When I joined the Potter Group in October 2008, which at that time was a leading logistics company, it was at the height (or depth) of the global economic crisis.
Naturally, the credit crunch had a major impact on the business. As well as our biggest customer not renewing its contract, most of our customers were also reducing their stockholding to free up working capital.
We’d reached our overdraft limit, and to make matters worse, two weeks after I joined, our biggest property tenant went bust. We weren’t left with a bad debt, but our rental income was reduced by an eye-watering £600,000.
To alleviate this situation, I immediately implemented strict financial controls on the business, including detailed cash flow forecasting, a full resource & activity review and better, faster management information.
This proved to be a firm foundation to enable the business to achieve year-on-year profit growth since that difficult time in 2008.
The same financial controls have continued into the Potter Space era. However, the property sector moves considerably slower than the logistics industry, so there is less urgency for the management information.
We have a number of KPIs but three very simple ones tell me, and the senior team, how the business is performing, the estate occupancy rate, the annual rent roll and cash at bank.
These KPIs, which are reviewed at the monthly Executive team meetings, provide a clear view on the investment performance, with the cash in the bank enabling us to plan future developments.
Potter Space currently has 400,000 square feet of consented building space to develop, at a cost of around £25 million. Our existing resources will enable this to be achieved over the next six years, however if demand increases, we can call on additional resources to meet that demand. Our plans for this financial year are to progress two or three new buildings costing approximately £4 million.
Simultaneously we will continue to invest in our five strategically located business parks.
with £2 million allocated to improvements in site facilities and infrastructure, as well as customer led requirements.
At the end of our financial year on 30 April we had increased our rent roll by 3%, completed our first new build within the Potter Space era and are 50% complete on a second building.
The whole team is extremely proud that, from a very worrying position just over a decade ago, we have successfully transitioned from a logistics company to a business which owns, develops and operates commercial business parks across the UK.
All of which is built on extremely secure financial foundations.