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AT. Ashtead Technology Holdings Plc

835.00
-7.00 (-0.83%)
17 May 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Ashtead Technology Holdings Plc LSE:AT. London Ordinary Share GB00BLH42507 ORD 5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -7.00 -0.83% 835.00 838.00 845.00 859.00 836.00 856.00 153,654 16:35:19
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Oil And Gas Field Expl Svcs 73.12M 12.67M 0.1584 53.09 672.36M

Ashtead Technology Holdings plc Full-Year Results 2023

16/04/2024 7:00am

RNS Regulatory News


RNS Number : 7111K
Ashtead Technology Holdings plc
16 April 2024
 

16 April 2024

Ashtead Technology Holdings plc

("Ashtead Technology" or the "Company" or the "Group")

 

Full-Year Results 2023

 

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 2023.

 

Financial Performance (£'m)

 


2023

2022

% Movement





Revenue

110.5

73.1

51.1%

Gross profit

86.3

54.3

59.0%

Gross profit %

78.1%

74.2%

390bps

Adjusted EBITA1

36.2

19.9

82.5%

Adjusted EBITA %

32.8%

27.1%

570bps

Operating profit

31.2

17.7

76.2%

Profit before tax

27.5

16.3

68.9%

Basic earnings per share (pence)

27.0p

15.5p

74.2%

Adjusted basic earnings per share (pence)2

33.4p

19.3p

73.1%

Return on Invested Capital (ROIC)

27.6%

21.2%

640bps

Leverage3

1.3

1.0


 

·    Group revenue up 51% to £110.5m (2022: £73.1m), driven by strong organic growth (35%) and M&A (17%), including the full year impact of WeSubsea and Hiretech acquisitions completed in 2022, and one-month impact of ACE Winches acquisition completed on 30 November 2023.  

·    Gross profit of £86.3m (2022: £54.3m), representing a gross margin of 78.1% (2022: 74.2%), benefitting from a combination of higher cost utilisation and improved pricing.

·    Adjusted EBITA1 of £36.2m (2022: £19.9m), 82% growth on prior year, with Adjusted EBITA margin of 32.8% (2022: 27.1%).

·    Revenues from both the offshore renewables and the oil and gas markets up 50% and 52%, respectively, with renewables revenue growth representing 31% of total revenue.    

·    Adjusted earnings per share of 33.4p (2022: 19.3p) and basic earnings per share of 27.0p (2022: 15.5p).

·    ROIC of 28% for the period (2022: 21%), significantly ahead of cost of capital.  

·    Reported net debt to Adjusted EBITDA leverage of 1.3x, 1.0x on a proforma basis.

·    Final dividend of 1.1p recommended.

 

Operational Highlights

 

·    Continued focus on expansion of the business through investment in equipment alongside further M&A activity and successful integration of 2022 acquisitions.

Successful integration of Hiretech and WeSubsea acquisitions with both performing ahead of their acquisition cases with combined revenue growth of 30% on LTM revenues at acquisition

Completed acquisition of ACE Winches on 30th November 2023 to expand equipment and service capability and market reach

ACE Winches results for the 12 months to 31 December 2023 delivered on expectations

·    Significant investment in high-quality equipment, expanding the breadth and depth of our fleet. £19.1m capex invested in rental fleet (2022: £13.1m).

·    Employee headcount grew by 25% organically to further support business development and reach with an additional 203 joining via the ACE Winches acquisition, taking total headcount to 527 at year end.

 

Outlook

 

·    Market growth across both oil and gas, and renewables driving continued customer backlog build with a combined CAGR of 11% across Ashtead Technology's addressable markets to 2027.

Growth in the offshore renewables market remains particularly significant, with the Company's addressable market within offshore wind to increase at 25% CAGR to 2027

·    Targeting low double-digit organic revenue growth in the medium-term with sustainable EBITA margins in the high 20%'s.

·    Acquisition of ACE Winches has supported a c.30% expansion of total accessible market (TAM) which is forecast to increase to $3.5bn by 2027 from $1.2bn at IPO. 

·    Robust balance sheet, together with strong operational cash generation, positions the Group to continue to pursue selective, value-accretive M&A opportunities. 

·    The Board is encouraged by the Group's performance in Q1 2024 and our full year 2024 expectation remains unchanged.

 

Allan Pirie, Chief Executive Officer, commented:

 

"2023 was another successful year for Ashtead Technology as we made great progress in delivering our strategic goals and reported strong financial growth during the period. We grew ahead of our markets in 2023, highlighting the efficiencies and value add we provide our customers' offshore operations. We are investing for the future, expanding our market reach through both organic and inorganic investment as we continue to broaden our fleet and build strength and depth of expertise which ensures we are well-positioned to continue to capitalise on upcoming market opportunities in a sector supported by long-term structural tailwinds."

 

 

Analyst Briefing

 

A conference call for sell-side analysts will be held on Tuesday 16th April at 8.30am. If you would like to participate, please email ashteadtechnology@vigoconsulting.com.

 

Investor Presentation

 

Allan Pirie and Ingrid Stewart will provide a live presentation relating to the full year results via the Investor Meet Company platform on Friday 19 April at 11.30am.

 

The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via the Investor Meet Company dashboard up until 9.00am the day before the meeting or at any time during the live presentation.  Investors can register for the presentation via the link below:

 

https://www.investormeetcompany.com/ashtead-technology-holdings-plc/register-investor

Investors who already follow ASHTEAD TECHNOLOGY HOLDINGS PLC on the Investor Meet Company platform will automatically be invited.



 

For further information, please contact:

 

Ashtead Technology

Allan Pirie, Chief Executive Officer

Ingrid Stewart, Chief Financial Officer

 

(Via Vigo Consulting)

 

Vigo Consulting (Financial PR)

Patrick d'Ancona

Finlay Thomson

Verity Snow

 

 

Tel: +44 (0)20 7390 0230

 ashteadtechnology@vigoconsulting.com

 

Numis Securities Limited (Nomad and Broker)

Julian Cater

George Price

Kevin Cruickshank (QE)

 

Tel: +44 (0)20 7260 1000

 

 

1 Adjusted EBITA is calculated as earnings before interest, tax, amortisation and items not considered part of underlying trading including foreign exchange gains and losses, is an Alternative Profit Measure used by management and is not an IFRS disclosure.

2 Adjusted Earnings per Share Tax is calculated as profit after tax for the financial year adjusted for amortisation and items not considered part of underlying trading including foreign exchange gains and losses, all adjusted for tax, divided by weighted average number of shares.

3 Leverage is calculated as Net Debt divided by Adjusted EBITDA.  Adjusted EBITDA is calculated as earnings before interest, tax, depreciation, amortisation and items not considered part of underlying trading including foreign exchange gains and losses, is an Alternative Profit Measure used by management and is not an IFRS disclosure.

See Note 28 to the financial statements for calculations.

 

Notes to editors:

 

Ashtead Technology is a leading subsea equipment rental and solutions provider for the global offshore energy sector.  Ashtead Technology's specialist equipment, advanced-technologies and support services enable its customers to understand the subsea environment and manage offshore energy production infrastructure.

 

The Company's service offering is applicable across the lifecycle of offshore wind farms and offshore oil and gas infrastructure.

 

In the fast-growing offshore wind sector, Ashtead Technology's specialist equipment and services are essential through the project development, construction and installation phase. Once wind farms are operational, Ashtead Technology supports customers with inspection, maintenance and repair ("IMR") equipment and services.  In the more mature oil and gas sector, Ashtead Technology's focus is on IMR and decommissioning.

 

Headquartered in the UK, the Group operates globally, servicing customers from its twelve facilities located in key offshore energy hubs.



CEO Report

Continuing positive momentum

I am pleased with the Group's trading performance through 2023, delivering another year of growth through strong execution of our organic and inorganic strategy.  We have continued to make great progress in delivering on our strategic goals,  broadening our fleet and building our strength and depth of expertise with a focus on long-term growth and shareholder value.

We delivered 51% growth in revenues, 82% growth in Adjusted EBITA, and ROIC of 28%, as demand for our services continued to increase from both offshore renewables and oil and gas, with our growth in both markets exceeding market growth. Our statutory profit before tax of £27.5m was 69% ahead of prior year (2022: £16.3m).

Our strategy for growth is centred on doing more for our customers by providing a high quality, outsourced solution to support them in undertaking an increasing range of subsea activities across the lifecycle of subsea offshore energy infrastructure.  It is differentiated through the breadth and depth of equipment supply, coupled with in-house expertise and service. Through both continued investment in our equipment and service offering, and M&A, we are building out a unique offering, providing true efficiencies and value add to our customers' offshore operations.

Responding to the market opportunity and in line with our strategy, we continued to invest in our high-quality equipment rental fleet through 2023, increasing the number of items from circa 19,000 to over 23,000 through both organic investment (£19.1m rental equipment capex) and through the ACE Winches acquisition. Through key strategic supply chain partnerships, and in-house design capability, we continue to focus on plugging key technology gaps to enhance our offering.

Acquisitions are an important element of our strategic ambition to deliver long-term shareholder returns. Our results for 2023 included a full year's trading from WeSubsea and Hiretech, the acquisitions completed in 2022, both of which have been fully integrated into the Group and are trading ahead of their acquisition cases. We also, in November 2023, completed our largest acquisition to date, ACE Winches, adding a highly complementary lifting, pulling and deployment capability to our broadening list of services. The reaction from our stakeholders has been very positive and we are already seeing significant cross-selling opportunities with our customers.

We finished the year with a robust balance sheet with leverage at 1.3x (proforma 1.0x) and this, together with our strong operational cash generation, leaves us well positioned to continue to invest in the business and take a disciplined approach to pursuing selective value-accretive M&A opportunities to build on our unique advantage through our growing mix of equipment and services. We see a pipeline of opportunities across complementary bolt-on acquisitions as well as larger opportunities that could grow our geographical reach and service capability in a similar way to that achieved through our recent strategic acquisitions.

Our business model is resilient, profitable and cash generative and we are very focussed on building out a business that has a long-term, sustainable future.

Sustainability

In an ever-evolving energy industry we continue to play our part in the energy transition, supporting our customers in both the offshore oil and gas and renewables markets. We continued to make good progress on our sustainability journey by increasing our revenues from renewables by 50%.  The majority of our equipment is fungible across both end markets which creates robustness and longevity as the world continues to transition to greener energy supplies.  Ashtead Technology remains committed to supporting the energy transition, targeting 50% of our revenues from the offshore renewables market in the medium term.

Our people are central to everything we do. Over the past couple of years, we have grown our workforce substantially, increasing to over 520 people by the end of 2023.  People development and growth is paramount, as is safeguarding the well-being of our employees. We strive to be a responsible employer and are focussed on ensuring our employees' physical and mental health are well looked after.

On governance, we pride ourselves on the way we do business and are always focussed on doing the right thing. We are committed to complying with applicable laws, working honestly, and applying the highest standards of integrity and ethics in everything we do.

Market

The market has continued to see growth and momentum increase across both offshore oil and gas, and renewables, as the world continues to wrestle with the energy trilemma of sustainability, affordability, and security. There is a heightened need for a balanced energy transition where all forms of energy are required not only to support global demand, but also to deliver an orderly transition. As a result, Rystad Energy forecast's growth across Ashtead Technology's addressable market at 11% CAGR from 2023 to 2027.

While 2023 saw some headline project delays and cancellations in the offshore wind market, the industry is still in its infancy and, growth  was never going to be a smooth journey. The market is growing quickly and investment into the sector remains high, with Rystad Energy forecasting the addressable offshore wind market size for Ashtead Technology to increase at 25% CAGR from 2023 to 2027. Beyond this, forecasts show continued investment, with Rystad forecasting a 26% CAGR in cumulative global offshore wind installed capacity through to 2030.

Within oil and gas, 2023 has seen a 61% increase in offshore greenfield sanctioning committed capex compared to the average of the previous five years, with many of the projects being sanctioned in Norway and South America. Years of under investment in both existing and new developments have caught up with the industry. As a source of reliable energy, the offshore hydrocarbon industry will remain a key contributor to global oil and gas production under all probable energy transition scenarios, with continued investment in this industry being critical to supporting the demand for energy. Subsea expenditure will play a significant part in this market, with Rystad Energy forecasting Ashtead Technology's addressable market within the subsea oil and gas space to increase at a healthy 7% CAGR from 2023 to 2027.

It is therefore no surprise that offshore contractors are continuing to report increasing backlogs which have more than doubled since 2020.  Whilst Ashtead Technology is not a backlog business, the backlogs of our customer base give us confidence in an increasing demand for our services for years to come.

The requirement for energy production from offshore sources is significant and is set to remain so for the foreseeable future, and the fungibility of Ashtead Technology's equipment and solutions across both the offshore wind and oil and gas markets makes for a compelling and robust proposition, enabling the Group to capture growth opportunities across both adjacent markets globally.

Our people

Credit for the 2023 financial results and progress in implementing our strategy during the year lies with our people and I would like to personally thank our fantastic team for their ongoing contribution to our growth and success. The Group continues to grow at pace, and we have made a significant investment in strengthening and developing the team over the last few years to ensure we have the appropriate structure and resource to satisfy our global growth ambitions.

In addition to recruitment, we are very focussed on employee retention. In a buoyant market this is ever challenging and through 2023 we continued to invest in our HR team to support this challenge. Through 2024 our focus is on increasing the quality of our in-house learning and development capability to ensure that we are giving our employees the best training and opportunities available to them in our sector.

Whilst the business grows in depth and breadth, we continue to maintain and champion our values of Agility, Collaboration, and Excellence. Within this we ensure that we maintain an informal and open structure and culture that enables all of our team to make a real difference to the business, whatever their role or seniority.

Our culture is one of always wanting to do our best, ensuring that we are delivering for our customers, maintaining strong relationships with both our customers and suppliers, and looking after our employees. Our true strength lies in the quality of service that we provide, and we continue to deliver on this, as is proven by the longevity and strength of our customer relationships.

Current trading and outlook

The trading result achieved in 2023 is testament to the strength of our business and the people we employ. The structural growth drivers in our end markets remain attractive and we are uniquely positioned to seize both organic and acquisitive growth opportunities. Our trading momentum has continued into the new financial year, and we are excited by the significant growth opportunities that are being worked on across the Group.  The Board is encouraged by the Group's performance in Q1 2024 and our full year 2024 expectation remains unchanged.

 

Allan Pirie

Chief Executive Officer

15 April 2024

 



 

CFO Report

Continued strong growth

The Group continued to perform strongly during 2023, achieving significant growth on the prior year as we continued to build on the strong foundations of the business.  We made good progress against all of our financial KPIs and delivered well above the expectations set at the start of the year.

Revenue

 

The Group delivered revenue of £110.5m in the year, an increase of 51% from £73.1m in 2022.  The increase continued to come from both markets with a 50% increase in revenues from offshore renewables and 52% increase in oil and gas.  Offshore renewables accounted for 31% of total revenue in 2023 (2022: 31%).

Our 51% revenue growth was derived from organic growth (35%), M&A (17%) (being the full year impact of the WeSubsea and Hiretech acquisitions completed in 2022 plus one-month trading from our most recent acquisition, ACE Winches), with a small decrease from FX rates (-1%).

If ACE Winches had been acquired on 1 January 2023 rather than 30 November 2023, full year revenue would have been £149.6m.

Gross profit

Our gross profit for the year was £86.3m (2022: £54.3m) representing a gross margin of 78.1% (2022: 74.2%).  The increase in gross margin was the result of a combination of increased pricing (increased by 13%), cost utilisation (increased by 1%) and a reduction in the proportion of revenues from cross hire as a result of both acquisition (Hiretech and WeSubsea) and capital investment.

Administration costs

Administration expenses of £55.8m (including impairment loss on trade receivables) compares to £37.4m in 2022.  Excluding exceptional costs (covered below), FX and amortisation, the total overheads were £50.7m compared to £35.2m in 2022, an increase of 44%.  Of the £15.5m increase, £2.0m relates to the addition of ACE Winches (one-month impact), £6.6m relates to payroll, £1.7m relates to LTIP and £3.3m relates to depreciation, with the remaining £2.0m being additional facility, insurance, legal and professional and other overhead costs associated with being a significantly larger business.

On payroll, the increase of £6.6m (34%) on prior year total cost (excluding LTIP increase of £1.7m) reflects our growing business.  In addition to implemented salary increases for all employees, we increased our headcount (excluding ACE Winches) from 260 at end December 2022 to 324 by December 2023, an increase of 25%.  Including ACE Winches, our headcount at the year end was 527.

Profitability

Adjusted EBITA of £36.2m compares to £19.9m in 2022 and represents a higher margin of 33% (2022: 27%), resulting in ROIC increasing to 27.6% (2022: 21.2%), significantly ahead of cost of capital.  We expect EBITA margins in the medium term to be high 20%s.

Our Adjusted EBITA growth of 82% can be split as 58% from organic growth, 25% from M&A with a small decrease due to FX.

Where we have provided adjusted figures, they are after the add-back of adjusting items which, with regard to 2023, predominantly related to professional and other fees arising from the ACE acquisition.  We also incurred c. £0.3m of transaction fees (classified as 'other' in the table below) in relation to a potential acquisition which we aborted during due diligence.

Restructuring costs relate to one-off costs to remove surplus entities from our group structure.  During 2023 we liquidated three entities being WeSubsea AS, WeSubsea UK Limited and Hiretech Limited and merged Aqua-Tech Solutions LLC and Alpha Subsea LLC into Ashtead Technology Offshore Inc.  The trade and assets of these entities were hived up into other trading entities within the Group prior to liquidation.  In addition, £0.7m external software development costs have been classed as one-off in nature.

Statutory profit before tax of £27.5m in 2023 compares to £16.3m in 2022, an increase of 69%.

Net finance expense

Net finance costs were £3.7m in 2023 compared to £1.4m in 2022, with the increase reflecting the higher net debt as a result of acquisitions completed through 2022 and 2023, all of which were funded through available RCF facilities.  £0.5m of this cost related to the write off of deferred finance costs which were written off as a result of the refinancing which completed in April 2023.

Taxation

The total tax charge was £5.9m (2022: £3.9m).  This equates to an effective tax rate of 21.5% compared to 24.0% in 2022.  Our expectation is that the Group's effective tax rate will be close to the UK corporation tax rate, although this will be impacted by the amount of profit the Group earns in its overseas jurisdictions where, in some cases, corporation tax rates are higher or lower than those in the UK. 

EPS and dividend

Adjusted EPS was 33.4 pence (2022: 19.3 pence) with statutory EPS at 27.0 pence (2022: 15.5 pence). The adjusted figures exclude the impact of adjusting items as set out in Note 28 of the accounts, foreign exchange profit/loss and amortisation and the impact of the US deferred tax liability (2022 only).

The Board sees an opportunity to reinvest profits to expand the business both organically and through M&A growth.  At the same time, the Board recognises the importance of dividends both to the Company's shareholders and in maintaining capital discipline.  In this regard, the Board has recommended a full and final dividend of 1.1 pence per share for the year ended 31 December 2023, payable on 3 June 2024 to shareholders based on an ex-dividend date of 2 May 2024 and record date of 3 May 2024.

Cash flow and balance sheet

Cash inflow from operations was £48.8m (2022: £35.3m).  The Group increased its investment in capital expenditure in the year to £19.5m (2022: £13.7m), investing predominantly in rental equipment to capitalise on the continued improvement in market conditions.  As we do not invest in rental fleet for resale, and have no plans to sell assets once they reach end of life, our capital expenditure is classed as an investing activity rather than operational activity in our cash flow statement.

Cash spent on acquisitions of £51.2m was funded through our RCF facility.  Acquisitions completed in the year resulted in an increase in both intangible assets (£14.6m of additions) and goodwill (£11.9m of additions).

Net working capital at year end represented 3.7% of actual revenues and 2.7% of proforma revenues.

Net cash flow from operating activities was £39.0m (2022: £32.1m) representing an Adjusted EBITDA to operating cash flow conversion of 81% (2022: 114%).  Overall movement in cash was a positive inflow of £2.3m for the year (2022: £3.9m) with the cash balance at £10.8m at year end (2022: £9.0m).

Net debt increased from £28.7m to £61.7m as a result of the ACE Winches acquisition being funded through the RCF.  This represents leverage of 1.3x at year end (2022: 1.0x).  On a proforma basis, taking into account the full year impact of ACE Winches, leverage was 1.0x.

Prior year restatement

 

The IFRS Interpretations Committee published an agenda decision in relation to configuration and customisation expenditure relating to cloud computing arrangements, including Software as a Service (SaaS) in 2021.  At the time of the decision the Group was reporting under UK GAAP and at the point of IFRS conversion, the intangible balance in relation to software was immaterial.  In 2023 the Group has identified an error in application of IAS 38 "Intangible Assets". The correction of this error has resulted in restating £0.7m of expenditure in 2022 that was previously incorrectly capitalised as an intangible asset, and expensing this to the Consolidated Income Statement as administrative costs. There is an offsetting decrease to amortisation of £0.3m.  The impact on profit before tax for the year ended 31 December 2022 is a reduction in profit before tax of £0.4m and adjusted profit before tax of £0.3m.  In addition, the opening balance sheet at 1 January 2022 has been restated to move £1.0m of net intangible assets to reserves.  Comparatives in the Strategic Report and the Financial Statements have been restated and further details are given in Note 2.2 of the accounts.

 

Going concern

During 2023 the Group has continued to generate positive cash flow from operating activities with a cash and cash equivalents balance of £10.8m (2022: £9m). The Group has access to a multi-currency RCF and additional accordion facility. After a refinance which completed on 5 April 2023, the RCF and accordion facility have total commitments of £100m and £50m respectively.  The Company exercised its option to extend its existing facility for a further 12 months through to April 2028, which was approved by the lenders in March 2024. The accordion facility is subject to credit approval. As at 31 December 2023 the RCF had an undrawn balance of £29.3m on the £100m facility available at that time. Refer to Note 17 of the accounts for details on the available facilities.

 

The Facility Agreement is subject to a leverage covenant of 3.0x and an interest cover covenant of 4:1, which are both to be tested on a quarterly basis. The Group has complied with all covenants from entering the Facility Agreement until the date of these financial statements.

 

The Group monitors its funding and liquidity position throughout the year to ensure it has sufficient funds to meet its ongoing cash requirements. Cash forecasts are produced based on a number of inputs such as estimated revenues, margins, overheads, collection and payment terms, capex requirements and the payment of interest and capital on its existing debt facilities. Consideration is also given to the availability of bank facilities. In preparing these forecasts, the Directors have considered the principal risks and uncertainties to which the business is exposed.

 

The Directors perform sensitivity analysis on the going concern assumption to determine whether plausible downside scenarios would have a material impact. Forecasts were flexed to incorporate a 5% downturn in forecast performance in the year ending 31 December 2024 and a 10% downturn in forecast performance in the year ending 31 December 2025. Under this downside scenario the peak funding requirement over the forecast period would leave £96m headroom in the available facilities with no threat to breach of covenants.

 

Taking account of reasonable changes in trading performance and bank facilities available, the application of severe but plausible downside scenarios to the forecasts, the cash forecasts prepared by management and reviewed by the Directors indicate that the Group is cash generative and has adequate financial resources to continue to trade for the foreseeable future and meet its obligations as they fall due.

 

Reconciliation of adjusted and reported IFRS results

The Group uses certain measures that it believes assist a reader of the Annual Report in understanding the business. These alternative performance measures (APMs) are not defined under IFRS and, therefore, may not be directly comparable with adjusted measures presented by other companies. The APMs are not intended to be a substitute for, or superior to, any IFRS measures of performance. However, they are considered by management to be important measures used in the business for assessing performance.

In establishing Adjusted EBITDA, Adjusted EBITA and Adjusted Profit After Tax (used for Adjusted EPS calculation), the Group has added back various costs, deemed to be one-off in nature, which in 2023 predominantly relate to acquisitions completed during the period and/or one-off restructuring costs.  In addition, amortisation of intangible assets is adjusted for in some of the APMs as we are aware that certain analysts and investors treat this differently in their analysis and this therefore allows a consistency of approach.  The definitions can be found in the definitions section of the Annual Report and reconciliation to GAAP metrics included in Note 28 to the accounts.


Table A - Results reconciliation / Adjusted figures

Results reconciliation

£'000

Adjusted

Amortisation

FX

Acquisition costs

Restructuring costs

Software costs

Deferred finance costs

Other**

Reported

Revenue

110,466

-

-

-

-

-

-

-

110,466

Gross profit

86,298

-

-

-

-

-

-

-

86,298

Administrative expenses*

(52,209)

-

(229)

2,533

216

683

-

380

(55,792)

Other operating income

704

-

-

-

-

-

-

-

704

Operating profit

34,793

-

(229)

2,533

216

683

-

380

31,210

Depreciation

12,029

-

-

-

-

-

-

-

12,029

Amortisation

1,431

-

-

-

-

-

-

-

1,431

EBITDA

48,253

-

(229)

2,533

216

683

-

380

44,670

Depreciation

(12,029)

-

-

-

-

-

-

-

(12,029)

EBITA

36,224

-

(229)

2,533

216

683

-

380

32,641

Amortisation

-

1,431

-

-

-

-

-

-

(1,431)

Finance cost (net)

(3,195)

-

-

-

-

-

522

-

(3,717)

Profit before tax

33,029

1,431

(229)

2,533

216

683

522

380

27,493

Tax

(6,365)

-

-

-

(54)

(171)

(131)

(95)

(5,914)

Profit after tax

26,664

1,431

(229)

2,533

162

512

392

285

21,579











*includes impairment loss on trade receivables.

** other includes £0.3m of transaction fees relating to an aborted acquisition.

Ingrid Stewart

Chief Financial Officer

15 April 2024



 

Consolidated Income Statement

For the year ended 31 December 2023

 


Notes

2023

£000

2022

(restated)*

£000

Revenue

4

110,466

73,120

Cost of sales

5

(24,168)

(18,829)

Gross profit


86,298

54,291

Administrative expenses

5

(55,291)

(36,567)

Impairment loss on trade receivables

5

(501)

(810)

Other operating income

5

704

804

Operating profit

5

31,210

17,718

Finance income

7

283

21

Finance costs

7

(4,000)

(1,459)

Profit before taxation


27,493

16,280

Taxation charge

8

(5,914)

(3,906)

Profit for the financial year


21,579

12,374



 


Profit attributable to:


 


Equity shareholders


21,579

12,374



 


Earnings per share


 


Basic

9

27.0

15.5

Diluted

9

26.7

15.3



 


The below financial measures are Alternative Profit Measures used by management and are not an IFRS disclosure:


 


Adjusted EBITDA**

28

48,253

28,282

Adjusted EBITA***

28

36,224

19,851

Adjusted Profit After Tax****

28

26,664

15,329



 


 

*       See Note 2.2 for an explanation of the prior year restatement.

**     Adjusted EBITDA is calculated as earnings before interest, tax, depreciation, amortisation and items not considered part of underlying trading including foreign exchange gains and losses, is an Alternative Profit Measure used by management and is not an IFRS disclosure. See Note 28 to the financial statements for calculations.

***  Adjusted EBITA is calculated as earnings before interest, tax, amortisation and items not considered part of underlying trading including foreign exchange gains and losses, is an Alternative Profit Measure used by management and is not an IFRS disclosure. See Note 28 to the financial statements for calculations.

**** Adjusted Profit After Tax is calculated as profit after tax for the financial year adjusted for amortisation and items not considered part of underlying trading including foreign exchange gains and losses, all adjusted for tax, is an Alternative Profit Measure used by management and is not an IFRS disclosure. See Note 28 to the financial statements for calculations.

 

All results derive from continuing operations.

The accompanying notes are an integral part of these consolidated financial statements.



 

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2023

 


2023

£000

2022

(restated)*

£000

Profit for the year

21,579

12,374

Other comprehensive (loss)/income:

 


Items that may be reclassified subsequently to profit or loss

 


Exchange differences on translation of foreign operations

(554)

1,179

Other comprehensive (loss)/income for the year, net of tax

(554)

1,179

Total comprehensive income

21,025

13,553


 


Total comprehensive income attributable to:

 


Equity shareholders of the Company

21,025

13,553

 

*     See Note 2.2 for an explanation of the prior year restatement.

 

The accompanying notes are an integral part of these consolidated financial statements.

 



 

Consolidated Balance Sheet

At 31 December 2023

 


Notes

2023

£000

2022

(restated)*

£000

Non-current assets


 


Property, plant and equipment

11

68,707

31,812

Goodwill

12

77,739

66,043

Intangible assets

12

17,709

4,582

Right-of-use assets

19

2,584

2,631

Deferred tax asset

8

52

-



166,791

105,068

Current assets


 


Inventories

13

4,064

1,865

Trade and other receivables

14

32,015

19,784

Cash and cash equivalents

15

10,824

9,037



46,903

30,686

Total assets


213,694

135,754

Current liabilities


 


Trade and other payables

16

32,021

19,134

Income tax payable

8

2,207

1,784

Loans and borrowings

17

23

-

Lease liabilities

19

1,154

865



35,405

21,783

Non-current liabilities


 


Loans and borrowings

17

69,673

34,865

Lease liabilities

19

1,656

1,991

Deferred tax liability

8

9,018

2,062

Provisions for liabilities

20

356

117



80,703

39,035

Total liabilities


116,108

60,818

Equity


 


Share capital

23

3,997

3,979

Share premium

23

14,115

14,115

Merger reserve

23

9,435

9,435

Share based payment reserve

23

2,538

827

Foreign currency translation reserve

23

(665)

(111)

Retained earnings

23

68,166

46,691

Total equity


97,586

74,936

Total equity and liabilities


213,694

135,754

*     See Note 2.2 for an explanation of the prior year restatement.

 

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 2023 were authorised by the Board of Directors on 15 April 2024 and signed on its behalf by:

 

 

Allan Pirie                                                         Ingrid Stewart

Chief Executive Officer                                     Chief Financial Officer

15 April 2024                                                      15 April 2024

 



 

Consolidated Statement of Changes in Equity
For the year ended 31 December 2023

 


Share

capital

£000

Share

premium

£000

Merger

reserve

£000

Share

based

payment

reserve

£000

Foreign

currency

translation

reserve

£000

Retained

earnings

£000

Total

£000

At 1 January 2022 as originally presented

3,979

14,115

9,435

-

(1,290)

34,893

61,132

Correction of error

-

-

-

-

-

(576)

(576)

Restated balance at 1 January 2022*

3,979

14,115

9,435

-

(1,290)

34,317

60,556

Profit for the year (restated)*

-

-

-

-

-

12,374

12,374

Other comprehensive income

-

-

-

-

1,179

-

1,179

Total comprehensive income

-

-

-

-

1,179

12,374

13,553

Share based payment charge

-

-

-

827

-

-

827

At 31 December 2022 as originally presented

3,979

14,115

9,435

827

(111)

47,558

75,803

Correction of error

-

-

-

-

-

(867)

(867)

Restated balance at 31 December 2022*

3,979

14,115

9,435

827

(111)

46,691

74,936

Profit for the year

-

-

-

-

-

21,579

21,579

Other comprehensive income

-

-

-

-

(554)

-

(554)

Total comprehensive income

-

-

-

-

(554)

21,579

21,025

Share based payment charge

-

-

-

1,711

-

-

1,711

Tax on share based payment charge

-

-

-

-

-

710

710

Issue of shares

18

-

-

-

-

(18)

-

Dividends paid

-

-

-

-

-

(796)

(796)

At 31 December 2023

3,997

14,115

9,435

2,538

(665)

68,166

97,586

 

*     See Note 2.2 for an explanation of the prior year restatement.

 

The accompanying notes are an integral part of these consolidated financial statements.

 



 

Consolidated Cash Flow Statement
For the year ended 31 December 2023

 


Notes

2023

£000

2022

(restated)*

£000

Cash generated from operating activities


 


Profit before taxation


27,493

16,280

Adjustments to reconcile profit before taxation to net cash from operating activities


 


Finance income

7

(283)

(21)

Finance costs

7

4,000

1,459

Depreciation

11, 19

12,029

8,431

Amortisation

12

1,431

878

Gain on sale of property, plant and equipment

5

(704)

(804)

Share based payment charges

23

2,496

825

Provision for bad debts movement


514

-

Provision for liabilities

20

48

(4)

Cash generated before changes in working capital


47,024

27,044

(Increase)/decrease in inventories


(157)

274

(Increase)/decrease in trade and other receivables


(2,120)

734

Increase in trade and other payables


4,082

7,207

Cash inflow from operations


48,829

35,259

Interest paid


(3,064)

(1,132)

Tax paid


(6,717)

(1,998)

Net cash generated from operating activities


39,048

32,129

Cash flow used in investing activities


 


Purchase of property, plant and equipment


(19,459)

(13,728)

Proceeds from customer loss/damage of assets held for rental


1,428

1,518

Acquisition of subsidiary undertakings net of cash acquired


(51,183)

(23,999)

Interest received


283

21

Net cash used in investing activities


(68,931)

(36,188)

Cash flow generated from financing activities


 


Loans received


62,014

31,000

Transaction fees on loans received


(1,241)

(228)

Repayment of bank loans


(26,587)

(21,727)

Payment of lease liability


(1,199)

(1,064)

Payment of finance lease liability


(2)

-

Dividends paid


(796)

-

Net cash generated from financing activities


32,189

7,981

Net increase in cash and cash equivalents


2,306

3,922

Cash and cash equivalents at beginning of year


9,037

4,857

Net foreign exchange difference


(519)

258

Cash and cash equivalents at end of year


10,824

9,037

*     See Note 2.2 for an explanation of the prior year restatement.

The accompanying notes are an integral part of these consolidated financial statements.



 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2023

 

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 2023 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

These consolidated financial statements are for the year ended 31 December 2023 and have been prepared in accordance with UK-adopted International Accounting Standards.

 

These consolidated financial statements have been prepared under the historical cost convention.

 

The financial information does not constitute the Company's statutory accounts for the years ended 31 December 2023 or 31 December 2022 but is derived from those accounts. Statutory accounts for the year ended 31 December 2023 will be delivered to the Registrar of Companies in due course.  The Auditor has reported on the 2023 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. 

 

Subsidiary audit exemption

Ashtead Technology Holdings plc (company registration number 13424040) has issued a parental company guarantee under s479A of the Companies Act 2006 dated 31 December 2023. As a result, for the year ended 31 December 2023, Underwater Cutting Solutions Limited (company registration number 05031272) is entitled to exemption from audit.

 

1.3 Presentational currency

The consolidated financial statements, unless otherwise stated, are presented in sterling, to the nearest thousand.

 

1.4 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 2025.

 

During 2023 the Group has continued to generate positive cash flow from operating activities with a cash and cash equivalents balance of £10,824,000 (2022: £9,037,000). The Group has access to a multi-currency RCF and additional accordion facility. After a refinance which completed on 5 April 2023, the RCF and accordion facility have total commitments of £100,000,000 and £50,000,000 respectively, both of which expire in April 2028. The accordion facility is subject to credit approval. As at 31 December 2023 the RCF had an undrawn balance of £29,325,000 on the £100,000,000 facility available at that time. Refer to Note 17 for details on the available facilities.

 

The Facility Agreement is subject to a leverage covenant of 3.0x and an interest cover covenant of 4:1, which are both to be tested on a quarterly basis. The Group has complied with all covenants from entering the Facility Agreement until the date of these financial statements.

 

The Group monitors its funding and liquidity position throughout the year to ensure it has sufficient funds to meet its ongoing cash requirements. Cash forecasts are produced based on a number of inputs such as estimated revenues, margins, overheads, collection and payment terms, capex requirements and the payment of interest and capital on its existing debt facilities. Consideration is also given to the availability of bank facilities. In preparing these forecasts, the Directors have considered the principal risks and uncertainties to which the business is exposed.

 

The Directors perform sensitivity analysis on the going concern assumption to determine whether plausible downside scenarios would have a material impact. Forecasts were flexed to incorporate a 5% downturn in forecast performance in the year ending 31 December 2024 and a 10% downturn in forecast performance in the year ending 31 December 2025. Under this downside scenario the peak funding requirement over the forecast period would leave £96,000,000 headroom in the available facilities with no threat to breach of covenants.

 

Taking account of reasonable changes in trading performance and bank facilities available, the application of severe but plausible downside scenarios to the forecasts, the cash forecasts prepared by management and reviewed by the Directors indicate that the Group is cash generative and has adequate financial resources to continue to trade for the foreseeable future and meet its obligations as they fall due.

 

1.5 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.

 

1.6 Business combinations

All business combinations are accounted for by applying the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.

 

The Group measures goodwill at the acquisition date as:

 

·      the fair value of the consideration transferred; plus

·      the recognised amount of any non-controlling interests in the acquiree; plus

·      the fair value of the existing equity interest in the acquiree; less

·      the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

 

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as incurred.

 

Any contingent consideration payable is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration are recognised in the income statement.

 

The Group determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive process that together significantly contribute to the ability to create outputs. The acquired process is considered substantive if it is critical to the ability to continue producing outputs, and the inputs acquired include an organised workforce with the necessary skills, knowledge or experience to perform that process or it significantly contributes to the ability to continue producing outputs and is considered unique or scarce or cannot be replaced without significant cost, effort or delay in the ability to continue producing outputs.

 

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

 

1.7 New and amended standards adopted by the Group

IFRS 17 Insurance Contracts and a number of amended standards became effective for the financial year beginning on 1 January 2023; however, the Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these.  Since IFRS 17 applies to all insurance contracts issued by an entity (with limited scope exclusions), its adoption may have an effect on non-insurers such as the Group.  The Group carried out an assessment of its contracts and operations and concluded that the adoption of IFRS 17 has had no effect on the consolidated financial statements.

 

Future standards, amendments and interpretations

The following standards, amendments and interpretations are effective subsequent to the year end, and have not been early adopted.  The Directors do not expect that the adoption of the standards and amendments listed below will have a material impact on the financial statements of the Group in future periods.

·      IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information*

·      IFRS S2 Climate-related Disclosures*

·      Amendment to IAS 1: Classification of Liabilities as Current or Non-current Liabilities**

·      Amendment to IAS 1: Non-current Liabilities with Covenants**

·      Amendment to IAS 7 and IFRS 7: Supplier Financing Arrangements**

·      Amendment to IFRS 16: Lease Liability in a Sale and Leaseback**

* Not yet endorsed by the UK as at the date of authorisation of the financial statements.

** Mandatory adoption date and effective date for the Group is 1 January 2024.

 

1.8 Statement of compliance

The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies. The areas where significant judgements and estimates have been made in preparing the financial statements and their effect are disclosed in Note 2.

 

2. Summary of material accounting policies

2.1 IFRIC: Configuration or customisation costs in a cloud computing arrangement (IAS 38 Intangible Assets)

The Group has a number of contracts for Software as a Service ("SaaS") Cloud Computing Arrangements. These contracts permit the Group to access vendor-hosted software and platform services over the term of the arrangement. The Group does not control the underlying assets in these arrangements and costs are expensed as incurred.

 

The Group also incurs implementation costs in respect of these contracts. Implementation costs are capitalised as intangible assets where costs meet the definition and recognition criteria of an intangible asset under IAS 38. Such costs typically relate to software coding which is capable of providing benefit to the Group on a standalone basis. Other implementation costs primarily relate to the configuration and customisation of the Cloud software solution and are assessed to determine whether the implementation activity relating to these costs is distinct from the Cloud Arrangement, in which case costs are expensed as the activity occurs. If the configuration and customisation costs relate to activity which is integral to the Cloud Arrangement such that the activity is received over the term of the Cloud Arrangement, costs are recognised as a prepayment and expensed over the term of the Cloud Arrangement.

 

2.2 Prior period adjustment

During 2023, management has re-evaluated the impact of the IFRIC guidance released during the prior year relating to accounting for cloud-based Software as a Service ("SaaS") arrangements. This guidance was incorrectly applied in the prior year, resulting in costs associated with a cloud-based SaaS being capitalised and not expensed as incurred in the consolidated income statement.

 

During 2021, £1,122,000 was capitalised and amortisation of £131,000 was charged. During 2022 a further £725,000 was capitalised and amortisation of £324,000 was charged. As a result of this error, the intangible assets as at 31 December 2021 were overstated by £991,000, prepayments were understated by £273,000 and administrative expenses for the period understated by £718,000. As at 31 December 2022, the intangible assets were overstated by £1,396,000, prepayments were understated by £328,000 and administrative expenses were understated by £350,000 for the year then ended. In addition, during the year ended 31 December 2021 cash flows from operations were overstated by £1,122,000 and investing cash flows understated by the same amount. Likewise, for the year ended 31 December 2022 the operating cash flows were overstated by £725,000 and the investing cash flows understated by the same amount. A summary of the impact, including taxation, is included in the following tables:



 


2022 (previously reported)

£000

Restatement

£000

2022 Restated

£000

Consolidated income statement




Administrative expenses

(36,217)

(350)

(36,567)

Operating profit

18,068

(350)

17,718

Profit before taxation

16,630

(350)

16,280

Taxation charge

(3,965)

59

(3,906)

Profit for the financial year

12,665

(291)

12,374

Basic earnings per share (pence)

15.9

(0.4)

15.5

Diluted earnings per share (pence)

15.7

(0.4)

15.3

Consolidated balance sheet




Intangible assets

5,978

(1,396)

4,582

Trade and other receivables

19,456

328

19,784

Total assets

136,822

(1,068)

135,754

Income tax payable

1,820

(36)

1,784

Deferred tax liability

2,227

(165)

2,062

Total liabilities

61,019

(201)

60,818

Retained earnings

47,558

(867)

46,691

Total equity

75,803

(867)

74,936

Total equity and liabilities

136,822

(1,068)

135,754

Consolidated cash flow statement

 



Profit before taxation

16,630

(350)

16,280

Amortisation

1,202

(324)

878

Cash generated before changes in working capital

27,718

(674)

27,044

(Increase)/decrease in trade and other receivables

785

(51)

734

Cash inflow from operations

35,984

(725)

35,259

Net cash generated from operating activities

32,854

(725)

32,129

Purchase of computer software

(725)

725

-

Net cash used in investing activities

(36,913)

725

(36,188)

 


2021 (previously reported)

£000

Restatement

£000

2021 Restated

£000

Consolidated balance sheet




Intangible assets

1,760

(991)

769

Deferred tax asset

1,010

24

1,034

Trade and other receivables

17,224

273

17,497

Total assets

99,035

(694)

98,341

Income tax payable

821

(118)

703

Total liabilities

37,903

(118)

37,785

Retained earnings

34,893

(576)

34,317

Total equity

61,132

(576)

60,556

Total equity and liabilities

99,035

(694)

98,341

 

2.3 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.

 

2.4 Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost comprises the purchase price or construction cost, which includes cost of materials, direct labour costs and other directly attributable costs, and any costs directly attributable to making the asset capable of operating as intended, in the intended location.  The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.  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                                - 25-50 years

Fixtures and fittings                             - 4-5 years

Motor vehicles                                      - 4-5 years

Assets held for rental                           - 4-15 years

Assets under construction                  - not depreciated

 

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 within other operating income.

 

Assets held for rental are held for rental until the end of their useful economic lives and are subsequently scrapped for minimal or no value.  Disposals of assets held for rental primarily arise where customers lose or damage equipment beyond repair and compensation is invoiced under the terms of the rental contract.  Assets held for rental are not subsequently held for sale as described in paragraph 68A of IAS 16.  Where assets held for rental are derecognised, any gain or loss realised on disposal is not recognised as revenue in accordance with IFRS 15.  Rather, in accordance with paragraph 68 of IAS 16, the profit realised is included within other operating income in the income statement.

 

In accordance with the circumstances described above, the cash flows for the purchase and disposal of assets held for rental are not considered to be in scope of the requirements in paragraph 14 of IAS 7.  Accordingly, these cash flows are classified in investing activities in line with the normal requirements in paragraph 16 of IAS 7.

 

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.

 

2.5 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               - 3-5 years

Customer relationships                       - 3-7 years

Trade names                                         - 2 years

Documented processes                      - 10 years

Computer software                               - 5 years

 

Non-compete arrangements, customer relationships, trade names and documented processes 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.  The fair value of trade names at the acquisition date has been determined using the royalty relief methodology.  The fair value of documented processes has been identified and valued using a cost approach.

 

2.6 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the FIFO (first-in, first-out) method.

 

2.7 Impairment of non-financial assets excluding inventories, deferred tax assets and contract assets

The carrying amounts of the Group's non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the reporting date.

 

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit"). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to groups of cash-generating units ("CGUs") that are expected to benefit from the synergies of the combination. For the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting purposes. This is subject to an operating segment ceiling test.

 

An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.

 

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

 

2.8 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.

 

2.9 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

Revenue is recognised as performance obligations are satisfied when control of promised goods or services is transferred to the customer and is measured at the amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.

 

For each performance obligation within a contract, the Group determines whether it recognises revenue:

·      Wholly at a single point in time when the Group has completed its performance obligation; or

·      Piecemeal over time during the period that control incrementally transfers to the customer while the good is being manufactured or the service is being performed.

 

The Group's activities that require revenue recognition at a point in time comprise:

·      The sale of goods that are not specifically designed for use by one particular customer; and

·      The manufacture of goods that are specifically designed for one particular customer but for which the Group does not have an enforceable right to payment for the work completed to date.

 

The events that trigger the recognition of revenue at a point in time are most commonly: (i) delivery of the product in accordance with the contractual terms; or (ii) when the product is made available to the customer for collection; or (iii) when the customer notifies the Group that they have accepted the product following a period of inspection. The Group utilises the customer acceptance approach when the contract with the customer contains a requirement for formal acceptance to be provided, that typically is required to be received before the customer is obliged to pay for the products.

 

Revenue under IFRS 16

All contracts for leases of equipment entered into by the Group are classified as operating leases. The contracts for equipment rentals do not transfer substantially all of the risks and rewards incidental to ownership of the underlying asset to the customer.

 

The Group recognises lease payments received under operating leases as revenue on a straight-line basis over the lease term.

 

Where customers are billed in advance, deferred rental income is recognised, which represents the portion of billed revenue to be deferred to future periods. Where customers are billed in arrears for equipment rentals, accrued rental income is recognised, which represents unbilled revenues recognised in the period.

 

Performance obligations and timing of revenue recognition

Revenue derived from selling goods is recognised at a point in time when control of the goods has transferred to the customer. This is generally when the goods are delivered to the customer. However, for export sales, control might also be transferred when delivered either to the port of departure or port of arrival, depending on the specific terms of the contract with a customer. There is limited judgement needed in identifying the point control passes: once physical delivery of the products to the agreed location has occurred, the Group no longer has physical possession, usually will have a present right to payments (as a single payment on delivery) and retains none of the significant risks and rewards of the goods in question.

 

2.10 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.

 

2.11 Taxation

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.

 

2.12 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.

 

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.

 

2.13 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.

 

The Group's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling.

 

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

 

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

 

Non-derivative financial liabilities, including loans and borrowings, and trade and other payables, are stated at amortised cost using the effective interest method.

 

For purposes of subsequent measurement, financial liabilities are classified in two categories:

 

·      Financial liabilities at fair value through profit or loss

·      Financial liabilities at amortised cost

 

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

 

Gains or losses on liabilities held for trading are recognised in the statement of profit or loss.

 

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The Group has not designated any financial liability as at fair value through profit or loss.

 

Financial liabilities at amortised cost (loans and borrowings, trade payables, other payables, accruals and lease liabilities) is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

 

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.

 

This category generally applies to interest-bearing loans and borrowings. For more information, refer to Note 17.

 

Financial assets are derecognised when and only when (a) the contractual rights to the cash flows from the financial asset expire or are settled, (b) the Group transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or (c) the Group, despite having retained some, but not all, significant risks and rewards of ownership, has transferred control of the asset to another party.

 

Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelled or expires.

 

Fair value measurement

The best evidence of fair value is a quoted price for an identical asset in an active market. When quoted prices are unavailable, the price of a recent transaction for an identical asset provides evidence of fair value as long as there has not been a significant change in economic circumstances or a significant lapse of time since the transaction took place. If the market is not active and recent transactions of an identical asset on their own are not a good estimate of fair value, the fair value is estimated by using a valuation technique.

 

Impairment of financial assets

The Group recognises loss allowances for expected credit losses (ECLs) on financial assets measured at amortised cost.

 

Loss allowances for trade receivables and accrued income are measured at an amount equal to the lifetime ECL. Trade receivables do not contain a significant financing component and typically have a short duration of less than 12 months. The Group prepares a provision matrix when measuring its ECLs. Trade receivables and accrued income are segmented on the basis of historic credit loss experience, based on geographic region. Historical loss experience is applied to trade receivables and accrued income, after being adjusted for:

 

·      information about current economic conditions; and

·      reasonable and supportable forecasts of future economic conditions.

 

Write-offs

The gross carrying amount of a financial asset is written-off (either partially or in full) to the extent that there is no realistic prospect of recovery.

 

2.14 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 Share based payments

The Group has equity settled compensation plans. Equity settled share based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity settled share based payments is expensed over the vesting period, based on the Group's estimate of awards that will eventually vest. Fair value is measured by the use of the Black-Scholes and Monte Carlo option pricing models.

 

The cost is recognised in staff costs (Note 6), together with a corresponding increase in equity (share based payment reserve), over the period in which the service and the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

 

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group's best estimate of the number of equity instruments that will ultimately vest. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.

 

Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss.

 

Employer's National Insurance contributions are treated as cash settled and included in accruals.

 

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share (further details are given in Note 9).

 

2.16 Critical estimates and judgements

In the application of the Group's accounting policies the Directors are required to make judgements that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

The Directors have not identified any critical judgements that have a significant effect on the amounts recognised in the consolidated financial statements, apart from those involving estimations (which are explained separately below).

 

2.17 Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

 

Provision for bad debts

The Group applies IFRS 9 to measure the lifetime expected credit loss of trade receivables. The lifetime expected credit loss is based upon historic loss experience, which is then adjusted for information about current economic conditions and reasonable and supportable forecasts of future economic conditions. The Group applies judgement to the adjustments to the expected credit loss for information about current economic conditions and reasonable and supportable forecasts of future economic conditions, and it considers all relevant factors that impact future payment by customers. The expected credit loss on trade receivables at the reporting date is estimated on the basis of these underlying assumptions. Refer to Note 24(a) for the carrying value of trade receivables to which the expected credit loss model is applied.

 

2.18 Adjusting items

Adjusting items are significant items of income or expense in revenue, profit from operations, net finance costs and/or taxation which individually or, if of a similar type, in aggregate, are relevant to an understanding of the Group's underlying financial performance because of their size, nature or incidence. In identifying and quantifying adjusting items, the Group consistently applies a policy that defines criteria that are required to be met for an item to be classified as an adjusting item. These items are separately disclosed in the segmental analysis or in the notes to the accounts as appropriate.

 

The Group believes that these items are useful to users of the consolidated financial statements in helping to understand the underlying business performance and are used to derive the Group's principal Alternative Performance 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 2023

 


Europe

£000

Americas

£000

Asia Pacific

£000

Middle East

£000

Head Office

£000

Total

£000

Total revenue

71,601

19,343

11,186

8,336

-

110,466

Cost of sales

(13,730)

(5,646)

(2,140)

(2,652)

-

(24,168)

Gross profit

57,871

13,697

9,046

5,684

-

86,298

Administrative expenses

(18,909)

(6,516)

(3,950)

(1,978)

(11,208)

(42,561)

Other operating income

374

53

208

69

-

704

Operating profit before depreciation, amortisation and foreign exchange gain/(loss)

39,336

7,234

5,304

3,775

(11,208)

44,441

Foreign exchange gain

 

 

 

 

 

229

Depreciation

 

 

 

 

 

(12,029)

Amortisation

 

 

 

 

 

(1,431)

Operating profit

 

 

 

 

 

31,210

Finance income

 

 

 

 

 

283

Finance costs

 

 

 

 

 

(4,000)

Profit before taxation

 

 

 

 

 

27,493

Taxation charge

 

 

 

 

 

(5,914)

Profit for the financial year

 

 

 

 

 

21,579


 

 

 

 

 

 

Total assets

167,063

17,293

9,991

7,012

12,335

213,694

Total liabilities

30,051

5,966

2,413

1,853

76,342

116,625

 



 

For the year ended 31 December 2022

 


Europe

£000

Americas

£000

Asia Pacific

£000

Middle East

£000

Head Office

(restated)*

£000

Total

(restated)*

£000

Total revenue

42,827

13,912

10,874

5,507

-

73,120

Cost of sales

(9,663)

(4,867)

(2,368)

(1,931)

-

(18,829)

Gross profit

33,164

9,045

8,506

3,576

-

54,291

Administrative expenses

(12,735)

(5,274)

(3,014)

(1,563)

(5,479)

(28,065)

Other operating income

264

156

362

22

-

804

Operating profit before depreciation, amortisation and foreign exchange gain/(loss)

20,693

3,927

5,854

2,035

(5,479)

27,030

Foreign exchange loss






(3)

Depreciation






(8,431)

Amortisation






(878)

Operating profit






17,718

Finance income






21

Finance costs






(1,459)

Profit before taxation






16,280

Taxation charge






(3,906)

Profit for the financial year






12,374








Total assets

93,522

15,335

11,025

5,429

10,443

135,754

Total liabilities

17,500

2,755

2,310

723

37,530

60,818

 

*     See Note 2.2 for an explanation of the prior year restatement.

 

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 facility from which the equipment is provided.

 

No single customer or group of customers under common control account for 15% or more of Group revenue.

 



 

The carrying value of non-current assets, other than deferred tax assets, split by the country in which the assets are held is as follows:

 


As at

31 December

2023

£000

As at

31 December

2022

(restated)*

£000

141,745

80,941

USA

13,111

11,163

Singapore

7,665

8,885

UAE

4,218

4,079

*     See Note 2.2 for an explanation of the prior year restatement.

 

4. Revenue

(a) Revenue streams

The Group's key revenue generating activity comprises equipment rental, sale of equipment and provision of related services (non-rental revenue). The revenue is attributable to the continuing activities of renting equipment, selling equipment or providing a service. All rental income is expected to be settled within 12 months.

 


2023

£000

2022

£000

Rental income (Note 19)

90,985

61,157

Non-rental revenue

19,481

11,963

Total revenue

110,466

73,120

 

(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.

 

Primary geographical markets

2023

£000

2022

£000

Europe

12,930

7,812

Americas

2,808

1,859

Asia Pacific

1,565

1,037

Middle East

2,178

1,255

Non-rental revenue

19,481

11,963

 

Major products and services and timing of revenue recognition of non-rental revenue:

 


2023

£000

2022

£000

Sale of equipment, transferred at a point in time

8,343

5,259

Provision of related services, transferred over time

11,138

6,704

Non-rental revenue

19,481

11,963

 



 

5. Operating profit

This is stated after charging/(crediting):

 


2023

£000

2022

(restated)*

£000

Cost of inventories recognised in cost of sales

6,757

4,956

Facilities costs

476

464

Depreciation on property, plant and equipment (Note 11)

10,939

7,501

Depreciation on right-of-use assets (Note 19)

1,090

930

Amortisation of intangible assets (Note 12)

1,431

878

Staff costs including share based payments (Note 6)

27,441

18,622

Transaction costs

2,292

787

Foreign exchange (gains)/losses

(229)

3

Lease rentals

254

172

Impairment loss on trade receivables

501

810

Impairment loss on inventories

118

394


 


Other operating income

 


Gain on sale of property, plant and equipment^

704

804


 


Fees payable to the auditor for the audit of the financial statements:

 


Total audit fees

358

202


 


Fees payable to the auditor and its associates for other services to the Group

 


Review of interim financial statements

5

5

Review of CRRT letter

5

-

Total non-audit fees

10

5

 

*     See Note 2.2 for an explanation of the prior year restatement.

 

^ The gain on sale of property, plant and equipment arises from compensation from third parties for items of property, plant and equipment that were lost, given up or damaged beyond repair by customers in both 2023 and 2022.  The gross compensation proceeds are disclosed in the consolidated cash flow statement.

 



 

6. Staff costs


2023

£000

2022

£000

Wages and salaries

22,625

16,190

Social security costs

2,231

1,097

Other pension costs (Note 22)

736

510

Share based payment expense

1,849

825


27,441

18,622

 

The average number of employees during the year was as follows:

 


No.

No.

Operations

186

133

Sales and administrative

132

97


318

230

 

Full details of the Directors' remuneration and interests are set out in the Directors' Remuneration Report on pages 47 to 50 of our Annual Report.

 

7. Finance income and costs

Finance income

2023

£000

2022

£000

Bank interest receivable

283

21

 

 

Finance costs

2023

£000

2022

£000

Interest on bank loans (held at amortised cost)

3,069

1,139

Amortisation of deferred finance costs

805

182

Interest expense on lease liability (Note 19)

124

138

Other interest and charges

2

-


4,000

1,459

 



 

8. Tax

(a) Tax on profit on ordinary activities

The tax charge is made up as follows:

 


2023

£000

2022

(restated)*

£000

Current tax:

 


UK corporation tax on profit for the year

6,956

2,637

Adjustment in respect of previous periods

(216)

(218)

Foreign tax reliefs

(155)

-

Foreign tax

205

94

Exchange rate differences

-

3

Total current income tax

6,790

2,516

Deferred tax:

 


Origination and reversal of temporary differences

(323)

981

Origination and reversal of temporary differences - prior periods

(533)

320

Effect of changes in tax rates

(20)

99

Exchange rate differences

-

(10)

Total deferred tax

(876)

1,390

Tax charge in the profit and loss account (Note 8(b))

5,914

3,906

*     See Note 2.2 for an explanation of the prior year restatement.

 

(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 23.52% (2022: 19%). The differences are explained below:


2023

£000

2022

(restated)*

£000

Profit on ordinary activities before taxation

27,493

16,280


 


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.52% (2022: 19%)

6,466

3,093

Effects of:

 


Expenses not deductible for tax purposes

885

112

Income not taxable

(64)

(88)

Gains/rollover relief

50

16

Effects of overseas tax rates

(972)

87

Adjustments in respect of previous periods

(745)

102

Tax rate changes

(21)

41

Share options

124

(17)

Movement in deferred tax not recognised

(102)

525

Exchange rate difference

(97)

47

Withholding taxes/State taxes

390

-

Super deduction relief

-

(12)

Tax charge

5,914

3,906

*     See Note 2.2 for an explanation of the prior year restatement.

 

(c) Income tax payable

 


2023

£000

2022

(restated)*

£000

Income tax due

2,207

1,784

*     See Note 2.2 for an explanation of the prior year restatement.

 

(d) Unrecognised tax losses

The Group has tax losses which arose in the UK, Canada and USA of £5,026,000 (2022: £11,447,000) 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:

 


2023

£000

2022

(restated)*

£000

Fixed asset timing differences

(6,464)

(2,088)

Short-term timing differences

1,321

376

Tax losses

546

1,071

Intangible asset timing differences

(4,369)

(1,421)

Deferred tax (liability)/asset

(8,966)

(2,062)

The recoverability of the deferred tax (liability)/asset is as follows:

 


Current

-

85

Non-current

(8,966)

(2,147)


(8,966)

(2,062)

Deferred tax is recognised on the balance sheet as follows:

 


Non-current asset

52

-

Non-current liability

(9,018)

(2,062)


(8,966)

(2,062)

*     See Note 2.2 for an explanation of the prior year restatement.

 


 

 


Deferred tax included in the balance sheet and income statement for each type of temporary difference as at 31 December 2023, split by category:


Opening

(restated)*

£000

Prior year adjustment

£000

Revised opening

£000

Income statement

£000

Credited to equity

£000

Current year acquisition

£000

Foreign exchange

£000

Closing

£000

Fixed asset timing differences

(2,088)

221

(1,867)

237

-

(4,897)

63

(6,464)

Short-term timing differences

376

(13)

363

198

690

67

3

1,321

Tax losses

1,071

-

1,071

(481)

-

-

(44)

546

Intangible asset timing differences

(1,421)

324

(1,097)

369

-

(3,640)

(1)

(4,369)

Total

(2,062)

532

(1,530)

323

690

(8,470)

21

(8,966)

*               See Note 2.2 for an explanation of the prior year restatement.

 

 

Deferred tax included in the balance sheet and income statement for each type of temporary difference as at 31 December 2022, split by category:





Income statement


 



Opening

(restated)*

£000

Prior year adjustment

£000

Revised opening

£000

US net deferred tax liability recognised

£000

Other

(restated)*

£000

Current year acquisition

£000

Foreign exchange

£000

Closing

(restated)*

£000

Fixed asset timing differences

863

(18)

845

(1,642)

(573)

(692)

(26)

(2,088)

Short-term timing differences

63

-

63

57

256

-

-

376

Tax losses

293

(83)

210

976

(115)

-

-

1,071

Intangible asset timing differences

(185)

-

(185)

(301)

(935)

-

-

(1,421)

Total

1,034

(101)

933

(910)

(1,367)

(692)

(26)

(2,062)





(2,227)




*               See Note 2.2 for an explanation of the prior year restatement.

 


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 dilutive potential Ordinary Shares. The Group has dilutive potential ordinary shares arising from share options granted to employees under the share schemes as detailed in Note 22 of these financial statements.

 

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

2023

Statutory

2023

Adjusted

(restated)*

2022

Statutory

(restated)*

2022

Earnings attributable to equity shareholders of the Group:

 

 



Profit for the year (£000)

26,664^

21,579

15,329^

12,374

Number of shares:

 

 



Weighted average number of Ordinary Shares at year end

79,873,733

79,873,733

79,582,000

79,582,000

Add dilutive effect of share based payment plans

1,095,629

1,095,629

1,097,071

1,097,071

Weighted average number of Ordinary Shares for calculating diluted earnings per share at year end

80,969,362

80,969,362

80,679,071

80,679,071

Earnings per share attributable to equity holders of the Group - continuing operations:

 

 



Basic earnings per share (pence)

33.4

27.0

19.3

15.5

Diluted earnings per share (pence)

32.9

26.7

19.0

15.3

*     See Note 2.2 for an explanation of the prior year restatement.

 

^     Refer to Note 28 for the reconciliation of Alternative Performance Measures.

 

10. Dividends

The Board is pleased to propose a final dividend of 1.1p per share, which, if approved at the Annual General Meeting to be held on 30 May 2024, will be paid on 3 June 2024 with a record date of 3 May 2024. The shares will become ex-dividend on 2 May 2024. No interim dividend was paid in 2023.

 

A final dividend for 2022 of 1.0p per share was paid on 23 June 2023 totalling £796,000.  The 2022 final dividend was approved at the Annual General Meeting on 8 June 2023, with a record date of 26 May 2023.  The shares became ex-dividend on 25 May 2023.  No interim dividend was paid in 2022.



 

 

11. Property, plant and equipment


Assets held

for rental

£000

Assets under construction

£000

Leasehold improvements

£000

Freehold property

£000

Fixtures

and fittings

£000

Motor

vehicles

£000

Total

£000

Cost:








At 1 January 2022

104,867

-

1,739

197

3,683

305

110,791

Acquisitions

10,984

-

409

-

443

29

11,865

Fair value adjustment on acquisitions

467

-

-

-

-

-

467

Additions

13,098

-

208

-

295

-

13,601

Disposals

(6,280)

-

(76)

-

(60)

(30)

(6,446)

Foreign exchange movements

5,937

-

85

-

170

35

6,227

At 31 December 2022

129,073

-

2,365

197

4,531

339

136,505









Accumulated depreciation:








At 1 January 2022

(85,621)

-

(1,219)

(68)

(2,867)

(184)

(89,959)

Acquisitions

(5,920)

-

(338)

-

(267)

(21)

(6,546)

Fair value adjustment on acquisitions

(1,118)

-

-

-

(81)

-

(1,199)

Charge for the year

(6,892)

-

(253)

(8)

(311)

(37)

(7,501)

Disposals

5,613

-

43

-

46

29

5,731

Foreign exchange movements

(5,018)

-

(62)

-

(117)

(22)

(5,219)

At 31 December 2022

(98,956)

-

(1,829)

(76)

(3,597)

(235)

(104,693)









Net book value:








At 31 December 2022

30,117

-

536

121

934

104

31,812

 



 

 

 

Assets held

for rental

£000

Assets under construction

£000

Leasehold improvements

£000

Freehold property

£000

Fixtures

and fittings

£000

Motor

vehicles

£000

Total

£000

Cost:








At 1 January 2023

129,073

-

2,365

197

4,531

339

136,505

Acquisitions (Note 27)

25,870

1,356

-

3,432

446

61

31,165

Fair value adjustment on acquisitions (Note 27)

(798)

(909)

-

(486)

365

(16)

(1,844)

Additions

19,137

59

42

-

386

-

19,624

Disposals

(10,712)

-

(196)

-

(205)

(9)

(11,122)

Foreign exchange movements

(1,908)

-

(31)

1

(56)

1

(1,993)

At 31 December 2023

160,662

506

2,180

3,144

5,467

376

172,335









Accumulated depreciation:








At 1 January 2023

(98,956)

-

(1,829)

(76)

(3,597)

(235)

(104,693)

Charge for the year

(10,274)

-

(224)

(26)

(378)

(37)

(10,939)

Disposals

9,989

-

196

-

168

8

10,361

Foreign exchange movements

1,585

-

26

1

34

(3)

1,643

At 31 December 2023

(97,656)

-

(1,831)

(101)

(3,773)

(267)

(103,628)









Net book value:








At 31 December 2023

63,006

506

349

3,043

1,694

109

68,707

 

12. Goodwill and intangible assets

 

Goodwill

£000

Customer relationships

£000

Trade name

£000

Non-compete arrangements

£000

Documented processes

£000

Computer software

(restated)*

£000

Total

(restated)*

£000

Cost:








Restated at 1 January 2022*

48,651

4,447

-

208

-

2,647

55,953

Acquisitions

16,852

4,414

-

274

-

-

21,540

Additions*

-

-

-

-

-

-

-

Foreign exchange movements

540

2

-

-

-

-

542

At 31 December 2022

66,043

8,863

-

482

-

2,647

78,035









Amortisation:








Restated at 1 January 2022*

-

(3,710)

-

(176)

-

(2,647)

(6,533)

Charge for the year*

-

(839)

-

(39)

-

-

(878)

Foreign exchange movements

-

1

-

-

-

-

1

Restated at 31 December 2022*

-

(4,548)

-

(215)

-

(2,647)

(7,410)









Net book value:








Restated at 31 December 2022*

66,043

4,315

-

267

-

-

70,625

*     See Note 2.2 for an explanation of the prior year restatement.

 


Goodwill

£000

Customer relationships

£000

Trade name

£000

Non-compete arrangements

£000

Documented processes

£000

Computer software

(restated)*

£000

Total

(restated)*

£000

Cost:








Restated at 1 January 2023*

66,043

8,863

-

482

-

2,647

78,035

Acquisitions (Note 27)

11,900

8,503

544

4,134

1,377

-

26,458

Additions

-

-

-

-

-

-

-

Foreign exchange movements

(204)

-

-

-

-

-

(204)

At 31 December 2023

77,739

17,366

544

4,616

1,377

2,647

104,289









Amortisation:








At 1 January 2023

-

(4,548)

-

(215)

-

(2,647)

(7,410)

Charge for the year

-

(1,236)

(23)

(161)

(11)

-

(1,431)

Foreign exchange movements

-

-

-

-

-

-

-

At 31 December 2023

-

(5,784)

(23)

(376)

(11)

(2,647)

(8,841)









Net book value:








At 31 December 20223

77,739

11,582

521

4,240

1,366

-

95,448

*     See Note 2.2 for an explanation of the prior year restatement.

 

Goodwill has arisen on the acquisition of the following subsidiaries: Amazon Group Limited (the parent company of the existing Ashtead Technology Group at the time of acquisition, in April 2016), TES Survey Equipment Services LLC, Welaptega Marine Limited, Aqua-Tech Solutions LLC and its subsidiary Alpha Subsea LLC, Underwater Cutting Solutions Limited, WeSubsea AS and its subsidiary WeSubsea UK Limited, Hiretech Limited and Rathmay Limited and its subsidiaries Alfred Cheyne Engineering Limited, ACE Winches Inc, ACE Winches DMCC and ACE Winches Norge AS, as well as the acquisition of the trade and assets of Forum Subsea Rentals, a division of Forum Energy Technologies (UK) Limited, Forum Energy Asia Pacific PTE Ltd and Forum US, Inc.

 

Impairment testing for CGUs containing goodwill

For the purpose of impairment testing, goodwill has been allocated to the Group's CGUs as follows. The groups of CGUs to which goodwill has been allocated are consistent with the Group's operating segments.

 


2023

£000

2022

£000

Europe

64,173

52,271

Americas

6,390

6,591

Asia Pacific

5,346

5,351

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:

 


2023

£000

2022

£000

Europe:

 


Post-tax discount rate

11.2%

12.8%

Terminal value growth rate

2%

2%

Forecast period

2 years

2 years

Americas:

 


Post-tax discount rate

10.6%

12.8%

Terminal value growth rate

2%

2%

Forecast period

2 years

2 years

Asia Pacific:

 


Post-tax discount rate

10.6%

12.8%

Terminal value growth rate

2%

2%

Forecast period

2 years

2 years

Middle East:

 


Post-tax discount rate

11.2%

12.8%

Terminal value growth rate

2%

2%

Forecast period

2 years

2 years

 

Key assumptions used in value in use calculations

In determining the above key assumptions, management has considered past experience together with external sources of information where available (e.g. industry-wide growth forecasts).

 

The calculation is most sensitive to the following assumptions:

 

·      Discount rates

·      Growth rates used to extrapolate cash flows beyond the forecast period

 

The discount rate applied to each CGU represents a post-tax rate that reflects the market assessment of the time value of money as at 31 December 2023. The discount rate calculation is based on the specific circumstances of the Group and its operating segments and is derived from its weighted average cost of capital (WACC), adjusted for the regional risk premium. The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Group's investors. The cost of debt is based on the interest-bearing borrowings the Group is obliged to service. Adjustments to the discount rate are made to factor in the specific amount and timing of the future tax flows in order to reflect a post-tax discount rate.

 

Sensitivity analysis shows that a post-tax discount rate higher than 22.4% would be required to start to indicate impairment.

 

Growth rate estimates are based on published industry research.

 

Sensitivity analysis shows that a terminal value growth rate lower than -15.8% would be required to start to indicate impairment.

Sensitivity analysis has been performed in respect of the key assumptions above with no impairment identified from the sensitivities performed.

 

13. Inventories


2023

£000

2022

£000

Raw materials and consumables

4,064

1,865

 

The cost of inventories recognised as an expense and included in cost of sales during the year is disclosed in Note 5. The impairment loss recognised as an expense during the year is disclosed in Note 5.

 

14. Trade and other receivables


2023

£000

2022

(restated)*

£000

Trade receivables (Note 24(a))

23,139

16,494

Prepayments

2,815

1,725

Contract assets

473

-

Accrued income

5,588

1,565


32,015

19,784

*     See Note 2.2 for an explanation of the prior year restatement.

 

The Directors consider that the carrying amount of trade receivables and accrued income approximates to fair value.

 

Information about the Group's exposure to credit and market risks, and impairment losses for trade receivables is included in Note 24.

 

15. Cash and cash equivalents


2023

£000

2022

£000

Cash at bank

10,818

9,031

Cash in hand

6

6

Cash and cash equivalents

10,824

9,037

 

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:

 


2023

£000

2022

£000

US dollar denominated balances

2,399

1,819

Singapore dollar denominated balances

819

982

Canadian dollar denominated balances

121

170

AED denominated balances

117

319

Norwegian krone denominated balances

1,126

127

Euro denominated balances

138

-


4,720

3,417

 

All other balances are denominated in sterling.

 



 

16. Trade and other payables


2023

£000

2022

£000

Trade payables

9,721

5,896

Accruals

22,300

13,137

Amounts due to related parties (Note 25)

-

101


32,021

19,134

 

The Directors consider that the carrying amount of trade and other payables equates to fair value. The amounts due to related parties bear no interest, and are due on demand.

 

The Group's exposure to currency and liquidity risks is included in Note 24.

 

17. Loans and borrowings


2023

£000

2022

£000

Current

 


Bank loans (held at amortised cost)

-

-

Finance lease liability

23

-


23

-

 

Non-current

 


Bank loans (held at amortised cost)

69,665

34,865

Finance lease liability

8

-


69,673

34,865

 

Until refinancing on 5 April 2023 the bank loans comprise a revolving credit facility which carried interest at SONIA plus 2.2%. The lenders were HSBC Bank plc and Clydesdale Bank plc. The Facility Agreement was subject to a leverage covenant of 2.5x and an interest cover covenant of 4:1. The total commitments was £60,000,000 for the RCF. A non-utilisation fee of 0.88% was charged on the non-utilised element of the RCF facility. The revolving credit facility was fully repayable by November 2025.

 

Due to refinancing on 5 April 2023, the revolving credit facility was increased from £60,000,000 to £100,000,000 and the accordion facility was increased from £nil to £50,000,000, and the repayment date was extended from November 2025 to April 2027 with an option to extend the facilities by one year.  The accordion facility is subject to credit approval.  ABN AMRO Bank N.V. and Citibank N.A. joined HSBC UK Bank plc and Clydesdale Bank plc as lenders.  The interest rate increased from SONIA plus 2.2% to SONIA plus 2.25%, the non-utilisation rate decreased from 0.88% to 0.7875% and leverage covenant increased from 2.5x to 3.0x.  Due to the quantitative and qualitative differences in the two facilities, the previous facility has been treated as being extinguished and as a result unamortised deferred finance costs of £522,000 were written off in 2023, as disclosed in Note 28, and deferred finance costs of £1,241,000 were capitalised during 2023, as disclosed in the consolidated cash flow statement.  The cash flow does not include the repayment of the previous facility or the drawdown of the new facility as there were no cash flows associated with the refinance.

 

At 31 December 2023 the bank loans comprise a revolving credit facility of £70,675,000 (2022: £35,438,000) which carried interest at SONIA plus 2.25%. The lenders are ABN AMRO Bank N.V., Citibank N.A., Clydesdale Bank plc and HSBC Bank plc. The Facility Agreement is subject to a leverage covenant of 3.0x and an interest cover covenant of 4:1. The total commitments are £100,000,000 (2022: £60,000,000) for the RCF and an additional £50,000,000 (2022: £ nil) accordion facility. As at 31 December 2023 the RCF had an undrawn balance of £29,325,000 (2022: £24,562,000) and the £50,000,000 accordion facility was undrawn (2022: fully drawn). The accordion facility is subject to credit approval. A non-utilisation fee of 0.7875% is charged on the non-utilised element of the RCF facility. On 20 March 2024 the revolving credit facility was extended by 12 months and is fully repayable by April 2028.

 

Certain companies within the Group joined in cross guarantees with respect to bank loans totalling £70,675,000 (2022: £35,438,000) advanced to Ashtead Technology Limited and Ashtead Technology Offshore Inc. The lenders have a floating charge over the assets of certain entities within the Group.

 

At 31 December 2023 the finance lease liability of £31,000 (2022: £nil) relates to the financing of certain IT equipment and carried interest at a fixed rate of 6.67%.  The lender is Wesleyan Bank and will be repaid in full by May 2025.

 

Bank loans are repayable as follows:

 


2023

£000

2022

£000

Within one year

-

-

Within one to two years

-

-

Within two to three years

-

35,438

Within three to four years

-

-

Within four to five years

70,675

-


70,675

35,438

Deferred finance costs

(1,010)

(573)


69,665

34,865

 

During the year drawdowns totalling £62,014,000 (2022: £31,000,000) and repayments totalling £26,587,000 (2022: £21,727,000) were made from/to the RCF.

 

Finance lease liability is repayable as follows:

 


2023

£000

2022

£000

Within one year

23

-

Within one to two years

8

-


31

-

 

 

The weighted average interest rates on floating rate instruments during the year was as follows:

 


2023

2022

Weighted average interest rates

8.11%

4.36%

 

 

The Group's exposure to interest rate, foreign currency and liquidity risks is included in Note 24.

 

18. Financing liabilities reconciliation


1 January

2022

£000

Cash

flows

£000

Acquisitions

£000

Interest (paid)/received

£000

Other

non-cash changes

£000

Changes

in exchange rates

£000

31 December 2022

£000

Cash at bank and in hand

4,857

(3,918)

7,938

21

(21)

160

9,037









Bank loans

(24,425)

(9,045)

-

(1,132)

950

(1,213)

(34,865)

Lease liabilities

(3,134)

1,064

-

-

(433)

(353)

(2,856)

Net debt

(22,702)

(11,899)

7,938

(1,111)

496

(1,406)

(28,684)

 

The non-cash movement relates to interest, the amortisation of deferred finance costs, accrual of finance costs on lease liability and addition of new leases during the year.

 


1 January

2023

£000

Cash

flows

£000

Acquisitions

£000

Interest (paid)/received

£000

Other

non-cash changes

£000

Changes

in exchange rates

£000

31 December 2023

£000

Cash at bank and in hand

9,037

(7,759)

10,065

283

(283)

(519)

10,824


 

 

 

 

 

 

 

Bank loans

(34,865)

(34,186)

-

(3,062)

2,257

191

(69,665)

Lease liabilities

(2,856)

1,199

(220)

-

(946)

13

(2,810)

Finance lease liability

-

2

(33)

(2)

2

-

(31)

Net debt

(28,684)

(40,744)

9,812

(2,781)

1,030

(315)

(61,682)

 

The non-cash movement relates to interest, the amortisation of deferred finance costs, accrual of finance costs on lease liability and the addition of new leases during the year.

 

19. Leases

Leases as lessee

The Group leases warehouses, offices and other facilities in different locations (UK, UAE, Singapore, Canada, USA, Norway). The lease terms range from 2 to 15 years with an option to renew available for some of the leases. 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 the consolidated balance sheet

 

Right-of-use assets

Property leases

£000

Balance at 1 January 2022

2,923

Additions to right-of-use assets

571

Depreciation charge for the year

(930)

Effects of movements in exchange rates

67

Balance at 31 December 2022

2,631

Additions to right-of-use assets

1,070

Depreciation charge for the year

(1,090)

Effects of movements in exchange rates

(27)

Balance at 31 December 2023

2,584

 

Lease liabilities:

Property leases

2023

£000

Property leases

2022

£000

Current

1,154

865

Non-current

1,656

1,991

Total lease liabilities

2,810

2,856

Refer to Note 24(b) for more information on maturity analysis of lease liabilities.

 

b) Amounts recognised in the income statement

 


2023

£000

2022

£000

Depreciation charge

1,090

930

Interest expense on lease liability

124

138

Expenses relating to short-term leases

254

172

Total amount recognised in the income statement

1,468

1,240

 

c) Amounts recognised in the cash flow statement

 


2023

£000

2022

£000

Total cash payments for leases

1,323

1,202

 

Leases as a lessor

The Group leases out equipment to its customers. The lease period is short term which ranges from weeks to multiple 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).

 

Where leased equipment is lost, given up or damaged beyond repair by third-party customers, they are invoiced for compensation under the rental contract.  The gross compensation proceeds are disclosed in the consolidated cash flow statement and the gain on sale of property, plant and equipment is disclosed in Note 5.

 

20. Provisions for liabilities


Warranty provision

£000

End of service benefits

£000

Total

£000

At 1 January 2022

-

108

108

Charge for the year

-

30

30

Paid during the year

-

(34)

(34)

Movement in foreign exchange

-

13

13

At 31 December 2022

-

117

117

Acquired with acquisition

195

-

195

Charge for the year

-

48

48

Paid during the year

-

-

-

Movement in foreign exchange

-

(4)

(4)

At 31 December 2023

195

161

356

 

Warranty provision

The provision relates to warranties provided to customers on certain manufactured products for 12-24 months.  The cost of the warranties is accrued upon recognition of the sale of the product.  The costs are estimated based on actual historical expenses incurred and on estimated future expenses related to current sales.  Actual warranty costs are charged against the warranty provision.

 

End of service benefits

The provision relates to end of service benefits for certain employees. The actual amount payable is dependent on the length of service of the impacted employees when their employment ceases and their salary at that time. The provision is calculated on the impacted employees' length of service and salary at the balance sheet date.

 

21. Capital commitments


2023

£000

2022

£000

Capital expenditure contracted for but not provided

4,307

689

 

22. Employee benefits

Share based payments

The IPO LTIP awards were granted on 5 September 2022 and comprise three equal tranches, with the first tranche vested on the publication of the Annual Report for the year ended 31 December 2022, the second tranche vesting on the publication of the Annual Report for the year ended 31 December 2023 and the third tranche vesting on the publication of the Annual Report for the year ended 31 December 2024. Certain senior managers from various Group companies are eligible for nil cost share option awards with Ashtead Technology Holdings plc granting the awards and on exercise, the awards will be equity settled with Ordinary Shares in Ashtead Technology Holdings plc. The IPO LTIP share awards vesting is subject to the achievement of a target annual Adjusted EPS and participants remaining employed by the Group over the vesting period.

 

The outstanding number of awards at 31 December 2023 is 1,011,329 (2022: 1,097,751).

 

Share based payments

Tranche 1

Tranche 2

Tranche 3

Valuation model

Black-Scholes

Black-Scholes

Black-Scholes

Weighted average share price (pence)

260.5

260.5

260.5

Exercise price (pence)

0

0

0

Expected dividend yield

0.76%

0.81%

0.85%

Expected volatility

41.93%

41.93%

41.93%

Risk-free interest rate

2.79%

3.14%

3.04%

Expected term (years)

0.67

1.67

2.67

Weighted average fair value (pence)

259.2

257.0

254.7

Attrition

5%

5%

5%

Weighted average remaining contractual life (years)

8.67

8.67

8.67

 

The expected volatility has been calculated using the Group's historical market data history since IPO in 2021.

 

Share based payments

Number

of shares

Weighted average exercise price (£)

Outstanding at beginning of the year

1,097,751

-

Granted

-

-

Exercised

(86,422)

£3.756

Forfeited

-

-

Outstanding at the end of the year

1,011,329

-

Exercisable at the end of the year

279,497

-

 

Share based payments expense recognised in the consolidated income statement for 31 December 2023 totals £1,997,000 (2022: £825,000), inclusive of employer's national insurance contributions of £563,000 (2022: £84,000).

 

2023 LTIP awards

The 2023 LTIP awards were granted on 4 May 2023, with vesting on the announcement of the annual results for the year ended 31 December 2025.  Certain senior managers from various Group companies are eligible for nil cost share option awards with Ashtead Technology Holdings plc granting the awards and on exercise, the awards will be equity settled with Ordinary Shares in Ashtead Technology Holdings plc.  The share awards vesting are subject to the achievement of agreed Adjusted EPS, ROIC and Total Shareholder Return ("TSR") targets and participants remaining employed by the Group over the vesting period.

 

The outstanding number of awards at 31 December 2023 is 438,622 (2022: nil).

 

Share based payments

EPS

ROIC

TSR

Valuation model

Black-Scholes

Black-Scholes

Monte Carlo

Weighted average share price (pence)

379.0

379.0

379.0

Exercise price (pence)

0

0

0

Expected dividend yield

0.0%

0.0%

0.0%

Expected volatility

40.17%

40.17%

40.17%

Risk-free interest rate

3.71%

3.71%

3.71%

Expected term (years)

3.02

3.02

3.02

Weighted average fair value (pence)

379.0

379.0

298.0

Attrition

5%

5%

5%

Weighted average remaining contractual life (years)

9.34

9.34

9.34

 

The expected volatility has been calculated using the Group's historical market data history since IPO in 2021.

 

Share based payments

Number of shares

Weighted average exercise price (£)

Outstanding at beginning of the period

Granted

438,622

Exercised

Forfeited

Outstanding at the end of the period

438,622

Exercisable at the end of the period

 

Share based payments expense recognised in the consolidated income statement during the period was £499,000 (2022: £nil), inclusive of employer's national insurance contributions of £84,000 (2022: £nil).

 

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 2023 was £736,000 (2022: £510,000). There was a balance outstanding of £171,000 in relation to pension liabilities at 31 December 2023 (2022: £134,000).

 

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

 

Allotted, called up and fully paid

31 December 2023


31 December 2022

No.

£000


No.

£000

Ordinary Shares of £0.05 each

79,947,919

3,997


79,582,000

3,979


 

3,997



3,979

 

Ordinary Share capital represents the number of shares in issue at their nominal value. The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

 

On 13 March 2023, the Company issued 365,919 newly authorised shares at a subscription price of £0.05 (being nominal value) to the Employee Benefit Trust in anticipation of the vesting of the first tranche of IPO LTIP share options. The shares are held by the Employee Benefit Trust on the behalf of certain option holders and are non-voting until each of the option holders choose to exercise their options at which point they are transferred to the option holder and become voting shares. As of 31 December 2023, 279,497 shares (2022: nil) were held by the Company's Employee Benefit Trust.

 

Share premium

Share premium represents the amount over the par value which was received by the Group upon the sale of the Ordinary 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.

 

Share based payment reserve

The share based payment reserve is built up of charges in relation to equity settled share based payment arrangements which have been recognised within the consolidated income statement.

 

Foreign currency translation reserve

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to the Group's presentational currency, sterling, at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated at an average rate for each month where this rate approximates to the foreign exchange rates ruling at the dates of the transactions.

 

Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income and accumulated in the translation reserve, within invested capital. When a foreign operation is disposed of, such that control, joint control or significant influence (as the case may be) is lost, the entire accumulated amount in the foreign currency translation reserve is recycled to the income statement as part of the gain or loss on disposal.

 

Retained earnings

The movement in retained earnings is as set out in the consolidated statement of changes in equity. Retained earnings represent cumulative profits or losses, net of dividends and other adjustments.

 


24. Financial instruments

Financial risk management

Risk management framework

The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.

 

The Group has exposure to the following risks arising from financial instruments:

 

·      Credit risk

·      Liquidity risk

·      Market risk

 

a) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers. The Group has no significant concentration of credit risk, with exposure spread over a large number of customers.

 

The credit risk on liquid funds held with HSBC, Bank of Montreal and The Royal Bank of Scotland is considered to be low. The long-term credit rating for HSBC is AA-/A+ per Fitch/Standard & Poor's. The long-term credit rating for Bank of Montreal is AA-/A+ per Fitch/Standard & Poor's. The long-term credit rating for The Royal Bank of Scotland is A+/A+ per Fitch/Standard & Poor's.

 

The Group has established a credit policy under which each new customer is analysed individually for creditworthiness before the Group's standard payment and delivery terms and conditions are offered. The Group's review includes external ratings, if they are available, financial statements, credit agency information, industry information and in some cases bank references. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from management.

 

Trade receivables and accrued income

Customer credit risk is managed by each business unit subject to the Group's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on a credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and action is taken through an escalation process in relation to slow or non-payment of invoices. The Group has no significant concentration of credit risk, with exposure spread over a large number of customers.

 

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e. by geographical region, product type, customer type and rating). The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Generally, trade receivables are written-off if past due for more than one year and are not subject to ongoing enforcement activity. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 14. The Group does not hold collateral as security. The Group evaluates the concentration of risk with respect to trade receivables and accrued income as low, as exposure is spread over a large number of customers.

 

The Group has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision percentage is determined for each subsidiary independently.

 

Trade receivables

2023

£000

2022

£000

Current (not past due)

9,087

6,955

Past due 0-90 days

14,823

9,738

Past due 91-180 days

723

427

Past due 181-270 days

54

153

Past due 271-365 days

179

625

More than 365 days

2,012

1,514


26,878

19,412

 

 

The following table details the risk profile of trade receivables based on Group's provision matrix:

 


 

Trade receivables - Days Past Due

 

Not past due

 

90>

 

91-180

 

181-270

 

271-360

 

360<

 

Total

 

£000

£000

£000

£000

£000

£000

£000

31 December 2023

 

 

 

 

 

 

 

Expected credit loss rate

0.8%

0.8%

2.9%

23.4%

53.9%

84.2%

7.5%








 

Estimated gross carrying amount at default

9,087

14,823

723

54

179

2,012

26,878

 

-------

-------

-------

-------

-------

-------

-------

Life-time ECL

72

117

21

13

96

1,694

2,013

Specific provision

395

575

278

96

67

315

1,726


-------

-------

-------

-------

-------

-------

-------


467

692

299

109

163

2,009

3,739

 

               

              

              

              

              

              

               

 



Trade receivables - Days Past Due


Not past due

 

90>

 

91-180

 

181-270

 

271-360

 

360<

 

Total


£000

£000

£000

£000

£000

£000

£000

31 December 2022








Expected credit loss rate

1.1%

1.3%

5.6%

20.8%

58.5%

77.8%

9.3%









Estimated gross carrying amount at default

6,955

9,738

427

153

625

1,514

19,412


-------

-------

-------

-------

-------

-------

-------

Life-time ECL

73

123

24

32

366

1,178

1,796

Specific provision

200

206

22

84

264

346

1,122


-------

-------

-------

-------

-------

-------

-------


273

329

46

116

630

1,524

2,918


               

               

              

              

              

              

               

 

Accrued income is current and is fully invoiced within a month of year end, once invoiced its original ageing is retained and provided for in line with the above matrix.

 

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 2022

(1,824)

Increase in allowance recognised in profit or loss during the year

(810)

Trade receivables written off during the year as uncollectible

(284)

At 31 December 2022

(2,918)

Acquired with acquisition

(421)

Increase in allowance recognised in profit or loss during the year

(501)

Trade receivables written off during the year as uncollectible

101

At 31 December 2023

(3,739)

 

Cash and cash equivalents

The Group held cash and cash equivalents and other bank balances of £10,824,000 at 31 December 2023 (2022: £9,037,000). The cash and cash equivalents are held with the HSBC Bank plc, Bank of Montreal and The Royal Bank of Scotland plc.

 

b) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group's objective when managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. The Group utilises both long and short-term borrowing facilities.

 

Cash flow forecasting is performed centrally with rolling forecasts of the Group's liquidity requirements regularly monitored to ensure it has sufficient cash to meet operational needs. The Group's revenue model results in a strong level of cash conversion allowing it to service working capital requirements.

 

The Group has access to a multi-currency RCF facility which has total commitments of £100,000,000 at 31 December 2023 plus an accordion facility of £50,000,000. As at 31 December 2023 the RCF had an undrawn balance of £29,325,000 and the accordion facility had an undrawn balance of £50,000,000.

 

Maturities of financial liabilities

The table below analyses the Group's financial liabilities into relevant maturity groupings based on their contractual maturities:

 

 

Contractual cash flows

As at 31 December 2022

Carrying total

£000

Total

£000

Within one year

£000

Between one to two years

£000

Between two to five years

£000

More than five years

£000

Non-derivative financial liabilities







Bank loans

34,865

35,438

-

-

35,438

-

Trade and other payables

19,134

19,134

19,134

-

-

-

Lease liabilities

2,856

3,031

955

722

1,290

64


56,855

57,603

20,089

722

36,728

64

 

 


Contractual cash flows

As at 31 December 2023

Carrying total

£000

Total

£000

Within one year

£000

Between one to two years

£000

Between two to five years

£000

More than five years

£000

Non-derivative financial liabilities

 

 

 

 

 

 

Bank loans

69,665

70,675

-

-

70,675

-

Trade and other payables

32,021

32,021

32,021

-

-

-

Lease liabilities

2,810

3,040

1,255

798

864

123

Finance lease liability

31

32

23

9

-

-


104,527

105,768

33,299

807

71,539

123

 

Based on the RCF balance and the interest rate prevailing at 31 December 2023, the outstanding balance would attract interest at £5,519,000 (2022: £2,307,000) per annum until repaid.

 

c) Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Group's income or the value of its holdings of financial instruments. The Group's exposure to market risk is primarily related to currency risk and interest rate risk.

 

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group's activities expose it primarily to the financial risks of movements in foreign currency exchange rates. The Group monitors net currency exposures and hedges as necessary.

 

The individual Group entities do not have significant financial assets and liabilities denominated in currencies other than their functional currency (2022: insignificant) and immaterial impact from the sensitivity analysis, therefore disclosures relating regarding exposure to foreign currencies and sensitivity analysis have not been included.

 

Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest-bearing investments and loans. Cash flow interest rate risk is the risk that the future cash flows of floating interest-bearing investments and loans will fluctuate because of fluctuations in the interest rates.

 

The Group is exposed to interest rate movements on its external bank borrowing. Based on average loans and borrowings, an increase/(decrease) of 1.0% in effective interest rates would increase/(decrease) the interest charged to the income statement by £707,000 (2022: £354,000).

 

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 2023, the Group had gross borrowings of £70,675,000 through its RCF and a cash and cash equivalents balance of £10,824,000. Currently interest is payable on the RCF at a rate of SONIA plus 2.25%. 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 (resigned 18 December 2023)

Tony Durrant

Thomas Thomsen

Jean Cahuzac (appointed 20 March 2024)

 

Transactions during the period with related parties:

 


2023

£000

2022

£000

Compensation to key management personnel

 


Short-term employee benefits

1,463

1,062

Share based payment charges

1,369

491

 

Full details of the Directors' remuneration and interests are set out in the Remuneration Committee report on pages 47 to 50 of our Annual Report.

 

Directors' interests in the Ordinary Shares of the Group are included in the Directors' Report on page 51 of our Annual Report.

 

Entity with significant influence over the Group

There are no entities with significant influence over the Group.

 

26. Group structure

A full list of subsidiary undertakings of Ashtead Technology Holdings plc as defined by IFRS as at 31 December 2023 is disclosed below.

 



Equity interest at

Name of the Group company

Country of incorporation

2023

2022

BP INV2 Pledgeco Limited1

England & Wales

100%

100%

Ashtead US Pledgeco Inc4

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%

Ashtead Technology (Canada) Limited (formerly Welaptega Marine Limited)*6

Canada

100%

100%

Aqua-Tech Solutions LLC*4^^^^

USA

-

100%

Alpha Subsea LLC*4^^^^

USA

-

100%

Underwater Cutting Solutions Ltd*1

England & Wales

100%

100%

WeSubsea AS*7^

Norway

-

100%

WeSubsea UK Limited*3^^

Scotland

-

100%

Hiretech Limited*3^^^

Scotland

-

100%

Rathmay Limited*3^^^^^

Scotland

100%

-

Alfred Cheyne Engineering Limited*3^^^^^

Scotland

100%

-

ACE Winches Inc*8^^^^^

USA

100%

-

ACE Winches DMCC*9^^^^^

UAE

100%

-

ACE Winches Norge AS*10^^^^^

Norway

100%

-

 

*     Shares held by a subsidiary undertaking.

1    The registered address of the subsidiary is 1 Gateshead Close, Sunderland Road, Sandy, Bedfordshire, SG19 1RS, United Kingdom.

2    The registered address of the subsidiary is 80 Raffles Place, #32-01 UOB Plaza 1, Singapore, 048624.

3    The registered address of the subsidiary is Ashtead House, Discovery Drive, Arnhall Business Park, Westhill, AB32 6FG, United Kingdom.

4    The registered address of the subsidiary is 2711 Centerville Road, Suite 400, Wilmington, Delaware, 19808, USA.

5    The registered address of the subsidiary is Warehouse B301, Plot M29, ICAD III, Musaffah, Abu Dhabi, UAE.

6    The registered address of the subsidiary is 238 Brownlow Avenue, Unit 103, Dartmouth, Nova Scotia, B3B 1Y2, Canada.

7    The registered address of the subsidiary is Bryggegata 6, 0250 Oslo, Norway.

8    The registered address of the subsidiary is 5151 San Felipe, Suite 800, Houston, Texas, 77056, USA.

9    The registered address of the subsidiary is Unit No 3303, Mazaya Business Avenue BB2, Jumeirah Lakes Towers, Dubai, UAE

10 The registered address of the subsidiary is Bekhuskaien 1, 4014 Stavanger, Norway.

^     During 2023 the trade and assets of WeSubsea AS were hived up into Ashtead Technology Limited and WeSubsea AS was liquidated on 14 December 2023.

^^   During 2023 the trade and assets of WeSubsea UK Limited were hived up into Ashtead Technology Limited and WeSubsea UK Limited was liquidated on 19 September 2023.

^^^ During 2023 the trade and assets of Hiretech Limited were hived up into Ashtead Technology Limited and Hiretech Limited was liquidated on 29 September 2023.

^^^^         On 10 March 2023, Alpha Subsea LLC was merged into Aqua-Tech Solutions LLC and thereafter Aqua-Tech Solutions LLC was merged into Ashtead Technology Offshore Inc.

^^^^^        On 30 November 2023, the Group acquired 100% of the issued share capital of Rathmay Limited and its subsidiaries Alfred Cheyne Engineering Limited, ACE Winches Inc, ACE Winches DMCC and ACE Winches Norge AS, companies whose primary activity is the design, manufacture and hire of lifting, pulling and deployment solutions to support the installation, inspection, maintenance & repair and decommissioning of offshore energy infrastructure.

 

27. Business combinations

Acquisition of Rathmay Limited

On 30 November 2023, the Group acquired 100% of the issued share capital of Rathmay Limited and its subsidiaries Alfred Cheyne Engineering Limited, ACE Winches Inc, ACE Winches DMCC and ACE Winches Norge AS (collectively "ACE Winches"), companies whose primary activity is the design, manufacture and hire of lifting, pulling and deployment solutions to support the installation, inspection, maintenance & repair and decommissioning of offshore energy infrastructure.

 

The acquisition has been accounted for under the acquisition method. The following tables sets out the book values of the separately identifiable assets and liabilities acquired and their fair value to the Group:

 

 

Book value

£000

Adjustments

£000

Fair value

to the Group

£000

Property, plant and equipment

30,916

(1,595)

29,321

Intangible assets

-

14,558

14,558

Right of use assets

229

-

229

Inventories

2,069

-

2,069

Trade and other receivables

12,089

-

12,089

Cash

10,065

-

10,065

Total assets

55,368

12,963

68,331





Trade and other payables

6,659

-

6,659

Income tax payable

474

-

474

Loans and borrowings

33

-

33

Lease liabilities

220

-

220

Deferred tax liability

2,793

6,200*

8,993

Provisions for liabilities

195

-

195

Total liabilities

10,374

6,200

16,574

Net assets

44,994

6,763

51,757

Goodwill



11,900




63,657





Satisfied by:




Cash**



52,653

Loan repayment



11,004




63,657

Cash acquired



(10,065)

Cash outflow on acquisition of subsidiary undertaking



53,592

 

* The adjustment to the deferred tax liability includes £2,519,000 related to a revaluation of property, plant and equipment in 2021 that was not included in the financial statements of Ace Winches.

** Of the cash consideration of £52,653,000, £48,570,000 was paid in 2023 and £4,083,000 due to be paid in 2024.

 

The Group incurred acquisition-related expenditure of £2,533,000 on legal fees and due diligence costs. These costs have been expensed to the consolidated income statement and included in 'Administrative expenses'.

 

In the year ended 31 December 2023, revenue of £3,825,000 and operating profit of £1,133,000 was included in the Consolidated Income Statement in respect of ACE Winches. If the acquisition had occurred on 1 January 2023, management estimates that the consolidated revenue would have been £149,613,000 and the consolidated operating profit for the year would have been £40,948,000. In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January 2023.

 

The goodwill reflects the significant opportunity for future growth in integrating ACE Winches, increasing rental equipment and solutions to both new and existing customers through utilising ACE Winches' in-house technical knowledge, and increasing cross selling opportunities to our combined customer base. In addition, there is an opportunity to increase ACE Winches' international presence and exposure through Ashtead Technology's existing international network. The wider synergies for the Group will be achieved by broadening the rental fleet, investing further in our people, and increasing our service offering which will broaden our customer relationships and increase customer retention.

 

28. Reconciliation of Alternative Performance Measures

Reconciliation of Adjusted EBITDA

For the year ended 31 December

 


Notes

2023

£000

2022

(restated)*

£000

Adjusted EBITDA


48,253

28,282

Cost associated with M&A

27

(2,533)

(787)

Restructuring costs


(216)

(28)

Software development costs


(683)

(401)

Other exceptional costs


(380)

(36)

Operating profit before depreciation, amortisation and foreign exchange loss


44,441

27,030

Depreciation on property, plant and equipment

11

(10,939)

(7,501)

Depreciation on right-of-use asset

19

(1,090)

(930)

Operating profit before amortisation and foreign exchange loss


32,412

18,599

Amortisation of intangible assets

12

(1,431)

(878)

Foreign exchange gain/(loss)

5

229

(3)

Operating profit


31,210

17,718

*     See Note 2.2 for an explanation of the prior year restatement.

 

Reconciliation of Adjusted EBITA

For the year ended 31 December                      

 


Notes

2023

£000

2022

(restated)*

£000

Adjusted EBITA


36,224

19,851

Cost associated with M&A

27

(2,533)

(787)

Restructuring costs


(216)

(28)

Software development costs


(683)

(401)

Other exceptional costs


(380)

(36)

Amortisation of intangible assets

12

(1,431)

(878)

Foreign exchange gain/(loss)

5

229

(3)

Operating profit


31,210

17,718

*     See Note 2.2 for an explanation of the prior year restatement.

 



 

Reconciliation of Adjusted Profit Before Tax

For the year ended 31 December                      

 


Notes

2023

£000

2022

(restated)*

£000

Adjusted Profit Before Tax


33,029

18,413

Cost associated with M&A

27

(2,533)

(787)

Restructuring costs


(216)

(28)

Software development costs


(683)

(401)

Deferred finance cost write off


(522)

-

Other exceptional costs


(380)

(36)

Foreign exchange gain/(loss)

5

229

(3)

Amortisation of intangible assets

12

(1,431)

(878)

Profit for the financial year


27,493

16,280

*     See Note 2.2 for an explanation of the prior year restatement.

 

Reconciliation of Adjusted Profit After Tax

For the year ended 31 December                      

 


Notes

2023

£000

2022

(restated)*

£000

Adjusted Profit After Tax


26,664

15,329

Cost associated with M&A

27

(2,533)

(787)

Restructuring costs


(216)

(28)

Software development costs


(683)

(401)

Deferred finance cost write off


(522)

-

Other exceptional costs


(380)

(36)

Foreign exchange gain/(loss)

5

229

(3)

Amortisation of intangible assets

12

(1,431)

(878)

Tax impact of the adjustments above


451

88

Deferred tax arising from temporary timing differences on intangible assets


-

(910)

Profit for the financial year


21,579

12,374

*     See Note 2.2 for an explanation of the prior year restatement.

 

Adjusted Profit After Tax is used to calculate the Adjusted basic earnings per share and Adjusted diluted earnings per share in Note 9.

 

Throughout the annual report we use a range of financial and non-financial measures to assess our performance. A number of the financial measures including Adjusted EBITDA, Adjusted EBITA, Adjusted Profit Before Tax, Adjusted Profit After Tax and Adjusted EPS are not defined under IFRS, so they are considered alternative performance measures ("APMs").

 

Management uses these measures to monitor the Group's financial performance alongside IFRS measures because they help illustrate the underlying financial performance and position of the Group. We use these measures, which are common across the industry, for planning and reporting purposes.  These measures are also used in discussions with the investment analyst community and credit rating agencies.  Where relevant, the APMs exclude non-recurring and non-trading related items to aid comparability with prior year metrics.  We have explained the purpose of each of these measures throughout the strategic report and included definitions on page 111 of our Annual Report. Management uses APMs as they measure business performance in a more consistent way.

 

These APM's should be considered in addition to, and not as a substitute for, or as superior to, measures of financial performance, financial position of cash flows reported in accordance with IFRS. APM's are not uniformly defined by all companies, including those in the Group's industry. Accordingly, APM's may not be comparable with similarly titled measures and disclosures by other companies.

 

29. Subsequent events

On 1 March 2024, the name of Ace Winches Norge AS was changed to Ashtead Technology AS.

 

On 20 March 2024 the term of the revolving credit facility and accordion facility was extended by 1 year and is fully repayable by April 2028.

 



 

Company Balance Sheet
At 31 December 2023

 


Notes

2023

£000

2022

£000

Non-current assets


 


Investments

4

44,851

43,140

Deferred tax asset

5

29

85

Trade and other receivables

6

16,726

15,287



61,606

58,512

Current assets


 


Trade and other receivables

6

7

-



7

-



 


Total assets


61,613

58,512



 


Current liabilities


 


Trade and other payables

7

32

16



32

16

Total liabilities


32

16



 


Equity


 


Share capital

8

3,997

3,979

Share premium

8

14,115

14,115

Merger reserve

8

38,318

38,318

Share based payment reserve

8

2,538

827

Retained earnings

8

2,613

1,257

Total equity


61,581

58,496

Total equity and liabilities


61,613

58,512

 

The accompanying notes are an integral part of the Company financial statements.

 

As permitted by Section 408 of the Companies Act 2006, the profit and loss of the Company has not been presented in these financial statements.  The profit for the year ended 31 December 2023 dealt with in the financial statements of the Company was £2,152,000 (2022: £3,738,000).

 

The financial statements were approved by the Board of Directors of Ashtead Technology Holdings plc (registered number 13424040) on 15 April 2024 and were signed on its behalf by:

 

 

Allan Pirie                                     Ingrid Stewart

Chief Executive Officer                         Chief Financial Officer

15 April 2024                                        15 April 2024

 



 

Company Statement of Changes in Equity
For the year ended 31 December 2023

 

 

Share

capital

£000

Share premium

£000

Merger

reserve

£000

Share based payment reserve

£000

Retained earnings

£000

Total

£000

At 1 January 2022

3,979

14,115

38,318

-

(2,481)

53,931

Profit for the year

-

-

-

-

3,738

3,738

Total comprehensive income

-

-

-

-

3,738

3,738

Share based payment charge

-

-

-

827

-

827

At 31 December 2022

3,979

14,115

38,318

827

1,257

58,496








Profit for the year

-

-

-

-

2,152

2,152

Total comprehensive income

-

-

-

-

2,152

2,152

Share based payment charge

-

-

-

1,711

-

1,711

Issue of shares

18

-

-

-

-

18

Dividends paid

-

-

-

-

(796)

(796)

At 31 December 2023

3,997

14,115

38,318

2,538

2,613

61,581

 

The accompanying notes are an integral part of the Company financial statements.

 



 

Notes to the Company Financial Statements
For the year ended 31 December 2023

 

1. Basis of preparation

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 financial statements of the Company as at and for the year ended 31 December 2023 are presented under the Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS 101"). The prior year comparatives are for the year ended 31 December 2022. The Company is domiciled in the United Kingdom and its registered address is 1 Gateshead Close, Sunderland Road, Sandy, Bedfordshire, SG19 1RS, United Kingdom.

 

The Company's financial statements are prepared under FRS 101 and take the available exemptions from FRS 101 in conformity with Companies Act 2006 as noted below:

 

·      a cash flow statement and related notes;

·      comparative period reconciliations;

·      disclosures in respect of transactions with wholly-owned subsidiaries;

·      disclosures in respect of capital management;

·      disclosures in respect of financial instruments;

·      disclosures in respect of fair value measurement;

·      the effects of new but not yet effective IFRSs; and

·      disclosures in respect of the compensation of key management personnel.

 

As the consolidated financial statements of the Group include equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in respect of the disclosures under IFRS 2 related to Group-settled share based payments.

 

The preparation of the financial statements requires the Directors to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities.

 

The Company financial statements have been prepared in sterling, which is the functional and presentational currency of the Company. All figures presented are rounded to the nearest thousand (£000), unless otherwise stated.

 

The Directors have used the going concern principle on the basis that the current profitable financial projections and facilities of the Company and the consolidated Group, of which the Company is the ultimate parent, will continue in operation for a period not less than 12 months from the date of this report.

 

Subsidiary audit exemption

Ashtead Technology Holdings plc (company registration number 13424040) has issued a parental company guarantee under s479A of the Companies Act 2006 dated 31 December 2023. As a result, for the year ended 31 December 2023, Underwater Cutting Solutions Limited (company registration number 05031272) is entitled to exemption from audit.

 

2. Accounting policies

Investments

Investments in subsidiaries are measured at cost less any provision for impairment. Annually, the Directors consider whether any events or circumstances have occurred that could indicate that the carrying amount of fixed asset investments may not be recoverable. If such circumstances do exist, a full impairment review is undertaken to establish whether the carrying amount exceeds the higher of net realisable value or value in use. If this is the case, an impairment charge is recorded to reduce the carrying value of the related investment.

 

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.

 

Trade and other receivables

Trade and other receivables 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.

 

Trade and other payables

Trade and other payables are non-derivative financial liabilities that are stated at amortised cost using the effective interest method and are derecognised only when the obligation specified in the contract is discharged, cancelled or expires.

 

Share capital

Ordinary Shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds.

 

Taxation

UK corporation tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

 

Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred on the balance sheet date.

 

A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all evidence available, it can be regarded as more likely than not that there will be suitable taxable profits against which to recover carried-forward tax losses and from which the future reversal of underlying temporary differences can be deducted.

 

Deferred tax is measured at the average rates that are expected to apply in the periods in which the temporary differences are expected to reverse based on the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on an undiscounted basis.

 

Share based payments

The Group has equity settled compensation plans. Equity settled share based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity settled share based payments is expensed over the vesting period, based on the Group's estimate of awards that will eventually vest. Fair value is measured by the use of the Black-Scholes option pricing model.

 

In the Company financial statements, the cost is recognised in investments (Note 4), together with a corresponding increase in equity (share based payment reserve), over the period in which the service and the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The increase or decrease to investments for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

 

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group's best estimate of the number of equity instruments that will ultimately vest. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.

 

Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss.

 

Critical estimates and judgements

The Directors do not consider there to be any critical estimates or any significant judgements in the carrying amounts of asset and liabilities of the Company.

 

3. Staff costs

The Company has no employees. Full details of the Directors' remuneration and interests are set out in the Directors' Remuneration Report on pages 47 to 50 of our Annual Report.

 

4. Investments


2023

£000

2022

£000

Cost:

 


At the beginning of the period

43,140

42,313

Additions

1,711

827

At the end of the year

44,851

43,140

 

There were no indicators of impairment noted under IAS 36 and accordingly, no impairment charge has been recognised.

 

Subsidiary undertakings are disclosed within Note 26 of the consolidated financial statements.

 

5. Deferred tax asset

Deferred tax included in the Company balance sheet is as follows:


2023

£000

2022

£000

Tax losses

32

85

 

6. Trade and other receivables


2023

£000

2022

£000

Amounts owed by Group companies

16,607

15,167

Group relief

119

120

Prepayments

7

-


16,733

15,287

 

Amounts owed by Group companies comprise intercompany balances with subsidiary companies within the Group. The amounts owed by Group companies bear no interest and are due on demand. IFRS 9 expected credit losses have been assessed as immaterial in relation to this balance. Amounts owed by Group companies are classified as non-current as the amounts are expected to be repaid after more than 12 months of the reporting period.

 

7. Trade and other payables


2023

£000

2022

£000

Accruals

32

16


32

16

 

8. Share capital and reserves

Called up share capital

 


31 December 2023


31 December 2022

Allotted called up and fully paid

No.

£000


No.

£000

Ordinary Shares of £0.05 each

79,947,919

3,997


79,582,000

3,979


 

3,997



3,979

 

Ordinary Share capital represents the number of shares in issue at their nominal value. The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

 

On 13 March 2023, the Company issued 365,919 newly authorised shares at a subscription price of £0.05 (being nominal value) to the Employee Benefit Trust in anticipation of the vesting of the first tranche of IPO LTIP share options. The shares are held by the Employee Benefit Trust on the behalf of certain option holders and are non-voting until each of the option holders choose to exercise their options at which point they are transferred to the option holder and become voting shares. As of 31 December 2023, 279,497 shares (2022: nil) were held by the Company's Employee Benefit Trust.

 

Share premium

Share premium represents the amount over the par value which was received by the Company upon the sale of the Ordinary 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. The Company investment in subsidiary undertakings is the book value from predecessor shareholders in the Group, with the difference over the statutory share capital issued by the Company presented as the merger reserve. The Company has applied merger relief.

 

Share based payment reserve

The share based payment reserve is built up of charges in relation to equity settled share based payment arrangements which have been recognised within investments in subsidiaries in the Company balance sheet.

 

Retained earnings

The movement in retained earnings is as set out in the Company statement of changes in equity. Retained earnings represent cumulative profits or losses, net of dividends and other adjustments.

 

9. Subsequent events

On 20 March 2024 the term of the revolving credit facility and accordion facility was extended by one year and is fully repayable by April 2028.

 



 

Company Information

 

Directors

W M F C Shannon

A W Pirie

I Stewart

A R C Durrant

T Hamborg-Thomsen

J Connolly (resigned 18 December 2023)

J Cahuzac (appointed 20 March 2024)

 

Company Secretary

I Stewart

 

Auditor

BDO LLP

Statutory Auditor

2 Atlantic Square

31 York Street

Glasgow G2 8NJ

 

Bankers

ABN AMRO Bank N.V.

Gustav Mahlerlaan 10

1082 PP Amsterdam

Netherlands

 

Citibank N.A.

Citigroup Centre

33 Canada Square

Canary Wharf

London E14 5LB

 

Clydesdale Bank plc

1 Queen's Cross

Aberdeen AB15 4XU

 

HSBC Bank plc

95-99 Union Street

Aberdeen AB11 6BD

 

Solicitors

White & Case LLP

5 Old Broad Street

London EC2N 1DW

 

Corporate broker

Numis Securities Ltd

45 Gresham Street

London EC2V 7BF

 

Registrar

Computershare Limited

The Pavilions

Bridgwater Road

Bristol BS13 8AE

 

Registered office

1 Gateshead Close

Sunderland Road

Sandy

Bedfordshire SG19 1RS

 

Registered number: 13424040

 

Website

www.ashtead-technology.com

 

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