05.09.2019

HSS profits from UK Platforms sale

UK rental group HSS has reported a modest increase in first half revenues but remains in the red, although the one off profit from the sale of UK Platforms pushed the company firmly into profit.

Total revenues for the six months to the end of June were £161.4 million, up 3.9 percent on last year in a ‘like for like’ comparison with a pre-tax loss of £7.4 million compared to a loss of £10.2 million last year.
The Actual revenues last year with UK Platforms included were £169.8 million and the pre-tax loss £7.1 million, reflecting the positive contribution of UK Platforms, the sale of which generated £47.5 million with a net profit of £12.8 million. This pushed this year's bottom line into the black, with a profit of £7.55 million. £38 million of the cash from UK Platforms was used to pay down debt, reducing it to £186 million.

Chief executive Steve Ashmore said: “I am pleased to report a solid performance for the first half of 2019 in which the continued focus on driving profitable revenue growth through strong price control and effective cost management led to a significant improvement in return on capital and a further reduction in leverage. As set out in April, the next phase of our strategy is focused on strengthening our commercial proposition by enhancing the digital offer in our Rental business and transforming the customer experience in our OneCall Services business. We are pleased with the positive reaction to the launch of our customer app, the roll-out of new driver technology and the completion of our new automated OneCall system.”

We will continue to develop our digital offering, further improving the customer experience, and build on these early positive results. The widely reported headwinds in the economy have affected the tool hire market but HSS is well placed to manage these more challenging conditions. We have taken additional action to further optimise our operating cost base and have a clear strategy to build upon our existing excellent market positions, leaving us well placed to continue to grow share in all of our markets.”

Vertikal Comment

While this is a more positive result for HSS shareholders, the company still has a long way to go. And being in this position at what looks like the start of a period of uncertainty and possibly recession is not ideal. One cannot help but think that the company is a potential target for acquisition, it is after all a major player in the UK tool hire market with many strong assets in its favour.