Profits soar at Morgan Sindall

Lovell delivered 1,757 new-build homes in 2017
Lovell delivered 1,757 new-build homes in 2017
Have your say

Infrastructure and regeneration company Morgan Sindall has reported a near 50​ per cent​ rise in ​2017 ​pre-tax profit, boosted by a strong performance from its Yorkshire operations.

The group said its office installation and refurbishment business Fit Out was the star performer.

Fit Out worked on the £23m refurbishment of The Worsley Building, part of the University of Leeds campus, which had been partially empty for more than 20 years prior to undergoing a full Cat A and Cat B refurbishment.

The ​group said the ​updated space now provides 150,000 sq ft of state-of-the-art teaching space along with high​ ​quality office accommodation, enabling the ​u​niversity to attract and retain the most talented staff and students.

​Operating profit at Fit Out rose 42 per cent to £39.1m in 2017. ​

​Elsewhere in Yorkshire, Morgan Sindall's Leeds-based housing developer Lovell ​delivered 1,757 new-build homes in 2017 including homes for open market sale​ ​and affordable homes.

Lovell’s combined national forward order book and regeneration pipeline now stands at £1.4bn.

Lovell's m​ajor Yorkshire projects include​ a​ £30​m waterside residential development in Doncaster, which will​ ​create 147 two, three and four​ ​bedroom homes. Work is​ ​set to start this summer at the Doncaster Lakeside site.

​The developer is also working on the 43​ ​home £3.6​m second phase of the 97​ ​home​ ​Waterdale development in Doncaster. The project is under construction for Lovell’s sister company Muse Developments.

In Belle Isle, south Leeds, Lovell is nearing completion o​n​ a £3.5​m development of​ ​33 affordable rented homes for Leeds Federated Housing Association.

The company is​ ​also delivering two schemes, together worth £3.1​m, in east Leeds for Clarion​ ​Housing Group creating 24 affordable rented homes in Seacroft and near Halton.

In Hull, Lovell is working on the £9.3​m latest phase of a major regeneration​ ​development creating nearly 800 new homes in the Ings area. Lovell is building 64 homes​ ​for sale for Compendium Living and four bungalows for Together Housing. The company​ ​is also about to complete 83 affordable homes through the regeneration programme.

Work will start later this year on a further phase of 78 homes.

​​Lovell regional managing director Robert Adams sa​id​: “The outlook for 2018 is highly​ ​encouraging as we continue to build urgently needed homes across the region. Our Eastern region forward order book currently stands at over £100​m with the company set to complete​ ​150 new homes this year in Yorkshire and the East Midlands.​"​

Morgan Sindall has raised its 2017 earnings forecast twice in the last year, citing better margins in construction and its office installation and refurbishment business.

Its results contrast with that of sector peers, who have been hit over the past year after they took on work at wafer-thin margins during the financial downturn.

Construction and support services providers Interserve, Mitie and Capita have all issued profit warnings in the past few months, and Carillion collapsed in January under a huge pile of debt.

However, Morgan Sindall has in recent years been more selective on which contracts it bids for.

The group's CEO John Morgan said: "Eight or nine years ago we got caught up in jobs we shouldn't have done.

"We changed our business five years ago and we are now far more selective. We also have the advantage of a good balance sheet."

The building and infrastructure company said pre-tax profit rose to £65m for the year to December 31, from £44m in 2016.

Its order book rose 6 per cent to £3.8bn.

Analyst Andrew Nussey at Peel Hunt said: "Morgan Sindall continues to impress.

"The outlook remains positive, supported by a strengthening Fit Out order book and positive margin momentum across construction and infrastructure. Medium term, the regeneration investments should more than offset a slowing Fit Out market. We confidently increase our 2018 and 2019 earnings per share by 6 per cent."