Morgan Sindall Group Plc

Last updated 26th April 2023

Morgan Sindall Group plc

London-based Morgan Sindall is one of the largest UK construction and regeneration groups with a turnover of £3.6 billion, around 6,700 employees and divisions covering: construction & infrastructure, property services, partnership housing, fit-out and urban regeneration. The group reported a strong performance for 2022 and a significant order book worth £8.5 billion.

Having been knocked back by loss-making contracts taken on in leaner times, the group is now bidding selectively and targeting more infrastructure work and mixed-use urban and mixed-tenure housing regeneration schemes.

Today, the group’s urban regeneration, property services, partnership housing and fit-out businesses are faring well and its core construction and infrastructure business is performing steadily.

In early 2023, chief executive John Morgan pointed to significant macroeconomic uncertainty but said that: “Morgan Sindall is a strong and agile business which is well-placed to overcome the challenges of the coming year and also well-positioned to take advantage of the opportunities that arise in this type of environment.

Financials

To view the financials for Morgan Sindall Group Plc., visit Companies House and use Company ID 00521970.

Morgan Sindall’s results show it making strong progress in 2022 despite facing ‘market headwinds’. The group reported adjusted pre-tax profits up 7% to £136.2 million in the year to December 2022 on revenues up 12% at £3.612 billion. Adjusted operating profit rose by 6% to £139.2 million although margins dipped to 3.9% from 4.1% previously. Meanwhile, the group put in a strong cash performance, ending the year with net cash of £355 million, little-changed on the previous year and the dividend was increased significantly, up by 10% to 101p.

Construction and Infrastructure

Morgan Sindall”s construction & infrastructure arm focuses on the education, healthcare, commercial, industrial, leisure and retail markets in construction; whilst its infrastructure side focuses on highways, rail, energy, water and nuclear. The firm works on projects and frameworks from £50,000 to over £1 billion.

The division delivered a ‘steady’ result in 2022; operating profit dipped to £52.1 million from £58.1 million on revenues up 3% at £1.57 billion and the operating margin was slightly down at 3.3%. Turnover was split fairly evenly between construction (£808 million) and infrastructure (£761million). The division”s overall order book in 2022 was slightly lower, down 4% at £2,601 billion.

The infrastructure order book was down 6% to £1,905 million, meanwhile the construction order book was down slightly at £802 million. The construction business also had a further £758 million of work at preferred bidder stage.

In education – a key sector for the construction arm – key project wins included the £63m redevelopment of King Henry VIII Secondary School in Abergavenny and a £15.1 million contract at Leeds Mathematics School.

In healthcare, construction wins included a £14.5m project to deliver a new imaging centre at Milton Keynes University Hospital, secured via the Pagabo framework.

Other frameworks included a place on the £9bn Procure 23 framework, a partnership between Crown Commercial Services and NHS England and Improvement (NHSE&I).

In infrastructure, Morgan Sindall’s order book was down 6% at £1,799 million and the margin slipped slightly to 3.9%.

Key wins included the A45 at Great Doddington, the first project under National Highways” new Scheme Delivery Framework, a £3.6bn, six-year programme to deliver vital renewals.

On rail, the division won various Network Rail schemes including the Bangor to Colwyn Bay signalling power upgrade and the refurbishment of Liverpool Street Station roof, secured through SCAPE”s Construction Framework.

Morgan Sindall is continuing to work on Sellafield”s £1.6bn Programme and Project Partners contract, its third year of a 20-year framework, and facilities for BAE Systems. The division also won a National Grid contract for the £112m Dinorwig scheme.

In the water sector, the group has started work on projects under the AMP7 framework with Welsh Water and completed work on the Thames Tideway Tunnel ”super sewer”.

Fit-Out

Through Overbury and Morgan Lovell, the group is a major player in the highly competitive fit-out sector where the business is in good health. In 2022, revenues at the division rose by 22% to £968 million although the margin dipped fractionally to 5.4%. Commercial office work stood at 73% of revenues with a dip in public sector and local authority work offset by an increase in higher education work.

The division”s order book was down at £841 million although it had £100 million of work as preferred bidder and significant work at the tendering stage. Key fit out projects won during the year included a 360,000 sq ft project for Marsh McLennan in London and Shell UK”s 250,000 sq ft Waterloo hq.

Partnership Housing

Expanded in recent years by the addition of Connaught, the group has a significant partnership housing business, Lovell. In 2022, revenues at the division rose by 22% to £696m and profits rose 13% to £37.4 million although margins dipped to 5.4%. The secured order book was up by a third at £1,984 million.

Mixed-tenure, where it has 58 sites operating and revenues rose by 15% to £371 m and contracting (including planned maintenance and refurbishment) where it built 2 021 equivalent units over the year and revenues were up by 31% to £325m, both performed well.

Urban Regeneration

Morgan Sindall’s urban regeneration arm rebounded well from the pandemic. Revenues rose by 20% to £244 million in 2022 and operating profits were up by 56% to £18.9 million. The division”s regeneration order book stood at £1.847bn and in all the division had 16 projects on site at the year end, totalling £1215m gross development value, and a further 5 projects worth £334 million expected to start on site in 2023.

Key new projects included an appointment as development partner for Arden Cross, Solihull, a £3bn scheme to create a 346-acre city district involving up to 6m sq ft of commercial space, up to 3,000 homes, transport infrastructure and significant public space.

Property Services

The group”s property services division saw profits rise to £4.3 million in 2022 from £4.1 million previously, on revenues up 22% at £163 million although the margin slipped to 2.6% from 3.1%. But the division”s year-end order book was up 27% at £1204 million.

Revenue growth was partly driven by a new ten-year contract with a housing association, Moat, for services to 11,500 homes across south east London, Kent, Essex and Sussex and worth over £200m.

Glenigan Data

Glenigan data shows that Morgan Sindall ranked as the 5th largest UK contractor in a recent year with 348 significant deals worth a total of £2,012.7 million in the year to March 2023 (£272 million on civils work and £1,741 million on building). Glenigan data also highlights Morgan Sindall”s regional strengths. During 2022, Morgan Sindall ranked as the largest contractor in the East of England (with 32 deals worth £444 million in 2022), the fifth largest contractor in the South East (with 57 deals worth £269.4 million), the third largest in the East Midlands (with 15 deals worth £144 million) and the fifth largest in the West Midlands (with 31 deals worth £118 million).

Conclusion: Strong order book and weathering difficult times well

Having re-bounded well from the pandemic, Morgan Sindall has re-bounded well from the pandemic and looks well-placed to prosper from its mix of construction and regeneration specialisms. Although its margins are inevitably under pressure, the group”s £8.5 billion-plus order book provides reassurance. Turnover growth at its construction & infrastructure division along with a thriving fit-out business and scope for growth – particularly in partnership housing and urban regeneration – should ensure Morgan Sindall makes further progress in 2023. Bolstered by its strong cash flow and positions on a growing number of frameworks, the group looks set to maintain its momentum in uncertain times.

Winning work with Morgan Sindall

Morgan Sindall is keen on developing long-term relationships with its supply chain which it sees as key to achieving its business objectives. It aims to engage with a fully-integrated supply chain throughout the construction process, from initial bid to completion.

The group operates a Supply Chain Sustainability School to help drive improvement from suppliers. Around 65% of the group”s spending is covered by group-wide agreements and it undertakes registration and conformance checks before admitting new suppliers to the agreements.

A page on the group’s website here gives full details of its approach to its supply chain and how to register to join. An email address for supply chain enquiries is msgsupplychain@morgansindall.com

Key contacts

Gavin Jamieson, Supply Chain & Procurement Director at Morgan Sindall Construction

Tel: 01788 534500

Email: gavin.jamieson@morgansindall.com

Jamie Showers, Buyer at Morgan Sindall, based in Rugby

Tel: 01788 534500

Email: Jamie.showers@morgansindall.com

The Head of Procurement & Sustainability at Lovell Partnerships, the affordable housing arm, is

Rob Worboys

Tel: 01827 305600

Ian Watson, Procurement Director, Morgan Sindall Property Services

Email: ian.watson@morgansindall.com