TOOL HIRE TOP TEN 2014 continued
TP HIRE
Chief Executive Travis Perkins plc John Carter Group Hire Director Head Office
Telephone number Website
Hire activities
Geographical coverage Status
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
Telephone number Website
Hire activities
Geographical coverage Status
72-75 Feeder Road, St Philips, Bristol, BS12 0TQ
0117 971 9119
www.brandonhire.co.uk
Hire of general tool and small plant, lifting equipment, pipe equipment, survey and safety equipment, toilets, training National
Private company with private equity backing (20% owned by the management of Brandon Hire)
31 Richard Dey
Lodge Way House, Harlestone Road, Northampton, NN5 7UG 01604 752424
www.travisperkins.co.uk/hire Small plant and tools National
Division of Travis Perkins plc (listed on the London Stock Exchange)
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.
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