Hills Electrical sold for £1 to rival M&E contractor

Family owned M&E firm Hills Electrical & Mechanical has been sold to Southern Electric Contracting for £1.

David Hill, a director who has been with the £70m-turnover company since 1976 and whose parents founded the business in 1967, said the firm had been hit by heavy losses on half a dozen “disastrous” school PFI contracts in Scotland and northern England.

Under the terms of the deal Hill, Eddie Molnar, the managing director, and Richard Smolarz, the commercial director, have left.

The news marks an abrupt end for Hills, which is one of the UK’s largest M&E firm and is known for its top-end specialist work. Past projects have included the Manchester’s Civil Justice Centre, the Swiss Re Tower and Heathrow Terminal 5.

Hill said difficulties in meeting the performance criteria set out by main contractors on the £45bn Building Schools for the Future (BSF) initiative, had led to losses of millions.

He added: “It’s a huge hit but that’s business. It’s a risk and if you’re playing the game, you have to know you can lose it and accept the risk. If you don’t want to play, you should get out of the playground.”

Hill said the company would not have been up for sale if the school projects had gone well. He claimed people were still “finding their way” with BSF.

Industry sources have questioned the pace of the firm’s expansion under Hill. It fell into the red in 2004 after rapid growth but recovered by 2006 after cutting turnover from £100m to £70m and refocusing on office and retail fit-out.

If you don't want to play, you should get out of the playground

David Hills, director, Hills

Hill said he wanted to sell the company to a trade buyer rather than a capital fund, and sold to Southern Electric Contracting (SEC) on the advice of accountant BDO Stoy Hayward.

SEC is part of FTSE Top 50 company Scottish and Southern Energy, and has a turnover of more than £350m. SEC would not confirm whether it planned to make any redundancies.

Hills Electrical & Mechanical has offices in Gatwick, Cardiff, Nottingham, Walsall, Glasgow, Edinburgh and London. It employs 200 people.

The firm had a pre-tax profit of £306,660 on a turnover of £69m in 2006.

Its 2007 results have not been filed, though it is understood that turnover had been scaled back in a bid to cut losses.

Hills Plc continues to trade as a holding company. Hill said he was now looking to set up a company offering training.