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Executive Report: Still driving forward Robert Aplin catches up with the progress made by Richard Coffey at Supply U.K. Ltd since EHN’s first visit to this dynamic independent hirer. We make no excuses for returning to Supply U.K. Ltd within 18 months of our original Profile. We stated in October 2004 that ‘instinctive’ entrepreneur, Richard Coffey, was building the company into one of the most dynamic independent tool hirers in the UK. At that time, he was already planning to expand his eight-depot operation, having identified further openings for 2005 in Yorkshire, Staffordshire and the Midlands. His first two moves in 2005 saw the re-location of Supply U.K.’s original Stoke outlet, only opened in July 2004, into a 5,000ft2 unit, on the main A500 road into the city centre. In March last year, Richard Coffey also purchased 5,500ft2 main road frontage premises in the heart of Widnes and moved Supply U.K.’s longest-established operation in nearby Runcorn into this new facility. Richard believes that Supply U.K. is “well on target” to achieve the £5.5m turnover in its financial year to April this year, as he predicted when we included the company in our Tool Hire Next Tier in May last year. “November was our best month when we achieved over £600,000 in turnover. Widnes is proving to be a successful location. We are attracting new, local customers and have built turnover to £35,000/month. Manchester is still our biggest branch and Liverpool is performing extremely well. Opened in November 2003, this branch is still in its infancy. With the expected development in Liverpool, there is potential for the branch to become a £1m turnover depot. Such has been the success at Liverpool to date that we are now in the process of moving into new 10,000ft2 city centre premises.” Supply U.K. opened its ninth tool hire outlet, a 3,000ft2 facility in Shrewsbury, last May. It is “centrally located in the town and we have employed local, experienced hiremen, who were previous work colleagues. Although it is still early days, the outlet is performing well and continues to grow.” The following month Supply U.K. opened a 5,500ft2 outlet in Sheffield, “in a good location alongside the town centre.” Similarly staffed by “experienced people we have previously worked with”, Richard Coffey argues, “although our Leeds outlet was performing extremely well, it was a lone depot in Yorkshire and we needed another location to develop our network in the county. In the next couple of years, we would expect to have four or five branches in Yorkshire under the management of Paul Goodchild.” For his next development, Richard moved down the M1 to acquire the business and assets of Merit Tool Hire in Nottingham during October. “The company is a strong, established business with a reasonable turnover that has been operating for 20 years. It also has a similar fleet profile to Supply U.K. We concluded a cash deal after a month of negotiations. We retained the services of the former owner for the first three months of transition. It was crucial to keep him to maintain local relationships and his character suited us – he is an easy-going, customer-orientated guy. We are currently developing the operation to include our typical shop fit, construction-type customers.” The purchase of Merit was actually Supply U.K.’s second acquisition last year, having acquired the assets and customer list of Stoke-based Apex Plant & Tool Hire in September. According to Richard Coffey, “the company had a good customer base that we will continue to look after professionally. We are tentatively looking around to acquire like-minded companies to ourselves that have a strong customer culture and are hands-on. Our trim management structure allows us to seize acquisition opportunities swiftly and be able to make decisions quickly and free from the bureaucratic constraints of larger plc-type companies.” Developing structure to continue growth Both these purchases were negotiated by Scott Mulley, who has now become Operations Director for all Supply U.K. depots. Previously, he was responsible for the Midlands region, which operated as a separate company within Supply U.K. until August. Richard states, “going forward, we needed a structure to continue our growth. We recognised that we required a good No.2 to look after all operations. Scott’s appointment will release me to drive the business forward. He will continue to explore further acquisition opportunities that will inevitably arise as the hire industry tightens.” In January, Chris Haycocks was appointed Financial Director of Supply U.K. Chris is said to have many years’ experience in our industry and returns after a two year break. Richard had previously worked with him as a Board Director at Hire Station and comments “the appointment of a Financial Director is a crucial step in our future development plans.” There are three other developments at Supply U.K. that deserve consideration. The separate Survey outlet nearby in Manchester has been re-located to a modern 4,000ft2 industrial unit around the corner and now includes a training centre and a repair and calibration facility. “Trading is buoyant and the operation is moving towards £1m annual turnover.” In December, Supply U.K. opened a second Survey hire outlet in Derby, taking on “long-serving experienced staff who, I am confident, will do extremely well for us. This outlet should achieve a minimum turnover of £500,000 within the next year.” Most significantly, early last year, Supply U.K. also won its first contract to establish an on-site hire and sales facility. Located on the site of John Lewis’ major refurbishment contract at the Trafford Centre, Richard reports that “the six-month contract suited our type of business and was very successful. We wanted to see how the concept of a tool hire shop on-site worked. We sold more than we hired, typically supplying PPE, engineering tools and signs. On-site opportunities “This gave us the confidence to tender for several on-site set-ups. We are now established on a substantial £500m development and, six months into the contract, we are trading well. I would be disappointed if we did not achieve £500,000 turnover in the first year; there is certainly the potential to achieve £1m turnover from this location. “We have also won several other on-site opportunities for 2006. These contracts have been won without tendering because clients have seen first hand what we have achieved on previous sites. Our emphasis has been on safety, product training in the form of ‘tool box talks’ and our PASMA-approved scaffold tower erection services. In particular, the way our IT system is run on-site gives the client an accurate minute-by-minute spend. “These on-site facilities have moved Supply U.K into sales in a significant way and clients are amazed at the one-off buys that they can achieve. They can buy on-site significantly cheaper than through their existing suppliers, without negotiating any terms. Sales currently represent 20% of our turnover, although I can see that reaching 50% in the future, as all our depots are now geared up with large stocks of contractors tools, safety PPE and clothing.” Supply U.K. has also established a ‘one call’ operation, Hire Direct, at its Widnes outlet. “We have just set up this activity in response to existing customers wanting to use us outside our present areas. It is very early days but we see potential for further revenues on new products and are looking to find other like-minded companies to do business with.” Even Richard Coffey admits surprise at Supply U.K.’s year-on-year growth. “I look back on your October 2004 article and see that our annual turnover has grown from £1.6m then to £5.5m in the current year to April and onwards towards £7m-£8m. We operate with, effectively, a very loose plan and I am just as relaxed if we stay as we currently are. “However, if an opportunity comes along, we will have to take it. Amazingly, we are still funding everything through cash flow. In addition to investing a few million pounds in new equipment – and this will increase again next year – we purchased the Widnes and Sheffield sites, spent £250,000 refurbishing other locations and we also own outright half of the vehicle fleet.” The pace of expansion at Supply U.K. shows no signs of abating. Not content with operating 12 tool hire outlets, two Survey locations and on-site facilities, Richard is looking to develop three new tool hire areas of operation, one of which is definitely London, where a potential greenfield site and an acquisition are both currently under negotiation. The others are closer to home in north Wales and in Bristol. There will also be further depot openings during the year in the company’s existing areas of operation. Repeating my earlier comment that he is as refreshing an individual as I have met for some years, Richard Coffey remains very much a man on a mission. • Executive Hire News › Archives › Feb/March 2006 › Executive Report › Still driving forward
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