TIDMSDY
RNS Number : 8714M
Speedy Hire PLC
12 May 2015
Speedy Hire Plc
("Speedy", "the Company" or "the Group")
Results for the year ended 31 March 2015
Path to Sustainable Profit Growth
12 May 2015
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 2015.
Financial Highlights
Year ended Year ended Change
31 March 31 March
2015 2014
---------------------------------- ----------- ----------- --------
(GBPm) (GBPm) %
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Group revenue* 375.0 349.7 +7.2
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UK & Ireland 351.3 328.1 +7.1
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International 23.7 21.6 +9.7
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Group EBITDA* 72.7 68.7 +5.8
---------------------------------- ----------- ----------- --------
Group EBITA* 26.4 22.1 +19.5
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UK & Ireland 37.4 32.7 +14.4
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International (5.6) (4.3)
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Adjusted* PBT 21.9 14.6 +50.0
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ROCE* 8.0% 7.0% +100bps
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Earnings per share* (pence) 3.23p 2.05p +57.6
---------------------------------- ----------- ----------- --------
Dividend for the year (pence per
share) 0.70p 0.61p +14.8
---------------------------------- ----------- ----------- --------
* before amortisation and exceptional items
Strategic Update:
Fixing the Business
-- Completed exit from general and spot hire in Middle East:
process underway for sale of remaining business
-- UK Sales & Marketing function re-structured delivering strong strategic customer growth
-- Network Optimisation Programme completed ahead of schedule
-- Implementation of new IT and MIS complete
-- Re-established culture of; Safety; Governance; Service; and People Engagement
Improving Performance
-- Radically enhanced sales and marketing function in place to grow core hire
-- Asset Optimisation Programme making good progress to improve asset utilisation
-- Cost efficiency plans accelerating
Transforming the Company
-- Developing a broader range of complementary services to meet customer demand
-- Significant opportunities to re-engage with Regional/Local
market segment through Express network
-- Further opportunities to deliver enhanced profit growth
Commenting on the results, Jan Åstrand, Chairman, said:
"I am delighted to report on a year of significant progress at
Speedy. It is particularly pleasing that, despite all the
challenges the Company has had to face, we have today reported a
strong set of results.
"Shortly after he was appointed CEO, Mark Rogerson set out a
clear plan to return the Group to health and build sustainable
profit growth. Mark and his new leadership team have made
significant progress, and whilst there is much to do, there is
further opportunity to improve the business.
"In the Middle East, having completed the exit from general and
spot hire ahead of schedule, discussions are underway regarding the
disposal of the oil and gas services operations, our last remaining
asset in the region.
"We can now turn our focus to developing the business in the UK
where there are major opportunities ahead through further
professionalising our sales and marketing activity supported by
improvements in cost management and asset utilisation.
"We are, once again, in a position to deliver sustainable profit
growth and our confidence for the future is underpinned by an
increase in the recommended final dividend."
Enquiries:
Speedy Hire Tel: 01942 720 000
Mark Rogerson, Chief Executive Officer
Russell Down, Group Finance Director
John Fahey, Director of Communications
Instinctif Partners Tel: 020 7457 2020
Mark Garraway
Helen Tarbet
James Gray
There will be an analysts' meeting at the offices at Instinctif
Partners, 65 Gresham Street, London, EC2V 7NQ at 09.30 today. The
presentation will be webcast at www.speedyservices.com/investors
and there will also be a conference call facility. For details
please contact Rosie Driscoll at Instinctif Partners on 020 7457
2020 or rosie.driscoll@instinctif.com
Note - 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 clients across
the construction, infrastructure, industrial, manufacturing and
facilities management sectors - as well as to local trade and
industry. The Group provides complementary support services through
the provision of training, asset management and testing, repair,
inspection and maintenance (TRIM). Speedy is accredited nationally
to ISO9001, ISO14001 and OHSAS18001. The Group operates from 221
fixed sites across the UK and Ireland together with a number of
on-site facilities at client locations throughout the UK, Ireland
and from an international hub based in the Middle East.
Chairman's Statement
I am delighted to report on a year of significant progress at
Speedy.
Shortly after he was appointed CEO, Mark Rogerson set out a
clear three-point 'FIT' plan to return the Group to health and
build sustainable profit growth. Despite some very challenging
historical issues, Mark and his leadership team have made
significant progress.
It is particularly pleasing that despite the many challenges the
Company has had to face, particularly with regard to the Middle
East, we have reported a 50% increase in PBT(1) . Underpinned by a
further good performance in the UK & Ireland, Group revenues(1)
increased by 7.2% to GBP375 million (2014: GBP349.7 million) and
Group EBITA(2) increased by 19.5% to GBP26.4 million (2014: GBP22.1
million). Earnings per share(1) increased by 57.6% to 3.23 pence
(2014: 2.05 pence). As at 31 March 2015, net debt was GBP105.3
million giving a net debt to EBITDA(1) ratio of 1.45x (2014:
1.23x).
PBT(1) increased by 50%, but was significantly affected by the
losses in our International Division. We are therefore pleased to
have exited fully from the general and spot hire market in the
Middle East ahead of our 2016 deadline and are in discussions
regarding the disposal of our oil and gas services operations which
have returned to a break even position in March 2015. This is a
very significant achievement. After de-risking the Middle East,
completing the upgrade to the backbone of our network and having
embedded our new IT and MI system, we are now in a position to
concentrate our resources on the UK where we enjoy a market leading
position and where there is considerable scope for sustainable
profit growth. We will now increase our efforts to deliver further
improvements in asset utilisation and cost management as well as
professionalising the sales and marketing activities; all of which
will contribute to an improvement in profits and ROCE.
On 18 September 2014 we announced the re-financing of the Group
and secured a new GBP180 million 5-year asset-based revolving
facility at an improved margin and with agreements in place to
support additional funding, if required. Alongside our focus on
cash generation, the new facility will provide us with the
flexibility to support our strategy for sustainable profit
growth.
Dividend
Our improved performance this year, and confidence in the future
prospects for the Group, has resulted in the Board recommending a
final dividend of 0.40 pence per share (2014: 0.35 pence). If
approved at the forthcoming Annual General Meeting the total
dividend for the year would be 0.70 pence per share (2014: 0.61
pence).
Board and People
I was appointed Chairman on 11 November 2014 following Ishbel
Macpherson's decision to step down from the Board on the same date.
Russell Down joined the Board as Group Finance Director on 6 April
2015 succeeding Lynn Krige who stepped down from the Board on 16
October 2014. Michael Averill, a non-executive Director since 1 May
2008, stepped down from the Board with effect from 26 February
2015. Dr Chris Masters, who was appointed a non-executive Director
on 13 July 2011, succeeded Michael as Senior Independent Director
and Chairman of the Remuneration Committee, also with effect from
26 February 2015. I would like to thank all our people for their
professionalism, commitment and dedication over the past year.
These have been challenging times and there is still a great deal
to do but, thanks to some outstanding contributions and no little
personal sacrifice, we can all look forward to a successful future
for Speedy.
Outlook
In the UK we have a market leading position and see major
opportunities ahead. Our initiatives to harness these opportunities
are already well underway. We are, once again, in a position to
deliver sustainable profit growth and our confidence for the future
is underpinned by an increase in the recommended final dividend. I
look forward to reporting on further progress.
Jan Åstrand
Chairman
(1) Excluding exceptional items and amortisation
(2) Excluding exceptional items, amortisation &
International
Chief Executive's Statement
Overview
Speedy has achieved a great deal this year, especially given
that a number of legacy issues have been much more challenging than
originally expected. To have delivered a result ahead of market
expectations is a good achievement.
Following my appointment in January 2014, I set out a
three-point turnaround plan: to fix the business, improve
operational performance, and transform the company over the medium
term with the aim of delivering sustainable profit growth.
Fixing the business meant principally addressing five key
issues: stabilising the Middle East; returning the Group to growth;
expediting the delivery of our Network Optimisation Programme;
delivering a new IT and MI system; and developing a new cultural
environment where safety, governance and compliance, service, and
employee conduct and ethics are our priority:
-- We are pleased to have fully exited the general hire market
in the Middle East and to have not only achieved a break even
position in the Oil and Gas Services Business, but to have also
built enterprise value.
-- In the UK and Ireland we recorded increases in Revenue and
EBITA before exceptional costs of 7.1% and 14.4% respectively. We
secured a significant number of new contracts during the period and
revenues from the Group's Strategic and Major accounts (generating
some 51% of total revenues) rose by 18%.
-- We have delivered the planned improvements to our UK network
ahead of the scheduled timeline, successfully implemented a new IT
system, and have made significant progress in establishing a new
culture across the business.
These achievements are a great credit not only to the wider
management team but to all our people throughout the business who
have frequently had to operate under stretching and challenging
conditions.
We have now commenced the journey to improve our business
further targeting three specific areas in the short term: growing
our core hire revenue; optimising our assets; and creating cost
efficiencies.
Looking to the future, we have identified three areas to focus
on within our transformation agenda: broadening our service
offering to our largest customers; reinventing the Express network;
and meeting customer demand through more demand led CapEx
allocation and targeted growth.
Major Progress in Delivering our Three-Point 'FIT' Turnaround
Plan
Fixing the business
Middle East
We announced last November the completion of our review of the
Middle East operations with a view to further de-risking the
business and stemming losses. It was clear that the continued
under-performance was the result of a legacy cost base, weak demand
for general and spot hire, and a business model unsuited to its
marketplace. Conversely, we identified good value in our Oil &
Gas Services business, which had the potential to deliver strong
revenue growth from long-term contracts. We have executed a
restructuring of this business under very difficult conditions
ahead of the targeted completion date of end Q1 FY2016:
-- We have exited the general and spot hire market in the Middle
East, and have sold, disposed of, or returned to the UK some circa
4,500 assets. We have sold our Oman business and closed our Egypt
and Qatar offices.
-- We have completed the mobilisation of our largest Oil &
Gas Services contracts and exploited opportunities from recently
signed contracts to build value. We have now de-risked the Middle
East business from both the loss perspective and also from the fact
we have reduced the NBV of assets by some GBP20m and created a much
simpler and easier to manage business. As previously announced, we
are progressing a process with a third party relating to the
disposal of this business.
Growth through Customer Focus
We have appointed a new Group Sales and Marketing Director and
restructured the sales teams to provide clear ownership of our
Strategic and Major customers who collectively account for 51% of
our revenues. At the same time we have implemented a simplified and
geographically aligned regional sales structure, and have
re-defined our value proposition within our target market segments.
This has contributed to an increased bid and tender win rate, and
we are starting FY16 with a number of new contracts at either award
or preferred bidder status.
Our Strategic and Major customers are increasingly looking to us
to provide a broader range of operational support services and
solutions. The provision of such services, alongside the hire and
sale of plant and equipment is already a major differentiator
between us and our peer group. We are developing this range of
value-added, complementary services, such as on-site training,
asset management and testing, repair, inspection and
maintenance.
We have also continued a number of initiatives including our
'Own City' campaigns, which have driven revenue performance in key
cities primarily through meeting the demand from the major projects
of our Strategic and Major customers. However, it is evident that
Speedy's previous strategy of moving away from the local markets
comprising 50,000+ Regional/Local customers (whist retaining the
infrastructure and cost base to support this market) needs to be
addressed. We are now starting to re-engage with this customer base
through targeted marketing campaigns. However, this is no small
task. Although it will take time to reverse the decrease we have
seen in market share, this does represent a significant opportunity
for the future.
Network Optimisation Programme
The programme to reconfigure the backbone of the Group's
national network and logistics capabilities into an integrated
distribution model was fully overhauled during the year. We have
incorporated a new 'National Distribution Centre' (NDC) into the
programme and re-profiled our Multi-Service Centre (MSC) footprint,
enabling us to accelerate and deliver the programme well ahead of
the original schedule. This was absolutely essential to provide
much needed improvements in our Engineering function, to enable us
to begin to operate in a modern, cost-effective manner and drive
cost benefits.
Our new NDC located in Tamworth will serve as the central hub
for overnight distribution to our UK Multi-Service Centres. This
will ensure that the right products are distributed on time to our
network of Superstores and Express Stores, while at the same time
achieving greater efficiencies by closely aligning our fleet
capability with the national network so that we can deliver our
products to our customers faster and at lower cost.
During the year we opened five new Multi-Service Centres and
seven new Superstores, the end result being a much improved network
comprising of a new National Distribution Centre, eight supporting
Multi-Service Centres and 38 Superstores which now form the
backbone of our operational network. Those who have seen first-hand
the work we have completed here will have witnessed a very real
transformation in our business. To have executed this redesigned
programme within 12 months has been an exceptional achievement and
a great credit to everybody involved.
IT & Management Information System
Our IT system had not been upgraded for nine years, and
establishing a much improved IT system was an urgent and long
overdue priority. We have had to overcome some very significant
operational and management issues. However, we now have in place a
new system which is providing us with much greater levels of
transparency and granularity of data around our assets, as well as
giving us a platform for future development of more efficient
customer processes. In addition, the new system has significantly
enhanced our data analytics and reporting capabilities.
Culture
We have spent a significant amount of time this year on a
programme to focus on four key cultural aspects of the business
namely: ensuring we keep our people and our customers safe;
behaving in an ethical way; putting our customers at the heart of
everything we do; and attracting, retaining and engaging good
people with strong business ethics. We have all worked tirelessly
in these areas this year, and I am proud of the results.
-- Safety
During the year we have made transformational progress in our
safety journey. We launched an inaugural Annual Leadership Safety
Day, mobilising all of our leaders to visit sites across the
Country, and embarked on a new behavioural safety training
programme. We have also launched safety awareness campaigns with
our customers and have won multiple awards for the safety of our
fleet.
-- Governance and Compliance
In light of the well-documented issues in the Middle East, we
have addressed a number of key business risks and have
re-established controls through a much improved management system
that now clearly defines policies, processes and procedures. To
re-enforce the importance of business ethics, we created a new,
comprehensive Code of Business Ethics booklet. This was posted to
each of our 3,800 employees' homes and as a wider leadership team,
we have been cascading and socialising the importance of this
message across the business.
-- Service Excellence
One of our major strategic themes has been the delivery of
service excellence to our customers. We have implemented a number
of strategic changes to our back office customer support functions,
including a re-invigoration of the Speedy Direct sales support
function, and introducing new operational support structures for
our Strategic accounts. During the year we were awarded the Babcock
Supply Chain Excellence Award and the J Murphy & Sons
Innovation Award.
-- People
An important task this year has been re-engaging and
re-energising our people to get the best from our exceptionally
talented and committed workforce. We have implemented a robust
programme of multi-media employee communications, which have had a
noticeably positive effect on morale. We have also aimed to attract
additional top talent. Our leadership team has been bolstered with
a host of new people from diverse backgrounds this year including:
BAE, Hyder Consulting, SCAPA, Manchester Airport Group and Hilti.
In addition, we have successfully retained the best people,
promoting where appropriate to strengthen the wider leadership
team. A positive trend which is emerging is the number of ex-Speedy
employees who are approaching us to re-join the Company.
Improving Operational Performance
Speedy today has a customer base of 50,000+ customers, a
1,100-strong fleet, a national network comprising more than 220
stores, a Net Book Value of GBP212m hire equipment and 3,800
people. Our task now is to complement this scale by focusing on
three things over the course of the next financial year which will
drive significant operational performance improvement namely: grow
our core hire revenue; optimise our asset management; and drive
cost efficiencies.
Grow Core Hire
Our growth strategy must be market led and everything must begin
with the customer. We have been extremely successful in building
long-term relationships with our Strategic and Major clients which
now give us much greater visibility of their business needs and
equipment demand. We will continue to build on these relationships
and target our Capex accordingly to meet the demand from this
customer segment. However, the Regional customer base is becoming
an increasingly competitive arena, particularly in London and the
South East, but it is clear from Customer Engagement Surveys that
there is a continued strong demand for our services. Our focus is
now on improving customer attraction and retention through:
-- Building new Sales channels including an enhanced telesales capability and a series of Marketing-led customer focused campaigns that demonstrate the breadth of our innovative and safe product range;
-- Pricing to reflect market conditions;
-- Introducing an improved commercial governance process
enabling us to generate and secure a pipeline of quality
opportunities;
-- Improving Sales productivity and performance management
through better sales training and a market leading reward
scheme.
Asset Optimisation
Having put in place a strong backbone to our property network
and a new IT infrastructure, the priority now is to optimise the
breadth and depth, depot stocking levels and availability of
equipment to drive asset utilisation up and costs down, whilst
improving customer fulfilment.
-- Asset Breadth and Depth
Speedy has an asset base which has been 20 years in the making.
The net result is that, in some areas, it is less than optimal in
the current marketplace. Using sophisticated analytical tools, we
have identified the optimum number of product lines, but more
importantly the stock levels we need within each SKU.
-- Asset Holdings
We are in the process of significantly improving our asset
holding strategy. The top 50 or so most utilised products will now
be stocked in each of our Express stores, the next 350 most
utilised products in our Superstores and the next 650 in the
regional MSCs, with our remaining products being held at the
National Distribution Centre. This will help to ensure that we
spend less time trying to find products in our network; the aim
being to never having to say no to a customer.
-- Asset Availability
The new NDC and MSC structure in our network will also enable us
to improve our engineering capabilities by consolidating our asset
servicing. This will enable us to improve our processes to ensure
that our asset flow and economies improve availability through the
deployment of lean and consolidated engineering processes.
Drive Cost Efficiencies
As we continue to refine our network, IT system, processes and
asset strategy, visibility of opportunities to improve operating
costs is now starting to emerge and we can begin a much more
scientific and focussed approach to cost improvement. Specifically:
Engineering Productivity (where we are developing lean processes
that will enable increased productivity by turning our assets
through the Test and Repair functions); Logistics (where we are
dovetailing our asset holding strategy into our logistics
efficiency programme); and Corporate overheads (where we have a
continual commitment to reviewing our residual cost base and
maximising productivity).
Transforming the Company
Having successfully addressed the 'Fix' issues and with traction
being made on our initiatives to improve operational efficiency, we
have begun turning our attention to transforming the business over
the medium term to achieve long term sustainable profit growth.
The total UK rental market is estimated to be worth c.GBP6bn per
year. With pre-exceptional revenues of GBP375m, Speedy is the
largest player and is well known as the market leader, covering the
broadest range of customers, services and assets. The market is
expected to continue to grow in coming years with market
commentators having predicted a c.3% growth p.a. between 2015 and
2017. In order to build on our market leading position, and the
opportunity that the market presents us, we have identified three
key areas for development:
-- Organic growth
Strategic and Major customer demand gives us good visibility of
product demand and, as such, we can identify shortfalls in our core
hire holdings. This will enable us to make more informed CapEx
decisions to ensure we are buying more of the right equipment which
will drive up core hire utilisation and rebalance our mix of direct
and rehire.
-- Reinventing our Express Network
We have 50,000+ Local/Regional customers who account for 49% of
our revenues, and who represent a potentially significant prize. We
are now re-evaluating the use of our 150+ strong Express Store
network to enable us to provide a much more convenient and relevant
service to these customers.
-- Broader Services
Our market-leading position with our Strategic and Major
customers, gives us significant opportunities to provide a broader
range of non-hire services. We are seeing an increasing demand
resulting from this customer base requiring fewer suppliers in
their supply chains to provide a broader range of services. For us
this includes, but will not be limited to training, fuel
management, logistics, property sharing, security, welfare support
and health and safety support.
Outlook
We have delivered a good result despite having had to address a
number of major issues over the past 12 months. We have
successfully executed and completed a number of key programmes and
have started making good progress on a number of improvement
initiatives.
The UK is investing in a major infrastructure regeneration
programme on an unprecedented scale and our customers are demanding
a broader range of services and products from their suppliers.
Meanwhile we have identified a major opportunity in re-connecting
with our 50,000+ Local/Regional customer base.
We have an increasingly strong platform to build on, we have a
strong brand and a leading market position and we are now well
placed to deliver sustainable profit growth over the medium and
long term.
Mark Rogerson
Chief Executive Officer
Financial review
Group financial performance
Revenue* for the year to 31 March 2015 was GBP375.0m (2014:
GBP349.7m) which included planned fleet disposals of GBP13.7m
(2014: GBP9.5m); excluding these disposals, revenue was up 6.2%
(2014: 2.2%). Exceptional revenue on disposal of Middle East assets
amounted to GBP11.0m (2014: GBPnil).
In line with our strategy to offer a full range of services to
customers, the proportion of partnered services revenues increased
again during the year. As a consequence of the lower margins in
this business the gross profit percentage* declined to 57.9% (2014:
61.4%).
The Group reported EBITA of GBP26.4m before exceptional items
(2014: GBP22.1m), an increase of 19.5%. The result was affected by
losses in the International division of GBP5.6m (2014: GBP4.3m).
The International division operated at break even in March 2015
following significant restructuring activities during the year.
Excluding the results from International, EBITA (before exceptional
costs) increased by 21.2% to GBP32.0m (2014: GBP26.4m). Profit
before taxation, exceptional items and amortisation increased by
50% to GBP21.9m (2014: GBP14.6m). Profit after taxation was GBP0.2m
(2014: GBP4.0m).
Revenue* (GBPm) EBITA* (GBPm)
2015 2014 2015 2014
--------------- --------------- -------------- -------------- -------------
UK & Ireland 351.3 328.1 37.4 32.7
International 23.7 21.6 (5.6) (4.3)
Corporate
costs - - (5.4) (6.3)
--------------- --------------- -------------- -------------- -------------
Total 375.0 349.7 26.4 22.1
--------------- --------------- -------------- -------------- -------------
*Pre-exceptional items
UK & Ireland performance
Revenue grew by 7.1% to GBP351.3m (2014: GBP328.1m). The Group
won c.51% of its revenue from strategic and major clients during
the year and secured a number of new contract wins and renewals
with clients on infrastructure and property projects including
Hinkley Point and Battersea Power Station. In line with our
strategy to offer a full service to clients, Partnered Services
revenue has grown as a proportion of total revenue which diluted
gross margins. Overhead costs have however been tightly controlled
and consequently the EBITA margin increased to 10.6% (2014:
10.0%).
International performance
The International division has been restructured during the year
with the closure of operations in Egypt and Qatar and the sale of
the business in Oman after the year end. The Group has withdrawn
from the spot hire business in the UAE with the consequent
relocation and disposal of assets; the remaining Oil and Gas
activities in the region are currently operating at break even.
Good growth prospects exist with our key clients in the Oil and Gas
sector, although discussions are continuing with a potential
purchaser. Pre-exceptional revenue in the division grew by 9.7%
reflecting mobilisation on existing and new oil and gas contracts,
offset in part by the closure of other operations. The region
incurred an EBITA loss of GBP5.6m for the year (2014: GBP4.3m).
Exceptional items
Exceptional items totalled GBP17.1m before taxation (2014:
GBP4.7m) as the Group has continued its activities to restructure
the UK depot network and exit from the Middle East. A summary of
costs treated as exceptional is provided below; full details are
provided in note 3 to the Financial Statements:
-- the programme to reconfigure and upgrade the UK depot network
has accelerated during the year; cost associated with this
principally relate to onerous lease provisions and amount to
GBP6.4m;
-- in the International division significant asset disposals
have been undertaken as part of the strategy to exit the core hire
business and close other business activities; losses on disposal of
assets amount to GBP6.2m, and,
-- restructuring and redundancy costs in the UK and Middle East,
finance costs and professional fees amount to GBP4.5m.
Interest and hedging
Net interest expense totalled GBP5.4m (2014: GBP7.4m). GBP0.3m
of this cost related to the cancellation of the international debt
facility and has consequently been treated as exceptional finance
costs.
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 40% of the applicable margin. During the
year, the margin payable on the outstanding debt fluctuated between
1.8% and 3.25% dependent on the Group's performance in relation to
leverage and the weighting of lending between receivables and plant
and machinery. The effective average margin in the year was 2.6%.
The current applicable margins are 2.0% on receivables and 2.5% on
plant and machinery.
The Group utilises interest rate hedges to manage fluctuations
in LIBOR. At the year end, hedges with a notional value of GBP70m
(2014: GBP55m) were in place, equivalent to approximately 66.4% of
net debt outstanding. The fair value of these hedges was a
liability of GBP0.4m at year end and they have varying maturity
dates to March 2018. The incremental interest cost arising from
these hedges amounted to GBP0.3m during the year (2014:
GBP0.5m).
Taxation
The Group's income statement shows a tax charge for the year of
GBP1.9m (2014: GBP3.0m), an effective tax rate of 90.4% (2014:
42.9%). The main reason for the high effective tax rate is that
certain of the losses and exceptional charges in the International
Division are not subject to tax. The effective rate of tax on
adjusted profit before tax amounts to 24.7% (2014: 28.8%).
Tax paid in the year ending 31 March 2015 amounted to GBP5.2m
(2014: GBP5.8m).
Shares, earnings per share and dividends
At 31 March 2015, 521,869,253 shares were outstanding, of which
6,252,907 were held in the Employee Benefits Trust.
Basic earnings per share before amortisation and exceptional
items was 3.23 pence (2014: 2.05 pence). After amortisation and
exceptional items, earnings per share was 0.04 pence (2014: 0.78
pence).
The Board remains committed to the payment of dividends when
prudent to do so. Subsequent to the year-end, it has recommended a
final dividend of 0.40 pence per share (2014: 0.35 pence) which
represents a total cash cost of approximately GBP2.1m. If approved
by shareholders, this gives a total dividend for the year of 0.70
pence per share (2014: 0.61 pence). It is proposed that the
dividend will be paid on 12 August 2015 to shareholders on the
register at 12 June 2015.
Capital expenditure and disposals
Total capital expenditure during the year amounted to GBP87.7m,
of which GBP68.6m (2014: GBP65.8m) related to equipment for hire.
The Group's property network has been redeveloped and optimised
during the year and consequently capital expenditure related to
land and buildings increased to GBP13.7m (2014: GBP6.2m). The
balance principally relates to investment in IT.
The hire fleet is continually reviewed to optimise asset
holdings for the target markets and to recycle capital employed in
low-utilisation assets. Disposal proceeds of GBP39.8m (2014:
GBP18.7m) increased during the year as a result of the sale of
equipment held in the Middle East. Reflective of the increased sale
proceeds, net capital expenditure reduced to GBP48.5m (2014:
GBP57.8m). At 31 March 2015, the average age of the fleet was
estimated at 4.0 years (2014: 3.9 years).
Cash flow and net debt
Net cash flow generated from operating activities amounted to
GBP3.0m in the year (2014: GBP4.8m). Free cash flow (before
dividends and financing activities) was an outflow of GBP16.2m
(2014: GBP8.2m) primarily as a result of increased investment in
the depot network, combined with a working capital outflow from
trade receivables, as the Group now has a greater proportion of
revenue from larger clients with longer payment terms. This outflow
has been offset by a GBP21.1m increase in asset disposal proceeds,
primarily from the International division. Dividend payments in the
year amounted to GBP3.4m (2014: GBP2.9m).
Accordingly, net debt has increased from GBP84.4m at the
beginning of the year to GBP105.3m at 31 March 2015, a GBP20.9m
increase. Similarly, net debt to EBITDA has increased to 1.45x
(2014: 1.23x). Net debt as a percentage of hire fleet NBV has
increased to 49.6% from 37.4% as at 31 March 2014.
Balance sheet
Net assets at 31 March 2015 totalled GBP234.0m (2014:
GBP239.3m).
Net assets per share amount to 44.8 pence (48.5 pence based on
tangible assets). Net property, plant and equipment was GBP253.3m
at 31 March 2015, of which equipment for hire represents
approximately 83.8%. Net debt/net property, plant and equipment of
0.42x at 31 March 2015 (2014: 0.33x) underlines the strong asset
backing within the business.
Gross trade receivables totalled GBP110.4m at 31 March 2015
(2014: GBP91.6m). Bad debt and credit note provisions totalled
GBP6.3m at 31 March 2015 (2014: GBP5.3m), equivalent to 5.7% of the
debtor book (2014: 5.8%). The increase in total provisions reflects
the marginal increase in debtor weeks (calculated on a count-back
basis) to 10.4 weeks at year end compared to 9.2 weeks at 31 March
2014.
Capital structure and treasury
Speedy's long-term funding is provided through a combination of
shareholders' funds and bank debt.
In September 2014 the Group refinanced its GBP220m credit
facility with a GBP180m asset-based revolving credit facility which
expires in September 2019.
At 31 March 2015 the gross amount utilised under the facility
was GBP122.9m. The undrawn available amount, based on eligible
receivables and plant and machinery under the facility, amounted to
GBP55m. The average gross borrowings under both facilities during
the year ended 31 March 2015 was GBP129.7m. The current facility
includes quarterly leverage and fixed charge cover covenant tests.
The Group was compliant with these tests throughout the year.
The Group will continue to closely monitor cash generation,
whilst balancing the need to invest in the quality of its UK hire
fleet and depot network.
Return on capital
The return on capital (based on EBITA before exceptional items)
generated by the Group's operations excluding its International
division was 10.8%, up from 9.5% in FY2014. The losses generated by
the International division resulted in a consolidated return on
capital employed for the Group of 8.0% (2014: 7.0%).
Russell Down
Group Finance Director
Statement of Directors' Responsibilities Pursuant to Disclosure
and Transparency Rules 4.1.12
The Directors confirm that, to the best of their knowledge:
(i) 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; and
(ii) the Management 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
Jan Astrand Non-Executive Chairman
Mark Rogerson Chief Executive Officer
Russell Down Group Finance Director
Chris Masters Senior Independent Director
James Morley 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 has considered
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 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 is reviewed at Board
level.
The principal risks and some of the mitigating controls in place
are summarised below.
Risk Potential impact Strategy for mitigation
--------------------- ------------------------------------- ---------------------------------------
Safety, health Serious injury or death
and environment Speedy operates, transports The Group is recognised for
and provides for rental a its industry-leading position
wide range of machinery. Without on promoting enhanced health
rigorous safety regimes in and safety compliance, together
place there is a risk of injury with a commitment to product
or death to employees, customers innovation. The Group's systems,
or members of the public. health and safety, and environment
Environmental hazard teams measure and promote
The provision of such machinery employee understanding of,
includes handling, transport and compliance with, procedures
and dispensing of substances, that affect safety and protection
including fuel, that are hazardous of the environment. Customer
to the environment in the account managers are responsible
event of spillage. for addressing service and
safety issues.
--------------------- ------------------------------------- ---------------------------------------
Revenue and Competitive pressure
trading performance The Hire market is fragmented The Group monitors its competitive
and highly competitive. Whilst position closely, to ensure
we continue to develop strategic that it is able to offer
relationships with strategic its customers the best solution
and major customers, it is for their requirements. The
important that we continue Group provides a wide breadth
to develop our local and regional of offerings, supplemented
accounts. by its partnered services
Reliance on high value customers division for specialist equipment.
As revenue from strategic The Group monitors the performance
customers grows there is a of its major accounts against
higher risk to future revenues forecasts, strength of client
should preferred supplier future order books and individual
status be lost when such agreements expectations with a view
may individually represent to ensuring that the opportunities
a material element of our for the Group are maximised.
revenues. Market share is measured
and competitors' activities
are reported on and reacted
to where appropriate. The
Group's integrated services
offering further mitigates
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.
--------------------- ------------------------------------- ---------------------------------------
Risk Potential impact Strategy for mitigation
------------ ----------------------------------------- -------------------------------------
Partner and Supply chain
supplier Speedy procures assets and A dedicated and experienced
service services from a wide range Supply Chain function is
levels of sources, both UK and internationally in place to negotiate all
based. Within the supply chain contracts and maximise the
there are risks of non-fulfilment. Group's commercial position.
Partner reputation Supplier accreditations are
A significant amount of our recorded and tracked centrally
revenues come from our partnered through a supplier portal
services offering, where the where relevant and set service
contact point with the customer related KPIs are included
is through a third party partner. within standard contract
Speedy's ability to supply terms.
assets with the expected customer Regular reviews take place
service is therefore reliant with all supply chain partners.
on the performance of others
with the risk that if this
is not effectively managed,
the reputation of Speedy and
hence future revenues may
be adversely impacted.
------------ ----------------------------------------- -------------------------------------
Operating Fixed cost base
costs Speedy has a fixed cost base The Group regularly reviews
including people, transport remuneration packages and
and property. When revenues aims to offer competitive
fluctuate this can have a reward and benefit packages,
disproportionate effect on including appropriate short
the Group's financial results. and long-term incentive schemes.
The Group has a purchasing
policy in place to negotiate
supply contracts that, wherever
possible, determine fixed
prices for a period of time.
In most cases, multiple sources
exist for each 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 undertake routine maintenance
works and manage the estate
in terms of rental costs.
We operate a dedicated fleet
of commercial vehicles that
are maintained new or nearly
new to support our brand
image. Fuel is purchased
through agreements controlled
by our supply chain processes.
------------ ----------------------------------------- -------------------------------------
Risk Potential impact Strategy for mitigation
--------------- ---------------------------------------- --------------------------------------
Information IT system availability
technology Speedy is increasingly reliant Annual and more medium-term
and data on IT systems to support our planning processes are in
integrity business activities. Interruption place; these create future
in availability or a failure visibility as to the level
to innovate will reduce current and type of IT support required
and future trading opportunities for the business strategy.
respectively. Business units create business
Data accuracy cases and projects for a
The quality of data held has formal Investment Committee
a direct impact on to agree spend where necessary
how both strategic and operational and then implement any new/upgraded
decisions are made. If decisions systems.
are made based on erroneous The introduction of improved
data there could be a direct data reporting with dedicated
impact on the performance analysts within the business
of the Group. provides improved business
Data security information and better data
Speedy, as with any organisation, quality and consistency.
holds data that is commercially Mitigations for IT data recovery
sensitive and in some cases are described below under
personal in nature. There Business continuity as these
is a risk that disclosure risks are linked.
or loss of such data is detrimental Speedy's IT systems are protected
to the business, either as against external unauthorised
a reduction in competitive access. All mobile devices
advantage or as a breach of have access restrictions
law or regulation. and, where appropriate, data
encryption is applied.
--------------- ---------------------------------------- --------------------------------------
End to end Process efficiencies
processes Speedy has grown successfully We have a Programme Management
over many years, both through Office to review our processes,
acquisition and organic growth. align these to our IT systems
This, combined with our specialist and improve efficiency whilst
divisions structure, could simultaneously enhancing
result in processes that do our customers' experience.
not adequately support our
customers' needs.
--------------- ---------------------------------------- --------------------------------------
Economic Economy
vulnerability Any changes in construction/industrial The Group monitors and assesses
market conditions could affect market conditions by reference
activity levels and consequently to a number of external sources,
the prices that the Group together with internal data
can charge for its services. which reports customer, sector,
Any reduction in Government product and geographical
expenditure which is not offset demand. The Group assesses
by an increase in private changes in both Government
sector expenditure could adversely and private sector spending
affect the Group. as part of its wider market
analysis. The impact on the
Group of any such change
is assessed as part of the
ongoing financial and operational
budgeting and forecasting
process. Our strategy is
to develop a differentiated
proposition in our 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.
--------------- ---------------------------------------- --------------------------------------
Risk Potential impact Strategy for mitigation
------------ -------------------------------------- -------------------------------------
Corporate Operational empowerment and
culture culture A concise guide to the Group's
We operate an internal structure business ethics, including
that is aligned around separate our Code of Conduct, was
specialisms to better serve prepared and issued to all
our customer base. Each division employees during the year;
is challenged with managing this is called "Do Things
their business and delivering Right, Doing the Right Thing"..
results with a degree of empowerment A copy is is also provided
within overriding Group policies. to new employees.
All Speedy employees are
expected to abide by our
Code of Conduct, which forms
a condition of employment.
Training is provided, via
a combination of online and
face-to-face means, to all
management grades in areas
such as compliance with the
Bribery Act 2010 and relevant
competition laws. Group policies
are in place that both support
and oversee key aspects of
our operation, in particular
the areas of treasury, purchasing,
asset management, accounting
and debt management. Review
and exception reporting activities
are in place, which are designed
to ensure that individuals
cannot override risk mitigation
procedures which have been
put in place by
the Group.
All of the above are supported
by a well-publicised and
robust whistle-blowing policy
with rigorous follow up of
all concerns raised.
------------ -------------------------------------- -------------------------------------
Business Business interruption
continuity Any significant interruption Preventative controls, back-up
to Speedy's operational capability, and recovery procedures are
whether IT systems, physical in place for key IT systems.
restrictions or personnel Changes to Group systems
based, could adversely impact are considered as part of
current and future trading wider change management programmes
as customers could readily and implemented in phases
migrate to competitors. wherever possible. The Group
This could range from short-term has critical incident plans
impact in processing of invoices in place for all its central
that would affect cashflows UK and International sites.
to the loss of a major site Insurance cover is reviewed
such as our National Distribution at regular intervals to ensure
Centre. appropriate coverage in the
event of a business continuity
issue.
------------ -------------------------------------- -------------------------------------
Risk Potential impact Strategy for mitigation
--------------- ----------------------------------- -----------------------------------
Asset holding Asset range and availability
and integrity Speedy's business model relies A better understanding of
on providing assets for hire customer expectation of the
to customers, when they want relative timescales for delivery
to hire them. In order to across our range of assets
maximise profitability and links directly into our network
ROCE, demand is balanced with and asset optimisation plans,
the requirement to hold a enabling us to reduce holdings
range of assets that is optimally of less time-critical assets
utilised. by centralising the storage
locations.
The introduction of an Asset
Information Cell will manage
integrity of records and
assist operational effectiveness
and decision making.
--------------- ----------------------------------- -----------------------------------
Consolidated Income Statement
For the year ended 31 March 2015
Year ended 31 March Year ended 31 March
2015 2014
------------------------------------------ ------------------------------------------
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
Total revenue 378.5 11.0 389.5 350.3 - 350.3
Less: share of
jointly
controlled
entity's
revenue (3.5) - (3.5) (0.6) - (0.6)
---------- ---------- ---------- ---------- ---------- ----------
Revenue 2 375.0 11.0 386.0 349.7 - 349.7
Cost of sales (157.9) (17.2) (175.1) (135.1) - (135.1)
---------- ---------- ---------- ---------- ---------- ----------
Gross profit 217.1 (6.2) 210.9 214.6 - 214.6
Distribution
costs (35.1) - (35.1) (35.7) - (35.7)
Administrative
expenses (158.3) (10.6) (168.9) (159.7) (4.7) (164.4)
Analysis of
operating
profit
Operating
profit before
amortisation
and
exceptional
items 26.4 - 26.4 22.1 - 22.1
Amortisation (2.7) - (2.7) (2.9) - (2.9)
Exceptional
costs 3 - (16.8) (16.8) - (4.7) (4.7)
----------------- ---- ---------------- --------------- ----------- --------------- --------------- ------------
Operating
profit 23.7 (16.8) 6.9 19.2 (4.7) 14.5
Share of
results of
jointly
controlled
entity 0.6 - 0.6 (0.1) - (0.1)
---------- ---------- ---------- ---------- ---------- ----------
Profit from
operations 24.3 (16.8) 7.5 19.1 (4.7) 14.4
Financial
expense (5.1) (0.3) (5.4) (7.4) - (7.4)
---------- ---------- ---------- ---------- ---------- ----------
Profit before
taxation 19.2 (17.1) 2.1 11.7 (4.7) 7.0
Taxation 4 (5.2) 3.3 (1.9) (3.8) 0.8 (3.0)
---------- ---------- ---------- ---------- ---------- ----------
Profit for the
financial year 14.0 (13.8) 0.2 7.9 (3.9) 4.0
Earnings per
share
- Basic (pence) 5 0.04 0.78
- Diluted
(pence) 5 0.04 0.76
Non-GAAP
performance
measures
EBITDA before
exceptional
items 7 72.7 68.7
Profit before
tax,
amortisation
and
exceptional
items 7 21.9 14.6
Adjusted
earnings per
share
(pence) 5 3.23 2.05
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2015
2015 2014
GBPm GBPm
Profit for the financial year 0.2 4.0
---------- ----------
Other comprehensive (loss)/ income that
may be reclassified subsequently to
the Income Statement:
- Effective portion of change in fair
value of cash flow hedges (0.3) 0.5
- Exchange difference on translation
of foreign operations (2.7) 1.4
---------- ----------
Other comprehensive (loss)/ income,
net of tax (3.0) 1.9
---------- ----------
Total comprehensive (loss)/ income for
the financial year (2.8) 5.9
Consolidated Balance Sheet
At 31 March 2015
Note 31 March 31 March
2015 2014
GBPm GBPm
ASSETS
Non-current assets
Intangible assets 48.6 51.3
Investment in jointly controlled
entity 5.2 4.0
Property, plant and equipment
Hire equipment 8 212.3 225.5
Non-hire equipment 8 41.0 29.6
Deferred tax assets 1.1 1.1
---------- ----------
308.2 311.5
---------- ----------
Current assets
Inventories 9.5 11.8
Trade and other receivables 114.5 93.4
Assets held for sale 9 1.9 -
Cash 0.2 2.6
---------- ----------
126.1 107.8
---------- ----------
Total assets 434.3 419.3
---------- ----------
LIABILITIES
Current liabilities
Borrowings 10 (1.6) -
Other financial liabilities (0.4) (0.1)
Trade and other payables (80.2) (76.8)
Provisions (2.9) (1.1)
Liabilities held for sale 9 (0.1) -
Current tax liabilities (0.8) (2.7)
---------- ----------
(86.0) (80.7)
---------- ----------
Non-current liabilities
Borrowings 10 (103.9) (87.0)
Trade and other payables (0.7) (1.2)
Provisions (1.3) (1.3)
Deferred tax liabilities (8.4) (9.8)
---------- ----------
(114.3) (99.3)
---------- ----------
Total liabilities (200.3) (180.0)
---------- ----------
Net assets 234.0 239.3
EQUITY
Share capital 26.1 26.0
Share premium 191.0 190.9
Merger reserve 1.0 1.0
Hedging reserve (0.6) (0.4)
Translation reserve (1.9) 0.8
Retained earnings 18.4 21.0
---------- ----------
Total equity 234.0 239.3
Consolidated Statement of Changes in Equity
For the year ended 31 March 2015
Share Share Merger Hedging Translation Retained Total
capital premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April 2013 25.9 190.5 1.0 (0.9) (0.6) 19.0 234.9
Total comprehensive income - - - 0.5 1.4 4.0 5.9
Dividends - - - - - (2.9) (2.9)
Tax on items taken directly
to equity - - - - - 0.2 0.2
Equity-settled share-based
payments - - - - - 0.7 0.7
Issue of shares under
the Sharesave Scheme 0.1 0.4 - - - - 0.5
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March 2014 26.0 190.9 1.0 (0.4) 0.8 21.0 239.3
Total comprehensive loss - - - (0.3) (2.7) 0.2 (2.8)
Dividends - - - - - (3.4) (3.4)
Tax on items taken directly
to equity - - - 0.1 - (0.1) -
Equity-settled share-based
payments - - - - - 0.7 0.7
Issue of shares under
the Sharesave Scheme 0.1 0.1 - - - - 0.2
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March 2015 26.1 191.0 1.0 (0.6) (1.9) 18.4 234.0
Consolidated Cash Flow Statement
For the year ended 31 March 2015
Note 2015 2014
GBPm GBPm
Cash generated from operations before
changes in hire fleet 43.0 63.8
Purchase of hire equipment (68.6) (65.8)
Proceeds from sale of hire equipment 38.9 18.7
---------- ----------
Cash generated from operations 13.3 16.7
Interest paid (5.1) (6.1)
Tax paid (5.2) (5.8)
---------- ----------
Net cash flow from operating activities 3.0 4.8
Cash flow to investing activities
Purchase of non-hire property, plant
and equipment (19.1) (10.7)
Disposal of other property, plant and
equipment 0.9 -
Investment in jointly controlled entity (1.0) (2.3)
---------- ----------
Net cash flow to investing activities (19.2) (13.0)
---------- ----------
Net cash flow before financing activities (16.2) (8.2)
---------- ----------
Cash flow from financing activities
Proceeds from asset-based revolving
credit facility 15.5 13.1
Proceeds from the issue of Sharesave
Scheme shares 0.1 0.5
Dividends paid (3.4) (2.9)
---------- ----------
Net cash flow from financing activities 12.2 10.7
---------- ----------
(Decrease)/increase in cash and cash
equivalents (4.0) 2.5
Cash at the start of the financial year 2.6 0.1
---------- ----------
Net (overdraft)/cash at the end of the
financial year (1.4) 2.6
Analysis of cash and cash equivalents
Cash 10 0.2 2.6
Bank overdraft 10 (1.6) -
---------- ----------
(1.4) 2.6
Reconciliation of net debt
Note 2015 2014
GBPm GBPm
Net (decrease)/increase in cash and
cash equivalents (4.0) 2.5
Increase in debt 10 (15.5) (13.1)
Amortisation of loan costs 10 (1.4) (1.5)
---------- ----------
Change in net debt during the year (20.9) (12.1)
---------- ----------
Net debt at 1 April (84.4) (72.3)
---------- ----------
Net debt at 31 March (105.3) (84.4)
Notes to the Financial Statements
1 Basis of preparation
The consolidated Financial Statements have been prepared and
approved by the Directors in accordance with International
Financial Reporting Standards as adopted by the European Union
('IFRS'), on 11 May 2015.
Basis of preparation
The Financial Statements are prepared on the historical cost
basis except that derivative financial instruments are held at fair
value. The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
Financial Statements.
The Group signed a GBP180m asset-based revolving credit facility
('the Facility') in September 2014, which matures in September 2019
and has no prior scheduled repayment requirements.
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 for
the period to September 2016 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 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.
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 Annual
Report and 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 2015 or 31 March 2014 but is derived from
those accounts. Statutory accounts for Speedy Hire Plc for the year
ended 31 March 2014 have been delivered to the Registrar of
Companies, and those for the year ended 31 March 2015 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, Chase House, 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' (CODM). UK & Ireland Asset Services delivers
asset management, with tailored services and a continued commitment
to relationship management. International Asset Services delivers
major overseas projects and facilities management contracts by
providing a managed site support service.
For the year ended 31 March 2015
UK & Ireland International Corporate
Asset Services Asset Services items Total
GBPm GBPm GBPm GBPm
Revenue before exceptional items 351.3 23.7 - 375.0
Exceptional revenue (note 3) - 11.0 - 11.0
---------- ---------- ---------- ----------
Total Revenue 351.3 34.7 - 386.0
Segment result:
EBITDA before exceptional costs 78.0 (0.5) (4.8) 72.7
Depreciation (40.6) (5.1) (0.6) (46.3)
---------- ---------- ---------- ----------
Operating profit/ (loss) before
amortisation and exceptional
items 37.4 (5.6) (5.4) 26.4
Amortisation (2.7) - - (2.7)
Exceptional costs (7.2) (8.4) (1.2) (16.8)
---------- ---------- ---------- ----------
Operating profit/(loss) 27.5 (14.0) (6.6) 6.9
Share of results of jointly controlled
entity - 0.6 - 0.6
---------- ---------- ---------- ----------
Trading profit/(loss) 27.5 (13.4) (6.6) 7.5
Financial expense (5.1)
Exceptional financial expense (0.3)
----------
Profit before tax 2.1
Taxation (1.9)
----------
Profit for the financial year 0.2
Intangible assets 48.6 - - 48.6
Investment in jointly controlled
entity - 5.2 - 5.2
Hire equipment 203.7 8.6 - 212.3
Non-hire equipment 37.8 3.2 - 41.0
Taxation assets - - 1.1 1.1
Current assets 102.7 22.4 0.8 125.9
Cash - - 0.2 0.2
---------- ---------- ---------- ----------
Total assets 392.8 39.4 2.1 434.3
Liabilities (71.3) (8.3) (6.0) (85.6)
Bank overdraft - - (1.6) (1.6)
Borrowings - - (103.9) (103.9)
Taxation liabilities - - (9.2) (9.2)
---------- ---------- ---------- ----------
Total liabilities (71.3) (8.3) (120.7) (200.3)
Capital expenditure 83.1 4.6 - 87.7
For the year ended 31 March 2014
UK & Ireland International Corporate
Asset Services Asset Services items Total
GBPm GBPm GBPm GBPm
Revenue 328.1 21.6 - 349.7
Segment result:
EBITDA before exceptional costs 73.3 0.8 (5.4) 68.7
Depreciation (40.6) (5.1) (0.9) (46.6)
---------- ---------- ---------- ----------
Operating profit/ (loss) before
amortisation and exceptional
items 32.7 (4.3) (6.3) 22.1
Amortisation (2.9) - - (2.9)
Exceptional restructuring costs (2.4) (0.7) (1.6) (4.7)
---------- ---------- ---------- ----------
Operating profit/(loss) 27.4 (5.0) (7.9) 14.5
Share of results of jointly controlled
entity - (0.1) - (0.1)
---------- ---------- ---------- ----------
Trading profit/(loss) 27.4 (5.1) (7.9) 14.4
Financial expense (7.4)
----------
Profit before tax 7.0
Taxation (3.0)
----------
Profit for the financial year 4.0
Intangible assets 51.3 - - 51.3
Investment in jointly controlled
entity - 4.0 - 4.0
Hire equipment 192.3 33.2 - 225.5
Non-hire equipment 28.7 0.9 - 29.6
Taxation assets - - 1.1 1.1
Current assets 93.9 10.7 0.6 105.2
Cash - - 2.6 2.6
---------- ---------- ---------- ----------
Total assets 366.2 48.8 4.3 419.3
Liabilities (68.8) (8.7) (3.0) (80.5)
Borrowings - - (87.0) (87.0)
Taxation liabilities - - (12.5) (12.5)
---------- ---------- ---------- ----------
Total liabilities (68.8) (8.7) (102.5) (180.0)
Capital expenditure 66.7 9.8 - 76.5
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 which
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.
Year ended 31 March Year ended 31 March
2015 2014
---------------------------------------- ----------------------------------------
Total Total
Revenues assets Revenues assets
GBPm GBPm GBPm GBPm
UK 345.5 385.3 322.9 361.4
Ireland 5.8 9.6 5.2 9.1
Other countries 34.7 39.4 21.6 48.8
---------- ---------- ---------- ----------
386.0 434.3 349.7 419.3
Major customers
No one customer represents more than 10% of revenue, reported
profit or combined assets of all reporting segments.
2 Exceptional items
For the year ended 31 March 2015
During the year, exceptional administrative costs have been
incurred as the business has rolled out a new network structure,
changed management and restructured the International
operations.
Exceptional costs of GBP6.4m were incurred in the period as the
programme to reconfigure the depot network continued. These costs
include provisions for onerous leases which remain as a result of
the changes and costs related to implementing the change
programme.
Costs relating to changing management totalled GBP2.2m,
including redundancy costs and related expenditure incurred in the
International division. A further GBP2.0m has been incurred in
respect of professional and legal costs associated with disposal
activity.
In addition, a further GBP6.2m has been incurred in respect of
losses on the disposal of assets in the International division,
related to the withdrawal from the General and Spot Hire
markets.
Exceptional financial expenses of GBP0.3m relate to costs
incurred in cancelling debt facilities during the period.
For the year ended 31 March 2014
In the UK & Ireland, exceptional costs of GBP2.4m were
incurred as the business rolled out its new network structure. The
most significant element of the cost (GBP1.9m) related to
provisions for onerous leases which remained as a result of the
changes. The remaining cost of GBP0.5m was as a result of costs
incurred for employee changes as part of the programme.
Within the International division, exceptional costs of GBP0.7m
were incurred. GBP0.4m arose as a result of costs and write-offs
associated with the closure of the Egypt operations. The remaining
GBP0.3m was incurred as a direct result of management changes
within the business.
Exceptional items which have not been allocated to the operating
divisions total GBP1.6m. This comprised the costs of investigating
and resolving the accounting irregularities within the
International Division (GBP1.0m), further details of this are
included in the 31 March 2014 Annual Report, the professional fees
incurred in entering into the Kazakhstan Joint Venture (GBP0.3m)
and costs incurred as a result of changes to Executive Directors in
the year (GBP0.3m).
4 Taxation
2015 2014
GBPm GBPm
Tax charged in the income statement
Current tax
UK corporation tax on profits for the period at
21% (2014: 23%) 4.2 5.1
Adjustment in respect of prior years (0.7) (0.2)
---------- ----------
Total current tax 3.5 4.9
Deferred tax
UK deferred tax at 20% (2014: 21%) (1.2) 0.3
Adjustment in respect of prior years - (1.4)
Impact of rate change (0.4) (0.8)
---------- ----------
Total deferred tax (1.6) (1.9)
---------- ----------
Total tax charge 1.9 3.0
Tax credited in equity
Current tax
Current tax on equity-settled share-based payments (0.2) (0.2)
---------- ----------
Total current tax (0.2) (0.2)
Deferred tax
Net loss on revaluation of cash flow hedges 0.1 0.1
Deferred tax on equity-settled share-based payments 0.1 (0.1)
---------- ----------
Total deferred tax credited in equity 0.2 -
---------- ----------
Total tax credited to equity - (0.2)
The tax charge in the income statement for the year is higher
(2014: higher) than the standard rate of corporation tax in the UK
of 21% (2014: 23%) and is explained as follows:
2015 2014
GBPm GBPm
Profit before tax 2.1 7.0
---------- ----------
Accounting profit multiplied by the standard rate
of corporation tax at 21% (2014: 23%) 0.4 1.6
Expenses not deductible for tax purposes 1.3 1.5
Non-taxable income (0.8) (0.4)
Share-based payments 0.2 -
Unrecognised tax losses 0.3 0.5
Overseas tax losses arising not subject to tax 1.8 2.2
Share of joint venture income already taxed (0.2) -
Adjustment to deferred taxation relating to future
changes in corporation tax rates (0.4) (0.8)
Adjustment to tax in respect of prior years (0.7) (1.6)
---------- ----------
Tax charge for the year reported in the income
statement 1.9 3.0
Tax credited in equity
Current tax credit (0.2) (0.2)
Deferred tax charge 0.2 -
---------- ----------
Tax credited to equity - (0.2)
Reductions in the UK corporation tax rate from 23% to 21%
(effective from 1 April 2014) and from 21% to 20% (effective from 1
April 2015) were substantively enacted on 2 July 2013. This will
reduce the Company's future current tax charge accordingly. The
deferred tax liability at 31 March 2015 has been calculated based
on the rate of 20% substantively enacted at the balance sheet
date.
The adjusted tax rate of 24.7% (2014: 28.8%) is higher than the
standard rate of UK corporation tax in the UK of 21% (2014: 23%)
primarily due to expenses which are not deductible for tax
purposes.
5 Earnings per share
The calculation of basic earnings per share is based on the
profit for the financial year of GBP0.2m (2014: GBP4.0m) and the
weighted average number of 5 pence ordinary shares in issue, and is
calculated as follows:
2015 2014
Profit (GBPm)
Profit for the year after tax - basic earnings 0.2 4.0
Intangible amortisation charge (after tax) 2.5 2.5
Exceptional items (after tax) 13.8 3.9
---------- ----------
Adjusted earnings (after tax) 16.5 10.4
Weighted average number of shares in issue (m)
At the beginning of the year 510.2 507.7
Exercise of share options 1.0 2.5
---------- ----------
At the end of the year - basic number of shares 511.2 510.2
Share options 3.6 4.6
Employee share scheme 1.4 2.4
---------- ----------
At the end of the year - diluted number of shares 516.2 517.2
Earnings per share (pence)
Basic earnings per share 0.04 0.78
Amortisation 0.47 0.50
Exceptional costs 2.72 0.77
---------- ----------
Adjusted earnings per share 3.23 2.05
Basic earnings per share 0.04 0.78
Share options - (0.01)
Employee share scheme - (0.01)
---------- ----------
Diluted profit per share 0.04 0.76
Adjusted earnings per share 3.23 2.05
Employee share schemes (0.01) (0.02)
---------- ----------
Adjusted diluted earnings per share 3.22 2.03
Total number of shares outstanding at 31 March 2015 amounted to
521,869,253, including 6,252,907 shares held in the Employee
Benefit Trust, which are excluded in calculating earnings per
share.
6 Dividends
The aggregate amount of dividend comprises:
2015 2014
GBPm GBPm
2013 final dividend (0.31 pence on 517.9m shares) - 1.6
2014 interim dividend (0.26 pence on 518.3m shares) - 1.3
2014 final dividend (0.35 pence on 520.4m shares) 1.8 -
2015 interim dividend (0.30 pence on 520.5m share) 1.6 -
---------- ----------
3.4 2.9
Subsequent to the end of the year and not included in the
results for the year, the Directors recommended a final dividend of
0.40 pence (2014: 0.35 pence) per share, bringing the total amount
payable in respect of the 2015 year to 0.70 pence (2014: 0.61
pence), to be paid on 12 August 2015 to shareholders on the
register on 12 June 2015.
The Employee Benefit Trust established to hold shares for the
Performance Plan and Co-Investment Plan has waived its right to the
interim and final proposed dividends. At 31 March 2015, the Trust
held 6,252,907 ordinary shares (2014: 7,319,967).
7 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.
2015 2014
GBPm GBPm
Operating profit 6.9 14.5
Add back: amortisation 2.7 2.9
Add back: exceptional costs 16.8 4.7
---------- ----------
Operating profit before amortisation and exceptional
costs 26.4 22.1
Add back: depreciation 46.3 46.6
---------- ----------
EBITDA before exceptional costs 72.7 68.7
Profit before tax 2.1 7.0
Add back: amortisation 2.7 2.9
Add back: exceptional costs 16.8 4.7
Add back: exceptional finance expense 0.3 -
---------- ----------
Profit before tax, amortisation and exceptional
costs 21.9 14.6
8 Property, plant and equipment
Land and Hire
buildings Equipment Other Total
GBPm GBPm GBPm GBPm
Cost
At 1 April 2013 33.8 375.7 63.5 473.0
Foreign exchange (0.1) (0.4) - (0.5)
Additions 6.2 64.8 4.5 75.5
Disposals (0.1) (33.1) (0.5) (33.7)
Transfers to inventory - (20.4) - (20.4)
---------- ---------- ---------- ----------
At 31 March 2014 39.8 386.6 67.5 493.9
Foreign exchange 0.2 (0.6) - (0.4)
Additions 13.7 66.9 5.3 85.9
Disposals (1.4) (47.9) (0.2) (49.5)
Transfers to inventory - (40.7) - (40.7)
---------- ---------- ---------- ----------
At 31 March 2015 52.3 364.3 72.6 489.2
Depreciation
At 1 April 2013 19.8 161.5 50.0 231.3
Foreign exchange - (0.1) - (0.1)
Charged in year 2.6 38.2 5.8 46.6
Disposals - (24.1) (0.5) (24.6)
Transfers to inventory - (14.4) - (14.4)
---------- ---------- ---------- ----------
At 31 March 2014 22.4 161.1 55.3 238.8
Foreign exchange (0.1) (0.4) - (0.5)
Charged in year 2.9 39.3 4.1 46.3
Disposals (0.7) (31.3) - (32.0)
Transfers to inventory - (16.7) - (16.7)
---------- ---------- ---------- ----------
At 31 March 2015 24.5 152.0 59.4 235.9
Net book value
At 31 March 2015 27.8 212.3 13.2 253.3
At 31 March 2014 17.4 225.5 12.2 255.1
At 31 March 2013 14.0 214.2 13.5 241.7
The net book value of land and buildings comprises freehold
properties of GBPnil (2014: GBPnil), and short leasehold properties
of GBP27.8m (2014: GBP17.4m).
At 31 March 2015, the net carrying amount of leased hire
equipment was GBPnil (2014: GBPnil).
9 Assets held for sale
The assets and liabilities held within the International
division in relation to its Oman entity have been classified as
held for sale following the commitment from management on 2 March
2015 to sell the shares in the business. The sale completed in
April 2015.
No impairment loss has been recognised on the re-measurement of
the assets and liabilities because, as at the year-end it was
expected the carrying value of the assets and liabilities would be
equal to their fair value less costs to sell.
At 31 March 2015 the asset held for sale comprised the following
assets and liabilities.
2015 2014
GBPm GBPm
Assets classified as held for sale
Property, plant and equipment 1.5 -
Trade receivables and other receivables 0.4 -
---------- ----------
1.9 -
Liabilities classified as held for sale
Accruals 0.1 -
---------- ----------
0.1 -
10 Borrowings
2015 2014
GBPm GBPm
Current borrowings
Bank overdraft 1.6 -
Non-current borrowings
Maturing between two and five years
- ABL Facility 103.9 86.1
- International Facility - 0.9
---------- ----------
Total non-current borrowings 103.9 87.0
---------- ----------
Total borrowings 105.5 87.0
Less: cash (0.2) (2.6)
---------- ----------
Net debt 105.3 84.4
In September 2014, the Group refinanced its asset based
revolving credit facility and cancelled the International revolving
credit facility. The refinanced GBP180m asset based revolving
credit facility is sub divided into:
(i) 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.
(ii) An asset based revolving credit facility of up to GBP175m,
based on the Group's hire equipment and trade receivables balance.
The undrawn availability of this facility as at 31 March 2015 was
GBP62.4m (2014: GBP68.4m) 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
September 2019, with no prior scheduled repayment requirements.
Interest on the refinanced facility is calculated by reference
to the London Inter Bank Offered Rate applicable to the period
drawn, plus a margin of 170 to 275 basis points (prior to
refinancing: 225 to 400 basis points), depending on leverage and on
the components of the borrowing base. During the period, the
effective margin was 2.60% (2014: 2.82%).
The facility is secured by fixed and floating charges over the
UK & Ireland assets.
Analysis of consolidated net debt
At 31 March Non-cash Cash flow 31 March
2014 movement 2015
GBPm GBPm GBPm GBPm
Cash at bank and in hand 2.6 - (2.4) 0.2
Bank overdrafts - - (1.6) (1.6)
Borrowings (87.0) (1.4) (15.5) (103.9)
---------- ---------- ---------- ----------
(84.4) (1.4) (19.5) (105.3)
11 Notes to the cash flow statement - cash from operating activities
2015 2014
GBPm GBPm
Profit before tax 2.1 7.0
Financial expense 5.4 7.4
Amortisation 2.7 2.9
Depreciation 46.3 46.6
Share of (profit)/loss of equity accounted investments (0.6) 0.1
Loss/ (profit) on disposal of hire equipment 1.8 (3.7)
Profit on disposal of other property, plant and
equipment - 0.2
Decrease in inventories 2.3 1.1
Increase in net assets held for sale (1.8) -
Increase in trade and other receivables (21.1) (10.3)
Increase in trade and other payables 3.4 11.2
Movement in provisions 1.8 0.6
Equity-settled share-based payments 0.7 0.7
---------- ----------
Cash from operating activities 43.0 63.8
12 Post-balance sheet events
Sale of shares in Speedy International Asset Services LLC
On 20 April 2015 the group received proceeds for the disposal of
its entire shareholding in Speedy International Assets Services
LLC, a company incorporated in Oman. The net assets of GBP1.8m are
held within assets held for sale on the balance sheet at the
year-end representing the fair value less costs to sell of the
business.
Dividends
The Directors have proposed a dividend of 0.40 pence per share
as a final dividend in respect of the year ended 31 March 2015. No
charge in respect of the proposed dividend has been made in the
income statement for the year, and there were no tax consequences.
The total amount payable if the dividend is approved at the AGM is
as follows:
2015 2014
GBPm GBPm
0.40 pence (2014: 0.35 pence) on 521.9m (2014: 520.4m)
ordinary shares 2.1 1.8
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GGUWWAUPAUAP
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