Acquisition of contracts from

RNS Number : 4635S

Morgan Sindall Group PLC

10 September 2010

 



10 September 2010

Acquisition of social housing contracts from Connaught

Morgan Sindall Group plc ("The Company" or "Morgan Sindall"), the construction and regeneration group, today announces that its Affordable Housing division, Lovell Partnerships ("Lovell"), has reached agreement to acquire the majority of the ongoing contracts and their related assets of the social housing division of Connaught plc, allowing essential maintenance services to continue without interruption. Around 2,500 employees connected with the ongoing contracts will transfer to Lovell as part of the agreement.  

A total cash consideration of £28m has been paid for the assets, which represents a discount to their net book value. The payment has been made from the Company's existing cash resources.  At 30 June 2010, Morgan Sindall had net cash of £138m and the Group will continue to have a strong financial position following the acquisition.

The acquisition is consistent with Morgan Sindall's long-term strategy to achieve leading positions in its chosen markets. The acquisition will significantly enhance Lovell's market leading position in the affordable housing sector and creates a national, full-service business delivering planned and reactive maintenance as well as new-build social and open market affordable housing.  The new contracts are expected to generate approximately £200m of additional annual revenue, split broadly between response maintenance contracts and Decent Homes, planned maintenance contracts.

In the year to 31 December 2009, Lovell reported an operating profit of £14.9m on revenue of £374m. On 30 June 2010, the Group announced the strategic acquisition of Powerminster Gleeson Services to extend the division's response maintenance capability and geographic reach. 

Commenting on the acquisition, John Morgan, Executive Chairman, Morgan Sindall Group plc, said:

"This is a step change for Lovell. The acquisition significantly increases the scope and scale of our planned and reactive maintenance activities and further develops our market leading position.

"Our focus now will be to ensure a smooth handover of the contracts and to minimise disruption to essential maintenance services.  We look forward to working with our new and existing clients and to provide them with a high level of service, as well as protecting jobs on the contracts we are acquiring.

"Through the experience built up at Lovell over many years, we are happy with the terms on which we are acquiring these contracts. The Board believes that this acquisition represents excellent value for our shareholders."

There will be a conference call for analysts and investors only at 10am today. For details of the call, please contact Blythe Weigh Communications on 020 7138 3204.

Ends

Media/Analyst Enquiries:

Morgan Sindall Group plc                                       Tel: [phone]

Paul Smith, Chief Executive

David Mulligan, Finance Director

Blythe Weigh Communications                               Tel: [phone]

Tim Blythe                                                                    Mobile: [phone]

Paul Weigh                                                                   Mobile: [phone]

Lovell Client Enquiries:

Lovell Partnerships

Kevin Willetts, Director of Business Development    Mobile: [phone]

Notes to Editors:

Morgan Sindall Group plc is a leading UK construction and regeneration group operating through four divisions of fit out, construction and infrastructure, affordable housing and urban regeneration, and an investment unit.

Lovell

Lovell is a leading UK provider of affordable housing. The company has expertise in new-build, regeneration and refurbishment while its responsive and planned maintenance business Lovell Respond provides comprehensive maintenance and estates management services. With offices in England, Scotland and Wales, Lovell offers a unique one-stop shop of services with the ability to build homes, offer a full menu of tenure options and maintenance for life.

 

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