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) – HSS’s heating, ventilation and air-conditioning hire business – will help to reduce the debt burden, which stood at £120m at the start of the year, it’s 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 £18m of HSS group revenues in 2020 and contributed £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 £23.6m pre-tax loss
- 2019: £5.8m pre-tax loss
- 2018: £4.5m pre-tax loss
- 2017: £85.2m pre-tax loss
- 2016: £17.4m pre-tax loss
- 2015: £13.8m pre-tax loss
- 2014 £8.5m pre-tax loss
- 2013 £300,000 pre-tax profit
- 2012 £17.0m pre-tax loss.
However, for the first six months of 2021, HSS made a pre-tax profit of £11.2m (2020 H1: £12.9m loss) on revenue of £150.5m (2020 H1: £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 – to de-lever the group, transform the tool hire business, and strengthen our commercial proposition – 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.
“ASH 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.
“With 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."