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Tuesday 6th April 2010
GSH announced plans to delist last year, seeing the departure of senior staff. Paul Cottam, MD for UK and Ireland, talks to Cathy Hayward on future strategy and the steady growth across Europe and the US.
8 April 2010
It’s been a turbulent 18 months at hard FM service provider GSH. Six of the key figures who ran the company have left with the CEO Jamie Reynolds, the most recent to depart last autumn. The firm has delisted and returned to being a family-owned business, a new management board is in place and the organisation recently turned to its bank for an £8m finance package.
But Paul Cottam, the MD of the UK and Ireland business, who joined at the beginning of February, is naturally keen to focus on the positives.
“There has been a lot of change over the last 12-18 months with the delisting and new faces on the senior management team but these all happened for good reasons and we are now focused on the future.”
Cottam says that there were two key drivers to the decision to float on the Alternative Investment Market (Aim) in 2004: to allow employees to share in the ownership of the company and to get investment into the business. But eventually the cons considerably outweighed the pros. “The management of the business became focused on short-term objectives that the markets demanded and often this seemed more important and was at the expense of long-term investments in, for example, training, IT or developing customer relationships,” he says.
With the recession starting to bite early last year, majority shareholder, and grandson of the founder, Ian Scarr-Hall started to push to delist by setting up an extraordinary general meeting to consider the resolution. The cancellation of the listing was eventually announced at the end of July and Scarr-Hall, with nearly 84 per cent of shares, took control on 10 August. He is currently in the process of buying back the shares of minority shareholders – although Cottam declines to name those individuals.
“The Aim listing was a drag in management time and we wanted to be focused on the customers and employees and to grow organically rather than through acquisition,” says Cottam. “We are now more flexible and agile and can make long-term investment for the business, such as a group IT platform, not requiring payback in six to nine months, but 12 to 18 months or longer.”
Degree of stability
While Cottam argues that clients have responded positively to the delisting, with no-one removing business as a result, he accepts that it has been a difficult time for staff who have seen the departure of joint CEOs Reynolds and Chris McLainin, together with other senior staff. “There is no doubt that it was an unsettling time, but there are now lots of positive messages coming out of the business, and there is a degree of stability with John Davy (the new chief operating officer who has 20 years’ experience in GSH) joining the board.”
Chaired by non-executive chairman, Duncan Scarr-Hall, the board is made up of a number of new faces to the FM sector including chief finance officer Ian Davidson and group HR director Richard Roberts together with Davy and the three MDs of the markets: Cottam for UK and Ireland, Ross Forman for the US and Garry Verbeeck for Europe.
Cottam himself has a long history with GSH. He joined the firm in 1992 as a management trainee and over the following nine years worked his way up to become a regional MD and commercial director before moving to GSL, which was acquired by G4S in May 2008, where he was in charge of the FM business outside the health and education markets. His return to GSH after 10 years away was, he says, driven by his desire to work for “a private, family-owned organisation with a fantastic culture which is ambitious.” He is also a close associate of Duncan Scarr-Hall.
The new board met together for the first time a few weeks ago, and are now in the process of devising a strategy for the next few years. The business, which was founded in 1895 as a small engineering firm servicing the pottery industry in Stoke, has stayed close to its roots as a hard FM firm. The last 20 years have seen it expand into energy management which is “a good fit” says Cottam. Energy now makes up 20 per cent of the UK and Ireland revenue and is a growing area – especially with the focus on CSR, CRC and the increase in energy prices and restriction on supply. But Cottam is clear that the new strategy will see GSH firmly aligned to its tradition.
“GSH’s heritage is as a hard services company; we are not going to be a TFM company like Interserve or Carillion.” The firm does offer services such as front-of-house, reprographics and landscaping, but only where the client requests it and a strong relationship already exists. “We are not going to start direct-delivering cleaning,” he emphasises.
Where there will be growth is in Europe and the US, Cottam says. “The UK and Ireland market makes up 75 per cent of the group revenue and it’s a mature TFM market. We’ve got a great collaborative team and we can take the lessons that we’ve learnt in the UK and translate that across our other markets.” The opportunity to work overseas also allows the firm to attract the best staff, he says. And the £8m finance package, secured last month will allow the firm to mobilise new contracts and make acquisitions, if needed.
Staying positive
Cottam believes that the recession is not as bad for the FM sector as for other industries and that for good FM firms it is an opportunity to work closely with clients. “Clients come to the better FM organisations and ask them how they can reduce their costs by 5 or 10 per cent. They won’t go out to tender. Many clients are also accepting a drop in service level which wasn’t the case before. And after the general election there will be numerous opportunities in the public sector to look at their assets and how they’re managed.” All of which will give plenty of fodder for the new GSH board’s discussions.
GSH Facts and Figures
GSH was founded in 1895 by George Scarr-Hall as a small engineering firm servicing the pottery industry in Stoke-on-Trent. Today the group employs 1,900 people and has a turnover of £239m.
• GSH floated on Aim in 2004 and delisted in 2009 with Ian Scarr-Hall, who owned nearly 84 per cent of shares, taking full control. He is currently in the process of buying up remaining shares from unnamed individuals.
• Last month the organisation secured an £8m finance package from Yorkshire Bank to find future growth.