TIDMSDY
RNS Number : 1915T
Speedy Hire PLC
13 November 2019
Speedy Hire Plc
("Speedy", "the Company" or "the Group")
Results for the six months to 30 September 2019
Continuing progress against strategic objectives
Speedy, the UK's leading tools, equipment and plant hire
services company, operating across the construction, infrastructure
and industrial markets, announces results for the six months to 30
September 2019.
Key points
6 months 6 months Change Change
ended ended
30 September 30 September % %
2019 (GBPm) 2018 (GBPm)
(excluding
IFRS 16)
Revenue (excluding disposals) 204.2 192.8 5.9 5.9
-------------- -------------- ------- ------------
Revenue 205.7 194.6 5.7 5.7
-------------- -------------- ------- ------------
Operating profit(*) 17.9 16.1 11.2 7.1
-------------- -------------- ------- ------------
Adjusted profit before
tax(1,*) 16.4 13.7 19.7 13.4
-------------- -------------- ------- ------------
Profit before tax(*) 16.4 13.5 21.5 15.2
-------------- -------------- ------- ------------
Adjusted earnings per
share(2,*) 2.56p 2.10p 21.9 16.0
-------------- -------------- ------- ------------
Basic earnings per share(*) 2.58p 2.06p 25.2 19.3
-------------- -------------- ------- ------------
Net debt(3) 85.3 62.7 36.0 36.0
-------------- -------------- ------- ------------
Return on Capital Employed(4) 12.7% 12.3% 3.3 3.3
-------------- -------------- ------- ------------
Dividend (pence per
share) 0.70p 0.60p 16.7 16.7
-------------- -------------- ------- ------------
* Comparatives restated as a result of the adoption of IFRS 16 -
see Note 1 (Basis of preparation). Non-statutory percentage change
under previous lease accounting policies also shown for
illustrative purposes.
Strategic and Operational highlights
-- Profit before tax up 21.5% to GBP16.4m (2018: GBP13.5m)
-- ROCE(4) (including goodwill and intangibles) increased to 12.7% (2018: 12.3%)
-- Strong balance sheet and cash generation. Net debt(3) reduced
to GBP85.3m (31 March 2019: GBP89.4m), with leverage(5) of 1.1x (31
March 2019: 1.1x)
-- Increasing resilience:
o Reducing reliance on construction sector
o Training growth c.400%
o Testing growth c.20%
o Average age of hire fleet reduced to 3.2 years (2018: 3.6
years) following further investment
-- Continuing growth in higher margin SME customer numbers and revenues
-- Asset utilisation in the UK and Ireland improved to 56.5% (2018: 56.2%)
-- Machine learning supporting growth through fleet optimisation and identification of revenue opportunities
-- Board strengthened with appointment of Rhian Bartlett in June
2019, bringing significant experience of digital applications
Commenting on the results Russell Down, Chief Executive,
said:
"I am pleased with the continuing momentum in the business and
to be reporting another positive set of results for Speedy. Our
strong balance sheet and financial performance are underpinned by
excellent customer service, with continuing progress against our
strategic objectives. I am particularly encouraged by the growth in
higher margin SME customer revenues and progress with our digital
roll out where we have continued to make significant
investment.
Over 40% of our revenue now comes from Services compared to
around 30% three years ago. This, combined with our more diverse
customer base, provides us with a strong platform for further
growth. In spite of the current uncertain UK political backdrop we
remain confident of delivering full year results in line with our
expectations."
Enquiries:
Speedy Hire Plc Tel: 01942 720 000
Russell Down, Chief Executive
Chris Morgan, Group Finance Director
MHP Communications Tel: 0203 128 8778
Oliver Hughes
Andrew Jaques
Notes:
Explanatory notes:
(1) See note 9
(2) See note 7
(3) See note 12
(4) Return on Capital Employed: Profit from operations before
amortisation and exceptional items (rolling 12 month basis) divided
by the average capital employed (where capital employed equals
shareholders' funds and net debt(3) ), for the last 12 months. This
metric excludes the impact of IFRS 16.
(5) Leverage: Net debt(3) covered by EBITDA(1) (rolling 12 month
basis). This metric excludes the impact of IFRS 16.
Inside Information: This announcement contains inside
information.
Forward looking statements: The information in this release is
based on management information. This report includes statements
that are forward looking in nature. Forward looking statements
involve known and unknown risks, assumptions, uncertainties and
other factors which may cause the actual results, performance or
achievements of the Group to be materially different from any
future results, performance or achievements expressed or implied by
such forward looking statements. Except as required by the Listing
Rules and applicable law, the Company undertakes no obligation to
update, revise or change any forward looking statements to reflect
events or developments occurring after the date of this report.
Notes to Editors: Founded in 1977, Speedy is the UK's leading
provider of tools, 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 and OHSAS18001.
The Group operates from over 200 fixed sites across the UK and
Ireland together with a number of on-site facilities at client
locations, from an international office based in Abu Dhabi and
through a joint venture in Kazakhstan.
Chief Executive's statement
Overview
The Group has reported results which are once again well ahead
of the prior period. In line with our strategy, operating margins,
before amortisation and exceptional items, have increased to 9.0%
(2018: 8.4%) and ROCE(4) has improved to 12.7% (2018: 12.3%).
The results include the acquisitions of Geason Training and
Lifterz that were completed in the second half of FY19. Both
businesses are providing cross selling opportunities in growth
markets and realising synergies in line with expectations.
Results
Revenue (excluding disposals) for the period to 30 September
2019 increased by 5.9% to GBP204.2m (2018: GBP192.8m). Revenue
increased 5.7% to GBP205.7m (2018: GBP194.6m). Hire revenue
increased by 0.8% following the acquisition of Lifterz and strong
SME revenue growth, offset by rate deflation due to the more
competitive landscape. The hire fleet increased by 1.9% to
GBP221.0m (31 March 2019: GBP216.9m) due to further investment in
core equipment. UK and Ireland average asset utilisation rates for
the period increased to 56.5% (2018: 56.2%) as a result of improved
management of our core fleet. Services revenue grew by 14.2%
following the acquisition of Geason Training, and growth in our
Lloyds British testing business.
EBITDA(1) increased by 5.4% to GBP52.7m (2018: GBP50.0m).
EBITA(1) increased by 14.1% to GBP18.6m (2018: GBP16.3m). Profit
before tax, amortisation and exceptional items for the period
increased to GBP16.4m (2018: GBP13.7m). Profit before tax was
GBP16.4m (2018: GBP13.5m).
Adjusted earnings per share(2) were 2.56 pence (2018: 2.10
pence).
As at 30 September 2019, net debt(3) amounted to GBP85.3m (31
March 2019: GBP89.4m) after GBP24.8m of capital expenditure on the
hire fleet and GBP4.8m on IT and depot refurbishments. After the
period end the Group concluded an agreement to sell its surplus
land to Bellway Homes Ltd for GBP4m and will recognise an
exceptional pre-tax profit on sale of c.GBP3.9m in the second half.
The proceeds have been received in cash and will be used to pay
down debt. The Group's continued good working capital management
and low gearing levels provide the opportunity to capitalise on
market opportunities through further value enhancing
acquisitions.
Dividend
The Board has declared an increase in the interim dividend of
16.7% to 0.70 pence per share (2019 interim dividend: 0.60 pence
per share), to be paid on 10 January 2020 to shareholders on the
register on 6 December 2019. This represents a fourth consecutive
year of significant dividend growth, at a CAGR of 35%.
Strategy and operational review
In the UK and Ireland we set up our customer relationship centre
in 2018 to provide a first class service to our SME customers. This
has resulted in revenues to that segment increasing by a CAGR of
over 25% since inception. As a result we have recently expanded
this centre to manage the relationship with some of our larger
customers more efficiently. We acquired powered access specialist
Lifterz in March 2019 in order to complete our national presence.
Following this acquisition and continued organic growth, Speedy now
has the second largest powered access fleet in the UK with which to
service both national and local customers. Lifterz has performed
well with strong utilisation rates and opportunities for cost
synergies as we integrate the business into the wider network.
Services revenues grew strongly in the period following the
acquisition of Geason Training in December 2018. Training revenues
have grown strongly and significant cross selling opportunities
exist between both businesses. With growth from our rehire and
testing businesses, over 40% of our revenue now comes from Services
compared to around 30% three years ago.
Our cost base remains tightly controlled; as a result UK and
Ireland staff numbers reduced slightly over the period.
We have continued to develop technological solutions, including
artificial intelligence, to better manage our business. Depot
stocking levels for our most popular products are set based on
predictive demand and utilisation models and have been rolled out
across the network. This has resulted in improved utilisation and
consequently will be expanded to further products over the coming
months.
Our mobile app has simplified our ability to transact with
customers and we have invested in developing further functionality
during the period. The app has the capability to on and off hire
equipment, reserve equipment for collection and track deliveries
and collections in real time. We are seeing increasing demand for
this service, particularly from major customers.
The International business has continued to perform well with
our major ADNOC contracts in Abu Dhabi being renewed until May
2020. Business development activities have increased and revenue
grew to GBP17.7m (2018: GBP17.4m). EBITA(1) fell by 13.8% to
GBP2.5m reflecting the commercial terms negotiated to secure the
contract extensions. The Kazakhstan JV performed well in the period
due to improved asset utilisation and cyclical shutdown activity;
share of results increased to GBP1.5m (2018: GBP0.9m).
Board and people
Rhian Bartlett joined the Board on 1 June 2019 as a
non-executive director. She has a wealth of experience in digital
applications and her experience is proving valuable as we invest in
new technologies and increase customer adoption rates for our
digital solutions.
The Group's headcount at 30 September 2019 was 4,070 (31 March
2019: 4,063). In the UK and Ireland headcount fell slightly to
3,447 (31 March 2019: 3,458); headcount in the International
business increased to 623 (31 March 2019: 605) as a result of
revenue growth.
Summary and outlook
I am pleased with the continuing momentum in the business and to
be reporting another positive set of results for Speedy. Our strong
balance sheet and financial performance are underpinned by
excellent customer service, with continuing progress against our
strategic objectives. I am particularly encouraged by the growth in
higher margin SME customer revenues and progress with our digital
roll out where we have continued to make significant
investment.
Over 40% of our revenue now comes from Services compared to
around 30% three years ago. This, combined with our more diverse
customer base, provides us with a strong platform for further
growth. In spite of the current uncertain UK political backdrop we
remain confident of delivering full year results in line with our
expectations.
Russell Down
Chief Executive
Financial review
Impact of reporting under IFRS 16 Leases
From 1 April 2019 the Group has reported under IFRS 16 Leases
for the first time. This has resulted in a material grossing up of
the Balance Sheet with the recognition of a right of use asset and
corresponding lease liability for all qualifying leased equipment,
vehicles and property. The Income Statement has also been impacted
as the right of use asset has been depreciated and interest charged
on the lease liability, largely offset by rental charges no longer
recognised. There have been no changes in the reported net cash
flows although operating cash flows and financing cash flows have
been impacted.
The financial impact of IFRS 16 in the period has been to
increase EBITA(1) by GBP2.9m and increase profit before tax by
GBP1.2m. In the Balance Sheet, the right of use asset recognised at
30 September 2019 is GBP66.4m and the corresponding lease liability
recognised is GBP75.1m. In the Income Statement, an additional
GBP11.7m of depreciation has been charged and an incremental
interest charge of GBP1.7m has been recognised, largely offset by
GBP14.6m of rental charges no longer recognised.
A reduction in retained earnings of GBP10.5m was recognised upon
transition to IFRS 16 on 1 April 2018.
Group financial performance
Revenue (excluding disposals) for the period to 30 September
2019 increased by 5.9% to GBP204.2m (2018: GBP192.8m). Revenue from
disposals was GBP1.5m (2018: GBP1.8m); total revenue for the period
increased by 5.7% to GBP205.7m (2018: GBP194.6m).
Gross profit was GBP113.6m (2018: GBP106.1m), an increase of
7.1%. The gross margin increased to 55.2% (2018: 54.5%), reflecting
the mix impact of training at higher margin, and increased revenue
from SME customers at better rates.
EBITA(1) increased by 14.1% to GBP18.6m (2018: GBP16.3m) and
profit before taxation, amortisation and exceptional costs
increased to GBP16.4m (2018: GBP13.7m). The Group recognised an
exceptional financial credit of GBP0.7m (2018: GBPnil) relating to
net changes in the fair value of contingent consideration.
After taxation, amortisation and exceptional items, the Group
made a profit of GBP13.4m, compared to a profit of GBP10.7m in
2018.
Segmental analysis
The Group's segmental reporting is split into UK and Ireland,
and International. The figures in the tables below are presented
before corporate costs of GBP2.3m (2018: GBP2.7m), which have
reduced 14.8% reflecting continued cost control.
6 months ended 6 months ended Movement Movement
30 September 30 September (excluding
UK and Ireland 2019 2018 IFRS 16)
GBPm GBPm % %
Revenue (excluding
disposals) 186.5 175.4 6.3 6.3
EBITDA(1,*) 50.8 48.1 5.6 3.1
EBITA(1,*) 18.4 16.1 14.3 10.7
* Restated as a result of the adoption of IFRS 16 - see Note 1
(Basis of preparation)
Excluding disposals, revenue increased by 6.3% to GBP186.5m
(2018: GBP175.4m) with an increase across both Hire and Services.
Revenue for the period benefited from the acquisitions of Geason
Training and Lifterz.
Hire revenues increased by 0.9%. Increased telemarketing
activity at our customer relationship centre in Newport, South
Wales continued to result in significant revenue uplift from SME
customers, which grew 27.0% on a like for like basis. This growth
helped offset less favourable trading conditions, Carillion
comparatives and Easter timing. The addition of Lifterz in March
2019 has complemented Speedy's previous powered access
acquisitions, creating a comprehensive national presence. We now
have the second largest fleet in the UK.
Services revenues grew by 16.9%. This has been achieved through
new Geason Training opportunities, and testing and rehire
growth.
Gross margins improved from 57.2% to 57.7%. Hire margin
increased to 77.0% (2018: 76.5%), and was supported by the growth
in the higher margin SME market, which more than offset price
deflation. Services margin strengthened due to the mix benefit of
the training growth. Overheads remain under tight control and,
excluding acquisitions, continued to improve, 3.2% lower than the
comparative period. Headcount has decreased since the year end to
3,447, compared to 3,458 at 31 March 2019.
Following the ongoing application of strict processes to manage
capital expenditure, number of product lines, disposal decisions
and ROCE(4) , asset utilisation continued to improve to 56.5%
(2018: 56.2%).
The business continues to perform well in a more competitive
market despite ongoing uncertainty associated with the UK's
departure from the European Union. The Board has prepared for a
number of likely scenarios and continues to monitor developments in
this area.
6 months ended 6 months ended Movement Movement
30 September 30 September (excluding
International 2019 2018 IFRS 16)
GBPm GBPm % %
Revenue 17.7 17.4 1.7 1.7
EBITDA(1,*) 3.8 4.2 (9.5) (10.0)
EBITA(1,*) 2.5 2.9 (13.8) (13.8)
* Restated as a result of the adoption of IFRS 16 - see Note 1
(Basis of preparation)
International revenue in the United Arab Emirates increased by
1.7%. This slowdown in growth from previous periods was anticipated
due to lower rehire and consumable sales. Contract extensions with
our principal customer, Abu Dhabi National Oil Company, have now
been confirmed through to May 2020. The renegotiation to secure the
extensions has impacted commercial terms, contributing to a
decrease in EBITA(1) , which fell by 13.8%. Despite the fall,
EBITA(1) margin was 14.1% (2018: 16.7%) reflecting continued strong
returns from the asset base.
Our share of profit from the joint venture in Kazakhstan
increased to GBP1.5m (2018: GBP0.9m) having benefited from further
increased cyclical shutdown activity in the period.
Exceptional items
There were no exceptional administrative items incurred during
the period (2018: GBPnil). After the reporting date, the Group sold
a plot of surplus land for cash consideration of GBP4.0m. The
resulting pre-tax profit of c.GBP3.9m will be recognised as an
exceptional item in the full year accounts to 31 March 2020.
An exceptional financial item of GBP0.7m has been credited to
the income statement in relation to changes in the fair value of
contingent consideration payable for the Geason Training
acquisition.
Interest
The Group's net financial expense before exceptional items
increased to GBP3.7m (2018: GBP3.5m).
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
period, the margin payable over LIBOR on the outstanding debt
fluctuated between 1.50% and 2.10% 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 1.84% (2018: 1.80%).
The Group utilises interest rate hedges to manage fluctuations
in LIBOR. The fair value of these hedges was not material at 30
September 2019 and they have varying maturity dates to April
2022.
Interest on lease liabilities of GBP1.7m (2018: GBP1.8m) was
incurred during the period, following the implementation of IFRS 16
(see note 1 Basis of Preparation).
Taxation
The Group seeks to protect its reputation as a responsible
taxpayer, and adopts an appropriate attitude to arranging its tax
affairs, aiming to ensure effective, sustainable and active
management of tax matters in support of business performance.
The tax charge for the period was GBP3.0m (2018: GBP2.8m), with
an effective tax rate of 18.3% (2018: 20.7%); the decrease in
effective rate includes the impact of the exceptional credit in the
period.
Shares, earnings per share and dividends
At 30 September 2019, 525,386,975 Speedy Hire Plc ordinary
shares were outstanding, of which 5,516,473 were held in the
Employee Benefits Trust.
Adjusted earnings per share(2) was 2.56 pence (2018: 2.10
pence), an increase of 21.9%. Basic earnings per share was 2.58
pence (2018: 2.06 pence).
The Board has declared an interim dividend of 0.70 pence per
share (2018: 0.60 pence), which represents a cash cost of
approximately GBP3.6m (2018: GBP3.1m). The dividend will be paid on
10 January 2020 to shareholders on the register at 6 December 2019.
This represents a fourth consecutive year of significant dividend
growth, at a CAGR of 35%.
Capital expenditure and disposals
Total capital expenditure during the period amounted to GBP32.2m
(2018: GBP34.4m), of which GBP27.4m (2018: GBP31.5m) related to
equipment for hire, and GBP4.8m related to other property, plant
and equipment (2018: GBP2.9m), which included investment in IT in
order to deliver our digital strategy.
Expenditure in the period reflects further investment in tools,
access, generators and fencing to improve availability in these
categories. Since November 2017 the Group has also invested over
GBP50m in the powered access market in line with its strategy to
build a national presence through in-fill acquisitions and organic
capital expenditure, and now has the second largest fleet in the
UK.
Capital expenditure has resulted in the average age of the fleet
again reducing to 3.2 years from 3.3 years as at 31 March 2019.
Total disposal proceeds were GBP5.8m (2018: GBP6.3m). During the
period 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.
Balance sheet
The Group continues to have a strong balance sheet, which
reflects the proactive management of the asset fleet and working
capital.
Net assets at 30 September 2019 were GBP209.7m (31 March 2019:
GBP202.0m), equivalent to 39.9 pence per share.
Net property, plant and equipment (excluding IFRS 16 right of
use assets) was GBP253.3m at 30 September 2019 (31 March 2019:
GBP249.1m), of which equipment for hire represents 87.2% (31 March
2019: 87.1%). Of the equipment for hire, GBP8.6m related to the
International business (31 March 2019: GBP7.1m).
Intangibles remained broadly flat at GBP39.7m (31 March 2019:
GBP40.4m), including fair value adjustments to recent
acquisitions.
Right of use assets of GBP66.4m (31 March 2019: GBP72.2m) and
corresponding lease liabilities of GBP75.1m (31 March 2019:
GBP82.4m) were recognised at 30 September 2019 following the
implementation of IFRS 16.
Gross trade receivables totalled GBP99.7m at 30 September 2019
(2018: GBP99.1m). Bad debt and credit note provisions were GBP3.4m
at 30 September 2019 (2018: GBP5.5m), equivalent to 3.4% of gross
trade receivables (2018: 5.5%). Debtor days were 68.2 days (2018:
67.8 days).
Trade payables and accruals were GBP93.2m (2018: GBP93.0m).
Creditor days were 100.5 days (2018: 103.2 days).
Cash flow and net debt(3)
Cash generated from operations for the period was GBP38.7m
(2018: GBP32.8m). Free cash flow (before dividends and financing
activities) decreased slightly to GBP24.2m (2018: GBP25.4m),
reflecting timing of tax payments and investment in IT
development.
Net debt(3) decreased by GBP4.1m from GBP89.4m at the beginning
of the period to GBP85.3m at 30 September 2019. This excludes the
impact of GBP4.0m cash received for the sale of surplus land
following the end of the reporting period. Net debt(3) to EBITDA(1)
(rolling 12 months basis) remained at 1.1x (31 March 2019:
1.1x).
The Group's continued strong cash position resulted in
substantial headroom within the Group's bank facility.
Capital allocation policy
The Board intends to continue to invest in the business in order
to grow revenue, profit and ROCE(4) . 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(2) ;
- Acquisitions: the Board will continue to explore value
enhancing acquisition opportunities in markets adjacent to, and
consistent with its 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(3) to
EBITDA(1) 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.
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, which was
amended and extended in October 2017, runs through to October 2022.
The additional uncommitted accordion of GBP220m remains in place
through to October 2022, should further funding requirements be
needed.
The average gross borrowings under the facility during the
period ended 30 September 2019 increased to GBP110.3m (2018:
GBP87.0m) following the acquisitions of Geason Training and
Lifterz. The facility includes quarterly leverage(5) 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 period.
Return on capital
ROCE(4) is a key performance measure for the Group. ROCE(4)
increased to 12.7% (2018: 12.3%), which exceeds the Group's
weighted average cost of capital of 9.2%, and continues to reflect
the improved profitability and balance sheet discipline.
Chris Morgan
Group Finance Director
Interim condensed consolidated income statement
Six months ended Six months ended
30 September 2019 30 September 2018
Restated(1)
---------------------------------- ----------------------------------
Before Before
Exceptional Exceptional Exceptional Exceptional
items items Total items items Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 4 205.7 - 205.7 194.6 - 194.6
Cost of sales (92.1) - (92.1) (88.5) - (88.5)
---------- ---------- ---------- ---------- ---------- ----------
Gross profit 113.6 - 113.6 106.1 - 106.1
Distribution and
administrative
costs(1) (95.7) - (95.7) (90.0) - (90.0)
Analysis of operating
profit
Operating profit before
amortisation and
exceptional
items 18.6 - 18.6 16.3 - 16.3
Amortisation (0.7) - (0.7) (0.2) - (0.2)
Exceptional items 3 - - - - - -
----------------------- --------- ------------ ------------- ---------- ------------ ------------- ----------
Operating profit 17.9 - 17.9 16.1 - 16.1
Share of results of
joint
venture 1.5 - 1.5 0.9 - 0.9
---------- ---------- ---------- ---------- ---------- ----------
Profit from operations 19.4 - 19.4 17.0 - 17.0
Financial expense(1) 5 (3.7) 0.7 (3.0) (3.5) - (3.5)
---------- ---------- ---------- ---------- ---------- ----------
Profit before taxation 15.7 0.7 16.4 13.5 - 13.5
Taxation 6 (3.0) - (3.0) (2.8) - (2.8)
---------- ---------- ---------- ---------- ---------- ----------
Profit for the
financial
period 12.7 0.7 13.4 10.7 - 10.7
Earnings per share
- Basic (pence)(1) 7 2.58 2.06
- Diluted (pence)(1) 7 2.55 2.04
Non-GAAP performance
measures
EBITDA before
exceptional
items(1) 9 52.7 50.0
Profit before tax,
amortisation
and exceptional
items(1) 9 16.4 13.7
Adjusted earnings per
share (pence)(1) 7 2.56 2.10
(1) Restated as a result of the adoption of IFRS 16 - see Note 1
(Basis of preparation)
Year ended
31 March 2019
Restated(1)
----------------------------------
Note Before
Exceptional Exceptional
items items Total
GBPm GBPm GBPm
Revenue 4 394.7 - 394.7
Cost of sales (180.3) - (180.3)
---------- ---------- ----------
Gross profit 214.4 - 214.4
Distribution and administrative
costs(1) (178.4) (1.2) (179.6)
Analysis of operating profit
Operating profit before amortisation
and exceptional items 36.7 - 36.7
Amortisation (0.7) - (0.7)
Exceptional items(1) 3 - (1.2) (1.2)
Operating profit 36.0 (1.2) 34.8
Share of results of joint
venture 1.9 - 1.9
---------- ---------- ----------
Profit from operations 37.9 (1.2) 36.7
Net financial expense(1) 5 (7.2) (0.8) (8.0)
---------- ---------- ----------
Profit before taxation 30.7 (2.0) 28.7
Taxation(1) 6 (5.5) - (5.5)
---------- ---------- ----------
Profit for the financial
period 25.2 (2.0) 23.2
Earnings per share
* Basic (pence)(1) 7 4.47
* Diluted (pence)(1) 7 4.43
Non-GAAP performance measures
EBITDA before exceptional
items(1) 9 104.8
Profit before tax, amortisation
and exceptional items(1) 9 31.4
Adjusted earnings per share
(pence)(1) 7 4.96
(1) Restated as a result of the adoption of IFRS 16 - see Note 1
(Basis of preparation)
Interim condensed consolidated statement of comprehensive
income
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
Restated(1) Restated(1)
GBPm GBPm GBPm
Profit for the financial period(1) 13.4 10.7 23.2
---------- ---------- ----------
Other comprehensive income that may
be reclassified subsequently to the
Income Statement:
- Effective portion of change in
fair value of cash flow hedges (0.2) (0.2) (0.6)
- Exchange difference on retranslation
of foreign operations(1) 1.3 0.7 0.4
- Tax on items - 0.1 0.1
---------- ---------- ----------
Other comprehensive income/(loss),
net of tax 1.1 0.6 (0.1)
---------- ---------- ----------
Total comprehensive income for the
financial period 14.5 11.3 23.1
(1) Restated as a result of the adoption of IFRS 16 - see Note 1
(Basis of preparation)
Interim condensed consolidated balance sheet
30 September 30 September 31 March
2019 2018 2019
Restated(1,2) Restated(1,2)
Note GBPm GBPm GBPm
ASSETS
Non-current assets
Intangible assets(2) 39.7 10.9 40.4
Investment in joint venture 7.6 6.2 5.8
Property, plant and equipment
- Hire equipment(2) 10 221.0 211.2 216.9
- Non-hire equipment(1) 10 32.3 32.7 32.2
Right of use assets(1) 11 66.4 68.1 72.2
Deferred tax assets(1,2) 2.8 3.6 3.0
---------- ---------- ----------
369.8 332.7 370.5
---------- ---------- ----------
Current assets
Inventories(2) 8.8 8.2 9.1
Trade and other receivables(1,2) 105.7 99.3 102.7
Cash 12 5.3 10.4 11.5
---------- ---------- ----------
119.8 117.9 123.3
---------- ---------- ----------
Total assets 489.6 450.6 493.8
---------- ---------- ----------
LIABILITIES
Current liabilities
Borrowings(1) 12 - (0.8) (1.1)
Lease liabilities(1) (20.1) (21.4) (22.3)
Other financial liabilities (0.5) - (0.3)
Trade and other payables(1,2) (93.2) (93.0) (83.5)
Current tax liabilities (1.2) (4.2) (4.6)
Provisions(1,2) (1.8) (1.8) (6.8)
---------- ---------- ----------
(116.8) (121.2) (118.6)
---------- ---------- ----------
Non-current liabilities
Borrowings(1) 12 (90.4) (71.9) (99.5)
Lease liabilities(1) (55.0) (58.6) (60.1)
Provisions(1,2) (10.7) (0.1) (6.5)
Deferred tax liabilities(1,2) (7.0) (6.5) (7.1)
---------- ---------- ----------
(163.1) (137.1) (173.2)
---------- ---------- ----------
Total liabilities (279.9) (258.3) (291.8)
---------- ---------- ----------
Net assets 209.7 192.3 202.0
EQUITY
Share capital 26.3 26.2 26.3
Share premium 0.4 0.1 0.4
Merger reserve 1.0 1.0 1.0
Hedging reserve (0.9) (0.3) (0.7)
Translation reserve 0.5 (0.3) (0.7)
Retained earnings(1) 182.4 165.6 175.7
---------- ---------- ----------
209.7 192.3 202.0
(1) Restated as a result of the adoption of IFRS 16 - see Note 1
(Basis of preparation)
(2) Restated for fair value adjustments relating to acquisitions
made in the prior year - see Note 1 (Basis of preparation)
Interim condensed consolidated statement of changes in
equity
Share Share Merger Hedging Translation Retained Total
reserve earnings equity
capital premium reserve reserve Restated(1) Restated(1)
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April 2018(1) 26.2 - 1.0 (0.1) (0.9) 161.1 187.3
Total comprehensive income/
(loss)(1) - - - (0.2) 0.6 10.9 11.3
Dividends - - - - - (6.0) (6.0)
Equity-settled share-based
payments - - - - - 0.7 0.7
Issue of shares under
the Sharesave Scheme - 0.1 - - - - 0.1
Purchase of own shares
to satisfy share schemes - - - - - (1.1) (1.1)
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 30 September 2018(1) 26.2 0.1 1.0 (0.3) (0.3) 165.6 192.3
Total comprehensive income/
(loss)(1) - - - (0.4) (0.4) 12.6 11.8
Dividends - - - - - (3.1) (3.1)
Tax on items taken directly
to equity - - - - - 0.4 0.4
Equity-settled share-based
payments - - - - - 0.2 0.2
Issue of shares under
the Sharesave Scheme 0.1 0.3 - - - - 0.4
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March 2019(1) 26.3 0.4 1.0 (0.7) (0.7) 175.7 202.0
Total comprehensive income/
(loss) - - - (0.2) 1.2 13.5 14.5
Dividends - - - - - (7.3) (7.3)
Tax on items taken directly
to equity - - - - - 0.1 0.1
Equity-settled share-based
payments - - - - - 0.4 0.4
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 30 September 2019 26.3 0.4 1.0 (0.9) 0.5 182.4 209.7
(1) Restated as a result of the adoption of IFRS 16 - see Note 1
(Basis of preparation)
Interim condensed consolidated statement of cash flows
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
Restated(1) Restated(1)
GBPm GBPm GBPm
Cash generated from operating
activities
Profit before tax(1) 16.4 13.5 28.7
Finance expense(1) 3.7 3.5 7.2
Exceptional financial items (0.7) - 0.8
Amortisation 0.7 0.2 0.7
Depreciation(1) 34.1 33.7 68.1
Share of profit from joint venture (1.5) (0.9) (1.9)
Loss/(profit) on disposal of hire
equipment 0.3 (0.3) (1.2)
Profit on termination of lease
contracts (0.6) - (1.0)
Decrease/(increase) in inventories 0.3 (0.3) (0.9)
Increase in trade and other receivables(1) (3.0) (2.2) (0.7)
Increase/(decrease) in trade and
other payables(1) 8.3 8.9 (2.7)
Movement in provisions(1) (0.8) (0.1) (0.3)
Equity-settled share-based payments 0.5 0.8 0.9
---------- ---------- ----------
Cash generated from operations
before changes in hire fleet 57.7 56.8 97.7
Purchase of hire equipment (24.8) (30.3) (54.3)
Proceeds from disposal of hire
equipment 5.8 6.3 17.8
---------- ---------- ----------
Cash generated from operations 38.7 32.8 61.2
Interest paid(1) (3.4) (3.3) (6.7)
Tax paid (6.3) (1.6) (4.7)
---------- ---------- ----------
Net cash flow from operating activities 29.0 27.9 49.8
---------- ---------- ----------
Cash flow from investing activities
Purchase of non-hire property,
plant and equipment (4.8) (2.9) (6.5)
Acquisitions, net of cash acquired - (0.5) (30.9)
Movement in investment in joint
venture - 0.9 1.2
---------- ---------- ----------
Net cash flow from investing activities (4.8) (2.5) (36.2)
---------- ---------- ----------
Net cash flow before financing
activities 24.2 25.4 13.6
---------- ---------- ----------
Cash flow from financing activities
Payments for the principle element
of leases(1) (12.7) (11.7) (23.7)
Drawdown of loans 197.3 213.4 468.7
Repayment of loans (206.6) (214.9) (442.9)
Purchase of own shares to satisfy
share schemes - (1.1) (1.1)
Proceeds from the issue of Sharesave
Scheme shares - 0.1 0.5
Dividends paid (7.3) (6.0) (9.1)
---------- ---------- ----------
Net cash flow from financing activities (29.3) (20.2) (7.6)
---------- ---------- ----------
Decrease/(increase) in cash and
cash equivalents (5.1) 5.2 6.0
Cash and cash equivalents at the
start of the period 10.4 4.4 4.4
---------- ---------- ----------
Cash and cash equivalents at the
end of the period 5.3 9.6 10.4
Analysis of cash and cash equivalents
Cash 12 5.3 10.4 11.5
Bank overdraft 12 - (0.8) (1.1)
---------- ---------- ----------
5.3 9.6 10.4
(1) Restated as a result of the adoption of IFRS 16 - see Note 1
(Basis of preparation)
1 Basis of preparation
Speedy Hire Plc ('the Company') is a company incorporated and
domiciled in the United Kingdom. The interim condensed consolidated
financial statements of the Company as at and for the six months
ended 30 September 2019 comprise the Company and its subsidiaries
(together referred to as 'the Group').
The financial statements of the Group for the year ended 31
March 2019 are available from the Company's registered office, or
from the website: www.speedyservices.com.
The Group meets its day to day working capital requirements
through operating cash flows, supplemented as necessary by
borrowings. The Directors have prepared cash flow projections which
show that the Group is capable of continuing to operate within its
existing loan facilities and can meet the covenant tests set out
within the facilities. The key assumptions on which the projections
are based include an assessment of the impact of future market
conditions on projected revenue and an assessment of the net
capital investment required to support the expected level of
revenue.
The Group has a GBP180m asset based finance facility ('the
facility') which matures in October 2022 and has no prior scheduled
repayment 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 the foreseeable future. Accordingly, they continue to
adopt the going concern basis of accounting in preparing the
interim condensed consolidated financial statements.
Statement of compliance
These interim condensed consolidated financial statements have
been prepared in accordance with IAS 34 Interim Financial Reporting
as adopted by the European Union (EU) and the Disclosure and
Transparency Rules (DTR) of the UK FCA. As required by the latter,
the interim condensed consolidated financial statements have been
prepared applying the accounting policies and presentation that
were applied in the Company's published consolidated financial
statements for the year ended 31 March 2019 except as described
below. They do not include all the information required for full
annual financial statements, and should be read in conjunction with
the Group's consolidated financial statements as at and for the
year ended 31 March 2019.
The comparative figures for the financial year ended 31 March
2019 are not the Company's statutory accounts for that financial
year. Those accounts which were prepared under IFRS as adopted by
the EU (adopted IFRS) have been reported on by the Company's
auditors and delivered to the Registrar of Companies. The report of
the auditors 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.
The interim report was approved by the Board of Directors on 12
November 2019.
Significant accounting policies
Transition to IFRS 16 'Leases'
In January 2016, the IASB issued IFRS 16 which applies to an
entity's first annual statements beginning on or after 1 January
2019, and is therefore applicable to the Group for the year ending
31 March 2020. The main principle of the standard is to eliminate
the dual accounting model for lessees under IAS 17, which
distinguishes between on-balance sheet finance leases and
off-balance sheet operating leases, and to provide a single model
for lessee accounting. IFRS 16 requires lessees to recognise right
of use assets and lease liabilities for leases. Accounting
requirements for lessors are substantially unchanged from IAS
17.
The standard represents a significant change in the accounting
and reporting of leases for lessees and impacts the Income
Statement and Balance Sheet as well as statutory and alternative
performance measures used by the Group.
The Group has applied the fully retrospective transition
approach to these financial statements, and therefore has restated
comparative amounts as at 1 April 2018, for the 6 month period
ended 30 September 2018, and the year ended 31 March 2019. Under
IFRS 16, the Group will experience a different pattern of expense
within the Income Statement, with the IAS 17 operating lease
expense replaced by depreciation and interest expense. The interest
expense is weighted towards the earlier years of the leases and as
a result a reduction in reserves of GBP10.5m has been recognised
upon transition. There is no impact on the Group's underlying cash
flows.
The financial impact of the transition on the Group's reported
results is set out below:
6 months ended 30 September 6 months ended 30 September
Income statement impact 2019 2018
================================
IFRS 16 Reported Excluding IFRS 16 Reported
Excluding impact IFRS impact
IFRS 16 GBPm GBPm 16 GBPm GBPm
GBPm GBPm
Operating profit 15.0 2.9 17.9 14.0 2.1 16.1
EBITDA 38.1 14.6 52.7 37.0 13.0 50.0
EBITA 15.7 2.9 18.6 14.2 2.1 16.3
Financial expense
(before exceptional
items) (2.0) (1.7) (3.7) (1.7) (1.8) (3.5)
Profit before tax,
amortisation and exceptional
items 15.2 1.2 16.4 13.4 0.3 13.7
Profit before tax 15.2 1.2 16.4 13.2 0.3 13.5
Year ended 31 March
2019
Excluding IFRS 16 Reported
IFRS 16 impact
GBPm GBPm GBPm
Operating profit 29.8 5.0 34.8
EBITDA 78.7 26.1 104.8
EBITA 32.7 4.0 36.7
Financial expense
(before exceptional
items) (3.7) (3.5) (7.2)
Profit before tax,
amortisation and exceptional
items 30.9 0.5 31.4
Profit before tax 27.2 1.5 28.7
Balance sheet impact 30 September 2019 30 September 2018
===============================
IFRS 16 Reported Excluding IFRS 16 Reported
Excluding impact IFRS impact
IFRS 16 GBPm GBPm 16 GBPm GBPm
GBPm GBPm
Right of use assets - 66.4 66.4 - 68.1 68.1
Non-hire equipment 32.8 (0.5) 32.3 33.4 (0.7) 32.7
Deferred tax assets 1.3 1.5 2.8 1.4 2.2 3.6
Lease liabilities (0.2) (74.9) (75.1) (0.4) (79.6) (80.0)
Other working capital 27.1 (1.2) 25.9 25.8 (0.9) 24.9
Provisions (12.8) 0.3 (12.5) (2.6) 0.7 (1.9)
31 March 2019
Excluding IFRS 16 Reported
IFRS 16 impact
GBPm GBPm GBPm
Right of use assets - 72.2 72.2
Non-hire equipment 32.8 (0.6) 32.2
Deferred tax assets 1.1 1.9 3.0
Lease liabilities (0.3) (82.1) (82.4)
Other working capital 41.3 (1.5) 39.8
Provisions (14.2) 0.9 (13.3)
Accounting for leasing activities under IFRS 16
The Group holds leases for a number of properties and vehicles.
Rental contracts are typically entered into for fixed periods of
one to ten years but may have break options or extension options as
set out below. Such leases can contain a wide range of different
terms and conditions.
Until 31 March 2018, leases of property, plant and equipment
were classified as either operating leases or finance leases.
Payments made under operating leases (net of any incentives
received from the lessor) were charged to the Income Statement on a
straight-line basis over the lease term.
From 1 April 2018, leases are recognised as a right of use asset
and a corresponding liability at the date at which the leased asset
is available for use by the Group. Each lease payment is allocated
between the liability and finance cost. The finance cost is charged
to the Income Statement over the lease period. The right of use
asset is depreciated over the lease term on a straight-line
basis.
Lease liabilities arising from a lease are initially measured on
a present value basis. Lease liabilities include the net present
value of fixed payments (including in-substance fixed payments) and
variable lease payments that are based on a specified index or
rate. A separate provision for onerous leases is therefore no
longer required. The lease payments are discounted using the
Group's incremental borrowing rate (if the interest rate implicit
in the lease is not readily determinable). This rate is the
interest rate the Group would have to pay to borrow the funds
necessary to obtain an asset of similar value over a similar term
and with similar security to the right of use asset in a similar
economic environment.
Right of use assets are measured at cost comprising the amount
of the initial measurement of the lease liability, any initial
direct costs, any restoration costs, and any lease payments made at
or before the commencement date. Payments associated with short
term leases and leases of low value assets are recognised on a
straight-line basis as an expense in the Income Statement. Short
term leases are certain leases with a lease term of 12 months or
less. Low value assets comprise certain small items of IT equipment
and office furniture where the cash value when new is considered
immaterial.
Extension and termination options are included in a number of
leases across the Group. These terms are used to maximise
operational flexibility in terms of managing contracts. In
determining the lease term applicable for accounting purposes,
management considers all facts and circumstances that create
economic incentive to exercise an extension option, or not to
exercise a termination option. Extension options are only included
in the lease term if the lease is reasonably certain to be extended
(or not terminated). The assessment is reviewed if a significant
event or significant change in circumstances occurs which affects
this assessment and that is within the control of the Group.
Fair value adjustments relating to prior year acquisitions
During the previous financial year the Group acquired the entire
share capital of both Lifterz Holdings Limited ("Lifterz") and
Geason Holdings Limited ("Geason"). The fair values disclosed as
provisional as at 31 March 2019 have been revised during the period
ended 30 September 2019. These adjustments comprise GBP1.3m of
additional intangible assets, a GBP0.6m reduction in the book value
of hire fleet acquired, a GBP0.2m reduction in working capital, and
an additional GBP0.5m of non-current payables.
Other accounting policies
The accounting policies applied by the Group in these interim
condensed consolidated financial statements are otherwise the same
as those applied by the Group in its consolidated financial
statements as at and for the year ended 31 March 2019.
The International Accounting Standards Board (IASB) and
International Financial Reporting Interpretations Committee
('IFRIC') have not issued or endorsed any new standards or
interpretations since the date of the 31 March 2019 year end
financial statements.
Seasonality
In addition to economic factors, revenue is subject to a small
element of seasonal fluctuation. Whilst construction activity tends
to increase in the summer months, the equipment range helps to
mitigate the impact, specifically with heating, lighting and power
generation products being more in demand during the winter months.
Overall, the Directors do not feel that these factors have a
material effect on the performance of the Group when comparing
first half results to those achieved in the second half.
2 Changes in estimates
The preparation of interim condensed consolidated financial
statements requires management to make judgements, estimates, and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing the interim condensed consolidated financial
statements, the significant judgements made by management in
applying the Group's accounting policies and key sources of
estimation uncertainty for the consolidated financial statements
for the year ended 31 March 2019 continued to apply.
3 Exceptional items
During the period, no exceptional administrative items were
incurred.
An exceptional financial item of GBP0.7m has been credited to
the Income Statement in relation to changes in the fair value of
contingent consideration during the period.
Prior period - restatement for IFRS 16
Under previous accounting policies for the year ended 31 March
2019, net exceptional items of GBP2.2m were charged to operating
profit. On transition to IFRS 16, an additional exceptional credit
of GBP1.0m was recognised for the year ended 31 March 2019 in
relation to a gain on termination of a distribution centre
lease.
4 Segmental analysis
The segmental disclosure presented in the interim condensed
consolidated financial statements reflects the format of reports
reviewed by the Chief Operating Decision Maker (CODM). UK and
Ireland delivers asset management, with tailored services and a
continued commitment to relationship management. International
delivers major overseas projects and facilities management
contracts by providing a managed site support service.
For the six months ended 30 September 2019
UK and Ireland International Corporate Total
items
GBPm GBPm GBPm GBPm
Revenue 188.0 17.7 - 205.7
Segment result:
EBITDA before exceptional
items 50.8 3.8 (1.9) 52.7
Depreciation (32.4) (1.3) (0.4) (34.1)
---------- ---------- ---------- ----------
Operating profit/(costs)
before amortisation and
exceptional items 18.4 2.5 (2.3) 18.6
Amortisation (0.7) - - (0.7)
Exceptional items - - - -
---------- ---------- ---------- ----------
Operating profit/(costs) 17.7 2.5 (2.3) 17.9
Share of results of joint
venture - 1.5 - 1.5
---------- ---------- ---------- ----------
Trading profit/(costs) 17.7 4.0 (2.3) 19.4
Financial expense (3.7)
Exceptional financial item 0.7
----------
Profit before tax 16.4
Taxation (3.0)
----------
Profit for the financial
period 13.4
Intangible assets 39.7 - - 39.7
Investment in joint venture - 7.6 - 7.6
Hire equipment 212.4 8.6 - 221.0
Non-hire equipment 30.0 2.3 - 32.3
Right of use assets 63.7 2.7 - 66.4
Taxation assets - - 2.8 2.8
Current assets 99.4 13.1 2.0 114.5
Cash - - 5.3 5.3
---------- ---------- ---------- ----------
Total assets 445.2 34.3 10.1 489.6
Lease liabilities (70.7) (4.4) - (75.1)
Other liabilities (87.6) (14.1) (4.5) (106.2)
Borrowings - - (90.4) (90.4)
Taxation liabilities - - (8.2) (8.2)
---------- ---------- ---------- ----------
Total liabilities (158.3) (18.5) (103.1) (279.9)
For the six months ended 30 September 2018
UK and Ireland International Corporate Total
items
Restated(1) Restated(1) Restated(1) Restated(1)
GBPm GBPm GBPm GBPm
Revenue 177.2 17.4 - 194.6
Segment result:
EBITDA before exceptional
items(1) 48.1 4.2 (2.3) 50.0
Depreciation(1) (32.0) (1.3) (0.4) (33.7)
---------- ---------- ---------- ----------
Operating profit/(costs)
before amortisation and
exceptional items 16.1 2.9 (2.7) 16.3
Amortisation (0.2) - - (0.2)
Exceptional (costs)/income - - - -
---------- ---------- ---------- ----------
Operating profit/(costs) 15.9 2.9 (2.7) 16.1
Share of results of jointly
controlled entity - 0.9 - 0.9
---------- ---------- ---------- ----------
Trading profit/(costs) 15.9 3.8 (2.7) 17.0
Financial expense(1) (3.5)
----------
Profit before tax 13.5
Taxation(1) (2.8)
----------
Profit for the financial
period 10.7
Intangible assets 10.9 - - 10.9
Investment in joint venture - 6.2 - 6.2
Hire equipment 204.9 6.3 - 211.2
Non-hire equipment(1) 30.1 2.6 - 32.7
Right of use assets(1) 65.1 3.0 - 68.1
Taxation assets(1) - - 3.6 3.6
Current assets(1) 94.8 11.0 1.7 107.5
Cash - - 10.4 10.4
---------- ---------- ---------- ----------
Total assets 405.8 29.1 15.7 450.6
Lease liabilities(1) (75.4) (4.6) - (80.0)
Other liabilities(1) (77.5) (12.3) (5.1) (94.9)
Borrowings(1) - - (72.7) (72.7)
Taxation liabilities - - (10.7) (10.7)
---------- ---------- ---------- ----------
Total liabilities (152.9) (16.9) (88.5) (258.3)
(1) Restated as a result of the adoption of IFRS 16 - see Note 1
(Basis of preparation)
For the year ended 31 March 2019
UK and Ireland International Corporate Total
items
Restated(1,2) Restated(1,2) Restated(1,2) Restated(1,2)
GBPm GBPm GBPm GBPm
Revenue 358.6 36.1 - 394.7
Segment result:
EBITDA before exceptional
items(1) 100.5 8.5 (4.2) 104.8
Depreciation(1) (64.3) (2.6) (1.2) (68.1)
---------- ---------- ---------- ----------
Operating profit/(costs)
before amortisation and
exceptional items 36.2 5.9 (5.4) 36.7
Amortisation (0.7) - - (0.7)
Exceptional (costs)/income(1) (1.2) - - (1.2)
---------- ---------- ---------- ----------
Operating profit/(costs) 34.3 5.9 (5.4) 34.8
Share of results of jointly
controlled entity - 1.9 - 1.9
---------- ---------- ---------- ----------
Trading profit/(costs) 34.3 7.8 (5.4) 36.7
Financial expense(1) (7.2)
Exceptional finance expense (0.8)
----------
Profit before tax 28.7
Taxation(1) (5.5)
----------
Profit for the financial
period 23.2
Intangible assets 40.4 - - 40.4
Investment in joint venture - 5.8 - 5.8
Hire equipment(2) 209.8 7.1 - 216.9
Non-hire equipment(1) 29.7 2.5 - 32.2
Right of use assets(1) 69.4 2.8 - 72.2
Taxation assets(1,2) - - 3.0 3.0
Current assets(1) 98.9 12.0 0.9 111.8
Cash - - 11.5 11.5
---------- ---------- ---------- ----------
Total assets 448.2 30.2 15.4 493.8
Lease liabilities(1) (77.9) (4.5) - (82.4)
Other liabilities(1,2) (81.6) (11.4) (4.1) (97.1)
Borrowings(1) - - (100.6) (100.6)
Taxation liabilities - - (11.7) (11.7)
---------- ---------- ---------- ----------
Total liabilities (159.5) (15.9) (116.4) (291.8)
(1) Restated as a result of the adoption of IFRS 16 - see Note 1
(Basis of preparation)
(2) Restated for fair value adjustments relating to acquisitions
made in the prior year - see Note 1 (Basis of preparation)
Corporate items comprise certain central activities and costs,
which 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 and are not directly attributable to the activities of the
operating segments, together with net corporate borrowings and
taxation.
Geographical information
In presenting geographical information, revenue is based on the
geographical location of customers. Assets are based on the
geographical location of the assets.
Six months ended Six months ended Year ended
30 September 30 September 31 March 2019
2019 2018
------------------------------ ------------------------------ ------------------------------
Total Total Total
Revenue assets Revenue assets(1) Revenue assets(1)
GBPm GBPm GBPm GBPm GBPm GBPm
UK 182.7 442.1 172.0 407.9 347.8 449.6
Ireland 5.3 13.2 5.2 13.6 10.8 14.0
United Arab
Emirates 17.7 34.3 17.4 29.1 36.1 30.2
---------- ---------- ---------- ---------- ---------- ----------
205.7 489.6 194.6 450.6 394.7 493.8
(1) Restated as a result of the adoption of IFRS 16 - see Note 1
(Basis of preparation)
Revenue by type
Revenue is attributed to the following activities:
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBPm GBPm GBPm
Hire and related activities 120.4 119.4 236.4
Services 83.8 73.4 152.8
Disposals 1.5 1.8 5.5
---------- ---------- ----------
205.7 194.6 394.7
Major customer
No one customer represents more than 10% of revenue, reported
profit or combined assets of all reporting segments.
5 Financial expense
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
Restated(1) Restated(1)
GBPm GBPm GBPm
Interest on bank loans and overdrafts 1.8 1.3 2.9
Amortisation of issue costs 0.2 0.2 0.4
---------- ---------- ----------
Total interest on borrowings 2.0 1.5 3.3
Interest on lease liabilities 1.7 1.8 3.5
Hedge interest payable 0.1 0.1 0.1
Other finance (income)/costs (0.1) 0.1 0.3
Exceptional financial items (see
note 3) (0.7) - 0.8
---------- ---------- ----------
3.0 3.5 8.0
(1) Restated as a result of the adoption of IFRS 16 - see Note 1
(Basis of preparation)
6 Taxation
The corporation tax charge for the six months ended 30 September
2019 is based on an effective rate of taxation of 18.3% before
exceptional items and amortisation (2018: 20.4%); and 18.3% (2018:
20.7%) after exceptional items and amortisation. This has been
calculated by reference to the projected charge for the full year
ending 31 March 2020, applying the applicable UK corporation tax
rate of 19% (2018: 19%). Deferred tax is provided using the tax
rates that are expected to apply to the period in which the
liability is settled, based on the tax rates that have been enacted
at the balance sheet date.
7 Earnings per share
The calculation of basic earnings per share is based on the
earnings attributable to equity holders of the Company of GBP13.4m
(2018: GBP10.7m) and the weighted average number of 5 pence
ordinary shares in issue and is calculated as follows:
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
Restated(1) Restated(1)
Profit (GBPm)
Profit for the period after tax -
basic earnings(1) 13.4 10.7 23.2
Intangible amortisation charge (after
tax) 0.6 0.2 0.5
Exceptional items (after tax) (0.7) - 2.0
---------- ---------- ----------
Adjusted earnings (after tax) 13.3 10.9 25.7
Weighted average number of shares
in issue (m)
Number of shares at the beginning
of the period 519.5 519.6 519.6
Exercise of share options - - 0.3
Movement in shares owned by the Employee
Benefit Trust 0.1 (0.5) (1.4)
---------- ---------- ----------
Weighted average for the period -
basic number of shares 519.6 519.1 518.5
Share options 5.3 3.8 4.4
Employee share schemes 0.7 0.9 1.2
---------- ---------- ----------
Weighted average for the period -
diluted number of shares 525.6 523.8 524.1
Earnings per share (pence)
Basic earnings per share 2.58 2.06 4.47
Amortisation 0.11 0.04 0.10
Exceptional items (0.13) - 0.39
---------- ---------- ----------
Adjusted earnings per share 2.56 2.10 4.96
Basic earnings per share 2.58 2.06 4.47
Share options (0.03) (0.02) (0.04)
---------- ---------- ----------
Diluted earnings per share 2.55 2.04 4.43
Adjusted earnings per share 2.56 2.10 4.96
Share options (0.03) (0.03) (0.05)
---------- ---------- ----------
Adjusted diluted earnings per share 2.53 2.07 4.91
(1) Restated as a result of the adoption of IFRS 16 - see Note 1
(Basis of preparation)
The total number of shares outstanding at 30 September 2019
amounted to 525,386,975, including 5,516,473 shares held in the
Employee Benefit Trust, which are excluded in calculating the
earnings per share.
8 Dividends
The aggregate amount of dividend comprises:
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBPm GBPm GBPm
2018 final dividend (1.15 pence on
523.7m ordinary shares) - 6.0 6.0
2019 interim dividend (0.60 pence
on 523.7m ordinary shares) - - 3.1
2019 final dividend (1.40 pence on
525.3m ordinary shares) 7.3 - -
---------- ---------- ----------
7.3 6.0 9.1
Subsequent to the end of the period, and not included in the
results for the period, the Directors have declared an interim
dividend of 0.70 pence (2019 interim dividend: 0.60 pence) per
share, to be paid on 10 January 2020 to shareholders on the
register on 6 December 2019.
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. 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.
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
Restated(1) Restated(1)
GBPm GBPm GBPm
Operating profit 17.9 16.1 34.8
Add back: amortisation 0.7 0.2 0.7
Add back: exceptional items - - 1.2
---------- ---------- ----------
Operating profit before amortisation
and exceptional items (EBITA) 18.6 16.3 36.7
Add back: depreciation 34.1 33.7 68.1
---------- ---------- ----------
EBITDA before exceptional items 52.7 50.0 104.8
Profit before tax 16.4 13.5 28.7
Add back: amortisation 0.7 0.2 0.7
Add back: exceptional items (0.7) - 2.0
---------- ---------- ----------
Profit before tax, amortisation and
exceptional items 16.4 13.7 31.4
(1) Restated as a result of the adoption of IFRS 16 - see Note 1
(Basis of preparation)
10 Property, plant and equipment
Land and Hire
buildings equipment Other Total
Restated(2) Restated(1) Restated(1,2)
GBPm GBPm GBPm GBPm
Cost
At 1 April 2018(1) 50.5 364.0 71.6 486.1
Foreign exchange 0.3 0.2 - 0.5
Additions 0.6 31.5 2.3 34.4
Disposals - (12.0) - (12.0)
Transfers to inventory - (6.1) - (6.1)
---------- ---------- ---------- ----------
At 30 September 2018(1) 51.4 377.6 73.9 502.9
Foreign exchange (0.2) (0.4) - (0.6)
Acquisition through business
combinations(2) 0.3 10.7 0.9 11.9
Additions 0.8 23.6 3.0 27.4
Disposals (0.1) (13.5) - (13.6)
Transfers to inventory - (12.2) - (12.2)
---------- ---------- ---------- ----------
At 31 March 2019(1,2) 52.2 385.8 77.8 515.8
Foreign exchange 0.3 0.7 - 1.0
Additions 0.8 27.4 4.0 32.2
Disposals - (12.5) - (12.5)
Transfers to inventory - (4.9) - (4.9)
---------- ---------- ---------- ----------
At 30 September 2019 53.3 396.5 81.8 531.6
Depreciation
At 1 April 2018(1) 29.9 160.3 58.0 248.2
Foreign exchange 0.1 0.1 - 0.2
Charged in period 1.5 18.2 3.1 22.8
Disposals - (7.9) - (7.9)
Transfers to inventory - (4.3) - (4.3)
---------- ---------- ---------- ----------
At 30 September 2018(1) 31.5 166.4 61.1 259.0
Foreign exchange - (0.1) - (0.1)
Charged in period 1.7 17.9 3.6 23.2
Disposals (0.1) (6.8) - (6.9)
Transfers to inventory - (8.5) - (8.5)
---------- ---------- ---------- ----------
At 31 March 2019(1,2) 33.1 168.9 64.7 266.7
Foreign exchange 0.4 0.1 - 0.5
Charged in period 1.7 17.8 2.9 22.4
Disposals - (7.7) - (7.7)
Transfers to inventory - (3.6) - (3.6)
---------- ---------- ---------- ----------
At 30 September 2019 35.2 175.5 67.6 278.3
Net book value
At 30 September 2019 18.1 221.0 14.2 253.3
At 31 March 2019(1,2) 19.1 216.9 13.1 249.1
At 30 September 2018(1) 19.9 211.2 12.8 243.9
(1) Restated as a result of the adoption of IFRS 16 - see Note 1
(Basis of preparation)
(2) Restated for fair value adjustments relating to acquisitions
made in the prior year - see Note 1 (Basis of preparation)
11 Right of use assets
Land and
buildings Other Total
GBPm GBPm GBPm
Cost
At 1 April 2018 119.2 41.7 160.9
Foreign exchange 0.5 - 0.5
Additions 2.5 9.3 11.8
Disposals (1.5) (2.8) (4.3)
---------- ---------- ----------
At 30 September 2018 120.7 48.2 168.9
Foreign exchange (0.2) - (0.2)
Additions 12.0 4.4 16.4
Disposals (4.5) (2.7) (7.2)
---------- ---------- ----------
At 31 March 2019 128.0 49.9 177.9
Foreign exchange 0.6 - 0.6
Additions 3.0 3.3 6.3
Disposals (5.7) (3.3) (9.0)
---------- ---------- ----------
At 30 September 2019 125.9 49.9 175.8
Depreciation
At 1 April 2018 71.6 21.0 92.6
Foreign exchange 0.3 - 0.3
Charged in period 5.3 5.6 10.9
Disposals (1.4) (1.6) (3.0)
---------- ---------- ----------
At 30 September 2018 75.8 25.0 100.8
Foreign exchange (0.1) - (0.1)
Charged in period 5.5 5.7 11.2
Disposals (4.0) (2.2) (6.2)
---------- ---------- ----------
At 31 March 2019 77.2 28.5 105.7
Foreign exchange 0.4 - 0.4
Charged in period 5.9 5.8 11.7
Disposals (5.7) (2.7) (8.4)
---------- ---------- ----------
At 30 September 2019 77.8 31.6 109.4
Net book value
At 30 September 2019 48.1 18.3 66.4
At 31 March 2019 50.8 21.4 72.2
At 30 September 2018 44.9 23.2 68.1
12 Borrowings
30 September 30 September 31 March
2019 2018 2019
GBPm GBPm GBPm
Current borrowings
Bank overdraft - 0.8 1.1
Non-current borrowings
Maturing between two and five years
- ABF facility 90.4 71.9 99.5
---------- ---------- ----------
Total borrowings 90.4 72.7 100.6
Less: Cash (5.3) (10.4) (11.5)
---------- ---------- ----------
Net borrowings 85.1 62.3 89.1
Add: Finance lease liabilities excluded
under IFRS 16 0.2 0.4 0.3
---------- ---------- ----------
Net debt 85.3 62.7 89.4
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
undrawn availability of this facility as at 30 September 2019 was
GBP76.7m (2018: GBP84.2m) based on the Group's eligible hire
equipment and trade receivables.
The facility is for GBP180m, but is 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
London Inter Bank Offered Rate 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 period, the
effective margin was 1.84% (2018: 1.80%).
The facility is secured by fixed and floating charges over the
UK and Ireland assets.
13 Contingent liabilities
In the normal course of business, the Company and certain
subsidiaries have given performance bonds issued on behalf of Group
companies, and parental guarantees have been given in support of
the contractual obligations of Group companies on both a joint and
a several basis.
The Directors do not consider any provision is necessary in
respect of guarantees and bonds.
14 Commitments
The Group had contracted capital commitments amounting to
GBP1.2m (2018: GBP5.4m) at the end of the financial period for
which no provision has been made.
15 Related party disclosures
There has been no significant change to the nature and size of
related party transactions, including the remuneration provided to
the key management, from that disclosed in the 2019 Annual
Report.
16 Principal risks and uncertainties
The principal risks and uncertainties which could have a
material impact upon the Group's performance over the remaining six
months of the 2020 financial year have not changed from those set
out on pages 38 to 45 of the Group's 2019 Annual Report, which is
available at www.speedyservices.com. These risks and uncertainties
include, but are not limited to the following:
-- Safety, health and environment;
-- Service;
-- Revenue and trading performance;
-- Project and change management;
-- People;
-- Partner and supplier service levels;
-- Operating costs;
-- Information technology and data integrity;
-- Funding;
-- Economic vulnerability, including the potential effects of
the UK's departure from the European Union;
-- Corporate culture;
-- Business continuity; and
-- Asset holding and integrity.
17 Post balance sheet events
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, after
any related costs, will be recognised as an exceptional item in the
full year accounts to 31 March 2020.
Directors' Responsibilities
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU;
-- the interim management report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the condensed set of financial statements; and a description of
the principal risks and uncertainties for the remaining six months
of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the current financial year and that have
materially affected the financial position or performance of the
entity during that period; and any changes in the related party
transactions described in the last Annual Report that could do
so.
Thomas Christopher Morgan
Director
12 November 2019
Independent Review Report to Speedy Hire Plc
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2019 which comprises the interim
condensed consolidated statement of comprehensive income, interim
condensed consolidated balance sheet, interim condensed
consolidated cash flow statement, interim condensed consolidated
statement of changes in equity and the related explanatory
notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2019 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU and the Disclosure Guidance and Transparency Rules ("the
DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
The impact of uncertainties due to the UK exiting the European
Union on our review
Uncertainties related to the effects of Brexit are relevant to
understanding our review of the condensed financial statements.
Brexit is one of the most significant economic events for the UK,
and at the date of this report its effects are subject to
unprecedented levels of uncertainty of outcomes, with the full
range of possible effects unknown. An interim review cannot be
expected to predict the unknowable factors or all possible future
implications for a company and this is particularly the case in
relation to Brexit.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Chris Hearld
for and on behalf of KPMG LLP
Chartered Accountants
1 St Peter's Square
Manchester
M2 3AE
12 November 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR UUAORKSAAAUA
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November 13, 2019 02:01 ET (07:01 GMT)
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