2021 has been an excellent year for Morgan Sindall Group, with a record set of results. Group revenue rose 6% from 2020, delivering an adjusted operating profit of £131.3m (FY 2020: £68.5m) on revenue of £3.2bn (FY 2020: £3.0bn). The Group reported a secured order book of £8.6bn, up 4% on the year end. With a strong balance sheet and net cash of £358m (FY 2020: £333m), the Group is confident of achieving another good year of progress in 2022.
Watch an overview of Morgan Sindall Group's results from John Morgan, Chief Executive, and Steve Crummett, Finance Director
"Once again, our strong commercial performance has been supported by our selective approach to work winning. I’m incredibly proud of our teams and colleagues, who continue to lead our commitment to innovative and responsible infrastructure with drive and dedication."
Simon Smith, managing director for Morgan Sindall Infrastructure said:
“We’re delighted to recognise the significant contribution we have made to Morgan Sindall Group’s 2021 results. Once again, our strong commercial performance has been supported by our selective approach to work winning. I’m incredibly proud of our teams and colleagues, who continue to lead our commitment to innovative and responsible infrastructure with drive and dedication.
We’re excited for the progress ahead of us in 2022 as we work collaboratively with our customers and supply chain to develop and enhance the UK’s infrastructure, and look forward to maintaining this positive momentum in the months and years ahead.”
In 2021, Morgan Sindall Infrastructure’s revenue decreased to £826m (from £967m in 2020) primarily due to the timing of its project workload, while operating profit increased significantly, up 32% to £36.2m (FY 2020: £27.5m). This resulted in an operating margin of 4.4%, up from 2.8% in the prior year and was driven by strong operational delivery on site and by the type of work.
The first half margin was 3.3%, while this increased to 5.5% in the second half, benefitting from work mix, efficiencies and final account settlements on a number of projects.
Infrastructure’s order book at the year end was £1,905m, down 6% on the previous year end (FY 2020: £2,025m), however was up 1% on the half year position (HY 2021: £1,894m). 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 customers.
Our focus remains on contract selectivity and risk management, operational delivery and developing long term relationships with our customers. Our new and upgraded medium-term target is to achieve revenue of £1bn per annum while delivering an operating margin within the range of 3.5%-4.0% per annum. Progress towards this target is expected in 2022, although due to the timing and nature of its project workload for the year, margin is expected to move back to within its target range, which is slightly lower revenue compared to 2021.
Morgan Sindall Infrastructure key figures
- Revenue: £826m
- Operating profit: Increased 32% to £27.5m
- Order book: £1,905m
- 2022 target revenue: £1bn
In highways, work won included the appointment by National Highways (formerly 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; and the detailed design for the Carlisle Southern Link Road by Cumbria County Council.
In addition, our Highways team was awarded a place on National Highways’ new Scheme Delivery Framework, a £3.6bn, six-year programme to deliver vital renewals to maintain safety and reliability; the division was selected for the General Civil Engineering Central Region. Work was completed in the year on enhancements to the M1 junction 23 and A512 scheme in Loughborough to improve journey times and safety for motorists, delivered for Leicestershire County Council through the Midlands Highways Alliance.
In rail, we secured a position as one of three partners on Lot 1 of Transport for London’s London Rail Infrastructure Improvement Framework and was subsequently awarded early contractor involvement works for Surrey Quays and Surrey Canal Road stations.
In addition, we have been appointed as principal contractor on Northumberland County Council’s framework to build six new 15 stations on the Northumberland Line. The initial part of the Northumberland project, which aims to restore regular passenger trains between Ashington and Newcastle by 2024, will see the conclusion of comprehensive design and delivery plans for the stations and bridges. Subject to government confirmation of funding and approval of the Transport and Works Act Order application, the framework provides for the division to undertake £40m of construction work, set to start in early 2022.
Other wins included a £28m contract for Network Rail to construct an extension to the rockfall shelter over the railway line between Dawlish and Holcombe in Devon; a c£9m project to upgrade Maidenhead and Slough Crossrail stations as part of Network Rail’s CP6 framework, Western region; and c£9m of station upgrade and access-for-all schemes via the Merseyrail framework. Work completed on the remodelling of London King’s Cross station; the £160m Werrington Grade Separation project for Network Rail to increase passenger capacity; and the construction of the new Whitechapel Station for Crossrail, including a new ticket hall and step-free access.
In nuclear, we secured a third term extension to the Infrastructure Strategic Alliance for Sellafield Ltd and continued to deliver the £1.6bn Programme and Project Partners contract, a 20-year programme to clean up the legacy of early operations at Europe’s largest nuclear site. Our Nuclear team also continues its work on the 10-year Clyde Commercial Framework for the Defence Infrastructure Organisation.
In energy, National Grid awarded us a place on its RIIO-2 electricity construction EPC (Engineer, Procure and Construct) framework which involves the construction, refurbishment and decommissioning of overhead line and underground cable systems operating between 33kV to 400kV across its transmission network. The framework, expected to be worth up to £1.5bn, is for an initial term of five years with an option for a two-year extension. The division secured additional work as part of the Scottish & Southern Electricity Networks (SSEN) overhead lines framework. Work completed on a £31.9m project in Cairngorms National Park to replace overhead lines and transmission towers with underground cables between Boat of Garten and Nethy Bridge, the first project in SSEN’s VISTA (Visual Impact of Scottish Transmission Assets) initiative.