Morgan Sindall Construction & Infrastructure adds to parent company results
Morgan Sindall Construction & Infrastructure, which has its national headquarters in Rugby, along with regional offices and sites across the UK, has contributed to half year results released today (5 August 2020) by parent company Morgan Sindall Group plc, the construction and regeneration group.
Morgan Sindall Group plc delivered results for the half year to 30 June 2020 which were unsurprisingly impacted by the COVID-19 pandemic, with adjusted profit before tax down 57% to £15.7m and revenue down 4% to £1,363m. Importantly, however, the Group’s balance sheet remains strong, with average daily net cash in the period increasing to £153m and period end net cash of £146m. With its secured workload up 5% to £8.0bn, the Group is confident of future success and growth.
Pat Boyle, managing director for Morgan Sindall Construction, said: “The first half of 2020 has been a challenging period for everyone, but our teams have worked incredibly hard alongside our supply chain partners to keep our sites safe, so we could continue to deliver for our customers. I am proud of how we have collectively responded to the challenges, with all of our projects following the latest government guidance on safe working practices and social distancing.
“I am also proud that our commitment to the communities in which we work has not diminished during this difficult period. Engagement schemes such as work experience have successfully moved online, we have supported the NHS and Emergency Services to build and repurpose facilities to support their COVID-19 response, and our team in the East of England helped to raise over £26,000 for NHS workers to say thank you for all their hard work.”
Simon Smith, managing director for Morgan Sindall Infrastructure, said: “We enjoyed a strong start to 2020 throughout quarter one, however, we were negatively impacted by COVID-19 in quarter two as we paused to ensure that we had the necessary safety measures in place on our projects. Since then we have been able to maintain operational delivery across all of our sectors with the support of our customers, supply chain and colleagues and I am extremely proud and grateful for the commitment and dedication shown throughout this period.
"We now look forward to maintaining positive momentum and focus to full year, maintaining our work winning selectivity, driving for operational excellence on all of our projects, delivering for our customers and stakeholders and continuing to operate as a responsible business.”
In Morgan Sindall Construction, at the ‘peak’ impact of the lockdown measures, c31% of our construction sites were closed completely (c15% by value), with the remainder impacted by significant productivity constraints.
The operational impact on our construction projects was broadly determined by the stage of construction, with a relatively low impact on projects at an earlier stage of construction (groundwork, piling, demolition etc), while those most impacted were projects at the final stages of construction.
As at 30 June, 100% of our Morgan Sindall Construction sites were open and active, operating at an estimated average 90% of productivity compared to pre-COVID-19 levels. This improved to c95% of pre-COVID-19 productivity levels by the end of July.
Morgan Sindall Construction’s order book increased by 8% to £554m. Of the total, £322m (58%) is secured for the second half of the year, £212m (38%) for 2021 and the remainder (4%) for 2022 and beyond.
During the first half of 2020 Morgan Sindall Construction won several new projects including a £46m residential development for Urban Regeneration (through its joint venture) as part of the wider New Bailey development in Manchester, two schools for the City of Edinburgh totalling £24m, a £37m school for Urban and Civic in Rugby and a £46m Engineering Block for Salford University. Morgan Sindall Construction was also appointed onto Lot 1 (£10m-£30m) and Lot 2 (£30m+) of the £1.5bn YORbuild framework as well as re-securing a place on the £0.5bn Scottish Hub South West Framework.
In Morgan Sindall Infrastructure, at the ‘peak’ impact of the lockdown measures, c61% of Infrastructure sites were closed completely (59% by value), however in many cases, the period of closure for a reassessment of safety procedures was relatively short, allowing many sites to reopen and maintain reasonable activity levels.
In the Aviation sector, all ongoing projects at Heathrow were immediately curtailed as a result of the pandemic. With minimal future work now expected during the second half of 2020 and 2021, teams are being re-deployed elsewhere within the business where possible.
In Nuclear, there have been COVID-19 restrictions across the whole Sellafield site, disrupting works on the Infrastructure Strategic Alliance. However, after an initial pause, early works on the 20-year Sellafield Programme and Project Partners (PPP) framework have progressed well.
As at 30 June, 93% of Morgan Sindall Infrastructure sites were open and active (c99% by value), operating at an estimated average 80% of productivity compared to pre-COVID-19 levels. This had improved to c90% of pre-COVID-19 productivity levels by the end of July.
Morgan Sindall Infrastructure’s order book grew strongly, up 13% to £1,994m. In excess of 90% of the order book value is derived through existing frameworks and with 58% of the order book for 2022 and beyond, this demonstrates the long-term nature of the work streams and customer relationships.
The focus for Infrastructure remains on its key sectors of highways, rail, nuclear, energy and water. As detailed above, the aviation business was significantly impacted in the period and any future workload is likely to be minimal.
Work won during the first six months of 2020 by Infrastructure includes the appointment by Highways England, through joint venture, as one of six partners in the £4.5bn Smart Motorway Alliance, a newly created alliance to transform the delivery of smart motorways and shape the digital roads of the future. In Rail, work commenced on the first scheme as part of Network Rail’s CP6 framework in the Western Region, while in Water, the division was awarded and has commenced work on AMP 7 schemes with Welsh Water.