Speedy finds £20.4m inventory shortfall
8 February 2023
Following a count of the equipment in its hire fleet in preparation for the upcoming 2023 audit, Speedy has found a shortfall of approximately £20.4 million in its inventory of non-itemised assets.
As at 31 March 2022, the reported net book value of the group's hire equipment assets was £226.9m. The company categorises hire equipment into two groups: those that are individually identifiable by a unique serial number to the asset register ("itemised assets", representing 78 per cent, or £177.0 million, of the total reported net book value), and other equipment such as scaffolding towers, fencing and non-mechanical plant which does not have a unique serial identifier and is not tracked on an individual asset basis ("non-itemised assets", representing 22 per cent or £49.9m, of the total reported net book value).
Whilst the latest count validated the previously disclosed net book value of itemised assets, it identified the deficiency in the value of non-itemised assets.
Speedy has instigated an external investigation into the issue, including a review of controls and accounting procedures. In addition, it says that management has strengthened the control environment for managing its non-itemised asset fleet, including weekly perpetual asset counts with additional internal audit focus, enhanced control over purchases and disposals, and monthly reconciliations against the fixed asset register.
The Board said that the finding is expected to result in a one-off non-cash write down of the balance sheet value of non-itemised assets in the year ending 31 March 2023, it is not expected to impact the Group's cash position or underlying profit performance.
In a trading update, the company said that in the second half of its financial year, the new management team's operational review of the depot network has led to establishing larger, more energy efficient low-carbon facilities, resulting in a net 20 reduction in locations at the end of January 2023.
The company said that revenue (excluding disposals) in the four months to 31 January 2023 was up by approximately 16 per cent against the corresponding period in the prior year.
