Morgan Sindall posts 'strong' profit growth for 2019
By Josh White
Date: Thursday 20 Feb 2020
(Sharecast News) - Construction and property company Morgan Sindall Group reported "strong profit growth" in its final results on Thursday, which it said was driven by a strategic focus on construction and regeneration.
The London-listed firm said revenue was ahead 3% for the year ended 31 December at ?3.1bn, with its adjusted operating margin improving to 3.0% from 2.9%.
Its adjusted profit before tax was 11% higher year-on-year at ?90.4m.
The company reported ongoing balance sheet strength, with its average daily net cash increasing to ?109m from ?99m, and year-end net cash standing at ?193m.
Morgan Sindall said it was "well set" for future growth with a high quality order book, as its secured workload rose 14% to ?7.6bn.
The board said the total dividend was up 11% for the year, at 59p per share.
Looking at its divisional performance, Morgan Sindall said its sContract selectivity and improved operational delivery drove further margin improvements in its construction and infrastructure division; where the operating margin was up to 2.2% from 2%, with operating profit rising 20% to ?32.3m.
It also reported another good performance from its fit out unit, where operating profit slipped to ?36.9m from ?43.8m, while the operating profit was described as "robust" at 4.4%, down from 5.3%.
There was a "significant improvement" in partnership housing, where operating profit rose 50% to ?18.3m, which the board said reflected ongoing operational improvements, adding that the division was "well-positioned" for future growth.
It also said there was "another strong contribution" from urban regeneration, with operating profit falling slightly to ?19.4m from ?19.6m, with the return on capital employed standing at 19%.
Volume and efficiency gains were reported in property services, with an increase in the adjusted operating margin to 3.7% from 2.0%, while adjusted operating profit more than doubled to ?4.3m from ?2.0m.
Finally, Morgan Sindall said there was further strategic progress in its investments, with "significant benefit" reported in its provision of future streams of construction work for the rest of the group, while its adjusted operating loss remained level year-on-year at ?2.4m.
"These strong results reflect the high quality of our operations and are testament to the work and commitment of all our people," said chief executive officer John Morgan.
"Our strategic focus on construction and regeneration underpins the positive momentum across the group and provides the platform for future progress.
"Our balance sheet remains a significant differentiator allowing us to make the right long-term decisions for the business."
Morgan said that, with the company's average daily net cash position further increasing in the year, it had the flexibility to continue being highly selective with its bidding while also investing in its regeneration activities.
"Both the volume and the quality of our secured workload have increased in the year leaving us well-positioned for the future.
"We are confident of another good year of progress in 2020 and the group is in a strong position to deliver on its expectations."
At 1159 GMT, shares in Morgan Sindall Group were up 0.52% at 1,948p.
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