For now, I will hand over to Dan. Over to you.
Thank you, Hannah, and good morning to everybody, and thank you for taking the time to dial into this presentation. My name's Dan Evans. I'm the Chief Executive Officer of the business, and with me today I've got Paul Rayner, our Chief Financial Officer. To take you through the highlights for the year, I'll go through the general business overview, and then I shall hand over to Paul. We remain thoroughly committed to our ambitious Velocity Strategy, and we've continued to invest both in our hire fleet and in the transformation program of our business during the year, including developing on our digital capabilities. When we launched our strategy in 2023, we said we had two phases: the enable phase and then our growth phase. The enable phase should conclude for us in FY2026.
There were a number of things that we said we needed to invest in in order to give the business the best platform to succeed. That is what we've continued to focus on developing during the period that we've been through, and we will conclude that part of our strategy in the financial year that we've just entered. Lloyds British, which is our test, inspection, and certification tick for those of you that follow the sector, our business in that space, good growth of 6% with our strategy and investments that we've made in previous years and earlier in the enable phase taking effect. We continue to be an industry leader in ESG. We would like to maintain that position always with a view on commercial sustainability and adding value to the business, to our customers, our people, and ultimately our shareholders.
There will be certain things that we just look to maintain in the year that we have entered into. The market conditions are challenging, but they are manageable. There are opportunities, there are risks, and throughout the presentation, you will see how we are looking to navigate some of those. Hopefully, as the market improves, that balance shifts more towards opportunities and things actually starting to happen for a number of the things that are starting to come out from the government and the private sector, and we remain vigilant to all of those. We have had a number of significant contract wins, good contract extensions, and a positive pipeline for the future that does give us confidence for the year that we have entered and beyond.
We're pleased, as part of the updates on our strategy, to have launched a new specialist business during FY26 of temporary site solutions, which I shall touch on a bit later on. I shall hand you over to Paul.
Thank you, Dan. Good morning, everybody. As I say, I'm Paul Rayner, the CFO. I'm going to, in summary, our revenue, if you exclude fuel, was up by about 1.3%. For those of you who follow us, we price fuel based on wholesale markets and make a small margin. As the price of fuel dropped in the year, our revenue dropped, but our margin was consistent. Throughout our business, we're very keen on maintaining pricing discipline, and we've managed to improve our gross margins with EBITDA and EBITA margins maintained despite the market which we're in. We've managed to convert nearly 95% of our EBITDA into underlying operating cash, and that enables us to invest in hire fleet, and we've increased our hire fleet investment by about GBP 15 million to just under GBP 58 million.
Our debt at the end of FY25 was GBP 113 million, which is a 1.9 times leverage based on bank debt and bank EBITDA, ignoring IFRS 16. Since the year-end, we refinanced our facilities, and I'm very pleased to say that we now have new facilities of GBP 225 million, of which GBP 150 million is a revolving credit facility with four banks, one of them's new, and which expires over three years in three years' time, with a private placement loan note, which is a seven-year note to 2032. We, as a board, took the opportunity to revise our capital allocation policy, and I'll talk to that in a minute, which supports our strategy. Finally, we decided to hold our dividend at the same level as fiscal 2024, and we've maintained our total dividend of GBP 0.026.
Thank you, Hannah. I'll try and talk now about some of the financial highlights.
I'm not going to read it all because I suspect you've looked at it already. But effectively, our national customers' revenue in hire, the consistent year-on-year, with some marginal growth in revenue, regional and trade and retail customers. We are a business that faces high operational gearing, which means that if our revenue drops significantly or even marginally, the bottom line is impacted. We did grow our services business. If you exclude fuel, and it was up 4.5%. Very pleased that Lloyds British, which we have invested in engineering, grew nearly 6% in the year to March 2024. I think I've touched on fuel, and it's down 25%, but the margins have been maintained, the amount of profit we make. You'll see on the slide there that our gross profit edged up from 54.6- 56.7.
Overheads increased, but we have managed to maintain and with high level of cost control. We put through a 5% pay rise to colleagues at the beginning of April 2024 in response to higher inflation, and we've just started the new financial year with an average rise of about 2%. We do control our overheads well in a challenging market. One thing you would have, if you followed us before, we have a joint venture in Kazakhstan in the oil and gas sector. Its profits were down as projects were completed. Our interest is higher, average borrowings related to more fleet and an increase in rates, and we also have an increased IFRS 16 interest liability up from GBP 5 million-GBP 6.4 million. Our strong underlying cash flow supports the growth in our fleet. It allows us to spend on the enable phase of our transformation.
This is the final year of enable, and we would have incurred in fiscal 2026 a further GBP 6 million of cost of transformation. Dan will talk about what we've been doing in the last two or three years in a minute. By the time we complete the enable phase at March 2026, we would have spent our expected GBP 15 million-GBP 17 million . Hire fleet, which is to support growth for the future. If I turn to the next slide, which is more of our analysis of our customers. Our national revenue was flat year-on-year. Volume was down slightly. A couple of reasons. We lost a large contractor in the market called ISG, which went into administration in the year to September in September 2024.
We had not quite foreseen it, but we had managed our exposure to that client down, but we still have to replace in the last year in excess of GBP 2 million revenue. We have managed to maintain our rates, and they edged up a bit. Regional customers, which are 51% of our business, we actually managed to grow that segment in the year. It had fallen 6% in the year to March 2024. We managed to bring it back to where it was. The volume is up, and the rate is flat year-on-year. It is a very competitive market, the regional ones. We do worry and look at it very closely at insolvencies, which still happen on a regular basis, especially in the regional space.
We did grow trade and retail over the year, and we have got good growth from B&Q, and we have got some new opportunities that we are working on, although it has taken slightly longer than we anticipated at the turn of the year. We are looking for future opportunities as we go on during fiscal 2026. Turn to the profit bridge on the next page, please.
This takes our profit from end of FY2024 to FY2025. As I said, we have improved margins, which is good. We have managed our losses and profits on disposal. Pay reviews there, as I mentioned before, it is about 5% pay rises going through the business. Other overheads grew over the year, but still well maintained. Our Kazakhstan JV, our share of thereafter tax profits, which is 45% in our case, were down year-on-year as we completed projects.
We talked about a higher interest bill as we've invested in fleet, as we've invested in transformation. Next slide, please. If I turn to the balance sheet, I think the balance sheet is pretty tidy from our perspective compared to a few years ago when Dan and I first started working together. Our hire fleet, GBP 197 million of it of the GBP 222 million, the next itemized product, which has increased year-on-year. And non-itemized, that's at a level which is consistent with last year. The additions of GBP 57 million are committed, and we've spent GBP 50 million in the year, and that's purely a timing of when you make the payments to your suppliers. We have 71% of the investment in fiscal 2025 is on Eco Products, which is a commercial sustainability thing rather than anything else. I spend a lot of time with my finance team focusing on working capital.
I'm very pleased that our overdue debts, which are debts over 30 days, have dropped nearly 24% in the year to just over GBP 7 million from just over GBP 10 million this time last year. I still think there's work to do to bring them in line with where I would want them to be. We spent a lot of time in the year. We've just finished working with suppliers to try and manage supplier agreements with our customer agreements. When I walked in here two and a bit years ago, a lot of our suppliers were on 30-day terms, and we spent a lot of time in the last year working with supply chain to improve upon that. There's a net debt, GBP 113 million at bank level, and the new facilities we've talked about, and that happened in April of this year.
All right, move on to where's the cash gone and what do we do with it? We've converted 95% of our EBITDA into operating cash flow. I think that's a good place for any business to be. If it converts its profits into cash, you're allowed to therefore, it allows for CapEx spend and everything else. Our net CapEx, which is because obviously we buy kit, but we also dispose of kit that's towards the end of its life and that we feel is not part of the future. So our net CapEx is about GBP 45 million. We've guided the market in the year we've just started to a similar level net CapEx to last year. We've spent GBP 600 million on transformation, and that will recur one more year in FY2026. You have interest and tax, which is fine.
The Kazakhstan joint venture, whilst its profitability was lower in a profit P&L perspective, we did get the cash and dividends, which related to last year's profits coming through. We have lease payments. We have about 135 depots, which we lease over the time. We have dividends giving our net cash outflow in the year. I'll just move on. We took the opportunity, as I've said, to revise our capital allocation policy. We fill with new facilities and quite rigidity on how we manage our business. We can increase our target leverage from one to one and a half, from one to two times. That's in line with our peer group and where we are. We can also flex outside of that if necessary.
We decided to hold our dividend because we feel that it's a better metric to hold the dividend now and grow it from the base, which we expect to grow in line with dividends. We will continue to invest in strategic projects and potentially acquisitions as they come along or costs that support Velocity along with costs that support the investment in hire fleet. Were we to have excess returns, which we had about three or four years ago, we would look to enhance them. Maybe there might be buybacks, but that's not on the agenda at the moment. There is a revised capital allocation policy for our shareholders to review. Finally, on my last slide, what does that look like from our Velocity metrics, which we set out two years ago? Revenue, cash flow, assets, utilization.
Utilization increased a little bit in the year to March 2025, and we think we could increase that a little bit more in 2026. There is our earnings, and our final dividend per share is there. That will go to the AGM on the 4th of September. That finishes my little review. Over to Dan now. Thank you all. Just in terms of a general business overview, within the market that we operate in, we see and we hope, and I think we all do, that construction is set for a recovery, but it will be a gradual one. Going into our presentation and our results being announced last week, we had the spending review from the government in the week prior that I think does underpin the areas that we saw as key to our focus, which was positive, and we welcome those.
We know, obviously, since we've been during the results roadshow, the updates on infrastructure spending, which we're yet to review, but hopefully they remain clear and remain an opportunity for the business as we go forwards. Whilst the PMI, the Purchasing Managers' Index, rose last month to just under 48, it is still below 50. It does mean that we're still seeing that period of contraction for a number of months now. There have been delays in project starting, new orders, and ultimately that impacting staffing levels. Whilst we can see the things that will lead to that gradual recovery right now and coupled with things that Paul mentioned earlier around administrations and things like that in the sector, we still need to be vigilant. It is a sticky period, but still a period where you can see that way forward, and hopefully that's sooner rather than later.
Whilst construction output has been downgraded, it is broadly consistent over the period. We can see, hopefully with the more recent announcements by the government and what they hopefully manifest into, that may create opportunities for that to be sped up as we go forwards. We were pleased to have taken market share, driven by the key wins and mobilizations that we've achieved and spoken about in the past. Yes, the market has got slightly smaller, but we have still had that focus on taking share led by our strategy that we're pleased to have achieved. We were really conscious to want to talk about our test inspection certification business, Lloyds British. That obviously is not a hire company. It is a part of our business that is slightly different, less cyclical, and much more led by regulation and legislation.
We have grown and improved that business during the year, all organically through recruitment of engineers into the business built on the system that we put in about 18 months ago. There are new opportunities coming into that sector. We already regulate services under pressure, gases, so hydrogen and other businesses that we have there offer an opportunity. EVs and things like the sciences and pharmaceutical offer us further opportunities to expand in that sector that is going to grow. We remain well positioned in a number of areas to capitalize on these increased spending commitments from the government and the general market recovery as that hopefully occurs. Moving forward onto sectors, this is not all of the sectors that we serve. Clearly, we serve really important sectors like house building, like general and commercial construction.
This was us drawing out some specific areas where there are those commitments from the government and what they might mean for us. If you look at rail and HS2, for instance, Control Period 7 in the railway has been tough. The first year of that period has been difficult, and there has been an underspend. Now, CP7 is not the entire railway industry. It is really important to note that, but it is that regulatory maintenance framework that we have been successful on in the past. We have great relationships with our customers that operate in that space, but we do need to see that commitment to that spending through that period in order for that to come through. We have the confidence that we are set fair for that as and when that occurs. HS2 continues to be a massive opportunity for us.
We're pleased to work across so many of the projects. Whilst there's obviously been a number of changes to the project over certainly the years that Paul and I have sat here, it continues to be that opportunity for us, and we'll continue to work hard to execute that. We were pleased in the period we've put an on-site facility on the Transpennine Rail Upgrade in the north. Again, CP7 is not the whole railway, so that Transpennine and east-west corridor upgrades are really important to us. In water, there's a lot of work going on at the moment with the AMP8 framework that's recently got started. It's not been an area where we've been as strong as we would have liked to have been in previous years.
We are working really hard with a number of our customers, both large and national customers, regionals, to ensure that we are in the right place to capitalize on the opportunity that AMP8 offers. We think that will be positive for the business. I'm not going to go through all of these, but if you go into nuclear, we are well aligned to capitalize on the opportunities that nuclear offers. We are on site and have a depot nearby at Hinkley Point, and we would suggest that's getting to the type of level that's most opportune for Speedy in terms of the work being carried out on site. We've got depots at and in and around Sizewell C. It's great to see the commitment to that project going ahead.
We obviously note the private funding that needs to be developed for that to come through, but we are well aligned to that as well as other areas of the nuclear sector. Obviously, as we transition this year from the one road investment scheme to the next, we hope to see those commitments come through from the government as this year progresses and we change from one scheme to the next. It was really pleasing to see the commitment from the government to lower TEMS, a very significant scheme in the infrastructure in and around London and the Southeast. That private funding, but with a commitment on that project around clean energy and sustainability that we think plays really well to our strategy and the customers that we serve in that space.
Similarly, around aviation, that sector became a lot tougher in and around COVID for very, very obvious reasons. The things that are now started to be invested in around the airport infrastructures, Heathrow, Gatwick, Manchester Airport Group, the various airports around the U.K. offer us a really good opportunity for that underlying maintenance work that is always there, as well as the larger investment schemes that are being supported by the government, both now and potentially in the future. Obviously, defence, we all know the difficult and the challenging things going on in the world, but the commitments around spending in the defence sector do offer us an opportunity aligned to the customers that we serve both now and in the longer term that is important to us. It is key that we understand the role that we play both in hire and in test and inspection services.
As that becomes clearer with the spending review and as those investments are made, we see that offering a positive opportunity to the Speedy business.
Thank you, Hannah. Just in summary on some key activities around our people and ESG, once again, Paul and I would like to thank the fantastic team of people that we've got working across Speedy, both running and changing the business. It's really, really important to us. We were pleased to have moved again in the top 50 inspiring workplaces coming 11th this year, which is another leap forward from last year. It's been really important that as we are leading a change program with our transformation and our strategy, being recognized for communicating better with our people was a fantastic fit for Speedy to achieve.
Voluntary attrition, as consistent with the last two or three years, continues to improve and has a gain in the early part of the financial year as we've continued to invest in our colleagues and make Speedy Hire a better place to work for our people. When we surveyed our people for how it feels to work here, we maintained a very good score in the challenging economic climate that we are pleased with, and we will continue to monitor and engage on that with our colleagues, obviously as part of generally running the business and as part of the people-first strategy within Velocity. We continue to invest in young people and earn and learn categories across apprenticeships, graduates, and professional development. We're really pleased with that. We have enhanced maternity and paternity pay, which, as we look to attract and retain the right people, is really important to us.
We have a significant number of our colleagues on our Speedy Work-Life Balance program enjoying a different mix of working week and a different blend of working week. Again, ensuring that it is always about serving the customer, but in also making sure that we are a balanced employer and that we are listening to our colleagues about what they would enjoy from us going forwards. Moreover, just pay, how can we develop those conditions for our people? In terms of ESG, Paul talked about it earlier, commercial sustainability is always key to our focus. What adds value to our customers and our shareholders? We continue to invest in the types of assets that allow us to achieve that and that we can measure, again, being recognized by the FT, which is not something that we apply for. They assess us as a climate leader for the third consecutive year.
We achieved EcoVadis, which is another measure in this space, putting us in the top 1% of businesses for sustainability, again, improving on the prior year and retaining our CDP A-minus score. Finally, perhaps on this slide, attaining the PAS 2080 carbon management and sustainable procurement standard as the first in U.K. Hire to have that, which a number of our larger customers now focus on and value. Thank you, Hannah. If we go forward into health and safety, very, very important for us that we continue to be in a very positive place across the sector.
Delighted to have received the RoSPA Award for our performance in the prior year in the sector, underpinning the fact that we've worked with RoSPA on the National Accident Prevention Strategy and have achieved our 11th consecutive year of RoSPA Gold Award following getting the President's Award last year for our health and safety standards. We've improved, again, in terms of accidents and lost time in the period, and increasing, which is a positive metric, the number of leading indicators we're reporting around hazards and preventing things from occurring in the first instance. Finally, just at the bottom there, a further investment on AI technology into our vehicle fleet, monitoring and working with our drivers on improving their driving behavior to, again, continue to innovate in that vehicle fleet space that we've done so well in over a significant number of years. Thank you, Hannah.
If we move in from business overview to strategy and transformation, there are some slides in the appendices of the pack that refer to previous years. We do not want to labor those too much when we are moving forward and talking about the year ahead, but demonstrating what we are going to achieve. It is not a strategy all aimed at revenue. It is also aimed at making the business more efficient and ensuring that as we move forward and we come out of the enable phase, we can get a greater part of the expansion of the business in efficiency and margin while also ensuring that high standard of customer performance. We said at the half year we were trialing a transport strategy in the business. I am pleased to say that is now rolling out through the business between now and September, October.
It will give a much greater level of detail to our customers in terms of where are we and consolidating loads and ensuring that better level of customer experience and communication. It will also make Speedy Hire more efficient. We will take miles off the road by ensuring that our vehicles move our own kit around internally more effectively and to and from our customers. Taking those miles off the road will reduce costs. It will also ensure that we use less carbon as a really happy byproduct of that change. Our new Speedy trading platform is about how our colleagues trade into our system that we have continued to optimize over the period. It will help with things like training, where the system will ask our colleagues the questions and give them the things that we want them to talk to our customers about.
It will make transacting in the system easier. It will link with transport optimization around things like booking time slots for customers, again, making it more efficient to serve a customer and ensuring that same level of excellent customer experience. All underpinned by the order management system that we said we were selecting and working on at the half year, we have now selected that. We are integrating it.
As we go forward, that should stitch together the trading platform and transport management system so that we're taking orders, we're allocating assets to trucks and assets to customer orders to ensure that we do have all of that data available and visible for customers that we now expect in our everyday lives as consumers and ensuring that we deliver that to all customers, both larger and smaller, as a way of us being more effective and using that systemization to support our growth without always needing to increase overhead. We said that we were rolling our CRM out when we spoke to you at the half year. We will continue to do that, and that will culminate later in this year throughout our business at the various customer touchpoints.
As we have never had one, that should really underpin our growth ambitions and make it a lot clearer for us how we interact with those customers, how we market to certain customers where the permissions allow, and support our growth strategy as we go forwards. We updated our website at the half year more around corporate and investor relations. As we go forwards, improving the transaction elements of that, we do have some customers now trading through there, much better experience. We know that continues to need to improve, and that is key to our focus this year, the more transactional element. From a customer voice perspective, we have our platform in place now.
It's now listening to what we're doing well at each point we touch a customer, from taking an initial inquiry right the way through to being paid and all of those areas in between. Where we're doing well, how can we do it better, and where we're not doing as well as we or our customers would like, how can we learn from that and improve going forwards, which again, we didn't have in place in the past. In terms of AI, we predominantly focus today on two main areas: inventory optimization, where is our kit, where should it be, and how should we move it around or repair it more effectively, which we use across our top 350 assets across the business.
We can see that those assets are performing well in terms of utilization, and we will do more of that across more products and with more AI intelligence with our partner Peak through the year in order to hopefully continue to see the utilization of those products improve and increase the range in which we apply AI within the products. Additionally, we use AI just on the bottom bullet there around dynamic pricing in our regional and our trade and retail spaces to ensure that we're delivering the right prices for our customers within the different regions that we serve and understanding at which point we've reached the right price point to ensure that we're getting the volume that we're looking for, but delivering the right value for our customers and the right returns for us.
There's a greater level of intelligence in there that we're now able to absorb and understand, and we will continue to try and reduce that complexity and improve that visibility for our customers as we go forwards, optimizing the way that we use that in the business to ensure the value for us and the value for the customers within the different segments. At the moment, that is predominantly across our regional customer range, our trade and retail range, which is led by our web pricing. We have started to use AI around bid writing. That is in trial at the moment. It's very interesting where we look at bids where we've been successful and bids where maybe we haven't been so and understand where AI can help us write or develop a more successful bid in the future.
We look forward to talking to you about that, perhaps as that develops. We have aligned our key resource, especially around sales and our colleagues in our trading desks and Speedy Hire Direct, our head office, to the key growth sectors that we talked about earlier and some others that were not in there around where we know the opportunities are going to be to grow, which is really important. As Paul mentioned earlier, we have launched our new temporary site solutions business focused on products like fencing and barrier, traffic management, ground protection, temporary roadway, temporary trackway, which, when we spoke to our largest customers, was a service that they wanted from us that we do not offer at anything like that scale today.
We will also ensure that we provide the labor services that, again, we do not today around deploying those assets before they are used to set them up with our customers and then taking them away again at the end when our customers are finished and managing that service, which offers us a service revenue stream that we do not generate today on a product that we know at the scale that we currently operate on, excuse me, is a positive product for us to have in our business. We said at the half year that we intend to organically invest in developing further specialist businesses aligned to our strategy where we have previously done things in power and energy, in powered access, and Lloyds British.
That is us continuing to demonstrate that we focus on the right products and services that offer the right return as we develop our business, and that will start from our second half of this year. Thank you, Hannah. If we now bring to a conclusion around summary and outlook, despite the challenging but manageable backdrop, we have continued to diversify the customers that we serve and the sectors that we support. We have done a good job maintaining margins, as Paul touched on earlier, and we have continued to invest in our hire fleet, but only to support the areas that are within our strategic growth engines to take the business forwards.
We have continued to make that choice to invest in our Velocity Strategy and its enable phase to set the business up for that growth as it comes through, as the market recovers, and to have that business in the right platform to make the most of those opportunities as we go forwards, as we laid out at our CMD in 2023. We are well positioned to capitalize on the opportunities in our current and hopefully in our future pipeline, which we are really pleased with. We do welcome those commitments in the long term from the government around infrastructure and construction, and we welcome that clarity coming forward as quickly as possible. The new financing facilities that we have secured support the group's growth ambitions. We are really pleased to have done that through Paul and the team.
The revised capital allocation policy that we have delivered delivers that clarity around what we are going to do with our money and our capital, ensuring that we can also offer the right returns to shareholders, which included the maintenance of the dividend. The board remains confident of achieving our full year expectations for 2026. Thank you for your time to listen to Paul and I and take you through our presentation. I will now hand back to Hannah for any questions.
Thank you. We do have some. The gross margin in hire showed good performance. What drove that?
What is it? That is my take, I suppose. Yeah. We have maintained our pricing discipline. If you get more, if we can get better rates, which we have managed to do in our national customers, you improve the margin a little bit. We are more efficient.
We've done some with our products that we buy. We look at the way we depreciate things. That is where the gross margin improved a little bit. It is all around pricing discipline.
Okay, thanks. What are your expectations for the new hydrogen generator business in 2026?
I presume by new, that is referring to the JV with Speedy Hydrogen Solutions. We are still really pleased to be working with AFC Energy, which is our JV partner in Speedy Hydrogen Solutions for those that are not aware. Our expectations are we would like to see more of those products out in the market, working with our customers as balanced alternatives to diesel. For us, it is still very small. It is a small number of products.
During the year, we would like to see more of those out in the field, more case studies and feedback so that we can work with more customers going forwards.
Thank you. The tick business. With regards to the growth strategy, why are you focused on organic? Given the current size of the business, would not it be better to build scale rapidly?
Should I take this one?
Look, I do not think we would have had the right to go after acquisitions more recently because having acquired Lloyds British in 2016, I do not think we had probably set it up in its own way to make the most of any opportunity to acquire. Now that we have invested in the system as we did 18 months ago, the system is in place that allows us to run Lloyds British as a tick business, not as a hire business.
That was the first building block. I understand the question, but we think we've had those right organic opportunities at the moment, and that's why we've increased engineering resource by 15%-20% during the year. If we were going to be acquisitive, we'd have to, at this time, as well as trying to transform and change the business and navigate the macro climate, we'd have had to have capacity for buying, integrating, and acquiring and looking after businesses that we could afford to buy in the sector and that offered the right value. We have the ability to do that within our capital allocation policy. If the right one came around, we would look at it, but we still see the opportunity as being organic and focusing on how we can work with the current Speedy Hire core customer base going forwards.
Okay.
Let's stay on that theme. A question here asking about the Lloyds British business and the focus on the fact that it's less seasonal than your legacy business. Is the broader business winter or summer biased, and what would the impact of a harsh winter be, for example?
Yes, it's less seasonal than the hire business. Seasonal and less cyclical because it's regulation and legislation led. You don't have a choice to inspect something under LOLER or PSSR pressure and height safety regulations. You have to do it. Whereas you do have the choice, do I hire an air conditioning unit or do I hire a heater? You could just be hot or just be cold, being blunt and to the point. Yes, less seasonal, yes, less cyclical. What was the second half of that?
I think they're also asking the core business itself, is that more winter or summer biased?
I would say, thank you for clarifying. Sorry. More weighted to autumn, winter because we hire out weather assets, we hire out cold weather assets, and we hire out lighting, which does see us get to be more of a, from middle of October onwards or whenever daylight saving kicks in, more of that business. That doesn't tend to have an impact on Lloyds British or tick. If we had a harsh winter for some parts of our business that hire out heating equipment, so the core Speedy Hire tool hire business, that would be a positive. For other areas of our business, if it's too windy or it's snowing or icy, you wouldn't want to be in a powered access machine up 30 ft in the air.
We look at it in balance, but colder weather does tend to drive products to be out on hire.
Okay. Thank you. Bring on the harsh winters, hey. You talked about the opportunity to cross-sell with existing customers within Lloyds British. Are you seeing any traction, and is the hope that it will improve stickiness with customers in the longer term?
Yes and yes. Yes, we are seeing the interest and the opportunity. I think now we can talk to customers with confidence about the platform that we've got and what that could do for them in a much simpler way. We now sell Lloyds British with that clarity. Yes, I would expect that to be a clear area of opportunity for Lloyds British and the Speedy Hire business for customers to see that more combined intrinsic value. Yes.
Thanks.
You have numerous substantial clients, a great plan, and expended the CapEx. How much of your pipeline have you actually secured?
We've secured those that we've been able to talk about in the past. The pipeline that we refer to in the document, I'm trying to say this in the right way, but it's pipeline because we haven't won it yet. If it's in the pipeline, we're still working on it. We're pleased with the value of the pipeline. There are a number of things that we've won and secured. As well as trying to give you the clarity on customers and pipeline, we've tried to give that bit more detail on sectors this year, which we maybe haven't in previous reporting periods. The pipeline that we refer to in the document is pipeline and therefore unsecured.
Thank you.
In FY26, do you think you can grow both volume and pricing?
My view, and Paul can chip in, is my view that we could chase volume by reducing price, but kit costs more, people cost more, depots cost more. I think we have to look at the balance of price and volume as exactly that. It is balance. It is our job to offer value to our customers, and we think we do that in the right way without chasing volume or potentially risking bad debt or not offering that right value. I think we need to look after price, whether that is in our national customers or we are looking at AI on regional dynamic pricing in the right way, as well as wanting to have those larger customers and their supply chains that offer you the volume too. I do not know if you have got a different view to that, Paul.
Not really. I mean, the art of it from our perspective, I think, is maintaining or improving bottom line and margin and grow the top line. One day we'll have all three green volume up and all three rate up. It's quite a, yeah, it's a hard art. If we can do the numbers that are in the marketplace, you've got to have thought that the rate would be in the right direction and the volume would be in the right direction.
Thank you. You are now nearly two years into Velocity. Are you confident that you will still hit the target set at the time within the next three years given the performance to date?
Yeah, we're just over two years into Velocity.
We will complete the investment in the enable phase this year, the year that we've just entered, in terms of the things that we said we needed to do to the business in order to make it as effective as we needed it to be to take it forwards. Yeah, we haven't changed what it is that we're focusing on delivering as an output of Velocity.
I think I would add just one thing to that. We're very focused on bottom line earnings. If you look at the way that the remuneration targets work, the minimum vest in 2028-2029 is GBP 0.06, which would be more than three or four times what it is today, and GBP 0.09 at the maximum. If you take the EBITDA that we talked about as a margin of 28%, you can work it down to GBP 0.09.
We might not get the revenue because I think Dan and I would, if we had a GBP 10 million hire contract versus a GBP 30 million fuel contract, we'd take hire any day, every day of the week because of the margin on hire versus the almost like the pass-through margin on fuel.
Yeah. Makes sense. A question on dividends. Have you considered equal distribution of dividends, or did you consider reducing the dividend to improve the P&L in your latest results?
On capital allocation, we had a debate about because we appreciate earnings are less than our stated dividend we've just announced.
We took the view that given where we are with an element of confidence into the future, the things we are doing and the messages we were coming out in the R&S, if we think that our recovery is a V-shaped recovery because we've had a tough couple of years, you'd maintain the dividend. If you felt there was going to be a long slog, a U-shape, and we were not point or outlook positive, you'd cut the dividend. We decided that actually where we are today, maintaining the dividend was the right thing to do. That is what we've done. It was an interesting debate at the board, and it was good.
Good. Thank you. Right. Last question. TSS, the temporary site services business that you're establishing, given customer demand, wouldn't it be better to buy a business to achieve scale quicker?
I think if the right and obvious business that was there to give us that scale immediately, we could always review that option. Part of why we've done what we've done in changing our depot network over the last two and a bit years as well is that we've got that capacity, we've got the product and the relationship with the suppliers, and we've got the customer base. With the right products, the right customers, the right suppliers, and the right depot network, we think we can do it at the moment organically. Again, if the right opportunity came around to do something larger, then we could look at it, but we've also got to be conscious of where we're at from a net debt perspective.
I think at the moment, we've done that in the right balance, but we will always remain vigilant to the right opportunities to do something either organically, which is what we said Velocity was. If we need to do anything with scale and we think that's the right thing to do, we would be open to those choices, and we always review those, Hannah, in the background before we make our investment decisions. A lot of it about CapEx is a make-buy decision. Dan and I often see various businesses for sale. You think, well, I could just go and buy the assets, don't have to worry about integrating a business, and you just use, and then you compete. That's the strategy on that.
Super.
That just leads me to thank you both for your presentation today, the audience for your questions, and for joining us. We look forward to having an update in another six months.
Thank you. Thank you. Thank you.