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(Alliance News) - Speedy Hire PLC on Tuesday reported a decline in annual profit due to an impairment of its under-performing Speedy Training unit.
Pretax profit for the Merseyside-based tool and equipment hire firm's financial year ended March 31 fell 28% to GBP20.7 million from GBP28.7 million.
While revenue increased 3.0% to GP406.7 million from GBP394.7 million, the company incurred a GBP23.8 million exceptional items charge in financial 2020 compared to just GBP1.2 million in financial 2019.
The GBP23.8 million was recognised in distribution and ministration expenses and includes a GBP20.1 million impairment of the Speedy Training cash-generating units.
Speedy Hire explained that: "The training [business] has performed below expectations during the year due to lower-than-expected learner enrolments, the setup of a number of regional training centres which have yet to reach critical mass, and compliance-related issues. More recently the business has been further affected by market conditions due to Covid-19."
No final dividend payment was recommended, meaning that the total payout for the year stays at 0.70 pence per share, down from 2.00p per share the year before.
Chair David Shearer said: "Whilst the board recognises the importance of dividend returns and financial discipline to shareholders, in the current exceptional circumstances it has decided not to recommend payment of a final dividend for the year. The board has not fundamentally changed its dividend policy and will consider whether it is appropriate to recommend payment of an interim dividend for the current financial year at the time of the half year results in November."
Looking ahead, Speedy Hire said a "significant proportion of revenue" has been retained in financial 2021 despite the pandemic. UK and Ireland Hire revenue in June was around 17% lower than the previous year. Net debt at the end of March was GBP79.3 million, down 11% from the prior year, and at May 31 has fallen further to GBP67.3 million with "significant headroom against bank facilities".
Discretionary spending has been frozen, and the firm made minimal capital expenditure in April and May, totalling around GBP500,000.
Based on current revenue, Speedy Hire will be able to operate throughout financial 2021 within its existing banking facilities and without breaching covenant tests, it said.
Chief Executive Russell Down said: "Whilst Covid-19 will have some financial impact on the business, I am reassured by our performance in the last three months. We are well placed to emerge in a position of strength to pursue our strategic objectives as more normal trading levels return."
Speedy Hire also said Bob Contreras will step down as senior independent director from August 1, with David Garman promoted to senior independent director in his place.
Shares in Speedy Hire were up 2.7% at 57.28p in London in morning trading, though remain down 23% so far in 2020.
By Anna Farley; annafarley@alliancenews.com
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