Bury St Edmunds: Servest Multi Service Group remains focused on growth

ROB Legge, chief executive of multi-million pound services firm Servest, travels economy class.

It’s not that he’s particularly a fan of cheap travel, and it’s certainly not comfortable, but Rob is keen to get the message across to his employees that his is a disciplined, tightly-run outfit.

“No business is recession proof. From our point of view, I will tell you where we have been successful: I think we have been ultra efficient in the way we have managed the business. That’s because we run a very tight, lean business. We travel economy class,” he says.

“On the train I travel economy class. Do I enjoy it? No. But it’s very much setting the benchmark. We say if you want to upgrade, then you can pay the difference. The same with your company car.”

It’s Rob’s philosophy for recessionary times, and ditto the choice of Fornham All Saints near Bury St Edmunds as the multi-service business’s headquarters. Yes, he lives nearby, but also, it’s a relatively cheap place to base a business.

“We have picked Bury St Edmunds primarily because I live here but actually it’s quite an efficient place. You are not paying London wages, it’s much more cost effective to be here and I think also staff enjoy it. It’s a nice standard of living here. It’s nice working environment,” he says.

Servest is a £200million turnover company employing around 13,500 staff across the UK, including around 60 at the Suffolk headquarters and a further 50 at Tesco and Debenhams in Bury St Edmunds. It started out as a cleaning franchise and developed into a cleaning operation in its own right, but now sees itself as a “multi-service” rather than a “facilities management” firm, reflecting the breadth of its offerings, from security to pest control. It has an impressive range of customers, including Primark and Tesco, and makes between 7% and 8% profit in a sector which is undoubtedly feeling squeezed by its client group, which is itself under pressure due to the ongoing effects of the financial crisis.

“We are a very profitable business. We are in line if not slightly higher than average,” says Rob.

Rob, who is exceptionally focused and driven, joined the business in the late 1990s when he was recruited to a company called Ecocleen, where he quickly became managing director. He had already sold his own start-up and saw a lot of potential in the environmentally-aware cleaning enterprise.

Ecocleen had been started in 1993 by husband-and-wife team Michael and Sherrill Hood, New Zealanders who had moved to Fareham in Hampshire in the UK and ran it as a cleaning franchise operation.

“I joined as managing director and worked with them and they decided they needed to be acquired,” explains Rob. “I lived in Colchester at the time and I travelled to Fareham on a weekly basis for the first three months and said to them: ‘We need to sell the business or put money in.’

“They decided to sell it and I sold it on their behalf in late 1999 to Servest.”

Servest, a South African facilities management company based in Johannesburg, had already acquired a company called the Executive Group in London. It bought the business in late 1999 as it looked to expand strategically within the UK.

When Rob joined Ecocleen, then a franchise business, it had a £900,000 a year which he quickly grew to £3m. By the time it was sold, the business had been moved to Bury St Edmunds to be nearer to Rob’s home, and Rob himself had moved to a village near Lavenham.

In 2003, there was a re-focusing of the South African business, and it decided to sell its UK interests, including the Ecocleen arm, so Rob led a management buyout. Meanwhile, Executive Group was sold to MITIE.

“We were about £4m turnover so we had not grown massively,” says Rob. “It was still a franchise business. I then decided that to move the company forward and to develop it we needed to take a different approach and decided to de-franchise the business, believing that was the way to grow the revenue.

“We allowed the franchise business to continue trading as it is today – about £3.5/4m turnover – but then began to grow a conventional cleaning operation. We were very good at what we did and we had a very good reputation in the market place for service delivery.

“We had a number of contracts we had begun to develop. We don’t touch domestic. We got very much involved in the retail market. We landed a couple of retail contracts and managed to get a footing in Primark and started on Primark contract in Hackney in 2003 and we today run about 100 of their stores. We are the biggest single provider they have for their store cleaning.”

By 2007, through landing various new contracts, Rob had got the revenue up to to £17m.

“During that period of time, I kept very close to Servest on the basis I liked their culture and kept very friendly with Kenton Fine, the group chairman, and learned he was relocating his family to live in the UK and had handed over the reins to his partner in South Africa. Lo and behold, I was still here.”

In July, he made a deal with Servest South Africa, which now owns 73% of the business, while the remainder is in the hands of the UK management team.

“I took cash off the table then put money back in and took quite a large equity stake in the group,” explains Rob.

“We talked about what we wanted to achieve. We then started our plan of action and the plan was very much to emulate what they had achieved in South Africa in terms of a multi-service group across the different sectors.”

The range of disciplines within the South African operation is vast, covering everything from cleaning, security, landscaping, interior plants, exterior plants, wash room hygiene, janitorial supplies, pest control, supplies, car parking business and transport. The ambition was to create a similar business here.

“They acquired a majority stake in the business and appointed me CEO and asked me to give them 10 years of my life. Effectively, 20 years has been my overall plan. During that time we would grow a very considerable business, something that would compete in the market place here in the UK, that would be a quality business offering a quality service and the employer a choice.

“We wanted it to be something to be proud of, not just something that made money but something we could leave as a legacy. That was really our vision.”

Kenton Fine, who, like Rob, is in his early 40s, returns to South Africa five or six times a year but is now based in Berkshire. He attends the majority of board meetings and Rob will speak to him usually around once a week.

“My forte is running the group and running the day-to-day businesses. He was able to identify funding,” explains Rob.

This recipe, with Rob managing and Kenton securing funds for expansion, has worked well. The business’s strategy is to grow through acquisition, and its progress over the last few years has been remarkable.

In 2008, Servest acquired Sherwood, a cleaning services business in Hertfordshire, but the growth plans were then temporarily curtailed as the effects of the Credit Crunch and the global economic meltdown began to be felt.

“It was a strategic acquisition because they were very much focused on public sector and visitor attractions,” explains Rob.

“We decided we needed to get a presence in that sector. We then had, like everybody else, the global meltdown of the economy and funding became very difficult to come by and we spent the next two years growing organically which was not a bad thing looking back on it.

“We grew 20% year-on-year which was phenomenal through the recession. We got ourselves up to about £40m. We then saw the markets beginning to ease and people say: ‘There’s no funding around.’ But there is if you are a quality business and you have got your own cash to put in. We found a bank that was very supportive (Yorkshire Bank).”

In 2010, the growth pattern continued with the acquisition of Turners Support Services Ltd based in Stevenage, taking turnover up to around £70m.

From there, the growth was, says Rob, “pretty phenomenal” and the firm continued to build organically until by the end of 2011, sales reached £80m.

Last year, Servest started to branch into other service lines, acquiring Stag Security in Harrogate, a national security company which included man guarding, gate security and security technology. The technical side of the business is high margin, says Rob, so it has proved a good investment.

This month, it purchased independent Staffordshire-based catering business 7 Day Catering, bringing its annual turnover to around £200m, and staff numbers to 13,500.

This is the second recession through which Rob has steered a business, although he admits this one is uncharted territory.

“I don’t think anyone thought it would be as deep and as hideous as it is,” he says.

Rob was brought up in the in East London, and caught the entrepreneurial bug young, cleaning neighbours’ cars for pocket money. The family – his father was a policeman – would come up to Dunwich and Aldeburgh on camping holidays. When he grew up, Rob joined the RAF Regiment for a few years. He believes it stood him in good stead, but certainly doesn’t consciously base his management style on the military model.

“We have always run a tight ship. I hope it’s not run like a military base. I like to think it’s very open and friendly,” he says.

Back in Civvy Street, Rob got involved in a business venture on the mail order side. He is keen on training and went on finance and leadership courses to teach himself some of the skills he needed. Without a good leader, a business will fail he says, and therefore it’s important to get the leadership right.

“Businesses have to be managed. You have got to have a good, solid board that make the right decisions for the shareholders. I have got a very, very strong team of directors that work with me and they are all responsible for different people,” he says.

“We are a national company with contracts as far north as Inverness and as far south as the Isle of Wight.”

Servest was one of just three companies providing cleaning and waste management services to five of the 2012 Olympics sites: the Box Hill cycling venue, the Hadleigh Farm mountain biking site, UDAC, the Uniform Distribution and Accreditation Centre, the shooting range at the Royal Artillery Barracks and the canoe slalom venue at Lea Valley. Around 100 Servest staff delivered services, and received good spectator and customer feedback.

The tentacles of the business stretch into many areas and that means that it hasn’t been immune from the collapse of other companies, including on the retail side Peacocks and MFI. However, it has a healthy spread of contracts with other retailers, local authorities and even the Science and Natural History museums.

It has just recently underlined its commitment to offer a full range of services by joining the British Association of Landscape Industries (BALI – the UK’s representative trade association for the landscaping sector).

It currently provides grounds maintenance at three of its contract sites, for defence contractor MBDA in Stevenage, for Pitney Bowes in Harlow and at the Science Museum in London.

It plans to work with up to 30 BALI members to ensure it can deliver a full range of services across the country, including design and construction as well as maintenance.

Achieving Full Member status with BALI was a rigorous process that included inspection of sites as well as an examination of Servest’s processes, from health and safety to training and quality control.

It’s just one of the growth areas Rob envisages for the firm.

The trend towards businesses outsourcing cleaning and other services will continue, he believes, as companies focus their attentions on their core activities.

“Outsourcing has been going on for 10/15/20 years now,” he says.

“Why do people outsource is the question. If you look at the likes of a Sainsbury, their skill set is selling food. Do they want to employ thousands and thousands of cleaners, or security guards? The advantage is you can scale it up and scale it down – they are working for the outsourcing company.

“If you have your own in-house operation, it becomes very fat and lazy and inefficient. You are looking at innovation and how to find the best ways of doing it because, if not, you are going to get rid of it.”

With around 80% of Servest’s costs in wages and employees, the only way for the business to save money is through efficiency, says Rob. Rob’s aim as the business swallows up new services from gritting to catering is to build the business to a £500m turnover in the four or five years he has left. If he pulls it off, it will be no mean feat, but if anyone can do it, you suspect he can.

“We are more efficient because we are good at that. We are lean and mean. It’s no different than our competitors, but we like to think we are better because of our service delivery. You can save them (businesses) a lot of money. They look good, and we are happy because we have made money from it,” he says.

Above all, he and his team enjoy what they do, he says.

“We do have fun. We are here to create wealth for the shareholders, we have got 10,000 people so 10,000 families who rely on what we do,” he says.

But he adds: “I have busted my chops to get here. It has been a hard journey.”