Morgan Sindall Group revenue for the year to 31st December 2023 was up 14% to £4,118m (2022: £3,612m).
Profit before tax was up 69% to £143.9m (2022: £85.3m)
An exceptional Building Safety credit of £2.2m was recognised in the year, compared to a charge of £48.9m in 2022. The credit arose as a result of a better estimate of expected costs and recoveries, the board said. This movement was the main driver of the 69% increase in pre-tax profit. However, underlying operating profit was still up by 2% at £141.3m.
End of year net cash was £461m (2022: £355m) while average daily net cash was £282m (2022: £256m), earning a tidy £10m in bank interest .
Morgan Sindall’s fit out division, Overbury, grew revenue by 14% to £1,105m (2022: £967m), with operating profit up 38% to £71.8m (2022: £52.2m) at an operating margin of 6.5% (2022: 5.4%)
The Construction division grew revenue by 18% to £967m (2022: £820m) at an operating margin of 2.7%. (2022: 2.8%). Operating profit was up 15% to £25.9m.
The Infrastructure business saw revenue up 15% to £887m (2022: £768m), with operating profit up 31% to £38.5m at an operating margin of 4.3% (2022: 3.8%).
The Property Services business suffered an operating loss of £16.8m (2022: £4.3m profit).
Partnership Housing grew revenue by 20% to £838m (2022: £696m) but operating profit was down 18% at £30.5m (2022: £37.4m).
Chief executive John Morgan said in the annual report: “Despite facing market headwinds in the year and the disappointing losses in Property Services, the diversified nature of our operations and capabilities has allowed us to continue to make significant strategic and operational progress. In addition, our focus on positive cash flow together with our strong balance sheet has positioned us well to benefit over the long term from the opportunities available in our markets.
“The challenging general market conditions coming into the year continued to ease throughout, with inflation falling in most areas. Although still a headwind for the group, the general trading environment became more manageable and predictable as the year progressed.
“During the year, however, the ongoing stability of the supply chain has become more uncertain with liquidity issues increasingly common, requiring additional vigilance both pre-construction and during the delivery of projects. The risk is mitigated to some extent by the diligence taken before project commencement and the fact that no division is overly reliant on any one supplier.
“In Construction and Infrastructure, where projects are currently underway, most include appropriate inflationary protection within the overall contract pricing and this is not seen as a significant risk. Where projects are being priced for future delivery, inflation continues to place some project budgets under pressure, which in turn has led to some delays in decision-making and project commencement. However, the impact of this has not been material and in many cases, any client budget constraints are being addressed by adjustments to project scopes, thereby allowing projects to proceed.
“The market for Fit Out's services has continued to be very strong, with a number of positive structural changes in the market. The main drivers of this include lease-related events, the requirement for greater energy efficiency from offices, the move towards more flexible and collaborative workspaces, the use of office space as a tool for enhancing staff retention and brand image, and office relocations to the regions with clients requiring increasingly complex projects.
“In Property Services, housing maintenance and the general state of repair of housing stocks are increasingly the focus for local authorities and housing associations. During the year, the business has been severely impacted by general cost and labour inflation which has impacted the profitability of its contracts.”
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