Designing and Delivering Stand-Out Results in Exhibitions

Introduction by Lloyds Bank has developed into an ongoing long-term partnership over two and a half years that has:
• Returned a struggling £2m turnover business to sustainable operating profit and positive cash generation;
• Improved profitability by £100k in each of the past two years;
• Introduced simple but effective management information to forecast cash and report on business performance that allows the Executive team to better direct and manage the business;
• Rebuilt trust in the business on the part of its bankers;
• Secured circa £0.5m equity value for the shareholders, with a target value of £2.5m by July 2013;
• Maintained employment for a staff of 20.

PiP were introduced to this exhibition design and build contractor in June 2008 by Lloyds Bank as part of our retained performance improvement relationship.
The first task was to help the Shareholder Directors and Lloyds to understand why a business that had a positive bank balance of £50k at the end of 2002 and reported aggregate operating profit of £170k in the following 6 years ended 2008 with an overdraft of £380k. PiP conducted a one week review of the business and quickly established that the principle reason was a build up of stock of fabricated exhibition stand components with a nominal balance sheet value of £560k. The policy of attributing balance sheet value to these components, had the effect of suppressing the cost of sales. If the cost of fabricating these components had been charged directly to the accounts, the business would have declared an aggregate operating loss of £315k between 2002 and 2008.
However, the review concluded that the fundamental business was a good one with strong, long-term customer relationships based on an excellent product, and that the business could be returned to sustainable profitability once again.
Immediately following the review PiP were engaged directly by the client to work alongside the Executive Team to return the business to long-term profit without losing its core values as a family business. Over two and a half years, that process has gone through three phases that are fairly typical, and illustrate our approach and business improvement philosophy:
1. Implement improved business controls to fully understand the business and the reasons for underperformance – without understanding it is impossible to know the right action to take;
2. Implement a range of measures to improve the operational performance of the business – although the symptoms of poor business performance are usually financial, they reflect underlying operational problems and only by addressing these will business improve in the medium term and thrive in the long-term;
3. Managed revenue growth – with a well oiled operational machine the business is set to maximise the profit from new business.
As a result of these measures, the company is now translating good business into operating profit. The underlying financial performance of the company in FY10 was better than in any year for which reliable information is available and £100k better than in FY09. This improvement was achieved despite a reduction in revenue of 14%, and was driven by:
• Gross margins stronger than at any time since 2002, and;
• Significantly reduced overheads.
Eight months through financial year FY11, we are currently forecasting a further year-on-year improvement in financial performance of £100k, based on continued improve in all regards:
• A 9% increase in revenue;
• Further improvement in gross margins despite significant raw material cost pressures;
• Further reduction in overheads;
• Lower finance costs.
With two years of dramatic improvement under our belt, the three year strategic plan forecasts a further improvement in profit of £70k in each of FY12 and FY13, at which time the company should be delivering recurring profit of over £200k and a return on sales of close to the Board’s target of 10%.
At these levels of profitability, a business that was close to failure in 2009, will end FY13 debt free and with an enterprise value of circa £2.5m.

At various stages in the relationship, Directors and shareholders of the business have said:
“The best resource in the business”
“We have never understood our business as well as this”