Speedy Hire Regulatory News (SDY)

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

22 November 2023

FY2024 Interim Results

Results for the six months to 30 September 2023 

Resilient performance and strong strategic progress

Speedy, the UK's leading tools and equipment hire services company, operating across the construction, infrastructure and industrial markets, announces results for the six months to 30 September 2023.

Financial Highlights

Trading and operations update:

· Resilient UK hire revenue performance, down 1.2% versus H1 FY2023:

o  Challenging but manageable market backdrop

o  Benefitting from diverse customer mix, including strong national customer performance that mitigates some softening with regional customers

o  Recent national key contract wins and extensions, as well as strengthening pipeline

· Service revenue decrease of 5.2% versus H1 FY2023:

o  Strong performance in our Customer Solutions business

o  Decline in wholesale fuel prices impacting pass through revenue by £6.9m, however, margin maintained

· Executing well on our Velocity transformation and growth strategy:

o  Investing in the transformation of the business 

o  Investing in specialist business growth engine including:

§ £0.5m in hydrogen electric powered access with Niftylift, supporting clean energy transition and commercial sustainability for our customers

§ Entered into a joint venture agreement with AFC Energy to provide sustainable power solutions - called Speedy Hire Solutions Limited

§ Acquisition of Green Power Hire Limited on 9 October 2023. Integrating well, with good first month of trading and significant interest from customers

· Digital evolution of our partnership with B&Q:

o  Launch of online, home delivery tool hire proposition on DIY.com and Trade-point.co.uk

o  Extend into over 310 B&Q stores nationally for digital hire in-store commencing before Christmas

o  Low cost-to-serve digital in-store and online hire proposition

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· Continued investment in our People First strategic pillar

o  Average increase in base pay to colleagues of c.7% in April

o  5.5pp improvement in voluntary attrition to prior year

Financial Performance

· Revenue of £208.5m in the first half (H1 FY2023: 214.8m)

· Resilient Adjusted EBITDA performance, down 2.5% but margin maintained at 22% with the shortfall in Revenue offset by disciplined cost control

· Adjusted profit before tax in H1 of £5.9m, down 56.0% on H1 FY2023 due to:

o  Investment in transformation to support Velocity strategy

o  Kazakhstan joint venture performing behind the record performance in FY23, alsoimpacted by dollar exchange rate movements

o  Higher interest rates

· Profit after tax has decreased by 61.1% to £4.2m, impacted by the increase in the corporation tax rate

· Strong cash flow generation, with free cash flow up to £10.6m versus £0.7m in H1 FY2023

· Investment in hire fleet of £17.6m primarily in strategic purchases; H1 itemised utilisation was 50.5%, improving to 58.0% currently.

· Cash and facility headroom of £70.5m (31 March 2023: £83.5m)

· Net debt at £89.6m, leverage6 of 1.3 times (31 March 2023: £92.4m, 1.3 times)

· Proposed interim dividend of 0.80 pence per share

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

"This set of results demonstrates our ability to perform resiliently against challenging but manageable market conditions, by maintaining price and cost discipline whilst investing in and executing on our Velocity Strategy.

The recent acquisition of Green Power Hire Limited and the launch of Speedy Hydrogen Solutions Limited in joint venture with AFC Energy to deliver market leading clean energy power generation and storage solutions for our customers, further demonstrates our Velocity strategy in action.

I am pleased to confirm the digital evolution of our partnership with B&Q, launching our online, home delivery tool hire proposition on diy.com and trade-point.co.uk. This will then be extended into over 310 B&Q stores nationally for digital hire in-store, in an overall lower cost to serve operating model.

The Group has a promising pipeline of opportunities to deliver revenue growth in the second half and beyond. As in prior years, the Group expects a second half weighting to its revenues and profits, as the winter programmes commence and new contracts fully mobilise in the period, including those communicated at year end. We expect to see the benefits of our investments in our Velocity strategy including operational efficiency and supply chain optimisation, in the second half and beyond. Whilst the macroeconomic outlook is uncertain, we remain confident of delivering results, albeit towards the lower end of the Board's expectations".

Enquiries:

Speedy Hire Plc Tel: 01942 720 000

Dan Evans, Chief Executive

Paul Rayner, Chief Financial Officer

MHP Communications 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 19.

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.

Inside Information: This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.

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 and equipment hire services to a wide range of customers in the construction, infrastructure and industrial markets, as well as to local trade and industry. The Group provides complementary support services through the provision of training, asset management and compliance services. Speedy is certified nationally to ISO50001, ISO9001, ISO14001, ISO17020, ISO27001 and 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

I am pleased to present our results for the first six months of the financial year. The business is performing resiliently in the face of cost inflation and well-documented macroeconomic uncertainty. Our focus is on delivering growth opportunities as well as operational efficiencies through exceptional customer service, excellent supplier and customer relationships.

Velocity, the Company's five year growth and transformation strategy, was launched earlier in the year at our Capital Markets Event and is progressing well. We have continued to invest in its early implementation as planned. Our Velocity strategy has included a clear focus on supply chain optimisation and is anticipated to deliver benefits in the second half of the current financial year and beyond. 

Our strong balance sheet enables us to invest further in our business and build on the Group's successful track record of leading on innovation. This is evidenced by our recent acquisition of Green Power Hire Limited ('GPH') and the launch of Speedy Hydrogen Solutions Limited ("SHS") a 50:50 joint venture with AFC Energy designed to deliver market leading sustainable power generation and storage solutions for our customers. These are complemented by our partnership with Niftylift on bringing the UK&I's first Hydrogen Electric powered access machines to market. The digital evolution of our partnership with B&Q, launching our online, home delivery tool hire proposition on diy.com and trade-point.co.uk is a great step forward. This will then be extended into over 310 B&Q stores nationally for digital hire in-store as the financial year develops, through a low cost to serve, digital, in-store and online proposition.

Trading performance

Our interim results for the six months to 30 September 2023 demonstrate the Group's ability to perform in challenging market conditions. Building on the momentum from FY2023, revenue with our national customer base has continued on its growth trajectory, up 5%, offset by softening of demand from our regional customers down 6%. Our services business continues to perform well and, although its pass through revenues were impacted by £6.9m through the effect of a decrease in wholesale fuel prices, margins were maintained.

Group hire revenue in the first half was resilient. Within our national customer segment, we have won and renewed contracts during the period, strengthening the pipeline of opportunities expected to contribute further growth in the second half of the year and beyond. We continue to maximise our revenue with existing customers working on major UK projects through offering our unique holistic site solutions across our core and re-hire range (Customer Solutions). This has been offset by softening demand from our regional customers in the first half and overall hire revenue was 1.2% behind the first half of last year.

Our diversified services businesses ensure we are resilient to an economic downturn. Services revenue performed well, although is 5.2% down on the first half of the last year due to the decrease in wholesale fuel prices, offset by a strong performance in our Customer Solutions business. The decrease has not impacted gross margin, as direct costs fall proportionately.

We recognise that wider market conditions are uncertain, with sustained high interest rates, and inflationary pressures. We have observed some softening in demand as our customers review their use of assets with a view to operational efficiency. In order to deliver profitable growth, and whilst the market remains competitive, we are focused on tendering for and winning national contracts that bring value and collective success for both us and our customers. With this in mind, we have maintained strong hire fleet capex discipline to ensure we remain well balanced with our investment decisions, supported by our AI partnership with PEAK.

Supporting a key pillar in our Velocity growth strategy we are extending our partnership with B&Q by launching an online home delivery tool hire proposition on DIY.com and Trade-point.co.uk. This proposition will soon be live to B&Q and TradePoint customers and provides mass-market national exposure of our hire proposition to millions of trade and retail customers.

Following the online launch, before Christmas we will start to extend this proposition into over 310 B&Q stores nationally, enabling customers to digitally hire in-store our most popular products for home delivery and collection. 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 and cost control

Operational efficiency continues to be a key part of our Velocity strategy. Our strategic collaboration with Peak has supported our progression in the use of data and Artificial Intelligence ('AI') in decision making. AI is helping us ensure we have the right products to meet customer demand, in the right place, at the right time, in the most efficient way; linking our service centre network with our logistics and asset intelligence.

We have continued to develop our future state property programme. This programme is modernising 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.

Cost control remains a key ingredient in delivering sustainable profitable growth. The significant macro inflationary pressures are impacting all businesses at this time. We are controlling costs and focusing on initiatives to improve operational efficiency and the effective management of our supply chain. These initiatives are expected to generate further benefit in the second half of the year and beyond, allowing continued investment in the transformational aspect of our Velocity strategy, in support of our five year plan.

ESG

We continue to lead the hire industry in sustainability and are embracing product innovation in areas that are increasingly in demand from our customer base. We are working with partners to deliver award winning, sustainable solutions for customers and to accelerate our own carbon reduction pathway. Earlier this year we were delighted to announce our partnership with Niftylift to launch the world-first hydrogen-electric powered access platform; complemented by our acquisition of GPH and formation of SHS with AFC Energy. These collaborations further solidify our position as industry leader.

We were the first company in hire to commit to Science Based Targets (SBTi's) to achieve net zero carbon before 2040 and have now had those targets validated for both near and long term emission reduction by SBTi.

During the period we invested £17.6m in our hire fleet, of which 42% was in carbon efficient ECO products. The proportion of our revenue from carbon efficient ECO products has increased from c.32% in the comparative period to 50% in the first half of FY2024.

Our colleagues are central to achieving our ambitions for growth. We have a unique culture at Speedy, it's what we call our Speedy Spirit. It is something our customers and supply chain partners have come to know, as we strive, on a daily basis, to create solutions for our customers' needs. During the period we accelerated our People First agenda including an investment in base pay of £3.5m in the first half of the year.

Group financial performance

Total revenue for the period to 30 September 2023 decreased by 2.9% to £208.5m (H1 FY2023 £214.8m) with hire rate increases and strong performance with our national customers mitigating softening of revenues with our regional customers. Revenue from disposals was £2.0m (H1 FY2023: £2.4m).

Gross profit was £112.7m (H1 FY2023: £116.9m), a decrease of 3.6%. The gross margin decreased to 54.1% (H1 FY2023: 54.4%), with gross profit also reflecting higher depreciation charged against non-itemised equipment (£1.1m) and additional provisions recognised to cover asset write offs (£1.0m). The higher depreciation charge is the result of reducing the useful economic lives and residual values for certain asset categories.

Adjusted EBITDA was broadly flat year on year at £46.2m (H1 FY2023: £47.4m). The decrease in gross profit has been offset by disciplined cost management, with overheads £0.7m favourable to H1 FY2023 after absorbing £1.0m of Velocity transformation costs. The net result is a £3.5m decrease in operating profit to £9.4m (H1 FY2023: £12.9m). Adjusted profit before tax decreased by £7.5m to £5.9m (H1 FY2023: £13.4m), the result of higher interest costs and a record prior year for the joint venture.

Profit after taxation decreased to £4.2m (H1 FY2023: £10.8m), impacted by the increase in corporation tax rates.

Revenue and margin analysis

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

Hire revenues decreased by 1.2%, reflecting price increases and strong performance with our national customers, offsetting a softening in volume demand from our regional customers. A number of new and renewed contracts with key customers have been secured in the period and the Group has a promising pipeline of opportunities expected to contribute in H2 FY2024.

Services revenues (including fuel) decreased by 5.2% compared to H1 FY2023. Excluding fuel, services revenues were up 4.2% versus H1 FY2023 (£60.0m), with continued growth in Customer Solutions. Fuel revenue decreased 27.3% versus H1 FY2023 as a result of the decline in the wholesale price of both diesel and hydrogenated vegetable oil (HVO), which doesn't impact gross margin.

The Group implemented price increases in January 2023 to offset the effects of cost inflation on both overheads and new equipment purchases. The price increases take effect as framework agreements and hire contracts are renewed resulting in the benefit of those increases building throughout the year.

Gross margins decreased from 54.4% in H1 FY2023 to 54.1%. Hire margin decreased to 77.1% (H1 FY2023: 78.7%) due to pricing increases offset by lower utilisation and the impact of higher depreciation on non-itemised assets and additional provisions recognised in the period. Services margin improved from 18.5% in H1 FY2023 to 19.5% due to the change in sales mix weighted less toward lower margin fuel revenue.

Overheads

Inflationary pressures on overheads, particularly a pay increase in April 2023 along with utilities, were expected in FY2024. Disciplined cost management, with savings realised from our operational and management restructuring in the last financial year, has meant that we have reduced our underlying cost base even whilst implementing salary increases (c.£7.0m annual investment) and investing £1.0m in our transformation programme. To ensure we can continue to invest in our growth strategy, we are continuing to control costs through initiatives to improve operational efficiency and build on the effective management of our supply chain in H1 FY2024.

The UK and Ireland headcount at 30 September 2023 was 3,435 (31 March 2023: 3,375), an increase of 1.8%.

Interest

The Group's net financial expense increased to £5.7m (H1 FY2023: £3.6m) reflecting higher average gross borrowings throughout the year following the share buyback programme and the impact of increased interest rates on borrowings and on lease liabilities.

The Group's main bank facilities were extended for two years in May 2023, now expiring in July 2026. There were no changes to the terms of the facility following the extension and it continues to give the Group headroom with which to support organic and inorganic growth opportunities. 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 period, the margin payable on the outstanding debt fluctuated between 1.55% and 2.15% dependent on the weighting of borrowings between receivables and plant and machinery. The effective average margin in the period was 1.89% (H1 FY2023: 1.80%).

The Group utilises interest rate hedges to manage fluctuations in rates. The fair value of these hedges was £1.5m at 30 September 2023. 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 October 2023, 65% of the Group' net debt is hedged with a weighted average hedge rate of 2.68%. Subsequent to the balance sheet date, a further £15m of debt was hedged in respect of the acquisition of Green Power Hire Limited.

Interest on lease liabilities of £2.3m (H1 FY2023: £1.6m) was charged during the period, impacted by the rise in interest rates which are used to calculate the incremental borrowing rate.

Taxation

The tax charge for the period was £1.4m (H1 FY2023: £2.4m), reflecting a projected full year effective tax rate before amortisation and exceptional items of 25.0% (H1 FY2023: 17.2%²).  The effective rate has increased year on year due to the increase in the UK corporation tax rate to 25% for periods from 1 April 2023 which was substantively enacted on 24 May 2021.

Shares and earnings per share

At 30 September 2023, 516,983,637 (31 March 2023: 516,983,637) Speedy Hire Plc ordinary shares were in issue, of which 55,146,281 were held in treasury and 4,106,820 were held in the Employee Benefit Trust. Adjusted earnings per share was 0.98 pence (H1 FY2023: 2.19 pence²), a decrease of 1.21p (55.3%). Basic earnings per share was 0.91 pence (H1 FY2023: 2.13 pence).

Capital expenditure and disposals

Total capital expenditure during the period amounted to £22.4m (H1 FY2022: £34.4m), of which £17.6m (H1 FY2023: £30.5m) related to equipment for hire, and £4.8m related to non-hire property, plant and equipment (H1 FY2023: £3.9m).

Our hire fleet investment included a significant proportion of carbon efficient ECO products, in line with the increasing relevance of sustainable solutions including customers mandating zero site emissions in some instances.

Asset count update

At the end of September, a full count of all itemised and non-itemised hire equipment was undertaken and the results of the count have not identified the need for any increased asset provisions. Blended count accuracy across the entire fleet was 99.3%, with, at least, the same level of accuracy targeted for the second half. A further full count will be undertaken in March 2024, in addition to other targeted counts during the remainder of the financial year. The Group remains committed to continual improvement of processes and controls in this area. The actions taken by the Group over the past nine months to improve asset controls continue to demonstrate benefits with digital technology being trialled to further assist in the control and counting of hire equipment.

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.

Net assets at 30 September 2023 were £181.9m (31 March 2023: £184.6m). ROCE was 11.9% for the 12 months to September 2023 (12 months to 30 September 2022: 12.5%²).

Net property, plant and equipment (excluding IFRS 16 right of use assets) decreased to £229.6m at 30 September 2023 (31 March 2023: £237.7m). The net book value of equipment for hire has decreased from £207.9m to £200.1m, representing 87.2% (31 March 2023: 87.5%) of the total property, plant and equipment balance.

Intangible assets decreased marginally to £24.1m (31 March 2023: £25.0m), with investment in software development offset by amortisation charged.

Right of use assets of £83.4m (31 March 2023: £83.2m) and corresponding lease liabilities of £86.6m (31 March 2023: £86.1m) were recognised at 30 September 2023. New leases and renewals entered into during the period have been broadly offset by exits in the period.

Gross trade receivables totalled £100.5m at 30 September 2023 (31 March 2023: £102.2m), benefiting from continued strong cash collections and a focus on overdue debt. Bad debt and credit note provisions were £3.7m at 30 September 2023 (31 March 2023: £4.3m), equivalent to 3.7% of gross trade receivables (31 March 2023: 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 in H1 FY2024, there are indications of economic vulnerability and increasing insolvencies and therefore we continue to monitor the situation closely. In light of this, the Group expects to take a prudent position and increase provisions in the second half.

Debtor days were 67 days (31 March 2023: 61 days), broadly consistent with September 2022 (68 days). Trade payables were £42.9m (31 March 2023: £39.1m). Creditor days were 47 days (31 March 2023: 37 days) a significant improvement on September 2022 (56 days), arising from effective working capital management.

Cash flow and net debt

Cash generated from operations (before changes in hire fleet) for the period was £42.4m (H1 FY2023: £40.2m), representing 91.7% conversion from adjusted EBITDA (H1 FY2023: 84.8%²), reflecting the continued focus on working capital improvements. Free cash flow? increased to £10.6m (H1 FY2023: £0.7m), as cash disciplines across the business were reinforced.

Net debt decreased by £2.8m from £92.4m at the beginning of the period to £89.6m at 30 September 2023. Net debt to adjusted EBITDA (rolling 12 months basis) remained flat at 1.3 times (31 March 2023: 1.3 times).

The Group's continued strong cash position resulted in cash and facility headroom of £70.5m within the Group's committed bank facility (31 March 2023: £83.5m).

Post balance sheet acquisitions and business developments

On October 9 2023, we acquired sustainable power solutions specialist, GPH, for an enterprise value of £20.2m. The total consideration, which was funded from the Company's existing debt facilities, represented £10m of equity value and assumed debt of £10.2m which was settled at completion. Integration is progressing well, post acquisition trading has been positive and in line with the Group's business plan, and we have observed significant interest from existing and new customers.

On November 15 2023, we announced the formation of a 50:50 joint venture company SHS with AFC Energy, a leading provider of hydrogen powered generator technologies. SHS will be a dedicated hydrogen powered generator plant hire business promoting sustainable, zero emission, temporary power solutions designed specifically for the off-grid generation market. SHS will initially be jointly funded by AFC Energy and Speedy by up to £2.5m each through initial equity subscription and subsequent shareholder loans subject to SHS performance.

Dividend

The Board is committed to maintaining an efficient balance sheet and regularly reviews the Group's capital resources in light of the medium-term investment requirements and in accordance with the capital allocation policy.

The Board has declared an interim dividend of 0.80 pence per share (H1 FY2023 interim dividend: 0.80 pence per share), to be paid on 19 January 2024 to shareholders on the register on 8 December 2023.

A Dividend Reinvestment Plan ("DRIP") is provided by Equiniti Financial Services Limited. The DRIP enables the Company's shareholders to elect to have their cash dividend payments used to purchase the Company's shares. More information can be found at www.shareview.co.uk/info/drip.34

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;

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

- 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 net debt to EBITDA through the business cycle, although it is prepared to move outside this if circumstances warrant.

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

Board

As announced in June 2023, Paul Rayner was appointed as Chief Financial Officer and executive director with effect from 1 July 2023 following an initial interim period and comprehensive recruitment process supported by external consultants.

Outlook

We have delivered resilient results for the first half of 2023 against a challenging but manageable market backdrop. We have also maintained investment in our Velocity Strategy. The Group has a promising pipeline of opportunities to deliver revenue growth in the second half and beyond and we will continue our strategic investment in growth initiatives including Transformation, Trade and Retail and ESG.

Whilst the macroeconomic outlook is uncertain and inflationary pressures remain high, the business is resilient and well positioned to manage these challenging market conditions. As in prior years, the Group expects a strong second half weighting to its hire revenues and profits, as the winter programmes commence and new contracts extended and won fully mobilise in the period, including those communicated at year end. We expect to see the benefits of our investments in our Velocity strategy including operational efficiency and supply chain optimisation, in the second half and beyond.

The Board remains confident of delivering results for the full year, albeit at the lower end of its expectations.

Dan Evans

Chief Executive

Interim condensed consolidated balance sheet

*See note 19.

Interim condensed consolidated statement of changes in equity

*See note 19.

Interim condensed consolidated statement of cash flows

*Prior period restated to present working capital movements separately, to split proceeds from the disposal of hire equipment between planned and customer loss/damage, and to separate capital expenditure on IT development from other purchases of non-hire property, plant and equipment.

1 Accounting policies

Speedy Hire Plc is a public limited company listed on the London Stock Exchange, incorporated and domiciled in the United Kingdom. The interim condensed consolidated financial statements of the Company for the six months ended 30 September 2023 comprise the Company and its subsidiaries (together referred to as the 'Group').

The financial statements of the Group for the year ended 31 March 2023 are available from the Company's registered office, or from the website: www.speedyservices.com.

Basis of preparation

These interim condensed consolidated financial statements have been prepared under the historical cost convention, with the exception of certain financial assets and liabilities (including derivative 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. The additional uncommitted accordion of £220m remains in place through to July 2026. Cash and facility headroom as at 30 September 2023 was £70.5m (31 March 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 these interim condensed consolidated 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 interim condensed consolidated financial statements. Accordingly, they continue to adopt the going concern basis of accounting in preparing the interim condensed consolidated financial statements.

Statement of compliance

These interim condensed consolidated financial statements for the six months ended 30 September 2023 have been prepared in accordance with the UK-adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

The interim report does not include all of the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 March 2023, which has been prepared in accordance with UK-adopted international accounting standards and the requirements of the Companies Act 2006, and any public announcements made by Speedy Hire Plc during the interim reporting period.

These interim condensed consolidated financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2023 were approved by the board of directors on 30 June 2023 and delivered to the Registrar of Companies. The report of the auditors on those accounts was qualified in respect of the Group's property, plant and equipment balance, however did not contain any statement under section 498 of the Companies Act 2006.

These interim condensed consolidated financial statements have been reviewed, not audited.

The interim report was approved by the Board of Directors on 21 November 2023.

Significant accounting policies

Other accounting policies

There have been no new standards or interpretations issued or endorsed by the International Accounting Standards Board (IASB) or IFRIC since the date of the FY2023 year end financial statements that materially impact the Group.

The accounting policies applied by the Group in these interim condensed consolidated financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 31 March 2023.

The carrying amount of goodwill is tested annually for impairment and, along with other non-financial assets, at each reporting date to the extent that there are any indicators of impairment. Due to the market capitalisation of the Group at 30 September 2023 being below the consolidated net asset position, a full impairment test has been undertaken at the interim reporting date, detail on which can be found in note 10.

Seasonality

In addition to economic factors, revenue is subject to an element of seasonal fluctuation. Whilst construction activity tends to increase in the summer months, the equipment range helps to mitigate the impact, specifically with heating, lighting and power generation products being more in demand during the winter months. Overall, the Directors do not feel that these factors have a material effect on the performance of the Group when comparing first half results to those achieved in the second half.

2 Changes in estimates

The preparation of interim condensed consolidated financial statements requires management to make judgements, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing the interim condensed consolidated financial statements, the significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty for the consolidated financial statements for the year ended 31 March 2023 continued to apply.

3 Segmental analysis

The segmental disclosure presented in these interim condensed consolidated 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 six months ended 30 September 2023

¹ UK and Ireland also includes revenue and costs relating to the disposal of hire assets.

² Intangible assets in Corporate items relate to the Group's ERP system, amortisation is charged to the UK and Ireland segment as this is fundamental to the trading operations of the Group. Depreciation in Corporate items relates to computers and is recharged from the UK and Ireland based on proportional usage. For the six months ended 30 September 2022 restated³