“Transflex projects that its profit before tax will more than double in 2013 and more than triple in 2014.”
The economic downturn in 2008 had a big impact on companies in the Light Commercial Vehicles (“LCV”) market. Many leading operators, such as TLS and Leaseway, withdrew from the market completely whilst the largest LCV company Northgate, cut investment in its fleet. However, at this time many customers, who had been extending the life of their LCV’s, were now having to look at buying replacement vehicles.
There was, therefore, considerable potential for a new operator to capitalise on these changing market conditions by offering flexible rental contracts as an alternative to buying vehicles outright.
Chelverton were particularly impressed with the Transflex businesss plan and its management team – Managing Director, Peter Abdale, and Chairman, Steve Smith – who had many years’ experience as senior directors of Northgate and know the market well.
Flexible rental contracts account for around 5% of the total LCV market, which is estimated to be 3.2m units. Peter and Steve see this as a growing market, as due to the current economic climate, customers are unwilling to commit capital to an outright purchase, or fixed term rental.
Transflex’s business plan focuses on building up a LCV rental fleet quickly. Vehicle funding is primarily through asset finance, with the ‘equity’ in the vehicle being funded from profits and equity capital. Based on existing market conditions, Transflex projects that its profit before tax (‘PBT’) will more than double in 2013 and more than triple in 2014 (year-end 31 December).