Strategic focus on construction and regeneration pays off for Morgan Sindall

Morgan Sindall is anticipating another strong year of growth driven by construction and partnership housing after group revenues topped £3 billion for the first time last year.

Strategic focus on construction and regeneration pays off for Morgan Sindall

John Morgan

Chief executive John Morgan said the group continued to make significant strategic and operational progress throughout 2019, with the focus in the year again on contract selectivity, operational delivery and on generally improving the overall quality of business won and delivered.

The benefit of this is reflected in the financial performance for the year, with further growth in both margin and profit, and the significant positive momentum across the group provides the platform for future progress, he added.

In its full year results, Morgan Sindall reported a 3% jump in revenue to £3.071bn (2018: £2.972bn), while profit before tax was up 10% to £88.6 million (2018: £80.6m). This resulted in an adjusted operating margin of 3.0%, an increase of 10bps on the prior year (FY 2018: 2.9%).

From a divisional perspective, Construction & Infrastructure delivered an operating margin of 2.2%, up 20bps on the prior year and was again driven by contract selectivity and improved operational delivery with operating profit of £32.3m, up 20%. Fit Out performed well, with revenue of £839m up 1% and operating profit of £36.9m (FY 2018: £43.8m) at a robust margin of 4.4%.  Further volume and efficiency gains in Property Services drove higher revenue, up 15% to £115m (FY 2018: £100m) and adjusted operating profit of £4.3m (FY 2018: £2.0m), up 115% at a margin of 3.7%.

Of the group’s regeneration divisions, Partnership Housing improved significantly with ongoing operational improvement supporting a 50% increase in operating profit to £18.3m (FY 2018: £12.2m). Urban Regeneration had another good year, with operating profit of £19.4m (FY 2018: £19.6m) and a return on capital of 19%. Investments made positive progress with its various joint ventures and with the provision of future construction opportunities for other parts of the group and as expected made a loss in the year of £2.4m (FY 2018: loss £2.4m). 

The group had a successful year of winning new work, with the total secured workload at the year-end of £7,593m, up 14% from the previous year.

Mr Morgan said: “These strong results reflect the high quality of our operations and are testament to the work and commitment of all our people. Our strategic focus on construction and regeneration underpins the positive momentum across the group and provides the platform for future progress.

“Our balance sheet remains a significant differentiator allowing us to make the right long-term decisions for the business. With our average daily net cash position further increasing in the year, we have the flexibility to continue being highly selective with our bidding while also investing in our regeneration activities.

“Both the volume and the quality of our secured workload have increased in the year leaving us well-positioned for the future.  We are confident of another good year of progress in 2020 and the group is in a strong position to deliver on its expectations.”

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