Water and Effluent Treatment Magazine
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10 Leaders 2016 The LeADeRS 2016 Going with the AMP flow Being a water sector specialist, Stonbury knows the AMP cycle inside out and has found ways to minimise its negative impact. The Leaders has been finding out how. S ome years ago I remember saying 'look we strive to be the best but we might not be the cheapest', recalls James Stoner, managing director of Stonbury. "That isn't true now. We work very hard at being the best and we are the cheapest because of the efficiencies we've been able to get in the last five years." Stoner points out that with the arrival of AMP6, the water companies have chal- lenged contractors and suppliers to achieve savings of 20% or more. "In any other industry if you talked about 1 or 2% you'd be pushed. I remember having con- versations with other companies involved in the water industry who were saying it's impossible. "What we said was 'well that's what they want, let's see how we can achieve it'. This goes alongside meeting the chal- lenge of this AMP which is financial effi- ciency, and the headline across the board." Return Stonbury operates 100% in the water industry, specialising in the repair, refur- bishment and maintenance of service res- ervoirs, water towers and associated structures. It also has a civils engineering Return on Capital % Stonbury 212.8 Public Sewer Services 81.8 Kirk Environmental 77.9 Mace 74.4 Acwa Services 69.6 Claret Engineering 59.0 Lewis Civil Engineering 53.3 Dyer & Butler 44.9 J Browne Construction 39.7 Galliford Try Infrastructure 33.2 "As a company operating in the AMP cycle you come up with innovative or strange methods because it's all about retention of skill" James Stoner arm. The Leaders met Stoner at his Cran- field head office recently and learned how the company works with the five- yearly regulated AMP cycle; why its engi- neers are "the highest paid" in the sector; and why his ambition is for Stonbury to be the number one specialist contractor in the sector. The company, which tops the Top 10 table for return on capital, reported a 2% rise in turnover to £12.7M for its 2014/15 financial year. Its pre-tax profit leapt from £0.4M in 2013/14 to £1.5M last year. Stoner expects revenue to be nearly £16M this year to exceed £19M for 2016/17, and says the company is well on the way to achieving that. "We already have the vast majority of that in for next year. That's the growth pattern at the moment which is fab, all good." He continues: "One hundred percent of our turnover is from the water industry. We don't work in any other industry now. We used to two years ago in power but we decided we're a water industry specialist full stop." 'Handy reminder' As a result, Stonbury has a good knowl- edge of the AMP cycle and plans around the humps. Stoner explains: "Once you get into the AMP cycles, and you accept what is going to happen, it helps you focus because what you aren't able to do at the end of the AMP is control sales. Instead, you spend a year or two concentrating on the gross and the return that you are getting. "It's a handy reminder to say 'look it's not all about turnover, it's not all about the size of the company, it's what you do with it'. We have some very innovative ways in terms of returning on those sales. Our gross margin has risen over five points in the last few years, which is massive. "At the moment we're about 20% year- on-year growth but even that does not iron out the dip. If you can keep growing enough that year five is the same as year four it wouldn't be a problem but even as a growing company that's what happens. If you are not growing, you can imagine how much more of an impact it would be." Stoner likens working with the AMP cycles as being a passenger, saying it is "quite strange" to be in a business where there is nothing you can do to effect sales. The AMP cycle is challenging and compa- nies need to find ways of minimising its impact. "As a company operating in the AMP cycle you come up with some quite inno- vative or strange methods because it's all Stonbury 187C High Street, Cranfield, Bedford MK43 0JB, www.stonbury.com