Morgan Sindall lifts interim pre-tax profit to £29m

A surge in size has lifted Morgan Sindall’s interim turnover to £1.2bn which represents a rise of 48%.

MS’s financial results covering the six months to 30 June show a pre-tax profit of £29m (figure in the comparable period last year: £25m).

The previous interim turnover of £840m was before MS snapped up a sizeable chunk of Amec. That happened in July 2007 when Amec’s new chief executive decided that the group’s construction operations were non-core.

MS has five operating divisions. The two that have grown the most as a result of the Amec deal are construction and infrastructure services.

Turnover in the five divisions in the first six months of 2008 was:

• £420m – construction
• £390m – infrastructure services
• £200m – fit-out
• £180m – affordable housing
• £50m – urban regeneration

The profit achieved in each of the five, before allocation of £6m of central costs, was:

• £11m – fit-out
• £9m – affordable housing
• £8m – infrastructure services
• £6m – urban regeneration
• £4m – construction

Performance of its five operating divisions were as follows:

Fit-out

Overall demand in the commercial office fit-out market has been reasonably robust and the division’s performance was driven by a strengthening of its market share. This helped offset some softening of demand from the financial services sector.

The orderbook stood at £180m at the start of the period and had risen to £220m by the end.

Construction

Demand in commercial property has weakened. However, demand from the rest of the private sector is “reasonably robust” and public sector demand is strong. The latter accounts for 70% of turnover.

The orderbook at the end of June was £830m, down by £60m from the figure a year ago despite the fact that the size of the construction operation has doubled from £200m to £420m.

Infrastructure

Buoyant market conditions, driven in particular by investment in the transport and utilities sectors. The group said “we expect these conditions to continue for the foreseeable future”.

The profit would have been higher but for a £1.4m IT cost relating to the Amec acquisition.

Affordable housing

The orderbook at the end of June was £1.4bn, slightly down on the previous figure of £1.5bn. In recent months the division’s open market house sales have been hit by the availability of mortgages.

Urban regeneration

Performance was in line with expectations.