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Sweett chief calls time on restructuring and PFI investment

Sweett Group’s chief executive officer has told CN that restructuring is now behind the company and that it will withdraw from PFI investments after delays hit its annual profits.

Sweett Group CEO Dean Webster said his company will step back from investing in public private partnership assets but continue to provide services to the schemes, following delays to the sale of two UK schools projects which deprived Sweett of £2m of expected earnings for the year.

“We did suffer quite badly in the first half of last year,” said Mr Webster. “I think the start of this year, which we have identified in our outlook statement, is the more positive news. We are seeing a turnaround in our fortunes.”

The CEO spoke to CN after the company posted a £1m pre-tax loss for the year to 31 March 2012, as revenue stayed flat at £72.8m. It also followed £1.7m of restructuring costs and finance costs.

Mr Webster said it took “early action” to counter the impact of the Arab Spring uprisings, which has resulted in a sharp reduction in its Middle East order book.

Sweett Group incurred £0.8m of redundancy costs in 2011/12, which were “predominantly in the UK and a little bit in the Middle East”, said Mr Webster.

He said it was “not a question of taking fee earners out of the business” but was focused on the support services and “middle group functions”.

The firm has no plans for further restructuring and is now in “recruiting mode” for more staff, he added.

The CEO said staff numbers are now at 450 UK employees – the same as before the restructuring – adding that an “awful lot of hard work” from his workforce over the past two to three years has set the company on a course for growth.

He predicted “single-digit growth” in the UK and Europe over the next three years following the launch of its three-year strategy and a move in the UK into energy and infrastructure.

Sweett also aims to increase overseas revenue to 50 per cent, but saw first half losses in Australia and the Middle East. The UK and Europe currently represents 55 per cent.

Its Asia Pacific business is growing at speed, with staff numbers up nearly a third to 600. That revenue now makes up 32 per cent of group turnover, driven largely by the successful integration of operations in China, following the acquisition of Widnell in 2010.

Mr Webster said the QS is not presently looking at acquisitions – and is not looking to become a takeover target.

“At the moment our three-year plan is to grow organically because we have now built the platform from which we can do that.”

He added: “We will row our own boat and that’s the way we will look to do things.”

Sweett will look to “concentrate our business more on providing services rather than investing in new PPP projects” Mr Webster said.

Asked whether this means they are pulling back from PFI, he said “in terms of investment, not in terms of providing services”.

“I think for the operators in that market there is still a lot of opportunity, but for us we want to concentrate on our core services,” he added.

Sweett’s loss in PPP for the year totalled £0.7m.

The group announced the conditional sale of the Dumfries & Galloway Schools PFI project in April, but has since withdrawn from it and will seek alternative divestment routes during the current financial year.

One of its PFI schemes – the £2m Inverclyde Schools PFI – reached completion in July for £2.2m.

Mr Webster pointed out that operating profit was £1.6m for the year – down from £3.8m – and said the firm has a record order book of £90m.

He said the completion of the rebranding, which saw the firm drop the Cyril name, is also having a positive impact on the international stage, where the firm is focused on following corporate clients.

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