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Compliance and social housing drive up Connaught profits

Connaught has seen profits increase dramatically thanks to longer term maintenance contracts with social landlords and the increasing pressure on company directors to ensure they comply with tightening health and safety laws.

Its preliminary results for the 12 months to the end of August show overall revenue up to £553million and operating profit before amoitisation and exceptional costs of £36.9mill. 

A statement on Connaught’s annual results said directors were under increasing pressure to meet gas, electricity and water safety regulations and this helped its compliance division increase revenues in this sector by 130 per cent to £106mill with operating profits up 206 per cent to £13.8mill.

The statement said: “The regulatory environment, driven by the increasing level of EU health and safety legislation, is holding businesses and directors to account.

“Financially there are increased penalties for non compliance. There are also higher insurance costs for companies who cannot demonstrate they are fully compliant with all relevant legislation.

“The reputation risks associated with non-compliance together with the corporate responsibility agenda are ensuring that directors are encouraged to meet their obligations more now than any time in the recent past.”

In social housing Connaught saw revenues grow 28 per cent to £447mill and operating profits up 38 per cent to £25.4mill as it secured more long term contracts for maintenance and repair.

The statement said: “The market for social housing maintenance and repair is large and fragmented. It continues to offer Connaught significant growth potential.”

The company argued the trend towards longer term multi-service partnership deals “has accelerated” as large social landlords look for efficiency savings. This year 83 per cent of Connaught’s £855mill order intake was integrated services contracts with four contracts of 10 or more years in length worth a total of £420mill.

The statement said: “Property maintenance and repair represents 48 per cent of a social landlord’s operating costs and is the biggest single efficiency saving opportunity. For most social landlords their supply chain is fragmented and costly to administrate which is leading many to seriously consider an integrated services approach.

“This drive for increasing efficiency had also led to the consolidation of registered social landlords (RSLs). These RSLs now control over 50 per cent of the UK’s social housing stock and their consolidation is generating longer, larger and more integrated contracts as they continue to seek ways to consolidate their inefficient and fragmented supply chains.'