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Tue May 17 2022

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Morgan Sindall hits 2% operating margin for construction

7 Aug 19 Morgan Sindall’s profits have jumped by a fifth in the first half of 2019 despite no growth in turnover.

In the six months to 30th June 2019 Morgan Sindall made a pre-tax profit of £35.5m (2018 H1: £29.9m) on revenue flat at £1,421m (2018 H1: £1,423m).

The Construction & Infrastructure division improved its operating profit margin to 2.0% (HY 2018: 1.7%) with operating profit up 23% to £13.9m.

Operating profit from the Fit Out division was down, at £16.4m (HY 2018: £18.8m), but the operating margin was still 4.0%. The group as a whole made an adjusted operating margin of 2.6%.

Net cash on 30th June was £114m (HY 2018: £97m). The average daily net cash for the period was £123m (HY 2018: £113m).

The secured order book stood at £4.2bn, up 19% from the start of the year. Work won in the period includes a £45m hotel and residential development for the Slough Urban Renewal joint venture, a £30m project to deliver new academic offices for the Royal College of Physicians at Paddington Place in Liverpool and a £53m leisure centre for the London Borough of Hackney. Morgan Sindall Construction has also been appointed onto all four tendered lots on the £1bn SEWSCAP 3 framework, all three lots of the University of Oxford's £1.5bn capital projects partner framework and retained its place on all three lots of the next generation of the £5.25bn Southern Construction Framework (SCF4).

Chief Executive John Morgan said: "We have had a strong first half of the year and these results underline the significant operational and strategic progress being made across the group.  Our strong balance sheet including our net cash position is a significant differentiator for us, allowing us to make the right long-term decisions for the business, which best positions us in our markets for continued sustainable growth.

“There is much positive momentum across the group and with our high quality, growing order book, we are excited by the opportunities ahead.  Following our strong first half performance and with the current visibility we have of the rest of the year, we now expect to deliver a result for the full year which is slightly ahead of our previous expectations."

H1 2019 Revenue   Operating Profit/(Loss)   Operating Margin  
  £m Change £m Change % Change
Construction & Infrastructure 679 3% 13.9 23% 2.00% +30bps
Fit Out 407 -4% 16.4 -13% 4.00% -40bps
Property Services 55 12% 1.6 220% 2.90% +190bps
Partnership Housing 238 3% 6.4 39% 2.70% +70bps
Urban Regeneration 44 -29% 8.3 36% n/a n/a
Investments 2 n/a -0.9 n/a n/a n/a
Central/Eliminations -4   -8.2      
Total 1,421 -% 37.5 18% 2.60% +40bps

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