HSS has not made a profit since 2013, since before venture capitalists floated it on the stock exchange saddled with debt. The board believes that the cash raised from this disposal could make all the difference.
The sale of All Seasons Hire (ASH) 鈥� HSS鈥檚 heating, ventilation and air-conditioning hire business 鈥� will help to reduce the debt burden, which stood at 拢120m at the start of the year, it鈥檚 lowest level since the 2015 flotation.
Following the disposal, net debt leverage will decrease from 2.6x to 1.0x (on a non-IFRS16, LTM1 pro-forma basis), enabling HSS to refinance its current lending facilities on improved terms.
ASH represented 拢18m of HSS group revenues in 2020 and contributed 拢6m of operating profit.
As part of the transaction, HSS has agreed a deal with Cross Rental Services (CRS) for the cross-hire of HVAC equipment and services. This follows the implementation of a similar agreement following the disposal of the aerial work platform business to Nationwide Platforms in 2019.
HSS has not made a profit since 2013, with 2017 proving its low-water mark. Its results over the last nine years have looked like this:
- 2020 拢23.6m pre-tax loss
- 2019: 拢5.8m pre-tax loss
- 2018: 拢4.5m pre-tax loss
- 2017: 拢85.2m pre-tax loss
- 2016: 拢17.4m pre-tax loss
- 2015: 拢13.8m pre-tax loss
- 2014 拢8.5m pre-tax loss
- 2013 拢300,000 pre-tax profit
- 2012 拢17.0m pre-tax loss.
However, for the first six months of 2021, HSS made a pre-tax profit of 拢11.2m (2020 H1: 拢12.9m loss) on revenue of 拢150.5m (2020 H1: 拢120.7m).
"HSS today is unrecognisable from the HSS of 2017," said chief executive Steve Ashmore. "Over the last four years HSS has undergone a radical transformation to become a modern, agile, digitally-driven business. During this time, we have continued to deliver against the strategic goals we set out in 2017 鈥� to de-lever the group, transform the tool hire business, and strengthen our commercial proposition 鈥� and today's announcement marks the completion of one of these goals. With leverage at around 1.0x post this disposal, we have materially exceeded our previously stated targets. Going forward the group will target leverage remaining between 1.0-1.5x.
鈥淎SH has made an important contribution to the group over recent years and I would like to thank the team for their commitment. I am very pleased that the business will be joining Cross Rental Services, who recognise its value and will help it reach its full potential. HSS will continue to work with ASH to provide our UK customers with all of their larger scale HVAC hire requirements.
鈥淲ith a substantial reduction in net debt and a strong balance sheet, we are now positioned to refinance on attractive terms, improving sustainable cash flow and supporting our growth. We will continue to focus on our digital capabilities and differentiated customer proposition. Our strategy is delivering for all stakeholders and we look forward to a strong and healthy future for HSS."
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