Morgan Sindall builds up cash despite 31% profit fall

Aaron Morby 3 years ago
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Morgan Sindall has built up strong cash reserves despite seeing pre-tax profit fall by almost a third to £61m.

Chief executive John Morgan says the firm is in a strong position with orders up 9% to over £8bn
Chief executive John Morgan says the firm is in a strong position with orders up 9% to over £8bn

Higher costs from site closures, lower productivity and construction delays hit profitability hard in the first half of last year before steadily recovering in the second half.

Over the year, Morgan Sindall managed to maintain revenue around £3bn, helped by strong growth at the construction and infrastructure division.

At year-end, Morgan Sindall had strengthened its balance sheet with net cash strongly ahead at £333m up from £193m previously.

Average daily net cash also rose significantly to £181m (£109m: 2019).

Even with a strong focus on cash generation, Morgan Sindall maintained one of the industry’s best payment records to support its supply chain during Covid.

Construction & Infrastructure, the largest operating division by revenue, maintained its average time taken to pay invoices at 27 days.

Fit-out reported its average time taken to pay invoices at 21 days, while Partnership Housing reported 35 days.

Morgan said:  “While the year has been dominated by the Covid-19 pandemic, these results reflect the resilience across the group and the benefits of actions taken in recent years to maintain contract selectivity, further improve payments to our supply chain and maintain a strong cash position at all times.

“The size and quality of our growing secured workload at well over £8bn leaves us well-positioned for the future and we are on track to deliver a result which is materially ahead of our previous expectations and slightly ahead of that delivered in 2019.”

Morgan Sindall division
Revenue Change Profit Change Op margin
Construction & Infrastructure £1,640m 10% £36m 11% 2.2%
Fitout £700m -17% £32m -13% 4.6%
Property Services £112m -3% £1m -77% 0.9%
Partnership Housing £441m -14% £16m -12% 3.7%
Urban regeneration £123m 3% £9.2m -53%  n/a

 

Targeted margins for 2021 remain the same across all divisions except at infrastructure where this has been raised to 3.5% from 3%.

Morgan Sindall also repaid £9.5m in Government furlough cash used to to support 1,900 workers at the height of the lockdown, and paid previously deferred tax.

The group also reinstated dividend payments.

 

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