Speedy Hire Plc

("Speedy Hire", "the Company" or "the Group")

19 June 2024

Audited results for the year ended 31 March 2024        

Transforming to drive sustainable growth

Speedy Hire Plc, the UK and Ireland's leading provider of tools, specialist equipment and services, announces its audited preliminary results for the year ended 31 March 2024.

Financial Highlights

·      Revenue of £421.5m, down 4.3% against a challenging market backdrop;

o  Resilient UK Hire performance, down 1.7% versus FY2023

§ Significant contract wins and renewals including a promising pipeline of further opportunities

§ Positive performance with our National customers, mitigating softening with Regional customers

o  Service revenue (excl. Fuel) down 1.6% versus FY2023

§ Strong performance in Customer Solutions

§ The decline in the wholesale price of fuel impacted our pass through revenues, however margin improved

·      Adjusted EBITDA¹ was down 6.8% versus PY but margin held broadly flat, the result of tight cost control and pricing discipline mitigating the revenue shortfall

·      Adjusted PBT¹ down 52.1%;

o  Impacted by high operational gearing

o  Increased interest costs

o  Normalised performance of our Kazakhstan JV, following a record FY2023.

·      EPS³ impacted by the decline in profit before tax

·      Significant free cash flow⁴ generation of £23.5m, more than double FY2023 (£10.6m).

·      Net debt⁵ at £101.3m, increased by £8.9m, due to the acquisition of Green Power Hire Limited ('GPH'), funded in part by £23.5m of free cash flow⁴; leverage⁶ of 1.5x

·      Proposed final dividend of 1.80pps, resulting in full year dividend of 2.60pps (FY2023: 2.60pps)

Executing well on our Velocity transformation and growth strategy

·      Continued investment in transformation of the business despite challenging market

·      Investing in specialist business growth engines, supporting clean energy transition and commercial sustainability for our customers:

o  £2.5m in hydrogen electric powered access with NiftyLift

o  Acquisition of GPH, trading well with a strong pipeline of future opportunities

o  Formation of Speedy Hydrogen Solutions Limited ('SHS') joint venture, showcasing the first H-Power Generator at our Speedy Hire Live Expo in March

·      Launched our low cost-to-serve online home delivery tool hire proposition on DIY.com and Trade-point.co.uk

·      Advanced our People First initiatives and invested £7.2m into base pay for our people

Outlook

·      The new financial year has started well and is marginally ahead of last year

·      Overall performance in line with Board expectations

·      Operational efficiencies and supply chain optimisation expected to deliver further benefit in FY2025

·      The Group expects a second half weighting to its revenues and profits as we mobilise the significant contracts won in FY2024

·    Contract wins and extensions, alongside key sector opportunities, give us confidence for FY2025.

Commenting on the results Dan Evans, Chief Executive, said:

"Speedy delivered a resilient financial performance, making positive strategic progress over the year, despite the challenging macro-economic environment.

We continue to improve our customer proposition, investing in technology and AI capabilities, sustainable products and our people, to position the Group strongly for profitable growth. I am particularly pleased with our progress building the foundations for growth, executing the 'Enable' phase of our Velocity strategy, which is focused on transformation and operational efficiency.

The new financial year has started well with performance in line with Board expectations and I am pleased that since the year end, we have also secured further contract wins and renewals with key customers."

Enquiries:

Speedy Hire Plc                                                                       Tel: 01942 720 000

Dan Evans, Chief Executive

Paul Rayner, Chief Financial Officer

MHP                                                                                         Tel: 0203 128 8540

Oliver Hughes

Katie Hunt

Notes:

Explanatory notes:

The Group believes that the non-GAAP performance measures presented in this announcement provide valuable additional information

for readers. Further details can be found in notes 7, 9 and 13.

¹ See note 9.

² Revised, see note 17.

³ See note 7.

⁴ Free cash flow: Net cash flow before movement in loan balances and returns to shareholders.

⁵ See note 13. This metric excludes lease liabilities.

⁶ Leverage: Net debt⁵ covered by EBITDA¹. This metric excludes the impact of IFRS 16.

⁷ From underlying performance; excludes non-underlying items.

⁸ Return on Capital Employed: Profit before tax, interest, amortisation and non-underlying items divided by the average capital employed (where capital employed equals total equity and net debt³), for the last 12 months. See note 9.

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 Hire is the UK's leading provider of tools and equipment hire services to a wide range of customers in the construction, infrastructure, industrial, and support services markets, as well as to local trade, and retail.  The Group provides complementary support services through the provision of training, asset management and compliance services. Speedy is certified nationally to ISO50001, ISO9001, ISO14001, ISO17020, ISO27001 and ISO45001. The Group operates from c.180 fixed sites and selected B&Q stores across the UK and Ireland together with a number of on-site facilities at client locations and through a joint venture in Kazakhstan.

Overview

The results we are reporting today demonstrate the resilience of our business model during a challenging macro-economic climate faced by many businesses at this time. We remain a strong business with a clear multi-year strategy for sustainable, profitable growth, with a robust balance sheet which will enable us to future-proof the business by investing in the innovative, market-leading sustainable products that our customers increasingly demand.

Results

Group revenue decreased by 4.3% to £421.5m (FY2023: £440.6m), in part due to a softening in Regional customer markets, resulting in lower adjusted profit¹ of £14.7m (FY2023: £30.7²), impacted by high operational gearing. Despite this, we have continued to invest in our people and made a significant commitment to transformation as part of our Velocity strategy launched in July 2023.

During the year we secured over £40.0m of annualised revenue from new multi-year contracts and subsequent to the year-end we have secured further renewals and extensions. These wins and renewals are a reflection of our market leading customer service proposition. The contracts won in FY2024 have taken longer to mobilise, due to contract specific delays and we anticipate these new contract revenues taking full effect during the course of FY2025. In all cases we are working closely with our customers to streamline the process for taking on and mobilising new work, to minimise future delays. Our partnership with B&Q was changed from an in-store concession model to a digital model with the launch of tool hire on both DIY.com and Trade-point.co.uk, providing in-store digital home delivery tool hire from c.300 B&Q stores nationwide to a wide-ranging Trade and Retail customer base.

The Group continue to operate internationally through a joint venture in Kazakhstan. The share of profits decreased to £2.9m (FY2023: £6.6m) following a reduction in scale of the significant temporary power contract that gave rise to a record performance in FY2023.

We have invested c.£42.5m in our hire fleet, using data and analytics to target products that our customers need. 63% of that investment was in sustainable products to meet the increasing demand from customers for such items.

We have an industry-leading ESG roadmap whereby we have committed to becoming a net zero carbon business by 2040, ten years ahead of the Government's target.  Our ESG strategy 'The Decade to Deliver' is accelerating the reduction of our carbon footprint, while enabling our customers to make choices that reduce their environmental impact. By increasing our percentage of sustainable products for hire, as well as our offering of sustainability related services, we are providing customers the tools they need to achieve this.

Dividend

The Board is recommending payment of a final dividend of 1.80 pence per share making a total dividend of 2.60 pence per share which is at the same level as last year. Whilst this dividend is outside our policy guideline given the weaker profit performance in FY2024, the strong cash generating performance in the business and the confidence in the future based on the recent contract wins supports this proposal. The Board also recognises the importance of regular returns to shareholders.

Board and people

Having been appointed as Interim CFO on 1 November 2022, Paul Rayner was appointed permanently as Chief Financial Officer on 1 July 2023. This appointment followed a comprehensive recruitment process supported by external consultants. Paul is a Fellow of The Institute of Chartered Accountants with over 25 years' experience in senior financial roles including interim and permanent roles respectively on the main board of FTSE listed companies Avon Protection Plc and Chemring Group Plc. In addition we have taken steps as part of our transformation programme to add additional bench strength to the senior management team as we roll out the Velocity Strategy.

During the year we made a number of changes to our reward strategy for all of our people recognising labour market challenges and the need to support our front-line workforce. This investment in our people is an important leg of our strategy going forward.

On behalf of the Board and personally, I would like to take this opportunity to thank each and every one of my colleagues for their continuing commitment and dedication to supporting the business.

Future

We have a resilient business with an ambitious sustainable growth strategy which has been embedded into our business by our experienced senior management team. As the Velocity strategy rolls out, it puts us in a strong position to meet customer needs and accelerate sustainable profitable growth despite any macro-economic challenges. Having committed to this multi-year strategy, the Board looks forward with confidence as we start to deliver the benefits and capitalise on opportunities in the year ahead.

David Shearer

Chairman

Chief Executive's statement

Results

I present our results for the financial year ended 31 March 2024, that demonstrate a resilient performance despite cost inflation and the ongoing macro-economic uncertainty, in common with many businesses and industries across the UK, Ireland and internationally.

Revenue declined by 4.3% to £421.5m (FY2023: £440.6m). Adjusted profit before tax​¹ decreased to £14.7m (FY2023: £30.7m​²). Adjusted earnings per share³ were 2.35 pence (FY2023: 4.96 pence²).

Our Hire business performed well despite challenging trading conditions and the performance of our seasonal products, which were negatively impacted by the winter period. Revenues were down 1.7% versus FY2023, and similarly, our Services business, excluding fuel, was down 1.6%. We are the only UK hire company to provide a fully managed fuel service and we proactively promote low-emission HVO fuel which now accounts for c.30% of our fuel sales. Impacted by the decline in wholesale price in the year, our fuel revenues were down 22.7%, year on year. In line with our Velocity strategy, we have made in year improvements to our testing, inspection and certification business, Lloyds British, promoting greater access to our diverse customer base, investing in their digital capabilities and restructuring the business to support their growth potential.

Within our National customer segment which accounts for 53% of revenue, our end markets remain positive, and there is a continued strong pipeline of major infrastructure, construction and energy projects. These include investment in hydrogen power infrastructure, major highways projects, nuclear new build and decommissioning work, National Water infrastructure and the continued investment in the rail network including the Government's commitment to HS2 and the proposed Northern Network. Our largest customers servicing these major projects continue to demand commercially sustainable solutions to complex problems, provided through our innovative products and specialist expertise. As a result, revenues from our National customers have increased by 0.2% year-on-year, however revenues from our Regional customers have softened, declining 6.0%. Trade and Retail revenue has remained flat year-on-year as we transition to our digital model.

During the year the Group has monitored and implemented price increases to offset inflationary cost pressures on both overheads and new equipment purchases. Our pricing strategy gives customers the very best value for the high-quality products and services we deliver.

We have taken action to improve asset controls, with digital technology being trialled to further assist in the control for accurate counting of hire equipment. Itemised asset utilisation was 52.4% (FY2023: 54.4%) reflecting the targeted investment in the Group's hire fleet and improved availability, supported by our work with PEAK AI.

Our joint venture in Kazakhstan has performed as expected, albeit lower than the record performance achieved in FY2023. The share of profit decreased to £2.9m (FY2023: £6.6m).

Strategy and operational review

At our Capital Markets Day in July 2023, we launched our five-year 'Velocity' strategy, designed to accelerate sustainable profitable growth. During FY2024 we have made significant progress in delivering the 'Enable' stage of the five-year transformation programme that underpins the strategy, through creating foundational improvements across technology and operational efficiency. Whilst there is still work to do, we are pleased with progress made in the year and look forward to the continued successful execution of the transformation programme.

Market overview

Whilst the macro-economic environment remains uncertain, our customer base and the sectors we serve are well diversified, and we are suitably positioned to capitalise on significant growth projected in major infrastructure projects and programmes.

National customers

We serve approximately 61,000 customers in the UK and Ireland, including 83 of the UK's 100 largest contractors*. Our customers include major infrastructure contractors working across Highways, Energy, Harbours and Airports, as well as frameworks in Water and Sewerage (AMP7/8), Roads (National Highways), Rail (CP6/7) and Broadband and Telecommunications. We continue to see revenue growth from opportunities with both new and existing National customers.

During the year we won and extended major contracts with key National customers. These contracts represent attractive growth opportunities but have taken longer to mobilise, due to contract specific delays. Therefore, we anticipate the benefit taking effect during FY2025.

Regional customers

We serve thousands of Regional customers through our Regional Account Management team located across the UK. These customers operate in Non-residential Construction, Infrastructure, RMI ('Repair Maintenance Improvement') and support services that include Facilities Management, Manufacturing and Production, Environmental Services, Engineering Services, Defence and Media. Many customers operating in these areas have been negatively impacted by the challenging economic environment, high interest rates and increased material costs, and as a result our revenues from this customer segment reduced by 6% on the prior year through a softening of volume sales, offset marginally by increased rates.

Trade and Retail

We support our Trade and Retail customers through our national network of Service Centres, by phone, online through our click and collect service, and through an in-store digital model in B&Q stores nationally, delivering a unique 4-hour delivery service in the process. During Q4 we successfully evolved our Trade and Retail business in partnership with B&Q. Our tool hire model is now an in-store digital offering in B&Q's c.300-strong store network nationally, so that customers can now hire our products seamlessly as part of their wider B&Q transaction at the B&Q tills, as well as online through B&Q's website diy.com and trade-point.co.uk for home delivery and collection. The Trade and Retail consumer market remains an attractive opportunity for the business. As an already established hire provider in the trade market, the industry-first partnership model with B&Q will penetrate a new consumer market opportunity. This low cost-to-serve combination of in-store and online hire, combined with our existing digital propositions and Service Centre network, will accelerate our strategic aim of increasing share within the Trade and Retail markets.

Operational efficiency

Operational efficiency continues to be a key part of our Velocity strategy and cost control remains key to delivering long-term sustainable profitable growth. The significant macro-inflationary pressures continue to impact our business, in common with most UK businesses at present. To mitigate the effects of this, we continue to control costs and focus on initiatives to improve operational efficiency and the effective management of our supply chain. By controlling costs, we will enable continued investment in the transformational aspect of our Velocity strategy, supporting the delivery of our stated targets of sustainable revenue and profitable growth. Our industry-leading utilisation of Artificial Intelligence ('AI') through our strategic collaboration with PEAK supports decision making through enhanced management information that links our Service Centre network with our logistics and asset intelligence. AI assists in predicting which products to invest in, which will further enhance the optimisation of our asset holdings, and through dynamic forecasting enable us to continue to achieve strong asset utilisation rates.

By activating these technologies, we can further ensure that we have the right products, in the right place, at the right time, in the most efficient way to meet customer demand. This is key to delivering for our customers on their key priorities of quality, availability, speed and receiving a first-class customer experience. The use of technology, combined with our service-led people culture makes this differentiating value proposition possible for our customers, enabling them to reduce time and cost on site. We will be digitally, and data driven to ensure our Service Centre network, our logistics and our assets are optimised to continue playing a vital role in our customers success.

Throughout FY2024, we continued to strengthen our partnership with PEAK AI, providing further automation and insight around the optimisation of our fleet holding, replenishment and informing our pricing strategy. These developments contributed to a 1.8pp improvement in utilisation rates across targeted assets. In FY2025 we will be deploying a further suite of initiatives, including a predictive capital expenditure model and a new price optimisation solution to dynamically adjust our pricing offered to customers. In addition, we will also launch PEAK's Audiences app, utilising the latest machine learning technology, to drive greater insight and understanding of our customer behaviour and segmentation to better inform our sales and marketing strategies.

Creating a modern workplace is a strategic pillar in achieving our growth ambitions, and fully integrating our ERP ('Enterprise Resource Planning') system is a foundational building block to enable this. Throughout the year we have further developed our longstanding collaboration with Microsoft by upgrading our ERP system to the cloud-based Microsoft Dynamics 365 Platform. The Platform is simplifying some of our key business processes and significantly improving the user experience, resulting in increased productivity through efficiency, and in the process improving the customer experience.  Further to this, we invested in our digital capabilities surrounding our hire fleet management. We have developed a stock counting application to simplify and standardise the asset count process, which will be used in our periodic asset counts.

We continue to develop our future state property programme, to modernise our network with energy efficient, low carbon facilities that optimise efficiencies and reduce operational costs whilst creating better working environments for our people and a market-leading experience for our customers. During the year we rationalised and consolidated a number of older, less efficient properties into new Service Centres, including in Hull, Southampton and a new flagship centre servicing the Capital; London Gateway, a state-of-the-art 33,000 sq ft facility located in East London.

ESG

We are committed to becoming a net zero business by 2040; ten years ahead of the UK Government's target. Our carbon emissions** in the UK and Ireland have reduced by 21.4% from 361,361.42 tonnes in FY2023, to 283,947.52 tonnes in FY2024. This reduction has been achieved through the continued procurement and organic generation of renewable energy, investment into a greener property network, a more efficient vehicle fleet and the use of HVO fuel in our larger vehicles.

To minimise our carbon footprint, we actively procure more commercially sustainable assets into our hire fleet including those with solar, hybrid, electric and hydrogen technology. During FY2024 we invested £42.5m in our hire fleet, of which 63% was on commercially sustainable equipment, in the process bringing a world-first hydrogen powered access lift to market. We have a target to ensure that eco products account for 70% of our itemised equipment fleet by 2027.

During the year we acquired sustainable power solutions specialist, Green Power Hire Limited ('GPH') to supply Battery Storage Units ('BSU') to the UK rental market, enabling customers to achieve both financial and environmental savings compared to alternative systems available. We continue to experience strong demand from our current and potential new customers for eco products and sustainable power solutions and are seeing an increasing number of tenders specifically requiring BSUs. The acquisition has performed in line with our business plan and since purchase we have procured further units to enlarge our battery storage unit fleet and satisfy customer demand.

We also entered into a Joint Venture with AFC Energy plc, a leading provider of hydrogen powered generator technologies to form 'Speedy Hydrogen Solutions Limited'. This collaboration is providing the UK construction and temporary power market with AFC Energy's sustainable, zero emission temporary power solutions designed specifically for off-grid power. Through the JV we are providing an exclusive full-service hire model for an initial three-year period and are working with our National customers on their demand needs, signifying the growing demand for zero emission power solutions.

Further initiatives to reduce our carbon emissions include investing in modernising our Service Centre network. We installed building management systems into a number of trial locations with a view to reducing our energy consumption. During FY2024 these locations, on average, have achieved an annualised energy consumption reduction of 63.5%, representing c.£40k of efficiency per property.

We were proud to be awarded Gold Standard by EcoVadis, a leading provider of business sustainability ratings, which puts Speedy Hire in the top 5% of sustainable businesses globally. We were also named as a European Climate Leader for 2023 by the Financial Times and attained the RoSPA Presidents Award for achieving the RoSPA Gold standard for ten consecutive years.

People

We recognise that our people are the most important component of our business, and our ambition is to become a Times Top 100 place to work. Our People First strategy prioritises personal and professional development, wellbeing and equality, diversity and inclusion within the workplace. During the year we have invested in our people to provide fair pay, reward and development opportunities. We have introduced flexible working, and improved systems and processes to make it easier for them to work in their everyday roles.

We have introduced a series of initiatives to enhance our colleagues' experience and encourage loyalty, in the process reducing our voluntary attrition rate to record low levels. Examples include an investment of £7.2m in base pay for people working at our lower grade levels, improved colleague wellbeing through the roll-out of Speedy Hire Work Life Balance to over a third of our colleagues and implementing the UN's Women Empowerment Principles to encourage more women into the business.

We are also preparing for the future by upskilling existing colleagues and attracting new talent to ensure we have the right levels of capability in future skills needed to achieve our Velocity strategy.

In addition, our Emerging Talent Development Board is a group of 11 from our brightest 'emerging talent' colleagues in our business. They are charged with developing themselves personally and professionally while working alongside the Executive Team in contributing to the strategic plans and delivering on complex business projects with female Chief Executive and Chief Financial Officers in position.

I would like to take this opportunity to thank all our colleagues for their resilience and relentless dedication to the business, whilst continuing to deliver a first-class service to our customers.

Outlook

We continue to make good progress with implementation of our Velocity strategy which is embedding a solid foundation for growth opportunities in the medium to long-term which will benefit our customers and people whilst enhancing shareholder returns.

The new financial year has started well with performance in line with Board expectations. After the year end, we have continued positive momentum, securing further contract wins and renewals.

As we implement a more efficient and streamlined service through enhanced AI driven data and system digitisation, keep close control of costs, and maximise growth potential through our strong visible pipeline in our core end markets, we look forward to delivering on these opportunities in the year ahead.

Dan Evans

Chief Executive

* Source - Glenigan Limited

** Scope 1, 2 & 3

Financial review

Our financial results for FY2024 demonstrate resilience in the face of cost inflation and well-documented macroeconomic uncertainty. Throughout all, we have maintained our commitment to our people, excellent customer service and progression of our Velocity strategy.

Revenue from our National customers was up marginally year on year, whilst our Regional customers traded 6% down in FY2024. We have observed some encouraging signs in the new financial year to date, with total revenues in line with expectations.

The contract wins achieved in FY2024 are encouraging, with the business securing additional annual turnover in excess of £40.0m across multi-year agreements with new and existing customers. This new business is underpinned by disciplined pricing and is a clear demonstration of the attractiveness of Speedy's customer proposition. Since the year end, further new contracts and extensions have been secured. As with prior periods, the Group expects a second half weighting to its revenues and profits in FY2025 as we mobilise these significant new contracts.

Our services business has performed well, although its pass-through revenues were impacted by the effect of a decrease in wholesale fuel prices. Margins were maintained in this segment.

Free cash flow⁴ is a key metric for the Group and in the year this increased to £23.5m (FY2023: £10.6m) following active working capital management.

In October 2023, the Group acquired the entire issued share capital of sustainable power solutions specialist, Green Power Hire Limited ('GPH') for an enterprise value of £20.2m. The acquisition has resulted in goodwill and other intangible assets of £10.9m. Since its acquisition, the GPH business has contributed £2.0m of revenue and £1.6m of EBITDA¹ to the Group, which includes acquisition synergies of c.£0.8m. This trading performance is continuing to build as we target rate increases and invest further in the fleet to satisfy growing customer demand. More detail on the acquisition is provided in note 3.

In addition to the acquisition, in November 2023 Speedy Hire formed a joint venture, Speedy Hydrogen Solutions Limited ('SHS'), with our partner, AFC Energy Plc.

Net debt⁵ has increased to £101.3m as at 31 March 2024 representing leverage⁶ of 1.5 times (FY2023: £92.4m, 1.3x leverage). This follows the acquisition of GPH, which was funded from the Group's existing debt facilities.

Group financial performance

Total revenue for the year ended 31 March 2024 decreased by 4.3% versus FY2023 to £421.5m. Revenue (excluding fuel) decreased by 1.9% to £381.4m and revenue from fuel was £40.1m (FY2023: £51.9m). Hire rate increases and performance with our National customers have mitigated some of the softening of revenues with our Regional customers.

Gross profit⁷ was £230.0m (FY2023: £239.4m), a decrease of 3.9%. The gross margin⁷ increased to 54.6% (FY2023: 54.3%), reflecting the lower proportion of pass-through fuel sales and our commitment to pricing discipline.

The share of profit from the joint venture in Kazakhstan returned to expected levels at £2.9m (FY2023: £6.6m), following a reduction in scale of the significant temporary power contract that gave rise to a record performance in FY2023.

Adjusted EBITDA¹ decreased by 6.8% to £96.8m (FY2023: £103.9²), however margins were held broadly flat at 23%.

Adjusted profit before taxation¹ decreased to £14.7m (FY2023: £30.7m²), due to the decline in revenue and the impact of operational gearing on the business. Higher interest costs and reduced performance from our joint venture also contributed to the year on year decrease. ROCE⁸ declined to 9.9%, impacted by lower profits in the year.

The Group incurred non-underlying items before taxation of £9.0m (FY2023: £28.5m), further detail on which is given below.

After taxation, amortisation and non-underlying items, the Group made a profit of £2.7m, compared to £1.2m in FY2023.

Revenue and margin analysis

The Group generates revenue through two categories, Hire and Services.

Hire revenue decreased by 1.7% compared to FY2023, reflecting rate increases mitigating a softening in Regional customer demand. A number of new and renewed contracts with key customers were secured during the year, reflecting the strength of our market position. The Group continued to implement rate increases during FY2024, following on from the programme established in FY2023, to offset the effects of cost inflation on both overheads and new equipment purchases. The rate increases take effect as framework agreements and as hire contracts are renewed, resulting in the benefits of those increases building throughout the year.

Services revenues decreased by 7.8% in the year. Excluding fuel, services revenues were down by 1.6%, affected by general market conditions. Fuel revenue decreased 22.7% compared to FY2023 as a result of the decline in the wholesale price of both diesel and hydrogenated vegetable oil ('HVO'), which does not impact gross margin. Included within Services is £19.8m of revenue from our Lloyds British business (FY2023: £19.6m).

Gross margin⁷ increased from 54.3% to 54.6%, resulting from a decrease in lower margin fuel sales, increase in hire rates and a lower depreciation charge offsetting lower utilisation. Hire margin⁷ decreased to 78.5% (FY2023: 78.8%) due to pricing increases offset by lower utilisation as a result of softening in customer demand. Asset utilisation on itemised assets for the year decreased to 52.4%, with non-itemised asset utilisation reported at 49.4%. Services margin of 19.4% was impacted positively by the reduction in lower margin fuel revenue (FY2023: 18.9%).

Overheads

The overheads as disclosed in the income statement can be further analysed as follows:

Disciplined cost management, with savings realised from our operational and management restructuring in the last financial year, has meant that we have maintained our underlying cost base even whilst implementing significant salary increases (£7.2m annual investment) for our people and absorbing inflationary pressures. As a result, underlying overheads were 0.2% lower at £202.3m (FY2023: £202.7m). To ensure we can continue to invest in our five-year Velocity growth strategy, we are continuing to control costs through initiatives to improve operational efficiency and targeted supply chain improvements.

Total headcount decreased 2.4% in the year, and average headcount 3.3%, as a result of depot optimisation and restructuring projects.

Non-underlying items

In October 2023, the Group acquired GPH, advancing the Group's sustainable offering to customers and evidencing the Velocity strategy in action. In addition to the acquisition of GPH, the Group also incurred costs in respect of the formation of SHS, the joint venture with AFC Energy Plc. The costs incurred relate primarily to professional and other supporting fees, amounting to £1.4m in total.

An external review of the entire depot network was commissioned in the year, to assess the condition of each site and the dilapidations that may be payable under the respective lease agreements. This is the first review of its kind undertaken by the Group, and it is not expected that a similar exercise of this scale will be required going forwards. Fees in relation to this review total £0.5m.

The Group incurred further, non-underlying, restructuring costs associated with moving towards its target operating model. At the year end, the Group had exited all B&Q concessions, and our products and services are now available for digital hire in-store within B&Q and Tradepoint locations as well as on the respective websites. In evolving our partnership with B&Q and moving to a more digitally focussed model, the Group incurred £2.7m of non-recurring losses.

The remainder of the restructuring costs included costs associated with depot optimisation and restructuring projects of £1.2m.

The investment in implementing our Velocity strategy and executing our transformation programme represents a significant cost to the business and resulted in an incremental cost of £3.2m to the business in the year.

Detail on the non-underlying items which occurred in FY2023 can be found in note 4.

Interest and banking facilities

The Group's net interest on borrowings increased to £7.7m (FY2023: £5.1m) reflecting higher average gross borrowings throughout the year following the acquisition of GPH and the impact of increased interest rates. Interest on lease liabilities increased to £5.0m (FY2023: £3.5m). The Group's main bank facilities expire in July 2026, with the additional uncommitted accordion of £220m remaining in place through to this date. The facility continues to give the Group headroom with which to support organic growth and acquisition opportunities.

The facility includes quarterly leverage⁶ and fixed charge cover covenant tests which are only applied if headroom in the facility falls below £18.0m. The Group tested and maintained significant headroom against these covenants in the year.

Borrowings under the facility are priced based on SONIA plus a variable margin, while any unutilised commitment is charged at 35% of the applicable margin. During the year, the margin payable on the outstanding debt fluctuated between 1.55% and 2.25% dependent on the weighting of the asset base on which borrowings are based between receivables and plant and machinery. The effective average margin in the year was 1.92% (FY2023: 1.84%).

The Group utilises interest rate hedges to manage fluctuations in SONIA. The fair value of these hedges was £0.4m at 31 March 2024 (FY2023: £1.0m). The hedges have varying maturity dates, notional amounts and rates and provide the Group with mitigation against interest rate rises. Over the next 12 months c.50% of the expected net debt is hedged. As of May 2024, 73.3% of the Group's net debt is hedged with a weighted average hedge rate of 4.1%, before bank margin.

Taxation

The Group seeks to protect its reputation as a responsible taxpayer and adopts an appropriate attitude to arranging its tax affairs, aiming to ensure effective, sustainable and active management of tax matters in support of business performance.

The tax charge for the year was £2.4m (FY2023: £0.6m), with an effective tax rate of 47.1% (FY2023: 33.3%). Adjusting for the impact of non-underlying items, the effective tax rate for FY2024 was 29.3% (FY2023: 20.2%).

Shares and earnings per share

At 31 March 2024, 516,983,637 Speedy Hire Plc ordinary shares were in issue (FY2023: 516,983,637), of which 4,106,820 were held in the Employee Benefit Trust (FY2023: 4,162,452) and 55,146,281 were held in Treasury (FY2023: 55,146,281).

Adjusted earnings per share³ was 2.35 pence (FY2023: 4.96 pence²). Basic earnings per share³ was 0.59 pence (FY2023: 0.25 pence), with both years impacted by non-underlying items in their respective years.

Balance sheet

The Group has maintained a strong balance sheet and is well placed to continue to pursue financial and strategic objectives despite the macroeconomic uncertainties.

Total capital expenditure during the year amounted to £51.5m (FY2023: £60.9m).

We have continued to invest in the hire fleet with additions of £42.5m in FY2024, of which 63% relate to carbon efficient ECO products in line with our target to be a net zero business by 2040 and the increasing relevance of sustainable solutions, including customers mandating zero site emissions in some instances. The acquisition of GPH also contributed a further £11.8m of hire fleet additions in the year. Itemised asset utilisation has decreased to 52.4% (FY2023: 54.4%), with non-itemised asset utilisation 49.4%.

Expenditure on non-hire property, plant and equipment of £9.0m (FY2023: £8.8m) represents the investment in our properties and IT capabilities.

Proceeds from disposal of hire equipment were £16.1m (FY2023: £17.4m). The decrease was driven primarily by an exercise to dispose of certain underutilised assets, resulting in a lower condition of assets being taken to auction attracting lower proceeds.

The Group expects to invest further in its hire fleet to support revenue growth in FY2025, with budgeted capex of c.£55.0m to support growth aspirations.

Net property, plant and equipment (excluding IFRS 16 right of use assets) was £233.1m as at 31 March 2024 (FY2023: £237.7m), of which equipment for hire represents 90.3% (FY2023: 87.5%). 

Following the write-off of assets in FY2023, the Group has implemented additional controls including enhanced senior engagement and involvement, weekly perpetual counts and full counts in September and March. The asset count performed in March 2024 did not identify any significant issues and indicated that the improved controls were operating effectively.

Intangible assets increased to £39.7m (FY2023: £25.0m), following the acquisition of GPH.

Right of use assets of £97.3m (FY2023: £83.2m) and corresponding lease liabilities of £97.6m (FY2023: £86.1m) have increased in part due to new vehicle leases to support the move to a lower carbon fleet as well as property lease renewals, offset in part by depot closures and consolidations. 

Continued focus on reducing overdue debt coupled with strong cash collections have resulted in gross trade receivables of £97.3m at 31 March 2024 (FY2023: £102.2m). Bad debt and credit note provisions were £3.4m as at 31 March 2024 (FY2023: £4.3m), equivalent to 3.5% of gross trade receivables (FY2023: 4.2%). In setting the provisions the Directors have given specific consideration to the impact of macroeconomic uncertainties. Whilst the Group has not experienced a significant worsening of debt collections or debt write-offs to 31 March 2024, we continue to monitor the situation closely.

Debtor days as at 31 March 2024 were 64 (FY2023: 61 days). Trade payables as at 31 March 2024 were £44.9m (FY2023: £39.1m). Creditor days were 40 days (FY2023: 37 days).

Cash flow and net debt

Cash generated from operations (before changes in hire fleet) for the year was £94.2m (FY2023: 88.7m), representing 97.3% (FY2023: 85.5%) conversion from EBITDA, reflecting the continued focus on working capital improvements. Free cash flow⁴ increased to £23.5m (FY2023: £10.6m), as cash disciplines across the business were reinforced.

Net debt⁵ increased by £8.9m from £92.4m at the beginning of the year to £101.3m at 31 March 2024, reflecting £20.2m for the acquisition of GPH funded from the Group's existing facilities. Excluding the impact of IFRS 16, leverage⁶ increased to 1.5 times (FY2023: 1.3 times).

The Group retained substantial headroom within its committed bank facility throughout the year, with cash and undrawn facility availability of £56.7m as at 31 March 2024 (FY2023: £83.5m). 

Dividend

The Board has proposed a final dividend for FY2024 of 1.80 pence per share (FY2023: 1.80 pence per share) to be paid on 20 September 2024 to shareholders on the register on 9 August 2024.

The cash cost of this dividend is expected to be c.£8m. This takes the total dividend for FY2024 to 2.60 pence per share (FY2023: 2.60 pence per share), following an interim dividend of 0.80 pence per share (FY2023: 0.80 pence per share).

The dividend proposed represents a temporary deviation a from the Group's capital allocation policy, however is in line with our Velocity strategy of enhancing shareholder returns and is affordable, twice covered by free cash flow in the year.

Capital allocation policy

The Board intends to continue to invest in the business in order to grow revenue, profit and ROCE. This investment is expected to include capital expenditure within existing operations, as well as value enhancing acquisitions that fit with the Group's strategy and are returns accretive.

The Board's objective is to maximise long-term shareholder returns through a disciplined deployment of cash generated, and it has adopted the following capital allocation policy in support of this as highlighted as part of our Velocity strategy:

-           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;

-           Gearing and treatment of excess capital: the Board is committed to maintaining an efficient balance sheet. The Board has adopted a target leverage in the region of 1.5x through the business cycle, although it is prepared to move outside this if circumstances warrant; 

-           Acquisitions: the Board will continue to explore value enhancing acquisition opportunities in markets adjacent to, and consistent with, its Velocity strategy.

The Board continues to believe that a strong balance sheet is appropriate for the current stage of the cycle to allow the Company to take full advantage of opportunities that arise

Paul Rayner

Chief Financial Officer

The responsibility statement below has been prepared in connection with the Group's full annual report for the year ended 31 March 2024.  Certain parts of that report are not included within this announcement.

We confirm that to the best of our knowledge:

·      the Financial Statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;

·      the Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

The names and functions of the Directors of the Company are:

Name                            Function

David Shearer               Chairman

Dan Evans                    Chief Executive

Paul Rayner                  Chief Financial Officer

David Garman               Senior Independent Director

Rob Barclay                  Non-Executive Director

Rhian Bartlett                Non-Executive Director

Shatish Dasani              Non-Executive Director

Carol Kavanagh             Non-Executive Director

The business strategy in place and the nature of the industry in which we operate expose the Group to a number of risks. As part of the risk management framework in place, the Board considers on an ongoing basis the nature, likelihood and potential impact of each of the significant risks it is willing to accept in achieving its strategic objectives.

The Board has delegated to the Audit & Risk Committee responsibility for reviewing the effectiveness of the Group's internal controls, including the systems established to identify, assess, manage and monitor risks. These systems, which ensure that risk is managed at the appropriate level within the business, can only mitigate risk rather than eliminate it completely.

Direct ownership of risk management within the Group lies with the senior management teams. Each individual is responsible for maintaining a risk register for their area of the business and is required to update this on a regular basis. The key items are consolidated into a Group risk register which has been used by the Board to carry out a robust assessment of the principal risks.

The principal risks and mitigating controls in place are summarised below.

Viability Statement

The Group operates an annual planning process which includes assessment of a five-year strategic plan and a one year financial budget. These plans, and risks to their achievement, are reviewed by the Board as part of its strategy review and budget approval processes. The Board has considered the impact of the principal risks to the Group's business model, performance, solvency and liquidity as set out above.

The Directors have determined that three years is an appropriate period over which to assess the Viability Statement. The strategic plan is based on detailed action plans developed by the Group with specific initiatives and accountabilities. There is inherently less certainty in the projections for years four and five. The Group has a £180m asset-based finance facility which runs through to July 2026. The strategic plan assumes financing facilities will be available on an appropriate basis to meet the Group's capital investment and acquisition strategies for the entire viability period.

In making this statement, the Directors have considered the resilience of the Group, its current position, the principal risks facing the business in distressed but reasonable scenarios and the effectiveness of any mitigating actions. These scenarios include lower than anticipated levels of revenue across the Group, while maintaining a broadly consistent cost base. Mitigations applied in these downturn scenarios include a reduction in planned capital expenditure and discretionary spend.

Based on this assessment, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period to March 2027.

The going concern statement and further information can be found in note 1 of the financial statements.

for the year ended 31 March 2024

¹ Detail on non-underlying items is provided in note 4.

² See notes 9 and 17.

³ See notes 7 and 17.

All activities in each year presented related to continuing operations.

The accompanying notes form part of the financial statements.

for the year ended 31 March 2024

as at 31 March 2024                                                                                         

¹ See note 17.

for the year ended 31 March 2024

for the year ended 31 March 2024

1          Summary of material accounting policy information

Speedy Hire Plc is a public limited company listed on the London Stock Exchange, incorporated and domiciled in the United Kingdom. The consolidated Financial Statements of the Company for the year ended 31 March 2024 comprise the Company and its subsidiaries (together referred to as the 'Group'). 

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these Consolidated Financial Statements.

Basis of preparation

These financial statements have been prepared under the historical cost convention, with the exception of derivative financial instruments which are measured at fair value through profit or loss.

The Directors consider the going concern basis of preparation for the Group and Company to be appropriate for the following reasons.

The Group's £180m asset based finance facility was entered into in July 2021 on a three year tenure. On 26 May 2023 options for a further two one-year extensions were exercised and the facility now terminates in July 2026. There are no prior scheduled repayment requirements. Cash and facility headroom as at 31 March 2024 was £56.7m (2023: £83.5m) based on the Group's eligible hire equipment and trade receivables.

The Group meets its day-to-day working capital requirements through operating cash flows, supplemented as necessary by borrowings. The Directors have prepared a going concern assessment covering at least 12 months from the date on which the financial statements were authorised for issue, which confirms that the Group is capable of continuing to operate within its existing loan facility and can meet the covenant requirements set out within the facility. The key assumptions on which the projections are based include an assessment of the impact of current and future market conditions on projected revenues and an assessment of the net capital investment required to support those expected level of revenues.

The Board has considered severe but plausible downside scenarios to the base case, which result in reduced levels of revenue across the Group, whilst also maintaining a consistent cost base. Mitigations applied in these downturn scenarios include a reduction in planned capital expenditure. Despite the significant impact of the assumptions applied in these scenarios, the Group maintains sufficient headroom against its available facility and covenant requirements.

Whilst the Directors consider that there is a degree of subjectivity involved in their assumptions, on the basis of the above the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for a period of at least 12 months from the date of approval of these Financial Statements. Accordingly, they continue to adopt the going concern basis of accounting in preparing the Financial Statements.

The financial information set out in this final results announcement does not constitute the Group's statutory accounts for the year ended 31 March 2024 or 31 March 2023 but is derived from those accounts. Statutory accounts for Speedy Hire Plc for the year ended 31 March 2023 have been delivered to the Registrar of Companies, and those for the year ended 31 March 2024 will be delivered in due course. The Group's auditor has reported on the accounts for 31 March 2024; their report was (i) qualified due to a limitation of scope in respect of property, plant and equipment, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

Copies of full accounts will be available on the Group's corporate website in due course. Additional copies will be available on request from Speedy Hire Plc, 16 The Parks, Newton-le-Willows, Merseyside, WA12 0JQ.

2          Segmental analysis

The segmental disclosure presented in the Financial Statements reflects the format of reports reviewed by the 'chief operating decision-maker'. UK and Ireland business delivers asset management, with tailored services and a continued commitment to relationship management. Corporate items comprise certain central activities and costs that are not directly related to the activity of the operating segment. The financing of the Group's activities is undertaken at head office level and consequently net financing costs cannot be analysed by segment. The unallocated net assets comprise principally working capital balances held by the support services function that are not directly attributable to the activity of the operating segment, together with net corporate borrowings and taxation.

For the year ended 31 March 2024 / As at 31 March 2024