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Morgan Sindall’s half-year profit jumps 29%

Morgan Sindall has posted a 29 per cent rise in pre-tax profit from £23.1m to £29.9m in the first half of 2018.

The contractor reported a solid start to 2018 with all its major divisions recording an increase in operating profit.

Morgan Sindall said the outlook for the rest of 2018 was now “ahead of its previous expectations”.

Revenue for the group increased to £1.42bn for the six months to 30 June, up from £1.31bn in the same period of 2017.

This increased the company’s pre-tax margin from 1.8 per cent to 2.1 per cent.

Morgan Sindall’s construction and infrastructure business reported a strong first half of the year, with operating profit up nearly 50 per cent from £7.6m to £11.3m.

The company said it was being “more selective” about the construction work it took on, which led to its order book shrinking 5 per cent to £1.76bn.

This approach was also expected to boost the margin for the construction business further in the second half of the year, the firm added.

Fit-out was the most profitable division in the first half of the year, with operating profit increasing by almost a third to £18.8m alongside a 25 per cent rise in revenue, leaving the division with a 4.4 per cent operating margin.

The company said the second half of the year looked “very positive” for the fit-out business.

Chief executive John Morgan said: “Fit-out and Construction & Infrastructure have both continued to deliver margin and profit growth, which has been complemented by a good performance from Urban Regeneration.”

The property service, partnership housing and urban regeneration divisions all reported profits for the first six months of 2018.

Regeneration has been a target market for Morgan Sindall in recent years, and Mr Morgan said the company was preparing to ramp up investment.

“There remain a significant number of opportunities in regeneration and our strong balance sheet and cash position leave us well placed to invest further in this key strategic area,” he said.

The division reported operating profit of £6.1m on revenue of £62m.

Borrowing remained low at £43m for the group, leaving the company with net cash of £96.9m at the end of June.

Morgan Sindall’s share price was up 4.8 per cent in early trading off the back of the results.

The first half of 2018 has seen Morgan Sindall secure a position on the Ministry of Defence’s £1.3bn 10-year framework for the navy’s nuclear base in Clyde, Scotland.

Morgan Sindall Investments was also set up earlier this year to work as a joint venture partner with Hertfordshire County Council for a £2bn property development programme.

Morgan Sindall was recently revealed to be better than average at paying its suppliers among the top 20 contractors.

On average it paid invoices within 44 days, compared with a top-20 average of 47 days, and paid more than 75 per cent of all invoices by their due dates.

Morgan Sindall’s results over the past year have seen its chief executive and finance director become the second and third highest-paid construction bosses among publicly listed contractors.

Between them they took home more than £4.5m in 2017.

In its most recent full-year accounts, Morgan Sindall’s pre-tax profit increased almost 50 per cent to £64.9m.

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