Ambitious new chief executive Alan Hope says contractor can hit £300m turnover by 2010
One hundred days ago today, Alan Hope took the helm at contractor Midas. Already he has big plans. He wants to grow the business by up to 15% a year for the next four to five years.
The straight-talking Mancunian is ambitious, but realistic: “Growth probably won’t be achieved through acquisition. We see that as a risky strategy because you don’t know quite what you are getting into. My focus is not on top-line growth.”
Hope joined the company from Carillion in April 2004 as managing director of Midas Projects, the retail and PFI/PPP arm of the business. Since then he’s been groomed for the chief executive role by Steve Hindley, the former chief executive and current chairman.
Hindley is a tough act to follow. Midas’ 2004 results showed a pre-tax profit of just over £3m on a £200m turnover. The company has also won many prizes, including contractor of the year at the Building Awards in 2004. Not that this record intimidates Hope: “I have a fair idea of what makes a good construction company,” he says.
By 2010, he aims to be running a £300m-turnover business with net margins of 3%. Prospects for growth, he says, lie in exploiting new sectors and expanding into new regions. He says he has absolutely no plan to float the business.
Midas primarily operates in the South-west of England and South Wales. Hope says that his next move will be into the Midlands, followed by London and the south of England, although he says: “We are not looking to go national for the sake of being national.”
Through its Midas Projects business, which was established last year, the company has already entered the PFI market, but like most contractors it thinks that the government needs to make changes to the process.
Growth probably won’t be achieved through acquisition. That is a risky strategy
Alan Hope, Midas chief executive
“Obviously there are some aspects, like bid costs, that are prohibitive. I think that the government is missing a trick here, because high bid costs make it difficult for medium-sized companies to get involved. The government is missing out on a pool of talent.”
Midas is part of the consortium called Medicinq, which is one of 12 to make it onto the Department of Health’s Procure21 framework. Hindley believes the government could handle health procurement better and in particular the decision to abolish NHS Estates in October. “The issue is the uncertainty in the long term,” he says. “We really like the theory behind Procure21, we’d just like it to be applied. It needs proper backing from the DoH so that the NHS trusts can believe in it more.”
Midas has already won NHS LIFT projects including a £15m scheme in Plymouth. And as part of Equion, a consortium led by Laing, it has made it onto a shortlist of three for the Bristol schools programme, part of the government’s Building Schools for the Future initiative.
His two main concerns for the industry are its health and safety and the slowing residential market in the UK – although he adds that he does not believe it will “fall off a cliff”.
He places part of the blame for the industry’s poor health and safety record at the door of clients. Many, he says, have not raised their game, and are no more exacting about health and safety than before. “Unfortunately, clients are focusing on price.”
Hope says that the biggest challenge for the company is to retain its culture during a period of expansion. “We want to continue growth without losing that,” he says. Perhaps he has a point – companies such as Gleeson that have over-expanded are now paying the price on contracts that were too risky. For Hope, merely expanding operations at Midas is not enough – his aim may be for growth, but it will be a stable growth.
Midas at a glance
- Midas Construction: Regional construction in the South-west and South Wales, specialising in commercial, light industrial, leisure, health and education. Projects up to £6m. Eighty per cent repeat business.
- Midas Property Services: Fit-out and refurbishment business in south England, in commercial, leisure, health, education, defence and social housing. Eighty per cent is long-term frameworks and repeat business.
- Midas Projects. The retail arm tackles new-build, extensions, refurbishments and fit-outs for customers such as Tesco and Marks & Spencer. Eighty per cent of work is framework and repeat. The projects arm works on jobs worth more than £6m and PFI work. Sixty per cent is frameworks and repeat business in health, education, defence, residential and commercial.
- Midas Developments: Property development in light industrial and commercial sectors.