TIDMSDY
RNS Number : 6516Z
Speedy Hire PLC
25 May 2021
Speedy Hire Plc
("Speedy", "the Company" or "the Group")
Results for the year ended 31 March 2021
Strong performance; well positioned for sustainable growth
Speedy, the UK's leading tools, equipment and plant hire
services company, operating across the construction, infrastructure
and industrial markets, announces results for the year ended 31
March 2021.
Commenting on the results Russell Down, Chief Executive,
said:
" I am pleased to report results that are ahead of our
expectations in what has been an exceptionally challenging year for
customers and colleagues alike. The resilient performance of our
business during this unprecedented period is testament to the
strength of our model, hard work of all my colleagues and strong
operational delivery. Our excellent customer service, including our
four-hour delivery commitment, has facilitated a strong recovery in
the second half.
"We have had an encouraging start to FY2022 with revenue in
April and May c.2% ahead of the equivalent period in 2019. Our
strong balance sheet and the actions we have taken to develop our
digital and ESG offerings give us confidence for the future."
Underlying results
Year ended 31 Year ended Change
March 2021 31 March 2020
(GBPm) (GBPm) %
Revenue (excluding disposals) 359.4 402.5 (10.7)
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Adjusted operating profit(1) 25.4 39.1 (35.0)
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Adjusted profit before tax(1) 20.7 34.9 (40.7)
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Adjusted earnings per share
(pence)(2) 3.22 5.54 (41.9)
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Statutory results
Year ended 31 Year ended Change
March 2021 31 March 2020
(GBPm) (GBPm) %
Revenue 363.6 406.7 (10.6)
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Operating profit 17.0 14.0 21.4
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Profit before tax 12.3 20.7 (40.6)
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Basic earnings per share 1.82 3.23 (43.7)
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Other measures
Year ended 31 Year ended Change
March 2021 31 March 2020
(GBPm) (GBPm) %
Net debt(3) 33.2 79.3 (58.1)
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Return on Capital Employed(4) 7.6% 12.0% (4.4)pp
-------------- --------------- --------
Dividend (pence per share) 1.40 0.70 100
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Group highlights
-- Progressive revenue recovery throughout the year:
o Hire revenue up 4% on a like for like basis in Q4
o Improved utilisation in the second half at 58.8% (2020:
55.9%)
o Increased market share following significant new contract wins
including Network Plus and MWH
o SME revenue has continued to grow, up 10% on the prior year in
the second half
-- Decisive and swift action taken to manage costs and preserve cash in response to COVID-19:
o Prioritised customer and colleague wellbeing
o Utilised Government support schemes in the first half
o Capex managed tightly in the first half; fleet age remains
young at 3.6 years (2020: 3.4 years)
o 13 depots closed and a further 22 being consolidated into six
improved locations
o Following restructure headcount in UK and Ireland reduced to
3,303 (2020: 3,464)
-- Disposal of Middle East assets to the principal customer on 1 March 2021 for $18m
-- Strong balance sheet and cash generation:
o Business model provided strong cash generation and improved
liquidity during the pandemic
o Middle East disposal generated $30m including working capital
settled on 31 March 2021
o Net debt materially reduced to GBP33.2m (2020: GBP79.3m);
leverage (5) of 0.5x (2020: 1.0x)
o Cash and facility headroom of GBP142.3m (2020: GBP99.0m)
o UK and Ireland debtor days reduced to 59 from 66
-- Continued strategic and operational progress:
o Extended our industry leading four-hour delivery promise to
the top 350 products
o Entered B2C market through trial with B&Q
o Continuous improvements to the digital customer journey
o Commitment to reaching net zero emissions before 2050, setting
science-based targets in FY2022 to provide a clearly defined
pathway on how we will achieve this
o Significant investment in sustainable hybrid and electric
equipment in support of our ESG strategy "Energise"
-- Dividend payments resumed with final dividend of 1.40p per
share proposed which recognises the strong recovery in the second
half
-- Board strengthened and diversity enhanced following recent changes
Enquiries:
Speedy Hire Plc Tel: 01942 720 000
David Shearer, Chairman
Russell Down, Chief Executive
James Bunn, Chief Financial Officer
MHP Communications Tel: 0203 128 8147
Oliver Hughes
Andrew Jaques
Notes:
Explanatory notes:
(1) See note 9
(2) See note 7
(3) See note 13
(4) Return on Capital Employed: Profit before tax, amortisation
and exceptional items divided by the average capital employed
(where capital employed equals shareholders' funds and net debt(3)
), for the last 12 months.
(5) Leverage: Net debt(3) covered by EBITDA(1) . This metric
excludes the impact of IFRS 16.
Inside Information : This 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, equipment and plant hire services to a wide
range of customers in the construction, infrastructure and
industrial markets, as well as to local trade and industry. The
Group provides complementary support services through the provision
of training, asset management and compliance services. Speedy is
certified nationally to ISO50001, ISO9001, ISO14001, ISO17020,
ISO27001 and OHSAS18001. The Group operates from c.200 fixed sites
across the UK and Ireland together with a number of on-site
facilities at client locations and through a joint venture in
Kazakhstan.
Chairman's statement
Overview
I am pleased with these results which demonstrate a strong
performance in the second half of the year following the challenges
in the first half dealing with the impact of the pandemic. The
Group has adapted well this year continuing to support customers
and colleagues in what have been very challenging conditions. We
close the year with both revenue and asset utilisation ahead of the
corresponding period in 2019 and positioned strongly in both
financial and operational terms to meet the needs of our customers
as we move into a post COVID world.
COVID-19
The Group managed its cost base and cash resources throughout
the COVID-19 pandemic, reducing staff costs through the use of
Government support schemes. We froze all capital expenditure unless
specifically needed to meet customer requirements and managed
working capital tightly. As customers returned to work we resumed
our capital expenditure to meet increasing customer demand, taking
the opportunity to make significant investments in new sustainable
hybrid and electric equipment. We initially closed two thirds of
our network in April 2020, by September the network was operating
once again at full capacity following a review of our depot
footprint. This resulted in the permanent closure of 13 depots and
the consolidation of a further 22 depots into larger scale units to
meet our customer requirements.
Results
Group revenue, excluding disposals, fell to GBP359.4m (2020:
GBP402.5m). Whilst revenue declined in the first half of the year,
it recovered strongly in the second half as customers returned to
work. We have secured new work and contract renewals from larger
customers and are growing revenue in the SME market. We are
trialling outlets in B&Q stores around the UK with the
objective of increasing our exposure to the B2C market.
The Group sold its Middle East assets to our major customer
ADNOC Logistics and Services LLC (ADNOC), for a consideration of
$18m in March 2021, after successfully turning round that business
over the last few years during which time it has been a positive
contributor to Group profits. On conclusion of a Transitional
Services Agreement (TSA) with ADNOC the Group's operations in the
Middle East will be terminated. The Group continues to operate
internationally through the Kazakhstan JV.
Our net debt position remains historically low with significant
headroom against our committed banking facilities. The strength of
our balance sheet and available financial resources will allow us
to invest to meet increasing demand and capitalise on growth
opportunities as activity levels continue to recover.
Dividend
As a result of the COVID-19 pandemic the Group utilised
Government support schemes and implemented cost reduction measures
across the business that affected colleagues and other
stakeholders. As a consequence the Board resolved not to pay a
final dividend for FY2020 nor an interim dividend for FY2021.
Following the strong performance in the second half of the year and
the robust balance sheet, the Board is recommending a final
dividend of 1.40 pence per share for the year ended 31 March 2021.
If approved at the forthcoming Annual General Meeting the dividend
will be paid on 24 September 2021 to shareholders on the register
at close of business on 13 August 2021.
Board and people
During the course of the last year we have made a number of
changes to the Board which have enhanced its diversity, broadened
its skill base and improved the average tenure of the Board to
manage future succession.
Chris Morgan resigned from the Board on 31 July 2020 and we
welcomed James Bunn as Chief Financial Officer with effect from 14
September 2020. James has extensive experience in senior finance
positions with a particular focus on digital business.
Bob Contreras stepped down from the Board on 17 February 2021,
to allow him to exclusively pursue his full-time executive role. On
behalf of the Board I would like to express my thanks to both Chris
and Bob for their contributions over the last few years and wish
them every success in the future.
Shatish Dasani was appointed as a Non-Executive Director and
Chairman of the Audit and Risk Committee and a member of the
Nomination Committee on 1 February 2021. Shatish has significant
experience in senior public company finance roles and will add to
the Board's skillset as we implement the next stage of our growth
strategy.
Carol Kavanagh will join the Board as a Non-Executive Director
and member of the Remuneration Committee with effect from 1 June
2021. Carol has extensive experience in business transformation and
people related matters across relevant sectors which will further
strengthen the expertise of the Board and broaden its diversity. I
am delighted to welcome both Shatish and Carol to the Board.
This year has proved challenging for all of my colleagues,
including many who were on furlough leave for a period. I would
like to take this opportunity to thank each and every one of the
Speedy family for their hard work, dedication, support to the
business and each other, and positive spirit throughout this
challenging time.
Future
I am pleased that the business has responded well to the
challenges of the past year. Through strong leadership, effective
management, dedication and resilience the business is able to move
forward from a position of strength to take advantage of
opportunities as the UK emerges from the pandemic and markets
continue to recover.
David Shearer
Chairman
Chief Executive's statement
Overview
I am pleased to report results that are ahead of our
expectations in what has been an exceptionally challenging year for
customers and colleagues alike. These results are testament to the
hard work of all our colleagues in supporting us throughout this
period whilst maintaining excellent service levels to our
customers.
The Group continued to serve customers through the pandemic
supporting the NHS and other essential services whilst prioritising
the safety and wellbeing of all stakeholders. In April 2020 up to
50% of staff were placed on furlough leave and, whilst we
maintained our national coverage, 66% of our depots were initially
closed. Following a detailed operational review of trading during
the first lockdown, 13 depots were permanently closed and a further
22 depots are being consolidated into six larger improved
locations. No colleagues were on furlough beyond 30 September,
although c.200 roles were regrettably made redundant during the
year.
Our revenues declined initially, falling by 35% in April 2020,
but recovered strongly following the first lockdown as existing
customers returned to work and we secured work from new customers.
In the fourth quarter UK and Ireland core hire revenue was 4% ahead
of the prior year. In April and May 2021 core hire revenue was c.2%
higher than the comparative period in 2019. The young age profile
of the Group's hire fleet allowed us to significantly reduce
capital expenditure in the first half year; asset utilisation for
the second half year increased to 58.8% (2020: 55.9%).
Infrastructure spending has grown and prospects are strong,
particularly on major projects including HS2; our investment in
equipment and new colleagues in the rail sector resulted in
revenues growing significantly. Our SME revenue has continued to
grow, up 10% on the prior year in the second half. We have entered
into a trial with B&Q to grow this segment further and are
currently trading out of 16 B&Q stores with significant
opportunities for growth. Revenue from regional customers has
declined slightly, primarily due to pricing pressure in this
competitive segment.
The Group sold its Middle East equipment fleet, stock and other
fixed assets to its principal customer, ADNOC, on 1 March 2021 for
$18m. Outstanding trade receivables of c.$12m were paid in full on
31 March 2021. The Group entered into a Transitional Services
Agreement (TSA) with ADNOC, which will expire on 30 June 2021, to
support the transfer of the assets, during which time it is
anticipated that the Group's c.600 UAE-based employees' contracts
will be terminated and all colleagues offered re-employment by
ADNOC. The successful exit from the Middle East operations is an
important strategic step for the Group leaving us well positioned
to take advantage of the market opportunities in the UK and Ireland
as activity levels continue to improve.
Financing and liquidity
Our business model provided strong cash generation and improved
liquidity during the pandemic; operating cash flow of GBP72.9m was
13.0% ahead of prior year (2020: GBP64.5m). Net debt, excluding
lease liabilities, as at 31 March 2021 reduced to GBP33.2m (2020:
GBP79.3m), following the sale of our operations in the Middle East
and excellent cash collections. The Group has significant headroom
against its committed banking facilities totalling GBP180m;
leverage at 31 March 2021 was 0.5 times.
Results
Group revenue fell by 10.6% to GBP363.6m (2020: GBP406.7m)
reflecting the impact of the first lockdown in April and May 2020
and the recovery in activity levels thereafter. Group revenues,
excluding disposals, fell by 10.7% to GBP359.4m (2020:
GBP402.5m).
In the UK and Ireland core hire revenue fell by 11.0%, with
first half revenues down 20.5%. In the second half core hire
revenue was broadly flat. Services revenue fell by 10.2% reflecting
a strong performance from our rehire business offset by lower
training revenue due to COVID-19 restrictions.
Gross margin decreased to 53.0% (2020: 55.1%), primarily as a
result of lower core hire revenues in the first half year and
services mix. Overheads remained tightly controlled reducing in the
year as a result of lower activity levels and Government support.
EBITA decreased by 35.0% to GBP25.4m (2020: GBP39.1m). EBITDA
decreased by 15.7% to GBP90.5m (2020: GBP107.4m).
There were GBP7.6m of net exceptional expenses incurred during
the year (2020: GBP12.9m) principally in relation to the depot
realignment programme and costs associated with Geason
Training.
Adjusted profit before tax decreased to GBP20.7m (2019:
GBP34.9m). Adjusted earnings per share decreased to 3.22 pence
(2020: 5.54 pence).
The Group has a 45% share in a joint venture in Kazakhstan
serving the oil and gas market. Share of profits fell to GBP1.2m
(2020: GBP2.8m) reflecting reduced activity levels in the year due
to COVID-19.
The net book value of the Group's hire fleet decreased to
GBP207.2m (2020: GBP 227.1m). The reduction in the size of the
fleet reflects the disposal of the Middle East equipment in March
2021 and lower capital expenditure in the first half year. The
average fleet age remains low, increasing slightly to 3.6 years
(2020: 3.4 years). Asset utilisation in the second half in the UK
and Ireland was 58.8% (2020: 55.9%), reflecting continued use of
artificial intelligence to manage stocking levels and lower capital
expenditure in the first half year. The Group will continue to
invest in sustainable products in line with its strategy to reduce
the carbon output of the hire fleet through investment in solar,
hybrid, electric and hydrogen technology.
Dividend
The Board is committed to a progressive dividend policy with a
pay-out ratio of between 33% and 50% of underlying profit after
tax.
The Group utilised Government support during the first half year
including use of the Coronavirus Job Retention Scheme and the
deferral of tax payments and has benefitted from rates relief. In
addition, substantial cost reduction measures were implemented
during the first half which affected colleagues, landlords and
other stakeholders. The Group has no intention of further utilising
Government COVID-19 support schemes, no staff were on furlough post
30 September 2020, and all tax deferrals were paid by 30 September
2020. Nevertheless the Board resolved not to pay a final dividend
for FY2020 or an interim dividend for FY2021.
The Board is pleased with the recovery of the business post the
initial lockdown and has therefore recommended a final dividend of
1.40 pence per share for the year ended 31 March 2021.
Strategy and operational review
Our vision is to be the best company in our sector to do
business with and the best to work for. We have continued to win
new customers and renew contracts with our existing customers over
the past year which is testament to the excellent customer service
we provide. We are constantly striving to improve the customer
journey and further differentiate our service offering. We are
actively listening and communicating with our people and enhancing
the employee value proposition in order to attract and retain the
best talent.
UK and Ireland
We serve approximately 50,000 customers in the UK and Ireland,
including 86 of the UK's 100 largest contractors. Our customers
include major infrastructure contractors, housebuilders,
industrials and SMEs. More recently we have entered the B2C market
through our partnership with B&Q where we are currently trading
through 16 stores across the UK. During the year we have extended
our contracts with Murphy, Osborne and Balfour Beatty, and won a
number of significant new contracts including with Network Plus and
MWH. We have also further grown our SME revenues by over 20% in the
fourth quarter compared with the same period last year through
continued growth in our Customer Relationship Centre (CRC) in South
Wales. We have restructured our sales teams and their ways of
working to better address customers' needs following the
pandemic.
Our customers' key priority is the prompt availability of
products for hire. We offer an industry leading unique four-hour
delivery service on our most popular products, 'Capital
Commitment'. This four-hour promise was originally launched within
the M25 in November 2018, has subsequently been extended nationally
and now covers our 350 most popular products. The success of
Capital Commitment reflects our customer service culture, and the
investment we have made in equipment, systems and processes. We
will continue to evolve this service promise to ensure that we
remain the best company in our sector to do business with.
Services revenues are less capital intensive, have greater
visibility and are more recurring in nature than hire revenues. As
a result, they are ROCE enhancing for the Group. Our Services
categories consist of: rehire; training; testing, inspection and
certification; product and consumable sales; and fuel management
services. Services revenue has been less affected by the pandemic
than our hire business primarily due to an increase in rehire of
accommodation and consumable sales including of PPE. Geason
Training has performed below expectations during the year due to
lower than expected learner enrolments as a result of the pandemic.
During the year we resolved the claim from the funding agency and
implemented a number of management changes. We are reviewing
further initiatives to improve the Group's financial position.
We have extended the use of artificial intelligence to optimise
our asset holdings and now produce a dynamic forecast which is
updated monthly. Optimal stocking levels are set to ensure we have
the right assets, at the right locations, at the right time to
satisfy customer demand in the most efficient way. Utilisation
rates have consequently increased to record levels with specialist
products yet to be added into the system. Our aim is to optimise
all elements of the operational support process through data led
intelligence.
During the year significant improvements were made to the
digital customer journey including more accurate allocation of
orders to locations, better online pricing capability, Hand Arm
Vibration (HAV) product selector enhancements, online inspection,
and the ability to place digital orders for collection from our
B&Q locations (including at weekends). We also launched a new
cross platform App which makes development quicker and provides a
single code base to maintain. Functionality available on the App
now includes a mini "MySpeedy" customer dashboard, the ability to
view and download invoices, and pay through the App, off hire by
scanning the barcode on the asset, and delivery and collection
tracking capability.
We anticipate further increases in digital take up following the
implementation of automated on-boarding for pay as you go customers
(primarily SME and B2C customers) and order approval workflow for
customers requiring transaction approvals (regional and major
customers).
Our online capability is supported by an omni-channel approach
to servicing customers. During the year we completed the rollout of
VOIP telephony across our network which provides additional
customer facing capability.
ESG
We are committed to reaching net zero emissions before 2050 and
during the current financial year will set science-based targets to
provide a clearly defined pathway on how we will achieve this. Our
Energise programme, which was launched in October 2019, encompasses
our objectives to reduce environmental impacts, improve social
responsibility and operate robust governance programmes. A new ESG
Director, and an Innovation Director were appointed in April 2021,
both of whom are working alongside our HR Director who joined in
October 2020 to progress our ESG strategy.
Our principal objective is to reduce the carbon output of our
hire and vehicle fleet through the use of solar, hybrid, electric
and hydrogen technology. We are working with equipment
manufacturers to increase the volume of sustainable products within
our hire fleet with this year's capital expenditure budget being
weighted towards such products; sustainable products already
generate more than 25% of our revenue. Our company car list now
consists almost entirely of hybrid and electric vehicles and we are
working closely with commercial vehicle manufacturers to introduce
hybrid and electric vehicles as soon as practicable. We are already
operating a number of electric delivery vehicles on a trial basis
including two converted electric London taxis. The carbon output of
our equipment fleet is affected by the use of fossil fuels. We are
working closely with customers and suppliers to trial the use of
hydrogenated vegetable oil (HVO) within our products as a
substitute for diesel. Initial trials have shown carbon output to
be reduced by up to 90% from the use of HVO and hence we are
working with customers to further roll out this product within our
network.
We are progressing the people agenda with a focus on wellbeing
as well as prioritising equality, diversity and inclusion within
the workplace. A significant investment is planned this financial
year on graduates and apprentices and we are proud to have joined
the 5% club; working towards having 5% of our employees on earn and
learn programmes within 5 years.
People
The Group's headcount at 31 March 2021 was 3,843 (2020: 4,065).
In the UK and Ireland underlying headcount reduced to 3,253
following c.200 redundancies in the first half year resulting from
the operational review undertaken during the first lockdown (2020:
3,464); in addition a further 50 colleagues joined our B&Q
instore offering during the year. Modest increases in colleague
numbers are expected during the current year as revenue growth
continues. The Middle East headcount at 31 March 2021 was 540; it
is anticipated that all colleagues will be transferred to ADNOC by
the conclusion of the TSA period on 30 June 2021.
We undertook a full survey of all colleagues in March and April
2021. I am pleased to report that once again our response rate
(74%) and engagement scores (77%) were strong. Detailed action
plans to address the results of the survey are being prepared and
will be communicated to colleagues during May. Our web and App
based communications tool, 'The Hub', was introduced following
previous surveys and has proved invaluable for communicating with
staff during the pandemic. Regional employee forums have been held
during the year, with the Chairpersons meeting me and the HR
Director in order to address any matters raised.
The Board is committed to ensuring there is regular
communication with, and support for colleagues who are
participating in the long-term success of the business. I would
like to take this opportunity to thank all my colleagues for their
ongoing support and dedication during this most challenging of
years.
Summary and outlook
I am pleased to report results that are ahead of our
expectations in what has been an exceptionally challenging year for
customers and colleagues alike. The resilient performance of our
business during this unprecedented period is testament to the
strength of our model, hard work of all my colleagues and strong
operational delivery. Our excellent customer service, including our
four-hour commitment, has facilitated a strong recovery in the
second half.
We have had an encouraging start to FY2022 with revenue in April
and May c.2% ahead of the equivalent period in 2019. Our strong
balance sheet and the actions we have taken to develop our digital
and ESG offerings give us confidence for the future.
Russell Down
Chief Executive
Financial review
Overview
It has been a challenging year for the business as we responded
to COVID-19. The financial results have been heavily impacted by
the pandemic; however they are testament to the hard work of all
our colleagues in supporting the business throughout this period.
The start to the new financial year is encouraging; in April and
May 2021 revenue is c.2% ahead of the comparative period (April
2019).
Revenues declined initially during the first lockdown,
recovering strongly as our customers returned to work. Despite
revenue falling by as much as 35% in April 2020, by the fourth
quarter like for like core hire revenue was trading ahead of prior
year by 4%. Activity recovered across our Major accounts and the
mobilisations of recent contract wins including Network Plus, MWH
and Horbury increased our market share. Our SME customer base has
continued to grow, with revenue up 10% in the second half; we
continue to explore further opportunities to grow in this sector
which includes a trial with B&Q.
We proactively managed our cost base in the first half with
decisive actions including a freeze on discretionary spend, the use
of Government support schemes, as well as reducing capital
expenditure to the level necessary to meet customer demand.
Investment in hire fleet resumed as activity levels recovered
during the second half. Following a detailed operational review
during the first lockdown 13 depots have been permanently closed
and c.200 roles made redundant.
The Group entered FY2021 with conservative debt levels. The
cautious action taken to preserve cash, including reduced capex and
no dividend payments combined with strong cash collections from
customers, the Group has operated throughout the year well within
existing banking facilities and without any covenant tests being
triggered. The disposal of the Middle East assets on 1 March 2021
has further strengthened the Group's net debt position.
We continue to monitor the COVID-19 situation and will respond
accordingly. The Group's strong balance sheet and the encouraging
trading at the start of the new financial year allows us to take
advantage of strategic opportunities as markets emerge from the
pandemic.
Group financial performance
Revenue (excluding disposals) for the year to 31 March 2021
decreased by 10.7% to GBP359.4m (2020: GBP402.5m). Revenue from
disposals was GBP4.2m (2020: GBP4.2m); total revenue for the period
decreased by 10.6% to GBP363.6m (2020: GBP406.7m).
Gross profit was GBP192.6m (2020: GBP224.2m), a decrease of
14.1%. The gross margin fell to 53.0% (2020: 55.1%), reflecting
reduced hire revenue with largely fixed depreciation charge, the
mix impact from reductions in training revenues, and competitive
price pressures.
EBITA(1) decreased by 35.0% to GBP25.4m (2020: GBP39.1m) and
profit before taxation, amortisation and exceptional costs
decreased to GBP20.7m (2020: GBP34.9m).
The share of profit from the joint venture in Kazakhstan
decreased to GBP1.2m (2020: GBP2.8m) as result of COVID-19 related
reductions in activity.
The Group incurred net exceptional expenses before taxation of
GBP7.6m (2020: GBP12.9m). Further details are included below.
After taxation, amortisation and exceptional items, the Group
made a profit of GBP9.5m, compared to a profit of GBP16.8m in
2020.
Segmental analysis
The Group's segmental reporting is split into continuing
operations - UK and Ireland, and discontinued operations -
International. The figures in the tables below are presented before
corporate costs of GBP4.6m (2020: GBP3.9m), which have increased
17.9% due to management compensation payments and additional audit
fees.
Year ended Year ended Change
31 March 31 March
UK and Ireland 2021 2020
GBPm GBPm %
Revenue (excluding
disposals) 328.1 367.3 (10.7)
EBITDA(1) 89.5 102.7 (12.9)
EBITA(1) 26.3 37.3 (29.5)
Excluding disposals, revenue decreased by 10.7% to GBP328.1m
(2020: GBP367.3m) with a fall across both Hire and Services.
Hire revenue decreased by 11.0%. Hire revenue was significantly
impacted by the national lockdown imposed at the end of March 2020,
initially falling by 35% in April. Activity levels then
progressively recovered as the construction sector reopened with
trading ahead of prior year by the fourth quarter. Major and Local
sectors both now exceed prior year levels following contract
renewals and new contract wins. The Regional sector remains
challenging, with competitive pricing.
Services revenues declined by 10.2% in the year as all areas of
the business were initially impacted by the first lockdown. A
strong performance from the rehire, fuel and consumables businesses
throughout the second half resulted in Services revenue for that
period being ahead of prior year.
Our training business G eason has continued to perform below
expectations during the year due to lower than expected learner
enrolments as a result of the pandemic and social distancing
impacting course delivery. During the year we resolved the claim
from the funding agency and implemented a number of management
changes. We are reviewing further initiatives to improve the
Group's financial position.
Gross margins reduced from 57.7% to 55.6%. Hire margin decreased
to 75.7% (2020: 77.0%) due to reduced activity in the first half
with a largely fixed depreciation charge; margin in the first half
was 74.8%, increasing to 76.4% in the second half. Expansion of our
powered access fleet has improved the national offering to major
customers and reduced reliance on lower margin rehire partners.
Services margin was impacted by sales mix with strong revenue
performance in lower margin services such as rehire and fuel
reducing overall margin to 23.2% (2020: 26.0%).
Overheads have reduced due to the mitigating actions taken to
manage the cost base in response to the COVID-19 pandemic including
the permanent closure of 13 depots and c.200 roles being made
redundant, temporary freezing of discretionary spend, alongside
Government support received from furlough schemes in the first half
(GBP8.9m) and rates relief (GBP4.8m). As a result of these actions,
there has been an overall 10.0% reduction in overheads compared to
the prior year.
Headcount has reduced to 3,303, compared to 3,464 at 31 March
2020 with redundancies from the operational restructure in the
first half year and 50 colleagues joining our B&Q instore
offering during the year.
Asset utilisation in the second half has increased to 58.8%
(2020: 55.9%), as a result of continued use of artificial
intelligence to connect customer demand with asset availability and
lower capex in the first half. Utilisation rates for the core range
of products have improved on prior year as the replenishment and
asset rebalancing programme that uses machine learning was launched
across the entire network during the first half. Our strategy to
simplify and standardise processes within the depot network has
enabled utilisation improvement and the expansion of our four-hour
customer promise.
The business recovered well in the second half with EBITA for
that period of GBP17.9m, 5.3% down on prior year. It continues to
perform well into FY2022 in a competitive market despite the
pandemic related disruptions associated with COVID-19.
Year ended Year ended Change
31 March 31 March
International 2021 2020
GBPm GBPm %
Revenue 31.3 35.2 (11.1)
EBITDA(1) 5.2 8.2 (36.6)
EBITA(1) 3.7 5.7 (35.1)
The Group sold its equipment fleet, stock and other fixed assets
relating to its Middle East business to its principal customer
ADNOC Logistics and Services LLC (ADNOC), on 1 March 2021, for
consideration of $18m. The consideration was paid in cash in full
on completion with trade receivables from ADNOC of c.$12m
subsequently paid on 31 March. The net proceeds, after working
capital payments, have reduced Group borrowings. The transaction
included the Group entering into a Transitional Services Agreement
(TSA) with ADNOC to 30 June 2021, to support the transfer of the
assets, during which time it is anticipated that the Group's c.600
UAE-based employees' contracts will be terminated and all
colleagues offered re-employment by ADNOC. On conclusion of the TSA
the Group intends to wind up its operations in the Middle East.
International revenue in the Middle East decreased by 11.1% due
to the disposal of the assets, COVID-19 related disruptions and the
full year effect of contract negotiations in the prior year.
Consequently, EBITA fell by 35.1%.
Exceptional items
There were GBP7.6m net exceptional items incurred during the
year (2020: GBP12.9m).
Total
--------------
GBPm
Property related costs (5.6)
Restructuring costs (1.9)
Disposal of Middle East assets 0.8
Training provision (0.9)
----------
(7.6)
Action has been taken to manage the Group's cost base following
the COVID-19 pandemic, and consequently the network has been
restructured; 13 depots have been closed and further consolidation
of 22 depots is underway to create six larger, customer focused
service centres. As a result, GBP5.6m of property related costs and
GBP1.9m redundancy costs have been incurred during the year.
As noted above, the Group sold its equipment fleet, stock and
other fixed assets relating to its Middle East business to its
principal customer ADNOC, for a consideration of $18m (GBP13.0m).
The transaction resulted in a gain on disposal of GBP0.8m.
The training business, Geason, which was acquired in December
2018, was subject to an assurance visit from a funding agency in
early 2020, and a subsequent claim was received for amounts
overpaid. The claim was settled in October 2020, within the
provision held at 31 March 2020. An additional provision has been
made for GBP0.9m to cover legal and other costs associated with
ongoing initiatives to improve the Group's financial position.
Interest
The Group's net financial expense, including interest on lease
liabilities and before exceptional items, decreased to GBP5.9m
(2020: GBP7.0m) reflecting lower average gross borrowings
throughout the year.
Net debt, excluding lease liabilities, as at 31 March 2021
reduced to GBP33.2m (2020: GBP79.3m), following the sale of the
Middle East assets and excellent cash collections. Borrowings under
the Group's bank facility are priced on the basis of LIBOR plus a
variable margin, while any unutilised commitment is charged at 35%
of the applicable margin. During the year, the margin payable over
LIBOR on the outstanding debt fluctuated between 1.50% and 2.00%
dependent on the Group's performance in relation to leverage and
the weighting of borrowings between receivables and plant and
machinery. The effective average margin in the period was 1.80%
(2020: 1.84%).
The Group utilises interest rate hedges to manage fluctuations
in LIBOR with varying maturity dates to October 2022. The fair
value of these hedges was not material at 31 March 2021.
Taxation
The Group seeks to protect its reputation as a responsible
taxpayer, and adopts an appropriate attitude to arranging its tax
affairs, aiming to ensure effective, sustainable and active
management of tax matters in support of business performance. The
Group utilised Government deferral schemes for tax payments of
GBP7.6m during the first half; all amounts deferred were paid prior
to 30 September 2020.
The tax charge for the period was GBP2.8m (2020: GBP3.9m), with
an effective tax rate of 22.7% (2020: 18.8%); the increase in the
effective rate includes the impact of exceptional items in the
year. The underlying effective tax rate for the continuing
operations is 19.6% (2020: 19.7%).
Shares, earnings per share and dividends
At 31 March 2021, 528,180,280 Speedy Hire Plc ordinary shares
were outstanding, of which 4,413,516 were held in the Employee
Benefits Trust.
Adjusted earnings per share was 3.22 pence (2020: 5.54 pence), a
decrease of 41.9%. Basic earnings per share was 1.82 pence (2020:
3.23 pence).
The decision to not pay a FY2020 final dividend reflected our
priority at that time of preserving cash. No interim dividend was
declared during FY2021 (2020: 0.70 pence). In light of the
improvement in trading in the second half of the year, and in
recognition of the strength of the balance sheet and cash position
at the year end, the Board is recommending a 2021 final dividend of
1.40p per share. The cash cost of this dividend is expected to be
c.GBP7.4m.
Capital expenditure and disposals
Total capital expenditure during the year amounted to GBP43.7m
(2020: GBP63.2m), of which GBP36.0m (2020: GBP55.3m) related to
equipment for hire, and GBP7.7m to other property, plant and
equipment (2020: GBP7.9m).
The Group entered the pandemic with a young fleet age, which
allowed for immediate cut-back on discretionary spend without
impacting service delivery. Capital expenditure on hire fleet was
reduced initially to GBP7.2m, a level necessary to meet customer
demand. The investment in fleet increased to GBP28.8m in the second
half in response to increases in customer activity. This
expenditure reflects further investment in the core range ensuring
the UK and Ireland business can continue to execute our four-hour
delivery promise. Throughout the year the Group has continued to
invest in sustainable products in line with its strategy to reduce
the carbon output of the hire fleet through investment in solar,
hybrid, electric and hydrogen technology.
Despite the capital expenditure constraints during the year, the
average age of the fleet remains young in comparison to the
industry; 3.6 years (2020: 3.4 years). Total disposal proceeds were
GBP12.2m (2020: GBP11.7m). During the year we further optimised our
stockholdings across the network, applying machine learning to
inform decisions on returns and asset utilisation, which
highlighted those areas requiring investment. The number of product
lines has further reduced, and this has enabled us to continually
improve the efficiency of our supply chain. This forward demand
planning will help mitigate the potential risk from lead time
delays and price inflation.
Balance sheet
The Group continues to have a strong balance sheet, which
reflects the decisive action taken during COVID-19, proactive
management of the asset fleet and effective control over working
capital.
Net assets at 31 March 2021 were GBP219.2m (2020: GBP209.9m),
equivalent to 41.5 pence per share.
Net property, plant and equipment (excluding IFRS 16 right of
use assets) was GBP233.1m at 31 March 2021 (2020: GBP257.6m), of
which equipment for hire represents 88.9% (2020: 88.2%). Following
the disposal of the Middle East assets, the International hire
fleet is GBPnil at 31 March 2021, (2020: GBP11.4m).
Intangibles increased to GBP24.7m (2020: GBP23.1m), due to
increased IT development expenditure.
Right of use assets of GBP59.1m (2020: GBP64.7m) and
corresponding lease liabilities of GBP65.8m (2020: GBP72.9m) are
recognised at 31 March 2021 following the implementation of IFRS 16
in the prior year.
Throughout the year the business has had a clear focus on cash,
in particular customer collections. The successful collaboration
between sales and credit control functions, leveraging strong
customer relationships, resulted in excellent cash collections.
Gross trade receivables totaled GBP93.3m at 31 March 2021 (2020:
GBP100.7m). Bad debt provisions were GBP3.5m at 31 March 2021
(2020: GBP3.9m), equivalent to 3.8% of gross trade receivables
(2020: 3.9%). Debtor days were 58.9 (2020: 69.6), of which UK and
Ireland were 59.4 (2020: 66.0). Overdue debt has reduced by 26%
over the year.
Trade payables were GBP49.6m (2020: GBP52.3m). Creditor days
were 86.6 (2020: 103.7).
Cash flow and net debt(3)
Cash generated from operations for the year was GBP72.9m (2020:
GBP64.5m). Free cash flow (being net cash flow before financing
activities) increased to GBP69.7m (2020: GBP45.2m).
Net debt decreased by GBP46.1m from GBP79.3m at the beginning of
the year to GBP33.2m at 31 March 2021. Excluding the impact of IFRS
16, leverage reduced to 0.5x (2020: 1.0x).
The Group's strong cash position resulted in substantial
headroom within the Group's bank facility throughout the year with
cash and undrawn facility availability of GBP142.3m at 31 March
2021 (2020: GBP99.0m). Discussions with a syndicate of banks are at
an advanced stage in relation to renewing the facility, which
expires in October 2022, on largely similar terms.
Capital allocation policy
The Board intends to continue to invest in the business in order
to grow revenue, profit and ROCE. This investment is expected to
include capital expenditure within existing operations, as well as
value enhancing acquisitions that fit with the Group's strategy and
are returns accretive.
The Board's objective is to maximise long term shareholder
returns through a disciplined deployment of cash generated, and it
has adopted the following capital allocation policy in support of
this:
- Organic growth: the Board will invest in capital equipment to
support demand in our chosen markets. This investment will be in
hire fleet and IT systems to better enable us to serve our
customers;
- Regular returns to shareholders: the Board intends to pay a
regular dividend to shareholders, with a policy of growing
dividends through the business cycle, and a payment in the range of
between 33% and 50% adjusted earnings per share;
- Acquisitions: the Board will continue to explore value
enhancing acquisition opportunities in specialist hire and services
businesses consistent with the Group's existing operations;
- Gearing and treatment of excess capital: the Board is
committed to maintaining an efficient balance sheet. The Board has
adopted a target gearing in the region of 1.5x net debt to EBITDA
through the business cycle, although it is prepared to move outside
this if circumstances warrant. The Board will continue to review
the Group's balance sheet in light of the policy, and medium term
investment requirements, and will return excess capital to
shareholders if and when appropriate.
The Group has a strong pipeline of organic growth and
acquisition opportunities, which it continues to evaluate on an
ongoing basis.
Capital structure and treasury
Speedy's long term funding is provided through a combination of
shareholders' funds and bank debt.
The Group's GBP180m asset based finance facility and uncommitted
accordion of GBP220m, expire in October 2022. Discussions with a
syndicate of banks are at an advanced stage in relation to renewing
the facility on largely similar terms.
The average gross borrowings under the facility during the year
ended 31 March 2021 decreased to GBP79.5m (2020: GBP110.2m). The
facility includes leverage and fixed charge cover covenant tests
which are only applied if headroom in the facility falls below
GBP18m. The Group had significant headroom against these tests
throughout the year.
Return on capital
ROCE(4) is a key performance measure for the Group and decreased
to 7.6% (2020: 12.0%) due to the impact of COVID-19 partially
offset with lower levels of net debt. The strength of the balance
sheet and available financial resources will allow us to invest in
growth opportunities as markets continue to recover.
James Bunn
Chief Financial Officer
The responsibility statement below has been prepared in
connection with the Group's full annual report for the year ended
31 March 2021. Certain parts of that report are not included within
this announcement.
Directors' Responsibilities Statement
We confirm that to the best of our knowledge:
-- the Financial Statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole;
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face.
The names and functions of the Directors of the Company are:
Name Function
David Shearer Chairman
Russell Down Chief Executive
James Bunn Chief Financial Officer
David Garman Senior Independent Director
Rob Barclay Non-Executive Director
Rhian Bartlett Non-Executive Director
Shatish Dasani Non-Executive Director
Principal risks and uncertainties
The business strategy in place and the nature of the industry in
which we operate expose the Group to a number of risks. As part of
the risk management framework in place, the Board considers on an
ongoing basis the nature, likelihood and potential impact of each
of the significant risks it is willing to accept in achieving its
strategic objectives.
The Board has delegated to the Audit & Risk Committee
responsibility for reviewing the effectiveness of the Group's
internal controls, including the systems established to identify,
assess, manage and monitor risks. These systems, which ensure that
risk is managed at the appropriate level within the business, can
only mitigate risk rather than eliminate it completely.
Direct ownership of risk management within the Group lies with
the senior management teams. Each individual is responsible for
maintaining a risk register for their area of the business and is
required to update this on a regular basis. The key items are
consolidated into a Group risk register which has been used by the
Board to carry out a robust assessment of the principal risks.
The principal risks and mitigating controls in place are
summarised below.
Risk Description and potential impact Strategy for mitigation
COVID-19 pandemic Trading performance As a supplier to industries that have
The UK and Ireland lockdowns have continued to operate, the Group has
reduced economic activity. The first also continued to
of these in 2020 affected trade. Entering the new financial year
Group revenues. Whilst the indications a significant proportion of revenues
for the future are promising in the have been retained,
UK, the uncertainty with trading through the Group's
leads to difficulty in forecasting. digital platform and by telephone.
People During the lockdown we
The COVID-19 pandemic may lead to suspended hire charges for equipment
shortages in the workforce as a direct not in use in order that the impact
result of illness, was minimised.
social shielding or isolation We acted quickly to contain costs and
measures, along with depot closures. preserve cash, including halting all
This may result in an inability discretionary spend
to effectively service our customers' and consolidating our depot network,
requirements. temporarily closing sites and
Supply chain servicing our clients from
The supply of goods, services and alternative locations, thus ensuring
assets (including the availability of we maintain a national coverage.
spares) may be disrupted. We previously utilised the
This may also result in an inability Government's coronavirus job retention
to effectively service our customers' scheme, furloughing up to
requirements. 50% of our workforce.
We continue to monitor Government
guidance and take action to ensure the
safety of our colleagues,
as we support customers continuing to
operate.
We have introduced COVID-19 safe ways
of working, restricting access to our
premises and maintaining
social distance. We have increased
opportunity for employees who can
perform duties from home
doing so and intend for this to be
offered as a flexible working option
where appropriate.
This involves the utilisation of our
secure and robust infrastructure and
technology platforms.
Speedy operates one of the youngest
hire fleets in the industry and is
well placed to provide
asset availability as a result of
better reliability. The age profile
also allows us to optimise
capital expenditure management during
this period, whilst maintaining
customer service.
Based on various revenue downturn
scenarios, and the measures outlined
above, the Board remains
confident that the Group can operate
within its existing debt facilities
and covenant tests
during a prolonged period of reduced
trading activity, including in the
event of a further
national lockdown.
--------------------------------------- ---------------------------------------
Safety, health and environment Serious injury or death The Group is recognised for its
Speedy operates, transports and industry-leading position in promoting
provides for rental a wide range of enhanced health and
machinery. Without rigorous safety compliance, together with a
safety regimes in place there is a commitment to product innovation. This
risk 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 of, and compliance with, procedures
includes handling, transport and that affect safety and protection of
dispensing of substances, the environment.
including fuel, that are hazardous to We maintain systems that enable us to
the environment in the event of hold appropriate industry recognised
spillage. accreditations
Climate change which have been enhanced further this
There is a risk that Speedy will fail year with the introduction of a
to meet climate change targets specialist platform
generally which in turn for managing data and reporting in
may limit our ability to trade with relation to Health, Safety and
some of our customers. Specifically, Environment.
the delivery locations The Group has built on its strong
for many of our customers require position by embracing the ESG agenda
Speedy to operate in designated low with the creation of
emission zones. our Energise programme demonstrating
our firm commitment to our
responsibility in each of
these areas. Robust targets have been
set and a director has been appointed
to lead the programme,
reporting to the Chief Executive.
Speedy has incorporated hybrid and
fully electric vehicles into the
commercial fleet to ensure
we meet and in some cases exceed
emission requirements.
All operatives who handle hazardous
substances are trained and provided
with appropriate equipment
to manage small scale spills. In the
case of more serious accidents, we
have a contract with
a third party specialist who would
undertake any clean-up operation as
necessary.
--------------------------------------- ---------------------------------------
Service Provision of equipment During the year we have successfully
Speedy's commitment is to provide well extended our nationwide four-hour
maintained equipment to its customers service promise under
on a consistent "Trust Speedy to Deliver" to cover a
and dependable basis. wider range of our assets
Back office services Our use of personal digital assistants
It is important that Speedy is able to (PDAs) and online based customer
provide timely and accurate management feedback system are
information fully embedded into our business and
to its customers, along with accurate these are used to improve the on-site
invoices and supporting documentation. customer experience.
In both cases, a failure to provide Speedy liaises with its customer base
such service could lead to a failure and takes into account feedback where
to attract or retain particular issues
customers, or to diminish the level of are noted, to ensure that work on
business such customers undertake with resolving those issues is prioritised
Speedy. accordingly. We have
introduced a Net Promoter Score metric
into our business to drive improvement
through dashboard
reporting at depot level.
During the year we have actively
progressed our Enable project to
upgrade our AX12 ERP system
and plan to move to Microsoft's
Dynamics365. This will strengthen our
customer service functionality,
our back office services and also
provides a range of opportunities for
future enhancements.
--------------------------------------- ---------------------------------------
Revenue and trading performance Competitive pressure The Group monitors its competitive
The hire market is fragmented and position closely, to ensure that it is
highly competitive. We are continuing able to offer customers
to develop strategic the best solution. The Group provides
relationships with larger customers a wide breadth of offerings,
and also working hard to grow our supplemented by its rehire
local and regional accounts. 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
Reliance on high value customers opportunities for the Group are
There is a risk to future revenues maximised. Market share is measured
should preferred supplier status with and competitors' activities are
larger customers reported on and addressed where
be lost when such agreements may appropriate. The Group's integrated
individually represent a material services offering further mitigates
element of our revenues. against this risk as it demonstrates
value to our customers,
setting us apart from purely asset
hire companies.
No single customer currently accounts
for more than 10% of revenue or
receivables. We have
been successful in growing our SME
customer base, which also helps to
mitigate this risk.
We have entered a trial within B&Q
stores which allows the Group to
directly access a marketplace
that provides significant potential
for growth. The Group has restructured
its operational
management team to include a managing
director dedicated to retail based
routes to market.
--------------------------------------- ---------------------------------------
Project and change management Acquisitions The Group has a defined process for
Our strategy includes selective monitoring and filtering potential
acquisitions that complement or extend targets, with input
our existing business from advisors and other third parties.
in specialised markets. There is a All potential business combinations
risk that suitable targets are not are presented to the Board, with an
identified, that acquired associated business
businesses do not perform to case, for approval.
expectations or they are not Once a decision in principle is made,
effectively integrated into the a detailed due diligence process
existing Group. covering a range of
criteria is undertaken. Where
necessary, this includes the use of
specialist external support.
The results of due diligence are
presented to the Board prior to formal
approval being granted.
The use of a cross functional project
team ensures effective integration
into the Group. These
teams work with a blueprint plan,
modified as needed to specifically
address any risks identified
during the due diligence phase.
A Programme Management Office function
is established with clearly defined
governance in place
to oversee all change initiatives.
--------------------------------------- ---------------------------------------
People Employee excellence Skill and resource requirements for
In order to achieve our strategic meeting the Group's objectives are
objectives, it is imperative that we actively monitored
are able to recruit, and action is taken to address
retain, develop and motivate employees identified gaps. Succession planning
who possess the right skills for the aims to identify talent
Group. 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
Partner reputation centrally through a supplier portal
A significant amount of our revenues where relevant and set service related
come from our rehire offering, where KPIs are included
the delivery or within standard contract terms.
performance is effected through a Regular reviews take place with all
third party partner. supply chain partners.
Speedy's ability to supply assets with Where practical, agreements with
the expected customer service is alternative suppliers are in place for
therefore reliant key ranges, diluting
on the performance of others with the reliance on individual suppliers.
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
supplier dependency and creating a
competitive supply-side
environment. All significant purchase
decisions are overseen by a dedicated
supply chain team
with structured supplier selection
procedures in place. Property costs
are managed by an in-house
team of specialists who manage the
estate.
We operate a dedicated fleet of
commercial vehicles that are
maintained to support our brand
image. Fuel is purchased through
agreements controlled by our supply
chain processes.
The growth of our services offering
will help to mitigate this risk as
these activities have
overheads that are more flexible.
--------------------------------------- ---------------------------------------
Cyber Security and data integrity IT system availability Annual and medium-term planning
Speedy is increasingly reliant on IT processes are in place to provide
systems to support our business visibility as to the level
activities. Interruption and type of IT infrastructure and
in availability or a failure to services required to support the
innovate will reduce current and business strategy. Business
future trading opportunities cases are prepared for any
respectively. new/upgraded systems, and require
Data accuracy formal approval.
The quality of data held has a direct Our planned move to Microsoft's
impact on how both strategic and Dynamics 365 cloud based platform
operational decisions reduces the likelihood of
are made. If decisions are made based system unavailability and will also
on erroneous data there could be a improve system performance levels.
direct impact on Management information is provided in
the performance of the Group. all key areas from dashboards that are
Data security based on real
Speedy, as with any organisation, time data drawn from central systems.
holds data that is commercially We have a dedicated data management
sensitive and in some cases team which is responsible
personal in nature. There is a risk for putting in place procedures to
that disclosure or loss of such data maintain accuracy of the information
is detrimental to provided by data owners
the business, either as a reduction in across the business.
competitive advantage or as a breach Mitigations for IT data recovery are
of law or regulation. described below under business
continuity as these risks
are linked.
We have formed a data security
governance committee which meets
regularly to monitor our control
framework and reports on a routine
basis to the Audit & Risk Committee.
Speedy's IT systems are protected
against external unauthorised access.
These protections
are tested regularly by an independent
provider. All mobile devices have
access restrictions
and, where appropriate, data
encryption is applied.
--------------------------------------- ---------------------------------------
Funding Sufficient capital The Board has established a treasury
Should the Group not be able to obtain policy regarding the nature, amount
sufficient capital in the future, it and 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 including an additional
and/or non-availability. This could uncommitted accordion of
disadvantage the GBP220m, is available through to
Group relative to its competitors and October 2022. Discussions with a
might adversely impact its ability to syndicate of banks are at
command acceptable an advanced stage in relation to
levels of pricing. renewing the facility on largely
similar terms.
In line with the treasury policy, the
Group's capital requirements, forecast
and actual financial
performance and potential sources of
finance are reviewed at Board level on
a regular basis
in order that its requirements can be
managed with appropriate levels of
spare capacity.
--------------------------------------- ---------------------------------------
Economic vulnerability Economy The Group assesses changes in both
Any changes in construction/industrial Government and private sector spending
market conditions could affect as part of its wider
activity levels and market analysis. The impact on the
consequently the prices that the Group Group of any such change is assessed
can charge for its services. Any as part of the ongoing
reduction in Government financial and operational budgeting
expenditure which is not offset by an and forecasting process.
increase in private sector expenditure Our strategy is to develop a
could adversely differentiated proposition in our
affect the Group. chosen markets and to ensure
that we are well positioned with
clients and contractors who are likely
to benefit from those
areas in which increased activity is
forecast. We consistently monitor our
share in each market
segment and seek to balance our risk
between cyclical areas and those which
are more predictable.
--------------------------------------- ---------------------------------------
Business continuity Business interruption As described in the paragraph above,
Any significant interruption to the Group has continued to operate
Speedy's operational capability, effectively throughout
whether IT systems, physical the COVID-19 pandemic. Management
restrictions or personnel, could acted promptly in line with our
adversely impact current and future documented plan to establish
trading as customers a crisis management team which
could readily migrate to competitors. co-ordinated the activities required
This could range from short-term in a rapidly changing
impact in processing of invoices that environment.
would affect cash flows Preventative controls, back-up and
to the loss of a major site. recovery procedures are in place for
key IT systems. Changes
to Group systems are considered as
part of wider change management
programmes and implemented
in phases wherever possible. The Group
has critical incident plans in place
for all its sites.
Insurance cover is reviewed at regular
intervals to ensure appropriate
coverage in the event
of a business continuity issue.
--------------------------------------- ---------------------------------------
Asset holding and integrity Asset range and availability Our understanding of customer
Speedy's business model relies on expectation of the relative timescales
providing assets for hire to for delivery across our
customers, when they want to range of assets allows us to reduce
hire them. In order to maximise holdings of less time critical assets
profitability and returns on deployed by centralising
capital, demand is balanced the storage locations, whilst at the
with the requirement to hold a range same time increasing the breadth of
of assets that is optimally utilised. holding across our
customer trading locations of those
assets most likely to be required on a
short notice basis.
We regularly monitor our asset status
information and use this to optimise
our asset holdings.
We constantly review our range of
assets and introduce innovative
solutions to our customers
as new products come to market, under
our Energise programme.
--------------------------------------- ---------------------------------------
Viability Statement
The Group operates an annual planning process which includes a
five year strategic plan and a one year financial budget. These
plans, and risks to their achievement, are reviewed by the Board as
part of its strategy review and budget approval processes. The
Board has considered the impact of the principal risks to the
Group's business model, performance, solvency and liquidity as set
out above.
The Directors have determined that three years is an appropriate
period over which to assess the Viability statement. The
projections for the first three years of the strategic plan are
based on detailed action plans developed by the Group with specific
initiatives and accountabilities. There is inherently less
certainty in the projections for years four and five. The Group has
a GBP180m asset-based finance facility in place through to October
2022. The Strategic Plan makes certain assumptions about the
adequacy of facilities and expected renewal on broadly similar
terms to meet the Group's capital investment and acquisition
strategies.
In making this statement, the Directors have considered the
resilience of the Group, its current position, the principal risks
facing the business in distressed but reasonable scenarios,
including various risks associated with additional global pandemics
as set out above, and the effectiveness of any mitigating
actions.
Based on this assessment, the Directors have a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the period to March
2024.
The going concern statement and further information can be found
in Note 1 of the financial statements.
Consolidated Income Statement
for the year ended 31 March 2021
Year ended March 2021 Year ended March 2020
---------------------------------------------- ------------------------------------------
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 2 332.3 31.3 363.6 371.5 35.2 406.7
Cost of sales (147.4) (23.6) (171.0) (157.2) (25.3) (182.5)
---------- ---------- ---------- ---------- ---------- ----------
Gross profit 184.9 7.7 192.6 214.3 9.9 224.2
Distribution
and
administrative
costs (172.4) (3.2) (175.6) (205.7) (4.5) (210.2)
Analysis of
operating
profit
Operating
profit
before
amortisation
and
exceptional
items 21.7 3.7 25.4 33.4 5.7 39.1
Amortisation 10 (0.8) - (0.8) (1.3) - (1.3)
Exceptional
items 4 (8.4) 0.8 (7.6) (23.5) (0.3) (23.8)
----------------- ---- ------------- ------------- -------------------- -------------- -------------- --------------
Operating
profit 12.5 4.5 17.0 8.6 5.4 14.0
Share of
results
of joint
venture 1.2 - 1.2 2.8 - 2.8
---------- ---------- ---------- ---------- ---------- ----------
Profit from
operations 13.7 4.5 18.2 11.4 5.4 16.8
Net financial
expense 5 (5.4) (0.5) (5.9) (6.2) (0.8) (7.0)
Exceptional
financial
income 5 - - - 10.9 - 10.9
---------- ---------- ---------- ---------- ---------- ----------
Profit before
taxation 8.3 4.0 12.3 16.1 4.6 20.7
Taxation 6 (2.2) (0.6) (2.8) (3.9) - (3.9)
---------- ---------- ---------- ---------- ---------- ----------
Profit for the
financial year 6.1 3.4 9.5 12.2 4.6 16.8
Earnings per
share
- Basic (pence) 7 1.17 0.65 1.82 2.35 0.88 3.23
- Diluted
(pence) 7 1.15 0.64 1.79 2.32 0.87 3.19
Non-GAAP
performance
measures 9 85.3 5.2 90.5 99.2 8.2 107.4
Adjusted
profit
before tax 9 17.5 3.2 20.7 30.0 4.9 34.9
Adjusted
earnings
per share
(pence) 7 2.68 0.54 3.22 4.60 0.94 5.54
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2021
Year ended Year ended
31 March 31 March
2021 2020
GBPm GBPm
Profit for the financial year 9.5 16.8
---------- ----------
Other comprehensive income that may
be reclassified subsequently to the
Income Statement:
- Effective portion of change in fair
value of cash flow hedges 0.2 (0.2)
- Exchange difference on translation
of foreign operations (1.4) 0.9
- Tax on items - 0.1
---------- ----------
Other comprehensive income, net of tax (1.2) 0.8
---------- ----------
Total comprehensive income for the financial
year 8.3 17.6
Consolidated Balance Sheet
at 31 March 2021
Note 31 March 31 March
2021 2020
GBPm GBPm
ASSETS
Non-current assets
Intangible assets 10 24.7 23.1
Investment in joint venture 6.2 7.3
Property, plant and equipment
Hire equipment 11 207.2 227.1
Non-hire equipment 11 25.9 30.5
Right of use assets 12 59.1 64.7
Deferred tax asset 2.5 2.8
---------- ----------
325.6 355.5
---------- ----------
Current assets
Inventories 8.2 8.7
Trade and other receivables 93.3 102.3
Cash 13 11.7 22.8
Current tax asset 1.1 1.5
---------- ----------
114.3 135.3
---------- ----------
Total assets 439.9 490.8
---------- ----------
LIABILITIES
Current liabilities
Borrowings 13 (0.5) -
Lease liabilities 14 (19.3) (20.2)
Other financial liabilities (0.4) (0.5)
Trade and other payables (94.8) (90.9)
Provisions 15 (3.1) (5.9)
---------- ----------
(118.1) (117.5)
---------- ----------
Non-current liabilities
Borrowings 13 (44.4) (102.1)
Lease liabilities 14 (46.5) (52.7)
Provisions 15 (2.9) (1.2)
Deferred tax liability (8.8) (7.4)
---------- ----------
(102.6) (163.4)
---------- ----------
Total liabilities (220.7) (280.9)
---------- ----------
Net assets 219.2 209.9
EQUITY
Share capital 26.4 26.4
Share premium 1.3 0.8
Merger reserve 1.0 1.0
Hedging reserve (0.7) (0.9)
Translation reserve (1.0) 0.4
Retained earnings 192.2 182.2
---------- ----------
Total equity 219.2 209.9
Consolidated Statement of Changes in Equity
for the year ended 31 March 2021
Share Share Merger Hedging Translation Retained Total
capital premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April 2019 26.3 0.4 1.0 (0.7) (0.5) 175.5 202.0
Total comprehensive
income - - - (0.2) 0.9 16.9 17.6
Dividends - - - - - (10.9) (10.9)
Tax on items taken
directly
to equity - - - - - 0.2 0.2
Equity-settled
share-based
payments - - - - - 0.5 0.5
Issue of shares under
the Sharesave Scheme 0.1 0.4 - - - - 0.5
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March 2020 26.4 0.8 1.0 (0.9) 0.4 182.2 209.9
Total comprehensive
income - - - 0.2 (1.4) 9.5 8.3
Equity-settled
share-based
payments - - - - - 0.5 0.5
Issue of shares under
the Sharesave Scheme - 0.5 - - - - 0.5
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March 2021 26.4 1.3 1.0 (0.7) (1.0) 192.2 219.2
Consolidated Cash Flow Statement
for the year ended 31 March 2021
Note Year ended Year ended
31 March 31 March
2021 2020
GBPm GBPm
Cash generated from operating activities
Profit before tax 12.3 20.7
Financial expense 5.9 7.0
Exceptional intangible asset impairment - 18.5
Exceptional financial income - (10.9)
Amortisation 0.8 1.3
Depreciation 68.1 69.4
Share of profit from joint venture (1.2) (2.8)
Termination of lease contracts (4.1) (2.4)
Loss/(Profit) on disposal of hire equipment 1.0 (0.8)
Loss/(Profit) on disposal of non-hire
equipment 0.5 (3.9)
Decrease in inventories 0.5 0.4
Decrease /(increase)in trade and other
receivables 9.3 (0.6)
Increase in trade and other payables 3.6 5.4
Movement in provisions (1.1) 4.6
Translation reserve recycled on disposal
of Middle East assets 1.0 -
Equity-settled share-based payments 0.5 0.5
---------- ----------
Cash generated from operations before
changes in hire fleet 97.1 106.4
Purchase of hire equipment (36.4) (53.6)
Proceeds from sale of hire equipment 12.2 11.7
---------- ----------
Cash generated from operations 72.9 64.5
Interest paid (6.0) (6.5)
Tax paid (0.8) (9.3)
---------- ----------
Net cash flow from operating activities 66.1 48.7
Cash flow from investing activities
Purchase of non-hire property, plant
and equipment and IT development (11.2) (9.0)
Proceeds from sale of non-hire property,
plant and equipment 0.8 4.2
Proceeds from disposal of Middle East
assets 13.0 -
Investment in joint venture 1.0 1.3
---------- ----------
Net cash flow from investing activities 3.6 (3.5)
---------- ----------
Net cash flow before financing activities 69.7 45.2
---------- ----------
Cash flow from financing activities
Payments for the principle element of
leases (23.6) (24.5)
Net loan (repayment)/drawdown (58.2) 2.1
Proceeds from the issue of Sharesave
Scheme shares 0.5 0.5
Dividends paid - (10.9)
---------- ----------
Net cash flow from financing activities (81.3) (32.8)
---------- ----------
(Decrease)/increase in cash and cash
equivalents (11.6) 12.4
Net cash at the start of the financial
year 22.8 10.4
---------- ----------
Net cash at the end of the financial
year 11.2 22.8
Analysis of cash and cash equivalents
Cash 13 11.7 22.8
Bank overdraft 13 (0.5) -
---------- ----------
11.2 22.8
Notes to the Financial Statements
1 Accounting policies
Speedy Hire Plc is a company incorporated and domiciled in the
United Kingdom. The consolidated Financial Statements of the
Company for the year ended 31 March 2021 comprise the Company and
its subsidiaries (together referred to as the 'Group').
The Group and Parent Company Financial Statements were approved
by the Board of Directors on 24 May 2021.
The accounting policies set out in the audited Financial
Statements for the year ended 31 March 2021 have, unless otherwise
stated, been applied consistently to all periods presented in these
consolidated Financial Statements. In accordance with IFRS 5
'Non-current Assets Held for Sale and Discontinued Operations', the
comparative income statement has been re-presented for the
disclosures of discontinued operations relating to all operations
that have been discontinued by the balance sheet date (see Note
3).
Discontinued operations
A discontinued operation is a component of the Group's business
that represents a separate major line of business or geographical
area of operations that has been disposed of or is held for sale,
or is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs upon disposal or
when the operation meets the criteria to be classified as held for
sale, if earlier. When an operation is classified as a discontinued
operation, the comparative income statement is restated as if the
operation has been discontinued from the start of the comparative
period.
Basis of preparation
The Directors consider the going concern basis of preparation
for the Group and Company to be appropriate for the following
reasons.
The Group has a GBP180m asset based finance facility ('the
facility') which expires in October 2022 and has no prior scheduled
repayment requirements. The total cash and undrawn availability on
the facility as at 31 March 2021 was GBP142.3m (2020: GBP99.0m)
based on the Group's eligible hire equipment and trade
receivables.
The Group meets its day-to-day working capital requirements
through operating cash flows, supplemented as necessary by
borrowings. The Directors have prepared a going concern assessment
up to 31 May 2022, which confirms that the Group is capable of
continuing to operate within its existing loan facility and can
meet the covenant requirements set out within the facility. The key
assumptions on which the projections are based include an
assessment of the impact of future market conditions on projected
revenues and an assessment of the net capital investment required
to support the expected level of revenues, including a continuation
of the impact of the increased economic uncertainty resulting from
COVID-19.
The Board has considered various possible downside scenarios to
the base case, which result in reduced levels of revenue across the
Group, whilst maintaining the same cost base. Mitigations applied
in these downturn scenarios include a reduction in planned capital
expenditure. Despite the significant impact of the assumptions
applied in these scenarios, the Group maintains sufficient headroom
against its available facility and covenant requirements.
Whilst the Directors consider that there is a degree of
subjectivity involved in their assumptions, on the basis of the
above the Directors have a reasonable expectation that the Company
and the Group have adequate resources to continue in operational
existence for a period of at least 12 months from the date of
approval of these Financial Statements. Accordingly, they continue
to adopt the going concern basis of accounting in preparing the
Financial Statements.
The financial information set out in this final results
announcement does not constitute the Group's statutory accounts for
the year ended 31 March 2021 or 31 March 2020 but is derived from
those accounts. Statutory accounts for Speedy Hire Plc for the year
ended 31 March 2020 have been delivered to the Registrar of
Companies, and those for the year ended 31 March 2021 will be
delivered in due course. The auditor has reported on those
accounts; their report was (i) unqualified, (ii) did not include a
reference to any matters to which the auditors drew attention by
way of emphasis without qualifying their report and (iii) did not
contain a statement under Section 498 (2) or (3) of the Companies
Act 2006.
Copies of full accounts will be available on the Group's
corporate website in due course. Additional copies will be
available on request from Speedy Hire Plc, 16 The Parks,
Newton-le-Willows, Merseyside, WA12 0JQ.
2 Segmental analysis
The segmental disclosure presented in the Financial Statements
reflects the format of reports reviewed by the 'chief operating
decision-maker'. UK and Ireland delivers asset management, with
tailored services and a continued commitment to relationship
management. International principally delivers projects and
facilities management contracts by providing a managed site support
service. During the year, the Middle East assets which were
previously classified as part of the international segment have
been disposed of (see Note 3) and are now shown as discontinued
operations. As a consequence of this change, the results from the
joint venture in Kazakhstan have been reallocated to 'Corporate
items'. The comparative period has been restated to reflect this
change.
For the year ended 31 March 2021
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 - 3.6 3.6 - 3.6
Current assets 96.5 2.2 98.7 2.8 101.5
Cash - 11.7 11.7 - 11.7
---------- ---------- ---------- ---------- ----------
Total assets 408.0 29.1 437.1 2.8 439.9
Lease liabilities (65.8) - (65.8) - (65.8)
Other liabilities (83.9) (8.8) (92.7) (8.5) (101.2)
Borrowings - (44.9) (44.9) - (44.9)
Taxation liabilities - (8.8) (8.8) - (8.8)
---------- ---------- ---------- ---------- ----------
Total liabilities (149.7) (62.5) (212.2) (8.5) (220.7)
Corporate items comprise certain central activities and costs
that are not directly related to the activities of the operating
segments. The financing of the Group's activities is undertaken at
head office level and consequently net financing costs cannot be
analysed by segment. The unallocated net assets comprise
principally working capital balances held by the support services
function that are not directly attributable to the activities of
the operating segments, together with net corporate borrowings and
taxation.
For the year ended 31 March 2020
Total -
Corporate continuing Discontinued
UK and Ireland items operations operations Total
GBPm GBPm GBPm GBPm GBPm
Revenue 371.5 - 371.5 35.2 406.7
Segment result:
EBITDA before exceptional items 102.7 (3.5) 99.2 8.2 107.4
Depreciation (65.4) (0.4) (65.8) (2.5) (68.3)
---------- ---------- ---------- ---------- ----------
Operating profit/(costs) before
amortisation and exceptional
items 37.3 (3.9) 33.4 5.7 39.1
Amortisation (1.3) - (1.3) - (1.3)
Exceptional items (23.5) - (23.5) (0.3) (23.8)
---------- ---------- ---------- ---------- ----------
Operating profit/(costs) 12.5 (3.9) 8.6 5.4 14.0
Share of results of joint venture - 2.8 2.8 - 2.8
---------- ---------- ---------- ---------- ----------
Trading profit/(costs) 12.5 (1.1) 11.4 5.4 16.8
Financial expense (6.2) (0.8) (7.0)
Exceptional financial income 10.9 - 10.9
---------- ---------- ----------
Profit before tax 16.1 4.6 20.7
Taxation (3.9) - (3.9)
---------- ---------- ----------
Profit for the financial year 12.2 4.6 16.8
Intangible assets 21.9 1.2 23.1 - 23.1
Investment in joint venture - 7.3 7.3 - 7.3
Hire equipment 215.7 - 215.7 11.4 227.1
Non-hire equipment 28.4 - 28.4 2.1 30.5
Right of use assets 62.2 - 62.2 2.5 64.7
Taxation assets - 4.3 4.3 - 4.3
Current assets 94.5 1.6 96.1 14.9 111.0
Cash - 22.8 22.8 - 22.8
---------- ---------- ---------- ---------- ----------
Total assets 422.7 37.2 459.9 30.9 490.8
Lease liabilities (68.8) - (68.8) (4.1) (72.9)
Other liabilities (82.4) (4.0) (86.4) (12.1) (98.5)
Borrowings - (102.1) (102.1) - (102.1)
Taxation liabilities - (7.4) (7.4) - (7.4)
---------- ---------- ---------- ---------- ----------
Total liabilities (151.2) (113.5) (264.7) (16.2) (280.9)
Geographical information
In presenting geographical information, revenue is based on the
geographical location of customers. Assets are based on the
geographical location of the assets.
Year ended 31 March Year ended 31 March
2021 2020
---------------------------------------- ----------------------------------------
Total Total
Revenue assets Revenue assets
GBPm GBPm GBPm GBPm
UK 323.6 423.7 361.3 438.4
Ireland 8.7 13.4 10.2 14.2
Discontinued operations -
Middle East 31.3 2.8 35.2 38.2
---------- ---------- ---------- ----------
363.6 439.9 406.7 490.8
Revenue by type
Revenue is attributed to the following activities:
Year ended Year ended
31 March 31 March
2021 2020
-------------- --------------
GBPm GBPm
Hire and related activities 213.3 240.5
Services 146.1 162.0
Disposals 4.2 4.2
---------- ----------
363.6 406.7
Major customers
No one customer represents more than 10% of revenue, reported
profit or combined assets of the Group.
3 Discontinued operations
On 1 March 2021, the Group sold the assets relating to its
Middle East operations. The transaction comprised of the disposal
of its equipment fleet, stock and other fixed assets relating to
its Middle East business to its principal customer ADNOC Logistics
and Services LLC (ADNOC), for a consideration of $18m. At the date
of sale, this translated to proceeds of 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.
Cash flows from/(used in) discontinued operations
2021 2020
GBPm GBPm
Net cash from/(used in) operating activities 13.8 (0.2)
Net cash from investing activities 13.0 -
Net cash used in financing activities (0.8) (0.7)
Net cash from/(used in) discontinued operations 26.0 (0.9)
4 Exceptional items
For the year ended 31 March 2021
Continuing Discontinued
operations operations Total
GBPm GBPm GBPm
Property related costs 5.6 - 5.6
Restructuring costs 1.9 - 1.9
Disposal of Middle East assets (see
Note 3) - (0.8) (0.8)
Training provision 0.9 - 0.9
---------- ---------- ----------
8.4 (0.8) 7.6
During the year, exceptional administrative items of GBP7.6m
were incurred.
Action has been taken to manage the Group's cost base following
the COVID-19 pandemic, and consequently the network has been
restructured. A number of depots have been closed and further
consolidation of depots is underway to create larger, customer
focused service centres. As a result, GBP5.6m of property related
costs and GBP1.9m of redundancy costs have been incurred during the
year.
On 1 March 2021 the Group sold its equipment fleet, stock and
other fixed assets relating to its Middle East business to its
principal customer ADNOC, for a consideration of $18m. The
transaction results in a gain on disposal of GBP0.8m.
The training business, Geason, which was acquired in December
2018, was subject to an assurance visit from a funding agency in
early 2020, and a subsequent claim was received for amounts
overpaid. The claim was settled in October 2020, within the
provision held at 31 March 2020. An additional provision has been
made for GBP0.9m to cover legal and other costs associated with the
ongoing initiatives to improve the Group's financial position
For the year ended 31 March 2020
Recognised Recognised
in distribution in
and admin net financial
expenses expenses Total
GBPm GBPm GBPm
Changes to fair value of contingent
consideration - (10.9) (10.9)
Impairment of Training CGU 20.1 - 20.1
Training provision 3.0 - 3.0
---------- ---------- ----------
Exceptional items relating to Training 23.1 (10.9) 12.2
Sale of surplus land (3.9) - (3.9)
Acquisition integration costs 1.7 - 1.7
Property related costs 2.0 - 2.0
COVID-19 related costs 0.6 - 0.6
International contract costs 0.3 - 0.3
---------- ---------- ----------
23.8 (10.9) 12.9
Exceptional items of GBP12.6m relate to continuing operations
with GBP0.3m relating to discontinued operations.
In the year ended 31 March 2020, an exceptional financial credit
of GBP10.9m had been recognised in relation to changes in the fair
value of contingent consideration no longer expected to be paid in
respect of Geason Training. An exceptional impairment charge of
GBP20.1m for the Speedy Training cash generating unit had also been
recognised
In April 2020 Speedy were notified that a funding agency was
suspending payments, and seeking repayment of funding from Geason
Training; GBP3.0 million was provided as an exceptional charge
including legal and verification costs. As referred to above, the
claim was settled within the amount provided. Further detail is
provided in Note 15.
On 29 October 2019, the Group sold a plot of surplus land.
Consideration of GBP4.0m was paid in cash in full at completion.
The land had a book value GBP0.1m and the resultant profit of
GBP3.9m was recognised as an exceptional item.
Following the acquisitions of Geason Training and Lifterzin the
year ended 31 March 2019, integration expenses of GBP1.7m were
incurred in the year ended 31 March 2020, relating to property
provisions, redundancy and project management costs. An exceptional
provision of GBP2.0m was made for specific non-recurring identified
repairs required to properties within the depot network as a result
of potential landlord claims. Exceptional costs of GBP0.6m related
to COVID-19, including bad debt and staff related costs were
provided for at 31 March 2020. Exceptional costs of GBP0.3m
incurred relating to the extension of the major contract in the
International division were also recognised in the prior year.
5 Financial expense
2021 2020
GBPm GBPm
Interest on bank loans and overdrafts 2.9 3.4
Amortisation of issue costs 0.4 0.4
---------- ----------
Total interest on borrowings 3.3 3.8
Interest on lease liabilities 2.6 3.2
Hedge interest payable - 0.1
Other finance income - (0.1)
---------- ----------
Net financial expense before exceptional items 5.9 7.0
Exceptional financial income (see Note 4) - (10.9)
---------- ----------
Net financial expense 5.9 (3.9)
6 Taxation
The adjusted tax rate of 18.9% (2020: 17.2%) is lower (FY20:
lower) than the standard rate of UK corporation tax of 19% (2020:
19%). The tax charge in the Income Statement for the year of 22.8%
is higher (2020: lower) than the standard rate of corporation tax
in the UK of 19% (2020: 19%) and is explained as follows:
2021 2020
GBPm GBPm
Profit before tax 12.3 20.7
---------- ----------
Accounting profit multiplied by the standard rate
of corporation tax at 19% (2020: 19%) 2.3 3.9
Expenses not deductible for tax purposes 0.7 0.9
Share-based payments - 0.1
Overseas profits not subject to tax - (0.6)
Share of joint venture income already taxed (0.2) (0.5)
Change in deferred tax rates - 0.5
Adjustment to tax in respect of prior years - (0.4)
---------- ----------
Tax charge for the year reported in the Income
Statement 2.8 3.9
Tax (credited)/charged in equity
Current tax - (0.2)
Deferred tax - 0.1
---------- ----------
Tax credited to equity - (0.1)
In the March 2021 Budget it was announced that the UK tax rate
will increase to 25% from 1 April 2023. This will have a
consequential effect on the Group's future tax charge. If this rate
change had been substantively enacted at the current balance sheet
date the deferred tax liability would have increased by
GBP2.0m.
7 Earnings per share
The calculation of basic earnings per share is based on the
profit for the financial year of GBP9.5m (2020: GBP16.8m) and the
weighted average number of 5 pence ordinary shares in issue, and is
calculated as follows:
2021 2020
Weighted average number of shares in issue (m)
Number of shares at the beginning of the year 521.3 519.5
Exercise of share options 0.3 0.3
Movement in shares owned by the Employee Benefit
Trust 0.8 0.2
---------- ----------
Weighted average for the year - basic number of
shares 522.4 520.0
Share options 6.5 5.2
Employee share scheme 0.6 1.1
---------- ----------
Weighted average for the year - diluted number
of shares 529.5 526.3
2021 2020
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
GBPm GBPm GBPm GBPm GBPm GBPm
Profit for the year
after tax 6.1 3.4 9.5 12.2 4.6 16.8
Amortisation charge
(after tax) 0.6 - 0.6 1.1 - 1.1
Exceptional items
(after tax) 7.3 (0.6) 6.7 10.6 0.3 10.9
---------- ---------- ---------- ---------- ---------- ----------
Adjusted earnings
(after tax) 14.0 2.8 16.8 23.9 4.9 28.8
Pence Pence Pence Pence Pence Pence
Basic earnings per
share 1.17 0.65 1.82 2.35 0.88 3.23
Dilutive options
and shares (0.02) (0.01) (0.03) (0.03) (0.01) (0.04)
---------- ---------- ---------- ---------- ---------- ----------
Diluted earnings
per share 1.15 0.64 1.79 2.32 0.87 3.19
Adjusted earnings
per share 2.68 0.54 3.22 4.60 0.94 5.54
Dilutive options
and shares (0.03) (0.01) (0.04) (0.06) (0.01) (0.07)
---------- ---------- ---------- ---------- ---------- ----------
Diluted adjusted
earnings per share 2.65 0.53 3.18 4.54 0.93 5.47
Total number of shares outstanding at 31 March 2021 amounted to
528,180,280 (2020: 526,773,177), including 4,413,516 (2020:
5,472,206) shares held in the Employee Benefit Trust, which are
excluded in calculating earnings per share.
8 Dividends
The aggregate amount of dividend comprises:
2021 2020
GBPm GBPm
2019 final dividend (1.40 pence on 525.3m shares) - 7.3
2020 interim dividend (0.70 pence on 525.4m shares) - 3.6
---------- ----------
- 10.9
Subsequent to the end of the year and not included in the
results for the year, the Directors recommended a final dividend of
1.40 pence (2020: nil pence) per share, bringing the total amount
payable in respect of the 2021 year to 1.40 pence (2020: 0.70
pence), to be paid on 24 September 2021 to shareholders on the
register on 13 August 2021.
The Employee Benefit Trust, established to hold shares for the
Performance Share Plan and other employee benefits, waived its
right to the interim dividend. At 31 March 2021, the Trust held
4,413,516 ordinary shares (2020: 5,472,206).
9 Non-GAAP performance measures
The Group believes that the measures below provide valuable
additional information for users of the Financial Statements in
assessing the Group's performance by adjusting for the effect of
exceptional items and significant non-cash depreciation and
amortisation. The Group uses these measures for planning, budgeting
and reporting purposes and for its internal assessment of the
operating performance of the individual divisions within the
Group.
2021 2020
Continuing Discontinued Total Continuing Discontinued Total
operations operations GBPm operations operations GBPm
GBPm GBPm GBPm GBPm
Operating profit 12.5 4.5 17.0 8.6 5.4 14.0
Add back: amortisation 0.8 - 0.8 1.3 - 1.3
Add back/(deduct): exceptional
items 8.4 (0.8) 7.6 23.5 0.3 23.8
---------- ---------- ---------- ---------- ---------- ----------
Adjusted operating profit
('EBITA') 21.7 3.7 25.4 33.4 5.7 39.1
Add back: depreciation 63.6 1.5 65.1 65.8 2.5 68.3
---------- ---------- ---------- ---------- ---------- ----------
EBITDA before exceptional
items 85.3 5.2 90.5 99.2 8.2 107.4
Profit before tax 8.3 4.0 12.3 16.1 4.6 20.7
Add back: amortisation 0.8 - 0.8 1.3 - 1.3
Add back/(deduct): exceptional
items 8.4 (0.8) 7.6 12.6 0.3 12.9
---------- ---------- ---------- ---------- ---------- ----------
Adjusted profit before
tax 17.5 3.2 20.7 30.0 4.9 34.9
10 Intangible fixed assets
Customer
Goodwill lists Brands IT development Total
GBPm GBPm GBPm GBPm GBPm
Cost
At 1 April 2019 126.3 45.1 7.0 - 178.4
Additions - - - 1.2 1.2
---------- ---------- ---------- ---------- ----------
At 31 March 2020 126.3 45.1 7.0 1.2 179.6
Additions - - - 3.5 3.5
---------- ---------- ---------- ---------- ----------
At 31 March 2021 126.3 45.1 7.0 4.7 183.1
Amortisation
At 1 April 2019 95.1 37.2 4.4 - 136.7
Charged in year - 0.9 0.4 - 1.3
Impairment 13.7 3.7 1.1 - 18.5
---------- ---------- ---------- ---------- ----------
At 31 March 2020 108.8 41.8 5.9 - 156.5
Charged in year - 0.4 0.4 - 0.8
Impairment - 1.1 - - 1.1
---------- ---------- ---------- ---------- ----------
At 31 March 2021 108.8 43.3 6.3 - 158.4
Net book value
At 31 March 2021 17.5 1.8 0.7 4.7 24.7
At 31 March 2020 17.5 3.3 1.1 1.2 23.1
At 31 March 2019 31.2 7.9 2.6 - 41.7
The amount of goodwill that is tax-deductible is GBPnil (2020:
GBPnil).
All goodwill has arisen from business combinations. On
transition to IFRS, the balance of goodwill as measured under UK
GAAP was allocated to cash-generating units (CGUs). These are
independent sources of income streams, and represent the lowest
level within the Group at which the associated goodwill is
monitored for management purposes. The Group's reportable CGUs
comprise UK and Ireland (excluding Training) and Training. All
intangible assets are held in the UK. Goodwill arising on business
combinations after 1 April 2004 has been allocated to the CGU that
is expected to benefit from those business combinations. The Group
tests goodwill annually for impairment, or more frequently if there
are indications that goodwill might be impaired. No impairment test
has been performed in respect of the International CGU as there are
no intangible assets allocated to the CGU.
The recoverable amounts of the assets allocated to the UK and
Ireland (excluding Training) and Training CGUs are determined by a
value-in-use calculation. The value-in-use calculation uses cash
flow projections based on five-year financial forecasts approved by
management. The key assumptions for these forecasts are those
regarding revenue growth and discount rate, which management
estimates based on past experience adjusted for current market
trends and expectations of future changes in the market. To prepare
the value-in-use calculation, the Group uses cash flow projections
from the FY2022 budget, and a subsequent four-year period using the
Group's business plan, together with a terminal value using
long-term growth rates. The resulting forecast cash flows are
discounted back to present value, using an estimate of the Group's
weighted average cost of capital, adjusted for risk factors
associated with each individual CGU and market-specific risks.
The Training CGU performed below expectations during the year
ended 31 March 2020 due to lower than expected learner enrolments,
the setup of a number of regional training centres which had yet to
reach critical mass and compliance related issues. During the year,
the business has been further affected by market conditions due to
COVID-19 and the impact social distancing has had on the delivery
of courses. The recoverable amount of the CGU is considered GBPnil
and the goodwill and intangible assets associated with the training
business have been fully impaired, which resulted in an impairment
of GBP1.1m in the year.
The pre-tax discount rates and terminal growth rates applied are
as follows:
31 March 2021 31 March 2020
---------------------------------------- ----------------------------------------
Pre-tax Terminal Pre-tax Terminal
discount value discount value
rate growth rate rate growth rate
UK and Ireland (excluding
Training) 12.3% 2.5% 9.2% 2.5%
Impairment calculations are sensitive to changes in key
assumptions of revenue growth and discount rate. At 31 March 2021,
the headroom between value in use and carrying value of related
assets for the UK and Ireland was GBP27.6m (2020: GBP45.1m). The
reduction in headroom is due to the rise in discount rate at 31
March 2021 compared with previous years. There are no reasonable
variations in these assumptions that would result in an
impairment.
11 Property, plant and equipment
Land and Hire
buildings equipment Other Total
GBPm GBPm GBPm GBPm
Cost
At 1 April 2019 52.2 385.8 77.8 515.8
Foreign exchange 0.3 0.7 - 1.0
Additions 2.4 55.3 5.5 63.2
Disposals (0.1) (21.6) (0.2) (21.9)
Transfers to inventory - (12.1) - (12.1)
---------- ---------- ---------- ----------
At 31 March 2020 54.8 408.1 83.1 546.0
Foreign exchange (0.5) (1.1) 0.6 (1.0)
Additions 1.7 36.0 6.0 43.7
Disposals (5.4) (46.0) (1.2) (52.6)
Transfers to inventory - (10.4) - (10.4)
---------- ---------- ---------- ----------
At 31 March 2021 50.6 386.6 88.5 525.7
Depreciation
At 1 April 2019 33.1 168.9 64.7 266.7
Charged in year 3.4 34.9 6.2 44.5
Disposals - (14.3) - (14.3)
Transfers to inventory - (8.5) - (8.5)
---------- ---------- ---------- ----------
At 31 March 2020 36.5 181.0 70.9 288.4
Foreign exchange (0.3) (0.6) - (0.9)
Charged in year 3.6 33.7 6.1 43.4
Disposals (3.2) (27.4) (0.4) (31.0)
Transfers to inventory - (7.3) - (7.3)
---------- ---------- ---------- ----------
At 31 March 2021 36.6 179.4 76.6 292.6
Net book value
At 31 March 2021 14.0 207.2 11.9 233.1
At 31 March 2020 18.3 227.1 12.2 257.6
At 31 March 2019 19.1 216.9 13.1 249.1
The net book value of land and buildings comprises freehold
properties of GBPnil (2020: GBPnil) and improvements to short
leasehold properties of GBP14.0m (2020: GBP18.3m).
Included within depreciation charged in the year is 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.
11 Right of use assets
Land and
buildings Other Total
GBPm GBPm GBPm
Cost
At 1 April 2019 128.0 49.9 177.9
Foreign exchange 0.4 - 0.4
Additions 9.5 8.5 18.0
Disposals (10.1) (6.5) (16.6)
---------- ---------- ----------
At 31 March 2020 127.8 51.9 179.7
Foreign exchange (0.6) - (0.6)
Additions 13.7 8.9 22.6
Disposals (9.6) (12.6) (22.2)
---------- ---------- ----------
At 31 March 2021 131.3 48.2 179.5
Depreciation
At 1 April 2019 77.2 28.5 105.7
Foreign exchange 0.2 - 0.2
Charged in year 13.2 11.7 24.9
Disposals (10.0) (5.8) (15.8)
---------- ---------- ----------
At 31 March 2020 80.6 34.4 115.0
Foreign exchange (0.4) - (0.4)
Charged in year 13.3 11.4 24.7
Disposals (6.9) (12.0) (18.9)
---------- ---------- ----------
At 31 March 2021 86.6 33.8 120.4
Net book value
At 31 March 2021 44.7 14.4 59.1
At 31 March 2020 47.2 17.5 64.7
At 31 March 2019 50.8 21.4 72.2
Included within depreciation charged in the year is GBP2.0m
relating to exceptional impairments (see Note 4).
13 Borrowings
2021 2020
GBPm GBPm
Current borrowings
Bank overdraft 0.5 -
Lease liabilities 19.3 20.2
---------- ----------
19.8 20.2
Non-current borrowings (excluding lease liabilities)
Maturing between two and five years
- Asset based finance facility 44.4 102.1
- Lease liabilities 46.5 52.7
---------- ----------
Total non-current borrowings 90.9 154.8
---------- ----------
Total borrowings 110.7 175.0
Less: cash (11.7) (22.8)
Exclude lease liabilities (65.8) (72.9)
---------- ----------
Net debt 33.2 79.3
The Group has a GBP180m asset based finance facility which is
sub divided into:
(a) A secured overdraft facility, provided by Barclays Bank Plc,
which secures by cross guarantees and debentures the bank deposits
and overdrafts of the Company and certain subsidiary companies up
to a maximum of 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 2021 was
GBP142.3m (2020: GBP99.0m), based on the Group's eligible hire
equipment and trade receivables.
The facility amounts to GBP180m and is based on the Group's hire
equipment and trade receivables balance, reduced to the extent that
any ancillary facilities are provided, and is repayable in October
2022, with no prior scheduled repayment requirements. An additional
uncommitted accordion of GBP220m remains in place through to
October 2022.
Interest on the facility is calculated by reference to the LIBOR
applicable to the period drawn, plus a margin of 150 to 250 basis
points, depending on leverage and on the components of the
borrowing base. During the year, the effective margin was 1.81%
(2020: 1.84%).
The facility is secured by fixed and floating charges over the
UK and Ireland assets.
Analysis of consolidated net debt
31 March Non-cash Cash flow 31 March
2020 movement 2021
GBPm GBPm GBPm GBPm
Cash at bank and
in hand 22.8 - (11.1) 11.7
Bank overdraft - - (0.5) (0.5)
Bank borrowings (102.1) 0.6 57.1 (44.4)
---------- ---------- ---------- ----------
(79.3) 0.6 45.5 (33.2)
14 Lease liabilities
Land and
buildings Other Total
GBPm GBPm GBPm
At 1 April 2019 60.8 21.6 82.4
Foreign exchange 0.2 - 0.2
Additions 9.5 8.4 17.9
Repayments (15.1) (12.6) (27.7)
Unwinding of discount rate 2.4 0.8 3.2
Terminations (2.5) (0.6) (3.1)
---------- ---------- ----------
At 31 March 2020 55.3 17.6 72.9
Foreign exchange (0.1) - (0.1)
Additions 12.7 8.9 21.6
Repayments (14.2) (12.0) (26.2)
Unwinding of discount rate 2.0 0.6 2.6
Terminations (4.3) (0.7) (5.0)
---------- ---------- ----------
At 31 March 2021 51.4 14.4 65.8
Included within terminations in the year is GBP3.7m (2020:
GBP0.7m) relating to exceptional terminations of property leases
(see Note 4).
Amounts payable for lease liabilities (discounted at the
incremental borrowing rate of each lease) fall due as follows:
2021 2020
GBPm GBPm
Payable within one year 19.3 20.2
Payable in more than one year 46.5 52.7
---------- ----------
At 31 March 65.8 72.9
15 Provisions
Contingent Training
Dilapidations consideration provision Total
GBPm GBPm GBPm GBPm
At 1 April 2019 2.5 10.9 - 13.4
Created in the year 3.1 - 3.0 6.1
Provision utilised
in the year (1.5) - - (1.5)
Net changes in fair
value - (10.9) - (10.9)
---------- ---------- ---------- ----------
At 31 March 2020 4.1 - 3.0 7.1
Created in the year 3.2 - 0.9 4.1
Provision utilised
in the year (2.5) - (2.7) (5.2)
---------- ---------- ---------- ----------
At 31 March 2021 4.8 - 1.2 6.0
Of the GBP6.0m provision at 31 March 2021, GBP3.1m (2020:
GBP5.9m) is due within one year and GBP2.9m (2020: GBP1.2m) is due
after one year. The dilapidations provision is calculated based on
estimated dilapidations at current market rates. The total
liability is discounted to current values.
In April 2020 Speedy were notified that a funding agency was
suspending payments, and seeking repayment of GBP2.6m from Geason
Training, based on an extrapolation of errors found in a small
sample of learner documentation over a three year period from
August 2017. In the year ended 31 March 2020, GBP3.0 million was
provided as an exceptional charge. The claim was settled in October
2020 within the provision held. An additional provision has been
recognised for GBP0.9m in relation to legal and other costs
associated with ongoing initiatives to improve the Group's
financial position.
Contingent consideration of between GBPnil and GBP26.0m may be
payable by the Group in relation to the acquisition of Geason
Training. The consideration depends on the combined performance of
the acquired business and the Group's training business in the
three years post acquisition. The fair value of contingent
consideration as at year end is GBPnil.
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