Morgan Sindall shows resilience with 8% profit rise

Diverse development and construction group Morgan Sindall, with businesses throughout the North West, produced a confident set of financial results for the year to the end of December 2008.

The group saw a 20% increase in revenue to £2.548bn compared to £2.115bn in 2007 and an 8% increase in pre-tax profit to £62.3m (2007: £57.6m). Earnings per share increased by 22% to 127.8p (2007: 104.5p).

Salford-based Muse Developments produced full -year operating profit of £7.8m compared to £4.2m during the five months of the financial year in 2007 before its acquisition as Amec Developments, on revenue of £84m (5 months, 2007: £26m).

The statement to the stock exchange said Muse had 'renegotiated a number of existing agreements in response to subdued market conditions'.

Muse is preferred developer on Pall Mall in Liverpool as part of English Cities Fund, Talbot Gateway in Blackpool and Victoria Station with Network Rail in Manchester. Development agreements have yet to be signed in each case. A development agreement was signed for a £350m scheme in Swindon during 2008.

The development pipeline ahead of Muse is worth £1.3bn, up slightly from £1,.2bn in 2007, the group said.

The fit-out division, Overbury, based in Manchester's Spring Gardens, saw operating profit maintained at £25.8m (2007: £25.9m), despite revenue softening to £474m (2007: £492m). The margin also held firm at 5.4% (2007: 5.3%).

Overbury has a forward order book of £124m (2007: £179m) which was strengthened to £181m at the end of January 2009 (Jan 2008: £183m). A fall in fit-out revenue is expected this year.

Construction arm, Morgan Ashurst, with offices in Salford Quays and Liverpool, enjoyed strong public sector demand, particularly in education and healthcare, offsetting the weak commercial property sector.

Operating profit for Morgan Ashurst was up 94% to £9.5m (2007: £4.9m), after one-off acquisition related IT costs of £1.0m, on turnover of £813m (2007: £621m).

Margin was up to 1.3% (2007: 1.2%) after adjusting for one-off costs. The forward order book was maintained at £805m (2007: £810m).

Morgan Est, the infrastructure business with a regional office in Birchwood, had a 'buoyant' year supported by investment in transport, water and energy. Operating profit increased 36% to £14.4m (2007: £10.6m) on revenue of £799m (2007: £575m).

Lovell, the affordable housing division based in Altrincham and Wirral, focused on refurbishment and new build social housing to offset against the private market collapse. Operating profit came in at £21.0m (2007: £25.5m) on revenue of £377m (2007: £398m). Lovell has an order book of £1.3bn (2007: £1.5bn).

John Morgan, executive chairman, commented: "We have delivered a record set of results in line with our expectations. Construction and infrastructure services divisions provided significantly increased profit contributions, which bring increased balance and resilience to our business, whilst our financial position remains robust.

"We continue to expect market conditions in 2009 to remain challenging, but we are well placed to emerge from these times as an even stronger business."

Cash balances for the year averaged £77m (2007: £75m), and year-end cash was £120m (2007: £219m). A final dividend of 30.0p (2007: 28.0p) is recommended, giving a total dividend for the year of 42.0p (2007: 38.0p), an increase of 11%.

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