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Executive Hire News › Archives › January/February 2014 › Tool Hire Top Ten 2014 : Industry revenue tops £2billion

Tool Hire Top Ten 2014 : Industry revenue tops £2billion

Catherine Stratton presents her 13th annual review of the UK's Top Ten tool and equipment hirers.

2013 was a good year for many leading tool and equipment hirers. As ever, they have been faced with a highly competitive market, but it was a market in which most of them were able to find some growth, despite the still sluggish economic background.

The make-up of the 2014 Tool Hire Top Ten is the same as last year. There have been no changes of ownership amongst the Top Ten this year and there has been little change in their ‘pecking’ order, although the rise of TP Hire from No.5 to No.3 is noteworthy. There are, however, indications that the rationalisation and re-configuration of depot networks by the market leaders could be causing them to lose market share, principally to local indepenent competitors.

As economic recovery strengthens, some resurgence in acquisition activity might be anticipated. Last year we saw both HSS and A-Plant acquiring companies that add to their activity and product ranges, but are not directly related to their core hire operations.

There is a considerable variation in ownership across the Tool Hire Top Ten and this has a significant impact on their individual strategies:

1. Speedy is the only publicly quoted hirer that is almost entirely focused on tool and equipment hire. It had become market leader before it acquired Hewden Hire Centres in 2007. The timing, of course, proved less than ideal and led to Speedy entering the 2008 recession with too much debt and too many depots. It has since seen a gradual erosion of its UK market share, but it still remains market leader by a good margin.

2. TP Hire, Jewson Hire and Hirebase are all divisions of builders’ merchants. The revenue figures included for TP Hire and Hirebase have been provided by them because, as divisions of the merchant’s business, they do not produce publicly available accounts. Jewson does not provide us with any figures for its hire operation, so we continue to make our own estimate. It should be borne in mind that these operations are an integral part of their groups’ businesses, sharing premises and, to a large extent, customer bases. They also tend to have a narrower product range and consumable sales probably account for a larger part of their revenues than is the norm. What is obvious is that tool and equipment hire is seen as an expanding area for builders’ merchants and a relatively easy area to penetrate through their existing customer bases.

3. HSS and Brandon are both owned by private equity companies. Each has a history of several owners and their current ownership is, by its very nature, likely to be limited in duration. Exponent, HSS’ private equity backers since October 2012, is showing strong support for the No.2 player’s expansion.

4. Hire Station and A-Plant are both subsidiaries of publicly quoted companies. A-Plant is part of Ashtead Group and the UK subsidiary has been eclipsed by Sunbelt in the US for some years. Nevertheless, the past year has seen a revival in acquisition activity at A-Plant and it seems likely to build further on this. Ashtead Group, as a whole, is one of the largest hirers in the world and, with a market capitalisation of £4billion, has recently become only the second equipment hirer to be part of the FTSE 100 Share Index (the other is Aggreko, currently capitalised at £4.6 billion).

By contrast Hire Station is owned by Vp, where the founding Pilkington family retains a stake of over 50% of the shares, with the company valued at £231m. Both Vp, as a whole, and Hire Station have made good progress over the past year.

5. The smallest of the Tool Hire Top Ten are both privately-owned companies, GAP and Supply UK. GAP has developed as a combined tool and plant company and it is the largest family-owned hirer in the UK. It has come through the recession exceptionally well and has clearly got the confidence of its bankers, which enabled it to secure a three year asset-based revolving credit facility of up to £70m. Growth prospects at GAP look excellent for 2014.

Supply UK is by far the smallest of the Top Ten companies. Nevertheless, its management has been innovative in carving out niche markets and it is gaining market share.

THE SIZE OF THE MARKET

There are very wide variations in the estimates of the size of the UK tool and equipment hire market. The foremost difficulty lies in its definition. We have based our estimates on the broad base of equipment held by a typical hire outlet, so we endeavour to eliminate the revenues of larger equipment held by companies such as Speedy.

We continue to use the total revenues generated by the Top Ten as the basis on which we estimate the overall size of the market. Because of the problems of quite widely differing accounting periods, we estimate Current Revenues for the Top Ten. These are based, where available, on interim figures released by the quoted companies, or on other information such as general growth figures. We are the first to concede that this is a difficult operation. However, we are very pleased to report that last year we estimated that the revenues of the Top Ten totalled £912.5m, and that this year’s Historic Revenue for those same companies (as shown in Table IB) totalled £914.1m, a difference of less than 0.2%.

Clearly, individual company performances vary greatly. Some, like Speedy, have found growth in the UK difficult in recent years as they have had to rationalise, and re-configure, their large depot networks to adjust to reduced demand. By contrast, those hirers owned by builders’ merchants have been keen to extend their reach into their groups’ customer bases and have on-going and easily-implemented programmes of expansion within their parents’ networks.

Our estimate for the current revenues of the Top Ten (Table IA) of £994.5m shows growth of just over 8% for the year. Even when inflation is taken into account, this easily outperforms the UK economy as a whole. Last year we estimated that the UK tool hire market was worth £1.825 billion. This figure was based on the premise that the Top Ten companies accounted for 50% of the market. Since then, there have been signs that many independent hirers are growing well and making inroads into the overall market as a result of the rationalisation of depot networks by some of the larger companies.

As a result we have decided that the balance of the market share has tipped away slightly from the leading companies. This year we estimate that the Top Ten account for 49% of the market. This indicates a total market value of £2billion, a rise of 11% on last year. This is the first time the tool and equipment hire industry has achieved revenues in excess of £2billion and it is a tremendous achievement.

At the outset of the New Year, there had been a distinct shift towards greater optimism for both the UK economy, in general, and for the construction industry, in particular. Economists are forecasting growth of about 2.4% for the overall economy. The uplift in construction activity at the end of 2013 is particularly welcome news for hirers. The Markit/CIPS purchasing manager’s index recorded a level of 62.1 in December, well above the 50.0 level which marks the difference between growth and contraction.

December saw the eighth consecutive month of growth for construction. House building has been the prime mover, but now commercial building work is also growing fast. There remains concern over the continuing low level of bank lending to business. Of course, this might be regarded as a mixed blessing for hirers. If their customers are finding getting loans difficult, it should encourage them to hire rather than buy. Overall, the hire market has grown strongly against an almost stagnant economic background. With economic prospects now looking significantly better, we believe 2014 will prove an excellent year for the UK tool and equipment hire industry.

Table IA: Estimated Current Revenue
Hire Company Est. Current revenue (£m) Est. Current Market Share (%)
1.Speedy Hire 345.0 17.0
2.HSS Hire 190.0 9.5
3.TP Hire 86.0 4.2
4.Brandon Hire 78.0 3.8
5.Jewson Hire 76.0 3.7
6.Hire Station 65.0 3.2
7.A-Plant Tool Hire 48.5 2.4
8.Hirebase 48.0 2.4
9.GAP Group Tools 41.0 2.0
10.Supply UK 17.0 0.8
TOP TEN TOTAL 994.5 49.0
ALL OTHERS 1035.1 51.0
TOTAL MARKET 2,029.6 100.0

 

Table IB: Historic Annual Revenue (based on most recent available annual accounts, where published)
Hire Company Revenue (£m) % Annual Growth
1.Speedy Hire 310.0 est. +0.0 est
2.HSS Hire 181.8 +0.9
3.TP Hire 78.6 +19.6
4.Brandon Hire 76.2 +1.2
5.Jewson Hire 72.0 est. +2.9
6.Hire Station 63.1 +4.0
7.A-Plant Tool Hire 41.9 +24.3
8.Hirebase 40.0 +19.4
9.GAP Group Tools 36.0 +20.0
10.Supply UK 14.5 +30.6
TOP TEN TOTAL 914.1 +4.4

 

Table II: Gross Book Value of Hire Equipment
Hire Company Gross book Value (£m) % Annual Growth
1.Speedy Hire 376.0 -2.0
2.HSS Hire 136.5 +28.9
3.GAP Group Tools 60.0 +11.1
4.Brandon Hire 58.5 -3.5
5.Hire Station 51.0 +13.8
6.A-Plant Tool 42.0 +16.7
7.Supply UK 9.5 +8.0
Hirebase Not available N/A
Jewson Hire Not available N/A
TP Hire Not available N/A

 

Table III: Number of Outlets
Hire Company No. of outlets +/- Change of year %Change on year
1.TP Hire (inc. 119 satellites) 342 +8 +2.4
2.Jewson Hire 281 +30 +12.0
3.Speedy Hire 258 -10 -3.7
4.HSS 255 +22 +9.4
5.Brandon Hire 150 -5 -3.2
6.A-Plant Tool 121 +14 +13.1
7.Hirebase 99 +16 +19.3
8.Hire Station 95 +1 +1.1
9.GAP Group 96 +14 +17.1
10.Supply UK 26 +3 +13.0
TOTAL TOP TEN 1723 +93 +5.7




SPEEDY HIRE PLC

Chief Operating Officer Mark Rogerson
Head Office Chase House, 16 The Parks, Newton-le-Willows, Merseyside, WA12 0JQ
Telephone Number 01942 720000
Website www.speedyhire.plc.uk
Hire activities General tools, power, survey and lifting equipment, pumps, non-mechanical access and rail, training
Geographical coverage UK, Ireland, UAE, Egypt, Oman, Kazakhstan
Status Public company listed on the London Stock Exchange

 

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013
  30.09.13 (£m) 30.09.12 (£m) % Change
Revenue      
UK & Ireland 158.8 160.6 -1.1
International 11.0 8.5 +29.4
Group 169.8 169.1 +0.4
EBITDA      
UK & Ireland 32.9 34.2 -3.8
International 2.6 2.4 +8.3
Less Corporate items (2.8) (3.0)  
Group EBITDA 32.7 33.6 -2.7
Group Operating Profit 8.7 8.5 +2.4
Group Profit before tax 5.3 4.7 +12.7

 

COMMENT

Just two weeks after the release of its interim results, Speedy informed the Stock Market that ‘accounting irregularities’ had been discovered following management changes at its International Division. This precipitated the resignation of Chief Executive Steve Corcoran, who, after a handover period, is expected to leave the company before the end of February. Initially, the Stock Market reacted sharply to the news, but the shares staged a recovery and on 16 January were trading at 69.0p, nearly at their 12 month high, capitalising the company at £357.6m.

Steve Corcoran has been not only the prime architect of Speedy’s recent strategy, but also a forceful hire industry representative in the wider business world. His resignation represents the end of an era at Speedy, and we wait to see who will step into the hot seat. Speedy’s interim report had announced the appointment of Mark Rogerson, a former director of Costain, as Chief Operating Officer. Hand-picked by Steve Corcoran, he took up his post at the beginning of December. He has to be regarded as Steve’s most likely successor.

Speedy had also recruited Andy Wright, formerly Lavendon International MD, to head up the Middle East and North Africa operation. It was soon after his arrival that the accounting discrepancies were uncovered. Speedy’s interim statement also referred to the departure of Main Board Director Mike McGrath, who was also MD of International Division, and David Graham, MD of its UK & Ireland business.

Issuing his final Speedy comment to EHN, Steve Corcoran states, “with two of our key markets - construction and infrastructure - showing growth forecasts, and with our target to establish more secured long term agreements with large volume users beginning to come to fruition, especially with a number of major contracts expected to be secured very soon, we are confident in our forward outlook. With the overall economy improving, there are clear signs of progressive growth for Speedy for the next decade. I am confident that Speedy will not only consolidate its market leadership, but will set new industry standards.”


HSS HIRE SERVICE GROUP LTD

Chief Executive Chris Davies
Head Office 25 Willow Lane, Mitcham, CR4 4TS
Telephone Number 08457 282828
Website www.hss.com
Hire activities General tool and equipment hire, plus specialist activities including Abird Power Solutions, UK Platforms Powered Access and Reintec Cleaning Services; sales, training and equipment management services
Geographical coverage UK and Ireland
Status Private company with private equity funding


COMMENT

Reviewing the progress of HSS, Chris Davies says “we have invested significantly in our equipment fleet, in our branch network and in our people. We have also extended our service offering with the acquisition of a number of specialist hire businesses including Abird and UK Platforms.”

The past year has certainly been busy in terms of acquisitions for HSS, a company that traditionally has shown no great appetite for acquisition. Following the Abird and UK Platforms deals, two smaller acquisitions were made. In September HSS bought the Irish division of Mobile Traffic Solutions, which supplies traffic and crowd management solutions for hire or purchase throughout Ireland. This business has been integrated into HSS’ own Irish subsidiary, Laois Hire. Most recently, in November, HSS expanded its cleaning operations through the acquisition of Premier FCM, which trades as TecServ.

Chris Davis concludes, “it is an exciting time as we embark upon the next stage of growth and development - increasing our presence in existing markets and expanding in new ones throughout the UK and Ireland.”


TP HIRE

Chief Executive Travis Perkins plc John Carter
Group Hire Director Richard Dey
Head Office Lodge Way House, Harlestone Road, Northampton, NN5 7UG
Telephone number 01604 752424
Website www.travisperkins.co.uk/hire
Hire activities Small plant and tools
Geographical coverage National
Status Division of Travis Perkins plc (listed on the London Stock Exchange)


COMMENT

Richard Dey reports that 2013 was “a good year. The start was slow, but October was a record month and November saw us break all records for kit out on hire and this continued throughout December.”

The company has added 30 locations, but the main development has been the establishment of a central workshop in the West Midlands. TP Hire has been able to continue to grow by driving sales through its existing branch network, continuing its long-standing policy of securing new ‘hire’ business through penetrating deeper into the Travis Perkins’ merchanting customer base.

Richard Dey believes that the strong trading of the second half of 2013 will give his business positive momentum for 2014. He says there is no doubt that there is now an upturn in building activity and this is reflected in increasing numbers of customers visiting TP Hire branches. Almost 90% of the hirer’s income derives from 14 product ranges, and it now has a fleet of 700 JCB mini excavators and is looking to expand by up to another 150 this year. In order to serve customers’ needs, TP re-hires quite extensively when necessary.

Richard Dey states that 80% of Travis Perkins’ customer base is not yet served by TP Hire, and the builders’ merchant’s policy is to expand its hire offering. This year TP Hire is planning to open in 80 extra locations, 60 of which will be satellites and 20 full TP Hire branches.

 


BRANDON HIRE GROUP LTD

Group Managing Director Tim Smith
Head Office 72-75 Feeder Road, St Philips, Bristol, BS12 0TQ
Telephone number 0117 971 9119
Website www.brandonhire.co.uk
Hire activities Hire of general tool and small plant, lifting equipment, pipe equipment, survey and safety equipment, toilets, training
Geographical coverage National
Status Private company with private equity backing (20% owned by the management of Brandon Hire)


COMMENT

It is three years since Brandon left the ownership of Wolseley to again become an ‘independent’ tool hirer. In that time, it has had to replace its former parent’s shared locations and the resulting revenues. In the first quarter of 2012, Brandon returned 17% of its network to Wolseley. Inevitably, these changes led to exceptional restructuring costs, totalling £2.2m and resulting in a pre-tax loss of £1.3m. Nevertheless, Brandon did achieve slightly better revenue growth than Speedy and HSS - its two larger ‘non-merchant-owned’ competitors.

One effect of these changes was that Brandon was able to save on capital expenditure by transferring the equipment of the closed locations to its other depots. Tim Smith also points out, “we have been re-locating to better sites and this has been facilitated by our independence from Wolseley. If we see an opportunity to open a branch, we can now take it, without having to go through a long decision-making process.”

Brandon continues to follow its established policy of serving a wide customer base with a focus on SMEs and sole traders. This spreads the risk, as its top ten customers account for a mere 8% of revenues. Tim Smith believes that the most critical aspect of hire management is cash generation and the company is now generating a healthy £8m a year and is gradually reducing its borrowings.

After the low levels of capex in 2012, Brandon spent about £4m gross (£2m net) in 2013 and Tim Smith forecasts that this will accelerate appreciably this year to £6.5m gross (£4.0m net) as a result of both new branch openings and the introduction of new products. 2013 appears to have been a year of cautious growth in revenue terms for Brandon, but, with its programme of increased investment and further branch openings in 2014, coupled with the more positive forecasts for the UK economy, Brandon’s revenue growth should begin to accelerate.

Decision time is getting closer for Brandon’s management who hold a 20% stake in the business. They enjoy a highly supportive private equity partner in Rutland, but they are now three and a half years into that relationship, and it might be expected to change within the next 18 months.

 


JEWSON HIRE

Director of Tool Hire Richard Pederson
Head Office Merchant House, Binley Business Park, Coventry, CV3 2TT
Telephone number 02476 438400
Website www.jewson.co.uk/tool-hire
Hire Activities Tools and Equipment
Geographical coverage National
Status Division of Jewson, with over 600 branches across the UK. Jewson is part of Saint- Gobain Building Distrbution UK and Ireland.

 


HIRE STATION LTD

Managing Director John Singleton
Head Office Field Farm Road, Long Eaton, Nottingham, NG10 3FZ
Telephone number 0845 604 5337
Website www.hirestation.co.uk
Hire activities General tool hire, lifting equipment, safety equipment and confined space training (ESS Safeforce), press fitting and electro-fusion (MEP), ‘white label’ partnerships e.g. with Homebase, Garden Centre Group (Virtual Hire)
Geographical coverage National
Status Subsidiary of Vp plc, a public limited company listed on the London Stock Exchange

 

INTERIM RESULTS FOR THE SIX MONTHS ENDED
31 SEPTEMBER 2013 (reported as part of VP plc)
  30.09.13 (£’000) 30.09.12 (£’000) %Change
Revenue 31,922 29,272 +9.1
Operating Profit 2,706 1,698 +59.4



COMMENT

Hire Station recorded highly satisfactory interim results with increasing efficiencies driving operating profits up by nearly 60%. Vp as a whole produced good figures with revenues up 9% at £91.3m and profit before tax up 16%.

The significant improvement at Hire Station came from all areas of the business and John Singleton believes that momentum will be maintained in the second half. He says that the April-June quarter of Hire Station’s financial year was “fairly quiet”, but, since then, the company has been busy with volumes getting back towards levels seen before the 2008 recession. The specialist businesses within Hire Station have performed well and are expanding. ESS Safeforce, which continued to be busy throughout the downturn, opened in Dublin in the course of 2013 and more recently in Rotterdam. John Singleton says that MEP has made significant progress over the past year, extending its product offering, and the Virtual Hire operation has seen revenue growth of nearly 25%.

On the general tool hire side, there has been some shift in strategy. Brian Sherlock, former MD of Hewden Tool Hire, has been brought in to head up this business, which is now focusing more on the requirements of local markets. Overall John Singleton remains optimistic, citing construction forecasts as grounds for expecting Hire Station to continue to build on the growth of 2013 throughout this year.

 


A-PLANT TOOL HIRE

Chief Executive (A-Plant) Sat Dhaiwal
Head Office 102 Dalton Avenue, Birchwood Park, Warrington, WA3 6YE
Telephone Number 01925 281000
Website www.aplant.com
Hire activities A wide range of plant and tools, including lifting, surveying, drilling, surface preparation and dust extraction equipment
Geographical coverage National
Status Subsidiary of Ashtead Group plc, a public company listed on the London Stock Exchange

 

ASHTEAD GROUP PLC: INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2013
  31.10.13 (£m) 31.10.12 (£m) % Change
Revenue      
Sunbelt (US) 711.5 576.8 +24.9
A-Plant (UK) 138.2 103.6 +33.4
Group 849.7 680.4 +24.3
EBITDA      
Sunbelt (US) 330.8 249.5 +32.6
A-Plant (UK) 43.2 30.6 +41.1
Central Costs (4.8) (4.5)  
Group EBITDA 369.2 275.6  
Group Operating Profit 234.1 163.2 +43.4
Group Profit before Tax 207.8 112.2 +85.2
*in dollar terms Sunbelt’s revenue rose by 21.3% to $1,107.5m
NB: the figures for A-Plant shown above relate to the whole of its operations; the figures in the Top Ten tables relate to the company’s tools and small equipment activities and have been provided by A-Plant management.



COMMENT

The recent half year figures from Ashtead show that the company is maintaining an impressive growth rate on both sides of the Atlantic. While Sunbelt continues to dominate the Group’s performance, 2013 is also proving a good year for A-Plant. The growth figures shown on the results table include Eve Trakway, which was acquired in May; without its contribution, A-Plant’s revenues rose by a very satisfactory 16%, which the company says reflects a 10% increase in the fleet on hire and a 5% improvement in yield.

Investors reacted favourably to the statement and its shares reached a new 52 week high of 780p on 20 December, a rise of more than 80% over the year.

Last July, A-Plant moved into trenchless technology with the acquisition of PSS. More recently, the A-Plant Acrow division has been re-branded as Leada Acrow, the original name of the business.

On the tool hire side, the past year has seen the introduction of Tool Hire Express, which opened its first store in Manchester City Centre in May. Since then stores have been opened in Liverpool, Mansfield, Sheffield and Plymouth.

 

 

HIREBASE

Hire Director Adrian Watts
Head Office Gemini One, 5520 Oxford Business Park South, Cowley, Oxford, OX4 2LL
Telephone number 018650871700
Website www.hirebase.co.uk
Hire activities Tools and small plant
Geographical coverage From Sheffield to Crawley and Norwich to Exeter
Status A division of Grafton GB, a subsidiary of Grafton Group plc (Irish registered public company, listed on London Stock Exchange)


COMMENT

Director Adrian Watts reports that Hirebase remains busy, focused on further expansion into the branch network of its parent, Buildbase. The past year has seen a near 20% uplift in revenues to £40.0m, reflecting the expanding of the branch network from 83 depots to 99 - the highest rate of growth in branch openings (19%) among the Top Ten. This rate of expansion looks set to accelerate with Buildbase set to open its 100th branch this month and a further 15 subsequently in the first quarter of 2014.

 

 

GAP GROUP LTD

Joint Managing Directors Douglas and Iain Anderson
Head Office 40 Carrick Street, Glasgow, G2 8DA
Telephone Number 0141 225 4600
Website www.gap-group.co.uk
Hire activities Non-operated plant and tools
Geographical coverage National
Status Private company owned by the Anderson family


COMMENT

GAP has a strong presence in both the general plant and tool hire markets. Tool hire accounted for just over one third of GAP revenues and just under one third of its fleet in Gross Book Value terms in the year ended 31 March 2013.

The company has grown impressively over the past two to three years and achieved record Group revenues of nearly £100m in 2012/2013. Further strong progress has also been made in the first three quarters of this year and Douglas Anderson is confidently forecasting that Group revenues will reach £110m for the year ended 31 March. The Glasgow-based company now has a comprehensive network of combined plant and tools depots across the UK (and the Isle of Man) and has built up a strong presence in the London area where it has recently opened its seventh depot. In addition to its general plant and tool hire operations, GAP now has well established networks of lifting and non-mechanical plant depots.

• City News in EHN November/December featured a more detailed review of GAP’s progress.

 

 

SUPPLY UK HIRE SHOPS LTD

Managing Director Richard Coffey
Head Office A8 Riverview, Embankment Business Park, Heaton Mersey, Stockport, SK4 3GN
Telephone number 0161 442 7772
Website www.supplyuk.co.uk
Hire activities Tool Hire & Sales, Survey & Laser, Asset Management and Water Services, Force 3
Geographical coverage North & NorthWest England, South Wales, South East England, and North East England & Midlands
Status Private company


COMMENT

Although Supply UK remains easily the smallest company in the Top Ten, its most recent accounts (for the year ended 30 April 2013) show very strong growth with revenues up by more than a quarter and profits before tax doubling to £1.2m.

Richard Coffey reports that 2013 signalled a new phase of development for Supply UK after four years of restructuring, repositioning and satisfactory, albeit limited, growth. He attributes the recent growth to investment in specialist divisions, which now account for approaching 50% of the company’s revenues.

Alongside its conventional tool hire operations, Supply UK has established three clearly defined and complementary divisions, Force 3 (which is a specialist hire service, supplying temporary heating and lighting for the Damage Restoration industry), Water Services, which works directly with water authorities (clients include Thames Water, United Utilities, Severn Trent, Yorkshire Water), and Survey & Laser.

Richard Coffey says “geographical growth will continue to be highly selective and driven by strategic locations, major customers and contracts. In addition, niche products, underpinned by sole distribution agreements, are playing an important role in the company’s growth and the development of Supply’s customer base. Overall the business has made great progress over the past year and the reported financials indicate a company emerging from the recession rather redefined and well positioned to build upon an order book growing with long term contracts and exciting national partnerships.” •

     
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