While there had been headwinds, including inflation, these appear to have all been broadly coped with.
For the year to 31st December 2022, Morgan Sindall’s revenue grew 12% to a new high of £3,612m (2021: £3,213m).
While adjusted pre-tax profit was up 7% to £136.2m – also a new high for the company – an exceptional £48.9m charge for (post Grenfell related) building safety repairs had to be accounted for. This meant that the bottom line profit before tax was actually down 32% at £85.3m (2021: £126.2m).
£5.5m of the charge was related to Morgan Sindall’s Partnership Housing division (Lovell) and £43.4m was related to Urban Regeneration (Muse).
Net cash at year-end was £355m (2021: £358m) and average daily net cash during the year was £256m (2021: £291m). The value of secured workload stood at £8.5bn at the end of 2022, down 2% on the year.
Chief executive John Morgan said that inflationary pressures and supply issues had been “a significant headwind throughout the year” but in the past two or three months there have been signs that inflation, particularly labour inflation, had plateaued and was starting to fall.
He said: “Where projects are active and underway, the additional costs arising have generally been offset by a combination of contractual protection, operational efficiencies, flexible sourcing and (in the case of Partnership Housing) by house sales price inflation. On projects where it has not been possible to mitigate all such additional costs in full, the resulting impact on margins has been unavoidable.
“Where projects are being priced for future delivery, the inflationary environment has continued to place some project budgets under pressure particularly in Construction & Infrastructure, which in turn has led to some delays in decision-making and project commencement. However, these have been minimal in number, with generally most of the public and regulated sector clients which the group serves indicating that committed spending on capital projects remains in place.”
Results by division
Summarising the year, John Morgan said: "The group delivered a strong performance in 2022, with significant strategic and operational progress made across the business despite the market headwinds. These results are another record for the group and they reflect the high quality of our operations and the talent and commitment of our people.
“With the more challenging economic backdrop, our strong balance sheet including our substantial net cash position provides us with confidence and enables us to continue operating efficiently and effectively. Particularly, it allows us to continue making the right decisions for the long term, to maximise our competitive advantage, and to best position us in our markets for continued sustainable long-term growth.”
He added: “While there remains significant macroeconomic uncertainty, Morgan Sindall is a strong and agile business which is well-placed to overcome the challenges of the coming year and also well-positioned to take advantage of the opportunities that arise in this type of environment. There are early signs that inflation, particularly labour inflation, has plateaued and is starting to fall in some areas. We look forward with optimism and although it is still early in the year, we're well-positioned to deliver a result for 2023 which is in line with our current expectations."
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