HSS Hire Group plc H1 FY16 Results Agenda John Gill, CEO John - PowerPoint PPT Presentation

HSS Hire Group plc H1 FY16 Results

Agenda 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  Revenue up 13.5% Revenue growth per quarter H1 16 results 25.0%  Adjusted EBITA up 64.4% 20.0%  Adjusted EBITA margin up 150 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 27 weeks ended 2 July / 26 weeks ended 27 June  Revenue growth across £m 2016 2015 Growth Organic H1 16 results the business, particularly (%) (%) HSS OneCall and key Revenue 166.2 146.4 13.5% 12.8% accounts Strategic progress Adj. EBITDA 1 32.1 28.9 11.1% 9.7%  EBITDA margin Adj. EBITDA margin 19.3% 19.7% movement reflecting change in revenue mix Adj. EBITA 2 7.4 4.5 64.4% Q&A Adj. EBITA margin 4.5% 3.0%  Improved EBITA margin Adj. earnings per share (p) 3 0.10 (2.27) Appendix reflecting positive impact of service activity Interim dividend (p) 0.57 0.57 1 Adjusted earnings stated before exceptional costs relating to restructuring, IPO and acquisition costs. See appendix C 2 Adjusted EBITDA less depreciation 3 Calculated as PBT before amortisation and exceptional costs less tax at the average prevailing rate across period, divided by weighted average number of shares 3

Segmental analysis Highlights 27 weeks ended 2 July / 26 weeks ended 27 June Core £m 2016 2015 Growth (%) H1 16 results  Growth in key accounts, OneCall and Core business Training Revenue 141.8 124.0 14.4%  Margin diluted by service revenues Strategic progress Adj. EBITDA 17.8 18.0 (1.1%) Adj. EBITDA margin 12.6% 14.5% Specialist Specialist businesses  Continued utilisation improvement and exploitation of fleet investment Q&A Revenue 24.4 22.4 8.9% delivering revenue and margin growth Adj. EBITDA 14.3 10.9 31.2% Appendix Adj. EBITDA margin 58.6% 48.7% 4

Segmental analysis (new format) Highlights 27 weeks ended 2 July / 26 weeks ended 27 June 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 (9.8) (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 32.1 28.9 11.1% 3 Comprises the group’s third party supplied rehire business (HSS OneCall), 5 HSS Training and TecServ

Movement in net debt Highlights 27 weeks ended 2 July / 26 weeks ended 27 June Temporary increase £m 2016 2015 H1 16 results reflecting: Adj. EBITA 7.4 4.5 Depreciation 24.7 24.4  Exceptional spend on Exceptionals (7.1) (8.1) Strategic progress NDEC Working capital (9.8) (6.1) Capex 1 (29.3) (59.2)  Extra rental payment Acquisition of All Seasons Hire - (11.0) Q&A Tax (0.1) (1.1)  Settlement of capex purchases Net interest payable (6.4) (8.0) Appendix Movement relating to IPO - 184.4 Net (increase) / decrease in net debt (20.6) 119.8 Closing net debt 238.7 1 Gross of finance lease funding 6

Current trading and FY16 outlook Highlights  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  Net debt expected to reduce through H2 16 Appendix 7

Our strategy Highlights Customer needs Our strategy Scalable benefits 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 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 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 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  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 H1 16 results Strategic progress Q&A Q&A Appendix