Construction and regeneration group Morgan Sindall Group plc has reported a resilient set of results for the past year. While pre-tax profit was down 2% to £40.0 million, revenues were up 6% at £2,227 million. However construction margins fell from 2.2% in 2010 to 1.7%.

Profit before tax and amortisation was £45.3 million (2010: £51.3 million) with revenue up six per cent at £2,227 million (2010: £2,102 million). The Group’s forward order book currently stands at £3.4 billion (2010: £3.6 billion) with a growing regeneration pipeline of £1.8 billion (2010: £1.4 billion), and a further £0.6 billion of regeneration schemes at preferred developer stage.

Commenting on the results, John Morgan, the Group’s executive chairman, said:

“We are pleased to report a solid set of results for 2011 in line with expectations, despite continued challenging markets.”

“We are benefiting from being a broadly based business, offering creative, integrated solutions for increasingly complex projects, with a track record of delivery. We are focused on maximising opportunities in sectors we believe offer the most growth and reward. We continue to invest for sustainable growth in the medium-term whilst maintaining a strong balance sheet and dividend.”

“Construction division delivers in testing market”

 In the Construction and Infrastructure division, operating profit of £21.1million was down from £26.9 million in 2010, despite increased revenue of £1,268million - up from £1,250 million in 2010. The Group said that as expected, a competitive market had led to the fall in margin to 1.7% from 2.2% in 2010. However, key projects had now been secured in the growing infrastructure sectors of roads, rail, aviation, and energy distribution. At £1.6 billion, the division’s forward order book is down 20% from £2.0 billion in 2010, with projects at preferred bidder stage currently standing at £0.3billion.

The Group said the Construction and Infrastructure division had performed in line with expectations despite operating within “a very competitive and challenging market place.”

Morgan Sindall said the division had further reinforced its market leading positions in tunnelling and aviation and substantially strengthened its leading reputation in the rail, highways and energy markets.

"Water remains an important sector"

During 2011 the division was appointed to eight new frameworks, renewed four others, bringing its total number of frameworks to 57. The Group said Water remained an important sector with the division supporting some of the UK’s leading water authorities. Morgan Sindall is currently working on the four-mile Lee Tunnel, London’s deepest ever tunnel, Undertaken for Thames Water, the £417m project is set for completion in 2015. In joint venture, the division has been appointed to build a pioneering bio-gas plant with a contract value of £25 million as part of Yorkshire Water’s AMP5 Large Projects framework to which the joint venture was appointed in 2010. The Group said the division’s focus would continue to remain on growth sectors where superior expertise was demanded, where a track record was a requisite and where margins were less constrained.

Focus on growth sectors

Looking ahead, the Group said its strategic focus was to develop its market position across construction activities and to use the cash generated from the operations to invest in, and grow, its regeneration-related businesses.

Chief Executive Paul Smith said:

“We continue to broaden our capability and service to our clients through the Group’s ability to deliver large-scale complex projects and believe our chosen markets offer the best prospects for quality margin in our industry and the greatest potential for revenue growth.”