HSS Hire (HSS) has struggled since joining the main market in February 2015, and its latest results indicate the challenges aren't over yet. The company made an operating loss of £2.7m in 2016, down from a £6.8m profit the year before. Management chalked this up to investment in a new distribution network, intended to centralise high-volume engineering activities, which led to non-finance exceptionals of £17m. The process took longer than expected, affecting hire volumes in the second half of the year, but the group says the changes leave it well positioned to improve efficiency and customer service.
Using the new platform to re-establish momentum in the rental business is now a priority for the group. Revenues for the division languished at £263m, flat on the year before, while its contribution - revenue less cost of sales and other attributable costs - fell marginally to £179m. Its services division, however, grew revenues 61 per cent to £79.6m. Its contribution also grew to £10.3m from £6.1m. This growth wasn't enough to counteract the impact of restructuring costs, and the group has decided to axe its final dividend in favour of reducing net debt.
Analysts at Numis are forecasting adjusted pre-tax profit of £3m in 2017, giving adjusted EPS of 1.5p, rising to £6.7m and 3.5p in 2018 (from £68.6m and 1.5p in 2016).
HSS HIRE (HSS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 62p | MARKET VALUE: | £106m | |
| TOUCH: | 60-64p | 12-MONTH HIGH: | 117p | LOW: 57p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | na | |
| NET ASSET VALUE: | 90p* | NET DEBT: | 143% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 182 | -10.5 | na | nil |
| 2013 | 227 | 2.6 | 0.3 | nil |
| 2014 | 285 | -8.5 | -8.6 | nil |
| 2015 (restated) | 312 | -13.8 | -9.9 | 1.14 |
| 2016 | 342 | -17.4 | -11.2 | 0.57 |
| % change | +10 | - | - | -50 |
*Includes intangible assets of £179m, or 105p a share | ||||
