Upstream - The Newsletter of Incentive FM Group

Jeremy's Point of View

The Lynx Effect
We have chosen this as our front page story partly because, in our ten year history, this is probably the biggest and most significant deal we have done. From a strategic perspective the board had no doubt that this was a great opportunity for us and as with so many things in life there is luck and there is also perhaps fate!
Lynx was well known to us previously and largely on account of the original friendship I had with their Managing Director, Craig Pickard. The net result is our considerable acceleration in terms of growth and a refreshingly organised and logical integration of the two organisations, which one month in, feels very comfortable and normal to all concerned. Many back office functions like finance and HR have a natural connection, as indeed does sales. The operational management and staff on the ground looking after our customers have, and will continue to, notice no discernible change and certainly no obstacles preventing them from delivering anything other than a first class service.

P&FM Partnership Awards
In the summer issue of our newsletter I was referring to our recent BIFM award and hoping that the Premises and Facilities Management partnership award submission for our work at EMAP would be recognised. I am delighted to say that we won our category! Congratulations to Annie Karastoyanova (our site facilities manager), her team, our head office support and the whole client team at EMAP’s four offices.

Market Overview
It will be no surprise to hear that market conditions are a bit tricky, but as always there is plenty of business out there for the right companies, provided they are responsive and competitive – so nothing new really. What is more worrying is the continued drive for lower and even lower margins and the question we should ask is ‘how low is too low?’

In my view there is an increasing convergence of margins across the service sector and it is becoming difficult to see the trend in differential between security, cleaning, multi service and M&E. It seems not unreasonable to expect a contractor to try and earn 8 -12% gross margin on larger volume work – say £ 500,000 per annum and upwards and that for smaller volume work to be operating at margins nearer 15%. My observation is that some buyers are teasing contractors with work and succeeding in closing deals at as low as 6% and this is entering the world of fantasy and idiocy. Companies who operate at this level will probably fail to be able to deliver or support the contract and sooner or later could well go out of business in any event. One bad debt is probably all it will take and if this sounds unlikely to you, check out the high street bloodbath.
Come on buyers let’s get realistic, there is more than one way of skinning a cat, so let’s try and be clever together and not with each other?

Health and Safety - Baton change at the helm
Les Carter retires in April and he has been a tremendous and highly skilled member of our team as well as an entertaining and ever positive colleague to work with over the last seven years. Have a great retirement Les and keep coming to see us on your collection of pristine motorcycles!
As one door closes another opens as we are fortunate in being able to expand the role of Bill Smale to full time as our Health and Safety Manager in addition to his current role in our consultancy division where he specialises in M&E maintenance aspects of facilities management. Bill has more qualifications than I can define in one line of text and is not only a good friend of the company and a client of ours in years gone by at BBC Wales, but a fine successor to Les Carter.

CSR and Fundraising
We continue to support the Teenage Cancer Trust in our numerous fund raising events around the country, most of them at a local level. In the autumn we had our white water rafting in the Lee Valley Park, scene of this summer’s Olympic canoeing events. This summer we will again be enrolling in the Tour Du Vin in association with the Waud Wine Club. A number of Incentive staff, clients and friends will be participating in this three day event through the Loire valley and into Bordeaux. In addition to being lots of fun we aim to raise a healthy sum for our charity.