HSS Hire Group PLC Q1 17 Trading Update (0672G)

TIDMHSS

RNS Number : 0672G

HSS Hire Group PLC

24 May 2017

24 May 2017

HSS Hire Group plc

Q1 17 Trading Update

Q1 in line with management expectations; encouraging early signs from sales initiatives in Q2

HSS Hire Group plc ("HSS" or the "Group") announces an update on the performance of the Group for the 13 week period ended 1 April 2017.

In line with its reporting obligations to holders of its Senior Secured Notes, the Group's wholly-owned subsidiary Hero Acquisitions Limited has today provided an update to noteholders on its performance for the same period. Details for the results call for Hero Acquisitions Limited can be found at the end of this announcement.

 
Financial Headlines      Q1 17(1)       Q1 16      Change 
 (Unaudited)             (13 weeks)   (14 weeks) 
----------------------  -----------  -----------  --------- 
Revenue                  GBP80.2m     GBP84.3m     (4.9%) 
----------------------  -----------  -----------  --------- 
Adjusted EBITA(2)        (GBP4.5m)     GBP4.9m    (GBP9.4m) 
----------------------  -----------  -----------  --------- 
Adjusted EBITA margin     (5.6%)        5.8%      (11.4pp) 
----------------------  -----------  -----------  --------- 
Net debt                 GBP226.3m    GBP234.0m    GBP7.7m 
----------------------  -----------  -----------  --------- 
 

1) Reflects one less trading week in Q1 17 and the closure of 55 branches through Q4 16 and Q1 17

2) Adjusted EBITA defined as Operating profit with amortisation and exceptional costs added back

Headlines

 
 *    Q1 performance in line with Management's expectations 
 
 
   *    Underlying revenue flat year on year; Continued 
        growth in Services 
 
          *    Revenue flat on comparable 13 week basis after impact 
               of branch closures 
 
 
          *    Double digit growth in both Services and Key Accounts 
 
   *    Adjusted EBITA impacted by revenue mix and temporary 
        parallel running costs 
 
         *    Margins reflect higher growth from lower contribution 
              Services business in Q1 17 
 
 
         *    Parallel running costs incurred through Q1 17 will 
              reduce now operating model changes complete 
 
  *    Net debt reduced year on year and in line with 
       expectations 
 
          *    Net debt reduced to GBP226.3m from GBP234.0m (Q1 16) 
 
 
          *    Continued improvement in working capital management 
 
 
          *    Cash and facility headroom of more than GBP30m at end 
               of Q1 
 *    Continued progress with evolution of operating model 
 
 
          *    Increasing fulfilment rates are leading to enhanced 
               fleet availability being achieved across the Group 
 
 
          *    NPS increased to 47, top third TNS NPS Benchmark 
 
 
          *    LTM utilisation maintained at 50% (Core) and in mid 
               70%'s (Specialist) 
 

Current Trading and Outlook

 
 
   *    Sales initiatives, commenced in March, delivering 
        positive year on year rental and related revenue 
        growth, with underlying revenue in the first 7 weeks 
        of Q2 marginally ahead of the prior year 
 
   *    Actively reinvigorating relationships with SMEs; 
        contract count growth driven to double digits post 
        initiative launch, compared to low single digit 
        growth in comparable prior periods 
 
   *    Industrialising sales initiatives and approach for 
        further large markets across UK 
 
   *    New operating model delivering higher fulfilment 
        rates resulting in improved fleet availability as 
        expected 
 
   *    Cost initiatives to deliver annualised cost savings 
        of GBP11 - 13m, compared to Q1 run rate, now being 
        implemented 
 

Alan Peterson, Chairman of HSS Hire said:

"Our Q1 performance is in line with management expectations as set out at the FY16 results in early April, with revenue flat year-on-year on a comparable 13 week basis and EBITA impacted by growth in our Services business and temporary parallel running costs.

"We are now firmly focused on re-establishing revenue growth by leveraging our new operating model to deliver market-leading availability to our customers in our branch and Customer Distribution Centre network. During March we implemented new sales initiatives, focused on core markets, to reinvigorate revenue growth in our core Rental business, particularly among our smaller and medium-sized customers. Whilst we are still in the initial phases, we have seen some encouraging signs in the markets in the early weeks of the second quarter.

"We remain focused on driving efficiency across our network and increasing cash generation through the business. This is reflected in the cost initiatives announced today.

"We are also pleased to have announced the appointment of Steve Ashmore as the Group's Chief Executive Officer, with Steve joining us on 1 June 2017. Steve brings considerable leadership experience in a range of industries complementary to HSS including building products supply, logistics and distribution, which will be invaluable as we target the continued profitable growth of the Group."

HSS Hire Group plc will announce its interim results for the 26 week period ended 1 July 2017 on 30 August 2017.

Update call for Hero Acquisitions Limited for holders of Senior Secured Notes

As required by the reporting obligations for the Senior Secured Notes, a conference call discussing the results of Hero Acquisitions Limited (a wholly owned subsidiary of HSS Hire Group plc) will be held for noteholders at 1400 BST today.

To obtain dial-in details for the call, holders should contact Citigate Dewe Rogerson at [e-mail]. The accompanying presentation for the call will be made available at www.hsshiregroup.com/investor-relations/senior-secured-notes.

For further information, please contact:

 
 HSS Hire Group plc                  Tel: [phone] (on 24 May 2017) 
 Paul Quested, Chief Financial                 Thereafter: 020 8260 3343 
  Officer 
  Robert Halls, Investor Relations 
  Manager 
 
 
 Citigate Dewe Rogerson   Tel: [phone] 
 Kevin Smith 
 Nick Hayns 
 

Note 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 280 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.

This information is provided by RNS

The company news service from the London Stock Exchange

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May 24, 2017 02:01 ET (06:01 GMT)