HSS Hire Group plc is a leading provider of tool and equipment hire and related services in the United Kingdom and Ireland with a key focus on delivering safety, value, availability and support to its customers. The Group concentrates on the maintain and operate segments of the tool and equipment hire market, as the Directors believe that these segments offer greater opportunities for the Group to generate higher and more stable returns on assets as opposed to providing large plant and heavy machinery geared to construction activities in the more cyclical new build segment. The Group complements its offering of tool and equipment hire with a range of value-added, specialist services that have been developed in response to customer demand and specifically oriented to the maintain and operate segments. The Directors believe that the combination of these products and services helps to differentiate the Group from its competitors, embed the Group more deeply with its customers and establish a one-stop-shop in order to capture a greater share of its customers' potential spending. The Directors believe that the Group is the second largest provider of tool and equipment hire and related services in the United Kingdom based on revenues and the second largest provider of temporary power generation in the United Kingdom based on fleet size. The Group is also the second largest provider of powered access equipment in the United Kingdom based on fleet size as reported by Cranes & Access magazine.

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HSS Hire Group's revenues rose to £256.0m in the 40 weeks to to 1 October - up 10.9% on the 39-week period last year but warns Q4 trading will be at the lower end of management's expectations.

Adjusted EBITDA rose by 2.3% to £52.4m and adjusted EBITA increased by 5.8% to £14.6m.

An update on current trading says: "Given the scale, complexity and investment in the operational change being rolled out across the Group, we have taken the decision to extend the implementation period through to Q1 17. This will impact on our core Rental and related revenue growth, and reduce the speed at which we can optimise our remaining network and reduce operating costs.

"As a result, Q4 trading will be at the lower end of management's expectations.

"Our focus on reducing operational cost continues; we have closed 18 underperforming branches in October and 4 distribution centres since the end of H1 16. Combined with the extension of our NDEC implementation timetable, full year exceptional costs to continue at the current run rate.

"Net debt has increased slightly to £240.4m, reflecting increased exceptional costs, which largely relate to the NDEC implementation, together with the additional rent payment taken in Q1 of this year."

Chief executive John Gill said: ""We made further progress with our strategy in the period, particularly with the growth in our market share and the implementation of the NDEC. Our investment through FY16 has laid the foundations for us to improve our customer experience and service proposition and deliver capital and operational efficiency.

"Given the scale and complexity of this transformational operational change within the Group, we have taken the decision to extend the implementation into Q1 17. While we are seeing some impact on performance in FY16, the Board remains confident that the initiatives being pursued will position the business to drive improved shareholder returns in what remains a competitive and fragmented marketplace.

"Looking ahead to 2017 we will continue the optimisation of our network across both distribution centres and local branches to deliver the benefits of our new operating platform, delivering an enhanced customer proposition, with a primary focus to drive EBITA margin growth."

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HSS Hire Group's revenues rose to £342.4m in the 53 weeks to the end of December - up from £312.3m in the 52 weeks of 2015.

The group said it was a year of significant operational change and investment when the foundations were laid for sustainable profit growth.

Adjusted EBITA rose by 1% to £20.5m and adjusted pre-tax profits were flat at £5.8m.

On a statutory basis, the group reported an operating loss of £2.7m against a profit of £6.8m last time.

Chief executive John Gill said: "2016 was a year of significant operational change and investment for the Group.

"The result is an enhanced operating platform that will enable us to deliver superior fleet availability to customers right across our network, creating the foundation for future sustainable profit growth.

"While we made good progress in key accounts, specialist rental and our fast-growing Services business during the year, this was not matched by revenue growth in our core Rental business and re-establishing momentum in this area is our primary focus in 2017 and beyond.

"With our new platform in place that we can now optimise and then leverage, we are firmly focused on pressing home our competitive advantage to drive growth in Rental revenues, particularly in our smaller and medium sized accounts.

"In particular, we appointed a Chief Commercial Officer in early 2017, with the objective of strengthening our customer proposition throughout our network.

"While we remain at the start of this journey, there are some encouraging initial signs that this strategy is beginning to gain traction in key markets such as London.

"In tandem, we will continue to grow our capital-light Services businesses, One-Call and HSS Training, where we are seeing strong demand from both existing and new customers.

"We expect to see the benefits of these activities deliver margin improvement in H2 17

"Our markets remain competitive on price, but the initiatives implemented over the last 12 months - and the ongoing programme of network optimisation - have strengthened our capabilities and leave the Group well positioned to continue to serve our existing and future customers."

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HSS Hire Group posted an adjusted pre-tax loss of £14.2m for the 26 weeks to 1 July compared with a profit of £2.2m a year ago.

Revenue fell by 3.4% to £160.5m and adjusted EBITDA was down 46.7% at £17.1m.

The group said that as expected, H1 profitability was hit by substantial operating model changes.

The group's reported pre-tax losses rose to £30.1m from £7.8m last time.

The group has not declared an interim dividend - 0.57p was paid a year ago.

Chief executive Steve Ashmore said: "While significant operational change was achieved during H1 17, both Rental revenue growth and the cost base were temporarily impacted leading to reduced profitability.

"We are facing into these challenges by taking decisive action to reinvigorate Rental revenue growth through the implementation of new sales initiatives and by rolling-out cost actions that will deliver annualised cost savings of c. £13m, a number of which are enabled by the recent investment in our centralised engineering and distribution capability.

"As a result of these actions the Group returned to profitability in June with revenue in growth for the first 8 weeks of Q3 17 and this momentum will result in a stronger H2 relative to H1 performance leading to a healthier exit rate as we head into 2018.

"Whilst the rate of recovery in our Rental revenues has been positive, it has been materially slower than originally targeted leading to lower than expected profitability over this period.

"On this basis we expect H2 Adjusted EBITA profit to be in the range of £8m to £11m.

"The new leadership team is currently conducting a thorough review of the Group's strategy to gain profitable share in what remains an attractive and fragmented market.

"We will update the market on the outcome of this process during Q4 17."

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HSS reaffirmed that full year performance was in line with guidance given in August, with second half fiscal year adjusted EBITA expected between £8m and £11m.

HSS highlighted progress toward efforts to reduce costs by £10m to £14m annually - £7m to £10m relates to changes in the supply chain model - as it reached an agreement with Unipart to make changes to the company's supply chain enabling the realisation of cost benefits at the higher end of this range.

The company said it expects to take a £40m hit, including an impairment of related assets of £7m, following testing and repair of all fast-moving products in the first half of 2018.

This is expected to reduce net cash by £2m to 3m in 2018, followed by net cash inflows of £7m to £8m annually over the following seven years.

HSS confirmed that it agreed with its lenders to extend the £80m revolving credit facility, which will now mature in July 2019.

Steve Ashmore, Chief Executive Officer of HSS Hire Group plc said: 'We continue to make good progress in implementing our strategy and today's announcement is a significant milestone in delivering further cost savings in our supply chain.'

'With clear implementation plans and highly engaged teams, who have responded positively to the proposed changes, we are confident in achieving savings towards the top end of our targeted range. This operational progress, combined with the extension of our bank facilities and positive Q4 performance, creates a strong platform to build upon in 2018 and beyond.'