Tools hire group confident it can ride out effects of pandemic

Tools hire group Speedy Hire said it hopes to publish its annual results by June 23.

It follows permission from the Financial Conduct Authority (FCA) for firms to delay the process following the lockdown measures introduced to stem the coronavirus.

Newton-le-Willows-based Speedy had planned to publish its results for the year to March 31, 2020, on June 9. However, it said today that it is working with its auditors, KPMG, to finalise the accounts, and given the practical challenges of remote working and the extra work required in relation to its Geason Training acquisition, these are now expected to be released on June 23, 2020.

Geason was acquired for £9m in December 2018, and accounts for around two per cent of group revenue.

Speedy Hire said it has not performed in line with management’s expectations and, as a consequence, the carrying value of goodwill and any contingent consideration payable will be written down to nil in the year-end accounts.

In addition, Geason received a claim from a funding agency in late April 2020 alleging poor financial controls and overpayments of up to £2.6m for the three-year period commencing August 2017, which the company is investigating.

In a trading update today, Speedy said group revenues in April were ahead of the board’s expectations, albeit 35% lower than the prior year due to reduced activity levels and suspensions of hired equipment.

Activity levels have steadily improved during May as lockdown measures have eased and customers have returned to work.

As a result, hire revenue for the week ended June 5, was around 17% lower than the prior year.

As previously reported, the group had furloughed approximately 50% of its UK and Ireland workforce in April. As at June 5, around 1,200 colleagues (c.33%) remained on furlough.

Speedy says it has a strong balance sheet and substantial unutilised banking facilities.

Cash collections, which had been strong in March 2020, have remained strong in April and May.

As a consequence of this and the utilisation of government support measures, net debt (on a non IFRS 16 basis) reduced from £79.3m at the year end to about £68m at May 31, 2020. The maximum committed facilities amount to £180m, which expire in October 2022.

The board remains confident that the group can operate within its existing debt facilities and covenant tests during a prolonged period of reduced trading activity.

In conclusion, Speedy said that, further to its previous announcement on April 9, as the COVID-19 situation is likely to remain uncertain for some time, all guidance remains suspended.

The group also announced today that Chris Morgan will step down from the board as group finance director with effect from July 31, 2020, by mutual agreement, and leave the business after a short handover period.

The board has commenced a formal process to appoint a new group finance director.