Morgan Sindall back in black as Faslane saga ends

Construction group Morgan Sindall has returned to profit over the first six months of this year after finally settling its problem contracts at Faslane, and says it is on track for better than expected full-year results despite the EU referendum result.

Morgan Sindall posted a pre-tax profit of £15.4m for the first half, compared to a £27.2m loss for the same period last year. Revenue held at £1.5bn. The firm had posted a £14.8m pre-tax loss for the full 2015 calendar year.

The firm’s results were boosted by it finally settling the second of two hugely expensive problem Ministry of Defence contracts at the Faslane naval base in Scotland during the reporting period.

These contracts - to build a floating jetty and neighbouring living accommodation at the nuclear submarine base - had come with Morgan Sindall’s deal to snap up Amec’s construction and civils arm nine years ago, but hit heavy losses that had plagued the firm.

All divisions contributed to the half-year profit growth, across fit-out, construction and infrastructure, property services, housing and regeneration.

Commenting on the half-year results, Morgan Sindall chief executive John Morgan said it was “too early” to determine the impact of the Brexit vote in the medium to long term, but it was on course for a strong 2016.

Morgan said: “For the current year […] based upon current trading patterns, our high quality secured order book and the visible pipeline of opportunities, the group is on track to deliver a full year result slightly above its previous expectations.”

The firm also announced its chairman Adrian Martin will be leaving the company, having seen “progress made in reshaping the business over the last two years”. A search for a new chairman is now under way.

The group’s committed order book^*hit £3.15bn up 11% on the previous year. The contractor held £36m in net cash at period end, compared to £8m last year. Average net debt dropped to £24m, down from £35m.