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
  0.00 0.0% 18.60 19.10 19.40 0.00 08:00:17
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Retailers 269.9 -23.6 -12.0 - 130

HSS Hire Group PLC Final Results

29/04/2021 7:00am

UK Regulatory (RNS & others)

Hss Hire (LSE:HSS)
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RNS Number : 9550W

HSS Hire Group PLC

29 April 2021

HSS Hire Group Plc

Audited Results for HSS Hire Group plc for the year ended 26 December 2020

Strategy delivering improved performance

HSS Hire Group plc ("HSS" or the "Group") today announces results for the year ended 26 December 2020

Financial Highlights(1)           FY20                FY20                      FY19(6)                 Change 
                             (IFRS 16 basis)    ( pre-IFRS16 basis)        ( pre-IFRS16 basis)       (pre-IFRS 16) 
Revenue                        GBP269.9m            GBP269.9m                  GBP328.0m               (17.7)% 
                            ----------------  ---------------------      ---------------------      -------------- 
Adjusted EBITDA(2)              GBP69.4m            GBP47.0m                   GBP63.9m                (26.4)% 
                            ----------------  ---------------------      ---------------------      -------------- 
Adjusted EBITDA margin           25.7%                17.4%                      19.5%                 (2.1)pp 
                            ----------------  ---------------------      ---------------------      -------------- 
Adjusted EBITA(3)               GBP19.8m            GBP16.7m                   GBP26.5m               GBP(9.8)m 
                            ----------------  ---------------------      ---------------------      -------------- 
Adjusted EBITA margin             7.3%                6.2%                       8.1%                  (1.9)pp 
                            ----------------  ---------------------      ---------------------      -------------- 
ROCE(4)                          10.7%                15.2%                      20.8%                 (5.6)pp 
                            ----------------  ---------------------      ---------------------      -------------- 
Net debt leverage(5)              2.8x                2.6x                       2.8x                    0.2x 
                            ----------------  ---------------------      ---------------------      -------------- 
Other extracts 
                            ----------------  ---------------------      ---------------------      -------------- 
Operating profit / (loss)       GBP1.5m             GBP(3.5)m                  GBP16.8m               GBP(20.3)m 
                            ----------------  ---------------------      ---------------------      -------------- 
Loss before tax                GBP(23.6)m          GBP(24.3)m                  GBP(5.8)m              GBP(18.5)m 
                            ----------------  ---------------------      ---------------------      -------------- 
Basic loss per share            (12.02)p            (12.40)p                    (3.66)p                (8.74)p 
                            ----------------  ---------------------      ---------------------      -------------- 
   --      Resilient performance through COVID-19  with strong trading in Q4 

o Progressive revenue growth over H2 FY20, trading revenues in Q4 at 94% of 2019 levels

o Positive EBITDA maintained throughout FY20, Q4 ahead of prior year

o Decisive actions taken maintained healthy EBITDA margins and ROCE

   --      Strengthened balance sheet, reduced leverage 

o Net debt (pre-IFRS16) materially reduced to GBP120.4m (FY19: GBP179.5m)

o Leverage reduced to 2.56x (pre-IFRS 16)

o Capital raise realised GBP52.6m gross proceeds

o Strong working capital management, overdue debt at lowest level in over 5 years

   --      Accelerated strategy implementation to better serve our customers and suppliers 

o Transformed our national operating model, delivering GBP15m annualised net cost savings and improved operational efficiency

o Expanded low cost builders merchant network, currently 31 locations and growing

o Continued technology investment including enhancements to, 22% of transactions online in Q4

o OneCall automated platform expanded to cover our full range of products and services, improving the customer experience with a faster and more efficient ordering process

   --      Strong start to FY21 

o Q1 FY21 EBITDA (pre-IFRS 16) ahead of both FY20 and FY19

o Revenue continues to improve, Q1 FY21 like for like(7) at around FY19 levels

o Leverage (pre-IFRS 16) further reduced to 2.1x as at 3(rd) April 2021, targeting FY21 exit rate below 2.0x

o Reached agreement to surrender 95% of the 134 closed branches, minimal ongoing liability

o Sale of Laois completed April 2021 for EUR11.2 million, reinvestment into additional capex for core Tool Hire business

o Strategy delivering, well positioned to capitalise on market opportunities.

Steve Ashmore, Chief Executive Officer, said:

"HSS has delivered a resilient performance in a year of unprecedented disruption. The onset of the pandemic had a significant impact across our markets but decisive action to preserve cash and adapt our business supported a strong recovery in the second half of the year with EBITDA ahead of 2019 levels in the final quarter.

During the course of the year, we took the decision to accelerate the implementation of our strategy. By increasing our focus on digital platforms, closing 134 of our branches, and partnering with builders merchants, we have been able to maintain national coverage while significantly reducing fixed costs. We are grateful for the overwhelming shareholder support for our strategy and in October successfully completed a GBP53m capital raise, further strengthening our balance sheet.

This significant progress has been possible due to the hard work and dedication of our colleagues who have shown outstanding commitment during a uniquely challenging year. Our people are the heart of our business and our most important asset and I would like to thank them for their hard work.

We have had an encouraging start to 2021, with EBITDA in the first quarter ahead of 2019 and 2020 levels. We are well positioned to capitalise on market opportunities as we continue to build on our differentiated commercial proposition to create the most advanced, customer-centric offer in the tool hire marketplace."


1) Results for FY20 and FY19 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 26 December 2020 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).

6) In adopting IFRS16 the Group has applied the cumulative catch-up ("modified") transition method. On this basis FY19 has not been restated to reflect the standard

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



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

Notes to editors

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

For further information, please contact:

 HSS Hire Group plc                       Tel: 020 3757 9248 (on 29 
                                           April 2021) 
 Steve Ashmore, Chief Executive Officer   Thereafter, please email: 
 Paul Quested, Chief Financial Officer 
 Greig Thomas, Head of Group Finance 
 Teneo                                 Tel: 07557 491 860 
 Tom Davies                            Tel: 07703 330 269 
  Charles Armitstead 
 Numis Securities (Nominated Adviser   Tel: 020 7260 1000 
  and Broker) 
 Stuart Skinner 
  George Price 

Chairman's Statement

2020 has demonstrated the resilience of our Group and the value of our digital transformation to customers and suppliers. We responded exceptionally well to COVID-19 whilst continuing the excellent execution of our strategic plan. The acceleration of our strategy has put the foundations in place for our transformation into a digitally-led, agile leader in the equipment services market.

Accelerating our strategy

Dear shareholder,

We have made considerable progress in delivering our strategy during 2020 despite the challenging market conditions. The Group has delivered a resilient performance, both operationally and financially, taking fast, decisive action in response to COVID-19 thereby ensuring the safety of our colleagues, customers, suppliers and other stakeholders as well as protecting the Group's liquidity.

The onset of the pandemic in March 2020 and the subsequent national lockdown significantly impacted performance as our business, customers and suppliers adapted to working in the new environment. By leveraging our rapidly evolving technology platform we were able to adapt our operating model, including the introduction of low-contact Click-and-Collect capability, and maintain customer service through our national Customer Distribution Centres and OneCall rehire business. Revenues recovered to 94% of FY19 levels by Q4 FY20. Combined with cost action, this has meant that Adjusted EBITDA has remained positive throughout 2020, improving throughout the year from the low point of April 2020.

During 2020 preserving liquidity has been a key focus. Multiple actions were taken across the business including deferring capital expenditure, working with landlords to agree rent holidays and taking advantage of Government job retention schemes. I am pleased that these actions have strengthened the Group's liquidity position.

We have also continued to execute against the strategic priorities we launched in December 2017. During 2020 we invested further in our technology platform and restructured our network allowing us to continue providing national coverage with a significantly lower and more flexible cost base. I am pleased with the progress made implementing our strategy and believe that these changes will further optimise our network efficiency, improve customer service and ultimately enhance shareholder value.

The Board was delighted by the strong support of our shareholders for the Group's strategy during the capital raise which completed in December 2020. GBP52.6m of gross proceeds were raised enabling a reduction in net debt (a key element of our Delever the Group strategic priority) and further investment in our technology platforms and hire fleet to support the Tool Hire business.

Sector opportunity

The UK hire industry is large (GBP4bn), but still highly fragmented and the players relatively homogeneous. Most companies have struggled to differentiate their offering and embrace new technologies, providing a significant opportunity for HSS to take a lead. I am confident that the digital transformation programme taking place at HSS will deliver clear advantages for the Group, its customers, colleagues, suppliers and investors alike.

Delivering our strategy

I am pleased to report that, despite the backdrop of COVID-19, material progress has been made against all our strategic priorities with significant changes implemented to create the foundations to transform our colleague, customer and supplier experiences.

Our digital transformation continued with the upgrade of and the launch of HSS Pro POS, a single online platform that enables every colleague to offer the full range of the Group's services to customers. This platform represents the evolution of our existing OneCall integrated system. We will continue to invest in our technology in 2021 as we deliver what I believe to be a very exciting roadmap.

Since the start of the first national lockdown, the Group has successfully trialled alternative sales models, including sales colleagues working remotely and partnership concessions with regional builders merchant chains.

The success of these trials, combined with the acceleration of customer behaviour towards the use of our digital platforms in sales and fulfilment channels, has demonstrated that there is a lower cost, more agile business model for rental. This was evidenced by the Group returning to revenue of over 90% of FY19 levels at the end of September with just 20% of the branch network open.

Consequently, the Group permanently closed 134 of its 234 locations, saving cGBP15m per annum. Working with our property restructuring partners, we have now successfully surrendered or agreed to surrender 95% of these sites.

We now have market-leading technology platforms supported by a national agile distribution network and extensive rehire business, enabling us to transform to a digitally-led agile equipment services provider which we believe will deliver superior returns.

Our results

FY20 performance has been heavily impacted by COVID-19. After a solid first quarter, the first national lockdown resulted in a weaker second quarter; however the business remained resilient and proactive measures enabled us to return to 94% of prior year revenue through Q4 FY20.

Total revenue for the year declined 17.7% with our Rental segment down 21.0% and Services showing more resilience down 3.3% like-for-like (after excluding the loss of Services revenue associated with a change to one managed services contract), having benefited from complementary revenue streams such as PPE sales. Through effective cost management segment margins were maintained.

Adjusted EBITDA (pre-IFRS 16) for the year at GBP47.0m, whilst a 26.4% decline year on year, benefited from the decisive management actions taken by the Group in response to the pandemic which have enabled margins to be maintained at 17.4% (2019: 19.5%). Adjusted EBITA (pre-IFRS 16) was GBP16.7m with margin at 6.2%.

Working capital management has been exceptional during FY20 with overdue debt reducing by GBP3.0m since last year. This, combined with the liquidity preservation actions in response to COVID-19 and gross proceeds from the recent capital raise (GBP52.6m), mean net debt (pre-IFRS16) has reduced to GBP120.4m (2019: GBP179.5m) and liquidity headroom (cash and undrawn revolving credit/overdraft facility) has increased to GBP103.6m as at 26 December 2020 from GBP45.9m in FY19. Group net debt leverage (pre-IFRS16 basis) was 2.6x, down from last year (2019: 2.8x), and the lowest level since the Group listed in 2015, an achievement all the more significant given the backdrop of COVID-19.

Capital expenditure was reduced in the financial year, and tightly managed to match the lower sales volume. We continue to use our insight tools, ensuring that investment is targeted on products with high demand and margins. Consequently ROCE (pre-IFRS16) remained healthy at 15.2% (2019: 20.8%).

Our results, including the impact of IFRS 16, are discussed in more detail in the Financial Review.

Our Board and management team

The Board aspires to lead by example and practice the HSS values: Make it: Safe, Happen, Better and Together.

I want to thank all Directors for their individual contributions, determination and increased governance which helped the Group calmly navigate through another year of change for our business against the backdrop of a global pandemic.


I reported last year that we were taking steps to implement the changes to corporate governance reflected in the 2018 Code and reinforce the work we were already doing. Since then, the Company has moved markets and, with its shares admitted to trading on AIM in January 2021, the Board has decided to adopt the QCA Corporate Governance Code, in line with many other AIM companies. We are reporting this year under the 2018 Code and from FY21 onwards will report under the QCA Corporate Governance Code. More detail on this, including our efforts to date around stakeholder engagement, can be found in the Corporate Governance section and throughout the Strategic Report.

Our people

The strength of our culture shone through this year and I am proud to be able to represent HSS. The way the Group responded in such a resilient manner to the challenges of the COVID-19 pandemic as well as accelerating many aspects of our strategy is a testament to the dedication, skills, can-do attitude and adaptability of our colleagues. This strong resonance with our culture, purpose and values has been evidenced by further improvement in our colleague engagement score in the 2020 survey. On behalf of the Board, I would like to take this opportunity to thank everyone for all of their extraordinary efforts during 2020.


Our primary responsibility is always to ensure the safety of HSS colleagues, customers, suppliers and other stakeholders, and never more so than in the current climate. To this end the Board remains fully committed to providing a safe and secure environment for all, monitoring and supporting senior management's plans including the implementation of COVID-19 safe practices. The processes and procedures in place have been appropriately recognised with the Group becoming ISO 45001 (Occupational Health and Safety) accredited during 2020.

Pleasingly, the progress has been translated well into results with another material reduction in the number of RIDDORs (incidents reported under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013) with only 2 reported in FY20 (FY19: 11). This remains an ongoing focus.

The Board is also active in ensuring that the business operates with transparency and integrity, delivering a sound economic performance, whilst paying close attention to reducing our impact on the environment, and that we are contributing in a positive way to the local communities in which we operate.


The Board is committed to delivering our strategic priorities, and after careful consideration of the performance of the Group during the year, believes it is in the best interests of the shareholders of the Group to not pay a final dividend in respect of 2020. The Board will re-evaluate this position once the net debt leverage ratio falls below 2.5x.

Looking ahead

Our business has demonstrated significant resilience in 2020, maintaining high customer service levels despite challenging conditions. Our strategic investment in technology is meeting changing customer needs and providing a high level of differentiation in a competitive marketplace. Combined with our more agile, lower cost national operating model and strengthened balance sheet, we believe the Group is well positioned to take advantage of recovering trading conditions as they occur and deliver enhanced returns for our shareholders.

I am delighted with the Group's performance at the start of 2021. Despite being in a national lockdown, revenue has continued to recover towards FY19 levels. Adjusted EBITDA (pre-IFRS16 basis) for Q1 FY21 is ahead of the comparable periods for FY19 and FY20.

We are well placed to benefit as restrictions are relaxed in the coming months.

Disposal of Laois Hire

To continue our strategic focus on the tool hire business we announced after the balance sheet date the sale of Laois, our Irish large plant hire business, to Briggs Equipment Ireland limited. The Laois business has made an excellent contribution to the Group over recent years and I wish our former colleagues every success for the future. As part of the disposal we have entered into a commercial agreement with Briggs to ensure we continue to provide our Irish customers with their large plant requirements.

Alan Peterson OBE


Chief Executive Officer's Strategic Review

I am pleased to report a resilient performance and good strategic progress despite the challenging market conditions in 2020. We took decisive action throughout the year, immediately reacting to lockdown to protect colleagues and customers, whilst offering continuity of supply, before accelerating our strategy, transforming our operating model and removing significant fixed costs. We have continued to invest in our technology platforms to drive digital adoption, and this, together with our new agile operating model, sets us up very well to differentiate ourselves in the market.

Resilient business, accelerating strategy

2020 was a year of both challenge and opportunity. I am pleased to report that the business responded quickly and decisively to the challenges presented by COVID-19 in the first half of the year, and then took advantage of the opportunities presented as the market recovered in the second half, accelerating the delivery of our strategy.

The excellent progress made can be attributed to four key factors:

1. People. Our colleagues really excelled this year, exemplifying our cultural values: Make it: Safe, Happen, Better and Together. I am very proud of the way they adapted to new working practices, stayed safe and continued to deliver exceptional customer service in challenging conditions.

2. Technology. Our technology platform put us in a great position, allowing customers to switch to digital channels in April and enabling our launch of Click-and-Collect in May. Technology also supported home working for all office-based colleagues in March.

3. Resilient Business Model. Our national network of Customer Distribution Centres allowed us to continue to offer high levels of customer service on critical projects during the initial lockdown. Our substantial Services division, in particular OneCall, provided a valuable source of equipment to customers who were facing supply chain challenges.

4. Strong Governance. It is testament to the governance we have in place that the Board, Executive Team and senior leadership teams have been able to calmly navigate the Group through the year, particularly during the rapidly changing environment we found ourselves in during Q2.

Our business exists to equip our customers with the tools, training and information required so they can safely and efficiently build, maintain and operate the UK and Ireland's infrastructure and services. Our customers are responsible for schools, hospitals, housing, offices, factories, roads, retail, hospitality and many other important elements of our infrastructure. It is therefore critical that we offer consistently good service, never more so than during the pandemic.

Our Services business, which has a vast supply chain, is a convenient source of equipment for customers wanting a one-stop shop for all their equipment needs. This year we sourced significant amounts of personal protective equipment, welfare units and cleaning equipment as our customers adapted to new working practices on site.

Overview of the year

During the first quarter of 2020 we traded in line with our expectations and made progress on several strategic initiatives. We continued to invest in our technology platforms and to drive customers to our digital channels. In our pursuit of leaner operating models, we set up several builders merchant concessions and removed some excess distribution capacity.

By February we were putting in place additional plans in response to the increasing threat of COVID-19. We equipped office-based colleagues with the technology to work from home, trialling this in early March. In our branches we introduced social distancing measures including new signage, barriers and screens. We also identified high-risk colleagues and encouraged shielding, and from a very early stage we increased colleague communications.

Trading was largely unaffected until the Government announcement of a national lockdown on 23 March. At this point we immediately closed all of our branches. We kept open our network of Customer Distribution Centres, so that we could continue servicing critical projects, but we stopped serving cash customers for safety reasons.

We relaxed this in May alongside the launch of our low-contact Click-and-Collect service.

Whilst some activity continued in April, many construction sites were initially closed and demand fell significantly. Revenues initially fell to 50% of prior year levels, with varying performance across divisions and geographies. Our rehire business was particularly resilient, as was our heating, ventilation and cooling business All Seasons Hire.

In response to the fall in revenue we focused on maximising liquidity. We preserved colleagues' roles using the Government's Job Retention Scheme, furloughing 60% of colleagues at peak and agreed a tapered series of salary reductions from Board level through to managers. Tax support was also utilised, deferring PAYE and VAT payments (all of which were settled before the financial year end), and obtaining business rates relief for our branch network. We worked with landlords, negotiating rent holidays and our lenders supported us with repayment deferrals. Discretionary spend was significantly reduced, as was capital expenditure to reflect weaker demand. In addition, our debt collection team was strengthened to ensure strong working capital management.

These actions allowed us to increase liquidity to over GBP68m by June and maintain a significant amount of headroom against our debt covenants during this critical period..

The role of technology

Our technology platform, which has seen significant investment over the last two years, served us really well during the pandemic. The home working we introduced in March was enabled in part by the Brenda technology introduced to the OneCall business in 2019. The Customer App launched in April 2019, and the enhancements made over the last two years to our website, helped address a surge in demand for online ordering, which in May exceeded 40% of all orders. Our technology also made possible the launch of Click-and-Collect, as well as

contact-free deliveries and collections    . 

Colleagues living our values

I said it at the outset, but it is worth repeating; our colleagues made an incredible contribution to our success this year in the face of unprecedented challenges. I cannot thank them enough for the dedication and determination they demonstrated.

They MADE IT SAFE, adapting to new working practices and using the additional protective equipment provided.

They MADE IT HAPPEN, offering continuity of service for our customers working on critical projects during lockdown.

They MADE IT BETTER, launching our Click-and-Collect service in May and continuing to enhance customers' online experience.

And they MADE IT TOGETHER, supporting each other during difficult times and maximising cross-selling opportunities.

I am very proud of our colleagues and our culture, and was delighted to see the improvements in engagement scores in our recent colleague survey, which has been achieved despite a period of significant challenge and change. Colleague participation was at its highest since we began these surveys in 2016, with 84% of colleagues completing the survey. Our engagement score was also at its highest, at 75%, from 72% in 2019, and significantly above the industry average in the UK of 61%. I am also delighted to report a record reduction in RIDDORS and our highest ever levels of safety observations.

Accelerating our strategy

In my Strategic Review in last year's Annual Report I highlighted our desire to drive e-channel adoption, to continue digitising our business and to optimise our go-to-market proposition, becoming more agile. COVID-19 accelerated a change in customer behaviour and allowed us to prove an alternative operating model with significantly fewer branches.

During April and May customers shifted to our digital channels, utilising our website and Customer App technology. They also shifted towards delivery rather than collection. These shifts in behaviour accelerated a long-term trend away from branch-based customer interactions.

As demand returned in May and June, we resisted the temptation to open up our branch network and instead began trialling remote sales teams. Sales colleagues returned from furlough, but worked from home, responding to customer enquiries and raising orders. This worked extremely well and by September we saw revenue return to 90% of prior year levels with the majority of our branches still closed.

During the summer we also accelerated the roll-out of HSS hire desk concessions inside regional builders merchants, something we had pioneered late in 2019. They provide additional Click-and-Collect venues at materially lower cost. These locations typically give us access to significantly higher footfall than we experience in traditional hire branches, and access to new customers. We are very pleased to finish the year with 24 builders merchants concessions, which together are typically raising 10% of daily Group contracts, and we are excited to be planning a further 26 in 2021.

The shift in customer behaviours, the successful trials of remote sales teams and builders merchant concessions, and the resultant return to 90% of pre-COVID revenues led us to announce the permanent closure of 134 branches in October 2020. Unfortunately, this was also accompanied by the loss of c300 colleagues who were made redundant as part of this restructure.

Together these changes have delivered a net fixed cost saving of cGBP15m per annum, and I am pleased to report that in the final quarter of the year we traded at 94% of 2019 levels with this new operating model. This is an incredible achievement and testament to the hard work of our colleagues.

Our technology development continued in the final quarter of the year, with the roll-out of HSS Pro POS, a web-based front end for our salesforce enabling them to place orders across our full range of products and services, quickly and easily on their mobile devices and laptops. This has been developed on the technology platform created to deliver the OneCall system, Brenda, in 2019.

With our restructure complete, revenues significantly recovered, a leaner, more agile operating model in place and advancing technology, we finished the year well placed to achieve our vision of being the digitally-led leader in our industry.

Capital raise

In the second half of the year, in pursuit of our strategic goal to reduce leverage below 2.5x, we approached our largest investors for additional capital. The successful outcome of this capital raise, GBP52.6m of gross proceeds, completed on 8 December, is testament to investors' belief in our compelling strategic plan. The capital raise has enabled us to significantly reduce net debt, and will allow us to continue investing in our technology platforms and hire fleet to support our strategy going forward.

2021 project focus

We enter 2021 with three strategic projects that will help deliver our vision:

   1.   Technology Development 
   2.   Sales Acquisition 
   3.   Standout Service 

Technology Development. We continue to develop the Brenda technology, striving for quicker response times, higher conversion rates, better service and improved margins. In 2021 we plan to roll-out the technology to the procurement teams of our larger customers, providing them with direct online access to our services. We also intend to integrate the technology with our website, providing smaller customers with instant access to our entire offering.

Sales Acquisition. We are very pleased with the performance of our remote sales teams and builders merchant concessions, but both models are still in their infancy. We believe there is much more scope to optimise their performance, improve sales acquisition and ultimately take market share. This project will fully leverage our new operating model, allowing us to grow the business while minimising fixed cost.

Standout Service. There remains an opportunity in our sector to differentiate on service, by offering outstanding reliability, delivering and collecting at the agreed time. Our technology platform now allows us to introduce enhanced scheduling and route optimisation functionality which will be the focus of our operations teams in 2021.

Our market

The equipment hire market in the UK is large, cGBP4bn, and fragmented with approximately 1,000 small independent hire companies. It is attractive because it covers a wide range of equipment and a diverse set of end-markets. We believe there is still a lack of differentiation amongst the leading players, particularly when it comes to digital adoption. Our investment in technology, combined with our transition to a digitally-led and more agile business model, will set us apart going forward.

Whilst COVID-19 had a significant impact on trading in 2020, the current trading environment appears strong with limited impact from the Government's third national lockdown. The construction sector appears much more resilient this time with companies far better prepared with COVID-19 working practices, virus testing and personal protection now well established. With the Government's plans to relax restrictions in the coming months, we see further strengthening of demand, and whatever the short term brings us, our new operating model is well placed to adapt and take advantage.

To summarise, I believe the business is in great shape to deliver on our strategy and our performance framework. We are well positioned with a more agile cost base, a superior, digitally-led proposition and a strengthened balance sheet, allowing us to continue achieving our strategic goals and differentiating in this fragmented market. We retain our vision of being the market-leading digitally-led brand for equipment services.

On 6th April 2021 we sold Laois Hire, our Irish large plant rental business, to Briggs Equipment Ireland Limited for EUR11.2m. This disposal is consistent with our strategy to focus on the core Tool Hire business. As part of the transaction, HSS entered into a commercial agreement with Briggs to ensure we continue to provide our Irish customers with their large plant requirements. As the disposal occurred after 26th December 2020 it has been treated as a non-adjusting post balance sheet event.

Steve Ashmore

Chief Executive Officer

Financial Review

Decisive action, balance sheet strengthened

Financial highlights - pre and post IFRS16(1,2)

                                              2020          2020            pre-IFRS16 v. 
                             GBPm         reported    pre-IFRS16    2019             2019 
---------------------------  ---------  ----------  ------------  ------  --------------- 
Revenue                      Rental          180.8         180.8   229.0          (21.0)% 
 Services                                     89.1          89.1    99.0          (10.0)% 
 -------------------------------------  ----------  ------------  ------  --------------- 
 Group                                       269.9         269.9   328.0          (17.7)% 
 -------------------------------------  ----------  ------------  ------  --------------- 
Contribution(3)              Rental          122.9         122.0   155.5          (21.5)% 
 Services                                     12.6          12.6    15.5          (18.7)% 
 -------------------------------------  ----------  ------------  ------  --------------- 
 Group                                       135.5         134.6   171.0          (21.3)% 
 -------------------------------------  ----------  ------------  ------  --------------- 
Adjusted EBITDA(4)                            69.4          47.0    63.9          (26.4)% 
--------------------------------------  ----------  ------------  ------  --------------- 
Adjusted EBITA(4)                             19.8          16.7    26.5          (37.0)% 
--------------------------------------  ----------  ------------  ------  --------------- 
Operating Profit/(Loss)(4)                     1.5         (3.5)    16.8           (20.3) 
--------------------------------------  ----------  ------------  ------  --------------- 

1 The Group adopted IFRS16 Leases in 2020 and chose the modified retrospective approach under which prior year figures are not restated. The reported results for FY20 are therefore not comparable directly to the prior year. Commentary within this review considers pre- and post-IFRS16 results where relevant to aid comparability. An explanation of the adoption and impact of IFRS16 on results is provided in note 2.

2 2019 results are for continuing operations

3 Contribution is defined as revenue less cost of sales (excluding depreciation and exceptional items), distribution costs and directly attributable costs (for each segment).

4 These measures are not reported on a segmental basis because branch and selling costs, central costs and exceptional items (non-finance) are allocated centrally rather than to each reportable segment.


FY20 was an extraordinarily demanding year for the business as we responded to COVID-19. Unsurprisingly the financial results have been heavily impacted by the pandemic, however the resilience demonstrated by each and every colleague to respond to the challenge, maintain customer service and accelerate strategy delivery has been truly exceptional.

Following the announcement of the first national lockdown in March 2020, demand fell significantly with revenue, at its lowest point, 50% of prior year levels. Decisive action was taken to preserve cash including reducing fleet capital expenditure, temporary reductions in Board and Management salaries, utilising the Government job retention scheme, securing rates relief and grants, agreeing rent holidays with a number of our landlords, a significant reduction in discretionary spend and the deferral of PAYE and VAT payments (although all tax deferrals were settled prior to the financial year end). Additional focus and resource was placed on working capital management; I am pleased to say this resulted in a 20% reduction in overdue debt taking it to the lowest level in my tenure with HSS.

During the year we accelerated our strategy execution, continuing to invest in the technology roadmap and progressing to a lower fixed-cost, more agile operating model, resulting in circa GBP15m of annualised cost savings. This involved the permanent closure of 134 branches. As at the date of this report we have surrendered or reached agreement to surrender 95% of related leases, limiting onerous lease liabilities going forward.

In December, shareholders demonstrated their support for the business and our strategy by investing GBP52.6m via the placing of new shares in the market. After fees, net proceeds were GBP50.8m (see note 15). This positive endorsement materially reduced the Group's net debt and strengthened the balance sheet.

The combination of the actions noted above ensured that the Group delivered positive adjusted EBITDA throughout the year with an improving trend as revenue recovered to close to 100% of FY19 levels, improved liquidity headroom to GBP103.6m (FY19: GBP45.9m), reduced net debt leverage pre-IFRS16 to 2.6x (FY19: 2.8x) and ensured that financial covenant tests were passed every quarter.

While we continue to monitor the COVID-19 situation and respond appropriately, I remain confident that the strategic changes made for our customers and to our operating model put the Group in a strong position to face the challenges and create future shareholder value. This is evident in our strong start to FY21 where adjusted EBITDA pre-IFRS 16 for Q1 is above both FY20 and FY19.


Group revenue declined by 17.7% to GBP269.9m (FY19: GBP328.0m). Q1 was in line with management expectations until the first national lockdown in late March 2020 after which trading was heavily impacted by COVID-19. Revenue dropped as low as 50% of prior year in Q2 before recovering to 94% by Q4.

Group revenue growth is one of our KPIs as, combined with estimates of market size and growth rates, it provides us with a measure of our market share.

Segmental performance

Rental and related revenues

Our Rental revenues were significantly impacted by COVID-19, declining by 21.0% to GBP180.8m (FY19: GBP229.0m) and accounted for 67.0% of Revenue (FY19: 69.8%).

While we scaled back capital investment we continued to invest where customer demand was strong. Following the decision to accelerate our strategy, which included rolling out HSS Pro POS and other technology to sales colleagues and streamlining the operating model with the permanent closure of 134 branches, we have been pleased to see Rental and related revenue recover as the year progressed. Rental and related revenues is one of our KPIs.

Contribution, defined as revenue less cost of sales (excluding depreciation and exceptional items), distribution costs and directly attributable costs, of GBP122.0m excluding a GBP0.9m benefit on the adoption of IFRS16 (FY19: GBP155.5m) was down 21.5% broadly in line with revenue, but benefiting from GBP2.7m of COVID-19 support (see other operating income below).


Services revenues decreased on a like-for-like basis by 3.3% to GBP89.1m (FY19: GBP99.0m), accounting for 33.0% (FY19: 30.2%) of Group revenues. This was principally due to the resilience demonstrated in our HSS OneCall business which reacted quickly to support customer demand on critical projects following the first national lockdown, with the entire team able to move immediately to remote working, a benefit of our investments in technology. Meanwhile our HSS Training business also reacted quickly, switching to online delivery of classes. The business has since recovered very well.

Contribution from Services fell by 18.7% to GBP12.6m (FY19: GBP15.5m), including GBP0.7m of COVID-19 grant income but higher than the reported revenue growth rate, reflecting the impact of fixed costs and mix on an unprecedented drop in overall demand due to COVID-19.


Our cost analysis set out below is on a reported basis and therefore includes exceptional costs, the most significant of which are associated with our strategy acceleration.

Our cost of sales reduced by 12.9% to GBP130.4m from GBP149.7m, mainly reflecting reduced sales volume and lower depreciation following scaled back capital expenditure.

Distribution costs reduced to GBP28.1m (2019: GBP33.2m) reflecting reduced operations during the lockdown but also the full year benefit of cost actions taken in prior years.

Administrative expenses were reduced by GBP7.1m, of which GBP4.9m was due to IFRS16 adoption with the balance being driven by cost action including the reduction in the branch network in Q4. Included within administrative expenses is GBP12.9m of exceptional items (2019: GBP3.8m) - refer to the exceptional items section of this review for more detail.

Adjusted EBITDA and Adjusted EBITA

Our Adjusted EBITDA pre-IFRS16 for 2020 was 26.4% lower at GBP47.0m (2019: GBP63.9m) driven by the impact of COVID-19 on revenues, offset partially by grant income and cost savings noted above. IFRS16 resulted in GBP22.4m of additional EBITDA due to lease costs previously reflected in EBITDA now reported as depreciation and interest. As a result, the Group's Adjusted EBITDA margin pre-IFRS16 for FY20 was 17.4% (FY19: 19.5%). Adjusted EBITDA and margin pre-IFRS16 are included in our KPIs.

Our Adjusted EBITA pre IFRS16 was GBP16.7m (FY19: GBP26.5m), a 37.0% decline with reduced depreciation following careful management of fleet to match demand. Adjusted EBITA margin pre-IFRS16 decreased by 1.9pp to 6.2% (FY19: 8.1%).

Adjusted EBITA pre-IFRS16 and EBITA margin pre-IFRS16 are included in our KPIs.

Other operating income

The Group benefited from government grant income of GBP9.8m as a result of participating in the UK and Irish governments' furlough programmes. GBP0.6m of grants for UK rates were also received. Support has not been taken in 2021 and so it is expected that this income will not recur. We also received GBP1.2m of insurance proceeds following a successful claim under our business interruption policy, with a further GBP1.2m received following the year-end. The remaining GBP0.2m (2019: GBP0.5m) reflects income received from the sub-letting of unutilised space across our network.

Operating profit

Our operating profit decreased from GBP16.8m in 2019 to GBP1.5m in 2020, driven by the impacts described above but also including a GBP5.0m benefit from adoption of IFRS16.

Exceptional items

We have incurred exceptional expenditure in FY20, with the majority of this being the result of our strategy acceleration, part of which meant the permanent closure of 134 branches and, unfortunately, the redundancy of around 300 colleagues.

The property related costs totalled GBP7.4m with GBP9.5m of this being impairment of right of use assets associated with closed branches. Additional non-lease onerous provisions associated with the properties (e.g. rates and utilities) were established totalling GBP2.1m. A gain of GBP4.0m was recognised on disposal of leases in the year. A net credit of GBP0.3m was generated from the impairment, reassessment or disposal of dilapidations liabilities. Following the emergence of the pandemic the Group sought to agree rent concessions from landlords - GBP0.3m of these were recognised as exceptional because they were related to branches that were non-trading.

GBP4.6m of non-property cost associated with the network restructure was also recorded. Of this, GBP3.0m related to the impairment or disposal of property plant and equipment and surplus resale stock arising from the branch closures. GBP1.6m was expensed on redundancy and associated costs.

GBP0.9m of costs were incurred related to the Capital Raise and preparation for the transfer of the Group's listing to AIM, and a downward revision of the rate used to discount the onerous contract provision related to NDEC liability resulted in a GBP0.6m charge.

Profit on disposal of UK Platforms (2019 only)

The disposal of UK Platforms resulted in a profit on disposal of GBP14.8m in 2019. Proceeds were used to partially repay the senior finance facility resulting in the accelerated amortisation of related debt issue costs of GBP1.9m in 2019.

Finance costs

Net finance expense increased to GBP25.1m (FY19: GBP22.6m). The increase is mainly driven by the adoption of IFRS16 which resulted in GBP4.3m of additional interest, but offset by the GBP1.9m accelerated amortisation of debt costs in the prior year.


The Group has an immaterial net tax charge compared with a charge of GBP0.4m in FY19. The Group made an overall loss for tax purposes in the UK, and the key components of the current year charge are Irish tax payable of GBP0.1m and a release of deferred tax liabilities held in respect of fixed assets.

Reported and adjusted earnings per share

Our basic and diluted reported loss per share increased to a loss of 12.02p (FY19: loss of 3.66p) due to COVID-19's impact on trading, partially offset by the increase in average shares following the capital raise in December.

Our basic adjusted earnings per share, being profit from continuing operations before amortisation and exceptional costs less tax at the prevailing rate of corporation tax divided by the weighted average number of shares, moved from earnings of 2.76p in FY19 to a loss of 2.03p in FY20. Our diluted adjusted earnings per share, calculated in the same manner as basic adjusted earnings per share but with the weighted average number of shares increased to reflect Long-Term Incentive Plan (LTIP) and Sharesave options, was a loss of 2.03p (FY19: earnings of 2.31p). These reflect the decline in Adjusted profit before tax in FY20 compared with FY19. Adjusted EPS (diluted) is one of our KPIs.

Capital expenditure

Additions to intangible assets and property, plant and equipment in the year were GBP24.8m (2019: GBP33.7m) on a pre-IFRS16 basis. The majority was invested to support our Rental business with GBP19.0m (2019: GBP27.1m) spent on hire fleet, albeit scaled back following the emergence of COVID-19. GBP3.3m was spent on developing software assets as the Group continues its investment in technology (FY19: GBP2.3m). The remaining GBP2.5m was spent on property, plant and equipment (2019: GBP4.3m).

IFRS16 saw the introduction of right of use assets with GBP9.2m of additions in the year, of which GBP4.1m relate to leases that would previously have been categorised as operating leases.

Return on capital employed

Our ROCE pre-IFRS16 for FY20 was 15.2% compared with 20.8% for FY19. ROCE is calculated as Adjusted EBITA from continuing operations divided by the total of average total assets (excluding intangible assets and cash) less average current liabilities (excluding current debt items). Adjusted EBITA declined by GBP9.8m (2019: GBP4.4m increase) whilst the average capital employed by the Group decreased by 14.5% from the level calculated at the end of 2019, reflecting depreciation and asset disposals being higher than capital expenditure and the significant reduction in trade receivables.

On a reported basis for FY20 ROCE is 10.7%. ROCE is one of our KPIs.

Trade and other receivables

There has been a reduction in Gross contract assets of 7.0%. This is the result of reduced trading through the year and a very strong focus on collections which has meant overdue debt has reduced by GBP3.0m and to the lowest level in several years.

Despite the focus on collections the economic outlook is far from certain given the ongoing pandemic and we have increased the level at which we provide versus the historic loss rate. This reflects our expectation that insolvencies will increase following the removal of government furlough support. The situation will be kept under review moving forward.


The onerous contract related to exiting arrangements with Unipart, which was established in 2017, saw GBP3.3m utilisation in the year and additions of GBP0.6m after revising the discount rate. This leaves GBP17.0m as the closing provision to be utilised over the remaining five years of the contract.

Following IFRS16, onerous lease provisions have been eliminated and now form part of Lease liability (see Leverage and net debt). However, the Group has onerous property cost provisions for non-lease costs (discussed earlier in the Financial review).

Adjustments made to the Group's dilapidations provision, which has decreased from GBP16.2m in 2019 to GBP12.7m in FY20, are also largely related to the reduction in the property footprint described earlier.

Cash generated from operations

Net cash generated from operating activities was GBP34.1m for FY20, an increase of GBP11.9m. IFRS16 accounts for an increase of GBP16.7m with operating lease payments now recorded as finance lease liability. Excluding this, a reduction of GBP4.8m was driven by trading offset by liquidity preservation actions described earlier.

Leverage and net debt

Net debt pre-IFRS16 (stated gross of issue costs) decreased by GBP59.1m to GBP120.4m (FY19: GBP179.5m). This reflects the steps taken to preserve liquidity following the emergence of COVID-19 including the completion of a Capital Raise in December, which generated net proceeds of GBP50.8m. As at 26 December 2020 the Group had access to GBP118.3m (2019: GBP59.3m) of combined liquidity from available cash and undrawn committed borrowing facilities. Our leverage (pre-IFRS16), calculated as net debt divided by Adjusted EBITDA, decreased from 2.8x in FY19 to 2.6x at the end of FY20. This was primarily due to the efforts made to preserve liquidity already outlined offset by the decline in adjusted EBITA. Leverage or Net Debt Ratio is one of our KPIs.

Net debt as reported is GBP194.6m with GBP74.3m of additional lease liabilities arising from IFRS16 reported at the year-end date.

Use of alternative performance measures to assess and monitor performance

In addition to the statutory figures reported in accordance with IFRS, we use alternative performance measures (APMs) to assess the Group's ongoing performance. The main APMs we use are adjusted EBITDA, adjusted EBITA, adjusted profit before tax, adjusted earnings per share, leverage (or Net Debt Ratio) and ROCE, which, with the exception of adjusted profit before tax, are included in our KPIs.

We believe that Adjusted EBITDA, a widely used and reported metric amongst listed and private companies, presents a 'cleaner' view of the Group's operating profitability in each year by excluding exceptional costs, finance costs, tax charges and non-cash accounting elements such as depreciation and amortisation. This metric is used to calculate any annual bonuses payable to Executive Directors.

Additionally, analysts and investors assess our operating profitability using the adjusted EBITA metric, which treats depreciation charges as an operating cost to reflect the capital-intensive nature of the sector in which we operate.

Analysts and investors also assess our earnings per share using an adjusted earnings per share measure, calculated by dividing an adjusted profit after tax by the weighted average number of shares in issue over the period. This approach aims to show the implied underlying earnings of the Group. The adjusted profit before tax figure comprises the reported loss before tax of the business with amortisation and exceptional costs added back. This amount is then reduced by an illustrative tax charge at the prevailing rate of corporation tax (currently 19%) to give an adjusted profit after tax. Adjusted earnings per share is used as a performance metric for the vesting of 2017 market value options and 2019 LTIP awards.

The calculation of Adjusted EBITDA and Adjusted EBITA can vary between companies, and a reconciliation of Adjusted EBITDA and Adjusted EBITA to operating profit/(loss) and adjusted profit before tax to loss before tax is provided on the face of the Group's income statement. A reconciliation of reported loss per share to adjusted earnings per share is provided in the full Financial Statements.

In accordance with broader market practice we comment on the amount of net debt in the business by reference to leverage (or Net Debt Ratio), which is the multiple of our Adjusted EBITDA that the net debt represents. This metric is also used in the calculation of any annual bonuses payable to Executive Directors.

We use ROCE to assess the return (the Adjusted EBITA) that we generate on the average tangible fixed assets and average working capital employed in each year. We exclude all elements of net debt from this calculation. This metric is also used as a performance metric for the vesting of 2019 LTIP awards.

IFRS16 and APMs

In this, the year of IFRS16 adoption, the Group has made use of additional APMs, being measures reported excluding the impact of IFRS16. These are clearly identified as such in the measure description and performance commentary. The Group believes that such additional measures are helpful to readers of the Annual Report and Accounts, particularly because under the method of adoption chosen by the Group comparators are not restated. This makes like-for-like performance analysis difficult without the use of these measures. The Group does not expect to use the additional measures in future years since from the FY21 report results will be directly comparable.

Post-balance sheet event - sale of Laois Hire

As noted in the Chairman's introduction and CEO statement, we announced on the 7th April the sale of Laois, our Irish large plant hire business, to Briggs Equipment Ireland limited for EUR11.2m of which EUR0.5m is deferred until completion accounts are finalised in Q2 2021. The sale is in continuation of our strategy to focus on the core Tool Hire business.

Paul Quested

Chief Financial Officer

Principal Risks and Uncertainties

Managing risk

The Group has risk management and internal control processes which identify, assess and manage the risks likely to affect the achievement of strategic priorities and performance objectives.


The Board sets the strategic priorities and relevant KPIs for the Group, monitors performance against these measures and establishes the risk appetite.

Overall responsibility for the principal risks lies with the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), with specific mitigating actions and controls owned by senior management. The Group risk register is maintained by the Risk and Assurance Director and is collectively reviewed in detail by the Executive Management Team (EMT) on a quarterly basis with changes to the risk landscape, assessment and mitigating actions agreed.


Risks are identified through a variety of sources, both external, to ensure that developing risk themes are considered, and from within the Group. This process is focused on those risks which, if they occurred, would have a material financial or reputational impact on the Group.


Management identifies the controls in place for each risk and assesses the impact and likelihood of the risk occurring, taking into account the effect of these controls, being the residual risk. This assessment is compared with the Group's risk appetite to determine whether further mitigating actions are required.


A risk-based internal audit programme is in place to ensure that assurance activity is targeted at key risk areas. Risk-based assurance work is then reported to the Audit Committee on a quarterly basis for review. In addition, the Risk and Assurance Director reports to the EMT and the senior management team on a monthly basis to review the findings of risk-based assurance activity and investigation, provided by the internal audit and Health, Safety, Environment and Quality (HSEQ) teams.


In 2020 the COVID-19 pandemic has had a material impact on the risks across the Group, principally macroeconomic conditions and Financial. Immediate steps were taken to ensure the safety of our colleagues and customers, ranging from home working to the introduction of low-contact Click-and-Collect capability, all supported by clear, risk assessed procedures and policies. Decisive action was also taken to preserve cash. Combined with the capital raise completed in December 2020, these actions resulted in increased liquidity and materially strengthened the Group balance sheet. The EMT continues to regularly monitor the evolving COVID-19 situation with appropriate mitigating actions taken as required.

Principal risks and strategy

The Board has carried out a robust assessment of the principal financial and operating risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity, based on its three strategic priorities:

-- Delever the business (control cost)

-- Transform the Tool Hire business (increase profit)

-- Strengthen our commercial proposition (growth)

These risks, how they have changed and how they are mitigated are shown in the table that follows.


   =     Unchanged 
   +     Increased 
   -      Decreased 
Key risks                               Description and impact                  Mitigation 
--------------------------------------  --------------------------------------  -------------------------------------- 
Macroeconomic conditions                An economic downturn in the UK and      The Group focuses on the 'fit-out, 
 Risk change                            Ireland may adversely affect the        maintain and operate' markets, which 
 =                                      Group's revenue and operating           are less cyclical, 
                                        results by decreasing the demand for    less discretionary and have a larger 
                                        its services and the prices it may      proportion of recurring, spend than 
                                        charge.                                 the new-build construction 
                                        The ongoing COVID-19 pandemic and       sector. While the Group is not 
                                        resultant restrictions have a material  isolated from the construction sector, 
                                        adverse impact on                       it focuses on the non-construction 
                                        demand and therefore financial          portion of the market, with specific 
                                        performance.                            exposure in the facilities management, 
                                                                                retail, commercial 
                                                                                fit-out, property, utilities and 
                                                                                waste, infrastructure and energy 
                                                                                services markets. 
                                                                                Significant activity has been 
                                                                                undertaken in 2020 to mitigate the 
                                                                                impact of COVID-19, including 
                                                                                the deferral of capital expenditure 
                                                                                and utilising the Government's Job 
                                                                                Retention Scheme. This 
                                                                                also included accelerating the Group's 
                                                                                digital strategy and the optimisation 
                                                                                of the operating 
                                                                                network to a leaner, more agile cost 
                                                                                model through the closure of 134 
                                                                                physical locations and 
                                                                                transition to virtual branches. These 
                                                                                strategic changes mitigate any 
                                                                                downside in future demand. 
                                                                                We continue to monitor and model 
                                                                                economic performance, assessing 
                                                                                whether the business needs 
                                                                                to take further action from that of 
                                                                                2020. This is reviewed regularly by 
                                                                                the EMT. 
--------------------------------------  --------------------------------------  -------------------------------------- 
Competitor challenge                    The Group's industry is highly          The Group's implementation of its 
 Risk change                            competitive, and competition may        digitally-led operating model has 
 =                                      increase. The equipment rental          reduced annual fixed costs 
                                        industry is highly fragmented, with     by GBP15m. This, combined with the 
                                        competitors ranging from national       economies of scale derived from being 
                                        equipment rental companies              a national player, 
                                        to smaller multi-regional companies     allows the Group to be highly 
                                        and small, independent businesses       competitive. 
                                        operating in a limited                  The Group's national presence (through 
                                        number of locations. Competition in     Customer Distribution Centres, 
                                        the market could lead to excess         branches and partnerships 
                                        capacity and resultant                  with regional builders merchants), 
                                        pricing pressure.                       effective distribution service model 
                                                                                and well-maintained 
                                                                                fleet provide high levels of customer 
                                                                                Through its Services business, the 
                                                                                Group provides customers with access 
                                                                                to a significantly 
                                                                                wider range of products and 
                                                                                complementary services such as 
                                                                                training courses. 
                                                                                A key strategic priority is to 
                                                                                strengthen the Group's commercial 
                                                                                proposition, differentiating 
                                                                                in the market by developing the 
                                                                                Digital and Services business offer. 
                                                                                To date the technology 
                                                                                roadmap to support this has included 
                                                                                the upgrade of, development of 
                                                                                the fully integrated 
                                                                                Customer App and enhancement of the 
                                                                                OneCall automated platform. All these 
                                                                                initiatives have 
                                                                                been implemented in line with planned 
                                                                                timescales and the Group's governance 
                                                                                process. Increased 
                                                                                technology investment is planned in 
                                                                                2021, utilising proceeds from the 
                                                                                Group's recent capital 
                                                                                A central trading team is in place to 
                                                                                monitor and manage changes in price, 
                                                                                providing controls 
                                                                                to ensure effective management. New 
                                                                                technology roll-out in 2021 will 
                                                                                provide further control. 
--------------------------------------  --------------------------------------  -------------------------------------- 
Strategy execution                      Failure to successfully implement the   A clearly defined and communicated 
 Risk change                            Group's strategic plans could lead to   strategic plan has been established 
 =                                      lower than forecast                     with appropriate performance 
                                        financial performance in terms of       metrics and key performance 
                                        revenue growth and cost savings.        indicators. 
                                                                                Prioritised projects have been 
                                                                                identified to deliver the strategic 
                                                                                plan and have been appropriately 
                                                                                A clear governance structure has been 
                                                                                established, with accountabilities 
                                                                                designed to support 
                                                                                delivery on time, to quality and 
                                                                                within budget. 
                                                                                Implementation of projects is 
                                                                                monitored by the EMT with regular 
                                                                                updates, including initiative 
                                                                                specific deep dives, to the Board. 
                                                                                Throughout the pandemic investment in 
                                                                                the strategy has been maintained with 
                                                                                projects reprioritised 
                                                                                where appropriate, including the 
                                                                                implementation of digital technology 
                                                                                that supported the introduction 
                                                                                of a safe, low-contact 
                                                                                Click-and-Collect service, and the 
                                                                                telephone system upgrade which has 
                                                                                been critical in supporting home 
                                                                                working and the establishment of 
                                                                                virtual branches. The established 
                                                                                governance approach has ensured these 
                                                                                changes were implemented effectively. 
--------------------------------------  --------------------------------------  -------------------------------------- 
Customer service                        The reliable supply of safe,            The Group has clear business 
 Risk change                            good-quality and well-maintained        continuity plans to ensure continuity 
 =                                      equipment in a timely and               of supply. 
                                        cost-effective                          COVID-19 risk assessments have been 
                                        manner is critical for delivery of the  completed across all locations with 
                                        Group's customer promise.               policies and procedures 
                                        The provision of the Group's expected   implemented, including stricter 
                                        service levels depends on its ability   hygiene protocols, to reduce the risk 
                                        to efficiently                          of a virus outbreak. 
                                        transport hire fleet across the         These are reviewed frequently by both 
                                        network to ensure that it is in the     operational management and independent 
                                        right place, at the right               assurance teams 
                                        time and of the appropriate quality.    to ensure compliance. 
                                        The Group is dependent on its           Colleagues at our head office moved to 
                                        relationships with key suppliers to     home working in March 2020. This 
                                        obtain equipment and other              included our OneCall 
                                        services on acceptable terms.           business, helping minimise any 
                                        Any disruption in supply, reduced       disruption to the Services business 
                                        availability or unreliable equipment    due to absenteeism. This 
                                        can reduce potential                    way of working has continued into 
                                        revenue and drive additional operating  2021. 
                                        costs into the business. In addition,   Whilst COVID-19 had minimal impact on 
                                        a decline in                            rehire supply during 2020, the wide 
                                        the Group's customer service levels     and diverse range 
                                        could result in a loss of customers     of OneCall suppliers provides ongoing 
                                        and market share.                       flexibility to ensure continuity of 
                                        COVID-19 leads to disruption in supply  supply for customers 
                                        for our customers due to site closures  and manage the risk should one fail to 
                                        or colleague                            fulfil its obligations in the future. 
                                        absenteeism.                            We have worked closely with our 
                                        The supply chain is adversely impacted  suppliers to ensure that appropriate 
                                        with rehire suppliers unable to fulfil  spares have been available 
                                        their obligations                       throughout the pandemic and post 
                                        or by restricted access to spares       Brexit. 
                                        leading to reduced product              Extensive colleague training is 
                                        availability for our customers.         conducted to ensure that testing and 
                                                                                repair quality standards 
                                                                                continue to be maintained. 
                                                                                The Group makes every effort to 
                                                                                evaluate its counterparties prior to 
                                                                                entering into significant 
                                                                                procurement contracts and seeks to 
                                                                                maintain a range of suppliers. 
                                                                                A number of business accreditations 
                                                                                are maintained, including ISO, which 
                                                                                provides our customers 
                                                                                with confidence in the quality of the 
                                                                                services provided. 
--------------------------------------  --------------------------------------  -------------------------------------- 
Third party reliance                    A significant amount of the Group       Third parties supporting OneCall are 
 Risk change                            revenue is derived from the Services    subject to stringent procurement and 
 =                                      business (OneCall)                      service criteria 
                                        which is dependent upon the             and all contracts are subject to 
                                        performance of third party service      demanding service level agreements. 
                                        providers. If any third parties         Performance and quality 
                                        become unable or refuse to fulfil       KPIs are monitored on an ongoing 
                                        their obligations, or violate laws or   basis. 
                                        regulations, there                      The wide and diverse range of OneCall 
                                        could be a negative impact on the       suppliers provides flexibility to 
                                        Group's operations leading to an        select those who meet 
                                        adverse impact on profitability         the required service levels. 
                                        and publicity.                          There is an extensive assessment 
                                        An important element of the strategy    process before entering into a 
                                        is the expansion of the regional        relationship with a builders 
                                        builders merchant model.                merchant which requires EMT approval. 
                                        At the balance sheet date there were    Legal contracts are in place with each 
                                        24 concessions with plans to expand to  partner. Any 
                                        50 over 2021.                           concession is subject to a financial 
                                        The Group is reliant on the             business case before opening. Risk 
                                        relationship with the relevant          assessments are conducted 
                                        builders merchant and the provision     at each location with follow up audits 
                                        of service in line with HSS standards.  conducted by internal audit. 
                                                                                Performance of each location 
                                                                                is monitored and regularly reviewed 
                                                                                with the builders merchant partner. 
--------------------------------------  --------------------------------------  -------------------------------------- 
IT infrastructure                       The Group requires an agile IT system   The current IT system has been fully 
 Risk change                            that supports the delivery of its       reviewed and, following extensive due 
 =                                      strategic plan. Where                   diligence, the 
                                        this involves third party technology    Group has engaged with third party 
                                        it is critical that this is             technology providers to develop 
                                        effectively integrated into             organisational agile capacity 
                                        the Group's core systems.               ensuring that current and future IT 
                                        All Group systems need to be            systems are optimised to deliver the 
                                        appropriately resourced to support the  strategic plan. 
                                        delivery of day-to-day                  Third party specialists continue to be 
                                        business operations. Any IT system      engaged to assess the appropriateness 
                                        malfunction may affect the ability to   of IT controls, 
                                        manage its operations                   including the risk of malicious or 
                                        and distribute its hire equipment and   inadvertent security attacks. This 
                                        services to customers, affecting        includes penetration 
                                        revenue and reputation.                 testing on a regular basis to detect 
                                        An internal or external security        weakness in our IT and cyber security. 
                                        attack, the risk of which has           Any resultant 
                                        potentially increased with              actions are prioritised through the 
                                        more home working, could lead to a      Group's governance process. A detailed 
                                        loss of confidential information and    review is scheduled 
                                        disruption to the                       for 2021. 
                                        business' transactions with customers   With more colleagues home working, 
                                        and suppliers.                          improved antivirus software has been 
                                                                                introduced, and endpoint 
                                                                                detection and clean up tools have been 
                                                                                implemented to remove malware and 
                                                                                similar agents. 
                                                                                Disaster recovery tests are carried 
                                                                                out on a regular basis and appropriate 
                                                                                back-up servers 
                                                                                are in place to manage the risk of 
                                                                                primary server failure. 
                                                                                A cross-departmental Data Governance 
                                                                                Team is in place to ensure that 
                                                                                business process are, 
                                                                                and continue to be, adequate. 
--------------------------------------  --------------------------------------  -------------------------------------- 
Financial                               To deliver its strategic goals the      The Group raised gross proceeds of 
 Risk change                            Group must have access to funding at a  GBP52.6m from the capital raise 
 -                                      reasonable cost.                        completed in December 2020. 
                                        The impact of COVID-19 could lead to a  Working capital management remains a 
                                        breach of financial covenants and       clear focus with cash collection 
                                        requirement for additional              targets (which roll 
                                        liquidity due to significantly reduced  up into our net debt KPI) cascaded 
                                        demand and delays in customers          throughout the business. These are 
                                        settling their debt.                    reviewed by the EMT 
                                        In executing the Group strategy, 134    on a regular basis. Overdue debt 
                                        branches were closed in October 2020,   reduced by GBP3.0m in FY20. 
                                        some with unexpired                     The capital raise, strong working 
                                        term on the lease. Failure to           capital management and COVID-19 
                                        surrender these leases will result in   mitigating actions have 
                                        ongoing onerous liabilities             enabled a material increase in 
                                        reducing free cash flow.                liquidity headroom and ensured that 
                                        Some of the Group's customers may be    financial covenant tests 
                                        unwilling or unable to fulfil the       have been passed each quarter. 
                                        terms of their rental                   Working with property restructuring 
                                        agreements with the Group. Bad debts    specialists, to date 95% of leases 
                                        and credit losses can also arise due    related to the closed 
                                        to service issues                       branches have been surrendered or 
                                        or fraud.                               agreed to be surrendered. 
                                        Unauthorised, incorrect or fraudulent   The risk of fluctuating interest rates 
                                        payments could be made, leading to      reducing profitability has been 
                                        financial loss or                       mitigated by entering 
                                        delays in payment which could           into an interest rate cap arrangement. 
                                        adversely affect the relationship with  The Group runs extensive credit 
                                        suppliers and lead to                   checking for its account customers and 
                                        a disruption in supply.                 maintains strict credit 
                                                                                control over its diversified customer 
                                                                                base. Credit insurance is in place to 
                                                                                minimise exposure 
                                                                                to larger customer default risk. 
                                                                                The Group's investigation team 
                                                                                conducts proactive and reactive work 
                                                                                in order to minimise the 
                                                                                Group's exposure to fraud, and 
                                                                                provides ongoing training in this 
                                                                                Payments and amendments authority is 
                                                                                defined by the Group's authorisation 
                                                                                matrix with periodic 
                                                                                IA risk-based audits to ensure that 
                                                                                they are being adhered to. 
--------------------------------------  --------------------------------------  -------------------------------------- 
Inability to attract and retain         The Group needs to ensure that the      The Group regularly benchmarks market 
personnel                               appropriate human resources are in      rates and seeks to ensure a 
Risk change                             place to support the                    competitive pay and benefits 
=                                       existing and future growth of the       package. It also focuses on building 
                                        business.                               the right working environment for its 
                                        Failure to attract and retain           colleagues. Training 
                                        high-performing colleagues could        for colleagues is provided at all 
                                        adversely impact targeted financial     levels to build capability and improve 
                                        performance.                            compliance. Training 
                                        Failure of colleagues to adapt to the   is job related and behaviour focused, 
                                        new digitally-led operating model       all through blended learning. 
                                        could adversely impact                  Colleague engagement surveys are 
                                        targeted financial performance.         conducted, with actions taken as a 
                                                                                result of the feedback. 
                                                                                Integral to enabling delivery of the 
                                                                                Group's strategic goals are a series 
                                                                                of people-related 
                                                                                projects. These projects are aimed at 
                                                                                colleague development, retention and 
                                                                                engagement including 
                                                                                embedding Group values, equipping 
                                                                                individuals with the skills to succeed 
                                                                                in the new operating 
                                                                                model, targeted management 
                                                                                development, expansion of 
                                                                                apprenticeships and increased 
                                                                                at all levels. These are managed and 
                                                                                monitored through a clear governance 
--------------------------------------  --------------------------------------  -------------------------------------- 
Safety, legal and regulatory            Failure to comply with laws or          Robust governance is maintained within 
requirements                            regulation, such as the Companies Act   the Group including: a strong 
Risk change                             2006, accounting regulations,           financial structure; 
-                                       health and safety law, the Bribery Act  assurance provision from internal and 
                                        2010, Modern Slavery Act 2015,          external audit, and employment of 
                                        Criminal Finances Act                   internal specialist 
                                        2017 or General Data Protection         expertise supported by suitably 
                                        Regulation (GDPR), leading to material  qualified and experienced external 
                                        misstatement and potential              practitioners. 
                                        legal, financial and reputational       Since the introduction of GDPR, the 
                                        liabilities for non-compliance.         Group's Data Governance Team has 
                                        The Group operates in industries where  continued to meet regularly 
                                        safety is paramount for colleagues,     to review and monitor progress and 
                                        customers and the                       developments. 
                                        general public. Failure to maintain     Training and awareness programmes are 
                                        high safety standards could lead to     in place, focusing on anti-bribery, 
                                        the risk of serious                     anti-modern slavery, 
                                        injury or death.                        anti-facilitation of tax evasion and 
                                        COVID-19 has an adverse impact on       data protection legislation. 
                                        colleague health and safety. However,   Colleagues are encouraged to raise 
                                        the Group's response                    concerns through the policy, either 
                                        to COVID-19, the achievement of ISO     through their line 
                                        45001 and a reduction in accidents      manager, via any of our three 
                                        mean that the level                     whistleblowing officers (anonymously, 
                                        of risk faced is reducing.              should a colleague so 
                                                                                wish) or via 'Protect', an independent 
                                                                                charity specialising in whistleblowing 
                                                                                advisory services. 
                                                                                The Audit Committee reviews all 
                                                                                whistleblowing cases, including 
                                                                                gaining satisfaction of appropriate 
                                                                                The Group operates a clear health and 
                                                                                safety policy with ongoing risk 
                                                                                management, monitoring 
                                                                                of accidents and colleague engagement 
                                                                                overseen by the EMT and a Health and 
                                                                                Safety Forum comprising 
                                                                                senior managers. Additional assurance 
                                                                                and support is provided by a fully 
                                                                                skilled HSEQ team 
                                                                                and an internal Group investigation 
                                                                                team. This has been complemented in 
                                                                                the year with improved 
                                                                                reporting tools to make it easier to 
                                                                                log near misses and safety 
                                                                                observations. The Group is 
                                                                                ISO 45001 accredited. 
                                                                                In light of the pandemic, actions have 
                                                                                been taken to ensure colleague and 
                                                                                customer safety 
                                                                                ranging from stricter hygiene 
                                                                                procedures to the introduction of the 
                                                                                low-contact Click-and-Collect 
                                                                                service. Support is in place for 
                                                                                colleagues who need to self-isolate or 
                                                                                shield and mental 
                                                                                health programmes, including greater 
                                                                                communication, have been increased, 
                                                                                especially for those 
                                                                                remote working. 
--------------------------------------  --------------------------------------  -------------------------------------- 

Consolidated Income Statement

For the year ended 26 December 2020

                                                                Year ended         Year ended 
                                                          26 December 2020   28 December 2019 
                                                   Note            GBP000s            GBP000s 
------------------------------------------------  -----  -----------------  ----------------- 
Revenue                                               3            269,933            328,005 
Cost of sales                                                    (130,434)          (149,706) 
Gross profit                                                       139,499            178,299 
------------------------------------------------  -----  -----------------  ----------------- 
Distribution costs                                                (28,072)           (33,190) 
Administrative expenses                                          (121,743)          (128,830) 
Other operating income                                4             11,815                542 
Adjusted EBITDA                                       3             69,362             63,929 
Less: Depreciation                                10,11           (49,590)           (37,396) 
------------------------------------------------  -----  -----------------  ----------------- 
Adjusted EBITA                                                      19,772             26,533 
Less: Exceptional items (non-finance)                 5           (13,076)            (4,094) 
Less: Amortisation                                    9            (5,197)            (5,618) 
------------------------------------------------  -----  -----------------  ----------------- 
Operating profit                                                     1,499             16,821 
------------------------------------------------  -----  -----------------  ----------------- 
Finance expense                                       6           (25,065)           (22,609) 
Adjusted (loss)/profit before tax                                  (4,920)              5,806 
Less: Exceptional items (non-finance)                 5           (13,076)            (4,094) 
Less: Exceptional items (finance)                     5              (373)            (1,882) 
Less: Amortisation                                    9            (5,197)            (5,618) 
------------------------------------------------  -----  -----------------  ----------------- 
Loss before tax                                                   (23,566)            (5,788) 
------------------------------------------------  -----  -----------------  ----------------- 
Income tax charge                                     7               (15)              (436) 
------------------------------------------------  -----  -----------------  ----------------- 
Loss from continuing operations                                   (23,581)            (6,224) 
------------------------------------------------  -----  -----------------  ----------------- 
Profit on disposal of discontinued operations         5                  -             14,770 
Profit from discontinued operations, net of tax                          -                162 
------------------------------------------------  -----  -----------------  ----------------- 
(Loss)/profit for the financial period                            (23,581)              8,708 
------------------------------------------------  -----  -----------------  ----------------- 
(Loss)/profit per share (pence) 
Continuing operations 
Basic and diluted loss per share                      8            (12.02)             (3.66) 
Adjusted basic (loss)/earnings per share(1)           8             (2.03)               2.76 
Adjusted diluted (loss)/earnings per share(1)         8             (2.03)               2.31 
Continuing and discontinued operations 
Basic and diluted (loss)/earnings per share           8            (12.02)               5.12 
Adjusted basic (loss)/earnings per share(1)           8             (2.03)               2.84 
Adjusted diluted (loss)/earnings per share(1)         8             (2.03)               2.38 
------------------------------------------------  -----  -----------------  ----------------- 

1 Adjusted (loss)/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.

Consolidated Statement of Comprehensive Income

For the year ended 26 December 2020

                                                                                       Year ended         Year ended 
                                                                                 26 December 2020   28 December 2019 
                                                                                          GBP000s            GBP000s 
-----------------------------------------------------------------------------   -----------------  ----------------- 
(Loss)/profit for the financial period                                                   (23,581)              8,708 
------------------------------------------------------------------------------  -----------------  ----------------- 
Items that may be reclassified to profit or loss: 
Foreign currency translation differences arising on consolidation of foreign 
 operations                                                                                   617              (782) 
Gains/(losses) arising on cash flow hedges                                                    306              (144) 
------------------------------------------------------------------------------  -----------------  ----------------- 
Other comprehensive gain/(loss) for the period, net of tax                                    923              (926) 
------------------------------------------------------------------------------  -----------------  ----------------- 
Total comprehensive (loss)/profit for the period                                         (22,658)              7,782 
------------------------------------------------------------------------------  -----------------  ----------------- 
Attributable to owners of the Company                                                    (22,658)              7,782 
------------------------------------------------------------------------------  -----------------  ----------------- 

Consolidated Statement of Financial Position

For the year ended 26 December 2020

                                                        Year ended         Year ended 
                                                  26 December 2020   28 December 2019 
                                           Note            GBP000s            GBP000s 
-----------------------------------------  ----  -----------------  ----------------- 
Non-current assets 
Intangible assets                             9            158,498            160,378 
Property, plant and equipment                10             62,024            101,851 
Right of use assets                          11             89,839                  - 
Derivative financial instruments                                 -                 14 
-----------------------------------------  ----  -----------------  ----------------- 
                                                           310,361            262,243 
Current assets 
Inventories                                                  3,183              3,735 
Trade and other receivables                  12             75,880             88,396 
Cash                                                        97,573             22,658 
-----------------------------------------  ----  -----------------  ----------------- 
                                                           176,636            114,789 
Total assets                                               486,997            377,032 
-----------------------------------------  ----  -----------------  ----------------- 
Current liabilities 
Trade and other payables                                  (61,821)           (66,031) 
Borrowings and finance lease liabilities     13           (38,395)            (5,355) 
Provisions                                   14            (7,448)            (8,145) 
Current tax liabilities                                        (1)                  - 
-----------------------------------------  ----  -----------------  ----------------- 
                                                         (107,665)           (79,531) 
Non-current liabilities 
Borrowings and finance lease liabilities     13          (245,276)          (185,729) 
Provisions                                   14           (26,206)           (32,470) 
Deferred tax liabilities                                     (260)              (341) 
-----------------------------------------  ----  -----------------  ----------------- 
                                                         (271,742)          (218,540) 
Total liabilities                                        (379,407)          (298,071) 
-----------------------------------------  ----  -----------------  ----------------- 
Net assets                                                 107,590             78,961 
-----------------------------------------  ----  -----------------  ----------------- 
Share capital                          15     6,965     1,702 
Share premium                          15    45,580         - 
Warrant reserves                              2,694     2,694 
Merger reserve                               97,780    97,780 
Foreign exchange translation reserve             15     (602) 
Cash flow hedging reserve                         -     (306) 
Retained deficit                           (45,444)  (22,307) 
-------------------------------------      --------  -------- 
Total equity                                107,590    78,961 
-------------------------------------      --------  -------- 

The Financial Statements were approved and authorised for issue by the Board of Directors on 28 April 2021 and were signed on its behalf by:

P Quested


28 April 2021

Consolidated Statement of Changes in Equity

For the year ended 26 December 2020

                                                                        exchange     Cash flow      Retained 
                        Share         Share       Warrant    Merger  translation       hedging     earnings/     Total 
                      capital       premium       reserve   reserve      reserve       reserve     (deficit)    equity 
                      GBP000s       GBP000s       GBP000s   GBP000s      GBP000s       GBP000s       GBP000s   GBP000s 
---------------  ------------  ------------  ------------  --------  -----------  ------------  ------------  -------- 
At 29 December 
 2019 - as 
 presented              1,702             -         2,694    97,780        (602)         (306)      (22,307)    78,961 
 of IFRS 16 
 (note 2)                   -             -             -         -            -             -           (9)       (9) 
At 29 December 
 2019 - as 
 restated               1,702             -         2,694    97,780        (602)         (306)      (22,316)    78,952 
---------------  ------------  ------------  ------------  --------  -----------  ------------  ------------  -------- 
Loss for the 
 period                     -             -             -         -            -             -      (23,581)  (23,581) 
 arising on 
 of foreign 
 operations                 -             -             -         -          617             -             -       617 
Hedging of 
 instruments                -             -             -         -            -           306             -       306 
---------------  ------------  ------------  ------------  --------  -----------  ------------  ------------  -------- 
 for the period             -             -             -         -          617           306      (23,581)  (22,658) 
---------------  ------------  ------------  ------------  --------  -----------  ------------  ------------  -------- 
with owners 
directly in 
Share issue             5,263        45,580             -         -            -             -             -    50,843 
 payment charge             -             -             -         -            -             -           453       453 
---------------  ------------  ------------  ------------  --------  -----------  ------------  ------------  -------- 
At 26 December 
 2020                   6,965        45,580         2,694    97,780           15             -      (45,444)   107,590 
---------------  ------------  ------------  ------------  --------  -----------  ------------  ------------  -------- 
                                                                       exchange    Cash flow 
                      Share        Share      Warrant       Merger  translation      hedging     Retained        Total 
                    capital      premium      reserve      reserve      reserve      reserve     earnings       equity 
                    GBP000s      GBP000s      GBP000s      GBP000s      GBP000s      GBP000s      GBP000s      GBP000s 
--------------  -----------  -----------  -----------  -----------  -----------  -----------  -----------  ----------- 
At 30 December 
 2018                 1,702            -        2,694       97,780          180        (162)     (31,728)       70,466 
loss for the 
Profit for the 
 period                   -            -            -            -            -            -        8,708        8,708 
 arising on 
 of foreign 
 operations               -            -            -            -        (782)            -            -        (782) 
Hedging of 
 instruments              -            -            -            -            -        (144)            -        (144) 
--------------  -----------  -----------  -----------  -----------  -----------  -----------  -----------  ----------- 
 for the 
 period                   -            -            -            -        (782)        (144)        8,708        7,782 
--------------  -----------  -----------  -----------  -----------  -----------  -----------  -----------  ----------- 
with owners 
directly in 
 charge                   -            -            -            -            -            -          713          713 
--------------  -----------  -----------  -----------  -----------  -----------  -----------  -----------  ----------- 
At 28 December 
 2019                 1,702            -        2,694       97,780        (602)        (306)     (22,307)       78,961 
--------------  -----------  -----------  -----------  -----------  -----------  -----------  -----------  ----------- 

Consolidated Statement of Cash Flows

For the year ended 26 December 2020

                                                                                         Year ended         Year ended 
                                                                                   26 December 2020   28 December 2019 
                                                                            Note            GBP000s            GBP000s 
--------------------------------------------------------------------------  ----  -----------------  ----------------- 
(Loss)/profit after income tax                                                             (23,581)              8,708 
Adjustments for: 
- Tax                                                                                            15                436 
- Profit on disposal of discontinued operations                                                   -           (14,770) 
- Amortisation                                                                                5,197              5,525 
- Depreciation                                                                               44,709             28,750 
- Accelerated depreciation relating to hire stock customer losses and hire 
 stock write-offs                                                                             4,727              8,257 
- Impairment of property, plant and equipment and right of use assets                        11,557                363 
- Disposal of sub-lease                                                                          59                  - 
- Disposal of intangible assets                                                                   -                 96 
- Loss on disposal of property, plant and equipment and right of use 
 assets                                                                                       2,110                576 
- Lease disposals                                                                           (4,012)                  - 
- Rent concessions                                                                            (996)                  - 
- Share-based payment charge                                                                    453                714 
- Foreign exchange loss/(gains) on operating activities                                         535              (474) 
- Finance expense                                                              6             25,065             22,609 
Changes in working capital (excluding the effects of disposals and 
exchange differences on 
- Inventories                                                                                   552                589 
- Trade and other receivables                                                                 9,845              5,863 
- Trade and other payables                                                                  (1,780)            (4,362) 
- Provisions                                                                                (5,181)            (3,718) 
--------------------------------------------------------------------------  ----  -----------------  ----------------- 
Net cash flows from operating activities before changes in hire equipment                    69,274             59,162 
Purchase of hire equipment                                                    10           (13,673)           (18,972) 
--------------------------------------------------------------------------  ----  -----------------  ----------------- 
Cash generated from operating activities                                                     55,601             40,190 
Net interest paid                                                                          (22,052)           (18,498) 
Income tax repaid                                                                               552                490 
--------------------------------------------------------------------------  ----  -----------------  ----------------- 
Net cash generated from operating activities                                                 34,101             22,182 
Cash flows from investing activities 
Proceeds on disposal of business, net of cash disposed of                                         -             45,618 
Purchases of non-hire property, plant, equipment and software               9,10            (5,814)            (6,670) 
--------------------------------------------------------------------------  ----  -----------------  ----------------- 
Net cash (used in)/generated from investing activities                                      (5,814)             38,948 
Cash flows from financing activities 
Proceeds from capital raise (net of share issue costs paid)   15    52,335         - 
Proceeds from borrowings (third parties)                      13    17,200         - 
Repayment of borrowings                                                  -  (51,018) 
Capital element of lease liability payments                       (23,263)         - 
Capital element of net investment in sublease receipts                 356         - 
Capital element of finance lease payments                                -   (7,361) 
Net cash received/(paid) from financing activities                  46,628  (58,379) 
Net increase in cash                                                74,915     2,751 
Cash at the start of the year                                       22,658    19,907 
Cash at the end of the year                                         97,573    22,658 
------------------------------------------------------------      --------  -------- 
   1.   Basis of preparation 

The Group's financial information has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and on a basis consistent with those policies set out in our audited financial statements for the year ended 26 December 2020 (which will be available at investor-relations/financial-results). These policies are consistent with those shown in the audited financial statements for the year ended 28 December 2019 with the exception of IFRS 16 Leases which the Group adopted in the year ended 26 December 2020. The financial statements were approved by the Board on 28 April 2021.

The financial information for the year ended 26 December 2020 and the year ended 28 December 2019 does not constitute the company's statutory accounts for those years. Statutory accounts for the year ended 28 December 2019 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 26 December 2020 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

The auditors' reports on the accounts for the years ended 26 December 2020 and the year ended 28 December 2019 were unqualified and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. The auditors' report on the accounts for the year ended 26 December 2020 did not draw attention to any matters by way of emphasis but the report for the year ended 28 December 2019 included a reference to a material uncertainty related to going concern as follows:

We draw attention to note 1e in the financial statements, which indicates that the Group and Parent Company may breach their bank covenants and may require further liquidity due to the possible effects of the ongoing COVID-19 pandemic. As stated in note 1e, these events or conditions, along with other matters as set out in note 1e, indicate that a material uncertainty exists that may cast significant doubt on the Group and Parent Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

The Annual Report and Accounts for the year ended 26 December 2020 will be posted to shareholders in early May 2021.

Going concern

At 26 December 2020, the Group's financing arrangements consisted of fully drawn senior finance and revolving credit facilities of GBP199.2m, an undrawn overdraft facility of GBP6.0m and finance lines to fund hire fleet capital expenditure, of which GBP14.7m had not been utilised. Both the senior finance and revolving credit facilities are subject to a net debt leverage covenant test each quarter. At the financial year end the Group had 36% headroom against this covenant. Subsequent to year end the Group repaid GBP15m of the senior finance facility and the GBP17.2m RCF. Cash at 26 December 2020 was GBP97.6m (28 December 2019: GBP22.7m).

The Directors have prepared a going concern assessment covering the 12 month period from the date of signing of the Financial Statements, which confirms that the Group is capable of continuing to operate within its existing facilities and can meet its covenant tests during that period. The key assumptions on which the projections are based include an assessment of the impact of future market conditions on projected revenues and the capital investment required to support that level of revenue. The Group has considered the impact of continued economic uncertainty resulting from COVID-19 as part of its assessment.

The Group's base case used for the going concern assessment was the Board approved budget and three year model. The budget assumes a continued recovery of revenue during 2021 albeit a conservative one in that it will not reach pre-COVID levels. The Group remains comfortably within covenant tests and maintains sufficient liquidity throughout the period modelled. In addition, the Board has considered various downside scenarios including a 'reverse stress test' case to assess the level of revenue (and ultimately EBITDA) loss the Group could sustain without breaching covenants or requiring additional liquidity should there be further COVID-19 lockdowns later in 2021. The reverse stress test scenario updates the base case for actual performance for the 14 weeks to 3 April 2021 and assumes revenue is reduced so that, expressed as a percentage of 2019 levels, it is 72% in Q4 2021 and 85% in Q1 2022, mirroring the revenue decline experienced by the Group during the first COVID-19 lockdown from April to September 2020. The only mitigation applied is a cGBP3m reduction in capital expenditure during the same period.

In this largely unmitigated 'reverse stress test' scenario the Group maintains significant liquidity and meets its covenant requirements. The Directors consider this scenario extremely unlikely to occur given that it is worse than the industry's current worst case expectation and the revenue profile seen in the second and third national lockdowns was more than 90% of 2019 levels. The Group has introduced new operating procedures, launched Click-and-Collect and changed its operating model, all of which have reduced physical contact with customers and allowed trading to continue. Similarly, customers now have established operating procedures that allow their operations to continue and Government has shown support for continuity in the construction sector.

Whilst the Directors consider that there is a degree of subjectivity involved in their assumptions, taking into account the adequacy of the Group's debt facilities, current and future developments and the principal risks and uncertainties and, after making appropriate enquiries, they 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 its Consolidated Financial Statements.

2. New accounting standards, accounting standards not yet effective and changes in accounting policy

Implementation of IFRS 16 Leases

IFRS 16 Leases is mandatory for periods beginning on or after 1 January 2019 and accordingly the Group has adopted the standard from 29 December 2019 (the date of initial adoption or DIA). The Group worked with third party specialists to develop IFRS 16 policies along with processes and systems to manage their successful implementation.

Adoption of IFRS 16 has had a significant impact on the consolidated income statement and consolidated statement of financial position as set out in the tables below. There is no impact on the Group's underlying cash flows.

Impact of IFRS 16 on the consolidated income statement for the year ended 26 December 2020

                                                 Year ended 26 December 2020 
                                                                  IFRS 16 
                                        Pre adoption of IFRS 16    impact  As reported 
                                                        GBP000s   GBP000s      GBP000s 
--------------------------------------  -----------------------  --------  ----------- 
Revenue                                                 269,933         -      269,933 
Cost of sales                                         (130,851)       417    (130,434) 
--------------------------------------  -----------------------  --------  ----------- 
Gross profit                                            139,082       417      139,499 
--------------------------------------  -----------------------  --------  ----------- 
Distribution costs                                     (28,637)       565     (28,072) 
Administrative expenses                               (126,683)     4,940    (121,743) 
Other operating income                                   12,726     (911)       11,815 
Adjusted EBITDA                                          46,977    22,385       69,362 
Less: Depreciation                                     (30,311)  (19,279)     (49,590) 
--------------------------------------  -----------------------  --------  ----------- 
Adjusted EBITA                                           16,666     3,106       19,772 
Less: Exceptional items                                (14,981)     1,905     (13,076) 
Less: Amortisation                                      (5,197)         -      (5,197) 
--------------------------------------  -----------------------  --------  ----------- 
Operating (loss)/profit                                 (3,512)     5,011        1,499 
--------------------------------------  -----------------------  --------  ----------- 
Net finance expense                                    (20,798)   (4,267)     (25,065) 
Adjusted loss before tax                                (4,035)     (885)      (4,920) 
Less: Exceptional items (non-finance)                  (14,981)     1,905     (13,076) 
Less: Exceptional items (finance)                          (97)     (276)        (373) 
Less: Amortisation                                      (5,197)         -      (5,197) 
--------------------------------------  -----------------------  --------  ----------- 
(Loss)/profit before tax                               (24,310)       744     (23,566) 
--------------------------------------  -----------------------  --------  ----------- 

The adoption has resulted in additional operating profit of GBP5.0m compared to the loss before tax that would have been reported under IAS 17. Administrative expenses reduced by GBP4.9m, the result of discounting lease liabilities with the discount unwind being reflected in net finance expense. Cost of sales and distribution costs reduced for the same reason (largely on vehicle leases). Other operating income decreases following adoption, with sub-let income reduced to only discount unwind on the net investment on sub-leases deemed to be finance leases.

The increase in net finance expense is driven by discounting as noted above, with the front-end loading of the discount resulting in an additional GBP4.3m of interest versus the equivalent operating lease cost that would have been recognised under IAS 17.

Adjusted EBITDA, which the Group reports as an additional performance measure, is significantly increased (by GBP22.4m) under IFRS 16 as a result of operating lease costs being replaced by depreciation and interest. Under the adoption method chosen by the Group (see below) comparators are not restated.

Impact of IFRS 16 on the consolidated statement of financial position at DIA

                                                  29 December 2019 
---------------------------------  ---------------------------------------------- 
                                                             IFRS 16 
                                   Pre adoption of IFRS 16    impact  As reported 
                                                   GBP000s   GBP000s      GBP000s 
---------------------------------  -----------------------  --------  ----------- 
Intangible assets                                  160,378         -      160,378 
Property, plant and equipment                      101,851  (29,312)       72,539 
Right of use assets                                      -   109,531      109,531 
Derivative financial instruments                        14         -           14 
Current assets                                     114,789   (1,476)      113,313 
Lease liabilities                                        -  (99,309)     (99,309) 
Finance leases                                    (16,583)    16,583            - 
Other liabilities                                (240,532)     1,752    (238,780) 
Provisions                                        (40,615)     2,222     (38,393) 
Deferred tax liabilities                             (341)         -        (341) 
Net assets                                          78,961       (9)       78,952 
---------------------------------  -----------------------  --------  ----------- 

Right of use (ROU) assets totalling GBP109.5m were created on transition with GBP29.3m of the total being a reclassification of hire stock assets held under finance lease from property, plant and equipment. Lease liabilities of GBP99.3m were created with GBP16.6m being related to the transfer of finance lease liabilities. The difference between lease liability and asset is the impact of adjusting the ROU asset for prepayments, accruals and onerous lease provisions. A net investment in sub-leases, representing where the Group has sub-let excess space or properties under a finance lease, was created totalling GBP1.9m.

Reconciliation of transition date commitments under non-cancellable operating leases to opening lease liability

The table below shows a reconciliation from the total operating lease commitment as disclosed at 29 December 2019 to the total lease liabilities recognised in the accounts immediately after transition:

                                                                                            29 December 2019 
------------------------------------------------------------------------------------------  ---------------- 
Operating lease commitments at 29 December 2019 (restated)                                            76,569 
Finance leases for property, plant and equipment transferred from finance lease liability             16,583 
Impact of discounting at the incremental borrowing rates as at 29 December 2019                     (17,969) 
Payments due for periods beyond break clauses where the Group expects not to exercise the 
 break                                                                                                24,126 
------------------------------------------------------------------------------------------  ---------------- 
Total lease liabilities recognised on 29 December 2019                                                99,309 
------------------------------------------------------------------------------------------  ---------------- 

Capitalisation of lease contracts

Under IFRS 16, the Group capitalises the ROU of all its qualifying property leases, vehicle leases, hire and other equipment leases previously held under operating leases.

The Group has applied the cumulative catch-up (modified) transition method. Under this option the Group has applied the option that calculates the ROU asset as equal to the lease liability for leases previously accounted for as operating leases. The comparative information has not been restated and continues to be reported under IAS 17 and IFRIC 4. The Group has recognised a ROU asset representing its right to use the underlying asset and a corresponding lease liability representing its obligation to make lease payments. The ROU asset is adjusted for any prepaid or accrued lease payments relating to that lease that were recognised in the statement of financial position immediately before the DIA. The Company has taken the practical expedient available to rely on its assessment of whether a lease is onerous by applying IAS 37 immediately before the date of initial application, reducing the carrying value of its ROU asset at the DIA.

Operating lease expenses are replaced by a depreciation of ROU assets expense and an interest expense as the discount applied to the Group's lease liabilities unwinds.

Lease term

The lease term will correspond to the duration of the contracts signed except in cases where the Group is reasonably certain that it will exercise contractual termination or extension options.

For property, the Group's policy is to use the full lease term (as opposed to first exercisable break date) for trading branches, distribution centres and offices unless there is an intention to exit the property early as at the reporting date. Had lease liabilities been calculated to the first break rather than lease end date the transition liability would have reduced by around GBP24m. For properties which are occupied beyond lease end date, liabilities are calculated based on specific extension clauses if they exist. Where they do not, the Group reviews leases at least twice annually and extends for a maximum of six months provided notice has not been served by the Group or relevant landlord. The increase in liabilities as a result of this judgement was less than GBP1m on transition.

Given the tenures and values involved, any similar judgements applied to vehicle and equipment leases are immaterial.

Discount rates

The Group has assessed that the interest rate implicit in the lease is not readily determinable for leases other than hire fleet financed via the lines agreed for that purpose with the Group's lenders. The Group therefore uses an incremental borrowing rate for all other leases, taking advantage of the expedient available to apply a single rate to leases of similar characteristics.

The incremental borrowing rate in use at transition and for new leases in the period is 3.5% for vehicles and equipment and between 5.1% and 6.0% for property leases. The discount rate selected for non-property leases is the rate at which the Group expects to finance assets of a similar class. For property, rates are those at which the Group might expect to borrow if acquiring an interest in property, over five- and ten-year tenures. These rates are adjusted upwards for properties considered to be higher risk because of geographic region or age.

Lessor accounting

The Group acts as intermediate lessor on vacant properties it sub-lets to assist in covering costs until the lease term ends or a break clause can be triggered. The Group has assessed whether the sub-lease is a finance or operating lease by reference to the ROU asset arising from the head lease. A sublease whose term covers substantially all of the remaining economic life of the head lease is accounted for as a finance lease; otherwise it is accounted for as an operating lease. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.

Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group's net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group's net investment outstanding in respect of the leases.

IFRS 16 and COVID-19 concessions

The Group has taken advantage of the practical expedient available under the amendment to IFRS 16. As such the Group assessed if rent concessions that occurred as a direct consequence of the COVID-19 pandemic meet the following conditions:

- the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;

- any reduction in lease payments affects only payments originally due on or before 30 June 2021; and

- there is no substantive change to other terms and conditions of the lease.

Where these conditions were met the change in the lease payments were not accounted for as a lease modification. The amount of qualifying rent concessions recorded in the income statement amounted to GBP1.3m.

Government grants

The Group received grant income as a result of Government support in response to the COVID-19 pandemic. Government grant income is reported within other operating income. The income is recognised when there is a reasonable assurance that the relevant entity or the wider Group will comply with the conditions attached to the grant and that the grants will be received. The grant income is recognised in the same period as any related costs for which the grants are intended to compensate.

Holiday pay accrual

As a result of the COVID-19 pandemic an exception to HR policy has been made, permitting colleagues to carry over an amount of unused annual leave into 2021. The Directors consider that the likelihood of any holidays not being utilised or paid out is low. The Group has accrued for the related salaries, employer's national insurance and pension costs.

Other standards effective for the first time in the year

IFRIC 23 Uncertainty over Income Tax Treatments: The standard is effective for annual reporting periods beginning on or after 1 January 2019. The Company has considered the application of IFRIC 23 and concluded that its income tax filings do not contain any uncertain positions requiring disclosure.

Standards effective in future periods

The Company is currently assessing the impact of the following accounting standards and amendments:

IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material);

IAS 1 Presentation of Financial Statements (Amendment - Classification of Liabilities as Current or Non-Current);

IFRS 3 Business Combinations (Amendment - Definition of Business);

Conceptual Framework for Financial Reporting (Amendments to IFRS 3);

Revised Conceptual Framework for Financial Reporting;

IBOR Reform and its Effects on Financial Reporting - Phase 1 & 2;

Annual Improvements to IFRS: 2018-2020 Cycle;

IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendment - Onerous Contracts - Cost of Fulfilling a Contract);

IAS 16 Property, Plant and Equipment (Amendment - Proceeds before Intended Use); and

IFRS 17 Insurance Contracts.

   3.   Segment reporting 

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

-- Rental and related revenue; and

-- Services.

Rental and related revenue comprises the rental income earned from owned tools and equipment, including powered access, power generation 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's 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. During the year the Group received GBP9.8m in grant income (2019: GBPnil) as a result of participation in the UK COVID-19 Job Retention Scheme and a similar scheme operated in the Republic of Ireland. Income has been allocated to segments based on where the underlying costs were incurred. This resulted in GBP2.7m being allocated to Rental and related contribution, GBP0.7m to Services contribution, GBP5.9m to branch and selling costs, GBP0.3m to central costs, and GBP0.2m to exceptional items. GBP0.6m of grant income related to property rates was allocated to branch and selling costs.

All segment revenue, operating profit, assets and liabilities are attributable to the principal activity of the Group being the provision of tool and equipment hire and related services in, and to customers in, the United Kingdom and the Republic of Ireland. Revenue from one customer was 10% or more of the Group revenue in the year (2019: one).

                                                    Year ended 26 December 2020 
--------------------------------------  ---------------------------------------------------- 
                                         (and related revenue)  Services   Central     Total 
                                                       GBP000s   GBP000s   GBP000s   GBP000s 
--------------------------------------  ----------------------  --------  --------  -------- 
Total revenue from external customers                  180,843    89,090         -   269,933 
--------------------------------------  ----------------------  --------  --------  -------- 
Contribution                                           122,914    12,629         -   135,543 
Branch and selling costs                                                  (44,394)  (44,394) 
Central costs                                                             (21,787)  (21,787) 
Adjusted EBITDA                                                                       69,362 
Less: Exceptional items                                                   (13,076)  (13,076) 
Less: Depreciation and amortisation                   (27,910)     (600)  (26,277)  (54,787) 
Operating profit                                                                       1,499 
Net finance expenses                                                                (25,065) 
Loss before tax                                                                     (23,566) 
Income tax                                                                              (15) 
Loss after tax                                                                      (23,581) 
--------------------------------------  ----------------------  --------  --------  -------- 
                                                 Year ended 26 December 2020 
----------------------------------  ------------------------------------------------------ 
                                     (and related revenue)  Services    Central      Total 
                                                   GBP000s   GBP000s    GBP000s    GBP000s 
----------------------------------  ----------------------  --------  ---------  --------- 
Additions to non-current assets 
Property, plant and equipment                       14,099        59      2,286     16,444 
Right of use assets                                  4,880         -      4,357      9,237 
Intangibles                                            979       861      1,477      3,317 
----------------------------------  ----------------------  --------  ---------  --------- 
Non-current assets net book value 
Property, plant and equipment                       44,078       203     17,743     62,024 
Right of use assets                                 26,976       212     62,651     89,839 
Intangibles                                        153,804     1,246      3,448    158,498 
Current assets                                                          176,636    176,636 
Current liabilities                                                   (107,665)  (107,665) 
Non-current liabilities                                               (271,742)  (271,742) 
----------------------------------  ----------------------  --------  ---------  --------- 
                                                                           Year ended 28 December 2019 
-----------------------------------------------------------------  ------------------------------------------- 
                                                                    (and related 
                                                                        revenue)  Services   Central     Total 
                                                                         GBP000s   GBP000s   GBP000s   GBP000s 
-----------------------------------------------------------------  -------------  --------  --------  -------- 
Total revenue from external customers from continuing operations         228,973    99,032         -   328,005 
-----------------------------------------------------------------  -------------  --------  --------  -------- 
Contribution                                                             155,490    15,518         -   171,008 
Branch and selling costs                                                                    (83,974)  (83,974) 
Central costs                                                                               (23,105)  (23,105) 
Adjusted EBITDA                                                                                         63,929 
Less: Exceptional items                                                                      (4,094)   (4,094) 
Less: Depreciation and amortisation                                     (32,817)     (217)   (9,980)  (43,014) 
Operating profit                                                                                        16,821 
Net finance expenses                                                                                  (22,609) 
Loss before tax from continuing operations                                                             (5,788) 
Income tax                                                                                               (436) 
Profit on disposal of discontinued operations                                                           14,770 
Profit for the year from discontinued operations                                                           162 
Profit after tax and discontinued operations                                                             8,708 
-----------------------------------------------------------------  -------------  --------  --------  -------- 
                                             Year ended 28 December 2019 
----------------------------------  --------------------------------------------- 
                                     (and related 
                                         revenue)  Services    Central      Total 
                                          GBP000s   GBP000s    GBP000s    GBP000s 
----------------------------------  -------------  --------  ---------  --------- 
Additions to non-current assets 
Property, plant and equipment              27,097        29      4,277     31,403 
Intangibles                                     -       878      1,461      2,339 
----------------------------------  -------------  --------  ---------  --------- 
Non-current assets net book value 
Property, plant and equipment              76,794       187     24,870    101,851 
Intangibles                               155,624       785      3,969    160,378 
Unallocated corporate assets 
Financial instruments                                               14         14 
Current assets                                                 114,789    114,789 
Current liabilities                                           (79,531)   (79,531) 
Non-current liabilities                                      (218,540)  (218,540) 
----------------------------------  -------------  --------  ---------  --------- 
   4.   Other operating income 
                                                          Year ended 26 December 2020  Year ended 28 December 2019 
                                                                              GBP000s                      GBP000s 
--------------------------------------------------------  ---------------------------  --------------------------- 
COVID-19 Government grant income: job retention schemes                         9,783                            - 
COVID-19 Government grant income: rates grants                                    595                            - 
Insurance proceeds (net of fees)                                                1,216                            - 
Sub-lease rental and service charge income                                        221                          542 
--------------------------------------------------------  ---------------------------  --------------------------- 
                                                                               11,815                          542 
--------------------------------------------------------  ---------------------------  --------------------------- 

During the year the Group received GBP9.8m (2019: nil) as a result of participation in the UK COVID-19 Job Retention Scheme and a similar scheme in the Republic of Ireland; COVID-19 rates grants of GBP0.6m (2019: nil); and GBP1.2m from a COVID-19 business interruption insurance claim.

Sub-let rental income of GBP0.2m (GBP0.5m) was received on vacant properties which are not onerous.

   5.   Exceptional items 

Items of income or expense have been shown as exceptional either because of their size or nature or because they are outside the normal course of business. As a result, during the year ended 26 December 2020 the Group has recognised exceptional items as follows:

                                       Included in      Included in      Included in 
                      Included in     distribution   administrative  other operating      Included in    Year ended 26 
                    cost of sales            costs         expenses           income  finance expense    December 2020 
                          GBP000s          GBP000s          GBP000s          GBP000s          GBP000s          GBP000s 
----------------  ---------------  ---------------  ---------------  ---------------  ---------------  --------------- 
Onerous property 
 costs                          -                -            7,058             (21)              373            7,410 
 restructure                  305               27            4,434            (152)                -            4,614 
Capital Raise 
 and AIM listing                -                -              868                -                -              868 
Onerous contract                -                -              557                -                -              557 
----------------  ---------------  ---------------  ---------------  ---------------  ---------------  --------------- 
                              305               27           12,917            (173)              373           13,449 
----------------  ---------------  ---------------  ---------------  ---------------  ---------------  --------------- 

During the year ended 28 December 2019, the Group recognised exceptional costs analysed as follows:

                                                               Included in 
                                Included in     Included in          other    Included in   Included in     Year ended 
                 Included in   distribution  administrative      operating        finance  discontinued    28 December 
               cost of sales          costs        expenses         income        expense    operations           2019 
                     GBP000s        GBP000s         GBP000s        GBP000s        GBP000s       GBP000s        GBP000s 
-------------  -------------  -------------  --------------  -------------  -------------  ------------  ------------- 
 leases                    -              9           2,924           (46)              -                        2,887 
 of debt 
 issue costs               -              -               -              -          1,882             -          1,882 
 programme                17            308             519              -              -             -            844 
Impairment of 
 plant and 
 equipment                 -              -             363              -              -             -            363 
 items - 
 operations               17            317           3,806           (46)          1,882             -          5,976 
 operations                -              -               -              -              -      (14,770)       (14,770) 
-------------  -------------  -------------  --------------  -------------  -------------  ------------  ------------- 
Total                     17            317           3,806           (46)          1,882      (14,770)        (8,794) 
-------------  -------------  -------------  --------------  -------------  -------------  ------------  ------------- 

Exceptional items incurred in 2020 and 2019

Costs related to onerous properties: branch and office closures

In October the Group announced a decision to permanently close 134 stores as part of an acceleration of strategy. Since that date the Group has been working hard to agree exits from these and pre-existing dark stores. Right of use assets valuing GBP9.5m were fully impaired following the decision to close stores in October. Associated onerous property costs of GBP2.1m have been recognised, including GBP0.4m in advisory fees. Around 60 of these leases were also disposed during the year resulting in a net gain of GBP4.0m. Interest (discount unwind) of GBP0.4m on dark store liability has also been recognised through exceptional finance costs.

Dilapidations assets totalling GBP1.2m were written off as a result of the decision to close branches, following which settlements were agreed for certain properties resulting in a release of liability of GBP1.2m. Reassessment of remaining non-trading store liabilities resulted in a further release of GBP0.3m. COVID-19 rent concessions have been negotiated with landlords. GBP0.3m of the rent concession agreed has been recognised as exceptional because it related to stores that were already non-trading and previously been considered onerous.

During 2019 a distribution centre was closed with operations transferred to nearby centres resulting in an onerous lease provision of GBP2.1m. No other branches were closed; however, the decision to cease using one of the floors at the Manchester registered office resulted in an additional onerous lease provision of GBP1.0m. The remaining reduction of GBP0.2m related to the reassessment of existing dark store and onerous lease provisions.

Network restructure (excluding onerous property items)

As a result of the decision to close branches and operate a more flexible structure the Group incurred significant other, non-property costs. 300 colleagues were placed at risk of redundancy with the majority of these leaving the business on completion of consultation. GBP1.6m has been recognised in this regard. Property, plant and equipment GBP2.0m was impaired and a further GBP0.8m disposed of. Excess resale stock valued at GBP0.3 was written off.

Capital raise and AIM listing

Fees totalling GBP0.9m were recognised related to the Group's successful capital raise and preparation for its subsequent move to AIM (which completed on 14 January 2021). These costs have been classified as exceptional due to both their size and the infrequent nature of the activity. Costs that related specifically to the capital raise were deducted from the net proceeds and included in the share premium account (note 15).

Onerous contract

The discount rate applied to the Group's provision for an onerous contract related to the (closed) National Distribution and Engineering Centre (NDEC) (note 14) was reviewed in line with market conditions resulting in an addition of GBP0.6m to the onerous contract provision.

Exceptional items incurred in 2019 only

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 GBP1.9m.

Cost reduction programme

In light of headwinds that emerged in the market during 2019, the Group undertook initiatives to reduce costs. These include the closure of a centre used to refurbish hire stock and costs to exit contracts related to the operation of a cross-dock facility used to redistribute assets across the network. Internal restructuring was also carried out, resulting in GBP0.8m of total costs which include GBP0.6m redundancy costs.

Impairment of closed branch property, plant and equipment

During the year ended 28 December 2019, an impairment of GBP0.4m to property, plant and equipment was recognised related to the closed distribution centre and Manchester registered office referenced above.

Business divestiture

On 19 July 2018 the Group announced the agreement to sell UK Platforms Limited, HSS's powered access business, to Loxam. The transaction completed in 2019 and was treated as a discontinued operation.

   6.   Finance expense 
                                                                  Year ended         Year ended 
                                                            26 December 2020   28 December 2019 
                                                                     GBP000s            GBP000s 
---------------------------------------------------------  -----------------  ----------------- 
Senior finance facility                                               16,334             16,552 
Debt issue costs                                                       2,398              2,468 
Lease liabilities                                                      5,042                  - 
Finance leases                                                             -                721 
Interest unwind on discounted provisions                                 429                414 
Revolving credit facility                                                382                 37 
Interest on financial instruments                                        320                247 
Bank loans and overdrafts                                                160                288 
Exceptional accelerated amortisation of debt issue costs                   -              1,882 
---------------------------------------------------------  -----------------  ----------------- 
                                                                      25,065             22,609 
---------------------------------------------------------  -----------------  ----------------- 
   7.   Income tax charge 
   (a)   Analysis of tax charge in the year 
                                                          Year ended         Year ended 
                                                    26 December 2020   28 December 2019 
                                                             GBP000s            GBP000s 
-------------------------------------------------  -----------------  ----------------- 
Current tax charge/(credit) 
UK corporation tax on the result for the year                     79                 58 
Adjustments in respect of prior years                             17            (1,295) 
-------------------------------------------------  -----------------  ----------------- 
Total current tax charge/(credit)                                 96            (1,237) 
Deferred tax (credit)/charge for the year 
Deferred tax (credit)/charge for the year                      (646)              1,643 
Deferred tax charge impact of change in tax rate                  40                175 
Adjustments in respect of prior years                            525              (145) 
-------------------------------------------------  -----------------  ----------------- 
Total deferred tax (credit)/charge                              (81)              1,673 
-------------------------------------------------  -----------------  ----------------- 
Income tax charge                                                 15                436 
-------------------------------------------------  -----------------  ----------------- 

In 2019 the Group received refunds of tax in Ireland related to prior years totalling GBP1.3m.

(b) Factors affecting the income tax expense/(credit) in the year

The tax assessed on the loss for the year differs from the standard UK corporation rate of tax. The differences are explained below:

                                                                                         Year ended         Year ended 
                                                                                   26 December 2020   28 December 2019 
                                                                                            GBP000s            GBP000s 
--------------------------------------------------------------------------------  -----------------  ----------------- 
Loss before tax                                                                            (23,566)            (5,788) 
--------------------------------------------------------------------------------  -----------------  ----------------- 
Loss before tax multiplied by the effective standard rate of corporation tax of 
 19% (2019: 
 19%)                                                                                       (4,478)            (1,100) 
Effects of: 
Utilisation of tax losses brought forward                                                         -                (3) 
Unprovided deferred tax movements on short-term temporary differences and 
 capital allowance 
 timing differences                                                                           2,972              (609) 
Adjustments in respect of prior years                                                           542            (1,513) 
Expenses not deductible for tax purposes                                                        860                677 
Losses carried forward                                                                            -                452 
Foreign tax suffered                                                                             79                 58 
Deferred tax write-back                                                                           -              2,237 
Impact of change in tax rate                                                                     40                237 
--------------------------------------------------------------------------------  -----------------  ----------------- 
Income tax charge                                                                                15                436 
--------------------------------------------------------------------------------  -----------------  ----------------- 
   (c)   Factors that may affect future tax charge 

In the March 2021 Budget the Government announced that the 2021 Finance Bill will contain provisions for the standard rate of UK corporation tax to increase to 25% from 1 April 2023. The existing rate of 19% has been used to calculate the above deferred tax disclosures above as the 2021 Finance Bill is not yet substantively enacted.

The Group has an unrecognised deferred tax asset relating to temporary timing differences on plant and equipment, intangible assets and provisions of GBP12.8m (2019: GBP9.6m) and relating to losses of GBP13.3m (2019: GBP10.4m).

These potential deferred tax assets have not been recognised on the basis that it is not sufficiently certain when taxable profits that can be utilised to absorb the reversal of the temporary differences will be made.

   8.   Earnings per share 
                                                                                                   Loss after tax from 
                                       Loss after tax from    Weighted average number of     continuing operations per 
                                     continuing operations                        shares                         share 
                                                   GBP000s                          000s                         pence 
----------------------------  ----------------------------  ----------------------------  ---------------------------- 
Year ended 26 December 2020                       (23,581)                       196,232                       (12.02) 
Year ended 28 December 2019                        (6,224)                       170,207                        (3.66) 
----------------------------  ----------------------------  ----------------------------  ---------------------------- 

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 year.

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 potentially dilutive equity derivatives outstanding, being market value options, nil-cost share options (LTIP shares), restricted stock grants, deferred bonus shares, Sharesave Scheme share options and warrants.

All of the Group's potentially dilutive equity derivative securities were anti-dilutive for the purpose of diluted basic loss per share for the years ended 26 December 2020 and 28 December 2019. This also applies to the adjusted diluted loss per share for the year ended 26 December 2020, while the potentially dilutive equity derivative securities were dilutive for the purpose of diluted adjusted earnings per share for the year ended 28 December 2019, with the exception of the 2017 options which were anti-dilutive due to the 2018 options lapsing if the 2017 options vest.

The following is a reconciliation between the basic loss per share and the adjusted basic earnings per share:

                                                                                Year ended 
                                            Year ended 26 December 2020   28 December 2019 
                                                                  pence              pence 
-----------------------------------------  ----------------------------  ----------------- 
Basic loss per share                                            (12.02)             (3.66) 
Add back: 
Exceptional items per share(1)                                     6.85               3.51 
Amortisation per share(2)                                          2.65               3.30 
Tax per share                                                      0.01               0.26 
Tax credit/(charge) at prevailing rate                             0.48             (0.65) 
-----------------------------------------  ----------------------------  ----------------- 
Adjusted basic (loss)/earnings per share                         (2.03)               2.76 
-----------------------------------------  ----------------------------  ----------------- 

1 Exceptional items per share is calculated as total exceptional items divided by the weighted average number of shares in issue through the year.

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

The following is a reconciliation between the basic and diluted loss per share and the adjusted diluted (loss)/earnings per share:

                                                                                     Year ended         Year ended 
                                                                               26 December 2020   28 December 2019 
                                                                                          pence              pence 
----------------------------------------------------------------------------  -----------------  ----------------- 
Basic and diluted loss per share                                                        (12.02)             (3.66) 
Add back: 
Adjustment to basic loss per share for the impact of dilutive securities(1)                   -               0.59 
Exceptional items per share(2)                                                             6.85               2.94 
Amortisation per share(3)                                                                  2.65               2.77 
Tax per share                                                                              0.01               0.21 
Tax credit/(charge) at prevailing rate                                                     0.48             (0.54) 
----------------------------------------------------------------------------  -----------------  ----------------- 
Adjusted diluted (loss)/earnings per share                                               (2.03)               2.31 
----------------------------------------------------------------------------  -----------------  ----------------- 

1 All of the Group's potentially dilutive equity derivative securities were anti-dilutive for the purpose of adjusted diluted loss per share for the year ended 26 December 2020. The warrants, LTIP options, market value options, CSOP options, Sharesave scheme options and Directors' deferred bonus shares were dilutive in the year ended 28 December 2019, with the exception of the 2017 options which were anti-dilutive.

2 Exceptional items per share is calculated as total finance and non-finance exceptional items divided by the diluted weighted average number of shares in issue through the year.

3 Amortisation per share is calculated as the amortisation charge divided by the diluted weighted average number of shares in issue through the year.

The weighted average number of shares (excluding the 2017 anti-dilutive options) for the purposes of calculating the adjusted diluted earnings per share are as follows:

                                                            Year ended                           Year ended 
                                                      26 December 2020                     28 December 2019 
                                     Weighted average number of shares    Weighted average number of shares 
                                                                  000s                                 000s 
---------------------------------  -----------------------------------  ----------------------------------- 
Basic                                                          196,232                              170,207 
Market value options                                                 -                               14,915 
Warrants                                                             -                                8,510 
LTIP share options                                                   -                                7,576 
CSOP options                                                         -                                  585 
Sharesave Scheme options                                             -                                  972 
Directors' deferred bonus shares                                     -                                  247 
---------------------------------  -----------------------------------  ----------------------------------- 
Diluted                                                        196,232                              203,012 
---------------------------------  -----------------------------------  ----------------------------------- 
   9.   Intangible assets 
                        Goodwill  Customer relationships    Brands  Software     Total 
                         GBP000s                 GBP000s   GBP000s   GBP000s   GBP000s 
----------------------  --------  ----------------------  --------  --------  -------- 
At 29 December 2019      124,877                  26,744    23,222    24,409   199,252 
Additions                      -                       -         -     3,317     3,317 
Disposals                      -                       -         -     (146)     (146) 
----------------------  --------  ----------------------  --------  --------  -------- 
At 26 December 2020      124,877                  26,744    23,222    27,580   202,423 
----------------------  --------  ----------------------  --------  --------  -------- 
At 29 December 2019            -                  18,694       525    19,655    38,874 
Charge for the period          -                   2,654        97     2,446     5,197 
Disposals                      -                       -         -     (146)     (146) 
----------------------  --------  ----------------------  --------  --------  -------- 
At 26 December 2020            -                  21,348       622    21,955    43,925 
----------------------  --------  ----------------------  --------  --------  -------- 
Net book value 
----------------------  --------  ----------------------  --------  --------  -------- 
At 26 December 2020      124,877                   5,396    22,600     5,625   158,498 
----------------------  --------  ----------------------  --------  --------  -------- 
                      Goodwill  Customer relationships    Brands  Software     Total 
                       GBP000s                 GBP000s   GBP000s   GBP000s   GBP000s 
--------------------  --------  ----------------------  --------  --------  -------- 
At 30 December 2018    124,877                  26,744    23,222    22,228   197,071 
Additions                    -                       -         -     2,339     2,339 
Disposals                    -                       -         -     (158)     (158) 
--------------------  --------  ----------------------  --------  --------  -------- 
At 28 December 2019    124,877                  26,744    23,222    24,409   199,252 
--------------------  --------  ----------------------  --------  --------  -------- 
At 30 December 2018          -                  15,996       427    16,991    33,414 
Charge for the year          -                   2,698        98     2,726     5,522 
Disposals                    -                       -         -      (62)      (62) 
--------------------  --------  ----------------------  --------  --------  -------- 
At 28 December 2019          -                  18,694       525    19,655    38,874 
--------------------  --------  ----------------------  --------  --------  -------- 
Net book value 
--------------------  --------  ----------------------  --------  --------  -------- 
At 28 December 2019    124,877                   8,050    22,697     4,754   160,378 
--------------------  --------  ----------------------  --------  --------  -------- 

Analysis of goodwill, indefinite life brands, other brands and customer relationships by cash generating unit:

                      Goodwill  Indefinite life brands    brands  Customer relationships     Total 
                       GBP000s                 GBP000s   GBP000s                 GBP000s   GBP000s 
--------------------  --------  ----------------------  --------  ----------------------  -------- 
Allocated to 
HSS Core               111,497                  21,900       236                   4,397   138,030 
Climate control          7,327                       -       273                     708     8,308 
Power generation         6,053                       -       191                     291     6,535 
--------------------  --------  ----------------------  --------  ----------------------  -------- 
At 26 December 2020    124,877                  21,900       700                   5,396   152,873 
--------------------  --------  ----------------------  --------  ----------------------  -------- 
                      Goodwill  Indefinite life brands    brands  Customer relationships     Total 
                       GBP000s                 GBP000s   GBP000s                 GBP000s   GBP000s 
--------------------  --------  ----------------------  --------  ----------------------  -------- 
Allocated to 
HSS Core               111,497                  21,900       256                   6,849   140,502 
Climate control          7,327                       -       336                     820     8,483 
Power generation         6,053                       -       205                     381     6,639 
--------------------  --------  ----------------------  --------  ----------------------  -------- 
At 28 December 2019    124,877                  21,900       797                   8,050   155,624 
--------------------  --------  ----------------------  --------  ----------------------  -------- 

The remaining life of intangible assets other than goodwill and indefinite life brands is between nil and fourteen years (2019: one and fifteen years). For the purpose of calculating Adjusted EBITDA and Adjusted EBITA, amortisation, as disclosed on the face of the income statement, is calculated as the total of the amortisation charge for the year and the loss on disposal of intangible assets.

The Group tests property, plant and equipment, right of use assets, goodwill and indefinite life brands for impairment annually and considers at each reporting date whether there are indicators that impairment may have occurred. The Group has three cash generating units (CGUs): HSS Core, HSS Power and Climate Control. The recoverable amounts of the goodwill and indefinite life brands, which are allocated to CGUs, are estimated from value in use (VIU) calculations which model pre-tax cash flows for the next five years (2019: five years) together with a terminal value using a long-term growth rate. The key assumptions underpinning the recoverable amounts of the CGUs tested for impairment are those regarding the discount rate, forecast revenue, EBITDA and capital expenditure including cash flows required to maintain the Group's right of use assets.

The key variables applied to the VIU calculations were determined as follows:

-- Cash flows were derived based on the budget for 2021 and model of the business for the following two years (to the end of 2023).

-- Operational activity then had a long-term growth rate applied to it while capital expenditure was specifically adjusted to reflect expectations of spend in the following years giving a model of five years in total after which a terminal value was calculated. The long-term growth factor used was 1.8% for each of the CGUs (2019: 1.4%).

-- A pre-tax discount rate of 9.16% (2019: 9.15%), calculated by reference to a weighted average cost of capital (WACC) based on an industry peer group of quoted companies.

An impairment may be identified if changes to any of the factors mentioned above become significant, including underperformance of the Group against forecast, negative changes in the UK tool hire market or a deterioration in the UK economy, which would cause the Directors to reconsider their assumptions and revise their cash flow projections.

Based on the VIU modelling and impairment testing, the Directors do not consider an impairment charge to be required in respect of any of the property, plant and equipment, goodwill or indefinite life brands assets carried in the balance sheet at 26 December 2020 for any of the CGUs.

The Directors carried out sensitivity analysis on various inputs to the models, including growth rates, discount rates and percentage reductions to ongoing cash flows which did not result in an impairment charge for any CGU. As part of the sensitivity analysis the Directors assessed combined outcomes utilised as part of the going concern and long-term viability assessments (refer to note 1), particularly in light of the potential impact of economic uncertainty arising from COVID-19. Given the level of headroom in VIU these calculations show, the Directors did not envisage reasonably possible changes, either individually or in combination, to the key assumptions that would be sufficient to cause an impairment charge at the balance sheet date.

In respect of HSS Core, at 26 December 2020, the headroom between VIU and carrying value of the related assets was GBP75.1m (2019: GBP192.7m). The Directors' sensitivity analysis with regard to the most sensitive CGU, HSS Core, shows that an increase in the discount rate to 11.5% (2019: 26.7%) or a reduction in the long-term growth rate to a decline of 0.7% (2019: decline of 4.2%) would eliminate the headroom shown. In addition, the Directors have assessed the combined impact of the long-term growth rate falling to zero (2019: zero) and an increase in the discount rate of 1% to 10.16% (2019: 10.15%). This shows that the headroom drops to GBP53.9m (2019: GBP131.3m) for HSS Core but that impairment is not required for any CGU.

10. Property, plant and equipment

                                                                              Materials & equipment held for 
                                     Land & buildings  Plant & machinery                                hire     Total 
                                              GBP000s            GBP000s                             GBP000s   GBP000s 
-----------------------------------  ----------------  -----------------  ----------------------------------  -------- 
At 29 December 2019                            73,505             61,925                             179,788   315,218 
Transferred to right of use assets                  -                  -                            (46,888)  (46,888) 
Transferred from right of use 
 assets                                             -                  -                               3,144     3,144 
Additions                                       1,284              1,061                              14,099    16,444 
Disposals                                    (16,408)            (7,748)                            (17,328)  (41,484) 
Foreign exchange differences                       38                 77                                 465       580 
-----------------------------------  ----------------  -----------------  ----------------------------------  -------- 
At 26 December 2020                            58,419             55,315                             133,280   247,014 
-----------------------------------  ----------------  -----------------  ----------------------------------  -------- 
Accumulated depreciation 
At 29 December 2019                            54,437             55,936                             102,994   213,367 
Transferred to right of use assets                  -                  -                            (17,576)  (17,576) 
Transferred from right of use 
 assets                                             -                  -                               1,652     1,652 
Charge for the year                             3,516              2,139                              14,518    20,173 
Impairment                                      1,789                227                                   -     2,016 
Disposals                                    (14,536)            (7,592)                            (13,004)  (35,132) 
Foreign exchange differences                        2                 40                                 448       490 
Transfers                                           -              (170)                                 170         - 
-----------------------------------  ----------------  -----------------  ----------------------------------  -------- 
At 26 December 2020                            45,208             50,580                              89,202   184,990 
-----------------------------------  ----------------  -----------------  ----------------------------------  -------- 
Net book value 
-----------------------------------  ----------------  -----------------  ----------------------------------  -------- 
At 26 December 2020                            13,211              4,735                              44,078    62,024 
-----------------------------------  ----------------  -----------------  ----------------------------------  -------- 
                                                                    Materials & equipment 
                               Land & buildings  Plant & machinery          held for hire     Total 
                                        GBP000s            GBP000s                GBP000s   GBP000s 
-----------------------------  ----------------  -----------------  ---------------------  -------- 
At 30 December 2018(1)                   73,293             62,685                190,373   326,351 
Foreign exchange differences                  -               (95)                  (840)     (935) 
Additions                                 2,415              1,891                 27,097    31,403 
Disposals                               (2,131)            (1,482)               (37,988)  (41,601) 
Transfers                                  (72)            (1,074)                  1,146         - 
-----------------------------  ----------------  -----------------  ---------------------  -------- 
At 28 December 2019                      73,505             61,925                179,788   315,218 
-----------------------------  ----------------  -----------------  ---------------------  -------- 
Accumulated depreciation 
At 30 December 2018(1)                   51,431             55,125                110,666   217,222 
Foreign exchange differences                  -               (79)                  (546)     (625) 
Charge for the year                       4,316              2,521                 21,764    28,601 
Impairment                                  209                154                      -       363 
Disposals                               (1,568)            (1,469)               (29,157)  (32,194) 
Transfers                                    49              (316)                    267         - 
-----------------------------  ----------------  -----------------  ---------------------  -------- 
At 28 December 2019                      54,437             55,936                102,994   213,367 
-----------------------------  ----------------  -----------------  ---------------------  -------- 
Net book value 
-----------------------------  ----------------  -----------------  ---------------------  -------- 
At 28 December 2019                      19,068              5,989                 76,794   101,851 
-----------------------------  ----------------  -----------------  ---------------------  -------- 

1 As part of the ongoing improvements to hire stock processes some historic consolidation entries have been corrected which resulted in a reduction to cost and accumulated depreciation of GBP5.0m. The adjustment had no impact on net book value.

Transferred to right of use assets category represents the transfer of assets previously recognised under finance leases, while transferred from right of use assets category represents assets no longer under lease acquired at the end of the lease term. The right of use asset is depreciated over the lease term on a straight line basis, except where the Group has the right, and expects to exercise that right, to take ownership of the assets after the end of the lease; in such cases the assets are depreciated over the useful life.

Materials and equipment held for hire with a net book value of GBP29.3m at 28 December 2019 (restated) were held under finance leases and transferred to right of use assets on the adoption of IFRS 16 Leases (note 2). The depreciation charge for assets held under finance leases in the year ended 28 December 2019 was GBP5.5m (restated). The amounts disclosed relating to assets held under finance lease have been restated due to a review carried out as part of IFRS 16 adoption. This had no impact on the total net book value or depreciation charge in the 2019 financial statements.

The results of the impairment review for property, plant and equipment are included in note 9.

11. Right of use assets

                                             Property  Vehicles  Equipment for hire and internal use     Total 
                                              GBP000s   GBP000s                              GBP000s   GBP000s 
-------------------------------------------  --------  --------  -----------------------------------  -------- 
Recognised on transition date                  58,014    21,416                               30,101   109,531 
Foreign exchange differences                      155        22                                    -       177 
Additions                                       1,317     3,040                                4,880     9,237 
Re-measurements                                 6,931        17                                    -     6,948 
Transfers to property, plant and equipment          -         -                              (3,144)   (3,144) 
Disposals                                     (5,164)     (814)                              (1,776)   (7,754) 
-------------------------------------------  --------  --------  -----------------------------------  -------- 
At 28 December 2020                            61,253    23,681                               30,061   114,995 
-------------------------------------------  --------  --------  -----------------------------------  -------- 
Accumulated depreciation 
Transfers to property, plant and equipment          -         -                              (1,652)   (1,652) 
Charge for the period                          10,999     7,613                                5,924    24,536 
Impairments                                     9,541         -                                    -     9,541 
Disposals                                     (5,137)     (759)                              (1,373)   (7,269) 
-------------------------------------------  --------  --------  -----------------------------------  -------- 
At 28 December 2020                            15,403     6,854                                2,899    25,156 
-------------------------------------------  --------  --------  -----------------------------------  -------- 
Net book value 
-------------------------------------------  --------  --------  -----------------------------------  -------- 
At 28 December 2020                            45,850    16,827                               27,162    89,839 
-------------------------------------------  --------  --------  -----------------------------------  -------- 

On adoption of IFRS 16 on 29 December 2019, the Group recognised right of use assets representing the Group's right to use leased assets. Right of use assets are depreciated over the lease term on a straight line basis, except where the Group has the right, and expects to exercise that right, to take ownership of the assets at the end of the lease; in such cases the assets are depreciated over the useful life and transferred to property, plant and equipment at the end of the lease.

Right of use assets are measured at cost comprising the initial measurement of lease liability, initial direct costs and restoration costs. Right of use assets arising on transition to IFRS16 are adjusted for any prepaid or accrued lease payments relating to that lease that were recognised in the statement of financial position immediately before the DIA. During the year the Group recorded re-measurements of GBP6.9m on its property leases due to changes in property footprint, including lease extensions and disposals following the decision to close 134 branches and subsequent negotiations with landlords to surrender leases. Under HSS accounting policy, locations that have not been permanently closed are deemed to be part of a wider cash generating unit (CGU) when being tested for impairment. The act of permanently closing a location has the effect of separating it from the CGU and is also a trigger for impairment. The value of ROU assets impaired as a result of decision to permanently close locations is GBP9.5m.

Disclosures relating to lease liabilities are included in note 13.

12. Trade and other receivables

                                   Year ended 26 December 2020                     Year ended 28 December 2019 
----------------------  -------------------------------------------------  ------------------------------------------- 
                                          Provision for                                      Provision for      Net of 
                           Gross             impairment  Net of provision     Gross             impairment   provision 
                         GBP000s                GBP000s           GBP000s   GBP000s                GBP000s     GBP000s 
----------------------  --------  ---------------------  ----------------  --------  ---------------------  ---------- 
Trade receivables         66,434                (5,374)            61,060    72,056                (3,745)      68,311 
Accrued income             6,965                  (107)             6,858     6,824                      -       6,824 
----------------------  --------  ---------------------  ----------------  --------  ---------------------  ---------- 
Contract assets           73,399                (5,481)            67,918    78,880                (3,745)      75,135 
----------------------  --------  ---------------------  ----------------  --------  ---------------------  ---------- 
Net investment in 
 sub-lease                 1,497                      -             1,497         -                                  - 
Other debtors              3,502                      -             3,502     2,762                      -       2,762 
Prepayments                2,963                      -             2,963    10,499                      -      10,499 
----------------------  --------  ---------------------  ----------------  --------  ---------------------  ---------- 
Total trade and other 
 receivables              81,361                (5,481)            75,880    92,141                (3,745)      88,396 
----------------------  --------  ---------------------  ----------------  --------  ---------------------  ---------- 

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

                                         26 December 2020  28 December 2019 
                                                  GBP000s           GBP000s 
---------------------------------------  ----------------  ---------------- 
Balance at the beginning of the period            (3,745)           (3,819) 
Increase in provision                             (5,962)           (4,590) 
Utilisation                                         4,226             4,664 
---------------------------------------  ----------------  ---------------- 
Balance at the end of the period                  (5,481)           (3,745) 
---------------------------------------  ----------------  ---------------- 

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

                        26 December 2020  28 December 2019 
                                 GBP000s           GBP000s 
----------------------  ----------------  ---------------- 
Bad debt provision               (3,023)           (1,568) 
Credit note provision            (2,458)           (2,177) 
----------------------  ----------------  ---------------- 
                                 (5,481)           (3,745) 
----------------------  ----------------  ---------------- 

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

26 December 2020                Current  0 to 60 days past due  61 to 365 days past due  1 to 2 years past due   Total 
------------------------------  -------  ---------------------  -----------------------  ---------------------  ------ 
Contract assets                  61,197                  5,902                    4,962                  1,338  73,399 
Expected loss rate                 1.4%                   4.6%                    25.7%                  47.5%    4.1% 
Provision for impairment 
 charge                             839                    272                    1,276                    636   3,023 
------------------------------  -------  ---------------------  -----------------------  ---------------------  ------ 
                                                                       61 to 365 
28 December 2019                  Current  0 to 60 days past due   days past due  1 to 2 years past due   Total 
--------------------------------  -------  ---------------------  --------------  ---------------------  ------ 
Contract assets                    63,633                  7,500           6,631                  1,116  78,880 
Expected loss rate                   1.0%                   3.0%            8.3%                  13.9%    2.0% 
Provision for impairment charge       633                    228             552                    155   1,568 
--------------------------------  -------  ---------------------  --------------  ---------------------  ------ 

Contract assets consist of trade receivables and accrued income.

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

The Directors have given specific consideration to the impact of COVID-19 on the general economy, particularly given expected tapering of Government support. At the balance sheet date the Group has not seen a marked increase in debt write-offs; in fact, reduced sales combined with an intense focus on collections have resulted in debt that is significantly lower than 2019. However, as has been widely reported, there is an expectation that the situation will deteriorate as Government support is reduced and that the rate of insolvencies will increase. Given these facts, the Group considers that historical losses are not a good predictor of future failures and has exercised judgement in increasing the expected loss rates across all categories of debt. In so doing the provision has been increased by around GBP1.2m from that which would have been required based on loss experience over the past two years. As in the prior year, historical loss rates have been increased where debtors have been identified as high risk with a reduction applied to customer debt covered by credit insurance. The total amount expensed was GBP4.1m (2019: GBP3.6m). Unless the counterparty is in liquidation, these amounts are still subject to enforcement action.

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

The overall provisions for bad debt and credit notes amount to 7.5% of contract assets at 26 December 2020 (2019: 4.7%). A 0.5% increase in the rate of provision required would give rise to an increased provision of GBP0.4m (2019: GBP0.4m).

13. Borrowings

                                   26 December 2020  28 December 2019 
                                            GBP000s           GBP000s 
---------------------------------  ----------------  ---------------- 
Senior finance facility                      15,000                 - 
Lease liabilities                            23,395                 - 
Obligations under finance leases                  -             5,355 
---------------------------------  ----------------  ---------------- 
                                             38,395             5,355 
---------------------------------  ----------------  ---------------- 
Senior finance facility                     161,899           174,501 
Revolving credit facility                    17,200                 - 
Lease liabilities                            66,177                 - 
Obligations under finance leases                  -            11,228 
---------------------------------  ----------------  ---------------- 
                                            245,276           185,729 
---------------------------------  ----------------  ---------------- 

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

                            26 December 2020  28 December 2019 
                                     GBP000s           GBP000s 
--------------------------  ----------------  ---------------- 
Senior finance facility              181,982           181,982 
Revolving credit facility             17,200                 - 
--------------------------  ----------------  ---------------- 
                                     199,182           181,982 
--------------------------  ----------------  ---------------- 

The Group's Senior finance facility and Revolving credit facility (RCF) expire on 10 July 2023 and 10 January 2023 respectively. The GBP15.0m current element of the Senior finance facility was repaid in January 2021 and the GBP17.2m RCF was repaid in April 2021.

The senior finance facility and RCF are secured over the assets of a Group company, Hero Acquisitions Limited, and all of its subsidiaries. These subsidiaries comprise all of the trading activities of the Group. The lenders under the RCF rank above those under the senior finance facility. The overall GBP25.0m RCF includes a GBP6.0m overdraft facility and a GBP1.8m guarantee arrangement to secure the Group's card-acquiring services provided by a third party.

The Group had undrawn committed borrowing facilities of GBP20.7m at 26 December 2020 (2019: GBP36.6m), including GBP14.7m of finance lines to fund hire fleet capital expenditure not yet utilised. Including net cash balances, the Group had access to GBP118.3m of combined liquidity from available cash and undrawn committed borrowing facilities at 26 December 2020 (2019: GBP59.3m).

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

                                                          26 December 2020  28 December 2019 
--------------------------  ---------  -----------------  ----------------  ---------------- 
Senior finance facility     Floating    %age above LIBOR              8.0%              8.0% 
Revolving credit facility   Floating    %age above LIBOR       2.5 to 3.0%              2.5% 
Lease liabilities           Floating    %age above LIBOR       2.4 to 2.9%                 - 
Finance leases              Floating    %age above LIBOR                 -              3.1% 
--------------------------  ---------  -----------------  ----------------  ---------------- 

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

                    26 December 2020  28 December 2019 
------------------  ----------------  ---------------- 
Borrowings                      9.8%             10.4% 
Lease liabilities               4.8%                 - 
Finance leases                     -              4.8% 
------------------  ----------------  ---------------- 

Amounts under the RCF are typically drawn for a one- to three-month borrowing period, with the interest set for each borrowing period based upon LIBOR and a fixed margin.

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

                                   26 December 2020           28 December 2019 
---------------------------  -----------------------------  -------------------- 
                             Lease liabilities  Borrowings    leases  Borrowings 
                                       GBP000s     GBP000s   GBP000s     GBP000s 
---------------------------  -----------------  ----------  --------  ---------- 
Less than one year                      27,452      30,581     6,306      16,423 
Two to five years                       55,544     208,725    11,615     220,805 
More than five years                    23,483           -         -           - 
---------------------------  -----------------  ----------  --------  ---------- 
                                       106,479     239,306    17,921     237,228 
---------------------------  -----------------  ----------  --------  ---------- 
Less interest cash flows: 
Senior finance facility                      -    (38,822)         -    (55,246) 
Revolving credit facility                    -     (1,302)         -           - 
Lease liabilities                     (16,907)           -         -           - 
Finance leases                               -           -   (1,338)           - 
---------------------------  -----------------  ----------  --------  ---------- 
Total principal cash flows              89,572     199,182    16,583     181,982 
---------------------------  -----------------  ----------  --------  ---------- 

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

                         26 December 2020  28 December 2019 
                        Lease liabilities    Finance leases 
                                  GBP000s           GBP000s 
---------------------  ------------------  ---------------- 
Less than one year                 23,395             5,355 
Two to five years                  47,030            11,228 
More than five years               19,147                 - 
---------------------  ------------------  ---------------- 
                                   89,572            16,583 
---------------------  ------------------  ---------------- 

Finance leases held at 28 December 2019 principally related to hire fleet assets.

14. Provisions

                                     property costs  Dilapidations  Onerous contracts     Total 
                                            GBP000s        GBP000s            GBP000s   GBP000s 
----------------------------------  ---------------  -------------  -----------------  -------- 
At 29 December 2019                           4,833         16,209             19,573    40,615 
Adoption of IFRS 16 (note 2)                (2,222)              -                  -   (2,222) 
Additions                                     5,326          1,452                  -     6,778 
Utilised during the period                    (601)        (2,726)            (3,330)   (6,657) 
Unwind of provision                               7            204                218       429 
Impact of change in discount rate                88            747                557     1,392 
Releases                                    (3,472)        (3,226)                  -   (6,698) 
Foreign exchange                                  -             17                  -        17 
----------------------------------  ---------------  -------------  -----------------  -------- 
At 26 December 2020                           3,959         12,677             17,018    33,654 
----------------------------------  ---------------  -------------  -----------------  -------- 
Of which: 
Current                                       1,328          2,823              3,297     7,448 
Non-current                                   2,631          9,854             13,721    26,206 
----------------------------------  ---------------  -------------  -----------------  -------- 
                                              3,959         12,677             17,018    33,654 
----------------------------------  ---------------  -------------  -----------------  -------- 
                                                     leases  Dilapidations  Onerous contracts     Total 
                                                    GBP000s        GBP000s            GBP000s   GBP000s 
-------------------------------------------------  --------  -------------  -----------------  -------- 
At 30 December 2018                                   4,745         16,779             22,808    44,332 
Additions                                             4,942            555                  -     5,497 
Utilised during the period                          (2,570)          (790)            (3,580)   (6,940) 
Unwind of provision                                      20             49                345       414 
Released, including disposal on sale of business    (2,304)          (360)                  -   (2,664) 
Foreign exchange                                          -           (24)                  -      (24) 
-------------------------------------------------  --------  -------------  -----------------  -------- 
At 28 December 2019                                   4,833         16,209             19,573    40,615 
-------------------------------------------------  --------  -------------  -----------------  -------- 
Of which: 
Current                                               2,043          2,990              3,112     8,145 
Non-current                                           2,790         13,219             16,461    32,470 
-------------------------------------------------  --------  -------------  -----------------  -------- 
                                                      4,833         16,209             19,573    40,615 
-------------------------------------------------  --------  -------------  -----------------  -------- 

Onerous property costs

Provisions for onerous property costs relate to the current value of contractual liabilities for future rates payments and other unavoidable costs on leasehold properties the Group no longer uses or where a site is partially in use and as a whole, loss-making. Until the implementation of IFRS 16 on 29 December 2019, the provision also included amounts for future rent payments. The Company has taken the practical expedient available under IFRS 16 to rely on its assessment of whether a lease is onerous by applying IAS 37 Provisions, Contingent Liabilities and Contingent Assets immediately before the date of initial application, reducing the carrying value of its right of use asset on implementation. This resulted in the elimination of onerous property costs of GBP2.2m and a corresponding impairment of the right of use asset on transition date.

The liabilities, assessed on a property-by-property basis, are expected to arise over a period of up to 9 years (2019: 8 years) with the weighted average of the onerous property costs post IFRS 16 being 3.76 years (2019: pre IFRS 16 3.9 years). Prior to implementation of IFRS 16, they were stated net of expected sub-let income based on existing sub-let agreements (2019: GBP0.7m). Provisions for onerous property costs relate to the current value of contractual liabilities for future rates payments and other unavoidable costs. These costs are treated as exceptional. The onerous property cost provision has been inflated at a rate of 0.1% (2019: discounted at 0.9%). A 1% increase in the discount rate at 26 December 2020 would reduce the provision post the implementation of IFRS 16 by GBP0.09m (2019: pre IFRS 16 GBP0.1m).

Since the implementation of IFRS 16, right of use assets are subject to impairment testing (note 9). Prior to the implementation of IFRS 16, the assessment of whether a site was onerous was based on the current year profit or loss being projected forward to the end of the lease. In considering profitability, expected sub-let income for unused space was considered. The amount of expected sub-let income leases included in the onerous lease provision amounted to GBP0.9m at 28 December 2019.


An amount equivalent to the provision for dilapidation is recognised as part of the asset of the related property. The timing and amounts of future cash flows related to lease dilapidations are subject to uncertainty. The provision recognised is based on management's experience and understanding of the commercial retail property market and third party surveyors' reports commissioned for specific properties in order to best estimate the future outflow of funds, requiring the exercise of judgement applied to existing facts and circumstances, which can be subject to change. The estimates used by management in the calculation of the provision take into consideration the location, size and age of the properties. The weighted average dilapidations provision at 26 December 2020 was GBP6.65 per square foot (psf) (2019: GBP8.68 psf). The reduction is due to an increase in surveys and landlord negotiations in the Group's effort to exit all its dark store liabilities. Estimates for future dilapidations costs are regularly reviewed as and when new information is available. A GBP0.50 psf increase in the dilapidations provision would lead to an increase in the provision at 26 December 2020 of GBP0.7m (2019: GBP0.9m).

The dilapidations provision has been discounted at a rate of 0.25% (2019: 1.26%) at 26 December 2020 based on ten-year UK gilt yields. A 1% increase in the discount rate at 26 December 2020 would decrease the dilapidations provision by GBP0.7m (2019: GBP0.8m). The inflation rate applied in the calculation of the dilapidations provision was 1.8% (2019: 1.8%).

Onerous contract

The onerous contract represents amounts payable in respect of the agreement reached between the Group and Unipart to terminate the contract to operate the NDEC. Under the terms of the agreement at 26 December 2020 GBP17.0m is payable over the period to 2026 (2019: GBP20.3m) and GBP3.3m has been paid during the year (2019: GBP3.6m). The provision has been restated to present value by applying an inflation rate of 0.1% (2019: discount rate of 1.2%). A 1% reduction in the inflation rate at 26 December 2020 would decrease the provision by GBP0.5m (2019: a 1% increase in the discount rate would decrease the provision by GBP0.6m).

15. Share Capital and Capital raise

On 8 December 2020 the Group completed a capital raise from existing and new shareholders resulting in gross proceeds of GBP52.6m. 526,270,512 ordinary shares of 1p each were issued for 10p each.

                                Year ended 
                          26 December 2020 
-----------------------  ----------------- 
Gross proceeds                      52,627 
Cost of share issue(1)             (1,784) 
-----------------------  ----------------- 
Net proceeds                        50,843 
-----------------------  ----------------- 
Accounted for as: 
Share capital                        5,263 
Share premium                       45,580 
-----------------------  ----------------- 
-----------------------  ----------------- 

The number of shares in issue and the related share capital and share premium are as follows.

                      Ordinary shares  Ordinary shares  Share premium 
                               Number          GBP000s        GBP000s 
--------------------  ---------------  ---------------  ------------- 
At 29 December 2019       170,207,142            1,702              - 
Shares issued             526,270,512            5,263         45,580 
At 26 December 2020       696,477,654            6,965         45,580 
--------------------  ---------------  ---------------  ------------- 

1 GBP1,492,000 of the GBP1,784,000 costs had not been paid as at 26 December 2020.

16. Post balance sheet events

On 14 January 2021 the Group's ordinary shares of 1 pence each were admitted to trading on AIM. Simultaneously, the admission of the ordinary shares to trading on the Main Market of London Stock Exchange plc and to the premium listing segment of the Official List were cancelled. This follows the Group's announcement on 16 November 2020 and the General Meeting held on 4 December 2020.

During the year the Group recognised GBP1.2m of insurance proceeds claimed under the business interruption policy due to the impact of the COVID-19 pandemic (note 4). Since the year end the Group has received a further GBP1.2m.

Since the year end a series of national lockdowns have come into force across the UK nations and the Republic of Ireland. These have not had a material impact on the Group's trading performance.

Since the year end the Group has continued to negotiate with landlords and has surrendered or agreed to surrender 95% of leases associated with dark stores.

On 7 April 2021 the Group announced that it has entered into an unconditional agreement to sell Laois Hire Services Limited, the Group's Irish large plant hire business, to Brigg's Equipment Ireland Limited ("Briggs"), for a cash consideration of EUR11.2m. Of this, EUR10.7m was received on completion with a further EUR0.5m payable on finalisation of completion accounts later in 2021. The proceeds will be used to invest in the core Tool Hire business in line with the Group's strategy. As part of this transaction, the Group has entered into a commercial agreement with Briggs for the cross hire of equipment to ensure we continue to provide our Irish customers with their large plant requirements. The sale has been treated as a non-adjusting post balance sheet event.

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(END) Dow Jones Newswires

April 29, 2021 02:00 ET (06:00 GMT)

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