HSS upbeat despite £8.5m loss for 2014

HSS, the tool and equipment hire company, has posted an £8.5m pre-tax loss in its first set of annual results since floating on the London Stock Exchange in February.

The company said on Monday that annual revenue rose a quarter to £284.6m in the 12 months to December 27 2014, led by robust growth in its HSS OneCall and HSS Training divisions. But the group reported a pre-tax loss of £8.5m for the period, against a pre-tax profit of £2.6m in 2013, following a large number of one-off exceptional items such as refinancing costs.

HSS, which floated at 210p a share - the bottom of its guided price range - issued results for what was its holding company before the IPO. The group, which focuses on smaller "fit-out" tools rather than heavy construction equipment, used most of the £103m raised in the listing to help pay down around £200m of debt.

Since then, its shares have struggled to stay above the listing price for a sustained period.

Despite the loss, HSS said it had had an "encouraging" start to 2015. Trading has so far been in line with expectations, with 13 new branches opened in the first quarter, the equivalent of roughly one per week. HSS plans to open 50 local branches this financial year. It has 2,900 staff, a delivery fleet of more than 400 commercial vehicles, 10 regional distribution centres, and 25 local distribution centres.

The group says it is on the hunt for "specialist" acquisitions as it expands in the UK.

"The rollout of our local branches is continuing to plan and the customer response continues to be positive," said chief executive Chris Davies.

"2014 was a year of excellent progress. Our performance reflects both our focus on the less cyclical and higher value-added 'maintain' and 'operate' segments of the market, and a deliberate customer demand-led approach to investment in our hire fleet."

Private equity group Exponent had unveiled the float in an effort to take advantage of a recovery in the UK construction sector after output flatlined in the wake of the financial crisis.

HSS, the UK's second-largest provider of tools and equipment by revenues after FTSE 100 rival Ashtead, had initially vied for a valuation of up to £406m. It looked to raise total gross proceeds of £103m to help fuel expansion, plus £11m for investors in Exponent, co-investor Standard Life, and certain members of the company's senior management.

HSS shares pared earlier gains to finish unchanged at 209p on Monday.

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