Morgan Sindall ‘in best shape ever’ says CEO

Morgan Sindall generated revenues of £3,213m in the year to 31st December 2021 (2020: £3,034m), an increase of 6%. Pre-tax profit was up 108% to £126.2m (2020: £60.8m).

Those headline numbers were also strongly ahead of the pre-pandemic 2019 results, by 5% and 42% respectively. In 2019, Morgan Sindall made a pre-tax profit of £88.6m on revenues of £3,071m.

Morgan Sindall Construction & Infrastructure grew its operating margin to 3.8%, up from 2.2% in both 2019 and 2020. The fit-out business also improved its margin, up from 4.6% to 5.6%.

The construction business had a strong year of winning work. The order book at the year end was £810m, an increase of 58% on the year before. Contract wins included: a £61m project for the University of Hertfordshire to build a new home for its School of Physics, Engineering & Computer Science; Maybole Community Campus, a new £54m school campus in South Ayreshire; a £23m contract to build a new primary school campus in North Lanarkshire; and the new £31m Glebe Farm School in Milton Keynes.

Infrastructure’s order book at the year-end was £1,905m, down 6% from the start of the year.

Chief executive John Morgan said: “2021 has been an excellent year for the group with progress across the board. Our record results reflect the high quality of our operations and the huge talent and commitment of our people. The group is in its best shape ever. Our strategic focus on construction and regeneration is driving positive momentum across the group and is enabling us to upgrade our divisional medium-term targets today which provide the framework for our next stage of growth.

“Underpinning these targets is our commitment to maintaining a strong balance sheet at all times and to hold a substantial net cash position.  This continues to allow us to make the right long-term decisions for the business. We remain committed to delivering economic, social and environmental value for all our stakeholders, and to this end, we have made good progress towards achieving our ambitious target of achieving ‘net zero’ by 2030.

“We continue to make strong positive progress in our chosen markets, with the size and quality of our secured workload increasing in the year. This leaves us well-positioned for the future and on track to deliver a result for 2022 which is slightly above our previous expectations.” 

 Revenue £mRevenue changeOperating profit £m Profit changeOperating margin %Margin change
Construction & Infrastructure1,520-7%58.163%3.80%+160bps
Fit Out79514%44.238%5.60%+100bps
Property Services13420%4.1310%3.10%+220bps
Partnership Housing57221%33.2108%5.80%+240bps
Urban Regeneration20364%12.138%n/an/a
Group/eliminations-11 -20.4   

While rising input costs, including the price of materials, has put pressure on many building companies, Morgan Sindall appears untroubled. John Morgan acknowledges that “inflationary pressures and supply issues have been a feature of most of the year, with a number of significant price increases experienced in certain product categories and increases in lead times for certain product deliveries to site”.

However, he adds: “The additional costs attached to sourcing some materials have generally been offset by a combination of contractual protection, operational efficiencies and (in the case of Partnership Housing) by house sales price inflation.  As a result, in most instances the impact of this has been managed at a divisional and local level without any consequent disruption to operations.

“General cost inflation has also placed some project budgets under pressure particularly in Construction & Infrastructure, which in turn has led to some delays in decision-making, while in Urban Regeneration specifically, construction cost inflation has provided additional challenges to the viability of some of its development schemes.

“Inflationary pressures remained at the year end and are expected to continue into much of 2022, however it is expected that the impact will continue to be minimised through focused sourcing through the supply chain and ongoing operational efficiency.”

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