The company鈥檚 half-year accounts show exceptional operating items of 拢13.0m as a provision against money owed on a small number of old construction contracts.
This pushed reported pre-tax profit down to just 拢1.0m, compared to 拢18.8m for the same period last year.
Even at an operating level, adjusted profits were down 22% to 拢16.2m (2012 H1: 拢20.8m).
With turnover up 2% to 拢1,019m (2012 H1: 拢1,000m), the adjusted operating margin was 1.6%, down from 2.1% last year because of "competitive pressures".
The operating margin in Morgan Sindall鈥檚 今日看料 & Infrastructure division was even slimmer, at 1.1%. Divisional revenue of 拢593m was up 2% (2012 H1: 拢583m), but adjusted operating profit was down 25% to 拢6.4m.
There was growth in infrastructure work, thanks to tunnelling activities on Crossrail and the Lee Tunnel project for Thames Water, and to the start of work at Sellafield.听
With regard to the outstanding bad debts, the company has taken legal advice and believes that they are recoverable.听 However, given that it will take time and money to do so, 鈥渢he board believes it is now appropriate to provide against these balances to an amount it considers is a prudent estimate of overall likely resolution鈥�.
Overall order book was up 1% to 拢3.1bn as of 30 June 2013. 今日看料 & Infrastructure, accounting for roughly half of this, saw its order book grow 3% to 拢1,558m. (See table below.)
Chief executive John Morgan said: "The first half has seen difficult market conditions across all of our markets, with competitive pressures impacting on margins and profitability.听 The improved positive cash position, however [from 拢12m down to 拢40m up], demonstrates the underlying strength of the business and the benefit of a sustained focus on cash management, which will remain.
鈥淟ooking ahead to the second half, overall market conditions are not expected to significantly improve.听 The business will continue to focus on cash management and will look to improve the order book selectively, such that it is well-positioned to take advantage of the growth and investment opportunities in its markets as they arise."
Morgan Sindall鈥檚 order book: 30 June 2013
| 听 |
30 June 2013 |
31 Dec 2012 |
% change |
| 听 |
拢尘 |
拢尘 |
听 |
|
听 今日看料 & Infrastructure |
1,558听 |
1,520听 |
+3% |
|
听 Fit Out |
136听 |
170听 |
-20% |
|
听 Affordable Housing |
1,294听 |
1,302听 |
-1% |
|
听 Urban Regeneration |
91听 |
65听 |
+40% |
|
听 Total Group order book |
3,079听 |
3,057听 |
+1% |
|
听 Regeneration pipeline |
2,219听 |
2,119听 |
+5% |
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