We find out from Tony Lockwood, managing director, BOFA International, and Paul Winter, finance director, Red Funnel, what it takes to be a BDO Central South Mid-Market award winner.
Central South Mid Market Company of the Year:
BOFA International was commended for its leadership, vision and innovation, as well as business planning that focused on investing in new technologies.
The Poole-based company is a leader in fume extraction technology. It manufactures filters and filter monitoring systems used by original equipment manufacturers (OEM) in their products. Examples include laser printing on plastic bottles, printed circuit board production and dental milling. BOFA filters remove harmful fumes from the production line and minimise downtime. Its patented filter designs with unique features extend their life to reduce the total cost of ownership.
Filters improve safety and productivity
“Our success is driven by understanding the safety and productivity challenges OEMs must overcome, and our ability to bring innovation to the market,” said Tony Lockwood, managing director at BOFA. “We decided early on to lead with technology that addresses OEM priorities, which creates a gap to our competitors.”
BOFA’s focus on OEMs, rather than end users, is another business advantage. “We create strong relationships with OEMs. They see the value we bring and rely on our technical knowledge to create the best solutions for their host products. They sell our filters on their products through their sales channels. We have a presence in 120 countries.”
BOFA’s iQ Intelligent Operating monitoring system checks filter performance and warns if it detects problems. Data is stored on a USB stick that can be sent to a local BOFA helpdesk to analyse. This year, iQ2 will be launched with wireless connectivity direct to BOFA. “It’s almost as good as having our engineer on your site,” said Lockwood. “No-one else has a product that offers these features.”
Queen’s Awards boost global reputation
In 2012, BOFA won the Queen’s Award for Enterprise, based on its export trade, and in 2017 it won the Queen’s Award for Enterprise: Innovation, for the iQ system. Lockwood had set a business objective of BOFA achieving two Queen’s Awards.
“The first time we wondered whether we could do it. We realised we were a strong contender but it was an arduous task – there’s a lot of documentation to complete. The second time, I used a bigger team led by our marketing manager.”
Lockwood highlighted the profile-raising benefits of winning. “The ‘Made in Britain’ statement and royal recognition really matters. You can go to markets around the world and it means something. Customers – and potential customers – are pleased to be associated with us. It gives them reassurance that we have been evaluated to a very high level. We have also benefited from local and international press coverage.”
BOFA’s revenue grew from £16.1 million in 2015 to £25.1m in 2017 and is expected to rise to around £29m in the year to May 31, 2018. Lockwood said the company intends to maintain double-digit revenue growth. “We have invested £5m from cash reserves on new systems and buildings, as well as taking on around 100 new staff. We delivered all this and maintained good EBITDA/growth + cash,” he said.
The company has a clear vision for future growth. “We know where business will come from and where we need to be to reach £50m annual revenue. Our rolling three-year plan includes establishing new offices in Mexico, Canada and China. We will enhance relationships at a local level with global OEMs, and increase our presence in developing markets.”
Central South Mid Market FD of the Year
Red Funnel has been operating ferry services between Southampton and Cowes, on the Isle of Wight since 1820. It carries around 3.4 million passengers and 860,000 vehicles a year, operating every day of the year with 30,000 combined sailings.
Refinancing and sale
A significant refinancing in July 2016 was followed shortly afterwards by the sale of the business in 2017. “The refinancing helped the process towards a sale, as we had refinancing in place that made the business more attractive to potential buyers. We underwent a subsequent post-acquisition refinancing in July 2017,” said Winter.
Preparing information for the memorandum of sale and presentations made to five prospective buyers took up a large chunk of Winter’s time in 2017, while he maintained business as usual activities. “We had strict deadlines and needed to pull together a huge amount of information. We didn’t want to draw too many people away from the day-to-day running of the business,” he said.
Going through the sale process helped Winter to focus on ways to improve management of the company’s financial information. “It made us realise that we could improve the way we stored information. Some documents were 20-30 years old and only available in hard copy formats,” he commented.
Red Funnel is now owned by two UK pension funds and a Canadian pension fund. It was sold by a private equity fund that had owned the business since 2007. Turnover was £50.1m in 2016 and £51.5m in 2017.
Changing role for FDs
Winter believes FDs today are expected to do far more than produce the numbers, operate some controls, and be aware of corporate governance and risk. “You have to wear a lot more hats than before,” he said. “You need to have internal conversations on a range of issues – practically anything, from any department, if it affects the finances.”
There is an expectation from chairmen, chief executives and investors that FDs have a good understanding of the business and can contribute to general strategy as well as financial matters. “It’s a challenge and an opportunity. I’m lucky as I know our business well – I spent about 14 months as the company’s temporary CEO,” said Winter.
Technology shapes the customer experience
Red Funnel increasingly uses technology to improve business efficiency and customer satisfaction. This includes social media and ANPR (automatic number plate recognition) on passenger vehicles so it can offer a more personalised service. It is currently developing an app for use on handheld technology for Red Jet services and launched its new website at the end of last year.
“We’re reviewing our ticketing processes, with more going digital, which gives us immediacy of data and greater accuracy. It enables us to generate reports more quickly for key areas of the business, so we know where to direct resources,” said Winter.
Last year was quite a challenge for Winter and his finance team and 2018 will be equally challenging. “We have gone from having one to three owners and are developing relationships with them and looking at our financial strategy. I have plenty of interesting projects to work on, including an update to our financial systems.”
Who’s driving our Economic Engine?
The announcement of the two winners is the culmination of BDO’s annual campaign to promote the importance of the mid-market to the regional economy. They identify the top performing mid-sized businesses in key areas and, in partnership with CMA Recruitment Group, the individual finance directors who contribute to their success.
“It was a tough decision again this year, with excellent finalists from very different industries,” said Malcolm Thixton, lead partner at BDO in Southampton. “The success of our region post-Brexit will be driven by a growing, successful mid-market and bold, entrepreneurial businesses and we look forward to discussing the challenges and opportunities with them over the coming year.”
Analysis is in progress and the top performing companies for 2018 will be revealed over the coming months. Nominations for this year’s top performing finance directors will open in the autumn.
For more information contact Cheryl Martin: