One New Bailey

Morgan Sindall profits down 19%

The diverse group's results were adversely impacted by a number of low-margin contracts in its construction division according to financial results posted today, with pre-tax profit down 19% from £31.3m in 2013 to £25.2m in 2014.

Turnover was up for the Lovell, Muse Developments, Overbury and Morgan Sindall Construction owner, from £2.09bn in 2013 to £2.2bn at 31 December 2014, with the urban regeneration and fit-out arms increasing revenue and operating profit.

Earnings for each share dipped from 60.9p last year to 46.7p.

In a statement accompanying the announcement to the stock market, John Morgan, chief executive of the group, called the result "disappointing", and said that he expected lower returns in the construction division to continue for at least the first half of 2015 as it completed projects in London and the South.

Overall, the group order book was up 11% to £2.7bn.

John Morgan, chief executive of Morgan Sindall, said: "Whilst there have been strong performances from fit out and urban regeneration, the overall group result for the year is disappointing, having been adversely impacted by a small number of construction contracts in construction and infrastructure. The progress in urban regeneration is particularly pleasing as it supports our long-term regeneration strategy and provides a positive platform for further investment in regeneration, leveraging off our existing strong market positions.

"Looking ahead to 2015, lower returns in construction and infrastructure are expected to remain for at least the first half of the year, as lower margin construction contracts tendered in 2012-2013 are worked through fit out, affordable housing and urban regeneration, together with further investment programmes in regeneration opportunities, and supported by the improvement in the quality of our order book, provides confidence that the group is well positioned to deliver overall growth in 2015 and beyond."

Projects for the construction division include a £300m eight-year redevelopment programme at BAE Systems' submarine-building site in Barrow-in-Furness. The company is also on site at Manchester Victoria Train Station and is doing a £32m refurbishment of Oldham Old Town Hall as well as school construction projects across Liverpool.

Muse Developments currently has multi-million pound developments underway at Chapel Street and New Bailey in Salford and Talbot Gateway in Blackpool, alongside a 7.5-acre commercial development at City Place in Chester.

Shares in Morgan Sindall were up 26.5p this morning to 670.5p.

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