Disposal helps push tool hire group into the black

Manchester tool hire grou HSS Hire achieved a year of “excellent strategic progress” in which it improved revenues, and reported a profit, after the disposal of its UK Platforms business.

Revenues for the year to December 28, 2019, rose 1.6% to £328m, while the pre-tax loss for the year of £5.788m showed an improvement from the previous year’s pre-tax loss of £9.156m.

However, the company reported a profit for the year of £8.708m, compared with a loss of £4.42m, after the disposal of UK Platforms resulted in a profit of £14.8m.

HSS said it also reported its highest EBITDA, with an adjusted figure of £63.9m, a 6.6% improvement.

The company had cash and a revolving credit facility headroom of £45.9m as at December 28, 2019, but it has decided not to pay a final dividend due to business conditions post-COVID-19.

In current trading, it said levels were in line with expectations for the first 12 weeks of fiscal year 2020 with the first signs of a COVID-19 related trading slowdown seen in the last week of March as the lockdown was enforced

Following government guidelines, on March 23, all HSS branches were closed with staff from these locations entered into the Government’s Coronavirus job retention scheme, although the firm’s nationwide central distribution centres and its OneCall re-hire business continue to operate to support customers.

In the first nine weeks of the second quarter revenue is approximately 40% below normal levels, with an improving trend, and as at May 23, the group has a cash and revolving credit facility headroom of £66.7m.

HSS said it is in regular dialogue with its lenders who continue to express their commitment to the business, and it is exploring government-backed finance facilities to provide additional liquidity safety net.

Chief executive Steve Ashmore said: “Our primary focus since the start of the COVID-19 outbreak has been, and remains, the safety and wellbeing of our colleagues, customers, suppliers and other stakeholders and this is what informs our decision making.

“We took immediate and decisive action to preserve cash ahead of what has been a period of significantly reduced economic activity. I am proud of how our team has stepped up and maintained continuity of service to fulfill our role as an essential service for critical customers who need our kit to continue their vital work.”

He said: “I am delighted 2019 was another year of excellent strategic progress enabling us to post record profits in a market impacted by uncertainty. The benefits of the work we have done since 2017 are coming to fruition and HSS is evolving towards a digital-led equipment services business.

“In 2019, targeted capex, strong price control and ongoing cost efficiencies enabled us to deliver a significant improvement in returns.

“This strong financial performance was underpinned by further improvement in our customer Net Promoter Score demonstrating the commitment and hard work of our colleagues across the business.”

He added: “The outlook for the remainder of the year is uncertain, but we have taken, and continue to take, action to reduce the impact of an extended period of lower revenues, albeit we have been encouraged by recent increases in activity.

“Our strategic ambitions remain unchanged with the pandemic demonstrating the importance of digital capability.

“Our digital transformation is well under way with the new customer app in tool hire gaining traction in our trial markets, and in the services business where our new automated system has been very well received.

“We will continue to manage the business prudently through this crisis but also ensure we continue to progress our digital journey in order to create the most advanced, customer centric offer in the marketplace.”