Housebuilder Morgan Sindall Group is set to exceed its financial expectations this year, thanks to record performance in the first half.
The London-headquartered company posted pretax profit growth of 21% to £70.1m for the six months to 30 June, up from £58m a year ago, benefiting from higher interest rates on its cash balances, with a net finance income of £4.6m versus £700,000 last year.
Revenue grew to £2.2bn from £1.9bn over the same period, driven by the fit-out division, focused on office space opportunities in commercial, central and local government hubs, and further education. Revenue in this division was up 26% to £630m.
Morgan Sindall expects the performance of its fit-out arm to well exceed the top end of the medium-term target range for this year due to exceptional revenue.
Property services remains the firm’s only unprofitable division, generating an operating loss so far this year of £11m, widened from £4.1m a year ago. The move came despite revenue growth of 6% to £103m, driven by planned repair works across residential properties.
The company expects this division to incur a further loss in the second half of 2024 of about £5.5m. However, the business is forecast to return to profit in 2025 and beyond following the implementation of the remediation plan by the end of this year.
An order book of £8.7bn as at 30 June has contracted against both £8.9bn as at the end of 2023 and £9.1bn at H1 2023, largely due to an adjustment to remove the revenue of the unexpired term of the contracts from which property services had negotiated an early release.
Morgan Sindall declared a dividend of 41.5p per share, up 15% year-on-year.
John Morgan, chief executive at Morgan Sindall, said: “The challenging market conditions that we experienced in 2023 are easing, as we continue to make significant strategic and operational progress across the group and remain well positioned to support the government’s affordable home and social infrastructure plans.
“Following our strong trading performance in the first half, combined with the high-quality secured order book and visibility for the rest of the year, we now expect to deliver a result for the full year which is slightly ahead of our previous expectations.”
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