­Sindall chair plans growth

Marion Dakers
CONSTRUCTION group Morgan Sindall painted a bleak picture of the UK building market yesterday but said it plans to increase its share of the shrinking market in 2011.

Morgan Sindall posted a full-year pre-tax profit of £40.7m for 2010, missing consensus forecasts of £46.9m, on a five per cent fall in revenue to £2.102bn.

The company, which recently won part of a large tunnelling contract for the £15bn Crossrail project, said underlying pre-tax profit before amortisation and non-recurring items for the year ending was flat at £51.3m.

Chairman John Morgan told City A.M.: “I don’t think the order book will grow significantly this year, but I’m confident that we are going to increase market share across the board.”

The firm’s order book last year was made up of 60 per cent government work, but Morgan said this had already dropped to 50 per cent and is expected to fall further as the year goes on.

“The private sector is coming back, particularly in London,” he said, adding that the firm’s overall market is looking 10 per cent smaller.

Morgan Sindall snapped up the bulk of social housing services group Connaught’s troubled assets last year and has finished the year with a cash balance of £149m, up 26 per cent year-on-year.

Morgan said the move “was quite a difficult integration for us... Connaught’s contracts were not run as we would have liked”, but said the firm was already seeing modest returns.

Margins in the firm’s affordable housing division Lovell, which has taken the Connaught work, rose 0.2 per cent to 4.2 per cent, delivering an operating profit of £16.1m, up eight per cent. Its overall margin rose from two per cent to 2.2 per cent.

Morgan Sindall said its order book grew to £3.6bn from £3.2bn last year.

RBS analyst Mark Howson said in a note that the firm’s underlying profit was better than expected, with cost savings helping overcome a slower-than-hoped recovery in the firm’s refurbishment business.

The FTSE-listed firm’s shares closed down 3.3 per cent at 692.5p yesterday.