CASE STUDIES

A company’s global expansion with BKR International

In 1994, Geoffrey Lewis (Partner, Ormsby & Rhodes, BKR International member firm in Ireland) was formally introduced to Kieron Tonge. This introduction was made by Patrick B Prior (then Finance Director of Primark Group, a client of Ormsby & Rhodes) at the Primark head office in Dublin.

Kieron Tonge had many years’ experience of the retail systems market with Sweda International and Hugin Sweda Group and was Sales and Marketing Director of Omron Systems Europe, based at its European headquarters in Hamburg, Germany. With these companies he was a key supplier to the Primark Group. Kieron was planning a return home to Ireland with his family.

On his return to Ireland, Kieron identified a niche in the market for ergonomic design in both the retail and office environments and started business in Ireland in a small way, supplying these solutions, particularly to retail companies. Ormsby & Rhodes partnered with Kieron in establishing his new company and provided the on-going accounting and taxation advice to Kieron and his company.

In 1995, Kieron met with Ian Dewar, with whom he had worked in Sweda, Hugin Sweda and Omron, and together they discussed setting up a UK based company to meet the growing demand for technology mounting solutions. Like Kieron, Ian had extensive experience of the retail systems market. They called this company Ergonomic Solutions Limited. The company was established in 1996 after Geoffrey Lewis met with Ian at Heathrow Airport to discuss the project. Ormsby & Rhodes were appointed auditors and tax advisors to the company. From the beginning, even as a small company starting out, Ergonomic Solutions’ accounts were audited and good corporate principals and governance were adopted.

o-rx-aspxo-ry-aspx

Ergonomic Solutions commenced trading in the United Kingdom in 1997 primarily distributing technology mounting products to the retail sector, which were designed and manufactured in Denmark by HD Design A/S. In 1998, the company had a turnover of £244,670 and made a profit of £1,160.

Over the next few years the relationship with the design and manufacturing company in Denmark grew closer and joint ventures were entered into between the organisations. As part of this process the mounting products were branded under the name of SpacePole®, a brand name owned by Ergonomic Solutions.

o-r2o-r3
o-r4

In 2002, the two companies established as a joint venture, Ergonomic Solutions GmbH in Germany to service the Central Region of Europe. Kieron Tonge and Rob Büchler, Financial Controller of ES met with Udo Post in BKR member firm WWS based in Dusseldorf. WWS was appointed to advise and audit that company and have continued to be involved in the successful developments there.

Subsequently, Ergonomic Solutions Limited and HD Design A/S established Ergonomic Solutions International (ESI) as an equal joint venture. This company now owned all aspects of the business, including design and manufacturing operations, distribution companies and held all intellectual property rights to brand names, copyrights and patents.

Kieron Tonge was appointed Chairman and Ian Dewar was appointed Group Managing Director. Two Non-Executives Directors, Paddy Prior and Morten Jensen, were appointed to the Group Board. Later, Heather Ann McSharry would join the board in 2011, as Non-Executive Director.
In 2006 Ergonomic Solutions SAS, a wholly-owned subsidiary of ESI, was set up in France to service France and the Southern Region of Europe. Jacqueline Wolfovski of the BKR firm now known as Exponens was approached to advise in the set-up, development and the running of this company, and her firm provided back office and other services, and introduced a separate firm as required under French Law to carry out the audit.

o-r5-aspx
Manufacturing plant, Aalborg, Denmark

In 2007 a company restructuring programme commenced and this included the acquisition by Ergonomic Solutions Limited of all of HD Design’s ESI share capital. Birgit Sode of BKR firm, RIR Revision, in Denmark and her firm advised in this process and also in the subsequent restructuring that was required, particularly in the manufacturing plant.

Although the quality of the product from the manufacturing plant was excellent and the design department was very innovative, considerable inefficiencies existed which led to the manufacturing division being a considerable financial drain on the group.

o-r6-aspx
Assembly – Manufacturing plant, Aalborg, Denmark

When the size of the challenges facing the group in its manufacturing plant was realised Per Bjerring joined Ergonomic Solutions in April 2009 as Group Operations Director, responsible for the Group’s complete ‘order fulfilment’ process including manufacturing, stock, purchasing, administration, and distribution. In June 2009 Per was additionally appointed as Managing Director of Ergonomic Solutions Manufacturing.

Under the leadership of Per the manufacturing and distribution plant has developed into a world class, state of the art facility.

It is particularly noticeable when visiting the company’s base in Denmark that the ethos is very much people based. Both Kieron and Ian have very good relationships with all the employees. This extends beyond the job and includes a genuine interest in their families and hobbies. Their standard practice when visiting the facility is to individually speak to each employee. The camaraderie and company spirit is quite evident on arrival.

o-r7-aspx

The staff at Aalborg can come in early to have breakfast together which gives Per the opportunity to communicate with them on a regular basis. A high quality lunch is also available to everyone working in the building.

This commitment to people is replicated throughout the group.

The finance team in the ES group has developed in line with the expansion of the group and has always worked well with the BKR firms.

Rob Büchler joined Ergonomic Solutions in 2003, initially as Financial Controller of the UK Company. In 2005 he was promoted to Financial Controller of the ES group. In this role he has worked very closely with BKR firms in the accounting and auditing areas.

Chris Davis joined Ergonomic Solutions in June 2007. Prior to this, from 1996, he undertook consultancy and interim management projects in Communications, Distribution, Retail, and Service industries through his own company. In 1990 he had become Financial Controller at Omron Systems UK running Finance, Systems and Distribution as part of the UK Company Management Board. Chris is a member of the ES Group Board and has been at the forefront in dealing with BKR firms in obtaining advice re strategy for development and also for tax planning.

Following his retirement from Primark at the end of 2010, Paddy Prior has been working with Chris on specific projects for the board.

Up to the year ended 2010, there was no requirement under UK legislation for the company to prepare audited consolidated accounts.

A change in legislation resulted in that requirement coming into place with effect from the accounts for the year ended 31 December 2010.

The company and Ormsby & Rhodes decided to have a trial run based on the December 2009 accounts and information was supplied to Ormsby & Rhodes by the other group auditors.

As a result of the issues which arose during this first consolidation Ergonomic Solutions International Limited and Ormsby & Rhodes jointly decided that the BKR audit partners from the various firms would attend the Ergonomic Solutions International Limited Group Financial Controllers Conference in September 2010. This conference was held just outside London near the group’s headquarters.

Kate Mullahy (Partner, Ormsby & Rhodes) and Rob Büchler (Group Financial Controller Ergonomic Solutions) presented a nearly prepared consolidation input document and Kate presented to the audit partners the new audit questionnaire prepared specifically for this client. The meeting was also addressed by Chris Davis and Geoffrey Lewis.

The client input into this meeting and the preparations for the audit and consolidation resulted in a very clean and speedy operation at the year end, and demonstrates again the importance of BKR firms communicating and working together.

As the group continues to expand there is further need for tax advice and Nilesh Shah of BKR firm Blick Rothenberg, London, has been added to the BKR team to assist Niall O’Connor of Ormsby & Rhodes who leads the BKR tax team for the group.

On their website, http://www.ergonomic-solutions.net, their Vision and Mission statements make interesting reading-

VISION
To be recognised and respected as the leading supplier of technology mounting solutions in each
of our chosen markets, by consistently exceeding our customers’ expectations.

MISSION
To develop and supply innovative mounting solutions which help our customers implement
technology in a user friendly, secure and space efficient manner

Ergonomic Solutions is an environmentally-friendly organisation where quality is defined as
product quality and ethical values of a high standard.

The current companies in the group are as follows:

Ergonomic Solutions Limited (Based in Epsom, UK is the Investment Holding Company)
Ergonomic Solutions International Limited (Based in Epsom, UK is the Operational Holding Company)
Ergonomic Solutions Manufacturing A/S (Based in Aalborg, Denmark is the Manufacturing & Operations Centre)
Ergonomic Solutions (Western Europe) Limited (Based in Epsom in the UK is the Western European Sales Operation)
Ergonomic Solutions GmbH (Based in Germany is the Central European Sales Company)
Ergonomic Solutions SAS (Based in France is the Southern European Sales Company)
Ergonomic Solutions Nordic A/S (Based in Nørresundby, Denmark is the sales company for the Nordic Countries)

One of the key drivers in the expansion of the group was the introduction of Chip and Pin technology at the point of sale. Initial roll-out of Chip & Pin in the UK has been followed in other European countries. The company partnered with corporate technology companies such as IBM, Wincor Nixdorf, Verifone and Ingenico in the supply of mounting solutions for this technology in the retail environment.

o-r8-aspx
Geoffrey Lewis and Kieron Tonge at factory reception area, Aalborg

Today, Ergonomic Solutions’ client list reads like a who’s who of international retailing. Retailers such as Sainsburys and Marks & Spencer in the UK, Rewe and Edeka in Germany, Carrefour and Auchan in France and Danish Co-Op and IKEA in Scandinavia are just some of the many major retailers who use SpacePole. In fact, over 30 of Europe’s top 50 retailers benefit from their products.

Recently, introductions have been made for the group to Daniel Faura of BKR firm Faura-Casas in Barcelona, Spain, and to Angelo Colombo of Ditrag, BKR’s member firm in Milan, Italy.

The ES group has now expanded to the position that the consolidated turnover for 2010 was €16.5m and profit before tax was €2.2m. Revenues for 2011 are projected to be approaching €20m. An ambitious strategy is now in place to grow the organisation to around €50 million by the end of 2014. The relationship between BKR and Ergonomic Solutions has been excellent and will develop further as ES expands into new territories around the globe.