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We look for signs that a
company can improve
return on capital with
a management team
grabbing the proverbial bull
by the horns
Polar Capital UK Value
Opportunities’ George Godber
and Georgina Hamilton say
technological innovation is being
used to gain an edge in unexpected
areas of the small-cap market
The silent
revolution
We look for signs a company can
improve return on capital, with a
management team grabbing the
proverbial bull by the horns. Insights
can be gained by understanding
how management is investing in
the business and the paybacks it
is achieving, as well as how it is
embracing technology in a world
driven by innovation.
Below are three examples of where
technological innovation is being
used to gain a competitive edge in
areas where it is least expected.
O
ne of the most difficult calls
for an investor to make at
the moment is whether a
company’s return on invested capital
can be maintained and increased
in the medium to longer term.
This is because macro factors are
dominating investment, casting
shadows over fundamentals.
Speedy Hire is the larg-
est construction equip-
ment rental company
in the UK. While the leas-
ing of cement mixers and
lighting towers may not be
the first place to look for a
technological revolution,
the results of innovation
are starting to show. Since
FE TRUSTNET
2016 when the company
began investing in arti-
ficial intelligence to im-
prove asset utilisation and
customer service, return
on capital employed has
jumped from 3.2 per cent
to 12.8 per cent. In the past
year alone, the company
has increased revenue
from small- and medium-
sized customers by about
25 per cent.
Trifast is aiming to be-
come the world’s leading
manufacturer of screws
and fastenings. To help
meet this target, the man-
agement has undertaken a
technology-focused invest-
ment programme called
Project Atlas which should
allow it to operate more ef-
ficiently and better service
its customers. The early
signs are encouraging, with
the company’s full-year
numbers reporting 5 per
cent growth in revenue
from auto companies over a
period when this sector was
down. Taking market share
in a tough market is a good
sign the company is doing
something different and
better than its competition.
bags. It has invested in five
state-of-the-art printing
presses that are allowing it
IG Design is a global
to take significant market
business focused on
share. These presses print
unique printing and
at more than 70 miles an
product design. The com- hour and operate more ef-
pany is currently the largest ficiently than those used by
manufacturer of not-for-
the competition. The past
resale paper and biode-
full year’s numbers show
gradable bags in the UK,
the company demonstrated
which it is hoped will help
organic growth of 9.8 per
wean shoppers off plastic
cent.
trustnet.com