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City News:

Continued progress

Catherine Stratton reports the latest results from hirers reflecting a buoyant industry.

Hire shares have continued to make progress in recent weeks, buoyed by good results and confident statements. Events have focused attention on the sector; initialy analysts greeted Speedy’s Hewden acquisition with an enthusiasm that carried the shares to a new ‘high’, but they, and others in the sector, have now fallen back as investors fear further hikes in interest rates. Only the day before the Speedy/Hewden deal, Archie Norman had caught the City’s attention with his investment in HSS; although HSS is not quoted, the endorsement of such a highly regarded investor can only impress the Square Mile.

Vp’s results also showed the Stock Market the growing strength of hire, its record results following shortly after those of Speedy, and after Aggreko and Lavendon earlier in the year. Vp now comprises six diverse hire businesses, of which the tool hire operation Hire Station is the largest in turnover terms, and second largest in profit contribution. Two years ago, during a period of re-structuring, Hire Station recorded an operating loss of £650,000; since then profitability has recovered substantially.

While much of Hire Station’s revenue growth was organic, it was assisted by a five month contribution from Mechanical and Electrical Pressfittings, which hires and sells electro fusion and press fitting tools. Its performance was ahead of expectation and it has expanded by relocating to larger premises near its original Glasgow site. Growth has also included a central hire desk facility, a distribution satellite that opened at Heathrow in April, and a trading location that has recently been opened in Dublin.

Operating profit margins have more than doubled (to nearly 7% from 3.4% last year). This is due to several factors, including operational gearing, with the company increasing sales by 7% while tightly controlling its cost base; the recovery in the lifting and safety businesses, which have rather higher margins than traditional tool hire; and the impact of the higher margin MEP business in the last few months of the year. Overall, however, Managing Director John Singleton states it was tool hire that showed greatest profit growth. In revenue terms Lifting Point, which now has satellite operations in all tool branches, has done particularly well with turnover up 20% last year and further growth anticipated.

Hire Station continues to develop its Call Centre, now accounting for 35% of the subsidiary’s business and which bigger customers are increasingly keen to use. A particularly helpful feature is that any unanswered call to a depot will be diverted to the Centre.

In March the company acquired Midway Plant and Tool Hire in Colchester. More recently, two new depots have opened in Exeter and Hull. The final quarter of last year saw the establishment of the Climate Hire business specialising in warm air (heaters), dry air (dehumidifiers and dryers), Cool Air (chillers and air conditioning) and Clean Air (ozone units and air purifiers). This business has been further strengthened by the recent acquisition of Cool Customers (see City News, EHN May).

John Singleton reports a good start to the current year and is confident of further progress. Vp Chairman Jeremy Pilkington echoes this from a Group perspective: “the record result…. reflects the underlying strength of the markets served by the Group and the success of our strategy in translating opportunities into profitable growth,” and adds that “the Group can deliver sustainable growth over the medium term”.

Executive Hire NewsArchivesJuly 2007City News › Continued progress

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