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Connaught’s problems provide opportunities for others

16 September 2010

The majority of Connaught Partnerships' contracts have transferred to new providers but many will lose their jobs

This fast moving story of the demise of Connaught Partnerships has provided unwelcome daily news.  Nevertheless, the majority of the social housing contracts have been taken up by new providers, safeguarding the majority of jobs and ensuring continuity of service for tenants. Commenting on the process to date, one of the KPMG administrators, Brian Green said, “To do this within days of the company going into administration is remarkable, and is a testament to the commitment of everyone involved in securing the future of these contracts in a very difficult situation.”
To date parts of Connaught’s business interests  has been acquired by Morgan Sindall’s Lovell Partnerships, Mears. and  Morrison.  Regular updates can be found on the KPMG website www.kpmg.co.uk . The story so far is as follows:
9th September: Connaught  plc went into admisinstration on threatening 1,400 jobs. KPMG were appointed joint administrators  of the Exeter-based group with reported debts to contractors and suppliers of £40m and outstanding debt of £220m. The company comprises three main operating businesses: Connaught Partnerships (maintenance services to social housing associations)employed around 4,400 staff across the UK; Connaught Environmental (environmental support services) employed around 2,700 staff across the UK and at a smaller operation in the USA. It comprised the Fountains business acquired in 2009; and Connaught Compliance (H&S compliance advice comprising the National Britannia business acquired in 2007) employed around 1,800 staff across the UK.
Connaught Environmental and Connaught Compliance are not in administration and continue to trade normally, but are likely to be sold by the administrators. KPMG were also appointed administrators to Connaught Partnerships Limited, headquartered in Leeds, and to  Connaught Technical Solutions Limited.
10th September: Administrators confirm about 700 redundancies.  The majority of the company's contracts and related assets are sold  to Lovell Partnerships, the affordable housing division of Morgan Sindall Group plc, for a sum reported to be £28m. Around 2,500 employees will move from Connaught Partnerships Ltd to Lovell as part of the deal.  Lovell will take over and deliver the contracts allowing essential maintenance services to continue with minimum disruption. The contracts are expected to generate around £200m of additional annual revenue from responsive maintenance and Decent Homes, planned maintenance contracts to further develops its social housing offering making it one of the largest providers in the UK. This acquisition creates a national, full-service business delivering planned and reactive maintenance as well as new build social and open market affordable housing.
According to Lovell’s MD, Stewart Davenport, “This acquisition not only saves several thousand jobs but also significantly enhances our existing social housing provision, opening up huge growth opportunities for us in the responsive and planned maintenance markets. It is a robust, financially strong business and our new local authority and housing association customers can be confident that their projects will be transferred seamlessly and completed successfully as planned.”
Earlier this year Lovell extended its housing maintenance capability and geographic reach following the strategic acquisition of Powerminster Gleeson Services. All Powerminster’s contracts were transferred to Lovell Respond, the company’s national housing maintenance business.
14 September:  Morrison announced it has taken on 18 trade person and 6 administrative staff from Connaught Partnerships on its Lambeth Living contract and that the full delivery of housing repairs services withing the Borough of Lambeth has now resumed. Administrators announced a further 400 redundancies, bringing the total to 1100. They include 300 staff who provide social housing services for Norwich Council, which was one of Connaught’s biggest contracts at  £125m for a five-year “integrated services” contract. 
Administrators confirm the transfer of the contractual relationships covering eight customers to Mears Limited. The administrators are hopeful that the Mears transfer presents re-employment opportunities for some of the 600 staff made redundant from those contracts.
The administrators are also in urgent negotiations on two contracts with Norwich City Council. The first includes the following services: waste, refuse and recycling, street cleansing, grounds and tree maintenance. This contract is sub-contracted to Connaught Environmental and, as this subsidiary is not in administration, the jobs of the 200 Connaught Environmental staff who work on the Norwich contract are not under threat as part of the administration. The second contract, which supplies social housing services, is staffed by 300 Connaught Partnerships' employees.
15th September:  Administrators announced a further 300 redundancies, bringing the total to 1400. These jobs related to the social housing contract with Norwich City Council which could not be transferred. A second contract between Connaught Partnerships and Norwich City Council and sub-contracted to Connaught Environmental to supply environmental services, such as refuse and recycling and tree maintenance, is still in negotiation. As this subsidiary is not in administration, the jobs of the 200 Connaught Environmental staff who work on the Norwich contract are not under threat as part of the administration.


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