REG - HSS Hire Group PLC - Final Results - Strategic transformation complete
06/10/2025 07:00
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RNS Number : 1693C HSS Hire Group PLC 06 October 2025
HSS Hire Group Plc
Strategic transformation complete
Long term commercial agreement for ProService and conditional sale of The Hire
Service Company
HSS Hire Group plc ("HSS" or the "Group") today announces results for the
15-month period ended 31 March 2025.
Delivered resilient results against a challenging backdrop and further
strategic progress achieved to unlock long-term value for shareholders
Financial Highlights FY25 2023
Continuing operations (15-month period ended 31 March 2025) (Year ended 30 December
2023)
Revenue £379.0m £312.4m
Gross profit £169.1m £147.1m
(Loss)/profit before tax (£130.3m) £6.9m
Earnings per share (18.48p) 0.42p
Other statutory extracts (APMs)
Underlying EBITDA(2) £50.5m £54.5m
Underlying EBITA(3) £6.6m £21.6m
Underlying profit before tax(4) (£8.4m) £9.7m
Underlying basic EPS (0.89p) 1.06p
Change
Net debt (Including IFRS16) £97.6m £111.6m (£14.0m)
Net debt leverage(5) (Including IFRS16) 2.3x 1.9x (0.4x)
Financial Highlights LTM 25(6) LTM 24(6)
(12-month period ended 31 March 2025) (12-month period ended 31 March 2024)
Proforma Continuing operations Change
Revenue £298.2m £314.4m (5.2%)
Underlying EBITDA £38.8m £52.9m (26.7%)
Underlying EBITA £3.9m £19.6m (80.1%)
Notes
1) Results for FY25, 2023 are on a continuing operations basis;
excluding the Power businesses which were disposed of in March 2024 and HSS
Ireland which was held for sale at 31 March 2025 and sold in May 2025.
2) Underlying EBITDA is defined as operating profit before depreciation,
amortisation, and non-underlying 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.
3) Underlying EBITA defined as Underlying EBITDA less depreciation
4) Underlying Profit before tax defined as profit before tax excluding
amortisation of brand and customer lists and non-underlying items
5) IFRS16 leverage is calculated as closing net debt divided by underlying
EBITDA. Comparators on a reported basis with no pro-forma adjustments to
reflect the disposal of the Power businesses
6) LTM25 (and the comparative LTM24) refers to a management's estimated view
of the income statement for the last twelve months (LTM) ending 31st March
2025 and the 12 months ending 31st March 2024 and excludes discontinued
operations including the disposal of the Power businesses announced on 7 March
2024 and the disposal of HSS Ireland announced on 1 April 2025 and held for
sale at 31 March 2025.
Financial highlights
· The Group delivered a solid performance as it continued to
navigate a challenging market environment and focus on the split of the
business into two distinct operations with the associated disruption of
separation, which occurred on 1 October 2024.
· Recognising the difference in periods (15 months for FY25 vs 12
months for 2023) and also the material changes to the business that took
effect from 1 October 2024, including reallocating certain revenues and costs
between ProService and The Hire Service Company ("THSC"), reallocating central
costs where appropriate and also restructuring THSC following the separation,
we have presented Group LTM numbers for FY25 vs the same period in 2024 above
but to give a true indication of business performance we have included in
each divisional review below a more detailed analysis of both the LTM to March
2025 and proforma numbers for the year ending 31 March 2025.
· Group Revenue on a continuing basis for FY25 was £379.0m (2023:
£312.4m), reflecting the additional three months in the reporting period.
· On a last twelve months ("LTM") basis, revenue for LTM25
decreased 5.2% to £298.2m (LTM24: £314.4m) reflecting the contract loss of
Amey in June 2024, together with the overall challenging market, offset
somewhat by growth in rehire and other revenues in the period.
· ProService reported revenue for FY25 of £362.8m; THSC revenue
for FY25 was £132.1m which included £115.9m of intra-group revenue with
ProService.
· Underlying EBITDA was £50.5m, with a reduction in margin to
13.3% (2023: 17.4%) reflecting increased costs and a change in revenue mix
impacting gross margins.
· On an LTM basis Underlying EBITDA declined 26.7% reflecting the
reduction in revenue, a reduction in gross margin with a mix shift towards
lower margin rehire and other categories together with increased costs related
to the separation and THSC re-sizing and associated cost reductions occurring
in the second half. This resulted in LTM25 EBITA falling 80.1% to £3.9m after
taking into account relatively fixed depreciation and finance costs.
· Net debt (IFRS16) decreased £14.0m to £97.6m (2023: £111.6m)
(Net debt excluding lease obligations decreased £11.1m to £43.2m); proceeds
of £30.1m from the strategic exits of Power during the period and HSS Hire
Ireland after the period end, were used to repay borrowings and further
strengthen the Group's balance sheet.
· IFRS16 leverage as per the Group's covenants at the period end
was 2.3x (2023: 1.9x) and interest cover was 4.5x (2023: 6.1x) and within
covenant compliance.
· Loss before tax on a continuing basis of (£130.3m) included an
impairment charge relating to THSC of £113.5m reflecting the reduced outlook
for this business given current market conditions and also the negative impact
on expected future performance from the right-sizing that has taken place to
reduce THSC's geographical footprint.
Operational highlights
· Significant strategic progress made to evolve HSS with the
separation of THSC and ProService on 1 October 2024 enabling each business to
independently shape and advance their own growth agenda.
· New structure provided greater optionality to maximise future
value for shareholders, enabling the Group to become the market-leading,
digitally-led brand for equipment services.
· THSC (formerly HSS Operations) has been re-branded and
re-structured operationally, with a number of depots closed to reduce costs.
Since the period end it has been expanding its offering to include a range of
new small plant and Mechanical and Electrical (M&E) equipment. A review of
strategic options for this division is now underway given the current
difficult market backdrop which has resulted in the lower levels of
profitability in the period continuing in the current year to date.
· ProService has continued to strengthen its attractive technology
platform and in the Group's view continues to be the leading digital
marketplace for building services in Europe servicing a broad range of buyers
and sellers. With over 3,200 customers having used the online marketplace and
a growing range of product verticals, ProService is on track to achieve its
medium-term target of 7,000 customers self-serving.
Current trading and outlook
The separation of ProService and THSC created a solid foundation for
ProService to continue to grow its unique marketplace offering to be able to
deliver strong returns from its cash generative model and enables the
restructured THSC to continue to diversify the customer base beyond
ProService.
The announcement today of a large scale, long-term commercial agreement
between ProService and Speedy Hire Plc together with the conditional sale of
THSC to funds advised by Endless LLP is a transformational deal for HSS
creating an asset-light, full service marketplace business. This deal is
expected to close before the end of 2025.
Alan Peterson, Non-Executive Chairman of HSS Hire Group said:
"HSS delivered strong strategic progress during the period in reshaping the
Group by successfully separating ProService and THSC. Despite having to bear
the considerable burden of increased taxation that came into effect in April
2025, our two businesses are well placed to focus on their respective
strategic priorities.
Since the period end we have continued the focus on broadening ProService's
product offering whilst maintaining our emphasis on its core hire vertical. In
THSC we have completed the rightsizing of the geographical footprint whilst
carefully targeting new capital investment in higher demand categories and
have continued to develop its direct selling channels. However, the market has
remained subdued in H1 to date which has impacted our core hire business in
particular which has also continued to be impacted by the loss of the Amey
contract in June 2024. We considered how best to allow both businesses to
develop and have concluded a transformational deal including a long-term
commercial agreement with Speedy Hire Plc. In order to fully focus on our
ProService business we have also conditionally agreed the disposal of THSC to
Project Mansell Newco Limited Limited, a newly formed company indirectly owned
by investment funds managed by Endless LLP.
We are confident that this transformational deal will deliver material added
value to our shareholders and customers as we are able to focus our capital on
this asset-light, full service marketplace business which is growing at pace."
FY25 Results Presentation
HSS Hire Group Plc will host a virtual presentation for analysts at 9:00am on
6 October 2025. Analysts wishing to attend should contact FTI Consulting to
register: hss@fticonsulting.com (mailto:Connie.Gibson@fticonsulting.com)
An audio recording will be available on our website in due course.
Notes
1) Results for FY25, 2023 are on a continuing operations basis;
excluding the Power businesses which were disposed of in March 2024 and HSS
Ireland which was held for sale at 31 March 2025 and sold in May 2025.
2) Underlying EBITDA is defined as operating profit before depreciation,
amortisation, and non-underlying 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.
3) Underlying EBITA defined as Underlying EBITDA less depreciation
4) Underlying Profit before tax defined as profit before tax excluding
amortisation of brand and customer lists and non-underlying items
5) IFRS16 leverage is calculated as closing net debt divided by
underlying EBITDA. Comparators on a reported basis with no pro-forma
adjustments to reflect the disposal of the Power businesses.
Notes to editors
HSS Hire Group plc operates through two separate but complementary businesses
serving predominantly business customers:
HSS ProService ("ProService") is a leading Digital marketplace business
focussed on customer and supplier acquisition. Technology driven, scalable and
uniquely differentiated, ProService is a one-stop-shop providing a wide range
of building-related product and services for over 7,000 active account
customers per month, in product verticals including equipment hire, training,
fuel, equipment sales and building materials. ProService acts as principal
with buyers and sellers, but all deliveries and collections are the
responsibility of sellers (direct to buyer).
HSS The Hire Services Company ("THSC") formerly known as HSS Operations,
provides building-related tools, equipment and powered access via its
extensive nationwide network of over 130 locations. THSC is dedicated to
delivering a personable hire service to over 9,500 end customers across the UK
including tradespeople, facilities management and construction companies.
HSS is listed on the AIM Market of the London Stock Exchange. For more
information, please see www.hsshiregroup.com (http://www.hsshiregroup.com/) .
For further information, please contact:
HSS Hire Group plc Email: Investors@hss.com
Steve Ashmore, Executive Chair, HSS ProService
Richard Jones, Group Chief Financial Officer
FTI Consulting Tel: 020 3727 1340
Nick Hasell
Victoria Hayns
Canaccord Genuity Limited (Nominated Adviser and Joint Broker) Tel: 020 7523 8000
Andrew Potts
George Grainger
Singer Capital Markets (Joint Broker) Tel: 020 7496 3000
Alex Bond / Rick Thompson (Investment Banking)
Rhys Williams (Equity Sales)
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 as it forms part of domestic law of the United Kingdom
by virtue of the European Union (Withdrawal) Act 2018, as amended (together,
"MAR"). Upon the publication of this announcement, this inside information is
now considered to be in the public domain. The person responsible for
arranging the release of this announcement on behalf of HSS is Richard Jones,
Interim Group Chief Financial Officer.
Chairman's Statement
The past 15 months represents a period of significant transformation for HSS
Hire Group, in line with the strategy we announced in 2022 to better position
the Group for long-term, profitable growth. The separation of THSC and
ProService has enabled the two businesses to independently shape and advance
their own growth agenda, tailored to their individual needs and strategic
direction. The foundations are now in place to create long-term value for
shareholders.
Our results
We delivered another set of resilient results reflecting the persistent end
market headwinds we experienced in the period and our transition to a new
operating model. Revenue for FY25 of £379.0m for the 15-month period compared
to £312.4m in 2023. Gross margin declined by 250bps as we refocused the
business for growth across two discrete verticals, whilst driving operating
efficiencies and cost control at a Group level. These cost efficiencies were
offset by strategic actions taken during the period to continue to build the
ProService platform to position it to deliver sustainable growth and
reflecting the costs of separating our ProService and THSC into two fully
separate operations. Overall, this resulted in FY25 Underlying EBITDA of
£50.5m (2023: £54.5m) and FY25 Underlying EBITA of £6.6m (2023: £21.6m)
and a reduction in Underlying EBITDA margin of 410bps. After taking account of
non-underlying costs including the impairment relating to THSC, we reported a
loss before tax of £130.3m (2023: Profit of £6.9m).
Whilst the change to our year-end and the strategic changes we made to the
business during the period make comparisons difficult, we have provided some
LTM analysis for both 2025 and the prior year which shows our revenue, EBITDA
and EBITA comparing the 12 months to March 2025 with the same prior period on
a continuing operations basis. This showed that revenues declined to £298.2m
(2023: £314.4m) or 5.2% YoY as a result of the impact of the loss of the Amey
contract in late 2024, as previously announced, together with the impact of
reducing the size of THSC, offset somewhat by growth in our ProService
offering. This reduction in revenue, together with the increased running costs
associated with running two discrete management teams, resulted in Underlying
EBITDA reducing to £38.8m (2023: 52.9m) or 26.7% YoY and Underlying EBITA
reducing 80.1%.
Operational progress
HSS's vision is to be the market-leading, digitally-led brand for equipment
services, with sustainability at our core. In order to achieve this, decisive
strategic steps have been taken to improve each business and better serve our
customers through the separation of ProService and THSC. Strong management
teams are now in place for each and the new structure positions THSC as the
key supplier to ProService, giving each business space to grow, to drive
market share and achieve higher returns.
Led by its new management team, ProService has continued to strengthen its
attractive technology platform, helping it to become what we believe is the
leading digital marketplace for building services in the UK. With over 7,000
active account customers and over 11,000 active cash customers per month,
ProService's lower-cost and flexible operating model provides a key platform
for aggregating buyers and sellers across a broad range of building-related
products and services. In addition to the equipment rental offering, new and
wider ranges of non-rental product verticals have been introduced for our
customers in the areas of Equipment Sales, Building Materials and Fuel. The
response has been positive, particularly in Fuel, and customer and supplier
behaviours continue to evolve as we further deploy our technology. Over 3,200
of our customers have now used our marketplace platform on a self-serve basis
and we are targeting 7,000 over the medium term which increases engagement,
the opportunity to cross sell and reduces our cost per transaction.
ProService's asset-light business model has proven it can deliver excellent
customer service in an efficient way, paving the way to becoming the UK's
leading business-to-business platform for building services.
For our traditional hire business, this has meant launching a new brand HSS
The Hire Service Company ("THSC") previously HSS Operations, in October 2024
supported by a new management team to effect change. During the year and into
the current year, THSC has been right-sized operationally, closing several
depots to reduce costs and move equipment geographically into areas of the UK
where there is more demand whilst continuing to expand the builders merchant
model. Since the period end it has also been expanding its offering to include
a range of new small plant and M&E equipment. THSC is now well placed to
leverage its diverse product offering and extensive network, although the
Board will continue to explore further areas of rationalisation where the
outcome is to improve return on capital employed for shareholders. The
builders' merchant model has continued to expand, working with new partners
such as leading building materials merchants, and there are currently over
THSC 130 hire locations, with more merchants in the pipeline and this together
with THSC's direct sales model into customers from the sales team established
in October 2024 continue to generate new demand.
A sustainable business
Our sustainability agenda remains a key component of our strategic growth plan
which reflects both our culture and the business models we have rolled out to
support our customers.
In recognition of our commitment to our Net Zero 2040 goal we are proud to be
the first in our sector to have our Science Based Targets validated by the
SBTi. For the third year in succession, we retained our gold rating in
EcoVadis' annual sustainability assessment, which is awarded to only the top
5% of all companies assessed.
2025 also saw ProService launch Greener Alternatives, a tool which complements
our Customer Carbon Reporting dashboard to help customers make more informed,
sustainability-led choices. These not only represent industry firsts but are a
key differentiator to attract further new business. THSC's commitment to
sustainability was further demonstrated this year by the launch of our
Internal Sustainability Champions Network to recognise greener practices and
help local initiatives and has also resulted in the launch of several
depot-led projects.
We continued to seek out ways to support our customers in achieving their Net
Zero goals, upgrading our fleets, exploring fuel alternatives and other ways
to reduce our carbon emissions.
Both businesses remain firmly aligned in their commitment to creating a
supportive and inclusive working environment. At THSC, we continue to support
and grow our ED&I strategy, inspiring young people through our "Open Door"
programme, which is now in its third year. This initiative was further
supported with the launch of a dedicated female mentoring scheme at
ProService, aimed at progressing women to senior leadership roles.
Colleague engagement, wellbeing, and a strong sense of belonging continue to
be shared priorities, reflecting a unified Group-wide ethos that places people
at the heart of the Group's long-term success.
Divestments
HSS Power
During March 2024, the Group announced the sale of ABird Limited, ABird
Superior Limited and Apex Generators Limited (together the 'Power' Companies)
to CES Global for consideration of £20.7m. The sale was undertaken as part of
a strategic decision to focus on the core THSC hire business and growth of the
ProService. The Group utilised £12.5m of the disposal proceeds to repay
borrowings and further strengthen the Group's balance sheet position.
As part of this transaction, HSS entered into a commercial agreement with CES
for the cross-hire of power generators and related services to ensure the
broadest possible distribution of, and customer access to existing fleets of
CES and HSS.
HSS Hire Ireland Limited
On 2 April 2025, the Group announced the sale of HSS Hire Ireland Limited
('HIL'), the Group's Republic of Ireland operations, to Grafton Group plc for
total consideration, after taking account of completion adjustments of
€28.9m (c.£24.3m), representing a transaction multiple of c.8.7x of HIL's
2024 Underlying EBITA.
The sale completed on 31 May 2025 and reflects the Group's strategic objective
of creating a more focused business with reduced debt. Shortly after
completion of the disposal, the Group utilised £17.6m of the proceeds to
repay borrowings and further strengthen the Group's balance sheet position.
Transformational re-shaping of the Group.
The financial and legal separation of our ProService and THSC businesses
equipped each division with the autonomy and leadership to pursue separate
growth strategies. The Board is committed to building on the strong
proposition of ProService, including broadening the range of suppliers on the
platform together with an expanded product offering and reinvesting free cash
flow into sales and marketing to support growth initiatives.
Details of the Speedy Hire Commercial Agreement and sale of THSC are detailed
in a separate announcement made to the market on 6 October 2025, outlining the
strategic progress achieved in order to position the Group to deliver long
term profitability.
Our Board
A period of significant transition for the Group resulted in re-invigorating
our divisional leadership teams and several Board changes. After eight years
in the role, Paul Quested stepped down as Chief Financial Officer on 30 August
2024. On behalf of the Board, I would like to thank Paul for his significant
contribution to the Group.
Richard Jones joined HSS as interim CFO on 9 August 2024. With over a decade
of experience in financial roles in UK public and private companies, Richard
is well placed to help us achieve our strategic, financial and operational
objectives. Furthermore, following the separation of ProService and
Operations, now THSC, Steve Ashmore was appointed as Executive Chairman of
ProService on 1 October 2024 and remains on the Board as an Executive Director
and Alan Peterson became non-Executive Chairman of THSC and retained his role
as non-Executive Chair of HSS.
FY25 saw some changes to the independent non-executive Board and its
committees with the departure of long-serving Directors, Amanda Burton and
Doug Robertson and the arrival of Neil Cooper also on 7 January 2025, whose
experience and insight is proving valuable to the Board. Ernst Kastner,
previously an observer on HSS's Board on behalf of HSS's second largest
shareholder since 2020 was also appointed to the Board on 7 January 2025. The
experienced Board supports two strong and senior management teams with the
execution of their strategic objectives whilst they independently progress
their strategy in areas such as ESG, technology development and talent
creation.
Dividend
Whist an interim dividend of 0.187 pence per share was paid in November 2024,
the Board have decided not to declare a final dividend for the extended period
ending 31 March 2025 reflecting the need to prioritise the allocation of our
capital to the ongoing business.
Outlook
HSS has delivered strong strategic progress during the period in reshaping the
Group by successfully separating ProService and THSC. Despite having to bear
the considerable burden of increased taxation that came into effect in April
2025, following the split of the two businesses we are well placed to focus on
ProService's strategic priorities and to drive improved performance at THSC.
With an encouraging pipeline of opportunities for ProService's digital
marketplace, the Group is well positioned to benefit as end market conditions
improve. Whilst the current market conditions remain challenging, we are
optimistic about our long-term prospects and the opportunity to create
significant value for shareholders. As part of our strategic review, we are
confident in being able to execute our plans to provide longer term capital
for the Group to replace our existing lending facilities which are due to be
repaid in September 2026.
As part of our strategic review, we are confident in being able to execute our
plans to provide longer term capital for the Group to replace our existing
lending facilities which are due to be repaid in September 2026 and in doing
so, resolve the material uncertainty over going concern.
Alan Peterson OBE
Chairman
6 October 2025
Group Chief Financial Officer Review
Financial highlights
The Group disposed of two businesses, using the funds generated to pay down
debt and create additional working capital. During the period, the Power
division was sold, and the Group's operations in the Republic of Ireland were
then sold subsequent to the year end as part of a strategic decision to focus
on the core hire business of THSC.
In addition to the effort expended by the Group's management teams on the
restructuring activities above, there has been a continued focus on delivering
a leaner operating model. This included further cost saving activities in
THSC, with additional location closures on underperforming sites and a focus
on higher utilisation locations to drive profitability and reduce operating
costs. The cost of implementing these efficiencies in the business was £2.7m
which is included within non-underlying items.
The Group's progress on its strategic objective to operationally separate the
two divisions, along with the disposal of non-core businesses, has positioned
the Group well to deliver on the Board's long-term strategic aims and maximise
shareholder value.
Revenue
Group revenue for FY25 was £379.0m (2023: £312.4m). This movement is
primarily driven by the current, fifteen-month period being compared against
twelve months in the prior year. The average monthly revenue year on year
declined slightly, with the difficult market conditions from the prior year
continuing into the current period. Revenues on an LTM basis decreased 5.2% to
LTM25 revenues of £298.2m (LTM24: £314.4m) reflecting the impact of the
contract loss of Amey announced in June 2024 offset somewhat by growth in hire
and other revenues in the period.
Group revenue growth is one of our KPIs as, combined with estimates of market
size and growth rates, it provides us with a measure of our market share.
HSS's revenue recognition accounting policy includes the judgment that some of
the Group's contracts with customers contain leases. Accordingly, the policy
explains that the Group's hire and rehire revenue streams fall within the
scope of IFRS 16 Leases. (see note 4 in the Consolidated Financial
Statements).
Segmental performance
Highlights from the Group's segments are shown below, all presented on a
continuing basis.
15-month period ended 31 March 2025 ProService Operations - UK Corporate Eliminations¹ Total
Revenue £362.8m £132.1m - (£115.9m) £379.0m
Underlying EBITDA £15.6m £37.9m (£3.0m) - £50.5m
Underlying EBITA £13.2m (£3.6m) (£3.0m) - £6.6m
12-month period ended 30 December 2023 ProService Operations - UK Corporate Eliminations Total
Revenue £311.0m £109.4m - (£108.0m) £312.4m
Underlying EBITDA £12.6m £43.7m (£1.9m) £0.1m £54.5m
Underlying EBITA £11.0m £12.3m (£1.9m) £0.2m £21.6m
¹ The 'Eliminations' column shows the value of eliminations in revenue
between the trading segments Operations - UK and ProService. Corporate
includes only those corporate costs incurred centrally to support the
businesses.
Proforma information on ProService and THSC
The operational separation of the ProService and THSC businesses occurred on 1
October 2024. This included the reallocation of certain customers and
associated costs from ProService to THSC relating primarily to non-ProService
marketplace customers and also the allocation of central costs to ProService
and THSC based on staff reallocations and new TSA arrangements.
The Group also changed its year end such that FY25 is a 15-month period
whereas 2023 was a 12-month reporting period. The Board acknowledges the
challenges that this presents in comparing financial performance period on
period.
Therefore, in addition to the twelve month Group proforma financial
information provided, proforma financial information for ProService and THSC
for the 12-month period ended 31 March 2025 has been prepared and is contained
in the respective ProService business review and THSC business review,
assuming that the separation of the two businesses occurred on 1 April 2024
rather than 1 October 2024, to assist in investor understanding of the
performance of ProService and THSC. No comparative proforma financial
information for ProService has been prepared as it was not possible to
accurately calculate on an equivalent basis.
Costs
Cost of sales were £209.9m (2023: £165.2m). Gross profit margin fell by 2.5%
to 44.6% (2023: 47.1%), partly due to a change in revenue mix, with rehire
revenues representing a higher percentage of Group revenue in the current
period.
Administrative expenses were £137.5m (2023: £102.1m), and this included
non-underlying costs of £4.9m incurred in connection with the operational
separation of the two divisions during the period.
Underlying EBITDA and Underlying EBITA
Continuing Underlying EBITDA for FY25 was £50.5m (2023: £54.5m) with
Continuing Underlying EBITDA margins lower than FY23 at 13.3% (2023: 17.4%).
The reduction in margin period on period is primarily caused by the increased
costs relating to the separation and non-underlying costs together with the
impact of lower gross margins. Continuing Underlying EBITDA on an LTM basis
decreased 26.7% to £38.8m (2023: 52.9m) reflecting the reduction in revenues,
a change of mix impacting gross margins and the increased costs of the
re-organisation.
Continuing Underlying EBITA for FY25 was £6.6m (2023: £21.6m), a combination
of the fall in Continuing Underlying EBITDA noted above and an increased
depreciation charge reflecting the 15-month period. On an LTM basis Continuing
Underlying EBITA decreased 80.1% to £3.9m (2023: £19.6m) reflecting the
reduction in Continuing Underlying EBITDA together with the relatively fixed
costs of depreciation and amortisation.
Operating loss and loss before tax
The Group generated an operating loss of £117.8m in FY25 (2023: profit of
£17.4m). This included a one-off impairment charge of £113.5m, in the period
relating to THSC. As a result loss before tax was £130.3m (2023: profit of
£6.9m).
Non-underlying items
During the period, the Group introduced a new Alternative Performance Measure
(APM) which distinguished between underlying and non-underlying results. This
change was made to allow the users of the financial statements to get a clear
view of the underlying performance of the business, excluding the effects of
items of income or expense which are not reflective of underlying trading
performance.
The table below shows the nature and values of the major categories of
non-underlying items on a continuing basis in the current period:
15-month period ended 31 March 2025
Onerous property costs £0.5m
Costs relating to Group restructuring £4.9m
Costs relating to network restructuring £2.7m
Onerous contract costs £0.3m
Impairment losses on tangible assets £45.7m
Impairment losses on intangible assets £67.8m
Total non-underlying items from continuing operations £121.9m
The most significant item in non-underlying costs is the impairment charge
that was recognised against segmental assets allocated to the HSS Operations
UK CGU, which includes the operations of THSC. The reason for the impairment
charge was a downwards revision in future forecast profits consistent with the
Group's recent experience of prolonged, challenging market conditions and
expectation that these will continue in the short-term.
The impairment charge recognised is the difference between the segmental
assets allocated to the CGU and the estimated recoverable amount, which
continues to be based on a value-in-use calculations, with the reduction in
the overall value-in-use, an impairment charge of £113.5m has arisen.
Finance costs
The Group incurred finance costs in the period of £12.6m on a continuing
basis (2023: £10.4m). These costs relate primarily to the charges associated
with the Group's senior finance facility which were £5.9m during the period
(2023: £5.3m). The increase period on period was due to the elongated
reporting period offset slightly by a fall in SONIA rates during the current
period. The Group's leases and hire purchase arrangements gave rise to finance
costs of £5.3m (2023: £4.0m), which increased due to an increase in THSC
leasing levels during the period, offset by the sale of Power which reduced
the lease portfolio.
Taxation
The Group had a tax charge for the year of £0.7m (2023: £4.0m) on continuing
operations. The total tax charge including discontinued operations was £1.3m,
with a current tax charge of £0.7m (2023: credit of £0.8m) and a deferred
tax charge of £0.6m (2023: £5.6m). The deferred tax charge in the previous
period was significantly higher due to the derecognition of deferred tax
assets in respect of losses when forecasts for the current period results were
revised downwards.
Deferred tax assets have been recognised to the extent that management
considers it probable that tax losses will be utilised. In the current period
a three-year (2023: three-year) recognition window has been applied.
Reported and underlying earnings per share
Our basic and diluted earnings per share ("EPS"), both on a reported and
underlying basis, reduced in the current period with reported EPS moving to a
loss per share of (18.48) pence (2023: profit per share of 0.42 pence). This
was driven by the reduced profit levels in the current period and most
significantly, by the impairment charge of £113.5m.
Capital expenditure
Additions to intangible assets during the period were £3.6m (2023: £7.1m).
The majority of this spending relates to investment in technology, principally
in our Brenda platform to support ProService's future marketplace business
growth. The decrease in additions during the period relates principally to the
maturity of the platform, with a shift towards more maintenance expenditure
and less cost of the costs incurred being original development eligible for
capitalisation.
Additions to our property, plant and equipment in respect of hire fleet was
£24.3m (2023: £29.6m). The decrease between periods is partly due to the
network restructure, which saw a significant volume of hire fleet redeployed
to locations with higher utilisation, reducing capital expenditure
requirements. This was offset somewhat after the period by THSC expanding its
offering to include a range of new land moving equipment, a completely new
product line for the segment.
Trade and other receivables
Gross trade debtors fell significantly in the period, from £76.6m to £64.4m.
This decrease is most significantly due to the disposal of the Power companies
and the presentation of Ireland as a disposal group classified as held for
sale. The disposal of Power reduced trade debtors by £2.2m and £7.5m of
trade debtors were classified as held for sale at the balance sheet date.
The remaining decrease of £2.5m has been the product of significant focus and
improved performance on cash collections. However, with the ongoing
macroeconomic uncertainty, we continue to adapt our processes and systems to
mitigate this risk (refer to Principal Risk and Uncertainties) and have
applied an adjusted risk factor to expected loss rates in determining the
provision for impairment.
Provisions
Provisions reduced £8.5m to £10.1m (2023: £18.6m). The vast majority of
this reduction relates to the ongoing annual onerous contract payments to
Unipart following the exit from the National Distribution and Engineering
Centre in 2018. At 31 March 2025, the remaining balance on this provision was
£2.9m, which is due to be fully utilised in the next financial period which
will therefore end the contractual obligations to Unipart.
Cash generated from operations
Net cash generated from operating activities was £28.4m, an increase of
£8.2m compared with 2023. The increase has been driven by a combination of
improved working capital management (inflow of £7.3m compared with an outflow
of £11.3m in 2023) and a reduction of £3.2m in hire equipment cash outflows
in the current period.
Leverage and net debt
Net debt levels improved by £14.0m to £97.6m (2023: £111.6m) and at 31
March 2025 the Group had access to £58.3m (2023: £68.2m) of combined
liquidity from available cash and undrawn borrowing facilities. With the
reduced Underlying EBITDA and higher net debt, leverage increased to 2.3x
(2023: 1.9x). Interest cover was 4.5x (2023: 6.1x)
The Group refinanced during the current period with changes to its covenant
levels to take account of the disposal of Ireland. These are tested quarterly
and all have passed with headroom during the period.
Our lenders have provided their support to the transformational re-shaping of
the Group announced today including re-setting covenants for the remaining
term of the facilities.
Going concern
The Group has continued to trade with sufficient liquidity to fund day to day
operations and this has also benefitted from the reduction in the senior term
facility following the utilisation of receipts from divestments and the
retention of the surplus balance relating to the sale of Ireland, together
with careful management of capital including more targeted capex and no final
dividend declared for the period.
However, whilst our lenders have approved the reshaping of the Group including
the commercial agreement with Speedy Hire and the disposal of THSC which
included the re-setting of covenants through to September 2026, ongoing
discussions to fully refinance the facilities due to expire in September 2026
have not yet concluded, and as the outcome of these discussions remains
uncertain, this gives rise to a material uncertainty as to going concern that
the Board is confident will be resolved in the near term following the outcome
of the strategic review and conclusion of refinancing discussions.
Use of alternative performance measures to assess and monitor performance
In addition to the statutory figures reported in accordance with IFRS, we use
alternative performance measures (APMs) to assess the Group's ongoing
performance. The main APMs we use are Underlying EBITDA, Underlying EBITA,
Underlying profit before tax, Underlying earnings per share, Net debt and
leverage (or Net Debt Ratio).
We believe that Underlying EBITDA, a widely used and reported metric amongst
listed and private companies, presents a 'cleaner' view of the Group's
operating profitability for the year by excluding non-underlying costs
(including exceptional items), finance costs, tax charges and non-cash
accounting elements such as depreciation and amortisation.
Additionally, analysts and investors assess our operating profitability using
the Underlying EBITA metric, which treats depreciation charges as an operating
cost to reflect the capital-intensive nature of the sector in which we
operate. This metric is used to calculate annual bonuses payable to Executive
Directors.
The Underlying profit before tax figure comprises the reported profit before
tax, amortisation of customer relationships and brands-related intangibles as
well as exceptional costs added back. This amount is then reduced by an
illustrative tax charge at the prevailing rate of corporation tax to give an
Underlying profit after tax.
Analysts and investors also assess our earnings per share using our Underlying
earnings per share measure, calculated by dividing Underlying profit after tax
by the weighted average number of shares in issue over the period. This
approach aims to show the implied underlying earnings of the Group.
In accordance with broader market practice, we comment on the amount of net
debt in the business by reference to leverage (or Net Debt Ratio), which is
the multiple of our Underlying EBITDA that the net debt represents over a
twelve-month period on a last twelve-month basis.
Discontinued operations
During the current period, the Group disposed of the Power CGU and HSS
Ireland, a second CGU was classified as an asset held for sale at the period
end. As a result, the Group presented these two CGUs as discontinued
operations in accordance with the requirements of IFRS 5.
As a result of adopting this presentation, the income statement and related
notes to the accounts have been adjusted to show the results consistently on a
continuing basis, which includes restating certain comparatives. The results
of discontinued operations including the result on disposal were £1.3m in the
current period (2023: £1.3m).
Post balance sheet events
Sale of HSS Hire Ireland Limited
Subsequent to the year end, on 1 April 2025, the Group entered into an
agreement for the sale of HSS Hire Ireland Limited to a third party,
Chadwick's Holdings Limited, a subsidiary of Grafton Group plc.
The sale completed on 31 May 2025 and the business was sold for gross
consideration of €28.0m, with customary working capital and debt adjustments
resulting in total net cash consideration of €28.9m (c. £24.3m). Net assets
disposed were £23.0m (including consolidation related intangibles of £7.5m)
for a gain before transaction costs of £1.3m. In connection with the sale of
the businesses the Group has incurred transaction costs of c. £1.0m.
The disposed entity was presented as a discontinued operation within these
financial statements and contributed revenues of £34.3m to the Group in the
current period.
Subsequent to the sale, proceeds of £17.6m were used to make a partial
repayment of the Group's senior loan facility, reducing the total liability
from £57.5m to £39.9m post period end. The balance of the proceeds were
retained as cash on deposit.
Commercial agreement with Speedy Hire and disposal of THSC
Details of the Speedy Hire Commercial Agreement and sale of THSC are detailed
in a separate announcement made to the market on 6 October 2025, outlining the
strategic progress achieved for the long-term profitability of the Group, more
details are included in note 21 below.
Drawdown of the Group's RCF
Subsequent to the year end, on 1 April 2025, the Group drew down £5.0m of the
revolving credit facility, leaving £15.0m of the facility available. The
£5.0m was drawn to facilitate payments to exit certain THSC trading locations
and accelerate cost saving plans in association with the THSC branch network
restructure.
The amounts drawn attract interest on the same basis as the Group's senior
facility, being SONIA plus margin.
Issue of Shares
After the period end, on 6 June 2025, the Group issued 3,404,025 shares in
connection with the Group's share schemes. These shares were part of the FY22
RSA share scheme and were issued for nil consideration. The total increase in
the Group's share capital was £34.0k.
Richard Jones
Chief Financial Officer
6 October 2025
ProService Business Review
HSS ProService is a market-leading marketplace for building services in the
UK. Acting as principal between buyers and sellers, it offers a one-stop-shop
for building-related products and services for a wide range of customers
including construction companies, facilities managers and tradespeople across
all end-user markets with its suppliers responsible for delivery of hire
equipment and other products. We currently have over 7,000 active account
customers and 11,000 active cash customers per month, with c.400 active
sellers each month in product verticals including equipment hire, training,
fuel, equipment sales and building materials. Our buyers range from large
enterprises to SMEs and tradespeople. Our sellers range from national players
to small local independents.
Investment case
Our business model is asset-light and inherently scalable. Our potential for
growth is significant given the size of our market and our technology
platform, which has taken several years to develop and we believe is not
easily replicated given the complexity of the service offering, particularly
in relation to equipment hire. We also believe we have a head-start in terms
of our network, with over 7,000 active buyers and c400 active sellers per
month, and we have the critical mass to generate powerful network effects. The
breadth of our supply chain provides superior availability for buyers, and as
more-and-more buyers adopt our marketplace its scale becomes more attractive
to sellers.
Our investment case is summarized in four elements:
· Large Building Services Market: highly fragmented, with low digital
adoption and limited differentiation, well placed for digital aggregation
· Unique Proposition: omnichannel and easy, push-button technology,
already scaled with circular economy dynamics and strong network effects
· Established Proprietary Technology Platform: Underpins our scalable
business model and not quickly replicated
· Clear Leader and Significant Head Start: Already the largest rehire
broker in Europe. Well established buyer and seller networks
ProService Chief Executive Officer's Review
I would like to thank the entire ProService team for their contribution to our
results and their hard work in achieving the reorganisation over several
months last year. I continue to be impressed by their dedication to our
business and our shared vision.
Our financial results are explained in more detail below. We believe we are
the largest digital marketplace for building services in Europe.
Over 3,200 account customers have used our self-serve marketplace with c,2,000
logging in each month. Our medium-term target is to have 7,000 customers that
have self-served.
We have started the journey of product diversification and exited the period
with 27% of our revenues in March 2025 generated from non-hire product
categories, up from 16% in April 2024.
We currently have over 7,000 active account customers and 11,000 active cash
customers per month. Average revenue per account customer (ARPC) is over
£2,500, and customer churn is c4%. Over one-third of ProService orders are
raised by customers themselves, on either our marketplace platform (account
customers) or hss.com (cash customers). We have c. 400 active sellers each
month. In due course we will be providing selected additional key performance
indicators which will assist investors in understanding the performance of the
ProService business.
I believe our proposition is market-leading and we are well placed to take
advantage of the fragmented nature of the building services sector. We are now
wholly focused on driving our marketplace measures and look forward to
reporting on our progress.
Tom Shorten
Chief Executive Officer, ProService
ProService Financial Review
ProService Last 6m Act Prior 6m Act FY25 LTM % Change FY25 ProForma
(Oct'24 - Mar'25 (Apr'24 - Sep'24 (Total) (12m to Mar'25)
Revenue 130.7 151.3 282.1 -13.6% 266.1
Underlying EBITDA 4.3 8.2 12.6 -47.1% 11.0
Underlying EBITA 3.4 7.2 10.6 -52.7% 9.3
The operational separation of the ProService occurred on 1 October 2024. This
included the reallocation of certain customers and associated costs from
ProService to THSC relating primarily to non-ProService marketplace customers
and also the allocation of central costs to ProService based on staff
reallocations and new TSA arrangements.
The above tables include financial information prepared on two bases:
(i) Last Twelve Months (LTM) - The financial performance for ProService
over the past 12 months, split into two 6-month periods to reflect the
separation occurring on 1 October 2024.
(ii) Proforma - The financial performance for ProService over the past 12
months assuming that the separation of the two businesses had occurred on 1
April 2024 and adjusting for the revenue and cost impact of the Business
Transfer Agreement between ProService and THSC as if this occurred from 1
April 2024 rather than 1 October 2024.
This has been provided to assist in investor understanding of the performance
of ProService. No comparative proforma financial information for ProService
has been prepared as it was not possible to accurately calculate on an
equivalent basis.
Overview
ProService has delivered a resilient set of results in a period of
transformation. The business is now well positioned to deliver profitable
growth from our broad range of buyers and sellers operating on what we believe
to be the leading marketplace in building services.
Financial highlights
FY25 has been a year of transformation for ProService. In September 2024, the
management and trading operations of ProService and THSC were separated and in
the months prior to this, the current management team was appointed.
As part of the separation a significant number of customer relationships were
transferred to THSC (generally, smaller non-marketplace customers), resulting
in a material intra-group transfer of sales and profit allowing each business
to pursue their different but complementary growth objectives. As part of the
mobilisation, intercompany trading arrangements and transitional services were
established, with these also implemented from 1 October 2024.
The organisational change inevitably diverted attention from trading in the
short term, and this, combined with the relatively weak economic backdrop,
made for difficult trading conditions throughout the period. Despite this, and
thanks to the efforts of the whole team, ProService delivered a resilient set
of results.
Revenue
ProService reported revenue in FY25 was £362.8m (2023: £311.0m). On an LTM
basis revenue was £282.1m with the decrease of £20.6m between the first and
second 6-month period reflecting both trading performance, but also the
transfer of a number of customers to THSC from 1 October. On a proforma basis,
revenue for the last twelve-month period to 31 March 2025 was £266.1m.
Hire-related revenue represented c.82% of total ProService revenue before
rebates and other income. Our sale verticals of Equipment Sales, Building
Materials and Fuel collectively provided 10% of total ProService revenues,
with Training the remaining 8% of total ProService revenues. We expect to see
growth in non-hire verticals outstrip that of Hire as we expand our product
offering to buyers through our growing network of sellers.
Costs
Cost of sales for FY25 was £280.9m, resulting in a gross profit margin of
22.6%. (2023: £242.5m, resulting in gross profit margin of 22.0%). Whilst
there is a year-on-year increase, after the separation margins reduced
slightly due to the transfer of customers to THSC, but also due to mix. The
margins in the new verticals of Equipment, Fuel and Building Materials are
lower than Hire and Training.
Consequently, as revenue growth in new verticals outperforms Hire and Training
growth this creates a change of mix resulting in slight gross profit margin
reduction over time. However, as the cost to transact these new verticals is
lower this should improve operating leverage overall and thus should result in
rising net profit margins over time.
Indirect costs for the period were £66.3m (2023: £55.9m). The increase was
driven primarily by the additional three months in the current period, however
the level of indirect costs incurred are lower post separation and these more
accurately reflect the go-forward costs for ProService under the Group's
revised operating model.
Underlying EBITDA and Underlying EBITA
Underlying EBITDA for FY25 was £15.6m (2023: £12.6m). FY25 results were an
Underlying EBITDA margin of 4.3% (2023: 4.1%). Underlying EBITDA expressed as
a percentage of Gross Profit, which is a useful indicator of scalable
profitability, was 19.0%. On an LTM basis Underlying EBITDA was £12.6m with
the change in the last six-month period reflecting a reduction in revenue
transferred to THSC, a reduction in gross margin due to changing mix and
increased costs relating to the separation. On a proforma basis, Underlying
EBITDA was £11.0m (assuming that the separation of the ProService and THSC
had occurred on 1 April 2024).
Underlying EBITA for FY25 was £13.2m (2023: £11.0m). This was after taking
account of an increase in amortisation charge relating to capitalised IT costs
which somewhat offset the increase in Underlying EBITA reported above.
Proforma Underlying EBITA was £9.3m (assuming that the separation of the
ProService and THSC had occurred on 1 April 2024).
Finance costs
Net finance expenses of £0.4m mainly relates to the discounting on IFRS16
lease liabilities.
Capital expenditure
Additions to intangible assets, property plant and equipment and right of use
assets were £5.6m in the 15 months to 31 March 2025 (2023: £9.2m). The main
driver of the decrease was a reduction in the amount of capitalised
development spend on our marketplace platforms, with a higher volume of
spending relating to operational and maintenance activities as the platform
matures. In addition, during the year we completely rebuilt the infrastructure
and front end of our B2C channel HSS.com, and this was launched at the end of
April 2025.
Provisions
Provisions of £0.4m (2023: £0.3m) relate to dilapidations on the handful of
properties leased by ProService.
The Hire Service Company (THSC)
HSS The Hire Service Company is a UK-based tool and equipment hire company,
established in 1957. The company provides building-related tools, equipment,
and powered access throughout the UK. THSC serves over 9,500 end customers,
including tradespeople, facilities management, and construction companies in
various markets.
Investment case
With an efficient and widespread distribution network and key partnerships
with a number of builders' merchants we are well placed to meet the needs of
the whole market. We are a key supplier to the ProService business but are
expanding our own route to markets, which we expect will reduce the overall
reliance on ProService over time.
Our investment case is summarised in four key factors:
1. Market for Hire: the spend on infrastructure and both residential and
commercial projects provides market indicators for hire.
2. Distribution network: Our distribution network is significant with a
national coverage and high performing depots and an expanding network of
builders' merchants as well as a direct sales force operating regionally.
3. Product range: Our product range covers a wide range of the market needs
and the mix has been shifted to focus on higher utilisation products over
recent years.
4. People: our leadership team has significant tenure in the hire industry
and within HSS which is also reflected in the operational levels, bringing
best practice across the entire estate to drive profitability.
THSC Chief Executive Officer's Review
I am pleased to report my first results as CEO of THSC. Firstly, it has taken
a huge effort from everyone in THSC to change the way they have been working
and build out the new processes required to run as an independent business and
I would like to thank all the people across the organisation for their
contribution to making this a successful transition. I have always been
impressed by the versatility of the people within the core HSS business and
over the last six months they have shown their commitment to our combined
vision for the future of THSC.
Operationally, the business has continued to work in a safe manner and with 7
RIDDORs (Reporting of Injuries, Diseases and Dangerous Occurrences
Regulations) and 18 LTIs (Lost Time Injury) which compare well to market
safety measures.
We have taken steps to right size the business and to develop our own sales
channels separate to ProService. This has led to the decision to close certain
subscale depots and focus our revised network closer to the depots.
We now have 4,000 customers trading directly with THSC and continue to build
this route to market through our 114 builders merchant desks and 21 CDC
counters.
We have targeted increasing our revenues from customers other than ProService
and whilst in 2023 well over 90% of revenue was from ProService by March 2025
this had reduced to 67% and continues to reduce as we grow our other channels
to market. We have added new product ranges towards the end of the year with a
return to the inclusion of a range of new small plant and M&E equipment
within our core offering. These will provide further momentum to the
diversification of the customer base.
Average Order Values (AOV) has improved from £207 in September 2024 to £237
in March 2025 and average hire duration has increased 2.1% over that same
period.
Jon Overman
Chief Executive Officer, THSC
THSC Financial Review
THSC Last 6m Act Prior 6m Act FY25 LTM % Change FY25 ProForma
(Oct'24 - Mar'25 (Apr'24 - Sep'24 (Total) (12m to Mar'25)
Revenue 56.6 50.6 107.2 11.9% 116.7
Underlying EBITDA 12.9 15.9 28.7 -18.8% 30.2
Underlying EBITA -3.4 -0.8 -4.2 316.8% (2.8)
The operational separation of THSC occurred on 1 October 2024. This included
the reallocation of certain customers and associated costs from ProService to
THSC relating primarily to non-ProService marketplace customers and also the
allocation of central costs to THSC based on staff reallocations and new TSA
arrangements.
The above tables include financial information prepared on two bases:
(i) Last Twelve Months (LTM) - The financial performance for THSC over
the past 12 months, split into two 6-month periods to reflect the separation
occurring on 1 October 2024.
(ii) Proforma - The financial performance for THSC over the past 12 months
assuming that the separation of the two businesses had occurred on 1 April
2024 and adjusting for the revenue and cost impact of the Business Transfer
Agreement between ProService and THSC as if this occurred from 1 April 2024
rather than 1 October 2024.
This has been provided to assist in investor understanding of the performance
of THSC. No comparative proforma financial information for THSC has been
prepared as it was not possible to accurately calculate on an equivalent
basis.
Financial highlights
FY25 has been a period of transition for THSC, starting the year as the
operational arm of the Group fully reliant on intercompany trade with
ProService and moving to a standalone business trading both with ProService
and directly with its own external customer base, On 1 October 2024, the
management and trading operations of ProService and The Hire Service Company
were separated and in the months prior to this, the current management team
was appointed.
As part of the separation a significant number of customer relationships and
associated costs to service these customers were transferred to THSC from
ProService, in parallel with the creation of the new trading name THSC. This
change allows each business to pursue their different but complementary growth
objectives. As part of the separation, intercompany trading arrangements and
transitional services were established, with these implemented from the 1
October 2024.
The organisational changes naturally drew focus away from trading in the short
term, and when combined with a subdued economic environment, created
challenging conditions during the final six months of the period.
Revenue
THSC reported revenue in the period was £132.1m (2023: £109.4m). On an LTM
basis revenue was £107.2m, with an increase of £6.0m between the first six
months and second six months of the LTM period reflecting both trading
performance including new direct channel sales initiatives but also the
transfer of a number of customers to THSC from 6 October 2025. On a proforma
basis revenue was £116.7m (assuming the separation of THSC had occurred on 1
April 2024).
Core hire revenue was £122.3m representing 92% of revenue with the balance
attributed to rehire (through ProService) (3%) and resale (5%). We continue to
focus on driving our own customer strategy and investing in further
complementary product ranges, which in turn is expected to drive higher
attachment rates for other revenue streams as we build deeper customer
relationships.
Costs
Our cost of sales, distribution and stock maintenance costs for the period
were £49.0m before inclusion of depreciation, resulting in a contribution
margin of 62.9% (2023: 68.2%). The decrease was driven by an increase in the
post-separation rehire revenue at a much lower margin than core hire together
with associated distribution costs. We have continued to focus on cost saving
in the indirect costs bases and rationalise the network to provide a stable
cost base from which to provide future EBITDA growth.
Indirect costs (excluding depreciation and amortisation) for the period
totalled £45.2m (2023: £30.8m).
Underlying EBITDA and Underlying EBITA
Continuing Underlying EBITDA for the period was £37.9m (2023: £43.7m) and in
the current period Underlying EBITDA margin was 28.7% (2023: 40.0%). On an LTM
basis, Underlying EBITDA was £28.7m with the £12.9m in the second six-month
portion of the period reflecting the positive contribution from revenue from
customers transferred from ProService on 1 October 2024, offset by a decline
relating to the restructuring from October 2024 and increased costs relating
to the separation. On a Proforma basis Underlying EBITDA was £30.2m (which
assumes the transfer to THSC had occurred on 1 April 2024).
The decrease from 2023 reflects the change to the operating model, which
includes a higher mix of lower margin revenue lines like rehire, alongside the
increased indirect costs assumed from ProService to manage the builders'
merchant locations.
Underlying EBITA for the period was a loss of £3.6m (2023: £12.3m). The loss
was a result of higher depreciation on property leases and expanded hire stock
and a higher cost base following separation and the impact of lower underlying
EBITDA. On a proforma basis Underlying EBITA was a loss of £2.8m. (assuming
the separation of THSC had occurred on 1 April 2024).
Impairment of tangible and intangible assets
The division recognised an impairment charge of £113.5m, first against
allocated goodwill of £64.3m and software of £3.5m, then allocated pro-rata
amongst the tangible assets of the CGU for a total of £45.7m impairment of
tangible assets including right of use assets.
The impairment charge was driven by challenging trading conditions experienced
during the reporting period continuing after the period end necessitating a
downwards revision of the forecasts for the CGU. The outcome of the strategic
review of THSC has been announced with these results and is discussed in more
detail in note 21 to the financial statements.
Finance costs
Net finance expense of £5.5m (including non-underlying items) mainly reflects
the discounting on IFRS16 lease liabilities across properties, vehicles and
some hire stock assets. Additionally, £1.1m relates to the interest on hire
purchase arrangements secured against specific items of hire stock.
Capital allocation
Our objective is to create a sustainable business by strengthening our direct
routes to market, thereby reducing our dependency on ProService as our major
customer. To support this strategy, whilst we have continued to be cautious
about the overall level of capital investment in our hire fleet overall, we
will continue to invest selectively in certain areas of our hire fleet where
possible to enhance the breadth and quality of service we offer our customers.
Capital expenditure
Additions to hire fleet assets, property plant and equipment and right of use
assets were £46.8m in the period (2023: £41.2m). The main driver of the
increase is the additional three-month period. The reduction in the average
monthly investment in the hire fleet is due to the reduction in the size of
the network and allowed for consolidation of our stock lines, aimed at
creating greater efficiency and improved utilisation of the products.
Provisions
Provisions of £9.8m (2023: £17.5m) relate mainly to dilapidations on the
leased properties with the reduction due to the reduction in size of the
estate and settlements on closed sites in the period.
GROUP SUSTAINABILITY
In FY24 we published our third ESG Impact Report, in line with our commitment
to update and publish annually so that, as a Group, we continue to hold
ourselves accountable to our ESG vision, strategy and goals.
SUSTAINABLITY AT HSS PROSERVICE
ProService is the technology-based business unit of the HSS Group. As a
marketplace business, its purpose is to offer our buyers (customers) tens of
thousands of products and services wherever and whenever they want, at the
click of a button, via our sellers (suppliers).
As an asset-free business, the challenges faced are materially different from
those of THSC, however the commitment to minimising our environmental impact
and scale our sustainability efforts remains steadfast.
By leveraging the data and digital tools available in-house, we are becoming
the more reliable and sustainable organisation in our market.
SCIENCE BASED TARGETS INITIATIVE
We take our ambitious Net Zero 2040 target seriously. That is why we are proud
to be the first in our sector to have our Science Based Targets (SBTs)
validated by the Science Based Target initiative (SBTi) in May 2023.
This means that our near and long-term emissions reduction targets, whilst
drastic, are achievable. We've also committed to align with a 1.5°C rise in
global temperatures compared with pre-industrial levels through the Business
Ambition for 1.5°C campaign.
ECOVADIS GOLD AWARD
For the third time now, we have participated in a group-wide EcoVadis audit,
and yet again we have made progress in our efforts. In 2024, we maintained our
prestigious Gold award and climbed from the top 95th percentile to the top
98th percentile, just narrowly coming short of a Platinum award by 1%.
With over 130,000 rated companies in more than 180 countries globally,
EcoVadis is one of the world's most trusted platforms for externally verifying
an organisation's sustainability efforts, covering a wide range of topics
pertaining to the Environment, Labour & Human Rights, Ethics and
Sustainable Procurement. Therefore, to be in the top 2% is testament to our
progress.
CARBON DISCLOSURE PROJECT (CDP)
The CDP is a global non-profit organisation that allows companies, cities,
states and regions manage and disclose their environmental impacts. Every
year, since our inaugural disclosure we have attained a higher mark. In 2024,
we were proud to achieve an A rating for the first time.
GREENER ALTERNATIVES
In 2024 we launched the Greener Alternatives feature to our self-service
platform, ProService Marketplace. This revolutionary tool is designed to help
buyers make more sustainable choices by highlighting environmentally
friendlier equipment options at point of order, alongside the commercial
implications in terms of price.
By providing clear comparisons between standard and low-emission or electric
alternatives, it empowers our users to consciously reduce their carbon
footprint without compromising on performance. This feature not only supports
businesses in meeting their environmental goals but also simplifies the
decision-making process and provides easy oversight as to which users are
making greener choices, and those that aren't. This enables more senior
members of an organisation to look at individual adoption rates and have
targeted discussions to enforce a culture.
CUSTOMER CARBON REPORTING
Following a successful and informative series of pilot projects in 2023, we
launched our industry-first Customer Carbon Reporting Dashboard at scale, for
all customers on HSS ProService Marketplace in 2024. This is a key milestone
in our commitment to delivering innovative, value-added services to our
already revolutionary self-service platform.
Since launch the feedback from our stakeholders has been overwhelmingly
positive. It empowers our customers to monitor and manage their use-phase and
transport-associated carbon emissions with clarity and confidence, whilst
providing our internal stakeholders with a powerful key differentiator to
attract new business with confidence.
However, we never rest on our laurels at ProService and we're already
exploring ways to expand this further by aligning to our verticals such as
fuel, building materials, equipment sales, training and more. We look forward
to providing further updates on our efforts in this area, but providing a
free, easy to use and accurate tool that is third party verified is proving
vital to customer retention.
SOCIAL VALUE
Increasing emphasis is being placed on measuring the positive social value we,
as a Group, are having on communities and the nation owing to our operations.
Increasingly, social value is a deciding factor on whether bid submissions are
successful or not, as a result a growing number of our stakeholders have asked
us to quantify this. We have listened and acted.
In 2024, we engaged a specialist partner in THRIVE to help us measure, track
and improve the already impressive social value we add. We now have the
facility to quantify this and are happy to report that in 2024 we added
£197.0m in social value, focusing specifically on three themes in our first
reporting year: Tackling Economic Inequality, Fighting Climate Change and
Well-being.
This in inaugural report is great step on our way to becoming an even better
company for all our stakeholders, and no doubt there are data points we've
been unable to report on until we further develop our ERP system, which is an
ongoing project.
The weighting of our first social value reports (on a calendar year basis) and
their sub-themes are:
Tackling Economic Inequality: £197,010,435
· Create new businesses, new jobs and new skills
· Increase supply chain resilience and capacity
Fighting Climate Change: £2,093,645
· Effective stewardship of the environment
Wellbeing: £333,841
· Improve health and wellbeing
· Improve community integration
VOLUNTEERING HOURS
4,551
DONATONS
£125,366
SUPPLIER AUDITING
In 2024, we continued to maintain the safest and largest network of sellers in
Europe, offering our buyers the peace of mind that whatever they hire or buy
they will receive the same level of excellent service, quality and safe
products and services.
For this reason, we have a supplier auditing policy which stipulates that all
preferred suppliers must pass an audit annually, carried out by our internal
team of qualified, competent and experienced auditors. The type of audit i.e.
physical or desktop varies depending on their risk rating, however no supplier
is permitted to have two consecutive desktop audits. This somewhat stringent
measure ensures that we are operate in an effective working partnership with
our entire supply chain, using it as an opportunity not to be punitive but
supportive to our crucial supply chain.
The next step is to automate this process, and we are developing an all-in-one
seller portal which will streamline the commercial, operational and ESG
aspects of our individual seller relationships. This will not replace the
important work of our auditors, merely complement it by automating certain
aspects such as compliance documentation, insurance documentation, product
offerings, pricing, coverage etc.
WASTE
ProService has a much smaller estate than our partners at THSC, comprising of
an office in Manchester and a training location in Birmingham. As an
asset-free business, the waste that we produce as a result of our operations
is different in nature and volume than that of THSC. However, we are still
committed to achieving improved landfill diversion rate, recycling ratios and
altogether avoiding the creation of new waste.
We have a well-established Dry Mixed Recycling bin system that all colleagues
have received training on and are working towards the elimination of
single-use plastics in our operations, which has contributed to a rise in our
recycling ratio to 27%
As a technology-based business, every colleague at ProService is issued with a
company laptop to ensure that all colleagues have the tools necessary to
effectively carry out their duties, wherever they are. We have engaged with a
specialist Waste Electrical and Electronic Equipment (WEEE) company to
effectively and responsibly dispose of our electric waste at the end of its
ProService life.
This ensures that all possible WEEE waste has its data securely and
irrevocably removed, before being refurbished and sold to other organisations,
thus extending its lifespan further. The agreement we have made is that 60% of
net profits from the resale of these items comes back to ProService.
Taking this further, we are exploring options for a similar partnership to
remove and recycle other office waste such as chairs, desks etc.
ROADSHOWS
Product innovation is vital for the construction industry to reduce its
environmental impact and play its part in helping the UK reach net zero.
According to Hansard and UK Government data, the construction process is
responsible for 10 to 13% of UK's annual greenhouse gas emissions. However, if
you take into account the built environment as a whole (including embodied
carbon) this figure rises to c25%.
As we expand our verticals such as building materials, equipment sales and
fuel the need for product innovation is more important than ever. Therefore,
in 2024 we continued with our now well-established Innovation Roadshows.
Spread across four locations throughout the UK, 90 suppliers met with over 500
colleagues and customers, showcasing hundreds of the most innovative products
available on HSS ProService Marketplace. The purpose was simple: spread
awareness of the fantastic products and services available to drive new
enquiries that grow business and reduce environmental impact.
SUSTAINABILITY AT HSS: THE HIRE SERVICE COMPANY
HSS: THSC is the operational and asset-heavy business unit of the HSS Group.
As a traditional hire company, with locations throughout the UK, a vast
commercial transport fleet and extensive fleet of equipment, THSC remains a
leading UK-based tool and equipment hire specialist.
The very nature of the business means that it is crucial to the HSS Group
reaching our stated ESG goals, including Net Zero 2040. Whilst the challenges
faced are different to that of ProService, it is crucial that both businesses
focus on their own respective areas where they have a material impact.
By continuing in our well-established efforts to reduce operational emissions,
THSC is already a leader in reducing its environmental impact.
FLEET
We have continued to make progress on our journey to transitioning our company
car and operational fleet of vehicles into low-carbon alternatives or electric
vehicles (EVs) where practicably possible, given current business
requirements.
In 2024, as vehicle leases expired, we moved to 83% of our company car fleet
being either plug-in hybrids (PHEV's) or EVs (31% being pure EV) with the
remaining 17% of vehicles with emissions of less than 120g CO2. This means we
are on target to achieve our 2030 goal to exceed 60% of our company car fleet
being either PHEVs or EVs and have already exceeded our 2025 goal of 40%.
Unfortunately, EV and PHEV technology still is not able to deliver the mileage
we require to maintain our high level of customer service in our commercial
fleet, if we were to convert our entire fleet to EV/PHEV. That's why we have
introduced 3.5t EV Dropside vehicles in targeted locations where their daily
requirements are in line with current mileage technology.
However, we are taking action where we can; for example, we have converted 50%
of our mobile engineer fleet to low-emission PHEV vans from diesel vans and
have introduced four x EV pick-up trucks which are suitable for the more
rugged, brownfield sites we sometimes have to attend.
After analysing our routing and miles per job data for each location, combined
with trials in 2023, we are proud to announce that 13% of our 3.5 ton delivery
vehicles are now zero-emissions.
We aren't just stopping there: our partnership with Microlise continues and
means that we can monitor our drivers' habits and behaviours on the road, such
as excessive acceleration and braking, all of which can potentially be unsafe,
burn unnecessary fuel and potentially damage our brand reputation. This
software enables our operation managers to review this data and have targeted
conversations with our driver colleagues, so that we are completing jobs
safely, economically and with reduced environmental impact.
WASTE
With a vast network of locations throughout the UK, THSC produces a different
type of waste than their office-based partners in ProService.
In 2023, we removed general waste skips from all locations to improve our
waste segregation and therefore recycling ratios. This had an immediate
positive effect, and we're happy to report that this trend has continued in
2024, with our recycling ratio for skips improved - contributing to the
overall increase in landfill diversion rate, from 90% to 97% in 2024.
We have also continued with our proven waste league tables per location. This
encourages healthy competition between branches with incentives on offer for
categories such as least waste produced, most recycled, etc.
Combined with our colleagues' efforts in ProService, this means we are well on
target to achieve 95% zero-waste to landfill target in 2025 and 60% reuse and
recycle rate across all locations.
WATER
Water saving is an often-forgotten aspect of improving environmental
performance. However, we recognise that the nature of our operations and the
changing climate means that it is of increasing importance to us.
We use water for a range of necessary things, from ensuring a clean and safe
workspace, personal hygiene and also cleaning equipment. In 2023, we started
to take action and gained 81% visibility of water usage across our entire
estate.
Now that we have a clear understanding of the water we use, we can start to
implement water-saving measures and are actively exploring a range of measures
such as: low-flow taps, toilets and urinals, leak detectors and closed-loop
water systems for equipment cleaning.
Staff training is vital, and we are working with our L&D team to implement
a training module that educates on the importance of water conservation and
how best to achieve it. We are looking forward to updating you further on our
efforts in this regard.
KEY BIODIVERSE AREA (KBA) REPORT
HSS has always fostered a strong reputation for effective governance which we
feel is necessary for an ethical, profitable and environmentally sustainable
business. This is one of the reasons that we submitted a voluntary Task Force
on Climate-related Financial Disclosures (TCFD) Report in 2022.
With the Taskforce for Nature-related Financial Disclosures (TNFD) on the
horizon, we have produced our first ever HSS Sites Biodiversity Report. This
report identifies whether our business has operational activities which are
proximal to biodiversity-sensitive areas and details our potential
environmental risk, impact and mitigation measures.
This report provides an early indication of potential concerns regarding
biodiversity, and serves to give guidance that can be used for informed
decision making within THSC.
As the nature of and composition of our estate changes over time, we will
update this report and look forward to sharing our progress.
EMPOWERING OUR PEOPLE
At THSC, we recognise that building a sustainable business starts with
empowering our people. We have always believed and understand that as the
challenges change and ESG landscape evolves, so must we. In 2024, we expanded
our e-learning courses to include an additional 13 modules, ensuring that all
colleagues understand the role they play in supporting our sustainability
goals. These modules cover topics such as energy conservation, responsible
waste management and the environmental impact of our operations.
However, all things in business are only effective if they are driven from a
strong leadership position. For that reason, environmental responsibility is
embedded at all levels of leadership within THSC, from our senior leadership
team (SLT) right through to our junior managers.
Regular updates on environmental performance and initiatives are reviewed by
our SLT, ensuring accountability and strategic alignment with our goals. This
top-down commitment is complemented by the launch of our Internal
Sustainability Champions Network, which sees colleagues from across the
business who advocate for greener practices and help local initiatives. The
purpose of these champions is to act as conduits between our high-level
sustainability goals and our day-to-day operations, encouraging further
behavioural change and identifying any opportunities for improvement that may
have been overlooked.
This relatively new initiative has already contributed to several successful
depot-led projects which we look forward to updating you on in 2026. We
believe this demonstrates that our approach to including all colleagues, at
all levels, is central to our success.
ENERGY EFFICIENCY IN OUR OPERATIONS
As a part of our ongoing commitment to reducing our environmental impact, THSC
has continued to invest in energy-efficient technologies and practices across
our operations, following the findings from the UK Government's Energy Savings
Opportunity Scheme (ESOS) in which we identified energy-efficiency projects
across our entire estate in 2023.
For the past 5 years we have invested in greener products, including upgrading
our lighting systems in 2024 across all branches and distribution centres to
LED and automatic light sensors, which improve energy efficiency and improve
safety by ensuring areas are properly illuminated when required, resulting in
measurable reductions in electricity usage. We are already well on our way to
reduce energy consumption by 30% per site by 2030, and will exceed this target
if we remain on our current trajectory.
We have continued to track and monitor energy use across our operations and
produce monthly reports on energy consumption, supplemented with quarterly
league tables on performance. This healthy competition, reinforced by energy
efficiency training to all staff, will contribute to the behavioural change
that we will require in order to decarbonise our operations in line with our
targets.
Our transition towards lower carbon operations must also include more
technology however, so we have begun evaluating the installation of solar
photovoltaic (PV) potential across all locations - despite already procuring
100% green electricity.
We are already well on our way to reduce energy consumption by 30% per site by
2030, and will exceed this target if we remain on our current trajectory.
IMPROVING PRODUCT CIRCULARITY
In line with our commitment to make the hire industry improve its already
impressive circularity credentials, we have advanced our efforts to extend the
lifespan of our products and reduce waste in new and innovative ways.
Whilst we continue to send safe equipment to auction and strip other equipment
for parts to maximise the lifespan of equipment as much as possible, in 2024
we began a new initiative with original equipment manufacturers (OEMs),
specifically piloting a scheme to manage the end-of-life process for
fibreglass steps - a frequently used and difficult to recycle product in our
fleet.
This pilot has proven both operationally effective and environmentally
beneficial, successfully diverting material from landfill whilst strengthening
further our partnership attitude with suppliers.
Building on this success, we plan to expand the programme to include more
difficult to recycle or resell product categories and deepen our collaboration
with OEMs.
RISK MANAGEMENT
MANAGING RISK AND UNCERTAINTY
"We have empowered Group businesses to grow, working closely with management
teams to build bespoke risk registers and assurance programmes, to help
identify and manage emerging issues."
Mark Shirley
Risk and Assurance Director
We employ a comprehensive risk management process to help the Group identify
emerging risks, assessing impact and ensuring appropriate mitigating actions
are put in place. Assurance programmes are in place to support Group business,
with monthly Executive Management Team (EMT) discussions and quarterly Board
review.
Ownership
The EMTs are responsible for delivery, setting the risk appetite, tolerance
and culture to achieve its goals. The Audit Committee plays a key supporting
role through monitoring the effectiveness of risk management and the control
environment, reviewing and requesting deep dives on emerging risk areas and
directing and reviewing independent assurance.
The Group's EMTs have overall responsibility for day-to-day risk management.
Mark Shirley, HSS' Risk and Assurance Director, maintains the Group's risk
register which is reviewed in detail by the Audit Committee on a quarterly
basis with changes to the risk landscape, assessment and mitigating actions
agreed.
The ProService risk register is maintained by ESG Director Matt Adams and THSC
Risk Register is maintained by Mark Shirley. Both are reviewed quarterly by
the respective EMTs teams with each risk assigned a specific risk owner to
manage mitigation actions for each identified risk.
Identification and assessment
Risks are identified through a variety of sources, both internal and external,
to ensure that key developing themes are considered. This process is focused
on those risks which, if they occurred, would have a material financial or
reputational impact on the Group.
Management identifies the controls in place for each risk and assesses the
impact and likelihood of the risk occurring, taking into account the effect of
these controls, with the result being the residual risk. This assessment is
compared with the Group's risk appetite to determine whether further
mitigating actions are required.
All risks have an overall EMT owner responsible for their day-to-day
management. Health and safety and ESG are key areas in our industry and, as
such, require collective ownership to continually improve. There is an
established Executive Health and Safety Forum (THSC) which is CEO-Chaired,
made up of the EMTs, the Risk and Assurance Director, the Quality Manager and
Head of Learning and Development. The Forum meets bi-monthly (and more
frequently if required) to review trends, incidents and issues.
Throughout the year an ESG Committee chaired by the ESG Director oversaw
improvement actions and monitored risk and opportunities. ESG risk is
integrated into our risk management process as part of the Group's commitment
to the requirements of CFD.
Monitoring
The Risk and Assurance Director reports and meets with the Group CFO and each
divisional CFO monthly to review the findings of risk-based assurance
activity. Risk-based assurance work is then reported to the Audit Committee on
a quarterly basis for review.
Culture and values
The Board is cognisant that risk management processes alone are not enough to
mitigate risk, and behaviour is a critical element in risk management. The
well-being of our colleagues, the drive and skill sets they bring and the
training and environment we provide are key to our success. These are
underpinned in the HSS values, which are vital in us achieving our strategy as
well as mitigating the risks associated with it.
HOW WE MANAGE RISK
We adopt a three lines of defence model for managing risk, providing the Board
and the EMTs with assurance that risk is appropriately managed. This is
achieved by dividing responsibilities as follows:
THE FIRST LINE OF DEFENCE
Functions that own and manage risk.
THE SECOND LINE OF DEFENCE
Functions that oversee or specialise in specific risk such as Health, Safety,
Environment and Quality (HSEQ), Supply Chain Auditors, Performance Reporting,
and Control Risk Self-Assessment (CRSA) audits undertaken by regional
management.
THE THIRD LINE OF DEFENCE
Functions that provide independent assurance, in the HSS case primarily
Internal Audit.
Macroeconomic risk
This continues to be the highest-rated risk facing the Group with a
combination of conflict, political change, protectionism, increased National
Insurance rates and high interest rates affecting consumer confidence in
construction and therefore UK growth. Continued high levels of insolvency mean
we continue to refine and invest in our credit control systems.
Within THSC, over the past 12 months we have closed a number of depots to
reduce costs and move equipment geographically into areas where there is more
demand. The company has also restructured its business to have one reporting
line for sales and operations for locations under the COO.
ProService's lower-cost and flexible operating model continues to be key in
combating inflationary pressures.
We closely monitor conditions and take action as appropriate to manage the
trading conditions.
Business separation
With the Group separating into two businesses with their own management teams,
there has been a degree of supporting activity and change to assurance
projects and programmes across the year.
Both ProService and THSC have established risk registers that reflect their
own individual risks that feed into the Group risk register. Both businesses
have separate assurance programmes and monthly reports and meetings to update
EMTs on any emerging issues so they can be managed.
RISK MANAGEMENT FRAMEWORK
1ST LINE OF DEFENCE
Owns and manages risk and implements/operates business controls
Who is responsible:
· Operational management/colleagues
Activity/controls:
· Policies and procedures
· Internal controls
· Planning, budgeting, forecasting processes
· Delegated authorities
· Business workflows/IT system controls
· Personal objectives and incentives
2ND LINE OF DEFENCE
Oversight of risks and control compliance through dedicated compliance teams,
CRSA, and financial and operational reporting and monitoring
Who is responsible:
· Compliance/oversight functions, finance and regional management
Activity/controls:
· HSEQ team with audit programme in place
· Rehire Supply Chain Audit Team
· Environmental/legal/regulatory compliance
· Risk management
· Controls compliance monitoring
· Management/Board reporting and review of KPIs and financial performance
· Corporate policies and central function oversight
3RD LINE OF DEFENCE
Segregated functions that provide assurance
Who is responsible:
· Internal Audit
Activity/controls:
· Approved internal audit plan
· Internal Audit has reporting line to Audit Committee
· Regular Internal Audit updates at Audit Committee
INDUSTRY AND ISO ACCREDITATIONS
EXTERNAL AUDIT
FY24/25 RISK MANAGEMENT DEVELOPMENTS
The focus in FY24/25 changed to focus organisation's risk and assurance needs
on the separate businesses, ensuring each business had access to appropriate
resources to support the EMTs whilst maintaining PLC Board oversight of risk
via the Group Audit Committee.
Introduced a balanced scorecard to evaluate health and safety performance
across locations and departments, using a blend of audit scores and
performance data, with a focus on safety and standards and communicating and
celebrating good performance in our location.
Built separate risk registers and assurance programmes for ProService and
THSC.
Created separate tracking reports for both businesses around health and safety
and fraud risk.
Built capacity in both businesses to enable separate application for ISO
accreditation, ensuring each business has separate policy, procedures and
management systems.
Fraud Training implemented for both customer-facing colleagues and credit
controllers across Group businesses. Real-life examples flagged through the
industry fraud forum used to bring emerging trends to light.
ProService developed a new customer complaints module to give better insight
into supply chain performance.
FY25/26 PLANNED IMPROVEMENTS TO RISK MANAGEMENT PROCESS
The focus for FY25/26 will be on building on the initiatives launched in 24/25
and ensuring we support individual businesses to grow alongside the Group.
Introduce a balanced scorecard relating to Internal Audit activity, building
on the balanced scorecard launched for health and safety last year.
The realigning of sales and operations enables the audit team to do more
analysis around how effectively assets are utilised, to improve efficiency and
reduce costs.
Work with a third party specialist to revamp health and safety training,
drawing on trainers with a military background experience.
Evolve the risk management process, to make the Group analysis of risk less
manual from each business.
Increase intercompany audit work to give the Board assurance that the
businesses continue to work effectively to grow the Group revenue and profit.
Expand the coverage of ISO 27001 to get wider assurance over information
security management.
PRINCIPAL RISKS AND UNCERTAINTIES
Key - Movement No movement: = Up: - Down:
¯
Key risk Description and impact How we mitigate What we have done in FY24/25
1. MACROECONOMIC CONDITIONS The Group's sales and profits, either volume or price, are adversely impacted The Group is not over-exposed to any one area or segment. We have continued to maintain tight cost control measures, due to market
by any decline in the macroeconomic environment.
confidence and demand being affected by political uncertainty, conflict and
Movement
Ongoing monitoring and modelling of macroeconomic indicators and performance, high interest rates.
International conflicts, inflationary pressures and the higher cost of both of which are reviewed regularly by the EMTs.
= borrowing lowers growth, affecting demand, supply chains and financial THSC closed a number of depots where demand was softer and restructured the
performance. operational side of the business, to bring sales and operations back under one
Owner: management line, reducing costs and headcount.
Steve Ashmore ProService Executive Chairman The low-cost merchant model has been expanded to increase the number of hire
locations to over 130.
2. COMPETITOR CHALLENGE A highly competitive and fragmented industry, with the chance that increased ProService employs differentiated technology platforms, including fully Following separation of ProService and THSC and establishment of separate
competition could result in excess capacity, therefore creating pricing integrated self-service interfaces for customers, suppliers and colleagues, EMTs, clearly defined visions and strategic objectives have been created for
Movement pressure and adverse impacts on planned growth. providing fast and efficient user journeys. each, providing focus to advance their differentiated propositions.
= Through our continually expanding supply chain,the Group gives customers a
one-stop shop providing access to a huge range of products and complementary
Owner: services such as training courses.
Steve Ashmore ProService Executive Chairman Our organisational structure allows for a strong focus on sales acquisition.
We have a low-cost operating model, providing national coverage from a network
of central distribution centres (CDCs), builders merchants and traditional
branches.
3. STRATEGY EXECUTION Failure to successfully implement the Group's strategic plans alongside Two clearly defined and communicated strategic plans are in place. Due to the risk of pursuing two separate strategies in a challenging market
lower-than-expected realised benefits leads to reduced forecast financial
the risk rating has been increased.
Movement performance in terms of revenue growth and cost savings. Clear governance structure, with defined accountabilities.
The Group separated into businesses with their own EMTs, reporting directly
- Implementation of projects is monitored by the Board, including resource into the main Board, with an added Group CFO and Chairman representing
allocation. ProService and THSC. This gives each business the freedom to pursue separate
Owner: In addition, this includes the risk that the announcements made today
strategic objectives, whilst maintaining a close working relationship under
regarding the future strategic initiatives do not complete and alternative Monthly updates, including initiative-specific deep dives, provided to the close monitoring of the Board.
Richard Jones Group Chief Financial Officer options need to be considered. Board.
The ProService strategy is to target large clients, grow verticals,
With regard to the strategic initiatives due to complete subsequent to the enhance the technology platform, and to improve supply management through
reporting date, the Board engages in regular dialogue with stakeholders and automation.
has considered a range of alternative scenarios should the strategic actions
not complete. The ProService self-service marketplace has continued to gain momentum over
the course of the year.
THSC strategy centres on growing local customers through their direct sales
team, CDCs and merchant networks.
THSC has continued to adapt its merchant model, changing locations and the
partners they work with, including a number of strategic closures to focus on
ensuring coverage matches the demands of the market.
The Group has engaged in active discussions with lenders regarding the
strategic initiatives and have obtained consent for their execution. The Group
has also considered alternative options as a contingency in the event that
these strategic initiatives do not complete after the period end.
4. CUSTOMER SERVICE The provision of the Group's expected service levels depends on its ability to National reach and presence through CDCs, branches, builders merchant partners We continue to invest in training for colleagues to improve the quality of our
efficiently transport the hire fleet across the network to ensure it is in the and online. service. A new customer complaints portal was established in ProService, to
Movement right place, at the right time and of the appropriate quality.
ensure quality is maintained in supply chain and customers remained satisfied.
Diverse range of rehire suppliers provides ongoing flexibility to ensure
= Management of customer relationships is important to ensure appropriate continuity of supply for customers. THSC have restructured to bring the sales and operational elements of the
payment is received for the quality of service provided.
business back under one management line, ensuring there is a more
Owner:
Clear business continuity plans to maintain supply. customer-centric approach.
Any disruption in supply, quality or relationship management can reduce
Steve Ashmore ProService Executive Chairman revenue and drive additional costs into the business. Extensive and continued training to ensure testing and repair quality THSC invested in new equipment requested by merchant customers, investing in
standards are maintained. diggers, dumpers, powered access, and manufacturing and engineering equipment.
Audits and reporting covering quality, contracts and complaints.
Business accreditations are maintained, including ISO 9001, providing
customers with confidence in the quality of the services provided.
5. THIRD PARTY RELIANCE THSC and ProService are reliant on each other to increase revenue and Group Third party rehire suppliers are subject to rigorous onboarding processes. The risk description was changed to reflect the separation of Group
profitability, which requires diligence. The majority of ProService's revenue
businesses and their reliance on working together profitably.
Movement is derived from the Services business which is dependent upon the performance Each supplier is subject to demanding service level agreements with
of third party service providers, whilst THSC is also reliant on ProService performance monitored on an ongoing basis. The new structure places THSC as the key supplier to ProService.
= and the merchant model.
The wide and diverse range of rehire suppliers provides flexibility to select The builders merchant model has continued to expand, working with new partners
Owner: If any third parties become unable or refuse to fulfil their obligations, or those who meet required service levels. such as Selco. There are currently over 130 hire locations, with more
violate laws or regulations, there could be a negative impact on the Group's
merchants in the pipeline.
Richard Jones Group Chief Financial Officer operations leading to an adverse impact on profitability and publicity. Extensive commercial and risk assessment process undertaken before and after
entering into a relationship with a builders merchant or opening a new
location.
6. IT INFRASTRUCTURE The Group requires an IT system that is appropriately resourced to support the Third party specialists are used to assess the appropriateness of IT controls, Whilst we have continued to invest in security to reduce the risk and have
business. An IT system malfunction may affect the ability to manage operations including the risk of malicious or inadvertent security attacks. improved performance, it comes with the backdrop of the UK experiencing a
Movement and distribute hire equipment and service to customers, affecting revenue and
greater threat, and we have decided to keep risk scoring at the same level.
reputation. Firewalls, antivirus software, endpoint detection and clean-up tools are used
=
to protect against malicious attempts to penetrate the business IT environment Investment has continued in IT infrastructure and our evolving cyber security
An internal or external security attack could lead to a potential loss of and remove malware or similar agents. plan
Owner: confidential information and disruption to transactions with customers and
suppliers. Procedures to update supplier security patches. Phishing alerts are reduced significantly due to our investment in cyber
Richard Jones Group Chief Financial Officer
security. A cyber security week was held in October to ensure colleagues are
Multi-factor Authentication login security technology in place for all aware of threats and good practice.
colleagues remotely accessing the Group's systems.
Restrictions were introduced for Artificial Intelligence (AI) solutions via
Regular disaster recovery tests conducted and appropriate back-up servers to our firewall controls, reducing the risk of data leakage when using AI for
manage the risk of primary server failure. analytical purposes.
Cross-departmental Data Governance team to ensure that business processes are, ISO 27001 and Cyber Essentials certifications were successfully completed, and
and continue to be, adequate. we are working on plans to expand the scope and coverage of accreditation
going forward.
Ongoing resilience and penetration testing.
7. FINANCIAL 7a. Funding (liquidity /headroom) - Loss of available funds and access to Working capital management with cash collection targets (which roll up into This risk was split into two separate risks mid-year and the rating
borrowing at reasonable rates to allow the businesses to function and grow to our net debt KPI). increased. This was to reflect the different teams managing the risk: Finance
Movement deliver their strategies. In addition, that trading results reach a position
for funding, and Operations colleagues managing the trading risk. It also
whereby covenant compliance becomes an issue and might prevent access to Extensive credit checking for account customers with strict credit control reflects the current UK insolvency rate, combined with higher interest rates.
- liquidity. over a diversified customer base.
The Group has utilised the proceeds of the sale of our HSS Power division to
Owner: 7b. Operational - The companies do not trade in a profitable way and are not Comprehensive risk reporting including regular detailed credit limit reviews. reduce our debt position. The proceeds from the sale of the Irish business
rewarded appropriately for the service provided.
will also be reinvested to reduce debt to improve liquidity.
Richard Jones Group Chief Financial Officer Credit insurance in place to minimise exposure to larger customer default
risk. The Group has negotiated an extension to its existing debt facilities.
This will provide an extension to September 2026 for the existing term
Investigation team focused on minimising the Group's exposure to fraud. debt of £57.5m and also liquidity in the form of a revolving credit facility
(RCF) of £20m.
Clearly defined authorisation matrix governing payments and amendments.
The Group is currently reviewing arrangements with lenders in light of the
forecast breach of the Group's covenants during the period of assessment for
going concern and we expect discussions with lenders to be successful.
8. Skills, Resources and Oversight The Group needs to ensure the appropriate skills, resources and management Market rates are regularly benchmarked to ensure competitive pay and benefits The risk has been reframed to focus on skills and resources and the
oversight is in place to support the existing and future growth of the packages. risk rating reduced to reflect the headcount reductions over the course
Movement business.
of the year.
Training for colleagues is provided at all levels to build capability and
¯ Failure to attract and retain the necessary high-performing colleagues could improve compliance. Training is role-related and behaviour-focused, via The increase in Employers' NI, coupled with the lowering of the payment
adversely impact targeted financial performance. blended learning. threshold and above-inflation National Living Wage significantly increased
Owner:
wage costs (£2.5m). The separation and restructuring of both businesses and
Global inflationary pressures impact ability to retain colleagues. Colleague engagement surveys are conducted, with actions taken as a result of closing of depots has led to efficiencies and a reduction in headcount helping
Steve Ashmore ProService Executive Chairman feedback. to manage the increased cost.
Recruitment programmes working with third parties such as prisons offering With the moving of sales and operations under one management line in THSC,
opportunities to ex-offenders. support and training has been provided to colleagues to help them adapt to the
wider scope of responsibilities.
Initiatives such as Earn as you Learn.
ProService has been able to reduce headcount through restructures
and innovation.
9. LEGAL AND REGULATORY REQUIREMENTS Failure to comply with applicable law and regulation could have severe Robust governance is maintained within the Group, including a strong financial Execution and reputational risk (including leak risk) around corporate
ramifications, including reputational damage and/or financial loss or penalty. structure, assurance provision from internal and external audit, and projects was a key risk this year, which was mitigated with careful project
Movement employment of internal specialist expertise supported by suitably qualified planning and project execution, with advice and assistance from our corporate
and experienced external practitioners. advisers.
=
Training and awareness programmes focusing on a variety of key topics such as
Owner: anti-bribery, anti-modern slavery, anti-facilitation of tax evasion, data
protection legislation, ED&I and price collusion have all been in place
Daniel Joll General Counsel during 2024.
Whistleblowing process in place providing colleagues with the ability to raise
non-compliance issues, which the Company Secretary discusses with the Audit
Committee and the Board.
10. SAFETY The Group operates in industries where safety is paramount for colleagues, Clear health and safety policy with ongoing risk management and monitoring of Seven RIDDORs were reported in the period, down from six reported in the
customers and the general public. accidents and incidents. previous year.
Movement
Failure to maintain high safety standards could lead to the risk of serious Health and Safety Forum chaired by the CEO and comprising senior managers with To improve engagement in safety training we started working with an outside
= injury or death. responsibility for setting direction and monitoring progress. company giving a military perspective to safety training. The aim is to mix up
our approach in delivering safety training and recognises the importance of
Owner: Fully skilled HSEQ team and internal investigators providing assurance and colleague training in preventing accidents
support.
Steve Ashmore ProService Executive Chairman
A balanced scorecard to evaluate health and safety performance in locations
Mandatory training programmes for higher-risk activities. was launched using a range of metrics to rate safety performance and celebrate
and reward locations monthly.
The Group is ISO 45001 Health and Safety accredited.
11. ESG If the Group fails to set and meet appropriate ESG goals, there may be an The Group has a comprehensive set of procedures in place to minimise adverse Political lobbying relating to net zero has not affected the corporate drive
adverse reputational impact with stakeholders and it could limit ability to environmental impact, including procurement of electricity from renewable to reach net zero.
Movement trade with customers. This could result in revenue reduction, deterring people sources, third party monitoring of utility consumption and waste management.
from joining the business and limiting attractiveness to investors.
Whilst we continue to see increased demand for environmental data relating to
=
Procedures are in place to manage social and governance risks, many of which product performance, this is not being translated into demand for
are covered in key risks 8, 9 and 10. lower-emission products as customers remain resistant to environmentally
Owner:
better performing products if there is a higher cost.
The Group is ISO 14001 Environmental Management accredited.
Matt Adams ESG Director
An ESG Committee that oversees improvement actions and monitors progress.
Monthly Board updates on ESG progress.
CONSOLIDATED INCOME STATEMENT
FOR THE PERIOD ENDED 31 MARCH 2025
15-month period ended 31 March 2025 12-month period ended 30 December 2023
Note Underlying Non-underlying costs (note 4) £000s Total Underlying Non-underlying costs (note 4) £000s Total
£000s
£000s
£000s
£000s
Revenue 2 378,992 - 378,992 312,359 - 312,359
Cost of sales (209,926) - (209,926) (165,215) - (165,215)
Gross profit 169,066 - 169,066 147,144 - 147,144
Distribution costs (33,503) - (33,503) (25,767) - (25,767)
Administrative expenses (129,511) (3,094) (132,605) (99,650) (2,458) (102,108)
Impairment loss on tangible assets 4,9,10 - (45,714) (45,714) - - -
Impairment loss on intangible assets 4,8 - (67,834) (67,834) - - -
Impairment loss on trade receivables and contract assets 11 (2,770) - (2,770) (2,151) - (2,151)
Other operating income 3 501 - 501 194 - 194
Exceptional items (non-finance) 4 - (4,892) (4,892) - 41 41
Operating profit 3,783 (121,534) (117,751) 19,770 (2,417) 17,353
Net finance expense (12,216) - (12,216) (10,075) - (10,075)
Exceptional items (finance) 4 - (334) (334) - (353) (353)
(Loss)/profit from continuing operations before tax (8,433) (121,868) (130,301) 9,695 (2,770) 6,925
Income tax (charge)/credit 6 (686) - (686) (3,987) - (3,987)
(Loss)/profit from continuing operations (9,119) (121,868) (130,987) 5,708 (2,770) 2,938
Profit from discontinued operations, net of tax 4, 19 3,168 (1,894) 1,274 1,339 (40) 1,299
(Loss)/profit for the financial period (5,951) (123,762) (129,713) 7,047 (2,810) 4,237
Alternative performance measures for continuing operations (£000s)
Underlying EBITDA 20 50,464 54,506
Underlying EBITA 20 6,600 21,589
Underlying profit before tax 20 (8,433) 9,695
Earnings per share for continuing operations (pence)
Basic (loss)/earnings per share 7 (0.89) (18.48) 1.06 0.42
Diluted (loss)/earnings per share 7 (0.88) (18.03) 1.02 0.40
Continuing and discontinued operations (pence)
Basic (loss)/earnings per share 7 (0.50) (18.30) 1.29 0.60
Diluted (loss)/earnings per share 7 (0.48) (17.85) 1.25 0.58
1 The notes supporting the income statement have been restated to
disclose continuing operations (see note 19), the comparative figures for
prior period have been re-presented, so that amounts relate to all operations
that have been discontinued by the end of the reporting period for the latest
period presented
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 MARCH 2025
15-month Year ended
period ended
30 December 2023
31 March 2025
£000s
£000s
Profit for the financial period (129,713) 4,237
Items that may be reclassified to profit or loss:
Foreign currency translation differences arising on consolidation of foreign (542) (231)
operations
Other comprehensive loss for the period (542) (231)
Total comprehensive profit for the period attributable to owners of the Group (130,255) 4,006
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE PERIOD ENDED 31 MARCH 2025
Note 31 March 2025 £000s 30 December 2023 £000s
ASSETS
Non-current assets
Intangible assets 8 71,991 152,982
Property, plant and equipment 9 38,034 93,183
Of which - Hire equipment 9 32,843 81,191
Of which - Non-hire equipment 9 5,191 11,992
Right of use assets 10 28,708 51,811
Of which - Hire equipment 10 1,737 2,592
Of which - Non-hire equipment 10 26,971 49,219
Deferred tax asset 16 3,479 2,012
142,212 299,988
Current assets
Inventories 3,017 3,823
Trade and other receivables 11 72,362 93,441
Cash and cash equivalents 23,914 31,931
99,293 129,195
Assets classified as held for sale 18 32,629 -
131,922 129,195
Total assets 274,134 429,183
EQUITY
Share capital 17 7,108 7,050
Share premium 17 45,552 45,552
Foreign exchange translation reserve (1,195) (653)
Other reserves 97,780 97,780
Retained (deficit)/earnings (99,645) 33,456
Total equity 49,600 183,185
LIABILITIES
Current liabilities
Trade and other payables 12 81,652 85,317
Lease liabilities 13 12,562 14,548
Borrowings 14 4,810 5,545
Provisions 15 5,632 4,816
104,656 110,226
Liabilities directly associated with assets held for sale 18 10,250 -
114,906 110,226
Non-current liabilities
Lease liabilities 13 38,796 42,822
Borrowings 14 64,152 79,015
Provisions 15 4,517 13,753
Deferred tax liabilities 16 2,163 182
109,628 135,772
Total liabilities 224,534 245,998
Total equity and liabilities 274,134 429,183
The Financial Statements were approved and authorised for issue by the Board
of Directors on 6 October 2025 and were signed on its behalf by:
Richard Jones
Director
6 October 2025
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 MARCH 2025
Share Share Merger Foreign Retained Total
capital
premium
reserve
exchange
earnings
equity
£000s
£000s
£000s
translation
£000s
£000s
reserve
£000s
At 31 December 2022 7,050 45,552 97,780 (422) 32,503 182,463
Profit for the period - - - - 4,237 4,237
Foreign currency translation differences on consolidation - - - (231) - (231)
of foreign operations
Total comprehensive profit for the period - - - (231) 4,237 4,006
Transactions with owners recorded directly in equity:
Dividends paid - - - - (3,877) (3,877)
Share-based payment charge - - - - 593 593
At 30 December 2023 7,050 45,552 97,780 (653) 33,456 183,185
Loss for the period - - - - (129,713) (129,713)
Foreign currency translation differences on consolidation - - - (542) - (542)
of foreign operations
Total comprehensive profit for the period - - - (542) (129,713) (130,255)
Transactions with owners recorded directly in equity:
Shares issued (see note 17) 58 - - - (58) -
Dividends paid - - - - (3,958) (3,958)
Share-based payment charge - - - - 628 628
As at 31 March 2025 7,108 45,552 97,780 (1,195) (99,645) 49,600
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 MARCH 2025
Note 15-month Year ended
period ended
30 December 2023 £000s
31 March 2025 £000s
Profit for the financial period (129,713) 4,237
Adjustments for:
Tax 6 1,280 4,743
Amortisation 2,840 1,943
Impairment loss on tangible assets 45,714 -
Impairment loss on intangible assets 67,834 -
Depreciation 40,632 33,673
Accelerated depreciation relating to hire stock customer losses and hire stock 7,566 6,653
write-offs
Accelerated depreciation of other property, plant and equipment and right of 1,582 1,459
use assets
Loss on disposal of property, plant and equipment and right of use assets 7,073 2,504
Gain on disposal of leases (8,191) (1,795)
Gain on disposal of intangibles (5) -
Capital element of receipts from net investment in sublease 141 143
Share-based payment charge 628 593
Loss on disposal of discontinued operations 19 16 -
Foreign exchange loss/(gain) on operating activities 79 (23)
Net finance expense 5 12,989 10,926
Changes in working capital (excluding the effects of disposals and exchange
differences on consolidation):
Inventories (258) (44)
Trade and other receivables 6,849 (5,767)
Trade and other payables 6,093 (2,327)
Provisions (5,375) (3,192)
Net cash flows from operating activities before purchase of hire equipment 57,774 53,726
Net cash flows from operating activities before purchase of hire equipment 57,774 53,726
Purchase of hire equipment (19,546) (22,789)
Cash generated from operating activities 38,228 30,937
Interest paid (11,899) (9,550)
Income tax repaid/(paid) 2,045 (1,183)
Net cash generated from operating activities 28,374 20,204
Cash flows from investing activities
Proceeds on disposal of business, net of cash disposed of 19 20,321 -
Proceeds on disposal of non-hire property, plant and equipment 17 541
Purchases of non-hire property, plant, equipment and software 8, 9 (7,585) (10,090)
Net cash used in investing activities 12,753 (9,549)
Cash flows from financing activities
Dividends paid (3,958) (3,877)
Facility arrangement fees (698) (35)
Repayment of borrowings (12,500) -
Capital element of lease liability payments (20,256) (15,729)
Capital element of hire purchase arrangement payments (8,174) (6,703)
Net cash used in financing activities (45,586) (26,344)
Net (decrease)/increase in cash and cash equivalents (4,459) (15,689)
Net effects of foreign exchange on cash and cash equivalents (260) (89)
Cash and cash equivalents at the start of the year 31,931 47,709
Cash and cash equivalents at the end of the year 27,212 31,931
Cash and cash equivalents comprise:
Cash at bank 23,914 -
Cash associated with disposal groups classified as held for sale 3,298 31,931
Cash and cash equivalents at the end of the year 27,212 31,931
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2025
1. BASIS OF PREPARATION
a) Reporting entity
The Company is a public limited company which was listed on the London Stock
Exchange up until 14 January 2021, when the Group's ordinary shares of one
pence each were admitted to trading on AIM. The Company is incorporated under
the Companies Act 2006 and domiciled in the United Kingdom. The address of the
Company's registered office is Building 2, Think Park, Mosley Road,
Manchester, M17 1FQ. These Consolidated Financial Statements comprise the
Company and its subsidiaries (the Group).
The financial information for the period ended 31 March 2025 and the year
ended 30 December 2023 does not constitute the company's statutory accounts
for those years. Statutory accounts for the year ended 30 December 2023 have
been delivered to the Registrar of Companies. The statutory accounts for the
period ended 31 March 2025 will be delivered to the Registrar of Companies
following the Company's Annual General Meeting
The auditors' reports on the accounts for the period ended 31 March 2025 and
for the year ended 30 December 2023 were unqualified and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
The auditors report on the accounts for the period ended 31 March 2025 drew
attention to a material uncertainty relating to going concern. No such
matter was drawn to the reader's attention in the auditors report on the
accounts for the year ended 30 December 2023.
The Annual Report and Accounts for the period ended 31 March 2025 will be
posted to shareholders during October 2025.
b) Statement of compliance
The Group Financial Statements of HSS Hire Group plc have been prepared in
accordance with UK adopted international accounting standards and the
Companies Act 2006.
During the period, the Group has changed its accounting reference date from 31
December to 31 March. This change was made to accommodate group restructuring
activities.
Historically, the Directors have taken advantage of the option within Section
390 of the Companies Act 2006 to prepare their Financial Statements up to a
date seven days either side of the Group's former accounting reference date of
31 December. These accounts cover the 65-week period from 31 December 2023 to
31 March 2025 (2023: 52-week period from 1 January 2023 to 30 December 2023).
c) Functional and presentational currency
These Financial Statements are presented in pounds sterling (£), which is the
Group's presentational currency. The functional currency of the parent and
subsidiaries is pounds sterling, except for HSS Hire Ireland Limited that is
incorporated in the Republic of Ireland, which has the euro as its functional
currency. All amounts have been rounded to the nearest thousand, unless
otherwise indicated.
d) Basis of preparation
These Financial Statements have been prepared under the historical cost
convention. The accounting policies set out below have been applied
consistently to all periods presented in these Financial Statements.
e) Going concern
At 31 March 2025, the Group's financing arrangements consisted of a drawn
senior finance facility of £57.5m, and an undrawn revolving credit facility
(RCF) of £20.0m, of which £5m was drawn as on 1 April 2025. Cash at the
balance sheet date was £23.9m (excluding cash within disposal groups)
providing available liquidity of £43.9m (2023: £56.9m). Since the year end,
following the sale of the HSS Ireland business for £24.3m (see note 34), the
Group has repaid £17.6m of senior finance facility leaving a balance of
£39.9m remaining. Both the senior finance facility and RCF are subject to net
debt leverage and interest cover financial covenant tests each quarter. At the
financial year end the Group had 34% and 29% headroom against these covenants
respectively (2023: 44% and 54% respectively).
Since the period end we have been focused on continuing to broaden
ProService's offering whilst continuing to focus on its core hire vertical. In
THSC we have completed the rightsizing of the geographical footprint whilst
carefully targeting new capital investment in higher demand categories and
have continued to develop its direct selling channels. However, the market has
remained subdued to date and has impacted our core hire business in particular
which, has also continued to be impacted by the loss of the Amey contract in
June 2024.
During the 15 month period to 31 March 2025, the Group completed an extension
agreement in respect of its existing finance facilities. This extension took
the Group's facilities from the initial expiry date of November 2025 to the
end of September 2026, which falls within the period in the Going Concern
assessment.
In determining whether the Going Concern basis of preparation is appropriate,
the Group considers its ability to continue in operation whilst meeting its
liabilities as they fall due for the foreseeable future. This assessment
includes consideration of the Group's covenants in respect of the term loan
and revolving credit facility (RCF).
In accordance with the requirements of IAS 1 Presentation of Financial
Statements, the Directors have assessed the Group's ability to continue as a
going concern for a period of at least twelve months from the date of
approval of these financial statements, to the end of October 2026
(the "assessment period").
In doing so, the Group has evaluated base case forecasts which include a
reasonably probable downside scenario. This includes lower revenue
expectations as compared to the initial budget, reflective of the continuing
subdued market for hire, assumes no improvement in the market for the rest of
our financial year, further delay in the conversion of new larger customers in
ProService and continued caution in terms of capital deployed into our hire
fleet with a resultant impact on core hire revenues. The Directors, when
considering mitigating actions, have also considered a range of further
potential downside scenarios, including more severe but plausible trading
outcomes, further cost inflation, delayed revenue recovery, and the
crystallisation of identified operational risks.
Management has also prepared contingency scenarios involving more extensive
restructuring, targeted asset disposals to reduce debt and provide additional
group liquidity and execution of other strategic initiatives to focus on high
value areas of the business with lower capital requirements and reduced
operating costs. As noted above, under the base case scenario, the forecasts
indicate a breach of the Group's financial covenants during the assessment
period and insufficient liquidity to settle the Group's bank facilities at the
end of September 2026.
Should a breach of covenants occur, the facilities may be withdrawn and
require immediate repayment. The Group's forecasted cash is insufficient to
immediately repay these if repayment is demanded following a breach of
covenants, or to repay the facilities at the settlement date. In mitigation of
these risks, as separately announced today, the Directors have entered into
several commercial arrangements to resolve the covenant issue:
· An arrangement between HSS ProService and SpeedyHire for
ProService's platforms to be used to serve Speedy's customers, with the hire
contracts fulfilled using Speedy's distribution network and plant,
· A buyer has been identified for THSC following the Board's
strategic review of the business, and;
· Consent has been arranged with the Group's lenders for the
proposed transactions, which also include the provision of a covenant waiver
and adjustment for the post-disposal period to allow the Group time to embed
the operational changes, but no commitment to refinance the Group's existing
bank facilities at the end of their current term.
Despite the potential covenant breach in the base case, the outcome of these
Commercial Arrangements demonstrate that the Group will maintain sufficient
liquidity headroom and cash reserves throughout the assessment period, until
the time when the Group's bank facilities fall due for repayment, as well as
mitigating the covenant breach that has been forecast.
However, notwithstanding the announcement of the above commercial arrangement,
completion of these remains conditional and therefore covenant breaches could
still occur and the loan facilities remain due for repayment at the end of
September 2026. As such, the Directors acknowledge the existence of a material
uncertainty, which may cast significant doubt upon the Group's ability to
continue as a going concern.
If the above commercial arrangements do not complete as expected, or if the
Groups bank facilities are not refinanced in due course, the facilities may be
withdrawn and require immediate repayment. As such, the Group may be unable to
realise its assets and discharge its liabilities in its ordinary course of
business. However, the Group continues to explore refinancing options with
existing and alternative lenders and remains confident that new facilities
will be in place prior to the expiry of existing ones.
On this basis, the Directors consider that the Group has adequate resources to
continue in operational existence for the foreseeable future and that it
remains appropriate to prepare the financial statements on a going concern
basis.
The financial statements have been prepared on a going concern basis and do
not include any adjustments that would be required should the going concern
basis of preparation no longer be appropriate. Such adjustments could be
material and could affect the carrying amounts assets and liabilities reported
in the statement of financial position. Areas of the financial statements that
could be impacted include, but are not limited to:
- Useful economic lives and residual values of tangible and intangible
assets;
- Valuation of goodwill;
- Measurement of right-of-use assets (currently based on a value-in-use
approach assuming continuation of operations without realisation of strategic
options); and
- Recognition of deferred tax assets.
f) Basis of consolidation
Subsidiaries are all entities over which the Company has control. The Company
controls an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully consolidated
from the date on which control is transferred.
Unless merger accounting has been adopted in specific circumstances, the Group
applies the acquisition method to account for business combinations. The
consideration transferred for the acquisition of a subsidiary is the fair
value of the assets transferred, the liabilities incurred to former owners of
the acquiree and the equity interests issued by the Group. The consideration
transferred includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date.
Acquisition-related costs are expensed as incurred.
2. SEGMENT REPORTING
As discussed in the Group's H1-24 interim financial statements, the Group had
moved on from the legal separation of ProService and Operations in 2022, to
full separation of the commercial and operational activities of both of the
major divisions. The main two divisional structures remain:
· ProService - Digital marketplace business focused on customer and
supplier acquisition. Technology-driven, extremely scalable and uniquely
differentiated including training services.
· Operations - Fulfilment business including power generation, focused on
health and safety and quality, with circular economy credentials,
comprehensive national footprint and high customer satisfaction.
Despite the changes in the organisation during the period, the Group's Chief
Operating Decision Maker continues to be the Board of Directors for the Group
as a whole.
The Group formalised the commercial and operational separation of THSC and
ProService through a Business Transfer Agreement ('BTA') at the end of
September 2024. As part of this agreement, specific assets and liabilities of
the ProService business were transferred to THSC. In addition to the transfer
of these assets and liabilities, certain specific customer contracts and
employees were also transferred. The net assets transferred during the period
were £6.1m which were settled through Intercompany. The impact of the
transfer of customer contracts was an additional £21.5m of revenue within the
Operations - UK segment in the current period. If the transaction happened at
the start of the period, the approximate additional revenue would have been
£13.4m.
With the operational and commercial separation of the two major divisions
during the period, it has become possible to more directly assign the Group's
central costs against the operating segments they principally relate to.
Accordingly, the Group has revised its segments during the period to present a
'Corporate' costs segment, which has a lower cost base than the historic
'Central' segment. Due to this change, in accordance with IFRS 8, comparative
information for the Group's operating segments has been restated to present
the previous segment note on this basis. The total figure for central costs
retrospectively allocated to HSS ProService and HSS Operations from the
Central segment in the comparative period information is £9.4m.
In addition, the elimination of transactions between trading segments on
consolidation has been presented in a separate standalone column
'Eliminations', rather than presented in combination with the 'Corporate'
costs. The comparative period has also been restated to be shown on this basis
for comparability.
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 except for the HSS Operations - Ireland segment whose revenues are
derived from customers in the Republic of Ireland. No single customer
represented more than 10% of Group revenue in the current year (2023: none).
15-month period ended 31 March 2025
ProService £000s Operations - UK Corporate £000s Eliminations £000s Total
£000s
£000s
Equipment hire and related revenue 146,349 122,323 - (108,877) 159,795
Equipment rehire 149,672 3,596 - (3,462) 149,806
Sale of goods and related services 38,399 6,171 - (3,587) 40,983
Training services rendered 28,408 - - - 28,408
Total revenue 362,828 132,090 - (115,926) 378,992
Cost of sales (exc. Depreciation and amortisation) (280,927) (8,704) - 116,089 (173,542)
Distribution costs (exc. Depreciation and amortisation) - (28,204) - - (28,204)
Stock maintenance costs (exc. Depreciation and amortisation) - (12,107) - - (12,107)
Contribution 81,901 83,075 - 163 165,139
Contribution margin 22.6% 62.9% - - 43.5%
Indirect costs (exc. Depreciation and amortisation) (66,301) (45,152) (3,059) (163) (114,675)
Underlying EBITDA 15,600 37,923 (3,059) - 50,464
Less: Depreciation (2,351) (41,481) - (32) (43,864)
Underlying EBITA 13,249 (3,558) (3,059) (32) 6,600
Less: Amortisation (1,966) (851) - - (2,817)
Underlying operating profit/(loss) 11,283 (4,409) (3,059) (32) 3,783
Net finance expenses (421) (5,199) (6,596) - (12,216)
Underlying profit/(loss) before tax 10,862 (9,608) (9,655) (32) (8,433)
Less: Non-underlying items (121,868)
Loss from continuing operations before tax (130,301)
The 'Eliminations' column shows the value of eliminations in revenue between
the trading segments Operations - UK and ProService. Corporate includes only
those corporate costs incurred centrally to support the businesses.
Year ended 30 December 2023
ProService £000s Operations - UK Corporate £000s Eliminations £000s Total
£000s
£000s
Equipment hire and related revenue 143,143 104,403 - (103,706) 143,840
Equipment rehire 121,791 - - (586) 121,205
Sale of goods and related services 26,593 4,983 - (3,710) 27,866
Training services rendered 19,448 - - - 19,448
Total revenue 310,975 109,386 - (108,002) 312,359
Cost of sales (exc. Depreciation and amortisation) (242,460) (3,770) - 108,112 (138,118)
Distribution costs (exc. Depreciation and amortisation) - (21,484) - - (21,484)
Stock maintenance costs (exc. Depreciation and amortisation) - (9,576) - - (9,576)
Contribution 68,515 74,556 - 110 143,181
Contribution margin 22.0% 68.2% - - 45.8%
Indirect costs (exc. Depreciation and amortisation) (55,913) (30,842) (1,921) - (88,676)
Underlying EBITDA 12,602 43,714 (1,921) 110 54,505
Less: Depreciation (1,573) (31,405) - 61 (32,917)
Underlying EBITA 11,029 12,309 (1,921) 171 21,588
Less: Amortisation (1,245) (573) - - (1,818)
Underlying operating profit/(loss) 9,784 11,736 (1,921) 171 19,770
Net finance expenses (235) (3,402) (6,438) - (10,075)
Underlying profit/(loss) before tax 9,549 8,334 (8,359) 171 9,695
Less: Non-underlying items (2,770)
Profit from continuing operations before tax 6,925
31 March 2025
ProService £000s Operations - UK Corporate £000s Eliminations £000s Total
£000s
£000s
Additions to non-current assets
Property, plant and equipment 526 22,895 - - 23,421
Right of use assets 2,759 23,880 - (686) 25,952
Intangibles 2,344 1,219 - - 3,563
Non-current assets - Net book value
Property, plant and equipment - Hire equipment - 32,843 - - 32,843
Property, plant and equipment - Non-hire assets 707 4,484 - - 5,191
Right of use assets - Property 1,582 11,281 - (474) 12,389
Right of use assets - Vehicles 2,546 11,973 - - 14,519
Right of use assets - Hire and non-hire assets 13 1,787 - - 1,800
Intangibles - Goodwill 37,964 - - - 37,964
Intangibles - Brands and Customer Relationships 21,900 - - - 21,900
Intangibles - Software 12,127 - - - 12,127
Deferred tax assets 1,217 2,262 - - 3,479
Current assets - Net book value
Inventories - 3,017 - - 3,017
Trade and other receivables 62,905 27,376 11,466 (29,385) 72,362
Cash 12,796 4,727 6,391 - 23,914
Current liabilities - Net book value
Trade and other creditors (69,587) (30,363) (5,575) 23,873 (81,652)
Lease liabilities (1,444) (11,118) (992) 992 (12,562)
Borrowings - (4,810) - - (4,810)
Provisions (4) (5,628) - - (5,632)
Non-current liabilities - Net book value
Lease liabilities (2,803) (35,993) (4,520) 4,520 (38,796)
Borrowings - (7,624) (56,528) - (64,152)
Provisions (354) (4,163) - - (4,517)
Deferred tax liabilities (2,163) - - - (2,163)
Net assets excluding disposal group assets and liabilities classified as held 77,402 51 (49,758) (474) 27,221
for sale
In the current period, the Group designated the assets and liabilities of HSS
Hire Ireland Limited as held for sale. This entity represents the entirety of
the Operations - Ireland segment and accordingly does not feature in the
segmental balance sheet above as at 31 March 2025. The prior period
comparatives have been prepared in a manner consistent with the balance sheet
and accordingly include the assets and liabilities of Operations - Ireland;
see note 18 for more details.
30 December 2023
ProService £000s Operations - UK Operations - Ireland Corporate £000s Eliminations £000s Total
£000s
£000s
£000s
Additions to non-current assets
Property, plant and equipment 458 26,081 5,539 - - 32,078
Right of use assets 3,037 15,100 741 309 - 19,187
Intangibles 5,718 1,340 - - - 7,058
Non-current assets - Net book value
Property, plant and equipment - Hire equipment - 71,635 9,556 - - 81,191
Property, plant and equipment - Non-hire assets 649 10,608 735 - - 11,992
Right of use assets - Property 1,143 29,267 1,645 - (441) 31,614
Right of use assets - Vehicles 3,333 13,316 956 - - 17,605
Right of use assets - Hire and non-hire assets - 2,592 - - - 2,592
Intangibles - Goodwill 37,964 70,381 7,510 - - 115,855
Intangibles - Brands and Customer Relationships 21,900 342 - - - 22,242
Intangibles - Software 11,748 3,137 - - - 14,885
Deferred tax assets - 2,012 - - - 2,012
Current assets - Net book value
Inventories - 3,656 167 - - 3,823
Trade and other receivables 145,622 160,686 7,631 20,550 (241,048) 93,441
Cash 5,536 9,078 7,401 9,916 - 31,931
Current liabilities - Net book value
Trade and other creditors (86,119) (99,658) (11,897) (121,585) 233,942 (85,317)
Lease liabilities (1,228) (13,089) (806) (992) 1,567 (14,548)
Borrowings - (5,545) - - - (5,545)
Provisions (220) (4,505) (91) - - (4,816)
Non-current liabilities - Net book value
Lease liabilities (3,498) (37,422) (1,773) (5,667) 5,538 (42,822)
Borrowings - (9,930) - (69,085) - (79,015)
Provisions (117) (12,975) (661) - - (13,753)
Deferred tax liabilities - (182) - - - (182)
Net assets 136,713 193,402 20,373 (166,862) (441) 183,185
31 March 2025
ProService £000s Operations - UK Corporate £000s Eliminations £000s Total
£000s
£000s
Lease liability payments
Less than one year 1,444 11,118 992 (992) 12,562
Two to five years 2,529 27,033 3,325 (3,325) 29,562
More than five years 274 8,960 1,195 (1,195) 9,234
Repayment of borrowings
Less than one year - 4,810 - - 4,810
Two to five years - 7,624 57,500 - 65,124
More than five years - - - - -
Total
Less than one year 1,444 15,928 992 (992) 17,372
Two to five years 2,529 34,657 60,825 (3,325) 94,686
More than five years 274 8,960 1,195 (1,195) 9,234
4,247 59,545 63,012 (5,512) 121,292
30 December 2023
ProService £000s Operations - UK Operations - Ireland Corporate £000s Eliminations £000s Total
£000s
£000s
£000s
Lease payments
Less than one year 1,228 13,089 806 992 (1,567) 14,548
Two to five years 2,970 27,283 1,298 3,896 (3,710) 31,737
More than five years 528 10,139 475 1,771 (1,828) 11,084
Borrowings
Less than one year - 5,545 - - - 5,545
Two to five years - 9,930 - 69,085 - 79,015
More than five years - - - - - -
Total
Less than one year 1,228 18,634 806 992 (1,567) 20,093
Two to five years 2,970 37,213 1,258 72,981 (3,710) 110,752
More than five years 528 10,139 475 1,771 (1,828) 11,084
4,726 65,986 2,579 75,744 (7,106) 141,930
The timing of the satisfaction of performance obligations as it relates to
revenue recognition is shown below:
15-month period ended 31 March 2025
ProService £000s Operations - UK Corporate £000s Eliminations £000s Total
£000s
£000s
Revenue from operating leases 267,130 104,230 - (93,003) 278,357
Revenue recognised at a point in time 67,290 27,860 - (22,923) 72,227
Revenue recognised over time 28,408 - - - 28,408
Total revenue recognised 362,828 132,090 - (115,926) 378,992
Year ended 30 December 2023
ProService £000s Operations - UK Corporate £000s Eliminations £000s Total
£000s
£000s
Revenue from operating leases 236,445 84,749 - (84,638) 236,556
Revenue recognised at a point in time 55,082 24,637 - (23,364) 56,355
Revenue recognised over time 19,448 - - - 19,448
Total revenue recognised 310,975 109,386 - (108,002) 312,359
3. OTHER OPERATING INCOME
15-month period ended 31 March 2025 £000s Year ended 30 December 2023 £000s
Property sublease rental and service charge income 501 236
During the period, the Group received sublet rental income of £0.1m (2023:
£0.1m) on vacant properties.
4. NON-UNDERLYING AND EXCEPTIONAL ITEMS
Items of income or expense have been shown as exceptional either because of
their size or nature or because they are outside the normal course of
business. As a result, during the period ended 31 March 2025 the Group has
recognised exceptional items as follows:
Non-underlying Exceptional items Total
15-month period ended 31 March 2025 Included in administrative expenses £000s Included in finance expense Included in loss on disposal £000s Included in administrative expenses £000s Total
£000s
£000s
Onerous property costs - - - 483 483
Costs relating to branch network restructure 813 77 - 1,805 2,695
Costs relating to group restructure 2,281 - - 2,604 4,885
Onerous contract (note 15) - 257 - - 257
Impairment loss on tangible fixed assets (notes 9 and 10) - - - 45,714 45,714
Impairment loss on intangibles (note 8) - - - 67,834 67,834
Non-underlying from continuing operations 3,094 334 - 118,440 121,868
Disposal costs - Discontinued operations 234 - - 1,018 1,252
Loss arising on business divesture (note 19) - - 642 - 642
Non-underlying from total operations 3,328 334 642 119,458 123,762
During the year ended 30 December 2023, the Group recognised exceptional items
analysed as follows:
Non-underlying Exceptional items Total
12-month period ended 30 December 2023 Included in administrative expenses £000s Included in finance expense Included in other operating income Included in administrative expenses £000s Total
£000s
£000s
£000s
Onerous property costs - 42 (41) 798 799
Costs relating to branch network restructure - - - 1,467 1,467
Costs relating to group restructure - - - 221 221
Onerous contract (note 15) - 311 - (28) 283
Non-underlying from continuing operations - 353 (41) 2,458 2,770
Onerous property costs - Discontinued operations - - - 40 40
Non-underlying from total operations - 353 (41) 2,498 2,810
Non-underlying and exceptional items incurred in FY25 and FY23
Costs related to onerous properties:
The Group continues to incur some costs in respect of historic properties
closed as part of the exit of a number of stores announced back in October
2020. In the period, an exceptional cost of £0.5m (2023: £0.8m) has been
recognised against these locations.
Costs related to group restructure
During the current year, the Group continued to develop its strategy of
operational separation of the Operations and ProService segments and at the
start of October, conducted a restructuring exercise to enable both businesses
to operate on a standalone basis. This included the transfer of certain
customer contracts, as well as the assets and liabilities of the builders
merchant locations previously operated by ProService.
The costs included in the current year of £4.9m relate primarily to the legal
and professional fees associated with these restructuring activities. The
Group expects similar costs to be incurred in the future as the businesses
continue to operate more independently, however there is no reliable estimate
of these costs available at this time. In the prior year, the group
restructure costs relate to £0.2m of residual costs incurred in connection
with the original separation of the ProService business.
Costs related to branch network restructure
During the prior year, the Group took the strategic decision to migrate the
remaining UK HSS branches to the builders merchant model. The impact of the
change includes the closure of 31 locations during the current period (2023:
16 branches). This strategic initiative is expected to generate annual cost
savings of c£1.9m (2023: c£1.0m).
The total costs incurred in respect of the UK branch network restructure in
the current period were £2.7m (2023: £1.5m). These costs materially all
relate to accelerated depreciation on the exit of these trading locations.
These costs are incurred where useful economic life estimates for assets at
these branches, which cannot be repurposed elsewhere, have been revised
downwards to the expected closure date.
Onerous contract
The Group maintains a provision to cover the expected outflows related to its
onerous contract with Unipart for the NDEC operation which ceased in early
2018 (note 15). The liability at the balance sheet date is £2.9m (2023:
£6.8m). The discount rate used to calculate the present value of the
provision is the five-year UK gilt rate of 4.05% (2023: 3.98%). Application of
the new discount rate at the balance sheet date resulted in a credit to the
income statement of £Nil (2023: credit of £28k), recognised as exceptional
in line with the original provision. A finance charge for the discount unwind
of £0.3m (2023: £0.3m) was recognised through exceptional finance costs.
Impairment loss on tangible and intangible assets (see notes 8, 9 and 10)
During the period, the Group identified indicators of impairment and following
the completion of the impairment review, an impairment charge of £113.5m was
recognised against the goodwill, intangible and tangible assets allocated to
the HSS Operations UK CGU. More details can be found in note 8.
5. NET FINANCE EXPENSE
15-month period ended 31 March 2025 £000s Year ended 30 December 2023 £000s
Interest on senior finance facility 5,946 5,278
Debt issue costs 640 506
Interest on lease liabilities 4,227 3,270
Interest on hire purchase arrangements 1,118 705
Unwind on discounted provisions 639 647
Interest on other bank loans and overdrafts 331 169
Other interest payable 54 51
Gross finance expense 12,955 10,626
Bank interest receivable (405) (198)
Net finance expense 12,550 10,428
Finance expense from discontinued operations 439 498
Total finance expense for statement of cash flows 12,989 10,926
6. INCOME TAX CHARGE
a) Analysis of tax charge in the period
15-month period ended 31 March 2025 £000s Year ended 30 December 2023 £000s
Current tax charge/(credit)
UK corporation tax on the result for the period 558 236
Adjustments in respect of prior years 156 (1,061)
Total current tax charge/(credit) 714 (825)
Deferred tax charge for the period
Deferred tax charge for the period (359) 4,935
Deferred tax impact of change in tax rate - (27)
Adjustments in respect of prior years 925 660
Total deferred tax charge (see note 16) 566 5,568
Income tax charge 1,280 4,743
Continuing and discontinued operations
Income tax expense from continuing operations 686 3,987
Income tax expense from discontinued operations 594 756
1,280 4,743
b) Factors that may affect future tax charge
The standard rate of UK corporation tax increased to 25% from 1 April 2023.
The increased rate has been used to calculate the above deferred tax
disclosures.
At 31 March 2025 the Group had an unrecognised deferred tax asset relating to
losses of £29.5m (2023: £21.1m). The gross value of this balance at 31 March
2025 was £117.9m (2023: £84.5m).
At 31 March 2025 the Group also had an unrecognised deferred tax asset
relating to temporary differences on plant and equipment, intangible assets
and provisions of £11.8m (2023: £3.1m). The gross value of this balance at
31 March 2025 was £47.3m (2023: £12.5m).
The unrecognised deferred tax assets have not been recognised on the basis
that it is not sufficiently certain when taxable profits that can be utilised
to absorb the reversal of the temporary difference will occur.
c) Factors affecting the income tax charge/(credit) in the period
The tax assessed on the profit for the period differs from the standard UK
corporation rate of tax. The differences are explained below:
15-month period ended 31 March 2025 £000s Year ended 30 December 2023 £000s
(Loss)/Profit after tax (129,713) 4,237
Income tax expense, including on discontinued operations 1,280 4,743
Profit before tax, including discontinued operations (128,433) 8,980
Profit before tax multiplied by the effective standard rate of corporation tax (32,108) 2,110
of 25% (2023: 23.5%)
Effects of:
Unprovided deferred tax movements on short-term temporary differences and 10,868 (2,715)
capital allowance timing differences
Adjustments in respect of prior years 1,109 (380)
Expenses not deductible for tax purposes 17,358 261
(Recognition)/derecognition of brought forward tax losses and temporary timing 4,228 6,485
differences
Utilisation of unrecognised tax losses brought forward - (739)
Differential in oversees tax rates (175) (252)
Impact of change in tax rate - (27)
Income tax charge/(credit) 1,280 4,743
The charge of £17.4m (2023: £0.3m) arising in respect of expenses not
deductible is mainly attributable to costs associated with the impairment of
intangible assets, share options awarded to some employees and the Group
exiting property leases. The amount has increased in the current period due
mainly to the impairment losses (see note 8).
The deferred tax charge of £0.6m (2023: £5.6m) was substantially lower as
during the prior year there was a marked reduction in forecasted levels of
loss utilisation with an associated derecognition of deferred tax assets on
the balance sheet.
7. EARNINGS PER SHARE
Basic earnings per share:
Profit after tax from total operations Profit after tax from continuing operations Weighted average number of shares Earnings after tax from total operations per share Earnings after tax from continuing operations per share
15-month period ended 31 March 2025 (129,713) (130,987) 708,819 (18.30) (18.48)
Year ended 30 December 2023 4,237 2,938 704,988 0.60 0.42
Basic earnings 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 earnings per share is calculated using the profit for the
period divided by the weighted average number of shares outstanding assuming
the conversion of potentially dilutive equity derivatives outstanding, being
market value options, nil-cost share options (LTIP shares) and restricted
stock grants.
Diluted earnings per share:
Profit after tax from total operations Profit after tax from continuing operations Weighted average number of shares Earnings after tax from total operations per share Earnings after tax from continuing operations per share
15-month period ended 31 March 2025 (129,713) (130,987) 726,597 (17.85) (18.03)
Year ended 30 December 2023 4,237 2,938 728,238 0.58 0.40
The following reconciles basic earnings per share and the underlying basic
earnings per share:
15-month period ended Year ended
31 March 2025
30 December 2023
Total Continuing Total Continuing
pence
pence
pence
pence
Basic earnings per share (18.30) (18.48) 0.60 0.42
Add back:
Non-underlying items per share(1) 17.46 17.19 0.40 0.39
Amortisation of customer relationships and brands per share(2) - - 0.02 -
Tax charge per share 0.18 0.10 0.67 0.57
Underlying earnings before tax (0.66) (1.19) 1.69 1.38
Charge:
Tax charge at prevailing rate 0.16 0.30 (0.40) (0.32)
Underlying basic earnings per share (0.50) (0.89) 1.29 1.06
The following reconciles diluted earnings per share and adjusted diluted
earnings per share:
15-month period ended Year ended
31 March 2025
30 December 2023
Total Continuing Total Continuing
pence
pence
pence
pence
Diluted earnings per share (17.85) (18.03) 0.58 0.42
Add back:
Non-underlying items per share(1) 17.03 16.77 0.39 0.39
Amortisation of customer relationships and brands per share(2) - - 0.02 -
Tax charge per share 0.18 0.09 0.66 0.57
Underlying earnings before tax (0.64) (1.17) 1.65 1.38
Charge:
Tax charge at prevailing rate 0.16 0.29 (0.40) (0.32)
Underlying diluted earnings per share (0.48) (0.88) 1.25 1.06
1 Non-underlying items per share is calculated as total finance and
non-finance non-underlying items divided by the diluted weighted average
number of shares in issue through the period.
2 Amortisation of customer relationships and brands per share is
calculated as the amortisation charge on customer relationships and brands
divided by the diluted weighted average number of shares in issue through the
period.
All of the Group's potentially dilutive equity derivative securities were
dilutive for the purpose of diluted earnings per share in both 2025 and 2023.
The weighted average number of shares for the purposes of calculating the
underlying diluted earnings per share is as follows:
Weighted average number of shares 15-month period ended 31 March 2025 £000s Year ended 30 December 2023 £000s
Basic 708,819 704,988
LTIP share options 1,018 3,003
Restricted stock grant 16,730 20,164
Company Share Option Plan (CSOP) options 30 83
Diluted 726,597 728,238
8. INTANGIBLE ASSETS
Goodwill £000s Customer relationships £000s Brands Software £000s Total
£000s
£000s
Cost
At 31 December 2023 115,855 25,400 22,585 39,462 203,302
Additions - - - 3,569 3,569
Reclassification of assets as held for sale (see note 18) (7,510) - - (4) (7,514)
Disposed of with business divestiture (see note 19) (6,053) (900) (685) - (7,638)
Disposals - - - (42) (42)
At 31 March 2025 102,292 24,500 21,900 42,985 191,677
Amortisation
At 31 December 2023 - 25,382 361 24,577 50,320
Charge for the period - 14 4 2,822 2,840
Impairment charge 64,328 - - 3,506 67,834
Disposed of with business divestiture (see note 19) - (896) (365) - (1,261)
Disposals - - - (47) (47)
At 31 March 2025 64,328 24,500 - 30,858 119,686
Net book value
At 31 March 2025 37,964 - 21,900 12,127 71,991
Analysis of goodwill, indefinite life brands, other brands and customer
relationships by cash generating unit:
Allocated to Goodwill £000s Indefinite life brands £000s Other Customer relationships £000s Total
brands
£000s
£000s
HSS Core Operations - - - - -
HSS ProService 37,964 21,900 - - 59,864
At 31 March 2025 37,964 21,900 - - 59,864
Goodwill Customer relationships £000s Brands Software Total
£000s
£000s
£000s
£000s
Cost
At 1 January 2023 115,855 25,400 22,585 32,764 196,604
Additions - - - 7,058 7,058
Disposals - - - (360) (360)
At 30 December 2023 115,855 25,400 22,585 39,462 203,302
Amortisation
At 1 January 2023 - 25,291 327 23,119 48,737
Charge for the year - 91 34 1,818 1,943
Disposals - - - (360) (360)
At 30 December 2023 - 25,382 361 24,577 50,320
Net book value
At 30 December 2023 115,855 18 22,224 14,885 152,982
Analysis of goodwill, indefinite life brands, other brands and customer
relationships by cash generating unit:
Allocated to Goodwill Indefinite life brands £000s Other Customer relationships £000s Total
£000s
brands
£000s
£000s
HSS Core Operations 64,328 - - - 64,328
HSS ProService 37,964 21,900 - - 59,864
HSS Core - Ireland 7,510 - - - 7,510
HSS Power 6,053 - 324 19 6,396
At 30 December 2023 115,855 21,900 324 19 138,098
Following the disposal of the Power companies during the period, the only
intangible assets from business combinations on the balance sheet are goodwill
and the indefinite life brand.
For the purpose of calculating Underlying EBITDA and Underlying EBITA,
amortisation is calculated as the total amortisation for the period as well as
the loss on disposal of intangible assets.
The Group tests property, plant and equipment, right of use assets, goodwill
and brands for impairment annually and considers at each reporting date
whether there are indicators that impairment may have occurred. In identifying
indicators of impairment management considers current market capitalisation,
asset obsolescence and closures, adverse trading performance and any other
relevant wider economic or operational factors.
The recoverable amounts of the goodwill and indefinite life brands, which are
allocated to CGUs, are estimated from VIU calculations from current and prior
reporting periods, which model pre-tax cash flows for the next five years
(2023: five years) together with a terminal value using a long-term growth
rate. The key assumptions underpinning the recoverable amounts of the CGUs
tested for impairment are those regarding the discount rate, long-term growth
rate, forecast EBITDA and capital expenditure including cash flows required to
maintain the Group's right of use assets.
The key variables applied to the VIU calculations were determined as follows:
· Cash flows, including forecast capital expenditure, were derived based on
the budget for FY26 and the following two years (to the end of FY28).
· Cash flows were then tapered down to a long-term growth rate to reflect
expectations of spend in the following years, for a model of five years in
total after which a long-term growth rate into perpetuity is applied to
calculate a terminal value. The long-term growth factor used was 2.0% for each
of the CGUs (2023: 2.0%), being the long-term inflation target per the Bank of
England.
· A pre-tax discount rate of 13.6% (2023: 13.3%), calculated by reference
to a weighted average cost of capital based on an industry peer group of
quoted companies and including a 3.1% premium reflective of the Group's market
capitalisation (2023: 3.1%).
Based on the testing performed, the Directors have identified an impairment
within HSS Core Operations. The impairment identified was £113.5m in total.
As this impairment exceeds the Goodwill of £64.3m allocated to the CGU, the
remaining impairment charge was allocated pro-rata to the other assets of the
CGU, except software against which a full impairment was allocated. The
allocation exercise is illustrated below:
HSS Core Operations - Segmental Assets (£m) Pre-impairment Impairment Closing
Intangible assets - goodwill £64.3m (£64.3m) -
Intangible assets - software £3.5m (£3.5m) -
Property, plant and equipment £65.5m (£27.8m) £37.7m
Right of use assets £42.2m (£17.9m) £24.3m
Net working capital (£9.4m) - (£9.4m)
Total £166.1m (£113.5m) £52.6m
There was no impairment in respect of the Group's other remaining CGU, HSS
ProService, in respect of any of the property, plant and equipment, goodwill
or indefinite life brands at the balance sheet date.
The Group's recent Annual Reports have shown a progressive reduction in the
headroom in the HSS Core Operations CGU over the past few years as the hire
market continues to be challenging, with many peers experiencing similar
reductions in demand in recent years. The Group's previous budget and forecast
for the HSS Core Operations CGU have been revised downwards in light of the
challenging market conditions and this has been the main trigger for the
impairment charge.
An impairment charge may be identified or increased if changes to any of the
factors mentioned above become significant. This includes under-performance
versus forecasts, negative changes in the UK tool hire market, a deterioration
in the UK economy, or other factors which would cause the Directors to
reconsider their assumptions and revise their cash flow projections. Given the
material nature of the impairment charge and the significant estimation
uncertainty involved, the Group has disclosed below the potential change to
the impairment charge based on the following adjustments to estimates included
in the VIU model.
Change in assumption within the value in use models for HSS Core Operations Adj. Change Adj. Change
Permanent reduction in EBITDA of X% 1% (£3.0m) 2% (£5.6m)
Increase in the discount rate of X% 1% (£3.0m) 2% (£5.5m)
Reduction in the long-term growth rate to X% 1% (£2.2m) 0% (£4.1m)
Impact of a reduction in the required annual capital expenditure budget of £1m £9.4m £2m £18.8m
£Xm to deliver forecast EBITDA
As the Goodwill has been fully impaired in HSS Core Operations, further
impairment charges identified would be assessed against the carrying value of
other assets of the CGU in accordance with IAS 36, which have a carrying value
of £52.6m after the impairment charge.
The Directors consider the impact of climate-related risks and opportunities
in the VIU calculation. Specifically, assumptions are incorporated around the
performance of certain weather dependent seasonal revenue streams. The
Directors have not identified any other significant climate-related factors to
incorporate into the VIU calculation.
The Directors also noted that the market capitalisation of the Group at the
balance sheet date was below the consolidated net asset position - which is
an indicator that an impairment may exist. Whilst this indicator of impairment
has been noted, there is no identified impairment recognised beyond those
identified in the impairment reviews noted above.
The Directors carried out sensitivity analysis on various inputs to the
models, including growth rates and discount rates, which did not result in an
impairment charge for HSS ProService. The level of headroom was sufficient
that the Directors did not believe a reasonably possible change could trigger
an impairment in this CGU.
The following tables summarise the results of sensitivity testing and scenario
modelling on the headroom from impairment testing in respect of the Group's
CGUs in the current and prior period:
31 March 2025 30 December 2023
HSS ProService HSS ProService HSS Core Operations HSS HSS Operations - Ireland
Power
Headroom between VIU and carrying value before sensitivity £9.8m £25.3m £31.5m £2.2m £10.9m
Discount rate required to eliminate the headroom above 14.8% 16.3% 15.7% 14.5% 19.7%
Long-term growth rate required to eliminate the headroom above 0.5% (2.0%) (1.4%) 0.4% (7.8%)
The permanent reduction in EBITDA before an impairment would be triggered 7.2% 9.2% 5.6% 3.1% 14.2%
Headroom with 0% long-term growth and an increase of 1% to the discount rate (£9.4m) £3.3m (£0.3m) (£2.0m) £5.5m
before mitigating actions
At the balance sheet date, the Group's HSS Operations - Ireland CGU was
designated as a disposal group held for sale. At this time the Group
considered whether there was any impairment to recognise against the disposal
group.
The Directors considered the net assets of the disposal group against the
anticipated disposal proceeds which were deemed the recoverable amount, less
the forecast costs of disposal. On this basis it was determined that no
impairment was required. Whilst this judgement is significant to the Financial
Statements, the post-year end disposal of HSS Hire Ireland has provided
further evidence of the recoverable amount for the CGU (see note 21).
9. PROPERTY, PLANT AND EQUIPMENT
Land & buildings Plant & machinery Materials & equipment held for hire Total
£000s
£000s
£000s
£000s
Cost
At 31 December 2023 35,759 21,912 181,054 238,725
Transferred from right of use assets - - 658 658
Transferred to right of use assets - - - -
Additions 1,489 1,545 24,332 27,366
Disposals (7,744) (3,599) (26,179) (37,522)
Disposed on business divestiture (note 19) (1,414) (1,291) (39,278) (41,983)
Reclassification of assets as held for sale (note 18) (2,145) (1,894) (21,200) (25,239)
Re-measurement (610) - - (610)
Foreign exchange differences (36) (7) (400) (443)
Transfers 605 (636) - (31)
At 31 March 2025 25,904 16,030 118,987 160,921
Accumulated depreciation
At 31 December 2023 26,539 19,140 99,863 145,542
Transferred from right of use assets - - 428 428
Transferred to right of use assets - - - -
Charge for the year 2,589 1,294 18,181 22,064
Disposals (7,217) (3,495) (18,890) (29,602)
Disposed on business divestiture (note 19) (1,007) (1,210) (26,757) (28,974)
Reclassification of assets as held for sale (note 18) (1,675) (1,714) (11,201) (14,590)
Impairment of property, plant and equipment (note 8) 2,396 903 24,502 27,801
Accelerated depreciation on exit of trading locations 342 9 - 351
Foreign exchange differences (14) (3) (85) (102)
Transfers - (134) 103 (31)
At 31 March 2025 21,953 14,790 86,144 122,887
Net book value
At 31 March 2025 3,951 1,240 32,843 38,034
Accelerated depreciation on exit of trading locations relates to additional
depreciation charged as a result of reductions to specific useful economic
lives when branches cease operations early: see note 4 for more details.
Land & buildings Plant & machinery Materials & equipment held for hire Total
£000s
£000s
£000s
£000s
Cost
At 1 January 2023 35,045 29,196 174,508 238,749
Transferred from right of use assets - - 372 372
Transferred to right of use assets - - (483) (483)
Additions 1,680 847 29,551 32,078
Disposals (724) (8,128) (22,753) (31,605)
Re-measurement (216) - - (216)
Foreign exchange differences (26) (3) (141) (170)
At 30 December 2023 35,759 21,912 181,054 238,725
Accumulated depreciation
At 1 January 2023 23,957 26,122 100,895 150,974
Transferred from right of use assets - - 323 323
Transferred to right of use assets - - (380) (380)
Charge for the year 2,531 1,248 15,296 19,075
Disposals (444) (8,124) (16,382) (24,950)
Accelerated depreciation on exit of trading locations 507 9 - 516
Foreign exchange differences (12) - (4) (16)
Transfers - (115) 115 -
At 30 December 2023 26,539 19,140 99,863 145,542
Net book value
At 30 December 2023 9,220 2,772 81,191 93,183
The transferred from right of use category represents the acquisition of right
of use assets at expiry of the lease in cases where the title is transferred
to the Group. Impairment testing performed on non-current assets can be found
in note 8, which includes the impairment review of intangible assets.
The impairment charge recognised against property, plant and equipment of
£27.8m is a product of the impairment review in respect of HSS Core
Operations which is discussed in more detail in note 8.
Included within property, plant and equipment are assets against which charges
have been registered as security against their acquisition through hire
purchase arrangements. The total value of assets subject to these securities
at the balance sheet date was £21.0m (2023: £20.5m).
During the prior year, as part of a routine review of the useful lives of
assets, the Group revised the useful economic lives of assets included within
the 'material and equipment held for hire' class of property, plant and
equipment. As part of this review, the Group has considered the levels of
disposals and write-offs for these assets, as well as their period of service
in the business and anticipated remaining useful economic lives. The result of
this review was that certain assets' useful lives were extended but remained
within the original estimates as disclosed in note 4 to the Group's 2022
Consolidated Financial Statements, with one exception.
The Group's powered access equipment had previously been depreciated over
between five and ten years but has been revised to between five and fifteen
years from the start of the prior period; this was due to evidence that this
equipment was being consistently used for a period in excess of its original
estimate. The total impact of the change was a reduction in depreciation for
these assets of £2.7m in the prior financial period; the impact on future
periods is expected to be materially the same as the current year subject to
the impact of future additions and disposals. All changes to estimates have
been applied prospectively.
10. RIGHT OF USE ASSETS
Property £000s Vehicles £000s Equipment for internal use Equipment held for hire £000s Total
£000s
£000s
Cost
At 31 December 2023 52,935 27,908 - 4,134 84,977
Additions 8,376 18,019 137 1,384 27,916
Re-measurements (247) - - - (247)
Transferred to property, plant and equipment - - - (658) (658)
Transferred from property, plant and equipment - - - - -
Disposals (13,847) (9,316) - (555) (23,718)
Disposed of with business divestiture (see note 19) (3,779) (1,801) (30) - (5,610)
Reclassification of assets as held for sale (see note 18) (2,393) (2,127) - - (4,520)
Foreign exchange differences (88) (59) - - (147)
At 31 March 2025 40,957 32,624 107 4,305 77,993
Accumulated depreciation
At 31 December 2023 21,321 10,303 - 1,542 33,166
Transferred to property, plant and equipment - - - (428) (428)
Transferred from property, plant and equipment - - - - -
Charge for the period 9,088 8,471 44 965 18,568
Accelerated depreciation on exit of trading locations 1,232 - - - 1,232
Impairment of right of use assets (note 8) 8,318 8,829 - 766 17,913
Disposals (8,751) (7,954) - (277) (16,982)
Disposed of with business divestiture (see note 19) (1,942) (748) - - (2,690)
Reclassification of assets as held for sale (see note 18) (677) (769) - - (1,446)
Foreign exchange differences (21) (27) - - (48)
At 31 March 2025 28,568 18,105 44 2,568 49,285
Net book value
At 31 March 2025 12,389 14,519 63 1,737 28,708
Property £000s Vehicles £000s Equipment for internal use Equipment held for hire £000s Total
£000s
£000s
Cost
At 1 January 2023 56,895 31,613 520 3,606 92,634
Additions 5,243 12,882 - 1,062 19,187
Re-measurements (608) - - - (608)
Transferred to property, plant and equipment - - - (372) (372)
Transferred from property, plant and equipment - - - 483 483
Disposals (8,558) (16,573) (520) (645) (26,296)
Foreign exchange differences (37) (14) - - (51)
At 30 December 2023 52,935 27,908 - 4,134 84,977
Accumulated depreciation
At 1 January 2023 20,540 18,909 502 870 40,821
Transferred to property, plant and equipment - - - (323) (323)
Transferred from property, plant and equipment - - - 380 380
Charge for the period 6,625 6,976 18 979 14,598
Accelerated depreciation on exit of trading locations 943 - - - 943
Disposals (6,787) (15,582) (520) (364) (23,253)
At 30 December 2023 21,321 10,303 - 1,542 33,166
Net book value
At 30 December 2023 31,614 17,605 - 2,592 51,811
The transferred to property, plant and equipment category represents the
acquisition of right of use assets at expiry of the lease in cases where the
title is transferred to the Group.
Accelerated depreciation on exit of trading locations relates to additional
depreciation charged as a result of reductions to specific useful economic
lives when branches cease operations early: see note 4 for more details.
The impairment charge recognised against right of use assets of £17.9m is a
product of the impairment review in respect of HSS Core Operations which is
discussed in more detail in note 8.
11. TRADE AND OTHER RECEIVABLES
31 March 2025
Gross Provision for impairment £000s Provision for credit notes £000s Net of provision £000s
£000s
Trade receivables 64,419 (2,998) (4,821) 56,600
Accrued income 4,653 (39) - 4,614
Total trade receivables and contract assets 69,072 (3,037) (4,821) 61,214
Net investment in sublease 23 - - 23
Other debtors 3,982 - - 3,982
Prepayments 7,143 - - 7,143
Total trade and other receivables 80,220 (3,037) (4,821) 72,362
30 December 2023
Gross Provision for impairment £000s Provision for credit notes £000s Net of provision £000s
£000s
Trade receivables 76,620 (3,607) (5,528) 67,485
Accrued income 13,318 (103) - 13,215
Total trade receivables and contract assets 89,938 (3,710) (5,528) 80,700
Net investment in sublease 569 - - 569
Other debtors 5,846 - - 5,846
Prepayments 6,326 - - 6,326
Total trade and other receivables 102,679 (3,710) (5,528) 93,441
Included in other debtors is £Nil (2023: £2.8m) relating to tax receivables.
The following table details the movements in the provisions for impairment of
trade receivables and contract assets and credit notes:
31 March 2025 Provision for impairment 31 March 2025 Provision for credit notes 30 December 2023 Provision for impairment 30 December 2023 Provision for credit notes
£000s
£000s
£000s
£000s
Balance at the beginning of the period (3,710) (5,528) (3,449) (5,554)
Increase in provision (2,770) (4,493) (2,183) (4,166)
Disposed of with business divestiture (note 19) 45 63 - -
Reclassified as part of assets held for sale (note 18) 110 142 - -
Utilisation 3,288 4,995 1,922 4,192
Balance at the end of the period (3,037) (4,821) (3,710) (5,528)
The bad debt provision based on expected credit losses and applied to trade
receivables, all of which are current assets, is as follows:
31 March 2025 Current £000s 0-60 days past due £000s 61-365 days past due £000s 1-2 years past due £000s Total
£000s
Trade receivables and contract assets 54,938 5,710 6,576 1,848 69,072
Expected loss rate (%) 0.7% 2.5% 21.9% 59.0% 4.4%
Provision for impairment 359 145 1,443 1,090 3,037
30 December 2023 Current £000s 0-60 days past due £000s 61-365 days past due £000s 1-2 years past due £000s Total
£000s
Trade receivables and contract assets 73,810 7,594 7,031 1,503 89,938
Expected loss rate (%) 0.6% 2.4% 24.1% 90.6% 4.1%
Provision for impairment 469 184 1,696 1,361 3,710
Contract assets consist of accrued income which is invoiced to customers in
the next financial period.
The bad debt provision is estimated using the simplified approach to expected
credit loss methodology and is based upon past default experience and the
Directors' assessment of the current economic environment for each of the
Group's ageing categories.
The Directors have given specific consideration to the macroeconomic
uncertainty leading to pressures on businesses facing staff and material
shortages and, more latterly, increased inflation. At the balance sheet date,
similar to 2023, the Group considers that historical losses are not a reliable
predictor of future failures and has exercised judgement in increasing the
expected loss rates across all categories of debt. In so doing the Group has
applied an adjusted risk factor of 1.125x (2023: 1.25x) to reflect the
increased risk of future insolvency. In so doing the provision has been
increased by £0.43m (2023: £0.7m) from that which would have been required
based on loss experience over the past two years. As in the prior year,
historical loss rates have been increased where debtors have been identified
as high risk with a reduction applied to customer debt covered by credit
insurance.
The total amount expensed was £3.5m (2023: £3.0m). Unless the counterparty
is in liquidation, these amounts are still subject to enforcement actions.
In line with the requirements of IFRS 15, provisions are made for credit notes
expected to be raised after year end for income recognised during the year.
The combined provisions for bad debt and credit notes amount to 11.4% of trade
receivables and contract assets at 31 March 2025 (2023: 10.3%). A 0.5%
increase in the combined provision rate would give rise to an increased
provision of £0.4m (2023: £0.4m).
12. TRADE AND OTHER PAYABLES
31 March 2025 £000s 30 December 2023 £000s
Current
Trade payables 50,339 50,410
Other taxes and social security costs 4,516 4,631
Other creditors 2,322 1,020
Accrued interest on borrowings 499 716
Accruals 22,790 27,204
Deferred income 1,186 1,336
81,652 85,317
All deferred income relates to goods and services to be provided to customers
in the next financial period.
13. LEASE LIABILITIES
31 March 2025 £000s 30 December 2023 £000s
Lease liabilities - Current 12,562 14,548
Lease liabilities - Non-current 38,796 42,822
51,358 57,370
The interest rates on the Group's lease liabilities are as follows:
31 March 2025 30 December 2023
Equipment for hire 6.3 to 19.1% 10.6 to 19.1%
Fixed
Other 3.5 to 7.7% 5.7 to 6.1%
Fixed
The weighted average interest rates on the Group's lease liabilities are as
follows:
31 March 2025 30 December 2023
Lease liabilities 6.9% 6.4%
The lease liability movements are detailed below:
Property £000s Vehicles £000s Equipment for hire and internal use £000s Total
£000s
Lease liability movement
At 31 December 2023 35,940 18,158 3,272 57,370
Additions 7,690 18,049 1,488 27,227
Re-measurements (321) - - (321)
Unwind of discount 2,506 1,631 413 4,550
Payments (including interest) (12,829) (9,995) (1,982) (24,806)
Disposals (4,883) (1,579) - (6,462)
Disposed of with business divestiture (see note 19) (2,019) (1,028) (27) (3,074)
Reclassification of liabilities as held for sale (see note 18) (1,761) (1,278) - (3,039)
Foreign exchange differences (70) (17) - (87)
At 31 March 2025 24,253 23,941 3,164 51,358
Property £000s Vehicles Equipment for hire and internal use £000s Total
£000s
£000s
Lease liability movement
At 1 January 2023 39,268 13,472 3,552 56,292
Additions 5,167 12,955 1,126 19,248
Re-measurements (720) - - (720)
Unwind of discount 2,320 764 536 3,620
Payments (including interest) (9,483) (7,924) (1,942) (19,349)
Disposals (584) (1,091) - (1,675)
Foreign exchange differences (28) (18) - (46)
At 30 December 2023 35,940 18,158 3,272 57,370
The Group's leases have the following maturity profile:
31 March 2025 £000s 30 December 2023 £000s
Less than one year 15,622 17,735
Two to five years 35,558 37,765
More than five years 11,038 13,375
62,218 68,875
Less interest cash flows: (10,860) (11,505)
Total principal cash flows 51,358 57,370
The maturity profile, excluding interest cash flows, of the Group's leases is
as follows:
31 March 2025 £000s 30 December 2023 £000s
Less than one year 12,562 14,548
Two to five years 29,562 31,737
More than five years 9,234 11,085
51,358 57,370
14. BORROWINGS
31 March 2025 £000s 30 December 2023 £000s
Current
Hire purchase arrangements 4,810 5,545
Non-current
Hire purchase arrangements 7,624 9,930
Senior finance facility 56,528 69,085
Total non-current borrowings 64,152 79,015
The senior finance facility is stated net of transaction fees of £1.0m (2023:
£0.9m) which are being amortised over the loan period.
The nominal value of the Group's loans at each reporting date is as follows:
31 March 2025 £000s 30 December 2023 £000s
Hire purchase arrangements 12,434 15,475
Senior finance facility 57,500 70,000
Revolving credit facility - -
69,934 85,475
The senior finance facility and revolving credit facility are covered by
composite company unlimited multilateral guarantee across all Group
subsidiaries and are secured over the assets of Hampshire TopCo Limited and
Hero Acquisitions Limited and all of its subsidiaries. These subsidiaries
comprise all of the trading activities of the Group. The £20.0m revolving
credit facility includes a £6.0m overdraft facility.
The Group had undrawn committed borrowing facilities of £34.4m at 31 March
2025 (2023: £36.3m), including £14.4m (2023: £11.3m) of finance lines to
fund hire fleet capital expenditure not yet utilised. Including net cash
balances, the Group had access to £58.3m of combined liquidity from available
cash and undrawn committed borrowing facilities at 31 March 2025 (2023:
£68.2m).
The interest rates on the Group's borrowings are as follows:
31 March 2025 30 December 2023
Hire purchase arrangements Floating percentage above NatWest base rate 2.2 to 2.5% 2.2 to 2.5%
Senior finance facility Floating percentage above SONIA 3.5% 3.0%
Revolving credit facility Floating percentage above NatWest base rate 3.5% 3.0%
The margin above of 3.5% (2023: 3.0%) that applies to the senior finance
facility and revolving credit facility is subject to a ratchet mechanism, the
output of which, following the refinancing exercise during the period ranges
from 3.00% to 4.00% (2023: 2.75% to 3.75%). The specific margin to apply is
dependent on the Group's net leverage position and updated quarterly based on
the latest position.
The weighted average interest rates on the Group's borrowings are as follows:
31 March 2025 30 December 2023
Hire purchase arrangements 6.9% 7.7%
Senior finance facility 8.0% 8.2%
Revolving credit facility 8.0% 8.2%
Amounts under the revolving credit facility are typically drawn for a one- to
three-month borrowing period, with the interest set for each borrowing period
based upon SONIA and a fixed margin.
The Group's borrowings have the following maturity profile:
31 March 2025 30 December 2023
Hire purchase arrangements £000s Borrowings Hire purchase arrangements Borrowings
£000s
£000s
£000s
Less than one year 5,464 4,574 6,333 5,733
Two to five years 8,254 59,889 10,805 75,096
13,718 64,463 17,138 80,829
Less interest cash flows:
Hire purchase arrangements (1,284) - (1,663) -
Senior finance facility - (6,963) - (10,829)
Total principal cash flows 12,434 57,500 15,475 70,000
15. PROVISIONS
Onerous property costs Dilapidations £000s Onerous contracts £000s Total
£000s
£000s
At 31 December 2023 554 11,215 6,800 18,569
Additions 402 1,339 - 1,741
Utilised during the period (499) (1,871) (4,111) (6,481)
Unwind of discount 18 390 258 666
Impact of change in discount rate (5) 127 (1) 121
Unused amounts reversed (311) (2,763) - (3,074)
Foreign exchange - (29) - (29)
Disposed of with business divestiture (see note 19) - (621) - (621)
Reclassification of liabilities as held for sale (see note 18) - (743) - (743)
At 31 March 2025 159 7,044 2,946 10,149
Current 146 2,540 2,946 5,632
Non-current 13 4,504 - 4,517
At 31 March 2025 159 7,044 2,946 10,149
Onerous property costs Dilapidations £000s Onerous contracts £000s Total
£000s
£000s
At 1 January 2023 117 11,380 9,806 21,303
Additions 492 230 - 722
Utilised during the period (60) (508) (3,289) (3,857)
Unwind of discount 5 377 311 693
Impact of change in discount rate - 907 (28) 879
Unused amounts reversed - (1,153) - (1,153)
Foreign exchange - (18) - (18)
At 30 December 2023 554 11,215 6,800 18,569
Current 271 1,477 3,068 4,816
Non-current 283 9,738 3,732 13,753
At 30 December 2023 554 11,215 6,800 18,569
Onerous property costs
The provision for onerous property costs represents the current value of
contractual liabilities for future rates payments and other unavoidable costs
(excluding lease costs) on leasehold properties the Group no longer uses. The
additions of £0.4m (2023: £0.5m) and the release of the provision of £Nil
(2023: £Nil) have been treated as exceptional and are included in the
property cost charge of £0.5m (2023: £0.8m) (note 4). These additions relate
primarily to the UK branch network restructure discussed further in note 4.
The releases in the prior year are the result of early surrenders being agreed
with landlords - the associated liabilities are generally limited to the date
of surrender but provided to the date of the first exercisable break clause
to align with recognition of associated lease liabilities.
The liabilities, assessed on a property-by-property basis, are expected to
arise over a period of up to three years (2023: six years) with the weighted
average period expected for onerous property costs being 2.0 years (2023: 2.6
years). The onerous property cost provision is discounted at a rate of 4.28%
(2023: 3.48%), representing a short-term risk-free rate based upon UK
five-year GILT rates. Sensitivity analysis has not been conducted due to the
immaterial nature of the remaining provision.
Dilapidations
An amount equal to the provision for dilapidation is recognised as part of the
asset of the related property. The timing and amounts of future cash flows
related to lease dilapidations are subject to uncertainty. The provision
recognised is based on management's experience and understanding of the
commercial retail property market and third party surveyors' reports
commissioned for specific properties in order to best estimate the future
outflow of funds, requiring the exercise of judgement applied to existing
facts and circumstances, which can be subject to change. The estimates used by
management in the calculation of the provision take into consideration the
location, size and age of the properties. The weighted average dilapidations
provision at 31 March 2025 was £6.16 per square foot (psf) (2023: £8.61
psf). The decrease is mainly due to a revision of the £ psf estimates in line
with actual expenditure on the exit of properties. Estimates for future
dilapidations costs are regularly reviewed as and when new information is
available. Given the large portfolio of properties, the Directors do not
believe it is useful or practical to provide sensitivities on a range of
reasonably possible outcomes on a site-by-site basis. Instead, consideration
is given to the impact of a sizeable shift in the average rate. A £1.00 psf
increase in the dilapidations provision would lead to an increase in the
provision at 30 December 2023 of £1.1m (2023: £1.2m).
The dilapidations provisions have been discounted depending on the remaining
lease term and the rate is based on the five- or ten-year UK gilt yields of
4.28% and 4.68% respectively (2023: 3.48% and 3.54% respectively). A 1%
increase in both the discount rates at 31 March 2025 would decrease the
dilapidations provision by £0.3m (2023: £0.5m). The inflation rate applied
in the calculation of the dilapidations provision was 3.5% for year 1 and
thereafter 2.0% (2023: 5% for year 1 and a 2.5% average used thereafter).
The aggregate movement in additions, releases and change in discount rate has
generated a net decrease of £1.3m (2023: decrease of £0.1m) to property,
plant and equipment through asset additions, re-measurements and disposals.
Onerous contract
The onerous contract represents amounts payable in respect of the agreement
reached in 2017 between the Group and Unipart to terminate the contract to
operate the NDEC. Under the terms of that agreement, at 31 March 2025 £2.9m
is payable over the period to 2026 (2023: £6.8m) and £3.3m has been paid
during the year (2023: £3.3m). The provision has been re-measured to present
value by applying a discount rate of 4.05% (2023: 3.98%). A 1% increase in the
discount rate at 31 March 2025 would decrease the provision by £0.1m (2023:
£0.1m).
16. DEFERRED TAX
Deferred tax is provided in full on taxable temporary differences under the
liability method using applicable tax rates.
Deferred tax asset/(liability) Other temporary timing differences £000s Tax losses £000s Property, plant and equipment and other items Acquired intangible assets Total
£000s
£000s
£000s
At 31 December 2023 1,130 882 (96) (86) 1,830
(Charge)/credit to the income statement - continuing operations (1,130) 2,597 (21) (2,116) (670)
(Charge)/credit to the income statement - discontinued operations - - 67 37 104
Disposed of with business divestiture (note 19) - - - 52 52
At 31 March 2025 - 3,479 (50) (2,113) 1,316
Deferred tax asset/(liability) Other temporary timing differences £000s Tax losses £000s Property, plant and equipment and other items Acquired intangible assets Total
£000s
£000s
£000s
At 1 January 2023 - 7,367 148 (117) 7,398
(Charge)/credit to the income statement - continuing operations 1,130 (6,485) (25) - (5,380)
(Charge)/credit to the income statement - discontinued operations - - (219) 31 (188)
At 30 December 2023 1,130 882 (96) (86) 1,830
Deferred tax assets have been recognised to the extent that management
considers it probable that tax losses will be utilised. Due to trading losses
in prior years, the Directors expect to phase in the recognition of taxable
losses expected to be utilised in the medium and long term as they can better
assess the probability of their utilisation. The level of losses to be
utilised is measured by reference to the Board-approved budget and three-year
plan, which, is also used to determine value in use for the Group's cash
generating units, as discussed in note 8. In the period ended 31 March 2025 a
three-year (2023: three-year) recognition window has been applied.
The net deferred tax liability on property, plant and equipment and other
items, and the deferred tax liability on acquired intangible assets, are
stated after offset of deferred tax assets from available tax losses of £3.0m
(2023: £2.9m) and £5.5m (2023: £5.5m) respectively.
At 31 March 2025, the Group had an unrecognised deferred tax asset relating to
losses of £29.5m (2023: £21.1m). The gross value of the balance at 31 March
2025 was £117.9m (2023: £84.5m).
At 31 March 2025, the Group also had an unrecognised deferred tax asset
relating to temporary differences on plant and equipment, intangible assets
and provisions of £11.8m (2023: £3.1m). The gross value of the balance at 31
March 2025 was £47.3m (2023: £12.5m).
A deferred tax liability of £2.1m (2023: £0.1m) has been recognised on the
net book value of brands. The Group is recognising the deferred tax liability
on the basis that it will crystallise at a single point in time (2023: over
time). On this basis the Group no longer expects to be able to fully mitigate
the deferred tax liability with available carried forward tax losses that are
subject to loss restrictions.
17. SHARE CAPITAL
The number of shares in issue and the related share capital and share premium
are as follows:
Ordinary shares Number Ordinary shares Share premium £000s
£000s
At 30 December 2023 704,987,954 7,050 45,552
Shares Issued 5,818,910 58 -
At 31 March 2025 710,806,864 7,108 45,552
18. ASSETS HELD FOR SALE
HSS Hire Ireland Limited
Subsequent to the current period, the Group entered into a Share Purchase
Agreement ('SPA') with a third party to sell the entire 100% shareholding of
the Group subsidiary HSS Hire Ireland Limited, a company incorporated in the
Republic of Ireland. The agreement was signed on 1 April 2025 and completed at
the end of May 2025.
During January 2025, being the point at which the disposal group for the
assets and liabilities for HSS Hire Ireland Limited was classified as held for
sale, depreciation on non-current assets ceased in accordance with IFRS 5.
As at 31 March 2025
Current Non-Current Total
£000s
£000s
£000s
Goodwill (note 8) - 7,510 7,510
Intangible assets other than goodwill (note 8) - 4 4
Property, plant and equipment (note 9) - 10,649 10,649
Right of use assets (note 10) - 3,074 3,074
Inventories 158 - 158
Trade and other receivables 7,936 - 7,936
Cash 3,298 - 3,298
Assets classified as held for sale 11,392 21,237 32,629
Trade and other payables 6,468 - 6,468
Provisions (note 15) 198 545 743
Lease liabilities (note 13) 973 2,066 3,039
Liabilities directly associated with assets held for sale 7,639 2,611 10,250
More information in respect of the discontinued operation associated with HSS
Hire Ireland Limited can be found in note 19. Details of the post balance
sheet events associated with this transaction can be found in note 21.
19. BUSINESS DISPOSAL
HSS Power
During the current period, on 7 March 2024, the Group announced the sale of
ABird Limited, ABird Superior Limited and Apex Generators Limited (together
the 'Power' companies) to CES Global. The sale was undertaken as part of a
strategic decision to focus on the core business and growth of the ProService
and THSC businesses. The consideration for the sale was entirely settled in
cash.
As part of this transaction, HSS has entered into a commercial agreement with
CES for the cross-hire of power generators and related services to ensure the
broadest possible distribution of, and customer access to, both parties'
existing fleets. The Board expects this commercial arrangement to ensure that
even post-disposal, the sales in respect of the Power hire stock will continue
through ProService under the new commercial agreement.
Shortly after the disposal, the Group utilised £12.5m of the proceeds to
repay borrowings and further strengthen the Group's balance sheet position. As
discussed more fully in note 2, the results of the Power companies were
previously reported within the Group's 'Operations - UK' reporting segment,
with a significant element of revenues recorded through the ProService
business.
HSS Hire Ireland Limited ('HIL')
Subsequent to the balance sheet date, on 1 April 2025, the Group announced the
sale of HSS Hire Ireland Limited, the Group's operations in the Republic of
Ireland to Chadwick's Holdings Limited, a subsidiary of Grafton plc. The sale
was undertaken as part of a strategic decision to focus on the core business
and growth of the ProService and THSC businesses. As the transaction was not
complete at the balance sheet date, the Group has reclassified the assets and
liabilities associated with HSS Hire Ireland Limited as held for sale. The
transaction completed on 31 May 2025 and generated disposal proceeds of
£24.3m before final working capital adjustments. Shortly after the disposal,
the Group utilised £17.6m of the proceeds to repay borrowings and further
strengthen the Group's balance sheet position. As discussed more fully in note
2, the results of HIL were presented as a separate operating segment,
Operations - Ireland.
The Group have restated comparative figures for the income statement
throughout the financial statements in accordance with IFRS 5. The table below
shows the details results of discontinued operations:
Discontinued operations - 15-month period ended 31 March 2025 HSS Power £000s HSS Hire Ireland Limited Total
£000s
£000s
Revenue 4,052 34,325 38,377
Other operating income - (71) (71)
Expenses other than finance costs, amortisation and depreciation (3,402) (27,162) (30,564)
Depreciation (847) (3,928) (4,775)
Amortisation (18) - (18)
Operating (loss)/profit from discontinued operations (215) 3,164 2,949
Net finance expenses (119) (320) (439)
Taxation (charge)/credit 104 (698) (594)
(Loss)/profit from trade within discontinued operations, net of tax (230) 2,146 1,916
Loss on disposal of discontinued operations (642) - (642)
(Loss)/profit from discontinued operations, net of tax (872) 2,146 1,274
Discontinued operations - Year ended 30 December 2023 HSS Power £000s HSS Hire Ireland Total
Limited
£000s
£000s
Revenue 9,409 27,342 36,751
Other operating income 37 (183) (146)
Expenses other than finance costs, amortisation and depreciation (4,228) (21,787) (26,015)
Depreciation (4,846) (3,067) (7,913)
Amortisation (125) - (125)
Operating (loss)/profit from discontinued operations 247 2,305 2,552
Net finance expenses (273) (224) (497)
Taxation (charge)/credit (212) (544) (756)
(Loss)/profit from discontinued operations, net of tax (238) 1,537 1,299
Period ended 31 March 2025 £000s Year ended 30 December 2023 £000s
Basic earnings/(loss) per share (p) from discontinued operations 0.18 0.18
Diluted earnings/(loss) per share (p) from discontinued operations 0.18 0.18
Weighted average number of shares (000s) 708,819 704,988
Weighted average number of diluted shares (000s) 726,597 728,238
The Group's cash flows from discontinued operations were as follows:
Period ended 31 March 2025 £000s Year ended 30 December 2023 £000s
Cash flows from operating activities (2,755) 5,865
Cash flows from investing activities 20,129 141
(including net cash flows on business divestiture)
Cash flows from financing activities (2,801) (2,936)
Total cash flows for the period from discontinued operations 14,573 3,070
Below is a detailed breakdown of the result on disposal:
HSS Power
£000s
Description of assets and liabilities
Goodwill 6,053
Brand and customer lists 324
Property, plant and equipment 13,009
Right of use assets 2,920
Deferred tax assets 56
Inventories 908
Trade and other receivables 3,018
Cash 369
Trade and other payables (2,148)
Provisions (621)
Deferred tax liabilities (108)
Lease liabilities (3,074)
Net assets disposed of 20,706
Total consideration 20,690
Less: net assets disposed of (20,706)
Loss on disposal before costs (16)
Less: costs of disposal (626)
Total loss on disposal (642)
Cash consideration received 20,690
Cash disposed of (369)
Net cash inflow on disposal of discontinued operations 20,321
20. ALTERNATIVE PERFORMANCE MEASURES
Earnings before interest, tax, depreciation and amortisation (EBITDA) and
Underlying EBITDA, earnings before interest, tax and amortisation (EBITA) and
Underlying EBITA and Underlying profit before tax are alternative, non-IFRS
and non-Generally Accepted Accounting Practice (GAAP) performance measures
used by the Directors and management to assess the operating performance of
the Group.
EBITDA is defined as operating profit before depreciation and amortisation.
For this purpose depreciation includes: depreciation charge for the year on
property, plant and equipment and on right of use assets; the net book value
of hire stock losses and write-offs; the net book value of other fixed asset
disposals less the proceeds on those disposals; impairments of tangible fixed
assets; the net book value of right of use asset disposals, net of the
associated lease liability disposed of; and the loss on disposal of subleases.
Amortisation is calculated as the total of the amortisation charge for the
year and the loss on disposal of intangible assets. Non-underlying items are
added back to EBITDA to calculate Underlying EBITDA, along with any impairment
losses on intangible assets.
EBITA is defined by the Group as operating profit before amortisation.
Non-underlying items are added back to EBITA to calculate Underlying EBITA, as
well as impairment losses on intangible assets.
Underlying profit before tax is defined by the Group as profit before tax,
amortisation of customer relationships and brands-related intangibles as well
as non-underlying items.
The Group discloses Underlying EBITDA, Underlying EBITA and Underlying profit
before tax as supplemental non-IFRS financial performance measures because the
Directors believe they are useful metrics by which to compare the performance
of the business from period to period and such measures similar to Underlying
EBITDA, Underlying EBITA and Underlying profit before tax are broadly used by
analysts, rating agencies and investors in assessing the performance of the
Group. Accordingly, the Directors believe that the presentation of Underlying
EBITDA, Underlying EBITA and Underlying profit before tax provides useful
information to users of the Financial Statements.
As these are non-IFRS measures, other entities may not calculate the measures
in the same way and hence are not directly comparable.
Underlying EBITDA is calculated as follows:
Year ended 31 March 2025 £000s Year ended 31 March 2025 £000s Year ended 30 December 2023 £000s Year ended 30 December 2023 £000s
Continuing
Total
Continuing
Total
Operating profit (117,751) (114,802) 17,354 19,906
Add: Depreciation 43,864 48,639 32,917 40,830
Add: Amortisation of intangible assets 2,817 2,835 1,818 1,943
Add: Non-underlying items (note 4) 121,534 122,786 2,417 2,457
Underlying EBITDA 50,464 59,458 54,506 65,136
Underlying EBITA is calculated as follows:
Year ended 31 March 2025 £000s Year ended 31 March 2025 £000s Year ended 30 December 2023 £000s Year ended 30 December 2023 £000s
Continuing
Total
Continuing
Total
Operating profit (117,751) (114,802) 17,354 19,906
Add: Amortisation of intangible assets 2,817 2,835 1,818 1,943
Add: Non-underlying items (note 4) 121,534 122,786 2,417 2,457
Underlying EBITA 6,600 10,819 21,589 24,306
Underlying profit before tax is calculated as follows:
Year ended 31 March 2025 £000s Year ended 31 March 2025 £000s Year ended 30 December 2023 £000s Year ended 30 December 2023 £000s
Continuing
Total
Continuing
Total
Profit before tax (130,301) (128,433) 6,925 8,980
Add: Amortisation of acquired intangibles (note 8) - 18 - 125
Profit before tax and amortisation of acquired intangibles (130,301) (128,415) 6,925 9,105
Add: Non-underlying items 121,868 123,762 2,770 2,810
(finance and non-finance) (note 4)
Underlying profit before tax (8,433) (4,653) 9,695 11,915
21. POST BALANCE SHEET EVENTS
Sale of HSS Hire Ireland Limited
Subsequent to the year end, on 1 April 2025, the Group entered into an
agreement for the sale of HSS Hire Ireland Limited to a third party,
Chadwick's Holdings Limited, a subsidiary of Grafton plc.
The business was sold for gross consideration of €28.0m, with draft
customary working capital and debt adjustments resulting in draft cash
consideration of €28.9m or £24.3m. Net assets disposed were £23.0m
(including consolidation-related intangibles of £7.5m) for a gain before
transaction costs of £1.3m. In connection with the sale of the businesses the
Group has incurred transaction costs of c£1.0m.
The disposed entity was presented as a discontinued operation within these
Financial Statements and contributed revenues of £34.3m and net profit of
£2.1m to the Group in the current period (see note 19).
Subsequent to the sale, proceeds of £17.6m were used to make a partial
repayment of the Group's senior loan facility, reducing the total liability
from £57.5m at the year end to £39.9m.
Issue of shares
After the period end, on 6 June 2025, the Group issued 3,404,025 shares in
connection with the Group's share schemes. These shares were part of the FY22
RSA share scheme and were issued for nil consideration. The total increase in
the Group's share capital was £34.0k.
Commercial agreement with Speedy Hire and disposal of THSC
Subsequent to the year end, in parallel with the release of these results, the Group announced that it has entered into a new five-year commercial supplier agreement (Commercial Agreement) with Speedy Hire (Speedy), with an option to extend for three years, resulting in Speedy Hire becoming the principal equipment supply partner to ProService replacing The Hire Service Company ("THSC").
In addition, Speedy will place a substantial portion of its third-party rehire, resale and training through ProService.
Additionally, the Group today announces the disposal of the entire issued share capital of HSS Service Group Limited, trading under the brand The Hire Service Company to a third party, a newly formed company indirectly owned by investment funds advised by Endless LLP.
The Commercial Agreement (and therefore indirectly the THSC Disposal) is conditional on the satisfaction of CMA conditions. In consideration, Speedy will pay the Group £35.0m as consideration for:
• Ordinary shares in the Group, comprising approximately 9.99% of the enlarged ordinary share capital of the Group.
• Certain fixed assets of THSC, including motor vehicles and hire equipment that will be on hire through the ProService platform at Completion.
In addition to the above,
• Speedy will assume certain lease liabilities of THSC in respect of properties, motor vehicles and hire equipment.
• A number of the employees of the Group are envisaged to transfer to Speedy under TUPE pursuant to the sale and purchase of assets.
• Speedy will procure certain training related assets and liabilities of HSS Training Limited.
The result of the Commercial Agreement for THSC is that it will no longer be the primary supplier for ProService, its largest customer, other than for certain hire equipment pursuant to a separate agreement, which will have a material impact on THSC's financial position.
The consideration receivable under the Commercial Agreement will be used to fund a seller contribution to THSC as it transitions to becoming an independent business under new ownership following completion, together with fees and other expenses related to these transactions.
To facilitate the Group's transition to a digital marketplace, it has entered into an agreement to dispose of THSC, for gross consideration of £1 and a contribution of approximately £26.0m to facilitate a viable separation. The £26.0m would be payable with an initial instalment of £16.0m and a deferred amount of £10.0m to be settled within twelve months.
The whole transaction is conditional on the UK Competition and Markets Authority (CMA) approval and would be expected to complete before the end of the calendar year.
Subject to completion of the transactions above the Group's lenders have
agreed to a revised covenant package for the period to 30 September 2026
(being the date of expiry of the facility) in exchange for a commitment to
commence refinancing measures no later the end of October 2025.
The outcome of these commercial agreements could materially change the
carrying values of certain assets and liabilities as compared to amounts
reported as at the balance sheet date.
Drawdown of the Group's revolving credit facility
Subsequent to the year end, on 1 April 2025, the Group drew down £5.0m of the
RCF, leaving additional facility of £15.0m available. The £5.0m was drawn to
facilitate payments to exit trading locations and accelerate cost saving plans
in association with the branch network restructure.
The amounts drawn by the Group are for a three-month term and attract interest
on the same basis as the Group's senior facility, being SONIA plus margin (see
note 14).
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