The group, which has annual sales of £400m, has been hit hard by the slump in the London office market. Its share price has fallen from 454p to 150p over the past three years, and it has had to scale back its European operation and its consultancy division.
We spoke to chairman David King about how the firm has responded to the implosion of its core market – and about those management buyout rumours …
What's your reaction to last week's results?
In truth, we ought to be really pleased. There was so much uncertainty early in the year – the demand for fit-out has continued to be so low. We have done a fantastic job in getting out of a reliance on that market.
Why did the firm have to wind up its business in Germany?
We spectacularly failed to do things as a local company serving German companies. We persisted in giving them an English and US model of service that hasn't necessarily been what they wanted to buy.
After five years, I don’t think that I am any nearer to understanding how the City values us
You are now targeting the PFI market. How will you fit in there?
We are not targeting the big-ticket PFI contracts. I don't want the firm to be at risk just on one big job. We want to be a tier-one supplier – meaning for facilities management we will be putting equity of hundreds of thousands into these schemes rather than millions. I think what's good about the PFI market is that it is an established delivery method – people are beginning to understand the risks. The crazier situations of old do not exist any more; it's more transparent.
Is there any truth to rumours that you are considering a management buyout because of your disappointing share price?
We are a public company and we have been for good reasons – if there were good reasons not to be, I would look at them. If the market perception of a company isn't fairly reflected in the price, every company looks at ways of trying to improve that. Going private is one of them, acquiring or merging with businesses is the other.
Are you closer to understanding the workings of the city?
We have been on the market for five years and I don't think I am any nearer to understanding valuation or price. We have just put our dividend up 20% and are generating 20% more cash. The basic business is sound and growing. I think the market's perception is that we are a London fit-out business that falls off the cliff when the office market dives. My strong message is that it has not done so because of the effort we have made to diversify. We have gone into different regions such as Scotland not as a regional contractor but chasing quality projects.
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