Case study - Trinity Fitout & Construction

Background

Trinity Fitout & Construction (Trinity) was founded in 1995 and currently focuses on four main sectors – education, commercial, government and social infrastructure. They commenced as a pure fitout company but moved into general construction dealing with projects ranging in sizes from $1 million to $20 million. Ben Lloyd, the current owner and Managing Director, joined Trinity in 2007. 

In 2018, he first sought RSM’s assistance in building and implementing a succession plan that would allow his father and founding Director Trevor Lloyd to retire. This plan was implemented with Ben taking shareholding and day-to-day management responsibilities on from November 2019. 

Challenges

The construction sector is currently facing significant challenges, but these come and go with the economic cycles according to Ben, “Coming out of COVID, it was resourcing in terms of subcontractors and staff, but this has now relaxed in the past 18 months. The ongoing challenges are the tight margins with high risk and the continually competitive nature of the sector leading to pressure on profit margins.” Additionally, clients are always looking for ways to pass more risk onto the contractor, particularly through the increasing use of design and construct contracts where design risk is passed onto the contractor, while control of the design remains with the principal that are proving to be an additional challenge for companies.

Adam Crowley, RSM’s National Head of Real Estate and Construction, said “The cost of materials and access to labour have continued to put pressure on the construction sector. Fortunately, material prices have stabilised over the past 24 months and businesses that were able to weather the storm post COVID have a bright future ahead as demand for construction remains high.”

Aleesha Bailey, RSM Director in Business Advisory and Strategic Outsourcing added:

"Due to tight margins in the industry, we understood the importance for Ben to have a clear and immediate understanding of the business's performance to make critical decisions. By working closely with Ben and the team, we optimised the finance function with new technology, refined processes, and established clear deadlines. This enabled us to gain valuable insights into the business and provide Ben with accurate and timely information. Ben and his team embraced our involvement and were open to change, allowing us to truly become part of the business.”

The experience

When Ben took over, he was a young MD looking for good people in his corner. “Industry experience was important – I wanted an accountant that understood construction. The generalist suburban accountant wasn’t going to cut it, and I knew the numbers needed to be 100% accurate due to the low margins and challenges of the industry”, said Ben. Trinity started with Aleesha to tidy up business expense accruals and then work out the best way to make accurate WIP adjustments to revenue and COGS.

“When we started working with Ben, the gross profit margins month on month were inconsistent, making it difficult to see how the business was performing. Implementing robust work in progress (WIP) adjustments enabled Ben to understand the true GP of the business at a critical time when margins were tight. This opened up conversations around the consideration of overheads to maintain a healthy balance sheet and manage cash flow,” said Aleesha. 

Following this, the Data Analytics team from RSM then came in, automated this and built specific dashboards and reports to make the process seamless. The end result means that Ben can now do WIP adjustments any day of the week and be sure that the actual cash and profitability position of the business is what he is seeing in front of him. Ben adds:

“This process implemented by RSM has allowed me to make informed, real-time decisions based on 100% accurate data. As the business grows and revenue increases, the associated overheads rise, and I don’t want to be scaling if the growth wasn’t being funded by underlying profits.” 

Aleesha added, “Once we had confidence in the new technology, systems, processes, and numbers, Ben, the data analytics team, and I worked closely together to build out real-time dashboards. These dashboards provide Ben and his team with real-time information. As we achieved a confident bird's-eye view of the business position, we aimed to get more timely reporting on a project-by-project basis. With data in multiple systems, we worked with our data analytics team to pull the granular information into custom dashboards. These dashboards support Ben and the Project Managers in tracking their projects on a daily basis. Such insights include project margins, billings to date, how projects are tracking to budgets, and stage of completion costs. By working closely with Ben, we were able to provide this granular reporting and offer a daily overview of the business performance, cash position, and obligations, helping him and the team make informed decisions in real time.”

Going forward, the team at Trinity has been examining company structures and tax with Adam Crowley (Partner) and Rowan Tabb (Director), in RSM’s Business Advisory Team. “This will allow us to re-deploy some of our retained profits into capital investments for use in furthering our long-term business goals and objectives, further cementing our growth and future”, said Ben. “As Trinity has scaled its operations, it is now turning its mind to future tax planning, corporate structuring, and strategies to mitigate risk while making well-thought-out investments,” said Rowan. 

The future

“We have a plan to grow the business by 50% in the next 5 years, and we should achieve that. Afterward, we will look at a consolidation period,” says Ben. He is aware that this growth will require continued reinvestment, and the consolidation phase will focus on reducing risk and building a strong balance sheet in order to withstand the next storm. “The main thing standing between you and the business failing is a strong balance sheet, “Ben adds.

When asked specifically about his experience with RSM Ben said, “I have genuinely felt that RSM has Trinity’s success as their priority and they have been instrumental in positioning us to tackle the hurdles facing the construction sector. They are very responsive, and their business structure means that the Partners and Managers are available when needed, which has been a huge help. They understand the immediate commercial priorities of my business and I have made some lasting relationships that are fantastic.”

We look forward to continuing our strong business relationship with Trinity and have no doubt that they will achieve their goals in the future. We are proud to be a part of their journey ahead.
 

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