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: 020 7307 9200
Paul Smith, Chief Executive
David Mulligan, Finance Director
Blythe Weigh Communications Tel: 020 7138 3204
Tim Blythe Mobile: 07816 924626
Paul Weigh Mobile: 07989 129658
Lovell Client Enquiries:
Lovell Partnerships
Kevin Willetts, Director of Business Development Mobile: 07890 630458
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.
