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Morgan Sindall seeks small role in big deals

FINANCE PFI bundles attract firm searching out regular work for improving construction arm

MORGAN Sindall is considering taking small stakes in bundled Private Finance Initiative concessions to secure a steady stream of work.

The firm, which pushed pretax profits up £3 million to £8.9 million in the first half of this year after dragging its regional construction divisions back into the black, had shied away from taking equity shares in PFI consortia, known as special project vehicles.

Finance director John Bishop said: 'We're happy to take stakes but only when it's a small stake in the SPV. We like the idea of small schemes such as bundles of fire stations but it's not the stake we're after, it's the work.'

Morgan Sindall's construction arm lost £4 million in the first half of last year but made an operating profit of £179,000 in the six months to June 2003 and hopes to make a full-year profit of around £1 million.

Chief executive Paul Smith said: 'We're trying to be selective and pruning our lossmaking markets.

'We've been pretty strong in industrial sheds and are concentrating on that along with health, education and property services work, which generally involve small-scale refurbishment and extension.'

The firm increased turnover by £44.4 million to £559.1 million in the first half of this year and has taken its overdraft up to £18 million to cover expansion of its social housing arm.

Morgan Sindall should build 2,000 houses for housing associations this year and refurbish a further 3,000 homes.

The firm will also build up to 800 homes for sale to the open market but Mr Bishop insisted it is not trying to be a house builder and that new build housing will only form part of mixed-tenure developments.

The civil order book is down £130 million to £435 million but a swathe of water-related work in the second half is expected to leave the business stable.