Morgan eyes social housing boost

Building firm Morgan Sindall has posted a 9% fall in profits but said its Lovell affordable housing arm had been transformed by two major deals.

The group, which also has divisions in construction and infrastructure, urban regeneration and fit-out, reported a 5% drop in revenues to £2.1 billion as “challenging” conditions left full-year profits at £40.7 million.

The affordable housing arm hiked profits by 8% to £16.1 million and saw its order book improve to £1.5 billion after the acquisition of some assets at collapsed firm Connaught boosted its services in social housing.

With the division also lifted by an earlier deal to buy MJ Gleeson’s maintenance arm Powerminster, Morgan Sindall said Lovell had secured new long-term contracts with 45 local authorities and housing associations.

As well as transforming its range of services, the company said the deals extended its coverage in the south and south-west of England. Its workload has also been buoyed by the award of a £45 million social housing contract to create 545 new homes for West Lothian Council and a £75 million redevelopment framework contract for Glasgow City Council.

Meanwhile, the slowdown in construction and infrastructure markets caused revenues in this area of Morgan’s business to fall by 17% to £1.25 billion. Operating profits of £26.9 million, compared with £30.1 million a year earlier, represented a robust performance, according to the company.

Significant projects secured during the year included the five-year Lee Tunnel contract for Thames Water and the £400 million Hull Building Schools for the Future programme.

Morgan Sindall, which employs 7,000 people, said it remained cautious about the short-term outlook but said opportunities remain in the infrastructure market due to planned investment in power generation and utilities.

Executive chairman John Morgan added: “Trading remains challenging, but we continue to secure profitable projects.”

Stripping out one-off costs, such as the integration of Powerminster and Connaught and the merger of its construction and infrastructure services divisions, Morgan Sindall recorded flat underlying profits of £51.3 million.