Morgan Sindall Group has delivered a record set of results for the first half of 2021, with trading substantially ahead of ‘pre-pandemic’ 2019 levels. Compared to 2019, revenue was up 10% to £1,559m (HY 2019: £1,421m) with adjusted operating profit of £54.8m (HY 2019: £37.5m), up 46%. The Group’s balance sheet has also further strengthened, with net cash of £337m and average daily net cash for the half of £294m. With three profit upgrades in the first half of the year and a high quality order book with a secured workload of £8.3bn, level with year-end, the Group is well-positioned for continued future growth.
Half year results summary
Watch an overview of Morgan Sindall Group's half year results from John Morgan, Chief Executive, and Steve Crummett, Finance Director
“We’re delighted by our strong performance during the first half of this year and the significant contribution we have made to Morgan Sindall Group’s results."
Simon Smith, managing director for Morgan Sindall Infrastructure, said: “We’re delighted by our strong performance during the first half of this year and the significant contribution we have made to Morgan Sindall Group’s results. I am extremely proud of the commitment and resilience of our teams as we continue to drive operational excellence across our business and make progress towards our ambitious net-zero targets.
“As we look forward to the second half of 2021 we remain focused on work winning, and working collaboratively with our customers to win and deliver innovative and responsible infrastructure. As always, our commitment to being a responsible business is paramount and, having adapted our ways of working throughout the pandemic, we’re excited to continue our community engagement projects across the country, to leave a lasting legacy for the areas we’re working in.”
Morgan Sindall Infrastructure’s revenue (56% of divisional revenue) reduced 13% to £435m (HY 2020: £499m), primarily due to the timing of its project workload.*
We delivered operating profit of £14.5m in the period, up 41% despite of the lower revenue, with an operating margin of 3.3%, up 120bps (HY 2020: 2.1%).
Our order book of £1,894m was down 6% compared to the year end and down 5% from the prior year. Around 95% of our order book value is derived through existing frameworks and with 53% of the order book for 2023 and beyond, this demonstrates the long-term nature of our work streams and customer relationships.
In our Highways team, work won in the period included the appointment by Highways England to the Concrete Roads Programme - Reconstruction Works Framework, a four-year programme worth c£130m to repair or replace the concrete surface of motorways or major A roads in England, as well as the detailed design for the Carlisle Southern Link Road by Cumbria County Council.
In Rail, we secured a position as one of three partners on the London Rail Infrastructure Improvement Framework for Transport for London, and were awarded a project by Network Rail to construct an extension to the rockfall shelter over the railway line between Dawlish and Holcombe in Devon.
In Energy, National Grid awarded us a place on their RIIO-2 electricity construction Engineer, Procure and Construct (EPC) framework. The initial term of the framework which involves the construction, refurbishment and decommissioning of both overhead line (OHL) and underground cable systems operating between 33kV to 400kV across National Grid's transmission network is five years, with a further option for a two-year extension. It is estimated that over the lifetime of the framework approximately £1bn to £1.5bn will be invested in delivering these works. Additional work has also been secured as part of the Scottish & Southern Electricity Networks overhead lines framework.
Work in our Water team continues as part of a long-term framework with Welsh Water, and in Nuclear, we continue to deliver the Infrastructure Strategic Alliance and the £1.6bn Programme and Project Partners contract which is currently in year three of the 20-year programme, both for Sellafield Ltd.
The medium-term target for Morgan Sindall Infrastructure is an operating margin of 3.5%. Based upon our first half performance and the current visible work mix and volumes through existing frameworks for the rest of the year, we expect to, at least, achieve this margin target for the full year.
*Morgan Sindall Infrastructure results also include sister company Baker Hicks’ design activities.