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Cape Plc
The best place to work in the world: IRJ meets Martin May, CEO at Cape Plc
When IRJ met with Martin May, CEO of Cape plc, the international non-mechanical industrial services company catering to many a big player in the energy and natural resources sectors, May told us he has “the best job in the world.”
In fact, he puts this down to the Cape team—which is world-class in execution and delivery, and May says that wherever you go in the world, Cape people have a pride, dedication and unmistakable quality in every undertaking.
“The thing that Cape’s success is bred upon is the great people we employ in the business; the great teams of people and the world-class management team we’ve put together over the last couple of years,” May says.
“This business has expanded in size in the last few years. We’ve doubled our margins, we’ve had a 40 per cent compound growth in earnings per share, and our success will continue as far as we can see as long as we keep doing the same things.”
May stopped by to talk more about the expanse of Cape’s international operations and reveals to us what kind of a top team it really takes to become the non-mechanical industrial services go-to company we know today.
Nuala Gallagher: Let’s begin by getting our heads around Cape’s international presence. Perhaps you can tell us more about how the company has built this presence, moved to meet demand and managed to stay flexible in its cross-continent growth?
Martin May: We’ve got four regions: the UK, the Far East/Pacific Rim, Middle East and CIS/Med & North Africa. The UK is where the history and heritage of the business was (and it’s a great one) but the UK is now predominantly a maintenance market. We are a mature high payroll economy here in the UK, there’s not much new-build project work going on for the time being, but we have a fantastic maintenance business founded around companies like British Energy, BP, BABT, and Shell; all of which are long-term maintenance contracts. We can look forward to the future with confidence because we have long-standing relationships and substantial contracts. It’s a business which, I’m sure, will go from strength-to-strength.
If you look at Cape outside of the UK, our business in the Gulf has grown like Topsy on the back of investment in places like Qatar, Saudi Arabia, Abu Dhabi and we’re also in Oman, Kuwait and Bahrain. We have a wonderful business in the Caspian, in Kazakhstan, Azerbaijan and we’re about to go into Turkmenistan. This is all oil and gas/energy related.
NG: Other than Turkmenistan, which other areas are your latest locations to enter? I understand you have operations in Thailand too, for example?
MM: A couple of years ago we decided to invest in business in Asia; in Thailand, Singapore, Indonesia, Brunei, and the Philippines. Everybody says to me, because I visit these places regularly, “Gosh, you have a business in Thailand!” But we’re not in Phuket; we’re in a place called Jurong.
It’s a shipyard, it’s a refinery, and usually when I go it’s unbearably hot. The humidity is very high and again these guys are working in very harsh conditions, doing all of those jobs safely, on time and at a world-class standard. It comes back to the people we employ—the team and the management. It’s world-class execution and delivery. Then a couple of years ago we decided to spend a quarter of a billion pounds doing three acquisitions down in Australia. This was all about investment in LNG which is going to take place over the next 10 years. Australia is going to become the world’s LNG manufacturing platform and LNG, as you’re probably aware, is going to be the source of energy that bridges the gap between coal /gas/oil and nuclear here in the UK.
We helped to build South Hook, down in Wales, the receiving terminal. We’ve got an international footprint now in a great maintenance business that give us long contract duration, as well as project businesses outside the UK where markets are still growing and people are still investing substantial amounts of money—and we really have a fantastic business model.
NG: Let’s talk more about LNG investment. Isn’t Cape involved in the Pluto LNG project off of northwest Australia?
MM: Yes it is. Cape, together with the businesses we acquired in Australia, have been involved in the construction of all five existing LNG production trains in Australia and we are actively involved in Pluto which will be the sixth. We were involved in the fabrication of modules in Thailand and are now helping with the onshore facilities in Karratha, North West Australia. We are a long-term partner of Foster Wheeler, the main contractor on the Pluto project. They’re an American business but their global centre for gas/oil/energy is in Reading and we’ve worked with them across the globe for many years. I’m off to Australia and Asia tomorrow for the best part of three weeks. While I’m there I’ll go to Karratha and it’s an enormous project. Woodside Energy is spending over $10 billion on this and it’s almost immediately going to be followed up with Pluto2 and another prospective major project for Cape. This type of project visibility allows us to look a long way into the future. We’ve also just signed a Joint Venture Agreement with SOCAR, the state oil company of Azerbaijan. There’s a new round of investment starting to take place there, and that puts Cape in poll position again. For energy, these are all going to be highly investment intensive for our business in the next 10 years.
NG: And is entering Azerbaijan a new territory for Cape also? What does partnering up with SOCAR mean for the company?
MM: One of our global partners is BP. In March we announced that we had picked up a contract to provide maintenance services across all of their assets in the North Sea. We also provide maintenance services to their assets in Australia. They have a big business in the Caspian and we haven’t [as yet] been able to make many inroads into Azerbaijan because of low levels of activity. We’ve done a great job in Kazakhstan onshore and offshore, but what this relationship with SOCAR does, alongside our relationship with BP, is give us an edge in that market in terms of contract awards going forward. You won’t see them next week—I think these are contracts which will appear in the next 12—24 months, but it gives us a local partner with considerable influence in Azerbaijan.
NG: You also have a press release dated July 6 for Cape winning the Abu Dhabi contract, and July 8 for winning the npower and RWE contracts. By the time we go to press, how many more will be posted? It certainly looks like business is booming.
MM: The important thing is that in line with everyone else in the sector and the global financial collapse, we said that 2010 would be a flat year. We said that we couldn’t see the market coming towards us until 2011/2012 and we’ve announced this contract which starts in 2012. The message is: In term of our analysis of the market we’re absolutely right. Don’t expect to see large contracts awarded in 2010 or the early part of 2011, but look beyond that because we can see some very significant contracts coming to us and that’s the first of those we can see in the coming months.
NG: Let’s try to hone in on Cape’s business model and identify your key strengths. What is Cape’s competitive edge across its markets and areas of operation today?
MM: The edge is about focus. In business you have to decide what you’re going to be good at, then where you’re going to be good at it, which is our footprint, and then you have to put the best possible team in place. What we’ve done at Cape is keep a very flat organisational structure. We’re still a small company but our turnover was more than £650million last year and we have over 17,000 people. If you came to Cape’s Head office where I am today, you’d see there are less than 20 of us.
We’ve filtered all of the responsibility down into the business units and these guys are allowed to run their businesses with a high degree of autonomy. Their focus is on delivering excellent client service and of course delivering the numbers. What we’re responsible for here is the strategy, management and organisation. We’re a listed company so I spend quite a bit of time with shareholders, broadening the appeal of the company.
NG: So where will Cape go from here? What goals do you have in place today, further expansion to new areas?
MM: We think that in the next five years we can double the size of the business —just through organic opportunities, nothing acquisition-led. We’re in some great markets; the Gulf, the Caspian, Northern Africa, Australia and Asia.In five years from now it’ll be all about the UK again because when it comes to investing in nuclear power stations and/or decommissioning, you’re talking about £10, £15, £20 billion projects that could go on for five, 10, 15 to 20 years—so lots of work for a very long time. But, the key to it is you must be safe, you must be on time and you must give your customers peace of mind. The strategic goal is broad in that I think there is significant scope for increasing the size of the business over the next five years. In September this year we’ll announce our interim results and we expect to return to the dividend list. Cape hasn’t paid a dividend for ten years so this will be quite a milestone.
I think closer to home, Cape’s an organisation that people enjoy working for—we’ve always invested in our peoples’ capability, we’re fair and we pay well which helps keep our people committed to the business—but this year we’ve focused on the career opportunities available across the group. We now offer people careers right across our footprint and it’s quite an attractive proposition really. Cape Careers is for those people who want to learn a new or second discipline like insulation or scaffolding, or become supervisors or foremen right through to those people who aspire to manage a project or for that matter a whole business unit.
NG: Of course, we can’t highlight what it is about Cape that gives you your edge without looking at what makes Cape People. How does this careers scheme work?
MM: We started with communication via our websites, making sure people know about opportunities as they come up and encouraging them to talk to us about where they see themselves in the future. This has enabled us to build a pool of people both internally and externally who are keen to take up opportunities as they arise who are actively building the skills and experiences that they need in order to achieve their aspirations.
Wherever you go, Nuala, there’s a great atmosphere in the business—I was up in Scotland with Shell yesterday going around one of our sites. People enjoy working for Cape. If you went to Bahrain in the Gulf you’d feel the atmosphere because they like working for a successful business, having a sense of achievement through their work and feeling valued. The numbers show over the last three or four years what a great bunch of people we have at Cape.
capeplc.com
When IRJ met with Martin May, CEO of Cape plc, the international non-mechanical industrial services company catering to many a big player in the energy and natural resources sectors, May told us he has “the best job in the world.”
In fact, he puts this down to the Cape team—which is world-class in execution and delivery, and May says that wherever you go in the world, Cape people have a pride, dedication and unmistakable quality in every undertaking.
“The thing that Cape’s success is bred upon is the great people we employ in the business; the great teams of people and the world-class management team we’ve put together over the last couple of years,” May says.
“This business has expanded in size in the last few years. We’ve doubled our margins, we’ve had a 40 per cent compound growth in earnings per share, and our success will continue as far as we can see as long as we keep doing the same things.”
May stopped by to talk more about the expanse of Cape’s international operations and reveals to us what kind of a top team it really takes to become the non-mechanical industrial services go-to company we know today.
Nuala Gallagher: Let’s begin by getting our heads around Cape’s international presence. Perhaps you can tell us more about how the company has built this presence, moved to meet demand and managed to stay flexible in its cross-continent growth?
Martin May: We’ve got four regions: the UK, the Far East/Pacific Rim, Middle East and CIS/Med & North Africa. The UK is where the history and heritage of the business was (and it’s a great one) but the UK is now predominantly a maintenance market. We are a mature high payroll economy here in the UK, there’s not much new-build project work going on for the time being, but we have a fantastic maintenance business founded around companies like British Energy, BP, BABT, and Shell; all of which are long-term maintenance contracts. We can look forward to the future with confidence because we have long-standing relationships and substantial contracts. It’s a business which, I’m sure, will go from strength-to-strength.
If you look at Cape outside of the UK, our business in the Gulf has grown like Topsy on the back of investment in places like Qatar, Saudi Arabia, Abu Dhabi and we’re also in Oman, Kuwait and Bahrain. We have a wonderful business in the Caspian, in Kazakhstan, Azerbaijan and we’re about to go into Turkmenistan. This is all oil and gas/energy related.
NG: Other than Turkmenistan, which other areas are your latest locations to enter? I understand you have operations in Thailand too, for example?
MM: A couple of years ago we decided to invest in business in Asia; in Thailand, Singapore, Indonesia, Brunei, and the Philippines. Everybody says to me, because I visit these places regularly, “Gosh, you have a business in Thailand!” But we’re not in Phuket; we’re in a place called Jurong.
It’s a shipyard, it’s a refinery, and usually when I go it’s unbearably hot. The humidity is very high and again these guys are working in very harsh conditions, doing all of those jobs safely, on time and at a world-class standard. It comes back to the people we employ—the team and the management. It’s world-class execution and delivery. Then a couple of years ago we decided to spend a quarter of a billion pounds doing three acquisitions down in Australia. This was all about investment in LNG which is going to take place over the next 10 years. Australia is going to become the world’s LNG manufacturing platform and LNG, as you’re probably aware, is going to be the source of energy that bridges the gap between coal /gas/oil and nuclear here in the UK.
We helped to build South Hook, down in Wales, the receiving terminal. We’ve got an international footprint now in a great maintenance business that give us long contract duration, as well as project businesses outside the UK where markets are still growing and people are still investing substantial amounts of money—and we really have a fantastic business model.
NG: Let’s talk more about LNG investment. Isn’t Cape involved in the Pluto LNG project off of northwest Australia?
MM: Yes it is. Cape, together with the businesses we acquired in Australia, have been involved in the construction of all five existing LNG production trains in Australia and we are actively involved in Pluto which will be the sixth. We were involved in the fabrication of modules in Thailand and are now helping with the onshore facilities in Karratha, North West Australia. We are a long-term partner of Foster Wheeler, the main contractor on the Pluto project. They’re an American business but their global centre for gas/oil/energy is in Reading and we’ve worked with them across the globe for many years. I’m off to Australia and Asia tomorrow for the best part of three weeks. While I’m there I’ll go to Karratha and it’s an enormous project. Woodside Energy is spending over $10 billion on this and it’s almost immediately going to be followed up with Pluto2 and another prospective major project for Cape. This type of project visibility allows us to look a long way into the future. We’ve also just signed a Joint Venture Agreement with SOCAR, the state oil company of Azerbaijan. There’s a new round of investment starting to take place there, and that puts Cape in poll position again. For energy, these are all going to be highly investment intensive for our business in the next 10 years.
NG: And is entering Azerbaijan a new territory for Cape also? What does partnering up with SOCAR mean for the company?
MM: One of our global partners is BP. In March we announced that we had picked up a contract to provide maintenance services across all of their assets in the North Sea. We also provide maintenance services to their assets in Australia. They have a big business in the Caspian and we haven’t [as yet] been able to make many inroads into Azerbaijan because of low levels of activity. We’ve done a great job in Kazakhstan onshore and offshore, but what this relationship with SOCAR does, alongside our relationship with BP, is give us an edge in that market in terms of contract awards going forward. You won’t see them next week—I think these are contracts which will appear in the next 12—24 months, but it gives us a local partner with considerable influence in Azerbaijan.
NG: You also have a press release dated July 6 for Cape winning the Abu Dhabi contract, and July 8 for winning the npower and RWE contracts. By the time we go to press, how many more will be posted? It certainly looks like business is booming.
MM: The important thing is that in line with everyone else in the sector and the global financial collapse, we said that 2010 would be a flat year. We said that we couldn’t see the market coming towards us until 2011/2012 and we’ve announced this contract which starts in 2012. The message is: In term of our analysis of the market we’re absolutely right. Don’t expect to see large contracts awarded in 2010 or the early part of 2011, but look beyond that because we can see some very significant contracts coming to us and that’s the first of those we can see in the coming months.
NG: Let’s try to hone in on Cape’s business model and identify your key strengths. What is Cape’s competitive edge across its markets and areas of operation today?
MM: The edge is about focus. In business you have to decide what you’re going to be good at, then where you’re going to be good at it, which is our footprint, and then you have to put the best possible team in place. What we’ve done at Cape is keep a very flat organisational structure. We’re still a small company but our turnover was more than £650million last year and we have over 17,000 people. If you came to Cape’s Head office where I am today, you’d see there are less than 20 of us.
We’ve filtered all of the responsibility down into the business units and these guys are allowed to run their businesses with a high degree of autonomy. Their focus is on delivering excellent client service and of course delivering the numbers. What we’re responsible for here is the strategy, management and organisation. We’re a listed company so I spend quite a bit of time with shareholders, broadening the appeal of the company.
NG: So where will Cape go from here? What goals do you have in place today, further expansion to new areas?
MM: We think that in the next five years we can double the size of the business —just through organic opportunities, nothing acquisition-led. We’re in some great markets; the Gulf, the Caspian, Northern Africa, Australia and Asia.In five years from now it’ll be all about the UK again because when it comes to investing in nuclear power stations and/or decommissioning, you’re talking about £10, £15, £20 billion projects that could go on for five, 10, 15 to 20 years—so lots of work for a very long time. But, the key to it is you must be safe, you must be on time and you must give your customers peace of mind. The strategic goal is broad in that I think there is significant scope for increasing the size of the business over the next five years. In September this year we’ll announce our interim results and we expect to return to the dividend list. Cape hasn’t paid a dividend for ten years so this will be quite a milestone.
I think closer to home, Cape’s an organisation that people enjoy working for—we’ve always invested in our peoples’ capability, we’re fair and we pay well which helps keep our people committed to the business—but this year we’ve focused on the career opportunities available across the group. We now offer people careers right across our footprint and it’s quite an attractive proposition really. Cape Careers is for those people who want to learn a new or second discipline like insulation or scaffolding, or become supervisors or foremen right through to those people who aspire to manage a project or for that matter a whole business unit.
NG: Of course, we can’t highlight what it is about Cape that gives you your edge without looking at what makes Cape People. How does this careers scheme work?
MM: We started with communication via our websites, making sure people know about opportunities as they come up and encouraging them to talk to us about where they see themselves in the future. This has enabled us to build a pool of people both internally and externally who are keen to take up opportunities as they arise who are actively building the skills and experiences that they need in order to achieve their aspirations.
Wherever you go, Nuala, there’s a great atmosphere in the business—I was up in Scotland with Shell yesterday going around one of our sites. People enjoy working for Cape. If you went to Bahrain in the Gulf you’d feel the atmosphere because they like working for a successful business, having a sense of achievement through their work and feeling valued. The numbers show over the last three or four years what a great bunch of people we have at Cape.
capeplc.com
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