The £10m injection will be used to increase the proportion of houses that Lovell builds for private sale. At the moment, Lovell Partnerships builds about 2000 homes a year on mixed developments. About 1500 of these are let by housing associations and the rest sold.
Chief executive John Morgan said: “It will still be a mixed development, but the proportion will be nearer 50:50 [rent to sale],” he said.
Group finance director John Bishop said the change would result in increased margins. Bishop said he expected the social housing market to expand in the short term, with increased government spending being allocated to it.
The news came as Morgan Sindall announced a 24% rise in first-half pre-tax profit, up from last year’s £5.05m to £6.28m in the six months to 30 June. The figure was achieved on group turnover that jumped 13% to £221m, but did not include Lovell Partnerships’ profit.
The group’s figures include a strong contribution from fit-out businesses Morgan Lovell and Overbury, which turned in operating profit up 23% at £3.74m.
The group’s regional contractors also performed well, returning operating profits of £1.03m, up almost 10% on the same period last year.
Morgan said he expected the group’s regional businesses to continue to increase their profit over the next year. He added: “We are planning to grow the business through our 10 regional contractors. Most are performing strongly, with the exception of Basingstoke-based contractor Barnes & Elliot, which lost about £1m.” Morgan said Barnes & Elliot’s problems had been sorted out and that the group had no more acquisitions planned for the future.
“We are planning to concentrate on smaller jobs through our different brands,” Morgan said.
