Results for the 26 week period ended 29 June 2019

RNS Number : 2707L
HSS Hire Group PLC
05 September 2019
 

HSS Hire Group Plc

Interim report: Half-year results for the 26 week period ended 29 June 2019

Improved returns; full-year expectations unchanged

HSS Hire Group plc ("HSS" or the "Group") today announces results for the 26 week period ended 29 June 2019.

 

Financial Highlights1 (Unaudited)

H1 2019

(26 weeks)

 

H1 2018

(26 weeks)

 

Change

 

Revenue

£161.4m

£155.4m

3.9%

Adjusted EBITDA2

£27.0m

£24.4m

10.9%

Adjusted EBITDA margin

16.7%

15.7%

1.0pp

Adjusted EBITA3

£8.8m

£3.3m

£5.5m

Adjusted EBITA margin

5.4%

2.1%

3.3pp

ROCE4

21.7%

4.9%

16.8pp

Net debt leverage5

3.0x

3.7x

0.7x

Adjusted basic loss per share

(0.77)p

(1.88)p

1.11p

 

 

 

 

Other extracts

 

 

 

Operating profit / (loss)

£4.8m

£(3.0)m

£7.8m

Profit / (loss) for the financial period

£7.6m

£(7.6)m

£15.2m

Total Basic earnings / (loss) per share

4.44p

(4.45)p

8.89p

 

The new accounting standard IFRS16 Leases will be adopted for the financial year beginning 29th December 2019.  IFRS16 has not been adopted for the current period and as such all of the financial results have been presented excluding the impact of the standard.

 

Highlights for H1 19                                                      

·      Significant improvement in returns, ROCE increased to 21.7%

Adjusted EBITDA growth of 10.9% and Adjusted EBITA increased £5.5m

Revenue growth and cost initiatives improved EBITDA margins by 1pp and EBITA margins by 3.3pp

ROCE improved 16.8pp by leveraging insight tools, improved price controls and growth in the capital light Services business

 

·      Revenue growth of 3.9% driven by increased focus on Services, improved availability and fleet investment

Rental (and related) revenue growth of 1.1%

Continued strength in Services with revenue +10.6% and contribution +15.7%

LTM utilisation6 has remained high following investment in new fleet at 51.3% in Core tool hire and 67.8% in Specialist

 

·      Further reduction in net debt leverage to 3.0x (H1 18: 3.7x)

Net debt has reduced by £52.7m as a result of improved EBITDA and the use of proceeds from the sale of UK Platforms

Cash and total facility headroom greater than £50m as at 29 June 2019

 

·      Continued progress against strategic priorities

Customer app launched and development is ongoing

New driver technology now in place, improving efficiency

OneCall automated platform rolled out for all suppliers

 

·      Self-help initiatives already implemented to manage well reported market headwinds

 

Outlook

·      Management confident that full year profit will be in line with market expectations

 

 

Steve Ashmore, Chief Executive Officer, said:

 

"I am pleased to report a solid performance for the first half of 2019 in which the continued focus on driving profitable revenue growth through strong price control and effective cost management led to a significant improvement in return on capital and a further reduction in leverage.

 

As set out in April, the next phase of our strategy is focused on strengthening our commercial proposition by enhancing the digital offer in our Rental business and transforming the customer experience in our OneCall Services business. We are pleased with the positive reaction to the launch of our customer app, the roll-out of new driver technology and the completion of our new automated OneCall system. We will continue to develop our digital offering, further improving the customer experience, and build on these early positive results.

 

The widely reported headwinds in the economy have affected the tool hire market but HSS is well placed to manage these more challenging conditions. We have taken additional action to further optimise our operating cost base and have a clear strategy to build upon our existing excellent market positions, leaving us well placed to continue to grow share in all of our markets."

 

Notes

1)     Results for H1 19 and H1 18 are for continuing operations and exclude the UK Platforms business which was sold in January 2019

2)     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

3)     Adjusted EBITA defined as Adjusted EBITDA less depreciation

4)    ROCE calculated as Adjusted EBITA for the 12 months to 29th June 2019 divided by the average of total assets less current liabilities (excluding intangible assets, cash and debt items) over the same period

5)     Net debt leverage is calculated as closing net debt divided by adjusted EBITDA for last 12 months (LTM).  H119 LTM EBITDA excludes UK Platforms.

6)     Utilisation is calculated for the 12 month period to 29th June 2019 and is value weighted based on rental revenue

 

 

-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, re-hire and related services in the UK and Ireland through a nationwide network of over 240 locations and its OneCall re-hire business. It offers a one-stop shop for all equipment through a combination of our complementary rental and re-hire businesses 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 Main Market of the London Stock Exchange. For more information please see www.hsshiregroup.com.

 

 

For further information, please contact:

 

HSS Hire Group plc

Tel: 020 3757 9248 (on 5 September 2019)

Steve Ashmore, Chief Executive Officer

Thereafter, please email: Investors@hss.com

Paul Quested, Chief Financial Officer

 

Greig Thomas, Head of Group Finance

 

 

Teneo

Tel: 020 3757 9248

Robert Morgan

Tom Davies

 

 

Group financial performance

The Group is working with third party specialists to develop IFRS 16 policies along with processes and systems to manage their successful implementation.  This work will be completed by the fourth quarter of 2019 and as such, the decision has been taken not to adopt IFRS16 early for the financial year 30th December 2018 to 28th December 2019.  The financial results are therefore presented on a non IFRS 16 basis.  All comparisons, except where separately disclosed, are on a Continuing Operations basis.

Revenue

Revenue in H1 19 was £161.4m, 3.9% above the previous year (H1 18: £155.4m). This year on year increase reflects improved trading in H1 19 across both our Rental and Services segments.

Rental and related revenues were £110.3m in H1 19 (H1 18: £109.1m), £1.2m and 1.1% higher than in H1 18. This was a strong performance in a tougher trading environment compared to H1 18 and strong comparators. In line with our strategy, the Group has used new insight tools to drive focus on profitable growth combined with improved availability post the FY18 operating model change.  Contribution was £73.5m (H1 18: £72.7m), an increase of 1.1% on H1 18 driven by improved revenues with margin consistent at 66.7%.

Services revenues were £51.2m in H1 19 (H1 18: £46.3m), growth of 10.6% reflecting a strong performance in our OneCall and Training businesses with customers continuing to value the "one stop shop" service offer. Contribution increased to £8.2m (H1 18: £7.1m), with margins improving to 16.0% (H1 18: 15.3%), reflecting ongoing focus on pricing discipline and effective supply chain management.

Costs

Cost of sales grew by £2.4m to £75.9m during the period (H1 18: £73.5m) primarily as a result of the growth in our Services business revenues and associated costs. Distribution costs decreased by £0.4m to £16.7m (H1 18: £17.1m), as the Group continued to control cost and benefit from network changes made in 2018. Administrative expenses decreased by £3.6m to £64.3m (H1 18: £67.9m) due to the benefit of cost actions taken in 2018 combined with lower exceptional costs. 

Gross exceptional costs in H1 19 were lower at £2.8m (H1 18: £3.2m) and include £1.7m accelerated amortisation of debt issue costs following early repayment of debt in January post the disposal of UK Platforms, a £0.5m increase in the dark stores provision and £0.5m related to cost saving initiatives.  This includes third party costs following the decision to close the cross-dock operation. 

In H1 18, exceptional costs were £3.2m, of which £1.5m related to onerous leases on closed branches and £0.4m was impairment of property, plant and equipment related to those closures.  There were no branch closures in H1 19 (H1 18: 12).  The H1 18 costs are net of sub-let income on onerous leases of £0.2m.

Net finance expenses were £4.9m higher at £12.1m (H1 18: £7.2m) reflecting the interest rate on the term facility entered into in July 18 and a higher level of debt issue costs as a result of the accelerated amortisation noted above.

 

Profitability

Adjusted EBITDA of £27.0m in H1 19 was 10.9% higher than the prior year (H1 18: £24.4m), with adjusted EBITDA margins improving 1pp to 16.7% (H1 18: 15.7%).  The improving profitability was driven by increased revenues in the period and lower costs due to continued focus on the strategic priorities including the ongoing benefit of annualised savings from initiatives implemented in FY18.

Adjusted EBITA increased from £3.3m in H1 18 to £8.8m in H1 18, with the margin improving to 5.4% (H1 18 -2.1%), for the reasons described above, and reduced depreciation as a result of investment timing.

Loss before tax reduced by 27.7% to £7.4m, from £10.2m in H1 18, despite increased finance expense.  This reflects stronger underlying performance year on year combined with lower exceptional costs.  

The basic profit per share was 4.44p in H1 19 improving from a loss per share of 4.45p in H1 18, reflecting the improved trading in the business and the profit from disposal of UK Platforms.

The adjusted basic and diluted loss per share was 0.77p per share in H1 19, improving from a loss of 1.88p in H1 18. This reflects the underlying improvement in the adjusted loss before tax position. 

 

Return on Capital Employed

ROCE increased to 21.7% reflecting a significant improvement compared to H1 18 (4.9%) and in line with our 2020 performance framework target of greater than 20%.   This has been driven by the utilisation of new insight tools to determine fleet investment, improved pricing control driving profitability and growth in our capital light Services business.

This improvement comes at a time when the investment in fleet and asset book value has increased.

 

Sale of UK Platforms Limited

As part of the strategy to Delever the Group and Transform the Tool Hire Business, on 11 January 2019, the Group completed the disposal of UK Platforms Limited to Nationwide Platforms Limited, a wholly owned subsidiary of the Loxam Group. Proceeds of disposal, net of transaction costs, were £47.5m generating a profit on disposal of £12.8m.  Costs of £2.1m were recognised in FY 18 and so the profit on sale recognised in H1 19 is £14.9m.

After completion, £38.0m of the proceeds was used to pay down Group debt, reducing the senior finance facility from £220.0m to £182.0m.

The Group continues to have access to the powered access fleet through its ongoing commercial agreement with UK Platform's new owner.

 

Net debt

Net debt at 29 June 2019 was £186.0m, £52.7m lower than December 2018 (FY 18 Total Operations: £238.7m) through the repayment of debt and reduction in finance lease obligations following completion of the disposal of UK Platforms in December, and improved Group profitability.  Headroom in the Group's total facilities including net cash was £52.9m.

The debt facilities consist of a £182.0m term loan facility, with £167.0m maturing in June 2023 and £15.0m in December 2020, along with a revolving credit facility of £25.0m maturing in December 2022.

Accelerated amortisation of debt issue costs of £1.7m was recorded in H1 19 as a result of the repayment of a portion of the loan with proceeds from the sale of UK Platforms.

 

Dividend

The Board remains firmly focused on reducing net debt in line with the clear priorities set out in our Strategic Review. As such, it believes that the interests of the shareholders of the Group are best served by not paying a dividend until the net debt leverage ratio falls below 2.5x at the earliest.  This is in line with the new term loan facility agreement.

 

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 2019 financial year have not changed significantly from those described in the Group's 2018 Annual Report and are summarised in note 13 of this interim report. 

The main risk expected to affect the Group in the remaining 26 weeks of the 2019 financial year is macro-economic conditions, which includes the impact that the Brexit related developments could have on the business.

 

Free float

The strong improvement in the Group's performance is already leading to increased investor interest.  However, the Company is cognisant of the level of the free float of its shares, which currently stands at c13.75%.

The Board and its advisors believe that:

(a)   the market in the Company's shares operates properly, with a greater level of liquidity than many companies of its size;

(b)   the excellent progress in the Group's turnaround will continue to lead to increased interest in the Company's shares from investors, both institutional and retail, thereby improving the level of free float.

The Company has been in dialogue with the FCA and agreed a modification of listing rule 9.2.15R, which would otherwise require a free float of at least 25%, until 21 August 2020.  The Board expects to extend the free float in the Company's shares during this time; however the Board is also able to consider multiple other options.

 

Responsibility Statement

We confirm to the best of our knowledge that:

(a)  the condensed interim set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union;

(b)   the Interim Report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c)  the Interim Report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

 

By order of the Board

Steve Ashmore

Director

5 September 2019

 

 

HSS Hire Group plc  

Unaudited condensed consolidated income statement

 

 

 

 

 

26 weeks   ended 29 June 2019

26 weeks    ended 30 June 2018

 

Note

 

 

£000s

£000s

 

 

 

 

 

 

Revenue

3

 

 

161,436

155,369

 

 

 

 

 

 

Cost of sales

 

 

 

(75,892)

(73,504)

 

 

 

 

 

 

Gross profit

 

 

 

85,544

81,865

 

 

 

 

 

 

Distribution costs

 

 

 

(16,719)

(17,126)

Administrative expenses

 

 

 

(64,339)

(67,888)

Other operating income

 

 

 

268

182

 

 

 

 

 

 

Operating profit / (loss)

 

 

 

4,754

(2,967)

 

 

 

 

 

 

Adjusted EBITDA(1)

3, 15

 

 

27,038

24,376

Less: Adjusted depreciation (1)

8

 

 

(18,276)

(21,090)

Adjusted EBITA(1)

15

 

 

8,762

3,286

Less: Exceptional items

4

 

 

(1,018)

(3,207)

Less: Amortisation(1)

7

 

 

(2,990)

(3,046)

 

 

 

 

 

 

Operating profit / (loss)

 

 

 

4,754

(2,967)

 

 

 

 

 

 

Net finance expense

5

 

 

(12,124)

(7,230)

 

 

 

 

 

 

Adjusted loss before tax

 

 

 

(1,623)

(3,944)

Less: Exceptional items (non-finance)

4

 

 

(1,018)

(3,207)

Less: Exceptional items (finance)

4

 

 

(1,739)

-

Less: Amortisation

7

 

 

(2,990)

(3,046)

 

 

 

 

 

 

Loss before tax

 

 

 

(7,370)

(10,197)

Income tax charge

 

 

 

(109)

(502)

Loss from continuing operations

 

 

 

(7,479)

(10,699)

 

 

 

 

 

 

Profit on disposal of discontinued operations

14

 

 

14,869

-

Profit from discontinued operations, net of tax

14

 

 

162

3,126

Profit/(loss) for the financial period

 

 

 

7,552

(7,573)

 

 

 

 

 

 

Total earnings/(loss) per share (pence)

 

 

 

 

 

Basic earnings/(loss) per share

6

 

 

4.44

(4.45)

Diluted earnings/(loss) per share

6

 

 

3.80

(4.45)

 

 

 

 

 

 

 

 (1) 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. Adjusted EBITA is defined as operating profit before amortisation and exceptional items.

 

The notes form part of these condensed consolidated financial statements.

 

 

HSS Hire Group plc  

Unaudited condensed consolidated statement of comprehensive income

 

 

 

 

 

26 weeks ended 29 June 2019

26 weeks   ended 30 June 2018

 

 

 

 

£000s

£000s

 

 

 

 

 

 

Profit/(loss) for the financial period

 

 

 

7,552

(7,573)

 

 

 

 

 

 

Items that may be reclassified to profit or loss:

 

 

 

 

 

Foreign currency translation differences arising on consolidation of foreign operations

 

 

 

516

(51)

Losses arising on cash flow hedges

 

 

 

(344)

-

 

 

 

 

 

 

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

 

 

 

172

(51)

 

 

 

 

 

 

Total comprehensive profit/(loss) for the period

 

 

 

7,724

(7,624)

 

 

 

 

 

 

 

The notes form part of these condensed consolidated financial statements.

 

 

HSS Hire Group plc  

Unaudited condensed consolidated statement of financial position

 

 

 

 

29 June
2019

29 December 2018

 

Note

 

£000s

£000s

 

 

 

 

 

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Intangible assets

7

 

161,693

163,657

Property, plant and equipment

8

 

109,257

109,129

Deferred tax assets

 

 

2,500

2,500

Derivative financial instruments

 

 

39

405

 

 

 

273,489

275,691

 

 

 

 

 

Asset associated with assets classified as held for sale

 

-

46,716

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

 

3,683

4,333

Trade and other receivables

9

 

93,685

93,981

Cash

 

 

15,329

17,832

 

 

 

112,697

116,146

 

 

 

 

 

Total assets

 

 

386,186

438,553

 

 

 

 

 

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

10

 

(74,412)

(71,011)

Borrowings and finance lease liabilities

11

 

(5,808)

(19,304)

Provisions

12

 

(7,929)

(10,284)

Current tax liabilities

 

 

(1,204)

(101)

 

 

 

(89,353)

(100,700)

 

 

 

 

 

Liabilities associated with assets classified as held for sale

-

(13,544)

 

 

 

 

 

Non-current liabilities

 

 

 

 

Borrowings and finance lease liabilities

11

 

(182,884)

(217,630)

Provisions

12

 

(33,372)

(34,048)

Deferred tax liabilities

 

 

(1,136)

(1,168)

 

 

 

(217,392)

(252,846)

 

 

 

 

 

Total liabilities

 

 

(306,745)

(367,090)

 

 

 

 

 

Net assets

 

 

79,441

71,463

 

 

 

 

 

EQUITY

 

 

 

 

Share capital

 

 

1,702

1,702

Merger reserve

 

 

97,780

97,780

Warrant reserves

 

 

2,694

2,694

Foreign exchange translation reserve

 

 

696

180

Cash flow hedging reserve

 

 

(506)

(162)

Retained deficit

 

 

(22,925)

(30,731)

Total equity

 

 

79,441

71,463

 

 

 

 

 

 

The notes form part of these condensed consolidated financial statements.

 

 

HSS Hire Group plc  

Unaudited condensed consolidated statement of changes in equity

 

 

Share capital

Merger reserve

Warrant reserve

Foreign exchange translation reserve

Cash flow hedging reserve

Retained deficit

Total equity

 

£000s

£000s

£000s

£000s

£000s

£000s

£000s

At 29 December 2018

1,702

97,780

2,694

180

(162)

(30,731)

71,463

Total comprehensive income for the period

 

 

 

 

 

 

 

Profit for the period

7,552

7,552

Foreign currency translation differences arising on consolidation of foreign operations

516

516

Cash flow hedge

(344)

(344)

Total comprehensive income for the period

516

(344)

7,552

7,724

Transactions with owners recorded directly in equity

 

 

 

 

 

 

 

Share based payment

254

254

At 29 June 2019

1,702

97,780

2,694

696

(506)

(22,925)

79,441

 

 

 

 

 

 

 

 

 

Share capital

Merger reserve

Warrant reserve

Foreign exchange translation reserve

Cash flow hedging reserve

Retained deficit

Total equity

 

£000s

£000s

£000s

£000s

£000s

£000s

£000s

At 30 December 2017

1,702

97,780

425

(26,335)

73,572

Total comprehensive loss for the period

 

 

 

 

 

 

 

Loss for the period

(7,573)

(7,573)

Foreign currency translation differences arising on consolidation of foreign operations

(51)

(51)

Total comprehensive loss for the period

(7,624)

(7,624)

Transactions with owners recorded directly in equity

 

 

 

 

 

 

 

Transfer to warrant reserve

2,694

2,694

Share based payment

31

31

At 30 June 2018

1,702

97,780

2,694

425

(33,928)

68,673

 

 

 

 

 

 

 

 

 

The notes form part of these condensed consolidated financial statements.

 

 

HSS Hire Group plc  

Unaudited condensed consolidated statement of cash flows

 

 

 

Note

26 weeks   ended 29 June 2019

26 weeks         ended 30 June 2018

Cash flows from operating activities

 

 

£000s

£000s

Profit/(loss) after tax

 

 

7,552

(7,573)

Adjustments for:

 

 

 

 

- Taxation charge

 

 

109

502

- Amortisation

 

7,14

2,993

3,069

- Depreciation

 

8,14

14,231

17,462

- Accelerated depreciation relating to hire stock customer losses,         

 

 

 

   hire stock write-offs

 

8

4,194

5,474

- Impairment of property, plant and equipment

 

 

-

450

- Loss on disposal of property, plant and equipment

 

 

-

175

- Profit on disposal of subsidiary

 

14

(14,869)

-

- Share based payment charge

 

 

254

31

- Foreign exchange losses on operating activities

 

 

541

-

- Net finance expense

 

5

12,124

7,420

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

 

 

 

 

- Inventories

 

 

641

(634)

- Trade and other receivables

 

 

(73)

(11,001)

- Trade and other payables

 

 

2,743

14,187

- Provisions

 

12

(3,032)

(5,586)

Net cash flows from operating activities before changes in hire equipment

 

 

27,408

23,976

Purchase of hire equipment

 

8

(10,738)

(5,837)

 

 

 

 

 

Cash generated from operating activities

 

 

16,670

18,139

Net interest paid

 

 

(9,803)

(6,902)

Tax paid

 

 

962

(240)

Net cash generated from operating activities

 

 

7,829

10,997

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Proceeds on disposal of businesses, net of cash disposed of

 

 

46,123

-

Proceeds on disposal of assets held for sale

 

 

-

1,500

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

 

7,8

(3,315)

(2,862)

Net cash generated from/(used in) investing activities

 

 

42,808

(1,362)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Bank arrangement fees

 

 

-

(400)

Proceeds from borrowings (third parties)

 

 

-

8,000

Repayments of borrowings

 

11

(51,018)

(3,000)

Finance lease payments

 

 

(4,197)

(6,330)

Net cash used in financing activities

 

 

(55,215)

(1,730)

 

 

 

 

 

Net (decrease)/increase in cash

 

 

(4,578)

7,905

Cash at the start of the period

 

 

19,907

2,151

Cash at the start of the period - continuing operations

 

 

17,832

2,151

Cash at the start of the period - discontinued operations

 

 

2,075

-

Cash at the end of the period

 

 

15,329

10,056

Cash at the end of the period - continuing operations

 

 

15,329

9,099

Cash at the end of the period - discontinued operations

 

 

-

957

 

 

 

 

 

 

The notes form part of these condensed consolidated financial statements

 

 

HSS Hire Group plc  

Notes forming part of the 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, Old Trafford, Manchester, England, M16 0PQ.

 

The condensed consolidated financial statements as at, and for the 26 weeks ended 29 June 2019 comprise the Company and its subsidiaries (the 'Group').

 

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 4 September 2019.

 

The condensed consolidated financial statements do not constitute the Statutory Accounts within the meaning of Section 434 of the Companies Act 2006. Statutory Accounts for the year ended 29 December 2018 were approved by the Board on 3 April 2019 and delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified, did not include a reference to any matter by way of emphasis and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

 

2.         Basis of preparation

 

The condensed consolidated financial statements for the 26 weeks ended 29 June 2019 have been prepared in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority and relevant International Financial Reporting Standards ('IFRS') as adopted by the European Union (including 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 29 December 2018, which were prepared in accordance with IFRS as adopted by the European Union.

 

IFRS16 Implementation

 

IFRS 16 Leases is mandatory for periods beginning on or after 1 January 2019. The Group is working with third party specialists to develop IFRS 16 policies along with processes and systems to manage their successful implementation. This work is now expected to be completed by the fourth quarter of 2019 and, as such the decision has now been taken not to adopt IFRS16 early for the financial year 30th December 2018 to 28th December 2019 as had been planned and noted in the Annual Report and Financial Statements 2018.  The date of initial application will now be for the financial year starting 29th December 2019.  By taking the time allowed by the standard it gives management the opportunity to perform a full review of its lease portfolio and accurately assess the impact of IFRS 16 and the required disclosure.

 

Going concern

 

The Directors have reviewed the Group's current performance, forecasts and projections, taking account of reasonably possible changes in trading performance and considering senior debt and interest repayments, combined with expenditure commitments.  In particular the directors have considered the adequacy of the Group's debt facilities with specific regard to the following factors:

 

-      the financial covenants relating to the term loan facility of £182 million and revolving credit facility of £25 million secured by the Group

-    the maturity of the term loan facility (£15m in December 2020, £167m in June 2023) and revolving credit facility in December 2022

 

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 for the foreseeable future.  Accordingly they continue to adopt the going concern basis in preparing these condensed consolidated interim financial statements.

 

3.         Segmental reporting

 

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

 

-       Rental and related revenue.

-       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.

 

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 exceeded 10% of Group turnover in the period ending 29 June 2019 (26 weeks ending 30 June 2018: one).

 

 

 

26 weeks ended 29 June 2019

 

 

Rental (and related revenue)

Services

Central

Total

 

 

£000s

£000s

£000s

£000s

 

 

 

 

 

 

Total revenue from external customers

110,267

51,169

-

161,436

 

 

 

 

 

 

Contribution

 

73,505

8,164

-

81,669

 

 

 

 

 

 

Branch and selling costs

 

-

-

(42,610)

(42,610)

Central costs

 

-

-

(12,021)

(12,021)

Adjusted EBITDA

 

 

 

 

27,038

Less: Exceptional items

 

-

-

(1,018)

(1,018)

Less: Depreciation and amortisation

 

(16,313)

(110)

(4,843)

(21,266)

Operating profit

 

 

 

 

4,754

Net finance expenses

 

 

 

 

(12,124)

 

 

 

 

 

 

Loss before tax

 

 

 

 

(7,370)

 

 

 

 

 

 

 

 

As at 29 June 2019

Non-current assets net book value

 

 

 

 

 

Intangibles

 

129,314

258

32,121

161,693

Property, plant and equipment

 

81,045

183

28,029

109,257

Unallocated corporate assets

 

 

 

 

 

Non-current deferred tax assets

 

 

 

2,500

2,500

Derivative financial instruments

 

 

 

39

39

Current assets

 

 

 

112,697

112,697

Current liabilities

 

 

 

-

-

Non-current liabilities

 

 

 

(217,392)

(217,392)

Net assets

 

 

 

 

168,794

 

 

 

 

 

 

 

 

 

 

26 weeks ended 30 June 2018

 

 

Rental (and related revenue)

Services

Central

Total

 

 

£000s

£000s

£000s

£000s

 

 

 

 

 

 

Total revenue from external customers

 

109,108

46,261

-

155,369

 

 

 

 

 

 

Contribution

 

72,734

7,058

-

79,792

 

 

 

 

 

 

Branch and selling costs

 

-

-

(41,308)

(41,308)

Central costs

 

-

-

(14,107)

(14,107)

Adjusted EBITDA

 

 

 

 

24,376

Less: Exceptional items

 

-

-

(3,207)

(3,207)

Less: Depreciation and amortisation

 

(19,022)

(81)

(5,034)

(24,136)

Operating loss

 

 

 

 

(2,967)

Net finance expenses

 

 

 

 

(7,230)

 

 

 

 

 

 

Loss before tax

 

 

 

 

(10,197)

 

 

 

 

 

 

 

 

As at 29 December 2018

Non-current assets net book value

 

 

 

 

 

Intangibles

 

158,420

324

4,913

163,657

Property, plant and equipment

 

76,691

377

29,061

109,129

Unallocated corporate assets

 

 

 

 

 

Non-current deferred tax assets

 

 

 

2,500

2,500

Derivative financial instruments

 

 

 

405

405

Assets held for sale (net)

 

 

 

33,172

33,172

Current assets

 

 

 

116,146

116,146

Current liabilities

 

 

 

(100,700)

(100,700)

Non-current liabilities

 

 

 

(252,846)

(252,846)

Net assets

 

 

 

 

71,463

 

 

 

 

 

 

 

4.         Exceptional items

 

Items of income or expense have been shown as exceptional because of their size and nature or because they are non-recurring. An analysis of the amount presented as exceptional items in the consolidated income statement is given below.

 

During the period ended 29 June 2019, the Group has recognised net exceptional costs as follows:

 

 

 

Included in cost of sales

Included in distribution costs

Included in administrative expenses

Included in finance expense

26 weeks     ended 30 June 2019

 

 

£000s

£000s

£000s  

£000s

£000s

Onerous leases

 

-

-

483

-

483

Cost reduction programme

 

13

396

126

-

535

Accelerated amortisation of debt issue costs

 

-

-

-

1,739

1,739

Exceptional items - continuing operations

13

396

609

1,739

2,757

 

 

 

 

 

 

 

 

 

During the period ended 30 June 2018, the Group recognised net exceptional costs as follows:

 

 

 

 

 

Included in administrative expenses

Included in other operating income

26 weeks    ended 30 June 2018

 

 

 

 

£000s

£000s

£000s

Onerous leases

 

 

 

1,518

-

1,518

Impairment of property, plant and equipment

 

439

-

439

Cost reduction programme

 

 

 

710

-

710

Strategic review

 

 

 

722

-

722

Sub-let rental income on onerous leases

 

 

-

(182)

(182)

Exceptional items - continuing operations

 

 

3,389

(182)

3,207

Exceptional items - discontinued operations

 

 

128

-

 

128

Exceptional items total

 

 

 

                     3,517

(182)

                 3,335

 

 

 

 

 

 

 

 

Exceptional items incurred in 2019 and 2018

 

Onerous leases: branch closures

 

In 2017 and 2018 the number of branches was reduced to remove less profitable locations with activity centralised into remaining locations. During the 26 weeks ended 29 June 2019 no additional branches were closed (26 weeks ended 30 June 2018: 12).

 

An exceptional charge of £0.5 million has been recognised in the 26 weeks ended 29 June 2019 (26 weeks ended 30 June 2018: £1.5 million) and relates to a revision of the existing dark store and onerous lease provision. The onerous lease provision charge is shown net of £0.3 million of sublet rental income. This is a change from prior periods, where the sublet rental income was disclosed separately and included in other operating income £0.2 million for the 26 weeks ending 30 June 2018.

 

 

Cost reduction programme

 

In light of headwinds emerging in the market, the Group has undertaken initiatives in Q2 2019 to reduce costs. These include internal restructuring, the closure of a centre used for hire fleet refurbishment and exiting contracts related to operation of the cross-dock facility used to redistribute assets across the network. This has resulted in an exceptional charge of £0.5 million.

 

In 2018 the Group carried out restructuring as it implemented plans to reduce central overhead, with most of the

£0.7 million cost being redundancy.

 

Accelerated amortisation of debt issue costs

 

During 2019 an element of proceeds from the UK Platforms disposal was used to repay debt. The early repayment resulted in accelerated amortisation of debt issue costs of £1.7 million.

 

Exceptional items incurred in 2018

 

Strategic review

 

Following the appointment of the new Chief Executive Officer in 2017, a thorough Strategic Review was carried out by the Group. Non-recurring third party consultancy costs of £0.7 million were incurred for the period ended 30 June 2018 as part of this review.

 

Impairment of closed branch property, plant and equipment

 

Following the branch closures in 2018 management conducted an impairment review of property plant and equipment in closed branches to determine what can be reused across the network. During the 26 weeks ended 30 June 2018, an impairment of £0.4 million was recorded.

 

5.         Finance income and expense

 

 

 

 

26 weeks   ended 29 June 2019

26 weeks   ended 30 June 2018

 

 

 

£000s

£000s

 

 

 

 

 

Interest received on cash deposits

 

 

(8)

-

 

 

 

 

 

Bank loans and overdrafts

 

 

212

1,615

Interest on Financial instruments

 

 

22

-

Term facility

 

 

8,431

-

Senior secured notes

 

 

-

4,577

Finance leases

 

 

365

373

Interest unwind on discounted provisions

 

 

109

37

Debt issue costs

 

 

1,254

628

Accelerated amortisation of debt issue costs (note 4)

 

1,739

-

Net finance expense continuing operations

 

 

12,124

7,230

Net finance expense discontinued operations

 

 

-

190

Net finance expense

 

 

12,124

7,420

 

 

 

 

 

 

6.         Earnings per share

 

 

 

26 weeks ended 29 June 2019

26 weeks ended 30 June 2018

Basic (loss)/earnings per share

 

Continuing operations

Total

Continuing operations

Total

(Loss)/profit for the year and earnings used in basic EPS '£000

 

(7,479)

7,552

(10,699)

(7,573)

Weighted average number of shares '000s

 

170,207

170,207

170,207

170,207

Basic (loss)/earnings per share (pence)

 

(4.39)

4.44

(6.29)

(4.45)

 

Basic (loss)/earnings 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 (loss)/earnings per share is calculated using the (loss)/profit for the year divided by the weighted average number of shares outstanding assuming the conversion of its potentially dilutive equity derivatives, being nil-cost share options (LTIP shares), Sharesave Scheme share options, Market value options and warrants.

 

 

 

 

 

 

 26 weeks     

ended 29 June

2019

 26 weeks      

ended 30 June

2018

 

 

 

 

 

 

000s

000s

Weighted average number of shares

 

 

 

 

 

 

Basic weighted average number of shares

 

 

 

 

             170,207

            170,207

Dilutive effect of issued equity instruments

 

 

 

 

               28,497

              10,273

Diluted weighted average number of shares

 

 

 

 

 

198,704

180,480

 

 

 

 

 

 

 

 

 

All of the Group's potentially dilutive equity derivatives were anti-dilutive for the periods ended 29 June 2019 and 30 June 2018 for the purpose of calculating the weighted average number of shares and hence the diluted loss per share on a continuing operations basis.

 

At a Total level the Group's potentially dilutive equity instruments were dilutive for the 26 weeks ended 29 June 2019 and anti-dilutive for the 26 weeks ended 30 June 2018.

 

 

 

 

 

 

 

 26 weeks      ended 29 June 2019

 26 weeks        ended 30 June 2018

Diluted (loss)/earnings per share

 

 

 

Total

Total

(Loss)/profit for the year and earnings used in basic EPS '£000

 

 

 

 

 

7,552

(7,573)

Weighted average number of shares '000s

 

 

 

 

 

198,704

170,207

Diluted (loss)/earnings per share (pence)

 

 

 

 

 

3.80

(4.45)

 

The following is a reconciliation between basic loss per share from continuing operations and adjusted basic loss per share from continuing operations.

 

 

 

 

 

 

 26 weeks          ended 29 June 2019

 26 weeks        ended 30 June 2018

Basic loss per share (pence)

 

 

 

 

(4.39)

(6.29)

Add back:

 

 

 

 

 

 

 

Exceptional items per share (1)

 

 

 

 

 

1.62

1.88

Amortisation per share (2)

 

 

 

 

1.76

1.79

Tax charge per share

 

 

 

 

0.06

0.29

Charge:

 

 

 

 

 

 

 

Tax at prevailing rate

 

 

 

 

0.18

0.45

Adjusted basic and diluted loss per share (pence)

 

 

 

 

 

(0.77)

(1.88)

 

 

 

 

 

 

 

 

(1)          Exceptional items per share are calculated as total finance and non-finance exceptional items divided by the weighted    average number of shares in issue through the period.

(2)          Amortisation per share is calculated as the amortisation charge divided by the weighted average number of shares in issue through the period.

 

7.         Intangible assets

 

 

 

Goodwill

Customer relationships

Brands

Software

Total

 

 

£000s

£000s

£000s

£000s

£000s

Cost

 

 

 

 

 

 

At 29 December 2018

 

124,877

26,744

23,222

22,228

197,071

Additions

 

-

-

-

1,026

1,026

At 29 June 2019

 

124,877

26,744

23,222

23,254

198,097

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

At 29 December 2018

 

-

15,996

427

16,991

33,414

Charge for the period

 

-

1,349

73

1,568

2,990

At 29 June 2019

 

-

17,345

500

18,559

36,404

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

At 29 June 2019

 

124,877

9,399

22,722

4,695

161,693

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

At 30 December 2017

 

128,991

26,744

24,102

20,481

200,318

Additions

 

-

-

-

761

761

At 30 June 2018

 

128,991

26,744

24,102

21,242

201,079

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

At 30 December 2017

 

-

13,346

526

13,937

27,809

Charge for the period

 

-

1,326

71

1,672

3,069

At 30 June 2018

 

-

14,672

597

15,609

30,878

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

At 30 June 2018

 

128,991

12,072

23,505

5,633

170,201

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

At 31 December 2017

 

128,991

26,744

24,102

20,481

200,318

Additions

 

-

-

-

1,844

1,844

Transferred to assets held for sale

 

(4,114)

-

(880)

(97)

(5,091)

At 29 December 2018

 

124,877

26,744

23,222

22,228

197,071

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

At 31 December 2017

 

-

13,346

526

13,937

27,809

Charge for the year

 

-

2,650

100

3,151

5,901

Transferred to assets held for sale

 

-

-

(199)

(97)

(296)

At 29 December 2018

 

-

15,996

427

16,991

33,414

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

At 29 December 2018

 

124,877

10,748

22,795

5,237

163,657

 

 

 

 

 

 

 

 

 

8.         Property, plant and equipment

 

 

 

Land & Buildings

Plant & Machinery

Materials & Equipment held for hire

Total

 

 

£000s

£000s

£000s

£000s

Cost

 

 

 

 

 

At 29 December 2018

 

73,286

61,934

161,748

296,968

Foreign exchange differences

 

-

(14)

(11)

(25)

Additions

 

-

2,287

16,142

18,429

Disposals

 

-

-

(12,148)

(12,148)

At 29 June 2019

 

73,286

64,207

165,731

303,224

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

At 29 December 2018

 

52,628

53,154

82,057

187,839

Charge for the period

 

917

2,538

10,627

14,082

Disposals

 

-

-

(7,954)

(7,954)

At 29 June 2019

 

53,545

55,692

84,730

193,967

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 29 June 2019

 

19,741

8,515

81,001

109,257

 

 

 

 

 

 

Cost

 

 

 

 

 

At 30 December 2017

 

71,771

60,282

237,498

369,551

Foreign exchange differences

 

(7)

(26)

(293)

(326)

Additions

 

676

1,694

6,894

9,264

Disposals

 

(571)

(70)

(14,339)

(14,980)

At 30 June 2018

 

71,869

61,880

229,760

363,509

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

At 30 December 2017

 

48,115

51,585

118,936

218,636

Foreign exchange differences

 

-

(20)

(152)

(172)

Charge for the period

 

2,323

1,348

13,791

17,462

Impairment loss

 

-

450

-

450

Disposals

 

(432)

(34)

(8,865)

(9,331)

At 30 June 2018

 

50,006

53,329

123,710

227,045

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 30 June 2018

 

21,863

106,050

136,464

 

 

 

 

 

 

Cost

 

 

 

 

 

At 31 December 2017

 

71,771

60,282

237,498

369,551

Foreign exchange differences

 

-

-

115

115

Additions

 

4,983

2,421

22,578

29,982

Transferred to assets held for sale

 

(2,304)

(649)

(69,907)

(72,860)

Disposals

 

(1,164)

(120)

(28,536)

(29,820)

At 29 December 2018

 

73,286

61,934

161,748

296,968

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

At 31 December 2017

 

48,115

51,585

118,936

218,636

Charge for the year

 

6,090

2,241

18,492

26,823

Impairment loss

 

-

-

533

533

Transferred to assets held for sale

 

(1,159)

(557)

(37,144)

(38,860)

Disposals

 

(418)

(115)

(18,760)

(19,293)

At 29 December 2018

 

52,628

53,154

82,057

187,839

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 29 December 2018

 

20,658

8,780

79,691

109,129

 

 

 

 

 

 

 

 

9.         Trade and other receivables

 

 

 

 

29 June
2019

29 December 2018

 

 

 

£000s

£000s

 

 

 

 

 

Gross trade receivables

 

 

75,518

78,026

Less provision for impairment

 

 

(4,130)

(3,819)

Net trade receivables

 

 

71,388

74,207

 

 

 

 

 

Other debtors

 

 

4,410

3,477

Prepayments

 

 

11,807

6,997

Accrued income

 

 

6,080

9,300

Total trade and other receivables

 

 

93,685

93,981

 

 

 

 

 

 

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

 

 

 

 

29 June
2019

29 December 2018

 

 

 

£000s

£000s

Balance at the beginning of the period

 

 

(3,819)

(4,429)

Movement in provision

 

 

(311)

324

Balance related to discontinued operations

 

 

-

286

Balance at the end of the period

 

 

(4,130)

(3,819)

 

 

 

 

 

 

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

 

 

 

 

29 June
2019

29 December 2018

 

 

 

£000s

£000s

Bad debt provision

 

 

(2,188)

(1,885)

Credit note provision

 

 

(1,942)

(1,934)

 

 

 

(4,130)

(3,819)

 

 

 

 

 

 

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

 is as follows:

 

Categories

Current

0-60 days

61-365 days

1 - 2 years

Total

Contract assets

63,025

8,223

8,530

1,820

81,598

Expected loss rate

0%

0.9%

20.9%

18.0%

2.7%

Provision for impairment charge

7

74

1,780

327

2,188

 

10.       Trade and other payables

 

 

 

29 June
2019

29 December 2018

 

 

£000s

£000s

Current

 

 

 

Trade payables

 

43,895

43,139

Other taxes and social security costs

 

4,177

4,104

Other creditors

 

1,157

368

Accrued interest on borrowings

 

3,750

4,557

Accruals

 

21,257

18,623

Deferred income

 

176

220

 

 

74,412

71,011

 

 

 

 

 

11.       Borrowings and lease liabilities

 

 

 

 

29 June
2019

29 December 2018

 

 

 

£000s

£000s

 

 

 

 

 

Current

 

 

 

 

Obligations under finance leases

 

 

5,808

6,304

Revolving credit facility

 

 

-

13,000

 

 

 

5,808

19,304

 

 

 

 

 

Non-current

 

 

 

 

Obligations under finance leases

 

 

9,767

9,468

Senior finance facility

 

 

173,117

208,162

 

 

 

182,884

217,630

 

 

 

 

 

 

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

 

 

 

 

29 June
2019

29 December 2018

 

 

 

£000s

£000s

Senior finance facility

 

 

181,982

220,000

Revolving credit facility

 

 

-

13,000

 

 

 

181,982

233,000

 

 

 

 

 

 

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

 

 

Interest rate type

 

29 June 2019

29 December 2018

 

 

 

 

 

 

Senior finance facility

Floating

%age above LIBOR

 

8.00%

8.00%

Finance leases

Floating

%age above LIBOR

 

2.75%

3.10%

Revolving credit facility

Floating

%age above LIBOR

 

                  -  

3.00%

 

 

 

 

 

 

 

The weighted average interest rate on the Group's borrowings are as follows:

 

 

 

 

29 June    2019

29 December 2018

Weighted average interest rate on borrowings

 

 

8.98%

7.00%

Weighted average interest rate on leases

 

 

4.99%

5.70%

 

 

 

 

 

 

 

The Group's leases and borrowings have the following maturity profile:

 

 

 

29 June 2019

29 December 2018

 

 

£000s

£000s

 

 

Finance leases

Borrowings

Finance leases

Borrowings

Less than one year

 

6,483

6,927

13,000

Two to five years

 

10,316

245,484

9,993

306,158

 

 

16,799

245,484

16,920

319,158

Less interest cash flows:

 

 

 

 

 

Senior finance facility

 

-

(63,502)

(86,158)

Finance leases

 

(1,224)

-

(1,148)

Total principal cash flows

 

15,575

181,982

15,772

233,000

 

 

 

 

 

 

 

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

 

 

 

 

29 June     2019

29 December 2018

Less than one year

 

 

5,808

6,295

Two to five years

 

 

9,767

9,477

 

 

 

15,575

15,772

 

 

 

 

 

 

The Group has undrawn committed borrowing facilities of £37.6 million at 29 June 2019 (29 December 2018: £27.1 million) under its facilities in place at that date. Including net cash balances, the Group had access to £52.9 million at 29 June 2019 (20 December 2018: £44.7 million) of combined liquidity from available cash and undrawn committed borrowing facilities.

 

 

12.       Provisions

 

 

Onerous leases

Dilapidations

Onerous Contracts

Total

 

£000s

£000s

£000s

£000s

 

 

 

 

 

At 29 December 2018

4,745

16,779

22,808

44,332

Additions

505

-

-

505

Utilised during the period

(1,345)

(200)

(1,902)

(3,447)

Unwind of discount

10

23

76

109

Released

(198)

-

-

(198)

At 29 June 2019

3,717

16,602

20,982

41,301

 

 

 

 

 

Of which:

 

 

 

 

Current

1,623

2,919

3,387

7,929

Non-current

2,094

13,686

17,592

33,372

 

3,717

16,605

20,979

41,301

 

 

 

 

 

At 31 December 2017

6,607

13,975

32,612

53,194

Additions

1,508

65

-

1,573

Utilised during the period

(1,889)

(546)

(4,125)

(6,560)

Unwind of discount

13

32

-

45

Released

(427)

-

-

(427)

At 30 June 2018

5,812

13,526

28,487

47,825

 

 

 

 

 

Of which:

 

 

 

 

Current

2,176

2,641

5,486

10,303

Non-current

3,636

10,885

23,001

37,522

 

5,812

13,526

28,487

47,825

 

 

 

 

 

At 31 December 2017

6,607

13,975

32,612

53,194

Transferred to assets held for sale

-

(573)

-

(573)

Additions

2,054

5,841

-

7,895

Utilised during the period

(3,254)

(1,312)

(9,918)

(14,484)

Unwind of discount

11

44

114

169

Released

(673)

(1,196)

-

(1,869)

At 29 December 2018

4,745

16,779

22,808

44,332

 

 

 

 

 

Of which:

 

 

 

 

Current

3,234

3,488

3,562

10,284

Non-current

1,511

13,291

19,246

34,048

 

4,745

16,779

22,808

44,332

 

 

 

 

 

 

 

13.       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 2019 financial year have not changed significantly from those set out on pages 24 to 27 of the Group's 2018 Annual Report, which is available at http://www.hsshiregroup.com/wp-content/uploads/2019/04/HSS-Annual-Report-2018.pdf. These risks and uncertainties were:

 

1)    Macroeconomic conditions;

2)    Competitor challenge;

3)    Strategy execution;

4)    Customer service;

5)    Third party service levels;

6)    IT infrastructure;

7)    Financial risk;

8)    Inability to attract and retain personnel; and

9)    Safety, legal and regulatory requirements

 

The main risk expected to affect the Group in the remaining 26 weeks of the 2019 financial year is macroeconomic conditions, which includes the impact that the Brexit related developments could have on the prevailing demand from new and existing customers within the numerous and diverse market sectors which HSS serves.

 

14.       Business disposal and discontinued operations

 

On 11 January 2019, the Group completed the disposal of UK Platforms Limited to Nationwide Platforms Limited, a wholly owned subsidiary of the Loxam Group, as part of the strategy to delever the group and transform the Tool Hire business. After completion of the sale £38.0 million of the net proceeds was used to pay down Group debt, reducing the senior finance facility from £220.0 million outstanding to £182.0 million. The table below shows the assets and liabilities disposed of and the calculation of the profit on disposal.

 

 

 

 

 

£000s

Description of assets and liabilities

 

 

 

 

Intangible assets (incl Goodwill)

 

 

 

4,749

Property, plant and equipment

 

 

 

30,725

Current assets, excluding cash

 

 

 

6,454

Cash

 

 

 

2,373

Debt - finance leases

 

 

 

(5,253)

Current liabilities, excluding debt

 

 

 

(2,943)

Deferred tax liabilities

 

 

 

(1,375)

Net assets disposed of

 

 

 

34,730

 

 

 

 

 

Proceeds of disposal less transaction costs

 

 

47,519

Total profit from disposal of UK Platforms Limited

 

 

12,789

 

 

 

 

 

Costs incurred on disposal of discontinued operations in 2018

 

Profit on disposal of discontinued operations in 2019

 

 

14,869

Total profit from disposal of UK Platforms Limited

 

 

12,789

 

 

 

 

 

 

 

The post-tax gain on the disposal of discontinued operations was determined as follows:

 

 

 

 

26 weeks   ended 29 June 2019

26 weeks

 ended 30 June 2018

Result of discontinued operations

 

 

£000s

£000s

Revenue

 

 

1,115

14,403

Expenses other than finance costs, amortisation and depreciation

(801)

(9,043)

Amortisation

 

 

(3)

(23)

Depreciation

 

 

(149)

(2,021)

Finance costs

 

 

-

(190)

Profit from discontinued operations, net of tax

 

162

3,126

Profit on disposal of discontinued operations in 2019

 

14,869

-

Profit for the period

 

 

15,031

3,126

 

 

 

 

 

 

15.       Adjusted EBITDA and Adjusted EBITA

 

Adjusted EBITDA is calculated as follows:

 

 

 

26 weeks   ended 29 June 2019

26 weeks   

ended 30 June

2018

 

 

£000s

£000s

Operating profit / (loss)

 

4,754

(2,967)

Add: Depreciation of property, plant and equipment

 

14,082

15,441

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

 

4,194

5,649

Add: Amortisation

 

2,990

3,046

EBITDA

 

26,020

21,169

Add: Exceptional items

 

1,018

3,207

Adjusted EBITDA

 

27,038

24,376

 

 

 

 

 

Adjusted EBITA is calculated as follows:

 

 

 

26 weeks  

ended 29 June 2019

26 weeks   

ended 30 June 2018

 

 

£000s

£000s

Operating profit / (loss)

 

4,754

(2,967)

Add: Amortisation

 

2,990

3,046

EBITA

 

7,744

79

Add: Exceptional items

 

1,018

3,207

Adjusted EBITA

 

8,762

3,286

 

 

 

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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