5 September 2022
Ashtead Technology Holdings plc
("Ashtead Technology" or the "Group")
Unaudited Half Year Results for the Six-Months Ended 30 June 2022
Strong start to the year with positive outlook
Ashtead Technology Holdings plc (AIM: AT.), a leading subsea equipment rental and solutions provider for the global offshore energy sector, announces its unaudited results for the six months ended 30 June 2022 ("HY22" or "the period").
Financial Performance
| £'m | HY22 | HY21 | % Movement |
| | | | |
| Revenue | 31.7 | 24.7 | 28.5% |
| Gross profit | 23.3 | 17.8 | 30.9% |
| Gross profit % | 73.4% | 72.0% | 140bps |
| Adjusted EBITDA1 | 12.3 | 10.1 | 21.1% |
| Adjusted EBITDA % | 38.6% | 41.0% | (240bps) |
| Adjusted EBITA2 | 8.2 | 5.5 | 47.7% |
| Adjusted EBITA % | 25.8% | 22.4% | 340bps |
| Adjusted profit before tax3 | 7.6 | 3.9 | 95.3% |
| Adjusted earnings per share | 8.3p | 4.1p | 102.0% |
| Return on Invested Capital4 | 19.1% | 10.9% | 820bps |
| Leverage5 | 0.9 | 1.8 | |
Additional Statutory Accounting Measures
| £'m | HY22 | HY21 | % Movement |
|
|
|
|
|
| Operating profit | 7.5 | 4.0 | 85.5% |
| Profit before tax | 6.9 | 2.1 | 233.1% |
| Basic earnings per share | 7.4p | 1.9p | 289.5% |
1Adjusted EBITDA is defined as operating profit adjusted to add back, depreciation, amortisation, foreign exchange movements and non-trading items as shown in Note 17 of the HY22 accounts
2Adjusted EBITA is defined as operating profit adjusted to add back, amortisation, foreign exchange movements and non-trading items as shown in Note 17 of the HY22 accounts
3Adjusted profit before tax is defined as profit before tax adjusted to add back amortisation, foreign exchange movements and non-trading items as shown in Note 17 of the HY22 accounts
4Return on Invested Capital is defined as LTM6 Adjusted EBITA divided by Invested Capital. Invested capital is defined as average net debt plus average equity
5Leverage is defined as LTM Adjusted EBITDA divided by net debt
6LTM is defined as latest twelve months to 30 June 2022
· Strong year-on-year revenue increase (28.5%) delivered through growth across all geographic markets, enabled by higher demand in both offshore renewables and offshore oil and gas
o Offshore renewables revenue increased by 25.6% to £9.4m (HY21: £7.5m)
o Offshore oil and gas revenue increased by 29.8% to £22.4m (HY21: £17.2m)
· Gross Profit margin increased to 73.4% (HY21: 72.0%) reflecting higher cost utilisation and improved pricing
· Adjusted EBITDA rose 21.1% to £12.3m (HY21: £10.1m), with EBITDA margin in line with expectations
· Adjusted EBITA increased by 47.7% to £8.2m (HY21: £5.5m) with an adjusted EBITA margin of 25.8% (HY2021: 22.4%) driven by top line growth
· Net debt of £21.2m with leverage reducing to 0.9x from 1.0x at year end due to cash generation and growth in LTM EBITDA
Operational Highlights and Outlook
· LTM average cost utilisation of 44% (H1 2021: 39%), reflecting an increase in offshore activity across both oil and gas, and renewables end markets
· Year to date investment of £7.6m in capital expenditure supporting rental fleet expansion (HY21: £2.5m), positioning the business for continued growth. Spend accelerated in HY22 to capture market opportunity and minimise delays due to extended lead times
· Quoting activity increased with value of quotes in HY22 up 29% compared to HY21
· Employee headcount at 30 June 2022 of 219, 7% higher than last year end, positioning the business for continued growth
· Further strengthening of senior team through appointment of Phil Middleton as Survey & Robotics Director, Bob Gillespie as Commercial Director and Ross MacLeod as Integrated Projects Director
· Continuing to review M&A opportunities to complement organic growth and consolidate a highly fragmented market. Separate announcement made today regarding signing of sale and purchase agreement to acquire WeSubsea, transaction expected to complete Q4 2022
· The Board is very encouraged by the Group's performance in HY22 and expects FY22 to be at least in line with market expectations
Allan Pirie, Chief Executive Officer, said:
"We are pleased with our half year performance which demonstrates continued positive momentum in the business against a supportive backdrop. As governments set out their plans to ensure energy security, investment in both oil and gas and renewables offshore infrastructure is expected to continue. We are well placed to benefit from this, and the market fundamentals remain strong for Ashtead Technology. Our HY22 results and end market outlook give us increased confidence in the outlook for our business."
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
| Tel: +44 (0)20 7390 0230
|
| Numis Securities Limited (Nomad and Broker) Julian Cater George Price Jonny Abbott Kevin Cruickshank (QE) | Tel: +44 (0)20 7260 1000
|
Notes to editors:
Ashtead Technology is a leading subsea equipment rental and solutions provider for the global offshore energy sector. Ashtead Technology's specialist equipment, advanced-technologies and support services enable its customers to understand the subsea environment and manage offshore energy production infrastructure.
The Company's service offering is applicable across the lifecycle of offshore wind farms and offshore oil and gas infrastructure.
In the fast-growing offshore wind sector, Ashtead Technology's specialist equipment and services are essential through the project development, construction and installation phase. Once wind farms are operational, Ashtead Technology supports customers with inspection, maintenance and repair ("IMR") equipment and services. In the more mature oil and gas sector, Ashtead Technology's focus is on IMR and decommissioning.
Headquartered in the UK, the Company operates globally, servicing customers from its nine facilities located in key offshore energy hubs.
Cautionary Statement
This announcement contains certain forward-looking statements, including with respect to the Group's current targets, expectations and projections about future performance, anticipated events or trends and other matters that are not historical facts. These forward-looking statements, which sometimes use words such as "aim", "anticipate", "believe", "intend", "plan", "estimate", "expect" and words of similar meaning, include all matters that are not historical facts and reflect the directors' beliefs and expectations, made in good faith and based on the information available to them at the time of the announcement. Such statements involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement and should be treated with caution. Any forward-looking statements made in this announcement by or on behalf of Ashtead Technology speak only as of the date they are made. Except as required by applicable law or regulation, Ashtead Technology expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.
Upon publication of this announcement, this information is now considered in the public domain.
CEO STATEMENT
I am pleased to present our first half year results statement following our IPO in November 2021. The focus during HY22 has been on continued investment in both equipment and people to capitalise on the positive momentum within the markets in which we operate and position the business for further growth. We have been delighted with the progress the business has made in its short period since listing and believe we are well‑placed to take advantage of the current market dynamics.
The strong market demand has enabled us to improve cost utilisation and pricing and deliver a strong financial performance in HY22. We saw a 29% increase in quoting in the first half of this year from HY21 levels giving us confidence through the remainder of the year.
In an ever-evolving energy market, the events of early 2022 have created a focus on the urgent need for governments globally to secure energy supply in a sustainable, affordable and responsible way. This has both heightened the need to accelerate investment in offshore renewable energy and rejuvenated activity in offshore oil and gas. The fungibility of Ashtead Technology's equipment rental fleet and the expertise that has built across both end markets positions our business well to capture growth across both adjacent markets.
Our People
Our people are at the heart of Ashtead Technology's success. Hiring new talent, providing valuable training and development, and a rewarding place to work, has been, and always will be, a priority for the business.
Through the course of the period we have made three senior appointments to further strengthen our market-leading position, enhance our capabilities and expand our technology offering. Phil Middleton joined the business in May as Survey & Robotics Director to lead the Survey & Robotics service line globally and we have recently announced the appointment of Bob Gillespie as Commercial Director. Both Phil and Bob are well known figures within the subsea industry and bring a wealth of experience within the global oil and gas, and renewables, markets. We are also delighted to have promoted Ross MacLeod into the newly created role of Integrated Projects Director, focussing on providing unique solutions by combining the capabilities of each of our three business lines, with a particular focus on the offshore renewables market.
Our Equipment
£7.6m of capital expenditure was invested during the first half of the year. Ashtead Technology is focussed on maintaining its market position as the leading independent provider of subsea rental equipment whilst broadening the range of complementary equipment and services we offer to our customers. With c.85% of our fleet fungible across both our oil and gas and renewables markets we are well-placed to service the needs of our customers across both growth markets.
During the course of the period lead times for new equipment and spares have continued to increase but our proactive approach to supply chain management has ensured we have industry-leading levels of product availability. Tight market conditions are increasing customer propensity to rent, which has enabled us to increase cost utilisation from 39% to 44% during the period and through our pricing increases have offset inflationary pressures in the business.
Our Strategy
Through our three service lines - Survey & Robotics, Mechanical Solutions and Asset Integrity - we support the installation, IMR, and decommissioning of offshore energy infrastructure through the provision of subsea equipment rental and solutions. Our target is to achieve low double-digit organic revenue growth by executing on our proven strategy of:
· Continuing to support the energy transition and capitalise on the significant expected increase in expenditure in the global offshore wind market
· Maintaining Ashtead Technology's position as the leading independent subsea equipment rental business, growing and strengthening our business in subsea technology rental and solutions, whilst continuing to capitalise on customers' increasing propensity to rent
· Continuing to broaden the range of complementary equipment and services and leveraging the Group's global footprint through the further internationalisation of Ashtead Technology's products and services
We remain focused on operational excellence, ensuring the reliability and availability of equipment, the delivery of integrated solutions and service agility, employee training and development, digitisation of internal processes and utilising our significant domain expertise and product knowledge, increasing operational benefits through continuous improvement to better serve our customers.
The Group plans to complement its organic growth through a clear and focused M&A strategy, building on its strong track record of value-enhancing transactions. We are focused on strengthening geographic, equipment and service capability to better support the Group's customers globally, and continue to review opportunities to acquire businesses which complement our current offering. The acquisition target listing contains a number of opportunities across each of the Group's service lines.
Sustainability
We continue to make progress on our sustainability journey and have recently obtained ISO 14001 (Environmental) certification. Our five priorities are aligned with the ten principles of the UN Global Compact - employee health, safety and wellbeing, labour practices & human rights, energy transition, ecological impact and business ethics - and initiatives such as the Ashtead Technology Star Awards are designed to help achieve our goals and support our sustainability efforts.
Our revenues from the renewables market continued to grow, increasing by 25.6% on HY21 and representing 29.5% of our revenues in the period. Our target remains 50% in the medium term despite the recent resurgence of activity from the oil and gas market.
Safety is core to our business and we are delighted to have maintained our zero TRIR (Total Recordable Incident Rate) score during the period, ensuring our employees are safe whilst at work.
Outlook
The Board is very encouraged by the Group's performance in HY22 which provides increased confidence in the outlook for the business and expects FY22 to be at least in line with market expectations.
Allan Pirie
Chief Executive Officer
CFO STATEMENT
The business has maintained its positive momentum from the FY21 results and continued on its growth trajectory into HY22 with a 28.5% increase in revenue compared to the comparable prior period. Increased activity levels in both the offshore oil and gas and renewables markets strengthened demand for Ashtead Technology's services through HY22 and contributed to underlying revenue growth of 24.9%. Additionally, positive FX movements contributed a further 3.6% increase in revenue.
Renewables revenues accounted for 29.5% of Group revenue HY22, representing 25.6% growth from this market compared to prior year. An increased focus on energy security and affordability has resulted in a resurgence in the oil and gas market with revenues from this market increasing by 29.8%. Despite this resurgence, it is our strong view that renewable energy will grow at a significant rate and we maintain our target of 50% activity from this market in the medium term.
Gross profit
The Group achieved gross profit of £23.3m (HY21: £17.8m) representing a gross profit margin of 73.4%, up from 72.0% in HY21. The gross margin improvement predominantly resulted from higher activity levels and improved pricing. Our average annualised cost utilisation increased by 5% from 39% to 44% from June 2021 to June 2022, which supported improved pricing.
Administration costs
Administration costs (excluding depreciation, amortisation and exchange gain/loss) for HY22 were £11.7m, a £2.9m increase on the prior year. Personnel costs increased to 28.1% of revenue (from 26.1%) due to the re‑introduction of the annual bonus scheme for FY22. Excluding the bonus accrual, personnel cost reduced as a percentage of revenue to 24.2%. The Group has continued to invest in its employees through HY22, increasing headcount from 204 in Dec 2021 to 219 in June 2022. No cost has been booked for the LTIP in HY22 as the awards have not yet been formalised.
Profitability
Adjusted EBITA of £8.2m compares to £5.5m in HY21 representing an EBITA margin of 25.8% compared to 22.4% in HY21 and continued margin growth on our full year FY21 numbers. The increase in profitability was the principal driver for an increase in ROIC (Return on Invested Capital) to 19.1% (HY21: 10.9%).
There was an exchange rate benefit year on year of £0.3m at EBITA level, caused predominantly by the strengthening of the US dollar against our GBP reporting currency. At HY21 FX rates the EBITA margin was 25.1%.
Where we have provided adjusted figures, they are after the add-back of various one-off items. The adjustments to determine Adjusted EBITA total £0.7m (HY21: £1.5m) and are set out in note 17 of the accounts.
Profit Before Tax of £6.9m compares to £2.1m in HY21.
Net finance expense
In addition to reducing leverage through the raising of £15m of primary capital, the Group refinanced its debt as part of the IPO process in November 2021 significantly reducing its interest cost. HY22 interest costs were £0.6m (HY21: £2.0m) with HY21 representing higher interest loans held under the previous private equity ownership structure.
Taxation
The tax provision for the period was £1.0m (HY21: £0.7m) representing an effective tax rate of 14.4% (HY21: 34.2%). The estimate has been based on the effective tax rates of each entity in FY21 after removing any adjusting items. The high effective tax rate in HY21 reflects the non-deductibility of costs relating to the IPO and higher standard income tax rates in overseas territories. The low effective tax rate in HY22 reflects the utilisation of brought forward overseas losses. Going forward, the directors expect the effective tax rate to be closer to UK statutory tax rates.
EPS and dividend
We are pleased with our performance during the first half year trading as a PLC having delivered positive results against our forecast at the time of our listing. Our adjusted basic earnings per share was 8.3p in HY22, up from 4.1p in the comparable period in 2021, supported by improved market conditions.
The company's capital allocation policy encompasses organic fleet investment, bolt-on M&A and shareholder returns by way of dividends. Mindful of both the current organic growth and M&A opportunities, it is the Board's intention to declare its first dividend in conjunction with the Company's final results for FY22.
Cash flow and net debt
The Group generated positive cash inflow before financing activities of £2.8m (HY21: £1.5m) in the period.
Working capital at 30 June 2022 represented 16% of the last 12 months revenues compared to 18% at 30 June 2021. The working capital increase from trade debtors represents the ramp up of activity as we reach our peak summer trading, offset by a slight decrease to debtor days since year end and an increase in creditors predominantly due to increased capex spend.
Our net debt has reduced to £21.2m from £22.7m at 31 December 2021 and our leverage has reduced from 1.0x to 0.9x during the period.
Ingrid Stewart
Chief Financial Officer
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF-YEARLY FINANCIAL REPORT
The Directors of Ashtead Technology Holdings plc (set out on page 28 and 29 of the latest Annual Report and Accounts) confirm that to the best of their knowledge:
• the condensed consolidated set of financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK;
• the interim management report includes a fair review of the information required by:
(i) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed consolidated set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(ii) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
By order of the Board of Directors
Allan Pirie Ingrid Stewart
Chief Executive Officer Chief Financial Officer
2 September 2022 2 September 2022
Consolidated income statement
for the six-month period ended 30 June 2022
| | | Unaudited six months to 30 June 2022 | Unaudited six months to 30 June 2021 | Audited year ended 31 December 2021 | |
| | Notes | £000 | £000 | £000 | |
| Revenue | 2 | 31,730 | 24,691 | 55,805 | |
| Cost of sales | 2 | (8,450) | (6,904) | (15,262) | |
| Gross profit | 2 | 23,280 | 17,787 | 40,543 | |
| Administrative expenses | 2 | (16,369) | (14,340) | (33,930) | |
| Other operating income | 2 | 569 | 585 | 995 | |
| Operating profit | 2 | 7,480 | 4,032 | 7,608 | |
| Finance costs | 3 | (579) | (1,960) | (4,019) | |
| Profit before taxation | | 6,901 | 2,072 | 3,589 | |
| Taxation charge | 4 | (997) | (708) | (1,060) | |
| Profit for the financial period | | 5,904 | 1,364 | 2,529 | |
| | | | | | |
| Profit attributable to: | | | | | |
| Equity shareholders of the Company | | 5,904 | 1,364 | 2,529 | |
| | | | | | |
| Earnings per share | | | | | |
| Basic | 5 | 7.4 | 1.9 | 3.6 | |
| Diluted | 5 | 7.4 | 1.9 | 3.6 | |
| The below financial measures are non-GAAP metrics used by management and are not an IFRS disclosure: | |
|
| | ||
| | | | | | | |
| Adjusted EBITDA^ | 17 | 12,252 | 10,121 | 22,437 | | |
| Adjusted EBITA^^ | 17 | 8,174 | 5,536 | 13,724 | | |
| | | | | | ||
^ Adjusted EBITDA is calculated as earnings before interest, tax, depreciation, amortisation and items not considered part of underlying trading including share based payments and foreign exchange gains and losses, is a non-GAAP metric used by management and is not an IFRS disclosure. See Note 17 to the financial statements for calculations.
^^ Adjusted EBITA is calculated as earnings before interest, tax, amortisation and items not considered part of underlying trading including share based payments and foreign exchange gains and losses, is a non-GAAP metric used by management and is not an IFRS disclosure. See Note 17 to the financial statements for calculations.
All results derive from continuing operations.
Consolidated statement of comprehensive income
for the six-month period ended 30 June 2022
| | Unaudited six months to 30 June 2022 | Unaudited Six months to 30 June 2021 | Audited year ended 31 December 2021 |
| | £000 | £000 | £000 |
| Profit for the period | 5,904 | 1,364 | 2,529 |
| Other comprehensive income: | | | |
| Items that may be reclassified subsequently to profit or loss | | | |
| Exchange differences on translation of foreign operations | 1,036 | (45) | 163 |
| Net gain on cash flow hedges | − | 351 | 351 |
| Other comprehensive income for the period, net of tax | 1,036 | 306 | 514 |
| Total comprehensive income | 6,940 | 1,670 | 3,043 |
|
Total comprehensive income attributable to: | | | |
| Equity shareholders of the Company | 6,940 | 1,670 | 3,043 |
Consolidated balance sheet
at 30 June 2022
| | | Unaudited as at 30 June 2022 | Unaudited as at 30 June 2021 | Audited as at 31 December 2021 |
| | Notes | £000 | £000 | £000 |
| Non-current assets | | | | |
| Property, plant and equipment | 6 | 25,782 | 20,300 | 20,832 |
| Goodwill | 7 | 49,185 | 48,549 | 48,651 |
| Intangible assets | 7 | 1,259 | 2,083 | 1,760 |
| Right-of-use assets | 13 | 2,746 | 3,042 | 2,923 |
| Deferred tax asset | | 1,059 | 764 | 1,010 |
| | | 80,031 | 74,738 | 75,176 |
| Current assets | | | | |
| Inventories | 8 | 2,351 | 1,782 | 1,778 |
| Trade and other receivables | 9 | 21,748 | 16,235 | 17,224 |
| Cash and cash equivalents | | 4,425 | 7,702 | 4,857 |
| | | 28,524 | 25,719 | 23,859 |
|
Total assets | |
108,555 | 100,457 | 99,035 |
| | | | | |
| Current liabilities | | | | |
| Loans and borrowings | 11 | − | 38,901 | − |
| Trade and other payables | 10 | 14,196 | 9,327 | 9,415 |
| Income tax payable | | 551 | 1,042 | 821 |
| Lease liabilities | 13 | 791 | 763 | 783 |
| | | 15,538 | 50,033 | 11,019 |
| Non-current liabilities | | | | |
| Loans and borrowings | 11 | 22,678 | 1,160 | 24,425 |
| Lease liabilities | 13 | 2,164 | 2,493 | 2,351 |
| Provisions for liabilities | | 103 | 310 | 108 |
| | | 24,945 | 3,963 | 26,884 |
| Total liabilities | | 40,483 | 53,996 | 37,903 |
| Equity | | | | |
| Share capital | 15 | 3,979 | 3,500 | 3,979 |
| Share premium | 15 | 14,115 | − | 14,115 |
| Merger reserve | 15 | 9,435 | 9,435 | 9,435 |
| Foreign currency translation reserve | 15 | (254) | (1,498) | (1,290) |
| Retained earnings | 15 | 40,797 | 35,024 | 34,893 |
| Total equity | | 68,072 | 46,461 | 61,132 |
|
Total equity and liabilities | |
108,555 | 100,457 | 99,035 |
Consolidated statement of changes in equity
for the six-month period ended 30 June 2022
| | Share capital | Share premium | Merger reserve | Hedging reserve | Foreign currency translation reserve | Retained earnings | Total |
| |||||||||||
| | £000 | £000 | £000 | £000 | £000 | £000 | £000 |
| |||||||||||
| At 1 January 2021 unaudited | 3,500 | − | 9,429 | (351) | (1,453) | 33,660 | 44,785 |
| |||||||||||
|
Profit for the period | − | − | − | − | − | 1,364 | 1,364 |
| |||||||||||
|
Other comprehensive income | − | − | − | 351 | (45) | − | 306 |
| |||||||||||
| Total comprehensive income | − | − | − | 351 | (45) | 1,364 | 1,670 |
| |||||||||||
|
Issue of shares* | − | − | 6 | − | − | − | 6 |
| |||||||||||
| At 30 June 2021 unaudited | 3,500 | − | 9,435 | − | (1,498) | 35,024 | 46,461 |
| |||||||||||
| Profit for the period | − | − | − | − | − | 1,165 |
1,165 |
| |||||||||||
|
Other comprehensive income | − | − | − | − | 208 | − | 208 |
| |||||||||||
| Total comprehensive income | − | − | − | − | 208 | 1 1,165 | 1,373 |
| |||||||||||
|
Issue of shares from IPO | 479 | 15,044 | − | − | − | − | 15,523 |
| |||||||||||
|
Transaction fees on issue of shares from IPO | − | (929) | − | − | − | − | (929) |
| |||||||||||
| Dividends declared** | − | − | − | − | − | (1,296) | (1,296) |
| |||||||||||
| At 31 December 2021 audited | 3,979 | 14,115 | 9,435 | − | (1,290) | 34,893 | 61,132 |
| |||||||||||
|
Profit for the period | − | − | − | − | − | 5,904 | 5,904 |
| |||||||||||
|
Other comprehensive income | − | − | − | − | 1,036 | − | 1,036 |
| |||||||||||
| Total comprehensive income | − | − | − | − | 1,036 | 5,904 | 6,940 |
| |||||||||||
| At 30 June 2022 unaudited | 3,979 | 14,115 | 9,435 | − | (254) | 40,797 | 68,072 | ||||||||||||
*The movement in merger reserve represents the issue of shares in BP INV2 Pledgeco Limited and Ashtead US Pledgeco Inc pre IPO.
**The dividends declared relate to the pre-IPO group restructure.
Consolidated cash flow statement
for the six-month period ended 30 June 2022
| | | Unaudited six months to 30 June 2022 | Unaudited six months to 30 June 2021 | Audited year ended 31 December 2021 |
| | Notes | £000 | £000 | £000 |
| Cash generated from operating activities | | | | |
| Profit before taxation | | 6,901 | 2,072 | 3,589 |
| | | | | |
| Adjustments to reconcile profit before taxation to net cash from operating activities | | | | |
| Finance costs | 3 | 579 | 1,960 | 4,019 |
| Depreciation | 6 | 4,078 | 4,586 | 8,713 |
| Amortisation | 7 | 758 | 760 | 1,516 |
| Gain on sale of property, plant and equipment | | (569) | (585) | (995) |
| Provision for liabilities | | (17) | 157 | (28) |
| Cash generated before changes in working capital | | 11,730 | 8,950 | 16,814 |
| Increase in inventories | | (484) | (542) | (524) |
| Increase in trade and other receivables | | (4,635) | (5,507) | (6,597) |
| Increase in trade and other payables | | 4,716 | 2,053 | 2,016 |
| Cash inflow from operations | | 11,327 | 4,954 | 11,709 |
| Interest paid | | (426) | (1,188) | (3,615) |
| Tax paid | | (1,112) | (115) | (858) |
| Net cash from operating activities | | 9,789 | 3,651 | 7,236 |
| Cash flow used in investing activities | | | | |
| Purchase of property, plant and equipment | | (7,571) | (2,498) | (6,923) |
| Purchase of intangible assets | | (255) | (457) | (966) |
| Disposal of property, plant and equipment | | 823 | 779 | 1,453 |
| Net cash outflow on investing activities | | (7,003) | (2,176) | (6,436) |
| Cash flow used in financing activities | | | | |
| Proceeds from IPO share issue | | − | − | 15,523 |
| Transaction fees on share issue | | − | (49) | (929) |
| Proceeds from share issue | | − | 6 | 50 |
| Loans received | | − | − | 25,107 |
| Transaction fees on loans received | | (5) | − | (914) |
| Repayment of bank loans | | (3,017) | (4,326) | (44,121) |
| Payment of lease liability | | (520) | (453) | (1,012) |
| Repayment of loan notes | | − | − | (830) |
| Net cash outflow from financing activities | | (3,542) | (4,822) | (7,126) |
| Net decrease in cash and cash equivalents | | (756) | (3,347) | (6,326) |
| Cash and cash equivalents at beginning of the period | | 4,857 | 10,958 | 10,958 |
| Net foreign exchange difference | | 324 | 91 | 225 |
| Cash and cash equivalents at end of the period | | 4,425 | 7,702 | 4,857 |
Notes to the consolidated interim financial statements
1. General information
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 condensed consolidated interim financial statements of the Company for the six-month period ended 30 June 2022 comprise the Company and its interest in subsidiaries (together referred to as the "Group"). The Company is domiciled in the United Kingdom and its registered address is 1 Gateshead Close, Sunderland Road, Sandy, Bedfordshire, SG19 1RS, United Kingdom. The Company registration number is 13424040.
Basis of preparation
The annual consolidated financial statements of Ashtead Technology Holdings plc will be prepared in accordance with UK-adopted International Accounting Standards. These condensed consolidated interim financial statements for the six-month period ended 30 June 2022 have been prepared in accordance with UK adopted International Accounting Standard ("IAS") 34, 'Interim Financial Reporting' and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
The financial information for the six-month period ended 30 June 2022 is unaudited. It does not constitute statutory financial statements within the meaning of Section 434 of the Companies Act 2006. This report should be read in conjunction with the Group's Annual Report and Accounts as at and for the year ended 31 December 2021 ("last Annual Report and Accounts"), which were prepared in accordance with UK-adopted International Accounting Standards. The last Annual Report and Accounts have been filed with the Registrar of Companies and are available from the Group's website (www.ashtead-technology.com). The auditors' report on those accounts was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
The condensed consolidated interim financial statements unless otherwise stated are presented in sterling, to the nearest thousand. The functional currency of the Group is sterling.
The condensed consolidated interim financial statements were approved by the Board of Directors on 2nd September 2022.
Predecessor accounting
Ashtead Technology Holdings plc was incorporated on 27 May 2021 and became the parent entity of the Group on 17 November 2021 when Ashtead Technology Holdings plc acquired the entire shareholding of both BP INV2 Pledgeco Limited and Ashtead US Pledgeco Inc by way of share for share exchange agreement.
This did not constitute a business combination under IFRS 3 'Business Combinations' as it is effectively a combination among entities under common control. There is currently no guidance in IFRS on the accounting treatment for combinations among entities or businesses under common control. IAS 8 requires management, if there is no specifically applicable standard or interpretation, to develop a policy that is relevant to the decision making needs of users and that is reliable. The entity first considers requirements and guidance in other international standards and interpretations dealing with similar issues, and then the content of the IASB's Conceptual Framework for Financial Reporting (Conceptual Framework). Management might consider the pronouncements of other standard-setting bodies that use a similar conceptual framework to the IASB's, provided that they do not conflict with the IASB's sources of guidance.
Considering facts and circumstances management decided to apply a method broadly described as predecessor accounting. The principles of predecessor accounting are:
· Assets and liabilities of the acquired entity are stated at predecessor carrying values. Fair value measurement is not required.
· No new goodwill arises in predecessor accounting.
· Any difference between the consideration given and the aggregate carrying value of the assets and liabilities of the acquired entity at the date of the transaction is included in equity in retained earnings or in a separate reserve.
Management used merger accounting and applied merger relief at a Company level. Under merger accounting principles, the assets and liabilities of the subsidiaries were consolidated at book value in the Group financial statements and the consolidated reserves of the Group were adjusted to reflect the statutory share capital of Ashtead Technology Holdings plc with the difference presented as the merger reserve. The cost of investments in subsidiaries is determined by the historical cost of investments in the subsidiaries of the Group transferred from the previous owning entities, including transaction costs. The value of total equity reflected the combination of the former BP INV2 Pledgeco Limited and Ashtead US Pledgeco Inc Group.
These last Annual Report and Accounts are the first set of financial statements for the Group and were presented as a continuation of the former combined BP INV2 Pledgeco Limited and Ashtead US Pledgeco Inc Group on a consistent basis as if the Group reorganisation had taken place at the start of the earliest period presented. BP INV2 Pledgeco Limited and Ashtead US Pledgeco Inc and their respective subsidiaries did not form a legal group, however, they were under common management and control throughout the period.
Accounting policies
The condensed consolidated interim financial statements have been prepared in accordance with the accounting policies set out on pages 57-62 of the last Annual Report and Accounts.
Taxation
Tax on income in the interim periods are accrued using management's best estimate of the weighted average annual tax rate that would be applicable to expected total annual earnings.
Critical accounting judgements and estimates
In preparing these condensed consolidated interim financial statements, management has made judgements, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
The areas of judgement and estimate which have the greatest potential effect on the amounts recognised in these financial statements are the provision for bad debts, impairment of goodwill and carrying value and useful lives of property, plant and equipment. These are consistent with matters disclosed on page 62 in the last Annual Report and Accounts.
Standards, amendments, and interpretations not yet effective
A number of amendments and interpretations have been issued which are not expected to have any significant impact on the accounting policies and reporting.
Standards and amendments effective for the period
There are no new or amended standards or interpretations from 1 January 2022 onwards that have a significant impact on the accounting policies and reporting.
Going concern
These condensed consolidated financial statements of the Group are prepared on a going concern basis. The Directors of the Group assert that the preparation of the condensed 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 an eighteen-month period ending 31 December 2023.
During the six months ended 30 June 2022 the Group has continued to generate positive cash flow from operating activities, repaying £3,017,000 of the RCF during the period, with a cash and cash equivalents balance of £4,425,000 at 30 June 2022 (31 December 2021: £4,857,000). The Group has access to a multi currency RCF and additional accordion facility. The RCF and accordion facility have total commitments of £40,000,000 and £10,000,000 respectively, both of which expire in November 2024, with an option to extend subject to credit approval. As at 30 June 2022 the RCF had an undrawn balance of £16,879,000 and the £10,000,000 accordion facility was undrawn.
The Facility Agreement is subject to a leverage covenant of 2.5x and an interest cover covenant of 4:1, which are both to be tested on a quarterly basis. The Group has complied with all covenants from entering the Facility Agreement until the date of these financial statements.
The Group monitors its funding and liquidity position throughout the period to ensure it has sufficient funds to meet its ongoing cash requirements. Cash forecasts are produced based on a number of inputs such as estimated revenues, margins, overheads, collection and payment terms, capex requirements and the payment of interest and capital on its existing debt facilities. Consideration is also given to the availability of bank facilities. In preparing these forecasts, the Directors have considered the principal risks and uncertainties to which the business is exposed.
Taking account of reasonable changes in trading performance and bank facilities available, the application of severe but plausible downside scenarios to the forecasts, the cash forecasts prepared by management and reviewed by the Directors indicate that the Group is cash generative and has adequate financial resources to continue to trade for the foreseeable future and to meet its obligations as they fall due.
2. Segmental analysis
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 regional segments display similar economic characteristics. There are no reportable segments which have been aggregated for the purpose of the disclosure of segment information.
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
Unaudited for the six-month period ended 30 June 2022
|
| |
Europe |
Americas | Asia Pacific | Middle East | Head Office |
Total | |||||
|
| £000 | £000 | £000 | £000 | £000 | £000 | ||||||
| Total revenue | 17,178 | 6,265 | 5,681 | 2,606 | - | 31,730 | ||||||
| Cost of sales | (4,163) -------- | (2,129) -------- | (1,172) -------- | (986) -------- | - -------- | (8,450) -------- | ||||||
| Gross profit | 13,015 | 4,136 | 4,509 | 1,620 | - | 23,280 | ||||||
| Administrative expenses | (5,384) | (2,095) | (967) | (550) | (2,693) | (11,689) | ||||||
| Other operating income | 223 -------- | 83 -------- | 267 -------- | (4) -------- | - -------- | 569 -------- | ||||||
| Operating profit before depreciation, amortisation and foreign exchange gain/(loss) | 7,854 | 2,124 | 3,809 | 1,066 | (2,693) | 12,160 | ||||||
| Foreign exchange gain | | | | | | 156 | ||||||
| Depreciation | | | | | | (4,078) | ||||||
| Amortisation | | | | | | (758) -------- | ||||||
| Operating profit Finance costs | | | | | | 7,480 (579) -------- | ||||||
| Profit before taxation Taxation charge | | | | | | 6,901 (997) -------- | ||||||
| Profit for the financial period | | | | | | 5,904 -------- | ||||||
|
| Total assets | 68,545 | 16,175 | 12,381 | 5,873 | 5,581 | 108,555 | |||||
|
| Total liabilities | 11,718 | 3,909 | 1,339 | 681 | 22,836 | 40,483 | |||||
Unaudited for the six-month period ended 30 June 2021
|
| |
Europe |
Americas | Asia Pacific | Middle East | Head Office |
Total |
| ||||||||||
|
| £000 | £000 | £000 | £000 | £000 | £000 | ||||||||||||
|
| Total revenue | 14,596 | 4,697 | 4,107 | 1,291 | - | 24,691 | |||||||||||
|
| Cost of sales | (3,669) -------- | (1,685) -------- | (853) -------- | (697) -------- | - -------- | (6,904) -------- | |||||||||||
| Gross profit | 10,927 | 3,012 | 3,254 | 594 | - | 17,787 |
| |||||||||||
|
| Administrative expenses | (5,457) | (1,780) | (447) | (439) | (640) | (8,763) | |||||||||||
|
| Other operating income | 283 -------- | 227 -------- | 35 -------- | 40 -------- | - -------- | 585 -------- | |||||||||||
|
| Operating profit before depreciation, amortisation and foreign exchange gain/(loss) | 5,753 | 1,459 | 2,842 | 195 | (640) | 9,609 | |||||||||||
|
| Foreign exchange loss | | | | | | (232) | |||||||||||
|
| Depreciation | | | | | | (4,585) | |||||||||||
|
| Amortisation | | | | | | (760) -------- | |||||||||||
|
| Operating profit Finance costs | | | | | | 4,032 (1,960) -------- | |||||||||||
|
| Profit before taxation Taxation charge | | | | | | 2,072 (708) -------- | |||||||||||
|
| Profit for the financial period | | | | | | 1,364 -------- | |||||||||||
| Total assets | 61,167 | 15,773 | 9,804 | 3,756 | 9,957 | 100,457 |
| |||||||||||
| Total liabilities | 8,302 | 2,742 | 859 | 553 | 41,540 | 53,996 |
| |||||||||||
Audited for the year ended 31 December 2021
| |
Europe |
Americas | Asia Pacific | Middle East | Head Office |
Total |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| Total revenue | 33,241 | 11,779 | 7,911 | 2,874 | - | 55,805 |
| Cost of sales | (7,723) -------- | (4,599) -------- | (1,817) -------- | (1,123) -------- | - -------- | (15,262) -------- |
| Gross profit | 25,518 | 7,180 | 6,094 | 1,751 | - | 40,543 |
| Administrative expenses | (9,143) | (3,799) | (2,169) | (1,064) | (7,311) | (23,486) |
| Other operating income | 351 -------- | 313 -------- | 77 -------- | 254 -------- | - -------- | 995 -------- |
| Operating profit before depreciation, amortisation and foreign exchange gain/(loss) | 16,726 | 3,694 | 4,002 | 941 | (7,311) | 18,052 |
| Foreign exchange loss | | | | | | (215) |
| Depreciation | | | | | | (8,713) |
| Amortisation | | | | | | (1,516) -------- |
| Operating profit Finance costs | | | | | | 7,608 (4,019) -------- |
| Profit before taxation Taxation charge | | | | | | 3,589 (1,060) -------- |
| Profit for the financial period | | | | | | 2,529 -------- |
|
Total assets | 62,402 | 15,912 | 9,669 | 5,102 | 5,950 | 99,035 |
| Total liabilities | 8,343 | 3,014 | 1,080 | 644 | 24,822 | 37,903 |
Central administrative expenses represent expenditures which are not directly attributable to any single operating segment. The expenditure has not been allocated to individual operating segments.
The revenues generated by each geographic segment almost entirely comprise revenues generated in a single country. Revenues in the Europe, Americas, Asia Pacific and Middle East segments are almost entirely generated in the UK, USA, Singapore and UAE respectively. Revenues generated outside of these jurisdictions are not material to the Group. The basis for the allocation of revenues to individual countries is dependent upon the depot from which the equipment is provided.
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:
| | Unaudited as at 30 June 2022 | Unaudited as at 30 June 2021 | Audited as at 31 December 2021 |
| £000 | £000 | £000 | |
| UK | 55,510 | 50,763 | 51,411 |
| USA | 10,998 | 12,206 | 11,394 |
| Singapore | 8,470 | 7,736 | 7,799 |
| UAE | 3,994 | 3,269 | 3,562 |
3. Finance costs
| | Unaudited six months to 30 June 2022 | Unaudited six months to 30 June 2021 | Audited year ended 31 December 2021 |
| | £000 | £000 | £000 |
| Interest on bank loans (held at amortised cost) | 419 | 1,184 | 2,261 |
| Amortisation of deferred finance costs | 91 | 345 | 1,222 |
| Loan note interest | - | 39 | 71 |
| Interest expense on lease liability (Note 13) | 69 | 78 | 151 |
| Hedge reserve movement | - | 313 | 313 |
| Other interest and charges | - | 1 | 1 |
| | 579 | 1,960 | 4,019 |
4. Tax
The tax expense for the six-month period ended 30 June 2022 is based upon management's best estimate of the weighted average annual tax rate expected for each jurisdiction for the full year ending 31 December 2022 applied to the profit before tax for the interim period. The effective tax rate for the six-month period ended 30 June 2022 is 14.4% and the income tax expense is lower than the standard UK rate of 19% due to overseas losses carried forward. The effective tax rate for the year ended 31 December 2021 was 29.5% and the income tax expense was higher than the standard UK rate due to non-deductible expenses and higher standard income tax rates in overseas territories.
5. 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 period.
Diluted earnings per share
For diluted earnings per share, the weighted average number of Ordinary Shares in issue is adjusted to assume conversion of all potentially dilutive Ordinary Shares. Up to and including 30 June 2022 the Group had no potentially dilutive Ordinary Shares.
Adjusted earnings per share
| | Unaudited Adjusted Six months to 30 June 2022 | Unaudited Statutory Six months to 30 June 2022 | Unaudited Adjusted Six months to 30 June 2021 | Unaudited Statutory Six months to 30 June 2021 | Audited Adjusted Year ended 31 December 2021 | Audited Statutory Year ended 31 December 2021 | |||||
| Earnings attributable to equity shareholders of the Group: | | | | | | | |||||
| Profit for the period (£000) | 6,581* | 5,904 | 2,836* | 1,364 | 9,385* | 2,529 | |||||
| Number of shares: | | | | | | | |||||
| Weighted average number of Ordinary Shares - Basic | 79,580,000 | 79,580,000 | 69,998,000 | 69,998,000 | 70,995,578 | 70,995,578 | |||||
| Weighted average number of Ordinary Shares - Diluted | 79,580,000 | 79,580,000 | 69,998,000 | 69,998,000 | 70,995,578 | 70,995,578 | |||||
| Earnings per share attributable to equity holders of the Group - continuing operations: | | | | | | | |||||
| Basic earnings per share (pence) | 8.3 | 7.4 | 4.1 | 1.9 | 13.2 | 3.6 | |||||
| Diluted earnings per share (pence) | 8.3 | 7.4 | 4.1 | 1.9 | 13.2 | 3.6 | |||||
* Refer to Note 17 for the reconciliation of Non-IFRS Profit Metrics.
6. Property, plant and equipment
| | Assets held for rental | Leasehold improvements | Freehold property | Fixtures and fittings | Motor vehicles | Total | |
| | £000 | £000 | £000 | £000 | £000 | £000 | |
| Cost: | | | | | | | |
| At 1 January 2021 unaudited | 104,906 | 1,537 | 197 | 3,322 | 245 | 110,207 | |
| Additions | 2,481 | 159 | − | 236 | 31 | 2,907 | |
| Disposals | (2,781) | − | − | (6) | − | (2,787) | |
| Foreign exchange movements | (832) | (12) | − | (56) | (2) | (902) | |
| At 30 June 2021 unaudited | 103,774 | 1,684 | 197 | 3,496 | 274 | 109,425 | |
| Additions | 4,144 | 42 | − | 185 | 25 | 4,396 | |
| Disposals | (3,885) | − | − | (23) | − | (3,908) | |
| Foreign exchange movements | 834 | 13 | − | 25 | 6 | 878 | |
| At 31 December 2021 audited | 104,867 | 1,739 | 197 | 3,683 | 305 | 110,791 | |
| Additions | 7,715 | 190 | − | 131 | − | 8,036 | |
| Disposals | (2,802) | − | − | (64) | (30) | (2,896) | |
| Foreign exchange movements | 5,197 | 71 | − | 180 | 35 | 5,483 | |
| At 30 June 2022 unaudited | 114,977 | 2,000 | 197 | 3,930 | 310 | 121,414 | |
| | | | | | | | |
| Accumulated depreciation: | | | | | | | |
| At 1 January 2021 unaudited | (84,593) | (974) | (60) | (2,593) | (157) | (88,377) | |
| Charge for the period | (3,763) | (145) | (4) | (165) | (11) | (4,088) | |
| Disposals | 2,588 | − | − | 6 | − | 2,594 | |
| Foreign exchange movements | 711 | 7 | − | 27 | 1 | 746 | |
| At 30 June 2021 unaudited | (85,057) | (1,112) | (64) | (2,725) | (167) | (89,125) | |
| Charge for the period | (3,395) | (99) | (4) | (131) | (13) | (3,642) | |
| Disposals | 3,664 | − | − | 6 | − | 3,670 | |
| Foreign exchange movements | (833) | (8) | − | (17) | (4) | (862) | |
| At 31 December 2021 audited | (85,621) | (1,219) | (68) | (2,867) | (184) | (89,959) | |
| Charge for the period | (3,349) | (112) | (4) | (162) | (19) | (3,646) | |
| Disposals | 2,549 | − | − | 63 | 29 | 2,641 | |
| Foreign exchange movements | (4,452) | (50) | − | (144) | (22) | (4,668) | |
| At 30 June 2022 unaudited | (90,873) | (1,381) | (72) | (3,110) | (196) | (95,632) | |
|
| | | | | | | |
| Net book value: | | | | | | | |
| At 31 December 2020 unaudited | 20,313 | 563 | 137 | 729 | 88 | 21,830 | |
| At 30 June 2021 unaudited | 18,717 | 572 | 133 | 771 | 107 | 20,300 | |
| At 31 December 2021 audited | 19,246 | 520 | 129 | 816 | 121 | 20,832 | |
| At 30 June 2022 unaudited | 24,104 | 619 | 125 | 820 | 114 | 25,782 | |
7. Goodwill and intangible assets
|
| Goodwill £000 | Customer relationships £000 | Non-compete arrangements £000 | Computer software £000 | Total £000 |
|
Cost: At 1 January 2021 unaudited | 48,585 | 4,447 | 208 | 2,801 | 56,041 |
| Additions | − | − | − | 457 | 457 |
| Foreign exchange movements | (36) | (7) | − | 2 | (41) |
| At 30 June 2021 unaudited | 48,549 | 4,440 | 208 | 3,260 | 56,457 |
| Additions | − | − | − | 509 | 509 |
| Foreign exchange movements | 102 | 7 | − | − | 109 |
| At 31 December 2021 audited | 48,651 | 4,447 | 208 | 3,769 | 57,075 |
| Additions | − | − | − | 255 | 255 |
| Foreign exchange movements | 534 | 2 | − | 9 | 545 |
| At 30 June 2022 unaudited | 49,185 | 4,449 | 208 | 4,033 | 57,875 |
| Amortisation: | | | | | |
| At 1 January 2021 unaudited | − | (2,261) | (109) | (2,627) | (4,997) |
| Charge for the period | − | (726) | (34) | (66) | (826) |
| Foreign exchange movements | − | − | − | (2) | (2) |
| At 30 June 2021 unaudited | − | (2,987) | (143) | (2,695) | (5,825) |
| Charge for the period | − | (723) | (33) | (82) | (838) |
| Foreign exchange movements | − | − | − | (1) | (1) |
| At 31 December 2021 audited | − | (3,710) | (176) | (2,778) | (6,664) |
| Charge for the period | − | (594) | (26) | (138) | (758) |
| Foreign exchange movements | − | 1 | − | (10) | (9) |
| At 30 June 2022 unaudited | − | (4,303) | (202) | (2,926) | (7,431) |
| Net book value: | | | | | |
| At 31 December 2020 unaudited | 48,585 | 2,186 | 99 | 174 | 51,044 |
| At 30 June 2021 unaudited | 48,549 | 1,453 | 65 | 565 | 50,632 |
| At 31 December 2021 audited | 48,651 | 737 | 32 | 991 | 50,411 |
| At 30 June 2022 unaudited | 49,185 | 146 | 6 | 1,107 | 50,444 |
Goodwill has arisen on the acquisition of the following subsidiaries: Amazon Group Limited (the parent company of the existing Ashtead Technology Group at the time of acquisition, in April 2016), TES Survey Equipment Services LLC, Welaptega Marine Limited, Aqua-Tech Solutions LLC and its subsidiary Alpha Subsea LLC, and Underwater Cutting Solutions Limited, as well as the acquisition of the trade and assets of Forum Subsea Rentals, a division of Forum Energy Technologies (UK) Limited, Forum Energy Asia Pacific PTE Ltd and Forum US, Inc.
The Group tests annually for impairment, or more frequently if there are indicators that goodwill might be impaired.
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. The key assumptions on which management has based its cash flow projections are the same as those used in the last Annual Report and Accounts.
8. Inventories
| | Unaudited 30 June 2022 | Unaudited 30 June 2021 | Audited 31 December 2021 |
| |
| | £000 | £000 | £000 |
| |
| Raw materials and consumables | 2,351 | 1,782 | 1,778 | ||
The cost of inventories recognised as an expense and included in cost of sales during the period was £1,690,000 (H1 2021: £1,422,000).
9. Trade and other receivables
| | Unaudited 30 June 2022 | Unaudited 30 June 2021 | Audited 31 December 2021 |
| | £000 | £000 | £000 |
| Trade receivables | 18,295 | 11,564 | 14,212 |
| Prepayments and accrued income | 3,453 | 3,378 | 3,012 |
| Amounts due to related parties (Note 16) | − | 1,293 | − |
| | 21,748 | 16,235 | 17,224 |
The Directors consider that the carrying amount of trade and other receivables approximates to fair value. The amounts owed by related parties bear no interest and are due on demand.
10. Trade and other payables
| | Unaudited 30 June 2022 | Unaudited \30 June 2021 | Audited 31 December 2021 |
| | £000 | £000 | £000 |
| Trade payables | 5,775 | 3,424 | 3,349 |
| Accruals | 8,298 | 5,903 | 5,682 |
| Amounts due to related parties (Note 16) | 123 | − | 384 |
| | 14,196 | 9,327 | 9,415 |
The Directors consider that the carrying amount of trade and other payables equates to fair value. The amounts due to related parties bear no interest and are due on demand.
11. Loan and borrowings
| | Unaudited 30 June 2022 | Unaudited 30 June 2021 | Audited 31 December 2021 | |||||||
| | £000 | £000 | £000 | |||||||
| Bank loans (held at amortised cost) | − | 38,901 | − |
| ||||||
| | − | 38,901 | − |
| ||||||
| Non-current | | | |
| ||||||
| Bank loans (held at amortised cost) | 22,678 | − | 24,425 |
| ||||||
| Related party loan notes (Note 16) | − | 1,160 | − |
| ||||||
| | 22,678 | 1,160 | 24,425 |
| ||||||
At 30 June 2022 the bank loans comprise a revolving credit facility of £23,121,000 (of which £11,430,000 denominated in USD) which carried interest at SONIA plus 2.2%. The lenders are HSBC Bank plc and Clydesdale Bank plc. The Facility Agreement is subject to a leverage covenant of 2.5x and an interest cover covenant of 4:1. The total commitments are £40,000,000 for the RCF and an additional £10,000,000 accordion facility. As at 30 June 2022 the RCF had an undrawn balance of £16,879,000 and the £10,000,000 accordion facility was undrawn. A non-utilisation fee of 0.88% is charged on the non-utilised element of the RCF facility. The revolving credit facility is fully repayable by November 2024, with an option to extend subject to credit approval.
Certain companies within the Group are party to cross guarantees with respect to bank loans totalling £23,121,000 (31 December 2021: £24,953,000) advanced to Ashtead Technology Limited and Ashtead Technology Offshore Inc. The lenders have a floating charge over certain assets of the Group.
At 30 June 2021 the bank loans comprised senior bank debt of £39,434,000 (of which £9,593,000 denominated in USD) and the senior A, B and revolving credit facility carried interest at LIBOR plus 3.5%, 4.0% and 5.0% respectively. The senior A, B and revolving credit facility were repaid in full in November 2021.
The related party loan notes carried interest at 7% which capitalised quarterly and was repaid in full in November 2021.
Bank loans are repayable as follows:
| | Unaudited 30 June 2022 | Unaudited 30 June 2021 | Audited 31 December 2021 |
| | £000 | £000 | £000 |
| Within one year | − | 39,434 | − |
| Within one to two years | − | − | − |
| Within two to three years | 23,121 | − | 24,953 |
| | 23,121 | 39,434 | 24,953 |
| Deferred finance costs | (443) | (533) | (528) |
| | 22,678 | 38,901 | 24,425 |
12. Financing liabilities reconciliation
| | Unaudited 1 January 2021 | Cash flows | Interest paid | Other non-cash changes | Changes in exchange rates | Unaudited 30 June 2021 |
| | £000 | £000 | £000 | £000 | £000 | £000 |
| Cash at bank and in hand | 10,958 | (3,347) | − | − | 91 | 7,702 |
|
Bank loans | (43,008) | 4,326 | − | (345) | 126 | (38,901) |
| Related party loan notes | (1,121) | − | − | (39) | − | (1,160) |
| Lease liabilities | (3,052) | 453 | 78 | (647) | (88) | (3,256) |
| Net debt | (36,223) | 1,432 | 78 | (1,031) | 129 | (35,615) |
The non-cash movement relates to amortisation of deferred finance costs, accrual of finance costs on related party loan notes and lease liability, and addition of new leases during the period.
| | Unaudited 30 June 2021 | Cash flows | Interest paid | Other non-cash changes | Changes in exchange rates | Audited 31 December 2021 |
| | £000 | £000 | £000 | £000 | £000 | £000 |
| Cash at bank and in hand | 7,702 | (2,979) | − | − | 134 | 4,857 |
|
Bank loans | (38,901) | 15,602 | − | (877) | (249) | (24,425) |
| Related party loan notes | (1,160) | 830 | − | 330 | − | − |
| Lease liabilities | (3,256) | 559 | 73 | (272) | (238) | (3,134) |
| Net debt | (35,615) | 14,012 | 73 | (819) | (353) | (22,702) |
The non-cash movement relates to the amortisation of deferred finance costs, accrual of finance costs on related party loan notes and lease liability, and the addition of new leases during the period.
| | Audited 31 December 2021 | Cash flows | Interest paid | Other non-cash changes | Changes in exchange rates | Unaudited 30 June 2022 |
|
| | £000 | £000 | £000 | £000 | £000 | £000 |
|
| Cash at bank and in hand | 4,857 | (756) | − | − | 324 | 4,425 |
|
|
Bank loans | (24,425) | 3,022 | − | (91) | (1,184) | (22,678) | |
| Lease liabilities | (3,134) | 520 | 69 | (261) | (149) | (2,955) | |
| Net debt | (22,702) | 2,786 | 69 | (352) | (1,009) | (21,208) | |
The non-cash movement relates to the amortisation of deferred finance costs, accrual of finance costs on lease liability and the addition of new leases during the period.
13. Leases
Leases as lessee
The Group leases warehouses, offices, and other facilities in different locations (UK, UAE, Singapore, Canada, USA). The lease term ranges from 2 to 15 years with an option to renew available for some of the leases. Lease payments are renegotiated every 3-5 years to reflect market terms. The Group has elected not to recognise right-of-use assets and lease liabilities for leases that are short-term and/or of low-value items. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Further information about leases is presented below:
a) Amounts recognised in consolidated balance sheet
|
| Right-of-use assets | £000 |
| ||||
|
| Balance at 1 January 2021 unaudited | 2,816 |
| ||||
|
| Additions to right-of-use assets | 668 |
| ||||
|
| Depreciation charge for the period | (418) |
| ||||
|
| Effects of movements in exchange rates | (24) ------ |
| ||||
|
| Balance at 30 June 2021 unaudited | 3,042 ------ |
| ||||
|
| Additions to right-of-use assets | 272 |
| ||||
|
| Depreciation charge for the period | (417) |
| ||||
|
| Effects of movements in exchange rates | 26 ------ |
| ||||
|
| Balance at 31 December 2021 audited | 2,923 ------ |
| ||||
|
| Additions to right-of-use assets | 180 |
| ||||
|
| Depreciation charge for the period | (432) |
| ||||
|
| Effects of movements in exchange rates | 75 ------ |
| ||||
|
| Balance at 30 June 2022 unaudited | 2,746 ------ |
| ||||
| | Unaudited 30 June 2022 | Unaudited 30 June 2021 | Audited 31 December 2021 | ||||
| Lease liabilities: | £000 | £000 | £000 | ||||
| Current | 791 | 763 | 783 | ||||
| Non-current | 2,164 | 2,493 | 2,351 | ||||
| Total lease liabilities | 2,955 | 3,256 | 3,134 |
| |||
Lease liabilities are repayable as follows:
| | Unaudited 30 June 2022 | Unaudited 30 June 2021 | Audited 31 December 2021 |
| | £000 | £000 | £000 |
| Within one year | 910 | 932 | 966 |
| Within one to two years | 690 | 823 | 767 |
| Within two to three years | 683 | 620 | 675 |
| Within three to four years | 460 | 587 | 568 |
| Within four to five years | 335 | 367 | 334 |
| Beyond five years | 198 | 481 | 362 |
| | 3,276 | 3,810 | 3,672 |
| Effect of discounting | (321) | (554) | (538) |
| Total lease liabilities | 2,955 | 3,256 | 3,134 |
b) Amounts recognised in the income statement
| | Unaudited six months to 30 June 2022 | Unaudited six months to 30 June 2021 | Audited year ended 31 December 2021 | ||||||||||||
| | £000 | £000 | £000 |
| |||||||||||
| Depreciation charge | 432 | 418 | 835 |
| |||||||||||
| Interest expense on lease liability | 69 | 78 | 151 |
| |||||||||||
| Expenses relating to short-term leases | 100 | 83 | 165 |
| |||||||||||
| Total amount recognised in the income statement | 601 | 579 | 1,151 |
| |||||||||||
c) Amounts recognised in the cash flow statement
| | Unaudited six months to 30 June 2022 | Unaudited six months to 30 June 2021 | Audited year ended 31 December 2021 | |||
| | £000 | £000 | £000 | |||
| Total cash payments for leases | 589 | 531 | 1,163 | |||
14. Capital commitments
| | Unaudited 30 June 2022 | Unaudited 30 June 2021 | Audited 31 December 2021 |
| | £000 | £000 | £000 |
| Capital expenditure contracted for but not provided | 2,720 | 1,900 | 2,825 |
15. Share capital and reserves
| Called up share capital | | Unaudited 30 June 2022 | | Unaudited 30 June 2021 | | Audited 31 December 2021 |
| Allotted, called up and fully paid | No. | £000 | No. | £000 | No. | £000 |
| Ordinary shares of £0.05 each | 79,580,000 | 3,979 | 69,998,000 | 3,500 | 79,580,000 | 3,979 |
| | | 3,979 | | 3,500 | | 3,979 |
Ordinary share capital represents the number of shares in issue at their nominal value. On 23 November 2021 the share capital of the former Group has been replaced with the newly issued listed shares following the IPO. Ordinary Shares of 9,582,000 with a nominal value of £479,000 were issued on IPO. The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.
Share premium
Share premium represents the amount over the par value which was received by the Group upon the sale of the Ordinary Shares. Upon listing on 23 November 2021 the par value of the shares was £0.05 but the initial offering price was £1.62. Share premium is stated net of direct costs of £929,000 relating to the issue of the shares.
Merger reserve
The merger reserve was created as a result of the share for share exchange under which Ashtead Technology Holdings plc became the parent undertaking prior to the IPO. Under merger accounting principles, the assets and liabilities of the subsidiaries were consolidated at book value in the Group financial statements and the consolidated reserves of the Group were adjusted to reflect the statutory share capital, share premium and other reserves of the Company as if it had always existed, with the difference presented as the merger reserve.
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.
16. Related parties
In prior periods the Group transacted with entities which formerly had significant influence over the Group which are presented below. There were no transactions with these related parties in the six-month period ended 30 June 2022.
| Transactions during the period with related parties: | Unaudited six months to 30 June 2022 | Unaudited six months to 30 June 2021 | Audited year ended 31 December 2021 |
| | £000 | £000 | £000 |
| Dividend expense* BP INV2 Newco Limited BP INV2B Bidco Limited | − − | − − | 476 820 |
| Interest expense BP INV2B Bidco Limited | − | 39 | 71 |
*The dividend expense related to the pre-IPO group restructure.
| Outstanding balances with related parties as at period end: | Unaudited 30 June 2022 | Unaudited 30 June 2021 | Audited 31 December 2021 |
| ||||
| | £000 | £000 | £000 |
| ||||
| Receivables from: | | | |
| ||||
| BP INV2B Bidco Limited | - | 820 | - |
| ||||
| BP INV2 Holdco Limited | - | 422 | - |
| ||||
| BP INV2 Newco Limited | - | 51 | - |
| ||||
| | - | 1,293 | - |
| ||||
| Payables to: | | | |
| ||||
| BP INV2B Bidco Limited | (101) | - | (362) | |||||
| BP INV2 Holdco Limited | (20) | - | (20) | |||||
| BP INV2 Newco Limited | (2) | - | (2) | |||||
| | (123) | - | (384) | |||||
| Related party loan notes payable to: | | | | |||||
| BP INV2B Bidco Limited | - | 1,160 | - | |||||
| Compensation of key management personnel: | Unaudited six months to 30 June 2022 | Unaudited six months to 30 June 2021 | Audited year ended 31 December 2021 |
| | £000 | £000 | £000 |
| Salaries and fees | 407 | 238 | 503 |
| Bonus(1) | 200 | - | - |
| Additional payments(2) | - | 9 | 268 |
| Other benefits | 41 | 34 | 67 |
| Total | 648 | 281 | 838 |
(1)Bonus paid was a contractual obligation on the successful completion of the IPO, which was accrued at 31 December 2021 and paid during February 2022.
(2)Additional payment paid to fund purchase of MIP shares pre-IPO.
Key management personnel are also entitled to long-term investment plan awards which were due to be issued post IPO and have not as yet been awarded.
17. Reconciliation of Non-IFRS Profit Metrics
| Reconciliation of Adjusted EBITDA
| | Unaudited six months to 30 June 2022 | Unaudited six months to 30 June 2021 | Audited year ended 31 December 2021 |
| ||||
| | Notes | £000 | £000 | £000 |
| ||||
| Adjusted EBITDA | | 12,252 | 10,121 | 22,437 | |||||
| Cost associated with IPO | | - | (88) | (3,332) | |||||
| Restructuring costs | | - | (329) | (1,314) | |||||
| One-off bad debts & debt collection costs | | - | (27) | (39) | |||||
| One-off inventory adjustment | | - | - | 205 | |||||
| One-off asset disposal | | - | - | 130 | |||||
| Other exceptional costs | | (92) -------- | (68) -------- | (35) -------- | |||||
| Operating profit before depreciation, amortisation and foreign exchange gain/(loss) | |
12,160 |
9,609 |
18,052 | |||||
| Depreciation on property, plant and equipment | 6 | (3,646) | (4,154) | (7,878) | |||||
| Depreciation on right-of-use asset | 13 | (432) -------- | (431) -------- | (835) -------- | |||||
| Operating profit before amortisation and foreign exchange gain/(loss) | |
8,082 |
5,024 |
9,339 | |||||
| Amortisation of intangible assets | 7 | (758) | (760) | (1,516) | |||||
| Foreign exchange gain/(loss) | | 156 -------- | (232) -------- | (215) -------- | |||||
| Operating profit | | 7,480 | 4,032 | 7,608 | |||||
|
| | | | | |||||
| Reconciliation of Adjusted EBITA
| | Unaudited six months to 30 June 2022 | Unaudited six months to 30 June 2021 | Audited year ended 31 December 2021 |
| ||||
| | Notes | £000 | £000 | £000 | |||||
| Adjusted EBITA | | 8,174 | 5,536 | 13,724 | |||||
| Cost associated with IPO | | - | (88) | (3,332) | |||||
| Restructuring costs | | - | (329) | (1,314) | |||||
| One-off bad debts & debt collection costs | | - | (27) | (39) | |||||
| One-off inventory adjustment | | - | - | 205 | |||||
| One-off asset disposal | | - | - | 130 | |||||
| Other exceptional costs | | (92) | (68) | (35) | |||||
| Amortisation of intangible assets | 7 | (758) | (760) | (1,516) | |||||
| Foreign exchange gain/(loss) | | 156 -------- | (232) -------- | (215) -------- | |||||
| Operating profit | | 7,480 | 4,032 | 7,608 | |||||
| Reconciliation of Adjusted Profit Before Tax
| | Unaudited six months to 30 June 2022 | Unaudited six months to 30 June 2021 | Audited year ended 31 December 2021 |
| ||||||||||||||||
| | Notes | £000 | £000 | £000 |
| ||||||||||||||||
| Adjusted Profit Before Tax | | 7,595 | 3,889 | 10,822 |
| ||||||||||||||||
| Cost associated with IPO | | - | (88) | (3,332) |
| ||||||||||||||||
| Restructuring costs | | - | (329) | (1,314) |
| ||||||||||||||||
| One-off bad debts & debt collection costs | | - | (27) | (39) |
| ||||||||||||||||
| One-off inventory adjustment | | - | - | 205 |
| ||||||||||||||||
| One-off asset disposal | | - | - | 130 |
| ||||||||||||||||
| One-off hedge reserve movement | | - | (313) | (313) |
| ||||||||||||||||
| Loan repayment fees | | - | - | (100) |
| ||||||||||||||||
| Deferred finance cost write off | | - | - | (704) |
| ||||||||||||||||
| Other exceptional costs | | (92) | (68) | (35) |
| ||||||||||||||||
| Foreign exchange gain/(loss) | | 156 | (232) | (215) |
| ||||||||||||||||
| Amortisation of intangible assets | 7 | (758) -------- | (760) -------- | (1,516) -------- |
| ||||||||||||||||
| Profit before taxation | | 6,901 | 2,072 | 3,589 |
| ||||||||||||||||
|
| |
|
|
|
| ||||||||||||||||
|
| |
|
|
|
| ||||||||||||||||
| | | | | |
| ||||||||||||||||
| Reconciliation of Adjusted Profit After Tax
| | Unaudited six months to 30 June 2022 | Unaudited six months to 30 June 2021 | Audited year ended 31 December 2021 | |||||||||||||||||
| | Notes | £000 | £000 | £000 |
| ||||||||||||||||
| Adjusted Profit After Tax | | 6,581 | 2,836 | 9,385 |
| ||||||||||||||||
| Cost associated with IPO | | - | (88) | (3,332) |
| ||||||||||||||||
| Restructuring costs | | - | (329) | (1,314) |
| ||||||||||||||||
| One-off bad debts & debt collection costs | | - | (27) | (39) |
| ||||||||||||||||
| One-off inventory adjustment | | - | - | 205 |
| ||||||||||||||||
| One-off asset disposal | | - | - | 130 |
| ||||||||||||||||
| One-off hedge reserve movement | | - | (313) | (313) |
| ||||||||||||||||
| Loan repayment fees | | - | - | (100) |
| ||||||||||||||||
| Deferred finance cost write off | | - | - | (704) |
| ||||||||||||||||
| Other exceptional costs | | (92) | (68) | (35) |
| ||||||||||||||||
| Foreign exchange gain/(loss) | | 156 | (232) | (215) |
| ||||||||||||||||
| Amortisation of intangible assets | 7 | (758) | (760) | (1,516) |
| ||||||||||||||||
| Tax impact of the adjustments above | | 17 -------- | 345 -------- | 377 -------- |
| ||||||||||||||||
| Profit for the financial period | | 5,904 | 1,364 | 2,529 |
| ||||||||||||||||
| | | | | |
| ||||||||||||||||
Adjusted Profit After Tax is used to calculate the Adjusted basic earnings per share in Note 5.
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