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Morgan Sindall upbeat despite Muse dive into red

Muse Developments, the Salford-based urban regeneration division of Morgan Sindall, made an operating loss over the first half of 2009 of £1.1m, compared to a profit of £5.6m in the same period of 2008.

Revenue at Muse fell sharply to £5m compared to £45m last time as demand for commercial property dived.

Reporting its first-half results today, Morgan Sindall said Muse had signed up to two major public sector-backed developments in the first half of the year, in Blackpool and Doncaster.

The £220m Talbot Gateway redevelopment of the north part of central Blackpool will include offices, a supermarket, hotels and shops, cafes and restaurants. Construction work is expected to begin in 2011.

Overall, the group, which has bases all over the North West, reported solid results in line with management's expectations. Turnover was down slightly at £1.14bn (£1.24bn in 2008), producing pre-tax profit of £20.5m (H1 2008: £28.6m). The group's cash balance stands at £89m, down 10% from this time last year. The interim dividend for shareholders remains at 12p.

John Morgan, executive chairman, commented: "While the construction industry will face challenging trading conditions in the short term, we are in good shape and will emerge from the downturn a much stronger business. Operationally and financially we are well set to take advantage of the opportunities for further growth that will arise in our chosen markets."

The fit out division, Morgan Professional Services, based in Warrington, saw margins fall to 4.6% from 5.6% and produced an operating profit of £7.4m (2008: £11.5m) on revenue of £160m (2008: £205m).

Morgan Ashurst, the construction arm, secured major contractors including building a factory for Airbus at Broughton valued at £71m, the third phase of works at HMP Perth valued at £20m and in the education sector projects at Reading University (£49m), University of Brighton (£18m) and two projects under the Liverpool Building Schools for the Future programme (£37m).

The construction division produced an operating profit of £5.7m (2008: £4.1m) on revenue of £378m (2008: £418m). Margins rose slightly to 1.5% (2008: 1.2%)

Lovell, the affordable housing division, is reporting reservation rates in open market housing up 50% on the same period last year.

Operating profit at Lovell was £7.1m in the six-month period (2008: £8.8m) on revenue of £178m (2008: £176m).

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