Strike up the brands

Diversification: Miles Jakeman, managing director The Citadel Group

Company: The Citadel Group

Rank: 3

Managing director: Miles Jakeman

Founded: 2002

Revenue: 2008-09 $55.67 million

Growth: 246.77 per cent

Secrets of success: The passion and commitment of the team. We make sure we spend as much time as it takes to get the right people on the team.

A business model that has seen the management consultant and business services provider, the Citadel Group, rank consistently as one of Australia's fastest-growing private companies has really come into its own during the global financial crisis.

Established in Canberra in 2002 as Jakeman Business Solutions, Miles and Le-Anne Jakeman have built a diverse group based on the "house of brands" model. A series of mergers and acquisitions has created a robust portfolio of separately branded and administered businesses.

"Having that diversification has been helpful for us during the downturn," managing director Miles Jakeman says. "If one business line was weak while another was working well, we were able to redirect effort and capital as necessary between the businesses to ensure the wider group remains on track."

Citadel's portfolio comprises JBS, information management company Filosoph-e - of which Citadel owns 25 per cent - recruitment firm Frontier Recruitment, audio and video-conferencing company ServicePoint and management consultant Gibsons JBS.

No Citadel business experienced declines in revenue during the slowdown, but Jakeman says "several did not achieve our internally set budget or profitability expectation due to the GFC".

ServicePoint and JBS were the strongest performers in the group.

ServicePoint increased revenue from $15 million in 2008 to $25 million this year. "We expect this to grow again [in 2010] as customers make greater use of technologies to reduce travel costs and carbon footprints," Jakeman says.

JBS increased its annual revenue from $13.5 million to $17 million this year. "JBS has always focused on the premium end of the consulting market," he says. "We're not the cheapest, but we always provide value for money and we've been able to grow our market share in a difficult time."

Frontier, acquired from Canberra businessman and BRW Young Rich list member Mark McConnell in 2007, "experienced the most volatility" during the year, but Jakeman says the recruitment market has turned the corner as the recovery continues apace. (McConnell is a director of Citadel and has a 28.4 per cent stake in the company.)

Another benefit of the "house of brands" model is the ability to cross-sell services. Internal referrals contributed $4.5 million to revenue this year.

Although Citadel has continued to grow, from turnover of $38.65 million in 2008 to $55.67 million this year, the company has not been unscathed by "difficult market conditions", Jakeman says. "A couple of our suppliers went into receivership, and that was a blow because they involved trusted relationships built up over years."

Citadel had budgeted for revenue of $65 million for this year and the slower than expected growth may delay its 2010 target of $100 million by a year.

Citadel is an unlisted public company, 50 per cent-owned by its employees. When it reaches its $100-million milestone, the group will move on to the next phase of development: an initial public offering, a trade sale or a new succession plan.

In the meantime, acquisitions will continue to contribute to Citadel's growth. In October last year, Citadel acquired audio-visual communication businesses Canberra Professional Equipment and BRE AV Central, which have been merged into ServicePoint. In April, Citadel acquired training company Australian Business Academy, which has operations in Canberra and Sydney.

Jakeman says the company will make further acquisitions that offer "a good strategic fit and do not distract too markedly from our core business lines".

Watching over the acquisition strategy and the rapid growth of the group is an independent board, which includes a mergers and acquisitions committee headed by McConnell.

"Citadel has always placed a premium on corporate governance, but during the downturn having a strong, knowledgeable board to provide independent advice has been invaluable," Jakeman says.

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