Dean Webster is feeling upbeat after returning from a “well-timed” three-month sabbatical, when he travelled to India and the Far East, following more than 30 years continuous service.
The consultancy reported a record order book last week, with contracted orders of £102 million – up £10m since the interim results were published in November 2012. That news lifted the share price from 18p to 22p this week.
Speaking following the first 12 months of a three-year strategy, during which the firm rebranded its four divisions into the Sweett Group and dropped the Cyril Sweett name, Mr Webster told CN: “The whole strategy now is about building on the platform we’ve created.”
That has come after office rationalisation and restructuring of the company. Last year saw a profit warning and delayed year-end results due to the stalled sale of two PFI schools projects, before the company booked a £1m loss in December on revenue of £72.8m.
Asked if he felt his decision to take a sabbatical in October could be seen as an unusual step, Mr Webster said some commentators had seen it as an example of where management “are confident [in] one another that one can take some time out”.
“I have been here man and boy and I am really enthusiastic about this business”
He said the executive team, including MDs Derek Pitcher and Kim Berry and FD Chris Goscomb, “managed things extremely well in my absence”.
Mr Webster said one broker had said executives usually go on a sabbatical when the business “is in good shape”.
“I couldn’t work out whether he was implying it was a bit of an odd time for me to go on sabbatical, or whether he actually understood our business, because when I went on sabbatical, it was in good shape,” Mr Webster said.
“We had gone through the restructuring and Derek, Kim and Chris presented our figures in December and I think everyone was happy with them.
“I think it was a good time to go. The strategy had been set for the next three years; we’ve got figures in the market at the moment we’re comfortable with; the order book is growing; and we’re delivering on the strategy in terms of what we said – both here and overseas.”
Asked if a sabbatical could be seen as a precursor to his departure, Mr Webster told CN: “I don’t think in those sorts of terms at all. I have been here man and boy and I am really enthusiastic about this business.
“We have got a cracking business. The industry has faced some really difficult times and a lot of our competitors have stood still or gone backwards at a time when we’ve carried on growing this business. We have achieved a lot and there’s a lot more we can achieve.”
Mr Webster, 53, said he could not say what he might be doing in five years’ time as he “looks at things in terms of a two-year horizon” due to the markets the firm operates in.
“What I am doing personally is that I will be spending more time with clients and more time travelling to support our overseas businesses.”
“We have achieved a lot and there’s a lot more we can achieve”
The Sweett share price had been down 28 per cent year on year, from 25p to 18p, until news of the record order book last week.
“The stock was marked down as a result of announcements we made last year in respect of deferred PFI sales; since then we have closed two deals and are working on others. I am looking forward to concluding those deals over the coming months,” Mr Webster said.
Overseas is a major focus for the firm, having hit its aim of increasing international revenue to 50 per cent. “The three-year plan, which we are currently updating, is about ‘steady as she goes’ in the UK and continuing to grow in Asia Pacific and India,” he said.
Mr Webster said staff numbers in the UK are steady, while overall numbers are up from 1,300 to 1,400. He said the firm took out “a lot of cost” when contractors were still reporting strong order books, two or three years ago. “That’s because we’re further up the cycle,” he said.
“Our regional offices are not making the margins they used to, but are still making an acceptable margin”
“So they’re now in the situation where they are taking a lot of costs out and we’re saying we’re beginning to see the signs. There’s no expectation that we’ll ever get back to the [2007/08] levels of activity. But we do think we’re on a gradual path to a sustainable level of activity.”
There were also some job losses last year amid £1.2m of restructuring costs. Rationalisation of space was done in September last year, where the firm “tightened up on [office] space” by about 35-40 per cent.
“We didn’t go through a massive office closures programme because we think we’re all in the right places,” Mr Webster said. “Our regional offices are not making the margins they used to, but are still making an acceptable margin, because they’ve got a mixture of national and international clients and local clients.”
He said the South-west and North-west are all “recovering and buoyant going forward” and there is “money looking to the regions to see where it can be spent”.
Expected growth sectors include energy and utilities, with some upturn in commercial, especially in the North-west.
Dean Webster on:
The QS market
On consolidation in the QS market, Mr Webster said: “At the moment we are looking at organic growth…it’s about growing off our existing platform and filling gaps where we see opportunity.
“We see ourselves very much as a provider of independent services. And I think as a culture, an ethos and being a very client-focused operation, that’s very important for us.
“We think it’s created opportunity for us, particularly on an international scale, where a number of our competitors have chosen to move away from [the] independent service provider route.
China and UK interest
Mr Webster said the company feels it has the regional coverage it needs in China, where it is traditionally a QS provider, but he said there is opportunity to expand services, including programme project management.
The CEO said that because of his company’s presence in China “we do provide guidance and information to some of our friends who are looking at those markets”. Asked if that includes contractors, he said: “They’re our friends as well.”
Mr Webster said interest in the UK from Chinese investors and contractors is “certainly something that, because of our contacts in China, we are aware of”.
He added: “We are seeing clients of ours in China wanting to invest here. We see that positively because we already have a relationship with them.”
Mr Webster said there is already investment happening here, such as at The Shard’s Shangri-la Hotel, but there is also interest in “some major regeneration projects” and regional regeneration. “They’re interested – it’s actually [about] connecting the money to the opportunity,” he said.
Asked about possible Chinese investment in Hinkley Point C, where Sweett is undertaking cost management, he said: “My understanding is that from a political level, it’s being encouraged.”
Mr Webster said that “somehow the supply chain is absorbing” cost rises and material cost increases, while contractors are now taking overhead down.
He said one of the concerns is getting the right team to do the job for some of the major clients, “because I think everyone has made themselves as lean and efficient as they can”.
After the losses incurred by the delays on the Inverclyde Schools and Dumfries and Galloway Schools PFI project sales, Sweett said it will no loger act as investor in the deals, though Mr Webster added: “I always say to myself you never say never.
“We have a huge amount of expertise and we will be looking to help other investors with the expertise we have.”