Morgan Sindall records £3.6bn turnover

The property group has reported a 12% increase in revenue in the year ending December 2022, from £3.2bn the previous year.

• Read the annual financial report here.

The group is active across the North West, with businesses spanning five divisions: construction, infrastructure, regeneration, fit-out, and property services.

According to its end-year report on the London Stock Exchange, Morgan Sindall’s pre-tax profit also increased in what has been a difficult year for construction, rising by 7% to £136m. 

Rising energy prices, supply constraints, and increased trade and labour costs have placed pressure on construction costs, which has subsequently placed increased strain on supply chain stability.

The company’s overall operation margin decreased against these headwinds, from 4.1% in 2021 to 3.9%. However, the group has a secured workload of £8.5bn for next year.

John Morgan, chief executive of Morgan Sindall, commented: “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.”

Construction and infrastructure 

Morgan Sindall Construction & Infrastructure make up this division. The infrastructure figures also include the work of design and engineering consultancy  BakerHicks, which is based in Derby and Switzerland.

The businesses recorded a 3% revenue increase in 2022, from £1.52bn in 2021 to £1.57bn. However, inflation pressures have delayed project commencements, leading to a 10% reduction in operating profits.

The construction arm’s order book had reduced to £802m by the end of last year, a 1% reduction on 2021 however 6% increase from 2021. The group has secured £646m of this for 2023.

Morgan Sindall Construction completed work on English City Fund’s £60m Novella scheme, delivering 211 apartments across 23 storeys to Salford, in August.

The construction group also delivered the University of Salford’s £16m North of England Robotics Innovation Centre in November.

Regeneration

Muse, Morgan Sindall’s offshoot urban regeneration firm, reported a 56% increase in operating profit last year, as well as a 20% increase in revenue.

Muse appears set for a healthy future, with 16 projects currently on site totalling £1.2bn, and a further five projects due to start on site next year with a value of £334m. The company’s forward pipeline stands at £1.8bn.

North West managing director Phil Mayall said: “We’ve had another strong year across our region with some important milestones, as we continue to deliver people-focused regeneration in places from Stockport, Salford, St Helens, Prestwich, and everywhere in between.

“We’ve been working in partnership with the public and private sector for nearly 40 years, with the aim of building a brighter future, together, by solving problems to local issues and creating growth through economic stimulation.”

Muse’s projects during this time include Salford Rise, a five-acre podium to be constructed over Frederick Road to unlock development potential within the £2.5bn Crescent masterplan. The podium is being developed by The English Cities Fund – a joint venture between Muse, Legal & General, and Homes England.

Muse formed more JVs last year. Its North West branch also forged a partnership with Bury Council to make plans for the regeneration of Prestwich Town Centre, which is in the pipeline for 2025. 

With work continuing on major projects, such as the £36m Eden office building, Muse has a secured workload of £8.5bn

Also construction started on ECF’s 96-apartment Salford Greenhaus in February. 

Meanwhile, the group’s partnership housing arm, Lovell Partnerships, experienced a 13% increase in operating profit, going from £37m from £33m the year before. Lovell also reported a 20% revenue increase in 2022, increasing its £572m figure in 2021 to £696m.

Fit-out

Morgan Sindall’s fit-out arm consists of companies Overbury and Morgan Lovell, both focused primarily on the fit out of office space.

Overbury and Morgan Lovell’s total operating profit and revenue increased substantially in 2022. 

Operating profit rose by 18% to £52m, while their revenue grew by 22% to £968m. 

Chris Booth, managing director of Overbury, states: “Despite the global market challenges, our teams have delivered for our clients. 

“They have exceeded expectations and have been instrumental to our success.”

Property services 

Morgan Sindall Property Services reported a revenue of £4.3m in 2022, up 5% from 2021.

The group’s property services arm also saw a 22% revenue increase last year, rising to £163m from £134 the year before.

Building safety

The Building Safety Act played a role in the 2022 figures, and will continue to impact Morgan Sindall Group’s results in the coming year.

In January this year, Lovell and Muse confirmed in writing their intention to sign and execute a contract for remedial works on buildings impacted by fire-safety rules. The two groups said they would sign this contract before the government’s 13 March deadline.

Lovell has acknowledged a £5.5m obligation, while Muse has noted a £43.4m one. It is worth noting that the Muse figure also includes £9.8m from joint venture projects.

Of the £48.9m to be dedicated for fire safety works, Morgan Sindall Group has already used £800,000.

Market outlook

The reaction to Morgan Sindall Group’s full year report has been positive, with stock prices rising 7.7% the day of the announcement. That brings the trade price to around 1,755 GBX – the highest price reported since August 2022.