HSS Hire (HSS) is pushing on with its local branch expansion programme. To do this the company has focused on reducing its hefty debt pile, now 2.2 times cash profits. Its February IPO raised £103m in gross proceeds, partly used to retrench borrowings. Prior to this, the tool hire company had issued £200m in senior secured notes to refinance existing debt. The latter pushed up full-year finance expenses by a half to £31m. Add to this heavy investment in the company's hire fleet, which more than doubled capital expenditure to £83.6m, and reported pre-tax profits were depressed.
However, organic sales grew by almost a fifth, boosting adjusted cash profits by more than a quarter to £71.1m. The group opened 34 new branches last year and a further 13 during the first quarter of this year. It also developed its key accounts - catering to the equipment requirements of larger clients - helping boost recurring revenue.
HSS is in the process of building an equipment refurbishment facility, which will help extend the life of its asset base and capitalise on the outsourcing trend by some of its larger clients. Chief executive Chris Davies said the facility would provide significant cost savings over time.
Broker Numis Securities expects pre-tax profit of £23.9m this year and EPS of 12.1p, up from a loss of £8.5m in 2014.
HSS HIRE (HSS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 211p | MARKET VALUE: | £327m | |
| TOUCH: | 211-213p | 12-MONTH HIGH: | 220p | LOW: 188p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | * | NET DEBT: | £317m | |
| Year to 27 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 177 | -13.3 | na | nil |
| 2012 | 182 | -10.5 | na | nil |
| 2013 | 227 | 2.6 | 0.3 | nil |
| 2014 | 285 | -8.5 | -3.6 | nil |
| % change | +26 | - | - | - |
Ex-div: na Payment: na *Negative shareholders' equity | ||||
