“...the team demonstrated a complete understanding of our business needs and developed solutions which delivered substantial results. They applied a formidable mix of consultancy skills, business processes and active management which we are still benefiting from today”

The Issues

Danka UK plc, one of the world’s largest independent suppliers of office imaging equipment related services parts and supplies had grown very fast in the UK after gaining an initial foothold through the acquisition of Saint Systems in 1994 followed by Kodak’s imaging division in 1996, and had effectively assimilated a range of diverse
businesses into a single Danka offer.

Whilst their property portfolio was adequate when it serviced separate business units, they now had the wrong facilities in the wrong locations relative to meeting the needs of staff and clients.

In early 2000 Danka Business Systems announced that January results and preliminary information indicated that the company was experiencing lower than anticipated gross margins in its US operations. As a result, the company expected its results with the
quarter ending March 2000 to be significantly below estimates.

Danka needed a better sales and service base in order to improve efficiency and reduce the cost of doing business. This meant minimising unnecessary property costs, getting the right buildings in the right locations on the right terms to meet business, people and client needs.

Our Role

We were asked to look at the portfolio tactically and strategically and to develop an understanding of real opportunities to increase shareholder value, support business growth and help streamline the delivery of services delivered through the UK Portfolio.

Through a series of interviews it was agreed that rapid expansion had led to inefficient real estate operations. In the face of stock price fluctuations, we analysed the portfolio and recommended a strategy to reduce owned and leased real estate assets by a significant margin
saving the company operating expenses and raising cash where appropriate.

We were then able to establish the true financial picture and breakdown of occupational costs whilst overlaying occupational details in order to highlight and identify:

• Economic value added performance of their investment in corporate real estate.
• Undervalued assets.
• Lower occupancy costs by co-locating business units and identifying facilities with higher than normal occupancy costs.
• Where appropriate seeking to convert properties to highest and best used status.
• Understand the real estate costs associated with non-core business activities and identify opportunities.

Our Solution

• We were now ready to implement the appropriate solution which involved the full alignment of UK corporate property strategy with global core objectives while retaining local business needs.
• A matrix was developed comparing the key performance indicators sort by Danka with the existing situation.
• At the commencement of March 2000 11 properties were identified as being surplus to the operational requirements of the business.
• All 11 properties were disposed of in full over approximately 12 months), resulting in the disposal of over 50,000 sq ft of occupied property with a total annual rent roll of approximately £500,000 per annum.

The Results

At the commencement of 2000 Danka’s annual rent role was £2.2m per annum and by November 2001 this had been reduced to £1.4m, a decrease of 40% per annum.