Morgan Sindall Group delivered a record performance in the first half against a difficult market backdrop, with Group revenue increasing by 9% up to £1,698m (HY 2021: £1,559m), while adjusted operating profit increased 4% to £56.9m (HY 2021: £54.8m). The Group demonstrated continued balance sheet strength with net cash at the period end of £274m and has a high-quality order book with a secured workload of £8.5bn. Following our strong first half performance and with the current visibility we have of the rest of the year, we now expect to deliver a result for the full year which is slightly ahead of our previous expectations.
Watch an overview of Morgan Sindall Group's results from John Morgan, Chief Executive, and Steve Crummett, Finance Director
"Our teams and colleagues are driven by delivering innovative and responsible infrastructure for all our stakeholders. Our commitment to being a responsible business remains at the centre of our strategy, along with developing long-term relationships with our customers and sustainable profitable growth."
Simon Smith, managing director for Morgan Sindall Infrastructure, said: “We’re delighted to have significantly contributed to Morgan Sindall Group’s results during the first half of this year.
“Our teams and colleagues are driven by delivering innovative and responsible infrastructure for all our stakeholders. Our commitment to being a responsible business remains at the centre of our strategy, along with developing long-term relationships with our customers and sustainable profitable growth.
“As we look forward to the second half of 2022, our strong order book and selective approach to work winning mean we are able to continue to build on the positive momentum generated in the first six months of 2022.”
Morgan Sindall Infrastructure revenue (49% of Construction and Infrastructure divisional revenue) reduced 14% to £372m (HY 2021: £435m) as expected primarily due to the timing and nature of its project workload. Operating margin increased 10bps to 3.4% (HY 2021: 3.3%), although operating profit reduced by 12% to £12.8m (HY 2021: £14.5m) in line with the lower revenue. The order book of £1,775m was down 7% compared to the year end (FY 2021: £1,905m) and down 6% from the prior year (HY 2021: £1,894m). Around 95% of the order book value remains derived through existing frameworks and with 78% of the order book for 2023 and beyond, this demonstrates the long‐term nature of the work streams and client relationships.
Morgan Sindall Infrastructure key figures
- Revenue: £372m
- Operating profit: £12.8m
- Order book: £1,775m
In highways, the division commenced the A11 Concrete Roads scheme as part of National Highway's 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. In addition, work was completed on the A45 Sprint corridor for Transport for West Midlands (TfWM), a c£40m scheme forming part of a bus priority corridor linking Walsall with the centre of Birmingham, Solihull and Birmingham Airport.
In rail, work began on six new stations as part of an extension to the Northumberland Line for Northumberland County Council, and work continued to progress on the Network Rail Parsons Tunnel rockfall shelter extension in Devon. In addition, work completed (delivered in joint venture) on the Barking Riverside Extension project for Transport for London.
In nuclear, work continued for Sellafield Ltd on the Infrastructure Strategic Alliance and the £1.6bn Programme and Project Partners contract, while in water, work continued as part of the long‐term AMP7 framework with Welsh Water.
In energy, the division was awarded a place, in a joint venture, on Scottish & Southern Electricity Networks (SSEN)'s RIIO‐2 framework with an initial term of five years, with an option for a two‐year extension. The framework involves the construction, refurbishment and decommissioning of both overhead lines, underground cable systems and substations operating between 33kV to 400kV across SSEN's transmission network.
The medium‐term target for Infrastructure is an operating margin of between 3.5% and 4% per annum and revenue of £1bn. For the full year, based upon the current visible work mix and volumes through its existing frameworks for the rest of the year, it is expected that revenue will be lower than last year, however the margin is expected to be towards the top end of its target range, albeit lower than last year's very strong performance.
You can view full details on the half year results from across the Group at the Morgan Sindall Group website.