BQ editor Mike Hughes talks to Martin Donnachie, whose company is well connected around the country.
Martin Donnachie’s summary of Fulcrum’s success is ‘so far, so good’. That is a polite understatement of the remarkable turnaround he has led at the Sheffield-based utilities company, which is the only independent utility infrastructure provider operating across the whole of Britain.
Fulcrum’s aim is to be the leading energy connections provider in the UK – and Martin’s leadership to bring it to that point has been high-profile and widely admired.
The company has won headline-grabbing contracts like providing the gas supply to the Olympic Cauldron for London 2012 and has provided gas to ridiculously inaccessible places like the restaurant on the 40th floor of Heron Tower in the middle of London (when the meter was in the basement, six metres below ground level) and four distilleries via a 16-mile pipeline through some of Scotland’s most beautiful and remote countryside.
So Martin is up for a challenge. Which is just as well. “Looking at what the company has achieved over the last couple of years, the key was to establish credibility with investors again and I think us moving into profit last year – and on the timeline promised – was really important,” Martin tells me. “That got us past quite a significant milestone but, of course, once you have delivered your first profit, the investors want to know how you are going to make even more next time – and then the time after.
“Winning things like the distilleries contract gives confidence to investors that we will achieve the figure we set out to achieve. We are projecting growth and winning contracts like that is very much a part of that.”
Martin’s rejuvenation of Fulcrum was always built on a complete confidence in its potential in the market for what it does. Historically, that has been gas connections, but is now moving into electricity and water. That potential led to a group of investors taking it from National Grid five years ago and floating on the AIM market.
“Three years in, that management team had done a lot of good things, moved the business on and reduced the cost base. But unfortunately a combination of that cost base still being too high and not enough sales coming in, meant that it wasn’t in profit as planned and had spent all of the cash it had raised from the float.
“So there was a management change and I was brought in initially for a six-month interim role. But over the last two years we have been working on what was initially a very urgent turnaround plan. That then became a transition model and then moved towards profit and growth.”
Fulcrum owns a lot of the pipelines it installs, so some of those were sold to rebalance the books with a healthy £5m injection back into the business. The cost base came down again with three ‘waves of downsizing’ and the foundations were in place.
“I came with a pretty open mind because you never quite know what is required to move a business on until you arrive. The cost base reduction was clear, but the company wasn’t delivering for customers in the way that it needed to do, so we had to put measures in place and create some drive.
“There were also people in the business who weren’t able to deliver their potential. One of the things I am very pleased about is that we have worked with people already in place. There was a management layer that wasn’t required, so that went and allowed a lot of people to fulfil that potential and drive the company on.
“I didn’t have a formula from day one, but over that first six months I realised it wasn’t like a normal turnaround. There was a chance here to take something that had lost its way, save it, get it delivering for its customers and then grow it as well.
“I saw that it was something I could also be fulfilled in for a number of years.”
After getting his Maths degree at Oxford, Martin became a chartered accountant, and had been working in science and technology businesses and then with construction companies as MD for George Wimpy and divisional MD for Rok. The housebuilding experience was valuable. Having bought in utilities services as a customer, he was now on the other side, knowing how high customer expectations were.
“I could relate to them. When something went wrong, you realise what a big impact utilities have on a contract, so it was great to be able to go somewhere like Fulcrum that has the potential to be the standout player because of its heritage and the way it operated.”
That involves the calibre of the people you work with, and it is clear this is a passion for Martin. There was no need to bring in a completely new team when he arrived. People came and went, but the core was skilled and supportive and keen to grasp any opportunities that came their way.
There will always need to be the Olympic Cauldrons, Heron Towers and the Speyside distilleries, but I imagine Martin is equally energised by the confident progress of a young team member within his company, which now has 200 staff.
Clarity has been a key concern as Fulcrum has changed. Staff have been kept fully advised of what was happening. They might not have agreed with it all, but they knew what was coming and Martin needed the right people to have a chance to stay and others to have the chance to leave. The changes will keep on coming. While 90% of the work is still gas connections, there is a potentially game-changing move into electricity as well, and biomass, solar and windpower could all be natural extensions for Fulcrum.
“We have trained up a number of our team to deliver gas and electricity connections to the house-building sector initially, so we see that as an area of growth. It will take some time to establish scale on that, but that is really exciting as a lot of our customers really want to give utilities in their entirety to an outside organisation, so we are taking our first steps to deliver with our own people.”
Fulcrum’s capacity for large-scale projects puts it in a strong position as work with other utilities starts to grow. Its success with the Speyside pipeline has just led to it securing a second contract with four other distilleries. This time the £3.95m work – running until May 2016 – will connect Tamdhu, Dalmunach, Cardhu and Knockando to Scotland’s main gas network via a 13-kilometre pipeline.
But one of the things that sets it apart from its competitors is that it is also structured to handle much smaller contracts, sometimes a single building and for just a few thousand pounds.
Martin says he has ‘always aspired to leadership’ and wanted to work with a group of people to ‘determine the destiny of an organisation’. But he also has a sense of duty to see a job through. “You can’t just be the big ‘I am’ when you are running a business. I have always embraced bringing in the best possible people. You need to bring people with you and if you are prepared to sacrifice yourself to some degree, then you have a better chance of achieving things.”
With thinking like that – a combination of driving force and supportive boss – the rebuilt reputation is clearly intact and in good hands.