Morgan Sindall nurses profit fall

John Morgan 'pleased' with urban regeneration progress
John Morgan 'pleased' with urban regeneration progress
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SOLID contributions from the Scottish operations of Morgan Sindall failed to offset severe pressures elsewhere as cost inflation in London and the south of England hampered the contractor’s construction division.

The group – which includes Morgan Sindall construction, urban regeneration specialist Muse Developments and affordable housing developer Lovell – yesterday posted a 19 per cent drop in adjusted pre-tax profits, which fell to £25.2 million last year. Problems on a “small number” of construction contracts and a drop in margins to just 0.3 per cent slashed that division’s operating profits by more than two-thirds to £3.5m.

In Scotland, the construction division works with a number of local councils on school refurbishment and other building work. It is also partnering with Network Rail on the £250m Edinburgh-Glasgow Improvement Programme (EGIP), a two-year project of infrastructure upgrades.

Urban regeneration, which includes Muse operations based out of Glasgow, Leeds, London and Manchester, put in a stronger performance as operating profit jumped nine-fold to £10m.

Construction progressed on 18 projects across the UK, including the controversial £107m Marischal Square development in Aberdeen.

Stephen Turner, Scottish regional director for Muse, said the company has made “significant progress” at Marischal Square. The mixed-use scheme of offices, retail and leisure space is due for completion in 2017. “2014 had been a positive year for us, with renewed confidence in the market, increased appetite for investment and continued support from our public sector partners,” Turner said.

Lovell remained busy in Scotland with a string of affordable housing projects, but across the UK as a whole the division suffered a 30 per cent decline in operating profits, which fell to £6m. That followed an expected loss of £3.5m on maintenance activity.

Morgan Sindall’s chief executive, John Morgan, said: “Whilst there have been strong performances from fit out and urban regeneration, the overall group result for the year is disappointing, having been adversely impacted by a small number of construction contracts in construction and infrastructure.

“The progress in urban regeneration is particularly pleasing as it supports our long-term regeneration strategy and provides a positive platform for further investment in regeneration, leveraging off our existing strong market positions.”

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