Having taken over as the CEO of Emrill in March 2019, Stuart Harrison along with newly promoted CFO Sam Emery outline the firm’s strategy moving forward.
There is an air of change at Emrill. Firstly the FM company has moved its head offices to Al Quoz fitted out with a theatre that’s fit for a private screening. Although Emrill uses it for a lot more constructive purposes activities such as dragon’s den sessions with its staff to bring new inventions to the fore.
More importantly Emrill has a new leadership in place with Stuart Harrison, who was previously the technical director at Emrill, taking over as the chief executive officer following the departure of Alex Davies.
As part of the leadership change Sam Emery, previously finance director, has been promoted to chief financial officer of the firm. Harrison and Emery explain that the change in structure at the top has a strategic outlook than what initially meets the eye.
fmME met Harrison and Emery at the firm’s new headquarters. “The reason (two new positions of CEO and CFO were created) is because we are looking at expanding beyond the UAE for the first time in our history,” Harrison says while we make our way to the firm’s knowledge theatre.
“Previously, because of an agreement with one of our shareholders, we only operated within the UAE. But they (Carillion) have exited which means we are now wholly owned by two GCC companies and that means we can now consider expansion plans. For now we want concentrate on the GCC,” Harrison adds stating that the plans are in the early stages.
Emrill could follow its stakeholders’ (Emaar and Al Futtaim Engineering) path which means Egypt and Saudi Arabia could be on the cards. “We have looked at the entire GCC, and more recently we have been in Saudi and Egypt doing business development. It’s early to say but we are potentially looking at opening our offices there by 2020,” he notes.
Emery feels the strong reputation and robust systems developed by Emrill over the years will hold it in good stead in its attempts to win business internationally. “The plans have only just started. Thanks to the robust controls, such as our proactive cash management methods, will make sure that we carry them forward elsewhere,” Emery tells fmME.
Speaking about cash management Emery delves into the current market conditions in which service providers have expressed concerns in getting paid on time. “Cash is very important to sustain our business which is true of every other company. At Emrill we lead from the top because we take issues related to cash seriously. The triangle between our finance department, operations team and the client is always in sync. It’s important for us to know that every invoice has the right back up so that we can get paid on time,” Emery says.
Taking a wider view to getting paid on time, Harrison says the issue is a global one and not just restricted to any particular region. “It’s all about developing great relationships. Having said that we are a bit choosy about where we go in the market and which clients we work with. We don’t tend to experience some of the difficulties that other service providers have seen and that’s down to the intelligent choices we make.
“It wouldn’t make sense for us to engage with a client who wants a basic service — that’s not what we are about. We look at projects that have an ambition to create a great environment or build on that. We also look at the history, just as people assess us when we submit tenders, we research them as well,” he says.
In the past FM companies have also expressed concerns over price wars with operators quoting lesser than the market rate in order to win the contract. This trend could potentially dent Tier 1 companies’ — such as Emrill — ability to win new work in the market.
Harrison acknowledges the detrimental potential in the trend, but says that clients are looking for better value which can be managed with the right business intelligence.
“If a client comes to us looking for cost effective solutions there are ways that we can adopt to that and ways that we can tailor our business towards their needs. Often the cost or the price might not change much but we can certainly have value adds that make it more attractive. We haven’t, however, been affected by this trend because we have the capabilities to adopt to our customers’. The key is to be flexible,” he reveals. Both Emery and Harrison add that clients are often looking to add value instead of simply cutting costs.
But Tier 1 FM companies also tend to have higher overheads which makes them slightly more expensive than its competitors in the market today. Emrill, like a few of its peers, engage in several staff welfare related activities.
“On the surface of things it might appear that we are more expensive because of all the amenities and facilities we offer our staff but you have to look at the value. There’s a difference when you buy a Rolls Royce and a 20-year old car. In our industry its all about our employees, we live and die based on their success. It has the potential to make us a little more expensive than perhaps somebody who doesn’t gives any of those facilities. But you can see the value of the service coming through,” Harrison says.
The philosophy reflects in Emrill’s recent work wins. A quick glance over the list of new contracts won makes for healthy reading, add to that a high retention rate of existing clients and work.
Harrison says: “There have been contract wins with Wasl, Nshama and Emaar to name a few in the master community space. We are well known in the residential and master community space. We have also looked at some areas that we haven’t looked at… We have a big presence at the Dubai Airport and we are hoping to increase and maintain our involvement there. Meanwhile we are looking at new sub-sectors such as healthcare, education and government.”
Emrill’s year-on-year growth in revenue has increased by 23.1% and its net profit by 14.7% over the last three years, while its cash balance in 2018 increased by 50.31%.
Emrill is looking to actively drive the concept of longer term contracts in FM which are prevalent in the regional hospitality sector, for instance.
Harrison reveals: “We would love to hold on to a contract for a longer duration. Its common practice for us in the UK, for instance, to have 10 or 15 year contracts, there are some contracts that even run for 30 years. That’s what we are aiming towards going forward.
Regionally, clients hand out three-year contracts to the FM operator but Harrison says the opportunities to collaborate on “longer term partnerships where both parties will be incentivised to look for efficient solutions and future ready solutions”.
“This is only possible through a long term strategic partnership,” he adds stating that Emaar’s decision to engage in five-year contracts is a big step towards the right direction.
He says: “Some clients are keen than others at this stage but there is an element of education that has to come from the FM operator. We are also in discussion with other clients to have longer term contracts. There is an appetite but there has to be a compelling reason to make the move.”
But what would motivate clients to hand out long-term contract, and what’s the right of going about it? Technology tools and digital dashboards might be one way of going about it, but Harrison has other ideas.
He tells fmME: “More than KPIs or proving things on paper it’s about developing that true partnership between two companies. A three-year contract it’s a temporary partnership in any case. I wouldn’t hold up a piece of technology to sell the idea of long term contracts. I’d much rather push for a philosophy of partnership. We have the trust from the market for that philosophy to take shape and succeed. We are cautious not to be arrogant because we have to keep at the forefront. We can’t rest on our laurels.”
Talking about a contract’s RFP and KPIs, Harrison sheds light on the evolution of a few trends. Starting with energy performance contracts (EPCs), Harrison says the trend has changed from standalone EPCs to more integrated ones.
“There was a drive towards standalone EPCs but in recent times we’ve seen EPCs make way for value added services in existing contracts. Five years ago, we looked at selling an EPC by its self. Today those EPCs are still taking place but embedded in a current contract. That’s where the value addition comes in for a client / contract,” he notes.
Contracts are, hence, a lot more sophisticated and today every RFP has an energy element to it that wasn’t the case before.
“It’s about the whole solution and the energy savings will subsidize the cost of maintenance,” he adds.
Looking at the next few years Emrill will have an “opportunistic” mindset towards business development.
“There’s no areas that we won’t look at, and there are some sub-sectors that we are already great at. There’s no room for a Tier 1 company to be specifically targeting one area of business in today’s market,” he says.
Harrison is conscious of the market conditions and concedes that it has become more cost focused. “It’s been slightly up and down and we’ve seen some challenges but I don’t see that leading to any big disruption. We know it’s going to be tough for 2019 and 2020, and then we expect the market to improve as forecast predicts,” he concludes.