Morgan Sindall Group demonstrated resilience in the face of the COVID pandemic, delivering an adjusted operating profit of £68.5m (FY 2019: £93.1m) on revenue of £3.0bn (FY 2019: £3.1bn). The Group reported a secured order book of £8.3bn, up 9% year-on-year. With a strengthened balance sheet and net cash of £333m (FY 2019: £193m), the Group has ended 2020 with real momentum. It now expects profit to be materially ahead of its previous expectations and slightly ahead of that delivered in 2019.
Watch an overview of Morgan Sindall Group's results from John Morgan, Chief Executive, and Steve Crummett, Finance Director
“Whilst 2020 was a challenging year for the business, I am immensely proud of how our teams have adapted and the dedication they have shown which has enabled us to deliver a strong overall performance. "
Simon Smith, managing director for Morgan Sindall Infrastructure, said: “Whilst 2020 was a challenging year for the business, I am immensely proud of how our teams have adapted and the dedication they have shown which has enabled us to deliver a strong overall performance.
“Throughout every aspect of our business, we strive to have a positive effect on the environment and the communities within which we work - we believe in connecting people, places and communities through innovative and responsible infrastructure. Our approach to being a responsible business underpins all of the decisions we make and we are committed to achieving net zero carbon emissions by 2030.”
Morgan Sindall Infrastructure’s revenue increased 12% to £967m, with 26% growth in the first half and revenue 1% lower in the second half, driven primarily by the mix of work across the year.
At the ‘peak’ impact of the lockdown measures in the second quarter of the year, c61% of sites were closed completely (59% by value), however in many cases, the period of closure for a reassessment of safety procedures was relatively short, allowing many sites to reopen and maintain reasonable activity levels.
Operating profit from Morgan Sindall Infrastructure increased 81% to £27.5m with an operating margin of 2.8%, up a significant 100bps from the prior year and driven by the higher revenue, the type of work and improved operational delivery on site. The first half margin was 2.1%, while this increased to 3.7% in the second half, benefitting from work mix, efficiencies and final account settlements on a number of projects.
Morgan Sindall Infrastructure’s order book grew strongly, up 15% to £2,025m (80% of Morgan Sindall Group’s total by value). In excess of 90% of the value of the order book is derived through frameworks, consistent with the strategic focus on long-term workstreams from its clients.
The focus for Morgan Sindall Infrastructure remains on its key sectors of highways, rail, nuclear, energy and water. In aviation, ongoing projects at Heathrow were curtailed due to C-19 and workload in this sector in 2021, the final year of the framework, is likely to be minimal.
Morgan Sindall Infrastructure key figures
- Revenue increased 12% to £967m
- Operating profit increased 81% to £27.5m
- Order book grew 15% to £2,025m
In highways, Morgan Sindall Infrastructure was appointed through joint venture by Highways England as one of six partners on the £4.5bn Smart Motorway Alliance, set up to improve motorway journeys through increased capacity and safety improvements. Mobilisation work has begun, with the project due to start on site in the early part of 2021. We were also appointed by Transport for West Midlands to deliver the main construction works for the Sprint corridor on the A45 between Bordesley Circus and Brays Road in Yardley, Birmingham. Completions included the M62 scheme and the M5 Oldbury viaduct, the largest concrete project, by value, carried out to date in the UK.
In rail, work progressed on two enhancement schemes for Network Rail: the Werrington Grade Separation project and the remodelling of London King’s Cross station, both due to complete in 2021. In addition, Morgan Sindall Infrastructure is working with Network Rail to develop enhancement schemes as part of the CP6 framework for the Western region. Following some disruption owing to travel restrictions relating to C-19, work resumed on the Barking Riverside Extension in joint venture for Transport for London, with the scheme due to complete in 2022.
In nuclear, progress was made with the first four projects of Sellafield’s 20-year Programme and Project Partners framework, and the Infrastructure Strategic Alliance framework achieved a significant milestone with the commissioning of a major project. Work also continued on the multi-million pound D58/59 submarine building facility in Cumbria for BAE Systems.
In energy, we completed two overhead line and cabling projects in 2020 for Scottish and Southern Electricity Networks and secured, under framework, a further c£50m of cabling and overhead line work. In addition, cable installation began during the year on National Grid’s c£80m Dorset Visual Impact Provision (VIP) project, with jointing works commencing in January 2021.
In water, work started on schemes under the AMP7 framework with Welsh Water; and progress was made on the west section of the Thames Tideway Tunnel ‘super sewer’, with the joint venture’s tunnel boring machine completing the 7km journey from Fulham to Acton.