Strong balance sheet helps Morgan Sindall deliver record results
Morgan Sindall has hailed the impact of a strong balance sheet as the group reported record preliminary results.
The construction and regeneration group delivered record profit for the full year to 31 December 2018, with adjusted profit before tax up 23% to £81.6 million (FY 2017: £66.1m) on revenue of £2,972m (FY 2017: £2,793m), a 6% increase on the previous year.
The group reported a committed order book of £3.6 billion and a regeneration and development pipeline of £3.1bn. Adjusted earnings per share was up 25% for the year to 151.8p (FY 2017: 121.1p) and total dividend per share increased by 18% to 53.0p (HY 2017: 45.0p). The group demonstrated continued strength of the balance sheet with year-end net cash of £207m and an average daily net cash of £99m.
Chief executive John Morgan said the business is in a strong position to deliver on expectations in 2019.
He added: “2018 has been another year of strong growth for the Group and these excellent results reflect the high quality of our operations and our people. There is significant positive momentum across all divisions and this provides the platform for future strategic and operational progress.
“Our strong balance sheet, with net cash throughout the year and a business which continues to generate positive operating cash flow is a significant differentiator for us. This provides us with the flexibility to continue being highly selective with bidding in our construction activities while also allowing us to invest in our regeneration activities.
“Looking ahead to 2019, we are confident of another good year of progress and the group is in a strong position to deliver on its expectations.”
The Construction & Infrastructure division delivered an industry-leading operating margin of 2.0%, with operating profit up 32% to £27.0m.
The Fit Out division saw operating profit rise 12% to £43.8m at a margin of 5.3%. Urban Regeneration contributed operating profit up 96% to £19.6m.
Morgan Sindall’s housing specialist Lovell contributed to record preliminary results, having built more than 2,500 homes across England, Scotland and Wales during 2018.
The company’s offer of the full mix of residential development services and bespoke development solutions has resulted in a combined national forward order book and regeneration and development pipeline now at £1bn.
Current major projects in Scotland include:
- A £10m, 80-home development of homes for social rent for Renfrewshire Council in Bishopton, Renfrewshire.
- A £5.8m contract to build 43 homes in East Kilbride for Clyde Valley Housing Association.
- Work is continuing on Lochside Grange, a £25m development by Lovell in Kinghorn, Fife, which is being delivered by Lovell in partnership with Kingdom Housing Association and Fife Council. It will provide 113 homes for open market sale by Lovell; ten low-cost homeownership homes for Fife Council and 10 social rented homes for the housing association.
- A £2m development of 14 homes for North Lanarkshire Council.
- A £7m development which will create 36 homes for open market sale at Glassford near Strathaven.
- The company will this year complete a number of developments for West Lothian Council including a £22.5m, 230-home scheme at Kirkhill; a £4m development of 37 homes near Almondvale Stadium and an £8.4m, 86-home development of social rented homes at Wester Inch.
- This year, Lovell is also set to complete work on a £3.4m development for Link Housing Association at Gilmerton providing 30 social rented homes.
David Ward, Lovell managing director for the North, said: “Our focus for 2019 is on continuing to drive strategic growth across Scotland where our ability to offer such a comprehensive range of solutions to our clients and partners, and in particular our expertise in land-led residential development, has led to our involvement in some of the country’s most important homes schemes. We’re excited to be working with our partners to deliver urgently-needed high-quality brand-new homes available to people on a range of incomes and look forward to completing work on more than 350 homes in Scotland this year.”