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EXECUTIVE REPORT continued


“We have re-started our five year property plan, which could see us open as many as 10 MSCs, around 50-70 ‘superstores’, whilst continuing to operate around 200 dedicated tool hire outlets.We have 315 outlets now, but this number will shrink as the programme to increase the square footage at our depots increases as we move towards better serving the long term hire market.


“The ‘Tesco of hire’ philosophy is still relevant today, as it remains the dominant brand in its market. Our average size 80,000-100,000ft2 MSC sites will be equivalent to Tesco Extra, our ‘superstores’ are similar to Tesco Superstores and our tool hire outlets are akin to Tesco Local outlets. The MSCs will support high use, heavy demand from construction and industrial users, whereas ‘superstores’ will support general trades. The local outlets will be located in provincial towns, serving more transient regional activity.”


I’ve long argued that the closure of so many Speedy depots over the last two years - the numbers closed or amalgamated roughly equals the number of outlets acquired from Hewden - is good news for independents in local towns. Steve Corcoran is prepared to take the risk of losing these local markets, arguing “in the same way that there are many other supermarket brands, there is definitely a place for everyone, but we’ve decided where our place is.We have moved things, changed things, and left other things behind.”


International division formed


Not content with re-structuring its UK operation over the last two years, Speedy also made the brave decision to extend its operation into the international rental market in July 2009, when it signed a five year agreement with Abu Dhabi-based contractor Al Futtaim Carillion. This was subsequently added to, with the recent agreement with Costain. Initially funded from its UK cash flow, Speedy has now secured separate funding to finance the growth of this operation.


“Our plan in the international market is to follow selected customers into chosen markets.We are establishing ourselves in the Middle East and North African region as this is at the centre of global construction growth. Abu Dhabi is the perfect base for further growth


Speedy’s international operation is based in Abu Dhabi.


in the south and east of the region and is a buoyant market in itself. We are at the centre of emerging economies within developing nations. Our customers are serving the key markets of oil and gas and infrastructure, like roads, rail, transport and hospitals. These are high value, large projects in which we have provided project and asset management right from the start.”


Steve Corcoran contends that Speedy’s revenue from this international operation will reach an annualised run rate of £20m by the end of its financial year in March. In addition, “margins are expected to be at pre-recession UK levels.” He confirms that Speedy’s own purpose-built international hub in Abu Dhabi will be operational by September this year. His final comment on the development of Speedy’s international business is “over 10 years, this will be commensurate with our UK operation.”


No regrets


Admitting that “the scale of the recession has made timing difficult,” Steve doesn’t regret any of the expensive more recent acquisitions. “These deals gave us the network of locations and ranges of products that have helped us consolidate our position with major users. This will stand us in good stead going forward.” Now much more involved again in the operational business, Steve is confident that decision making is quicker and “we have a better feel for where the market is going.


“I’m really confident about 2011, in spite of the impact of the Comprehensive Spending Review. The positive aspect of the CSR is the Government’s commitment to spend £20bn on major infrastructure projects over the next five years.


“There will be bumps along the way and growth will certainly not be dramatic, rather it will be sustainable and manageable with improving margins and returns.We have a Balance Sheet to die for, gearing is only 50% and net debt is less than half of our assets.We have a great future.”


• Speedy has re-started its five year property plan. 19 • Our Tool Hire Top Ten 2011 report commences on page 25.


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