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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Hss Hire Group Plc | LSE:HSS | London | Ordinary Share | GB00BVFD4645 | ORD GBP0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.36 | -4.31% | 8.00 | 8.00 | 8.10 | 8.40 | 8.00 | 8.40 | 1,890,780 | 16:35:06 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Equip Rental & Leasing, Nec | 332.78M | 20.48M | 0.0290 | 2.79 | 57.1M |
From Apr 2019 to Apr 2024
TIDMHSS
RNS Number : 2324P
HSS Hire Group PLC
30 August 2017
30 August 2017
HSS Hire Group plc
Interim report: Half year results for the 26 week period ended 1 July 2017
HSS Hire Group plc ("HSS" or the "Group") today announces results for the 26 week period ended 1 July 2017.
Hot Features
Premium
Financial Highlights H1 2017 H1 2016 Change
(26 weeks) (27 weeks)
--------------------- ----------- ----------- ----------
Revenue GBP160.5m GBP166.2m (3.4%)
--------------------- ----------- ----------- ----------
Adjusted EBITDA(1) GBP17.1m GBP32.1m (46.7%)
--------------------- ----------- ----------- ----------
Adjusted EBITA(2) (GBP7.3m) GBP9.4m (GBP16.7m)
--------------------- ----------- ----------- ----------
Adjusted EBITA
margin (4.5%) 5.7% (10.2pp)
--------------------- ----------- ----------- ----------
Adjusted (loss) (GBP14.2m) GBP2.2m (GBP16.4m)
/ profit before
tax
--------------------- ----------- ----------- ----------
Adjusted earnings
per share (6.74p) 1.13p (7.87p)
--------------------- ----------- ----------- ----------
Interim dividend - 0.57p (0.57p)
--------------------- ----------- ----------- ----------
Reported loss (GBP30.1m) (GBP7.8m) (GBP22.3m)
before tax
--------------------- ----------- ----------- ----------
Reported loss
per share (17.81p) (5.34p) (12.47p)
--------------------- ----------- ----------- ----------
Trading and Operational Highlights
* As expected, H1 profitability impacted by substantial
operating model changes in Group
* Improving performance trend through second quarter:
o Underlying revenue growth achieved in Q2 on
comparable 13 week basis after adjusting for
impact of branch closures
o Improving Rental revenue trend as sales initiatives
gained traction with target customers
o Adjusted EBITDA and EBITA for Q2 17 ahead of
Q1 17 run rate
* Continued strength in Services (+8%) and Key Accounts
(+11.6%) during H1 17
* On track to deliver annualised cost savings:
o Targeting annualised cost savings of c. GBP13m
compared to Q1 run rate
o Majority of cost actions implemented by end
of Q2, with remainder in Q3
* New operating model delivering planned improvements:
o Enhanced fleet availability has led to Net
Promoter Score improving to 47 (H1 16: 42)
o Improved capital efficiency will enable reduction
of GBP4m - GBP6m in capex year on year
o LTM(3) fleet utilisation remains high: 49%
in Core and 72% in Specialist, notwithstanding
the disruption resulting from the operating model
change programme
o Continued focus on working capital management
with facility and cash headroom of GBP35m as
at 1 July 2017
Current Trading and Outlook
* Year on year revenue growth on both underlying and
reported basis for first 8 weeks of Q3 17, however at
a materially lower level of improvement than expected
at the start of H2
* Sales and cost initiatives have improved Adjusted
EBITDA and EBITA in July and August but we now expect
H2 Adjusted EBITA profit to be in the range of GBP8m
to GBP11m
* Detailed strategic review commenced to drive
profitable market share gains with update to be
presented in November 2017
Explanatory Notes:
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.
2) Adjusted EBITA defined as Adjusted EBITDA less depreciation 3) Utilisation calculated over the last twelve months to the end of H1 2017
Steve Ashmore, Chief Executive Officer, said:
"While significant operational change was achieved during H1 17, both Rental revenue growth and the cost base were temporarily impacted leading to reduced profitability.
"We are facing into these challenges by taking decisive action to reinvigorate Rental revenue growth through the implementation of new sales initiatives and by rolling-out cost actions that will deliver annualised cost savings of c. GBP13m, a number of which are enabled by the recent investment in our centralised engineering and distribution capability. As a result of these actions the Group returned to profitability in June with revenue in growth for the first 8 weeks of Q3 17 and this momentum will result in a stronger H2 relative to H1 performance leading to a healthier exit rate as we head into 2018.
"Whilst the rate of recovery in our Rental revenues has been positive, it has been materially slower than originally targeted leading to lower than expected profitability over this period. On this basis we expect H2 Adjusted EBITA profit to be in the range of GBP8m to GBP11m.
"The new leadership team is currently conducting a thorough review of the Group's strategy to gain profitable share in what remains an attractive and fragmented market. We will update the market on the outcome of this process during Q4 17."
Results presentation
Management will be hosting a presentation for analysts at 9.00 a.m. BST today at Citigate Dewe Rogerson, 3 London Wall Buildings, London Wall, EC2M 5SY.
Analysts/investors unable to attend in person may join the meeting by conference call by dialling in on +44 (0) 20 3003 2666. Password: HSS Hire. A copy of the presentation will be available this morning at www.hsshiregroup.com/investor-relations/financial-results/.
A separate conference call discussing the results of Hero Acquisitions Limited will be held for holders of Senior Secured Notes at 2.00 p.m. BST today. Details for this call and an accompanying presentation will be made available at www.hsshiregroup.com/investor-relations/senior-secured-notes/.
For further information, please contact:
HSS Hire Group plc Tel: (On 30 August 2017)
020 7638 9571
Steve Ashmore, Chief Thereafter: 020 8260 3343
Executive Officer
Paul Quested, Chief
Financial Officer
Robert Halls, Investor
Relations Manager
Citigate Dewe Rogerson Tel: 020 7638 9571
Kevin Smith
Nick Hayns
Notes to editors
HSS Hire Group plc provides tool and equipment hire and related services in the UK and Ireland through a nationwide network of over 250 locations. Focusing primarily on the maintain and operate segments of the market, 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.
Progress against strategic priorities
The Group has historically focused on three strategic priorities. The progress against each in H1 17 is detailed in the table below.
Strategic Progress in H1 17
priority
------------------- -------------------------------------------------------------
Optimise
distribution * Completed roll in of Scotland to central engineering
and branch and distribution model
network
* Actions taken to right size network:
o 37 underperforming branches closed in Q1
o 13 further branches closed at end of Q2
o Fleet and colleagues re-deployed across network
* Re-profiling of stock across network, reduction in
offline hire fleet and improved fulfilment
performance is driving enhanced fleet availability
* Cost actions implemented in late Q2 and early Q3 to
deliver annualised cost savings of c. GBP13m
------------------- -------------------------------------------------------------
Win new,
and deepen * 11.6% growth in Key Accounts revenue
existing,
customer
relationships * Majority of growth from existing Key Accounts (+11%)
* Average number of account customers in period up 1%
* Customer experience further improved. Net Promoter
Score of 47, significantly above the TNS B2B
Benchmark(1) average of 27
------------------- -------------------------------------------------------------
Continued
development * Revenue performance impacted by consolidation of
and growth Specialist brand sales team into core team in H1 16
of our specialist
businesses
* Specialist brand specific sales teams reinstated,
with early positive signs in revenues
------------------- -------------------------------------------------------------
1) Kantar TNS Benchmark data comes from Business to Business studies. The sectors included in the benchmark are Manufacturing (e.g. durables, consumer goods, investment goods, other manufacturing industry), Service providers (e.g. logistics, call centres, leasing, consulting), Utilities (e.g. water, gas, electricity)
The new leadership team is currently reviewing these strategic priorities and will provide an update to the market in Q4 17.
Group financial performance
Revenue
Revenue in H1 17 was GBP160.5m, 3.4% below H1 16 (GBP166.2m). This decline year on year reflects an additional week of trading in H1 16, the targeted closure of 68 branches in the last 12 months and weaker performance in our Rental revenues, impacted by the Group's operating model change in 2016 and early 2017. On an underlying basis, adjusting for the 53(rd) week and the branch closures, revenues are broadly flat, with marginal growth year on year within Q2.
Rental and related revenues were GBP119.3m in H1 17, GBP9.5m or 7.3% lower than in H1 16 reflecting the factors outlined above. Sales initiatives implemented in March 2017 have delivered revenue growth in core markets and further work is underway to extend these initiatives into more markets. Contribution was GBP73.9m, representing a 61.9% margin. This is lower than H1 16 (GBP86.7m, 67.4% margin) due to growth in our cost of sales (excluding depreciation) and parallel running costs relating to our operating model change, primarily in Q1 17, which contributed to higher distribution and stock maintenance costs.
Services revenues were GBP41.3m in H1 17, reflecting continued growth in our OneCall and Training businesses. Contribution of GBP5.2m was in line with H1 16 albeit at a lower margin of 12.6% (H1 16: 13.9% margin) reflecting changes to the customer mix, including the annualisation of a large managed service provider ("MSP") contract and investment in the operating costs of OneCall and Training to support continued and future growth.
Key Accounts, which contribute to both Rental and related and Services revenues grew 11.6% to GBP73.4m from GBP65.8m in H1 16. Growth amongst our existing Key Account customers was particularly pleasing and accounted for the majority of this growth year on year.
Costs
Cost of sales grew by GBP3.3m to GBP76.0m (H1 16: GBP72.7m) principally due to higher depreciation charges and growth in our rehire revenues and associated costs. Administrative expenses grew by GBP12.0m to GBP84.9m (H1 16: GBP72.9m), with GBP9.9m of this increase due to growth in exceptional administrative expenses.
Gross exceptional costs in H1 17 were GBP13.2m, including GBP2.0m of costs to support the cost actions implemented in Q2 17 and GBP11.2m which relate to onerous leases on branch closures in the period and the associated impairment of certain property, plant and equipment. In H1 16, exceptional costs were GBP7.1m, of which GBP5.9m related to the NDEC start-up costs and GBP1.3m related to onerous leases. In both years exceptional income comprised GBP0.5m related to fully or sub-let non-trading stores.
Net finance expenses were GBP0.3m lower at GBP6.9m (H1 16: GBP7.2m) reflecting the lower number of trading weeks within H1 17.
Profitability
As expected, Adjusted EBITDA of GBP17.1m in H1 17 was GBP15.0m lower than in H1 16 (GBP32.1m), reflecting lower revenue in the period, particularly the higher margin rental and related revenues which were 6.8% lower year on year, together with parallel running costs through Q1 17. As previously reported initiatives designed to deliver cost savings of c. GBP13m on an annualised basis compared to our Q1 17 cost run rate have been implemented toward the end of Q2 17.
Adjusted EBITA declined from GBP9.4m in H1 16 to a loss of GBP7.3m in H1 17, with the margin declining to (4.5%) (H1 16: +5.7%). This also reflects the revenue and cost profile through H1 17 as described above together with an increase in depreciation year on year. The Adjusted EBITA margin of (3.5%) in Q2 17 represents an improvement from Q1 17 when the EBITA margin was (5.6%) with the intra year improvement due to sales growth and the planned cost actions.
Loss before tax increased to GBP30.1m, from GBP7.8m in H1 16, reflecting weaker revenue performance year on year, together with the increase in cost of sales and exceptional costs.
The basic and diluted loss per share increased from 5.34p in H1 16 to 17.81p in H1 17, reflecting the increased loss before tax within H1 17.
The adjusted basic and diluted earnings per share moved from earnings of 1.13p per share in H1 16 to a loss per share of 6.74p in H1 17. This reflects the move from an adjusted profit before tax in H1 16 to an adjusted loss before tax in H1 17, partially offset by the increase in the weighted average number of shares between the two periods as a result of the share placing completed in December 2016.
Net debt
Net debt at 1 July 2017 was GBP230.6m, GBP8.2m lower than H1 16 reflecting the continued focus on working capital management and GBP11.2m higher than at the 2016 year end reflecting the traditionally cash consumptive H1 profile of the Group. Headroom in the Group's facilities including net cash was GBP35.4m (H1 16: GBP22.1m).
Dividend
The Board remains focused on reducing net debt and moving toward a position of profitability. After careful consideration of the performance of the business in H1 17 and its existing net debt position the Board believe it is in the best interests of shareholders to not pay an interim dividend.
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 2017 financial year have not changed significantly from those described in the Group's 2016 Annual Report and are summarised in note 15 of this interim report.
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
30 August 2017
Unaudited condensed consolidated income statement
Restated
26 weeks 53 weeks 27 weeks
ended ended ended
1 July 31 December 2 July
2017 2016 2016
Note GBP000s GBP000s GBP000s
Revenue 3 160,538 342,410 166,229
Cost of sales (76,000) (145,232) (72,723)
Gross profit 84,538 197,178 93,506
----------------------------- ----- --------- ------------- ---------
Distribution costs (23,423) (45,091) (21,775)
Administrative expenses (84,866) (155,969) (72,873)
Other operating income 4 525 1,151 528
Operating loss (23,226) (2,731) (614)
----------------------------- ----- --------- ------------- ---------
3,
Adjusted EBITDA(1) 16 17,095 68,638 32,101
Less: Adjusted depreciation
(1) (24,394) (48,175) (22,703)
----------------------------- ----- --------- ------------- ---------
Adjusted EBITA(1) 16 (7,299) 20,463 9,398
Less: Exceptional
items 4 (12,643) (16,957) (7,067)
Less: Amortisation(1) (3,284) (6,237) (2,945)
----------------------------- ----- --------- ------------- ---------
Operating loss (23,226) (2,731) (614)
----------------------------- ----- --------- ------------- ---------
Net finance expense 5 (6,915) (14,686) (7,207)
Loss before tax (30,141) (17,417) (7,821)
----------------------------- ----- --------- ------------- ---------
Adjusted (loss)/ profit
before tax (14,214) 5,777 2,191
Less: Exceptional
items 4 (12,643) (16,957) (7,067)
Less: Amortisation 8 (3,284) (6,237) (2,945)
----------------------------- ----- --------- ------------- ---------
Loss before tax (30,141) (17,417) (7,821)
----------------------------- ----- --------- ------------- ---------
Taxation (175) 104 (438)
Loss for the financial
period (30,316) (17,313) (8,259)
----------------------------- ----- --------- ------------- ---------
(Loss)/profit per
share
Basic and diluted
loss per share 6 (17.81) (11.18) (5.34)
Adjusted basic (loss)/
earnings per share(2) 6 (6.74) 2.98 1.13
Adjusted diluted (loss)/
earnings per share(2) 6 (6.74) 2.94 1.13
----------------------------- ----- --------- ------------- ---------
(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
(2) Adjusted earnings per share is defined as profit before tax with amortisation and exceptional costs added back less tax at the prevailing rate of corporation tax divided by the weighted average number of ordinary shares.
The notes form part of these condensed consolidated financial statements.
Unaudited condensed consolidated statement of comprehensive income
Restated
26 weeks 53 weeks 27 weeks
ended ended ended
1 July 31 December 2 July
2017 2016 2016
GBP000s GBP000s GBP000s
Loss for the financial
period (30,316) (17,313) (8,259)
Items that may be reclassified
to profit or loss:
Foreign currency translation
differences arising
on consolidation of
foreign operations 144 1,533 1,326
Other comprehensive
loss for the period,
net of tax 144 1,533 1,326
---------------------------------- --------- ------------- ---------
Total comprehensive
loss for the period (30,172) (15,780) (6,933)
================================== ========= ============= =========
The notes form part of these condensed consolidated financial statements.
Unaudited condensed consolidated statement of financial position
Restated
1 July 31 December 2 July
2017 2016 2016
Note GBP000s GBP000s GBP000s
ASSETS
Non-current assets
Intangible assets 8 177,277 178,755 179,614
Property, plant and
equipment 9 161,945 178,473 187,682
Deferred tax assets 532 780 1,282
339,754 358,008 368,578
Current assets
Inventories 7,817 7,898 8,887
Trade and other receivables 10 97,874 103,744 103,387
Cash 7,070 15,211 2,255
---------- ------------ ----------
112,761 126,853 114,529
Total assets 452,515 484,861 483,107
LIABILITIES
Current liabilities
Trade and other payables 11 (83,209) (89,150) (84,652)
Borrowings 12 (68,500) (66,000) (68,083)
Provisions 13 (6,236) (6,431) (4,462)
Current tax liabilities (500) (501) (520)
(158,445) (162,082) (157,717)
Non-current liabilities
Trade and other payables 11 (17,185) (17,266) (21,585)
Borrowings 12 (133,733) (133,212) (132,717)
Provisions 13 (12,032) (10,712) (11,059)
Deferred tax liabilities (7,911) (8,203) (9,549)
(170,861) (169,393) (174,910)
Total liabilities (329,306) (331,475) (332,627)
Net assets 123,209 153,386 150,480
----------------------------- ----- ---------- ------------ ----------
EQUITY
Share capital 1,702 1,702 1,548
Merger reserve 97,780 97,780 85,376
Retained earnings 23,727 53,904 63,556
Total equity attributable
to owners of the group 123,209 153,386 150,480
----------------------------- ----- ---------- ------------ ----------
The notes form part of these condensed consolidated financial statements.
Unaudited condensed consolidated statement of changes in equity
Share Merger Retained Total
capital reserve earnings equity
Note GBP000s GBP000s GBP000s GBP000s
At 31 December 2016 1,702 97,780 53,904 153,386
--------- --------- ---------- ---------
Total comprehensive
loss for the period
Loss for the period - - (30,316) (30,316)
Foreign currency translation
differences arising
on consolidation of
foreign operations - - 144 144
Total comprehensive
loss for the period - - (30,172) (30,172)
--------- --------- ---------- ---------
Transactions with owners
recorded directly in
equity
Share based payment - - (5) (5)
At 1 July 2017 1,702 97,780 23,727 123,209
========= ========= ========== =========
Share Merger Retained Total
capital reserve earnings equity
GBP000s GBP000s GBP000s GBP000s
At 26 December 2015 1,548 85,376 71,345 158,269
--------- --------- ---------- --------
Loss for the period - - (8,259) (8,259)
Foreign currency translation
differences arising
on consolidation of
foreign operations - - 1,326 1,326
Total comprehensive
loss for the period - - (6,933) (6,933)
--------- --------- ---------- --------
Transactions with owners
recorded directly in
equity
Dividends paid 7 - - (882) (882)
Share based payment - - 26 26
At 2 July 2016 (restated) 1,548 85,376 63,556 150,480
========= ========= ========== ========
Share Merger Retained Total
capital reserve earnings equity
GBP000s GBP000s GBP000s GBP000s
At 26 December 2015 1,548 85,376 71,345 158,269
--------- --------- ---------- ---------
Loss for the period - - (17,313) (17,313)
Foreign currency translation
differences arising
on consolidation of
foreign operations - - 1,533 1,533
Total comprehensive
loss for the period - - (15,780) (15,780)
========= ========= ========== =========
Transactions with owners
recorded directly in
equity
New share issue for
cash 154 12,800 - 12,954
Share issue costs - (396) - (396)
Dividends paid 7 - - (1,764) (1,764)
Share based payment - - 103 103
At 31 December 2016 1,702 97,780 53,904 153,386
========= ========= ========== =========
The notes form part of these condensed consolidated financial statements
Unaudited condensed consolidated statement of cash flows
Restated
26 weeks 53 weeks 27 weeks
ended ended ended
1 July 31 December 2 July
2017 2016 2016
Cash flows from operating GBP000s GBP000s GBP000s
activities
Loss before tax (30,141) (17,417) (7,821)
Adjustments for:
- Amortisation 3,284 6,237 2,945
- Depreciation 18,894 37,729 18,103
- Net book value of hire
stock losses and write
offs 5,500 9,762 4,485
- Impairment of property, 6,225 - -
plant and equipment
- Loss on disposal of
other fixed assets - 684 115
- Share based payment (5) 103 26
- Net finance expense 6,915 14,686 7,207
- Inventories 81 1,197 208
- Trade and other receivables 5,853 (5,717) (5,802)
- Trade and other payables (3,350) 2,571 (2,628)
- Provisions 984 (1,187) (1,505)
Net cash flows from operating
activities before changes
in hire equipment 14,240 48,648 15,333
Purchase of hire equipment (11,852) (22,085) (14,060)
Cash generated from operating
activities 2,388 26,563 1,273
--------- ------------- ---------
Net interest paid (6,884) (12,974) (6,394)
Tax paid (219) (373) (113)
Net cash (utilised)/ generated
from operating activities (4,715) 13,216 (5,234)
--------- ------------- ---------
Cash flows from investing
activities
Purchases of non hire
property, plant, equipment
and software (4,114) (16,804) (8,011)
Net cash used in investing
activities (4,114) (16,804) (8,011)
--------- ------------- ---------
Cash flows from financing
activities
Proceeds from the issue
of ordinary share capital - 12,954 -
Share issue costs (226) (170) -
Proceeds from borrowings 3,500 31,000 26,000
Repayments of borrowings (1,000) (11,000) (5,000)
Cash received from refinancing 5,030
hire stock - -
Capital element of finance
lease payments (6,616) (12,498) (6,860)
Dividends paid - (1,764) -
Net cash received from
financing activities 688 18,522 14,140
--------- ------------- ---------
Net (decrease)/ increase
in cash (8,141) 14,934 895
Cash at the start of the
period 15,211 277 277
Cash at the end of the
period 7,070 15,211 1,172
========= ============= =========
The notes form part of these condensed consolidated financial statements.
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 25 Willow Lane, Mitcham, Surrey, CR4 4TS.
The condensed consolidated financial statements as at, and for the 26 weeks ended 1 July 2017 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 29 August 2017.
The condensed consolidated financial statements do not comprise Statutory Accounts within the meaning of Section 434 of the Companies Act 2006. The comparative financial information for the 27 weeks ended 2 July 2016, and the 53 weeks ended 31 December 2016, do not constitute statutory accounts for those periods, respectively. Statutory Accounts for the year ended 31 December 2016 were approved by the Board on 5 April 2017 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 1 July 2017 have been prepared in accordance with the Disclosure 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 31 December 2016, which were prepared in accordance with IFRS as adopted by the European Union.
The accounting policies, and judgements and estimates, applied in the condensed consolidated financial statements are consistent with those set out in the Group's Annual Report and Accounts for the year ended 31 December 2016. There are no new IFRS or IFRIC Interpretations that are effective for the first time for this interim period which have a material impact on the Group.
Prior period restatement
Comparative information as at, and for the 27 week period ending 2 July 2016 has been restated in these condensed consolidated financial statements, and a reconciliation to amounts previously reported may be found in note 17. The group redefined its operating segments in its half year accounts for the 27 week period ending 2 July 2016 adopting reportable segments defined as Rental and related revenue, and Services, and subsequently further refined and restated the half year accounts figures in an announcement made on 22 March 2017. The basis of the change was more fully described in note 2 of the Group's Annual Report and Accounts for the year ended 31 December 2016. The comparative segmental disclosure in note 3 is based upon the restated 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 revolving credit facility secured by the Group - the maturity of the revolving credit facility in February 2019 - there is no requirement to redeem any of the Senior Secured Notes until 1 August 2019
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, cleaning 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 rehire business (HSS OneCall), HSS Training and TecServ. HSS One Call 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; and TecServ provides customers with maintenance services for a full range of cleaning machines.
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 1
July 2017 (2016: nil).
26 weeks ended 1 July 2017
Rental
(and
related
revenue) Services Central Total
GBP000s GBP000s GBP000s GBP000s
Total revenue from
external customers 119,252 41,286 - 160,538
---------- --------- ---------- ----------
Contribution 73,930 5,158 - 79,088
Branch and selling
costs (41,315) (41,315)
Central costs (20,678) (20,678)
Adjusted EBITDA 17,095
Less: Exceptional
items - - (12,643) (12,643)
Less: Depreciation
and amortisation (21,499) (164) (6,028) (27,678)
Operating loss (23,226)
Net finance expenses (6,915)
Loss before tax (30,141)
----------
Additions to non-current
assets
Property, plant
and equipment 11,623 18 2,289 13,930
Intangibles - 109 1,697 1,806
Non-current assets
net book value
Property, plant
and equipment 125,611 343 35,991 161,945
Intangibles 168,336 549 8,392 177,277
Unallocated corporate
assets
Non current deferred
tax assets 532 532
Current assets 112,761 112,761
Current liabilities (158,445) (158,445)
Non current liabilities (170,861) (170,861)
----------
Net assets 123,209
----------
Restated
27 weeks ended 2 July 2016
Rental
(and
related
revenue) Services Central Total
GBP000s GBP000s GBP000s GBP000s
Total revenue from
external customers 128,704 37,525 - 166,229
---------- --------- ---------- ----------
Contribution 86,657 5,167 - 91,825
Branch and selling
costs (45,503) (45,503)
Central costs (14,221) (14,221)
Adjusted EBITDA 32,101
Less: Exceptional
items (7,067) (7,067)
Less: Depreciation
and amortisation (19,291) (126) (6,231) (25,648)
Operating loss (614)
Net finance expenses (7,207)
Loss before tax (7,821)
----------
Additions to non-current
assets
Property, plant
and equipment 17,805 77 8,411 26,293
Intangibles - 34 2,283 2,317
Non-current assets
net book value
Property, plant
and equipment 144,036 384 43,262 187,682
Intangibles 171,206 598 7,810 179,614
Unallocated corporate
assets
Non current deferred
tax assets 1,282 1,282
Current assets 114,529 114,529
Current liabilities (157,717) (157,717)
Non current liabilities (174,910) (174,910)
----------
Net assets 150,480
----------
4. Exceptional items
Items of income or expense have been shown as exceptional either because of their size or 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 1 July 2017, the Group has recognised total exceptional costs of GBP12.6 million, analysed as follows:
Included Included
in in 26 weeks
cost Included Included other ended
of in distribution in administrative operating 1 July
sales costs expenses income 2017
GBP000s GBP000s GBP000s GBP000s GBP000s
NDEC exceptional costs
Project management, - - - - -
design, set-up
Parallel running - - - - -
Non-recurring transitional - - - - -
engineering costs
Branch and CDC closure - - - - -
redundancies
Total NDEC exceptional - - - - -
costs
Branch and distribution
centre closure onerous
leases - - 4,969 - 4,969
Impairment of property,
plant and equipment - - 6,225 - 6,225
Group restructuring - - - - -
Resale stock impairment - - - - -
Pre-opening costs - - - - -
Cost reduction programme 95 162 1,717 - 1,974
IPO fees - - - - -
Sub-let rental income
on onerous leases - - - (525) (525)
Exceptional items
(non-finance) 95 162 12,911 (525) 12,643
========= ================= =================== =========== =========
The Group has incurred significant costs restructuring its business and its operating model. Central to this has been the establishment of the National Distribution and Engineering Centre ("NDEC") near Oxford which is the centrepiece of our supply chain, designed to serve our branch and distribution network and provide improved customer experience, operational and capital efficiency. This replaces the former hub and spoke model deployed by the group. Additionally we have closed branches and reduced headcount.
Branch and distribution centre closure onerous leases
The number of branches and distribution centres has been reduced as activity has been centralised into fewer locations and a new divisional structure created. 50 branches were closed during the period. An exceptional cost of GBP5.0 million relating to onerous leases and dilapidations costs has been recorded in the 26 weeks ended 1 July 2017 (53 weeks ended 31 December 2016: GBP4.5 million; 27 weeks ended 2 July 2016: GBP1.3 million).
Impairment of property, plant and equipment
Following the branch closures management have 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 1 July 2017 an impairment of GBP6.2 million has been recorded, (53 weeks ended 31 December 2016: GBPnil; 27 weeks ended 2 July 2016: GBPnil).
Cost reduction programme
Associated to the establishment of the NDEC and the reduced branch network the Group has also announced plans to deliver significant cost reductions primarily by reducing headcount by redundancy. During the 26 weeks ended 1 July 2017 costs of GBP2.0 million are included as exceptional items relating to the cost reduction programme, (53 weeks ended 31 December 2016: GBPnil; 27 weeks ended 2 July 2016: GBP0.1 million).
Sub-let rental income
Sub-let income from vacant properties is recorded within exceptional items as other operating income. During the 26 weeks ended 1 July 2017 an exceptional credit of GBP0.5 million was recorded. (53 weeks ended 31 December 2016: GBP1.1 million credit; 27 weeks ended 2 July 2016: GBP0.5 million credit).
During the period ended 31 December 2016, the Group has recognised GBP17.0 million of exceptional costs, analysed as follows:
Included Included
in in Year
cost Included Included other ended
of in distribution in administrative operating 31 December
sales costs expenses income 2016
GBP000s GBP000s GBP000s GBP000s GBP000s
NDEC exceptional costs
Project management,
design, set-up 508 - 2,560 - 3,068
Parallel running 1,036 1,128 4,130 - 6,294
Non-recurring transitional
engineering costs 125 - 226 - 351
Branch and CDC closure
redundancies 162 163 116 - 441
Total NDEC exceptional
costs 1,831 1,291 7,032 - 10,154
Branch and distribution
centre closure onerous
leases - - 4,492 - 4,492
Group restructuring 15 5 1,622 - 1,642
Resale stock impairment 1,552 - - - 1,552
Pre-opening costs - 8 172 - 180
Cost reduction programme - - - - -
IPO fees - - 74 - 74
Sub-let rental income
on onerous leases - - - (1,137) (1,137)
Exceptional items 3,398 1,304 13,392 (1,137) 16,957
========= ================= =================== =========== =============
NDEC
The restructuring began in 2015. The NDEC started to operate in March 2016, and by October 2106 was processing more than 50% of operational volumes. During the 26 weeks ended 1 July 2017 the NDEC became fully operational. Total NDEC exceptional costs for the 53 weeks ended 31 December 2016: GBP10.2 million; (27 weeks ended 2 July 2016: GBP5.9 million).
Group Restructuring
In parallel with the implementation of the NDEC, the Group changed its operating model moving to a new divisional structure. This results in a reduction in headcount leading to a redundancy cost of GBP1.6 million during the 53 weeks ended 31 December 2016 (27 weeks ended 2 July 2016 GBPnil.)
Resale stock impairment
During the 53 weeks ended 31 December 2016 the Group recorded an impairment of resale stock of GBP1.6 million following the centralisation of inventory held for resale into fewer locations. (27 weeks ended 2 July 2016 GBPnil).
Pre-opening costs and IPO fees
During the 53 weeks ended 31 December 2016 the Group incurred exceptional costs relating to opening new branches of GBP0.2m (27 weeks ended 2 July 2016 GBP0.2 million), and the 2015 IPO of GBP0.1 million (27 weeks ended 2 July 2016 GBP0.1 million).
During the period ended 2 July 2016, the Group has recognised GBP7.1 million of exceptional costs, analysed as follows:
Included Included
in in 27 weeks
cost Included Included other ended
of in distribution in administrative operating 2 July
sales costs expenses income 2016
GBP000s GBP000s GBP000s GBP000s GBP000s
NDEC exceptional costs
Project management,
design, set-up 1,835 - 1,041 - 2,876
Parallel running 2,782 - 108 - 2,890
Non-recurring transitional
engineering costs - - - - -
Branch and CDC closure
redundancies - - 170 - 170
Total NDEC exceptional
costs 4,617 - 1,319 - 5,936
Branch and distribution
centre closure onerous
leases - - 1,306 - 1,306
Resale stock impairment - - - - -
Pre-opening costs - - 162 - 162
Cost reduction programme - - 113 - 113
IPO fees - - 78 - 78
Sub-let rental income
on onerous leases - - - (528) (528)
Exceptional items 4,617 - 2,978 (528) 7,067
========= ================= =================== =========== =========
5. Finance income and expense
26 weeks 53 weeks 27 weeks
ended ended ended
1 July 31 December 2 July
2017 2016 2016
GBP000s GBP000s GBP000s
Interest received on
cash deposits (1) (3) (1)
Finance income (1) (3) (1)
--------- ------------- ---------
Bank loans and overdrafts 1,020 2,039 991
Senior secured notes 4,577 9,331 4,753
Finance leases 761 1,792 878
Interest unwind on discounted
provisions 38 484 58
Debt issue costs 520 1,043 528
Finance expense 6,916 14,689 7,208
--------- ------------- ---------
Net finance expense 6,915 14,686 7,207
========= ============= =========
6. Earnings per share
26 weeks ended 1 July
2017
---------------------------------
Weighted
average
number
Loss after of Loss per
tax shares share
GBP000s 000s pence
----------- --------- ---------
Basic loss per share (30,316) 170,207 (17.81)
Potentially dilutive
securities - - -
Diluted earnings
per share (30,316) 170,207 (17.81)
=========== ========= =========
53 weeks ended 31 December
2016
---------------------------------
Weighted
average
number
Loss after of Loss per
tax shares share
GBP000s 000s pence
----------- --------- ---------
Basic loss per share (17,313) 154,887 (11.18)
Potentially dilutive
securities - - -
Diluted earnings
per share (17,313) 154,887 (11.18)
=========== ========= =========
27 weeks ended 2 July
2016 (restated)
---------------------------------
Weighted
average
number
Loss after of Loss per
tax shares share
GBP000s 000s pence
----------- --------- ---------
Basic loss per share (8,259) 154,762 (5.34)
Potentially dilutive
securities - - -
Diluted earnings
per share (8,259) 154,762 (5.34)
=========== ========= =========
Basic 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 loss per share is calculated using the loss for the year divided by the weighted average number of shares outstanding assuming the conversion of its potentially dilutive equity derivatives outstanding, being nil cost share options (LTIP shares) and Sharesave Scheme options, as disclosed in note 21 in the Annual Report and Financial Statements for the year ended 31 December 2016.
All of the Group's potentially dilutive equity derivatives were anti-dilutive for the periods ended 1 July 2017 and 2 July 2016, and the year ended 31 December 2016, respectively, for the purpose of diluted loss per share.
The LTIP shares and Sharesave Scheme options were anti-dilutive for purposes of calculating adjusted diluted earnings per share for the 26 weeks period ended 1 July 2017. The weighted average number of shares for purposes of calculating the adjusted diluted earnings per share are as follows:
26 weeks 53 weeks 27 weeks
ended ended 31 ended
1 July December 2 July
2017 2016 2016
Weighted Weighted Weighted
average average average
number number number
of shares of shares of shares
000s 000s 000s
Basic 170,207 154,887 154,887
LTIP share options - 1,256 696
Sharesave scheme
options - 378 -
Diluted 170,207 156,521 155,583
======================= =========== ===========
The following is a reconciliation between the basic loss per share and the adjusted basic loss/earnings per share.
26 weeks 53 weeks 27 weeks
ended ended 31 ended
1 July December 2 July
2017 2016 2016
Basic and diluted
loss per share (pence) (17.81) (11.18) (5.34)
Add back:
Exceptional items
per share (1) 7.43 10.95 4.57
Amortisation per
share (2) 1.93 4.03 1.90
Tax charge per share 0.10 (0.07) 0.28
Charge:
Tax at prevailing
rate 1.61 (0.75) (0.28)
Adjusted basic (loss)/
earnings per share
(pence) (6.74) 2.98 1.13
========== =========== ==========
(1) Exceptional items per share is 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.
The following is a reconciliation between the basic loss per share and the adjusted diluted earnings/ (loss) per share.
26 weeks 53 weeks 27 weeks
ended ended 31 ended
1 July December 2 July
2017 2016 2016
Basic loss per share
(pence) (17.81) (11.18) (5.34)
Add back:
Adjustment to basic
loss per share for
the impact of dilutive
securities (1) - 0.12 0.03
Exceptional items
per share (2) 7.43 10.83 4.55
Amortisation per
share (3) 1.93 3.98 1.89
Tax charge per share 0.10 (0.07) 0.28
Charge:
Tax at prevailing
rate 1.61 (0.74) (0.28)
Adjusted diluted
(loss)/ earnings
per share (pence) (6.74) 2.94 1.13
========== =========== ==========
(1) The LTIP and Sharesave share options were anti-dilutive for purposes of calculating adjusted diluted earnings per share in the 26 week period ended 1 July 2017.
(2) Exceptional items per share is calculated as total finance and non finance exceptional items divided by the weighted average number of shares in issue through the period.
(3) Amortisation per share is calculated as the amortisation charge divided by the weighted average number of shares in issue through the period.
7. Dividends
26 weeks 53 weeks 27 weeks
ended ended ended
1 July 31 December 2 July
2017 2016 2016
GBP000s GBP000s GBP000s
Dividends - 1,764 882
- 1,764 882
====================== ============= =========
No interim or final dividend has been paid or proposed during the period ended 1 July 2017.
During the period ended 2 July 2016, the shareholders approved a final dividend of 0.57p per ordinary share, totalling GBP0.9 million in respect of the year ended 26 December 2015. The amount was included as a liability at 2 July 2016 and subsequently paid on 4 July 2016.
8. Intangible assets
Customer
Goodwill relationships Brands Software Total
GBP000s GBP000s GBP000s GBP000s GBP000s
Cost
At 31 December
2016 129,744 27,482 24,142 19,968 201,336
Additions - - - 1,806 1,806
At 1 July
2017 129,744 27,482 24,142 21,774 203,142
--------- --------------- -------- --------- --------
Amortisation
At 31 December
2016 - 10,940 391 11,250 22,581
Charge for
the period - 1,388 72 1,824 3,284
At 1 July
2017 - 12,328 463 13,074 25,865
--------- --------------- -------- --------- --------
Net book value
At 1 July
2017 129,744 15,154 23,679 8,700 177,277
========= =============== ======== ========= ========
At 31 December
2016 129,744 16,542 23,751 8,718 178,755
========= =============== ======== ========= ========
Cost
At 26 December
2015 130,171 27,044 24,142 14,999 196,356
Additions - - - 2,317 2,317
At 2 July
2016 130,171 27,044 24,142 17,316 198,673
-------- ------- ------- ------- --------
Amortisation
At 26 December
2015 - 8,014 234 7,866 16,114
Charge for
the period - 1,383 82 1,480 2,945
At 2 July
2016 - 9,397 316 9,346 19,059
-------- ------- ------- ------- --------
Net book value
At 2 July
2016 130,171 17,647 23,826 7,970 179,614
======== ======= ======= ======= ========
At 26 December
2015 130,171 19,030 23,908 7,133 180,242
======== ======= ======= ======= ========
9. Property, plant and equipment
Materials
& Equipment
Land Plant held
& Buildings & Machinery for hire Total
GBP000s GBP000s GBP000s GBP000s
Cost
At 31 December 2016 69,187 58,673 247,295 375,155
Foreign exchange
differences 10 41 396 447
Additions 1,132 1,175 11,623 13,930
Disposals (759) (49) (14,817) (15,625)
At 1 July 2017 69,570 59,840 244,497 373,907
------------- ------------- ------------- ---------
Accumulated depreciation
At 31 December 2016 37,095 46,214 113,373 196,682
Foreign exchange
differences - 30 244 274
Charge for the period 2,359 1,949 14,586 18,894
Impairment loss 6,225 - - 6,225
Disposals (758) (38) (9,317) (10,113)
At 1 July 2017 44,921 48,155 118,886 211,962
------------- ------------- ------------- ---------
Net book value
At 1 July 2017 24,649 11,685 125,611 161,945
============= ============= ============= =========
At 31 December 2016 32,092 12,459 133,922 178,473
============= ============= ============= =========
Cost
At 26 December 2015 63,313 55,914 256,208 375,435
Foreign exchange
differences 23 184 1,908 2,115
Additions 4,208 4,280 17,805 26,293
Disposals (384) (95) (11,786) (12,265)
At 2 July 2016 67,160 60,283 264,135 391,578
------------- ------------- ------------- ---------
Accumulated depreciation
At 26 December 2015 35,258 44,016 112,948 192,222
Foreign exchange
differences - 126 1,110 1,236
Charge for the period 2,754 2,008 13,341 18,103
Disposals (269) (95) (7,301) (7,665)
At 2 July 2016 (restated) 37,743 46,055 120,098 203,896
------------- ------------- ------------- ---------
Net book value
At 2 July 2016 (restated) 29,417 14,228 144,037 187,682
============= ============= ============= =========
At 26 December 2015 28,055 11,898 143,260 183,213
============= ============= ============= =========
10. Trade and other receivables
1 July 31 December 2 July
2017 2016 2016
GBP000s GBP000s GBP000s
Gross trade receivables 77,575 83,072 78,231
Less provision for impairment (3,879) (3,740) (4,766)
-------- ------------ --------
Net trade receivables 73,696 79,332 73,465
Other debtors 417 679 510
Prepayments and accrued
income 23,761 23,733 29,412
Total trade and other
receivables 97,874 103,744 103,387
======== ============ ========
1 July 31 December 2 July
2017 2016 2016
Movements in provision GBP000s GBP000s GBP000s
Balance at the beginning
of the period (3,740) (4,000) (4,000)
Movement in provision (139) 260 (766)
Balance at the end of
the period (3,879) (3,740) (4,766)
======== ============ ========
11. Trade and other payables
1 July 31 December 2 July
2017 2016 2016
GBP000s GBP000s GBP000s
Current
Obligations under finance
leases 12,126 11,448 11,446
Trade payables 43,550 52,505 44,472
Other taxes and social
security costs 6,831 5,688 4,521
Other creditors 1,936 467 1,776
Accrued interest on borrowings 3,844 3,859 3,885
Accruals and deferred
income 14,922 15,183 18,552
83,209 89,150 84,652
======== ============ ========
Non-current
Obligations under finance
lease 17,185 17,266 21,585
17,185 17,266 21,585
======== ============ ========
12. Borrowings
1 July 31 December 2 July
2017 2016 2016
GBP000s GBP000s GBP000s
Current
Revolving credit facility 68,500 66,000 67,000
Bank overdraft - - 1,083
68,500 66,000 68,083
======== ============ ========
Non-current
6.75% Senior secured
notes 133,733 133,212 132,717
133,733 133,212 132,717
======== ============ ========
The interest rates on the Group's variable interest loans are as follows:
1 July 31 December 2 July
2017 2016 2016
% above % above % above
LIBOR LIBOR LIBOR
Revolving credit facility 2.50% 2.25% 2.00%
-------- ------------ --------
The following table shows the fair value of the Group's Senior Secured Notes:
1 July 31 December 2 July
2017 2016 2016
GBP000s GBP000s GBP000s
Financial liabilities
6.75% Senior secured
notes 134,980 137,700 132,430
134,980 137,700 132,430
======== ============ ========
The Group has undrawn committed borrowing facilities of GBP28.3 million at 1 July 2017 (2 July 2016: GBP20.9 million). Including net cash balances, the Group had access to GBP35.4 million of combined liquidity from available cash and undrawn committed borrowing facilities at 1 July 2017.
13. Provisions
Onerous
leases Dilapidations Total
GBP000s GBP000s GBP000s
At 31 December 2016 5,398 11,745 17,143
-------- -------------- --------
Additions 4,353 160 4,513
Utilised during the
period (2,018) (1,052) (3,070)
Unwind of provision 16 23 39
Released (104) (253) (357)
At 1 July 2017 7,645 10,623 18,268
======== ============== ========
Of which:
Current 3,617 2,619 6,236
Non current 4,028 8,004 12,032
--------
7,645 10,623 18,268
======== ============== ========
At 26 December 2015 4,537 10,136 14,673
-------- -------------- --------
Additions 669 2,296 2,965
Utilised during the
period (925) (527) (1,452)
Unwind of provision 32 26 58
Released (163) (560) (723)
At 2 July 2016 4,150 11,371 15,521
======== ============== ========
Of which:
Current 1,682 2,780 4,462
Non current 2,468 8,591 11,059
-------- -------------- --------
4,150 11,371 15,521
======== ============== ========
14. Commitments and contingencies
The Group's commitments under non-cancellable operating leases are set out below:
1 July 31 December 2 July
2017 2016 2016
GBP000s GBP000s GBP000s
Land and buildings
Within one year 15,972 16,140 15,863
Between two and five years 48,550 48,447 48,047
After five years 34,920 35,562 31,758
99,442 100,149 95,668
-------- ------------ --------
Other
Within one year 9,162 9,142 7,657
Between two and five years 14,451 15,952 11,311
After five years 56 321 40
23,669 25,415 19,008
-------- ------------ --------
123,111 125,564 114,676
======== ============ ========
15. 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 2017 financial year have not changed significantly from those set out on pages 30 to 33 of the Group's 2016 Annual Report, which is available at www.hssannualreport2016.com. These risks and uncertainties include, but are not limited to the following:
1) Macroeconomic conditions; 2) Competitor challenge; 3) Operational disruption; 4) IT infrastructure; 5) Customer credit/supplier payment; 6) Equipment supply, maintenance & availability; 7) Customer retention and brand reputation; 8) Outsourcing of services; 9) Inability to attract and retain personnel; and
10) Legal and regulatory requirements
The main risk expected to affect the Group in the remaining 26 weeks of the 2017 financial year is macroeconomic conditions, which includes the impact that the election of a minority government and/or Brexit related developments could have on the prevailing demand from new and existing customers within the numerous and diverse market sectors which HSS serves.
16. Adjusted EBITDA and Adjusted EBITA
Adjusted EBITDA is calculated as follows:
26 weeks 53 weeks 27 weeks
ended ended ended
1 July 31 December 2 July
2017 2016 2016
GBP000s GBP000s GBP000s
Operating (loss) (23,226) (2,731) (614)
Add: Depreciation of
property, plant and equipment 18,894 37,729 18,103
Add: Net book value of
hire stock losses and
write offs 5,500 9,762 4,485
Add: Net book value of
other fixed asset disposals
less proceeds on those
disposals - 684 115
Add: Amortisation 3,284 6,237 2,945
EBITDA 4,452 51,681 25,034
Add: Exceptional items 12,643 16,957 7,067
Adjusted EBITDA 17,095 68,638 32,101
========= ============= =========
Adjusted EBITA is calculated as follows:
26 weeks 53 weeks 27 weeks
ended ended ended
1 July 31 December 2 July
2017 2016 2016
GBP000s GBP000s GBP000s
Operating (loss) (23,226) (2,731) (614)
Add: Amortisation 3,284 6,237 2,945
EBITA (19,942) 3,506 2,331
Add: Exceptional items 12,643 16,957 7,067
Adjusted EBITA (7,299) 20,463 9,398
========= ============= =========
17. Prior period restatement for change in depreciation estimate
Change in depreciation estimate
The Group reviews its depreciation policy annually. As disclosed in note 1 in the Annual Report and Financial Statements for the year ended 31 December 2016, effective 27 December 2015, the directors assessed that the residual values of certain powered access assets should be changed from 10% to 20% and residual values of 10% should be introduced for power generation assets. As a result of these changes, the depreciation charge for the 27 week period ending 2 July 2016 previously reported has been reduced by GBP2.0 million.
Reconciliation of the condensed consolidated statement of financial position at 2 July 2016
Change
in depreciation As originally
Restated estimate reported
GBP000s GBP000s GBP000s
ASSETS
Non-current assets
Intangible assets 179,614 - 179,614
Property, plant
and equipment 187,682 (1,986) 185,696
Deferred tax assets 1,282 - 1,282
368,578 (1,986) 366,592
Current assets
Inventories 8,887 - 8,887
Trade and other
receivables 103,387 - 103,387
Cash 2,255 - 2,255
114,529 - 114,529
Total assets 483,107 (1,986) 481,121
LIABILITIES
Current liabilities
Trade and other
payables (84,652) - (84,652)
Borrowings (68,083) - (68,083)
Provisions (4,462) - (4,462)
Current tax liabilities (520) - (520)
(157,717) - (157,717)
Non-current liabilities
Trade and other
payables (21,585) - (21,585)
Borrowings (132,717) - (132,717)
Provisions (11,059) - (11,059)
Deferred tax liabilities (9,549) - (9,549)
(174,910) - (174,910)
Total liabilities (332,627) - (332,627)
Net assets 150,480 (1,986) 148,494
------------------------------ ---------- ----------------- --------------
EQUITY
Share capital 1,548 - 1,548
Merger reserve 85,376 - 85,376
Retained earnings/(deficit) 63,556 (1,986) 61,570
Total equity attributable
to owners of the group 150,480 (1,986) 148,494
------------------------------ ---------- ----------------- --------------
Reconciliation of the condensed consolidated income statement for the 27 week period ended 2 July 2016
Change
in depreciation As originally
Restated estimate reported
GBP000s GBP000s GBP000s
Revenue 166,229 - 166,229
Cost of sales (72,723) (1,986) (74,709)
Gross profit 93,506 (1,986) 91,520
-------------------------- --------- ----------------- --------------
Distribution costs (21,775) - (21,775)
Administrative expenses (72,873) - (72,873)
Other operating income 528 - 528
Operating loss (614) (1,986) (2,600)
-------------------------- --------- ----------------- --------------
Finance income 1 - 1
Finance expense (7,208) - (7,208)
Loss before tax (7,821) (1,986) (9,807)
-------------------------- --------- ----------------- --------------
Taxation (438) - (438)
Loss for the financial
period (8,259) (1,986) (10,245)
-------------------------- --------- ----------------- --------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SEDFUUFWSELA
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