Mountfield Group Plc (LON:MOGP) Chairman Peter Jay caught up with DirectorsTalk for an exclusive interview to discuss the trading statements for Mountfield Building Group & Connaught Access Flooring
Q1: Mountfield issued a pretty positive trading statement today, if I could start by asking, how is the business looking generally?
A1: The business is looking good, there’s a lot of activity around, as you know we’ve certainly made a number of changes particularly within our building division, Mountfield Building Group, the flooring side is looking very strong & we expect great things from our building division over the coming year.
Q2: Now you refer in the RNS to new business strategies, could you explain to us what you mean by this?
A2: Yes, we’ve been looking at the business in the light of the way the market responded to the end of the recession & one of the changes it brought was that there’s a decline in demand for new data centre builds which have been underpinned the company’s business prior to the recession. It still gets a lot of work in the data centre area, both in flooring & in refurbishment & upgrades but the actual construction work has fallen off so we looked at the markets & we made changes to the two component companies, MBG & to Connaught. Very simply with MBG it has moved away from what was called ‘builders packages’, essentially subcontract work, not all subcontractor work primarily most of the subcontract work it undertook, which we found overly risky & the margins were squeezed so that work is no longer taken up by MBG. For Connaught, it’s built an excellent reputation in flooring as one of the leading companies installing & supplying raised access flooring for offices & data centres & we’re working on taking that to associated areas such as whitewall & flooring & wall coverings & alike so really widen the offering that the group can provide.
Q3: What has been the impact on Mountfield Building Group of its reconstruction?
A3: It’s been good, we’ve obviously targeted a somewhat reduced or slightly reduced turnover because we’re now chasing margins rather than turnover as such & we expect the group, MBG, to become a profitable company & a significant congruity to the group’s profits but with the profits derived from a smaller turnover, not a small one but a smaller, slightly reduced one. So the aim now will be to target quality work where margins are good rather than the bulk work where we found margins being squeezed in the past.
Q4: Now where do you see Connaught going in terms of clients & product?
A4: Well, it’s one of the leading flooring companies for raised access flooring & for commercial flooring for offices & data centres & is fully engaged at the moment in the flooring for a city headquarter building where it got a contract of around £5 million & that’s taking up a lot of its time retention at the moment. So although there’s quite a bit of space still in the flooring centre to expand, it’s now looking to use the expertise, the connections it’s built up & reputation to move into other associated areas which really it includes wall coverings, partitioning, ceilings, tiling & that I think will be its path over the next couple of years, ideally it’ll be both in the UK & in mainland Europe where clients have asked us to consider new contracts.
Q5: How do you see Mountfield Group Plc developing over the next three years?
A5: I think the way the group will develop is we will look to strengthen areas that we’re not already associated, essentially moving more into the fit-outs field, that’s not fit-out generally for pulling more specialists fit-out, so we may look for an acquisition that will boost one of the areas that Connaught is in, maybe cladding or partitioning & maybe an area associated construction where MBG is situated. We expect to work on the areas we’re already in rather than taking the company off in a completely new area, we haven’t got the management resources or really the size to do that because that would mean a much more substantial acquisition that one we would consider at the current time.
