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City News:

Hire Station impresses

Catherine Stratton reviews the latest financial results from Hire Station and A-Plant.

Vp’s annual results showed strong performances from most of its businesses with one of the most impressive coming from Hire Station. All parts of Hire Station delivered strong growth in revenues and, with costs being relatively stable, operating margins exceeded 10%, a near 50% rise on last year. Over two thirds of the growth was organic, coming from both the core tool hire operations and the specialist activities within Hire Station. The tool hire depot network has grown through greenfield site openings in Hull, Exeter and Skipton, and through the addition of three locations in Scotland from the ET Hire acquisition. A small number of greenfield site openings are planned in the current year.

Vp Group Managing Director Neil Stothard says that Hire Station’s specialist businesses ESS Safeforce (which opened four new training centres in the year), MEP and Climate Hire have all performed very well. MEP has also added new locations and is now trading out of Heathrow, Manchester and Port Laoise in Ireland, as well as its original depot in Glasgow. The company says that the pipefitting market in both the UK and Ireland is growing strongly as customers move away from traditional threading methods, which will continue to fuel demand for MEP’s more modern alternatives. Hire Station’s air-conditioning and heating business, Climate Hire & Sales, was boosted by last summer’s flooding in Yorkshire and the West Country.

There have been rumours circulating for some weeks about the imminent disposal of Ashtead Technology to Phoenix Equity Partners. It has now been confirmed that Phoenix is backing a management-led buyout of the company; the consideration is £95.6m cash. The proceeds will be used to reduce Group debt. Because of the US involvement (Phoenix is American) the deal was announced ‘after hours’ to the London Stock Exchange, and just hours before Ashtead posted its annual results which, as our tables show, recorded strong growth in both the US and the UK. The price looks a good one for Ashtead; the shares had closed at 71.75p on the day of the announcement, giving the company a market capitalisation of £375.25m. Thus the Technology business, which contributed 4% to the Group’s 2008 EBITDA has been sold for the equivalent of 25% of Ashtead’s Stock Market value.

A-Plant continues to build on its recovery. Perhaps the most impressive feature of the results is the almost 4% margin improvement. The company says that growth has been achieved through “focusing on the value added products and services required by our customers.” With the change in structure of the industry since Hewden’s disposal of its Tools business to Speedy, A-Plant claims to be the leading company providing a combined plant and tool product offering which it describes as being “particularly attractive to our larger customers.”

Programmed investment has seen the average age of A-Plant’s fleet fall to 23 months from 29 months a year ago; physical utilisation has improved by 2% to 71%. In addition, the initiative commenced in April 2007 to move to fewer, larger locations is clearly helping to promote efficiencies and thus leading to better returns. The final quarter of the year (i.e. from February to April) saw A-Plant gaining further momentum with physical utilisation rising to 74% on a fleet that was on average 12% larger, giving A-Plant a strong platform and confidence in the prospects for its new financial year.

Executive Hire NewsArchivesJuly 2008City News › Hire Station impresses

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