Loss-making division sold to developer for £1
The developer behind the overhaul of the Park Hill estate in Sheffield has bought the offsite construction business of SIG.
The building products firm said it had sold the £9m turnover business, called SIG Building Systems, to Urban Splash for a nominal £1.
SIG said it expected to be hit with an £7.9m exceptional charge for the sale when it publishes its 2017 results next week. It added that it will also rack up a £4.9m cash cost following the sale until March 2020.
The business made a pre-tax loss of £5.7m in 2016 and has been on the chopping block since November last year when the firm carried out a review of its business following the arrival of new chief executive Meinie Oldersma last April.
In November, it said the review had “been to assess the potential profits and returns achievable by the Group over the medium term and to identify the key strategic levers that will drive a step change in performance”.
Cenkos analyst Kevin Cammack said the move was long overdue, adding SIG had led a “doomed pursuit of growth in a dedicated offsite construction division. Good riddance.”
The sale leaves its roof manufacturing business RoofSpace as its remaining offsite construction business. Earlier this month, it sold its pipe insulation business called GRM to Kingspan for an undisclosed sum.
Urban Splash chairman Tom Bloxham said the Manchester-based business, which made its name with the New Islington scheme in the city, which includes architect Will Alsop’s Chips building, would be taking on around 70 staff along with SIG’s modular factory in the East Midlands.
He added: “Urban Splash is committed to expanding its offsite construction capacity and this purchase is a way to vertically integrate our business and give us control of the production of our [modular housing].”
The developer also announced that Channel 4 presenter George Clarke and the founder of car buying website WeBuyAnyCar.com, Noel McKee, were ploughing an undisclosed amount into its modular business which is carrying out work at sites in Manchester and North Shields.
Park Hill is a 1960s brutalist housing estate that was given a grade II* listing in 1998 with work to renovate set to complete in 2022. The first phase of the work, carried out by architects Hawkins Brown and Studio Egret West, was shortlisted for the Stirling prize back in 2013.