result of increased activity following new contract
awards.
We have invested c.GBP70m 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
GBP30 million share buyback programme in January 2022. To date
cGBP10m 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 GBP3.2m (FY2021: GBP1.2m).
Financing and liquidity
The business generated operating cash flow of GBP28.6m (FY2021:
GBP72.9m) reflective of increased capital expenditure. At 31 March
2022 net debt, excluding IFRS16 lease liabilities, increased to
GBP67.5m (2021: GBP33.2m). The Group has significant headroom
against its committed banking facilities of GBP180m; 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
GBP30 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.GBP10m
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 GBP386.8m (FY2021: GBP332.3m)
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 GBP381.7m (FY2021:
GBP328.1m).
Adjusted profit before tax increased 72.0% to GBP30.1m (FY2021:
GBP17.5m). Adjusted earnings per share were 4.24 pence (FY2021:
2.68 pence). Profit before tax increased to GBP29.1m (FY2021:
GBP8.3m).
The Group has a 45% share in a joint venture in Kazakhstan
servicing the oil and gas market. Share of profits increased to
GBP3.2m (FY2021: GBP1.2m), 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 GBP10 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 GBP68.4m 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 GBP75,000 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 GBP25,000.
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 GBP68.4m 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 GBP67.5m 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 GBP381.7m and 3.9% versus
FY2020. Revenue from disposals was GBP5.1m (FY2021: GBP4.2m); total
revenue for the year increased by 16.4% to GBP386.8m (FY2021:
GBP332.3m).
Gross profit was GBP221.1m (FY2021: GBP184.9m), 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 GBP32.6m (FY2021: GBP21.7m) and
profit before taxation, amortisation and exceptional costs
increased to GBP30.1m (FY2021: GBP17.5m), 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 GBP3.2m (FY2021: GBP1.2m) as result of strong recovery
following COVID-19 pandemic and new contract wins.
The Group incurred no exceptional items in the year (FY2021:
GBP8.4m).
After taxation, amortisation and exceptional items, the Group
made a profit of GBP21.6m, compared to of GBP9.5m in FY2021.
Revenue and margin analysis
The Group generates revenue through two categories, Hire and
Services.
Year ended Year ended
31 March 31 March
Revenue and margin by type 2022 2021 Change
GBPm GBPm %
Hire:
Revenue 243.3 206.4 17.9%
Cost of sales (54.5) (50.3)
----------- -----------
Gross profit 188.8 156.1 20.9%
----------- -----------
Gross margin 77.6% 75.6%
Services:
Revenue 138.4 121.7 13.7%
Cost of sales (107.8) (93.5)
----------- -----------
Gross profit 30.6 28.2 8.5%
----------- -----------
Gross margin 22.1% 23.2%
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 GBP5.7m (FY2021: GBP5.4m) reflecting
higher average gross borrowings throughout the year.
Net debt, excluding lease liabilities, as at 31 March 2022
increased to GBP67.5m (2021: GBP33.2m), reflecting increased
capital expenditure, the return of dividend payments and GBP6.0m
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 GBP7.7m (FY2021: GBP2.2m), 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 GBP2.0m 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 GBP82.1m
(FY2021: GBP43.7m), of which GBP68.4m (FY2021: GBP36.0m) 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 GBP13.7m (FY2021:
GBP7.7m) 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 GBP13.6m (FY2021: GBP12.2m).
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 GBP226.4m (2021: GBP220.8m),
equivalent to 43.7 (2021: 41.8) pence per share.
Net property, plant and equipment (excluding IFRS 16 right of
use assets) was GBP257.7m as at 31 March 2022 (2021: GBP233.1m), of
which equipment for hire represents 88.0% (2021: 88.9%).
Intangibles increased to GBP25.9m (2021: GBP24.7m), 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 GBP73.3m (2021: GBP59.1m) and
corresponding lease liabilities of GBP76.7m (2021: GBP63.2m) 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 GBP104.9m at
31 March 2022 (2021: GBP93.4m). Bad debt provisions were GBP3.0m as
at 31 March 2022 (2021: GBP3.5m), 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 GBP45.3m (2021:
GBP49.8m). 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 GBP28.6m reflecting increased capital
expenditure (FY2021: GBP72.9m). Free cash flow (being net cash flow
before financing activities) decreased to GBP5.5m (FY2021:
GBP69.7m).
Net debt increased by GBP34.3m from GBP33.2m at the beginning of
the year to GBP67.5m 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 GBP110.8m as at 31
March 2022 (2021: GBP142.3m).
The Group's GBP180m 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 GBP220m
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 GBP18m. 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.GBP7.6m. 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
GBP30 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
Whilst the Group performed well during the UK & take action to ensure the safety of our
Ireland lockdown periods, the uncertainty colleagues,
from COVID-19 leads to difficulty in as we support customers.
forecasting. Although the restrictions imposed We have implemented COVID-19 safe ways of
by Government working and a flexible working policy for
have almost all been lifted, there remains a employees
risk of future restrictions in the event of new who can perform duties from home utilising our
variants emerging. There are risks that the secure and robust infrastructure and technology
people and supply chain risks described for the platforms.
Group below may also impact our customers' Speedy operates one of the youngest hire fleets
businesses and reduce our ability to achieve in the industry and is well placed to flex
revenue capital expenditure during this period, whilst
targets. maintaining customer service.
People Based on various revenue downturn scenarios,
The COVID-19 pandemic has led to shortages in and the measures outlined above, the Board
the workforce as a direct result of illness remains
or isolation measures, along with changes in confident that the Group can withstand a
holiday patterns. These factors could result prolonged period of reduced trading activity,
in an inability to effectively service our including
customers' requirements. in the event of a further national lockdown.
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
Speedy operates, transports and provides industry-leading position in promoting
for rental a wide range of machinery. enhanced health and
Without rigorous safety compliance, together with a
safety regimes in place there is a risk commitment to product innovation. This
of injury or death to employees, is achieved by the
customers or members Group's health, safety, and
of the public. environmental teams measuring and
Environmental hazard promoting employee understanding
The provision of such machinery includes of, and compliance with, procedures that
handling, transport and dispensing of affect safety and protection of the
substances, environment.
including fuel, that are hazardous to the We maintain systems that enable us to
environment in the event of spillage. hold appropriate industry recognised
accreditations
supported by a specialist software
platform for managing data and reporting
in relation to
Health, Safety and Environment.
All operatives who handle hazardous
substances are trained and provided with
appropriate equipment
to manage small scale spills. In the
case of more serious accidents, we have
a contract with
a third party specialist who would
undertake any clean-up operation as
necessary.
Service Provision of equipment We operate an industry leading four-hour
Speedy's commitment is to provide well service promise under "Trust Speedy to
maintained equipment to its customers on Deliver" which
a consistent covers a wide range of our assets
and dependable basis. Our use of personal digital assistants
Back office services (PDAs) and online based customer
It is important that Speedy is able to feedback system are
provide timely and accurate management fully embedded into our business and
information these are used to improve the on-site
to its customers, along with accurate customer experience.
invoices and supporting documentation. Speedy liaises with its customer base
In both cases, a failure to provide such and takes into account feedback where
service could lead to a failure to particular issues
attract or retain are noted, to ensure that work on
customers, or to diminish the level of resolving those issues is prioritised
business such customers undertake with accordingly. We have
Speedy. introduced a Net Promoter Score metric
into our business to drive improvement
through dashboard
reporting at depot level.
During the year we successfully
concluded the implementation of a new
ERP 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
There is a risk that climate change position of embracing the ESG agenda
may impact Speedy's operations or with the creation of
ability to trade. Conversely, the Board Sustainability Committee to
there is a risk that Speedy will fail oversee the development of the
to meet internal or external targets sustainability and climate
designed to reduce change response plan.
the Group's impact on climate change. Robust science-based targets have been
This could arise from insufficient set and a director has been appointed
target setting, inadequate progress of to lead the programme,
initiatives, or reporting directly to the Chief
a failure to capture relevant data Executive.
accurately. Speedy has incorporated hybrid and
Sustainability fully electric vehicles into both the
There is a risk that the Group's commercial and company
business model may not be sustainable car fleets to ensure we continue to
in the long term, for reduce our emissions
example if assets reliant on fossil Further details of the risks,
fuels are not replaced or if the opportunities and mitigating actions
distribution network in relation to sustainability
continues to be similarly reliant on and climate change are detailed in the
fossil fuels. Taskforce for Climate-Related
The result from either of the above Financial Disclosures
may include loss of customer (TCFD) section of the Annual Report
confidence impacting revenue, and Accounts.
or investor and bank confidence
leading to difficulty in obtaining
future funding.
Revenue and trading performance Competitive pressure The Group monitors its competitive
The hire market is fragmented and position closely, to ensure that it is
highly competitive. There is a risk able to offer customers
that customers can readily the best solution. The Group provides
change provider, with minimal a wide breadth of offerings,
disruption to their own business supplemented by its rehire
activity. division for specialist equipment. The
There is a risk that the Group does Group monitors the performance of its
not have an effective route to market major accounts
for consumer rentals against forecasts, strength of client
and this could lead to a missed future order books and individual
opportunity that is capitalised upon expectations with
by our competition. a view to ensuring that the
There is a risk that cost inflation opportunities for the Group are
may reduce margins if customers resist maximised. Market share is measured
price increases. and competitors' activities are
This risk is higher in a small number reported on and addressed where
of cases where larger customers may be appropriate. The Group's integrated
on fixed term services offering further mitigates
agreements with no inflation clause. against this risk as it demonstrates
Reliance on high value customers value to our customers,
There is a risk to future revenues setting us apart from purely asset
should preferred supplier status with hire companies.
larger customers Whilst we develop and maintain
be lost when such agreements may strategic relationships with larger
individually represent a material customers, no single customer
element of our revenues. currently accounts for more than 10%
of revenue or receivables. We have
been successful in
growing our SME and retail customer
base, which helps to mitigate this
risk.
We have opened 36 concessions within
B&Q stores, which allows the Group to
directly access
a marketplace that represents
significant potential for 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
Our strategy includes value enhancing monitoring and filtering potential
acquisitions that complement or extend targets, with input
our existing from advisors and other third parties.
business in specialised markets. There All potential business combinations
is a risk that suitable targets are are presented to the Board, with an
not identified, associated business
that acquired businesses do not case, for approval.
perform to expectations or they are Once a decision in principle is made,
not effectively integrated a detailed due diligence process
into the existing Group. 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
In order to achieve our strategic BREXIT has resulted in short term
objectives, it is imperative that we challenges, particularly
are able to recruit, in the recruitment and retention of
retain, develop and motivate employees drivers and engineers. We have
who possess the right skills for the reviewed our reward packages
Group, whilst for these colleagues and are actively
also demonstrating our commitment to seeking alternative routes to meet the
equality, diversity and inclusivity. demand, such
Labour availability as our support for the 5% Club and the
There is a risk that with increased Armed Services Covenant.
numbers of people leaving the labour Skill and resource requirements for
market, or salary meeting the Group's objectives are
inflation leading to increased staff actively monitored
turnover, there will be shortages of and action is taken to address
available employees identified gaps. Succession planning
for the Group, with greater aims to identify talent
requirements for training. within the Group and is formally
reviewed on an annual basis by the
Nomination Committee,
focusing on both short and long-term
successors for the key roles within
the Group.
Programmes are in place for employee
induction, retention and career
development, which are
tailored to the requirements of the
various business units within the
Group.
The Group regularly reviews
remuneration packages and aims to
offer competitive reward and
benefit packages, including
appropriate short and long-term
incentive schemes.
--------------------------------------- ---------------------------------------
Partner and supplier service levels Supply chain A dedicated and experienced supply
Speedy procures assets and services chain function is in place to
from a wide range of sources, both UK negotiate all contracts and
and internationally maximise the Group's commercial
based. Within the supply chain there position. Supplier accreditations are
are risks of non-fulfilment. recorded and tracked
The COVID-19 pandemic has resulted in centrally through a supplier portal
some supply chain delays which may where relevant and set service related
increase the likelihood KPIs are included
of this risk impacting the Group. within standard contract terms.
It is possible that the war in Ukraine Regular reviews take place with all
may result in disruption to the supply supply chain partners.
chain. Where practical, agreements with
Partner reputation alternative suppliers are in place for
Significant revenues are generated key ranges, diluting
from our rehire business, where the reliance on individual suppliers.
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
Speedy has a fixed cost base including place to negotiate supply contracts
people, transport and property. When that, wherever possible,
revenues fluctuate determine fixed prices for a period of
this can have a disproportionate time. In most cases, multiple sources
effect on the Group's financial exist for each
results. supply, decreasing the risk of
Fuel management supplier dependency and creating a
As a result of changes in the competitive supply-side
worldwide fuel supply chain, the Group environment. All significant purchase
faces risks of both low decisions are overseen by a dedicated
supply volumes and inflated prices for supply chain team
fuel. with structured supplier selection
This may impact both our own cost base procedures in place. Property costs
and our ability to supply fuel to our are managed by an in-house
customers. team of specialists who manage the
estate.
We operate a dedicated fleet of
commercial vehicles that are
maintained to support our brand
image. This includes a growing number
of Electric and hybrid vehicles. Fuel
is purchased through
agreements controlled by our supply
chain processes.
The growth of our services offering
will help to mitigate this risk as
these activities have
a greater proportion of variable
overheads.
--------------------------------------- ---------------------------------------
Cyber security and data integrity IT system availability Annual and medium-term planning
Speedy is increasingly reliant on IT provides visibility as to the level and
systems to support our business type of IT infrastructure
activities. Interruption and services required to support the
in availability or a failure to business strategy. Business cases are
innovate will reduce current and future prepared for any
trading opportunities new/upgraded systems, and require
respectively. formal approval.
Data accuracy Our successful move to Microsoft's
The quality of data held has a direct Dynamics365, a cloud based platform,
impact on how both strategic and has reduced the likelihood
operational decisions of system unavailability and improved
are made. If decisions are made based system performance.
on erroneous or incomplete data there Management information is provided in
could be a direct all key areas from dashboards that are
impact on the performance of the Group. based on real
Data security time data drawn from central systems.
Speedy, as with any organisation, holds We have a dedicated data management
data that is commercially sensitive and team which is responsible
in some cases for putting in place procedures to
personal in nature. There is a risk maintain accuracy of the information
that disclosure or loss of such data is provided by data owners
detrimental to across the business.
the business, either as a reduction in Mitigations for IT data recovery are
competitive advantage or as a breach of described below under business
law or regulation. continuity as these risks
are linked.
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
Should the Group not be able to obtain policy regarding the nature, amount and
sufficient capital in the future, it maturity of committed
might not be able funding facilities that should be in
to take advantage of strategic place to support the Group's
opportunities or it might be required activities.
to reduce or delay expenditure, The GBP180m asset based finance
resulting in the ageing of the fleet facility, along with an additional
and/or non-availability. This could uncommitted accordion of
disadvantage the GBP220m, is available through to July
Group relative to its competitors and 2024, with two one-year extensions
might adversely impact its ability to available.
command acceptable We have a defined capital allocation
levels of pricing. 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
Any changes in construction/industrial and private sector spending as part of its
market conditions could affect activity wider
levels and market analysis. The impact on the Group of
consequently the Group's revenue. any such change is assessed as part of the
As markets change and evolve, there is a ongoing
risk that the Group strategy will need to be financial and operational budgeting and
aligned forecasting process.
accordingly. Our strategy is to develop a differentiated
There is a risk of recession in the UK which proposition in our chosen markets and to
could affect the Group's revenue. ensure
Inflation that we are well positioned with clients and
There is a risk of inflationary pressure on contractors. The Board oversees the
both material and employee costs impacting importance
margins of strategic clarity and alignment, which is
that the Group is able to generate, if seen as essential for the setting and
customers resist price rises or are in execution
existing framework of priorities, including resource allocation.
agreements for fixed terms.
War Our close relationships with our customers,
There is a risk that a prolonged war in coupled with the differentiation allows us to
Ukraine, or an increase in hostilities adopt a partnership approach to responding to
involving more cost inflation.
countries, may impact the global economy. The Group implemented price increases in
This may result in a range of impacts for April 2022 on list prices and new contract
the Group, renewals
including cost inflation, labour to offset the effects of cost inflation on
availability and disruption to the supply both overheads and new equipment purchases.
chain.
Business continuity Business interruption As described in the paragraph above, the
Any significant interruption to Speedy's Group has continued to operate effectively
operational capability, whether IT systems, throughout
physical the COVID-19 pandemic. Management acted
restrictions or personnel, could adversely promptly in line with our documented plan to
impact current and future trading as establish
customers a crisis management team which co-ordinated
could readily migrate to competitors. the activities required in a rapidly changing
This could range from short-term impact in environment.
processing of invoices that would affect Preventative controls, back-up and recovery
cash flows procedures are in place for key IT systems.
to the loss of a major site. Changes
Joint venture to Group systems are considered as part of
The Group's joint venture in Kazakhstan, wider change management programmes and
Speedy Zholdas, may be impacted by Russia's implemented
invasion in phases wherever possible. The Group has
of Ukraine. This may be a direct result of critical incident plans in place for all its
military activity in the wider region, or sites.
there Insurance cover is reviewed at regular
may be politically motivated impacts as intervals to ensure appropriate coverage in
Kazakhstan has historically maintained the event
strong links of a business continuity issue.
with Russia. The main impact that the Group We continue to monitor the situation in
has faced to date has been the impact of Kazakhstan through regular contact with the
fluctuations expat
in exchange rates. management team and will take action as may
be necessary to ensure the safety of our
colleagues.
--------------------------------------------- ----------------------------------------------
Asset holding and integrity Asset range and availability We regularly monitor the status of our
Speedy's business model relies on assets and use this information to
providing assets for hire to customers, optimise our asset
when they want to holdings.
hire them. In order to maximise This is based on our knowledge of customer
profitability and returns on deployed expectations of delivery timescales, which
capital, demand is balanced vary
with the requirement to hold a range of by asset class. By structuring our depot
assets that is optimally utilised. network 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 GBP180m 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*
GBPm GBPm
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 Year ended
ended 31 March
31 March 2021
2022
GBPm GBPm
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*
GBPm GBPm
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
Capital Retained Total
Share Share redemption Merger Hedging Translation Earnings Equity
capital premium reserve reserve reserve reserve Restated* Restated*
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
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 31 March
2022 2021
Restated*
GBPm GBPm
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 GBP180m 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 GBP110.8m (2021: GBP142.3m)
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
Corporate
UK and Ireland Items Total
GBPm GBPm GBPm
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
Total-
Corporate continuing Discontinued
UK and Ireland items operations operations Total
GBPm GBPm GBPm GBPm GBPm
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 Year ended 31 March
2022 2021
---------------------------------------- ----------------------------------------
Total Total
Revenue assets Revenue assets
GBPm GBPm GBPm GBPm
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
GBPm GBPm
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 GBP13.0m, on which a pre-tax gain of GBP0.8m was
recognised. The attributable tax was GBP0.2m, resulting in a gain
after tax of GBP0.6m.
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 GBP0.2m.
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 GBP8.4m 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, GBP5.6m of property related costs and GBP1.9m 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 GBP0.9m to cover legal
and other costs.
5 Financial expense
2022 2021
GBPm GBPm
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
GBPm GBPm
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 0.2 -
fair value of cash flow hedges
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
GBPm GBPm
Profit before tax 29.1 8.3
---------- ----------
Accounting profit multiplied by the standard rate
of corporation tax at 19% (2021: 19%) 5.5 1.6
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 GBP2.0m.
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 GBP21.6m (2021: GBP9.5m) 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 (GBPm)
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
GBPm GBPm
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
GBPm GBPm
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
Customer
Goodwill lists Brands IT development Total
GBPm GBPm GBPm GBPm GBPm
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 GBPnil and the goodwill and intangible
assets associated with the training business were fully impaired,
which resulted in an impairment of GBP1.1m 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 Pre-tax Terminal
discount value discount value
rate growth rate 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 GBP52.8m (2021: GBP27.6m). 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
buildings equipment Other Total
GBPm GBPm GBPm GBPm
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 GBPnil (2021: GBP1.0m) 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
buildings Other Total
GBPm GBPm GBPm
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 GBP2.0m relating to exceptional impairments (see Note
4).
13 Borrowings
2022 2021 Restated*
GBPm GBPm
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 GBP180m 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
GBP5m.
(b) An asset based finance facility of up to GBP175m, 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
GBP110.8m (2021: GBP142.3m), based on the Group's eligible hire
equipment and trade receivables.
The facility is for GBP180m, 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 GBP220m 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 31 March
2021 movement Cash flow 2022
GBPm GBPm GBPm GBPm
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 GBP0.9m of fees
paid in respect of the refinancing of the facility during the
year.
14 Lease liabilities
Land and
buildings Other Total
GBPm GBPm GBPm
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
GBP3.7m 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*
GBPm GBPm
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
GBPm GBPm GBPm
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 GBP4.0m provision at 31 March 2022 (2021: GBP6.0m),
GBP2.8m (2021: GBP3.1m) is due within one year and GBP1.2m (2021:
GBP2.9m) 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 GBP2.6m from Geason Training. In the year
ended 31 March 2020, GBP3.0 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 GBP0.9m 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 GBPm m GBPm
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 GBP6.2m. 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
GBPm GBPm GBPm
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 GBP2.0m, 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 GBP58.2m has been restated to show loan drawdowns of
GBP340.8m and repayments of GBP399.0m.
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END
FR PPUQWAUPPGPR
(END) Dow Jones Newswires
May 30, 2022 02:01 ET (06:01 GMT)
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