REG - HSS Hire Group PLC - Interim report: Half year results

HSS HireAnnouncement

30/08/2018 07:05

RNS Number : 2403Z
HSS Hire Group PLC
30 August 2018
 


HSS Hire Group Plc
Interim report: Half year results for the 26 week period ended 30 June 2018
Significant progress made against strategic priorities
HSS Hire Group plc ("HSS" or the "Group") today announces results for the 26 week period ended 30 June 2018.
 




 
Financial Highlights


H1 2018
(26 weeks)


H1 2017
(26 weeks)


Change




Revenue


£169.8m


£160.5m


5.8%




Adjusted EBITDA1


£29.9m


£17.1m


74.7%




Adjusted EBITDA margin


17.6%


10.6%


7.0pp




Adjusted EBITA2


£6.8m


(£7.3m)


£14.1m




Adjusted EBITA margin


4.0%


(4.5%)


8.5pp




Adjusted loss before tax


(£0.7m)


(£14.2m)


£13.5m




Adjusted earnings per share


(0.32p)


(6.74p)


6.42p




Interim dividend


-


-


-




 


 


 


 




Reported loss before tax


(£7.1m)


(£30.1m)


£23.0m




Reported loss per share


(4.45p)


(17.81p)


13.36p




 
Highlights for H1 18
·      Adjusted EBITDA growth of 74.7%
o  Rental revenue growth and cost initiatives improved margins by 7.0pp to 17.6%
o  LTM Adjusted EBITDA of £61.7m
 
·      Revenue growth of 5.8% driven by improved availability and sales initiatives
o  Underlying3 revenue growth of 8.7%
o  Underlying3 core rental revenue growth of 3.7%
o  LTM utilisation4 has increased in Tool Hire to 52.3% (H1 17: 49.5%) and remained consistently high in Specialist businesses at 73.6% (H1 17: 73.6%).
o  Continued strength in Services with revenue +13.9% and contribution +30.8% 
 
·      Significant reduction in net leverage to 3.7x (FY17: 4.3x)
o  Net debt has reduced by £7.5m during the first half of the year
o  Cash and total facility headroom greater than £35m as at 30 June 2018
 
·      Secured successful refinancing
o  Appropriate facilities in place to continue delivering on our strategic priorities and the Group's full potential
 
·      Network reconfiguration implementation complete
o  Full implementation of new supply chain model complete with expected savings of c.£11m
 
Current Trading and Outlook
·      Trading momentum continued for the 8 weeks to 25 August 2018
o  Underlying3 revenue grew more than 5% against the comparable prior year period
o  Underlying3 core rental revenue grew more than 4% against the comparable prior year period
o  Continued growth in EBITDA
 
·      Secured shareholder approval for proposed sale of UK Platforms Limited
o  Total Enterprise Value of £60.5 million
o  Net cash proceeds from the Disposal will be approximately £47.5 million
o  At least 80% will be used to repay debt, with the balance to be invested in the tool hire business
o  Subject to CMA approval
 
·      Reducing Group leverage continues to be a key focus
o  Cash and RCF headroom increased by £18m post successful refinancing
o  Looking ahead, we expect further deleveraging to occur during the second half of 2018 following the continued implementation of the identified strategic actions and the use of proceeds from the proposed sale of UK Platforms Limited
 
Steve Ashmore, Chief Executive Officer of HSS Hire, said:
 
"We are eight months into our new strategy and the Group has made significant progress. In this time we transitioned seamlessly to a new distribution model, refinanced the Group giving us long-term stability and announced the sale of our UK Platforms business, allowing us to focus on the tool hire business and further reduce our debt.
 
Alongside this strong operational progress, trading has been much improved, helped by our increased focus on our tool hire business and by customer demand for our extensive range of relevant seasonal products.
 
With significant operational change behind us and continued momentum in current trading, we look forward with confidence as our attention turns to driving improved performance from the tool hire business and strengthening the Group's commercial proposition."
 
Notes
1) Adjusted EBITDA is defined as operating profit before depreciation, amortisation, and exceptional items. For this purpose depreciation includes the net book value of hire stock losses and write offs, and the net book value of other fixed asset disposals less the proceeds on those disposals.
2) Adjusted EBITA is defined as operating profit before amortisation and exceptional items
3) Underlying revenue is total revenue adjusted for the impact of business divestments in 2017
4) Utilisation calculated over the last twelve months to the end of H1 2018
 
 
-Ends-
 
Disclaimer:
 
This announcement contains forward-looking statements relating to the business, financial performance and results of HSS Hire Group plc and the industry in which HSS Hire Group plc operates. These statements may be identified by words such as "expect", "believe", "estimate", "plan", "target", or "forecast" and similar expressions, or by their context. These statements are made on the basis of current knowledge and assumptions and involve risks and uncertainties. Various factors could cause actual future results, performance or events to differ materially from those described in these statements and neither HSS Hire Group plc nor any other person accepts any responsibility for the accuracy of the opinions expressed in this presentation or the underlying assumptions. No obligation is assumed to update any forward-looking statements.
 
Notes to editors
HSS Hire Group plc provides tool and equipment hire and related services in the UK and Ireland through a nationwide network of over 250 locations. Focusing primarily on the maintain and operate segments of the market, over 90% of its revenues come from business customers. HSS is listed on the Main Market of the London Stock Exchange. For more information please see www.hsshiregroup.com.
 
For further information, please contact:
 




HSS Hire Group plc


Tel: 020 3757 9248 (on 30 August 2018)




Steve Ashmore, Chief Executive Officer


Thereafter, please email: Investors@hss.com




Paul Quested, Chief Financial Officer


 




Jonathan Edwards, Investor Relations, Treasury and Special Projects Manager


 




 




Teneo Blue Rubicon


Tel: 020 3757 9248




Robert Morgan
Shona Buchanan


 




 
 
Group financial performance
Revenue
Revenue in H1 18 was £169.8m, 5.8% above the previous year (H1 17: £160.5m). This year on year increase reflects improved trading in H1 18 across both our Rental and Services segments.
Rental and related revenues were £122.7m in H1 18 (H1 17: £119.3m), £3.4m or 2.9% higher than in H1 17. This was driven by improved performance in our core tool hire business delivered through focused sales initiatives, improved availability following the smooth implementation of strategic network changes moving test and repair of equipment back into our branches and the implementation of strategic profitability initiatives. Contribution was £80.5m (H1 17: £73.9m), an increase of 8.8% on H1 17 representing a 65.6% margin (H1 17: 62.0%) largely driven by improved revenues and lower operating costs following the network changes made earlier in the year.
Services revenues were £47.0m in H1 18 (H1 17: £41.3m), reflecting a strong performance in our OneCall and Training businesses with customers continuing to value the "one stop shop" service offer. Contribution increased significantly to £6.7m (H1 17: 5.2m), with margins improving to 14.3% (H1 17: 12.6%), reflecting ongoing focus on pricing discipline and effective supply chain management.
Costs
Cost of sales grew by £2.8m to £78.8m during the period (H1 17: £76.0m) primarily as a result of the growth in our rehire revenues and associated costs. Distribution costs decreased by £2.7m to £20.7m (H1 17: £23.4m) benefiting from increased efficiency following the strategic network changes made earlier in 2018. Administrative expenses decreased by £14.8m to £70.1m (H1 17: £84.9m) due to the benefit of cost actions taken in 2017 and 2018 combined with lower exceptional costs. 
Gross exceptional costs in H1 18 were considerably lower at £3.3m (H1 17: £12.6m), including £1.6m of costs which relate to onerous leases on branch closures, £0.5m impairment of fixed assets associated with these closures, £0.7m relating to the implementation of the cost reduction programme across the Group and £0.7m of third party costs to complete the strategic review. In H1 17, exceptional costs were £12.6m, of which £6.2m related to the impairment of property, plant and equipment and £5.0m related to onerous leases. Exceptional income during H1 18 was £0.2m (H1 17: £0.5m) and related to fully or sub-let non-trading stores. This decrease was as a result of sub-let agreements coming to the end of their tenure.
Net finance expenses were £0.5m higher at £7.4m (H1 17: £6.9m) reflecting a higher level of drawdown on the revolving credit facility.
Profitability
Adjusted EBITDA of £29.9m in H1 18 was 74.7% higher than the prior year (H1 17: £17.1m), with adjusted EBITDA margins improving 7.0pp to 17.6% (H1 17: 10.6%).  The improving profitability was driven by increased revenues in the period and lower costs due to actions taken in 2017 and 2018, including the successful implementation of the network changes which is expected to realise around £11m of annualised ongoing cost benefit as well as improved availability.
Adjusted EBITA increased from a loss of £7.3m in H1 17 to a profit of £6.8m in H1 18, with the margin improving to 4.0% (H1 17 -4.5%), for the reasons described above, and is in line with management expectations.
Loss before tax reduced by 76.5% to £7.1m, from £30.1m in H1 17, reflecting stronger underlying performance year on year, together with lower exceptional costs. 
The basic and diluted loss per share improved to a loss of 4.45p in H1 18 from 17.81p in H1 17, reflecting the lower loss before tax during H1 18.
The adjusted basic and diluted earnings per share saw a small loss of 0.32p per share in H1 18, improving from a loss of 6.74p in H1 17. This reflects an improvement in the adjusted loss before tax position in H1 18 of £0.7m, compared to a loss of £14.2m in H1 17. 
Net debt
Net debt at 30 June 2018 was £225.2m, £7.5m lower than December 17 (FY 17: £232.7m) through improved Group profitability and continued focus on working capital efficiency.  Headroom in the Group's total facilities including net cash was £35.4m.
On 10 July 2018 the Group successfully refinanced with £245m of new debt facilities replacing the existing senior secured notes and revolving credit facility.
The new debt facilities consist of a £220m term loan facility, with £200m maturing in June 2023 and £20m in December 2020, along with a new revolving credit facility of £25m maturing in December 2022.
In connection with the provision of this new term facility, on 20 June 2018 the Company granted 8,510,300 warrants to subscribe for new ordinary shares to the lenders under the facility, exercisable at £0.01 per share.  The fair value of the warrants at the date of grant was £2.7m. 
Total other lender and advisory fees incurred in respect of the new facilities amount to around £11m and have been included in accruals at 30 June 2018. These costs and the fair value of the warrants have been deferred in the balance sheet and will be reclassified to debt issue costs in H2 2018.  They will then be amortised to the income statement over the life of the facility.  Debt issue costs of £1.5m were written off in H2 2018 in relation to the facilities that these arrangements replaced.
Proposed sale of UK Platforms Limited
On 19 July 2018, the Group announced that it had entered into a conditional agreement with Nationwide Platforms Limited for the sale of UK Platforms Limited for a total Enterprise Value of £60.5m and expected net cash proceeds of £47.5m, the majority of which will be used to pay down debt.
HSS shareholder approval for the transaction was granted on 7 August 2018.
Completion of the disposal, contingent upon confirmation that the proposed transaction is not referred to the Competition and Mergers Authority and retention of key managers, is expected to occur in Q4 2018.
Dividend
The Board remains firmly focused on reducing net debt in line with the clear priorities set out in our Strategic Review. As such, it believes that the interests of the shareholders of the Group are best served by not paying a dividend until the net debt leverage ratio falls below 2.5x at the earliest.  This is in line with the new term loan facility agreement.
Risks and uncertainties
The principal risks and uncertainties that could have a material impact upon the Group's performance over the remaining 26 weeks of the 2018 financial year have not changed significantly from those described in the Group's 2017 Annual Report and are summarised in note 14 of this interim report. 
Responsibility Statement
We confirm to the best of our knowledge that:
(a)   the condensed interim set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union;
(b)   the Interim Report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
(c)   the Interim Report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
By order of the Board
 
Steve Ashmore
Director
30 August 2018
 
 
 

HSS Hire Group plc  

Unaudited condensed consolidated income statement
 




 


 


 


26 weeks ended 30 June 2018


52 weeks ended 30 December 2017


26 weeks ended 1 July 2017




 


Note


 


£000s


£000s


£000s




 


 


 


 


 


 




Revenue


3


 


169,772


335,780


160,538




 


 


 


 


 


 




Cost of sales


 


 


(78,794)


(154,289)


(76,000)




 


 


 


 


 


 




Gross profit


 


 


90,978


181,491


84,538




 


 


 


 


 


 




Distribution costs


 


 


(20,669)


(46,140)


(23,423)




Administrative expenses


 


 


(70,142)


(207,652)


(84,866)




Other operating income


4


 


182


882


525




 


 


 


 


 


 




Operating profit / (loss)


 


 


349


(71,419)


(23,226)




 


 


 


 


 


 




Adjusted EBITDA(1)


3, 17


 


29,864


48,944


17,095




Less: Adjusted depreciation (1)


 


 


(23,111)


(47,159)


(24,394)




Adjusted EBITA(1)


17


 


6,753


1,785


(7,299)




Less: Exceptional items


4


 


(3,335)


(66,567)


(12,643)




Less: Amortisation(1)


7


 


(3,069)


(6,637)


(3,284)




 


 


 


 


 


 




Operating profit / (loss)


 


 


349


(71,419)


(23,226)




 


 


 


 


 


 




Net finance expense


5


 


(7,420)


(13,743)


(6,915)




 


 


 


 


 


 




Loss before tax


 


 


(7,071)


(85,162)


(30,141)




 


 


 


 


 


 




Adjusted loss before tax


 


 


(667)


(11,958)


(14,214)




Less: Exceptional items


4


 


(3,335)


(66,567)


(12,643)




Less: Amortisation


7


 


(3,069)


(6,637)


(3,284)




 


 


 


 


 


 




Loss before tax


 


 


(7,071)


(85,162)


(30,141)




 


 


 


 


 


 




Taxation


 


 


(502)


5,240


(175)




 


 


 


 


 


 




Loss for the financial period


 


 


(7,573)


(79,922)


(30,316)




 


 


 


 


 


 




Loss per share


 


 


 


 


 




Basic and diluted loss per share


6


 


(4.45)


(46.96)


(17.81)




Adjusted basic and diluted loss per share(2)


6


 


(0.32)


(5.68)


(6.74)




 
(1)   Adjusted EBITDA is defined as operating profit before depreciation, amortisation, and exceptional items.  For this purpose depreciation includes the net book value of hire stock losses and write offs, and the net book value of other fixed asset disposals less the proceeds on those disposals. Adjusted EBITA is defined as operating profit before amortisation and exceptional items.
(2)   Adjusted earnings per share is defined as profit before tax with amortisation and exceptional costs added back less tax at the prevailing rate of corporation tax divided by the weighted average number of ordinary shares.
 
The notes form part of these condensed consolidated financial statements.
 
 

HSS Hire Group plc  

Unaudited condensed consolidated statement of comprehensive income
 




 


 


 


26 weeks ended 30 June 2018


52 weeks ended 30 December 2017


26 weeks ended 1 July 2017




 


 


 


£000s


£000s


£000s




 


 


 


 


 


 




Loss for the financial period


 


 


(7,573)


(79,922)


(30,316)




 


 


 


 


 


 




Items that may be reclassified to profit or loss:


 


 


 


 


 




Foreign currency translation differences arising on consolidation of foreign operations


 


 


(51)


104


144




 


 


 


 


 


 




Other comprehensive loss for the period, net of tax


 


 


(51)


104


144




 


 


 


 


 


 




Total comprehensive loss for the period


 


 


(7,624)


(79,818)


(30,172)




 


 


 


 


 


 




Attributable to owners of the Company


 


 


(7,624)


(79,818)


(30,172)




 
 
The notes form part of these condensed consolidated financial statements.
 
 

HSS Hire Group plc  

Unaudited condensed consolidated statement of financial position
 




 


 


30 June

2018


30 December 2017


1 July

2017




 


Note


£000s


£000s


£000s




 


 


 


 


 




ASSETS


 


 


 


 




Non-current assets


 


 


 


 




Intangible assets


7


170,201


172,509


177,277




Property, plant and equipment


8


136,464


150,915


161,945




Deferred tax assets


 


358


358


532




 


 


307,023


323,782


339,754




 


 


 


 


 




Asset held for resale


 


-


1,500


-




 


 


 


 


 




Current assets


 


 


 


 




Inventories


 


6,153


5,519


7,817




Trade and other receivables


9


110,192


96,503


97,874




Cash


 


10,056


2,151


7,070




 


 


126,401


104,173


112,761




 


 


 


 


 




Total assets


 


433,424


429,455


452,515




 


 


 


 


 




LIABILITIES


 


 


 


 




Current liabilities


 


 


 


 




Trade and other payables


10


(93,263)


(82,452)


(83,209)




Borrowings


11


(74,000)


(69,000)


(68,500)




Provisions


12


(10,303)


(16,684)


(6,236)




Current tax liabilities


 


(47)


(90)


(500)




 


 


(177,613)


(168,226)


(158,445)




 


 


 


 


 




Non-current liabilities


 


 


 


 




Trade and other payables


10


(12,110)


(14,105)


(17,185)




Borrowings


11


(134,470)


(134,242)


(133,733)




Provisions


12


(37,522)


(36,510)


(12,032)




Deferred tax liabilities


 


(3,036)


(2,800)


(7,911)




 


 


(187,138)


(187,657)


(170,861)




 


 


 


 


 




Total liabilities


 


(364,751)


(355,883)


(329,306)




 


 


 


 


 




Net assets


 


68,673


73,572


123,209




 


 


 


 


 




EQUITY


 


 


 


 




Share capital


 


1,702


1,702


1,702




Merger reserve


 


97,780


97,780


97,780




Warrant reserves


 


2,694


-


-




Foreign exchange translation reserve


 


374


425


321




Retained earnings


 


(33,877)


(26,335)


23,406




Total equity attributable to owners of the group


 


68,673


73,572


123,209




 
 
The notes form part of these condensed consolidated financial statements.
 
 

HSS Hire Group plc  

Unaudited condensed consolidated statement of changes in equity
 




 


 


 
 
 
Share capital


 
 
 
Merger reserve


 
 
 
Warrant reserve


Foreign exchange translation reserve


 
 
 
Retained earnings


 
 
 
Total equity




 


Note


£000s


£000s


£000s


£000s


£000s


£000s




At 30 December 2017


 


1,702


97,780


- 


425


(26,335)


73,572




Total comprehensive loss for the period


 


 


 


 


 


 


 




Loss for the period


 


- 


- 


- 


- 


(7,573)


(7,573)




Foreign currency translation differences arising on consolidation of foreign operations


 


- 


- 


- 


(51)


- 


(51)




Total comprehensive loss for the period


 


- 


- 


- 


(51)


(7,573)


(7,624)




Transactions with owners recorded directly in equity


 


 


 


 


 


 


 




Transfer to warrant reserve


15


- 


- 


2,694


- 


- 


2,694




Share based payment


 


- 


- 


- 


- 


31


31




At 30 June 2018


 


1,702


97,780


2,694


374


(33,877)


68,673




 


 


 


 


 


 


 


 




 


 


Share capital


Merger reserve


Warrant reserve


Foreign exchange translation reserve


Retained earnings


Total equity




 


 


£000s


£000s


£000s


£000s


£000s


£000s




At 1 January 2017


 


1,702


97,780


- 


321


53,583


153,386




 


 


 


 


 


 


 


 




Loss for the period


 


- 


- 


- 


- 


(30,316)


(30,316)




Foreign currency translation differences arising on consolidation of foreign operations


 


- 


- 


- 


- 


144


144




Total comprehensive loss for the period


 


- 


- 


- 


- 


(30,172)


(30,172)




Transactions with owners recorded directly in equity


 


 


 


 


 


 


 




Share based payment


 


- 


- 


- 


- 


(5)


(5)




At 1 July 2017


 


1,702


97,780


- 


321


23,406


123,209




 


 


 


 


 


 


 


 




 


 


Share capital


Merger reserve


Warrant reserve


Foreign exchange translation reserve


Retained earnings


Total equity




 


 


£000s


£000s


£000s


£000s


£000s


£000s




At 1 January 2017


 


1,702


97,780


- 


321


53,583


153,386




 


 


 


 


 


 


 


 




Loss for the period


 


- 


- 


- 


- 


(79,922)


(79,922)




Foreign currency translation differences arising on consolidation of foreign operations


 


- 


- 


- 


104


- 


104




Total comprehensive loss for the period


 


- 


- 


- 


104


(79,922)


(79,818)




Transactions with owners recorded directly in equity


 


 


 


 


 


 


 




Share based payment charge


 


- 


- 


- 


- 


4


4




At 30 December 2017


 


1,702


97,780


- 


425


(26,335)


73,572




 
 
The notes form part of these condensed consolidated financial statements.
 
 

HSS Hire Group plc  

Unaudited condensed consolidated statement of cash flows




 


 


26 weeks ended 30 June 2018


52 weeks ended 30 December 2017


26 weeks ended 1 July 2017




Cash flows from operating activities


 


£000s
 


£000s
 


£000s
 




Loss before tax


 


(7,071)


(85,162)


(30,141)




Adjustments for:


 


 


 


 




- Amortisation


 


3,069


6,637


3,284




- Depreciation


 


17,462


37,006


18,894




- Net book value of hire stock losses and write offs


 


5,474


10,066


5,500




- Impairment of property, plant and equipment


 


450


11,230


6,225




- Impairment of intangible assets


 


-


1,239


-




- Loss on disposal of property, plant and equipment


 


175


87


-




- Loss on disposal of intangible assets


 


-


3


-




- Loss on disposal of subsidiary


 


-


4,919


-




- Share based payment charge


 


31


4


(5)




- Net finance expense


 


7,420


13,743


6,915




Changes in working capital (excluding the effects of disposals and exchange differences on consolidation):


 


 


 


 




- Inventories


 


(634)


804


81




- Trade and other receivables


 


(11,001)


6,560


5,853




- Trade and other payables


 


14,187


(5,764)


(3,350)




- Provisions


 


(5,586)


31,504


984




Net cash flows from operating activities before changes in hire equipment


 


23,976


32,876


14,240




Purchase of hire equipment


 


(5,837)


(22,787)


(11,852)




 


 


 


 


 




Cash generated from operating activities


 


18,139


10,089


2,388




Net interest paid


 


(6,902)


(12,494)


(6,884)




Tax paid


 


(240)


(59)


(219)




Net cash generated from / (used in) operating activities


 


10,997


(2,464)


(4,715)




 


 


 


 


 




Cash flows from investing activities


 


 


 


 




Proceeds on disposal of businesses, net of cash disposed of


 


-


1,138


-




Proceeds on disposal of assets held for sale


 


1,500


-


-




Purchases of non-hire property, plant, equipment and software


 


(2,862)


(7,260)


(4,114)




Net cash used in investing activities


 


(1,362)


(6,122)


(4,114)




 


 


 


 


 




Cash flows from financing activities


 


 


 


 




Bank arrangement fees


 


(400)


-


-




Share issue costs


 


-


-


(226)




Proceeds from borrowings (third parties)


 


8,000


18,000


3,500




Repayments of borrowings


 


(3,000)


(15,000)


(1,000)




Cash received from refinancing hire stock


 


-


5,030


5,030




Capital element of finance lease payments


 


(6,330)


(12,504)


(6,616)




Net cash received from financing activities


 


(1,730)


(4,474)


688




 


 


 


 


 




Net increase / (decrease) in cash


 


7,905


(13,060)


(8,141)




Cash at the start of the period


 


2,151


15,211


15,211




Cash at the end of the period


 


10,056


2,151


7,070




 
 
The notes form part of these condensed consolidated financial statements.
 
 

HSS Hire Group plc  

Notes forming part of the condensed consolidated financial statements
 
1.         General information
 
The Company is a public limited company which is listed on the London Stock Exchange and is incorporated and domiciled in the United Kingdom. The address of the registered office is Oakland House, 76 Talbot Road, Old Trafford, Manchester, England, M16 0PQ.
 
The condensed consolidated financial statements as at, and for the 26 weeks ended 30 June 2018 comprise the Company and its subsidiaries (the 'Group').
 
The Group is primarily involved in providing tool and equipment hire and related services in the United Kingdom and the Republic of Ireland.
 
The condensed consolidated financial statements were approved for issue by the Board on 29 August 2018.
 
The condensed consolidated financial statements do not comprise Statutory Accounts within the meaning of Section 434 of the Companies Act 2006. The comparative financial information for the 26 weeks ended 30 June 2018, and the 52 weeks ended 30 December 2017, do not constitute statutory accounts for those periods, respectively. Statutory Accounts for the year ended 30 December 2017 were approved by the Board on 5 April 2018 and delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified, did not include a reference to any matter by way of emphasis and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.
 
2.         Basis of preparation
 
The condensed consolidated financial statements for the 26 weeks ended 30 June 2018 have been prepared in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority and relevant International Financial Reporting Standards ('IFRS') as adopted by the European Union (including IAS 34 Interim Financial Reporting). The condensed consolidated financial statements should be read in conjunction with the Group's Annual Report and Accounts for the year ended 30 December 2017, which were prepared in accordance with IFRS as adopted by the European Union.
 
IFRS 9 Financial instruments and IFRS 15 Revenue from contracts with customers have been adopted in these condensed consolidated financial statements but neither these IFRS nor any IFRIC Interpretations that are effective for the first time for this interim period have had a material impact on the Group. The accounting policies and judgements and estimates, applied in the condensed consolidated financial statements are therefore consistent with those set out in the Group's Annual Report and Accounts for the year ended 30 December 2017.
 
For the year ending 28 December 2019, the Group will adopt IFRS 16 Leases. Having performed an initial review of this standard, the Directors expect it will have a material impact on reported assets and liabilities, EBITDA, operating profit and interest expense as more assets (called right of use assets) are capitalised on to the balance sheet in relation to the lease contracts the Group has entered into.
 
Going concern
 
The Directors have reviewed the Group's current performance, forecasts and projections, taking account of reasonably possible changes in trading performance and considering senior debt and interest repayments, combined with expenditure commitments.  In particular the directors have considered the adequacy of the Group's debt facilities with specific regard to the following factors:
 
-     the financial covenants relating to the new  term loan facility of £220 million and revolving credit facility of £25 million secured by the Group
-     the maturity of the term loan facility (£20m in December 2020, £200m in June 2023) and revolving credit facility in December 2022
 
After reviewing the above, taking into account current and future developments and principal risks and uncertainties, and making appropriate enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.  Accordingly they continue to adopt the going concern basis in preparing these condensed consolidated interim financial statements.
 
3.         Segmental reporting
 
The Group's operations are segmented into the following reportable segments:
 
-       Rental and related revenue.
-       Services.
 
Rental and related revenue comprises the rental income earned from owned tools and equipment, including powered access, power generation, cleaning and HVAC assets, together with directly related revenue such as resale (fuel and other consumables) transport and other ancillary revenues.
 
Services comprise the Group's rehire business (HSS OneCall) and HSS Training. HSS One Call provides customers with a single point of contact for the hire of products that are not typically held within HSS' fleet and are obtained from approved third party partners; HSS Training provides customers with specialist safety training across a wide range of products and sectors.
 
Contribution is defined as segment operating profit before branch and selling costs, central costs, depreciation, amortisation and exceptional items.
 
All segment revenue, operating profit, assets and liabilities are attributable to the principal activity of the Group being the provision of tool and equipment hire and related services in, and to customers in, the United Kingdom and the Republic of Ireland. Revenue from one customer exceeded 10% of Group turnover in the period ending 30 June 2018 (26 week ending 1 July 2017: one).
 




 


 


26 weeks ended 30 June 2018




 


 


Rental (and related revenue)


Services


Central


Total




 


 


£000s


£000s


£000s


£000s




 


 


 


 


 


 




Total revenue from external customers


 


122,740


47,032


-


169,772




 


 


 


 


 


 




Contribution


 


80,459


6,749


-


87,208




 


 


 


 


 


 




Branch and selling costs


 


 


 


(43,237)


(43,237)




Central costs


 


 


 


(14,107)


(14,107)




Adjusted EBITDA


 


 


 


 


29,864




Less: Exceptional items


 


-


-


(3,335)


(3,335)




Less: Depreciation and amortisation


 


(20,888)


(81)


(5,211)


(26,180)




Operating loss


 


 


 


 


349




Net finance expenses


 


 


 


 


(7,420)




Loss before tax


 


 


 


 


(7,071)




 


 


 


 


 


 




Additions to non-current assets


 


 


 


 


 




Property, plant and equipment


 


6,894


46


2,324


9,264




Intangibles


 


-


124


635


759




Non-current assets net book value


 


 


 


 


 




Property, plant and equipment


 


106,050


224


30,190


136,464




Intangibles


 


134,974


365


34,860


170,199




Unallocated corporate assets


 


 


 


 


 




Non-current deferred tax assets


 


 


 


358


358




Current assets


 


 


 


126,401


126,401




Current liabilities


 


 


 


(177,613)


(177,613)




Non-current liabilities


 


 


 


(187,138)


(187,138)




Net assets


 


 


 


 


68,671




 
 




 


 


26 weeks ended 1 July 2017




 


 


Rental (and related revenue)


Services


Central


Total




 


 


£000s


£000s


£000s


£000s




 


 


 


 


 


 




Total revenue from external customers


 


119,252


41,286


-


160,538




 


 


 


 


 


 




Contribution


 


73,930


5,158


-


79,088




 


 


 


 


 


 




Branch and selling costs


 


-


-


(41,315)


(41,315)




Central costs


 


-


-


(20,678)


(20,678)




Adjusted EBITDA


 


 


 


 


17,095




Less: Exceptional items


 


-


-


(12,643)


(12,643)




Less: Depreciation and amortisation


 


(21,499)


(164)


(6,028)


(27,678)




Operating loss


 


 


 


 


(23,226)




Net finance expenses


 


 


 


 


(6,915)




Loss before tax


 


 


 


 


(30,141)




 


 


 


 


 


 




Additions to non-current assets


 


 


 


 


 




Property, plant and equipment


 


11,623


18


2,289


13,930




Intangibles


 


-


109


1,697


1,806




Non-current assets net book value


 


 


 


 


 




Property, plant and equipment


 


125,611


343


35,991


161,945




Intangibles


 


168,336


549


8,392


177,277




Unallocated corporate assets


 


 


 


 


 




Non-current deferred tax assets


 


 


 


532


532




Current assets


 


 


 


112,761


112,761




Current liabilities


 


 


 


(158,445)


(158,445)




Non-current liabilities


 


 


 


(170,861)


(170,861)




Net assets


 


 


 


 


123,209




 
4.         Exceptional items
 
Items of income or expense have been shown as exceptional either because of their size or nature or because they are non-recurring. An analysis of the amount presented as exceptional items in the consolidated income statement is given below.
 
During the period ended 30 June 2018, the Group has recognised net exceptional costs as follows:
 




 


Included in administrative expenses


Included in other operating income


26 weeks ended 30 June 2018




 


£000s


£000s


£000s




Onerous leases


1,634


-


1,634




Impairment of property, plant & equipment


450


-


450




Cost reduction programme


711


-


711




Strategic review


722


-


722




Sub-let rental income on onerous leases


-


(182)


(182)




Exceptional items


3,517


(182)


3,335




 
During the period ended 30 December 2017, the Group has recognised net exceptional costs as follows:




 


Included in cost of sales


Included in distribution costs


Included in administrative expenses


Included in other operating income


   Year ended 30 December 2017




 


£000s


£000s


£000s


£000s


£000s




Onerous leases


-


-


6,903


-


6,903




Impairment of property, plant and equipment


-


-


8,279


-


8,279




Business divesture


-


-


4,919


-


4,919




Cost reduction programme


176


131


3,432


-


3,739




Senior management changes


-


-


1,031


-


1,031




Strategic review


-


-


1,172


-


1,172




Network reconfiguration


-


-


40,692


-


40,692




Preparatory refinancing cost


-


-


714


-


714




Sub-let rental income on onerous leases


-


-


-


(882)


(882)




Exceptional items


176


131


67,142


(882)


66,567




 
During the period ended 1 July 2017, the Group has recognised net exceptional costs as follows:




 


Included in cost of sales


Included in distribution costs


Included in administrative expenses


Included in other operating income


26 weeks ended

1 July 2017




 


£000s


£000s


£000s


£000s


£000s




Branch and distribution centre closure onerous leases


-


-


4,969


-


4,969




Impairment of property, plant and equipment


-


-


6,225


-


6,225




Cost reduction programme


95


162


1,717


-


1,974




Sub-let rental income on onerous leases


-


-


-


(525)


(525)




Exceptional items


95


162


12,911


(525)


12,643




 
Onerous leases: branch and distribution centre closures
 
The number of branches has been reduced to remove less profitable locations with activity centralised into fewer locations. 12 branches were closed during the 26 weeks ended 30 June 2018 (26 weeks ending 1 July 2017: 50; 52 weeks ended 30 December 2017: 55). An exceptional cost of £1.6 million relating to dark stores and onerous leases has been recorded in the period (26 weeks ending 1 July 2017: £5.0 million; 52 weeks ended 30 December 2017: £6.9 million). Sub-let rental income on onerous leases for the period amounted to £0.2 million (52 weeks ended 30 December 2017: £0.9 million; 26 weeks ending 1 July 2017: £0.5 million).
 
Cost reduction programme and network reconfiguration
 
Following the Strategic Review in the second half of the 2017 financial year, the Group has embarked upon a plan to deliver annual cost savings estimated to be between £10 million and £14 million. Principal to this were annual savings of between £7 million and £10 million to be achieved through the reconfiguration of the Group's supply chain model by moving the testing and repair of all fast moving products closer to our customers. In order to realise these benefits, network reconfiguration costs of £40.7 million was recognised in the year ended 30 December 2017 including the impairment, totalling £7.6m, of certain assets. 
 
The annual cost savings also include a reduction in central overhead estimated to be between £3 million and £4 million.  To realise these benefits, largely relating to redundancy costs, an exceptional item of £0.7 million has been recorded during the 26 weeks ended 30 June 2018.
 
The Group announced plans in the first half of the financial year 2017 to deliver significant cost reductions primarily by reducing head office headcount by redundancy and restructuring costs at the NDEC to drive operational efficiencies in the supply chain.  These initiatives gave rise to exceptional items of £3.7 million and £2.0 million for the 52 weeks ended 30 December 2017 and 26 weeks ended 1 July 2017 respectively.
 
Strategic review
 
Non-recurring third party consultancy costs of £0.7 million were incurred by the Group towards its strategic review. (52 weeks ended 30 December 2017: £1.2 million; 26 weeks ending 1 July 2017: £nil)
 
Impairment of closed branch property, plant and equipment
 
Following the branch closures management conducted an impairment review of property plant and equipment in closed branches to determine what can be reused across the network. During the 26 weeks ended 30 June 2018 an impairment of £0.5m was recorded in relation to branches closed in the period (26 weeks ended 1 July 2017: £6.2 million; year ended 30 December 2017 £8.3 million).
 
Business divesture
 
The Group sold businesses not considered core to the strategy during the 52 weeks ended 30 December 2017.  The Reintec branded fleet of cleaning machines and the associated Tecserv equipment maintenance business were sold on 16 November 2017 for a consideration of £1.5 million.  After transaction costs net proceeds were £1.2 million.   This gave rise to a loss of £4.9 million including goodwill written off of £0.8 million.
 
5.         Finance income and expense
 




 


 


 


26 weeks ended 30 June 2018


52 weeks ended 30 December 2017


26 weeks ended 1 July 2017




 


 


 


£000s


£000s


£000s




 


 


 


 


 


 




Interest received on cash deposits


 


 


-


-


(1)




Finance income


 


 


-


-


(1)




 


 


 


 


 


 




Bank loans and overdrafts


 


 


1,658


2,118


1,020




Senior secured notes


 


 


4,577


9,155


4,577




Finance leases


 


 


511


1,392


761




Interest unwind on discounted provisions


 


 


46


31


38




Debt issue costs


 


 


628


1,047


520




Finance expense


 


 


7,420


13,743


6,916




 


 


 


 


 


 




Net finance expense


 


 


7,420


13,743


6,915




 
6.         Earnings per share
 




 


Basic and diluted earnings per share




 


Loss after tax


Weighted average

number of

shares


Loss per share




 


£000s


000s


pence




26 weeks ended 30 June 2018


(7,573)


170,207


(4.45)




26 weeks ended 1 July 2017


(30,316)


170,207


(17.81)




52 weeks ended 30 December 2017


(79,922)


170,207


(46.96)




 
 
Basic loss per share is calculated by dividing the result attributable to equity holders by the weighted average number of ordinary shares in issue for that period.
Diluted loss per share is calculated using the loss for the year divided by the weighted average number of shares outstanding assuming the conversion of its potentially dilutive equity derivatives outstanding, being nil cost share options (LTIP shares) and Sharesave Scheme options, as disclosed in note 21 in the Annual Report and Financial Statements for the year ended 30 December 2017 and share warrants as disclosed in note 15 of this report.
All of the Group's potentially dilutive equity derivatives (the LTIP shares, Sharesave Scheme options and warrants) were anti-dilutive for the periods ended 30 June 2018 and 1 July 2017, and the year ended 30 December 2017, respectively, for the purpose of calculating the weighted average number of shares and hence the diluted loss per share.
The following is a reconciliation between the basic loss per share and the adjusted basic loss per share.
 




 


 Basic and diluted earnings per share


 52 weeks ended

30 December 2017


 26 weeks ended

1 July 2017




 


 


 


 




Basic and diluted loss per share (pence)


(4.45)


(46.96)


(17.81)




Add back:


 


 


 




Exceptional items per share (1)


1.96


39.11


7.43




Amortisation per share (2)


1.80


3.90


1.93




Tax charge per share


0.29


(3.08)


0.10




Charge:


 


 


 




Tax at prevailing rate


0.08


1.35


1.61




Adjusted basic and diluted loss per share (pence)


(0.32)


(5.68)


(6.74)




 
(1)   Exceptional items per share are calculated as total finance and non-finance exceptional items divided by the weighted average number of shares in issue through the period.
(2)   Amortisation per share is calculated as the amortisation charge divided by the weighted average number of shares in issue through the period.
 
7.         Intangible assets
 




 


 


Goodwill


Customer relationships


Brands


Software


Total




 


 


£000s


£000s


£000s


£000s


£000s




Cost


 


 


 


 


 


 




At 30 December 2017


 


128,991


26,744


24,102


20,481


200,318




Additions


 


-


-


-


761


761




At 30 June 2018


 


128,991


26,744


24,102


21,242


201,079




 


 


 


 


 


 


 




Amortisation


 


 


 


 


 


 




At 30 December 2017


 


-


13,346


526


13,937


27,809




Charge for the period


 


-


1,326


71


1,672


3,069




At 30 June 2018


 


-


14,672


597


15,609


30,878




 


 


 


 


 


 


 




Net book value


 


 


 


 


 


 




At 30 June 2018


 


128,991


12,072


23,505


5,633


170,201




 


 


 


 


 


 


 




At 30 December 2017


 


128,991


13,398


23,576


6,544


172,509




 


 


 


 


 


 


 




 




 


 


 


 


 


 


 




Cost


 


 


 


 


 


 




At 31 December 2016


 


129,744


27,482


24,142


19,968


201,336




Additions


 


-


-


-


1,806


1,806




At 1 July 2017


 


129,744


27,482


24,142


21,774


203,142




 


 


 


 


 


 


 




Amortisation


 


 


 


 


 


 




At 31 December 2016


 


-


10,940


391


11,250


22,581




Charge for the period


 


-


1,388


72


1,824


3,284




At 1 July 2017


 


-


12,328


463


13,074


25,865




 


 


 


 


 


 


 




Net book value


 


 


 


 


 


 




 


 


 


 


 


 


 




At 1 July 2017


 


129,744


15,154


23,679


8,700


177,277




 


 


 


 


 


 


 




At 31 December 2016


 


129,744


16,542


23,751


8,718


178,755




 
8.         Property, plant and equipment
 




 


 


Land & Buildings


Plant & Machinery


Materials & Equipment held for hire


Total




 


 


£000s


£000s


£000s


£000s




Cost


 


 


 


 


 




At 30 December 2017


 


71,771


60,282


237,498


369,551




Foreign exchange differences


 


(7)


(26)


(293)


(326)




Additions


 


676


1,694


6,894


9,264




Disposals


 


(571)


(70)


(14,339)


(14,980)




At 30 June 2018


 


71,869


61,880


229,760


363,509




 


 


 


 


 


 




Accumulated depreciation


 


 


 


 


 




At 30 December 2017


 


48,115


51,585


118,936


218,636




Foreign exchange differences


 


-


(20)


(152)


(172)




Charge for the period


 


2,323


1,348


13,791


17,462




Impairment loss


 


-


450


-


450




Disposals


 


(432)


(34)


(8,865)


(9,331)




At 30 June 2018


 


50,006


53,329


123,710


227,045




 


 


 


 


 


 




Net book value


 


 


 


 


 




At 30 June 2018


 


21,863


8,551


106,050


136,464




 


 


 


 


 


 




 


 


 


 


 


 




At 30 December 2017


 


23,656


8,697


118,562


150,915




 


 


 


 


 


 




 


 


 


 


 


 




Cost


 


 


 


 


 




At 31 December 2016


 


69,187


58,673


247,295


375,155




Foreign exchange differences


 


10


41


396


447




Additions


 


1,132


1,175


11,623


13,930




Disposals


 


(759)


(49)


(14,817)


(15,625)




At 1 July 2017


 


69,570


59,840


244,497


373,907




 


 


 


 


 


 




Accumulated depreciation


 


 


 


 


 




At 31 December 2016


 


37,095


46,214


113,373


196,682




Foreign exchange differences


 


-


30


244


274




Charge for the period


 


2,359


1,949


14,586


18,894




Impairment loss


 


6,225


-


-


6,225




Disposals


 


(758)


(38)


(9,317)


(10,113)




At 1 July 2017


 


44,921


48,155


118,886


211,962




 


 


 


 


 


 




Net book value


 


 


 


 


 




At 1 July 2017


 


24,649


11,685


125,611


161,945




 


 


 


 


 


 




 


 


 


 


 


 




At 31 December 2016


 


32,092


12,459


133,922


178,473




 
9.         Trade and other receivables
 




 


 


 
30 June

2018


30 December 2017


 
1 July

2017




 


 


£000s


£000s


£000s




 


 


 


 


 




Gross trade receivables


 


81,413


85,270


77,575




Less provision for impairment


 


(4,284)


(4,429)


(3,879)




Net trade receivables


 


77,129


80,841


73,696




 


 


 


 


 




Other debtors


 


836


271


417




Prepayments and accrued income


 


19,043


15,391


23,761




Prepaid finance fees on loan facility


 


13,184


- 


- 




Total trade and other receivables


 


110,192


96,503


97,874




 


 


 


 


 




 


 


 


 


 




 


 


 
30 June

2018


30 December 2017


 
1 July

2017




Movements in provision


 


£000s


£000s


£000s




 


 


 


 


 




Balance at the beginning of the period


 


(4,429)


(3,740)


(3,740)




Movement in provision


 


145


(689)


(139)




Balance at the end of the period


 


(4,284)


(4,429)


(3,879)




 
10.       Trade and other payables
 




 


30 June

2018


30 December 2017


1 July

2017




 


£000s


£000s


£000s




Current


 


 


 




Obligations under finance leases


9,174


11,892


12,126




Trade payables


39,694


39,729


43,550




Other taxes and social security costs


5,128


5,792


6,831




Other creditors


1,003


916


1,936




Accrued interest on borrowings


3,910


3,904


3,844




Accruals and deferred income


34,354


20,219


14,922




 


93,263


82,452


83,209




 


 


 


 




 


 


 


 




Non-current


 


 


 




Obligations under finance lease


12,110


14,105


17,185




 
11.       Borrowings
 




 


 


 
30 June

2018


30 December 2017


 
1 July

2017




 


 


£000s


£000s


£000s




 


 


 


 


 




Current


 


 


 


 




Revolving credit facility


 


74,000


69,000


68,500




 


 


 


 


 




Non-current


 


 


 


 




6.75% Senior secured notes


 


134,470


134,242


133,733




 
The interest rates on the Group's variable interest loans are as follows:
 




 


 


 
30 June

2018


30 December 2017


 
1 July

2017




 


 


% above LIBOR


% above LIBOR


% above LIBOR




 


 


 


 


 




Revolving credit facility


 


2.50%


2.50%


2.50%




 
The following table shows the fair value of the Group's Senior Secured Notes:
 




 


 


30 June

2018


30 December 2017


1 July

2017




 


 


£000s


£000s


£000s




Financial liabilities


 


 


 


 




6.75% Senior secured notes


 


135,603


128,778


134,980




 
The Group has undrawn committed borrowing facilities of £25.3 million at 30 June 2018 (1 July 2017: £28.3 million) under its facilities in place at that date (see note 15). Including net cash balances, the Group had access to £35.4 million of combined liquidity from available cash and undrawn committed borrowing facilities at 30 June 2018.
 
12.       Provisions
 




 


Onerous leases


Dilapidations


Onerous Contracts


Total




 


£000s


£000s


£000s


£000s




 


 


 


 


 




At 30 December 2017


6,607


13,975


32,612


53,194




Additions


1,508


65


-


1,573




Utilised during the period


(1,889)


(546)


(4,125)


(6,560)




Unwind of provision


13


32


-


45




Released


(427)


-


-


(427)




At 30 June 2018


5,812


13,526


28,487


47,825




 


 


 


 


 




Of which:


 


 


 


 




Current


2,176


2,641


5,486


10,303




Non-current


3,636


10,885


23,001


37,522




 


5,812


13,526


28,487


47,825




 


 


 


 


 




At 31 December 2016


5,398


11,745


-


17,143




Additions


4,353


160


-


4,513




Utilised during the period


(2,018)


(1,052)


-


(3,070)




Unwind of provision


16


23


-


39




Released


(104)


(253)


-


(357)




At 1 July 2017


7,645


10,623


-


18,268




 


 


 


 


 




Of which:


 


 


 


 




Current


3,617


2,619


-


6,236




Non-current


4,028


8,004


-


12,032




 


7,645


10,623


-


18,268




 
13.       Commitments and contingencies
 
The Group's commitments under non-cancellable operating leases are set out below:
 




 


 


 
30 June

2018


30 December 2017


 
1 July

2017




 


 


£000s


£000s


£000s




Land and buildings


 


 


 


 




Within one year


 


14,810


15,030


15,972




Between two and five years


 


44,119


45,316


48,550




After five years


 


31,457


33,084


34,920




 


 


90,386


93,430


99,442




Other


 


 


 


 




Within one year


 


8,574


9,074


9,162




Between two and five years


 


14,762


15,263


14,451




After five years


 


-


7


56




 


 


23,336


24,344


23,669




 


 


 


 


 




 


 


113,722


117,774


123,111




 
14.       Risks and uncertainties
 
The principal risks and uncertainties which could have a material impact upon the Group's performance over the remaining 26 weeks of the 2018 financial year have not changed significantly from those set out on pages 14 to 17 of the Group's 2017 Annual Report, which is available at www.hssannualreport2017.com. These risks and uncertainties include, but are not limited to the following:
 
1)    Macroeconomic conditions;
2)    Competitor challenge;
3)    Distribution Network;
4)    IT infrastructure;
5)    Insufficient liquidity headroom;
6)    Equipment supply, maintenance & availability;
7)    Customer retention and brand reputation;
8)    Outsourcing of services;
9)    Inability to attract and retain personnel; and
10)  Legal and regulatory requirements
The main risk expected to affect the Group in the remaining 26 weeks of the 2018 financial year is macroeconomic conditions, which includes the impact that the Brexit related developments could have on the prevailing demand from new and existing customers within the numerous and diverse market sectors which HSS serves.
 
15.       New finance arrangements and share warrants
 
HSS Hire Group plc entered into a new five year, £220 million term loan facility, provided by HPS Investment Partners on 20 June 2018 and which completed on 10 July 2018.  In connection with this term loan facility, the Company granted the lenders under the facility, 8,510,300 Warrants on 20 June 2018 to subscribe for new ordinary shares in the Company exercisable at a price of £0.01 per share and valued at £2.7m.  The warrants can be exercised for five years subject to certain conditions that include full repayment of the term loan facility itself.  Total lender and advisory fees incurred in respect of the new facility amount to c£11m and have been included in accruals at 30 June 2018.  The warrant valuation and prepaid finance fees on loan facility, together totalling £13.2m net of amounts already accrued, have been deferred in the balance sheet and will be reclassified to debt issue costs in H2 2018; they will be amortised to the income statement over the life of the facility.  Debt issue costs of £1.5m were written off in H2 2018 in relation to the facility that these arrangements replaced.
 
16.       Post balance sheet event
 
On 19 July 2018, the Group announced the proposed sale of UK Platforms Limited to Nationwide Platforms Limited, a wholly-owned subsidiary of Loxam Group, for an enterprise value of £60.5m.  The proposed disposal, which was not highly probable as at 30 June 2018, is subject to Competition and Markets Authority approval and is expected to complete in quarter 4 of 2018.  The Group will use at least 80% of any proceeds from the sale to pay down debt and UK Platforms Limited will be treated as a discontinued operation in the results for the year ending 29 December 2018.
 
17.       Adjusted EBITDA and Adjusted EBITA
 
Adjusted EBITDA is calculated as follows:




 


26 weeks ended 30 June 2018


52 weeks ended 30 December 2017


26 weeks ended 1 July 2017




 


£000s


£000s


£000s




Operating profit / (loss)


349


(71,419)


(23,226)




Add: Depreciation of property, plant and equipment


17,462


37,006


18,894




Add: Net book value of hire stock losses and write offs


5,649


10,153


5,500




Add: Amortisation


3,069


6,637


3,284




EBITDA


26,529


(17,623)


4,452




Add: Exceptional items


3,335


66,567


12,643




Adjusted EBITDA


29,864


48,944


17,095




 
Adjusted EBITA is calculated as follows:




 


26 weeks ended 30 June 2018


52 weeks ended 30 December 2017


26 weeks ended 1 July 2017




 


£000s


£000s


£000s




Operating profit / (loss)


349


(71,419)


(23,226)




Add: Amortisation


3,069


6,637


3,284




EBITA


3,418


(64,782)


(19,942)




Add: Exceptional items


3,335


66,567


12,643




Adjusted EBITA


6,753


1,785


(7,299)




 




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END
 
 
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