Nervous clients want to see contractors’ balance sheets before signing up, Morgan Sindall boss says

More and more clients are running the rule over firms’ balance sheets in the wake of high-profile collapses, the chief executive of Morgan Sindall has said.

The firm this morning cemented its status as the industry’s star performer with a record set of results which saw it post a pre-tax profit of £144m last year, a rise of two-thirds, and revenue up 18% to £4.1bn.

Its average daily net cash in 2023 was up 10% to £282m with its cash at the year-end standing at £461m, up from £355m.

“Having a very strong balance sheet with a lot of cash is very helpful,” John Morgan said. “Clients are very interested in that. We have found housing associations, especially, are interested. Firms that go bust on them, it ends up costing them more and jobs end up being very late.”

He added: “A strong balance sheet tells clients you’re not going to go bust on them and you will pay your supply chain on time.”

The firm’s fit-out, construction and infrastructure divisions all saw profit and revenue go up with operating profit from fit out now standing at 6.5% on turnover through the £1bn barrier with a 14% rise to £1.1bn. Operating profit was up 38% to £72m.

Margins at construction were flat at 2.7% on income up 18% to £967m but infrastructure margins jumped from 3.8% to 4.3% on revenue up 15% to £887m.

The firm’s partnerships housing business saw revenue climb 20% to £838m although operating profit was down 18% to £30m.

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The one blot in the firm’s numbers was its property services business, which carries out repairs in the social housing sector, with the division racking up an operating loss of nearly £17m from a profit of £4.3m which Morgan blamed on a “catalogue of things. We signed contracts that weren’t good and got hit by mega inflation.”

Morgan said the firm has drafted in its construction business boss Pat Boyle to run property services as well and added the division was on track to post a profit in 2025.

The firm, whose last major purchase was the £26m it paid for Amec’s construction business in 2007, said it was looking at bolt-on acquisitions mainly in the housing partnerships and urban regeneration sectors.

Morgan Sindall’s order book was up 5% to £8.9bn while its dividend for the full year would be 114p, an increase of 13%.