Chief executive goes in Morgan Sindall shake-up
RUGBY-based construction group Morgan Sindall has responded to difficult trading conditions by making “significant and immediate board and operational changes”.
The group’s chief executive Paul Smith has resigned and executive chairman John Morgan has been appointed chief executive while senior independent director Adrian Martin has been appointed non-executive chairman and Patrick De Smedt has been appointed senior independent director.
And Elizabeth Peace, CBE, has joined the firm as a non-executive director. She has been chief executive of the British Property Federation (BPF) since 2002 and spent 12 years at Malvern-based defence specialist QinetiQ.
Morgan Sindall also said it will take a one-off hit of £10m this year to pay for operational changes.
In an interim management statement covering the period July1 to November 5, the firm said economic conditions have remained difficult during the period and the UK construction market continues to face challenges including further reductions in public spending, deferred investment decisions and high levels of competition.
“Against this backdrop, the board expects underlying trading for this year to be slightly below previous expectations before taking into account a £7m gain from the sale of the group’s medical property interests in July,” it said.
“In response to market conditions, the group continues to be highly selective when bidding for new work and we have taken further steps to reorganise and streamline the group. In particular we have re-organised our network of offices delivering construction and our affordable housing business, to ensure we balance the right level of resources to current workload.
“These organisational changes will have a one-off impact this year, estimated at £10m (including £3.5m of property related provisions). This is part of an on-going process that will have delivered £55m of annualised savings over the three-year period to the end of 2012.
“Since the half year we have experienced further market deterioration, which has impacted the short-term outlook for the group into 2013. However, the group’s confidence in the medium-term outlook from 2014 onwards has increased through its success in securing a number of longer-term opportunities in growing sectors of the market.”
New chief executive John Morgan said: “I am excited by the opportunities for the group. My focus will be on growing the business and ensuring that exceptional levels of service continue to be delivered to clients across the group.”
The firm’s share price dropped 7% during early trading this morning.
