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Tue October 27 2020

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Lovell moves to alternative funding models

15 Dec 10 Housebuilder Lovell is working with its social housing clients to develop alternative funding mechanisms in the wake of government cuts in the Comprehensive Spending Review. Plans include mixed tenure regeneration and zero grant developments.

Parent company Morgan Sindall has issued an upbeat trading statement, saying that despite the cuts, the recent consolidation of providers in the social housing sector has “further enhanced” Lovell’s opportunities, especially given the the continuing trend of outsourcing social housing maintenance. “Lovell is now strongly positioned given its national coverage and unique full-service offering that has been created following the Connaught and Powerminster acquisitions,” Morgan Sindall said.

It added: “Affordable Housing is making good progress integrating the contracts secured from Connaught. The affordable housing market remains robust with a reasonable pipeline of new build social housing, response and planned maintenance opportunities as demonstrated by the recent announcement of three regeneration schemes for Southampton City Council, valued at £30m. Conversely activity levels in the open market housing sector remain at a low level.

“The Comprehensive Spending Review was largely in line with our expectations. With the fiscal constraints in place we expect that new privately funded investment models will emerge. The Bournemouth Local Asset Backed Vehicle project, where the Investments unit is currently preferred bidder, is a good example of one such alternative structure.  This is a partnership between the Group and Bournemouth Borough Council, which will enable the Borough's regeneration needs to be funded through private finance.”

Morgan Sindall said that when it announces its 2010 results in February, it will show a strong financial position and an order book consistent with the position at the half year.

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“Our £3.6bn forward order book, breadth of capabilities and leading positions across a range of market sectors leave us well placed to capture further market share,” the company said.

The group’s newly-integrated Construction & Infrastructure division “continues to trade positively in varying market conditions”. Frameworks and longer term client relationships are providing a stable workload, although there are still challenges ahead with the cutbacks in public sector capital spending. The outlook for infrastructure is brighter, given the recently published National Infrastructure Plan setting out government's commitment to finding ways to funding much needed infrastructure improvement. As expected, infrastructure revenue for the company this year has been affected by the delayed start of major infrastructure projects and the transition between regulatory periods in the utilities sector, the company said. 

The Fit Out division reports strong revenue growth in the second half of the year, “reflecting the division's market leading position and an increase in the number of larger projects”. The number of larger projects coming on stream has slowed slightly, however, which will impact on the division in the months ahead.

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