Contractor to make profit in second half of 2011/12 after £12.7 million loss
Contractor refutes sell-off rumours
The chief executive of Morrison has launched a robust defence of the repairs and maintenance contractor, quashing reports that a string of worries over poor performance and a £12.7 million loss in the first half of the financial year had seen the company put up for sale.
‘There’s not a shred of truth in it,’ said Guy Wakeley, chief executive of the firm since 2008, when asked about the sale rumours. ‘I promise you there is no chance of the business being put up for sale in the near future. There may have been approaches, but we are not talking to anyone.’
The rumour spread following a tough period for the contractor. Earlier this month, Southwark Council ended a contract with Morrison, worth around £9.5 million a year, three years early. The news came shortly after it pulled out of a £3.8 million deal with Kensington and Chelsea Tenant Management Organisation, claiming the partnership was no longer sustainable. Meanwhile, a £3 million-a-year contract with Birmingham Council was under threat after the local authority demanded improved performance.
An improvement plan is in place for Birmingham, but the council has kept the firm on probation.
In January, the accounts of Anglian Water, which owns Morrison, revealed the contractor had suffered pre-tax losses of £12.7 million in the first half of 2011/12. But Mr Wakeley, speaking for the first time since sale rumours emerged, told Inside Housing that the business was in line to turn a profit for the second half.
‘We restructured in the first half of the year and changed how we operate, and have taken the medicine in the first half.’
He added that Morrison, which has around 60 housing contracts worth about £1.4 billion, had won several new jobs in recent months, including those with Tamworth and Woking councils and Home Group. He would not disclose their values, but Mr Wakeley said the Home Group deal is worth more than its Southwark contract. ‘They are all big, long-term contracts,’ he added.
Mr Wakeley also said the firm had been ‘underbid by up to 15 per cent’ on some tenders it did not win, adding that ‘nine out of 10 contracts still go to the cheapest bidder’. But a senior figure at another contractor said public sector contracts were increasingly not decided by price.
‘Since [the demise of contractor] Connaught, a much higher proportion of contracts are not going to the cheapest bidder,’ said the source. ‘They [procurers] are going for a combination of price and quality.’