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Morgan Sindall's profits rise in first six months of 2012

Morgan Sindall saw a rise in pre tax profit in the first six months of 2012 with margins holding up in its construction division.

Adjusted pre tax profit rose 4 per cent to £20.3m to 30 June (2011:£19.5m), while revenue dropped 8 per cent from £1.08bn to £1bn.

The firm said margins held up ‘due to focus on operational discipline’. Morgan Sindall said construction and infrastructure saw ‘efficient management of overheads and careful contract selection’ to maintain a 1.5 per cent margin.

But reduced levels of cash generated construction activities and investment in regeneration meant Morgan Sindall had average net debt of £36m, compared with cash of £43m.

Its investments division saw a return to profit after the sale of PFI and medical assets.

The firm’s order booked dipped from £3.5bn last time to £3.2bn.

It said it will focus on growing infrastructure sectors in “which we have a strong track record; rail, aviation, energy and highways”.

John Morgan, executive chairman, said:  “Despite the challenging economic environment, we are encouraged by the continuing opportunities in growth infrastructure sectors and we remain committed to investing in our regeneration business to drive growth over the medium to long term.

“Whilst we expect market conditions to remain challenging in the short term, we believe our strong track record of successful delivery and our ability to provide our customers with creative, integrated solutions leaves us well positioned for the future.”

The group interim dividend will be maintained at 12p.

Construction and infrastructure saw operating profit fall to £8.5m (2011: £9.5m) with revenue dropping to £583m (2011: £617m).
Margin of 1.5 per cent (2011: 1.5 per cent) due to focus on growth sectors, efficient management of overheads and careful contract selection, despite challenging macro-economic conditions and downward pressure on margins across the industry.
Order book dropped to £1.5bn (2011: £1.9bn)

Fit out saw operating profit of £5.5m (2011: £6.1m) on revenue of £191m (2011: £222m). Results expected to be weighted towards the second half of 2012 due to recent commencement of a large contract.
Slight improvement in margin to 2.9% (2011: 2.7%);
Increase in order book to £230m from £133m in 2011.

Affordable housing operating profit decreased to £7.5m (2011: £8.3m) on revenue of £202m (2011: £228m) with margin at 3.7% (2011: 3.6%);
Order book stable at £1.4bn (2011: £1.5bn)

Urban regeneration saw revenue up to £23m (2011: £19m) and operating profit to £1.5m (2011: £1.0m); regeneration pipeline of £1.6bn, with a further £0.6bn at preferred developer stage

Investments; directors’ portfolio valuation of £56m (2011: £42m), with operating profit of £1.3m (2011: loss of £2.1m);
Realised investment in Dorset Fire and Rescue PFI for £3.8m during the period and sold medical properties interests shortly after the period end for £24m providing capital to reinvest into new projects
It sees “significant opportunities to utilise the division’s specialist skills to help its public sector partners overcome on-going constraints on the public purse and realise economic potential from under-utilised assets”.

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