Connaught rescue decision reaps rewards for Morgan

BUILDING firm Morgan Sindall yesterday said its decision to rescue parts of the collapsed social housing firm Connaught was paying off.

Public spending cuts and economic turbulence squeezed margins at two of its biggest divisions, leading to a 12 per cent fall in profits to £45.3m.

But executive chairman John Morgan described the performance as resilient. Mr Morgan said the company was particularly pleased with a 15 per cent rise in operating profits at its Lovell affordable housing division following the Connaught acquisition.

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The purchase of some of the assets of the social housing specialist at the end of 2010 saved around 2,500 jobs and opened up a range of opportunities for Lovell, which achieved profits of £18.5m in the year to December 31.

Morgan Sindall’s Yorkshire operation, which is based in Garforth, near Leeds, secured a number of major contracts last year.

Key project wins for the Leeds office included a £6.7m contract to extend Europe’s largest soft drinks factory for Coca-Cola Enterprises (CCE) in Wakefield, West Yorkshire, as part of a £30m investment in the site.

The company has also completed a £15m civic office building for English Cities Fund (ECF) and Wakefield Council.

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The four-storey, 123,000 sq ft building forms a key part of the second phase of the £140m Wakefield Merchant Gate Masterplan, a project which aims to create an urban quarter covering 17 acres of land between Westgate Railway Station and the city centre.

Graham Shennan, the managing director of Morgan Sindall, said: “Morgan Sindall will focus on growing market share and maintaining and improving our market-leading positions throughout 2012.

“The depth and breadth of our skills as well as those of our supply chain and joint venture partners, combined with our ability to offer a fully integrated service on complex projects, will continue to allow us to capitalise on our strong pipeline of opportunities throughout the year.”

Morgan Sindall’s construction and infrastructure division grew revenues by one per cent to £1.3bn but its profits declined 22 per cent to £21.1m because of “extremely challenging and competitive” trading conditions.

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The Rugby-based division’s forward order book fell to £1.6bn from £2bn but key projects in the roads, rail and energy distribution sectors have offset dwindling demand from the public sector.

Across the group, 50 per cent of Morgan Sindall’s work was generated from public projects in 2011, compared with 70 per cent in 2009.

The London-based company, which employs more than 7,000 people, pegged its dividend at 42p a share yesterday.