With annual turnover for the 2019/20 financial year expected to be over £70m, spurred on by an ever-increasing customer base, HMS is one of the North West’s fastest growing contractors. What makes this success all the more impressive is that the organisation emerged after taking on the workload of a failing business, as Paul Worthington, Managing Director, recently outlined to Construction Industry News.
“We were created in 2011 as a trading subsidiary of Liverpool Mutual Homes (LMH), which is a Registered Provider (RP), formed in 2008 to look after the city’s public housing stock of around 15,000 properties,” explains Mr Worthington. “The now defunct contractor Kinetics, had previously been carrying out the majority of work for LMH before it went into administration in 2011. We were already looking to take on the work just before they went bump.”
Given Kinetics demise, the conditions for building a brand new organisation might sound less than ideal, but following its creation HMS has never looked back, having grown strongly year-on-year ever since, while also attracting extensive award recognition along the way.
“We were originally set up to deliver in-house activity for LMH and from the very beginning we strived to find the right balance between self-delivery and developing a sustainable work stream,” says Mr Worthington. “Employing people if work was not available had to be avoided, so we designed the organisation around the aim of securing a strong pipeline of contracts going forward. Subsequently, we nibbled at every bit of operational work that LMH could offer us. We started with repairs and maintenance (R&M), gas servicing and refurbishment activity; before moving into grounds maintenance and cleaning. We progressed to the extent that we were looking after pretty much everything that could be outsourced operationally.”
Over the years HMS expanded into planned maintenance, which provided the pathway for further growth. To put this into context, when it was created in 2011 its turnover was around £9m. Within the space of five years that figure had increased to closer to £32m.
With HMS having demonstrated such a strong capacity for growth and expansion, in 2018 LMH commenced dialogue about a potential merger with fellow North West housing organisation Torus Group, which was created in 2016 following the amalgamation of Helena Partnerships and Golden Gates Housing Trust, a move that had led to the creation of a 22,000-strong property portfolio.
“Geographically these various organisations had all been operating in the same part of the North West to us. In fact, you could throw a blanket over them because their spheres of influence were so close to each other. Following discussions, it soon became apparent that a merger would make sense for a wide variety of reasons, particularly as we’d be able to create a much larger entity with responsibility for over 37,000 properties in relatively close proximity. The result was an amalgamated organisation that retained the Torus name, of which HMS is now a subsidiary.”
Regardless of the benefits that the marriage between LMH and Torus provided, there have unsurprisingly been some issues to address given the scale of the respective operations.
“Bringing two large operational workforces together was always going to involve a significant amount of reorganisation,” outlines Mr Worthington. “We’ve therefore been working closely on a business transformation programme for the past year. For instance, both LMH and Torus used different IT platforms, so a great deal of ground work has taken place to bring these elements together in order to take the business forward.”
The legwork required from an IT and organisational perspective has been a relatively small price to pay for the increased volume of opportunities now coming Torus’ way, as it looks to play its part in meeting the government’s demand for more housing, while at the same time continuing to generate benefits for the local community. The group’s premise has been slightly different to other RPs around the country, in that it’s a traditional housing association maintaining its properties, but also supports vulnerable customers with a range of social initiatives.
“We have put together a housing team that gives customers a landlord plus offer, well beyond the bricks and mortar, while at the same time developing an arm within the group that operates like a charity. This allows us to both maintain the properties to the required standard and have a positive impact as a social entity.
“All the money Torus makes is reinvested into improving and maintaining existing properties and into building more new homes. HMS has a huge role to play in generating the funds that make this possible.
“Investing 100% of the profits we make through commercial and construction activity is put back into the communities we work in which helps us to achieve the shared corporate aims of being a social entrepreneur.
“Torus Foundation – the charitable arm of the business – focuses on supporting and creating opportunities for the people who live in our communities. Helping them into employment and achieving real independence is a key priority. Giving them greater financial resilience is another, so we offer support with budgeting and money. Providing digital assistance is important too, because many of our customers aren’t used to being online. And, of course, health and wellbeing is key to building stronger, healthier and happier communities. In the last couple of years, we have funded our charitable arm to the tune of £14m. What’s more, by continuing to grow and diversify the range of activities we carry out, our ability to fund more socially conscious initiatives snowballs.”
Mirroring its social endeavours, HMS’ business plan is also split into four areas. First of all is its core activity, which are the elements it started with, namely responsive maintenance and gas servicing. This is the predominant aspect of its operation and every year it upgrades hundreds of domestic heating systems; replacing old, inefficient boilers with new high efficiency models. This reduces fuel consumption, which offers savings to customers across the North West. In 2017/18 alone, over 600 systems were upgraded and over 18,000 repairs to existing systems and over 17,000 gas services were carried out, which gives an indication of the volume of work involved.
HMS has been carrying out installations of new heating systems since its inception and has installed at least one new boiler every day since then. The work is delivered by the organisation’s award winning in-house team of directly employed, highly trained gas engineers; the quality of which is underlined by the fact that the gas team has won Morgan Lambert’s national gold award for excellence in gas safety for an unprecedented five years running, as well as securing two national awards from AGSM for best performing partnering contractor.
The second main element of HMS’ activities is planned maintenance, which is focused on investment programmes to improve kitchens, bathrooms, fascias and roofs.
Thirdly there’s development, with Torus aiming to build 1,000 properties annually, with HMS looking to deliver 200 of those each year. Meeting this target in a defined geographical area is a tough ask, so the group is looking to achieve this in a number of different ways, such as by building partnerships with developers.
“We’ve completed a couple of great projects over the past few years,” highlights Mr Worthington. “We did a fantastic award-winning scheme in 2018 in Ogden’s Place in Everton, which consisted of a mixed new build development that included brand new houses and the creation of a number of apartments.”
Ogden’s, a decaying Victorian tobacco factory, was transformed into more than 150 affordable homes, while the iconic Grade II listed clock tower was repurposed to incorporate a further 19 apartments. With a firm commitment to retaining the urban fabric and valuable historic features of the site, the 18-month build was a mixture of complex restoration, fast-paced construction and large-scale urban regeneration.
Ogden’s Place attracted further praise after being named Affordable Housing Scheme of the Year at the Northern Housing Awards. The development saw off tough competition from seven other housing organisations to win the coveted award, which celebrates the delivery of high-quality, innovative schemes that have changed the lives of residents.
“Mixed developments are the most challenging projects we take on but this has both its pros and cons for the group. We end up with the awkward sites that other developers aren’t interested in because they’re deemed too tricky. We on the other hand, have the in-house provision to make it work, as we’re flexible enough to balance the risk.
“We were also involved in another major development in Liverpool City Centre called Granby Street. This was a significant and much needed regeneration project in Toxteth. Various RPs in partnership with the council have tried to lift the entire area so it was great to be involved in another scheme that has had such a positive impact.”
The fourth and final area of activity for HMS is the external work it carries out that has nothing to do with the Torus group. Over the last three years this side of its operation has grown to the extent that it now represents a fifth of the total turnover. “This work is similar to the activities we carry out for the group, but is provided for third party operators such as RPs and local authorities,” adds Mr Worthington. “We carry out everything from traditional refurbishment projects through to reactive maintenance developments, as well as a number of construction projects. It’s very mixed.
“We are currently working on a circa £1m refurbishment project with a private developer that has a link to the city council. We are also doing fit-outs for other developers as well, because we have such a large mechanical and electrical team. We’re carrying out a group project for Galliford Try at the moment that we will maintain once the scheme is handed over.
“The model is designed to capture all of the costs that would otherwise been spent on getting a third party to carry out the work. When that money leaves the organisation it is either going to shareholders or directors, while we’re able to divert funds into social investment.
“Some of that money will be invested in apprentices because this is another important focus for us. The number of companies employing apprentices is declining because there’s less money in construction than there used to be. It’s a real industry-wide issue. In contrast, we are in a position to have a more positive influence by actually investing in the development of young people coming through.”
In terms of how HMS’ progress has been achieved, a major factor has been its desire to refresh its business plan each year.
“In 2008 the economy fell apart but by the time we were created in 2011 things had started to improve, so we have always been on an upward trajectory. As we’ve continued to grow, we’ve been in a great position to make further improvements and develop new initiatives to become even more efficient.
“When we got to 2015/16 our turnover didn’t increase – it stayed at about £30m – but the activities we were involved in had changed substantially. For example, we had stopped doing the likes of Decent Homes work for the group, as it had all been completed, and instead moved into carrying out increasingly complex projects and larger refurbishments, like more traditional construction developments. This meant we had to alter our skill base. The size of the Quantity Surveyor (QS) teams increased and we became more of a traditional contractor, having moved away from being a purely R&M business. By adapting and changing, the foundations for further growth were established.”
With the Torus merger having provided added further impetus, HMS is moving into 2020 with the intention of building on the substantial progress it has made already. “We held a board meeting recently where we discussed our main objectives for the next 12 months,” says Mr Worthington. “Bringing the previously separate organisations closer together remains a key focus. This is all about consolidating our combined assets across the three different sites. Doing so will allow us to kick on to the next level.
“In 2018 we built 48 units and by the end of 2019 we are anticipating that we will have completed over 100. There will be even more to come in 2020, so we will have progressed to the stage where we are consistently building 200 units a year. These will be mixed developments, so some will be flats and some will be traditional houses. One great scheme we’re involved in is the conversion of a former fire station in Liverpool that is Grade II listed. It won’t be without its challenges, but it will be an interesting and exciting project for the team to get their teeth into.
“We have also done work with Steve Biko, which is a small local RP. The number of properties we look after for them is quite small, only around 300 or so, but they are a specialist organisation that are really nice to work with.
“We are also delivering a major refurbishment for the Sisters of Nazareth in Liverpool, which is a home for elderly nuns. Once again it’s been a great project to be involved in. These types of partners particularly like the fact that we’re an ethical builder. We always operate on the proviso that we will deliver a project at the market rate and any money we make will go into helping the local community. This point of difference is a real advantage for us. Ultimately it’s all about giving something back.
“In terms of the award recognition we’re received, it helps with marketing and getting our name out there. When we first moved into new build no-one quite knew who we were, which caused some teething issues from a supply chain point of view. As we’ve successfully carried out a growing number of projects and secured award recognition on the back of them, our name and reputation has become more pronounced, which in turn makes the overall process that much easier.”
As its project portfolio increases and its positive social impact continues to build, awareness of the work that HMS is carrying out is only going to increase. At the same time, further award recognition is surely only a matter of time too.