Revenues and profits fall for Morgan Sindall

WARWICKSHIRE construction group Morgan Sindall has seen full year profits decline on an 8% reduction in revenue.

The company, which has been appointed to deliver the £70m Longbridge town centre development in Birmingham, said the performance was in line with expectations given the difficult market conditions.

Revenue for 2012 came in at £2,047m (2011: £2,227m), while pre-tax profit was £34.2m (2011: £40m), a decline of 15%.

Basic earnings per share dropped 6% to 72.5p (2011: 77.5p) and the dividend declined 36% to 27p (42p).

John Morgan, Chief Executive, said: “2012 has seen a solid performance in what has been a very tough market. The newly structured board is focused on managing the business tightly to ensure we emerge from the downturn in a strong position to take advantage of the opportunities we believe lie ahead.  

“Our exposure to infrastructure continues to grow, and we see further opportunity to leverage our strong track record and gain market share. The momentum in our regeneration pipeline reinforces our confidence that returns from our investment will start to increase over the medium term and deliver superior returns.”

The group said despite the difficult conditions margins were stable due to a continued focus on strategy. A disposal of mature investments released £26m of capital to be redeployed into major housing and urban regeneration schemes.    
            
The results also included a £7m gain on the disposal of medical properties investment while a restructuring of construction and affordable housing activities gave rise to non-recurring costs of £10m.  

The group said it had continued to develop market-leading positions in sectors where it has a strong track record and could utilise scale and expertise to deliver complex projects. It is also bidding selectively for quality projects and it said the business was now more streamlined to match the expected medium-term workload.  

In outlook, the group said it had a “sound” forward order book of £3.1bn (2011: £3.4bn) with projects at preferred bidder of £0.5bn (2011: £0.3bn). There is a growing regeneration pipeline of £2.1bn (2011: £1.8bn) with £0.4bn (2011: £0.6bn) of opportunities at preferred developer stage.

The group said its focus now would be on the growing infrastructure sectors in which it has a strong track record and where there are high barriers to entry.

The expected public sector land release is also expected to drive regeneration in the medium term although it warned the market would remain challenging in the short term due to the delay in economic recovery.

The group will also be looking for more stability at board level following a series of changes.

In November, Adrian Martin was appointed as chairman with John Morgan returning to the position of chief executive. David Mulligan will step down as finance director at end of this month and is being succeeded by Steve Crummett, formerly finance director at Filtrona.
 

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