Hero Acquisitions Limited (subsidiary of HSS Hire Group plc) H1 - PowerPoint PPT Presentation

Hero Acquisitions Limited (subsidiary of HSS Hire Group plc) H1 FY16 Results

Agenda Hero Acquisitions Limited – H1 FY16 John Gill, CEO John Gill, CEO Strategic progress Highlights Steve Bailey, Interim CFO Steve Bailey, Interim CFO H1 results H1 results John Gill, CEO John Gill, CEO Strategic progress Summary 1

First half highlights Highlights Profitable market share growth Strong track record of revenue growth Hero Acquisitions Limited – H1 FY16  Revenue up 13.5% Revenue growth per quarter H1 16 results 25.0%  Adjusted EBITA up 73.3% 20.0%  Adjusted EBITA margin up 160 bps Strategic progress 15.0% Significant progress in strategy execution 10.0%  NDEC supporting 50% of network; capacity for growth 5.0% Q&A  41% growth in key accounts 0.0% Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16  Continued growth of specialist businesses and further -5.0% Appendix utilisation improvements Delivering strong revenue and underlying profit growth 2

Financial summary Highlights  Revenue growth across Hero Acquisitions Limited – H1 FY16 27 weeks ended 2 July / 26 weeks ended 27 June the business, particularly HSS OneCall and key £m 2016 2015 Growth Organic H1 16 results accounts (%) (%) Revenue 166.2 146.4 13.5% 12.8%  EBITDA margin Strategic progress movement reflecting Adj. EBITDA 1 32.5 29.0 12.1% 10.6% change in revenue mix Adj. EBITDA margin 19.5% 19.8%  Improved EBITA margin Adj. EBITA 2 7.8 4.5 73.3% reflecting positive impact Q&A Adj. EBITA margin 4.7% 3.1% of service activity Appendix 1 Adjusted earnings stated before exceptional costs relating to restructuring and acquisition costs. See appendix C 2 Adjusted EBITDA less depreciation 3

Segmental analysis Highlights Hero Acquisitions Limited – H1 FY16 27 weeks ended 2 July / 26 weeks ended 27 June £m 2016 2015 Growth (%) H1 16 results Core Core business  Growth in key accounts, OneCall and Revenue 141.8 124.0 14.4% Training Strategic progress Adj. EBITDA 18.1 18.0 0.6%  Margin diluted by service revenues Adj. EBITDA margin 12.8% 14.5% Specialist Specialist businesses  Continued utilisation improvement and Q&A Revenue 24.4 22.4 8.9% exploitation of fleet investment Adj. EBITDA 14.3 10.9 31.2% delivering revenue and margin growth Appendix Adj. EBITDA margin 58.6% 48.7% 4

Segmental analysis (new format) Highlights 27 weeks ended 2 July / 26 weeks ended 27 June Hero Acquisitions Limited – H1 FY16 Rental £m 2016 2015 Growth  Volume growth and shift towards key H1 16 results Rental (and related revenue) 1 account business at lower average rates Revenue 133.7 126.2 5.9% Services Contribution 2 86.5 83.5 3.6% Strategic progress  Strong growth in lower margin supply Contribution margin 64.7% 66.2% chain management contracts through Services 3 OneCall Revenue 32.5 20.2 60.9% Costs Q&A Contribution 2 5.2 4.1 26.8%  Investment in sales network offset by Contribution margin 16.0% 20.3% delivery of planned cost actions Appendix Branch and selling costs (49.8) (46.2) 1 Rental income earned from owned tools and equipment and directly related Central costs (9.5) (12.5) revenue e.g. resale, transport and other ancillary revenues 2 Revenue less cost of sales (excluding depreciation and exceptional items), distribution costs and directly attributable costs Adj. EBITDA 32.5 29.0 12.1% 3 Comprises the group’s third party supplied rehire business (HSS OneCall), 5 HSS Training and TecServ

Movement in net debt Highlights Hero Acquisitions Limited – H1 FY16 27 weeks ended 2 July / 26 weeks ended 27 June Temporary increase in £m 2016 2015 H1 16 results third party net debt Adj. EBITA 7.8 4.5 reflecting: Depreciation 24.7 24.4 Exceptionals (7.0) (5.2) Strategic progress  Exceptional spend on NDEC Working capital (10.6) (6.1) Capex 1 (29.3) (59.2)  Extra rental payment Acquisition of All Seasons Hire - (11.0) Q&A Tax (0.7) (1.1)  Settlement of capex Net interest payable (6.4) (8.0) purchases Appendix Movement in group undertakings / IPO funds flow (3.3) 49.8 Net (increase) / decrease in net debt (24.8) (11.7) Closing net debt 455.0 1 Gross of finance lease funding 6

Current trading and FY16 outlook Highlights Hero Acquisitions Limited – H1 FY16  Q3 16 trading has started ahead of Q3 15 H1 16 results  Continued strong growth in key accounts and services revenue Strategic progress  Capital efficiency: increased utilisation and refurbishment lowering capex to £40 - £45m  Continued focus on EBITA margin to improve returns Q&A Appendix 7

Our strategy Highlights Customer needs Our strategy Scalable benefits Hero Acquisitions Limited – H1 FY16 H1 16 results Optimise the distribution and  Availability  Enhanced customer branch network service proposition Strategic progress  Safety Win new, and deepen  Operational and existing, customer relationships capital efficiencies Q&A  Support Appendix Continued  Shareholder value  Value development and growth of our specialist businesses 8

Optimise the distribution and branch network Highlights National Distribution and Engineering Centre  Evolving network to drive efficiency gains and Hero Acquisitions Limited – H1 FY16 support future scalable growth H1 16 results Centralised maintenance and logistics o Next day fulfilment o Strategic progress Re-focus local branch staff on sales o  NDEC implementation will complete in FY16  Optimisation of Customer Distribution Centre  Currently serving 50% of network (c.160 branches) Q&A network  c.1,000 product lines stocked, serviced and supplied to network  Selective branch upgrade programme  Currently testing c. 9,000 items and maintaining c. 800 items/wk Appendix Step-changes availability and capacity for growth 9

Win new, and deepen existing, customer relationships Highlights  41% growth in key accounts  Enhanced customer proposition supported by Hero Acquisitions Limited – H1 FY16 NDEC £m revenue 2016 Growth Growth H1 16 results (£m) (%)  Investment in key account teams Existing key accounts 51.4 6.5 14.4% Customer sector specialisms o New key accounts 12.0 12.0 Strategic progress New business capabilities Total key accounts 63.4 18.5 41.0% o  Multi channel offering  3% increase in average number of Branch optimisation account customers o Q&A E-commerce o  Net promoter score of 42 (top third of TNS Appendix  Cross selling Specialist categories NPS Benchmark) Brands and channels positioned for our diverse customer base 10

Developing our specialist businesses Highlights  Increased cross selling of brands via HSS Hero Acquisitions Limited – H1 FY16 OneCall H1 16 results  Benefiting from FY15/16 fleet investment  Increasing geographic reach and operational Strategic progress efficiency through co-location  Simplification of operating structure will deliver sales efficiencies  Revenue up 8.9% to £24.4m Q&A  Additional capacity in new Refurbishment  EBITDA up 31.2% to £14.3m Centre enhancing buy/refurbish decision Appendix  Utilisation improved to 76% (H1 15: 73%) flexibility Specialist capabilities enhancing customer proposition 11

Summary Highlights Hero Acquisitions Limited – H1 FY16  Strong revenue and underlying profit growth; Q3 trading ahead of prior year H1 16 results  Significant strategy execution progress; NDEC on plan for 2016 completion Strategic progress  Simplification of operating structures to deliver sales efficiencies and support cost reduction  Focus on continued margin improvement and capital efficiency to improve returns Q&A  Creating an infrastructure for scale and volume growth Appendix 12

Highlights Hero Acquisitions Limited – H1 FY16 H1 16 results Strategic progress Q&A Q&A Appendix