Chief executive Roger Feast rejects City speculation that the company is to go private or be sold, saying his long-term strategy is to buy or merge.
YJL’s new chief executive, Roger Feast, has insisted that the company is neither for sale nor preparing to exit the stock market, despite City rumours that it is no longer large enough to sustain investor interest.

YJL, formerly YJ Lovell, which last year sold its social housing business for £15m to pay off debt, now has a market capitalisation of only £11.7m. Since the sale, analysts have consistently tipped the company to go private.

In an interview with Building, Feast said his long-term strategy was to either merge with or acquire another large company. In theory, a stock market listing will help him to raise cash for such deals.

“I can see why people would say we should exit the stock market,” he said. “But that is not the plan and we are definitely not for sale.”

Feast said a merger would be two or more years down the road. But he added that, in the short term, he was considering acquiring a specialist contractor worth up to £10m and a £40m-60m facilities management firm.

“If we can’t find something, setting up an FM company from scratch may be the most attractive option,” he said.

Feast, 47, joined YJL from Jarvis last October. He replaced long-standing group chief executive David Heppell, who retired in December.

A lot of our competitors are getting out of contracting — I will happily pick up the pieces

Roger Feast

Feast said he had left Jarvis for YJL because he wanted to be with a company that was committed to contracting. “An awful lot of our competitors are getting out of contracting,” he said. “Some say firms like ours will be picking up the pieces, and there are £25m-30m pieces that I will happily pick up.”

Feast said that since joining YJL, he had reviewed each of its divisions and set new targets for margins.

Commercial builder Lovell Construction, which makes a profit of 1% on turnover, has been set a target of 2% by October 2001. Social housing refurbishment specialist Bullock is expected to up its returns from 2% to 3%, and quality fit-out contractor Walter Lilly has been told to increase its performance from about 3% to 4%.

“I want us to make margins at a practical level. If it gets beyond that, you become too expensive for the client,” said Feast.

  • A report by Arthur Andersen has found that more firms in the construction industry went private last year than in any other sector — six in total. The highest-profile exits were made by housebuilders Wainhomes, Cala and Banner Homes. The other firms to delist were materials suppliers Norcros, Epwin and Avonside.

    Andersen corporate financier Martin Kitcatt explained that, because most smaller construction businesses now had a low rating, they would have difficulty raising finance for acquisitions.