A decision on Mowlem’s future strategy will be revealed in the final quarter of the year, when the findings of a strategic review, involving management consultant McKinsey, are announced.
Mowlem chief executive John Gains said: “We are beginning to gain clarity about where the group is going. We want to do work with customers who want to buy more than one of our services, so we can trade the value of our construction against maintenance and against facilities management.
“I view the facilities management market with a degree of excitement.”
Hinting at the disposal of SBG, Gains said it was no longer a core investment. “We have hung on to SBG and added as much value as we possibly can.”
Analysts predict that selling SBG could generate £105m for an FM acquisitions. Gains would not say directly that the money from a disposal would be used for this purpose, although said he is “always looking for quality businesses” and that any development would “most likely be in our services business”.
The other alternative for Mowlem would be to return the proceeds of the sale to shareholders.
The group reported a 21% rise in pre-tax profit to £16.7m for the six months to 30 June 1999. The order book now stands at £1bn, of which £800m is in construction. A quarter of this work is overseas, mostly in the Far East.
Gains said the margin for the construction activities and services division, which was 1.2% before interest, compared with 1.1%.
in the same period last year, had been affected by investment in marketing initiatives and a number of claims. He set the division a target of 3%. Operating profit for the division rose 54% to £5.1m, on turnover up 9% to £541m.
Operating profit for facilities services business Aqumen was up 40% to £1.4m, with turnover up 32% to £90m.
The environmental services arm’s operating profit was up 11% to £2m on a static turnover of £18m.
The project investment and property division turned a £700 000 loss into a £100 000 operating profit on flat turnover of £4m.
The access products and services arm enjoyed a 15% increase in operating profit to £10.7m, on turnover up £1m to £129m.