Enhancing customer experience
Speedy Hire Plc Annual Report and Accounts 2017 Speedy is focussed on enhancing our customers’ experience. We provide safe, reliable hire equipment and services to enable the successful delivery of customer projects.
Visit our website to find out more speedyservices.com/investors Strategic Report Governance Financial Statements Corporate Information 76 35 52 39 81 02 82 26 70 20 36 79 16 78 10 30 42 12 18 54 77 04 80 06 24 40 48 14 01 119 121 112 115 113 120 114
Annual Report and Accounts 2017 Accounts and Report Annual
Statement of Directors’ Statementof responsibilities Directors of Board Corporate Governance AuditCommittee Report ReportCommittee Nomination Remuneration Report ReportIndependentAuditor’s Directors’ Report Directors’ Strategic ReportStrategic glance a at Speedy statement Chairman’s Executive’s Chief review strategy and model Business experience customer Enhancing Governance Governance lettershareholders Chairman’s to Financial StatementsFinancial Statement ConsolidatedIncome ConsolidatedStatement of ComprehensiveIncome ConsolidatedBalance Sheet ConsolidatedStatement of Equity in Changes Statement Flow ConsolidatedCash Reconciliation of Net Debt Statements Financial the to Notes BalanceCompany Sheet Statement Company of Equity in Changes Statement Flow Cash Company theCompany to Notes Statements Financial SummaryFive-year Corporate Information Corporate ShareholderInformation Registered Ofce and Advisers Innovationdiferentiation and Cultivatingrelationships culture Empowered Safetysustainabilityand Key performance indicators Financialreview uncertainties and risksPrincipal
Speedy Hire Plc Hire Speedy 18 12 e e R R
Read mo Read Read mo Read We are creating a culture in which creatingin culture are a We make stafallto empowered are appropriatedecisions. Empowered culture Empowered 06 e R Read mo Read we are partners in the successful delivery delivery successful the in partners are we We are more than just equipment providers, providers, equipment just than more are We our commitment is permanent. of our customers’ projects because while while because projects customers’ our of hire, on temporarily be may equipment our operationalperformance measures. ChiefExecutive’s review aboutthesignifcant Read improvementsfnancialall across and Enhancing customer experience customer Enhancing 02 Speedy Hire Plc Annual Report and Accounts 2017
SPEEDy At A GlAnCE Enhancing the customer experience
Our vision Our priority is to provide Our vision is to become the best company in our a frst class customer sector to do business with and the best to work for. experience so that everything we do is Our mission focussed on the customer. Our mission is to provide safe, reliable hire equipment and services to enable successful delivery of customer projects.
Our values Safe – the frst priority in everything we do As One – working together to collectively At Speedy, we all share the same achieve our goals vision: to help make our customers’ Innovative – to continuously improve Driven – to deliver a frst class customer experience business as successful as it can be. “ This approach to the way we do business will enable It’s why we do what we do and what us to deliver sustainable growth through improved motivates us every single day.” proftability and ROCE. In this report we highlight the progress we have made Russell Down Chief Executive against our key strategic themes.
Key fgures
Revenue national bRand and coveRage £369.4m Strategic Report Governance Financial Statements Corporate Information 03
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Delivering our strategy our Delivering decisions. Underpinning these is our commitment to keeping keeping to commitment our is these Underpinning culture a creating and safe, customers and people our appropriate make to empowered are staf all which in Our strategy Our themes: fundamental three on strategy Our focusses 04 Speedy Hire Plc Annual Report and Accounts 2017
CHAIRmAn’S StAtEmEnt
Overview I am pleased to report that the actions Solid platform undertaken by management have enabled us to report substantially improved results; revenue and profts for the future have increased, the hire feet has been reduced, utilisation rates increased, and net debt1 has fallen signifcantly. The business has been stabilised and we have created a solid platform for the future. Having previously identifed the I am pleased to report that the underlying issues that had afected the Group’s performance last year, actions undertaken by management management has improved engineering efciency, addressed equipment “ have enabled us to report availability, structured the sales force to ensure that we address large and SME substantially improved results.” customers alike, embedded ownership and accountability at a regional level, Jan Åstrand and invested in upgrades to our IT and Chairman management information systems; all of which have led to improved business performance. Customer focussed initiatives were launched to improve responsiveness and service levels, including customer surveys, and these have also made a major contribution to our strong performance. Strategic Report Governance Financial Statements Corporate Information
05
). 1 this year and year this 2 Annual Report and Accounts 2017 Accounts and Report Annual See note 19 to the to Financial Seenote 19 Statements. ReturnCapitalon Employed: Proft from operationsbefore amortisation divided by theaverage opening of andclosing capital employed(where capital employed equals Debt Net and funds shareholder
I am confdent we can deliver furtherdeliver can we confdent am I proftablegrowth. Explanatory notes: Explanatory 1 2 Summary the responded to well has Thebusiness actionsundertaken, pleased am I and colleagues our all by work thatthehard throughoutrefectedbeen has theyear theseresults. in substantially have our improved We efciencyROCE and Åstrand Jan Chairman
Speedy Hire Plc Hire Speedy David Shearer joined the Board as a theBoardDavidas Shearerjoined Non-ExecutiveSeptemberDirector 9 on subsequently appointedwas and 2016 Nominationand theAudit Committees. to appointed David was 2017 March 31 On theRemuneration to Committee. I revertedNon-Executive to Chairmanon accordance in and September 2016, 30 withbestpractice steppedfrom down Remunerationand thebothAudit have We 2017. March Committees31 on of wealth strong a a Board, combining industryoperationaland expertise with forward. business the take to which Dividend fnal recommending a TheBoardis an share, per pence dividend0.67 of the at approved If 67.5%. of increase forthcomingAnnual GeneralMeeting be thewould totaldividend theyear for pence). 0.70 (2016: share per 1.00 pence August 11 Thedividend on willpaid be shareholders theregisterto on 2017 2017. July 7 on business of close at Board
, a key measure, increased measure, key a , 2 fell signifcantlyfell £71.4m to 1 was 8.4% (2016: 3.0%). The3.0%). 8.4%(2016: was 2 by 140.6% to 7.7%; excluding disposalsexcluding 7.7%; 140.6%to by ROCE to strengthen to marketposition. our Group has a strong a balance sheet,has Group and substantialheadroom with to which organicallygrow through or targeted enhancingvalue acquisitionsorder in Speedy’sthespecialistofering overall in liftingmarket. locationsKingdom.theUnited across in paid £3.8m Theacquisitionwas of cost completion;full on in thebusiness cash enhancingfullyintegrated now is and is specialistcarriesbusiness, which out testing,certifcation, inspectionand lifting of equipment, fromtraining and the acquisition of thebrand,theacquisition business of British Lloyds assets and of Testing (‘LloydsLimitedBritish’) thefrom PwC. Administrator, British Lloyds a is Acquisition announced we December2016 19 On The hire feet reduced by 11.4% to to 11.4% by reduced feet Thehire targeted of disposals result a as £194.8m utilisation, asset improved and whilst debt net savings realised during the year, partiallysavings duringrealised theyear, the to payabledue bonuses ofsetby goodresults. £329.1m), following actions better to £329.1m), improve and market theSME address non-hirerevenues.Overhead costs have tightlybeen controlled with further Results overview Results £369.4m(2016: increased to Revenue (2016: £102.6m). Return on capital Returnon £102.6m). (2016: employed 06 Speedy Hire Plc Annual Report and Accounts 2017
CHIEF ExECutIvE’S REvIEW
Overview I am pleased to report that our fnancial We continue to focus and operational performance has improved signifcantly this year. on our customers’ These results refect the benefts which have been realised following implementation of the recovery plan that experience was put in place last fnancial year. The recovery plan is now complete and with the business stabilised, revenue growing, a lower cost and asset base, improved systems and management information, we have a strong platform for future proftable growth.
the recovery plan is now complete Results and with the business stabilised, Revenue increased by 12.2% to £369.4m (2016: £329.1m). During the “ revenue growing, a lower cost year we have improved the customer experience, increased asset availability and asset base, improved systems and restructured our sales activities. On and management information, a constant currency basis, and excluding the impact of planned disposals, revenue we have a strong platform for future increased by 6.7%. In the second half of the year core hire revenue was stronger proftable growth.” despite the disposal of hire assets and the consequent transfer of revenues to Russell Down partnered services. Secondary revenues, Chief Executive including training and consumable sales, increased strongly. Gross margins declined primarily as a result of the revenue mix, which included an increase in lower margin partnered services and disposal revenues as we optimised our hire feet. Overhead costs were tightly controlled during the year, with the UK regional operations restructured into two divisions in order to increase efciency and reduce costs. Adjusted proft before tax 1 increased by 224.0% to £16.2m (2016: £5.0m) beneftting from lower interest costs due to the lower net debt 2, and an improved performance from joint venture operations. Proft before tax was £14.4m (2016: loss £57.6m). The prior year result was afected by the write of of goodwill and exceptional costs. Adjusted earnings per share 3 increased to 2.44 pence (2016: 0.79 pence). Strategic Report Governance Financial Statements Corporate Information 07
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has reduced to to reduced has 1
to EBITDA to this year to £71.4m (2016: (2016: £71.4m to year this 2
2
Annual Report and Accounts 2017 Accounts and Report Annual See note 11 to the to Financial Seenote 11 Statements. the to Financial Seenote 19 Statements. theSee to Financialnote 9 Statements. ReturnCapitalon Employed: Proft from operationsbefore amortisation divided by theaverage opening of andclosing capital employed(where capital employed equals Debt Net and funds shareholder
£102.6m), which includes theproceedsincludes which £102.6m), heavy £14.4m, plantof thefromsale of after specialistis theacquisitionand of liftingBritish Lloyds business £3.8m. for debt Net Explanatory notes: Explanatory 1 2 3 4 Capital allocationCapital committedensuring The Boardis to theefcient allocation capital. of signifcantly ourhave reduced We debt net 2019. With a clear strategy clear With a sustainable for 2019. proftablegrowth, theBoardwill regularly revieworganic growth opportunities, enhancingvalue acquisitions, and operatesit shareholder ensure returns to withefcient an capital structure. 1.13x (2016: 1.93x). This reduction This 1.93x). (2016: 1.13x controls improved over of result a is under- of disposals expenditure, capital utilisedassets goodworkingand capital management. strong a balance sheetandhas The Group substantialheadroomits under banking facilities,September in expire which Speedy Hire Plc Hire Speedy was 8.4% (2016: 3.0%). 8.4%(2016: was 4
has improved signifcantly improved has this 4
year to 7.7% (2016: 3.2%); excluding 3.2%); (2016: 7.7% to year disposalsROCE We have mapped out our customer our mappedout have We areand year detailjourneythis in implementingaction our improve plans to we performancestages.all at late2016 In launchedcustomersatisfaction surveys, obtain textto order email,by and in performance our feedback on directly customers. our from Theresults have withprovided feedbackus valuable on improve. to areas ROCE We will review organicboth andWe acquisitiveopportunities value in our realise to order enhancing in areas strategicobjectives. We willmeasuredrive continue this to We throughby feet optimisinghire our purchasingassetsprovide only which theright lower return, of disposing and utilisedassetsprocuring or these throughpartnered our services ofering. growing non-hirewillin our invest We capital intensive,less are which revenues training,including sales consumable inspection,and fullyutilise to order in existing our overhead.fxeddepot All costsoverhead tightlywill be continue to controlled.
sustainableproftable growth Put innovationPut theheart at of everythingdo we Cultivatestrong relationships,client loyaltyterm thatlong build for Providefrst customerclassexperience, thateverything focussedso is do we thecustomer on
> > > focussed approachfocussed designedaddress to varying our needs.customers’ to: is approach Our Our strategyOur designeddiferentiate is to thecompetitionfrom us thediferent in customeroperate,segments we which in principallythrough adopting customer a We operate in a highly competitivehighly a operatein and We fragmentedmarketplace withnumber a competitors. local and regional national, of multinationalcorporations, with whom framework contracts,have we local to traded builders;withduringwe theyear 50,000 customers. over order to meetcustomer demand, to and order transport,secondary as such revenues consumables,fuel, inspection and training.customersOur rangelargefrom hire out to customers. to out of Thehire remainder partnered our from come revenues our servicesdivision,re-hire we where equipmentotherfromproviders in equipment and servicesequipmentand theenable to deliverycustomer successful projects. of revenuesApproximately our 60% of derived are productsfrom and own we Strategy Speedy hire reliableprovide and safe 08 Speedy Hire Plc Annual Report and Accounts 2017
CHIEF ExECutIvE’S REvIEW CONTINUED
Operational review We have fully integrated the acquisition uK and ireland of Lloyds British into the business and have rationalised the number of Lloyds The UK and Ireland business contributed British depots, re-locating some into Whilst we have made 92.8% of Group revenues. Revenue our existing network. We have already increased by 11.1% to £342.9m (2016: a solid start to the year, realised a number of further revenue “ £308.7m). Partnered services revenue and cost synergies. Lloyds British increased 15.0% to £52.2m (2016: the market remains complements Speedy’s existing lifting, £45.4m), refecting revenue from the testing and training businesses and is heavy plant disposal which transferred to competitive. With the enhancing Speedy’s overall ofering to partnered services, and an improvement its customers. business now stabilised in revenue from larger customers. Total and a strong balance revenues, excluding asset disposals, During the year we launched our vision increased 6.4%. of becoming the best company to do business with in our sector and the best sheet, we are well Gross margins on core hire revenue to work for, and have further developed declined slightly over the period positioned to take our strategy to help us achieve these refecting the competitive market aims. advantage of market environment, ofset by improvements in asset utilisation, the lower hire feet We have improved the customer opportunities and and consequently lower depreciation experience in a number of ways continue to deliver charges. Overhead costs fell by £1.6m, including through embedding new after absorbing £4.3m of bonus costs customer feedback technology that sustainable proftable (2016: £1.0m) and the costs of Lloyds enables customers to review our service British. The regional operating divisions in real time and at a local level. This growth.” were restructured into two during the feedback gives us the opportunity to year to improve efciency and enhance respond immediately to any issues that accountability and empowerment; this may arise. We have also launched an has resulted in cost savings and an internal initiative made up of four key improved operational performance. programmes that ensure our people understand, and can contribute to our EBITA1 increased to £22.0m (2016: strategic vision: promoting our brand £14.5m) before central costs of £4.8m proposition; improving customer (2016: £5.1m). satisfaction; enhancing internal advocacy We have introduced a more stringent and engagement; and delivering better governance process for capital systems, processes and management expenditure decisions, and improved our information. These programmes are asset utilisation by c.7% to an average monitored and reported on monthly at for the year of 51.5%. As a result, the the Executive Board and are improving hire feet has been reduced by 11.4% to business performance. £186.8m (2016: £210.8m) including the Our focus on strong customer sale of the Group’s heavy plant for a total relationships has enabled us to win and consideration of £14.4m in September renew a number of contracts with our 2016. The feet was sold to Ardent with larger customers, including a contract whom we entered into a fve-year re-hire renewal, and scope extension with agreement, with an option to extend for a Carillion Plc, which in total could be further two years. Our hire feet remains worth up to £45m over three years, and the largest of its type in the UK and renewals with Babcock and Morgan Ireland, and combined with our partnered Sindall Plc. Whilst there is some market services ofering we are proud to ofer our uncertainty in the lead up to Brexit and customers the ability to hire a full range the general election we are now well of products. placed to deliver sustainable proftable growth. Strategic Report Governance Financial Statements Corporate Information 09
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Annual Report and Accounts 2017 Accounts and Report Annual See note 11 to the to Financial Seenote 11 Statements. the to Financial Seenote 19 Statements. theSee to Financialnote 9 Statements. ReturnCapitalon Employed: Proft from operationsbefore amortisation divided by theaverage opening of andclosing capital employed(where capital employed equals Debt Net and funds shareholder
Explanatory notes: Explanatory 1 2 3 4 Outlook Theseresults demonstrate thesuccess turnaround our plan withof signifcant improvementsfnancialall across and operationalperformance measures. startsolid a made theWhilst have to we competitive. remains themarket year, stabilisedWith now thebusiness and strong a balancewell sheet, are we positionedadvantagetake market to of opportunitiesdelivercontinue and to sustainableproftable growth. RussellDown Executive Chief
Speedy Hire Plc Hire Speedy like to take this opportunity this take to like thank to supporttheircolleagues for my all and year. the during dedication engagementsurvey during September runningthiswith commitment to a annualbasis. Thean survey on was its in highly scored and received well managementengagementand indices, whilstidentifying for areas numberof a implemented a have improvement.We actionGroup localaction as well plan as vision our of achieve helpus plans to for work to thebestcompany becoming sector. our in Thesignifcantlyare results we improved been reportinghave not would year this withoutpossible thecontinued passion would people.I our of all of work hard and People 2017 March 31 at headcount TheGroup’s 3,644) including (2016: 3,745 was followingemployees theacquisition 176 in numbers Employee British. Lloyds of reduced business Ireland and UK the following theoperational 116 by restructuringefciencyand programmes, increased numbers East Middle the in whilst increasingrevenue. of result a as 41 by undertook fullemployee We a
has increased to £2.1m (2016: (2016: £2.1m increasedto has 1 nternational £1.7m (2016: £0.7m). The Group operates a joint venture in venture joint operatesThea Group Kazakhstanperformed has which this well following year cyclical shutdownactivity. operations JV fromProft increased to £0.6m). Of this improvement £0.2m £0.2m improvement this Of £0.6m). exchangefavourablerelated rate to movements. lower carbon emittinglower products, our and greener for opt purchasingpolicyto is satisfyassets to need. this where possible, and have identifed have and waste possible, where down break to streams us thatenable re-cycleand assetsthe life at of end disposal. customersOurof demandpoint for energy for withsaving.work suppliers We the into coming waste minimise to throughbusiness reducing packaging Our vehicle feet is accredited to FORS accreditedto is feet vehicle Our standardGold nationally. sector our thefrst in were company We accreditation 50001 theISO achieve to Achilles Building Confdence with5-star Confdence a Building Achilles ratingthefourth for running, year and 5-starmaintained our RISQS have Achilles accreditationrunning. year thesecond for health and safetyhealthand related matters and recommendations.During we theyear third our awarded be to pleased were Medal, accreditedto Gold were RoSPA lowest accidentinjuryourlowest and in rates implementedrecently sector have and facilitate to ‘app’ reporting an all of safetysustainabilityand continueand safetypromote to related withtopics our customersthrough ‘Intelligent our Safety’ campaign.consistentlyreport We the Safety and sustainability Safetyand industry an have approachleading to We approximately 50% is partnered approximatelyis 50% services. marginsincreased slightly Gross have result,reduced.As a have overheads and EBITA have fully mobilised and new work has work new and fullymobilised have 29.9% grewsecured.been Revenue constant a currency on basis) (12.7% which of £20.4m) (2016: £26.5m to primarilywith national government in market Gas and clientsthe Oil in pricesthe oil low of spite Dhabi.AbuIn projects as year grownthis has business i is Eastbusiness our theMiddle In 10 Speedy Hire Plc Annual Report and Accounts 2017
BuSInESS mODEl AnD StRAtEGy Our customer focussed business model and strategy
Our business has a three-part and sustaina ety bili customer strategy: Saf ty Customer experience
Innovation and diferentiation e Cu nc lt e iv Cultivating relationships ri a e t p tomer foc in x us us g We provide safe, reliable hire e c r r e equipment and services to enable e l a the successful delivery of customer m t o i o t projects. We have a wide and varied n s
u s c customer base, ranging from large h C
Sustainable s
u i p national clients to regional and SME u s
value creation c s t customers. In FY2016 we rolled out o o f m a three-part customer focussed r e e strategy and have continued to r f m o to implement this throughout FY2017. cu s s cu In n n o io va at tio nti n and dif ere
Em re powered cultu
What we do
tool Hire. The latest hand Fuel management. Clean, efcient training. Award winning training tools and accessories, certifed on-site fuel solutions, including courses delivered by qualifed for compliance. Includes our fPod®, our self contained single experts that have helped extensive GO (Green Options) point refuelling terminal. thousands of contractors work range. more safely and more efciently Specialist sector equipment. every year. Rail. Providing all the tools, Challenging environments training and consultancy services like marine and infrastructure BIm. An extensive library of BIM needed in this specialised feld. developments demand specialised (Business Information Modelling) equipment and knowledge. objects detailing the total energy Power. An industry-leading feet footprint of our equipment for of latest energy-efcient hybrid Sales. A comprehensive range of use in public sector tendering. units, generators, compressors PPE (personal protective equipment) and pumps for every size of and site consumables. Over 5,000 Partnered services. Providing project. products available for next day a complete plant and equipment delivery. service through our partnerships lifting. Specialist load with the leading suppliers. management equipment, backed by the knowledge and expertise of our dedicated Lifting Team and our specialist Lloyds British business. Speedy Hire Plc Annual Report and Accounts 2017 11 Strategic Report Strategic
Our vision is to become the best Governance company to do business with in our sector, and the best to work for.
Over the following pages we talk about the core elements that drive this vision.
Enhancing customer Innovation and Cultivating Statements Financial experience diferentiation relationships During FY2017 we have We have introduced over We consistently develop undertaken a number of 70 new and innovative products integrated relationships at all customer excellence initiatives. into the feet in the last year. levels throughout our business. Read moRe
Read moRe Read moRe Read moRe
12 14 16 Information Corporate
Empowered Safety and culture sustainability We are creating a culture in We are industry leaders in which all staf are empowered safety and sustainability. to make appropriate decisions.
Read moRe 18 Read moRe 20 12 Speedy Hire Plc Annual Report and Accounts 2017
Our three-part customer strategy launched in FY2016 remains frmly in place. During FY2017 we have Enhancing undertaken a number of customer excellence initiatives to build upon it, broken down into four key themes: Brand proposition – vision, mission and values customer Customer satisfaction Internal advocacy and engagement experience Systems, processes and management information During FY2017 we have undertaken a Brand proposition – vision, mission and values number of customer excellence initiatives. Our people and customers have a clear understanding of what we do, and the behaviours that will enable us to realise our strategic aims. During the year we launched a simple vision and mission, whilst retaining the Speedy values that are as important now as they have ever been. We have re-enforced the importance of providing customer excellence to our employees through a comprehensive employee communications and training programme.
Customer satisfaction To help us improve customer satisfaction we launched our ‘voice of the customer’ programme. This programme uses technology to allow customers to rate their satisfaction in real time and at a local level. This is improving the customer experience by allowing local managers to address any concerns raised by customers as quickly as possible. The system data enables us to quantifably measure our levels of service and identify overall areas for improvement.
Internal advocacy and engagement During FY2017 we re-launched our employee survey ‘People Matters’, last conducted in 2012, with a commitment to running this on an annual basis. An overriding positive theme resulting from the survey was the level of loyalty and commitment employees had to the business. Inevitably there were areas where we need to improve, and we have put action plans in place at a Group and local levels to address these. Strategic Report Governance Financial Statements Corporate Information 13
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RussellDown improving ROCE.” t leading customerservice leading this in business and ultimately ultimately and business British gives us the ability ability the us gives British improve the combined business’ level level business’ thecombined improve Chief Executive Chief to improve revenues in our our in revenues improve to and lifting services to our our to services lifting and valuable sector.valuable of performance of and provide market- synergies with our existing existing our with synergies serviceso customers whilst realising realising whilst customers successful and our objective to our now and successful is Speedy business has been efcientbeen Speedy andhas business enhanced training, testing testing training, enhanced Theintegration British Lloyds theof into “
Speedy Hire Plc Hire Speedy
knowledgeablespecialist workforce,and test, repair, inspection test,certifcation,repair, and theexisting British Lloyds network 12 of testingandbusinessestraining and its customers.to Lloyds British Lloyds talented anda contains unique a deliver Speedyenables It to withliftingthe bestin equipment full life cyclefullservice life existing and new to positionsin leader themarketSpeedy as as well as thedesignmanufacture and as well as safetyand legislation strictdemands of the supply chain for thosesector for chain thesupply of customers. of specialist of lifting sales.equipmentand customerstheregulated in industries of robustsolutionsand thesecompliance in ofces. complementedtheexisting lifting, energy,utilities.renewablesand Health engineeringBritish Lloyds 182 and Speedyjoinedemployees acrossfrom Speedy’senhanced ofering overall sectors,acquisitionenabled this has and Speedy and Lloyds BritishSpeedy Lloyds and chip blue integralmore parta becomeSpeedy to The Lloyds British TheLloyds synonymous brandis British TheLloyds acquisition of has
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td (‘ td l esting t loyds Britishspecialist loyds a is l ering to customers to ering nited Kingdom.nited f loyds British loyds u liftingequipment, trainingand business,carrieswhich testing, out l PwC. In December 2016 Speedyacquired December2016 In British’) from the Administrator, British’)Administrator, the from the brand, businessassetsbrand,the and of from locations from theacross certifcation,inspectionand of o Enhancing our service our Enhancing are enabling us to better to performancemonitorenabling us are against KPIs relation utilisation,in asset to engineering logistics.and queriesreduction improved a and alsoto invoice has led It in collections. cash right equipment when and where it is needed to our customers. our to customersatisfaction, thedeliver to able are we ensure needed to is it where and when equipment right management in informationmade Thehave improvements we Systems, processes and management management and processes Systems, information systemsreviewed Duringour processes we and theyear improving productwithof availability,theaim utilisation and 14 Speedy Hire Plc Annual Report and Accounts 2017
We have introduced over 70 new and innovative products into the feet in the last year. We also innovate in the Innovation way we service customers to make it easier for them to do business with us. During FY2017 we completed the roll out of new mobile Smart Devices for frontline and colleagues who deliver and collect our assets from site. We have also introduced In-Depot Tablets for customers who are collecting in-store. This technology is improving the accuracy of documented information, diferentiation reducing customer queries and making our service to customers simpler, quicker and more seamless. We have introduced over 70 new and innovative products into the feet in the leading the industry in BIm technology last year. We are at the forefront of Business Information Modelling (BIM) technology within the hire sector. BIM allows the total energy footprint of our equipment to be detailed for use in public sector tendering. It enables our customers to access detailed information about our assets in a digital format required for working in a BIM environment, assisting with access to BIM information on site during design, planning and building phases. We work closely with a number of our large customers and BIM experts to develop the range and services ofered through this innovative technology.
Smart Device technology is improving the accuracy of information and reducing customer queries. Strategic Report Governance Financial Statements Corporate Information 15
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od od ssociation hairman at hairman p a c - e ire ire h ire, and it was was it and ire, xpo was was xpo h e lant lant p lant lant p tility sector overall.” sector tility u t was fantastic spendwas to t i rovider in the category. the in rovider p abcock team learnt a great deal deal great a learnt team abcock onstruction b c rid, but the the but rid, abcock team left with an ‘ leftwithan team abcock ongratulations to all in Speedy on on Speedy in all to ongratulations he he would like to congratulate you allcongratulate to you like would i t Brian Jones Brian Dean Blood Dean b I am sure willNationalbeneft just not sure am I practises, and we welcome more of of more welcome we and practises, the the team work very hard at challenging challenging at hard very work team operational greater deliver to same the us to change and innovate in our our in innovate and change to us c ConstructionProcurement,and g Service Service at Speedy in my position of of position my in Speedy at around new products, innovation, and it it and innovation, products, new around efectiveness. I know the visiting visiting the know I efectiveness. on the way that your your that way the on futurein the of exciting to see so many products many so excitingthatsee to great industrygreatpositive and upbeat so sized list’ of new ideas to prioritise. prioritise. to ideas new of list’ sized some timeamongstsome withinpeopleour staging a magnifcent Speedy Expo and and Expo Speedy magnifcent a staging confrmed your value add as a Managed Managed a as add value your confrmed conducted. concluding an industry leading event.” SupplierContracts, National Grid Supply Chain DirectorSupplyChain Marine – and Technology – Babcock International Group “ “
xpo, it was a credit to the to credit a was it xpo, e K. u hank you to all the Speedythe peopleall to you hank he Speedy Expo Speedy he ovember at the Exhibition Centre Centre Exhibition the at ovember he event, which was held in in held was which event, he iverpool, is the largest private private largest the is iverpool, t Steve Search Steve who behind the scenes put on a great a on put scenes the behind who by our customers. customers. our by we recognise the innovation that that innovation the recognise we whilst developing our employees’ employees’ our developing whilst in the Environmental category, Reactec Reactec category, Environmental the in and category Safety and Health the in Morris Site Machinery in the Innovation Innovation the in Machinery Site Morris the Speedy Supplier Excellence Awards. Awards. Excellence Supplier Speedy the product knowledge. During the Expo the During knowledge. product than 125 suppliers suppliers 125 than Speedy brand.” Speedy Speedy Speedy Over 1,500 people people 1,500 Over Winners this year included Atlas Copco Copco Atlas included year this Winners SeniorOperations Manager, SelectLtd Plant Co Hire attended with more more with attended and network with our suppliers and and suppliers our with network and category. With the opportunity to to opportunity the With category. employees, the event is highly valued valued highly is event the employees, discover new innovative products products innovative new discover suppliers bring to our business through through business our to bring suppliers showcasing the latest product and and product latest the showcasing customers, our to technology service t l in kind its of exhibition the helps us to build relationships with with relationships build to us helps employees. and suppliers customers, t n Our annual event, the Speedy Expo, Expo, Speedy the event, annual Our “ 16 Speedy Hire Plc Annual Report and Accounts 2017
We have developed long-term relationships with our customers. This investment in relationship building runs Cultivating throughout the whole organisation, from the Executive Board to our employees on the frontline and in the back ofce. By meeting regularly at all levels with our relationships customers we have created an open dialogue, helping to ensure we understand their business and current and future requirements. We consistently develop integrated relationships at all levels throughout Contract wins our business. By forging strong customer relationships we have won and renewed a number of contracts with our larger customers. These include a contract renewal, and scope extension with Carillion Plc, worth up to £45m over three years, and renewals with Babcock and Morgan Sindall Plc.
Customer Innovation Days We have continued to run our Customer Innovation Day programme. This programme enables us to demonstrate innovative solutions and new products. Working with our suppliers, we are able to raise awareness about how our products deliver enhanced safety, operational efciency, cost reduction and environmental benefts. Feedback from our customers continues to be positive from an engagement, as well as a product awareness perspective.
tradePoint Partnership We are establishing new customer relationships through our agreement with TradePoint as their preferred partner for hire services. This partnership is providing a valuable channel for us to promote a selected range of hire tools and small equipment direct to TradePoint’s extensive customer base. Strategic Report Governance Financial Statements Corporate Information 17
arillion c his renewal his t t demonstrates t i arillion have arillionhave K construction K and c u arillion since 2003 and 2003 arillion since c arillion and Speedy, and arillionSpeedy, and c Annual Report and Accounts 2017 Accounts and Report Annual
oreenWinhall arillion is pleased to award Speedy award to pleased arillionis his agreement pick will continue to his n RussellDown infrastructureactivities.” between between is testament to the levels of service of levelstestament the to is innovationprojects.”their to will also extend into the hire of rail rail of willalsohire the extend into Chief Executive Chief with an increase in scope. scope. in increase an with to provided furtherforward look to we increasing relationshipswith renewed contract being this in resulted up the hire of tools and small plantbuttools small and of hire the up this three-year contract as a renewal of of three-year renewal a this contract as framework.current the strengththe relationshipthe of c our shared ambition to continuously ambition to shared our our in equipment and innovationSpeedy thatand has our collaborative withour working bringfurther to years coming the over drive innovation as well as service as well drive innovation as 2003. since done have we as delivery, Supply Chain Director, Carillion Director, Chain Supply t “ “We are delighted that our strong our delightedthat are “We
Speedy Hire Plc Hire Speedy A) with A) Carillion t In addition to the hire of tools andof addition thehire In to process across all Carillionall across process business process and involved a fullassessment a involved and process relationships,experiencemarket and when combined with combined when existing units. Award of the new agreement thenew units. was of Award additionalcriteria. These includedhealth safety,and environment, sustainability operational of areas thekey as well as growth develop mutualto desireclear a opportunity,and compelling a created argumentcontinue thetradingto furtherperiod. a for arrangements of supply to include the hire of rail of thehire include to supply of of Carillion’s number of against spend of a equipment to create a singletrading a create equipmentto deliverythecommercialand ofering. subject to a robustcompetitive a subject to tender smallplant, extends thescopethePSTA Speedymeeting Carillion’s requirements rading Agreementrading (PS A t
t A) with A) he PS he t t hree-yearSupplierPreferred rading Agreementrading (PS hire feet as well as utilising as our well feetas hire In June 2016, Speedysigned a June2016, In partneredservices enhancethe to primarilythrough Speedy’s replaced a previousreplaced a framework three-yearSupplierPreferred Carillionpotentially worthto up overall service. overall contract and is being delivered being contractis and £45m over the period. period. the over £45m t t 18 Speedy Hire Plc Annual Report and Accounts 2017
We are working to develop a culture where employees enjoy coming to work, feel empowered in their roles, Empowered are trained, developed, and are rewarded for great performance. culture People matters employee survey In order to achieve our vision, it’s important that we understand how engaged people are and what’s important to them about We are creating a culture in which working for Speedy. all staf are empowered to make During FY2017 we re-launched our employee survey ‘People appropriate decisions. Matters’. The survey achieved a 69% response rate which is an excellent result when we benchmark it against similar companies. We measured how engaged people were with the business, how committed they are to helping Speedy succeed, and how people feel about their line manager. The survey provided valuable information on the commitment and dedication of all our people and their desire to ensure that the company continues to be successful. Whilst the results were good, we have developed a fve point Group improvement action plan as well as localised improvement plans. Strategic Report Governance Financial Statements Corporate Information 19
3,745 3,644) March2016: (31 Annual Report and Accounts 2017 Accounts and Report Annual
Speedy Hire Plc Hire Speedy
more than 200 of our employees nominated their colleaguesnominatedemployeestheir our of than200 more award.win an to headcount Group Group headcount 2016. Awards Excellence Speedy Performance and recognition recognition and Performance launchedstandardised new we a Personal DuringFY2017 people’s measure to (PDR) process DevelopmentReview performanceidentify to and development. and training for areas also Group-wide introduced a We performance related bonus schemethatlinks performancedirectlyGroup to the and process. PDR foremployees recognise managersOur to empowered are performanceexcellent delivered within is roles. their This schemeOver‘Celebrating reward through spot Excellence’. a also We during award FY2017. an received employees 700 loyalty celebrate servicethroughschemelong thatrecognises a years’service 25 and with the 20 10, thosehave whoincluding reachedthese milestones have employees 160 Company. year. fnancial duringthis colleaguestheirnominate through peopleto our empower We initiative. annualExcellence Awards publiclyour Theawards outstandingrecognise individualsand teams FY2017 in and
VQ VQ n
SE
n
VQ level 2 qualifcation 2 level in VQ n MATTERS RESPO
RATE PEOPLE 69% SURVEY raining and development development and raining whist implementingwhistperformance new a relatedstructure bonus beneftsreviewed our have packagesemployees.all andfor We fexible ofer solutions attractto to aim retaintalentedand staf. During FY2017 we reviewed employee rewards and beneftsand reviewed rewards employee we DuringFY2017 enhancing efectivewithof remuneration cost theaim a in theNational above rates pay lowest increased our We manner. competitive remain themarket,we in ensure to Living Wage 1,000 employees have attended1,000 date.have employees to benefts and Rewards Asstrategypart our customer our of improve to ExcellenceCustomer a rolled out service, have we programme,trainingthan more which level 3 qualifcation. 3 level schemebenchmark we will This a actas as expandapprenticeships our ofering. permanent new All drivers eligibleparticipate are to the in CommercialDriving. During FY2017 we recruited Multi-Serviceapprentices we our into During FY2017 networkthemthroughCentre develop the Plant to Maintenance an achieving towards working are they and apprenticeship, training academy delivers a comprehensive schedule of online, comprehensiveacademyscheduletrainingof deliversa classroompracticaland courses.training employee Every new attendscorporateinduction receivinga further as well as role. job their thenatureof depending trainingon t skills people’s our our and committed developing are to We 20 Speedy Hire Plc Annual Report and Accounts 2017
Our approach We are pleased that based on publicly available Safety and information on RIDDOR accident frequency rates we continue to be the safest company in our industry. Our aim is to ensure all our employees, visitors and sustainability contractors are safe. We adopt an ‘Intelligent Safety’ mind set; a way in which the psychology of safety is broken down into simple decision making processes. We are industry leaders in safety Our policies and procedures will continue to focus and sustainability. on risk reduction and risk minimisation. We are pleased to have maintained a very low RIDDOR accident frequency rate; at 0.14 our RIDDOR frequency rate per 100,000 hours worked is at an industry leading level and on a par with some of our major customers. It’s particularly pleasing that during this period we collected our third ROSPA Gold award for health and safety. Our specifed injury frequency rate has risen slightly to 0.04 FY2017 from 0.01 FY2016.
Educating the industry through Intelligent Safety Intelligent Safety refects the joined up approach we take to safety. The approach encompasses risk awareness, the right protocols and the right training. It includes taking personal responsibility and an interest in everything that may appear unsafe in the workplace, our customers’ workplaces and even in the home. There are some major issues challenging the construction industry and in particular construction workers. Some of these issues are occurring on a daily basis but can afect workers health for their whole life. With issues such as dust, hand arm vibration and musculoskeletal disorders, we believe it’s our duty to help reduce risks in the construction arena by ofering solutions, not just tools to reduce these hazards. We understand that the challenges to completely remove the risk to health from using equipment in the construction industry may test the best solutions on the market, but our ethos is to work closely with our suppliers and partners to truly make a diference on some of these known health issues. Through our Dust Control initiative, Speedy has supported the national Breathe Freely campaign run by BOHS, The Chartered Society for Worker Health Protection, and we have four dedicated dust centres in and around London to support and assist customers in selecting dust reducing solutions. Speedy Hire Plc Annual Report and Accounts 2017 21 Strategic Report Strategic Governance RIDDOR accident frequency rate
0.5
0.4 0.43
Group target 0.3 0.39
0.2
0.18 0.1 0.14 0.12 Financial Statements Financial
0 2013 2014 2015 2016 2017
0.14 0.04 We are proud that we have IN RIDDOR ACCIDENTS MAJOR ACCIDENT PER 100,000 FREQUENCY RATE the best health and safety
HOURS WORKED (MAFR) PER 100,000 Information Corporate (2016: 0.12) HOURS WORKED performance in the industry, (2016: 0.01) as well as leading in the feld of sustainability in our sector.
Image taken from Speedy’s Intelligent Safety campaign
Awards and accreditations During FY2017 we were proud to be We have maintained a 5-star rating for Speedy is proud to be an active the frst company in our sector to our Achilles RISQS accreditation for member of the major industry achieve the ISO 50001 accreditation the third year running, demonstrating accreditation schemes, and is for energy management, and over the that we have not received any non- committed to working with them past year progress has continued in the conformances for four years through to drive forward the standards monitoring of our energy usage, and this scheme. Speedy is also accredited of best practice. we have implemented initiatives to to Archilles Building Confdence reduce our consumption. Other current Achilles UVDB, Achilles F-Pal, SAFed, accreditations include: SafeHire, Constructionline and CHAS, > ISO 9001 for Quality Management to name a few. > ISO 14001 for Environmental During FY2017 we won a RoSPA Management Gold award for health and safety > OHSAS 18001 for Health & Safety for the third year running, providing Management through Intertek further demonstrable evidence of our Certifcation Ltd commitment to keeping our people and customers safe. 22 Speedy Hire Plc Annual Report and Accounts 2017
SAFEty AnD SuStAInABIlty CONTINUED
Intelligent Workplace We are shifting the culture within the business so that performance management and recognition and reward refect our vision to be the best company to do business with in our sector and the best to work for. During FY2017 we have re-assessed our performance review process and launched a standardised Personal Development Review programme. This learning and development programme will aim to ensure our people have the skills and expertise to provide frst class service to our customers, and develop and enhance their own careers and personal development.
Intelligent Community Under the guidance of our Charities Committee, we contribute to the wellbeing of both the construction community and the local communities in which we operate. Our chosen charity partners Putting social and environmental impact are the Lighthouse Club and WellChild. at the forefront of our activity The Lighthouse Club work to support families that have sufered During FY2017 we have reviewed our Corporate Social injury or loss in the construction industry. We support the Responsibility (CSR) Roadmap to ensure our Key Performance production of their newsletter, and promote membership at Indicators remain integral to our business objectives the Speedy Expo. and strategy. WellChild help sick children and their families across the Our CSR Working Group operates within a framework which links UK. During FY2017 we have supported their Helping Hands directly to our KPI Roadmap, targeting performance improvement programme which renovates the homes and gardens of sick in areas that make a real diference to people, customers and children by providing tools and equipment as well as volunteers. communities. Our approach is categorised into four key areas We were delighted to be awarded the WellChild Volunteer of the that we call Intelligent Marketplace, Environment, Year award during the year for our long-standing commitment Workplace and Community. to this initiative. We have also supported them by training their Programme Head and Project Manager on the IOSH Managing Intelligent marketplace Safely course at our National Training Centre. Understanding our customers’ challenges and the wider industry context they work in sits at the In addition to our two charity partners, we also run a prison centre of our approach. Championing innovation is the driving workshop at HMP Garth in Lancashire. We provide real work force in shaping our approach to an intelligent marketplace. training to nVQ level 2 in electrical engineering for up to Collaborating with our customers enables Speedy to tailor 60 inmates at any given time, providing the skills which will sustainable solutions that ofer benefts to all parties. Led by make fnding work easier upon release. our Supply Chain Team, we have over 100 Green Option (GO) We also support employees with their own fundraising activities, products that deliver sustainable solutions to our customers. and our employees are proactive in running fundraising events that support both local charities, and nationally recognised Intelligent Environment fundraising days. We have measured our carbon footprint for ten years. We have demonstrated to our customers, our people and our wider communities that we are serious about playing our part in reducing the carbon impact of the construction industry. We have reduced our carbon footprint from above ten tonnes per capita per annum when we started to less than seven today.
WellChild Helping Hands project, Lincolnshire 2016. Strategic Report Governance Financial Statements Corporate Information 23
year 1.30 6.69
2015 32.24
590.93 355.36 e 202.01
2 5,409.79 17,403.61
22,813.39 Comparison 2016 6.83 1.60 23.67 Tonnes of CO Current 486.74 212.90 248.57 4,858.88 25,350.98 20,423.25 ecember 2016 ecember reporting year year reporting d Annual Report and Accounts 2017 Accounts and Report Annual
anuary 2016 to 31 31 to anuary2016 peremployee fromup theis previous we 2% year by j 2 Speedy Hire Plc Hire Speedy Kazakhstan:share 50% East: shareMiddle 49% ethodology ata for period 1 period1 for ata
Emissionsreported abovenormalised to Employee’ ‘per Purchased for own use own for Purchased have reducedhave ourScopeemissions doing3 andourin waste so18% by to landfllreducedhas 30%. by Omissions thetestingequipment/machinery for The combustiondiesel of of establishedreporting be not this for could period. Dataconfdence reviewed andreportwas emissions to The data used theGHG 6.2%. +/- confdence of examined‘Good’ gives and level a onguidance established Protocol was the‘GHG This using uncertaintyinventoriescalculating and GHG in assessment statisticalparameter uncertainty’, independentlyand verifed McHugh, Collins Limited. by Scope 3 BusinessScope 3 railtravel – BusinessScope 3 airtravel – Recycled/Recovered – Waste 3 Scope Landfll – Waste 3 Scope EmissionsScope 3 Total Company’sChosen Intensity Measurement: CO total our Although m underrequired sources theemission reported of allhave on We (StrategicActtheCompanies 2006 Report Directors’and Report) fallwithinThese consolidatedRegulations sources our 2013. responsibility any Financial any have Statements. for not do We statementconsolidated our includedin not that are sources section.the Omissions in thosequoted except CorporateAccounting andProtocol theGHG used have We and Reporting3 & 2 edition), Standard 1, (revised Scopes factors emission FactorsGovernment’sConversion UK fromGHG reportyear’s This Well includes Reporting Company for 2016. Distributionand factorsTransmission Waste andTank, also.to Theboundaryequityreport on basedthis been sharehas of includes: and > > CombustionOperationFuel & of Facilities of Speedy Hire Plc Corporate Greenhouse Greenhouse Corporate Plc Hire Speedy Report (GHG) Gas Introduction fuelsthe covering combustedreportcompiled been GHG has This electricity gases, refrigerant fugitive operations, Speedy by directly Mainland activities,UK our in consumed Northern Republic and Ireland Internationaloperationsventure of joint our and Asset Servicesdisposalwasteand travel thebusiness includes and activitiesdepots.and Mainland ofces UK our of emissions GHG Global d from: Emissions Total Scope 1 and 2 Emissions and2 Scope 1 Total Electricity,Heat, andSteamCooling 3,152 551 All other Speedy employees 29
7 Senior management team 6 Female Male
0 Directors ■ ■ Group headcount concerned. personswere who the numberof genderof by breakdown A managerssenior otheremployees and Directors theCompany, of below. out set is 2017, March 31 at as status,nationality ethnicorigin, or religion sexualrace, or orientation.Applications fully always people disabledfromare theaptitudesconsidered,bearing mind theapplicant in of Equality and diversity opportunitiesequal an Speedy is peopleand our and employer age,theirapplicants equallyregardlessof and treated fairly are creed,disability,part full or time status,colour, marital gender, allows equal human rightshumanequalallows personsall whilstto prohibiting labour. actionschild or forced contrary as such this, to commits Speedy to upholding the provision of basic humanbasiccommits upholding Speedytheprovision of to rightseliminatingand discriminatory any practices. Thepolicy rightsdohuman commitmentwe to emphasisesour theway in whichculture work a maintain and business,create seeking to Human rights Human Speedy’sRightsHuman andemployeesPolicyall appliesto 24 Speedy Hire Plc Annual Report and Accounts 2017
KEy PERFORmAnCE InDICAtORS measuring our progress against our strategy
Financial KPIs Why this KPI is important KPI to our strategy How we have done Fy2017 performance
Revenue £m A measure of the work FY17 369.4 we are undertaking. £369.4m FY16 329.1 FY15 375.0
EBItA1 £m A measure of the proft we FY17 19.3 generate from our revenue. £19.3m FY16 10.0 FY15 26.4
EBItA1 margin % Highlights how successful Speedy FY17 5.2 is in maximising its return from 5.2% FY16 3.0 the revenue generated. FY15 7.0
EBItDA1 £m A measure of operating return FY17 63.1 before depreciation. £63.1m FY16 53.1 FY15 72.7
EBItDA1 margin % Highlights value generated either FY17 17.1 through operational efciency 17.1% FY16 16.1 or the quality of the revenue. FY15 19.4
Profit/(loss) before tax A measure of proft we generate FY17 14.4 from our revenue activity having £14.4m FY16 (57.6) accounted for all costs before taxation. FY15 2.1
Return on capital A measure of how well Speedy FY17 8.4 employed2 % is delivering a return from the 8.4% FY16 3.0 capital invested. FY15 8.5 net Debt3 £m A measure of the Company’s FY17 71.4 borrowings. £71.4m FY16 102.6 FY15 105.3
1 See note 11 to the Financial Statements. 2 The calculation used is proft from operations before amortisation and disposals divided by the average of opening and closing capital employed (where capital employed equals shareholder funds and Net Debt3). 3 See note 19 to the Financial Statements. 4 See note 9 to the Financial Statements. Strategic Report Governance Financial Statements Corporate Information 25 1.9 3.23
264.1 253.3 234.7 1.5 2.44
Achieved 1.1 0.79 restated 7 7 7 6 5 6 5 5 6 1 1 1 2017 performance 2017 1 1 1 1 1 1 Y Y Y Y Y Y Y Y Y y F F F F F F F F F F Annual Report and Accounts 2017 Accounts and Report Annual
How we have done have we How We achieved 0.04 6.83 tonnesachieved We capita per Speedy Hire Plc Hire Speedy arget t How we have done have we How 1.1x £234.7m 2.44p 0.1 accidents 0.1 100,000 per worked hours tonnes 7.5 capita per
generator, this efectively this generator, measures supportinvestment to theof scale revenue. thereturn generated of measure A ordinary our holderof each for shares. As our assets are our core revenue core assets Asour our are We recognise that we and our and thatwe recognise We the of somecustomers in work mostdangerousindustry UK’s sectors have thereforeand we responsibility a keeping towards peoplesafe. We must play our part in the low- efcienciescreate carboneconomy, a be andwithin business our in, invest to responsiblebusiness workbusinessandfordo with. A measure of how leveraged how of measure A is. sheet balance the Why this KPI is important is KPI this Why strategy our to Why this KPI is important is KPI this Why strategy our to
1
DA t e per e 2 pence pence 4 to EBI 3 of property, plantproperty, of v B et debt et (specified injury rate) Keeping people safe people Keeping Customer service Customer provide frstto customer classservice, aim service measuringWe levels of our identifyingand improvement. for areas customersservice our 90%rate ‘good’. of as change – CO – change Impact on climate climate Impact on KPI Non fnancial KPIs fnancial Non per share per Adjusted earningsAdjusted n £m equipment and KPI n capita 26 Speedy Hire Plc Annual Report and Accounts 2017
FInAnCIAl REvIEW
Group fnancial performance Revenue for the year to 31 March 2017 Driving improved increased by 12.2% to £369.4m (2016: £329.1m) which included feet disposals of £20.3m (2016: £5.6m); excluding these proftability disposals and on a constant currency basis, revenue increased by 6.7%. Current year feet disposals include £14.4m for the sale of heavy plant. Gross proft was £191.7m (2016: £184.2m), an increase of 4.1%. The gross proft During the year we have improved percentage was 51.9% (2016: 56.0%) and refected the increase in disposals and a the customer experience, increased higher proportion of partnered services asset availability and restructured income. “ EBITA1 increased by 93.0% to £19.3m our sales activities.” (2016: £10.0m) and proft before taxation, amortisation and exceptional costs Chris morgan increased to £16.2m (2016: £5.0m). Group Finance Director After taxation, amortisation and exceptional costs, the Group made a proft of £11.5m, compared to a loss of £52.7m in 2016. The loss in 2016 was impacted by a goodwill impairment charge of £45.9m and exceptional costs of £14.0m. Further details are included in note 3 to the Financial Statements. Strategic Report Governance Financial Statements Corporate Information 27
). 3 in the year, net fnancialnet theyear, in 3 Annual Report and Accounts 2017 Accounts and Report Annual See note 11 to the to Financial Seenote 11 Statements. ReturnCapitalon Employed: Proft from operationsbefore amortisation divided by theaverage opening of andclosing capital employed(where capital employed equals Debt Net and funds shareholder See note 19 to the to Financial Seenote 19 Statements.
axation
Explanatory notes: Explanatory 1 2 t statementincome TheshowsGroup’s (2016: £2.9m of tax the year chargea for efective an and £4.9m), credit tax of rate Theefective 8.5%). of rate (2016: 20.1% adjustedamountstaxproft 21.6% on to 16.8%). (2016: beneftted has TheGroup deferred a from arises which from £0.3m taxof credit restatingdeferredthenettax liability at down enacted an future17%, taxof rate 18%.from 2017 March 31 ended theyear in paid Tax £0.6m). (2016: £1.9m to amounted Interest and hedging and Interest thereduction of consequence As a debt net in 3 The Group utilisesTheGroup interesthedges rate managefuctuations to LIBOR. in Thefair liability a these hedgesof was of value varying theyhave and end £0.4myear at The maturitySeptember 2019. to dates incrementalarisinginterest cost from these£0.4mhedges amountedduring to £0.3m). (2016: year the expense declined to £4.8m (2016: expense£4.8m declinedto (2016: Borrowings theGroup’s under £5.7m). facilitybank of thebasis priced are on variable a margin, LIBORplus any while unutilisedcharged40% commitmentat is theapplicable margin.of During theyear, themargin theoutstanding payableon fuctuateddebt between 1.80% and theGroup’s dependent on 2.75% performancerelation andin leverage to borrowingstheweighting of between plantandmachinery. receivablesand Theefective margin average the in Thecurrentapplicable 2.35%. was year margins1.80%and are receivables on 2.30%planton and machinery. % 29.9 56.3 250.0 , along , 1 Speedy Hire Plc Hire Speedy Movement £m 0.6 3.2 2016 20.4 ended 31 March 12 months 12 £m 5.0 2.1 arch 2017 26.5 increased to £2.1m (2016: (2016: £2.1m increasedto m 1 ended 31 12 months 12 1 1 nternational EBITA growth £3.5m was due to exchange rateto growthdue was £3.5m the movements,to due theremainder and equipment,mobilisation new spite in of increased prices.of result oil As a low of EBITA revenue, TheInternational divisionperformed has this Of £6.1m. by with up well revenue £0.6m). A slight increase in gross margingross slightin increase A £0.6m). savingsand administration in costs contributedtheincreasedEBITA to renegotiationcontingent considerationof relation in theprior £0.6m to year of Limited. OHP acquisition of Exceptional items Exceptional exceptional Net totalleditems £0.0m £59.9m). taxationbefore (2016: incurred Exceptionalwere £2.2m costs of relatingrestructuring a to and theUK of Irelandbusiness,September’s General Meeting,amortisation theaccelerated contract of costs followingcustomer a acquisitionand insolvency, expenses associatedwith British. Lloyds Ofsettingexceptional theabove costs therevision of to due credit £1.6m a was theInternational provision,receivables theyear, in cash of following thereceipt provision, a following of the release a and i Revenue EBITDA with£0.2m. exchangebeneft rate an of cyclical of Oneshutdownactivity in Kazakhstanhelpedshare our increase £1.7m to venture thefromjoint proft of (2016: £0.7m).
%
51.7 11.1 14.8
Movement , asset , 2
£m 2016 14.5 54.2 ended 308.7 31 March 12 months 12 £m arch 2017 62.2 22.0 m ended 342.9 31 12 months 12 reland i was £64.0m (2016: £53.5m) £53.5m) £64.0m was (2016: 1 1
1 K and and K EBITA Excludingtheimpactdisposals, of EBITDA utilisation improved by c.7% to an utilisationto c.7% by improved averageforthe 51.5%. yearof representing an increase of 19.6%. 19.6%. representing of increase an EBITDA Revenue u into UK and Ireland,and International.UK and into arethetablesThe fgures below in corporatepresentedbeforecosts of £5.1m). £4.8m(2016: Segmental analysis Segmental segmental TheGroup’s reporting split is disposal decisionsdisposal ROCE and divisionsrestructured ordertwo in into efciencyincrease to costs. reduce and Followingtheimplementation strict of managecapital to expenditure, processes and vehicle numbers, which fell by 116 116 numbers, by fell vehicle which and respectively, 99 and excludingwhen British. Lloyds tightlyOverheads were controlled,withregional theUK operating costs fell by £1.6m, after £1.6m, absorbingcosts by fell costs.bonus £4.3m refected of This managementaction headcount reduce to Gross margins decreased from 58.1% margins Gross decreased58.1% from theplanned of result 54.2%a to as disposalsmix.feet revenue and Administrationexpenses distributionand which in total could be worth up to £45m £45m worth be to up totalcould in which thefnal three for years. Revenue over quarterbeneftted thefromacquisition British. Lloyds of 15.0% to £52.2m (2016: £45.4m). Future (2016: £52.2m 15.0%to securedbeenthrough has a revenue contract numberof renewals,wins and agreement an including with Carillion Plc, experience,availabilityincreased asset restructuredand activities.sales our Partneredservices increased revenue improved by 11.1% to £342.9m (2016: (2016: £342.9m to 11.1% by improved with acrossincrease an £308.7m), streams. revenue Duringkey all the thecustomer improved have we year Including theheavyIncluding plantrevenue sale, 28 Speedy Hire Plc Annual Report and Accounts 2017
FInAnCIAl REvIEW CONTINUED
Shares, earnings per share Capital expenditure and disposals and dividends Total capital expenditure during the year At 31 March 2017, 523,566,491 shares amounted to £44.8m (2016: £69.0m), were outstanding, of which 4,129,653 of which £40.5m (2016: £57.8m) related the Group has a very were held in the Employee Benefts Trust. to equipment for hire and £4.3m other property, plant and equipment (2016: 4 strong balance sheet, Adjusted earnings per share was £11.2m). 2.44 pence (2016: 0.79 pence). After “ which refects the amortisation and exceptional items, basic The hire feet is continually reviewed to earnings per share was 2.22 pence (2016: optimise asset holdings for the target proactive management loss per share 10.19 pence). market. As a result of better management of the asset feet and information informing decisions on The Board remains committed to the returns and asset utilisation, along working capital.” payment of dividends, with a policy of with tight governance introduced via between 2x and 3x adjusted earnings per the investment committee, capital 4 share cover. The Board has recommended expenditure requirements reduced in a fnal dividend of 0.67 pence per share the year. Disposal proceeds of £29.4m (2016: 0.40 pence), which represents (2016: £17.6m) increased during the year a cash cost of approximately £3.5m. as a result of the sale of heavy plant. If approved by shareholders, this gives a At 31 March 2017, the average age of total dividend for the year of 1.00 pence the UK and Ireland feet was 4.2 years per share (2016: 0.70 pence), an increase (2016: 3.9 years). This increase resulted of 42.9% with cover of 2.44x adjusted in part from the disposal of heavy plant, earnings per share. It is proposed that the which had an average life of less than dividend will be paid on 11 August 2017 to 18 months. shareholders on the register at 7 July 2017. Cash fow and net debt net cash fow generated from operating activities increased to £42.7m in the year (2016: £20.4m). Free cash fow (before dividends and fnancing activities) was an infow of £35.0m (2016: £8.6m), and was supported by proceeds of £14.4m from the heavy plant sale. Net debt3 decreased by £31.2m from £102.6m at the beginning of the year to £71.4m at 31 March 2017. Net debt3 to EBITDA1 decreased to 1.13x (2016: 1.93x). Net debt3 as a percentage of hire feet nBV decreased to 36.7% from 46.7% as at 31 March 2016. This further strengthening of the cash position resulted in substantial headroom within the Group’s bank facility. Strategic Report Governance Financial Statements Corporate Information 29
). 3 Annual Report and Accounts 2017 Accounts and Report Annual See note 11 to the to Financial Seenote 11 Statements. ReturnCapitalon Employed: Proft from operationsbefore amortisation divided by theaverage opening of andclosing capital employed(where capital employed equals Debt Net and funds shareholder See note 19 to the to Financial Seenote 19 Statements. theSee to Financialnote 9 Statements.
Explanatory notes: Explanatory 1 2 3 4
Speedy Hire Plc Hire Speedy increased to 7.7% 7.7% increasedto 2
organ is a key performance key measurea is 3.0%). 8.4%(2016: was 2 2 m
(2016: 3.2%), refecting 3.2%), theimproved (2016: proftabilitystrengthenedand balance sheet.Excluding theimpactdisposals, of ROCE Chris Director Finance Group Return on capital on Return ROCE £75.8m (2016: £54.8m). Theaverage (2016: £75.8m borrowingsgross thefacilityunder was 2017 March during31 ended theyear Thecurrent £132.9m). (2016: £108.8m facilityquarterlyincludes andleverage tests whichcovenant fxedcharge cover theheadroom applied in if only are facilityhadTheGroup falls £18m. below signifcantheadroom against thesetests throughout theyear. willTheGroup closely continue to generation, cash monitor whilst balancing thequality itsin invest of theneedto network.depot and feet hire UK Capital structure and treasury structureand Capital Speedy’slong-termprovided fundingis shareholders’throughcombination of a debt. bank and funds asset-basedrevolving £180m TheGroup’s facilitycredit September 2019. expiresin amountthegross 2017 March 31 At utilisedthefacilityunder £85.0m was Theundrawnavailable £114.3m). (2016: amount,eligible on based receivables plantandmachinery, and amounted to for the Group. ROCE Group. the for addition drivingIn to improved proftabilitygeneration, cash and the themonitorimpactwill Group closely changes,futurefeet organichire of growthenhancingvalue and acquisition opportunities.
/property,plant 3
et debt et n Trade payables were £39.2m (2016: (2016: £39.2m payableswere Trade with creditordays reduced £41.2m), days). 111.5 94.7 of days (2016: gross trade receivables (2016: 12.7%), 12.7%), trade(2016: gross receivables demonstratingageing improved an days 63.7 were days Debtor profle. days). (2016: 62.9 increase refectingincrease growth. therevenue provisions note creditand Baddebt 2017 March 31 at £6.9m to reduced of 7.6% equivalentto £10.9m), (2016: the International business (2016: £9.1m). theInternational (2016: business tradetotalled receivables Gross £90.2m with the £85.8m) (2016: 2017 March 31 at and equipment of 0.30x at 31 March 2017 2017 March 31 0.30xat equipmentof and underlines thestrong0.39x) asset (2016: backingwithin thebusiness. theOf £8.0m relatedhire, equipment to for plant and equipment was £234.7m at £234.7m plant equipmentwas and which of £264.1m), (2016: 2017 March 31 represents hire equipment 83.0%for (2016: 83.3%). Net assets at 31 March 2017 totalled 2017 March assets31 Net at equivalent to £178.4m), (2016: £189.6m tangibleand share, per 36.2pence fxed assets44.8property, Net share. per pence sheet,refects which theproactive andfeet the asset management of workingcapital. Balance sheet Balance very stronga has ThebalanceGroup 30 Speedy Hire Plc Annual Report and Accounts 2017
PRInCIPAl RISKS AnD unCERtAIntIES Efective management of risks
The business strategy in place and The Board has delegated to the Audit Direct ownership of risk management the nature of the industry in which we Committee responsibility for reviewing within the Group lies with the senior operate expose the Group to a number the efectiveness of the Group’s management teams. Each individual of risks. As part of the risk management internal controls, including the systems is responsible for maintaining a risk framework in place, the Board considers established to identify, assess, manage register for their area of the business and on an ongoing basis the nature, likelihood and monitor risks. These systems, which is required to update this on a regular and potential impact of each of the ensure that risk is managed at the basis. The key items are consolidated signifcant risks it is willing to accept appropriate level within the business, can into a Group risk register which has been in achieving its strategic objectives. only mitigate risk rather than eliminate used by the Board to carry out a robust it completely. assessment of the principal risks. The principal risks and mitigating controls in place are summarised below.
Risk Potential impact Strategy for mitigation Safety, health Serious injury or death The Group is recognised for its industry-leading and environment Speedy operates, transports and provides for rental position in promoting enhanced health and safety a wide range of machinery. Without rigorous safety compliance, together with a commitment to product regimes in place there is a risk of injury or death to innovation. The Group’s systems, health and safety, and employees, customers or members of the public. environment teams measure and promote employee understanding of, and compliance with, procedures environmental hazard that afect safety and protection of the environment. The provision of such machinery includes handling, Customer account managers are responsible for transport and dispensing of substances, including fuel, addressing service and safety issues. that are hazardous to the environment in the event of spillage. Service provision of equipment The Group has invested substantially in its operational Speedy is required to provide well maintained and back ofce processes, to continue to improve its equipment to its customers on a consistent and service ofering. new personal digital assistants (PDAs) dependable basis. have been successfully rolled out during FY2017, improving the on-site customer experience whilst the Back ofce services Group continues to invest heavily in its IT infrastructure It is important that Speedy is able to provide to support its business. timely and accurate management information to its Speedy also liaises with its customer base and takes customers, along with accurate invoices and supporting into account feedback where particular issues are documentation. noted, to ensure that work on resolving those issues is In both cases, a failure to provide such service could prioritised accordingly. We have introduced an online lead to a failure to attract or retain customers, or based customer feedback system which signifcantly to diminish the level of business such customers enhances our ability to understand the customer undertake with Speedy. experience and improve service levels. Revenue competitive pressure The Group monitors its competitive position closely, and trading The hire market is fragmented and highly competitive. to ensure that it is able to ofer customers the best solution. The Group provides a wide breadth of performance Whilst we are developing strategic relationships with larger customers, we are also working hard to grow our oferings, supplemented by its partnered services Local and Regional accounts. division for specialist equipment. The Group monitors the performance of its major accounts against Reliance on high value customers forecasts, strength of client future order books and As revenue from our larger customers grows, there is a individual expectations with a view to ensuring higher risk to future revenues should preferred supplier that the opportunities for the Group are maximised. status be lost when such agreements may individually Market share is measured and competitors’ activities represent a material element of our revenues. are reported on and reacted to where appropriate. The Group’s integrated services ofering further mitigates against this risk as it demonstrates value to our customers, setting us apart from purely asset hire companies. No single customer currently accounts for more than 10% of revenue or receivables. Strategic Report Governance Financial Statements Corporate Information 31
Annual Report and Accounts 2017 Accounts and Report Annual
Group’scommercial position. Supplier accreditations recordedare andtracked centrally through supplier a portalwhere relevant andsetservice related KPIs includedare within standard contract terms. Regular reviewstakeplace with allsupply chainpartners. Thepurchasing Groupa has policy placenegotiate in to supplycontracts that, wherever possible, determine fxedpricesperiod a for time. of most In cases, multiple sourcesexist decreasingeachforsupply, the risk supplier of dependency andcreating competitive a supply-sideenvironment. Allsignifcant purchase decisionsoverseendedicatedare a by supply chain teamwith structured supplier selection procedures place. in Property costs managedare in-housean by specialists teamof whoundertake routine maintenance worksandmanage the estate rentalterms in of costs. operate dedicated We a commercialfeet of vehicles thatmaintainedare support to brandour image. Fuel purchased is through agreements controlled our by supplychainprocesses. Skillandresource requirements meetingfor the Group’s objectivesactivelyare monitored andaction taken is address to identifed gaps. Succession planning aims identify to talent within theformally Group andis reviewedannualan on the basis Nominationby Committee,focussing both on short andlong-term successorsrolesthewithin for key the Group. Programmesplace in areemployeefor induction, retentionandcareer development, whichtailored are the requirementsto the variousof business units within theGroup. TheGroup regularly reviews remuneration packages competitiveofer to andaims reward andbeneft packages,including appropriate short andlong-term schemes.incentive dedicated A andexperienced supply chainfunction placenegotiate in to is allcontracts andmaximise the Strategy for mitigation Strategyfor Speedy Hire Plc Hire Speedy artnerreputation mployee excellence mployee ixed cost base cost ixed customerservice therefore is reliant the on performanceothers of with the risknot that is this if efectivelymanaged, the reputation Speedy of and impacted. adversely be may revenues future hence f Speedyfxed costbasea including has people, transportandproperty. When revenues fuctuate this disproportionate a can have efect the on Group’s results. fnancial Supply chain Supply Speedyprocures assets andservices widefrom a range sources, of bothandinternationally UK based. Within thesupply chainthere risksare non-fulflment. of p signifcant A amountrevenues our fromcomeof our partneredservices ofering, where the delivery or performanceefected is through thirdparty a partner. Speedy’sability supply assetsto with the expected e strategic our achieve objectives, to is order it In motivate and retain recruit, to able are we that imperative rightthe Group.skills thepossess who for employees Potential impact Potential Operating costs Operating Partnerand service supplier levels Risk People 32 Speedy Hire Plc Annual Report and Accounts 2017
PRInCIPAl RISKS AnD unCERtAIntIES CONTINUED
Risk Potential impact Strategy for mitigation Information it system availability Annual and more medium-term planning processes technology and Speedy is increasingly reliant on IT systems to support are in place; these create future visibility as to the level and type of IT infrastructure and services required data integrity our business activities. Interruption in availability or a failure to innovate will reduce current and future to support the business strategy. Business cases are trading opportunities respectively. prepared for any new/upgraded systems, and require formal approval. data accuracy The introduction of improved reporting with dedicated The quality of data held has a direct impact on how analysts within the business provides improved both strategic and operational decisions are made. business information and better data quality and If decisions are made based on erroneous data consistency. there could be a direct impact on the performance of the Group. Mitigations for IT data recovery are described below under business continuity as these risks are linked. data security Speedy, as with any organisation, holds data that is Speedy’s IT systems are protected against external commercially sensitive and in some cases personal unauthorised access. All mobile devices have access in nature. There is a risk that disclosure or loss of restrictions and, where appropriate, data encryption such data is detrimental to the business, either as is applied. a reduction in competitive advantage or as a breach of law or regulation. Funding Sufcient capital The Board has established a treasury policy regarding Should the Group not be able to obtain sufcient capital the nature, amount and maturity of committed funding in the future, it might not be able to take advantage of facilities that should be in place to support the Group’s strategic opportunities or it might be required to reduce activities. or delay expenditure, resulting in the ageing of the feet In line with the treasury policy, the Group’s capital and/or non-availability. This could disadvantage the requirements, forecast and actual fnancial performance Group relative to its competitors and might adversely and potential sources of fnance are reviewed at Board impact on its ability to command acceptable levels level on a regular basis in order that its requirements of pricing. can be managed with appropriate levels of spare capacity. Close relationships are maintained with the Group’s bankers with a view to ensuring that the Group enjoys a broad degree of support. The Group’s current £180m asset based revolving credit facility is not due to expire until September 2019. Economic economy The Group assesses changes in both Government and vulnerability Any changes in construction/industrial market private sector spending as part of its wider market conditions could afect activity levels and consequently analysis. The impact on the Group of any such change the prices that the Group can charge for its services. is assessed as part of the ongoing fnancial and Any reduction in Government expenditure which is operational budgeting and forecasting process. Our not ofset by an increase in private sector expenditure strategy is to develop a diferentiated proposition in could adversely afect the Group. In common with many our chosen markets and to ensure that we are well UK businesses, Speedy faces uncertainty as to the positioned with clients and contractors who are likely possible impact of leaving the European Union. There to beneft from those areas in which increased activity are risks to the overall level of economic activity, in is forecast. addition to more direct risks relating to increased costs as a result of the falling value of sterling. Strategic Report Governance Financial Statements Corporate Information 33
Annual Report and Accounts 2017 Accounts and Report Annual
Company will be able to continue in to willable Company be operationmeetitsand liabilitiesthey as 2020. theperiod March to over fall due In coming to this conclusion, it has been has conclusion,it this to coming In renewal successful thata assumed asset-backed £180m theGroup’s of facility fnance beforewillconcluded be similarbroadly terms on September2019, theexisting to facility. is conclusion This fnancial improved performance on based continuingand constructive relationships members. syndicate bank the all with assessment, this Basedthe Directorson reasonableexpectation a have thatthe systemsconsideredare part as wider of change managementprogrammes andimplemented phases in whereverpossible. The Groupcritical has incident plansplace in all forits central andInternational UK sites.reviewed Insuranceis regularcover at intervals to ensureappropriate business a thecoverage of eventin continuityissue. better A understanding customer of expectation of therelative timescales deliveryfor across rangeour of assetsreduce holdingsallowsto time-criticalus less of assetscentralising by the storage locations, whilst at thesame time increasing the breadth holding of across customerour trading locations those of assets most requiredshortbe a to likely on notice basis. constantly We review rangeassetsour of andintroduce innovativesolutions customersour to productsnew as cometomarket, under our Green Option programme. AllSpeedy employees expectedare abideby to Conduct, of Codeour whichcondition forms a of employment.provided, is Training combinationvia a online of andface-to-face means, allmanagement to gradescomplianceareas suchas in with the Bribery andrelevant competition Act2010 laws. Group policiesplace in are that both support andoversee aspects key operationour of particular in the areas of treasury,purchasing, asset management, accounting anddebtmanagement. Review andexception reporting activitiesplace, in are whichdesigned are ensurethat to individualscannot override risk mitigation procedures beenwhichplace putthehave in Group.by the supportedareaboveAll of well-publicised a by androbust whistleblowing policy with rigorous follow allconcerns of raised. up Preventativecontrols, back-up andrecovery procedures systems.ITplace in arekey for Changes Group to Strategy for mitigation Strategyfor Speedy Hire Plc Hire Speedy
There is inherently less certaintyinherently less There is the in projectionsand fve and four years for theDirectors determined thatthree have appropriate an whichperiodis years over theViability assess to Statement. statementmaking this In theDirectors the of theresilienceconsidered have its currentGroup, position, theprincipal risksdistressedfacing in thebusiness reasonablescenarios,but theand efectivenessmitigating any of actions. Theprojections thefrst for three of years thestrategic detailed on basedplan are actionwiththeGroup plansby developed specifcinitiatives accountabilities.and
perational empowerment and culture and empowerment perational ssetrangeavailability and usiness interruptionusiness a Speedy’sbusiness model reliesproviding on assets for customers, to hire when theythem. hire want to order In maximise to proftability andROCE, demandbalanced is withthe requirement rangeassets hold a of to that is optimallyutilised. b Anysignifcant interruption Speedy’s to operational capability,whether systems,IT physical restrictions or personnelbased, adverselycould impact current and futuretrading customers as readilycould migrate to competitors. rangeThiscould from short-term impact processing in thatinvoices would afect of the of loss cashto fows a major site. o operate internalWe an structure alignedthat is around separatespecialisms better to serve customerour base. Eachdivision challenged is operate to with degree a empowerment of within overriding Group policies. Potential impact Potential
Asset holding Assetholding integrity and Business continuity Business Risk Corporate culture iability Statement iability risks to the Group’s business model,business riskstheGroup’s to performance,solvencyliquidity and above. out set as achievement are reviewed by theBoardreviewed are by achievement partits as strategyof reviewbudget and processes.approval TheBoardhas theimpactconsideredtheprincipal of The Group operates an annualplanningoperates Thean Group year fve a includes which process strategicfnancial year one plan a and budget.These plansrisks and their to v 34 Speedy Hire Plc Annual Report and Accounts 2017
Governance
Governance Chairman’s letter to shareholders 35 Directors’ Report 36 Statement of Directors’ responsibilities 39 Board of Directors 40 Corporate Governance 42 Audit Committee Report 48 Nomination Committee Report 52 Remuneration Report 54 Independent Auditor’s Report 70 Strategic Report Governance Financial Statements Corporate Information 35
Annual Report and Accounts 2017 Accounts and Report Annual
ominationCommittees with efect from n Speedy Hire Plc Hire Speedy otwithstandingreverting my non-executive to back status, undertakenexecutive any duties during theprevious quarter. n with bestaccordance practice in steppedbothfrom down I Remunerationand theAudit Committees with efect from 2017. March 31 relating theCode annual electionThe provisions of to all of the to apply not do companies thedirectors FTSE for 350 Notwithstanding Company. voluntarily theBoardthis,has determinedDirectorsthatall annualelection willto submit forward. going independentDuring an external theyear evaluationthe of BoardBoardCommitteesand undertaken. was view of In theconsiderableCommitteeBoardand thechanges across fndingsthat theoverall were pleased previouswas two I years positive,supporting personal my assessment. Theexercise has alsoagree prioritiesenabledtheBoardto further to improve efectiveness. our Further detailsthe evaluation of are Report. Governance the of 45 page on provided Åstrand Jan Chairman Asthereported Chris to appointed Morgan was last year, Director Finance Group withBoardas efectApril 1 from2016, havinginterimserved an capacity in December2015, since Non-Executive a Barclayappointedas was Rob and Director theRemuneration of Chairmanand Committee member a and the of Audit and addition, In electedthe DavidShearerwas to April 1 2016. Non-Executive a Boardas Director theGeneralMeeting at in Davidbrings signifcant Septemberexperienceboard 2016. theAudit, Nominationof each to appointedbeen since has and Remunerationand CommitteestheBoard. of Asreported last Annualin year’s Report, therole on took I Russell assist to Executive 2015 of July 1 fromChairman Executive, Chief supportas to role and new the his in Down Executiveefortstheir accelerate and in improve team to operatingimportantperformance. an was This supporttime to personally am veryI andwith thehappyCompany the ofcially revertedachieved.I has back thatthe team outcome non-executivehaving notto September status2016 30 on
Non-ExecutiveChairman Jan Åstrand Jan throughout the year. I am pleased to summarise theto below pleased am throughoutI theyear. principalinitiatives corporategovernance, our changesin and thosetheincludefromreview. which are central to theefective to central are thebusiness,management to of thebest in are investorsand our of theconfdence maintaining stakeholders. our interests we of all 42, page of Ason noted withfull theCode compliance thein provisionsbeen of have of our size. We have also assessed our compliance with alsocompliance theUK our assessed have We size. our of disclosures and ‘Code’) (the 2014 Code Corporate Governance Annualyear’s Report main this describein theCode’s how principles principlesthattheCode’s consider applied. are We During the year, a full review of governance practices governance full review of a was Duringtheyear, structuresundertaken governance our ensure line to in remain withbestpractice company developing a suitable are for and On behalf of the Board I am pleased to present thepresentGovernance to pleased am theBoardI of behalf On section This theAnnual Report of highlights ReportFY2017. for processes,alongsidethe Company’sgovernance of thework Committees. Board and Board the Dear Shareholder Dear
to shareholders Chairman’s letter letter Chairman’s 36 Speedy Hire Plc Annual Report and Accounts 2017
Governance Directors’ Report
Strategic Report Substantial shareholders The Chairman’s statement on pages 4 and 5, the Strategic As at 15 May 2017, the Company had been notifed under the Report on pages 2 to 33, the Corporate Governance review on Disclosure and Transparency Rules of the following holders of pages 42 to 47 and the reports of the Audit, Nomination and shares with 3% or more of the total voting rights in the issued Remuneration Committees on pages 48 to 49 are incorporated share capital of the Company. by reference into this report and are deemed to form part of this report. Percentage of Shareholder name voting rights The Strategic Report was approved by the Board and authorised Toscafund Asset Management 19.44 for issue on 15 May 2017. Schroder Investment Management 10.12 Results and dividends Aberforth Partners 8.55 The consolidated proft after taxation for the year was £11.5m Majedie Asset Management 8.34 (2016: loss £52.7m). This is after a taxation charge of £2.9m FIL Investments International 7.59 (2016: credit £4.9m) representing an efective rate of 20.1% Artemis Investment Management 7.09 (2016: 8.5%). An interim dividend of 0.33 pence per share was The Wellcome Trust 4.11 paid during the year. The Directors propose that a fnal dividend of 0.67 pence per share be paid, which, if approved, would make a total dividend distribution in respect of the year of Directors 1.00 pence per share (2016: 0.70 pence). The fnal dividend The Directors who served during the year and the interests of will be paid on 11 August 2017 to all shareholders on the Directors in the share capital of the Company are set out on register at 7 July 2017. page 68.
Related party transactions In accordance with the Company’s Articles of Association, a third of the Board should retire by rotation at each Annual General Except for Directors’ service contracts, the Company did not have Meeting and, if eligible and willing, seek re-election. However, in any material transactions or transactions of an unusual nature compliance with the principles of best corporate governance, the with, and did not make loans to, related parties in the periods Board unanimously supports the annual re-election of Directors in which any Director is or was materially interested. and therefore all Directors shall be submitted for annual re-election commencing from this year’s Annual General Meeting. Buy-back of shares At the Annual General Meeting held on 13 July 2016, a special No Director had any interest, either during or at the end of resolution was passed to authorise the Company to make the year, in any disclosable contracts or arrangements, other purchases on the London Stock Exchange of up to 10% of its than a contract of service, with the Company or any subsidiary ordinary shares. company. No Director had any interest in the shares of any subsidiary company during the year. As at 15 May 2017, no shares had been purchased under this authority. Shareholders will be requested to renew this authority Equal opportunities at the forthcoming Annual General Meeting in July 2017. The Group employs 3,252 people in the UK and Ireland, and 493 people internationally. The Group has a clear policy that Financial instruments employees are recruited and promoted solely based on aptitude The Group holds and uses fnancial instruments to fnance its and ability. The Group does not discriminate in any way in operations and manage its interest rate and liquidity risks. respect of race, sex, marital status, age, religion, disability Full details of the Group’s arrangements are contained or any other characteristic of a similar nature. In the case of in note 18 to the Financial Statements. disability, all reasonable adjustments are considered to enable employment or continue employment as well as to ensure that Going concern any disabled employees receive equal treatment in matters such The Directors consider that the Group has adequate fnancial as career development, promotion and training. Managers at resources and has access to sufcient borrowing facilities to all levels are trained and developed to adhere to and promote continue operating for the foreseeable future. Accordingly, this goal, including receiving training specifcally on diversity as detailed in note 1 to the Financial Statements (basis of matters. Further information on equal opportunities within the preparation), the Directors continue to adopt the going concern Group is set out on page 23 in the Strategic Report. basis in preparing the Annual Report and Accounts. Strategic Report Governance Financial Statements Corporate Information 37
Annual Report and Accounts 2017 Accounts and Report Annual
Speedy Hire Plc Hire Speedy otice of AGM specifes exercisingdeadlines for votingAGM of otice n the correct amount of stamp duty; stamp of amount correct the joint thanfour more of favour in thetransferwhere is transferees; certifcated a accompanied not is theshare where is and share certifcate(s)share therelevantotherevidence such by and thetitlethe of prove to reasonablyrequire theBoardmay as transferor;or certain in circumstances questiontheshareholderwhere in the with noticeof Section under issued been a has 793 Companies Act 2006. where the share is not a fully paid share; paid fully a not is share the where stamped duly been transfer not theshare where with has greements which may result in restrictions on share transfers share on restrictions in result may which greements
akeover Directive information Directive akeover > > > Theserestrictions applicable are additionwhich any in are to regulation.listed lawcompaniesimposedor all UK by to withrights special Shares withtheCompany specialin shares rights no There are with theCompany. of control regardto rightsRestrictions voting on The rightsrelation in vote to appointingandproxy proxies to or a theAnnual Generalat resolutionspassedMeeting. be to All withheldagainst or thenumbersand for, counted are proxy votes relation resolutionin each theAnnualannouncedto at are GeneralMeetingthe Company’swebsite publishedon and aftermeeting.the a agreements any of aware between not is TheCompany restrictions in shareholdersresult may which thetransfer on securities of onand/or voting rights. t provided not Whereelsewherereport, this in theadditional the of information result shareholdersa for required as Directive Englishlawimplementation into theTakeover of set is out below. capital Share comprised capital share Company’s the 2017, March 31 at As March 31 at As each. pence 5 of shares ordinary of class single a comprising £26,178,325 capitalshare was theissued 2017 each. noTherepence are 5 ordinary of shares 523,566,491 specialrights obligations or attaching theordinary to shares. transfers Restrictionsshare on TheCompany’sArticles Association of provide thattheCompany thefollowingtransfer in to customarysharesrefuse may circumstances: > >
Annual General Meeting in July 2017. AnnualGeneral2017. Meeting July in has expressed has its TheBoardwillingness ofce. continue in to auditors andreappointedas LLP recommending be KPMG is authorise to resolutionsand this theDirectors concerning to determineits remuneration theforthcoming to willput be Auditors theAnnual General appointedat Meeting the LLP was KPMG of itsand appointment expiresat 2016 July 13 on held LLP Company KPMG Meeting. General Annual year’s this of conclusion the information.confrmationinterpreted given be This should and is thewith Section theof provisionsaccordance of in 418 Companies Act 2006. auditors are unaware and each Directorthealleach taken and auditorsunaware has are Director make a to as taken have oughtto she or that stepshe informationauditrelevant any andof herself aware or himself thatestablish of to that theauditorsCompany’saware are Disclosure of information to auditors to information of Disclosure this of approval of thedate TheDirectors at ofce held who Directors’aware, Reporteach they are that, confrm as far so informationtheCompany’sauditrelevant which no thereof is development. key engagementTheemployeeBoardseesa as itssuccess. partof The Group has a peoplestrategy a an has being TheGroup at placeaimed in of 19 and 18 pages on seen be can as choice, of employer theStrategic Report. activelynumberTheof Group a makes engagement commitmentsandits pay, includingemployees to arrangementsExecutive for Directors summarised are the in The Remuneration59. and Committee’s Report58 pages on departing to Directors in paymentsout set FY2017 are in made 67. page on Report Committee’s Remuneration the It is the Group’s policy generallytheGroup’s thatshouldemployees be is It eligibleparticipate to soonincentive scheme as of formsome in practicable as following aftertheGroup, theconclusion joining probationaryrelevant any of period. Details annualincentive of order to achieve a shared commitmentshared to employeesallfrom a achieve to order employed. are they which in businesses the of success the theefectiveness in TheBoard believes fnancial incentives.of Employee involvement Employee in involvement employeeactivelypromote The Group to aims 38 Speedy Hire Plc Annual Report and Accounts 2017
Governance Directors’ Report continued
appointment and replacement of directors Directors’ indemnities The Company’s Articles of Association provide that all Directors Throughout the fnancial year and at the date of approval of must stand for election at the frst Annual General Meeting after the Financial Statements, the Company has purchased and having been appointed by the Board. The Articles of Association maintained Directors’ and Ofcers’ liability insurance in respect also provide that each Director must also stand for re-election of itself and its Directors. As permitted by the Companies Act at the third Annual General Meeting following their last election 2006, it is the Company’s policy to indemnify its Directors. or re-election by shareholders. If the number of Directors Where qualifying deeds of indemnity are not currently in place standing for re-election is less than one-third of the current for any of its Directors, these will be put in place during the Board (which excludes any Directors appointed by the Board coming year. who are standing for election for the frst time) then additional Directors must also stand for re-election in order that one- Political contributions third of the Board is standing for re-election, save that where No political donations were made during the year (2016: nil). the number of Directors is not three or a multiple of three, the number of Directors which is nearest to but does not exceed Greenhouse gas emissions one-third must stand for re-election. The disclosures concerning greenhouse gas emissions are However, the Board has determined that, whilst not a requirement included in the Safety and sustainability section of the Strategic of the Company’s Articles of Association or the UK Corporate Report on page 23. Governance Code as it applies to the Company, to comply with the principles of best corporate governance all Directors should Annual General meeting be submitted for re-election annually commencing from the The Company’s Annual General Meeting will be held at the Annual General Meeting to be held in July 2017. ofces of Liberum Capital Limited at Ropemaker Place, Level 12, 25 Ropemaker Street, London, EC2Y 9LY on 12 July 2017 at articles of association 11.00am. A formal Notice of Meeting, an explanatory circular The Company’s Articles of Association may be amended by and a form of proxy will be sent separately to shareholders. special resolution of the Company’s shareholders. This report was approved by the Board and signed on its behalf directors’ powers by Russell Down, Chief Executive. At the Annual General Meeting to be held on 12 July 2017, By order of the Board on 15 May 2017. shareholders will be asked to renew the Directors’ power to allot shares and buy back shares in the Company and to renew the disapplication of pre-emption rights.
Change of control – signifcant agreements Russell Down There are no signifcant agreements to which the Company is Chief Executive a party that may take efect, alter or terminate upon a change of control following a takeover bid other than in relation to: (i) employee share schemes; and (ii) the Company’s borrowings, which would become repayable on a takeover being completed. Shares in the Company are held in the Speedy Hire Employee Benefts Trust (‘Trust’) for the purpose of satisfying awards made under the Company’s Performance Share Plan. Unless otherwise directed by the Company, the Trustees of the Trust abstain from voting on any shares held in the Trust in respect of which the benefcial interest has not vested in any benefciary. In relation to shares held in the Trust where the benefcial interest has vested in a benefciary, the benefciary can direct the Trustees how to vote. As at 15 May 2017 the Trust held 4,129,653 shares in the Company (0.8% of the issued share capital).
Compensation for loss of ofce There are no agreements between the Company and its Directors or employees providing for compensation for loss of ofce or employment (whether through resignation, purported redundancy or otherwise) that occurs in the event of a bid for the Company or takeover. Strategic Report Governance Financial Statements Corporate Information
39
RussellDown ExecutiveChief Annual Report and Accounts 2017 Accounts and Report Annual
Speedy Hire Plc Hire Speedy
theFinancial Statements, with theaccordance prepared in accounting standards,applicable of set truefairgive and a theassets, viewof liabilities, fnancial position or proft and theundertakingsand theCompany of loss the includedin andwhole; consolidationa as taken theStrategicthedevelopment review of Reportfair a includes performancethepositionandand the thebusiness of of theundertakingsand Company theconsolidation includedin togetherwhole, withdescriptiona a as taken theprincipal of face. they that uncertainties and risks
We consider the Annual Report and Accounts, taken as a whole,theAnnual consider Report a Accounts,andas taken We balanced understandableand fair, providesandis the informationnecessary theGroup’s shareholders assess for to strategy. and model business performance, and position Åstrand Jan Chairman 15 May 2017 Responsibility statement of the Directors in respect in Directors the of statement Responsibility ReportFinancial Annual the of knowledge: our thebestof thatto confrm We > >
unless it is inappropriatethe and thattheGrouppresume is it to unless willCompany business.Parentcontinue in state whether they have been prepared in accordance with stateaccordance preparedbeen whetherin theyhave and theEU; adoptedby as IFRSs preparetheFinancial basis Statements concern thegoing on selectsuitable accounting policiesthem thenapply and consistently; judgements make estimatesand reasonableandthat are prudent;
preparationFinancialdissemination and Statements of legislationfrom difer may otherjurisdictions. in TheDirectorsintegrity and themaintenance responsible for are thefnancialcorporateand informationof the includedon LegislationCompany’swebsite. the governing theUK in Under applicableUnder regulations,andlaw theDirectors also are preparingresponsible Strategicfor a Report, Directors’ Report, Directors’Remuneration Report CorporateandGovernance statementwith thosethatcomply regulations.thatandlaw the Companies Act 2006. They have generalAct responsibilitytheCompanies 2006. They have for safeguard themto to reasonablyopen are taking as steps such detectand prevent fraud and to and theGroup theassets of otherirregularities. Company’stransactions with disclose reasonableandaccuracy time any thefnancial at andpositionCompany theParent of thatits ensure Financial themto enable Statements with comply TheDirectorsadequate accounting keeping responsible for are explainand show sufcienttheParent that are to records > > > > and of their proft or loss for thatperiod. for thepreparing loss In of or profteach their of and FinancialCompany Parent andStatements, Group theDirectors to: required are FinancialStatements thesamebasis. on thelawDirectors company UndertheFinancial approve mustnot Statementssatisfedthey are unless thattruetheygive and a CompanyParent and theGroup afairsof thestate viewof of fair law they are required to prepare the Group FinancialpreparetheGroup Statementsto required theylaw are (‘EU’) Union Company European the by adopted as Parent withIFRSs accordance the in prepare to elected have and law applicable and and the Group and Parent Company FinancialCompany Parent andStatements theGroup and in with applicableaccordance regulations.andlaw theDirectorsrequireslaw Parent Company and prepare Group to FinancialthatCompany Under Statements fnancialeach year. for TheDirectors preparingresponsible for are theAnnual Report of the Annual Report and and Report Annual the of Financial Statements responsibilities in respect respect in responsibilities Statement of Directors’ Directors’ of Statement 40 Speedy Hire Plc Annual Report and Accounts 2017
Governance Board of Directors
Jan Åstrand Russell Down Chris morgan Non-Executive Chairman Chief Executive Group Finance Director
appointment to the board and appointment to the board appointment to the board committee memberships Appointed to the Board as Group Finance Appointed to the Board as Group Finance Appointed to the Board in November Director in April 2015 and promoted to Director in April 2016. 2014 as Non-Executive Chairman Chief Executive in July 2015. and Chairman of the Nomination Skills and experience Committee. Member of the Audit Skills and experience Chris is a highly experienced Finance and Remuneration Committees Russell was formerly Group Finance Director and a Fellow of the Institute of from February 2015 to 31 March Director (from 2008 to 2015) at Hyder Chartered Accountants in England and 2017. Assumed the role of Executive Consulting Plc (‘Hyder’), the multinational Wales. Before joining Speedy, Chris was Chairman from 1 July 2015 and design and engineering consultancy. Chief Financial Ofcer at Go Outdoors, reverted back to non-executive status He spent 17 years in total at Hyder in the UK’s leading retailer of outdoor on 30 September 2016. a number of senior roles, including fve equipment and clothing, since 2012. years as Group Financial Controller He was previously Chief Financial Ofcer Skills and experience and six years as Regional Finance and at Focus DIY, and before that held a Jan brings broad experience and a Commercial Director for the Middle East number of senior fnance positions at focussed, strategic approach to the operations based in Dubai. Russell is Tesco including Group Controller from Board as Speedy concentrates on the a Fellow of the Institute of Chartered 1999 to 2004, and more recently as delivery of sustainable proft growth. Accountants in England and Wales, having Finance Director for the Czech Republic He was a Non-Executive Director qualifed with KPMG, and has previously and Slovakia. of Lavendon Group Plc from 2010 worked for container leasing company until early in 2014, latterly as Senior Cronos as Director of Accounting. Independent Director. He has also held previous non-executive roles as Chairman of CRC Group PLC and Car Park Group AB in Stockholm as well as being Senior Independent Director of PHS Group PLC, Chairman of easyHotel Plc and Non-Executive Director of Northgate plc. Jan’s executive experience includes roles as President and Chief Executive of Axus International Inc. (previously known as Hertz Leasing International), Vice President, Finance & Administration and Chief Financial Ofcer of Hertz (Europe) Limited and Chief Financial Ofcer of Commodore International. external appointments non-Executive Director of Vidrala, S.A. in Spain. Strategic Report Governance Financial Statements Corporate Information 41
oard and oard b
Annual Report and Accounts 2017 Accounts and Report Annual David ShearerDavid Independent Non-ExecutiveDirector
ppointment to the the to ppointment ommitteememberships xternal appointmentsxternal Meeting on 9 September 2016 as SeptemberMeeting 2016 9 on Non-ExecutiveDirector.Appointeda Nominationand theAudit memberof and Committees2016 November from theRemuneration of Committee from 2017. March 31 Skillsexperience and experiencedan David is non- executivecorporatefnancier director, turnaroundand specialist. was He partnerpreviouslysenior Scotland for Northern & Executive UK Ireland a and Deloitte Boardmemberof LLP, Co-ChairmanMartin of Currie(Holdings) MouchelGroup Limited,Chairmanof non-CrestNicholsonand a and plc executiveCitydirector Limitedof Inn standingcase each after in down completingrestructuringthe successful alsothese businesses. was Senior of He Independentplc, DirectorRenold of STVplc,SuperglassGroup Holdings plc Scottishand Financial Enterprise, a and TheGlasgowArt. School of of Governor e Liberty Chairmanof Living Group, Investment Trust Dawn Aberdeen New theScottishand a and plc Fund, Edge plc. MithrasdirectorInvestment Trust of a c theGeneralElectedtheBoard at to
Speedy Hire Plc Hire Speedy oard and oard b
Rob Barclay Rob Independent Non-ExecutiveDirector ppointment to the the to ppointment ommitteememberships where he originates. he where DirectorUK, EastIreland of Middle and of supplier leading plc,themarket SIG specialistproducts and thebuilding to constructionindustry. company, FTSE plc,a 250 SIG joined Rob variousheld seniorhas and 1997 in managementwithin roles thebusiness Managingincluding Director SIG of Distribution,itshaving led creation bringing by UK together theGroup’s insulations,interiors, construction accessoriesfxingsand businesses. Regional a was Rob SIG, Priorjoining to globalproducts wood a Managerfor Zealand, New from in based company a c as April theBoardin Appointed 2016 to Non-ExecutiveDirector Chairmanand theRemuneration of Committee and Nominationand theAudit memberof a Committees. Skillsexperience and sector brings experienceof wealth Rob a currentlyManaging theBoard. is to He oard and oard b Bob Contreras Bob Director Independent Senior ppointment to the the to ppointment ommitteememberships Group Finance Director of Azlan Group plc. Azlan Group of Director Finance Group serviceshealthcaretheprofessional for also was previously Chief He sector. ExecutiveDirectorprivateFinance and of S.A.,equityGroup Damovo backed and was President of theSurgical Presidentof was Division of world- a Group, HealthCare Mölnlycke manufacturer leading products of and the UK and Spain between June 2010 and between Spain and 2010 June theUK havingthebusiness joined January2017, Director2008.Finance June Prior as in appointmentNorthgate, at his to Bob lean,efcient customer-focussedand Executive Chief business. was Bob at Northgatelightleading plc,theFTSE 250 both in business hire commercialvehicle Skillsexperience and bringsBob extensive rental asset and sectorexperience SpeedytheBoard, as to more a becoming on focus continues to of theNomination Remunerationof and Committees.Senior Appointed as 2016. March IndependentDirector 31 on c 2015 December in Board the to Appointed Non-Executive as Director Chairmanand Committeemember theAudit a and of a 42 Speedy Hire Plc Annual Report and Accounts 2017
Governance Corporate Governance
Highlights We explain in this section how the Company has applied the > Review of corporate governance practices and full compliance principles of good governance and the code of best practice with the UK Corporate Governance Code; set out in the Code. > Board deciding to adopt the annual election of all Directors; Throughout the year ended 31 March 2017, the Company has > The appointment of Chris Morgan to the Board as Group been in full compliance with the provisions set out in the Code. Finance Director following his appointment as Interim Finance Director; Directors > The appointment of Rob Barclay as a Non-Executive Director the board and Chairman of the Remuneration Committee and a member In the year ended 31 March 2017, the Board met eight times. of the Audit and Nomination Committees; The Board also meets as required on an ad hoc basis to deal with > The election of David Shearer at the General Meeting urgent business, including the consideration and approval of on 9 September 2016 as a Non-Executive Director and transactions. The table below lists the Directors’ attendance at a member of the Audit and Nomination Committees from the Board meetings and Committee meetings during the year 10 November 2016 and of the Remuneration Committee ended 31 March 2017. from 31 March 2017; Chris Morgan was appointed as Interim Group Finance Director > The Chairman reverting back to non-executive status on in December 2015 and appointed to the Board as Group Finance 30 September 2016 and subsequently stepping down Director with efect from 1 April 2016. Jan Åstrand took on the from both the Audit and Remuneration Committees; and role of Executive Chairman from 1 July 2015 to assist Russell > Independent external evaluation of the Board and Board Down in his new role as Chief Executive, and to support the Committees. Executive team in their eforts to improve and accelerate operating performance. This was always to be an interim Governance progress appointment and following the stabilisation of the business and strengthening of the Board, Jan Åstrand reverted back to the role The Company undertook a full review of governance practices of Non-Executive Chairman on 30 September 2016. Rob Barclay during the year and the Board agreed actions to ensure was appointed to the Board on 1 April 2016 as Non-Executive governance structures remain in line with developing best Director, Chairman of the Remuneration Committee and a practice and are suitable for a company of its size. The agreed member of the Audit and Nomination Committees. David Shearer actions included addressing concerns noted by shareholders was elected to the Board at the General Meeting on 9 September as well as helping to ensure the relevant skills and expertise 2016 and appointed a member of the Audit and Nomination are available to the key Board Committees. This culminated Committees from 10 November 2016 and of the Remuneration in the Board being comfortable that it was the right time for Committee on 31 March 2017. Jan Åstrand stepped down from the Chairman, Jan Åstrand, to revert back to a non-executive the Audit and Remuneration Committees on 31 March 2017. position after stepping into an interim executive role in July 2015. It should be noted that this was a supporting role to assist board and committee attendance Russell Down in his new role as Chief Executive and was not Board Audit Nomination Remuneration remunerated as an executive position and additional fees were (8) Committee (4) Committee (2) Committee (5) taken and not a salary. There were also no performance related Executive Directors elements to this interim post. Russell Down 8/8 – – – uK Corporate Governance Code compliance Chris Morgan 1 8/8 – – – The Board is committed to maintaining high standards of non-Executive Directors corporate governance. The Board frst reported its compliance Jan Åstrand 2 8/8 4/4 2/2 5/5 with the Combined Code in 2004. Since then, other than as Bob Contreras 8/8 4/4 2/2 5/5 explained in previous Annual Reports and Accounts, it has 3 complied in full with the Combined Code (now the UK Corporate Rob Barclay 8/8 4/4 2/2 5/5 Governance Code) and continued to develop its approach to David Shearer 4 5/5 1/1 0/0 0/0 corporate governance and the efective management of risk in 1 Appointed on 1 April 2016. the context of an evolving business. The Company frst reported 2 Classed as an Executive Director between 1 July 2015 and 30 September fully against the UK Corporate Governance Code 2012 in its 2016 when he reverted to a Non-Executive role. Stepped down from the 2014 Annual Report and has since been reporting against the Audit and Remuneration Committees on 31 March 2017. UK Corporate Governance Code 2014 (the ‘Code’). A copy of the 3 Appointed on 1 April 2016. 2014 edition of the Code is available to view on the website of 4 Elected on 9 September 2016. Member of the Audit and Nomination Committees from 10 November 2016 and Remuneration Committee the Financial Reporting Council. As a new version of the Code was from 31 March 2017. introduced during 2016 and the revised provisions will apply to accounting periods commencing on or after 17 June 2016, the The Executive Directors of the Company may, and generally Company will report formally against the 2016 edition of the do, attend meetings of the Committees at the invitation of the Code in its 2018 Annual Report and Accounts. Chairman of the respective Committee. Strategic Report Governance Financial Statements Corporate Information
43
Annual Report and Accounts 2017 Accounts and Report Annual
Speedy Hire Plc Hire Speedy otherNon-Executive Directors annuallyleast meetwillat usually without theChairman’s appraise theto presentChairman performanceparttheBoard annualappraisal process.as of detailed below. Contreras.Bob by CommitteeIts chaired The Audit other is February In Barclay 2015 membersDavidShearer. and Rob are Non-Executive thenumberof (when Directors to reduced was membership retained and Committee the joined Åstrand Jan two), Board The 2017. March 31 on down stepped he until date that from appointment his on independent Åstrand was Jan that considers the of C.3.1. paragraph of satisfying Chairman, requirement the as year the during Committee the of membership his for and Code, review. under Barclay.ItsThe Remuneration otherRob by Committee chaired is 2015 February In Shearer. David and Contreras Bob are members to Non-Executivereduced of was Directors number the (when membership retained and Committee the Åstrand joined Jan two), noted As 2017. March 31 on down stepped he until date that from Åstrandconsiders thatJan theCompany independentabove, was appointmentChairman, satisfyingas his on therequirement the membership of his for and theCode, of paragraph of D.2.1. Committeeduringreview.under theyear Åstrand.TheNomination Jan by Committee chaired is Its other BarclaymembersContreras, Bob David Shearer. are andRob TheCommittee therefore satisfes paragraph therequirementof majority thata theCode its be membersof of to B.2.1. are independentNon-Executive Directors. otherNon-ExecutiveTheChairmanand Directors generally meet withouttwiceleast year at a theExecutive Directors present. In addition,theChairmanregularly briefs theotherNon-Executive Directorsdevelopmentsrelevant on andregarding theCompany necessary. as GroupTheIndependent Senior Director theand The posts of Chairman and Chief Executive TheChief postsandChairman by held of are Åstrand Jan Down,respectively. Russell and Therewere an be to steppingtheChairmanup commercialbehind reasons interimExecutive time,additional theneedfor a Chairmanfor stabilitysubstantialduring guidancetimeand of a Board stabilise theto withDown closely Russell worked he changesand business,undertake essential an restructuring theCompany of implementandactiontheremedial programmes have which performance in resulted improvements. intendedheAs always non-executive reverteda to with role, Septemberefect 30 from During theentire remuneratedtime continuedbe in he to 2016. his with performanceliken no that would only, ofered fees pay theotherExecutive thatof package pay to Directors. ThetheBoardChairman,includes thetwo Executive Directors threeandindependent Non-Executive Directors: Contreras,Bob TheseBarclay three Non-ExecutiveDavidShearer. andRob Directorsstrongbringindependent anda non-executive element theBoard. to TheIndependentSenior DirectorContreras.Bob is ThedeterminationBoard’s independenceregardingtheir is
approving the Group’s policiesrelationapproving alia,thein inter the Group’s to, Conduct whistleblowing,and of Code Group’s theBribery Act,theenvironment, safetyhealthand corporateand responsibility. theconstitution theBoarditsitself,including variousof Committees,planning (followingappropriatesuccession and recommendationsthefromNomination Committee); and approval of the Group’s riskmanagement internalcontroland theGroup’s of approval (followingappropriate processes recommendations from Committee); Audit the approvingtheCompany’sannualViability Statement; recommendationsthefromRemuneration Committee); riskappetite, theGroup’s and risk acceptance oversight of mitigation; risk for programmes issue of shares, the approval of circulars shares,of the approvalcommunications and of issue themarket); to thepolicies frameworkandrelation of approval in to remuneration(followingappropriatetheGroup across Group strategyGroup transactions key and major (including acquisitionsdisposals);and Exchange/Listing Stock Authority matters the (including Company’sposition performance,and modelbusiness strategy; and banking capitalfnance, and structure theGroup’s arrangements; ReportFinancialand Statements (followingappropriate thatrecommendations ensure Committee)to thefromAudit balanced understandableand fair, provides and overall is it theinformation necessary the shareholdersassess for to fnal Financialfnal Statements, interim management statements dividends); and Annual theGroup’s of approving content and theform fnancialreporting interim andof theapproval (including
at least one Non-Executiveoneleast at Director. use of theDirectors’ of use time. Theimplementation matters of theBoard, particularlyby approved relation in matters to such signifcant as acquisitionsother material or projects, sometimes theestablishmentsub-committeeincludes a of comprising information,Committeepart theBoard or as papers of circulated meeting.priortherelevant to practicable,Where papers such advanceof generally in are circulated days fve least at meetings,thebesttime proper reviewallowensure and for to Mattersrequiring Committee Boardor generally are approval theExecutiveproposal by a thesubject of Directors, which formally submitted is theBoard, togetherto with supporting > > > > > > > > > > website. Thematterswebsite. reserved thedecisionBoard for by including, areas butkey numberof subdivided be a can into to: limited not > Corporate Governance Code Compliance Statement) was Compliance Code Corporate Governance mostand 2011 March 30 theBoardformallyon adoptedby inspectionavailable for is It 2017. March 23 reviewed recently on theCompany’stheCompany’sregistered on at and ofce The Board has approved a schedule of matters scheduleof a reserved approved TheBoardhas for partformstheUK it.decisionscheduleof (which by This 44 Speedy Hire Plc Annual Report and Accounts 2017
Governance Corporate Governance continued
The minutes of all meetings of the Board and each Committee The Board considers that each of Bob Contreras, Rob Barclay are taken by the Company Secretary or Assistant Company and David Shearer are independent, on the basis of the criteria Secretary. In addition to constituting a record of decisions taken, specifed in paragraph B.1.1. of the Code and, generally, are free the minutes refect questions raised by the Directors relating to from any business or other relationship which could materially the Company’s businesses and, in particular, issues raised from interfere with the exercise of their independent judgement. the reports included in the Board or Committee papers circulated Bob Contreras is considered to be independent notwithstanding prior to the relevant meeting. Any unresolved concerns are that he had previously served with Jan Åstrand on the board recorded in the minutes. of Northgate plc (whilst neither now serve on the board of that company). During his time with the Company, Bob Contreras On resignation, written concerns (if any) provided by an outgoing has demonstrated that he exercises strong and independent Non-Executive Director are circulated by the Chairman to the judgement and the Board feels that his proven track record and remaining members of the Board. success with northgate plc has added signifcant value to the Appropriate Directors’ and Ofcers’ insurance cover is arranged Board. Following the General Meeting on 9 September 2016, and maintained via the Company’s insurance brokers, JLT Specialty at which David Shearer was elected to the Board pursuant to Limited, and is reviewed annually. a resolution tabled by a large shareholder, the Nomination Committee considered his independence. This included David The Companies Act 2006 allows directors of public companies to Shearer’s confrmation of the absence of any previous or current authorise conficts, and potential conficts of interest of directors, commercial relationship with the nominating shareholder. The where the Articles of Association contain a provision to that Committee was satisfed to recommend to the Board that he efect. The Company’s Articles of Association give the Board be regarded as independent and be appointed as a member authority to authorise matters which may otherwise result in of the Audit and Nomination Committees and subsequently the Directors breaching their duty to avoid a confict of interest. the Remuneration Committee. The Board is satisfed that since Directors who have an interest in matters under discussion at appointment he has demonstrated to the Board independence a Board meeting must declare that interest and abstain from from the nominating shareholder both through his conduct and voting. Only Directors who have no interest in the matter being contributions. considered are able to approve a confict of interest and, in taking that decision, the Directors must act in a way they consider, in The Board is both balanced and diverse in respect of its good faith, would be most likely to promote the success of the experience and skills, although the Board does not currently Company. The Directors are able to impose limits or conditions have any female representation. The Board remains committed when giving authorisation if they feel this is appropriate. Any to maintaining and building on its diversity, including appointing conficts considered by the Board and any authorisations given women at Board and senior management levels based on merit. are recorded in the Board minutes and in the register of conficts The succession planning for the Board recognises this and which is reviewed annually by the Board. The Board considers during the current process for selecting an additional Non- that its procedures to approve conficts of interest and potential Executive Director it has been requested that there be diversity conficts of interest are operating efectively. considerations, including of gender, where possible in the shortlisting of candidates. chairman and chief executive A statement as to the division of the responsibilities between the appointments to the board Chairman and Chief Executive is included in the UK Corporate The Board has established a Nomination Committee. The terms Governance Code Compliance Statement. The Board considered of reference of the Nomination Committee are published on that the Chairman, on his appointment, met the independence the Company’s website. The Committee meets formally as criteria set out in paragraph B.1.1. of the Code. The Board has an necessary, but at least twice a year. This is detailed in more depth established policy that the Chief Executive should not go on to in the Nomination Committee Report on pages 52 and 53. The become Chairman. As reported above, Jan Åstrand ceased his principal functions of the Nomination Committee are to consider role as Executive Chairman on 30 September 2016. and review the structure and composition of the Board and membership of Board Committees. It also considers candidates board balance and independence for Board nomination including job description, re- election to The Board comprises the Chairman, two Executive Directors and the Board for those candidates retiring by rotation and succession three independent Non-Executive Directors. The independent planning generally. A specifcation for the role of Chairman, Non-Executive Directors and their respective experience, details including anticipated time commitment, is included as part of of which are set out on pages 40 and 41, clearly indicates that the written statement of division of responsibilities between the they are of sufcient calibre and number for their views to carry Chairman and Chief Executive. Details of the Chairman’s other appropriate weight in the Board’s decisions. material commitments are set out on page 40 and are disclosed to the Board in advance and included in a register of the same maintained by the Company Secretary. Strategic Report Governance Financial Statements Corporate Information 45
Annual Report and Accounts 2017 Accounts and Report Annual
Speedy Hire Plc Hire Speedy In general, In theindividual Directors bring skillsrelevant and mutualregardand high experiencea theBoard, have to independentconsideredall are of respectother, each for theotherDirectors, management shareholders,and areand duties; their of discharge the to time sufcient providing with keeping bestpractice, In theChairmansteppingdown Committees; Remuneration and Audit the from additional an Recruitment of Non-Executive Director would provideadditional optionstheBoardand deptharoundto Committees; of stafng and succession Board IncreasedBoardreporting against strategic objectives and strategicdiferent to regularin dives acrosstopicsdeep helptherightmaintain would theyear balance between strategic operationaland matters;and Non- for opportunities additional include to program Board Executivemanagementsenior exposureDirectors to have to operationaland visitssite appreciationdeepentheir to of business. the of understanding and management senior
erformance evaluationerformance 1. 2. 3. 4. 5. AstheNominationreported in and Committee above, Report, hand. Itemsin is 3 item and March efected 31 was on 2 item theBoardprogram. will incorporatedto be 5 in and 4 TheNon-Executive Directors, IndependenttheSenior by led conductedDirector, evaluationtheChairmanduring an of IndependenttheSeniorand Director the discussed FY2017, withthatassessment resultstheChairman.of actions No were theevaluation, of theBoard andnecessaryconsidered result a as satisfed is with the Chairman’s commitment and performance. p engagedtheCompany 2017, March During31 ended theyear BoardcarryCondignConsulting (‘Condign’) to detailed a out independentBoardtheBoardCommitteeandand review of efectiveness.andprocesses, procedures frm a is Condign other no evaluationsspecialises board has which and in work connectiona of consisted withTheprocess theCompany. structuredinterview with theChairman,Director each theand Secretary,thenCompany be withtheto topics outline an of providedadvance.Theevaluation in alsocovered included Boardpapersrelevant attendance andreview of Boarda at overview, theevaluation of meetingsway By observer. an as thatfollowingperiodconsiderableconcludedbusiness a of upheaval,personnel shareholderchangeand activism 2015 in efcient an operating in now more theBoardis once 2016, and the of efectiveandthelong-term promote success to way shareholders. for value and Company Principalfndingsrecommendations and theindependent of evaluationimplementation:endorsedthe Boardthatfor are by
iversity on-ExecutiveDirectors regularly further make enquiries of nformation and professional development professional and nformation is a matter a is specifcally reserved for decision theby Board. Company Secretary, whose role is to ensure thatinformation ensure Secretary, Company to is role whose areproceduresall timely manner, a theBoardin by received is applicableandregulations followedand rules complied are with.SecretarytheCompany Theof appointmentremoval or such advice to be obtained is included in the UK Corporate theUK includedin obtained be is advice such to Statement. Compliance Code Governance theadviceservices and to the DirectorsAll of access have are Directors or through associated professional frms. professional associated through or Directors are Directorsenable independentplaceto take in to are Procedures necessary,advice,theprofessionalCompany’sexpense, if at thefurtherance in duties.their enableof to Theprocedure particularly regarding new laws and regulations which relate to or or to relate regulationswhich and laws new particularly regarding the by obtained is education and training Such Group. the afect briefngs including Company, the through individually Directors they which of companies other advisers,externalthrough from providedmeetingtherelevant either at subsequently. or induction tailored importanceof the recognises Board The education, and training ongoing and Board the joining on training ExecutiveDirectorFinance Group and also brief Directors on strategy.and issues results, key During Boardmeetings, the n theExecutive Directors furtherseek and information is which Before each scheduledBeforeeach Boardmeeting Directorsall receive appropriateinformation comprising regardinga theGroup, fnancialreport briefngsand executives.senior from TheChief seeksselect to individuals meetthe to best able are who overall recommendedimprove and requirements the role of diversitythe of Board. i and the beneft to the Group’s overall performance overall theGroup’s thatdiversitythebeneft and to backgrounds, across experience, knowledge, skills genderand bring.can appointments, new In theNomination Committee FTSE 100 company. FTSE 100 d diversity of theThethevalueboardroom Boardrecognises in Audit,Remuneration Nomination or Committees. Details other of registermaterial a theBoardand commitments to disclosed are Secretary.theCompany maintained by thesame is of Non-Executive Directora No is a Director Chairmanof or for inspection for theCompany’sregistered at during normalofce hours.business Eachletterappointment specifesof the anticipatedtime commitment including,of level relevant,where additionalresponsibilities withderived theinvolvement from The terms and conditions of appointment of all theNon-allappointment conditions and Theof terms of ExecutiveDirectors, theChairman,available are those of and 46 Speedy Hire Plc Annual Report and Accounts 2017
Governance Corporate Governance continued
Re-election The remuneration of Non-Executive Directors is dealt with Under the Company’s Articles of Association, all Directors are by a Committee of the Board specifcally established for this subject to election by shareholders at the frst Annual General purpose comprising normally the Chief Executive and the Group Meeting following appointment and all Directors are subject Finance Director without the presence of the Non-Executive to retirement by rotation provisions requiring re-election at Directors. It is the policy of the Board to review the remuneration intervals of no more than three years. As set out in the Directors’ of Non-Executive Directors periodically. The remuneration of Report, the Board has determined that in the interests of good Non-Executive Directors was reviewed at the end of FY2017 governance all Directors shall be submitted for re-election and the conclusion was that no increase would be made for annually commencing at the 2017 Annual General Meeting. FY2018, however Bob Contreras would receive additional fees This will also satisfy the re-election provisions within the of £5,000 per annum to refect the additional responsibilities in Articles of Association. Biographical details of all the Directors respect of his role as Senior Independent Director. Details of the are included in this report in order to enable shareholders to take remuneration of Non-Executive Directors are set out on page 65. an informed decision on any re-election resolution. The letters procedure of appointment of each of the Non-Executive Directors and the Chairman confrm that appointments are for specifed terms and The Board has constituted a Remuneration Committee which that reappointment is not automatic. met fve times during the year. The terms of reference of the Remuneration Committee are published on the Company’s directors’ remuneration website and are fully compatible with the provisions of The performance related elements of the remuneration of paragraph D.2.1. of the Code. The Remuneration Committee the Executive Directors form a signifcant proportion of their members are Rob Barclay, Bob Contreras and David Shearer, potential total remuneration packages. The performance related who are independent of management and free from any elements of the schemes in which the Executive Directors business or other relationship which could materially interfere are entitled to participate are set out in more detail in the with the exercise of their independent judgement. The Chief Remuneration Report. The Remuneration Committee, with the Executive attends by invitation but is not present for discussions advice of New Bridge Street (part of Aon Plc) (NBS), reviews the relating to his own remuneration. The Remuneration Committee Company’s Remuneration Policy on a regular basis, including has appointed NBS to advise it in relation to the design of the design of performance related remuneration schemes. Such appropriate executive remuneration structures. NBS has no performance related elements have been designed with a view other connection with the Company. to aligning the interests of the Executive Directors with those of The responsibilities of the Remuneration Committee include shareholders and to incentivise performance at the highest level. setting Remuneration Policy, ensuring that remuneration The service contracts for Russell Down and Chris Morgan provide (including pension rights and compensation payments) and the for termination by the Company on one year’s and nine months’ terms of service of the Executive Directors are appropriate and notice respectively. It is the Company’s current policy that notice that Executive Directors are fairly rewarded for the contribution periods on termination of Directors’ contracts should not exceed which they make to the Group’s overall performance. It is 12 months. also responsible for the allocation of shares under long-term incentive arrangements approved by shareholders and in The policy of the Board is that the remuneration of the Non- accordance with agreed criteria. In addition, it monitors current Executive Directors should be consistent with the levels best practice in remuneration and related issues. of remuneration paid by companies of a similar size. The levels of remuneration also refect the time commitment and The Board’s policy is that all new long-term incentive schemes responsibilities of each role, including Chairmanship of Board (as defned in the Listing Rules) and signifcant changes to existing Committees. It is the policy of the Board that remuneration for schemes should be specifcally approved by shareholders, Non-Executive Directors should not include share options or while recognising that the Remuneration Committee must any other share-based incentives. have appropriate fexibility to alter the operation of these arrangements to refect changing circumstances. The Company’s current long-term incentive scheme was approved by shareholders in 2014. A more detailed summary of the work of the Remuneration Committee during the year and the Group’s proposed Remuneration Policy for the next three years is contained on pages 54 to 69. Strategic Report Governance Financial Statements Corporate Information 47
eeting m eneral eneral g nnual nnual Annual Report and Accounts 2017 Accounts and Report Annual a
Speedy Hire Plc Hire Speedy ialogue with institutionalialogue shareholders onstructivethe of use frameworktheCompany. for c TheCompany’sAnnual GeneralMeeting include,procedures specifyingmattercourse, a of proxiesas lodged on of thelevel resolutioneach againstresolutionand thebalanceeach and for withheld show withvotes anda dealt beenafter on has each also separatethehands.Company’sis policy proposea It of to resolutiontheAnnual Generalat Meeting substantive each on relation in includingtheAnnual Reportseparateto issue, and Directors’the and Remuneration Accounts Report. questions shareholders’ for available are Chairmen Committee All Meeting. General Annual the at thattheNotice ensure TheCompany’sstandardto is procedure shareholdersrelated 20 leastand to papers at sent are AGM of themeeting,workingbefore days with compliance paragraphin E.2.4.theCode. of Relations withRelationsshareholders d Executive TheChief Director Finance Group and routinely attend analysts’brokers’and presentations relation in theCompany’s to full-yearand half results. ExecutiveTheChairman, Chief and withDirector, Finance assistanceGroup thefromCompany’s brokers,collatepresentations feedback such from reportand the thenextfndings to meetingthealsoBoard. Theis Chairmanof matters discuss availablewithto shareholders relationmajor in alia,results, inter strategyto, issues.corporate governance and TheIndependentavailableSenior to Contreras, Bob Director, is attendmeetings understand withto shareholders order major in thenormalshould communication concerns and issues their channelswith ExecutivetheChairman, Chief FinanceGroup or Directorinefectiveconsidered be inappropriate. or engagedbeen withinvestors Duringhave major and theyear they issues or concerns any on consulted been have 30 thetop have concerns Any theCompany. of thegovernance in have may withthesharedgovernancebeen in consideredtheBoard and
ommittee and auditors ommittee and c udit udit inancial reporting inancial nternal control nternal internalfunction.audit Thefndings recommendations and theCommittee thenformallyof are reported theBoardfor to detailedconsideration. Committee in the presence of KPMG and, by invitation, and,by KPMG Committeeof thepresence in the Executive, Chief FinancialtheGroup Director, Finance theGroup Assurance.and The Committee Risk of ControllertheHead and alsoconsidersformalreports the preparedpresentedby and RelatedFinancial ReportingBusiness and theTurnbull (formerly formalreporttheexternal preparedA by is auditors, Guidance). highlighting LLP(KPMG), KPMG matters identifed thecourse in its statutoryof theAuditreviewed work, auditby is and a review considersmaterialalla controls, fnancial,including operationalcontrols compliance riskandmanagement and systems,with therecommendations accords and containedin Management, Risk on guidance Internal andControl theFRC’s of such systems. such of TheBoard,Committee, via theAudit conductsleast at review, a systemsinternal control. theGroup’s of Such of annually, i theCompany’sinternalcontrolresponsible for TheBoardis reviewing for and processes theefectivenessand procedures are independent. are detailedCommitteemore description theAudit A of thework of theseparate reportcontainedin the duringis of theyear Committee on pages 48 to 51. removal of theexternal of removal auditors. ThepolicytheAudit of objectivityauditor ensure Committeeto is independenceand safeguarded times.all is at As further 51, pagedetailed on Committee theAudit considersthattheCompany’sauditors external auditors. external CommitteeThe Audit primary has responsibility making for recommendation a theappointment, on reappointment and Directors being present, to review and discuss issues arising Directorsfromissues present,review discuss being and to externalinternaland planningagreeand audits thescope to and future work.of Theefectivenessinternal audit theGroup’s of functionthematters of one conjunction reviewed is in with the results, and recommending their approval to the Board.the to approval their recommending results, and TheCommittee regularmeets witha basis on theexternal auditorsinternalfunction,auditand without theExecutive In addition responsibilitysystemsIn internal to the of Group’s for control,theCommitteereviewingresponsible for is theintegrity full-yeartheCompany’saccounts,and thehalf including of of reference are compatible are withreference paragraph theprovisionsof of satisfed TheBoardC.3.2.is theCode. thattheof Chairman of Committee, theAudit appropriateContreras,Bob has and recent fnancialrelevant experience. a established TheBoardCommitteehas Audit met an which theAudit of reference of Theterms times four during theyear. termsSuchCommittee theCompany’swebsite. publishedon are TheDirectors’ Report Independentand ReportAuditor’s appear respectively comply and 74 to 70 pagesand 38 to 36 pages on theCode. of C.1.3.and with paragraphs theprovisions of C.1.1. Accountability and audit and Accountability f 48 Speedy Hire Plc Annual Report and Accounts 2017
Governance Audit Committee Report
Composition of the Audit Committee The Audit Committee comprises three Non-Executive Directors: Bob Contreras (Chairman), Rob Barclay and David Shearer (from November 2016). All members are considered by the Board to be independent. Biographies of each of the members of the Audit Committee are set out on page 41. Jan Åstrand also served on the Audit Committee until 31 March 2017. He had joined the Audit Committee due to the size of the Board in 2015. He was considered independent on appointment as Chairman, and his skills and experience enhanced the Audit Committee during the period in which he served. With the addition of Rob Barclay (April 2016) and David Shearer (November 2016) to the Audit Committee, and following a period of overlap to provide continuity, Jan Åstrand stepped down from the Audit Committee. Bob Contreras is a chartered accountant with over 20 years’ experience as a board member at both listed and private companies. He recently stepped down from the position Bob Contreras of Chief Executive Ofcer of northgate plc, the FTSE 250 leading Chairman of the Audit Committee light commercial vehicle hire business in both the UK and Spain. Previously, Bob was President of the Surgical Division of Mölnlycke Health Care Group, a world-leading manufacturer of products and services for the professional healthcare sector. The Audit Committee presents its report in relation to the He was also previously Chief Executive and Finance Director of fnancial year ended 31 March 2017. private equity backed Damovo Group S.A., and Group Finance Audit Committee objectives and terms of reference Director of Azlan Group plc. The Board is satisfed that Bob Contreras has recent and relevant fnancial experience and that The Audit Committee’s key objectives are the review of the the Committee has an appropriate balance of skills, experience, efectiveness of the Group’s fnancial reporting and internal qualifcations and sector related knowledge. controls, together with the procedures for identifcation, evaluation and reporting of key risks. The role of the Audit Attendance Committee in monitoring the integrity of the Group’s fnancial The Audit Committee’s agenda is linked to events in the Group’s afairs is important to shareholders and other stakeholders, fnancial calendar, and the Audit Committee met on four both internal and external. Accordingly we work closely with occasions during the year. Details of the attendance at Audit management and our external and internal auditors to adopt Committee meetings are set out below. best practice approaches to policies and controls. In addition, a key objective of the Audit Committee is to ensure all fnancial audit committee members and meetings attended reporting is fair, balanced and understandable. The Audit Meetings Committee is satisfed that the Group’s internal and external Name Position attended processes are considered to be robust and appropriately aligned Bob Contreras Chairman Non-Executive Director 4/4 to delivering good fnancial reporting and governance. The 1 Directors confrm that they have carried out a comprehensive Rob Barclay Non-Executive Director 4/4 assessment of the principal risks facing the Group, including David Shearer 2 Non-Executive Director 1/1 those that would threaten its business model, future Jan Åstrand 3 Non-Executive Chairman 4/4 performance, solvency or liquidity. 1 Appointed on 1 April 2016. The terms of reference of the Audit Committee, which include 2 Appointed on 10 November 2016. all matters referred to in the UK Corporate Governance Code, 3 Stepped down on 31 March 2017. are reviewed annually by the Audit Committee and proposed changes made to the Board. The current terms of reference can be found at speedyservices.com/investors and are also available in hard copy from the Company Secretary. Strategic Report Governance Financial Statements Corporate Information 49
Annual Report and Accounts 2017 Accounts and Report Annual
2017 2017 Speedy Hire Plc Hire Speedy y the existence and valuation of hire equipment; hire of valuation and existence the thevaluation,goodwill, potentialandimpairment of, for other intangibleassets property,and plantequipment; and thepreparation for theFinancial basis of concern thegoing Statements;and theInternationalmaterial in a receivable of thedisclosure divisionpreviously provided for. monitoringtheintegrity Financial StatementstheGroup’s of formalannouncementsand relating theGroup’s to performance; reviewingtheCompany’sViability Statement, challenging assumptionswithmade managementthought and,if theBoardand appropriate, by approval for recommending this FinancialStatements;ReportAnnual theand in inclusion concern considering thegoing liquidity of theuse riskand preparingFinancial for Statements;basis theGroup’s and theAnnual Reportevaluating of Financial and thecontent reasonably may it whether to as Board the advise to Statements, thattheAnnual Reportconclude Financialand Statements is balancedunderstandable and fair, providesand the overall informationnecessarythe shareholdersenableassess to to Group. the strategyof and model business performance, xistence and valuation of hire equipment hire of valuation and xistence
inancial Statements inancial managementprocesses.thesereviews The fndings are of Committee themeeting.Audit each by at considered addition consideringIn to theappropriateness theGroup’s of depreciationpolicies, Committee theAudit reviews thevaluation equipmenttaking considerationhire into trackconsistent of a to close equipment at hire of disposing in theGroup of record also This thoroughvalue.bookincorporates usefula review of values. residual and lives economic performed,thework of Committeeresult As theAudit a is satisfedequipmentvalued.assets fairly thathire are Signifcant areas considered by the Audit Committee Committee Audit the by considered areas Signifcant F during Committee theAudit discussed andconsidered During theyear, withtheexternal auditors thefollowing items: > > > > with along these, to Committee Audit the of response and role The Financialcorresponding impact any Statements, theGroup’s on report. this detailin more in discussed are e individualcomprisesmillionfeet several The hire assets, representsthelargest thebalance sheet,on asset underpinsand streams. revenue key theGroup’s environmentThecontrol surroundingthemanagement of critical is feetup-to-date an maintainingthehire to of record theassets ensuringand correctlythat they are withinvalued theFinancialthatthe assurance Statements. gain to order In environmentcontroloperatingsatisfactory a is in the manner, Committeereview Audit theassetinternal to auditrequires f developing accounting standards,developing membersandexpected are to participatepersonallybriefng relevant sessionsin training and year. duringthe > > > > Aspartits Committee theAudit annualprogrammebusinessof of regularlythefromexternalupdates receives to auditors as
in respectexternalreview of in a of auditors. involves This theaudit,risk, of theauditor’sof assessment the scope fndings. key the and materiality of appropriateness (ii) feedback variousthefromAudit stakeholders; (ii) (iii) and assessment;Committee’s own and monitoringconsideringand theprovisions and Code recommendationsCorporate Governance theUK of consideringthought and,if appropriate, approving theuse the of external auditors for non-audit work; consideringtheexternal theindependence of auditors, non-audit undertakentakingwork account: (i) into them; by of the of external auditors; with liaising theexternal respecttherotationauditors in of audit of partners at appropriate junctures; monitoringtheefectiveness theexternal of process audit recommendingincludingtheappointment remunerationand whistleblowingpolicy; and monitoringfnancesenior performance theGroup’s of personnelensuringand development. their determining and directingdeterminingand theinternal audit of thescope programme; Assurance; and Risk of Head the replacing or appointing reviewingmatters reported through theGroup’s signifcant risk in the business; the in risk signifcant consideringtheefectiveness theinternalresourcing and of function; audit monitoringtheefectiveness appropriatenessand internal of controls; identifying evaluatingfor process theBoard’s managingand xternal auditors xternal
nternal controls and risk and controls nternal e The Audit CommitteeThe Audit undertakes its activities withline anin annualprogrammebusiness.Committee’s The dutiesAudit of alia: inter include, i The members of the Audit Committee theAudit Themembers can,of theywhereit judge necessarydischargeresponsibilities,their to obtainindependent adviceprofessionaltheCompany’sexpense. at the Audit Committee theAudit also private holds meetings withboth the externalauditors. the and Assurance and Risk of Head SecretaryCompany The acts secretary as Committee. Audit the to present.andTheexternal Risk of auditorsthe Head and alsoAssurance may meetingrequest a with Committee theAudit necessary.Assuranceandit departmentthey consider The Risk if carriesinternalfunction.audit theGroup’s out Theof Chairman being present. being andTheexternal Risk of auditorstheHead and Assurancemeetprivately with Committee,advise theAudit to mattersCommittee any theAudit should they consider of which attentiontheir brought be to without theExecutive Directors representativestheexternalfrom auditors, FinancialtheGroup invitedAssurance,and are to Risk of ControllertheHead and attendmeetings Committee, theAudit althoughof theAudit Committeereserveswithout timediscussions for invitees any Operation and responsibilities of the Audit Committee Audit the of responsibilities and Operation Executive TheChief together Director, withFinance Group and > > > > > > > > > > > > 50 Speedy Hire Plc Annual Report and Accounts 2017
Governance Audit Committee Report continued
the valuation, and potential for impairment of, goodwill, presentation and recoverability of international receivable other intangible assets and property, plant and equipment As noted by the Company in its half-year announcement on The Audit Committee considers on an ongoing basis whether 10 November 2016, the Group made an exceptional impairment any impairment in the value of assets would be appropriate. which related to an asset sale agreement entered into during In considering this position the Audit Committee considers FY2015. Following this, the Group entered into a settlement the discounted value of future cash fows compared with the agreement with the purchaser. Since 1 April 2016, payments carrying value of the assets. In order to form a judgement over totalling £1.6m have been received in accordance with this the reasonableness of the discount value of future cash fows, agreement (including amounts subsequent to the end of the the Audit Committee challenge management’s view of the fnancial year) and have been recognised as an exceptional item. future cash fows, applying sensitivities where appropriate, and The remaining receivable amounting to £1.2m is fully provided concludes on an appropriate discount rate to apply in order to given the inherent uncertainty that all the outstanding debt will discount the cash fows. In addition, and where appropriate to do be recovered, the Audit Committee considers that the remaining so, the Audit Committee takes account of the external valuation provision is reasonable. reports prepared in connection with the Group’s fnancing arrangements. Internal control and risk management The Board is responsible for the Group’s system of internal Following the acquisitions in FY2016 and FY2017 of the OHP control and risk management and for reviewing its efectiveness. Group and of the assets and operations of Lloyds British The detailed review of internal controls has been delegated by respectively, the Audit Committee has considered, and the Board to the Audit Committee. challenged management on, the values included in respect of these transactions in the Financial Statements. Taking account The Risk and Assurance Department incorporates the Group’s of this, in conjunction with advice from the external auditor, the internal audit function. The Head of Risk and Assurance reports Audit Committee is satisfed with the amounts recorded and that to the Board and to the Audit Committee. The internal audit these are consistent with accounting policies. function is involved in the assessment of the quality of risk management and internal controls. It helps to promote and going concern basis for the preparation of the develop further efective risk management in all areas of the financial Statements business, including the embedding of risk registers and risk The Group has adopted a going concern basis for the preparation management procedures within individual business areas. of the Financial Statements. Judgement over the future cash The Audit Committee receives detailed reports from the Risk fows of the business (for a period of at least 12 months from and Assurance Department at each meeting. signing the accounts) and their interaction with the available liquidity from the Group’s borrowing facilities must be applied The Audit Committee ensured that questionnaires were in concluding whether to adopt a going concern basis of circulated to senior management requesting they notify internal preparation. The Audit Committee has challenged forecast cash audit of any signifcant irregularities in information provided for fows, the assumptions applied to derive the cash fows and inclusion in the Financial Statements. None have been reported. availability of fnance from existing facilities. The Audit Committee has reviewed the efectiveness of internal During the year, the Group has remained in compliance with controls and risk management during the year taking into its fnancial covenants under the Group’s banking facilities consideration the framework and risk register maintenance which were renewed during FY2016. Net debt has again fallen by management, in addition to reports from both internal and in the year, refecting the focus on working capital and cost external auditors. The Audit Committee has concluded that the management. Based on the expectations of future cash fows internal controls have operated efectively during FY2017. and the continued availability of the banking facilities, the Audit Committee has concluded that the available borrowing Review of internal audit facilities are adequate for both existing and future levels of The Audit Committee reviews the efectiveness of the Group’s business activity. The Audit Committee therefore considers that internal audit function. This review includes the audit plan and it is appropriate to continue to adopt a going concern basis in the the level of resource devoted to internal audit, as well as the preparation of the Financial Statements. degree to which the function can operate free from management restrictions. The Audit Committee considered the results of the audits undertaken by the internal audit function and in particular considered the response of management to issues raised by internal audit, including the time taken to resolve matters reported. Although internal audit has raised recommendations for improvement in the normal course of business, the Audit Committee is satisfed that none of these constituted signifcant control failings during FY2017. In accordance with Attribute Standard 1312 of the Global Institute of Internal Auditors (‘IIA’) International Professional Practices Framework, an external quality assessment of internal audit was undertaken during the year. The review concluded that the Group’s internal audit function ‘Generally Conforms’ to the IIA standards (the highest possible rating). Strategic Report Governance Financial Statements Corporate Information
51
Annual Report and Accounts 2017 Accounts and Report Annual
Speedy Hire Plc Hire Speedy necessarytheperformance, shareholders enableassess to to strategyGroup. the and model of business 2017. May 15 theBoardon reportby This approved was Contreras Bob Committee Audit the of Chairman auditors, on the basis that the new audit partneraudit that theauditors,new thebasis LLPon KPMG from strong independenta and partneris Committee theAudit who is satisfedwill robustly challenge management appropriately. Conduct of Code The Company remains committed to the highest standards of business conduct and expects its Directors, employees, consultants and other stakeholders to act accordingly. The Company has a well-established Code of Conduct which incorporates a whistleblowing policy. These policies are actively promoted within the Group. Code of Conduct training is covered in our induction programme for new employees and where appropriate, this is reinforced on an annual basis via an online training course for existing employees. withshareholders Communicating importanceconsiderableplaces Company The communication on withits shareholders, institutionsbothincluding privateand shareholders.Executive Chief DirectorTheGroup’s Finance and Chairman Group’s The relations. investor with involved closely are alsoregularly meets with investors. theCompany’sThe views of shareholders major reportedregularly are are theBoardand to committees various the at and Board the meetingsof at discussed the of Board, including, where appropriate, the Audit Committee. StatementsFinancial and Report Annual of Approval Havingreviewed theAnnual Report Financialand Statements verifedand its contentsinternal withstakeholders, key the Committee Audit advised itsthe theBoardthatin opinion AnnualReportbalanced Financialand Statements fair, was understandableand providesand theinformationall overall Appointment of auditors of Appointment the work, Committee’s Audit the of results the considered Having auditors as LLP KPMG of reappointment the recommending is Board to continue will PricewaterhouseCoopers FY2018. for Group the of KPMG operations. Eastern Middle Group’s the of audit the perform auditors external as continue to willingness its expressed has LLP reappointment its proposing resolutions Separate Group. the of the at proposed be will remuneration its of determination the and 2017. July 12 on held be to Meeting General Annual external theGroup’s contract auditAspreviously, noted was CommitteeThe Audit lasttheAprilrecognises tenderedin 2001. Financial theUK Reporting by changemade Councilregarding theretenderingservices audit yearsevery ten of once least at LLP’s KPMG own above. and theFTSE in companies 350 for partnertherotationauditrequire procedures thelead of after with Chris FY2016 of theend at placeas years,took which fve partner. lead WhilstHearldappointedas Committee theAudit theAudit review, under area this willkeep continue to Committeeas recommendedremain LLP shouldthat KPMG has
ectiveness and independence independence and ectiveness f performancefees of reviewedduringand thelevel theyear charged,appropriateconsidered are which given thesize the to 4 note detailed are in ThetheGroup.fees of Statements. Financial services,theexternal payableto 4 auditorsnote given are in theFinancial to Statements. CommitteeThe Audit theexternalconsidered auditors’ non-auditservices relate to theyear providedthe auditors in by theAuditresultstheCompany’shalf-year which the review of bestCommitteeworkundertaken is acceptstheexternal by auditors.Details thefees,betweensplit non-auditof and audit the provision of any non-audit any theprovision servicesof theexternal by auditors Committee. priortheAudit subject by to approvalTheAudit is Committeemonitors spendstheamountclosely theCompany withtheexternal non-auditauditors on services. Theonly non-audit fees paid to the auditor should not exceed 100% exceed not shouldtheauditor non-auditto paid fees thethree-yearand thatyear, in relatedtheauditpaid fees of exceed not shouldtheauditor non-auditto of paid fees average fees.theannualaudit The policy of 50% further thatrequires order to ensure that their objectivitythattheir ensure to order independenceand are safeguarded.Thepolicy beprovidesshould thatpreference retainingconsultantsgiven to otherthanthefromexternal auditorsstrong unless existthecontrary, reasons that to and agreedwith theCommitteeproposal thefromAudit thatthe refectpolicy practiceto updatedcurrentmarket be be and Thepolicydesignedthe control is to appliedAprilfrom 2017. non-audit provisionof services theexternal by auditors in the Group and the external auditors. external the and Group the theexternal Theof policy non-audittheuse auditors for for relatedreviewed purposestheBoardduringandwas theyear resolution,judgements,accountingaudit and key anyand recommendationstheauditorsthe theandBoard by to made Committeeresponse.Board’sresponsibleThe Audit for is ensuringappropriate thatan relationship maintainedbetween is cost-efectiveness,work,welltheir as of thescope review of a with compliance their ethical, as regulatoryprofessionaland requirements.CommitteeThe Audit also reviewsmajor any theirariseand theaudit which during of theissues course the Group and theexternaland theGroup responsibility auditorshas and for monitoringtheexternal auditors’ independenceobjectivity. and performancetheir of assessment and an includes work This Review of the work, e auditors external the of CommitteeThe Audit reviews annually therelationship between The Internal Audit Charter was reviewed by the Audit CommitteeCharterThe theInternalAudit Audit reviewed by was determinedduring thatthis was theit fnancialand year purpose. for ft remained other review processes describedotherreview processes determinewhether to internal working efectively. is audit CommitteeFollowing theAudit thereview, that concluded internalfunctionaudit theGroup’s efective. remains managementinviting Assuranceand commentstheRisk on function,respecttheexternal alsoin it of did as auditors and Committee theAudit itself.by considered The responses are conjunction Committeein theAudit used are withand the During this fnancial year, the Audit Committee theAudit reinstatedDuring fnancial this year, thecirculation questionnaire a Directors of to seniorand 52 Speedy Hire Plc Annual Report and Accounts 2017
Governance nomination Committee Report
The Nomination Committee presents its report in relation to the fnancial year ended 31 March 2017. Chaired by Jan Åstrand, the key functions of the nomination Committee are to review the structure and composition of the Board, to identify and propose to the Board suitable candidates to fll Board vacancies, and to undertake succession planning for Board and senior management positions.
Composition of the nomination Committee The Nomination Committee comprises the Chairman, Jan Åstrand, and the three independent Non-Executive Directors, Bob Contreras, Rob Barclay and David Shearer. Appointments and attendance at meetings during the year are set out below. Biographies of the members of the nomination Committee are set out on pages 40 and 41. The terms of reference of the Nomination Committee are reviewed annually by the Committee and proposed changes are made to the Board. The current terms are published on the Company’s website at speedyservices.com/investors and are Jan Åstrand also available in hard copy form on application to the Company Chairman of the Nomination Committee Secretary.
Attendance The Nomination Committee met on two occasions during the year, with additional ad hoc meetings as required. Details of the attendance at Nomination Committee meetings are set out in the table below. At the invitation of the Chairman, the Chief Executive may attend meetings. The Group’s HR Director may also be invited to attend, particularly where discussions are taking place around succession planning within the Group. nomination committee members and meetings attended Meetings Name Position attended Jan Åstrand Chairman Non-Executive Chairman 2/2 Bob Contreras Non-Executive Director 2/2 Rob Barclay 1 Non-Executive Director 2/2 David Shearer 2 Non-Executive Director 0/0 1 Appointed to the Board and Nomination Committee on 1 April 2016. 2 Elected to the Board on 9 September 2016. Member of the Nomination Committee from 10 November 2016. Strategic Report Governance Financial Statements Corporate Information 53
Annual Report and Accounts 2017 Accounts and Report Annual
Speedy Hire Plc Hire Speedy for an appointmenttheBoard, an theNominationto for Committee satisfed independencewas subsequently and reviewed his to independentregarded as be theBoard that he recommend to Nominationand theAudit memberof appointeda be and theRemunerationand Committees2016 November in Committee2017. March in additionBoardlevel, changes theNominationat In to Committee individuals, planningkey reviewedfor succession including ExecutiveNon-Executiveand Directors, talentand management, identifcationincluding themosttalented individualsof key for theGroup.management across roles TheNomination Committee recommended theannualhas re- electionDirectors,all of theDirectors’ detailed in as Report 36.page on 2017. May 15 theBoardon reportby This approved was TheNominationBoardall for Committee theprocess leads appointments,carefully evaluating theskills theavailable on bestbalanced be enhanced, these and may how Boardand agreeingtheperson specifcation, selecting external recruitmentconsultants, considering makingcandidatesalland recommendationsappointment.the Boardfor to selecting In candidates,theNomination Committee givesconsideration due thebenefts diversity.to of recommendations All on are made meritagainst objective criteria. reviewing In thestructure, composition size, diversityand the of recommendedadditional thatan Board,was it Non-Executive Directorappointed. be TheNomination Committee agreed has thespecifcation Partners externalappointedLygon and (an otherconnectionconsultancy searchno has which with the undertake is to detailedsearch. above Company) The a process appointment. new this for followed being the electedDuringtheBoardby David Shearerwas to theyear shareholderstheGeneralSeptemberMeeting at 2016. 9 on detailed above process theusual follow not Whilst did this Jan Åstrand Jan NominationtheCommittee of Chairman
ominationCommittee undertook the of all omination Committee omination n n sufcienttime discharge to their duties; and makingrecommendations respectDirectors theBoardin of to standingre-election. for on the Board; the on theBoard placefor in planning ensuring is thatsuccession management; senior and ensuringthatNon-Executive Directorsdevote to able are reviewingcompositionandthewithBoard along thesize of committees; Board of membership evaluatingskills, thebalance of knowledge experienceand ensuring that there is a formal and transparentformaland a ensuringprocedure thatthereis Executive new theappointment for of Non-Executiveand DirectorsmakingtheBoardand recommendations to the to appointments; such on Board
with a view to ensuringwithview thecontinued to a ability to theGroup of compete efectively. During the year the the year the During additionallyand duties above out set reviewed theleadership theorganisation, of needs executiveboth non-executive,and > > > > > > obtainindependent professionaladvicetheCompany’s at expense. alia: inter include, duties Committee’s Nomination The during a year, although regularlymeetmore can it required. if duringyear, a SecretaryTheCompany acts secretary as theNomination to Committee.theNominationThemembers of Committee can, necessarytheywhereit judge dischargeresponsibilities,their to Operation of the the of Operation TheNomination Committee generally meets two occasionson 54 Speedy Hire Plc Annual Report and Accounts 2017
Governance Remuneration Report
Annual Statement The Remuneration Committee presents its report in relation to the fnancial year ended 31 March 2017. This year’s report has been split into three sections: > this Annual Statement summarising major decisions and any outstanding changes to remuneration; > the Remuneration Policy Report, which sets out the Group’s proposed policy on the remuneration of Executive and Non-Executive Directors for the next three years; and > the Annual Remuneration Report outlining how the Group’s existing Remuneration Policy was implemented in FY2017. The Remuneration Policy Report will be subject to a binding vote and the Annual Remuneration Report will be subject to an advisory vote at the 2017 Annual General Meeting (AGM).
Performance and reward for Fy2017 As noted in the Strategic Report, stronger operational Rob Barclay performance and customer service delivery has led to a Chairman of the Remuneration Committee signifcant improvement in performance during the year, with Group proft before tax increasing to £14.4m from a loss of £57.6m. Enhanced asset utilisation has led to increased efciencies with improvements in core hire revenues at the same time as delivering a reduction in the net book value of feet assets. The Executive Directors were eligible to receive a bonus opportunity of up to 100% of salary for performance in FY2017. As a result of the strong fnancial and operational performance during the year, the threshold performance targets were exceeded and bonuses paid out at 97.43% of salary. Due to their comparatively recent appointments, there were no long-term incentive awards vesting to the Executive Directors in the year or based on performance to 31 March 2017.
Remuneration Policy for Fy2018-Fy2020 The current Remuneration Policy was approved by shareholders in 2014. During the course of the year, the Remuneration Committee reviewed the Remuneration Policy to ensure that it continued to support the business strategy and complied with the latest guidance. The Remuneration Committee concluded that the current policy remained ft for purpose and therefore no substantive changes have been made to the policy being put to shareholders for approval at the AGM. Some minor changes have been made which include changes to the wording around the choice of performance measures to be used for the annual bonus and Performance Share Plan to ensure sufcient fexibility and alignment to the business strategy over the next three-year period. Details of how the policy will be applied in FY2018 are set out on page 55. Strategic Report Governance Financial Statements Corporate Information 55
Annual Report and Accounts 2017 Accounts and Report Annual
Speedy Hire Plc Hire Speedy Chairman of the RemunerationtheCommittee of Chairman Shareholder engagement Shareholder TheCommittee active an takes shareholderinterest views in on theCompany’sexecutive remuneration mindfulpolicyof is and shareholders otherstakeholdersof and theconcerns we and shareholders our theviews of account willinto take continue to appropriate. as thattheproposedRemuneration believe frmly conclusion,we In appropriately is and Company the of interests best the in is Policy alignedwith thestrategic delivering in goalstheGroup of supportingshareholderand value the of thelong-term success continuedforwardreceivinglook your and supportGroupto for theresolutions relating the to proposed Remuneration Policy Report. Remuneration Annual and 2017. May 15 theBoardon report by This approved was Barclay Rob
2018 2018 y 10% will continue to be based on UK & Ireland core & UK on basedwill be continue to 10% revenues. hire (replacing asset optimisation). ROCE measures how well the well (replacingoptimisation). how asset measures ROCE seen thecapitalreturnis anddeliverson investeda Group performance key thebusiness. indicator a for as theprimary fnancial performanceof measure thebonus, for fnancialtargetedmore providing performance.of a measure capitalreturn on (ROCE). on employedwillbased be 20% specifc metrica bonus FY2018 includedas been in has ROCE 70% will be based on Group earningsGroup interest, before on will based be tax70% and amortisationtaxreplacesbeforeproft as targetsEBITA (EBITA).
further increases have been given to employees in key roles furtherkey in employeesgivenbeen to increaseshave recruitmentwhere priority. retentiona and is of theorganisation. of addition, In alongside widetheCompany salary1.5%, was increase the average where review process that alsoensure investment duringhas madeto been theyear theNational above andLiving remains Wage pay employee Directors,theRemuneration Committee account into takes employmentEveryand conditionspay the Company. across Speedy in participatesemployee scheme to relevantbonus a in thesuccess in share to ensuringable are employeesallrole, their Employee engagement Employee consideringWhen theremuneration policy theExecutive for per share (EPS) growth targets (50% of the award) over threegrowth over (EPS) share targets theaward) per of (50% fnancialyears.two-year A postvesting periodholding applies. set are awards Detailstheperformance of targets the2017 for theAnnual Remunerationin out Report. Annual Report and Accounts. and Report Annual Performancegrantedwill be over continue awards shareto salary.relative worth shareson willbasedof be 100% Awards earningsand theaward) totalshareholder of return (TSR) (50% minimum EBITA threshold is achieved.Thethresholdforward is looking EBITA minimum targetscommercially be sensitive deemed to are further but retrospective detailsa on next will disclosed in be year’s basis > Outstandingperformance themaximum willfor required be thewithpayable, payablebecomeunless bonus no to bonus > at 100% of salary. of 100% Theperformance at FY2018 for measures follows: willas be > annum, with efect from 1 April 2017, in line withline theaveragein annum,with efectApril 1 from2017, theGroup. across increase of rate Themaximum opportunitybonus unchanged remains Application of the Remuneration Policy in F in Policy Remuneration the of Application TheExecutive Directors’ per salaries 1.5% increasedby were 56 Speedy Hire Plc Annual Report and Accounts 2017
Governance Remuneration Report continued
Remuneration Policy Report Changes to the Remuneration Policy approved This part of the Directors’ Remuneration Report sets out the by shareholders at the 2014 AGm Remuneration Policy for the Group. This revised Directors’ The Remuneration Committee has undertaken a thorough review Remuneration Policy will be put to shareholders for approval of the existing Remuneration Policy, taking full account of the in a binding vote at the AGM on 12 July 2017. The efective date Group’s strategic objectives and developments in the executive of the revised policy will be 12 July 2017. The Remuneration pay environment. The Remuneration Committee frmly believes Committee’s current intention is that the revised policy will that the current overarching Remuneration Policy continues to be operate for the three-year period to the AGM in 2020. efective and that no signifcant changes are required. However, some minor amendments have been proposed to ensure that the Policy overview policy is sufciently fexible to operate efectively over the next The primary objective of the Remuneration Policy is to promote three-year period (e.g. the Remuneration Committee has built in the long-term success of the Group. In working towards the some additional fexibility with regard to the specifc measures fulflment of this objective the Remuneration Committee takes which will be used for the bonus and PSP to ensure that any into account a number of factors when setting the Remuneration targets are fully aligned with the strategic imperatives prevailing Policy for the Executive Directors including the following: at the time they are set). > the need to attract, retain and motivate high calibre Executive Remuneration scenarios for Executive Directors Directors and senior management; The charts below show how the composition of the Executive > internal pay and benefts levels and practice and employment Directors’ remuneration packages vary under the policy at three conditions within the Group as a whole; performance levels, namely, at minimum (i.e. fxed pay only), > the recommendations set out in the UK Corporate Governance target and maximum levels. Code and the views of shareholders and their representative Russell Down, Chief Executive bodies; and > periodic external comparisons to examine current market Minimum 100% £423 trends and practices and equivalent roles in similar On-target 54% 23% 23% £778 companies taking into account their size, business complexity, international scope and relative performance. Maximum 38% 31% 31% £1,133 Our remuneration structure is intended to be simple and £’000 0 250 500 750 1,000 1,250 transparent, and to contribute to the building of a sustainable performance culture. The main elements of the remuneration Basic salary, benefts and pension Bonus PSP award package for Executive Directors are a base salary, benefts and pension provision and, subject to stretching performance Chris morgan, Group Finance Director conditions, an annual bonus plan and shares awarded under a Performance Share Plan (PSP). Minimum 100% £294 The key principles of the policy are: On-target 54% 23% 23% £538
> base salaries between lower quartile and median, but with Maximum 38% 31% 31% £781 the potential to earn above-market rewards for sustained exceptional performance provided that stretching and £’000 0 250 500 750 1,000 1,250 demanding performance conditions, designed to promote the long-term success of the Group, are met; Basic salary, benefts and pension Bonus PSP award > a reward structure that balances short-term and long-term performance; and The charts above are based on: > competitive incentive arrangements, ensuring a focus on > salary levels efective 1 April 2017; business performance and alignment with the interests of > an approximated annual value of benefts; shareholders. > an annualised pension contribution (as a % of salary); As a result, the Remuneration Committee has determined > a 100% of salary maximum annual bonus (with target assumed that the remuneration of Executive Directors will provide an to be 50% of the maximum); and appropriate balance between fxed and performance related > a 100% of salary PSP award (with target assumed to be 50% pay elements. The Remuneration Committee will continue to of the maximum). No share price appreciation in respect of the review the Remuneration Policy to ensure it takes due account PSP awards has been assumed. of remuneration best practice and that it remains aligned with shareholders’ interests. The scenarios exclude share price appreciation and dividend assumptions. Strategic Report Governance Financial Statements Corporate Information 57
None,although theoverall performance of theindividual considered is as partthe reviewof processalongside factors the how in described operate we the policy salary
> Performancetargets Annual Report and Accounts 2017 Accounts and Report Annual
scale,responsibilityscope or take to the roleand/or of relevant accountof market movements WhereExecutivean Director’ssalary setbelow is marketlevels appointment,at series a increases of may givenbe addition (in to thefactors listedin above) achieveorder theto desired salarypositioning, subject satisfactory to individual performance Thereprescribedno is maximumannual basic salary salary or increase. Details the current of salary levels thesetareout Annualin RemunerationReport Anysalary increase (in percentagesalary of terms) willordinarily line in be withthe general increase thefor broader employee population;lower a however, higher a or increase bemay awardedrecognise, to for example,increasean the in aximum
> > > m Speedy Hire Plc Hire Speedy companieswith similar characteristicsandsector comparatorstakenare into review in account Internalreference points, theresponsibilities the of individualrole,progression withinthe roleandindividual performancealsoare taken account into Normallyreviewed annually withchanges typically April efective1 monthly a cash on in Paid basis;pensionable Comparisonagainst
> Operation > > >
appropriate of level basicfxed income avoidingexcessive riskarising from over reliancevariable on income Refectsthe value the individual of role their and Refectsskills and time over experience Providesan
> > Purposeand strategy linkto > Salary Element Summary Director policy table Summarypolicy Director summarisesThetable below theRemuneration AGM: PolicyDirectors, for efective as thefromCompany’s2017 58 Speedy Hire Plc Annual Report and Accounts 2017
Governance Remuneration Report continued
Purpose and Element link to strategy Operation maximum Performance targets Benefts > To provide a > Benefts may include a > There is no maximum limit, n/a competitive benefts combination of car or car but the Committee reviews package allowance, health benefts the cost of the benefts > To promote including permanent provision on a regular basis recruitment and incapacity and life insurance to ensure that it remains retention > Other benefts including appropriate. Participation in relocation allowances may the all-employee share plans be ofered if considered is subject to the limits set out appropriate and reasonable by HMRC by the Committee > Any reasonable business related expenses can be reimbursed (including the tax thereon if determined to be a taxable beneft) > Executive Directors are also eligible to participate in any all-employee share plans operated by the Company, in line with prevailing HMRC guidelines (where relevant), on the same basis as for other eligible employees Pension > Provide competitive > Defned contribution and/or > Up to 20% of basic salary p.a. n/a retirement benefts cash in lieu of pension Bonus > Incentivise delivery > Normally payable in cash > 100% of salary p.a. > Group fnancial of specifc strategic (although the Committee measures (e.g. objectives, including reserves the right to deliver proft before tax) fnancial performance some or all of the bonus will apply and personal annual in shares which may be > Personal and/or goals deferred) strategic KPIs may > Maximum bonus only > Non-pensionable apply for a minority payable for achieving > Levels of award are of the bonus demanding targets determined by the > One-year Committee after the year performance end based on performance period against the targets set > Clawback > All bonus payments are provisions apply at the ultimate discretion for a period of of the Committee and three years from the Committee retains an the bonus payment overriding ability to ensure date that overall bonus payments refect its view of corporate performance during the year Strategic Report Governance Financial Statements Corporate Information 59
awardcycles, as appropriate,to refectthe strategic prioritiesthe of businessthatat time Performance underpinsmay apply also maximum A 25% of veststhresholdat increasingto vesting100% at maximuma on straightlinebasis Withholding andclawback provisionsapply for period a three of yearsfollowing the vestingawardan of n/a Performance normallymeasured threeover years currentlyAwards vestbased on performance againststretching relative Total ShareholderReturn (TSR)targets absolute and/or EarningsSharePer targets(EPS) set andassessed by theCommittee. diferent However, measuresmay futuresetfor be
> > > > > > Performancetargets
Annual Report and Accounts 2017 Accounts and Report Annual
ExecutiveDirectors are requiredandbuild up to maintainshareholding a worthleastat of 100% salary base 150% of salary of 150% p.a. normal limit salary 200%of exceptional limit dividend A equivalent provisionexists allowing the Committeeamountan pay to equivalentshares) cash or (in the dividendsto orpaid payablevested on shares options later(for no to up post- the of end the than vestingholding period or exercise,the at pointof if sooner);amountany payable assumemay the reinvestment dividends of aximum
> > > > m Speedy Hire Plc Hire Speedy equivalentleastat oneto year’sbasesalary (although increasedbe maythis PSP if awardlevels increasedare the future)in through the retentionvested of share throughawards or open purchases market ExecutiveDirectors are requiredbuildand to maintainshareholding a holdingperiod will be appliedthe grantto awards of Conditionalnilawards or nominal or costoptions are annually granted normally TheCommittee reviews the quantumawardsannually of andmonitors the continuing suitabilitythe performanceof measures two-year A post vesting
> Operation > > >
and shareholders and To provide alignment To interests of between ExecutiveDirectors Alignedmain to strategicobjectives of deliveringlong-term creation value AlignExecutive Directors’interests withthose of shareholders To promote retention
> > Purposeand strategy linkto > > ownership ownership guidelines Share Performance Performance Plan Share Element 60 Speedy Hire Plc Annual Report and Accounts 2017
Governance Remuneration Report continued
Purpose and Element link to strategy Operation maximum Performance targets non- > To attract and retain > The Non-Executive Directors’ > There is no prescribed n/a Executive high calibre Non- fees are set by the Board maximum fee or fee increase. Executive Directors on the recommendation Total fees for the Non- Directors of the Executive Directors. Executive Directors are no Director takes part in subject to the overall limit set discussions relating to their out in the Company’s Articles own remuneration of Association > The fees are set taking into > Any increase will be guided account the time commitment by changes in market rates, and responsibilities of the time commitments and role responsibility levels > Fees are normally paid monthly in cash and are normally reviewed annually > Expectation that individuals build and maintain a shareholding equal to 100% of fees > Non-Executive Directors can be reimbursed for any reasonable business related expenses (including the tax thereon, if determined to be a taxable beneft) notes: 1 The choice of the performance metrics applicable to the annual bonus scheme refect the Remuneration Committee’s belief that any incentive compensation should be appropriately challenging and tied to both the delivery of key fnancial targets and individual and/or strategic performance measures intended to ensure that Executive Directors are incentivised to deliver across a range of objectives for which they are accountable. The Remuneration Committee has retained some fexibility on the specifc measures which will be used to ensure that any measures are fully aligned with the strategic imperatives prevailing at the time they are set. 2 The performance conditions applicable to the PSP awards were selected by the Remuneration Committee on the basis that a combination of relative TSR and key fnancial objectives provides strong alignment with the delivery of long-term returns to shareholders and incentivises strong Group fnancial performance – consistent with the Company’s objective of delivering superior levels of long-term value to shareholders. The Remuneration Committee has retained fexibility on the measures which will be used for future award cycles to ensure that the measures are fully aligned with the strategy prevailing at the time the awards are granted. notwithstanding this, the Remuneration Committee would seek to consult with major shareholders in advance of any material change to the choice or weighting of the PSP performance measures. 3 The Remuneration Committee operates the annual bonus, PSP and all-employee share plans in accordance with the relevant plan rules and where appropriate, the Listing Rules and HMRC legislation. The Remuneration Committee, consistent with market practice, retains discretion over a number of areas relating to the operation and administration of the plans. These include, for example, the timing of awards and setting performance criteria each year, dealing with leavers, discretion to retrospectively amend performance targets in exceptional circumstances (providing the new targets are no less challenging than originally envisaged) and in respect of share awards, to adjust the number of shares subject to an award in the event of a variation in the share capital of the Company. 4 Consistent with HMRC legislation, the all-employee Sharesave scheme does not have performance conditions. 5 Directors are eligible to receive payment, and any existing award may vest, in accordance with the terms of any such award made prior to the approval of the Remuneration Policy detailed in this report, and in accordance with the provisions of the Remuneration Policy in force at the time such award or right to receive payment was made or granted. Strategic Report Governance Financial Statements Corporate Information 61
Annual Report and Accounts 2017 Accounts and Report Annual
Speedy Hire Plc Hire Speedy where possible, ensure that these awards are consistent withconsistent are thattheseawards ensure possible, where vesting periodsforfeitedof terms expected andawards in value. TheRemuneration Committeeperformancediferent apply may measures,performance vesting periodsperiods forand/or followingmade initial appointmentawards theannualunder long-term incentive arrangements, and/or bonus thesubject to thedeterminesplan,that the it circumstances if theof rules of recruitmentmeritmade alteration. be can such award PSP A not shortlyis theCompany following appointment an (assuming period). closed a in internalExecutive an For Director appointment, variable any pay to allowed be respecttheprior may in role awardedelement of its originalto according out pay terms. external For internalappointments,and theRemuneration Committeeagreewill thatthemay Company meet certain incidentalrelocation appropriate.expensesand/or as structureThe fee Non-Executivequantum andfor Director appointmentsNon-Executivetheprevailing on willbased be policy. fee Director place planningTheBoardin evaluation processes succession and thecorrectskills, thereis balance designed of ensure are to experienceknowledgeandtheBoard. on Theactivities the of NominationCommittee theseoverseeingmatters disclosed are NominationCommitteethe Report.in Approach to recruitment and promotions and recruitment to Approach Theremuneration Executive new packagea for Director would approved theprevailing with of theterms accordance in set be RemunerationappointmentPolicyintothe time take andat of theskills account experienceand theindividual, of themarket thatexperience candidateof the importancea and for rate of securingindividual.therelevant attract to required as Salarylevel a provided such be at would themostinitiallyappropriate set a be at may candidateand progresstowards may thatit thebasis mid-marketon below level expertise themid-marketonce level performanceand been have sustained. and proven awarded be variablemay which Theof pay maximum level Executive new to Directors,buy- any of thevalue excluding arrangements,out withline thewillpolicyin In be above. set addition,theRemuneration additionalCommittee ofer may cash share-based and/or elementsincentivereplace deferred or to will, executiveIt forfeited an pay previousby leavingemployer. a RemunerationPolicy.TheRemuneration Committee also closely monitorsdevelopments institutional in investors’ bestpractice expectations. considers shareholder feedback received in relation considersshareholderin the feedback received to Directors’Remunerationany plus this,Reportand year each additionalconsidered time,timefrom is feedbackto received parttheRemuneration as of Committee’s annualreview of mindful of the concerns of shareholders otherstakeholders.of and theconcerns mindfulof TheRemuneration Committee seeksengage withto its major shareholderssignifcant any theRemunerationwhen changesto Policyproposed. are TheRemuneration Committee also How shareholders’ views are taken into account into taken are views shareholders’ How TheRemuneration Committee active an takes interest in executiveshareholder our views on remuneration policy is and and the Group believes that they fulfl a business needby business that theyfulfl a believes theGroup and encouragingtheloyalty rewarding and motivation and long- of servingthosewithemployees rewarding by andemployees experience. higherlevelsof Group operates a long-term operatesa Groupservice schemewhichunder award rangeof a receive years 25 and servingemployees20 10, additionalbenefts, additionalannualholidayincluding of days entitlement.These benefts popular are amongst employees growth and share price performance. price share and growth therecognising approachwith Consistent of theGroup’s contributionthebusiness,the itslevelsallin at employeesof based remuneration,based with remuneration marketdriven by question. comparatorsin theimpact therole and of Long-term incentivesreservedhaving are thosethegreatestjudged as for strategic theGroup’s potentialinfuence to direction, earnings TheRemuneration Policy described providesoverview an above thestructure of executivesthemostsenior thatoperates for lower a executive have Employeesbelow theGroup. in level incentive- of up made remuneration total their proportion of How the Executive Directors’ Remuneration Policy Remuneration Directors’ Executive the How widerGroup the to relates widerandwiderworkforce. consider pay The requirement to employmentconditionsconsidered elsewhere is theGroup in objective theRemuneration key by is and a Committee be to theRemunerationembedded reference.in Committee’sof terms TheRemuneration Committee regularly interacts with theHR functionoperationalsenior and executives monitorsand pay theworkforce. across Salarytrends increaseswill ordinarily salarywiththeline percentage thoseof in of (in be terms) employees regardingemployeestheremuneration directors. of However, conditionsand theelsewherepay considered are theGroup in designingwhen thepolicy Executive for Directors continueand relation in consideredimplementation be to to thepolicy. of How employees’ pay is taken into account into taken is pay employees’ How TheRemuneration Committeewith directly not does consult 62 Speedy Hire Plc Annual Report and Accounts 2017
Governance Remuneration Report continued
Service contracts and approach to leavers In relation to a termination of employment, the Remuneration The Company’s policy is for Executive Directors to have service Committee may make payments in relation to any statutory contracts which may be terminated with no more than 12 months’ entitlements or payments to settle compromise claims as notice from either party. The Executive Directors’ service contracts necessary. The Remuneration Committee also retains the are available for inspection by shareholders at the Company’s discretion to reimburse reasonable legal expenses incurred registered ofce. in relation to a termination of employment and to meet any transitional costs if deemed necessary. Payment may also be The relevant dates of service contracts and notice periods for the made in respect of accrued benefts, including untaken holiday current Executive Directors are set out as follows: entitlement. Executive Director Date of contract Notice period There is no provision for additional compensation on a change Russell Down 8 January 2015 12 months of control. In the event of a change of control, the PSP awards Chris Morgan 13 January 2016 9 months will normally vest on (or shortly before) the change of control subject to the satisfaction of the relevant performance conditions at that time and, unless the Remuneration Committee no Executive Director has the beneft of provisions in his determines otherwise, reduced pro-rata to refect the proportion or her service contract for the payment of pre-determined of the vesting period served. Outstanding awards under any compensation in the event of termination of employment. all-employee share plans will vest in accordance with the It is the Remuneration Committee’s policy that the service relevant scheme plan. Bonuses may become payable, subject contracts of Executive Directors will provide for termination to performance and, unless the Remuneration Committee of employment by giving notice or by making a payment of determines otherwise, a pro-rata reduction to refect the an amount equal to the monthly basic salary and pension curtailed performance period. contributions in lieu of notice. It is the Remuneration Committee’s policy that no Executive Director should be entitled External appointments to a notice period or payment on termination of employment in The Board allows Executive Directors to accept appropriate excess of the levels set out in his or her service contract and in outside commercial non-executive director appointments determining amounts payable on termination, the Remuneration provided the aggregate commitment is compatible with their Committee will take into consideration the Executive Director’s duties as Executive Directors. The Executive Directors concerned duty to mitigate his or her loss. may retain fees paid for these services, which will be subject to Annual bonus may be payable with respect to the period of approval by the Board. No Non-Executive Directorships in a listed the fnancial year served although it will be pro-rated for time company were held by the Executive Directors during the year. and paid at the normal pay-out date. Diferent performance targets may be set for the remainder of this bonus period non-Executive Directors to refect the Directors’ specifc responsibilities. Any share- The Chairman and Non-Executive Directors do not have contracts based entitlements granted to an Executive Director under the of service, but their terms are set out in letters of appointment. Company’s share plans will be determined based on the relevant Appointments are subject to annual re-election by shareholders plan rules. In certain prescribed circumstances, such as death, ill at the AGM and may be terminated by three months’ notice on health, disability or other circumstances at the discretion of the either side. The letters of appointment of the Non-Executive Remuneration Committee, ‘good leaver’ status may be applied. Directors, copies of which are available for inspection at the For good leavers, awards will normally vest at the normal vesting Company’s registered ofce during normal business hours, date, subject to the satisfaction of the relevant performance specify an anticipated time commitment of 50 days per annum in conditions at that time and reduced pro-rata to refect the relation to Jan Åstrand and 15 days in relation to Bob Contreras, proportion of the vesting period actually served. However, under Rob Barclay and David Shearer. Relevant appointment letter and the plan rules, the Remuneration Committee has discretion to term dates of the Non-Executive Directors are set out as follows: determine that awards vest at cessation of employment and/or to disapply the time pro-rating requirement if it considers Expected month it appropriate to do so. Non-Executive Appointment Month of last of expiry of Director letter date election current term 1 Jan Åstrand 9 October July 2015 November 2014 2017 Bob Contreras 9 December July 2016 December 2015 2018 Rob Barclay 30 March 2016 July 2016 April 2019 David Shearer 22 September September September 2016 2016 2019 1 Subject to annual re-election by shareholders at the AGM. Strategic Report Governance Financial Statements Corporate Information 63 and
speedyservices.com/investors Annual Report and Accounts 2017 Accounts and Report Annual
Speedy Hire Plc Hire Speedy performance of external remuneration advisers; remuneration external of performance equityrelation plans shareemployee in of dilution for use to and limits; headroom determiningremuneration arrangements senior for managementleavers.joinersand determination of FY2016 bonuses for theExecutive for bonuses Directorsdetermination FY2016 of managers; senior and determinationexecutive of remuneration structure policyand FY2018; for planperformanceshare employee progressof interimfnal and againstmeasures targets any of consequentapprovaland vestingawards; of theunder FY2018 in made be to awards any grantof plan; share performance executive bonuses; FY2017 for achievement bonus progressof serviceeligiblelong for 25-year employees; awards efectivenessandtheRemuneration of, for, reference of terms Committee; appropriatenessongoing efectivenessand remuneration of beneftsand policiesExecutive for Directors employeesand generally;
Advisers theRemuneration DuringCommitteeadvice theyear, received Bridgeindependent New an fromplc), Street(part Aon of remunerationconnectionconsultancy, in with remuneration mattersmarketgeneral on guidancetheprovision including of bestandpractice, theDirectors’ thereview of Remuneration Policytheproductionand report. this of Bridge New Street otherconnection no has relationship or withand theGroup, providedotherservices no duringtheGroup FY2017. to totalled Bridge New FY2017 Streetfor to paid Fees respectadvice providedin of to VAT) (excluding £37,155 theRemuneration Committee related for matters.and The RemunerationCommittee also sought advice thefromGroup’s connection in legaladvisers, with the Pinsent LLP, Masons productionreport, this of Performancethe operation the2004 of Performance PlanShare and expired), the2014 PlanShare (now (SAYE). scheme share all-employee the > > > published Theare Remuneration reference Committee’sof terms at website Company’s the on application on theCompany copy alsoto are hard availablein Secretary. During FY2017, theRemuneration Committee reviewed the DuringFY2017, followingmatters its meetings:at > > > > > > > > 5/5 5/5 5/5 0/0
attended Meetings
Non-ExecutiveChairman Position Non-ExecutiveDirector Non-ExecutiveDirector Non-ExecutiveDirector 1
ommittee members and meetings and ommitteeattendedmembers c 2
Chairman 3
Member from 31 March 2017. March 31 from Member 2017. March 31 memberon Åstrand Jan a as stepped down Appointed on 1 April 2016. April 1 on Appointed efectiveness of all remunerationallefectiveness policies. of executivestheperformanceand targets used; be to decisions any in Directorinvolved that no ensure is to remuneration; own his/her and to as review regularlyto appropriatenesstheongoing and to determine whether awards made under performancedetermineundermadewhether to awards the relatedincentivemade, share schemes be and should theindividualtheawards,to amountawards of overall is terminated; is incentiveshare schemesother and design theGroup’s to performanceoperaterelatedandschemes, pay to and schemes; such administer are fair and reasonable;and fair are review Directors’to expenses; executivestheemployment which of on determine thebasis to frameworkpolicyand the remuneration for theExecutive of Directors,SecretaryCompany executives;senior and theBoard, executive of behalf review determine,on and to remunerationpackages such incentive andensure packages to to make recommendations theGroup’s make the Boardon to to
> > > > > > > independent professional advice at the Group’s expense.independent professionaladvicetheGroup’s at include: duties Committee’s Remuneration The > involved in determining their own remuneration. own determiningtheir in TheCompanyinvolved Secretaryacts thesecretary as theRemuneration to Committee. theRemunerationThemembers of Committee can,theywhere necessaryit judge dischargeresponsibilities,their to obtain At theinvitation At theRemuneration of Committee Chairman, managementattendsenior theBoard andothermembers may of meetingstheRemuneration of Committee,their when except remuneration own consideration.under is Directors No are 2 3 1 Name BarclayRob of theattendance Remunerationof at Committee meetings set are below. out Remuneration Directors.Åstrand Jan also served theCommittee on during the DavidShearerhavingtheappointment stepped on of down year, themembers Biographies of 2017. March theCommittee 31 to on DetailstheRemuneration of 41. page Committee on out set are Remuneration Committee role and membership and role Committee Remuneration TheRemuneration Committee comprises three members: Rob whom of all DavidShearer, ContrerasandBob Barclay(Chairman), independent be Non-Executive theBoard to by considered are Annual Remuneration Report Remuneration Annual DavidShearer Åstrand Jan Bob Contreras Bob 64 Speedy Hire Plc Annual Report and Accounts 2017
Governance Remuneration Report continued
Implementation of the Remuneration Policy EBITA has replaced proft before tax as the primary measure of fnancial performance under the bonus plan for FY2018 for Fy2018 to provide a more targeted measure of fnancial performance. The sections of the Annual Remuneration Report that have been ROCE has been included as a specifc bonus metric in FY2018 audited by KPMG LLP are page 65 from ‘Non-Executive Directors’ (replacing asset optimisation). ROCE measures how well the to page 68 up to and including ‘Directors’ interests in the share Group delivers a return on capital invested and is seen as a key capital of the Company’, but excluding paragraphs concerning performance indicator for the business. UK & Ireland core hire ‘Details of long-term incentive plan awards outstanding’, revenue continues to account for 10% of the overall bonus, ‘Dilution’, ‘Percentage change in Chief Executive’s remuneration’ refecting our priority to improve asset productivity. The forward and ‘Shareholder voting at AGM’. looking targets are deemed to be commercially sensitive but full details will be disclosed on a retrospective basis in next year’s Base salary Annual Report and Accounts. Base salaries for each Executive Director are reviewed annually Outstanding performance will be required for a maximum bonus by the Remuneration Committee, taking account of the Director’s to become payable, with no bonus payable unless the minimum performance, experience and responsibilities with any changes EBITA threshold is achieved. A clawback provision will continue efective from 1 April. When determining Executive Directors’ to operate for a 36-month period. base salaries, the Remuneration Committee has regard to economic factors, remuneration trends and the general level long-term incentive plans of salary increases awarded throughout the Group. Executive Directors’ salaries were increased by 1.5% per annum which The 2014 Performance Share Plan (PSP) will continue to operate was in line with the average rate of increase across the Group. as the Company’s primary long-term incentive arrangement, Current base salaries are as follows: whereby awards over shares will normally vest three years from grant, subject to continued employment and performance From From % increase conditions based on relative total shareholder return (TSR) and 1 April 2017 1 April 2016 in year earnings per share (EPS) growth. It is intended that Executive Russell Down £355,250 £350,000 1.5% Director award levels in FY2018 will be over shares worth no Chris Morgan £243,600 £240,000 1.5% more than 100% of salary. In respect of performance targets for awards to be granted in Until 30 September 2016 when the Chairman reverted to FY2018: non-executive status, the Chairman was eligible to receive > 50% of each award will be subject to an EPS condition. 25% of a daily rate in excess of his normal fee to the extent that his this part of an award vests for threshold EPS in FY2020 (before actual time commitment exceeded that agreed for his amortisation and exceptional costs) with full vesting of this Non-Executive Chairman role. Additional fees of £13,125 part of an award for maximum EPS or better. A sliding scale were paid during FY2017 (of which £10,625 were payable operates between these points. The threshold and maximum for services provided during FY2016 and £2,500 payable EPS targets had not been fnalised at the date this report was for services provided during FY2017). signed, with full disclosure of the target range to be provided in the RnS stock exchange announcement issued following Benefts in kind and pension the grant; The Group operates a policy whereby Executive Directors > 50% of each award will be subject to a TSR condition based and senior management are ofered a car or cash alternative on the Group’s performance against FTSE 250 companies (as appropriate), health insurance, life cover and pension (excluding investment trusts) as at the date of grant. 25% of contributions, or cash in lieu of pension contributions (further this part of an award vests if the Company’s TSR is at a median details of which are set out on page 58). of the ranking of the TSRs of the comparator group increasing The Group does not operate a defned beneft pension scheme pro-rata to full vesting of this part of an award for upper and has no plans to introduce such a scheme. quartile performance or better; > in addition to the above, no part of the award subject to the Performance related annual bonus TSR condition will vest unless the Committee is also satisfed The Remuneration Committee’s policy continues to be that that the TSR performance of the Company is refective of the Executive Directors in the Group should be included in some Group’s underlying performance; and form of incentive scheme as soon as practicable after joining > clawback provisions and a two-year post vesting holding the Group. period will continue to be applied to Executive Directors. For FY2018, the maximum bonus opportunity will continue to be limited to 100% of salary. The bonus opportunity will be split as follows: > 70% will be based on Group earnings before interest, tax and amortisation targets (‘EBITA’); and > 30% will be based on strategic/fnancial targets (namely, return on capital employed (‘ROCE’) (20%) and hire revenue targets (10%)). Strategic Report Governance Financial Statements Corporate Information 3
– – – 65 47 47 22 13 219 165 757
524 138 806 Total 409 2016
1 April 1 £’000s 1,535
£47,000 £47,000 £40,000 £125,000 remuneration 3 1
– – – – – – – – – – – – – – – 2017 £’000s 1 April 1 Value of Value long-term £47,000 incentives £52,000 £40,000 £125,000 2
– – – – – – – – – – – – 575 341 234 bonus £’000s Annual Annual Report and Accounts 2017 Accounts and Report Annual
– – – – – – – – – 8 – Remuneration Nomination Audit Committee role chair 57 52 49 36 88 £’000s Pension 1
Speedy Hire Plc Hire Speedy – – – – – – – – – 8 32 28 40 14 14 £’000s Benefts 6
– – – 47 47 22 13 219 328 350 149 709 138 240 844 salary £’000s Fees/basic 5 4 year 2016 2016 2016 2016 2016 2016 2016 2017 2017 2017 2017 2017 2017 2017 2016 Financial 2017 y Non-ExecutiveDirector Non-ExecutiveDirector Role Non-ExecutiveChairman Non-ExecutiveDirector 6
2
organ m No PSPawardsNo heldExecutive by Directors vested after during(or the yearFY2017 end based performanceon March 2017). 31 to RussellDownpromoted was Chief to Executive July2015. 1 on 2016. April 1 on Board the to appointed was Morgan Chris JanÅstrand reverted backnon-executive to status September 30 on During additionalin 2016. the paidyearwas£13,125 he feesandnormal above over his £125,000base feeExecutiveof role as forhis and£2,500 forFY2016 forFY2017). Chairman £10,625 (split to as December 2016 (being Decemberthe valuethe discountof 2016 under the scheme). Russell Down andChris Morgan received £46,000 and£36,000 respectively lieuin pension of contributions which areincluded thein Pension column abovetogether with anyactual pension contributions made. the maximum FY2017 For bonus opportunity forthe Executive Directors salary, 100%wasof with 80%the opportunityof based adjustedon proft before tax(PBT) targets basedand20% strategic on objectives. Details actual of performance against targets setout is below. Taxablebenefts comprise carcashor alternative, a health insurance, andlife insurance, including 8.484 awards granted pence pershare 2016 inforthe SAYE Thepolicy refects base Boarda £40,000; feeof additional fees forthe Chairman the Auditof andRemuneration Committees and, with£7,000 of efect additionalan fromApril 1 2017 fee forthe Senior Independent Director £5,000. of JanÅstrand served Executive as Chairman September 30 Additionalto 2016. fees relative services to detailsprovided which wereof payable FY2017, in areprovided thein table below. September 2016. 9 election on Boardon theShearer’s David annualfee to on-ExecutiveDirectors
otals
t DavidShearer FormerDirectors Rob BarclayRob DavidShearer Bob Contreras Bob Rob Barclay Rob Jan Åstrand Jan Bob ContrerasBob 3 4 5 6 2 1 RussellDown Directors’ remuneration for F for remuneration Directors’ follows: as review underThe emolumentswere theyear the Directors for theCompany of of 1 2 3 Jan ÅstrandJan n Non-Executive levelsfor annual fee Current Directors follows: as are Chris 66 Speedy Hire Plc Annual Report and Accounts 2017
Governance Remuneration Report continued
Annual bonuses awarded in respect of Fy2017 performance Russell Down and Chris Morgan were eligible to receive bonuses with a maximum opportunity of 100% of salary in respect of fnancial and operational performance in FY2017. Details of the performance targets and resulting bonus outcome are set out in the table below:
Measure Weighting Threshold/Target Stretch Result Adjusted proft before tax (‘PBT’) 80% £13.1m £16.4m 77.4% of salary (based on PBT of £16.2m, max 80%) Strategic targets: Hire revenue 10% Year on year increase – Achieved Asset optimisation 10% ≥£20m reduction in net – 10% of salary (based on reduction of book value of feet assets £25.1m, max 10%) 100% Bonus achieved for Fy2017 97.4% of salary
The bonus awards for the Executive Directors for FY2017 refect the signifcant improvement in the fnancial and operational performance of the Company in the year. The bonuses will be paid in cash in June 2017. As set out in the Remuneration Policy, clawback provisions apply for a period of three years following the payment of a bonus. long-term incentive plan awards granted in the year Russell Down and Chris Morgan were granted the following awards under the 2014 Performance Share Plan on 22 June 2016 as set out below:
Maximum % vesting shares under Face value Performance Vesting at threshold Executive Director Date of grant Basis of award award of awards 1 period 2 period performance Russell Down 22/06/2016 100% of salary 978,336 £350,000 Three years ending Three years 25% of 31 March 2019 from grant an award Chris Morgan 22/06/2016 100% of salary 670,859 £240,000 Three years ending Three years 25% of 31 March 2019 from grant an award 1 Determined using the average mid-market closing share price of the Company for the 5 days preceding the date of grant. 2 50% of the award is subject to an EPS condition. 25% of this part of the award vests for EPS (before amortisation and exceptional costs) of 2.92 pence, with full vesting of this part of the award for EPS of 5.11 pence or better. A sliding scale operates between these points. 50% of the award is subject to a TSR condition based on the Company’s performance against FTSE 250 companies (excluding investment trusts) measured over three fnancial years ending 31 March 2019. 25% of this part of the award vests if the Company’s TSR is at a median of the ranking of the TSRs of the comparator group, with full vesting of this part of the award for upper quartile performance or better. A sliding scale operates between these points. Regardless of the Company’s TSR performance, no portion of the part of the award which is subject to TSR performance may vest unless the Committee is also satisfed that the Company’s TSR performance is refective of its underlying performance over the performance period. Strategic Report Governance Financial Statements Corporate Information
67
to expiry to date (if appropriate)(if exercisable/vested Feb 2019 – Jul – 2019 Feb2019 Normaldatefrom which Feb 2020 – Jul – 2020 Feb2020 Feb 2020 – Jul – 2020 Feb2020 Jun 2019 – Jun 2026 Jun – 2019 Jun 2026 Jun – 2019 Jun Aug 2018 – Aug 2025 Aug – 2018 Aug nil nil nil price (pence) 26.936 33.936 33.936 Exercise Annual Report and Accounts 2017 Accounts and Report Annual
9,653 9,622 13,260 676,328 670,859 978,336 Interestat 684,119 1,673,939 31 March 2017 – – – – – – – – Speedy Hire Plc Hire Speedy the year the lapsedduring Options/awards – – – – – – – – exercised during the year the during Options/awards 9,653 9,622 the year the 13,260 676,328 670,859 978,336 684,119 1,673,939 grantedduring Options/awards – – – – – – – – Interestat 1 April 2016 4 4
1,2 1,3 1,3
organ m All-employeescheme giving employees the opportunity acquire to the shares discountmarket of 20% a at of value the sharesof theat time the invitation issued. Theis maximum monthly contribution £250. is Company’sTSRperformance, portionno the partof the awardof whichsubject is TSRperformance to mayvest unless the Committee also is satisfed that the Company’sTSRperformance refective is its of underlying performance theover performance period. Theperformance conditions Performance forthe 2016 Share Plan awards areunderset outnote in 2 ‘Long-term incentive plan awards granted thein year’ 66. page on 50% of each 2015 Performance each 2015 50%of Share Plan subjectaward is EPSancondition. to thispart of the 25% awardof vests forEPS (before amortisation and exceptionalcosts)4.0 of pence, with full vesting thispart of the awardof 4.7 forEPS pence of better. or sliding A scale operates between these points. Performance each 2015 50%of Share Plan subjectaward is TSRcondition a to based theon Company’s performance against FTSE companies 250 (excluding investmenttrusts) theatgrant. date as of this part of the 25% awardof vests theif Company’s median thea at ranking of TSRis the TSRsof the comparatorof group,with full vesting thispart of the awardof forupper quartile performance better.or sliding A scale operates between these points. Regardless the of The 2015 and 2016 Performance and2016 TheShare2015 Plan awards, made underPerformance the 2014 Share Plan, weregranted nil-cost as options. considerationNo was options. these of grant the for paid o Director left in the year and no compensation for loss of ofce was paid. The principles governing compensation for loss of ofce paid.Theprinciplesofce was compensationof governing ofce loss Directorfor compensationof no o and loss left theyear for in
ermination payments ermination otal otal
Chris 2016 PSP 2016 SAYE SAYE 2015 SAYE t PSP 2016 PSP 2014 Performance Share Plan on 24 November 2014 (112,951 shares under award) will lapse in November 2017 as a result of the of result a as 2017 will November lapse in award) under shares (112,951 2014 Performance November 24 PlanShare on 2014 termination performanceparthis arrangements, as of totalmet.conditions being a last As not disclosed paid year, RogersonMarkwas relatingnoticetheagreed and payments monthlyof pensioncontributions. to lieu £98,000 in during of FY2017 and the award granted to her under the Company’s Co-Investment Plan (171,042 shares under award) (‘2013 COIP’) lapsed in JuneCOIP’)lapsed in (‘2013 award) under shares theCompany’sCo-Investmentunder her granted to theaward and Plan (171,042 theperformance of met.result conditions being a not as 2016 undershares (407,587 2013 June Performance RogersontheMarkCompany’s2004 under21 grantedPlan Share on Theto award theperformance theCompany’sunderof met.him result conditionsgranted being The a to not award as 2016 Junelapsed in award) The award granted to Steve Corcoran under the Company’s 2004 Performance Share Plan on 21 June 2013 (590,508 shares undershares (590,508 2013 June Performance theCompany’s2004 under21 Plan Share on Corcoran Steve granted Theto award theperformance of met.result conditions being a not as 2016 Junelapsed in award) award) under shares (415,851 2013 June Krige Performance Lynn grantedtheCompany’s 2004 under 21 Plan The to Shareaward on n 62. page on out set paymentsare Directors past to Payments TheCommittee withinmonitors remains thesethepositionthattheCompany ensure theseunder schemes priormakingto awards to used.been have limit 10% the of 4.14% and limit 5% the of report, this limits.of 2.12% date the As at t employee share schemes should not exceed an amount equivalent to 10% of the Company’s issued share capital over a ten-year a capitalshare over theCompany’sissued of 10% amount equivalent an to exceed schemes not shareshouldemployee theCompany’s limit,period.of dilution 10% 5% throughamountWithin equivalent this an to thePerformance to limited PlanShare is ten-year a period. capital share over withissued line Both limitsinstitutional in are shareholder guidelines. to 54.2 to share.per pence Dilution optionforshare shares Theschemesnew Performanceprovide dilution that overall of Plan throughShareSAYE and theissuance 4 pence 29.5 therangeduringand was pence theyear 53.0 was 2017 March ordinary 31 Plc Speedy at sharesHire price Theof market 3 2 1 RussellDown 2015 PSP ExecutiveDirector Details of long-term incentive plan awards outstanding awards plan incentive long-term Detailsof DetailstheExecutive of Directors’ interests follows:share-based as in are awards t SAYE 2016 SAYE 68 Speedy Hire Plc Annual Report and Accounts 2017
Governance Remuneration Report continued
Percentage change in Chief Executive’s remuneration The table below shows the percentage change in the Chief Executive’s total remuneration (excluding the value of any long-term incentives and pension benefts receivable in the year) between FY2016 and FY2017 compared to that of the average for all UK & Ireland based employees of the Group.
% change from FY2016 to FY2017 Salary Benefts Bonus Chief Executive 0.0%1 0.0% –2 Average employees 1.5% 2.0% 240.1% 1 Whilst total remuneration for Russell Down increased in FY2017 compared with FY2016, this related only to his promotion from Group Finance Director to Chief Executive on 1 July 2015. Therefore remuneration for FY2016 included part-year as Group Finance Director and part-year as Chief Executive. 2 The Chief Executive did not receive a bonus for FY2016. The bonus for FY2017 is detailed on page 66.
Shareholder voting at AGm At the 2016 AGM, the Directors’ Remuneration Report received the following votes from shareholders:
Total number % of of votes votes cast For 421,123,905 98.86 Against 4,867,552 1.14 Total votes cast (for and against) 425,991,457 100 Votes withheld 1 64,882 n/a Total votes cast (including withheld votes) 426,056,339 1 A vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes cast ‘For’ and ‘Against’ a resolution.
Directors’ interests in the share capital of the Company The interests of the Directors (all of which were benefcial) who held ofce during FY2017, are set out in the table below:
% of salary/fee under share Legally owned PSP Awards Sharesave Total ownership guideline 1 31 March 2016 31 March 2017 Unvested Vested Unvested 31 March 2017 (100% of salary/fee) Russell Down 151,276 294,871 1,654,664 – 19,275 1,968,810 37.4% Chris Morgan – 179,680 670,859 – 13,260 863,799 34.5% Jan Åstrand 350,000 500,000 – – – 500,000 >100.0% Bob Contreras – 40,000 – – – 40,000 44.2% Rob Barclay – 19,000 – – – 19,000 21.2% David Shearer – 150,000 – – – 150,000 >100% 1 Note that only legally owned shares and vested PSP awards count towards the share ownership guideline.
There have been no changes in the interests of any current Director in the share capital of Speedy Hire Plc between 1 April 2017 and the date of this report.
Share ownership guidelines Executive Directors are expected to build and maintain a shareholding of 100% of salary. Russell Down joined the Board in April 2015 and Chris Morgan joined in April 2016. Neither currently meets this level due to being relatively recent appointments. Directors are expected to retain a proportion of shares vesting under their share awards (after tax) until such time as the guidelines are met.
Comparison of overall performance and pay The chart below presents the total shareholder return for Speedy Hire Plc compared to that of the FTSE 250 and FTSE SmallCap (both excluding investment trusts). The values indicated in the graph show the share price growth plus reinvested dividends over an eight- year period from a £100 hypothetical holding of ordinary shares in Speedy Hire Plc and in the index. Strategic Report Governance Financial Statements Corporate Information – 69
3.7 5.6 757
FY2017
97.4% % change – 0% 409 RussellDown FY2016 3.8 2017 98.6 – – 107 FY2016 – 3.6 593 2016 95.1 60% FY2015 Mark RogersonMark – – Annual Report and Accounts 2017 Accounts and Report Annual 2017
March 115 FY2014 – 707 82% 2016 March FY2014 Speedy Hire Plc Hire Speedy – 553 37% FY2013 2015 March – – 421 Source: Thomson Reuters (Datastream) FY2012 2014 March Steve CorcoranSteve – – 423 FY2011 2013 – – March 419 FY2010
2012 March 2011 March 2010 March 2009 March Speedy Hire Plc Speedy Hire FTSE 250 (excluding investment trusts) Index FTSE SmallCap (excluding investment trusts) Index
0
500 100 300 200 400 otal shareholder return shareholder otal (£) Value and Russell Down was appointed as Chief Executive Chief as appointed was duringDown FY2016. Russell and PSP vesting (% of max) of (% vesting PSP Executive Chief as appointed RogersonMarksteppedwas during and down Corcoran FY2014. RogersonMark stepped down Steve Annual bonus (% of max) of (% bonus Annual Rob Barclay Rob RemunerationtheCommittee of Chairman Relative importance of spend on pay on spend importanceof Relative relative dividends. employees) allto The following thetableCompany’sactual(for shows pay on spend Total remuneration (£’000s) based on three-year on based performance periods afterjustend.pay-out endingThe annual bonus year therelevant vestingPSP and level, themaximum percentage of opportunity,a as theseyears. of alsoeach are for shown invested in the FTSE 250 Index (excluding investment trusts) and the FTSE SmallCap Index (excluding investment trusts). The other points other The trusts). investment (excluding Index SmallCap FTSE the and trusts) investment (excluding Index 250 FTSE the in invested ends. year fnancial intervening at values the are plotted Thetotalremuneration Executive theChief fgures for thethelasttable below. duringfnancialin eight shown of each are years awards PSP and FY2017) to Thetotalremuneration performancethatyear’s on fgurebased theannualincludesbonus (FY2010 This graph shows the value, by 31 March 2017, of £100 invested in Speedy Hire Plc on 31 March 2009 compared with the value of £100 £100 of value withthe compared 2009 March 31 on Plc Hire Speedy in invested £100 of 2017, March 31 by value, the shows graph This t Stafcosts (£’m) Dividends (£’m) Dividends This report was approved by the Board on 15 May 2017. May 15 theBoardon reportby This approved was £1,058,000 of thestaftheExecutive costsfor of £1,058,000 fgurespay relate to Directors. thefromaggregatediferent is thesingle fgures This of Thedividends fguresamounts relatefor. to accounted are awards based theshare which in theway to reviewunder due theyear for fnancialrespecttherelevant payablein year. of 70 Independent Auditor’s Report
to the members of Speedy Hire Plc only
Opinions and conclusions arising from our audit
1. Our opinion on the Financial Statements is Overview unmodified Materiality: £0.675m (2016:£0.5m) We have audited the Financial Statements of Group Financial Speedy Hire Plc for the year ended 31 March 2017 4.7% (2016: 4.5%) of Profit before Statements as a set out on pages 76 to 118. In our opinion: tax normalised to exclude whole — the Financial Statements give a true and fair exceptional items view of the state of the Group’s and of the Coverage 100% (2016:100%) of Profit before Parent Company’s affairs as at 31 March 2017 tax and of the Group’s profit for the year then ended; Risks of material misstatement vs 2016 — the Group Financial Statements have been properly prepared in accordance with Recurring risks Hire equipment ◄► International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU); Trade receivables ◄► — the Parent Company Financial Statements have been properly prepared in accordance with IFRSs as adopted by the EU and as applied in accordance with the provisions of the Companies Act 2006; and — the Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards the Group Financial Statements, Article 4 of the IAS Regulation. 71
2. Our assessment of risks of material misstatement In arriving at our audit opinion above on the financial statements, the risks of material misstatement that had the greatest effect on our audit, in decreasing order of audit significance, were as follows:
The risk Our response
Hire equipment Physical quantities Our procedures included: (£194.8 million; 2016 restated: The Group has more than four million — Control design and re-performance: £219.9m) items of equipment, and a high Testing the design and operating frequency of movement in individual effectiveness of key controls including the Refer to page 49 (Audit assets, through asset purchases, reconciliation of the fixed asset register to Committee Report), page 84 physical hires and disposals. As such the accounting ledgers. (accounting policy) and page 99 there is inherent difficulty in — Count design and attendance: Testing (financial disclosures). maintaining an accurate fixed assets the design of controls operating over hire register. equipment counts. For a sample of hire equipment counts, performing test counts Subjective estimate to ensure the accuracy of the counting. For Judgement is applied by management the sample verifying that the records from in the estimation of useful the counts had been accurately reflected economic lives and residual values on the fixed asset register. which are based on both historical — Tests of details: Agreeing a statistical experience and an assessment of the sample of assets acquired and disposed of nature of the assets involved. during the year to third party evidence. Comparing the hire fleet register for the current year to prior year to determine any changes made to useful economic lives and residual values and reviewing any changes to ensure they are consistent with accounting policies. Reviewing profit or loss on disposal of hire equipment to support the reasonableness of the useful economic lives and residual values applied. — Sector experience: Comparing the hire fleet register to hire revenue information to identify the net book value of assets not recently hired to customers. Identifying from this analysis those assets we consider to be at highest risk of obsolescence and challenging management to provide evidence over the existence, and valuation, of these assets. — Assessing transparency: assessing the adequacy of the Group’s disclosures in respect of the judgements and estimates involved in arriving at the valuation of hire equipment. 72 The risk Our response
Trade Receivables Subjective valuation Our procedures included: (£83.3 million; 2016: £74.9m) The Group’s customers operate in the — Control design and re-performance: Theconstruction risk market which may result Our responseIdentification and testing of the operating Refer to page 50 (Audit in an increased risk of non- effectiveness of key controls including TradeCommittee receivables Report), page [ ] Subjectiverecoverability valuation of trade receivables. Our procedurescredit control included: procedures and sales ledger reconciliations. (£83.3(accounting million; policy) 2016: £74.9m)and page [ ] The Group’s customers operate in the — Control design and re-performance: (financial disclosures). The International business’s customer construction market which may result —IdentificationHistorical Comparison: and testing of Assessing the operating the base in the Middle East increases the Refer to page 50 (Audit in an increased risk of non- effectivenessmethodology of used key controlsto calculate including the risk associated with the recoverability Committee Report), page 87 recoverability of trade receivables. creditprovision control recorded procedures against and trade sales ledger of trade receivables as longer payment (accounting policy) and page 100 reconciliations.receivables, challenging the terms are given in those jurisdictions, (financial disclosures). The International business’s customer appropriateness of these provisions based which could delay the identification of — Historical comparison: Assessing the base in the Middle East increases the on historical bad debt write offs. irrecoverable trade receivables. methodology used to calculate the risk associated with the recoverability provision recorded against trade of trade receivables as longer payment — Sector experience: After analysing the receivables, challenging the terms are given in those jurisdictions, level of cash receipts post year end appropriateness of these provisions based which could delay the identification of identifying a risk based sample of on historical bad debt write offs. irrecoverable trade receivables. receivables obtaining. For this sample obtaining a detailed understanding of the — Sector experience: After analysing the payment status of the receivable balance level of cash receipts post year end and the customer’s likelihood of payment identifying a risk based sample of including independently verifying the receivables obtaining. For this sample customer’s latest credit score. obtaining a detailed understanding of the —paymentAssessing status transparency: of the receivable assessing balance the andadequacy the customer’s of the Group’s likelihood disclosures of payment in includingrelation independentlyto the degree ofverifying estimation the customer’sinvolved in latest arriving credit at the score. carrying amount of the trade receivables balance. — Assessing transparency: assessing the adequacy of the Group’s disclosures in relation to the degree of estimation We continue to perform procedures over the valuation of intangible assets. However,involved following in arriving the impairment at the carrying of £45.9m amount of goodwill in 2016, it is considered that no reasonable change in assumptions wouldof cause the trade an impairment receivables and balance. as such we have not assessed this as one of the risks that had the greatest effect on our audit and, therefore, it is not separately identified in our report this year. We continue to perform procedures over the valuation of intangible assets. However, following the impairment of £45.9m of goodwill in 2016, it is considered that no reasonable change in assumptions would cause an impairment and as such we have not assessed this as one of the risks that had the greatest effect on our audit and, therefore, it is not separately identified in our report this year. 73
3. Our application of materiality and an Profit before tax normalised to Materiality overview of the scope of our audit exclude exceptional items £0.675m (2016: £0.5m) £14.4m (2016: profit before tax, Materiality for the Group Financial Statements as a normalised to exclude whole was set at £0.675 million (2016: £0.5 million), exceptional items and averaged £0.675m determined with reference to a benchmark of Group over a three-year period £11.1m) Whole Financial profit before tax, normalised to exclude exceptional Statements materiality items (as disclosed in note 3 to the Financial (2016: £0.5m) Statements), of which it represents 4.7% (2016: 4.5%). In 2016 the benchmark was averaged over a £0.65m three-year period due to the volatility in the 2016 Range of materiality at 7 reported level of profit before tax, normalised to components (£0.06m-£0.65m) exclude exceptional items. (2016: £0.06m to £0.475m)
We report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £33,500 (2016: £25,000),in addition to other identified misstatements that warranted reporting on qualitative grounds. Profit before tax normalised to exclude exceptional items £0.0335m Group materiality Misstatements reported to the The Group team performed procedures on the Audit Committee (2016: exceptional items excluded from normalised group £0.025m) profit before tax.
Of the Group’s eight reporting components, seven (2016: seven) were subjected to audit for Group Group profit/(loss) reporting purposes and one (2016: one) was subject Group revenue before tax to specified risk-focussed audit procedures by the Group audit team. The work on the two International components was performed by 2 12 component auditors. The work on the other six 1 1 components was performed by the Group audit team. This scoping is consistent with the prior year. The Group audit team instructed the component 100% 100% auditors as to the significant areas to be covered (2016 100%) (2016 100%) during their audit, including the relevant risks detailed above, and the information to be 99 99 reported to the Group auditor from the component. 98 88 The Group audit team approved the component materialities to be applied, which ranged from £63,000 to £650,000 (2016: a range of £63,000 to £475,000) having regard to the mix of size and risk Group profit before tax before profile of the Group across the components. Group total assets exceptional items The component for which we performed specified 2 risk-focussed procedures was not individually 12 financially significant enough to require an audit for 1 Group reporting purposes, but did present specific individual risks that needed to be addressed. We 30 subjected one (2016: one) component to specified risk-focussed audit procedures over revenue and 100% 100% profit for the period. (2016 100%) (2016 100%)
The Group audit team held telephone conference 99 70 meetings with the component auditors. At these 98 88 meetings, the findings reported to the Group audit team were discussed in more detail, and any further work required by the Group audit team was then performed by the component auditors.
Key: Full scope for Group audit purposes 2017 Specified risk-focussed audit procedures 2017 Full scope for Group audit purposes 2016 Specified risk-focussed audit procedures 2016 74
4. Our opinion on other matters prescribed by the — the parent company Financial Statements and the part Companies Act 2006 is unmodified of the Directors’ Remuneration Report to be audited are In our opinion: not in agreement with the accounting records and returns; or — the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with — certain disclosures of Directors’ remuneration specified the Companies Act 2006; and by law are not made; or — the information given in the Strategic Report and the — we have not received all the information and Directors’ Report for the financial year is consistent explanations we require for our audit. with the Financial Statements. Based solely on the work required to be undertaken in the Under the Listing Rules we are required to review: course of the audit of the Financial Statements and from reading the Strategic Report and the Directors’ Report: — the Directors’ statements, set out on pages 36 and 33, in relation to going concern and longer-term viability; — we have not identified material misstatements in those and reports; and — the part of the Corporate Governance statement on —in our opinion, those reports have been prepared in page 42 relating to the Company’s compliance with the accordance with the Companies Act 2006. eleven provisions of the 2014 UK Corporate 5. We have nothing to report on the disclosures of Governance Code specified for our review. principal risks We have nothing to report in respect of the above Based on the knowledge we acquired during our audit, we responsibilities. have nothing material to add or draw attention to in relation to: — the Directors’ Viability Statement on page 33, concerning the principal risks, their management, and, based on that, the Directors’ assessment and expectations of the Group’s continuing in operation Scope and responsibilities over the three years to 31 March 2020; or As explained more fully in the Directors’ Responsibilities — the disclosures in note 1 of the Financial Statements Statement set out on page 39 the Directors are responsible for concerning the use of the going concern basis of the preparation of the financial statements and for being accounting. satisfied that they give a true and fair view. A description of the scope of an audit of Financial Statements is provided on the 6. We have nothing to report in respect of the matters Financial Reporting Council’s website at on which we are required to report by exception www.frc.org.uk/auditscopeukprivate. This report is made solely Under ISAs (UK and Ireland) we are required to report to to the Company’s members as a body and is subject to you if, based on the knowledge we acquired during our important explanations and disclaimers regarding our audit, we have identified other information in the Annual responsibilities, published on our website at Report that contains a material inconsistency with either www.kpmg.com/uk/auditscopeukco2014a, which are that knowledge or the Financial Statements, a material incorporated into this report as if set out in full and should be misstatement of fact, or that is otherwise misleading. read to provide an understanding of the purpose of this report, the work we have undertaken and the basis of our opinions. In particular, we are required to report to you if: — we have identified material inconsistencies between the knowledge we acquired during our audit and the Directors’ statement that they consider that the Annual Report and Financial Statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s position and performance, business model and Chris Hearld (Senior Statutory Auditor) strategy; or for and on behalf of KPMG LLP, Statutory Auditor — the Audit Committee Report does not appropriately Chartered Accountants address matters communicated by us to the Audit 1 St Peter’s Square Committee. Manchester Under the Companies Act 2006 we are required to report to M2 3AE you if, in our opinion: 15 May 2017 — adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or Speedy Hire Plc Annual Report and Accounts 2017 75 Strategic Report Strategic
Financial Governance Statements Financial Statements Financial Corporate Information Corporate
Financial Statements Consolidated Income Statement 76 Consolidated Statement of Comprehensive Income 77 Consolidated Balance Sheet 78 Consolidated Statement of Changes in Equity 79 Consolidated Cash Flow Statement 80 Reconciliation of Net Debt 81 Notes to the Financial Statements 82 Company Balance Sheet 112 Company Statement of Changes in Equity 113 Company Cash Flow Statement 114 Notes to the Company Financial Statements 115 Five-year Summary 119 76 Speedy Hire Plc Annual Report and Accounts 2017
Financial statements Consolidated Income Statement for the year ended 31 March 2017
Year ended 31 March 2016 Year ended Before 31 March exceptional Exceptional 2017 items items Total Note £m £m £m £m Revenue including share of jointly controlled entity’s revenue 375.1 333.4 – 333.4 Less: share of jointly controlled entity’s revenue (5.7) (4.3) – (4.3) Revenue 2 369.4 329.1 – 329.1 Cost of sales (177.7) (144.9) – (144.9) Gross proft 191.7 184.2 – 184.2 Distribution costs (34.6) (31.8) – (31.8) Administrative expenses (139.6) (145.1) (59.9) (205.0)
Analysis of operating proft loss Operating proft before amortisation and exceptional items 19.3 10.0 – 10.0 Amortisation 12 (1.8) (2.7) – (2.7) Exceptional items 3 – – (59.9) (59.9)