SUMMARY OF REPORT CONTENTS

                                  UK Plant Hire Market 2002-2012 (£m.)

Regional growth opportunities provide strong motivation for many plant hire companies, for example severe flooding in 2007 resulted in high demand for pumps, dehumidifiers, generators etc. . In addition, new road construction and the Olympic infrastructure represent further examples of long term regional growth opportunities. Levels of plant hire market penetration are also stimulated by the development of high productivity multi-functional and compact equipment, such as telehandlers.

Earth moving equipment, estimated to be the largest product sector, accounts for around 43% of hire turnover, while lifting accounts for around 31%, construction 7%, road making 6%, compressors/generators 5%, and others – including portable accommodation, environmental and tools – approximately 8% of hire turnover.

Current indications in early-mid 2008 suggest that the plant hire sector is still reasonably buoyant despite the housebuilding downturn – with non-residential construction, infrastructure and industrial maintenance all relatively positive. Undoubtedly, more speculative developments in office and retail development and refurbishment will become increasingly affected and uncertainty over the economic climate will take time to evaporate. As a result, our estimates are for market decline during 2008-9 of around 4-5% over the 2-year period, followed by a flat 2010 before some market recovery in 2011-12, though the volatile economic climate creates an unusually high degree of uncertainty around any market forecasts.

A number of key external influences have had a significant impact upon the market over the last 2-3 years. The performance of the housing market, growing threat of competitive retail channels, growth of ‘Get Someone In’, changing customer profile and the increased emphasis placed on ‘green’ issues have all had an effect on the market in recent years.

The DIY market’s close links to the housing market mean that the performance of the two is also linked. The current decline being experienced by the housing market is expected to have a detrimental effect on consumer confidence and on the DIY multiples, as RMI activity, new housebuilding and housing transactions have all fallen. This housing decline, coupled with the poor economic environment are expected to cause the DIY multiples market to decline by 6% in 2008. As consumer confidence recovers around 2010, the fortunes of the DIY multiples are also expected to recover, aided by strong brands, extensive store networks and large marketing budgets.

DIY multiples have had to adapt to the changing environment in which they now operate, and many have taken steps to maintain and expand their sales. Recent developments include adjusting their market position towards the ‘home adornment’ end of the market, attempting to appeal more to trade customers and expanding their product ranges to include more and more non-core products such as smaller electrical appliances and soft furnishings.

B&Q continue to be the dominant player in the market, with Homebase, Wickes and Focus their major competitors. Several smaller companies have struggled in recent years, with Budget DIY and Glynn Webb both entering administration, while others have been forced to close stores in an increasingly difficult trading environment.

Within the multiples’ products, performance has varied significantly between different sectors. Sectors such as Lighting & Electrical Products have performed strongly, boosted by product innovation and a growing lamps market. Other sectors within DIY multiples have struggled, including Window & Floor Coverings, affected by the decline in popularity of laminate flooring and increased price competition.