Speedy Hire plc

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Speedy Hire plc

Chase House, 16 The Parks
Newton-le-Willows,
United Kingdom
Telephone: (44) 01942 720000
Fax: (44) 01942 720077
Web site: http://www.speedyhire.plc.uk

Public Company
Employees: 3,400
Sales: £206.5 million ($477.5 million) (2005)
Stock Exchanges: London
Ticker Symbol: SDY
NAIC: 236115 New Single-Family Housing Construction (Except Operative Builders); 236210 Industrial Building Construction; 236220 Commercial and Institutional Building Construction; 237210 Land Subdivision; 531190 Lessors of Other Real Estate Property; 532412 Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing

Speedy Hire plc is the United Kingdom's leading specialist tool and equipment rental company. Based in Newton-le-Willows, in Merseyside, the company operates more than 300 branch offices, or depots, covering all of the United Kingdom, including Scotland and Northern Ireland. The company has also begun extending its operations into the Republic of Ireland.

The largest part of the company's operations is its Tool Hire division, which accounted for 58 percent of the group's £206 million ($477.5 million) in revenues in 2006. The company's 230 tool hire depots provide a full range of woodworking, plumbing, and hand and power tools, as well as scaffolding, podium steps, heaters, lighting units and small generators, welding equipment and the like. Speedy's strongest growth into the mid-first decade of the 2000s, however, has come from its Equipment Hire division, which specializes in the professional construction, industrial and related markets. As such the company has built up leading shares in such market segments as lifting and materials handling, power generation and compressed air equipment, lighting towers, portable accommodation and other onsite facilities, surveying equipment and pumps.

Speedy has especially benefited from the growing trend among large-scale construction and industrial companies to abandon equipment ownership, and the correspondingly heavy maintenance costs, in favor of the equipment rental model. Acquisitions remain a key part of Speedy's growth into the second half of the first decade of the 2000s. Between 2000 and 2006, the company bought nearly 30 companies. These included such large-scale purchases as LCH Generators Limited, bought for £60 million in May 2006. Speedy is led by chairman David Wallis and CEO Steven Corcoran. The company is included in the London Stock Exchange's FTSE 250 Index.

CONSTRUCTION GROUP ADDS PLANT HIRE IN 1977

Speedy Hire originated as an offshoot of the construction business founded by brothers Samuel and Thomas Allen in Wigan, in northern England, in 1946. Allen Brothers initially served the public sector market, building for the region's housing authorities, while taking on other public works contracts. By the end of the 1960s, the company's operation included engineering services as well. Allen Brothers next expanded into the private housing market, which grew strongly in the 1970s, and particularly during the years when Margaret Thatcher was prime minister. The company also increasingly competed for large-scale development projects in the 1970s and into the 1980s. In 1989, Allen Brothers went public, listing on the London Stock Exchange and changing its name to Allen plc.

By then, Allen had also developed a strong tool rental business. That market was relatively young, but it represented one of the fast-growing areas in the British building industry. The tool hire, or rental, concept was considered to have been developed in the late 1940s, with the founding of the Hire Services Company. In 1965, the company merged with the hire business set up by scaffolding leader SGB just one year earlier. The merger resulted in the creation of HSS, which remained the dominant player in the U.K. tool hire market into the early 2000s.

Nonetheless, the success of HSS and of the tool hire concept in general encouraged a large number of players to enter the market. A great majority of these were smaller business, catering particularly to the home construction and do-it-yourself (DIY) markets. These markets took off especially during the 1970s; at the same time, the tool hire sector had been widening its scope, adding a wide range of equipment and plant rental services. The complementary nature of tool hire operations with the construction industry led a number of construction groups to add their own tool and equipment rental operations.

The newly public Allen plc boasted its own fast-growing hire unit known as Speedy Hire. That operation had been launched in 1977, when John Brown was named managing director of Livesey Hire, based in Wigan. That business started out with just a single depot, in Wallgate. The 1982 acquisition of Speedy Fixings Power Tools Ltd. not only provided the company with a new name, it also added rental offices in Prescot, Llandudno, and Manchester. Speedy at first remained focused on the northern region. In 1987, however, the company made its entry into the important southern region, installing its first depot in London. The move enabled the company to capture a share of the region's building boom into the late 1980s.

Soon after, however, the U.K. building market collapsed; the economic recession, exacerbated by the Persian Gulf War of 1991, further hit the country's construction sector. Allen plc, like many other construction groups, found itself in increasing financial difficulty. Yet the company's tool hire unit provided a bright spot amid the gloomy economic landscape in the early 1990s. Backed by its parent company, Speedy Hire Centres launched its expansion drive in 1993, buying Hire-A-Tool in 1993. This purchase expanded the company's network to 30 depots and confirmed the group's decision to pursue further expansion through acquisition. By the end of 1994, the company had completed its second major acquisition, of Kendrick's Hire. This purchase not only added 41 depots to Speedy's network, it also established the group as a full-fledged, nationally operating company. Following the Kendrick's purchase, the company restructured its tool hire operations into two business units, Speedy Southern and Speedy Northern.

COMPANY PERSPECTIVES

Our vision: to be number one in every sector in which we operate. This will be achieved in line with our values. Integrity: Speedy aims to be open and honest in all its dealings, and deliver value to its stakeholders through high ethical standards. Safety: Speedy is committed to promoting a healthy and safe culture for the protection of both customers and employees. Social responsibility: Speedy maintains this through environmental awareness and community involvement. Reputation: Speedy is committed to maintaining and building upon its reputation. People: Speedy endeavours to employ the best, devolve responsibility where possible, encourage and support their development, and reward well for success and loyalty. Commitment: Speedy works hard to maintain its "can do" culture, one of the fundamental reasons for our success.

PURE PLAYER IN 2001

Speedy continued to build its national map into the mid-first decade of 2000. At the end of 1995, for example, the company acquired a group of depots from John Cummings, a purchase which brought the company into Scotland for the first time. Another purchase, Rentall, brought the company an additional eight depots in the northern region at the beginning of the next year. Following that purchase, Allen restructured its plant hire division, regrouping these operations under the Speedy name. This helped boost the company's network of Speedy centers to 100 by the end of 1996. The Rentall acquisition was quickly followed by the purchase of Tidy Hire, a move that helped solidify Speedy's presence in the Midlands region.

By the end of the 1990s, Allen plc's early decision to expand its tool and plant hire operations had begun to pay off for the group, as Speedy emerged among the national rental leaders. Acquisitions among the still highly fragmented market remained an important factor in the group's success, as the company filled in its network through the end of the 1990s. By then, Speedy had also recognized the fast-growing potential for supplying large-scale building contractors, and particularly companies operating on a national scale. Rather than commit to the high costs of purchasing and maintaining their own tools and plant equipment, construction groups were increasingly attracted to the possibility of outsourcing these operations to rental specialists such as Speedy Hire. In support of this market Speedy put into place a new unit, Speedy Hire Direct, offering a central call center facility to service its nationally operating customers.

The booming construction market enabled Allen's Speedy Hire unit to grow strongly into the turn of the century. In particular, Speedy Hire represented Allen's strongest profit center; from 1998 to 1999, for example, Speedy's profits jumped by some 60 percent. When Allen's building division slipped into economic trouble in 2000—posting its first loss since the company's founding—Speedy emerged as the group's most vital unit. At the same time, the prevailing trend among the investment community to favor "pure play" companies (those specializing in one product or service) had come to penalize the diversified Allen company's share price.

In response, Allen's management announced its decision to spin off Speedy as a separate, publicly listed company in 2001. As Allen's CEO, Ken Fox, told the Birmingham Post, "The sum of the parts of the group is currently worth more than the whole. Speedy is being restricted by the poor results from our building division and will be better placed to take advantage of its growing market as an independent company."

Yet Allen's spinoff plans soon took an unexpected twist. Continued difficulties in the construction group's core divisions led the company to make an about-face in early 2001. In February of that year, Fox stepped down, and Allen announced its decision to shed its construction and engineering operations, and instead refocus itself around its core plant hire operations. This process was largely completed by August of that year, and John Brown, who had served as managing director of the plant hire division, became chief executive of the new Speedy Hire plc.

RENTAL LEADER IN THE NEW CENTURY

In the meantime, Speedy had placed its expansion effort into high gear. By 2006 the company had completed nearly 30 acquisitions. In 2000, for example, the company completed six acquisitions, including Rapid Hire UK, formerly held by Tilbury Douglas, and Hire Easy, Construction Instruments, and New Mills. In 2001, the company added Balfour Beatty Tools, helping to boost the group's total number of depots to nearly 190. By 2002, Speedy had succeeded in raising itself to the number two spot in the U.K. hire market, claiming nearly 10 percent of the total market.

The purchase of the Jewson's tool and equipment hire network, the retail DIY subsidiary of Saint Gobain that included 37 standalone branches primarily in the London and southwest regions, helped boost Speedy into the market lead. The acquisition, completed in early 2002, cost Speedy £13.5 million.

KEY DATES

1946:: Samuel and Thomas Allen establish a construction and engineering business.
1977:: John Brown founds the tool hire division, becoming managing director of Livesey Hire in Wigan.
1982:: The company acquires Speedy Fixings Power Tools Ltd., adding three new depots.
1987:: Speedy Hire Centres opens its first depot in London.
1989:: Allen plc goes public on the London Stock Exchange.
1994:: Allen acquires Kendrick's Hire, extending its operations to the national level.
1996:: Tidy Hire is acquired, extending the company's presence in the Midlands region.
2001:: The company becomes Speedy Hire, spinning off its construction and engineering operations to become a "pure play" company specializing in tool and equipment rental.
2002:: Speedy Hire acquires a 47-branch tool hire network from Jewsons.
2005:: John Brown retires; Steven Corcoran becomes company CEO.
2006:: Speedy Hire completes the acquisition of LCH Generators Ltd. for £59 million.

Speedy had also been expanding its operations to include a number of specialized units. In 2000, for example, the company purchased Construction Instruments, which formed the basis of its new Speedy Survey subsidiary. That operation was boosted in 2003 through the acquisition of Watts Optronics, enabling the company to claim the leading position in that specialty rental sector. Similarly, in 2002, the company established another subsidiary, Speedy Lifting, which took over the operations of the group's lifting machinery rentals. By 2005, after the purchase of Lloyds British Hire, Speedy claimed the top rank in the United Kingdom's lifting and materials handling hire market. By then, the company had launched several other specialized subsidiaries, including Speedy Pumps, created in 2004, Speedy Space, focused on portable accommodations; and Speedy Power, which had gained the U.K. lead in the power generation and compressed air market.

The creation of specialized divisions enabled Speedy Hire to compete more strongly for the fast-growing market of providing tool, plant, and equipment outsourcing services not only to large-scale construction companies, but to industrial corporations as well. This outsourcing market was given a new boost mid-decade, with the passage of new legislation by the British government establishing stricter safety standards for the construction and other industries. Rather than face the need for continual reinvestments in their own tool and equipment fleets, companies increasingly turned to rental specialists such as Speedy Hire.

Speedy's acquisition effort continued into the mid-decade. In 2004, the company's purchases included Simons Construction, Coates Rentair, Multi-Equipment Hire, and Pitreavie Tool Hire. The following year, the company added DAD Hire Services; The Cabin Company Ltd., formerly part of the Birse Group; the internal plant hire business of MJ Gleeeson Group; North Wales-based Delyn Hire Centres; and the accommodation and survey operations of Mowlem plc. During that year, also, John Brown retired from the company, and Steven Corcoran, who had worked alongside Brown since the early 1990s, was named company CEO.

By the end of 2006, Speedy had successfully outpaced its chief rival HSS, claiming nearly 15 percent of the total U.K. hire market. The company had also completed its largest acquisition to date, paying £59 million to acquire LCH Generators Ltd. in May 2006. In that year also, Speedy Hire expanded beyond the United Kingdom for the first time, opening its first depot in Northern Ireland, followed by the launch of the creation of a subsidiary in the Republic Ireland. That subsidiary then opened its first depot in Dublin.

As it turned toward the second half of the decade, Speedy Hire announced its intention to continue to solidify its national network, with plans to open as many as 30 new depots per year. At the same time, the company laid plans to continue its diversification, seeking out new rental markets in order to ensure its future growth.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Allen Investments Ltd.; Speedy Asset Leasing Ltd.; Speedy Hire (Ireland) Ltd.; Speedy Hire (Scotland) Ltd.; Speedy Hire Centres (Northern) Ltd.; Speedy Hire Centres (Southern) Ltd.; Speedy Hire Centres (Western) Ltd.; Speedy Hire Direct Ltd.; Speedy Lifting Ltd.; Speedy Power Ltd.; Speedy Pumps Ltd.; Speedy Space Ltd.; Speedy Support Services Ltd.; Speedy Survey Ltd.; Speedy Transport Ltd.

PRINCIPAL COMPETITORS

Wolseley plc; Alfred McAlpine plc; Shepherd Building Group Ltd.; Tramp Group Ltd.; Bloor Holdings Ltd.; Mansell plc; Ashtead Group plc; Birse Construction Ltd.; Birse Group plc; CP Holdings Ltd.; Hewden Stuart plc.