Morgan Sindall chief executive John Morgan told analysts this week that he wants his company to join industry moves towards consolidation in order to make it more attractive to investors.

Although the contractor is well thought of in the City, its market capitalisation is relatively small, at £110m.

One analyst said: “It will need to get up to near £350m to be on most fund managers’ radar screens.” Another said: “Morgan gave the impression that he would look at any company seriously considering a merger proposal and that he would also be interested in non-British firms.”

Many analysts believe listed contractors that do not merge or acquire other firms will be under pressure to leave the stock market. However, Morgan told analysts that there was no question of the firm delisting.

At the results meeting on Tuesday, it was also announced that Morgan would become executive chairman, following the retirement of Sir Derek Hornby, who will stay on as a non-executive director. Morgan will be replaced as chief executive by Andy Stoddart, who has been promoted from operations director to managing director.

Morgan Sindall’s pre-tax profit rose 3% to £10.8m on turnover up 23% to £521m for the year to 31 December 1999. The figures were affected by the closure of the firm’s loss-making housing association maintenance business.

Morgan said his regional business would be the main growth engine in the next few years. Its operating profit rose from £2.4m to £3.1m on turnover up from £251m to £275m. Morgan has appointed Chris Saxton, former head of the North-west business, managing director of the whole division.

Analysts say Morgan wants the division to increase its 1% margin to 2% by the end of 2000. He also wants to boost turnover.

The social housing business, Lovell Partnerships, which was bought from YJL last year, made an operating profit of £1.1m. Fit-out businesses Morgan Lovell and Overbury raised operating profit 20% to £7.6m on turnover up from £163m to £174m.