SME focus — The M&E contractor that has made a bold leap into the education and leisure sectors

Back in January, EIC was half way through its five-year business plan, and things weren’t looking good.

The Stratford-upon-Avon-based M&E contractor had just decided to shift resources away from its core work in the retail sector to try to break into the education and leisure sectors, and its profit for the year to 31 December 2005 had fallen from £996,000 to £680,000. The 30% drop in was particularly disappointing because the previous year had been a record one for the company.

Six months on, however, and the picture is looking up. The company’s turnover has passed £72m, which is 87% of its target for 2006, and it is confident that its profit will be another record.

The firm has also invested £2m in a headquarters in Alcester, Warwickshire, a sign of its confidence in the future.

It will be the actual results that count, but Graham Lyall, the firm’s finance director and one of the driving forces behind its decision to broaden its markets, is upbeat. “Our patience has paid off, with the education sector proving buoyant. We’ve had to go through a learning curve, but we’re confident that the strategy will pay off.”

EIC had existing relationships with several major contractors active in education and leisure, including Willmott Dixon, Galliford Try and Leadbitter, and these proved invaluable. Last week, for example, the firm announced a £2.8m contract for Leadbitter on a PFI leisure scheme in Solihull in the West Midlands. Other recent contracts include work on the Building Schools for the Future project in Lewisham, south London, and a contract for Ferndale Hotels in Soho.

EIC’s recent non-retail clients have included Dire Straits guitarist Mark Knopfler, who commissioned it to install aircraft-style floor lighting in his Southampton home.

“We do a few of those kind of projects, but it’s not our normal kind of work,” says Lyall. “You have to be careful to respect the client’s privacy, but it’s interesting work.”

Our patience has paid off, with the education sector proving buoyant

Finance Director Graham Lyall

The move away from retail is a brave step for EIC, which had been a retail specialist since it was founded 30 years ago by engineers John Alexander Lyall, Ken Le Marachel and John Howles.

The group is now managed by the second generations of these families: Graham Lyall and his brother Ian, both directors, are the sons of John Alexander, and joint managing director Nigel Le Marachel is Ken Le Marachel’s son. Howles’ daughter Dawn is the company secretary.

According to Graham Lyall, this close-knit management structure is a blessing. “The strength is we probably are more honest with each other, but sometimes we can be too honest,” he says. “There are pros and cons.”

One manifestation of the close relationship between the directors is that the firm operates a rare rotational management structure. Over the past 10 years, each of the key men has held a variety of senior positions, and have switched the roles of managing director between themselves. Until recently, the Lyall brothers were joint managing directors, with Nigel Le Marachel as finance director, until Le Marachel and Graham Lyall switched.

“We don’t rotate in a structured fashion, but sometimes one of us will want to try something a bit different,” says Lyall. “On the face of it, it might appear that it would cause problems, but it isn’t actually that complicated. Regardless of the titles, we always work as a partnership, and we work closely together.”

For the foreseeable future, Lyall says this management partnership will concentrate on consolidating its position in its new sectors in order to achieve its targeted growth.

And although Lyall says the firm has no plans to acquire within the M&E sector, there is a possibility it may look to purchase niche specialist contractors, such as ductwork and sprinkler specialists. “We have no firm plans, but we will be looking at specialist operations,” confirms Lyall.