A company-wide stock take, conducted in preparation for Speedy’s upcoming 2023 audit, has found a £20.4m shortfall in its inventory of non-itemised hire assets.
The reported net book value of the group's hire equipment assets was £226.9m as of 31st March 2022. The company categorises hire equipment into two groups: those that are individually identifiable by a unique serial number are itemised assets, representing 78% of the total reported net book value (£177.0m); and other equipment such as scaffolding towers, fencing and non-mechanical plant that does not have a unique serial identifier and is not tracked on an individual asset basis are non-itemised assets, representing 22% of the total reported net book value (£49.9m).
The stock-take confirmed the previously disclosed net book value of itemised assets but could only find £29.5m worth of non-itemised assets – £20.4m short.
It is not clear how much stuff has gone walkabout and how much is down to just bad bookkeeping.
The board has instigated an external investigation, including a review of controls and accounting procedures. The control environment for managing non-itemised asset fleet has also been strengthened, including weekly perpetual asset counts, more control over purchases and disposals, and monthly reconciliations against the fixed asset register.
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The board is also now looking into how best to treat the deficiency in its next accounts.
“Whilst this 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,” the board said in a trading update today.
The revelations come just a few months after Dan Evans, formerly chief operating officer, succeeded Russell Down as chief executive.
The new management team's operational review has included further progress in the consolidation of depots from lots of smaller ones to fewer and bigger one. This has resulted in a net 20 depot reduction at the end of January 2023 at a cost of £2.9m but saving an expected £2.9m per year.
The trading statement also disclosed that revenue (excluding disposals) for the four months to 31st January 2023 was up 16% against the corresponding period a year before.
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