Half-year Report

RNS Number : 4503N
HSS Hire Group PLC
30 September 2021
 

 

HSS Hire Group Plc

2017 strategic plan complete; business positioned for next phase of accelerated growth

HSS Hire Group plc ("HSS" or the "Group") today announces results for the 27 week period ended 3 July 2021

 

Financial Highlights 1 (Unaudited)

 

H1 2021

 

H1 2020

 

 

Change

 

Revenue2

£150.5m

£120.7m

 

22.0%

Adjusted EBITDA3

£38.3m

£27.9m

 

37.2%

Adjusted EBITDA margin

25.4%

23.1%

 

2.3pp

Adjusted EBITA4

£17.7m

£1.1m

 

£16.6m

Adjusted EBITA margin

11.8%

0.9%

 

10.9pp

Net debt leverage5,7

1.7x

2.9x

 

1.2x

 

 

 

 

 

Other extracts

 

 

 

 

Operating profit / (loss)

£22.6m

£(0.7)m

 

£23.3m

Profit / (loss) after tax

£11.2m

£(12.9)m

 

£24.1m

Basic earnings/(loss) per share

1.61p

(7.55)p

 

9.16p

 

· Strong trading performance with new operating model driving significantly improved profitability above 2019 levels

H1 2021 like-for-like6 revenues at 99% of H1 2019, with Q2 2021 at 102%

Capital-light Services segment 17% ahead of FY19 on a like-for-like6 basis

EBITDA7 and EBITA7 comfortably ahead of 2019, up 13% and 99% respectively

Digitally-led, lower-cost operating model underpinning Group profitability with EBITDA margin up 2.3pp on H1 2020 and  ROCE8 increasing to 24.0%, up 13.3pp since December 2020

 

· Further strengthening of balance sheet with leverage reduced to 1.7x7

Net debt7 reduced further to £97.6m (FY 2020: £120.4m)

Leverage at a record low and significantly ahead of previous FY 2021 target

Sale of Laois completed April 2021 for €11.2m

Efficient working capital management maintained, overdue debt remains at low levels

 

· Delivered 2017 strategic plan, focus now on leveraging digital offering to drive accelerated growth

Transition to new digital platform, HSS Pro POS, largely complete; improving the customer experience by providing single point-of-sale access to full range of HSS products and services

Restructured organisation into two divisions, already delivering improved sales conversion and customer service

"Sales Acquisition", focused on customer conversion and the leveraging of digital assets; and

"Make it Happen", focused on customer fulfilment and service.

Low cost builders merchant network expanded to 50 locations (June 2020: 10), now representing 13% of customer orders in England & Wales

Continued technology investment including enhancements to HSS.com, with online revenue up 75% compared to prior year representing 24% of transactions in H1 2021

 

·   Current trading and outlook 

Revenue, EBITDA7 and EBITA7 all above management expectations in Q3 2021 to date. 

Management now expect full year EBITDA, on a non-IFRS16, continuing operations basis, to be ahead of market expectations and EBITA7 to be materially ahead

Sale of All Seasons Hire completed 29 September 2021 for gross consideration of £55m, with proceeds to be used to further reduce debt.  Leverage7 as at 3 July 2021 on a LTM pro-forma basis will reduce to c1.0x post this transaction, delivering on one of the three strategic objectives announced in 2017 - "Delever the Group".

Group revised target is for leverage7 to remain between 1.0x and 1.5x

Refinancing process underway, well placed for material reduction in Group interest cost

Strategy delivering, well positioned to capitalise on market opportunities

HSS will host a series of events, starting later in the year, to demonstrate the Group's technology platforms and provide an update on the Group's financial performance framework

 

 

Steve Ashmore, Chief Executive Officer, said:

 

"The first half of 2021 has been one of significant progress and I am very pleased with what we have accomplished. We started the year with strong momentum and trading continued to improve over the period, with Q2 21 revenues at 102% of 2019 levels, EBITDA and EBITA margins up and ROCE at a record level. This strong performance, combined with the post balance sheet date sale of All Seasons Hire, has allowed us to reduce leverage to around 1.0x, well below our 2.0x target, completing the final element of the strategic plan set out in 2017: to Delever the Group, Transform the Tool Hire business and Strengthen our Commercial proposition.

 

The Group has made strong progress over the last four years so that HSS today is unrecognisable from the HSS of 2017. Our unrivalled digital capabilities allow us to offer our customer what they need, when they need it, servicing demand through our 500+ partner supply chain. Leveraging our differentiated customer offering, highly-evolved technology platform, and scalable structure built around two key divisions, we are uniquely positioned to capitalise on market opportunities as we begin the next exciting phase of our growth."

 

 

Notes

1)  Results for H1 21 and H1 20 are for continuing operations on an IFRS16 basis (unless otherwise stated) and exclude the Laois Hire Limited business which was sold in April 2021

2)  Revenue variance excludes the impact of additional week's trading in H1 FY21

3)  Adjusted EBITDA is defined as operating profit before depreciation, amortisation, and exceptional items. For this purpose depreciation includes the net book value of hire stock losses and write offs, and the net book value of other fixed asset disposals less the proceeds on those disposals

4)  Adjusted EBITA defined as Adjusted EBITDA less depreciation

5)  Net debt leverage is calculated as closing net debt divided by adjusted Last Twelve Months (LTM) EBITDA 

6)  Like-for-like excludes impact of loss of Services volume associated with FY19 announced change to one managed service contract and impact of additional week's trading in Q1 FY21

7)  Pre-IFRS16 basis

8)  ROCE is calculated as Adjusted EBITA for the 12 months to 3 July 2021 divided by the average of total assets less current liabilities (excluding intangible assets, cash and debt items) over the same period

 

 

 

-Ends-

 

Disclaimer:

 

This announcement contains forward-looking statements relating to the business, financial performance and results of HSS Hire Group plc and the industry in which HSS Hire Group plc operates. These statements may be identified by words such as "expect", "believe", "estimate", "plan", "target", or "forecast" and similar expressions, or by their context. These statements are made on the basis of current knowledge and assumptions and involve risks and uncertainties. Various factors could cause actual future results, performance or events to differ materially from those described in these statements and neither HSS Hire Group plc nor any other person accepts any responsibility for the accuracy of the opinions expressed in this presentation or the underlying assumptions. No obligation is assumed to update any forward-looking statements.

 

Notes to editors

HSS Hire Group plc provides tool and equipment hire and related services in the UK and Ireland through a nationwide network and its OneCall rehire business. It offers a one-stop shop for all equipment through a combination of its complementary rental and re-hire business to a diverse, predominantly B2B customer base serving a range of end markets and activities. Over 90% of its revenues come from business customers. HSS is listed on the AIM Market of the London Stock Exchange. For more information please see  www.hsshiregroup.com .

 

 

For further information, please contact:

 

HSS Hire Group plc

  Tel: 07557 491 860 (on 30 September 2021)

Steve Ashmore, Chief Executive Officer

  Thereafter, please email: Investors@hss.com

Paul Quested, Chief Financial Officer

 

Greig Thomas, Head of Group Finance

 

 

Teneo 

 

Tom Davies

Charles Armitstead

 

Tel: 07557 491 860

Tel: 07703 330 269

Numis Securities (Nominated Adviser and Broker) 

Tel: 020 7260 1000

Stuart Skinner

George Price

 

 

Chief Executive Officer's Report

The first six months of 2021 saw our new operating model deliver well, with revenue returning to pre-COVID-19 levels despite further related government restrictions, and profitability increasing significantly above 2019 levels. Performance has been driven by the rollout of new technology (HSS Pro POS) to our salesforce, expansion of the builders merchant model and a resilient construction market. The changes made to our network in Q4 2020 have proved successful, delivering strong customer service, while reducing costs and our carbon footprint. Following on from that we have reorganised our business into two divisions, Sales Acquisition and Make it Happen, which is bringing separate focus to how we acquire customers and then fulfil their requirements.

HSS Pro POS Technology Rollout

We have continued to invest in the Brenda platform since its launch for the OneCall business in 2018. During Q1 2021 we rolled out the latest application, HSS Pro POS, to our entire salesforce. This allows them direct access to our full range of products and services, whether sourced directly from owned fleet or via our large supply chain of rehire suppliers. The platform has landed well with colleagues, being simple, quick and intuitive, and most important of all, allowing them to say "Yes!" to customers quickly for all hire enquiries.

We are already seeing HSS Pro POS deliver great results with rehire enquiries up 18%, conversion rates improved by 17ppts and a resultant 17% improvement in like-for-like Services revenue. We are also seeing better decision-making, reducing the number of high cost-to-serve and high-carbon, long-distance jobs in favour of using our rehire supply chain to offer a more efficient response to customers. This is likely to drive continued outperformance of Services revenue against Rental.

Builders Merchants Network Expansion

In H1 2021 we increased the number of builders merchant locations from 24 to 43, and at mid-September have 50 open, all of which have significantly higher footfall than a typical standalone hire location. These builders merchants are proving to be a convenient location for our customers to order and collect hire equipment, with 13% of our contracts raised in England & Wales now being done at these locations. Our network is approaching optimum size with a national footprint now in place with 14 partners. The pace of rollout will slow in H2 as we focus instead on maturing open locations and working with our partners to improve penetration with their larger customers.

Market Resilience

While some important end-user markets like retail, hospitality and airports continued to be adversely impacted by COVID-19 in H1, the lack of volume there has been replaced by strong demand in areas like housebuilding, home improvement, repair & maintenance and infrastructure. It is testament to our diversified customer base and exposure to so many end-user markets that our revenue performance remains strong. As more COVID-19 restrictions are removed we see further opportunities for growth in H2. The outlook for the market is positive with the Construction Products Association forecasting 6.3% growth in construction output for 2022 and the ONS publishing forecasts for GDP growth in 2022 averaging 5.4%.

Operating Network Changes

The changes to our operating network in October 2020 have delivered ahead of our operational and financial expectations and we are now better placed than ever to fulfil customer requirements. We believe that we have the leading national fulfilment network, offering both depth of coverage and breadth of offering across the UK and Ireland. Our directly employed operations teams have new-found focus on operating 40 well established distribution hubs, into which we consolidated the vast majority of our owned fleet. This strategically located network is fit for the future and we do not foresee any major changes, providing an opportunity for our teams to focus on delivering exceptional customer service using the new routing and scheduling technologies that we are introducing in H2.

Our network also includes fulfilment from a further 2000+ locations operated by over 500 supply partners, ranging from large multi-site generalists to small single-site specialists. Our technology platform allows these suppliers to access our enquiries and fulfil those suited to them. This gives customers access to an unrivalled level of availability in addition to lowering the cost to serve and reducing duplicated carbon footprint.

Finally, the combination of our distribution centres, local sales branches and builders merchants locations means that we now have 135 click-and-collect locations nationwide. I am pleased to report that 21% of customer orders were fulfilled this way in H1, a reflection of customer demand for this technology-driven fulfilment channel

Business Reorganisation

Following the changes made to our operating network in Q4 2020 and the rollout of HSS Pro POS in Q1 2021, we have now reorganised our business around two divisions in order to drive superior customer service and to create clarity around performance management.

Our Sales Acquisition division comprises our directly employed field sales teams, 45 local sales branches, 50 HSS builders merchant hire counters and over 100 ProService managers. Its role is to drive revenue growth through generating enquiry volume and maximising conversion rates, while maintaining gross margins and improving digital penetration. The rollout of HSS Pro POS has enhanced cross-selling and is driving a quicker response for customers.

Our Make It Happen division comprises our directly employed operations teams in 40 distribution centres, plus the operations teams of the 500 supplier partners which operate from over 2000 locations. This division is focused on fulfilment rates, customer service measures, utilisation, cost-to-serve and returns. We now have an operating model well suited to minimise the Group's carbon footprint going forward.

These two divisions offer customers what we believe is an unrivalled speed of response, the deepest and broadest product offering and by far the best availability in the market. It certainly appears to be working with like-for-like Services revenue up 17% in H1 (versus 2019) and Trustpilot scores of 4.3 stars. 

Strategy update

We are approaching the four year anniversary of our strategy reset launched in December 2017, where we set out to: 1. Delever the Group; 2. Repair the Tool Hire business; and 3. Strengthen our Commercial Proposition. I am pleased to report that these three strategic priorities have been fulfilled and our business turnaround is complete. The business is now in great shape, delivering superior profitability and return on capital, and has a strong balance sheet. I believe we are uniquely positioned to target market share gains through outstanding service, driven by unparalleled technology and a focused organisational structure.

 

1.  Delever the Group

 

Since we announced our strategy reset we have reduced our leverage (pre-IFRS16) from 4.8x to 1.7x. This is an outstanding achievement and testament to both the hard work of colleagues and the support from our Board and shareholders on key strategic decisions. The divestments of UKP, Laois and ASH have provided proceeds to reduce debt, while retaining capability and customer service through long-term commercial partnerships. Significantly improved profitability has also reduced our leverage, both through improved trading and cost reduction. In particular, the decisions taken to remove the NDEC and reduce central costs in 2018 removing circa £14m in operating costs per annum, to implement a builders merchant model starting from 2019 and to close 134 branches in October 2020 resulting in £15m annualised cost savings have all led to a leaner, more agile operating network and record returns.

 

2.  Repair the Tool Hire business (more latterly 'Transform')

The original priority of improving profitability in key areas of products, branches and customers in 2018 allowed us to repair the tool hire business and then focus on transforming it into the great business we have today. The customer segmentation study in 2018 led to a new vision to become the market-leading digitally-led brand for equipment services. Our journey to make the customer proposition 'easy' started with the launch of our customer App in 2018, the first fully transactional App in our sector, and has more recently involved the launch of HSS Pro POS. Our employee proposition has improved too with continued improvements in engagement scores over four years and significantly improved safety performance.

 

Strengthen our Commercial Proposition

Significant progress has been made here in the last 12 months as we accelerated our strategy and created a more scalable organisation model. Our national network of Customer Distribution Centres, click-and-collect locations and supply chain partners offers superior customer choice and availability. Our successful builders merchant network rollout is built on convenience for customers and gives us access to new customers. Our technology provides colleagues with a platform that is easy to operate, allowing them to convert enquiries across the full range of hire products. We now have a scalable, agile, technology-driven proposition in place which has the opportunity to target ambitious market share gains in the next chapter of our development.  We are already seeing 24% of orders transacted online.

In conclusion, our turnaround phase is complete and the business is in great shape both financially and operationally. I look forward to sharing our ambitions for the next exciting phase of business growth later in H2.

 

Group Financial Performance

 

Results and commentary are presented on a continuing operations basis unless otherwise noted, reflecting the impact of the strategic disposal of Laois in April 2021.

Revenue and segmental contribution

The H1 21 results are based on 27 weeks of trading whereas H1 20 is 26 weeks.  Revenue growth metrics versus FY20 have been adjusted to exclude the impact of this additional week (with the adjusted metric shown in brackets). We have made comparisons to FY19 because, given COVID-19, FY20 is not a typical period for trading. All comparisons to FY19 are on a like-for-like basis, taking into account this adjustment as well as the impact of a loss of Services volume associated with the FY19 announced change to one managed service contract.

Revenue in H1 21 was £150.5m, 25% (22%) higher than the previous period (H1 20: £120.7m), which was heavily impacted by the COVID-19 pandemic and associated lockdowns in the UK and Ireland from March 2020. Since then, revenue has recovered to pre-COVID-19 levels through effective strategy implementation in an improving market as government restrictions relax. In H1 21 the Group's revenue, on a like for like basis, was 99% of the comparable FY19 period with an improving trend over the six months.

Turning to segmental performance, Rental and related revenues were £101.7m in H1 21 (H1 20: £82.3m), 24% (21%) higher than in H1 20, and recovered to 94% of FY19 levels on a comparable basis. Contribution is up 27% at £72.0m (H1 20: £56.6m). Margin increased to 70.8% (H1 20: 68.8%) with good cost control as volume recovered and reflecting the benefit of the new operating model. H1 20 contribution benefited from around £1.6m of government furlough income, and after adjusting for the impact of this the improvement in margin rises to 3.8pp.

Services revenue has increased by 27% (24%) to £48.7m (H1 20: £38.4m). Against FY19, on a like for like basis, revenue has grown 17%, reflecting a very strong performance from the business segment with customers continuing to value the one stop shop offer through the Group's evolving technology platforms; making it easy for customers to access all of their hire needs in one simple transaction. Contribution increased to £7.2m (H1 20: £4.9m).  Margins are increased by 2.1pp at 14.9% (H1 20: 12.8%), reflecting the mix benefit of recovering Training revenue and the increased OneCall volume. H1 20 contribution benefited from around £0.6m of government furlough income, and after adjusting for the impact of this the improvement in margin rises to 3.6pp.

Costs

In October 2020 the Group implemented a new digitally-led operating model, reducing the fixed cost base by £15m.  The benefit of this change is borne out by the year on year reduction in costs set out below.

Cost of sales increased to £68.3m during the period (H1 20: £60.1m) primarily as a result of the recovery in revenue following a COVID-19 related decline in our Services business during 2020. Distribution costs increased only slightly by £0.2m versus the prior year to £13.1m (H1 20: £12.9m). Costs have been tightly managed despite the increase in activity.

Administrative expenses decreased by £7.2m to £48.0m (H1 20: £55.2m) with the reduction mainly driven by the move to a digitally-led operating model noted above and the associated property and headcount related savingsAn exceptional credit of £7.5m was recognised in H1 21 largely as a result of the Group's efforts to negotiate and complete early surrenders on stores closed as part of the changes to the Group's operating model referenced above. The figure includes £0.9m of associated professional fees. In H1 20 an exceptional credit of £0.8m was recognised reflecting a release from onerous lease provision on adoption of IFRS16.

Net finance expenses have reduced reflecting the reduction in discount unwind following lease surrenders and the reduced interest and debt issue cost amortisation following repayments of senior finance facility debt in January and May.

Other operating income

Other operating income at £1.6m (H1 20: £6.7m) relates to £1.2m received under a COVID-19 business interruption insurance claim, a £0.2m release of provision held against Irish Temporary Wage Subsidy Scheme 2020 receipts (now that eligibility to participate in the scheme has been confirmed) and £0.1m of sublease rental income. Government support has not been taken in FY21 given the recovery of trading and strengthened balance sheet. Prior year income comprises the receipt of £6.2m in grant income as a result of participation in the UK Job Retention Scheme and a similar scheme operated in the Republic of Ireland, alongside rates grants of £0.3m and sublease rental income of £0.2m.

Profitability

Adjusted EBITDA of £38.3m in H1 21 is significantly higher than the prior period (H1 20: £27.9m); improving revenue performance delivered through the Group's lower cost operating model being the principal driver. This has resulted in a corresponding increase in adjusted EBITDA margin of 2.3pp to 25.4% (H1 20: 23.1%).

Adjusted EBITA increased from £1.1m in H1 20 to £17.7m in H1 21 with margin increasing 10.9pp to 11.8% (H1 20: 0.9%). In addition to the drivers of EBITDA performance, depreciation of right-of-use assets materially reduced with the implementation of the new operating model.

The result of the drivers noted above is that the Group recognised a profit before tax of £11.2m versus a loss of £12.9m in the prior period.

The basic earnings per share were 1.61p in H1 21 versus a basic loss per share of 7.55p in H1 20 reflecting the large improvement in profit before tax but reduced by the significant increase in average shares in issue following the Group's highly successful capital raise in December 2020. The diluted earnings per share were 1.55p, versus a loss of 7.55p in the prior period (when all potentially dilutive instruments were anti-dilutive).

Sale of Laois Hire Limited

To enable the Group to focus on its strategic priority to Transform the Tool Hire Business, the disposal of Laois Hire Limited, the Irish large plant hire business, to Briggs Equipment Ireland Limited ("Briggs") completed on 7 April 2021. Proceeds of the disposal, net of transaction costs, were £10.0m generating a profit on disposal of £3.2m. As part of the transaction, HSS entered into a commercial agreement with Briggs for the cross hire of equipment to ensure the broadest possible distribution of, and customer access to, each party's existing fleet. Accordingly, Laois has been treated as a discontinued operation. The loss from the discontinued operation was £0.3m (H1 20: loss of £21k)

The profit on disposal of Laois, net of the loss in the period, increased the profit from total operations for the financial period to £14.1m compared to a loss of £12.9m in the prior period.

Return on Capital Employed

ROCE was 24.0% reflecting the significant improvement in EBITA driven by the improvements in revenue noted above. ROCE is calculated as Adjusted EBITA divided by average capital employed, where capital employed is total assets except intangibles, derivatives and cash, less current liabilities excluding debt items.

Net debt

Net debt at 3 July 2021 was £97.6m, a reduction of £22.8m from the year end. This has been driven by improved EBITDA, strong working capital management, proceeds from the disposal of Laois and a reduction in lease liabilities following the successful surrender of closed branches. Leverage has reduced to 1.7x (pre-IFRS16 basis), ahead of the Group's target of below 2x by the end of 2021. Leverage post-IFRS16 is 2.0x.

The debt facilities consist of a £160.8m senior finance facility, maturing in June 2023, and an undrawn revolving credit and overdraft facility of £23.2m maturing in January 2023. Including net cash balances the Group had access to £119.2m of combined liquidity at 3 July 2021.

Dividend

The Group has made great progress in reducing leverage by executing against its strategy. Reducing net debt and continuing to invest in the technology to drive better returns remain the focus for the Board. As such, it believes that the interests of the shareholders of the Group are best served by not paying a dividend at this time, a position which will be reviewed in the next twelve months.

Going concern

While encouraged by the resilience of the Group during a period of unprecedented disruption, the Directors continue to model via a number of scenarios the potential impact of COVID-19 on results. At the 26 December 2020 year end the Group had sufficient liquidity to operate within banking covenants for the next 12 months even under its reasonable worst case scenario. Actual events and trading since then have been favourable compared to the assumptions made and as a result the more recent models predict only increased liquidity from that position.

After reviewing the above, taking into account current and future developments and principal risks and uncertainties, and making appropriate enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence over a period of at least twelve months from the date of approval of these financial statements. Accordingly they continue to adopt the going concern basis in preparing these unaudited condensed consolidated financial statements.

Risks and uncertainties

The principal risks and uncertainties that could have a material impact upon the Group's performance over the remaining 26 weeks of the 2021 financial year have not changed significantly from those described in the Group's 2020 Annual Report and are summarised in note 19 of this interim report.

The main risk expected to affect the Group in the remaining 26 weeks of the 2021 financial year is macro-economic conditions, which includes the impact that COVID-19 and Brexit related developments could have on the business.

 

By order of the Board

 

Steve Ashmore    

Director

29 September 2021 

 

HSS Hire Group plc

Unaudited condensed consolidated income statement

 

 

 

 

 

27 weeks ended
3 July 2021

26 weeks ended
27 June 2020

 

Note

 

 

£000s

£000s

 

 

 

 

 

 

Revenue

4

 

 

150,450

120,657

 

 

 

 

 

 

Cost of sales

 

 

 

(68,322)

(60,054)

 

 

 

 

 

 

Gross profit

 

 

 

82,128

60,603

 

 

 

 

 

 

Distribution costs

 

 

 

(13,094)

(12,883)

Administrative expenses

 

 

 

(47,988)

(55,154)

Other operating income

5

 

 

1,554

6,708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

4, 20

 

 

38,275

27,892

Less: Depreciation

7

 

 

(20,580)

(26,800)

Adjusted EBITA

20

 

 

17,695

1,092

Add back: Exceptional items (non-finance)

6

 

 

7,539

802

Less: Amortisation

7

 

 

(2,634)

(2,620)

 

 

 

 

 

 

Operating profit/(loss)

 

 

 

22,600

(726)

 

 

 

 

 

 

Finance expense

8

 

 

(11,379)

(12,133)

 

 

 

 

 

 

Adjusted profit/(loss) before tax

 

 

 

6,436

(11,041)

Add back: Exceptional items (non-finance)

6

 

 

7,539

802

Add back: Exceptional items (finance)

6

 

 

(120)

-

Less: Amortisation

7

 

 

(2,634)

(2,620)

 

 

 

 

 

 

Profit/(loss) before tax

 

 

 

11,221

(12,859)

Income tax charge

 

 

 

(37)

-

Profit/(loss) from continuing operations

 

 

 

11,184

(12,859)

 

 

 

 

 

 

Profit on disposal of discontinued operations

18

 

 

3,180

-

Loss from discontinued operations, net of tax

18

 

 

(313)

(21)

Profit/(loss) for the financial period

 

 

 

14,051

(12,880)

 

 

 

 

 

 

Earnings/(loss) per share (pence)

 

 

 

 

 

Continuing operations

 

 

 

 

 

Basic earnings/(loss) per share

9

 

 

1.61

(7.55)

Diluted earnings/(loss) per share

9

 

 

1.55

(7.55)

 

 

 

 

 

 

Continuing and discontinued operations

 

 

 

 

 

Basic earnings/(loss) per share

9

 

 

2.02

(7.57)

Diluted earnings/(loss) per share

9

 

 

1.95

(7.57)

 

 

 

 

 

 

 

 

The notes form part of these condensed consolidated financial statements.

 

HSS Hire Group plc 

Unaudited condensed consolidated statement of comprehensive income

 

 

 

27 weeks ended
3 July 2021

26 weeks ended
27 June 2020

 

 

£000s

£000s

 

 

 

 

Profit/(loss) for the financial period

 

14,051

(12,880)

 

 

 

 

Items that may be reclassified to profit or loss:

 

 

 

Foreign currency translation differences arising on consolidation of foreign operations

 

(654)

842

Gains arising on cash flow hedges

 

-

86

 

 

 

 

Other comprehensive (loss)/gain for the period, net of tax

 

(654)

928

 

 

 

 

Total comprehensive profit/(loss) for the period

 

13,397

(11,952)

 

 

 

 

Attributable to owners of the Company

 

13,397

(11,952)

 

 

 

 

 

The notes form part of these condensed consolidated financial statements.

 

 

HSS Hire Group plc 

Unaudited condensed consolidated statement of financial position

 

 

 

 


3 July
2021


26 December 2020

 

Note

 

£000s

£000s

 

 

 

 

 

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Intangible assets

10

 

155,920

158,498

Property, plant and equipment

11

 

60,228

62,024

Right of use assets

12

 

80,243

89,839

 

 

 

296,391

310,361

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

 

3,366

3,183

Trade and other receivables

13

 

68,790

75,880

Cash

 

 

81,256

97,573

 

 

 

153,412

176,636

 

 

 

 

 

Total assets

 

 

449,803

486,997

 

 

 

 

 

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

14

 

(70,049)

(61,821)

Borrowings

16

 

-

(15,000)

Lease liabilities

15

 

(19,233)

(23,395)

Provisions

17

 

(5,395)

(7,448)

Current tax liabilities

 

 

(75)

(1)

 

 

 

(94,752)

(107,665)

 

 

 

 

 

Non-current liabilities

 

 

 

 

Borrowings

16

 

(156,875)

(179,099)

Lease liabilities

15

 

(56,250)

(66,177)

Provisions

17

 

(20,363)

(26,206)

Deferred tax liabilities

 

 

(230)

(260)

 

 

 

(233,718)

(271,742)

 

 

 

 

 

Total liabilities

 

 

(328,470)

(379,407)

 

 

 

 

 

Net assets

 

 

121,333

107,590

 

 

 

 

 

EQUITY

 

 

 

 

Share capital

 

 

6,965

6,965

Share premium

 

 

45,552

45,580

Warrant reserves

 

 

2,694

2,694

Merger reserve

 

 

97,780

97,780

Foreign exchange translation reserve

 

 

(639)

15

Retained deficit

 

 

(31,019)

(45,444)

Total equity

 

 

121,333

107,590

 

 

 

 

 

 

The notes form part of these condensed consolidated financial statements.

HSS Hire Group plc 

Unaudited condensed consolidated statement of changes in equity

 

 

Share capital

Share premium

Warrant reserve

Merger reserve

Foreign exchange translation reserve

Cash flow hedging reserve

Retained earnings/ (deficit)

Total equity

 

£000s

£000s

£000s

£000s

£000s

£000s

£000s

£000s

 

 

 

 

 

 

 

 

 

At 27 December 2020

6,965

45,580

2,694

97,780

15

(45,444)

107,590

 

 

 

 

 

 

 

 

 

Profit for the period

14,051

14,051

Foreign currency translation differences arising on consolidation of foreign operations

-

(654)

-

(654)

Total comprehensive (loss)/profit for the period

(654)

14,051

13,397

Transactions with owners recorded directly in equity

 

 

 

 

 

 

 

 

Cost true up relating to FY 20 share issue

(28)

(28)

Share-based payment charge

451

451

Share based payment transfer to reserves

(77)

(77)

At 3 July 2021

6,965

45,552

2,694

97,780

(639)

(31,019)

121,333

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

Share premium

Warrant reserve

Merger reserve

Foreign exchange translation reserve

Cash flow hedging reserve

Retained deficit

Total equity

 

£000s

£000s

£000s

£000s

£000s

£000s

£000s

£000s

At 29 December 2019 - as previously presented

1,702

2,694

97,780

(602)

(306)

(22,307)

78,961

Implementation of IFRS 16

(9)

(9)

At 29 December 2019 - as restated

1,702

2,694

97,780

(602)

(306)

(22,316)

78,952

 

 

 

 

 

 

 

 

 

Total comprehensive loss for the period

 

 

 

 

 

 

 

 

Loss for the period

(12,880)

(12,880)

Foreign currency translation differences arising on consolidation of foreign operations

-

842

-

842

Hedging of financial instruments

-

-

86

86

Total comprehensive income/(loss) for the period

-

-

-

-

842

86

(12,880)

(11,952)

Transactions with owners recorded directly in equity

 

 

 

 

 

 

 

 

Share-based payment charge

221

221

At 27 June 2020

1,702

2,694

97,780

240

(220)

(34,975)

67,221

 

 

 

 

 

 

 

 

 

 

The notes form part of these condensed consolidated financial statements.

 

HSS Hire Group plc 

Unaudited condensed consolidated statement of cash flows

 

 

Note

27 weeks ended
3 July 2021

26 weeks ended
27 June 2020

 

 

£000s

£000s

Profit/(loss) after income tax

 

14,051

(12,880)

Adjustments for:

 

 

 

- Tax

 

37

-

- Profit on disposal of discontinued operations

18

(3,180)

-

- Amortisation

7

2,634

2,620

- Depreciation

7

19,398

25,294

- Accelerated depreciation relating to hire stock customer losses and hire stock write offs

7

1,766

2,324

- (Profit)/loss on disposal of property, plant and equipment and right of  use assets

7

(47)

14

- Lease disposals

 

(3,463)

-

- Share-based payment charge

 

451

221

- Foreign exchange (gains)/loss on operating activities

 

(378)

516

- Finance expense

8

11,388

12,140

Changes in working capital (excluding the effects of disposals and exchange differences on consolidation):

 

 

 

- Inventories

 

(389)

469

- Trade and other receivables

 

3,265

20,697

- Trade and other payables

 

10,217

4,154

- Provisions

 

(6,929)

(2,770)

Net cash flows from operating activities before changes in hire equipment

 

48,821

52,799

Purchase of hire equipment

11

(9,749)

(6,630)

Cash generated from operating activities

 

39,072

46,169

 

 

 

 

Net interest paid

 

(10,498)

(8,871)

Income tax repaid

 

7

648

Net cash generated from operating activities

 

28,581

37,946

 

 

 

 

Cash flows from investing activities

 

 

 

Proceeds on disposal of business, net of cash disposed of

18

9,550

-

Proceeds on disposal of fixed assets

 

526

 

Purchases of non-hire property, plant, equipment and software

10,11

(2,836)

(3,411)

Net cash generated from/(used in) investing activities

 

7,240

(3,411)

 

 

 

 

Cash flows from financing activities

 

 

 

Costs of capital raise

 

(1,556)

-

Proceeds from borrowings

16

-

17,200

Repayment of borrowings

16

(38,432)

-

Capital element of lease liability payments

 

(12,279)

(11,689)

Capital element of net investment in sublease receipts

 

129

-

 

 

 

-

Net cash (paid)/received from financing activities

 

(52,138)

5,511

 

 

 

 

Net (decrease)/increase in cash

 

(16,317)

40,046

 

 

 

 

Cash at the start of the period

 

97,573

22,658

Cash at the end of the period - continuing operations

 

81,256

61,626

Cash at the end of the period - discontinued operations

 

-

1,078

Cash at the end of the period

 

81,256

62,704

 

 

 

 

 

 

The notes form part of these condensed consolidated financial statements.

 

HSS Hire Group plc 

Notes forming part of the unaudited condensed consolidated financial statements

 

1.  General information

 

The Company is a public limited company which is listed on the London Stock Exchange and is incorporated and domiciled in the United Kingdom. The address of the registered office is Oakland House, 76 Talbot Road, Manchester, M16 0PQ. These condensed consolidated financial statements comprise the Company and its subsidiaries (the 'Group') and cover the 27 week period ended 3 July 2021.

 

The Group is primarily involved in providing tool and equipment hire and related services in the United Kingdom and the Republic of Ireland.

 

The condensed consolidated financial statements were approved for issue by the Board on 29 September 2021.

 

The condensed consolidated financial statements do not constitute the Statutory Accounts within the meaning of Section 434 of the Companies Act 2006 and have not been subject to audit by the Group's auditor. Statutory Accounts for the year ended 26 December 2020 were approved by the Board on 28 April 2021 and delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

 

2.  Basis of preparation and significant accounting policies

 

The condensed consolidated financial statements for the 27 weeks ended 3 July 2021 have been prepared in accordance with IAS 34 Interim Financial Reporting. The condensed consolidated financial statements should be read in conjunction with the Group's Annual Report and Accounts for the year ended 26 December 2020, which were prepared in accordance with IFRS as adopted by the European Union.

 

Accounting policies are consistent with those in the Statutory Accounts for the year ended 26 December 2020.

 

Going concern

 

At 3 July 2021, the Group's financing arrangements consisted of a drawn senior finance facility of £160.8m, undrawn overdraft facilities of £6.0m, undrawn revolving credit facilities of £17.2m and finance lease lines to fund hire fleet capital expenditure, of which £14.7m had not been utilised. Both the senior finance facility and revolving credit facility are subject to a net debt leverage financial covenant test every quarter. At the balance sheet date the Group had 51% headroom against this covenant.

 

While encouraged by the resilience of the Group during a period of unprecedented disruption, the Directors continue to model via a number of scenarios the potential impact of COVID-19 on results. At the 26 December 2020 year end the Group had sufficient liquidity to operate within banking covenants for the next 12 months even under its reasonable worst case scenario.  Actual events and trading since then have been favourable compared to the assumptions made and as a result the more recent models only predict increased liquidity from that position.

 

After reviewing the above, taking into account current and future developments and principal risks and uncertainties, and making appropriate enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence over a period of at least twelve months from the date of approval of these financial statements.  Accordingly they continue to adopt the going concern basis in preparing these unaudited condensed consolidated financial statements.

 

3.  Restatement of interim results for 26 weeks ending 27 June 2020

 

During the preparation of the 26 December 2020 annual financial statements, a lease validation exercise was performed that identified the following restatements relating to the transition date. The restatement of property, plant and equipment of £4.5m represents hire stock assets held under finance lease that had not been included in the transfer to right of use assets. The remaining restatement of right of use assets relates to contractual rent escalations, rolling leases and lease term amendments.

 

The impact of these entries on the consolidated statement of financial position as at the date of initial application (DIA) 29 December 2019 is reflected below:

 

 

As previously reported

Restatement

Restated
29 December 2019

 

£000s

£000s

£000s

 

 

 

 

Intangible assets

160,378

-

160,378

Property, plant and equipment

76,999

(4,460)

72,539

Right of use assets

104,059

5,472

109,531

Derivative financial instruments

14

-

14

Current assets

112,938

375

113,313

Lease liabilities

(98,351)

(958)

(99,309)

Other liabilities

(238,508)

(272)

(238,780)

Provisions

(38,393)

-

(38,393)

Deferred tax liabilities

(341)

-

(341)

Net assets

78,795

157

78,952

 

 

 

 

 

The impact of these entries on the consolidated statement of financial position as at 27 June 2020 is reflected below:

 

 

As previously reported

Restatement

Restated 
27 June  

2020

 

£000s

£000s

£000s

 

 

 

 

Intangible assets

159,618

-

159,618

Property, plant and equipment

71,545

(4,460)

67,085

Right of use assets

99,140

5,472

104,612

Current assets

131,007

375

131,382

Lease liabilities

(96,928)

(958)

(97,886)

Other liabilities

(261,350)

(272)

(261,622)

Provisions

(35,627)

-

(35,627)

Deferred tax liabilities

(341)

-

(341)

Net assets

67,064

157

67,221

 

 

 

 

 

There was no impact on the income statement or the statement of cash flow as a result of this restatement and no change is required to the financial statements for the year ending 26 December 2020.

 

4.  Segmental reporting

 

The Group's operations are segmented into the following reportable segments:

 

-  Rental and related revenue; and

-  Services.

 

Rental and related revenue comprises the rental income earned from owned tools and equipment, including powered access, power generation and HVAC assets, together with directly related revenue such as resale (fuel and other consumables), transport and other ancillary revenues.

Services comprise the Group's HSS OneCall rehire business and HSS Training. HSS OneCall provides customers with a single point of contact for the hire of products that are not typically held within HSS' fleet and are obtained from approved third party partners; HSS Training provides customers with specialist safety training across a wide range of products and sectors.

 

Contribution is defined as segment operating profit before branch and selling costs, central costs, depreciation, amortisation and exceptional items. In the 27 weeks ending 3 July 2021 the Group recognised £0.2m of income received in 2020, the result of participation in Republic of Ireland's COVID-19 Wage Subsidy Scheme, recognition of which had been deferred pending confirmation of entitlement (26 weeks ended 27 June 2020: £6.2m recognised from participation in UK and Republic of Ireland schemes).  Income has been allocated to segments based on where the underlying costs were incurred. This resulted in £0.1m being allocated to Rental and related contribution (26 weeks ending 27 June 2020: £1.6m), £nil to Services contribution (26 weeks ending 27 June 2020: £0.6m), £0.1m to Branch and Selling Costs (26 weeks ending 27 June 2020: £3.8m) and £nil to Central costs (26 weeks ending 27 June 2020: £0.2m). £0.3m of grant income related to property rates was allocated to Branch and Selling Costs for the 26 weeks ending 27 June 2020.

 

All segment revenue, operating profit, assets and liabilities are attributable to the principal activity of the Group being the provision of tool and equipment hire and related services in, and to customers in, the United Kingdom and the Republic of Ireland. Revenue from one customer was 10% or more of Group Revenue in the period ending 3 July 2021 (26 weeks ending 27 June 2020: one customer was 10% or more of Group Revenue).

 

 

27 weeks ended 3 July 2021

 

Rental (and related revenue)

Services

Central

Total

 

£000s

£000s

£000s

£000s

 

 

 

 

 

Total revenue from external customers from continuing operations

101,742

48,708

-

150,450

 

 

 

 

 

Contribution

71,992

7,248

-

79,240

 

 

 

 

 

Branch and selling costs

 

 

(26,115)

(26,115)

Central costs

 

 

(14,850)

(14,850)

 

 

 

 

 

Adjusted EBITDA

 

 

 

38,275

Add back: Exceptional items

 

 

7,539

7,539

Less: Depreciation and amortisation

(14,237)

(297)

(8,680)

(23,214)

 

 

 

 

 

Operating profit

 

 

 

22,600

 

 

 

 

 

Net finance expenses

 

 

 

(11,379)

 

 

 

 

 

Profit before tax from continuing operations

 

 

 

11,221

 

 

 

 

 

 

 

As at 3 July 2021

 

Rental (and related revenue)

Services

Central

Total

 

£000s

£000s

£000s

£000s

 

 

 

 

 

Additions to non-current assets

 

 

 

 

Property, plant and equipment

9,749

15

1,070

10,834

Right of use assets

3,590

-

1,170

4,760

Intangibles

1,178

-

573

1,751

 

 

 

 

 

Non-current assets net book value

 

 

 

 

Property, plant and equipment

43,999

203

16,026

60,228

Right of use assets

24,602

579

55,062

80,243

Intangibles

151,717

1,046

3,157

155,920

 

 

 

 

 

Unallocated corporate assets

 

 

 

 

Current assets

 

 

153,412

153,412

Current liabilities

 

 

(94,752)

(94,752)

Non-current liabilities

 

 

(233,718)

(233,718)

 

 

 

 

 

 

 

 

 

121,333

 

 

 

 

 

 

 

 

26 weeks ended 27 June 2020

 

 

 

Rental (and related revenue)

Services

Central

Total

 

 

 

£000s

£000s

£000s

£000s

 

 

 

 

 

 

 

 

Total revenue from external customers from continuing operations

 

82,255

38,402

-

120,657

 

 

 

 

 

 

 

 

Contribution

 

56,612

4,902

-

61,514

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Branch and selling costs

 

 

 

(22,203)

(22,203)

 

Central costs

 

 

 

(11,419)

(11,419)

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

27,892

 

Add back: Exceptional credit

 

 

 

802

802

 

Less: Depreciation and amortisation

 

(15,027)

(236)

(14,157)

(29,420)

 

 

 

 

 

 

 

 

Operating loss

 

 

 

 

(726)

 

 

 

 

 

 

 

 

Net finance expenses

 

 

 

 

(12,133)

 

 

 

 

 

 

 

 

Loss before tax from continuing operations

 

 

 

 

(12,859)

 

 

 

 

 

 

 

 

 

Year ended 26 December 2020

 

Rental (and related revenue)

Services

Central

Total

 

£000s

£000s

£000s

£000s

 

 

 

 

 

Additions to non-current assets

 

 

 

 

Property, plant and equipment

14,099

59

2,286

16,444

Right of use assets

4,880

-

4,357

9,237

Intangibles

979

861

1,477

3,317

 

 

 

 

 

Non-current assets net book value

 

 

 

 

Property, plant and equipment

44,078

203

17,743

62,024

Right of use assets

26,976

212

62,651

89,839

Intangibles

153,804

1,246

3,448

158,498

 

 

 

 

 

Unallocated corporate assets

 

 

 

 

Current assets

 

 

176,636

176,636

Current liabilities

 

 

(107,665)

(107,665)

Non-current liabilities

 

 

(271,742)

(271,742)

 

 

 

 

 

Net assets

 

 

 

107,590

 

 

 

 

 

                   

 

5.  Other operating income

 

 

 

 

27 weeks ended
3 July 2021

26 weeks ended
27 June 2020

 

 

 

£000s

£000s

 

 

 

 

 

COVID-19 Government grant income: Job retention schemes

 

232

6,194

COVID-19 Government grant income: Rates grants

 

-

345

Insurance proceeds

 

 

1,203

-

Sublease rental and service charge income

 

 

119

169

 

 

 

1,554

6,708

 

 

 

 

 

 

During the 27 weeks ended 3 July 2021 the Group recognised £0.2m of income received in 2020, the result of participation in Republic of Ireland's COVID-19 Wage Subsidy Scheme, recognition of which had been deferred pending confirmation of entitlement (26 weeks ended 27 June 2020: £6.2m recognised from participation in UK and Republic of Ireland schemes), and £1.2m from a COVID-19 business interruption insurance claim.

 

Sub-let rental income £0.1m (26 weeks ended 27 June 2020: £0.2m) was received on vacant properties that were not treated as exceptional and which have been assessed as operating sub-leases under IFRS 16.

 

 

6.  Exceptional items

 

Items of income or expense have been shown as exceptional because of their size and nature or because they are outside the normal course of business. As a result, during the period ended 3 July 2021 the Group has recognised exceptional items as follows:

 

 

 

 

 

Included in administrative expenses

Included in finance expense

27 weeks ended
3 July 2021

 

 

 

 

£000s 

£000s

£000s

 

 

 

 

 

 

 

Release of onerous property costs

 

 

 

(7,539)

120

(7,419)

Exceptional items - continuing operations

 

(7,539)

120

(7,419)

Business divesture - discontinued operations

(3,180)

-

(3,180)

Total

 

 

 

(10,719)

120

(10,599)

 

 

 

 

 

 

 

During the period ended 27 June 2020, the Group recognised exceptional costs analysed as follows:

 

 

 

 

 

Included in administrative expenses

26 weeks ended
27 June 2020

 

 

 

 

 

£000s 

£000s

 

 

 

 

 

 

 

Release of onerous property costs

 

 

 

 

(828)

(828)

Cost reduction programme

 

 

 

 

26

26

Total

 

 

 

 

(802)

(802)

 

 

 

 

 

 

 

 

Costs related to onerous properties: branch and office closures (incurred in 2021 and 2020)

An exceptional credit of £7.4m (26 weeks ended 27 June 2020 exceptional credit of £0.8m) has been recognised in the 27 weeks ended 3 July 2021. This relates mainly to the release of lease liabilities, onerous property cost and dilapidations provisions on surrender of properties following the branch closures as part of the Group's acceleration of its digital and network strategy announced in October 2020. The figure includes £0.9m of associated professional fees. Lease liability discount unwind on closed stores totalling £0.1m was recognised as an exceptional finance expense.

In H1 20 an exceptional credit of £0.8m was recognised reflecting a release from onerous lease provision on adoption of IFRS16.

Business divesture (incurred in 2021 only)

To enable the Group to focus on its strategic priority to Transform the Tool Hire Business, the disposal of Laois Hire Limited, the Irish large plant hire business, to Briggs Equipment Ireland Limited ("Briggs") completed on 7 April 2021. Proceeds of the disposal, net of transaction costs, were £10.0m generating a profit on disposal of £3.2m. As part of the transaction, HSS entered into a commercial agreement with Briggs for the cross hire of equipment to ensure the broadest possible distribution of, and customer access to, each party's existing fleet.

 

Cost reduction programme (incurred in 2020 only)

In the 26 weeks ended 27 June 2020 the Group recognised final costs related to a cost reduction programme which included internal restructuring that was announced and largely completed during 2019.

 

 

7.  Depreciation and amortisation expense

 

 

 

 

 

27 weeks ended
3 July 2021

 

26 weeks ended
27 June 2020

 

 

 

 

£000s

 

£000s

 

 

 

 

 

 

 

Amortisation

 

 

 

2,634

 

2,620

Depreciation

 

 

 

20,580

 

26,800

 

 

 

 

 

 

 

 

Amounts charged in respect of depreciation:

 

 

27 weeks ending

3 July

2021

27 weeks ending

3 July

2021

27 weeks ending

3 July

2021

26 weeks ending

27 June 2020

26 weeks ending

27 June 2020

26 weeks ending

27 June 2020

 

 Depreciation

 Depreciation

 Depreciation

 Depreciation

 Depreciation

 Depreciation

 

Property, plant and equipment

Right of use assets

Total

Property, plant and equipment

Right of use assets

Total

 

£000s

£000s

£000s

£000s

£000s

£000s

 

 

 

 

 

 

 

Depreciation (note 11,12)

  7,889

  11,509

  19,398

  12,045

  12,978

  25,023

Accelerated depreciation relating to hire stock customer losses and hire stock write offs (note 11,12)

  6,488

  133

  6,621

  2,324

1

  2,325

Loss on disposal of other assets (note 11,12)

  625

  304

  929

  284

1

  285

 

  15,002

  11,946

  26,948

  14,653

  12,980

  27,633

 

 

 

 

 

 

 

Less accelerated depreciation included in exceptionals

(243)

-

(243)

-

-

-

Less disposal of Laois hire stock assets

(4,612)

-

(4,612)

-

-

-

Less (loss)/profit on disposals included in exceptional amounts

(94)

145

51

-

(1)

(1)

Less disposal of Laois other assets

(588)

(439)

(1,027)

-

-

-

Less depreciation from discontinued operations

(413)

(124)

(537)

(731)

(101)

(832)

Total non-exceptional depreciation

  9,052

  11,528

  20,580

  13,922

  12,878

  26,800

 

 

 

 

 

 

 

 

Amounts charged in respect of amortisation

 

 

 

 

 

 

27 weeks ending 3 July 2021

26 weeks ending 27 June 2020

 

 

 

 

 

£000s

£000s

Intangible assets

 

 

 

 

 

 

Amortisation (note 10)

 

 

 

 

  2,634

  2,620

Loss on disposal of intangible assets

 

 

 

  1,695

-

 

 

 

 

 

  4,329

  2,620

Less disposal of Laois goodwill

 

 

 

 

(1,695)

-

Total non-exceptional amortisation

 

 

 

 

  2,634

  2,620

 

 

 

 

 

 

 

 

8.  Finance income and expense

 

 

 

 

27 weeks ended
3 July 2021

26 weeks ended
27 June 2020

 

 

 

£000s

£000s

 

 

 

 

 

Senior finance facility

 

 

  7,590

  8,167

Debt issue costs

 

 

  1,085

  1,199

Accelerated amortisation of debt issue costs

 

 

  166

-

Lease liabilities

 

 

  2,088

  2,315

Interest unwind on discounted provisions

 

 

  13

  142

Revolving credit facility

 

 

  104

  75

Interest on financial instruments

 

 

-

  100

Bank loans and overdrafts

 

 

  333

  135

 

 

 

  11,379

  12,133

 

 

 

 

 

 

 

9.  Earnings per share

 

Basic earnings/(loss) per share

 

 

 

 

 

Profit/(loss) after tax from continuing operations

Weighted average number of shares

Profit/(loss) per share from continuing operations

 

 

£000s

000s

pence

27 weeks ended 3 July 2021

 

11,184

696,478

1.61

26 weeks ended 27 June 2020

 

(12,859)

170,207

(7.55)

 

 

 

 

 

 

Basic earnings/(loss) per share is calculated by dividing the result attributable to equity holders by the weighted average number of ordinary shares in issue for that period.

 

Diluted earnings per share is calculated using the result attributable to equity holders divided by the weighted average number of shares outstanding assuming the conversion of potentially dilutive equity derivatives outstanding, being market value options, nil-cost share options (LTIP shares), restricted stock grants, deferred bonus shares, Sharesave Scheme share options and warrants.

 

All of the Group's potentially dilutive equity derivative securities were dilutive (26 weeks ending 27 June 2020: anti-dilutive) for the purpose of diluted basic earnings per share for the period except for market value options and their related CSOP's which were anti-dilutive.

 

Diluted earnings/(loss) per share

 

 

 

 

 

Profit/(loss) after tax from continuing operations

Weighted average number of shares

Profit/(loss) per share from continuing operations

 

 

£000s

000s

pence

27 weeks ended 3 July 2021

 

11,184

721,364

1.55

26 weeks ended 27 June 2020

 

(12,859)

170,207

(7.55)

 

 

 

 

 

 

The weighted average number of shares for the purposes of calculating the diluted earnings per share are as follows:

 

 

 

 

 27 weeks ended
3 July 2021

 26 weeks ended
27 June 2020

 

 

 

Weighted average number of shares

Weighted average number of shares

 

 

 

000s

000s

 

 

 

 

 

Basic

 

 

  696,478

  170,207

Warrants

 

 

  8,505

-

LTIP share options

 

 

  8,368

-

Restricted stock grant

 

 

  7,265

-

CSOP options

 

 

  748

-

Diluted

 

 

  721,364

  170,207

 

 

 

 

 

 

 

10.  Intangible assets

 

 

 

Goodwill

Customer relationships

Brands

Software

Total

 

 

 

£000s

£000s

£000s

£000s

£000s

 

Cost

 

 

 

 

 

 

 

At 27 December 2020

 

124,877

26,744

23,222

27,580

202,423

 

Additions

 

-

-

-

1,751

1,751

 

Disposals

 

(1,695)

-

-

(138)

(1,833)

 

At 3 July 2021

 

123,182

26,744

23,222

29,193

202,341

 

 

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

 

At 27 December 2020

 

-

21,348

622

21,955

43,925

 

Charge for the period

 

-

1,377

51

1,206

2,634

 

Disposals

 

-

-

-

(138)

(138)

 

At 3 July 2021

 

-

22,725

673

23,023

46,421

 

Net book value

 

 

 

 

 

 

 

At 3 July 2021

 

123,182

4,019

22,549

6,170

155,920

 

 

 

 

 

 

 

 

 

 

 

Goodwill

Customer relationships

Brands

Software

Total

 

 

£000s

£000s

£000s

£000s

£000s

Cost

 

 

 

 

 

 

At 29 December 2019

 

124,877

26,744

23,222

24,409

199,252

Additions

 

-

-

-

1,860

1,860

At 27 June 2020

 

124,877

26,744

23,222

26,269

201,112

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

At 29 December 2019

 

-

18,694

525

19,655

38,874

Charge for the period

 

-

1,328

48

1,244

2,620

At 27 June 2020

 

-

20,022

573

20,899

41,494

Net book value

 

 

 

 

 

 

At 27 June 2020

 

124,877

6,722

22,649

5,370

159,618

 

 

 

 

 

 

 

                           

 

 

 

Goodwill

Customer relationships

Brands

Software

Total

 

 

£000s

£000s

£000s

£000s

£000s

Cost

 

 

 

 

 

 

At 29 December 2019

 

124,877

26,744

23,222

24,409

199,252

Additions

 

-

-

-

3,317

3,317

Disposals

 

-

-

-

(146)

(146)

At 26 December 2020

 

124,877

26,744

23,222

27,580

202,423

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

At 29 December 2019

 

-

18,694

525

19,655

38,874

Charge for the period

 

-

2,654

97

2,446

5,197

Disposals

 

-

-

-

(146)

(146)

At 26 December 2020

 

-

21,348

622

21,955

43,925

Net book value

 

 

 

 

 

 

At 26 December 2020

 

124,877

5,396

22,600

5,625

158,498

 

 

 

 

 

 

 

 

The Group tests property, plant and equipment, goodwill and indefinite life brands for impairment annually and considers at each reporting date whether there are indicators that impairment may have occurred.

 

11.  Property, plant and equipment

 

 

 

Land and buildings

Plant and machinery

Materials and equipment held for hire

Total

 

 

£000s

£000s

£000s

£000s

Cost

 

 

 

 

 

At 27 December 2020

 

58,419

55,315

133,280

247,014

Transferred from right of use assets

 

-

-

5,967

5,967

Additions

 

673

412

9,749

10,834

Disposals

 

(618)

(1,235)

(17,669)

(19,522)

Foreign exchange differences

 

(31)

(31)

(581)

(643)

At 3 July 2021

 

58,443

54,461

130,746

243,650

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

At 27 December 2020

 

45,208

50,580

89,202

184,990

Transferred from right of use assets

 

-

-

3,336

3,336

Charge for the year

 

1,318

859

5,712

7,889

Disposals

 

(163)

(1,065)

(11,181)

(12,409)

Foreign exchange differences

 

(6)

(56)

(322)

(384)

At 3 July 2021

 

46,357

50,318

86,747

183,422

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 3 July 2021

 

12,086

4,143

43,999

60,228

 

 

 

 

 

 

 

 

 

 

 

Restated

Restated

 

 

Land and buildings

Plant and machinery

Materials and equipment held for hire

Total

 

 

£000s

£000s

£000s

£000s

Cost

 

 

 

 

 

At 29 December 2019

 

73,505

61,925

179,788

315,218

Transferred to right of use assets

 

-

-

(46,888)

(46,888)

Additions

 

1,012

551

7,279

8,842

Disposals

 

(559)

(236)

(9,778)

(10,573)

Foreign exchange differences

 

118

149

734

1,001

At 27 June 2020

 

74,076

62,389

131,135

267,600

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

At 29 December 2019

 

54,437

55,936

102,994

213,367

Transferred to right of use assets

 

-

-

(17,576)

(17,576)

Charge for the year

 

1,971

887

9,187

12,045

Disposals

 

(343)

(168)

(7,454)

(7,965)

Foreign exchange differences

 

95

123

426

644

At 27 June 2020

 

56,160

56,778

87,577

200,515

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 27 June 2020

 

17,916

5,611

43,558

67,085

 

 

 

 

 

 

 

Refer to note 3 for further details on the restatement relating to the 26 weeks ending 27 June 2020. 

 

Land and buildings

Plant and machinery

Materials and equipment held for hire

Total

 

 

£000s

£000s

£000s

£000s

Cost

 

 

 

 

 

At 29 December 2019

 

73,505

61,925

179,788

315,218

Transferred to right of use assets

 

-

-

(46,888)

(46,888)

Transferred from right of use assets

 

-

-

3,144

3,144

Additions

 

1,284

1,061

14,099

16,444

Disposals

 

(16,408)

(7,748)

(17,328)

(41,484)

Foreign exchange differences

 

38

77

465

580

At 26 December 2020

 

58,419

55,315

133,280

247,014

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

At 29 December 2019

 

54,437

55,936

102,994

213,367

Transferred to right of use assets

 

-

-

(17,576)

(17,576)

Transferred from right of use assets

 

-

-

1,652

1,652

Charge for the year

 

3,516

2,139

14,518

20,173

Impairment

 

1,789

227

-

2,016

Disposals

 

(14,536)

(7,592)

(13,004)

(35,132)

Foreign exchange differences

 

2

40

448

490

Transfers

 

-

(170)

170

-

At 26 December 2020

 

45,208

50,580

89,202

184,990

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 26 December 2020

 

13,211

4,735

44,078

62,024

 

 

 

 

 

 

 

'Transferred from right of use assets' category represents assets previously held under a lease where ownership has passed to the Group. 'Transferred to right of use assets' category represents the value of assets transferred to right of use assets on adoption of IFRS16.

 

12.  Right of use assets

 

 

 

Property

Vehicles

Equipment for hire and internal use

Total

 

 

£000s

£000s

£000s

£000s

Cost

 

 

 

 

 

At 27 December 2020

 

61,253

23,681

30,061

114,995

Foreign exchange differences

(120)

(23)

-

(143)

Additions

 

519

651

3,590

4,760

Remeasurements

227

137

-

364

Transfers to property, plant and equipment

-

-

(5,967)

(5,967)

Disposals

 

(7,785)

(805)

(727)

(9,317)

At 3 July 2021

 

54,094

23,641

26,957

104,692

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

At 27 December 2020

 

15,403

6,854

2,899

25,156

Transfers to property, plant and equipment

-

-

(3,336)

(3,336)

Charge for the period

4,340

3,783

3,386

11,509

Disposals

 

(7,920)

(366)

(594)

(8,880)

At 3 July 2021

 

11,823

10,271

2,355

24,449

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 3 July 2021

 

42,271

13,370

24,602

80,243

 

 

 

 

 

 

 

 

 

Restated

Restated

Restated

Restated

 

 

Property

Vehicles

Equipment for hire and internal use

Total

 

 

£000s

£000s

£000s

£000s

Cost

 

 

 

 

 

Recognised on transition date

58,014

21,416

30,101

109,531

Foreign exchange differences

167

26

-

193

Additions

 

3,254

961

3,652

7,867

Disposals

 

(110)

(136)

-

(246)

At 27 June 2020

 

61,325

22,267

33,753

117,345

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

Charge for the period

6,180

3,927

2,871

12,978

Disposals

 

(110)

(135)

-

(245)

At 27 June 2020

 

6,070

3,792

2,871

12,733

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 27 June 2020

 

55,255

18,475

30,882

104,612

 

 

 

 

 

 

 

Refer to note 3 for further details on the restatement relating to the 26 weeks ending 27 June 2020.

 

 

 

Property

Vehicles

Equipment for hire and internal use

Total

 

 

£000s

£000s

£000s

£000s

Cost

 

 

 

 

 

Recognised on transition date

58,014

21,416

30,101

109,531

Foreign exchange differences

155

22

-

177

Additions

 

1,317

3,040

4,880

9,237

Remeasurements

6,931

17

-

6,948

Transfers to property, plant and equipment

-

-

(3,144)

(3,144)

Disposals

 

(5,164)

(814)

(1,776)

(7,754)

At 26 December 2020

 

61,253

23,681

30,061

114,995

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

Transfers to property, plant and equipment

-

-

(1,652)

(1,652)

Charge for the period

10,999

7,613

5,924

24,536

Impairments

 

9,541

-

-

9,541

Disposals

 

(5,137)

(759)

(1,373)

(7,269)

At 26 December 2020

15,403

6,854

2,899

25,156

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 26 December 2020

45,850

16,827

27,162

89,839

 

 

 

 

 

 

 

Right of use assets are measured at cost comprising the initial measurement of lease liability, initial direct costs and restoration costs.

 

Right of use assets are depreciated over the lease term on a straight line basis, except where the Group has the right, and expects to exercise that right, to take ownership of the assets after the end of the lease; in such cases the assets are depreciated over the useful life.

 

Disclosures relating to lease liabilities are included in note 15.

 

 

13.  Trade and other receivables

 

 

3 July 2021

26 December 2020

 

Gross

Provision for impairment

Net of provision

Gross

Provision for impairment

Net of provision

 

£000s

£000s

£000s

£000s

£000s

£000s

 

 

 

 

 

 

 

Trade receivables

65,607

(5,698)

59,909

66,434

(5,374)

61,060

Accrued income

3,288

(73)

3,215

6,965

(107)

6,858

Contract assets

68,895

(5,771)

63,124

73,399

(5,481)

67,918

Net investment in sublease

1,029

-

1,029

1,497

-

1,497

Other debtors

939

-

939

3,502

-

3,502

Prepayments

3,698

-

3,698

2,963

-

2,963

Total trade and other receivables

74,561

(5,771)

68,790

81,361

(5,481)

75,880

 

 

 

 

 

 

 

The following table details the movements in the provision for impairment of trade receivables and other receivables:

 

 

 

 

 

 

3 July 2021

26 December 2020

 

 

 

 

 

£000s

£000s

 

 

 

 

 

 

 

Balance at the beginning of the period

 

 

 

(5,481)

(3,745)

Movement in provision

 

 

 

 

(290)

(1,736)

Balance at the end of the period

 

 

 

 

(5,771)

(5,481)

 

 

 

 

 

 

 

The provision for impairment of trade receivables is comprised as follows:

 

 

 

 

 

3 July 2021

26 December 2020

 

 

 

 

£000s

£000s

 

 

 

 

 

 

Bad debt provision

 

 

(3,156)

(3,023)

Credit note provision

 

 

(2,615)

(2,458)

 

 

 

 

(5,771)

(5,481)

 

 

 

 

 

 

The bad debt provision based on expected credit losses and applied to trade receivables, all of which are current assets, is as follows:

 

3 July 2021

Current

0-60 days past due

61-365 days past due

1-2 years past due

Total

Contract assets

  57,208

  5,342

  4,993

  1,352

  68,895

Expected loss rate

1.6%

5.7%

25.5%

50.1%

4.6%

Provision for impairment charge

  902

  302

  1,274

  678

  3,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26 December 2020

Current

0-60 days past due

61-365 days past due

1-2 years past due

Total

Contract assets

  61,197

  5,902

  4,962

  1,338

  73,399

Expected loss rate

1.4%

4.6%

25.7%

47.5%

4.1%

Provision for impairment charge

  839

  272

  1,276

  636

  3,023

 

Contract assets consist of trade receivables and accrued income.

 

The bad debt provision is estimated using the simplified approach to expected credit loss methodology and is based upon past default experience and the Directors' assessment of the current economic environment for each of the Group's ageing categories.

 

The Directors have given specific consideration to the impact of COVID-19 on the general economy, particularly given tapering of government support. At the balance sheet date the Group has not seen a marked increase in debt write-offs. However the Group expects the situation to deteriorate as government support is withdrawn. Given the above, historical losses are not a good predictor of future failures and the Group has exercised judgement in increasing the expected loss rates across all categories of debt. In so doing the provision has been increased by around £1.2m from that which would have been required based on loss experience over the past two years. The position is being monitored closely and the Group expects to review these judgements at year-end based on ageing of debt, write-offs in the second half of the year and the economic outlook at that point.

 

Provisions are made for credit notes expected to be raised after the reporting date for income recognised during the year.

 

14.  Trade and other payables

 

 

 

 

3 July
2021

26 December 2020

 

 

 

£000s

£000s

Current

 

 

 

 

Trade payables

 

 

30,407

23,957

Other taxes and social security costs

 

 

5,091

5,109

Other creditors

 

 

1,603

2,300

Accrued interest on borrowings

 

 

2,785

3,442

Accruals

 

 

29,760

26,907

Deferred income

 

 

403

106

 

 

 

70,049

61,821

 

 

 

 

 

 

 

15.  Lease liabilities

 

 

 

 

 

3 July
2021

26 December 2020

 

 

 

 

£000s

£000s

Current

 

 

 

 

 

Lease liabilities

 

 

 

19,233

23,395

 

 

 

 

19,233

23,395

 

 

 

 

 

 

Non-current

 

 

 

 

 

Lease liabilities

 

 

 

56,250

66,177

 

 

 

 

56,250

66,177

 

 

 

 

 

 

The weighted average interest rates on the Group's lease liabilities are as follows:

 

 

 

 

 

3 July
2021

26 December 2020

 

 

 

 

 

 

Lease liabilities

 

 

 

5.2%

4.8%

 

 

 

 

 

 

 

The Group's leases have the following maturity profile:

 

 

 

 

 

3 July
2021

26 December 2020

 

 

 

 

£000s

£000s

 

 

 

 

 

 

Less than one year

 

 

 

22,685

27,452

Two to five years

 

 

 

47,342

55,544

More than five years

 

 

 

20,091

23,483

 

 

 

 

90,118

106,479

 

 

 

 

 

 

Less interest cash flows:

 

 

 

(14,635)

(16,907)

Total principal cash flows

 

 

 

75,483

89,572

 

 

 

 

 

 

 

The maturity profile, excluding interest cash flows of the Group's leases is as follows:

 

 

 

 

 

3 July
2021

26 December 2020

 

 

 

 

£000s

£000s

 

 

 

 

 

 

Less than one year

 

 

 

19,233

23,395

Two to five years

 

 

 

39,909

47,030

More than five years

 

 

 

16,341

19,147

 

 

 

 

75,483

89,572

 

 

 

 

 

 

 

 

16.  Borrowings

 

 

 

 

 

3 July
2021

26 December 2020

 

 

 

 

£000s

£000s

Current

 

 

 

 

 

Senior finance facility

 

 

 

-

15,000

 

 

 

 

-

15,000

 

 

 

 

 

 

Non-current

 

 

 

 

 

Senior finance facility

 

 

 

156,875

161,899

Revolving credit facility

 

 

 

-

17,200

 

 

 

 

156,875

179,099

 

 

 

 

 

 

 

The senior finance facility is stated net of unamortised debt issue costs of £3.9m (26 December 2020: £5.1m).

 

The nominal value of the Group's loans at each reporting period date is as follows:

 

 

 

 

 

3 July
2021

26 December 2020

 

 

 

 

£000s

£000s

 

 

 

 

 

 

Senior finance facility

 

 

 

160,750

181,982

Revolving credit facility

 

 

 

-

17,200

 

 

 

 

160,750

199,182

 

 

 

 

 

 

 

The interest rates on the Group's borrowings are as follows:

 

 

 

 

3 July   2021

26 December 2020

 

 

 

 

 

 

Revolving credit facility

Floating

%age above LIBOR

2.5%

2.5-3.0%

Senior finance facility

Floating

%age above LIBOR

7.5%-8.0%

8.0%

 

The weighted average interest rates on the Group's borrowings is 9.3% (26 December 2020: 9.8%).

 

The Group's borrowings have the following maturity profile:

 

 

 

 

 

3 July
2021

26 December 2020

 

 

 

 

£000s

£000s

 

 

 

 

 

 

Less than one year

 

 

 

13,085

30,581

Two to five years

 

 

 

174,702

208,725

 

 

 

 

187,787

239,306

Less interest cash flows:

 

 

 

 

 

Senior finance facility

 

 

 

(27,037)

(38,822)

Revolving credit facility

 

 

 

-

(1,302)

Total principal cash flows

 

 

 

160,750

199,182

 

 

 

 

 

 

 

The Group repaid £15.0m of the senior finance facility in January 2021 and a further £6.2m in May 2021.  The £17.2m RCF was repaid in April 2021.

 

The Group has undrawn committed borrowing facilities of £37.9m at 3 July 2021 (26 December 2020: £20.7m), including £14.7m of finance lines (26 December 2020: £14.7m) to fund hire fleet capital expenditure not yet utilised. Including net cash balances, the Group had access to £119.2m at 3 July 2021 (26 December 2020: £118.3m) of combined liquidity from available cash and undrawn committed borrowing facilities.

 

17.  Provisions 

 

 

 

Onerous property costs

Dilapidations

Onerous contracts

Total

 

 

£000s

£000s

£000s

£000s

 

 

 

 

 

 

At 27 December 2020

 

3,959

12,677

17,018

33,654

Additions

 

147

24

-

171

Utilised during the period

 

268

(2,058)

(1,645)

(3,435)

Unwind of provision

 

-

13

-

13

Releases

 

(3,727)

(919)

-

(4,646)

Foreign exchange

 

-

1

-

1

At 3 July 2021

 

647

9,738

15,373

25,758

 

 

 

 

 

 

Of which:

 

 

 

 

 

Current

 

212

1,894

3,289

5,395

Non-current

 

435

7,844

12,084

20,363

 

 

647

9,738

15,373

25,758

 

 

 

 

 

 

 

 

 

Onerous

property costs

Dilapidations

Onerous contracts

Total

 

 

£000s

£000s

£000s

£000s

 

 

 

 

 

 

At 29 December 2019

 

4,833

16,209

19,573

40,615

Eliminated on transition to IFRS 16

 

(2,222)

-

-

(2,222)

Additions

 

5,326

1,452

-

6,778

Utilised during the period

 

(601)

(2,726)

(3,330)

(6,657)

Unwind of provision

 

7

204

218

429

Impact of change in discount rate

 

88

747

557

1,392

Releases

 

(3,472)

(3,226)

-

(6,698)

Foreign exchange

 

-

17

-

17

At 26 December 2020

 

3,959

12,677

17,018

33,654

 

 

 

 

 

 

Of which:

 

 

 

 

 

Current

 

1,328

2,823

3,297

7,448

Non-current

 

2,631

9,854

13,721

26,206

 

 

3,959

12,677

17,018

33,654

 

 

 

 

 

 

 

On the 8th October 2020, the Group announced a programme of restructuring which includes the permanent closure of around 130 of its branches. Since then, the Group has worked hard to negotiate and complete the early surrender of leases resulting in the large reduction in the value of onerous property cost and dilapidations provisions.

 

18.  Business disposal

 

To enable the Group to focus on its strategic priority to Transform the Tool Hire Business, the disposal of Laois Hire Limited, the Irish large plant hire business, along with its parent company Bannagroe Limited, to Briggs Equipment Ireland Limited ("Briggs") completed on 7 April 2021. Proceeds of the disposal, net of transaction costs, were £10.0m generating a profit on disposal of £3.2m. As part of the transaction, HSS entered into a commercial agreement with Briggs for the cross hire of equipment to ensure the broadest possible distribution of, and customer access to, each party's existing fleet. The funds from the sale are being used to invest in the hire fleet.

 

The table below shows the assets and liabilities disposed of:

Of the transaction fees included in the calculation £0.1m remains unpaid at period end.

 

The table below shows the result of discontinued operations:

 

 

 

 

£000s

Description of assets and liabilities

 

 

 

Intangible assets (incl Goodwill)

 

 

1,695

Property, plant and equipment

 

 

5,200

Right of use assets

 

 

439

Current assets, excluding cash

 

 

2,509

Cash

 

 

 

504

Current liabilities (incl lease liabilities)

 

 

(3,241)

Foreign exchange reserve

 

 

(53)

Net assets disposed of

 

 

7,053

 

 

 

 

 

Proceeds of disposal less transaction costs

 

 

9,950

Profit on asset sale

 

 

283

Less net assets disposed of

 

 

(7,053)

Total profit from disposal of Laois Hire Limited

 

 

  3,180

 

 

 

 

 

 

 

27 weeks ended

 3 July 2021

26 weeks ended 27 June 2020

 

 

 

£000s

£000s

Result of discontinued operations

 

 

 

Revenue

 

 

  2,991

  5,160

Expenses other than finance costs, amortisation and depreciation

 

(2,758)

(4,342)

Depreciation

 

(537)

(832)

Finance costs

 

(9)

(7)

Loss from discontinued operations, net of tax

 

(313)

(21)

Profit on disposal of discontinued operations

 

3,180

 -

Profit for the period

 

2,867

(21)

Basic earnings/(loss) per share

 

  0.41

(0.01)

Diluted earnings/(loss) per share

 

  0.40

(0.01)

 

 

19.  Risks and uncertainties

 

The principal risks and uncertainties which could have a material impact upon the Group's performance over the remaining 26 weeks of the 2021 financial year have not changed significantly from those set out on pages 30 to 35 of the Group's 2020 Annual Report, which is available at https://www.hsshiregroup.com/wp-content/uploads/2021/05/HSS_ARA2020_Web.pdf.

 

These risks and uncertainties are:

1)  Macroeconomic conditions;

2)  Competitor challenge;

3)  Strategy execution;

4)  Customer service;

5)  Third party reliance;

6)  IT infrastructure;

7)  Financial risk;

8)  Inability to attract and retain personnel; and

9)  Safety, legal and regulatory requirements

COVID-19 has been considered in terms of its impact on each of the principal risks and uncertainties. The main risk expected to affect the Group in the remaining 26 weeks of the 2021 financial year is macroeconomic conditions, which includes the impact COVID-19 and Brexit could have on the prevailing demand from new and existing customers within the numerous and diverse market sectors which HSS serves.Adjusted EBITDA and Adjusted EBITA

 

Adjusted EBITDA is calculated as follows:

 

 

27 weeks ended
3 July 2021

 

26 weeks ended
27 June 2020

 

Continuing operations

 

Continuing operations

 

£000s

 

£000s

 

 

 

 

Operating profit/(loss)

22,600

 

(726)

Add: Depreciation of property, plant and equipment

7,476

 

11,314

Add: Depreciation of right of use assets

11,385

 

12,877

Add: Accelerated depreciation relating to hire stock customer losses, hire stock write offs and other asset and right of use asset disposals

1,719

 

2,609

Add: Impairments of right of use assets

-

 

-

Add: Loss on disposal of subleases

-

 

-

Add: Amortisation of intangible assets

2,634

 

2,620

Add: Loss on disposal of intangible assets

-

 

-

EBITDA

45,814

 

28,694

Less: Exceptional items

(7,539)

 

(802)

Adjusted EBITDA

38,275

 

27,892

 

 

 

 

 

Adjusted EBITA is calculated as follows:

 

 

27 weeks ended
3 July 2021

 

26 weeks ended
27 June 2020

 

Continuing operations

 

Continuing operations

 

£000s

 

£000s

 

 

 

 

Operating profit/(loss)

22,600

 

(726)

Add: Amortisation of intangible assets

2,634

 

2,620

Add: Loss on disposal of intangible assets

-

 

-

EBITA

25,234

 

1,894

Less: Exceptional items

(7,539)

 

(802)

Adjusted EBITA

17,695

 

1,092

 

 

 

 

 

20.    Post balance sheet event

 

On the 29th September 2021, following market close, the Group entered into an unconditional agreement to sell All Seasons Hire Limited ("ASH"), the Group's heating, ventilation and air-conditioning ("HVAC") hire solution provider, to Cross Rental Services ("CRS") for a cash consideration of £55million (the "Disposal"). The proceeds from the Disposal will principally be used to accelerate the repayment of debt.  As part of this transaction, HSS has entered into a commercial agreement with CRS for the cross hire of HVAC equipment to ensure the broadest possible distribution of, and customer access to, both parties existing fleets.  The sale has been treated as a non-adjusting post balance sheet event.

 

 

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