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Morgan Sindall boss resigns amid market 'deterioration'

John Morgan has replaced Paul Smith as chief executive of Morgan Sindall, in what the contractor says is a bid to simplify the management structure.

Mr Morgan founded the business in 1977 and served as chief executive from 1994 until 2000, when he became executive chairman. Paul Smith joined the board as chief executive in 2003.

Mr Morgan said his focus will be on “growing the business and ensuring that exceptional levels of service continue to be delivered to clients”.

His appointment follows Morgan Sindall’s plans to close four offices and cut about 60 jobs in a reorganisation that is expected to provide annualised savings of £55 million over three years until the end of 2012.

The restructure is expected to incur a one-off cost of £10m, partially offset by a £7m sale of medical assets.

Earlier this month Morgan Sindall’s housing arm Lovell said it would merge five divisions into two, with three senior staff set to leave the firm as a result.

Since the half year, the firm has experienced “further market deterioration, which has impacted the short-term outlook for the group into 2013”, it said in a financial statement.

“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,” it added.  

The contractor is closing offices in Ashford, Banbury, Bristol and Theale in Reading after it confirmed the closure of its Durham office in October as part of a restructure.

Construction is being reorganised to focus delivery through regional hub offices, closing a number of smaller regional offices. Affordable housing operational efficiency is also a priority.

The firm’s trading for 2012 is expected to be slightly lower than expectations due to public spending cuts, deferred investment and high competition.

However, it said there were “some interesting opportunities” in the construction pipeline, and the firm said it would focus on increasing exposure to rail, aviation, energy and highways.

Forward orders stand at £3 billion, with a further £700m in projects at preferred bidder stage.

Among its recent contract wins in the past month Morgan Sindall was named as preferred partner for Slough Borough Council’s £1bn, 15-year regeneration and was also announced as preferred partner for a £1.1bn Sellafield contract in a joint venture with Arup.

In addition to Mr Morgan’s appointment, Adrian Martin becomes non-executive chairman while Patrick De Smedt will serve as senior independent director.

British Property Federation chief executive Liz Peace has also been appointed a non-executive director.

Commenting on the firm’s personnel changes, chairman Adrian Martin said: “After almost 10 years as chief executive of Morgan Sindall, Paul Smith has announced his intention to stand down from the board.

“We would like to thank Paul for his significant contribution to the group over this period and wish him well in the future.

“The board regularly reviews the way in which the group operates, to reflect changes in our markets so that we can respond rapidly to capture new opportunities.

“The organisational changes under way give us a simplified operating structure.

“We are delighted to welcome Liz to the board. We believe that she will make a significant contribution as an independent non-executive director.

“Her public sector background with the MoD as well as her extensive knowledge and understanding of the UK property industry through her role at the BPF will bring a valuable new set of skills and experience to board discussions.”

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