Full-year Results 2021
6 June 2022
Ashtead Technology Holdings plc
("the Company")
Full-year Results 2021
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 2021.
Highlights
Financial Results
·Group revenue up by 32% to £55.8m (2020: £42.4m), driven by increased demand in both offshore renewables and offshore oil and gas markets
o Revenues from oil and gas of £37.3m, up 23% on the previous year (2020: £30.3m), reflecting industry-wide recovery following pandemic-driven downturn in global energy activity in 2020
o Strong growth in offshore renewables revenues up over 50% at £18.5m (2020: £12.1m) now representing 33% of Group revenue (2020: 29%), with the Group targeting revenue from the offshore renewables market of at least 50% in the medium term
· Adjusted EBITDA margin of 40.2% (2020: 40.2%), resulting in Adjusted EBITDA of £22.4m (2020: £17.0m), up 32% on the year prior
· Adjusted EBITA increased 118% to £13.7m (2020: £6.3m), with an Adjusted EBITA margin of 24.6% (2020: 14.9%)
· Net debt reduced to £22.7m as at 31 December 2021, with net debt / Adjusted EBITDA 1.0x, following £15m primary capital raise as part of successful IPO in November 2021
· £50m RCF in place (£40m facility plus £10m accordion), of which £25.0m has been drawn as at 31 December 2021
*Adjusted EBITDA is defined as operating profit adjusted to add back, depreciation, amortisation, foreign exchange movements and non-trading items as described in Note 27 to the accounts. Adjustments predominantly owing to one off costs related to IPO
*Adjusted EBITA is defined as operating profit adjusted to add back, amortisation, foreign exchange movements and non-trading items as described in Note 27 to the accounts. Adjustments predominantly owing to one off costs related to IPO
Operational Highlights
· Reinforced market leading position in subsea rental, investing £6.6m in new subsea equipment and technology to further expand our extensive equipment rental fleet, the largest independent fleet in the industry
· Continued focus on operational excellence ensuring the reliability and availability of equipment, employee training and development, digitalisation of internal processes and by focusing on the delivery of integrated solutions and service agility
· Cost utilisation of 43%, up from 37% in 2020, reflecting increased market activity across both renewables and oil and gas industries
· Increased proportion of total revenue derived from the Group's services offering
· Leveraging significant product knowledge and domain expertise to better serve a broad range of customers and increase market share
· Continuing to review M&A opportunities to complement organic growth and consolidate a highly fragmented market
Outlook
· The twin themes of energy transition and energy security are providing strong market growth drivers for the Group, across both renewables and oil and gas markets, and are contributing to high levels of tendering activity
· The Group's trading in the first four months of 2022 has been strong, benefiting from positive utilisation and pricing trends, and as a result, the Board has modestly raised its profit expectations for the full year 2022
· The fungibility of the Group's rental fleet leaves the business well positioned to capitalise on favourable market dynamics following the renewed focus on energy security
Allan Pirie, Chief Executive Officer, commented:
"2021 was a significant year for Ashtead Technology with the completion of our IPO on AIM, providing a strong platform for future growth and enabling us to support our customers more widely in the delivery of the energy transition.
We delivered a solid financial performance in 2021 which is testament to the resilience of our business, the growing market opportunities available, particularly in offshore wind, and the expertise and efforts of our people who are central to our success.
One of the most significant challenges facing our industry is being able to deliver sources of energy in a more sustainable, affordable and responsible way. Based on the fungibility of our equipment and solutions across the offshore wind and oil and gas end markets, we are well-positioned to support this as investment increases across all forms of energy in order to secure supply.
We have made a promising start to 2022 and look forward to an exciting future."
For further information, please contact:
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Ashtead Technology |
Via Vigo Consulting |
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Allan Pirie, Chief Executive Officer |
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Ingrid Stewart, Chief Financial Officer |
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Vigo Consulting (Financial PR) |
Tel: +44 (0)20 7390 0230 |
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Patrick d'Ancona |
Ashteadtechnology@vigoconsulting.com |
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Finlay Thomson |
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Numis Securities Limited (Nomad and Broker) |
Tel: +44 (0)20 7260 1000 |
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Julian Cater |
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George Price |
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Jonny Abbott Kevin Cruickshank (QE) |
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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. Headquartered in the UK, the Company operates globally, servicing customers from its nine international customer service hubs.
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.
Chairman's Statement
I am delighted to introduce Ashtead Technology's maiden full-year results following the Company's Initial Public Offering (IPO) on AIM in November 2021.
As a newly listed company, this is the start of an exciting new chapter for Ashtead Technology, which will enable us to accelerate our growth plans and support our customers more widely in the delivery of the energy transition.
Financial results
Total revenue for the year to 31 December 2021 increased by 32% to £55.8m reflecting an improving market backdrop both in the offshore renewables and oil and gas sectors. Our oil and gas business provides a strong underpin and grew 23% in the year and we were particularly pleased to see the continued rapid growth of our offshore renewables business which grew over 50% year on year. Adjusted EBITA of £13.7m compares to £6.3m in 2020. Profit before tax of £2.5m, after IPO and other adjusting costs of £4.4m, compares to a loss before tax of £0.7m in 2020 delivering Adjusted earnings per share of 13.2p in 2021. This performance reflects a strong finish to the year and was ahead of our expectations at the time of the IPO.
With the Board's support, management's focus is on long-term value creation through continued organic growth and an increased focus on M&A opportunities as we set out on our journey to fulfil the strategy as detailed in our IPO investment case. We will continue to do this while maintaining capital discipline. With net debt at £22.7m (2020: £36.2m), leverage at 31 December 2021 was 1.0x with the business having a stated leverage target of 1-2x in the medium term. The Board recognises the merits of establishing a small, progressive dividend flow and will consider this from 2022 onwards subject to the Company having sufficient distributable profits.
Employees
The Group would not have delivered this performance in 2021 without the continued dedication of its employees. On behalf of the Board, I would like to thank all of the Group's employees for their continued contribution to its success. Particular thanks go to our offshore team who with continued quarantine requirements have had to deal with challenging logistical issues and extended periods away from their families.
Environment, Social and Governance
The Board recognises the importance of our role in environmental, social and governance matters ("ESG") and the part we play to help deliver a lower carbon future.
As a market leader in subsea technology rental and solutions, built over a 37-year history, Ashtead Technology's offering sits firmly at the heart of the energy transition providing critical late life and decommissioning support to the oil and gas industry and supporting the extensive growth in offshore wind globally.
The Group is committed to trading responsibly and creating sustainable value for all stakeholders and is focused on five key priorities aligned with the United Nations Sustainable Development Goals.
Board and governance
I would like to thank my fellow Board members, and in particular Allan Pirie (CEO) and Ingrid Stewart (CFO), for their contribution to the successful IPO. The Board welcomed independent Non-Executive Directors Tony Durrant and Thomas Thomsen to the Board shortly before the IPO, who bring significant industry experience and expertise to the Board. Having been involved with the business for six years, Joe Connolly continues to serve as a Non-Executive Director in his capacity for Buckthorn Partners who remain a substantial shareholder.
Summary and outlook
The Group displayed strong financial resilience during the COVID-19 pandemic and, whilst challenges remain with restrictions in the movement of personnel and quarantines in certain countries, the business has continued to demonstrate this resilience through 2021.
As I write, the world has been rocked by Russia's invasion of Ukraine and our thoughts are with those who are personally impacted by the tragic events that are unfolding.
The impact on the energy markets, both renewables and oil and gas, is significant and as the focus on energy security increases the outlook for the business remains positive. Recent months have seen a high level of tendering across both renewables and oil and gas projects and Ashtead Technology remains well-positioned for long-term growth in demand for its services as the industry delivers the infrastructure required to address the changing energy landscape.
Bill Shannon
Chairman
Chief Executive Officer's Review
A resilient business with an exciting future
Overview
2021 was a milestone year for Ashtead Technology as we successfully listed the business on AIM in November, providing a strong, long-term platform for future growth.
The Group performed well throughout the year and ahead of the expectations set out at IPO.
We delivered a resilient financial performance in 2021, reduced our leverage, while also continuing to invest in our high-quality equipment rental fleet. This was achieved despite the challenging operating backdrop, resulting from the COVID-19 restrictions and is testament to the resilience of our business, the tremendous efforts and commitment of our people, and our growing presence in the offshore renewables market.
A solid performance
As a market leader in subsea equipment rental and solutions for the global offshore energy sector, we benefitted from improving market conditions across both wind, and oil and gas, end markets.
Group revenue for the year to 31 December 2021 grew by 32% to £55.8m (2020: £42.4m), with Adjusted EBITA of £13.7m (2020: £6.3m) up 118% against the prior year, resulting in a margin of 25% and showing a recovery towards pre-COVID levels. Adjusted earnings per share was 13.2p.
Strategic and operational review
Through our three service lines - Survey & Robotics, Mechanical Solutions and Asset Integrity - we support the installation, IMR (inspection, maintenance & repair), and decommissioning of offshore energy infrastructure through the provision of subsea equipment rental and solutions. Our target is to achieve low double-digit organic revenue growth by executing on our proven strategy of:
· Continuing to support the energy transition and capitalise on the significant expected increase in expenditure in the global offshore wind market
· Maintaining Ashtead Technology's position as the leading independent subsea equipment rental business, growing and strengthening our business in subsea technology rental and solutions, whilst continuing to capitalise on customers' increasing propensity to rent
· Continuing to broaden the range of complementary equipment and services and leveraging the Group's global footprint through the further internationalisation of Ashtead Technology's products and services
During the year, we continued to deliver against these objectives. Revenue from offshore renewables continued to increase, rising to 33% of Group revenue (2020: 29%). The Group is targeting revenue from the offshore renewables market of at least 50% in the medium term.
We also continued to cement our market leading position, investing £7.9m in capital expenditure which includes investment in new subsea equipment and technology to further expand our extensive equipment rental fleet, the largest independent fleet in the industry. There was further evidence of customers' increasing propensity to rent evidenced through increased outsourced asset management interest, and we expect this trend to continue.
We remained focused on operational excellence, ensuring the reliability and availability of equipment, the delivery of integrated solutions and service agility, employee training and development, digitisation of internal processes and utilising our significant domain expertise and product knowledge, increasing operational benefits through continuous improvement to better serve our customers.
The Group plans to complement its organic growth through a clear and focused M&A strategy, building on its strong track record of value-enhancing M&A. We are focused on strengthening geographic, equipment and service capability to better support the Group's customers globally, and continue to review opportunities to acquire businesses which complement our current offering. The acquisition pipeline contains a number of opportunities across each of the Group's service lines.
Sustainability
In 2021, we made good progress in our sustainability journey through focusing on five priorities that are aligned with the principals of the UN Global Compact - employee health, safety & wellbeing, labour practices & human rights, energy transition, ecological impact and business ethics.
Throughout the year, we took action to reduce our environmental impact, support the communities where we live and operate, improve and respect diversity and inclusion in the Group, reinforce our health and safety culture, and reaffirm our commitments to respecting human rights and to corporate governance. Whilst we are pleased with what we have achieved so far, we recognise that more needs to be done to support our ambitions and create value for all our stakeholders. Led by a sustainability working group, we have developed an enhanced sustainability strategy for 2022 and beyond to ensure sustainability issues are firmly integrated into our day-to-day operations and to help guide our efforts and improve our performance.
Market
In an ever-evolving energy industry, one of the most significant challenges we face is the increased demand society places on being able to deliver sources of energy in a sustainable, affordable and responsible way. The expansion of offshore wind as a means of energy production, alongside the decommissioning of existing oil and gas infrastructure, is critical to a successful energy transition process.
Throughout 2021 we saw market forecasts for offshore renewable energy spend increase, with analysts forecasting strong growth for wind energy, evidenced in our own business by a step change in our offshore renewables pipeline. The backdrop for the industry continues to strengthen with 25GW capacity awarded in the ScotWind 1 auction in the UK, and several new lease awards in the US alone. This has been further propelled by the UK Government's Energy Strategy to accelerate the offshore wind industry and increase the pace of deployment to deliver 50GW by 2030 as countries look to secure domestic energy sources in light of rising global energy prices, provoked by surging demand after the pandemic as well as Russia's invasion of Ukraine.
Oil and gas will also continue to be important constituents in meeting energy demand as the industry continues its transition to cleaner energy production and the need to focus on energy security. Significant expenditure will be required to maintain oil and gas production from existing fields, as well as investment in new oil and gas developments and associated infrastructure.
The fungibility of Ashtead Technology's equipment and solutions across the offshore wind and oil and gas markets makes for a compelling and robust proposition, enabling the Group to capture growth across both these adjacent markets.
Our people
Our people are central to the success of our business, and I would like to extend my thanks to all our employees for their contributions in the delivery of the Group's solid operational performance during another year in which we operated amid a global pandemic.
Our employee headcount increased from 172 to 204 during the year and we continued to encourage personal development through training and progression. Our senior leadership team was enhanced with the appointment of Ingrid Stewart as CFO and we expanded our business development, marketing and QHSE teams globally to meet the growing needs of our enlarged business, including the recruitment of Caroline Merson as Marketing & Communications Director.
Current trading and outlook
We remain well placed to support the changing requirements of the global offshore energy sector as the transition to more renewable sources of energy continues apace and our large fleet of rental equipment allows us to support the increased investment required to ensure energy security.
While we are mindful of uncertainty arising from the current geopolitical environment, inflationary pressures have been mitigated by tightening market conditions and increasing pricing. We remain confident of making further progress in 2022, with a clear organic growth strategy and pipeline of acquisition opportunities.
The Group has continued to perform strongly in the first four months of 2022, supported by good ongoing customer demand across both offshore wind and oil and gas end markets. Activity levels experienced are higher than the same period in the prior year, with utilisation rates remaining strong supporting increased pricing. Given the performance to date, the Board expects outturn for the year to be modestly ahead of its previous expectations.
I am proud of all we have accomplished in our short period so far as a publicly listed company and look forward to an exciting future.
Allan Pirie
Chief Executive Officer
Chief Financial Officer's Review
Strong progress and growth in our performance
Introduction
It has been an exciting year for Ashtead Technology as we returned to growth following the downturn in 2020 caused by COVID-19 restrictions.
Our IPO in November 2021 is testament to the quality of our business and the resilience shown through the latest downturn and was the culmination of a lot of hard work from many people in the organisation. I would like to express my sincere thanks to those involved in helping us reach this milestone in our Group's history.
Revenue
Group revenue grew year-on-year by 32% from £42.4m to £55.8m driven by an increase in demand from both the offshore renewables and offshore oil and gas markets.
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Region |
Revenue 2020 |
Revenue 2021 |
Revenue Growth 2020-2021 |
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Europe |
£23.6m |
£33.2m |
41% |
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Americas |
£10.0m |
£11.8m |
18% |
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APAC |
£5.1m |
£7.9m |
54% |
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Middle East |
£3.7m |
£2.7m |
(22%) |
Renewables revenues represented 33% of Group revenue in 2021 (2020: 29%), representing over 50% growth from this market, whilst revenues from oil and gas also grew by 23%.
Gross profit
Gross profit increased to £40.5m (a gross margin of 73%) from £31.4m in 2020 (a gross margin of 74%) with the margin reduction due to a higher proportion of revenue in the year coming from equipment sales versus rental. In our rental business, we saw cost utilisation increase from 37% in 2020 to 43% in 2021.
Administration costs
Administration expenses of £33.9m in 2021 compared to £29.8m in 2020 with the increase (£4.1m) coming from personnel costs (£3.1m) and legal and professional fees (£2.6m) predominantly as a result of the IPO. Personnel cost increases were the result of post-COVID salary increases following salary reductions in 2020 as well as an increase in personnel from 172 at December 2020 to 204 at December 2021. This was offset by a decrease in depreciation of £2m. Whilst the Group maintains a blue-chip customer base, the Group also increased its provision for doubtful debts by £0.7m.
Profitability
Adjusted EBITA of £13.7m compares to £6.3m in 2020 and was ahead of our expectations at the time of the IPO process following a strong finish to the year. This represents an EBITA margin of 24.6% compared to 14.8% in the prior year. As a result, ROIC (Return on Invested Capital) increased to 17% (2020: 7%), a return to historical levels.
Where we have provided adjusted figures, they are after the add-back of various one-off items which, in relation to 2021 predominantly related to professional and other fees arising from the admission to AIM.
Profit before tax of £2.5m, after IPO and other adjusting costs of £4.4m, compares to a loss before tax of £0.7m in 2020.
Net finance expense
Net finance costs were £4m in 2021, reflecting our pre-IPO debt structure. As part of the IPO process the Company raised £15m of primary capital that was utilised to repay existing debt facilities, including high interest loan notes held under the previous private equity ownership structure. The business also refinanced its external debt facilities and achieved more favourable pricing. The 2021 costs are not representative of ongoing expectations.
Taxation
The total tax charge was £1.1m (2020: £0.3m), giving rise to an effective tax rate of 29.5%. In future years we expect the Group's effective tax rate to be closer 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 than those in the UK.
EPS and dividend
Adjusted EPS is 13.2 pence with statutory EPS at 3.6 pence. The adjusted figures exclude the impact of one-off costs as set out in note 27 of the accounts as well as foreign exchange profit/loss and amortisation.
The Group paid dividends totalling £1,296,000 in 2021 which related to the pre-IPO group restructure. As noted at the time of the IPO, the Group has elected not to pay a further dividend in relation to the 2021 results. In terms of capital allocation, the Group's current focus is on organic fleet growth, complemented by bolt-on M&A. It is the Directors' intention to implement a progressive dividend policy in the near future, subject to the discretion of the Board and to the Company having distributable reserves.
Cash flow and net debt
Free cash flow in the year was impacted by one-off costs as a result of the admission to AIM as well as an increase in working capital caused by the uplift in trading and a general slowdown of debtor payments at the year end.
The Group increased investment in capital expenditure in the year to £7.9m, investing predominantly in rental equipment as the market continued to improve. Overall, net debt reduced from £36.2m to £22.7m from 31 December 2020 to 31 December 2021 due predominantly to the raising of £15m of primary capital. As a result of the primary capital raise, borrowings reduced during the year with drawn RCF of £25.0m at 31 December 2021 versus external bank loans of £43.0m at 31 December 2020. Leverage at 31 December 2021 was 1x.
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.
During 2021 the Group has continued to generate positive cash flow from operating activities with a cash and cash equivalents balance of £4.9m (2020: £11m). The Group has access to a multi currency RCF and additional accordion facility. The RCF and accordion facility have total commitments of £40m and £10m respectively, both of which expire in November 2024, with an option to extend subject to credit approval. As at 31 December 2021 the RCF had an undrawn balance of £15m and the £10m accordion facility was undrawn.
The Facility Agreement is subject to a leverage covenant of 2.5x 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.
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 EPS, the Group has added back various costs, deemed to be one-off in nature, which in 2021 predominantly relate to Admission costs and restructuring of the group entity structure in preparation for Admission.
Ingrid Stewart
Chief Financial Officer
Note - Where we have provided adjusted figures, they are after the add-back of various one-off items which, in relation to 2021, predominantly relate to professional and other fees arising from the admission to AIM. Please see Note 27.
Consolidated income statement
for the year ended 31 December 2021
|
|
|
2021 |
Unaudited 2020 |
|
|
Notes |
£000 |
£000 |
|
Revenue |
4 |
55,805 |
42,401 |
|
Cost of sales |
5 |
(15,262) |
(11,044) |
|
Gross profit |
|
40,543 |
31,357 |
|
Administrative expenses |
5 |
(33,930) |
(29,796) |
|
Other operating income |
5 |
995 |
1,547 |
|
Operating profit |
5 |
7,608 |
3,108 |
|
Finance costs |
7 |
(4,019) |
(3,849) |
|
Profit/(loss) before taxation |
|
3,589 |
(741) |
|
Taxation charge |
8 |
(1,060) |
(257) |
|
Profit/(loss) for the financial year |
|
2,529 |
(998) |
|
|
|
|
|
|
Profit/(loss) attributable to: |
|
|
|
|
Owners of the Company |
|
2,529 |
(998) |
|
|
|
|
|
|
Earnings per share |
|
|
|
|
Basic |
9 |
3.6 |
(1.4) |
|
Diluted |
9 |
3.6 |
(1.4) |
|
The below financial measures are non-GAAP metrics used by management and are not an IFRS disclosure: |
|
|
|
|
|||||
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|
|
|
|
|
|||||
|
Adjusted EBITDA^ |
27 |
22,437 |
17,037 |
|
|||||
|
Adjusted EBITA^^ |
27 |
13,724 |
6,284 |
|
|
||||
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
^ Adjusted EBITDA is calculated as earnings before interest, tax, depreciation, amortisation and items not considered part of underlying trading including share based payments and foreign exchange gains and losses, is a non-GAAP metric used by management and is not an IFRS disclosure. See Note 27 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 share based payments and foreign exchange gains and losses, is a non-GAAP metric used by management and is not an IFRS disclosure. See Note 27 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 2021
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Profit/(loss) for the year |
2,529 |
(998) |
|
Other comprehensive income/(loss): |
|
|
|
Items that may be reclassified subsequently to profit or loss |
|
|
|
Exchange differences on translation of foreign operations |
163 |
(365) |
|
Net gain/(loss) on cash flow hedges |
351 |
(108) |
|
Other comprehensive income/(loss) for the year, net of tax |
514 |
(473) |
|
Total comprehensive income/(loss) |
3,043 |
(1,471) |
|
Total comprehensive income/(loss) attributable to: |
|
|
|
Equity shareholders of the Company |
3,043 |
(1,471) |
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated balance sheet
at 31 December 2021
|
|
|
2021 |
Unaudited 2020 |
|
|
Notes |
£000 |
£000 |
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
10 |
20,832 |
21,830 |
|
Goodwill |
11 |
48,651 |
48,585 |
|
Intangible assets |
11 |
1,760 |
2,459 |
|
Right-of-use assets |
19 |
2,923 |
2,816 |
|
Deferred tax asset |
8 |
1,010 |
747 |
|
|
|
75,176 |
76,437 |
|
Current assets |
|
|
|
|
Inventories |
12 |
1,778 |
1,245 |
|
Trade and other receivables |
13 |
17,224 |
11,256 |
|
Cash and cash equivalents |
14 |
4,857 |
10,958 |
|
|
|
23,859 |
23,459 |
|
Total assets |
|
99,035 |
99,896 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Loans and borrowings |
17 |
− |
8,007 |
|
Trade and other payables |
15 |
9,415 |
7,243 |
|
Income tax payable |
8 |
821 |
515 |
|
Lease liabilities |
19 |
783 |
676 |
|
Derivative financial instruments |
16 |
− |
38 |
|
|
|
11,019 |
16,479 |
|
Non-current liabilities |
|
|
|
|
Loans and borrowings |
17 |
24,425 |
36,122 |
|
Lease liabilities |
19 |
2,351 |
2,376 |
|
Provisions for liabilities |
20 |
108 |
134 |
|
|
|
26,884 |
38,632 |
|
Total liabilities |
|
37,903 |
55,111 |
|
Equity |
|
|
|
|
Share capital |
23 |
3,979 |
3,500 |
|
Share premium |
23 |
14,115 |
− |
|
Merger reserve |
23 |
9,435 |
9,429 |
|
Hedging reserve |
23 |
− |
(351) |
|
Foreign currency translation reserve |
23 |
(1,290) |
(1,453) |
|
Retained earnings |
23 |
34,893 |
33,660 |
|
Total equity |
|
61,132 |
44,785 |
|
Total equity and liabilities |
|
99,035 |
99,896 |
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 2021 were authorised by the Board of Directors on 4 June 2022 and signed on its behalf by:
A W Pirie I Stewart
Chief Executive Officer Chief Financial Officer
4 June 2022 4 June 2022
Consolidated statement of changes in equity
for the year ended 31 December 2021
|
|
|
Share capital |
Share premium |
Merger reserve |
Hedging reserve |
Foreign currency translation reserve |
Retained earnings |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
At 1 January 2020 |
|
3,500 |
− |
9,429 |
(243) |
(1,088) |
34,658 |
46,256 |
|
Loss for the year |
|
− |
− |
− |
− |
− |
(998) |
(998) |
|
Other comprehensive income/(loss) |
|
− |
− |
− |
(108) |
(365) |
− |
(473) |
|
Total comprehensive loss |
|
− |
− |
− |
(108) |
(365) |
(998) |
(1,471) |
|
At 31 December 2020 (Unaudited) |
|
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 |
*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 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 2021
|
|
|
2021 |
Unaudited 2020 |
|
|
Note |
£000 |
£000 |
|
Cash generated from operating activities |
|
|
|
|
Profit/(loss) before taxation |
|
3,589 |
(741) |
|
|
|
|
|
|
Adjustments to reconcile profit/(loss) before taxation to net cash from operating activities |
|
|
|
|
Finance costs |
|
4,019 |
3,849 |
|
Depreciation |
|
8,713 |
10,753 |
|
Amortisation |
11 |
1,516 |
1,567 |
|
Gain on sale of property, plant and equipment |
|
(995) |
(1,156) |
|
Forgiveness of loan - US Paycheck Protection Program |
|
− |
(391) |
|
Provision for liabilities |
|
(28) |
5 |
|
Cash generated before changes in working capital |
|
16,814 |
13,886 |
|
Increase in inventories |
|
(524) |
(154) |
|
(Increase)/decrease in trade and other receivables |
|
(6,597) |
4,788 |
|
Increase in trade and other payables |
|
2,016 |
109 |
|
Cash inflow from operations |
|
11,709 |
18,629 |
|
Interest paid |
|
(3,615) |
(2,884) |
|
Tax paid |
|
(858) |
(763) |
|
Net cash from operating activities |
|
7,236 |
14,982 |
|
Cash flow used in investing activities |
|
|
|
|
Purchase of property, plant and equipment |
|
(7,889) |
(5,073) |
|
Disposal of property, plant and equipment |
|
1,453 |
1,620 |
|
Net cash outflow on investing activities |
|
(6,436) |
(3,453) |
|
Cash flow used in financing activities |
|
|
|
|
Proceeds from IPO share issue |
|
15,523 |
− |
|
Transaction fees on share issue |
|
(929) |
− |
|
Proceeds from share issue |
|
50 |
− |
|
Loans received |
|
25,107 |
3,409 |
|
Transaction fees on loans received |
|
(914) |
− |
|
Repayment of bank loans |
|
(44,121) |
(7,863) |
|
Payment of lease liability |
|
(1,012) |
(721) |
|
Repayment of loan notes |
|
(830) |
− |
|
Net cash outflow from financing activities |
|
(7,126) |
(5,175) |
|
Net (decrease)/increase in cash and cash equivalents |
|
(6,326) |
6,354 |
|
Cash and cash equivalents at beginning of year |
|
10,958 |
4,855 |
|
Net foreign exchange difference |
|
225 |
(251) |
|
Cash and cash equivalents at end of year |
|
4,857 |
10,958 |
The accompanying notes are an integral part of these consolidated financial statements.
Notes to the consolidated financial statements
for the year ended 31 December 2021
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 2021 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 2021 or 31 December 2020 but is derived from those accounts. Statutory accounts 2021 will be delivered to the Registrar of Companies in due course. The Auditor has reported on the 2021 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. An other matter was noted as follows, "The corresponding figures presented for the year ended 31 December 2020 are unaudited". The corresponding figures presented for the year ended 31 December 2020 are unaudited as the Group was not in existence in its current form. A full explanation of the accounting treatment to provide comparatives can be found in Note 1.4.
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.
Management has used merger accounting and taken merger relief at a Company level. Under merger accounting principles, the assets and liabilities of the subsidiaries are consolidated at book value in the Group financial statements and the consolidated reserves of the Group have been 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 the former BP INV2 Pledgeco Limited and Ashtead US Pledgeco Inc Group.
These consolidated financial statements of the Group are the first set of financial statements for the newly formed Group and the prior period has been presented as a continuation of the former combined BP INV2 Pledgeco Limited and Ashtead US Pledgeco Inc Group on a consistent basis as if the Group reorganisation had taken place at the start of the earliest period presented. The prior period comparatives are those of the former combined BP INV2 Pledgeco Limited and Ashtead US Pledgeco Inc Group since no substantive economic changes have occurred. BP INV2 Pledgeco Limited and Ashtead US Pledgeco Inc and their respective subsidiaries did not form a legal group, however, they were under common management and control throughout the period.
1.4 Prior period comparatives
The financial statements for the year ended 31 December 2020, forming the comparative figures of the financial statements for the year ended 31 December 2021, are referenced as unaudited. Prior to the restructuring the Group was not in existence in its current form, as described above. A statutory audit within the meaning of section 434 of the Companies Act 2006 was not performed and hence no audit opinion was issued in respect of the year ended 31 December 2020. However, as part of the process of Admission to listing and trading on AIM, an accountant's report, undertaken by BDO LLP and Deloitte LLP, in accordance with the Standards for Investment Reporting 2000 ("SIR 2000") issued by the Auditing Practices Board in the United Kingdom, was issued on the historical information included in the Prospectus. The accountant's report, dated 18 November 2021, included an unqualified opinion on the historical information presented.
1.5 Presentational currency
The consolidated financial statements unless otherwise stated are presented in sterling, to the nearest thousand. The functional currency of the Group is sterling.
1.6 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 2023.
During 2021 the Group has continued to generate positive cash flow from operating activities with a cash and cash equivalents balance of £4,857,000 (2020: £10,958,000). The Group has access to a multi currency RCF and additional accordion facility. The RCF and accordion facility have total commitments of £40,000,000 and £10,000,000 respectively, both of which expire in November 2024, with an option to extend subject to credit approval. As at 31 December 2021 the RCF had an undrawn balance of £15,047,000 and the £10,000,000 accordion facility was undrawn.
The Facility Agreement is subject to a leverage covenant of 2.5x 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.
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 to meet its obligations as they fall due.
1.7 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.
1.8 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.
1.9 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.
1.10 Standards issued but not effective
A number of new standards are effective for annual periods beginning after 1 January 2022 and earlier application is permitted; however, the Group has not early adopted the new or amended standards in preparing these consolidated financial statements.
The following new and amended standards are not expected to have a significant impact on the Group's consolidated financial statements:
· Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16).
· Reference to Conceptual Framework (Amendments to IFRS 3).
· Classification of Liabilities as Current or Non-current (Amendments to IAS 1).
· IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts.
· Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16).
· Onerous contracts - Cost of fulfilling a contract (Amendments to IAS 37).
· Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2).
· Definition of Accounting Estimates (Amendments to IAS 8).
· Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).
1.11 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 judgment in applying the Group's accounting policies. The areas where significant judgments 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 - 5-7 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, deferred tax assets and contract 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.
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 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.
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.
Non-derivative financial liabilities, including loans and borrowing, and trade and other payables, are stated at amortised cost using the effective interest method.
Derivative financial instruments
The Group uses derivative financial instruments from time to time to reduce exposure to interest rate movements. The Group does not hold or issue derivative financial instruments for speculative purposes.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in the income statement immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the income statement depends on the nature of the hedge relationship.
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.
Hedge accounting
The Group designates certain derivatives as hedging instruments in cash flow hedges.
At the inception of the hedge relationship, the entity documents the economic relationship between the hedging instrument and the hedged item, along with its risk management objectives and clear identification of the risk in the hedged item that is being hedged by the hedging instrument. Furthermore, at the inception of the hedge the Group determines and documents causes for hedge ineffectiveness.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement. Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods in which the hedged item affects profit or loss or when the hedging relationship ends.
Hedge accounting is discontinued when the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any gain or loss accumulated in equity at that time is reclassified to profit or loss when the hedged item is recognised in profit or loss. When a forecast transaction is no longer expected to occur, any gain or loss that was recognised in other comprehensive income is reclassified immediately to profit or loss.
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 lease receivables 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 contract assets are segmented on the basis of historic credit loss experience, based on geographic region. Historical loss experience is applied to trade receivables and contract assets, 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 Government grants
Grants that compensate the Group for expenses incurred are recognised in the income statement as other income on a systematic basis in the periods in which the expenses are recognised, unless the conditions for receiving the grant are met after the related expenses have been recognised. In this case, the grant is recognised at the point when there is reasonable assurance that the terms for the forgiveness of a government loan will be met. Refer to Note 5 for further disclosure related to government grants received.
2.14 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.
2.15 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).
2.16 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 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 11 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. No impairment loss was recognised during the period.
2.17 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 them 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 2021
|
|
Europe |
Americas |
Asia Pacific |
Middle East |
Head Office |
Total |
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
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 Finance costs |
|
|
|
|
|
7,608 (4,019) -------- |
|
Profit before taxation Taxation charge |
|
|
|
|
|
3,589 (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 |
For the year ended 31 December 2020 (Unaudited)
|
|
Europe |
Americas |
Asia Pacific |
Middle East |
Head Office |
Total |
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Total revenue |
23,609 |
9,990 |
5,125 |
3,677 |
- |
42,401 |
|
Cost of Sales |
(5,117) -------- |
(2,718) -------- |
(1,308) -------- |
(1,901) -------- |
- -------- |
(11,044) -------- |
|
Gross profit |
18,492 |
7,272 |
3,817 |
1,776 |
- |
31,357 |
|
Administrative expenses |
(9,629) |
(3,873) |
(862) |
(1,122) |
(1,678) |
(17,164) |
|
Other operating income |
231 -------- |
869 -------- |
298 -------- |
149 -------- |
- -------- |
1,547 -------- |
|
Operating profit before depreciation, amortisation and foreign exchange (loss)/gain |
9,094 |
4,268 |
3,253 |
803 |
(1,678) |
15,740 |
|
Foreign exchange loss |
|
|
|
|
|
(312) |
|
Depreciation |
|
|
|
|
|
(10,753) |
|
Amortisation |
|
|
|
|
|
(1,567) -------- |
|
Operating profit Finance costs |
|
|
|
|
|
3,108 (3,849) -------- |
|
Loss before taxation Taxation charge |
|
|
|
|
|
(741) (257) -------- |
|
Loss for the financial year |
|
|
|
|
|
(998) -------- |
|
Total assets |
56,047 |
16,721 |
9,443 |
4,415 |
13,270 |
99,896 |
|
Total liabilities |
5,976 |
2,457 |
710 |
351 |
45,617 |
55,111 |
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.
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 Dec 2021 |
Unaudited As at 31 Dec 2020 |
|
£000 |
£000 |
|
|
UK |
51,411 |
49,663 |
|
USA |
11,394 |
13,868 |
|
Singapore |
7,799 |
8,376 |
|
UAE |
3,562 |
3,783 |
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.
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Rental income (Note 19) |
43,913 |
34,183 |
|
Non-rental revenue |
11,892 |
8,218 |
|
Total revenue |
55,805 |
42,401 |
(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.
|
|
2021 |
Unaudited 2020 |
|
Primary geographical markets |
£000 |
£000 |
|
Europe |
7,579 |
5,222 |
|
Americas |
3,052 |
1,409 |
|
Asia Pacific |
550 |
171 |
|
Middle East |
711 |
1,416 |
|
Non-rental revenue |
11,892 |
8,218 |
Major products and services and timing of revenue recognition of non-rental revenue:
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Sale of equipment, transferred at a point in time |
6,147 |
3,661 |
|
Provision of related services, transferred over time |
5,745 |
4,557 |
|
Non-rental revenue |
11,892 |
8,218 |
5. Operating profit
This is stated after charging/(crediting):
|
|
2021 |
Unaudited 2020 |
|
|
|
£000 |
£000 |
|
|
Spares, consumables and external repairs |
2,838 |
2,651 |
|
|
Facilities costs |
329 |
332 |
|
|
Depreciation on property, plant and equipment (Note 10) |
7,878 |
9,924 |
|
|
Depreciation on right-of-use assets (Note 19) |
835 |
829 |
|
|
Amortisation of intangible assets (Note 11) |
1,516 |
1,567 |
|
|
Staff costs (Note 6) |
13,851 |
10,696 |
|
|
Transaction costs |
3,332 |
865 |
|
|
Other external charges |
18,398 |
13,664 |
|
|
Foreign exchange losses |
215 |
312 |
|
|
Total cost of sales and administrative expenses |
49,192 |
40,840 |
|
|
The above includes: |
|
|
|
|
Operating lease rentals |
165 |
289 |
|
|
Impairment loss on trade receivables |
788 |
401 |
|
|
|
|
|
|
|
Other operating income |
|
|
|
|
Gain on sale of property, plant and equipment |
995 |
1,156 |
|
|
Loan forgiveness - US Paycheck Protection Program* |
− |
391 |
|
|
|
995 |
1,547 |
|
*During the year ended 31 December 2020 Ashtead Technology Offshore Inc had taken a government loan of £391,000 under the US 'Paycheck Protection Program'. The loan was forgiven on meeting the required criteria of the program.
|
Fees payable to the auditor for the audit of the financial statements: |
|
|
|
|
Total audit fees |
167 |
116 |
|
|
|
|
|
|
|
Fees payable to the auditor and its associates for other services to the Group |
|
|
|
|
Tax compliance services |
− |
97 |
|
|
Corporate finance services** |
− |
322 |
|
|
Reporting accountant services*** |
152 |
− |
|
|
Total non-audit fees |
152 |
419 |
|
**These fees were capitalised in 2020 as part of the acquisition accounting and not charged through the income statement.
***These fees were incurred as reporting accountant services provided by BDO LLP in relation to the listing. Included in the total fee is £18,000 that was deducted from share premium.
6. Staff costs
|
|
|
|
2021 |
Unaudited 2020 |
|
|
|
|
£000 |
£000 |
|
Wages and salaries |
|
|
12,520 |
9,597 |
|
Social security costs |
|
|
908 |
736 |
|
Other pension costs (Note 22) |
|
|
423 |
363 |
|
|
|
|
13,851 |
10,696 |
The average number of employees during the year was as follows:
|
|
|
|
No. |
No. |
|
Operations |
|
|
122 |
100 |
|
Sales and administrative |
|
|
77 |
76 |
|
|
|
|
199 |
176 |
Full details of the Directors' remuneration and interests are set out in the Directors' Remuneration Report on pages 37 to 38 of the Group's Annual Report.
7. Finance costs
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Interest on bank loans (held at amortised cost) |
2,261 |
2,919 |
|
Amortisation of deferred finance costs |
1,222 |
674 |
|
Loan note interest |
71 |
76 |
|
Interest expense on lease liability (Note 19) |
151 |
168 |
|
Hedge reserve movement |
313 |
− |
|
Other interest and charges |
1 |
12 |
|
|
4,019 |
3,849 |
8. Tax
(a) Tax on profit/(loss) on ordinary activities
The tax charge is made up as follows:
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Current tax: |
|
|
|
UK corporation tax on profit/loss for the year |
1,397 |
392 |
|
Adjustment in respect of previous periods |
(78) |
(23) |
|
Foreign tax |
1 |
203 |
|
Foreign tax adjustment in respect of previous periods |
− |
(21) |
|
Exchange rate differences |
4 |
(4) |
|
Total current income tax |
1,324 |
547 |
|
Deferred tax: |
|
|
|
Origination and reversal of temporary differences |
(227) |
(220) |
|
Origination and reversal of temporary differences - prior periods |
292 |
38 |
|
Effect of changes in tax rates |
(326) |
(99) |
|
Exchange rate differences |
(3) |
(9) |
|
Total deferred tax |
(264) |
(290) |
|
Tax charge in the profit and loss account (Note 8(b)) |
1,060 |
257 |
(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% (2020: 19%). The differences are explained below:
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Profit/(loss) on ordinary activities before taxation |
3,589 |
(741) |
|
|
|
|
|
Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2020: 19%) |
682 |
(141) |
|
Effects of: |
|
|
|
Expenses not deductible for tax purposes |
500 |
316 |
|
Income not taxable |
(43) |
(107) |
|
RDEC expenditure credit |
− |
(6) |
|
Gains/rollover relief |
11 |
27 |
|
Effects of overseas tax rates |
213 |
85 |
|
Adjustments in respect of previous periods |
213 |
(7) |
|
Tax rate changes |
(326) |
(61) |
|
Unrecognised temporary differences |
− |
35 |
|
Recognition of previously unrecognised tax losses |
(176) |
(118) |
|
Current year losses for which no deferred tax asset is recognised |
− |
251 |
|
Exchange rate difference |
7 |
(17) |
|
Adjustment in relation to IFRS 16 |
(21) |
− |
|
Tax charge |
1,060 |
257 |
|
|
|
|
(c) Income tax due
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Income tax due |
821 |
515 |
(d) Unrecognised tax losses:
The Group has tax losses which arose in the UK, Canada and USA of £10,255,000 (2020: £15,767,000) 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:
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Fixed asset timing differences |
838 |
258 |
|
Short-term timing differences |
76 |
17 |
|
Tax losses |
242 |
472 |
|
Intangible asset timing differences |
(146) |
− |
|
Deferred tax asset |
1,010 |
747 |
The recoverability of the deferred tax asset is as follows:
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Current |
17 |
42 |
|
Non-current |
993 |
705 |
|
|
1,010 |
747 |
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. 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 |
|
|
2021 |
2021 |
2020 |
2020 |
|
Earnings attributable to equity shareholders of the Group: |
|
|
|
|
|
Profit/(loss) for the year (£000) |
9,385* |
2,529 |
2,022* |
(998) |
|
Number of shares: |
|
|
|
|
|
Weighted average number of Ordinary Shares - Basic |
70,995,578 |
70,995,578 |
69,998,000 |
69,998,000 |
|
Weighted average number of Ordinary Shares - Diluted |
70,995,578 |
70,995,578 |
69,998,000 |
69,998,000 |
|
Earnings per share attributable to equity holders of the Group - continuing operations: |
|
|
|
|
|
Basic earnings per share (pence) |
13.2 |
3.6 |
2.9 |
(1.4) |
|
Diluted earnings per share (pence) |
13.2 |
3.6 |
2.9 |
(1.4) |
* Refer to Note 27 for the reconciliation of Non-IFRS Profit Metrics.
10. Property, plant and equipment
|
|
Assets held for rental |
Leasehold improvements |
Freehold property |
Fixture and fittings |
Motor vehicles |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Cost: |
|
|
|
|
|
|
|
At 1 January 2020 |
106,402 |
1,439 |
197 |
3,344 |
148 |
111,530 |
|
Additions |
4,197 |
113 |
− |
283 |
121 |
4,714 |
|
Disposals |
(4,479) |
(1) |
− |
(282) |
(20) |
(4,782) |
|
Foreign exchange movements |
(1,214) |
(14) |
− |
(23) |
(4) |
(1,255) |
|
At 31 December 2020 (Unaudited) |
104,906 |
1,537 |
197 |
3,322 |
245 |
110,207 |
|
|
|
|
|
|
|
|
|
Accumulated depreciation: |
|
|
|
|
|
|
|
At 1 January 2020 |
(80,335) |
(839) |
(52) |
(2,585) |
(143) |
(83,954) |
|
Charge for the year |
(9,523) |
(145) |
(8) |
(209) |
(36) |
(9,921) |
|
Disposals |
4,059 |
1 |
− |
183 |
17 |
4,260 |
|
Foreign exchange movements |
1,206 |
9 |
− |
18 |
5 |
1,238 |
|
At 31 December 2020 (Unaudited) |
(84,593) |
(974) |
(60) |
(2,593) |
(157) |
(88,377) |
|
|
|
|
|
|
|
|
|
Net book value: |
|
|
|
|
|
|
|
At 31 December 2020 (Unaudited) |
20,313 |
563 |
137 |
729 |
88 |
21,830 |
|
|
Assets held for rental |
Leasehold improvements |
Freehold property |
Fixture and fittings |
Motor vehicles |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
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 |
11. Goodwill and intangible assets
|
|
Goodwill £000 |
Customer relationships £000 |
Non-compete arrangements £000 |
Computer software £000 |
Total £000 |
|
Cost: |
|
|
|
|
|
|
At 1 January 2020 |
48,722 |
4,448 |
208 |
2,647 |
56,025 |
|
Additions |
− |
− |
− |
156 |
156 |
|
Disposals |
− |
− |
− |
(1) |
(1) |
|
Foreign exchange movements |
(137) |
(1) |
− |
(1) |
(139) |
|
At 31 December 2020 (Unaudited) |
48,585 |
4,447 |
208 |
2,801 |
56,041 |
|
|
|
|
|
|
|
|
Amortisation: |
|
|
|
|
|
|
At 1 January 2020 |
− |
(764) |
(39) |
(2,626) |
(3,429) |
|
Charge for the year |
− |
(1,497) |
(70) |
(3) |
(1,570) |
|
Disposals |
− |
− |
− |
1 |
1 |
|
Foreign exchange movements |
− |
− |
− |
1 |
1 |
|
At 31 December 2020 (Unaudited) |
− |
(2,261) |
(109) |
(2,627) |
(4,997) |
|
|
|
|
|
|
|
|
Net book value: |
|
|
|
|
|
|
At 31 December 2020 (Unaudited) |
48,585 |
2,186 |
99 |
174 |
51,044 |
|
|
Goodwill £000 |
Customer relationships £000 |
Non-compete arrangements £000 |
Computer software £000 |
Total £000 |
|
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 |
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, and Underwater Cutting Solutions 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.
There has been a reclassification of computer software from property, plant and equipment to intangible assets. The impact on 2020 is immaterial.
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.
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Europe |
34,916 |
34,916 |
|
Americas |
6,569 |
6,503 |
|
Asia Pacific |
5,336 |
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:
|
|
|
|
2021 |
Unaudited 2020 |
|
|
|
|
£000 |
£000 |
|
Europe : Pre-tax discount rate |
|
|
11.6% |
11.8% |
|
Terminal value growth rate |
|
|
2% |
2% |
|
Forecast period |
|
|
2 years |
3 years |
|
Americas : Pre-tax discount rate |
|
|
11.6% |
12.3% |
|
Terminal value growth rate |
|
|
2% |
2% |
|
Forecast period |
|
|
2 years |
3 years |
|
Asia Pacific: Pre-tax discount rate |
|
|
11.6% |
11.6% |
|
Terminal value growth rate |
|
|
2% |
2% |
|
Forecast period |
|
|
2 years |
3 years |
|
Middle East: Pre-tax discount rate |
|
|
11.6% |
10% |
|
Terminal value growth rate |
|
|
2% |
2% |
|
Forecast period |
|
|
2 years |
3 years |
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 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 2021 and the risks specific to the CGU. Beyond the two year Group forecast period these projections are extrapolated using a terminal value growth rate. Sensitivity analysis has been performed in respect of the key assumptions above with no impairment identified from the sensitivities performed.
12. Inventories
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Raw materials and consumables |
1,778 |
1,245 |
The cost of inventories recognised as an expense and included in cost of sales during the year is disclosed in Note 5.
13. Trade and other receivables
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Trade receivables (Note 24(a)) |
14,212 |
7,723 |
|
Prepayments and accrued income |
3,012 |
2,241 |
|
Amounts due from related parties (Note 25) |
− |
1,292 |
|
|
17,224 |
11,256 |
The Directors consider that the carrying amount of trade and other receivables approximates to fair value. The amounts owed by related parties bear no interest and are due on demand.
Information about the Group's exposure to credit and market risks, and impairment losses for trade receivables is included in Note 24.
14. Cash and cash equivalents
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Cash at bank |
4,842 |
10,953 |
|
Cash in hand |
15 |
5 |
|
Cash and cash equivalents |
4,857 |
10,958 |
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:
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
US dollar denominated balances |
1,581 |
3,124 |
|
Singapore dollar denominated balances |
864 |
2,612 |
|
Canadian dollar denominated balances |
150 |
200 |
|
AED denominated balances |
133 |
154 |
|
|
2,728 |
6,090 |
All other balances are denominated in sterling.
15. Trade and other payables
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Trade payables |
3,349 |
2,487 |
|
Accruals |
5,682 |
4,701 |
|
Amounts due to related parties (Note 25) |
384 |
55 |
|
|
9,415 |
7,243 |
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.
16. Derivative financial instruments
The Group held three interest rate swaps which are designated to hedge a portion of the interest payments on each of the sterling and US dollar denominated facilities arising until 30 June 2021. The fair value of interest rate swaps has been valued by calculating the present value of future cash flows, estimated using forward rates from third party market price quotations.
The table below summarises the fair value of the interest rate swaps at each reporting date:
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Current liabilities |
|
|
|
Interest rate swaps used for hedging |
− |
(38) |
|
Average contract fixed interest rate (%) |
0.6607% |
0.6607% |
|
Notional principal value |
− |
13,661 |
The interest rate swaps settled on a quarterly basis. The floating rate on the interest rate swaps was three months LIBOR. The Group settled the difference between the fixed and floating interest rate on a net basis. All interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest amounts are designated as cash flow hedges to reduce the Group's cash flow exposure resulting from variable interest rates on borrowings. The hedged cash flows were expected to occur and to affect profit or loss over the period to maturity of the interest rate swaps.
Amount recognised in profit or loss:
The Group has recognised derivatives initially at fair value at the date a derivative contract is entered into and subsequently remeasured to their fair value at each reporting date. The amount recognised in the consolidated income statement in relation to derivatives for the year ended 31 December 2021 is £313,000.
Amount recognised in other comprehensive income:
The Group has applied hedge accounting for the interest rate swaps. The table below details the changes in fair value of derivative assets recorded in the consolidated other comprehensive income:
|
|
Interest rate swaps |
Total hedging reserves |
|
£000 |
£000 |
|
|
At 1 January 2020 |
(243) |
(243) |
|
Changes in fair value of hedging instruments recognised in other comprehensive income |
(108) |
(108) |
|
At 31 December 2020 (Unaudited) |
-------- (351) |
-------- (351) |
|
Changes in fair value of hedging instruments recognised in other comprehensive income |
351 |
351 |
|
At 31 December 2021 |
-------- − -------- |
-------- − -------- |
(a) Sterling interest rate swap
The fair value of the sterling interest rate swap at the balance sheet date was £nil (2020: liability £24,000). This swap is designated as a hedge on approximately 36% (2020: 34%) of the expected floating rate payments expected to arise in the period to 30 June 2021 on £26,841,000 (2020: £29,663,000) senior sterling bank loans. The terms of this contract is that the Group paid a fixed rate of 0.5355% and 0.525% and received 3 month floating LIBOR rate from HSBC (net settled quarterly) on a £9,564,000 (2020: £9,948,000) notional sum subject to a repayment schedule in line with the bank loan.
(b) US dollar interest rate swap
The fair value of the US dollar interest rate swap at the balance sheet date was £nil (2020: liability £14,000). This swap is designated as a hedge on approximately 35% (2020: 33%) of the expected floating rate payments expected to arise in the period to 30 June 2021 on $13,236,000 (2020: $15,314,000) US dollar bank loan. The terms of this contract are that the Group paid a fixed rate of 1.003% and received three month floating LIBOR rate from HSBC (net settled quarterly) on a $4,693,000 (2020: $5,087,000) notional sum subject to a repayment schedule in line with the bank loan.
Information about the Group's exposure to interest rate, credit and market risks is included in Note 24.
17. Loan and borrowings
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Current |
|
|
|
Bank loans (held at amortised cost) |
− |
8,007 |
|
|
− |
8,007 |
|
Non-current |
|
|
|
Bank loans (held at amortised cost) |
24,425 |
35,001 |
|
Related party loan notes (Note 25) |
− |
1,121 |
|
|
24,425 |
36,122 |
At 31 December 2021 the bank loans comprise a revolving credit facility of £24,953,000 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 2.5 and an interest cover covenant of 4:1. The total commitments are £40,000,000 for the RCF and an additional £10,000,000 accordion facility. As at 31 December 2021 the RCF had an undrawn balance of £15,047,000 and the £10,000,000 accordion facility was undrawn. A non-utilisation fee of 0.88% is charged on the non-utilised element of the RCF facility. The revolving credit facility is fully repayable by November 2024.
At 31 December 2020 the bank loans comprised senior bank debt of £43,841,000 and the senior A, B and revolving credit facility debt carried interest at LIBOR plus 3.5%, 4.0% and 5.0% respectively. The senior A, B and revolving credit facility were repaid in full in November 2021.
Certain companies within the Group joined in cross guarantees with respect to bank loans totalling £24,953,000 (2020: £43,841,000) 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:
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Within one year |
− |
8,674 |
|
Within one to two years |
− |
35,167 |
|
Within two to three years |
24,953 |
− |
|
|
24,953 |
43,841 |
|
Deferred finance costs |
(528) |
(833) |
|
|
24,425 |
43,008 |
The related party loan notes carried interest at 7% which capitalised quarterly and was repaid in full in November 2021.
The weighted average interest rates on floating rate instruments during the year was as follows:
|
|
2021 |
Unaudited 2020 |
|
Weighted average interest rates |
5.54% |
5.84% |
The Group's exposure to interest rate, foreign currency and liquidity risks is included in Note 24.
18. Financing liabilities reconciliation
|
|
1 January 2020 |
Cash flows |
Forgiveness of US PPP loan |
Interest paid |
Other non-cash changes |
Changes in exchange rates |
Unaudited 31 December 2020 |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Cash at bank and in hand |
4,855 |
6,354 |
− |
− |
− |
(251) |
10,958 |
|
Bank loans |
(47,490) |
4,454 |
391 |
− |
(674) |
311 |
(43,008) |
|
Related party loan notes |
(1,045) |
− |
− |
− |
(76) |
− |
(1,121) |
|
Lease liabilities |
(3,483) |
721 |
− |
168 |
(510) |
52 |
(3,052) |
|
Net debt |
(47,163) |
11,529 |
391 |
168 |
(1,260) |
112 |
(36,223) |
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.
|
|
1 January 2021 |
Cash flows |
Interest paid |
Other non-cash changes |
Changes in exchange rates |
31 December 2021 |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
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 the amortisation of deferred finance costs, accrual of finance costs on related party loan notes and 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 |
£000 |
|
Balance at 1 January 2020 |
3,349 |
|
Additions to right-of-use assets |
342 |
|
Depreciation charge for the year |
(829) |
|
Effects of movements in exchange rates |
(46) -------- |
|
Balance at 31 December 2020 (Unaudited) |
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 -------- |
|
|
2021 |
Unaudited 2020 |
|
Lease liabilities: |
£000 |
£000 |
|
Current |
783 |
676 |
|
Non-current |
2,351 |
2,376 |
|
Total lease liabilities |
3,134 |
3,052 |
Refer to Note 24(b) for more information on maturity analysis of lease liabilities.
b) Amounts recognised in the income statement
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Depreciation charge |
835 |
829 |
|
Interest expense on lease liability |
151 |
168 |
|
Expenses relating to short-term leases |
165 |
289 |
|
Total amount recognised in the income statement |
1,151 |
1,286 |
c) Amounts recognised in the cash flow statement
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Total cash payments for leases |
1,163 |
890 |
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 |
|
|
|
|
£000 |
|
At 1 January 2020 |
|
|
112 |
|
Charge for the year |
|
|
34 |
|
Paid during the year |
|
|
(6) |
|
Movement in foreign exchange |
|
|
(6) |
|
At 31 December 2020 (Unaudited) |
|
|
134 |
|
Charge for the year |
|
|
28 |
|
Paid during the year |
|
|
(56) |
|
Movement in foreign exchange |
|
|
2 |
|
At 31 December 2021 |
|
|
108 |
Other
Other provisions relate 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
|
|
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Capital expenditure contracted for but not provided |
2,825 |
297 |
22. Employee benefits
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 2021 was £423,000 (2020: 363,000). There was a balance outstanding of £59,000 in relation to pension liabilities at 31 December 2021 (2020: £44,000).
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 2021 |
|
Unaudited 31 December 2020 |
|
Allotted, called up and fully paid |
No. |
£000 |
No. |
£000 |
|
Ordinary shares of £0.05 each |
79,580,000 |
3,979 |
69,998,000 |
3,500 |
|
|
|
3,979 |
|
3,500 |
Ordinary share capital represents the number of shares in issue at their nominal value. In the current year, the share capital of the former Group has been replaced with the newly issued listed shares following the IPO. Ordinary Shares of 9,582,000 with a nominal value of £479,000 were issued on IPO. 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. Upon the date of listing the par value of the shares was £0.05 but the initial offering price was £1.62. Share premium is stated net of direct costs of £929,000 relating to the issue of the shares.
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.
Hedging reserve
The hedging reserve records the portion of the gains and losses from changes in fair value on hedging instruments that are deemed to be effective.
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 and Bank of Montreal 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 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
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.
|
|
|
|
2021 |
Unaudited 2020 |
|
|
|
|
£000 |
£000 |
|
Current (not past due) |
|
|
4,698 |
2,447 |
|
Past due 0-90 days |
|
|
8,934 |
5,181 |
|
Past due 91-180 days |
|
|
1,459 |
756 |
|
Past due 181-270 days |
|
|
484 |
376 |
|
Past due 271-365 days |
|
|
51 |
60 |
|
More than 365 days |
|
|
410 -------- |
182 -------- |
|
|
|
|
16,036 -------- |
9,002 -------- |
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 |
£000 |
|
Balance at 1 January 2020 |
(1,250) |
|
Movement during the year |
(29) |
|
At 31 December 2020 (Unaudited) |
-------- (1,279) |
|
Movement during the year |
(545) |
|
At 31 December 2021 |
-------- (1,824) |
|
|
-------- |
Cash and cash equivalents
The Group held cash and cash equivalents and other bank balances of £4,857,000 at 31 December 2021 (2020: £10,958,000). The cash and cash equivalents are held with the HSBC Bank plc and Bank of Montreal.
Derivative financial instruments
The derivatives were entered into with HSBC Bank plc.
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 multicurrency RCF and accordion facility which have total commitments of £40,000,000 and £10,000,000 respectively. As at 31 December 2021 the RCF had an undrawn balance of £15,047,000 and the £10,000,000 accordion facility was undrawn.
Maturities of financial liabilities
The table below analyses the Group's financial liabilities into relevant maturity groupings based on their contractual maturities:
|
As at 31 December 2020 (Unaudited) |
Contractual cash flows |
|||||
|
|
Carrying total |
Total |
Within one year |
Between one to two years |
Between two to five years |
More than five years |
|
Non-derivative financial liabilities |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Bank loans |
43,008 |
43,841 |
8,674 |
35,167 |
− |
− |
|
Related party loan notes |
1,121 |
1,121 |
− |
1,121 |
− |
− |
|
Trade and other payables |
7,243 |
7,243 |
7,243 |
− |
− |
− |
|
Lease liabilities |
3,052 |
3,480 |
810 |
721 |
1,330 |
619 |
|
|
54,424 |
55,685 |
16,727 |
37,009 |
1,330 |
619 |
|
Derivative financial liabilities |
|
|
|
|
|
|
|
Interest rate swaps |
38 |
38 |
38 |
− |
− |
− |
|
|
38 |
38 |
38 |
− |
− |
− |
|
As at 31 December 2021 |
|
Contractual cash flows |
||||
|
|
Carrying total |
Total |
Within one year |
Between one to two years |
Between two to five years |
More than five years |
|
Non-derivative financial liabilities |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
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 |
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 Company has no monetary assets and liabilities denominated in currencies that are different to the functional currency of the Company.
Interest 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 0.25% in effective interest rates would increase/(decrease) the interest charged to the income statement by £62,000 (2020: £68,000).
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 2021, the Group had gross borrowings of £24,953,000 through its RCF and a cash and cash equivalents balance of £4,857,000. 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 38 of the Group's Annual Report.
Entity with 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: |
2021 |
Unaudited 2020 |
|
|
£000 |
£000 |
|
Dividend expense* BP INV2 Newco Limited BP INV2B Bidco Limited |
476 820 |
- - |
|
Interest expense BP INV2B Bidco Limited |
71 |
75 |
|
Compensation to key management personnel Emoluments |
838 |
282 |
* The dividend expense related to the pre-IPO group restructure.
Full details of the Directors' remuneration and interests are set out in the Directors' Remuneration Report on pages 37 to 38 of the Group's Annual Report.
|
B. Outstanding balances with related parties as at year end: |
2021 |
Unaudited 2020 |
|
|
|
£000 |
£000 |
|
|
Receivables from: |
|
|
|
|
BP INV2B Bidco Limited |
- |
820 |
|
|
BP INV2 Holdco Limited |
- |
421 |
|
|
BP INV2 Newco Limited |
- |
51 |
|
|
|
- |
1,292 |
|
|
|
|
|
|
|
Payables to: |
|
|
|
|
BP INV2B Bidco Limited |
(362) |
- |
|
|
BP INV2 Holdco Limited |
(20) |
(46) |
|
|
BP INV2 Newco Limited |
(2) |
(9) |
|
|
|
(384) |
(55) |
|
|
|
|
|
|
|
Related party loan notes payable to: |
|
|
|
|
BP INV2B Bidco Limited |
- |
(1,121) |
|
26. Group structure
A full list of subsidiary undertakings of Ashtead Technology Holdings plc as defined by IFRS as at 31 December 2021 is disclosed below.
|
|
|
Equity interest at |
|
|
Name of the Group company |
Country of incorporation |
2021 |
Unaudited 2020 |
|
BP INV2 Pledgeco Limited (1) |
England & Wales |
100% |
100% |
|
Ashtead US Pledgeco Inc |
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% |
^ 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.
27. Reconciliation of Non-IFRS Profit Metrics
|
Reconciliation of Adjusted EBITDA For the year ended 31 December |
|
2021 |
Unaudited 2020 |
|
|
|
£000 |
£000 |
|
Adjusted EBITDA |
|
22,437 |
17,037 |
|
Cost associated with IPO |
|
(3,332) |
- |
|
Cost associated with M&A |
|
- |
(865) |
|
Restructuring costs |
|
(1,314) |
(374) |
|
One-off upgrade of IT system |
|
- |
(113) |
|
One-off bad debts & debt collection costs |
|
(39) |
(319) |
|
One-off inventory adjustment |
|
205 |
- |
|
One-off asset disposal |
|
130 |
- |
|
US PPP loan forgiveness |
|
- |
391 |
|
Other exceptional costs |
|
(35) -------- |
(17) -------- |
|
Operating profit before depreciation, amortisation and foreign exchange gain/(loss) |
|
18,052 |
15,740 |
|
Depreciation on property, plant and equipment |
10 |
(7,878) |
(9,924) |
|
Depreciation on right-of-use asset |
19 |
(835) -------- |
(829) -------- |
|
Operating profit before amortisation and foreign exchange gain/(loss) |
|
9,339 |
4,987 |
|
Amortisation of intangible assets |
11 |
(1,516) |
(1,567) |
|
Foreign exchange gain/(loss) |
|
(215) -------- |
(312) -------- |
|
Operating profit |
|
7,608 |
3,108 |
|
|
|
|
|
|
Reconciliation of Adjusted EBITA For the year ended 31 December |
|
2021 |
Unaudited 2020 |
|
|
|
£000 |
£000 |
|
Adjusted EBITA |
|
13,724 |
6,284 |
|
Cost associated with IPO |
|
(3,332) |
- |
|
Cost associated with M&A |
|
- |
(865) |
|
Restructuring costs |
|
(1,314) |
(374) |
|
One-off upgrade of IT system |
|
- |
(113) |
|
One-off bad debts & debt collection costs |
|
(39) |
(319) |
|
One-off inventory adjustment |
|
205 |
- |
|
One-off asset disposal |
|
130 |
- |
|
US PPP loan forgiveness |
|
- |
391 |
|
Other exceptional costs |
|
(35) |
(17) |
|
Amortisation of intangible assets |
11 |
(1,516) |
(1,567) |
|
Foreign exchange gain/(loss) |
|
(215) -------- |
(312) -------- |
|
Operating profit |
|
7,608 |
3,108 |
|
Reconciliation of Adjusted Profit After Tax For the year ended 31 December |
|
2021 |
Unaudited 2020 |
|
|
|
£000 |
£000 |
|
Adjusted Profit After Tax |
|
9,385 |
2,022 |
|
Cost associated with IPO |
|
(3,332) |
- |
|
Cost associated with M&A |
|
- |
(865) |
|
Restructuring costs |
|
(1,314) |
(374) |
|
One-off upgrade of IT system |
|
- |
(113) |
|
One-off bad debts & debt collection costs |
|
(39) |
(319) |
|
One-off inventory adjustment |
|
205 |
- |
|
One-off asset disposal |
|
130 |
- |
|
US PPP loan forgiveness |
|
- |
391 |
|
One-off hedge reserve movement |
|
(313) |
- |
|
Loan repayment fees |
|
(100) |
- |
|
Deferred finance cost write off |
|
(704) |
- |
|
Other exceptional costs |
|
(35) |
(17) |
|
Foreign exchange gain/(loss) |
|
(215) |
(312) |
|
Amortisation of intangible assets |
11 |
(1,516) |
(1,567) |
|
Tax impact of the adjustments above |
|
377 -------- |
156 -------- |
|
Profit/(loss) for the financial year |
|
2,529 |
(998) |
Adjusted Profit After Tax is used to calculate the Adjusted basic earnings per share in Note 9. A reconciliation of adjusted profit before tax is included in the CFO report on page 19 of the Group's Annual Report.
Company Information
Directors
W M F C Shannon (appointed 23 November 2021)
A W Pirie (appointed 4 November 2021)
I Stewart (appointed 4 November 2021)
J A Connolly (appointed 4 November 2021)
A R C Durrant (appointed 23 November 2021)
T Hamborg-Thomsen (appointed 23 November 2021)
P Blackburn (appointed 27 May 2021, resigned 4 November 2021)
M A Caveley (appointed 27 May 2021, resigned 4 November 2021)
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
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