Cyril Sweett getting approaches from cash-starved consultancy groups

Consultancy group Cyril Sweett – active on the acquisition trail in recent times – reports having cash-starved but profitable firms knocking on its door.

Sweett has successfully integrated its four recent acquisitions which might indicate that chief executive Dean Webster is poised to strike again, given that Sweett’s stated aspiration of reaching a turnover figure of £100m will require further acquisitions.

In reality, the situation is somewhat different as Webster reports: “We need to manage the business on a tight rein at the moment so that when the upturn comes we are first in the queue to look for opportunities.

“We’ve focused on keeping on top of our debtors. With a net debt of just £200,000 – down from £1.9m a year earlier - we’re in an excellent financial position.”

Sweett has a line of bank facilities running to almost £17m should it need such a sum.

“Our ambition is still to be a global player," says Webster. “We first set that challenge back in 2006 and we saw right away that we needed to float the group to move along that road.”

Since flotation, Sweett’s turnover is up 40% and profits 30%, with acquisitions accounting for 30% of recent growth.

“The current economic conditions mean that the date for us to reach £100m turnover has been moved back as we’ll be treading water, in that respect, for a year or two.

“Opportunities exist but we are going slower because our share price isn’t helpful and I’ve got to keep an eye on retaining cash. I wouldn’t want to use shares right now as part of an acquisition.

“We just need to be patient as the house building sector has not hit bottom yet.”

Sweett has entered 2009 with a strong order-book that runs to a record £92m and it has potential framework revenue over the next three years of £34m.

“I’m delighted that the government is expanding the public sector workload,” said Webster.

He reckons that given the additional spend that government has committed to in 2010 and 2011, this phase will be followed by a push to “balance the books” which in turn could well result in government “extending the reach of PFI”.

Areas that could see such an opening up would be:

• Waste – “it is slow”
• Building Schools for the Future (BSF)
• Energy – with nuclear being increasingly possible if Russia “turns the gas off”

Government is spending its way out of recession –or so it says – but where is the evidence of that?

“Well we’ve seen more enquiries at the business planning end, especially in the community (i.e. smaller) end of sectors such as health,” says Webster.

He sees on-going expansion abroad: Sweett’s international workload now accounts for 35% of the future order-book. A year ago that figure was just 15%.