The new owner of Marlborough Stirling has warned there will be job losses at the troubled firm, saying it is targeting savings of £6m a year.
United Utilities, the parent company of Vertex which now owns Marlborough Stirling, made the announcement as part of its preliminary results at the end of last week.
The group say it has found immediate opportunities to save money by cutting central overheads and by integrating certain business processes from Marlborough Stirling into Vertex.
United Utilities (UU) says that despite the job losses among Marlborough Stirling’s 1600 strong workforce it is in fact looking to grow staff in the long term.
Nigel Charlton, external affairs manager at Vertex, has added the survival of the Marlborough Stirling brand could also be in doubt saying: " We have talked about integrating the Marlborough Stirling brand into the Vertex brand but that is not to say The Exchange will go that way, it is a very well recognised brand and should remain that way. The Marlborough Stirling brand may well disappear but the offshoots such as The Exchange will continue as we continue to grow that part of the business."
Charlton insisted Vertex has no intention of asset stripping Marlborough Stirling reiterating instead that in intends to grow the business. He claims 85% of effeciencies so far identified by Vertex have been in areas such as IT infrastructure and telephony and that speculation jobs losses will be in the hundreds "is far too extreme an estimate." An announcement on job losses could come as early as Septemebr.
Preliminary results issued by UU, formerly known as North West Water Group, on 2 June, suggested Vertex has become the UK's third largest business process outsourcing company.
Commenting on the Marlborough Stirling purchase specifically, chief executive, John Roberts, is quoted in the results stating: "We believe that Marlbourough Stirling has significant untapped potential that can be unlocked by combining its sector specific knowledge with Vertex's expertise in business process outsourcing. We have identified immediate opportunities to deliver efficiencies of around £6m per annum, on a full-year basis, from that acquisition, mainly derived from a reduction in central overheads."
According to the results statement, the deal placed an enterprise value of just over £72m on Marlborough Stirling. It means Vertex will now have the expertise to "manage open and closed book administration and new business acquisition within both the life and pensions, and mortgage markets."
In one respect, Marlborough Stirling has been right in its assessment of the deal with Vertex: UU has just raised another £500m or so through the second rights issue affecting its 'A' shares listed on the stock exchange. UU will raise about £1bn in cash to meet regulatory demands for capital investment in its water and energy businesses, but the rights issue will also leave a substantial amount of cash in the kitty with which to grow its various businesses.
Vertex may not need additional support, however, as it reported an operating profit up 5% to £26m on turnover up 8% to £396m in its past financial year. Operating cash inflow was £68m, against £64m in net capital expenditure cash outflow.IFAonline
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