Although YJL will be in a stronger cash position once the 拢15m disposal of Lovell Partnerships to Morgan Sindall is complete, many analysts think the business is now too small to attract interest from institutional investors.
YJL 鈥� which changed its name after the sale 鈥� is bidding to buy a small building services, maintenance or property management firm with a turnover of 拢50m. It is in 鈥渁ctive discussions鈥� with at least two companies and wants to make a purchase during 1999.
But analysts say an acquisition of that size would not be enough to boost the company鈥檚 attractiveness to the market. One said: 鈥淭he problem is, everyone wants to buy that sort of FM business at the moment. And I would be very surprised if YJL is not looking at either being bought or, more likely, launching a management buyout to take the company private.鈥� YJL finance director Paul Sellars reacted to the speculation by saying: 鈥淭he stock market regards any company capitalised at under 拢400m as being small, and we stand at about 拢12m. Any company that is capitalised at that level has the same thoughts.鈥� Sellars said the company鈥檚 main aim now was to return to profitability after the disposal of the homes division, which was by far the most profitable part of the business.
I would be very surprised if YJL is not looking at being bought or a management buyout
City Analyst
YJL announced an interim pre-tax profit of 拢1.1m for the six months to 31 March 1999, an increase of 120% on the same period last year. Turnover rose 12% to 拢138.5m.
The company does not break down pre-tax profit by division, but Sellars said the three construction businesses that now make up the company 鈥� Lovell Construction, Bullock and Walter Lilly 鈥� had all been profitable during the period.
Balance sheet debt was down from 拢8m in the first six months of last year to 拢2.6m. This figure does not include the 拢15m payment for the uncompleted homes arm sale. Cash left over from the payment will be used for the planned acquisitions.
