Connaught jobs contribute to profit drop at Lovell

Grant Prior 11 years ago

Contracts taken over from Connaught are believed to be a factor in the drop in profits at Morgan Sindall’s affordable housing division Lovell.

The affordable housing arm saw operating profits dip to £7.5m for the six months to June 30 2012 from £8.3m last time.

Morgan Sindall bought the bulk of Connaught Partnerships social housing maintenance operations from the administrators for £28m in September 2010 after the high-profile failure of Connaught due to unsustainably low bids for work.

Chief executive Paul Smith told analysts at the recent results presentation that the “first year to 18 months” after the Connaught acquisition had been spent on “stabilising and bringing the business under control.”

He said: “Turnover is slightly down from where we started and the focus now is on expanding the business again.”

Sources close to Morgan Sindall told the Enquirer that some of the Connaught contracts still needed to improve.

The source said: “Some of the former Connaught contracts have not performed as some people had hoped”

Figures show that response maintenance work at Lovell shot up from £3m during the first six months of 2010 to £41m during the same period in 2011 following the Connaught acquisition.

This year response maintenance turnover was £39m during the first half.

Morgan Sindall said in its latest half-year results that “the repairs market is challenging” as it confirmed plans to concentrate on contracts in London and the South East.

The firm added: “In the medium-term the division does not anticipate any major change from current demanding market conditions.”

A company statement said: “The Connaught business is now fully embedded within our Affordable Housing division, creating a complete affordable housing service nationwide.

“As a consequence of this strengthened offering we have won a healthy number of response maintenance contracts in recent months, both extending our remit with existing clients and through Connaught’s old client relationships.

“We continue to capitalise on the increased scope of our maintenance business and consolidate our market-leading position.”

Morgan Sindall confirmed earlier this month that two regional managing directors have left the business as the contractor restructures its construction operations to “reflect market conditions”.

The company said: “We do, in the normal course of prudent business management, regularly review the scale of our operations to reflect market conditions.

“In order to increase the operational efficiency of our construction business, we have taken the decision to move from six to four geographic operating areas.”

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