HSS Hire

Welcome to our 2016 Annual Report

Scroll down to read the highlights of the year.
Or jump down to downloads to see all of the report in full.

Chairman’s Overview

Alan Peterson
quote

2016 was a year of investment in innovation, particularly in the ongoing development of our distribution and engineering model. Our clear objectives are to increase capital and operational efficiency and deliver the benefits of a significantly enhanced customer service proposition for competitive advantage in our Branch Network over the medium term. These underpin the Board’s commitment to creating profitable growth and shareholder value.

Alan Peterson
Chairman

The year was a transformational one for HSS, in which we invested in our operating model to incorporate an industrialised engineering function alongside our retail-like logistics capability. This will drive a real competitive advantage for our Branch Network, providing a paradigm shift in kit availability within our markets where we expect to see growth in the medium term. In addition, we grew our Services revenue significantly in 2016, delivering an attractive return with minimal capital investment. However, we were disappointed with our earnings out-turn, which was below our initial expectations for the year, as a consequence of our complex programme of change.

We took the decision to extend implementation of our network transformation programme into Q1 17 in order to minimise execution risk. We will now leverage our investment, concentrating on reinvigorating Rental revenues through reconnecting with customers who were impacted through the change. We expect the benefits of the transformation and sales plans to accrue in H2 17.

The Board remains confident that the changes undertaken in the year will position the business to drive improved shareholder returns over the medium term. Our focus in 2017 is firmly on cost control, operational and capital efficiency and deriving clear competitive advantage from our enhanced customer experience.

We have entered 2017 with a firm agenda to capture the full benefits from the material operational changes and investment made across the Group through 2016 and beyond. We have strengthened our sales leadership to drive Rental growth through our Branch Network via a significantly enhanced customer proposition. The Board remains fully committed to optimising this investment to deliver profitable growth and create shareholder value.

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Chief Executive Officer’s Review

CEO

In 2016, we focused hard on implementing a network transformation that will create clear competitive advantage for our Branch Network through ensuring industry leading kit availability to our customers – in short ensuring that we have the tools they need exactly when they need them. This programme has been complex and taken longer to achieve than originally anticipated – and we will continue to refine our network to support our customers, positioning us well for long-term growth and scale.

John Gill
Chief Executive Officer

Overview

In 2016 we invested heavily in our network to drive future operational and capital efficiency through centralised, industrialised engineering and logistics processes for our high-volume product lines. This new capability is supported by regional engineering expertise for larger Specialist hire fleet and lower transactional volume products and a retail-like logistics network replenishing our equipment in our national network of local branches. Our objective is to ensure certainty of kit availability through a very clear customer proposition delivered via a cost-efficient network.

The change programme was ambitious; we took the decision to delay implementation of the final element (Scotland) into early 2017 and I am pleased to say that the process is now complete, but we will continue to refine and right-size our network going forward as part of our culture of continuous improvement.

We should start to see the benefits over the medium term.

The investment and extended period of change impacted our profit performance. Whilst we delivered strong revenue growth in Services and via our larger customer accounts, both of which are earnings enhancing, performance in our local and regional customers was weaker than expected, leading to lower profits than anticipated at the start of 2016.

We are now well positioned to leverage our investment through the implementation of sales plans that will win back customers impacted by the change. We are therefore focused hard on ensuring profitable Rental revenue growth in our Core customer base of smaller and regional accounts. We have invested in our senior management team, with the creation of a new post of Chief Commercial Officer, to drive this forward in 2017.

Our Strategy

Our strategy continues to be centred on three priorities which are inherent to the creation of long-term shareholder value, through a strong focus on the scalable benefits of operational and capital efficiency and enhanced customer service.

Customer needs

Availability

Safety

Support

Value

Our strategy

Win new, and deepen existing, customer relationships

Optimise the distribution and branch network

Continued development and growth of our specialist businesses

Scalable benefits

Enhanced customer service proposition

Operational and capital efficiencies

Shareholder value

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2016 performance highlights

Revenue £342.4m +9.6%

Adjusted EBITDA £68.6m (3.4%)

Adjusted EBITA £20.5m +1.0%

Operating (loss) / profit (£2.7m) £6.8m

Reported EPS
(basic and diluted)
(11.18p) (1.32p)

Adjusted EPS (diluted) 2.94p (0.26p)

Core utilisation (LTM) 50% +2pp

Specialist utilisation (LTM) 75% (1pp)

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Downloads Centre

Annual Report 2016

  • Full Report

    Contains all content from the Annual Report 2016.

    Download PDF (9.4 MB)

    Request the print version.

  • Strategic Report

    Includes the Chairman’s Statement, the Chief Executive Officer’s Review and the Financial Review together with an overview of the business including its strategy, business model, marketplace, KPIs and principal risks and uncertainties.

    Download PDF (5.7 MB)
  • Directors' Report

    Includes the Chairman’s overview of corporate governance, reports from each of the Board Committees (Audit, Nomination, Market Disclosure, and Remuneration) together with the Directors’ Remuneration Report and other statutory disclosures.

    Download PDF (1.9 MB)
  • Financial information

    Independent Auditor’s Report, Financial Statements, Company Information, Shareholder Information and Definitions and Glossary.

    Download PDF (1.7 MB)

Annual general meeting

Our AGM is at 11am on 14th June 2017 at
Hilton Garden Inn, Eastern Perimeter Road, Hatton Cross, Heathrow, TW6 2SQ.
The Notice of AGM for this meeting can be downloaded here.

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