EXECUTIVE REPORT continued
“The target business also needed to be firmly aligned to the markets as I defined them back at Speedy in 2011. At the time, I wanted to re-position Speedy to focus on major contractors undertaking large investment in infrastructure in support of energy/environment, transport, water and waste, in addition to construction because these customers represented a lower debt risk. Whilst this did not work then, my strategy has been vindicated as major work from these markets is coming through. The energy market is strong, as is investment in rail, roads and air. The Highways Agency is investing heavily in the road network and investment in rail is £50m/month for the next six years, and that’s without HS2.
“As simple as making tea and coffee”
“Fork Rent and One Call were the best fits I could find. The difference in size between them is negligible. They have similar business models, although operationally they are different, as Fork Rent has operated in an entrepreneurial way, whereas One Call was run on a more structured management basis. They are undoubtedly vibrant, growing, well-invested and profitable businesses.
“Between them, they generate around £50m of cash annually, with operating profits approaching £30m, which nets to £20m. With its telehandler fleet, Fork Rent was achieving utilisation in the low to mid-80%s, whereas One Call’s telehandler fleet was achieving low to mid-70%s, with the opposite percentages on excavators. As a simple analogy, they both offered tea and coffee, one was better at making tea, the other was better at making coffee. Most importantly, they also offered the same brands of tea and coffee.
“Going forward, with little crossover between the customer bases, there are plenty of cross-selling opportunities and the ability to generate revenues in the high end infrastructure and expanding house building markets. In the negotiations, neither party knew the identity of the other until the middle of May. Each subsequently said they would have picked the other as their partner. It is a perfect marriage.”
No geographic overlap
There is also no overlap in their geographic coverage. Fork Rent operates four depots in Ipswich, Hullavington near Malmesbury, Erith and Warrington. Interestingly, for the last three years, Fork Rent has a licence to trade out of Speedy’s Warrington Multi Service Centre, in which it sub-lets part of the depot. One Call has depots in Enfield, Rochester, Southampton, Cambridge, Oxford, Birmingham, Bristol and Eye, near Ipswich.
In their individual growth plans, One Call had purchased a site in Warrington and Fork Rent, having served notice on Speedy, will now move into the new combined site. Similarly, Fork Rent was looking to open a depot in Birmingham, and One Call already operates an outlet in the city. These ‘early wins’ have, obviously, enabled savings on expansion costs.
19
“We will hit drive early next year, with a new trading name for the two operations,”
“We will build on the business values of Fork Rent and One Call, which need to be recognised by offering quality equipment at the right price. There are four pillars that will differentiate our position in the market. The first is availability, as Fork Rent has the largest telehandler fleet in the UK, and One Call has one of the largest excavator fleets.
“The second is reliability as both companies have invested heavily in fleet purchases from leading brands, resulting in an average fleet age of less than two years. This fleet has the highest specification products available. We have extras that aren’t even options to most hirers. Capability is the third pillar. Both hirers, working with key suppliers, have well-trained knowledgeable teams, with manufacturer- trained service engineers. We also offer sustainability, as machines are fully compliant with Stage IIIB/Tier 4 emissions across the fleet.”
New trading name to be introduced
In his initial post-acquisition plan, Steve Corcoran will run both companies independently of the other, and they will continue to trade on different IT networks, separate customer agreements and individual purchasing terms. An integration team is now working on harmonising all these aspects into a single platform. An early decision has been made to extend the inspHire computer software system, currently operated by One Call, throughout both hirers. The objective, by early January 2016, is to introduce a new trading name for the two operations.
“We will then hit drive. We already have good network coverage from The Wash to Bristol. Five new outlets are planned in the next two years to give us full national coverage and we have already identified properties in Scotland, Yorkshire, south Wales and south of Bristol. We will make acquisitions, where appropriate, to stimulate growth and we will pick out the right options, with the right assets, the right products, serving the right markets.
“Fork Rent and One Call currently have limited exposure to some of the infrastructure markets, and my role is to extend into this space. They are ideally aligned to extract value from these markets. I firmly believe my view on infrastructure was ahead of the market in 2011, and, whilst it didn’t happen for Speedy, it is happening now. This is an exciting opportunity to run a business with a longer term outlook.”
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