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Morgan Sindall boosts profit despite ‘disappointing’ social landlord partnerships performance
Construction company Morgan Sindall has boosted its profits for the first half of 2018, despite a “disappointing” performance from the part of its business that works with housing associations and councils.
The firm posted a £30.2m profit for the year, up 27% from £23.7m – the figure for the equivalent period in 2017.
This was despite a fall in profit from its “partnership housing” business which Morgan Sindall says is “focused on working in partnerships with local authorities and housing associations”.
In this division of the business, Morgan Sindall saw less profit in the period, the figure falling from £5.5m to £4.6m, because of construction cost overruns, a performance the firm called “disappointing”.
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Its statement said that this fall was “primarily impacted by one poor performing contracting project in London”.
The group has chosen to prioritise partnership housing as well as urban regeneration. In the latter area, profit was up considerably from £2m to £6.1m.
Nevertheless, in both these target areas, the value of the company’s committed order book had fallen, down 20% from £523m to £418m in partnership housing and down 18% from £141m to £115m in urban regeneration.
The Morgan Sindall report said that activities of its partnership housing business “include mixed-tenure developments, building and developing homes for open market sale and for social/affordable rent, ‘design & build’ contracting and planned maintenance & refurbishment”.
A growth in mixed-tenure activities actually led to an increase in revenue for partnership housing, but cost escalation still led to the reduced profits.
During the period, Morgan Sindall signed two deals with Homes England, the government’s housing delivery agency and was selected by Liverpool City Council to build the first new homes for its new housing company.
Its urban regeneration business also worked with Homes England, on part of the Salford regeneration scheme also involving Legal & General.
John Morgan, chief executive of the company, said: “Fit-out and construction & infrastructure have both continued to deliver margin and profit growth, which has been complemented by a good performance from urban regeneration.
“There remain a significant number of opportunities in regeneration and our strong balance sheet and cash position leave us well-placed to invest further in this key strategic area.”
