Fit-out performance helps boost profits at Morgan Sindall

Morgan Sindall Group chief executive John Morgan
Morgan Sindall Group chief executive John Morgan

Morgan Sindall has reported a 44% leap in pre-tax profits thanks to an “excellent” performance from the group’s Fit-Out division.

Figures for the six months to 30th June 2017 saw Morgan Sindall delivered strong profit growth with operating profit up 37% to £24.9m (HY 2016: £18.2m) on revenue up 14% to £1.307 billion (2016 H1: £1.148bn).

The company’s Construction & Infrastructure division has improved its profit margin to 1.1% this year from just 0.5% last year by better selection of work to take on.

This resulted in operating profit of £7.6m for Construction & Infrastructure, up 138%, on revenue of £694m, up 13%.

The Fit-Out division saw a 27% increase of operating profit to £14.6m, with an operating margin recovering to 4.3% from 3.9% last year.

Across the business there was a significant rise in average daily net cash to £132m. The group’s order book rose 5% to £3.8bn.

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Commenting on the results, chief executive John Morgan said: “This is a strong set of results, driven by another period of margin and profit growth in Fit Out and further progress on margin recovery in Construction & Infrastructure. Reflecting our overall profit performance, our strong balance sheet and cash performance, and our confidence in the quality of our business, we are increasing the interim dividend by 23% to 16p per share.

“With the current trading patterns in Fit Out and the forward visibility provided by the size and quality of its order book, together with further margin improvement in Construction & Infrastructure and an increase in scheme completions in Partnership Housing and Urban Regeneration, we are confident of another strong performance by the Group in the second half.”

In Scotland, the forward order book at partnership housing developer Lovell, of which Morgan Sindall Group is a parent company, stands at £123m thanks to new contracts with housing association partners and land-led developments.

The region expects to complete around 450 new homes in Scotland during 2017.

Artist’s impression of Lochside Grange, 133-home Lovell development in Kinghorn, Fife, in partnership with Kingdom Housing Association and Fife Council
Artist’s impression of Lochside Grange, 133-home Lovell development in Kinghorn in partnership with Kingdom Housing Association and Fife Council

Lovell managing director, Jonathan Goring, said: “2017 has started well for Lovell with the company set to complete over 2,000 homes across the UK this year. Our combined national forward order book and regeneration and development pipeline is now worth over £1.2bn as we continue to benefit from our solid relationships with housing associations and local authorities partners, providing services ranging from design and build contracting and mixed tenure development with open market sale and planned maintenance services.

“The sentiment remains extremely strong in favour of first-time buyers and the Homes and Communities Agency are supporting this with accelerated construction schemes and a proactive promotion of new home starts. This aligns well with the Lovell approach to partnership homes and long term regeneration.

“Progress on flagship schemes includes the start of construction on site at the Electric Quarter in Enfield, a £46m, 167-home development in Ponders End in partnership with the London Borough of Enfield; our 800-home new urban village in Cardiff - The Mill, Canton – is moving at pace while the first phase of our £398m scheme in Woolwich is scheduled to deliver its first 118 open market homes this year.”

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