Speedy launches investigation into loss of £20m of non-itemised equipment
Construction equipment group, Speedy Hire, has launched an external investigation into the disappearance of £20.4m of its equipment.
The Newton-le-Willows-based group carried out a major count of all its hire equipment ahead of its upcoming 2023 audit.
As at March 31, 2022, the reported net book value of its assets was £226.9m.
The company categorises hire equipment into two groups – those that are individually identifiable by a unique serial number to the asset register, or itemised assets, and other equipment, such as scaffolding towers, fencing and non-mechanical plant which does not have a unique serial identifier and is not tracked on an individual asset basis, or non-itemised assets.
It said itemised assets represent 78%, or £177m, of the total reported net book value, while non-itemised equipment was valued at £49.9m.
The recently completed comprehensive count has covered both itemised and non-itemised assets, and while this count validated the previously disclosed net book value of itemised assets, it identified a deficiency in the value of non-itemised assets of around £20.4m.
Consequently, the board has instigated an external investigation, including a review of controls and accounting procedures.
In addition, management has strengthened the control environment for managing its non-itemised asset fleet, including weekly perpetual asset counts with additional internal audit focus, enhanced control over purchases and disposals, and monthly reconciliations against the fixed asset register.
These actions will be further considered in conjunction with the findings of the external investigation, including any further changes to controls and processes as appropriate.
In a separate announcement this morning (February 8), the board said the group performing well and there is no change to the board’s underlying expectations for 2023.
The board said it is reviewing the appropriate accounting treatment of the equipment deficiency. While this is expected to result in a one-off non-cash write down of the balance sheet value of non-itemised assets in the year ending March 31, 2023, it is not expected to impact the group’s cash position or underlying profit performance.
In the second half the new management team’s operational review has included further progress in the evolution of the depot network towards larger, more energy-efficient low carbon facilities, located and designed to create a better experience for all customers and an enhanced working environment for colleagues.
This has resulted in a net 20 depot reduction at the end of January 2023. The cost of these closures will be approximately £2.9m and will be taken as an exceptional cost in the financial year. The associated benefits are expected to be in the region of £2.9m per annum.
The group said it continues to perform well in the second half, with its revenue, excluding disposals, for the four months to January 31, 2023, up around 16% against the corresponding period in the prior year, and apart from any effects of the asset loss, the board continues to be confident in delivering underlying profit in line with its expectations for the full year.