A year ago Dave Sheridan suddenly found himself thrust to the top of property services group, Apollo. Once he’d got over the shock he set out on a high-risk strategy of shifting the business away from London to the northern regions
On an otherwise quiet weekend just over a year ago, Dave Sheridan received an email that was to propel his own career and transform the property services firm Apollo. At the time, Sheridan was the group’s chief operating officer and the email was from his boss, Rob McGregor, telling him he was leaving “to take a much needed break”. Within 48 hours of receiving the email, Sheridan, 47, had become the group’s chief executive - just two years after joining the company from Kier.
“It was something we had talked about when I joined, but for the future, so my initial thought was, well, this isn’t what I joined for,” he relates from Apollo’s Essex head office. “But when these things come along, you have no choice but to be ready. So I went from feeling ’this is a change’ to ’this is fantastic’ pretty quickly.”
After the drama of McGregor’s exit, the industry has been watching Sheridan closely over the past year. People are wondering where he will take the £370m-turnover company next, and they are wondering what will happen following the sale of Bank of Scotland Integrated Finance (BSIF), a private equity firm that has a 20% stake in Apollo. Lloyds Banking Group sold a majority stake in BSIF to Coller Capital last July. Questions concerning Apollo’s future have been raised amid rumours that Pricewaterhouse Coopers has been reviewing the business.
What is certain is that this is a particularly tough time for firms like Apollo. It is heavily reliant on the public sector with a strong focus on education and housing. This puts it in an extremely vulnerable position, especially after the Comprehensive Spending Review. On top of this there is the fact that BSIF also invested in social housing firm Keepmoat. This has sparked predictions that a merger with Apollo could be on the cards. Sheridan has been fending off such rumours since the summer, insisting in this interview that the firm is “in good shape” and pointing to his business strategy as evidence.
When these things come along, you have no choice but to be ready. So I went from feeling ’this is a change’ to ’this is fantastic’ pretty quickly
This strategy has been to push Apollo down the path that McGregor shied away from - heading away from London and out to the regions with a specific focus on the North-east and North-west. London currently makes up £200m of group revenue. Sheridan expects this to shrink by about £50m over the next three to five years, but anticipates that revenue from the regions will grow by the same amount instead.
Whereas others might avoid the North at present - thought likely to bear the brunt of the swingeing cuts to public spending - Middlesbrough-born Sheridan believes this is just where the opportunities lie. “This is where I see the future of the business. There is a lot of housing stuff up there that needs investment. London will consolidate so we’re growing northwards.”
He seems fairly bullish that, under his watch, the group’s turnover will head “north of £500m” within five years.
Sixty-five per cent of its work for 2011/12 is already secured, he says, with a £860m-strong order book and a development pipeline worth £2bn.
In response to rumours that the firm is not meeting the private equity company’s targets, Sheridan says Apollo is “on track to meet the [forecast of] £22m earnings before interest, tax, depreciation and amortisation”.
Not so grim up North?
Sheridan plans to twin targeted geographical areas with emerging areas of business - “areas like planned maintenance, incremental repairs and smaller schemes rather than large frameworks”, he says. “Maintenance in particular is a major part of the strategy.” Indeed it is: in June, Apollo bought Essex-based social housing maintenance firm
FWA West in a deal estimated to be worth about £2m.
Sheridan says the strategy is paying off: “We have got on to a few frameworks [in the northern regions] already and the work is starting to come through. And then it’s about going for the smaller jobs - the £1m cladding job, say, rather than the £15m five-year framework. The spending review reduced some of the larger capital tickets but there is still a lot of stuff that needs investment so it’s a case of piecemeal bidding now.”
But does he not take fright at the sound of warning bells going off? Public sector focus, housing, northern regional targets?
“We have a structured approach,” he says. “Our market share is low enough for us to build on and Apollo has a great reputation.
“Plus, we still have a healthy pipeline. We have secured over £22m of new build orders in the last six months.”
Housebuilding is a new area for Apollo - in March it launched an affordable housing division. But again, where others see dangers, Sheridan sees a chance to grow the business: “With the relaxation of housing borrowing rules, there are opportunities,” says Sheridan. “Having said that, it would be wrong to say the market isn’t going to be challenging.”
Work for the troops
So far, Apollo has kept redundancies to a minimum - just a couple of managers. But with a shift of structure and focus, Sheridan admits there could be job losses in the near future - although only as a last resort, he stresses. “As work moves from London to the regions, there is a possibility people may have to leave … Hopefully we’ll get enough work to be able to keep most of the frontline troops with us … At the moment we have work for most teams, certainly up to April. And we’re working hard to make sure it goes beyond that.
“I have a very honest approach when it comes to this and we will keep people informed. So far we have managed to juggle resources to avoid mass redundancies.”
As for the rumours of a potential merger with Keepmoat and those that imply Apollo is not hitting its targets for Coller Capital, his response is dismissive on both fronts: “There is no story with Keepmoat. Certainly not at the moment and we are on track to hit our targets. That wasn’t always the case and, before the refinancing, we weren’t. The target agreement with [Coller] this year is one we’re going to hit, and we have north of £30m in the bank. We will be a bigger player in this marketplace within the next few years and I want to reassure everyone that Apollo is in good shape.”
Dave Sheridan’s favourites
Building? The Natural History Museum
Dish? Fish ’n’ chips
Football team? Middlesbrough
Film? Star Wars
Song? Baby Love by Diana Ross and The Supremes. I love anything Motown