TIDMAT.
RNS Number : 1933Y
Ashtead Technology Holdings plc
03 May 2023
3 May 2023
Ashtead Technology Holdings plc
("the Company")
Full-year Results 2022
Ashtead Technology Holdings plc (AIM: AT.), a leading subsea
equipment rental and solutions provider for the global offshore
energy sector, announces its full-year results for the period ended
31 December 2022.
Highlights
Financial Results
-- Group revenue up 31% to GBP73.1m (2021: GBP55.8m), primarily
driven by organic growth (23.7%) favourable FX rates (c.5.5%) and
M&A (1.7%).
-- Revenues from offshore renewables and offshore oil and gas
markets up 22% and 35%, respectively.
-- Gross profit up 34% to GBP54.3m (2021: GBP40.5m), with gross
margin of 74% (2021: 73%), benefitting from increased pricing and
utilisation.
-- Adjusted EBITA(1) increased 47% to GBP20.1m (2021: GBP13.7m),
with an Adjusted EBITA(1) margin of 28% (2021: 25%).
-- Adjusted earnings per share of 19.6p (2021: 13.2p) and basic
earnings per share of 15.9p (2021: 3.6p).
-- ROIC of 21% for the period (2021: 17%).
-- RCF refinanced and increased in April 2023 to GBP100m (plus
accordion of GBP50m) to support growth opportunities.
-- Final dividend of 1p per share recommended.
Operational Highlights
-- Meaningfully expanded operational capabilities and technical
expertise through bolt-on acquisitions in H2:
o Hiretech, completed December 2022, adding a multi-purpose
fleet of marine and subsea equipment rental assets and skilled
personnel
o WeSubsea, completed September 2022, providing high
performance, in-house designed dredge systems to complement
existing product and service offering
-- Continued to invest in high-quality equipment rental fleet,
increasing number of items from 17,000 to over 19,000 through
organic investment (GBP13.1 million capex in our equipment rental
fleet), as well as WeSubsea and Hiretech acquisitions.
-- Employee headcount 260 at year end, up from 204, with
business continuing to scale up to support future growth.
-- New senior leadership appointments to grow international
footprint and bolster technical capabilities across our
services.
-- Strong progress towards sustainability goals - increased
revenues from offshore renewables, secured ISO14001 environmental
management certification.
Outlook
-- Market outlook remains strong, with customer backlogs at
record levels. Demand remained high in Q1 2023 across both offshore
oil and gas and offshore renewables markets with pricing and
utilisation continuing to track upwards.
-- Inflationary pressures remain, but increased pricing is
expected to continue to offset impact on the business.
-- The Board remains confident in the business' near and
medium-term prospects and is focused on leveraging its market
position and offering to drive further progress.
-- Given the performance to date, the Board expects the outturn
for the full year to be materially ahead of its previous
expectations.
Allan Pirie, Chief Executive Officer, commented:
"This has been a very successful and busy year for Ashtead
Technology. We believe we are well-positioned to exploit the many
growth opportunities that lie before us in 2023 and beyond, driven
by higher activity levels across both oil and gas and offshore
renewables markets. With a full year's benefit of our two recent
acquisitions, coupled with enhanced financial firepower, we will
look to further expand our offering whilst continuing to grow
within our existing markets."
Analyst Briefing
A conference call for sell-side analysts will be held today at
8.00am BST. If you would like to participate, please email
ashteadtechnology@vigoconsulting.com.
Investor Presentation
Allan Pirie and Ingrid Stewart will provide a presentation
relating to the full year results via the Investor Meet Company
platform on 12 May 2023 at 11.00am BST.
The presentation is open to all existing and potential
shareholders. Questions can be submitted pre-event via the Investor
Meet Company dashboard up until 9.00am the day before the meeting
or at any time during the live presentation. Investors can register
for the presentation via the link below:
https://www.investormeetcompany.com/ashtead-technology-holdings-plc/register-investor
For further information, please contact:
Ashtead Technology (Via Vigo Consulting)
Allan Pirie, Chief Executive Officer
Ingrid Stewart, Chief Financial
Officer
Vigo Consulting (financial PR) Tel: +44 (0)20 7390 0230
Patrick d'Ancona ashteadtechnology@vigoconsulting.com
Finlay Thomson
Kate Kilgallen
Numis Securities Limited (Nomad Tel: +44 (0)20 7260 1000
and Broker)
Julian Cater
George Price
Kevin Cruickshank (QE)
1. Adjusted EBITA is defined as operating profit adjusted to add
back, amortisation, foreign exchange movements and non-trading
items as described in Note 28 to the accounts. Adjustments
predominantly owing to one off costs related to acquisitions
Notes to editors:
Ashtead Technology is a leading subsea equipment rental and
solutions provider for the global offshore energy sector. Ashtead
Technology's specialist equipment, advanced-technologies and
support services enable its customers to understand the subsea
environment and manage offshore energy production
infrastructure.
The Company's service offering is applicable across the
lifecycle of offshore wind farms and offshore oil and gas
infrastructure.
In the fast-growing offshore wind sector, Ashtead Technology's
specialist equipment and services are essential through the project
development, construction and installation phase. Once wind farms
are operational, Ashtead Technology supports customers with
inspection, maintenance and repair ("IMR") equipment and services.
In the more mature oil and gas sector, Ashtead Technology's focus
is on IMR and decommissioning.
Headquartered in the UK, the Company operates globally,
servicing customers from its ten facilities located in key offshore
energy hubs.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 as it forms part of domestic
law of the United Kingdom by virtue of the European Union
(Withdrawal) Act 2018, as amended (together, "MAR"). Upon the
publication of this announcement, this inside information is now
considered to be in the public domain.
Chairman's Statement
In our first full year as a publicly listed company, I am
pleased to report that Ashtead Technology has delivered a strong
performance. We have consistently outperformed against the
forecasts we set at IPO with revenue growth in both the offshore
wind and oil and gas markets, new talent added to the business, a
broadened shareholder base, and demonstrable progress towards our
sustainability goals. We were also delighted to complete two
acquisitions, WeSubsea and Hiretech, during H2.
Delivering beyond Expectations
When we detailed our investment case prior to our 2021 IPO, we
set out four key growth drivers for the business; 1) growth from
the significant increase in expenditure in offshore renewables 2)
revenues underpinned by strong demand from oil and gas 3) increased
customer propensity to rent and 4) value enhancing M&A.
Throughout 2022, the business has delivered across all four growth
drivers, delivering a 31% increase in revenues to GBP73.1m (2021:
GBP55.8m), a 47% increase in Adjusted EBITA to GBP20.1m (2021:
GBP13.7m) and statutory profit before tax of GBP16.6m versus
GBP3.6m in 2021, an increase of 363%.
With the Board's support, management's focus remains on
long-term value creation through continued organic growth and a
focus on M&A. In this regard, we were delighted that the
business successfully completed its first two acquisitions since
the IPO, both of which have now been fully integrated into the
Group. With net debt at GBP28.7m (2021: GBP22.7m), leverage at 31
December 2022 was 1.0x. We also recently secured an increase to our
banking facility which provides further capacity for future
investment.
Governance
The Board remains committed to strong corporate governance and,
in particular, making sure we monitor and challenge our strategy,
performance, risk and approach to managing our people. More
information about our governance arrangements can be found in the
Corporate Governance statement on page 29 of our 2022 Annual
Report.
I also chair the Nominations Committee which met for the first
time during the year. I am pleased to confirm that the Board has
integrated itself into the business well and, through our Board
review, I am confident that we currently provide a sufficient mix
of governance, strategy, financial and industry knowledge, as well
as independence.
Sustainability
The Board understands the growing interest in environmental,
social and governance ("ESG") matters for all our stakeholders and
as a business we recognise the importance of our role in helping
deliver a lower carbon future given our offering sits firmly at the
heart of the energy transition.
We have made good progress on our sustainability programme
throughout 2022 (as highlighted in pages 12 to 15 of our 2022
Annual Report). Given the strengthening of the markets in which we
operate, there has been a significant focus on the social element
of ESG, with a number of initiatives put in place to support both
the recruitment and retention of personnel.
I would like to personally thank everyone within Ashtead
Technology who has helped make 2022 such a successful year. In my
visits to the business I have been very impressed by the
commitment, knowledge, and ambition for the business that was
demonstrated by everyone I met and which bodes well for the
future.
Dividends
While the Board sees an opportunity to reinvest profits to
finance the continued development and expansion of the business
through both organic and M&A growth opportunities, it also
recognises the importance of dividends both to the Company's
shareholders, and in maintaining capital discipline. In this
regard, we are delighted to recommend a full and final dividend of
1 pence per share for the year ended 31 December 2022. As noted
previously, the Directors will seek to grow the dividend
progressively.
Looking forward
The Group has a proven track record of delivering on both
organic growth and earnings enhancing M&A. While the events of
the last few years have increased fears of recession and cost
inflation, Ashtead Technology has successfully mitigated these
risks to date through increased pricing and has successfully
increased utilisation of its equipment rental fleet through 2022.
With a healthy cash position, recently increased debt capacity and
a highly experienced management team, I have every faith in our
ability to continue to monitor and mitigate risk whilst
implementing our growth strategy. The Board is confident that the
strategic investments made during the year will contribute to
further progress in 2023 and beyond.
Bill Shannon
Chair
Chief Executive Office's Report
I am delighted with the performance of our business in 2022. We
made great progress on our strategic goals and continued to build
our strength and depth of expertise with a focus on long-term
growth.
During 2022 we increased our revenues from offshore renewables
projects, supporting subsea activities in the quest for energy
affordability and security, supported the increased propensity to
rent by our customer base, and completed two strategic
acquisitions. In addition to delivering a strong financial
performance with revenue growth across all our geographic regions,
we invested further in our team, expanded our expertise and
continued to invest in our fleet with GBP13.1m capex on new
equipment, positioning us well for long-term growth.
Delivering Growth
We ended an excellent year with 31% growth in revenues, 47%
growth in Adjusted EBITA and ROIC of 21%. Increased activity
offshore and the emergence of the energy trilemma, a three-way
push-pull of energy security, affordability and sustainability,
resulted in increased demand for our services across all the
markets and geographies in which we operate. Our statutory profit
before tax of GBP16.6m was 363% ahead of prior year (2021:
GBP3.6m).
Responding to the market opportunity and in line with our
strategy, we continued to invest in our high-quality equipment
rental fleet, increasing the number of items from 17,000 to over
19,000 through both organic investment (GBP13.1m rental equipment
capex) and through the acquisitions of WeSubsea and Hiretech during
H2.
WeSubsea, completed in September 2022, added a fleet of
high-performance, in-house designed, dredge systems and strong
technical know-how that strongly complements, and will provide
further pull through for, our wider product and service
offerings.
Hiretech, completed in December 2022, was previously a key
supplier to Ashtead Technology and a business we had been tracking
as an acquisition opportunity for a number of years. Through its
multi-purpose fleet of marine and subsea equipment rental assets
and skilled personnel, the acquisition provided strong synergies
through vertical integration of the supply chain, and meaningfully
expanded our business by adding complementary capabilities to
strengthen our mechanical solutions service line and deliver an
enhanced offering to our customers.
Both the acquired businesses have been active in offshore
renewables and now, as part of Ashtead Technology, will be further
internationalised increasing their exposure to wider market
opportunities both in offshore renewables and in their traditional
offshore oil and gas market.
Sustainability
We maintained our QHSE track record with no lost time incidents
throughout 2022. We also continued to make good progress on our
sustainability journey by increasing our revenues from renewables
by 22% and securing our ISO 14001 certification.
From a social perspective, a tightening of the labour market,
coupled with increased mobility opportunities following COVID, has
increased focus on staff retention and recruitment. Being a
responsible employer and supporting the local communities in which
we operate is central to how we do business.
On governance, the new Board formed at the time of the IPO has
effectively established itself, further strengthening the
governance environment and processes and procedures under which we
operate the business. We recognise there is always more that can be
done as we continue to make progress on our sustainability goals,
and our enhanced governance structure has further embedded this
into our day-to-day operations.
Market
World events in 2022 resulted in the emergence of the energy
trilemma. The heightened focus on energy security and affordability
resulted in increased spending in oil and gas production which,
when coupled with the continued focus on renewable energy sources,
has created a tightness in the market that has allowed the supply
chain to increase both utilisation and pricing.
While the expansion of offshore wind as a means of energy
production and the decommissioning of existing oil and gas
infrastructure are both critical to a successful energy transition,
the importance of oil and gas as part of this journey is now much
better understood. Oil and gas will for some time remain an
important constituent in meeting energy demand, and will play an
important role in the energy transition, not least by continuing
its transition to cleaner energy production. Years of
underinvestment has resulted in a requirement for significant
expenditure to maintain production from existing fields, as well as
the renewed need for investment in new oil and gas developments and
associated infrastructure.
Ashtead Technology remains committed to supporting the energy
transition, targeting 50% of our revenues from the offshore
renewables market in the medium term.
The requirement for energy production from offshore sources has
never been greater and the fungibility of Ashtead Technology's
equipment and solutions across both the offshore wind and oil and
gas markets makes for a compelling and robust proposition, enabling
the Group to capture growth opportunities across both adjacent
markets.
Our people
Employee headcount increased from 204 to 260 during the year as
we continued to scale the business for further growth, and included
a number of additions to the senior leadership team - all part of
our commitment to bolster capability across our three service
lines, further strengthen our market leading position
internationally, and deliver for our customers.
As part of our programme of wider employee engagement including
leadership visits, regular town hall meetings, monthly newsletters,
our company magazine, and weekly technology awareness sessions, we
also introduced the Ashtead Technology Star Awards recognition
programme, where our employees can nominate colleagues who have
gone above and beyond in demonstrating our company values of
agility, collaboration, and excellence.
Building on the strong foundations established in recent years,
I would like to thank the whole team at Ashtead Technology for
their ongoing contribution as we seek to continue that positive
momentum in 2023.
Use of Alternative Performance Measures and Non-Financial
KPI's
Throughout the strategic report we use a range of financial and
non-financial measures to assess our performance. A number of the
financial measures including Adjusted EBITDA, Adjusted EBITA,
Adjusted Profit After Tax and Adjusted EPS are not defined under
IFRS, so they are considered alternative performance measures
("APMs"). Management uses these measures to monitor the Group's
financial performance alongside IFRS measures because they help
illustrate the underlying financial performance and position of the
Group.
These APM's should be considered in addition to, and not as a
substitute for, or as superior to, measures of financial
performance, financial position of cash flows reported in
accordance with IFRS. APM's are not uniformly defined by all
companies, including those in the Group's industry. Accordingly,
APM's may not be comparable with similarly titled measures and
disclosures by other companies.
Current trading and outlook
The outlook for all our geographic regions is positive, with all
markets remaining strong and customer backlogs at record levels. Q1
2023 has continued to deliver strong results with customer demand
remaining high across both offshore wind and oil and gas end
markets in what traditionally would be our weakest quarter due to
seasonality. Activity levels experienced were higher than the same
period in the prior year, with utilisation rates and pricing
continuing to track upwards. Inflationary pressures continue to be
mitigated by increased pricing and we remain confident of making
further progress in 2023 as we continue to focus on delivering our
strategic growth plan. Given the performance to date, the Board
expects the outturn for the full year to be materially ahead of its
previous expectations.
Allan Pirie
Chief Executive Officer
Chief Financial Officer's Report
The Group delivered a strong trading performance in 2022, whilst
continuing to focus on our strategic goals and long-term growth. We
have made progress against all of our financial KPI's and were
delighted to add the WeSubsea and Hiretech acquisitions as we
continue to build on the strong foundations of our business.
Revenue
The Group delivered revenue of GBP73.1m in the year, an increase
of 31% from GBP55.8m in 2021, driven by an increase in revenue
across both the offshore renewables (22%) and offshore oil and gas
markets (35%). Offshore renewables revenue accounted for 31% of
total revenue in 2022 (2021: 33%).
Our 31% revenue growth was derived from organic growth (23.7%),
M&A (1.7%), and favourable FX rates (5.5%) with growth coming
from all our geographical segments.
On a proforma basis, taking into account the full year impact of
WeSubsea and Hiretech, our revenues were GBP80.9m.
Gross profit
Gross profit increased to GBP54.3m from GBP40.5m in 2021. The
increase in the gross margin to 74% (2021: 73%) was the result of a
higher proportion of revenues from equipment rental. In our rental
business, we saw cost utilisation increase from 43% in 2021 to 44%
in 2022.
Administration costs
Administration expenses of GBP37.0m compares to GBP33.9m in 2021
with the increase (GBP3.1m) coming from personnel costs (up
GBP4.8m) offset by lower professional fees (down GBP2.2m)
predominantly related to IPO costs in 2021. In addition to pay
increases and an increase in number of employees, personnel costs
were impacted by the re-introduction of an annual bonus scheme
(GBP2.2m) and the introduction of an LTIP (GBP0.8m).
Profitability
Adjusted EBITA of GBP20.1m compares to GBP13.7m in 2021 and
represents a margin of 28% (2021: 25%), resulting in ROIC
increasing to 21% (2021: 17%), significantly ahead of cost of
capital.
Our EBITA growth of 47% can be split as 36% from organic growth,
5% from M&A, and 6% from FX.
On a proforma basis, taking into account the full year impact of
WeSubsea and Hiretech, our Adjusted EBITA increased to
GBP25.1m.
Where we have provided adjusted figures, they are after the
add-back of adjusting items which, with regard to 2022,
predominantly related to professional and other fees arising from
our two acquisitions. Our 2021 adjustments were mostly in relation
to costs associated with the IPO.
Statutory profit before tax of GBP16.6m in 2022 compares to a
statutory profit before tax of GBP3.6m in 2021.
Net finance expense
Net finance costs were GBP1.4m in 2022 compared to GBP4.0m in
2021, with the decrease reflecting our lower post IPO debt
structure.
Taxation
The total tax charge was GBP4.0m (2021: GBP1.1m). This equates
to an effective tax rate of 23.8% compared to 29.5% in 2021, which
was high due to non-deductible expenses associated with the IPO.
The 2022 tax charge includes the recognition of a non-cash deferred
tax liability of GBP0.9m, excluding this, our effective tax rate
would have been 18.4%. Our expectation is that the Group's
effective tax rate will be close to the UK corporation tax rate,
although this will be impacted by the amount of profit the Group
earns in its overseas jurisdictions where, in some cases,
corporation tax rates are higher or lower than those in the UK.
EPS and dividend
Adjusted EPS was 19.6 pence (2021: 13.2 pence) with statutory
EPS at 15.9 pence (2021: 3.6 pence). The adjusted figures exclude
the impact of adjusting items as set out in note 28 of the
accounts, foreign exchange profit/loss and amortisation and
reverses the impact of the US deferred tax liability
recognition.
The Board sees an opportunity to reinvest profits to expand the
business both organically and through M&A growth. At the same
time, the Board recognises the importance of dividends both to the
Company's shareholders and in maintaining capital discipline. In
this regard, the Board has recommended a full and final dividend of
1 pence per share for the year ended 31 December 2022, payable on
23 June 2023 to shareholders with a record date of 26 May 2023.
Going forward the Directors will seek to pay a progressive annual
final dividend.
Cash flow and balance sheet
Cash inflow from operations was GBP36.0m (2021: GBP11.7m). The
Group increased its investment in capital expenditure in the year
to GBP14.5m (2021: GBP7.9m), investing predominantly in rental
equipment to capitalise on the continued improvement in market
conditions. The net book value of our rental fleet increased by
GBP10.4m in the period.
Cash spent on acquisitions of GBP24.0m was funded in part by
debt (net draw of GBP9.3m on RCF during the year). Acquisitions
completed in the year resulted in an increase in both intangible
assets (GBP4.7m of additions) and goodwill (GBP16.9m of
additions).
Net working capital reduced significantly in the year due to
improvement in debtor days (GBP0.8m), bonus accrual (GBP2.5m),
accrued completion accounts and other payments relating to
acquisitions (GBP1.6m), and timing of capex payables (GBP2.4m)
resulting in a lower than normal 3% of working capital to revenues
ratio.
Overall movement in cash was a positive inflow of GBP3.9m for
the year (2021: GBP6.3m) with cash balance at GBP9.0m at year end
(2021: GBP4.9m).
Net debt increased from GBP22.7m to GBP28.7m representing
leverage of 1.0x at year end (2021: 1.0x). On a proforma basis,
taking into account the full year impact of the acquisitions,
leverage was 0.8x.
Going concern
The consolidated financial statements of the Group are prepared
on a going concern basis. The Directors of the Group assert that
the preparation of the consolidated financial statements on a going
concern basis is appropriate based upon a review of the future
forecast performance of the Group.
During 2022 the Group continued to generate positive cash flow
from operating activities with a cash and cash equivalents balance
of GBP9.0m (2021: GBP4.9m) at year end.
In December 2022, the Company utilised its accordion facility
provided by Clydesdale Bank and HSBC, increasing its RCF capacity
to GBP60m in order to support the Hiretech acquisition. With a
continued focus on M&A, in April 2023 the Company extended its
RCF facility further to GBP100m (plus an accordion of GBP50m),
expanding its banking syndicate to include ABN and Citibank. This
new RCF facility expires in April 2027.
Under the new RCF facility, the Company is subject to a leverage
covenant of 3.0x and an interest cover covenant of 4:1, which are
both to be tested on a quarterly basis. The increase in leverage
covenant is designed to give more flexibility to funding of
potential acquisitions with a focus on maintaining a 1-2x leverage
over the short to medium term. The Group has complied with all
covenants through 2022 and to the date of this report.
The Group monitors its funding and liquidity position throughout
the year to ensure it has sufficient funds to meet its ongoing cash
requirements. Each geographic region prepares its own forecasts
based on a number of inputs such as estimated revenues, margins and
overheads which is challenged by the Executive Directors and rolled
into a Group cash flow forecast based on assumed collection and
payment terms, capex requirements, and the payment of interest and
capital on existing debt facilities. Consideration is also given to
the availability of bank facilities. In preparing these forecasts,
both management and the Directors have considered the principal
risks and uncertainties to which the business is exposed.
Taking account of reasonable changes in trading performance and
bank facilities available, the cash forecast prepared by management
and reviewed by the Directors indicates that the Group is cash
generative, has adequate financial resources to continue to trade
for the foreseeable future, and to meet its obligations as they
fall due.
Reconciliation of adjusted and reported IFRS results
The Group uses certain measures that it believes assist a reader
of the Report and Accounts in understanding the business. The
measures are not defined under IFRS and, therefore, may not be
directly comparable with adjusted measures presented by other
companies. The non-GAAP measures are not intended to be a
substitute for, or superior to, any IFRS measures of performance.
However, they are considered by management to be important measures
used in the business for assessing performance.
In establishing Adjusted EBITDA, Adjusted EBITA and Adjusted
Profit After Tax (used for Adjusted EPS calculation), the Group has
added back various costs, deemed to be one-off in nature, which in
2022 predominantly relate to acquisitions completed during the
period. The definitions can be found in the definitions section of
the 2022 Annual Report and reconciliation to GAAP metrics included
in Note 28 to the accounts.
Table A - Results reconciliation / Adjusted figures
Results reconciliation Adjusted Acquisition Restructuring Other Reported
GBP'000 costs costs
--------------------------- --------- ------------ -------------- ------ ---------
Revenue 73,120 - - - 73,120
Gross profit 54,291 - - - 54,291
Administrative expenses* (36,176) 787 28 36 (37,027)
Other operating income 804 - - - 804
--------------------------- --------- ------------ -------------- ------ ---------
Operating profit 18,919 787 28 36 18,068
Finance cost (net) (1,437) - - - (1,437)
--------------------------- --------- ------------ -------------- ------ ---------
Profit before tax 17,482 787 28 36 16,630
--------------------------- --------- ------------ -------------- ------ ---------
Profit after tax 13,517 787 28 36 12,665
Foreign exchange 3
Amortisation 1,202
Tax impact of adjustments (12)
Remove US deferred tax
recognition 910
---------
Adjusted profit after
tax for EPS calculation 15,619
---------
EBITDA/EBITA/Adjusted Profit
Before Tax
Operating profit 18,919 787 28 36 18,068
Foreign exchange 3 - - - 3
Depreciation 8,431 - - - 8,431
Amortisation 1,202 - - - 1,202
--------------------------- --------- ------------ -------------- ------ ---------
EBITDA 28,555 787 28 36 27,704
Depreciation (8,431) - - - (8,431)
--------------------------- --------- ------------ -------------- ------ ---------
EBITA 20,124 787 28 36 19,273
--------------------------- --------- ------------ -------------- ------ ---------
Finance cost (net) (1,437)
--------------------------- ---------
Adjusted profit before
tax 18,686
--------------------------- ---------
*includes impairment loss on trade receivables
Ingrid Stewart
Chief Financial Officer
Consolidated Income Statement
for the year ended 31 December 2022
2022 2021
Notes GBP000 GBP000
------------------------------------------- ------ --------- ---------
Revenue 4 73,120 55,805
Cost of sales 5 (18,829) (15,262)
------------------------------------------- ------ --------- ---------
Gross profit 54,291 40,543
Administrative expenses 5 (36,217) (33,385)
Impairment loss on trade receivables 5 (810) (545)
Other operating income 5 804 995
------------------------------------------- ------ --------- ---------
Operating profit 5 18,068 7,608
Finance income 7 21 -
Finance costs 7 (1,459) (4,019)
------------------------------------------- ------ --------- ---------
Profit before taxation 16,630 3,589
Taxation charge 8 (3,965) (1,060)
------------------------------------------- ------ --------- ---------
Profit for the financial year 12,665 2,529
------------------------------------------- ------ --------- ---------
Profit attributable to:
Equity shareholders of the Company 12,665 2,529
------------------------------------------- ------ --------- ---------
Earnings per share
Basic 9 15.9 3.6
Diluted 9 15.7 3.6
------------------------------------------- ------ --------- ---------
The below financial measures are non-GAAP
metrics used by management and are not
an IFRS disclosure:
Adjusted EBITDA* 28 28,555 22,437
Adjusted EBITA** 28 20,124 13,724
------------------------------------------- ------ --------- ---------
* Adjusted EBITDA is calculated as earnings before interest,
tax, depreciation, amortisation and items not considered part of
underlying trading including foreign exchange gains and losses, is
a non-GAAP metric used by management and is not an IFRS disclosure.
See Note 28 to the financial statements for calculations.
** Adjusted EBITA is calculated as earnings before interest,
tax, amortisation and items not considered part of underlying
trading including foreign exchange gains and losses, is a non-GAAP
metric used by management and is not an IFRS disclosure. See Note
28 to the financial statements for calculations.
All results derive from continuing operations.
The accompanying notes are an integral part of these
consolidated financial statements.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
2022 2021
GBP000 GBP000
----------------------------------------------------------- -------- --------
Profit for the year 12,665 2,529
Other comprehensive income:
Items that may be reclassified subsequently to profit
or loss
Exchange differences on translation of foreign operations 1,179 163
Net gain on cash flow hedges - 351
----------------------------------------------------------- -------- --------
Other comprehensive income for the year, net of
tax 1,179 514
----------------------------------------------------------- -------- --------
Total comprehensive income 13,844 3,043
----------------------------------------------------------- -------- --------
Total comprehensive income attributable to:
Equity shareholders of the Company 13,844 3,043
----------------------------------------------------------- -------- --------
The accompanying notes are an integral part of these
consolidated financial statements.
Consolidated Balance Sheet
at 31 December 2022
2022 2021
Notes GBP000 GBP000
-------------------------------------- ------ -------- --------
Non-current assets
Property, plant and equipment 11 31,812 20,832
Goodwill 12 66,043 48,651
Intangible assets 12 5,978 1,760
Right-of-use assets 19 2,631 2,923
Deferred tax asset 8 - 1,010
-------------------------------------- ------ -------- --------
106,464 75,176
-------------------------------------- ------ -------- --------
Current assets
Inventories 13 1,865 1,778
Trade and other receivables 14 19,456 17,224
Cash and cash equivalents 15 9,037 4,857
-------------------------------------- ------ -------- --------
30,358 23,859
-------------------------------------- ------ -------- --------
Total assets 136,822 99,035
-------------------------------------- ------ -------- --------
Current liabilities
Trade and other payables 16 19,134 9,415
Income tax payable 8 1,820 821
Lease liabilities 19 865 783
21,819 11,019
-------------------------------------- ------ -------- --------
Non-current liabilities
Loans and borrowings 17 34,865 24,425
Lease liabilities 19 1,991 2,351
Deferred tax liability 8 2,227 -
Provisions for liabilities 20 117 108
-------------------------------------- ------ -------- --------
39,200 26,884
-------------------------------------- ------ -------- --------
Total liabilities 61,019 37,903
-------------------------------------- ------ -------- --------
Equity
Share capital 23 3,979 3,979
Share premium 23 14,115 14,115
Merger reserve 23 9,435 9,435
Share based payment reserve 23 827 -
Foreign currency translation reserve 23 (111) (1,290)
Retained earnings 23 47,558 34,893
-------------------------------------- ------ -------- --------
Total equity 75,803 61,132
-------------------------------------- ------ -------- --------
Total equity and liabilities 136,822 99,035
-------------------------------------- ------ -------- --------
The accompanying notes are an integral part of these
consolidated financial statements.
The financial statements of Ashtead Technology Holdings plc
(registered number 13424040) for the year ended 31 December 2022
were authorised by the Board of Directors on 2 May 2023 and signed
on its behalf by:
Allan Pirie Ingrid Stewart
Chief Executive Officer Chief Financial Officer
2 May 2023 2 May 2023
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
Share Foreign
based currency
Share Merger payment Hedging translation Retained
Share capital premium reserve reserve reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- -------------- --------- --------- --------- --------- ------------- ---------- --------
At 1 January
2021 3,500 - 9,429 - (351) (1,453) 33,660 44,785
--------------------- -------------- --------- --------- --------- --------- ------------- ---------- --------
Profit for the
year - - - - - - 2,529 2,529
Other comprehensive
income - - - - 351 163 - 514
--------------------- -------------- --------- --------- --------- --------- ------------- ---------- --------
Total comprehensive
income - - - - 351 163 2,529 3,043
--------------------- -------------- --------- --------- --------- --------- ------------- ---------- --------
Issue of shares
from IPO 479 15,044 - - - - - 15,523
Transaction fees
on issue of shares
from IPO - (929) - - - - - (929)
Issue of shares* - - 6 - - - - 6
Dividends declared** - - - - - - (1,296) (1,296)
--------------------- -------------- --------- --------- --------- --------- ------------- ---------- --------
At 31 December
2021 3,979 14,115 9,435 - - (1,290) 34,893 61,132
--------------------- -------------- --------- --------- --------- --------- ------------- ---------- --------
Profit for the
year - - - - - - 12,665 12,665
Other comprehensive
income - - - - - 1,179 - 1,179
--------------------- -------------- --------- --------- --------- --------- ------------- ---------- --------
Total comprehensive
income - - - - - 1,179 12,665 13,844
--------------------- -------------- --------- --------- --------- --------- ------------- ---------- --------
Share based payment
charge - - - 827 - - - 827
At 31 December
2022 3,979 14,115 9,435 827 - (111) 47,558 75,803
--------------------- -------------- --------- --------- --------- --------- ------------- ---------- --------
* The movement in merger reserve represents the issue of shares
in BP INV2 Pledgeco Limited and Ashtead US Pledgeco Inc pre
IPO.
** The dividends declared in 2021 relate to the pre-IPO group
restructure.
The accompanying notes are an integral part of these
consolidated financial statements.
Consolidated Cash Flow Statement
for the year ended 31 December 2022
2022 2021
Notes GBP000 GBP000
------------------------------------------------------ -------- --------- ---------
Cash generated from operating activities
Profit before taxation 16,630 3,589
Adjustments to reconcile profit before taxation
to net cash from operating activities
Finance income 7 (21) -
Finance costs 7 1,459 4,019
Depreciation 11 & 19 8,431 8,713
Amortisation 12 1,202 1,516
Gain on sale of property, plant and equipment 5 (804) (995)
Share based payment charges 6 825 -
Provision for liabilities 20 (4) (28)
------------------------------------------------------ -------- --------- ---------
Cash generated before changes in working capital 27,718 16,814
Decrease/(increase) in inventories 274 (524)
Decrease/(increase) in trade and other receivables 785 (6,597)
Increase in trade and other payables 7,207 2,016
------------------------------------------------------ -------- --------- ---------
Cash inflow from operations 35,984 11,709
Interest paid (1,132) (3,615)
Tax paid (1,998) (858)
------------------------------------------------------ -------- --------- ---------
Net cash generated from operating activities 32,854 7,236
------------------------------------------------------ -------- --------- ---------
Cash flow used in investing activities
Purchase of property, plant and equipment (13,728) (7,889)
Proceeds from disposal of property, plant and
equipment 1,518 1,453
Purchase of computer software (725) -
Acquisition of subsidiary undertakings net of
cash acquired (23,999) -
Interest received 21 -
------------------------------------------------------ -------- --------- ---------
Net cash used in investing activities (36,913) (6,436)
------------------------------------------------------ -------- --------- ---------
Cash flow generated from/(used in) financing
activities
Proceeds from IPO share issue - 15,523
Transaction fees on share issue - (929)
Proceeds from share issue - 50
Loans received 31,000 25,107
Transaction fees on loans received (228) (914)
Repayment of bank loans (21,727) (44,121)
Payment of lease liability (1,064) (1,012)
Repayment of loan notes - (830)
------------------------------------------------------ -------- --------- ---------
Net cash generated from/(used in) financing
activities 7,981 (7,126)
------------------------------------------------------ -------- --------- ---------
Net increase/(decrease) in cash and cash equivalents 3,922 (6,326)
Cash and cash equivalents at beginning of year 4,857 10,958
Net foreign exchange difference 258 225
------------------------------------------------------ -------- --------- ---------
Cash and cash equivalents at end of year 9,037 4,857
------------------------------------------------------ -------- --------- ---------
The accompanying notes are an integral part of these
consolidated financial statements.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
1. General information
1.1 Background
Ashtead Technology Holdings plc (the "Company") is a public
limited company incorporated in the United Kingdom under the
Companies Act 2006, whose shares are traded on AIM. The
consolidated financial statements of the Company as at and for the
year ended 31 December 2022 comprise the Company and its interest
in subsidiaries (together referred to as the "Group"). The Company
is domiciled in the United Kingdom and its registered address is 1
Gateshead Close, Sunderland Road, Sandy, Bedfordshire, SG19 1RS,
United Kingdom.
1.2 Basis of preparation
The financial information set out in this statement has been
prepared in accordance with the recognition and measurement
principles of International Financial Reporting Standards
("IFRSs"), IFRIC interpretations and the Companies Act 2006
applicable to companies reporting under IFRS. It does not include
all the information required for full annual accounts.
The financial information does not constitute the Company's
statutory accounts for the years ended 31 December 2022 or 31
December 2021 but is derived from those accounts. Statutory
accounts 2022 will be delivered to the Registrar of Companies in
due course. The Auditor has reported on the 2022 accounts; his
reports (i) were unqualified, (ii) did not include a reference to
any matters to which the Auditor drew attention by way of emphasis
without qualifying his report and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
1.3 Predecessor accounting
Ashtead Technology Holdings plc was incorporated on 27 May 2021
and became the parent entity of the Group on 17 November 2021 when
Ashtead Technology Holdings plc acquired the entire shareholding of
both BP INV2 Pledgeco Limited and Ashtead US Pledgeco Inc by way of
share for share exchange agreement.
This does not constitute a business combination under IFRS 3
'Business Combinations' as it is effectively a combination among
entities under common control. There is currently no guidance in
IFRS on the accounting treatment for combinations among entities or
businesses under common control. IAS 8 requires management, if
there is no specifically applicable standard or interpretation, to
develop a policy that is relevant to the decision making needs of
users and that is reliable. The entity first considers requirements
and guidance in other international standards and interpretations
dealing with similar issues, and then the content of the IASB's
Conceptual Framework for Financial Reporting (Conceptual
Framework). Management might consider the pronouncements of other
standard-setting bodies that use a similar conceptual framework to
the IASB's, provided that they do not conflict with the IASB's
sources of guidance.
Considering facts and circumstances management has decided to
apply a method broadly described as predecessor accounting. The
principles of predecessor accounting are:
-- Assets and liabilities of the acquired entity are stated at
predecessor carrying values. Fair value measurement is not
required.
-- No new goodwill arises in predecessor accounting.
-- Any difference between the consideration given and the
aggregate carrying value of the assets and liabilities of the
acquired entity at the date of the transaction is included in
equity in retained earnings or in a separate reserve.
During the year ended 31 December 2021, management used merger
accounting and had taken merger relief at a Company level. Under
merger accounting principles, the assets and liabilities of the
subsidiaries were consolidated at book value in the Group financial
statements and the consolidated reserves of the Group were adjusted
to reflect the statutory share capital of Ashtead Technology
Holdings plc with the difference presented as the merger reserve.
The cost of investments in subsidiaries is determined by the
historical cost of investments in the subsidiaries of the Group
transferred from the previous owning entities, including
transaction costs. The value of total equity reflects the
combination of former BP INV2 Pledgeco Limited and Ashtead US
Pledgeco Inc Group.
1.4 Presentational currency
The consolidated financial statements, unless otherwise stated,
are presented in sterling, to the nearest thousand.
1.5 Going concern
The consolidated financial statements of the Group are prepared
on a going concern basis. The Directors of the Group assert that
the preparation of the consolidated financial statements on a going
concern basis is appropriate, which is based upon a review of the
future forecast performance of the Group for a two year period
ending 31 December 2024.
During 2022 the Group has continued to generate positive cash
flow from operating activities with a cash and cash equivalents
balance of GBP9,037,000 (2021: GBP4,857,000). The Group has access
to a multi currency RCF and additional accordion facility. After a
refinance which completed on 5 April 2023, the RCF and accordion
facility have total commitments of GBP100,000,000 and GBP50,000,000
respectively, both of which expire in April 2027, with an option to
extend by 1 year. The accordion facility is subject to credit
approval. As at 31 December 2022 the RCF had an undrawn balance of
GBP24,562,000 on the GBP60,000,000 facility available at that time.
Refer to Note 17 for details on the available facilities.
The Facility Agreement is subject to a leverage covenant of 3.0x
and an interest cover covenant of 4:1, which are both to be tested
on a quarterly basis. The Group has complied with all covenants
from entering the Facility Agreement until the date of these
financial statements.
The Group monitors its funding and liquidity position throughout
the year to ensure it has sufficient funds to meet its ongoing cash
requirements. Cash forecasts are produced based on a number of
inputs such as estimated revenues, margins, overheads, collection
and payment terms, capex requirements and the payment of interest
and capital on its existing debt facilities. Consideration is also
given to the availability of bank facilities. In preparing these
forecasts, the Directors have considered the principal risks and
uncertainties to which the business is exposed.
The Directors perform sensitivity analysis on the going concern
assumption to determine whether plausible downside scenarios would
have a material impact. Forecasts were flexed to incorporate a 5%
downturn in forecast performance in the year ending 31 December
2023 and a 10% downturn in forecast performance in the year ending
31 December 2024. Under this downside scenario the peak funding
requirement over the forecast period would leave GBP105,000,000
headroom in the available facilities with no threat to breach of
covenants.
Taking account of reasonable changes in trading performance and
bank facilities available, the application of severe but plausible
downside scenarios to the forecasts, the cash forecasts prepared by
management and reviewed by the Directors indicate that the Group is
cash generative and has adequate financial resources to continue to
trade for the foreseeable future and meet its obligations as they
fall due.
1.6 Basis of consolidation
Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
In assessing control, the Group takes into consideration potential
voting rights and rights to variable returns of the subsidiaries.
The acquisition date is the date on which control is transferred to
the acquirer. The financial information of subsidiaries is included
in the consolidated financial statements from the date that control
commences until the date that control ceases. Control is reassessed
whenever facts and circumstances indicate that there may be a
change in any of these elements of control.
The consolidated financial statements present the results of the
Company and its subsidiaries as if they formed a single entity.
Intercompany transactions and balances between Group companies are
therefore eliminated in full.
The consolidated financial statements incorporate the results of
the business combinations using the acquisition method. In the
balance sheet, the acquiree's identifiable assets, liabilities and
contingent liabilities are initially recognised at their fair
values at the acquisition date.
1.7 Business combinations
All business combinations are accounted for by applying the
acquisition method as at the acquisition date, which is the date on
which control is transferred to the Group.
The Group measures goodwill at the acquisition date as:
-- the fair value of the consideration transferred; plus
-- the recognised amount of any non-controlling interests in the acquiree; plus
-- the fair value of the existing equity interest in the acquiree; less
-- the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
Costs related to the acquisition, other than those associated
with the issue of debt or equity securities, are expensed as
incurred.
Any contingent consideration payable is recognised at fair value
at the acquisition date. Subsequent changes to the fair value of
the contingent consideration are recognised in the income
statement.
The Group determines that it has acquired a business when the
acquired set of activities and assets include an input and a
substantive process that together significantly contribute to the
ability to create outputs. The acquired process is considered
substantive if it is critical to the ability to continue producing
outputs, and the inputs acquired include an organised workforce
with the necessary skills, knowledge, or experience to perform that
process or it significantly contributes to the ability to continue
producing outputs and is considered unique or scarce or cannot be
replaced without significant cost, effort, or delay in the ability
to continue producing outputs.
When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition date.
This includes the separation of embedded derivatives in host
contracts by the acquiree.
1.8 New and amended standards adopted by the Group
There are no new IFRS or IFRIC Interpretations that are
effective for the first time this financial year which have a
material impact on the Group. The Group has not early adopted any
standards, interpretations or amendments that have been issued but
are not yet effective. There are no IFRS standards or amendments
that have been issued but not yet adopted that are expected to have
a material impact on the Group.
1.9 Statement of compliance
The preparation of financial statements in compliance with
adopted IFRS requires the use of certain critical accounting
estimates. It also requires Group management to exercise judgement
in applying the Group's accounting policies. The areas where
significant judgements and estimates have been made in preparing
the financial statements and their effect are disclosed in Note
2.
2. Summary of significant accounting policies
2.1 Foreign currencies
Transactions in foreign currencies are translated to the
respective functional currencies of Group entities at the foreign
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the
balance sheet date are retranslated to the functional currency at
the foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in the income
statement. Non-monetary assets and liabilities that are measured in
terms of historical cost in a foreign currency are translated using
the exchange rate at the date of the transaction.
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on consolidation, are
translated to the Group's presentational currency, sterling, at
foreign exchange rates ruling at the balance sheet date. The
revenues and expenses of foreign operations are translated at an
average rate for each month where this rate approximates to the
foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign
operations are reported as an item of other comprehensive income
and accumulated in the translation reserve, within equity. When a
foreign operation is disposed of, such that control, joint control
or significant influence (as the case may be) is lost, the entire
accumulated amount in the foreign currency translation reserve is
recycled to the income statement as part of the gain or loss on
disposal.
2.2 Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and impairment losses. Depreciation is
charged to the income statement on a straight-line basis over the
estimated useful lives of each part of an item of property, plant
and equipment. The estimated useful lives are as follows:
Leasehold improvements - remaining lease term
Freehold property - 25 years
Fixtures and fittings - 5 years
Motor vehicles - 5 years
Assets held for rental - 4-8 years
Depreciation methods, useful lives and residual values are
reviewed at each balance sheet date.
Any gain or loss on disposal of an item of property, plant and
equipment is recognised in the income statement.
Subsequent expenditure is capitalised only if it is probable
that the future economic benefits associated with the expenditure
will flow to the Group.
2.3 Intangible assets and goodwill
Goodwill
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash-generating units and is not
amortised but is tested annually for impairment.
Other intangible assets
Expenditure on internally generated goodwill and brands is
recognised in the income statement as an expense as incurred.
Other intangible assets that are acquired by the Group are
stated at cost less accumulated amortisation and accumulated
impairment losses.
Amortisation
Amortisation is charged to the income statement on a
straight-line basis over the estimated useful lives of intangible
assets unless such lives are indefinite. Intangible assets with an
indefinite useful life and goodwill are systematically tested for
impairment at each balance sheet date. Other intangible assets are
amortised from the date they are available for use. The estimated
useful lives are as follows:
Non-compete arrangements - 3 years
Customer relationships - 3 years
Computer software - 5 years
Both the non-compete arrangements and customer relationships are
intangible assets arising from business combinations. The fair
value of the non-compete arrangements at the acquisition date has
been determined using the 'with and without method', an income
approach which considers the difference between discounted future
cash flow models, with and without the non-compete clause. The fair
value of the customer relationships at the acquisition date has
been determined using the multi-period excess earnings method.
2.4 Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is calculated using the FIFO (first in, first out)
method.
2.5 Impairment of non-financial assets excluding inventories,
deferred tax assets and contract assets
The carrying amounts of the Group's non-financial assets, other
than inventories and deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of
impairment. If any such indication exists, then the asset's
recoverable amount is estimated. For goodwill, and intangible
assets that have indefinite useful lives or that are not yet
available for use, the recoverable amount is estimated each year at
the reporting date.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. For the purpose of impairment
testing, assets that cannot be tested individually are grouped
together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the
cash inflows of other assets or groups of assets (the
"cash-generating unit"). The goodwill acquired in a business
combination, for the purpose of impairment testing, is allocated to
groups of cash-generating units ("CGUs") that are expected to
benefit from the synergies of the combination. For the purposes of
goodwill impairment testing, CGUs to which goodwill has been
allocated are aggregated so that the level at which impairment is
tested reflects the lowest level at which goodwill is monitored for
internal reporting purposes. This is subject to an operating
segment ceiling test.
An impairment loss is recognised if the carrying amount of an
asset or its CGU exceeds its estimated recoverable amount.
Impairment losses are recognised in the income statement.
Impairment losses recognised in respect of CGUs are allocated first
to reduce the carrying amount of any goodwill allocated to the
units, and then to reduce the carrying amounts of the other assets
in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
2.6 Employee benefits
Defined contribution plans
The Group pays contributions to selected employees' defined
contribution pension plans. The amounts charged to the income
statement in respect of pension costs are the contributions payable
in the period. Differences between contributions payable in the
period and contributions actually paid are shown as either accruals
or prepayments on the balance sheet.
2.7 Provisions
A provision is recognised in the balance sheet when the Group
has a present legal or constructive obligation as a result of a
past event, and it is probable that an outflow of economic benefits
will be required to settle the obligation. If the effect is
material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, when appropriate, the
risks specific to the liability.
2.8 Revenue recognition
Revenue relates to the provision of services, rental of
equipment and sale of equipment. Revenues arising from the rental
of equipment are recognised in accordance with the requirements of
IFRS 16: Leases. Revenues arising from all other revenue streams
are recognised in accordance with the requirements of IFRS 15.
Revenue under IFRS 15
Revenues for the provision of services are recognised over time
as the services are provided. The services provided to customers
meet the criterion that the customer simultaneously receives and
consumes the benefits provided. Accordingly, these services qualify
for over-time revenue recognition.
Revenues for the provision of goods are recognised at a point in
time, which is the point at which the Group satisfies the
performance obligation under the terms of the contract. The
performance obligation is the delivery of the goods to the
customer, which is the point at which the customer obtains
control.
Revenues for the provision of goods and services are measured at
the transaction price, stated net of VAT.
Revenue under IFRS 16
All contracts for leases of equipment entered into by the Group
are classified as operating leases. The contracts for equipment
rentals do not transfer substantially all of the risks and rewards
incidental to ownership of the underlying asset to the
customer.
The Group recognises lease payments received under operating
leases as revenue on a straight-line basis over the lease term.
Where customers are billed in advance, deferred rental income is
recognised, which represents the portion of billed revenue to be
deferred to future periods. Where customers are billed in arrears
for equipment rentals, accrued rental income is recognised, which
represents unbilled revenues recognised in the period.
Performance obligations and timing of revenue recognition
Revenue derived from selling goods is recognised at a point in
time when control of the goods has transferred to the customer.
This is generally when the goods are delivered to the customer.
However, for export sales, control might also be transferred when
delivered either to the port of departure or port of arrival,
depending on the specific terms of the contract with a customer.
There is limited judgement needed in identifying the point control
passes: once physical delivery of the products to the agreed
location has occurred, the group no longer has physical possession,
usually will have a present right to payments (as a single payment
on delivery) and retains none of the significant risks and rewards
of the goods in question.
2.9 Operating segments
The Group operates in the following four geographic regions,
which have been determined as the Group's reportable segments. The
operations of each geographic region are similar.
-- Europe
-- Americas
-- Asia-Pacific
-- Middle East
The Chief Operating Decision Maker (CODM) is determined as the
Group's Board of Directors. The Group's Board of Directors reviews
the internal management reports of each geographic region monthly
as part of the monthly management reporting. The operations within
each of the above regional segments display similar economic
characteristics. There are no reportable segments which have been
aggregated for the purpose of the disclosure of segment
information.
2.10 Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the income statement except to
the extent that it relates to items recognised directly in equity,
in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a
business combination; and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised. Deferred tax assets
are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be
realised; such reductions are reversed when the probability of
future taxable profits improves. Unrecognised deferred tax assets
are reassessed at each reporting date and recognised to the extent
that it has become probable that future taxable profits will be
available against which they can be used.
Current tax assets and current tax liabilities are offset only
when:
-- the Group has a legally enforceable right to set off current
tax assets against current tax liabilities; and
-- the Group intends either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
Deferred tax assets and liabilities are offset only if:
-- the Group has a legally enforceable right to set off current
tax liabilities and assets; and
-- the deferred tax liabilities and assets relate to income
taxes levied by the same tax authority.
2.11 Leases
At the inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration.
As a lessee
At commencement or on modification of a contract that contains a
lease component, along with one or more other lease or non-lease
components, the Group accounts for each lease component separately
from the non-lease components. The Group allocates the
consideration in the contract to each lease component on the basis
of its relative stand-alone price and the aggregate stand-alone
price of the non-lease components.
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the end of the
lease term, unless the lease transfers ownership of the underlying
asset to the Group by the end of the lease term or the cost of the
right-of-use asset reflects that the Group will exercise a purchase
option. In that case the right-of-use asset will be depreciated
over the useful life of the underlying asset, which is determined
on the same basis as those of property, plant and equipment. In
addition, the right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain remeasurements
of the lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability comprise the following:
-- fixed payments, including in-substance fixed payments;
-- variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement
date;
-- amounts expected to be payable under a residual value guarantee;
-- the exercise price under a purchase option that the Group is
reasonably certain to exercise;
-- lease payments in an optional renewal period if the Group is
reasonably certain to exercise an extension option; and
-- penalties for early termination of a lease unless the Group
is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate,
there is a change in the Group's estimate of the amount expected to
be payable under a residual value guarantee, if the Group changes
its assessment of whether it will exercise a purchase, extension or
termination option or if there is a revised in-substance fixed
lease payment.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right-of-use asset, to the extent that the right-of-use asset is
reduced to nil, with any further adjustment required from the
remeasurement being recorded in the income statement.
The Group presents right-of-use assets and lease liabilities as
separate line items on the balance sheet.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and
lease liabilities for lease of low-value assets and short-term
leases. The Group recognises the lease payments associated with
these leases as an expense on a straight-line basis over the lease
term.
As a lessor
Refer to the revenue accounting policy note for the Group's
accounting policy under IFRS 16, as a lessor.
2.12 Financial instruments
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the
instrument.
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all of
its liabilities.
Financial assets and liabilities
All financial assets and liabilities are initially measured at
transaction price (including transaction costs), except for those
financial assets classified as at fair value through profit or
loss, which are initially measured at fair value (which is normally
the transaction price excluding transaction costs).
Financial assets and liabilities are only offset in the balance
sheet when, and only when there exists a legally enforceable right
to set off the recognised amounts and the Group intends either to
settle on a net basis, or to realise the asset and settle the
liability simultaneously.
Commitments to make and receive loans which meet the conditions
mentioned above are measured at cost (which may be nil) less
impairment.
Financial assets are classified, at initial recognition, as
subsequently measured at amortised cost, fair value through other
comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition
depends on the financial asset's contractual cash flow
characteristics and the Group's business model for managing them.
With the exception of trade receivables for which the Group has
applied the practical expedient, the Group initially measures a
financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss, transaction
costs.
For purposes of subsequent measurement, financial assets are
classified in four categories:
-- Financial assets at amortised cost (debt instruments)
-- Financial assets at fair value through OCI with recycling of
cumulative gains and losses (debt instruments)
-- Financial assets designated at fair value through OCI with no
recycling of cumulative gains and losses upon derecognition (equity
instruments)
-- Financial assets at fair value through profit or loss
In order for a financial asset to be classified and measured at
amortised cost or fair value through OCI, it needs to give rise to
cash flows that are 'solely payments of principal and interest'
(SPPI) on the principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an instrument
level. Financial assets with cash flows that are not SPPI are
classified and measured at fair value through profit or loss,
irrespective of the business model.
The Group's business model for managing financial assets refers
to how it manages its financial assets in order to generate cash
flows. The business model determines whether cash flows will result
from collecting contractual cash flows, selling the financial
assets, or both. Financial assets classified and measured at
amortised cost are held within a business model with the objective
to hold financial assets in order to collect
contractual cash flows while financial assets classified and
measured at fair value through OCI are held within a business model
with the objective of both holding to collect contractual cash
flows and selling.
Non-derivative financial assets are classified on initial
recognition in accordance with the Group's business model as trade
and other receivables, or cash and cash equivalents and accounted
for as follows:
-- Trade and other receivables: These are non-derivative
financial assets that are primarily held in order to collect
contractual cash flows and are measured at amortised cost, using
the effective interest rate method, and stated net of allowances
for credit losses.
-- Cash and cash equivalents: Cash and cash equivalents include
cash in hand and deposits held on call.
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.
Non-derivative financial liabilities, including loans and
borrowings, and trade and other payables, are stated at amortised
cost using the effective interest method.
For purposes of subsequent measurement, financial liabilities
are classified in two categories:
-- Financial liabilities at fair value through profit or loss
-- Financial liabilities at amortised cost
Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value
through profit or loss.
Gains or losses on liabilities held for trading are recognised
in the statement of profit or loss.
Financial liabilities designated upon initial recognition at
fair value through profit or loss are designated at the initial
date of recognition, and only if the criteria in IFRS 9 are
satisfied. The Group has not designated any financial liability as
at fair value through profit or loss.
Financial liabilities at amortised cost (loans & borrowings,
trade payables, other payables, accruals and lease liabilities) is
the category most relevant to the Group. After initial recognition,
interest-bearing loans and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and losses are
recognised in profit or loss when the liabilities are derecognised
as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as finance costs
in the statement of profit or loss.
This category generally applies to interest-bearing loans and
borrowings. For more information, refer to Note 17.
Financial assets are derecognised when and only when (a) the
contractual rights to the cash flows from the financial asset
expire or are settled, (b) the Group transfers to another party
substantially all of the risks and rewards of ownership of the
financial asset, or (c) the Group, despite having retained some,
but not all, significant risks and rewards of ownership, has
transferred control of the asset to another party.
Financial liabilities are derecognised only when the obligation
specified in the contract is discharged, cancelled or expires.
Fair value measurement
The best evidence of fair value is a quoted price for an
identical asset in an active market. When quoted prices are
unavailable, the price of a recent transaction for an identical
asset provides evidence of fair value as long as there has not been
a significant change in economic circumstances or a significant
lapse of time since the transaction took place. If the market is
not active and recent transactions of an identical asset on their
own are not a good estimate of fair value, the fair value is
estimated by using a valuation technique.
Impairment of financial assets
The Group recognises loss allowances for expected credit losses
(ECLs) on financial assets measured at amortised cost.
Loss allowances for trade receivables and accrued income are
measured at an amount equal to the lifetime ECL. Trade receivables
do not contain a significant financing component and typically have
a short duration of less than 12 months. The Group prepares a
provision matrix when measuring its ECLs. Trade receivables and
accrued income are segmented on the basis of historic credit loss
experience, based on geographic region. Historical loss experience
is applied to trade receivables and accrued income, after being
adjusted for:
-- information about current economic conditions; and
-- reasonable and supportable forecasts of future economic conditions.
Write-offs
The gross carrying amount of a financial asset is written off
(either partially or in full) to the extent that there is no
realistic prospect of recovery.
2.13 Borrowing costs
Borrowing costs are capitalised and amortised over the term of
the related debt. The amortisation of borrowing costs is recognised
as finance expenditure in the income statement.
2.14 Share based payments
The Group has equity settled compensation plans. Equity settled
share based payments are measured at fair value at the date of
grant. The fair value determined at the grant date of the equity
settled share based payments is expensed over the vesting period,
based on the Group's estimate of awards that will eventually vest.
Fair value is measured by the use of the Black Scholes option
pricing model.
The cost is recognised in staff costs (Note 6), together with a
corresponding increase in equity (share based payment reserve),
over the period in which the service and the performance conditions
are fulfilled (the vesting period). The cumulative expense
recognised for equity-settled transactions at each reporting date
until the vesting date reflects the extent to which the vesting
period has expired and the Group's best estimate of the number of
equity instruments that will ultimately vest. The expense or credit
in the statement of profit or loss for a period represents the
movement in cumulative expense recognised as at the beginning and
end of that period.
Service and non-market performance conditions are not taken into
account when determining the grant date fair value of awards, but
the likelihood of the conditions being met is assessed as part of
the Group's best estimate of the number of equity instruments that
will ultimately vest. Non-vesting conditions are reflected in the
fair value of an award and lead to an immediate expensing of an
award unless there are also service and/or performance
conditions.
Where an award is cancelled by the entity or by the
counterparty, any remaining element of the fair value of the award
is expensed immediately through profit or loss.
The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of diluted earnings
per share (further details are given in Note 9).
2.15 Dividends
Dividends are recognised as a liability and deducted from equity
at the time they are paid or approved by shareholders at the Annual
General Meeting. Otherwise dividends are disclosed if they have
been proposed or declared after the year end and before the
relevant financial statements are approved.
2.16 Critical estimates and judgements
In the application of the Group's accounting policies the
Directors are required to make judgements that have a significant
impact on the amounts recognised and to make estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
The Directors have not identified any critical judgements that
have a significant effect on the amounts recognised in the
consolidated financial statements, apart from those involving
estimations (which are explained separately below).
2.17 Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources
of estimation uncertainty at the balance sheet date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below.
Provision for bad debts
The Group applies IFRS 9 to measure the lifetime expected credit
loss of trade receivables. The lifetime expected credit loss is
based upon historic loss experience, which is then adjusted for
information about current economic conditions and reasonable and
supportable forecasts of future economic conditions. The Group
applies judgement to the adjustments to the expected credit loss
for information about current economic conditions and reasonable
and supportable forecasts of future economic conditions, and it
considers all relevant factors that impact future payment by
customers. The expected credit loss on trade receivables at the
reporting date is estimated on the basis of these underlying
assumptions. Refer to Note 24(a) for the carrying value of trade
receivables to which the expected credit loss model is applied.
Impairment of goodwill
The Group determines whether goodwill is impaired on an annual
basis. For each group of CGUs to which goodwill has been allocated
a goodwill impairment review is performed. The carrying value of
each group of CGUs to which goodwill is allocated is compared to
the recoverable amount, which is determined through a value in use
calculation. The value in use at each reporting date is based on
certain assumptions, including future forecast cash flows, discount
rates and growth rates. Refer to Note 12 for further information in
respect of the key assumptions applied in determining the value in
use for each group of CGUs.
Carrying value and useful lives of property, plant and
equipment
The Group reviews the estimated useful lives of property, plant
and equipment at the end of each reporting period based on
condition and usage of those assets. Based on management's
assessment as at the end of the reporting period the useful lives
of property, plant and equipment remain appropriate. The Group
reviews at the end of each reporting period, the carrying amounts
of its property, plant and equipment to determine whether there is
any indication that these assets have suffered an impairment loss.
The Group applies judgement to the impairment review including
future cash flow, discount rates and growth rates, which are common
with the impairment review of goodwill noted above. No impairment
loss was recognised during the period.
Business combinations
The Group assesses the fair value of the assets and liabilities
on acquisition and there is estimation uncertainty in identifying
any adjustments to the book values. The business combinations in
2022 included adjustments for intangible assets in respect of
customer relationships and non-compete agreements. For intangible
assets, a valuation methodology based on a discounted cash flow
(DCF) model was used and there is estimation uncertainty in the
future forecast cash flows, discount rates and growth rates used.
The acquisition of Hiretech also gave rise to a fair value
adjustment to property, plant and equipment. The Group reviewed the
estimated useful lives of property, plant and equipment on
acquisition, based on condition and usage of those assets. The
Group has had to estimate the residual value of property, plant and
equipment which resulted in a fair value adjustment to book value.
The Group reviewed all other assets and liabilities on acquisition
and after considering all relevant factors, no other adjustments
were made to book value. Refer to Note 27 for further information
in respect of the business combinations.
2.18 Adjusting items
Adjusting items are significant items of income or expense in
revenue, profit from operations, net finance costs and/or taxation
which individually or, if of a similar type, in aggregate, are
relevant to an understanding of the Group's underlying financial
performance because of their size, nature or incidence. In
identifying and quantifying adjusting items, the Group consistently
applies a policy that defines criteria that are required to be met
for an item to be classified as an adjusting item. These items are
separately disclosed in the segmental analysis or in the notes to
the accounts as appropriate.
The Group believes that these items are useful to users of the
consolidated financial statements in helping to understand the
underlying business performance and are used to derive the Group's
principal non-GAAP measure of Adjusted EBITDA, which is before the
impact of adjusting items and which is reconciled from profit from
operations.
3. Segmental analysis
For the year ended 31 December 2022
Asia Middle Head
Europe Americas Pacific East Office Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------------- --------- --------- --------- -------- -------- ---------
Total revenue 42,827 13,912 10,874 5,507 - 73,120
Cost of sales (9,663) (4,867) (2,368) (1,931) - (18,829)
--------------------------------------- --------- --------- --------- -------- -------- ---------
Gross profit 33,164 9,045 8,506 3,576 - 54,291
Administrative expenses (12,735) (5,274) (3,014) (1,563) (4,805) (27,391)
Other operating income 264 156 362 22 - 804
--------------------------------------- --------- --------- --------- -------- -------- ---------
Operating profit before depreciation,
amortisation and foreign
exchange gain/(loss) 20,693 3,927 5,854 2,035 (4,805) 27,704
Foreign exchange loss (3)
Depreciation (8,431)
Amortisation (1,202)
--------------------------------------- --------- --------- --------- -------- -------- ---------
Operating profit 18,068
Finance income 21
Finance costs (1,459)
--------------------------------------- --------- --------- --------- -------- -------- ---------
Profit before taxation 16,630
Taxation charge (3,965)
--------------------------------------- --------- --------- --------- -------- -------- ---------
Profit for the financial
year 12,665
--------------------------------------- --------- --------- --------- -------- -------- ---------
Total assets 93,522 15,335 11,025 5,429 11,511 136,822
Total liabilities 17,500 2,755 2,310 723 37,731 61,019
--------------------------------------- --------- --------- --------- -------- -------- ---------
For the year ended 31 December 2021
Asia Middle Head
Europe Americas Pacific East Office Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------------- -------- --------- --------- -------- -------- ---------
Total revenue 33,241 11,779 7,911 2,874 - 55,805
Cost of sales (7,723) (4,599) (1,817) (1,123) - (15,262)
--------------------------------------- -------- --------- --------- -------- -------- ---------
Gross profit 25,518 7,180 6,094 1,751 - 40,543
Administrative expenses (9,143) (3,799) (2,169) (1,064) (7,311) (23,486)
Other operating income 351 313 77 254 - 995
--------------------------------------- -------- --------- --------- -------- -------- ---------
Operating profit before depreciation,
amortisation and foreign
exchange gain/(loss) 16,726 3,694 4,002 941 (7,311) 18,052
Foreign exchange loss (215)
Depreciation (8,713)
Amortisation (1,516)
--------------------------------------- -------- --------- --------- -------- -------- ---------
Operating profit 7,608
Finance costs (4,019)
--------------------------------------- -------- --------- --------- -------- -------- ---------
Profit before taxation 3,589
Taxation charge (1,060)
--------------------------------------- -------- --------- --------- -------- -------- ---------
Profit for the financial
year 2,529
--------------------------------------- -------- --------- --------- -------- -------- ---------
Total assets 62,402 15,912 9,669 5,102 5,950 99,035
Total liabilities 8,343 3,014 1,080 644 24,822 37,903
--------------------------------------- -------- --------- --------- -------- -------- ---------
Central administrative expenses represent expenditures which are
not directly attributable to any single operating segment. The
expenditure has not been allocated to individual operating
segments.
The revenues generated by each geographic segment almost
entirely comprise revenues generated in a single country. Revenues
in the Europe, Americas, Asia Pacific and Middle East segments are
almost entirely generated in the UK, USA, Singapore and UAE
respectively. Revenues generated outside of these jurisdictions are
not material to the Group. The basis for the allocation of revenues
to individual countries is dependent upon the depot from which the
equipment is provided.
No single customer or group of customers under common control
account for 10% or more of Group revenue.
The carrying value of non-current assets, other than deferred
tax assets, split by the country in which the assets are held is as
follows:
As at 31 As at 31
December December
2022 2021
GBP000 GBP000
----------- ---------- ----------
UK 82,337 51,411
USA 11,163 11,394
Singapore 8,885 7,799
UAE 4,079 3,562
----------- ---------- ----------
4. Revenue
(a) Revenue streams:
The Group's key revenue generating activity comprises equipment
rental, sale of equipment and provision of related services
(non-rental revenue). The revenue is attributable to the continuing
activities of renting equipment, selling equipment or providing a
service. All rental income is expected to be settled within 12
months.
2022 2021
GBP000 GBP000
Rental income (Note 19) 61,157 43,913
Non-rental revenue 11,963 11,892
------------------------- -------- --------
Total revenue 73,120 55,805
------------------------- -------- --------
(b) Disaggregation of revenue from contracts with customers:
Revenue from contracts with customers from sale of equipment and
provision of related services is disaggregated by primary
geographical market, major products and services and timing of
revenue recognition.
2022 2021
Primary geographical markets GBP000 GBP000
------------------------------ -------- --------
Europe 7,812 7,579
Americas 1,859 3,052
Asia Pacific 1,037 550
Middle East 1,255 711
------------------------------ -------- --------
Non-rental revenue 11,963 11,892
------------------------------ -------- --------
Major products and services and timing of revenue recognition of
non-rental revenue:
2022 2021
GBP000 GBP000
--------------------------------------------------- -------- --------
Sale of equipment, transferred at a point in time 5,259 6,147
Provision of related services, transferred over
time 6,704 5,745
--------------------------------------------------- -------- --------
Non-rental revenue 11,963 11,892
--------------------------------------------------- -------- --------
5. Operating profit
This is stated after charging/(crediting):
2022 2021
GBP000 GBP000
----------------------------------------------------- -------- --------
Spares, consumables and external repairs 4,956 2,838
Facilities costs 464 329
Depreciation on property, plant and equipment (Note
11) 7,501 7,878
Depreciation on right-of-use assets (Note 19) 930 835
Amortisation of intangible assets (Note 12) 1,202 1,516
Staff costs including share based payments (Note
6) 18,622 13,851
Transaction costs 787 3,332
Foreign exchange losses 3 215
Operating lease rentals 172 165
Impairment loss on trade receivables 810 545
Impairment loss on inventories 394 98
----------------------------------------------------- -------- --------
Other operating income
Gain on sale of property, plant and equipment 804 995
804 995
----------------------------------------------------- -------- --------
Fees payable to the auditor for the audit of the financial
statements:
Total audit fees 202 167
------------------------------------------------ ---- ----
Fees payable to the auditor and its associates
for other services to the Group
Review of interim financial statements 5 -
Reporting accountant services* - 152
------------------------------------------------ ---- ----
Total non-audit fees 5 152
------------------------------------------------ ---- ----
* These fees were incurred as reporting accountant services
provided by BDO LLP in relation to the listing. Included in the
total fee is GBP18,000 that was deducted from share premium.
6. Staff costs
2022 2021
GBP000 GBP000
------------------------------- -------- --------
Wages and salaries 16,190 12,520
Social security costs 1,097 908
Other pension costs (Note 22) 510 423
Share based payment expense 825 -
------------------------------- -------- --------
18,622 13,851
------------------------------- -------- --------
The average number of employees during the year was as
follows:
No. No.
-------------------------- ---- ----
Operations 133 122
Sales and administrative 97 77
-------------------------- ---- ----
230 199
-------------------------- ---- ----
Full details of the Directors' remuneration and interests are
set out in the Directors' Remuneration Report on pages 34 to
35.
7. Finance income and costs
2022 2021
Finance income GBP000 GBP000
------------------------- -------- --------
Bank interest receivable 21 -
21 -
------------------------- -------- --------
2022 2021
Finance costs GBP000 GBP000
------------------------------------------------- -------- --------
Interest on bank loans (held at amortised cost) 1,139 2,261
Amortisation of deferred finance costs 182 1,222
Loan note interest - 71
Interest expense on lease liability (Note 19) 138 151
Hedge reserve movement - 313
Other interest and charges - 1
------------------------------------------------- -------- --------
1,459 4,019
------------------------------------------------- -------- --------
8. Tax
(a) Tax on profit on ordinary activities
The tax charge is made up as follows:
2022 2021
GBP000 GBP000
--------------------------------------------------- -------- --------
Current tax:
UK corporation tax on profit for the year 2,555 1,397
Adjustment in respect of previous periods (218) (78)
Foreign tax 94 1
Exchange rate differences 3 4
--------------------------------------------------- -------- --------
Total current income tax 2,434 1,324
--------------------------------------------------- -------- --------
Deferred tax:
Origination and reversal of temporary differences 1,122 (227)
Origination and reversal of temporary differences
- prior periods 320 292
Effect of changes in tax rates 99 (326)
Exchange rate differences (10) (3)
--------------------------------------------------- -------- --------
Total deferred tax 1,531 (264)
--------------------------------------------------- -------- --------
Tax charge in the profit and loss account (Note
8(b)) 3,965 1,060
--------------------------------------------------- -------- --------
(b) Factors affecting the current tax charge for the year
The tax assessed for the year differs from the standard rate of
corporation tax in the UK of 19% (2021: 19%). The differences are
explained below:
2022 2021
GBP000 GBP000
------------------------------------------------------ -------- --------
Profit on ordinary activities before taxation 16,630 3,589
------------------------------------------------------ -------- --------
Profit on ordinary activities multiplied by standard
rate of corporation tax in the UK of 19% (2021:
19%) 3,160 682
Effects of:
Expenses not deductible for tax purposes 112 500
Income not taxable (88) (43)
Gains/rollover relief 16 11
Effects of overseas tax rates 87 213
Adjustments in respect of previous periods 102 213
Tax rate changes 74 (326)
Share options (17) -
Movement in deferred tax not recognised 525 (176)
Exchange rate difference 47 7
Adjustment in relation to IFRS 16 - (21)
Super deduction relief (53) -
------------------------------------------------------ -------- --------
Tax charge 3,965 1,060
------------------------------------------------------ -------- --------
(c) Income tax due
2022 2021
GBP000 GBP000
---------------- -------- --------
Income tax due 1,820 821
---------------- -------- --------
(d) Unrecognised tax losses:
The Group has tax losses which arose in the UK, Canada and USA
of GBP11,447,000 (2021: GBP10,255,000) that are available
indefinitely for offset against future taxable profits of the Group
companies in which the losses arose.
Deferred tax assets have not been recognised in respect of these
losses as they may not be used to offset taxable profits elsewhere
in the Group and they have arisen in subsidiaries that are loss
making.
(e) Deferred tax:
Deferred tax included in the Group balance sheet is as
follows:
2022 2021
GBP000 GBP000
---------------------------------------------------------- -------- --------
Fixed asset timing differences (1,212) 838
Short-term timing differences 319 76
Tax losses 85 242
Intangible asset timing differences (1,419) (146)
---------------------------------------------------------- -------- --------
Deferred tax (liability)/asset (2,227) 1,010
---------------------------------------------------------- -------- --------
The recoverability of the deferred tax (liability)/asset
is as follows:
Current 85 17
Non-current (2,312) 993
---------------------------------------------------------- -------- --------
(2,227) 1,010
---------------------------------------------------------- -------- --------
9. Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of Ordinary Shares in issue during the year.
Diluted earnings per share
For diluted earnings per share, the weighted average number of
Ordinary Shares in issue is adjusted to assume conversion of all
potentially dilutive Ordinary Shares. The Group has potentially
dilutive ordinary shares arising from share options granted to
employees under the share schemes as detailed in Note 22 of these
financial statements. During the year ended 31 December 2021, the
Group had no potentially dilutive Ordinary Shares.
Adjusted earnings per share
Earnings attributable to ordinary shareholders of the Group for
the year, adjusted to remove the impact of adjusting items and the
tax impact of these, divided by the weighted average number of
Ordinary Shares outstanding during the period.
Adjusted Statutory Adjusted Statutory
2022 2022 2021 2021
------------------------------------------------ ----------- ----------- ----------- -----------
Earnings attributable to equity shareholders
of the Group:
Profit for the year (GBP000) 15,619* 12,665 9,385* 2,529
------------------------------------------------ ----------- ----------- ----------- -----------
Number of shares:
Weighted average number of Ordinary
Shares - Basic 79,582,000 79,582,000 70,995,578 70,995,578
Weighted average number of Ordinary
Shares - Diluted 80,679,071 80,679,071 70,995,578 70,995,578
------------------------------------------------ ----------- ----------- ----------- -----------
Earnings per share attributable to equity
holders of the Group - continuing operations:
Basic earnings per share (pence) 19.6 15.9 13.2 3.6
Diluted earnings per share (pence) 19.4 15.7 13.2 3.6
------------------------------------------------ ----------- ----------- ----------- -----------
* Refer to Note 28 for the reconciliation of Non-GAAP Profit Metrics.
10. Dividends
The Board is pleased to propose a final dividend of 1.0p per
share, which if approved at the Annual General Meeting to be held
on 8 June 2023, will be paid on 23 June 2023 with a record date of
26 May 2023. The shares will become ex-dividend on 25 May 2023. No
interim dividend was paid in 2022.
11. Property, plant and equipment
Assets
held for Leasehold Freehold Fixture Motor
rental improvements property and fittings vehicles Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- ---------- -------------- ---------- -------------- ---------- ---------
Cost:
At 1 January 2021 104,906 1,537 197 3,322 245 110,207
Additions 6,625 201 - 421 56 7,303
Disposals (6,666) - - (29) - (6,695)
Foreign exchange movements 2 1 - (31) 4 (24)
---------------------------- ---------- -------------- ---------- -------------- ---------- ---------
At 31 December 2021 104,867 1,739 197 3,683 305 110,791
---------------------------- ---------- -------------- ---------- -------------- ---------- ---------
Accumulated depreciation:
At 1 January 2021 (84,593) (974) (60) (2,593) (157) (88,377)
Charge for the year (7,158) (244) (8) (296) (24) (7,730)
Disposals 6,252 - - 12 - 6,264
Foreign exchange movements (122) (1) - 10 (3) (116)
---------------------------- ---------- -------------- ---------- -------------- ---------- ---------
At 31 December 2021 (85,621) (1,219) (68) (2,867) (184) (89,959)
---------------------------- ---------- -------------- ---------- -------------- ---------- ---------
Net book value:
At 31 December 2021 19,246 520 129 816 121 20,832
---------------------------- ---------- -------------- ---------- -------------- ---------- ---------
Assets
held for Leasehold Freehold Fixture Motor
rental improvements property and fittings vehicles Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- ---------- -------------- ---------- -------------- ---------- ----------
Cost:
At 1 January 2022 104,867 1,739 197 3,683 305 110,791
Acquisitions (Note
27) 10,984 409 - 443 29 11,865
Fair value adjustment
on acquisitions (Note
27) 467 - - - - 467
Additions 13,098 208 - 295 - 13,601
Disposals (6,280) (76) - (60) (30) (6,446)
Foreign exchange movements 5,937 85 - 170 35 6,227
---------------------------- ---------- -------------- ---------- -------------- ---------- ----------
At 31 December 2022 129,073 2,365 197 4,531 339 136,505
---------------------------- ---------- -------------- ---------- -------------- ---------- ----------
Accumulated depreciation:
At 1 January 2022 (85,621) (1,219) (68) (2,867) (184) (89,959)
Acquisitions (Note
27) (5,920) (338) - (267) (21) (6,546)
Fair value adjustment
on acquisitions (Note
27) (1,118) - - (81) - (1,199)
Charge for the year (6,892) (253) (8) (311) (37) (7,501)
Disposals 5,613 43 - 46 29 5,731
Foreign exchange movements (5,018) (62) - (117) (22) (5,219)
---------------------------- ---------- -------------- ---------- -------------- ---------- ----------
At 31 December 2022 (98,956) (1,829) (76) (3,597) (235) (104,693)
---------------------------- ---------- -------------- ---------- -------------- ---------- ----------
Net book value:
At 31 December 2022 30,117 536 121 934 104 31,812
---------------------------- ---------- -------------- ---------- -------------- ---------- ----------
12. Goodwill and intangible assets
Customer Non-compete Computer
Goodwill relationships arrangements software Total
GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- --------- --------------- -------------- ---------- --------
Cost:
At 1 January 2021 48,585 4,447 208 2,801 56,041
Additions - - - 966 966
Foreign exchange movements 66 - - 2 68
---------------------------- --------- --------------- -------------- ---------- --------
At 31 December 2021 48,651 4,447 208 3,769 57,075
---------------------------- --------- --------------- -------------- ---------- --------
Amortisation:
At 1 January 2021 - (2,261) (109) (2,627) (4,997)
Charge for the year - (1,449) (67) (148) (1,664)
Foreign exchange movements - - - (3) (3)
---------------------------- --------- --------------- -------------- ---------- --------
At 31 December 2021 - (3,710) (176) (2,778) (6,664)
---------------------------- --------- --------------- -------------- ---------- --------
Net book value:
At 31 December 2021 48,651 737 32 991 50,411
---------------------------- --------- --------------- -------------- ---------- --------
Customer Non-compete Computer
Goodwill relationships arrangements software Total
GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- --------- --------------- -------------- ---------- --------
Cost:
At 1 January 2022 48,651 4,447 208 3,769 57,075
Acquisitions (Note 27) 16,852 4,414 274 - 21,540
Additions - - - 725 725
Foreign exchange movements 540 2 - - 542
---------------------------- --------- --------------- -------------- ---------- --------
At 31 December 2022 66,043 8,863 482 4,494 79,882
---------------------------- --------- --------------- -------------- ---------- --------
Amortisation:
At 1 January 2022 - (3,710) (176) (2,778) (6,664)
Charge for the year - (840) (39) (323) (1,202)
Foreign exchange movements - 2 - 3 5
---------------------------- --------- --------------- -------------- ---------- --------
At 31 December 2022 - (4,548) (215) (3,098) (7,861)
---------------------------- --------- --------------- -------------- ---------- --------
Net book value:
At 31 December 2022 66,043 4,315 267 1,396 72,021
---------------------------- --------- --------------- -------------- ---------- --------
Goodwill has arisen on the acquisition of the following
subsidiaries: Amazon Group Limited (the parent company of the
existing Ashtead Technology Group at the time of acquisition, in
April 2016), TES Survey Equipment Services LLC, Welaptega Marine
Limited, Aqua-Tech Solutions LLC and its subsidiary Alpha Subsea
LLC, Underwater Cutting Solutions Limited, WeSubsea AS and its
subsidiary WeSubsea UK Limited and Hiretech Limited, as well as the
acquisition of the trade and assets of Forum Subsea Rentals, a
division of Forum Energy Technologies (UK) Limited, Forum Energy
Asia Pacific PTE Ltd and Forum US, Inc.
Impairment testing for CGUs containing goodwill
For the purpose of impairment testing, goodwill has been
allocated to the Group's CGUs as follows. The group of CGUs to
which goodwill has been allocated are consistent with the Group's
operating segments.
2022 2021
GBP000 GBP000
-------------- -------- --------
Europe 52,271 34,916
Americas 6,591 6,569
Asia Pacific 5,351 5,336
Middle East 1,830 1,830
-------------- -------- --------
An impairment test has been performed in respect of each of the
groups of CGUs to which goodwill has been allocated on each
reporting date.
For each of the operating segments to which goodwill has been
allocated, the recoverable amount has been determined on the basis
of a value in use calculation. In each case, the value in use was
found to be greater than the carrying amount of the group of CGUs
to which the goodwill has been allocated. Accordingly, no
impairment to goodwill has been recognised. The value in use has
been determined by discounting future cash flows forecast to be
generated by the relevant regional segment.
A summary of the key assumptions on which management has based
its cash flow projections at each reporting date is as follows:
2022 2021
GBP000 GBP000
---------------------------- -------- --------
Europe:
Pre-tax discount rate 12.8% 11.6%
Terminal value growth rate 2% 2%
Forecast period 2 years 2 years
Americas:
Pre-tax discount rate 12.8% 11.6%
Terminal value growth rate 2% 2%
Forecast period 2 years 2 years
Asia Pacific:
Pre-tax discount rate 12.8% 11.6%
Terminal value growth rate 2% 2%
Forecast period 2 years 2 years
Middle East:
Pre-tax discount rate 12.8% 11.6%
Terminal value growth rate 2% 2%
Forecast period 2 years 2 years
---------------------------- -------- --------
Key assumptions used in value in use calculations
In determining the above key assumptions, management has
considered past experience together with external sources of
information where available (e.g. industry-wide growth
forecasts).
The calculation of is most sensitive to the following
assumptions:
-- Discount rates
-- Growth rates used to extrapolate cash flows beyond the forecast period
The discount rate applied to each CGU represents a pre-tax rate
that reflects the market assessment of the time value of money as
at 31 December 2022. The discount rate calculation is based on the
specific circumstances of the Group and its operating segments and
is derived from its weighted average cost of capital (WACC). The
WACC takes into account both debt and equity. The cost of equity is
derived from the expected return on investment by the Group's
investors. The cost of debt is based on the interest-bearing
borrowings the Group is obliged to service. Adjustments to the
discount rate are made to factor in the specific amount and timing
of the future tax flows in order to reflect a pre-tax discount
rate.
Sensitivity analysis shows that a pre-tax discount rate higher
than 18.8% would be required to start to indicate impairment.
Growth rate estimates are based on published industry
research.
Sensitivity analysis shows that a terminal value growth rate
lower than -6.7% would be required to start to indicate
impairment.
Sensitivity analysis has been performed in respect of the key
assumptions above with no impairment identified from the
sensitivities performed.
13. Inventories
2022 2021
GBP000 GBP000
------------------------------- -------- --------
Raw materials and consumables 1,865 1,778
------------------------------- -------- --------
The cost of inventories recognised as an expense and included in
cost of sales during the year is disclosed in Note 5. The
impairment loss recognised as an expense during the year is
disclosed in Note 5.
14. Trade and other receivables
2022 2021
GBP000 GBP000
-------------------------------- -------- --------
Trade receivables (Note 24(a)) 16,494 14,212
Prepayments 1,397 1,684
Accrued income 1,565 1,328
19,456 17,224
-------------------------------- -------- --------
The Directors consider that the carrying amount of trade
receivables and accrued income approximates to fair value.
Information about the Group's exposure to credit and market
risks, and impairment losses for trade receivables is included in
Note 24.
15. Cash and cash equivalents
2022 2021
GBP000 GBP000
--------------------------- -------- --------
Cash at bank 9,031 4,842
Cash in hand 6 15
--------------------------- -------- --------
Cash and cash equivalents 9,037 4,857
--------------------------- -------- --------
Cash at bank earns interest at floating rates based on daily
bank overnight deposit rates. The Directors consider that the
carrying amount of cash and cash equivalents equates to fair
value.
Foreign currency denominated balances within Group cash and cash
equivalents amount to:
2022 2021
GBP000 GBP000
--------------------------------------- -------- --------
US dollar denominated balances 1,819 1,581
Singapore dollar denominated balances 982 864
Canadian dollar denominated balances 170 150
AED denominated balances 319 133
Norwegian krone denominated balances 127 -
--------------------------------------- -------- --------
3,417 2,728
--------------------------------------- -------- --------
All other balances are denominated in sterling.
16. Trade and other payables
2022 2021
GBP000 GBP000
------------------------------------------ -------- --------
Trade payables 5,896 3,349
Accruals 13,137 5,682
Amounts due to related parties (Note 25) 101 384
------------------------------------------ -------- --------
19,134 9,415
------------------------------------------ -------- --------
The Directors consider that the carrying amount of trade and
other payables equates to fair value. The amounts due to related
parties bear no interest and are due on demand.
The Group's exposure to currency and liquidity risks is included
in Note 24.
17. Loans and borrowings
2022 2021
GBP000 GBP000
------------------------------------- -------- --------
Non-current
Bank loans (held at amortised cost) 34,865 24,425
34,865 24,425
------------------------------------- -------- --------
At 31 December 2022 the bank loans comprise a revolving credit
facility of GBP35,438,000 (2021: GBP24,953,000) which carried
interest at SONIA plus 2.2%. The lenders are HSBC Bank plc and
Clydesdale Bank plc. The Facility Agreement is subject to a
leverage covenant of 2.5x and an interest cover covenant of 4:1.
The total commitments are GBP60,000,000 (2021: GBP40,000,000) for
the RCF and an additional GBPnil (2021: GBP20,000,000) accordion
facility. As at 31 December 2022 the RCF had an undrawn balance of
GBP24,562,000 (2021: GBP15,047,000) and the accordion facility was
fully drawn (2021: GBP20,000,000 undrawn). A non-utilisation fee of
0.88% is charged on the non-utilised element of the RCF facility.
During 2022 the revolving credit facility was extended by 12 months
and is fully repayable by November 2025.
On 5 April 2023 the revolving credit facility was increased from
GBP60,000,000 to GBP100,000,000 and the accordion facility was
increased from GBPnil to GBP50,000,000, and is fully repayable by
April 2027 with an option to extend the facilities by 1 year. The
accordion facility is subject to credit approval. The terms of the
facilities are substantially the same terms with ABN AMRO Bank N.V.
and Citibank N.A. joining HSBC UK Bank plc and Clydesdale Bank plc
as lenders.
Certain companies within the Group joined in cross guarantees
with respect to bank loans totalling GBP35,438,000 (2021:
GBP24,953,000) advanced to Ashtead Technology Limited and Ashtead
Technology Offshore Inc. The lenders have a floating charge over
certain assets of the Group.
Bank loans are repayable as follows:
2022 2021
GBP000 GBP000
--------------------------- -------- --------
Within one year - -
Within one to two years - -
Within two to three years 35,438 24,953
--------------------------- -------- --------
35,438 24,953
Deferred finance costs (573) (528)
--------------------------- -------- --------
34,865 24,425
--------------------------- -------- --------
During the year drawdowns totalling GBP31,000,000 (2021:
GBP25,107,000) and repayments totalling GBP21,727,000 (2021:
GBP44,121,000) were made from/to the RCF.
The weighted average interest rates on floating rate instruments
during the year was as follows:
2022 2021
--------------------------------- ------ ------
Weighted average interest rates 4.36% 5.54%
--------------------------------- ------ ------
The Group's exposure to interest rate, foreign currency and
liquidity risks is included in Note 24.
18. Financing liabilities reconciliation
Other Changes
1 January Interest non-cash in exchange 31 December
2021 Cash flows paid changes rates 2021
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cash at bank and in hand 10,958 (6,326) - - 225 4,857
-------------------------- ---------- ----------- --------- ---------- ------------- ------------
Bank loans (43,008) 19,928 - (1,222) (123) (24,425)
Related party loan notes (1,121) 830 - 291 - -
Lease liabilities (3,052) 1,012 151 (919) (326) (3,134)
-------------------------- ---------- ----------- --------- ---------- ------------- ------------
Net debt (36,223) 15,444 151 (1,850) (224) (22,702)
-------------------------- ---------- ----------- --------- ---------- ------------- ------------
The non-cash movement relates to amortisation of deferred
finance costs, accrual of finance costs on related party loan notes
and lease liability, and addition of new leases during the
year.
Other Changes
1 January Interest non-cash in exchange 31 December
2022 Cash flows Acquisitions paid changes rates 2022
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cash at bank
and in hand 4,857 (3,918) 7,938 - - 160 9,037
------------------- ---------- ----------- ------------- --------- ---------- ------------- ------------
Bank loans (24,425) (9,045) - - (182) (1,213) (34,865)
Lease liabilities (3,134) 1,064 - 138 (571) (353) (2,856)
------------------- ---------- ----------- ------------- --------- ---------- ------------- ------------
Net debt (22,702) (11,899) 7,938 138 (753) (1,406) (28,684)
------------------- ---------- ----------- ------------- --------- ---------- ------------- ------------
The non-cash movement relates to the amortisation of deferred
finance costs, accrual of finance costs on lease liability and the
addition of new leases during the year.
19. Leases
Leases as lessee
The Group leases warehouses, offices, and other facilities in
different locations (UK, UAE, Singapore, Canada, USA). The lease
term ranges from 2 to 15 years with an option to renew available
for some of the leases. Lease payments are renegotiated every 3-5
years to reflect market terms. The Group has elected not to
recognise right-of-use assets and lease liabilities for leases that
are short-term and/or of low-value items. The Group recognises the
lease payments associated with these leases as an expense on a
straight-line basis over the lease term.
Further information about leases is presented below:
a) Amounts recognised in consolidated balance sheet
Right-of-use assets GBP000
---------------------------------------- -------
Balance at 1 January 2021 2,816
Additions to right-of-use assets 940
Depreciation charge for the year (835)
Effects of movements in exchange rates 2
---------------------------------------- -------
Balance at 31 December 2021 2,923
---------------------------------------- -------
Additions to right-of-use assets 571
Depreciation charge for the year (930)
Effects of movements in exchange rates 67
---------------------------------------- -------
Balance at 31 December 2022 2,631
---------------------------------------- -------
2022 2021
Lease liabilities: GBP000 GBP000
------------------------- -------- --------
Current 865 783
Non-current 1,991 2,351
------------------------- -------- --------
Total lease liabilities 2,856 3,134
------------------------- -------- --------
Refer to Note 24(b) for more information on maturity analysis of
lease liabilities.
Leases as lessee continued
b) Amounts recognised in the income statement
2022 2021
GBP000 GBP000
------------------------------------------------- -------- --------
Depreciation charge 930 835
Interest expense on lease liability 138 151
Expenses relating to short-term leases 172 165
------------------------------------------------- -------- --------
Total amount recognised in the income statement 1,240 1,151
------------------------------------------------- -------- --------
c) Amounts recognised in the cash flow statement
2022 2021
GBP000 GBP000
-------------------------------- -------- --------
Total cash payments for leases 1,202 1,163
-------------------------------- -------- --------
Leases as a lessor
The Group leases out equipment to its customers. The lease
period is short-term which ranges from weeks to a few months. All
leases are classified as operating leases from a lessor
perspective, because they do not transfer substantially all of the
risks and rewards incidental to the ownership of the equipment.
The Group as a lessor recognises lease payments received from
operating leases as income on a straight-line basis. Increases (or
decreases) in rental payments over a period of time, other than
variable lease payments, are reflected in the determination of the
lease income, which is recognised on a straight-line basis (refer
to Note 4).
20. Provisions for liabilities
Other
GBP000
------------------------------ --------
At 1 January 2021 134
Charge for the year 28
Paid during the year (56)
Movement in foreign exchange 2
------------------------------ --------
At 31 December 2021 108
------------------------------ --------
Charge for the year 30
Paid during the year (34)
Movement in foreign exchange 13
------------------------------ --------
At 31 December 2022 117
------------------------------ --------
End of service benefits
The provision relates to end of service benefits for certain
employees. The actual amount payable is dependent on the length of
service of the impacted employees when their employment ceases and
their salary at that time. The provision is calculated on the
impacted employees' length of service and salary at the balance
sheet date.
21. Capital commitments
2022 2021
GBP000 GBP000
----------------------------------------------------- -------- --------
Capital expenditure contracted for but not provided 1,184 2,825
----------------------------------------------------- -------- --------
22. Employee benefits
Share based payments
The IPO LTIP awards were granted on 5 September 2022 and
comprise three equal tranches, with the first tranche vesting on
the publication of the annual report for the year ended 31 December
2022, the second tranche vesting on the publication of the annual
report for the year ended 31 December 2023 and the third tranche
vesting on the publication of the annual report for the year ended
31 December 2024. Eligible senior managers from various Group
companies are eligible for nil cost share option awards with
Ashtead Technology Holdings plc granting the awards and the awards
will be equity settled with ordinary shares in Ashtead Technology
Holdings plc. The share awards vesting is subject to the
achievement of Adjusted EPS and that for participants to remain
employed by the Group over the vesting period.
The outstanding number of awards at 31 December 2022 is
1,097,071 (2021: nil).
Tranche Tranche Tranche
Share based payments 1 2 3
---------------------------------------- -------------- -------------- --------------
Valuation model Black-Scholes Black-Scholes Black-Scholes
Weighted average share price (pence) 260.5 260.5 260.5
Exercise price (pence) 0 0 0
Expected dividend yield 0.76% 0.81% 0.85%
Expected volatility 41.93% 41.93% 41.93%
Risk-free interest rate 2.79% 3.14% 3.04%
Expected term (years) 0.67 1.67 2.67
Weighted average fair value (pence) 259.2 257.0 254.7
Attrition 5% 5% 5%
Weighted average remaining contractual
life (years) 9.67 9.67 9.67
---------------------------------------- -------------- -------------- --------------
The expected volatility has been calculated using the Group's
historical market data history since IPO in 2021.
Weighted
average
Number of exercise
Share based payments shares price (GBP)
------------------------------------- ---------- -------------
Outstanding at beginning of the year - -
Granted 1,097,071 -
Exercised - -
Forfeited - -
------------------------------------- ---------- -------------
Outstanding at the end of the year 1,097,071 -
------------------------------------- ---------- -------------
Exercisable at the end of the year - -
------------------------------------- ---------- -------------
Share-based payments expense recognised in the consolidated
income statement for 31 December 2022 total GBP825,000 (2021:
GBPnil).
Defined contribution scheme
The Group operates defined contribution retirement benefit
schemes for all qualifying employees. The total expense charged to
the income statement in the year ended 31 December 2022 was
GBP510,000 (2021: GBP423,000). There was a balance outstanding of
GBP134,000 in relation to pension liabilities at 31 December 2022
(2021: GBP59,000).
23. Share capital and reserves
The Group considers its capital to comprise its invested
capital, called up share capital, merger reserve, retained earnings
and foreign exchange translation reserve. Quantitative detail is
shown in the consolidated statement of changes in equity. The
Directors' objective when managing capital is to safeguard the
Group's ability to continue as a going concern in order to provide
returns for the shareholders and benefits for other
stakeholders.
Called up share capital
31 December 2022 31 December 2021
------------------------------------ -------------------- --------------------
Allotted, called up and fully paid No. GBP000 No. GBP000
------------------------------------ ----------- ------- ----------- -------
Ordinary shares of GBP0.05 each 79,582,000 3,979 79,582,000 3,979
------------------------------------ ----------- ------- ----------- -------
3,979 3,979
------------------------------------ ----------- ------- ----------- -------
Ordinary share capital represents the number of shares in issue
at their nominal value. The holders of Ordinary Shares are entitled
to receive dividends as declared from time to time and are entitled
to one vote per share at meetings of the Company.
Share premium
Share premium represents the amount over the par value which was
received by the Group upon the sale of the Ordinary Shares. Share
premium is stated net of direct costs of GBP929,000 relating to the
issue of the shares in 2021 on IPO.
Merger reserve
The merger reserve was created as a result of the share for
share exchange under which Ashtead Technology Holdings plc became
the parent undertaking prior to the IPO. Under merger accounting
principles, the assets and liabilities of the subsidiaries were
consolidated at book value in the Group financial statements and
the consolidated reserves of the Group were adjusted to reflect the
statutory share capital, share premium and other reserves of the
Company as if it had always existed, with the difference presented
as the merger reserve.
Share based payment reserve
The share based payment reserve is built up of charges in
relation to equity settled share based payment arrangements which
have been recognised within the consolidated income statement.
Foreign currency translation reserve
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on consolidation, are
translated to the Group's presentational currency, sterling, at
foreign exchange rates ruling at the balance sheet date. The
revenues and expenses of foreign operations are translated at an
average rate for each month where this rate approximates to the
foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign
operations are reported as an item of other comprehensive income
and accumulated in the translation reserve, within invested
capital. When a foreign operation is disposed of, such that
control, joint control or significant influence (as the case may
be) is lost, the entire accumulated amount in the foreign currency
translation reserve is recycled to the income statement as part of
the gain or loss on disposal.
Retained earnings
The movement in retained earnings is as set out in the
Consolidated Statement of Changes in Equity. Retained earnings
represent cumulative profits or losses, net of dividends and other
adjustments.
24. Financial instruments
Financial risk management
Risk management framework
The Group's risk management policies are established to identify
and analyse the risks faced by the Group, to set appropriate risk
limits and controls and to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group's
activities.
The Group has exposure to the following risks arising from
financial instruments:
-- Credit risk
-- Liquidity risk
-- Market risk
a) Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's receivables from customers. The Group has no significant
concentration of credit risk, with exposure spread over a large
number of customers.
The credit risk on liquid funds held with HSBC, Bank of Montreal
and The Royal Bank of Scotland is considered to be low. The
long-term credit rating for HSBC is AA-/A+ per Fitch/Standard &
Poor's. The long-term credit rating for Bank of Montreal is AA/A+
per Fitch/Standard & Poor's. The long-term credit rating for
The Royal Bank of Scotland is A+/A per Fitch/Standard &
Poor's.
The Group has established a credit policy under which each new
customer is analysed individually for creditworthiness before the
Group's standard payment and delivery terms and conditions are
offered. The Group's review includes external ratings, if they are
available, financial statements, credit agency information,
industry information and in some cases bank references. Sale limits
are established for each customer and reviewed quarterly. Any sales
exceeding those limits require approval from management.
Trade receivables
Customer credit risk is managed by each business unit subject to
the Group's established policy, procedures and control relating to
customer credit risk management. Credit quality of a customer is
assessed based on a credit rating scorecard and individual credit
limits are defined in accordance with this assessment. Outstanding
customer receivables are regularly monitored and action is taken
through an escalation process in relation to slow or non-payment of
invoices. The Group has no significant concentration of credit
risk, with exposure spread over a large number of customers.
An impairment analysis is performed at each reporting date using
a provision matrix to measure expected credit losses. The provision
rates are based on days past due for groupings of various customer
segments with similar loss patterns (i.e., by geographical region,
product type, customer type and rating). The calculation reflects
the probability-weighted outcome, the time value of money and
reasonable and supportable information that is available at the
reporting date about past events, current conditions and forecasts
of future economic conditions. Generally, trade receivables are
written-off if past due for more than one year and are not subject
to ongoing enforcement activity. The maximum
exposure to credit risk at the reporting date is the carrying
value of each class of financial assets disclosed in Note 14. The
Group does not hold collateral as security. The Group evaluates the
concentration of risk with respect to trade receivables as low, as
exposure is spread over a large number of customers.
The Group has used a practical expedient by computing the
expected credit loss allowance for trade receivables based on a
provision matrix. The provision percentage is determined for each
subsidiary independently.
2022 2021
GBP000 GBP000
------------------------ -------- --------
Current (not past due) 6,955 4,698
Past due 0-90 days 9,738 8,934
Past due 91-180 days 427 1,459
Past due 181-270 days 153 484
Past due 271-365 days 625 51
More than 365 days 1,514 410
------------------------ -------- --------
19,412 16,036
------------------------ -------- --------
Movements in the allowance for impairment in respect of trade
receivables
The movement in the allowance for impairment in respect of trade
receivables during the year was as follows:
Movement in provision for doubtful debts GBP000
---------------------------------------------------------------- --------
Balance at 1 January 2021 (1,279)
Increase in allowance recognised in profit or loss during
the year (545)
---------------------------------------------------------------- --------
At 31 December 2021 (1,824)
Increase in allowance recognised in profit or loss during
the year (810)
Trade receivables written off during the year as uncollectible (284)
---------------------------------------------------------------- --------
At 31 December 2022 (2,918)
---------------------------------------------------------------- --------
Cash and cash equivalents
The Group held cash and cash equivalents and other bank balances
of GBP9,037,000 at 31 December 2022 (2021: GBP4,857,000). The cash
and cash equivalents are held with the HSBC Bank plc, Bank of
Montreal and The Royal Bank of Scotland plc.
b) Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset. The Group's objective when managing liquidity is
to ensure that it will have sufficient liquidity to meet its
liabilities when they are due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage
to the Group's reputation. The Group utilises both long and
short-term borrowing facilities.
Cash flow forecasting is performed centrally with rolling
forecasts of the Group's liquidity requirements regularly monitored
to ensure it has sufficient cash to meet operational needs. The
Group's revenue model results in a strong level of cash conversion
allowing it to service working capital requirements.
The Group has access to a multicurrency RCF facility which has
total commitments of GBP60,000,000 at 31 December 2022, which was
increased on 5 April 2023 to a multicurrency RCF facility of
GBP100,000,000 plus an accordion facility of GBP50,000,000. As at
31 December 2022 the RCF had an undrawn balance of
GBP24,562,000.
Maturities of financial liabilities
The table below analyses the Group's financial liabilities into
relevant maturity groupings based on their contractual
maturities:
Contractual cash flows
Between Between
Carrying Within one to two to More than
total Total one year two years five years five years
As at 31 December 2021 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- --------- -------- ---------- ----------- ------------ ------------
Non-derivative financial
liabilities
Bank loans 24,425 24,953 - - 24,953 -
Trade and other payables 9,415 9,415 9,415 - - -
Lease liabilities 3,134 3,672 966 767 1,577 362
-------------------------- --------- -------- ---------- ----------- ------------ ------------
36,974 38,040 10,381 767 26,530 362
-------------------------- --------- -------- ---------- ----------- ------------ ------------
Contractual cash flows
-------------------------------------------------------------
Between Between
Carrying Within one to two to More than
total Total one year two years five years five years
As at 31 December 2022 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- --------- -------- ---------- ----------- ------------ ------------
Non-derivative financial
liabilities
Bank loans 34,865 35,438 - - 35,438 -
Trade and other payables 19,134 19,134 19,134 - - -
Lease liabilities 2,856 3,031 955 722 1,290 64
-------------------------- --------- -------- ---------- ----------- ------------ ------------
56,855 57,603 20,089 722 36,728 64
-------------------------- --------- -------- ---------- ----------- ------------ ------------
Based on the RCF balance and the interest rate prevailing at 31
December 2022, the outstanding balance would attract interest at
GBP2,307,000 per annum until repaid.
c) Market risk
Market risk is the risk that changes in market prices - such as
foreign exchange rates, interest rates and equity prices - will
affect the Group's income or the value of its holdings of financial
instruments. The Group's exposure to market risk is primarily
related to currency risk and interest rate risk.
Currency risk
Currency risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in foreign exchange rates. The Group's activities expose it
primarily to the financial risks of movements in foreign currency
exchange rates. The Group monitors net currency exposures and
hedges as necessary.
The individual Group entities do not have significant financial
assets and liabilities denominated in currencies other than their
functional currency (2021: insignificant) and immaterial impact
from the sensitivity analysis, therefore disclosures relating
regarding exposure to foreign currencies and sensitivity analysis
have not been included.
Interest rate risk
Interest rate risk can be either fair value interest rate risk
or cash flow interest rate risk. Fair value interest rate risk is
the risk of changes in fair values of fixed interest-bearing
investments and loans. Cash flow interest rate risk is the risk
that the future cash flows of floating interest-bearing investments
and loans will fluctuate because of fluctuations in the interest
rates.
The Group is exposed to interest rate movements on its external
bank borrowing. Based on average loans and borrowings an
increase/(decrease) of 1.00% in effective interest rates would
increase/(decrease) the interest charged to the income statement by
GBP354,000 (2021: GBP248,000).
d) Capital risk management
The Group's objectives when managing capital (defined as net
debt plus equity) are to safeguard the Group's ability to continue
as a going concern in order to provide returns to shareholders and
benefits for other stakeholders, while optimising returns to
shareholders through an appropriate balance of debt and equity
funding. The Group manages its capital structure and makes
adjustments to it with respect to changes in economic conditions
and strategic objectives.
As at 31 December 2022, the Group had gross borrowings of
GBP35,438,000 through its RCF and a cash and cash equivalents
balance of GBP9,037,000. Currently interest is payable on the RCF
at a rate of SONIA plus 2.2%. The Group remains in compliance with
its banking covenants.
25. Related parties
Note 26 provides information about the entities included in the
consolidated financial statements as well as the Group's structure,
including details of the subsidiaries and the holding company.
Key managerial personnel:
Allan Pirie
Ingrid Stewart
Bill Shannon
Joe Connolly
Tony Durrant
Thomas Thomsen
Directors' interests in the Ordinary Shares of the Group are
included in the Directors' Report on page 36.
Entity with significant influence over the Group:
There are no entities with significant influence over the
Group.
During 2021 the following entities had significant influence
over the Group:
BP INV2 Holdco Limited
BP INV2 Newco Limited
BP INV2B Bidco Limited
A. Transactions during the period with related parties:
2022 2021
GBP000 GBP000
------------------------------------------ -------- --------
Dividend expense*
BP INV2 Newco Limited - 476
BP INV2B Bidco Limited - 820
Interest expense
BP INV2B Bidco Limited - 71
Compensation to key management personnel
Emoluments 1,062 838
Share based payment charges 491 -
------------------------------------------ -------- --------
* The dividend expense related to the pre-IPO group restructure.
Full details of the Directors' remuneration and interests are
set out in the Remuneration Committee Report on pages 34 to 35.
B. Outstanding balances with related parties as at year end:
2022 2021
GBP000 GBP000
------------------------ -------- --------
Payables to:
BP INV2B Bidco Limited (101) (362)
BP INV2 Holdco Limited - (20)
BP INV2 Newco Limited - (2)
------------------------ -------- --------
(101) (384)
------------------------ -------- --------
26. Group structure
A full list of subsidiary undertakings of Ashtead Technology
Holdings plc as defined by IFRS as at 31 December 2022 is disclosed
below.
Equity interest
at
------------------
Name of the Group company Country of incorporation 2022 2021
--------------------------------------- -------------------------- -------- --------
BP INV2 Pledgeco Limited(1) England & Wales 100% 100%
Ashtead US Pledgeco Inc(4) USA 100% 100%
Amazon Acquisitions Limited*(1) England & Wales 100% 100%
Ashtead Technology (South East Asia)
PTE Limited*(2) Singapore 100% 100%
Ashtead Technology Limited*(3) Scotland 100% 100%
TES Survey Equipment Services LLC*(5) UAE 100% 100%
Ashtead Technology Offshore Inc*(4) USA 100% 100%
Welaptega Marine Limited*(6) Canada 100% 100%
Aqua-Tech Solutions LLC*(4) ^^^ USA 100% 100%
Alpha Subsea LLC*(4) ^^^ USA 100% 100%
Underwater Cutting Solutions Ltd*(1) England & Wales 100% 100%
WeSubsea AS*(7) ^ Norway 100% -
WeSubsea UK Limited*(3) ^ Scotland 100% -
Hiretech Limited*(3) ^^ Scotland 100% -
--------------------------------------- -------------------------- -------- --------
* Shares held by a subsidiary undertaking.
(1) The registered address of the subsidiary is 1 Gateshead
Close, Sunderland Road, Sandy, Bedfordshire, SG19 1RS, United
Kingdom.
(2) The registered address of the subsidiary is 80 Raffles
Place, #32-01 UOB Plaza 1, Singapore, 048624.
(3) The registered address of the subsidiary is Ashtead House,
Discovery Drive, Arnhall Business Park, Westhill, AB32 6FG, United
Kingdom.
(4) The registered address of the subsidiary is 2711 Centerville
Road, Suite 400, Wilmington, Delaware, 19808, USA.
(5) The registered address of the subsidiary is Warehouse B301,
Plot M29, ICAD III, Musaffah, Abu Dhabi, UAE.
(6) The registered address of the subsidiary is 238 Brownlow
Avenue, Unit 103, Dartmouth, Nova Scotia, B3B 1Y2, Canada.
(7) The registered address of the subsidiary is Bryggegata 6, 0250 Oslo, Norway.
^ On 27 September 2022, the Group acquired 100% of the issued
share capital of WeSubsea AS and its subsidiary WeSubsea UK
Limited, companies whose primary activity is the provision of
subsea dredges and ancillary equipment rental to the offshore
energy industry.
^^ On 5 December 2022, the Group acquired 100% of the issued
share capital of Hiretech Limited, a company whose primary activity
is the provision of equipment rental and solutions to the offshore
energy industry.
^^^ On 10 March 2023, Alpha Subsea LLC was merged into Aqua-Tech
Solutions LLC and thereafter Aqua-Tech Solutions LLC was merged
into Ashtead Technology Offshore Inc.
27. Business Combinations
A. Acquisition of WeSubsea AS
On 27 September 2022, the Group acquired 100% of the issued
share capital of WeSubsea AS and its subsidiary WeSubsea UK
Limited, companies whose primary activity is the provision of
subsea dredges and ancillary equipment rental to the offshore
energy industry.
The acquisition has been accounted for under the acquisition
method. The following tables sets out the book values of the
separately identifiable assets and liabilities acquired and their
fair value to the Group:
Fair value
Book to the
value Revaluation Other adjustments Group
GBP000 GBP000 GBP000 GBP000
------------------------------- -------- ------------ ------------------ -----------
Fixed assets
Property, plant and equipment 800 - - 800
Intangible assets - 926 - 926
Current assets
Inventories 10 - - 10
Trade and other receivables 791 - - 791
Cash 959 - - 959
------------------------------- -------- ------------ ------------------ -----------
Total assets 2,560 926 - 3,486
------------------------------- -------- ------------ ------------------ -----------
Trade and other payables 278 - - 278
Income tax payable 298 - - 298
Deferred tax liability 41 195 - 236
------------------------------- -------- ------------ ------------------ -----------
Total liabilities 617 195 - 812
------------------------------- -------- ------------ ------------------ -----------
Net assets 1,943 731 - 2,674
------------------------------- -------- ------------ ------------------ -----------
Goodwill 3,982
------------------------------- -------- ------------ ------------------ -----------
6,656
------------------------------- -------- ------------ ------------------ -----------
Satisfied by:
Cash 6,656
------------------------------- -------- ------------ ------------------ -----------
6,656
------------------------------- -------- ------------ ------------------ -----------
The Group incurred acquisition-related expenditure of GBP386,000
on legal fees and due diligence costs. These costs have been
expensed to the Consolidated Income Statement and included in
'Administrative expenses'.
In the year ended 31 December 2022, revenue of GBP143,000 and
operating profit of GBP107,000 was included in the Consolidated
Income Statement in respect of WeSubsea AS and WeSubsea UK Limited.
If the acquisition had occurred on 1 January 2022, management
estimates that the consolidated revenue would have been
GBP75,092,000 and the consolidated operating profit for the year
would have been GBP19,705,000. In determining these amounts,
management has assumed that the fair value adjustments, determined
provisionally, that arose on the date of acquisition would have
been the same if the acquisition had occurred on 1 January
2022.
The goodwill reflects the significant opportunity for future
growth in integrating WeSubsea, utilising their in-house technical
knowledge in renting subsea dredges and ancillary equipment to both
new and existing customers of Ashtead Technology, and increasing
cross selling opportunities across all of our businesses. In
addition, this is an opportunity to increase WeSubsea's
international presence and exposure through Ashtead Technology's
existing international network. The wider synergies for the Group
will be created by broadening our rental fleet, investing further
in our people, and increasing our service offering to our customers
with a resultant broadening in customer relationships and increased
retention.
B. Acquisition of Hiretech Limited
On 5 December 2022, the Group acquired 100% of the issued share
capital of Hiretech Limited, a company whose primary activity is
the provision of equipment rental and solutions to the offshore
energy industry.
The acquisition has been accounted for under the acquisition
method. The following tables sets out the book values of the
separately identifiable assets and liabilities acquired and their
fair value to the Group:
Fair value
Book to the
value Revaluation Other adjustments Group
GBP000 GBP000 GBP000 GBP000
------------------------------- -------- ------------ ------------------ -----------
Fixed assets
Property, plant and equipment 4,519 (732) - 3,787
Intangible assets - 3,762 - 3,762
Current assets
Inventories 395 (132) - 263
Trade and other receivables 2,002 - - 2,002
Cash 6,980 - - 6,980
------------------------------- -------- ------------ ------------------ -----------
Total assets 13,896 2,898 - 16,794
------------------------------- -------- ------------ ------------------ -----------
Trade and other payables 1,427 - - 1,427
Income tax payable 640 - - 640
Deferred tax liability 651 739 - 1,390
------------------------------- -------- ------------ ------------------ -----------
Total liabilities 2,718 739 - 3.457
------------------------------- -------- ------------ ------------------ -----------
Net assets 11,178 2,159 - 13,337
------------------------------- -------- ------------ ------------------ -----------
Goodwill 12,870
------------------------------- -------- ------------ ------------------ -----------
26,207
------------------------------- -------- ------------ ------------------ -----------
Satisfied by:
Cash* 26,207
------------------------------- -------- ------------ ------------------ -----------
26,207
------------------------------- -------- ------------ ------------------ -----------
* Of the total cash consideration of GBP26,207,000,
GBP25,281,000 was paid in 2022 and GBP926,000 was paid in 2023.
The Group incurred acquisition-related expenditure of GBP401,000
on legal fees and due diligence costs. These costs have been
expensed to the Consolidated Income Statement and included in
'Administrative expenses'.
In the year ended 31 December 2022, revenue of GBP519,000 and
operating profit of GBP500,000 was included in the Consolidated
Income Statement in respect of Hiretech Limited. If the acquisition
had occurred on 1 January 2022, management estimates that the
consolidated revenue would have been GBP78,955,000 and the
consolidated operating profit for the year would have been
GBP21,741,000. In determining these amounts, management has assumed
that the fair value adjustments, determined provisionally, that
arose on the date of acquisition would have been the same if the
acquisition had occurred on 1 January 2022.
The fair value of the acquired trade and other payables includes
an accrual of GBP748,000 which is provisional pending clarification
of the tax treatment of certain matters.
The goodwill reflects the significant opportunity for future
growth in integrating Hiretech, increasing rental equipment and
solutions to both new and existing customers through utilising
Hiretech's in-house technical knowledge, and increasing cross
selling opportunities to our combined customer base. In addition,
there is an opportunity to increase Hiretech's international
presence and exposure through Ashtead Technology's existing
international network. The wider synergies for the Group will be
achieved by broadening the rental fleet, investing further in our
people, and increasing our service offering which will broaden our
customer relationships and increase customer retention.
28. Reconciliation of Non-IFRS Profit Metrics
Reconciliation of Adjusted EBITDA
For the year ended 31 December
2022 2021
Notes GBP000 GBP000
----------------------------------------------- ------ -------- --------
Adjusted EBITDA 28,555 22,437
Cost associated with IPO - (3,332)
Cost associated with M&A 27 (787) -
Restructuring costs (28) (1,314)
One-off bad debts & debt collection costs - (39)
One-off inventory adjustment - 205
One-off asset disposal - 130
Other exceptional costs (36) (35)
----------------------------------------------- ------ -------- --------
Operating profit before depreciation,
amortisation and foreign exchange loss 27,704 18,052
Depreciation on property, plant and equipment 11 (7,501) (7,878)
Depreciation on right-of-use asset 19 (930) (835)
----------------------------------------------- ------ -------- --------
Operating profit before amortisation and
foreign exchange loss 19,273 9,339
Amortisation of intangible assets 12 (1,202) (1,516)
Foreign exchange loss 5 (3) (215)
----------------------------------------------- ------ -------- --------
Operating profit 18,068 7,608
----------------------------------------------- ------ -------- --------
Reconciliation of Adjusted EBITA
For the year ended 31 December
2022 2021
Notes GBP000 GBP000
------------------------------------------- ------ -------- --------
Adjusted EBITA 20,124 13,724
Cost associated with IPO - (3,332)
Cost associated with M&A 27 (787) -
Restructuring costs (28) (1,314)
One-off bad debts & debt collection costs - (39)
One-off inventory adjustment - 205
One-off asset disposal - 130
Other exceptional costs (36) (35)
Amortisation of intangible assets 12 (1,202) (1,516)
Foreign exchange loss 5 (3) (215)
------------------------------------------- ------ -------- --------
Operating profit 18,068 7,608
------------------------------------------- ------ -------- --------
Reconciliation of Adjusted Profit After Tax
For the year ended 31 December
2022 2021
Notes GBP000 GBP000
-------------------------------------------- ------ -------- --------
Adjusted Profit After Tax 15,619 9,385
Cost associated with IPO - (3,332)
Cost associated with M&A 27 (787) -
Restructuring costs (28) (1,314)
One-off bad debts & debt collection costs - (39)
One-off inventory adjustment - 205
One-off asset disposal - 130
One-off hedge reserve movement - (313)
Loan repayment fees - (100)
Deferred finance cost write off - (704)
Other exceptional costs (36) (35)
Foreign exchange loss 5 (3) (215)
Amortisation of intangible assets 12 (1,202) (1,516)
Tax impact of the adjustments above 12 377
Deferred tax arising from temporary timing
differences on intangible assets (910) -
Profit for the financial year 12,665 2,529
-------------------------------------------- ------ -------- --------
Adjusted Profit After Tax is used to calculate the Adjusted
basic earnings per share and Adjusted diluted earnings per share in
Note 9. A reconciliation of adjusted profit before tax is included
in the CFO report on page 19.
Throughout the annual report we use a range of financial and
non-financial measures to assess our performance. A number of the
financial measures including Adjusted EBITDA, Adjusted EBITA,
Adjusted Profit After Tax and Adjusted EPS are not defined under
IFRS, so they are considered alternative performance measures
("APMs").
Management uses these measures to monitor the Group's financial
performance alongside IFRS measures because they help illustrate
the underlying financial performance and position of the Group. We
have explained the purpose of each of these measures throughout the
strategic report and included definitions on page 86. Management
uses APMs as they measure business performance in a more consistent
way.
These APM's should be considered in addition to, and not as a
substitute for, or as superior to, measures of financial
performance, financial position of cash flows reported in
accordance with IFRS. APM's are not uniformly defined by all
companies, including those in the Group's industry. Accordingly,
APM's may not be comparable with similarly titled measures and
disclosures by other companies.
29. Subsequent events
On 13 March 2023, the Company issued 365,919 newly authorised
shares at a subscription price of GBP0.05 (being nominal value) to
the EBT in anticipation of the vesting of the first tranche of IPO
LTIP share options. The shares are held by the EBT on the behalf of
certain option holders and are non-voting until each of the option
holders choose to exercise their options at which point they will
be transferred to the option holder and become voting shares. As of
31 March 2023 the Company has 79,947,919 shares in issue
representing a nominal value of GBP3,997,396.
On 5 April 2023 the revolving credit facility was increased from
GBP60,000,000 to GBP100,000,000 and the accordion facility was
increased from GBPnil to GBP50,000,000, and is fully repayable by
April 2027 with an option to extend the facilities by 1 year. The
terms of the facilities are substantially the same terms with ABN
AMRO Bank N.V. and Citibank N.A. joining HSBC UK Bank plc and
Clydesdale Bank plc as lenders.
On 10 March 2023, Alpha Subsea LLC was merged into Aqua-Tech
Solutions LLC and thereafter Aqua-Tech Solutions LLC was merged
into Ashtead Technology Offshore Inc.
On 10 February 2023, the name of Welaptega Marine Limited was
changed to Ashtead Technology (Canada) Limited.
Company Information
Directors
W M F C Shannon
A W Pirie
I Stewart
J A Connolly
A R C Durrant
T Hamborg-Thomsen
Company Secretary
I Stewart
Auditor
BDO LLP
Statutory Auditor
4 Atlantic Quay
70 York Street
Glasgow G2 8JX
Bankers
HSBC Bank plc
95-99 Union Street
Aberdeen AB11 6BD
Clydesdale Bank plc
1 Queen's Cross
Aberdeen AB15 4XU
Solicitors
White & Case LLP
5 Old Broad Street
London EC2N 1DW
Corporate broker
Numis Securities Ltd
45 Gresham Street
London EC2V 7BF
Registrar
Computershare Limited
The Pavilions
Bridgwater Road
Bristol BS13 8AE
Registered Office
1 Gateshead Close
Sunderland Road
Sandy
Bedfordshire SG19 1RS
Registered number: 13424040
Website
www.ashtead-technology.com
Ashtead Technology Holdings plc
Ashtead House
Discovery Drive
Westhill
Aberdeenshire, UK
AB32 6FG
www.ashtead-technology.com
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END
FR NKBBQNBKBKPK
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