Source says that AWG will demerge Morrison's facility and utility businesses and sell them off as separate entities

Utilities company AWG is set to sell subsidiary Morrison鈥檚 拢600m-turnover support services division.

A source close to the firm said AWG was planning to offload the support services division, which comprises facilities services and utility services. It will first demerge the businesses and sell them off as separate entities.

The plans are at an early stage but AWG is expected to announce the decision to demerge when its next set of results are announced in September.

The news comes five months after AWG sold Morrison Project Investments and Morrison Construction to Galliford Try, the contractor and housebuilder, for 拢42m.

The utilities business increased turnover 37% to 拢405m in the year to 31 March, after winning work from Transco and Scotia Gas, Thames Water and Anglian Water. It more than doubled operating profit to 拢12.7m.

Turnover within the facilities services business rose 28% to 拢192m, and it more than doubled its operating profit to 拢7.9m. Contracts won by the division include Decent Homes work in Newcastle and Gateshead, the impact of which is expected to be seen in next year鈥檚 results.

Its wins last year included a 10-year, 拢54m repair and maintenance contract in Redbridge, Essex, and a 30-year PFI schools contract in the Highlands worth 拢100m. The business operates in Scotland, north-east England, the Midlands, London and Essex.

A spokesperson for AWG said: 鈥淭he company will make an announcement on the businesses in the next set of figures in September. No decision has been taken about their future yet.鈥�

But the marriage between Morrison and its parent company has been unhappy since 2000, when AWG made the acquisition.

AWG claimed that Sir Fraser Morrison, the founder of Morrison, had inflated the value of the company, which AWG originally bought for 拢263m. AWG was seeking 拢130m but made an out-of-court settlement in February, the terms of which were confidential.

AWG made a loss of 拢56m when it sold Morrison Construction and Project Investments to Galliford Try because 拢93m of goodwill was written off.
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