Last checked at 
LONDON (Alliance News) - HSS Hire Group PLC Monday reported higher operating profit for its last financial year as revenue rose by a quarter thanks to strong demand for its hire fleet, although it swung to a pretax loss due to higher finance expenses.
The tool hire business also said 2015 has got off to a good start, and it's still looking for acquisition opportunities to add to its specialist hire business.
HSS Hire, which listed on the London Stock Exchange in early February, reported a pretax loss of GBP8.5 million for the year ended December 27, compared with a profit of GBP2.6 million in the 12 months to December 27, 2013. That was down to a GBP10.6 million increase in finance expenses, after it issued GBP200 million of senior secured notes in February to refinance existing borrowings, as well as an increase in its weighted average interest rate on borrowings to 7.19% from 7.02%.
Its revenue rose 26% to GBP284.6 million, from GBP226.7 million, although operating profit only rose 10% to GBP23.6 million, from GBP21.4 million, because its HSS OneCall rehire revenue grew strongly, meaning third-party supplier costs rose GBP14.3 million. Stock maintenance costs also rose, due in part to the increased size of the hire fleet.
Its organic revenue growth, which excludes the impact of acquisitions, was 18.7%.
Still, its closely-watched adjusted earnings before interest, tax, depreciation and amortisation, which is operating profit with depreciation, amortisation and exceptional costs added back, rose 27% to GBP71.1 million, from GBP56.2 million, with the adjusted Ebitda margin rising to 25.0% from 24.8%.
The group is planning to adopt a progressive dividend policy and expects to make its first such payment to shareholders for the first half of 2015.
HSS said it had grown ahead of the market in both its businesses, had opened 23 new branches, successfully developed larger key accounts, and continued to invest in its fleet.
Chief Executive Chris Davies told Alliance News that the group is aiming to open one branch per week. It has already opened 14 new branches so far in 2015, including 13 in the first quarter, and has 34 in progress, he added.
"There are about 800 trade markets in the UK, so that will put us just through about half of them and a lot more to go at in future years. We've said we want to get to 500 of those local branches and those 800 local trade markets. So we're very much going on with that, hanging off the back of the distribution network that we continue to evolve," Davies said in a statement.
Davies also said that HSS is working hard with its key account customers in the 'maintain and operate' segments of the market, including airports, infrastructure, retail chains and facilities management. In addition, the chief executive wants to develop the bolt-on acquisitions made last year.
"We're also going to work on the bolt-on acquisitions we bought last year: APEX, the temp power business in Scotland; and MTS, which is a portable variable messaging sign business which we moved from the South of England to Scotland because of the bigger market opportunity there," Davies said.
In its outlook statement, HSS said it will look to strengthen the business and "create new ways to exceed our customers' expectations" in 2015.
"While the forthcoming UK general election creates an element of short term uncertainty for our customers, HSS is in good shape and we look to the future with confidence," it said.
HSS Hire shares were up 0.8% at 210.75 pence on Monday afternoon, slightly above its initial public offering price of 210p.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
Update by Samuel Agini; samagini@alliancenews.com; @SamuelAgini
Copyright 2015 Alliance News Limited. All Rights Reserved.
