Morgan Sindall marks record £3.6bn order book

The parent group of Muse, Lovell and Overbury posted a strong set of results on Thursday and said the value of work already scheduled in for the future was at a new high.

Turnover was up 7% to £2.56bn, pre-tax profit was £43.9m and the order book leapt 29% to £3.6bn. There was net cash in the bank of £209m at year end compared to £58m at the end of 2015.

Shares in the London-listed group rose 8% to 980p this morning as the stockmarket welcomed the turnaround, set out in its unaudited preliminary results published before the full audited results. Morgan Sindall reported a £15m pre-tax loss in 2015 after taking a £47m hit on problem projects including a floating jetty and accommodation for the Ministry of Defence at Faslane.

All divisions performed well in the year to 31 December 2016.

Muse Developments posted a £13.4m operating profit on turnover of £156m. Housing partnerships division Lovell saw a 40% rise in its operating profit to £13.4m on £433m turnover.

Overbury, the fit-out arm, produced “another excellent performance”, with operating profit up 15% to £27.5m at a margin of 4.3%, improved slightly on last year’s 4.0%.

Morgan Sindall’s eponymous construction and infrastructure business had an operating margin of 0.7% on £1.3bn of revenue, the biggest division by sales, producing an adjusted operating profit of £8.9m.

In the North West, the construction side is working on the £90m contract for BAE Systems to develop industrial facilities at the submarine yard in Barrow-in-Furness and the £39m training facility for the Civil Nuclear Constabulary in West Cumbria.

A design-and-build project for BUPA UK is currently underway to see the creation of a replacement office overlooking Salford Quays.

Overbury is working for Schroders Real Estate Investment Management on office refurbishment at Manchester’s City Tower.

Muse has major developments ongoing in partnership with local authority landowners in Stockport, Warrington, Salford and Preston and has finished the seven-phase Smithfield project in Manchester.

John Morgan, chief executive, said: “These results demonstrate the considerable strategic and operational progress made in the group over the last few years and the underlying quality of the business.

“The UK is struggling to cope with the increasing demand for affordable housing and there is a clear need for Government to deliver urban regeneration and infrastructure investment to support future economic growth. Morgan Sindall Group has strong established positions in these markets, and the balance sheet and cash position to fund further investment and growth.

“From this strong base, we are confident in the outlook and expect the positive momentum across the Group to continue through 2017 and beyond. With significant opportunities in partnership housing, the continued improvement in operational delivery in construction and infrastructure, and the size and quality of our secured order book in fit-out and elsewhere across the group, we are well-placed to deliver a result for the year which is slightly above our previous expectations.”

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