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Tue June 28 2022

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Morgan Sindall sees profits fall a third but revenues stand firm

25 Feb 21 Morgan Sindall withstood the ravages of Covid-19 in 2020 to deliver more than £60m pre-tax profit on group revenues down just 1%.

Chief executive John Morgan
Chief executive John Morgan

For the year to 31st December 2020 Morgan Sindall generated revenue of £3,034m (2019: £3,071m). Pre-tax profit down 31% to £60.8m (2019: £88.6m)

Chief executive John Morgan said that the company had proved resilient in the face of the challenges and an £8bn order book left the business well-positioned for the years ahead.

Strategies remain unchanged, he said, which for the Construction & Infrastructure division means staying “focused on contract selectivity and risk management, operational delivery and developing long term relationships with its clients”.

However, it hopes to raise profit margins in infrastructure works.

The medium-term target for Construction remains to deliver a consistent operating margin within the range of 2.5%-3.0%. Infrastructure's medium-term target is to achieve an operating margin of 3.5%, which is an increase on its previous target from 3.0%.  Progress towards these targets is expected in 2021.

Chief executive John Morgan said: “Whilst the year has been dominated by the Covid-19 pandemic, these results reflect the resilience across the group and the benefits of actions taken in recent years to maintain contract selectivity, further improve payments to our supply chain and maintain a strong cash position at all times.

“Throughout the year, the business has had to adapt quickly and decisively to the continually changing external environment. I would like to sincerely thank all our employees for their commitment and dedication throughout.  I am extremely proud of the way our people have stepped up in these adverse circumstances.  

“Despite the differing challenges each division faced, the group has continued to make strategic and operational progress. Again, we have an improved cash position and have further strengthened our balance sheet, allowing us to make the right decisions and actions for the long-term benefit of the business.  Our strategy remains the same, based on organic growth and operational improvement in markets geared towards future demand for affordable housing, urban regeneration and infrastructure and construction investment. We welcome the government’s continued support for our activities and the recognition of the industry as a key driver for economic stability and recovery.”

He concluded: “The size and quality of our growing secured workload at well over £8bn leaves us well-positioned for the future and we are on track to deliver a result which is materially ahead of our previous expectations and slightly ahead of that delivered in 2019.” 

Morgan Sindall 2020 headline results by business segment

  Revenue Operating Profit/(Loss) Operating Margin
  £m Change £m Change % Change
Construction & Infrastructure 1,637 +10% 35.7 +11% 2.2% -
Fit Out 700 -17% 32.1 -13% 4.6% +20bps
Property Services 112 -3% 1.0 -77% 0.9% -280bps
Partnership Housing 441 -14% 16.1 -12% 3.7% +10bps
Urban Regeneration 123 +3% 9.2 -53% n/a n/a
Investments 34 n/a (6.9) n/a n/a n/a
Central/Eliminations (13)   (18.7)      
Total 3,034 -1% 68.5 -26% 2.3% -70bps

Morgan Sindall also reported some social results as well as financial. Some progress has been made in improving diversity within the business, it said, and the representation of people from a Black, Asian and/or Minority Ethnic (BAME) background has increased from 13.6% to 15% during 2020. But female representation has remained static at 24%. Morgan Sindall’s 2020 median gender pay gap is 29.10%6 (2019: 31.2%), reflecting a higher number of senior male employees in the company. Women make up 10% (2019: 9%) of the upper pay quartile compared to 40% (2019: 37%) in the lower quartile.

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