Morgan Sindall's first-half results broke a lot of records. The office fit-out company achieved its highest-ever profit margin, while Lovell, its affordable housing arm, reported record profits. And the £3.4bn group order book - yet another record - means that the future looks bright.
An improving commercial property market was behind the 29 per cent rise in the fit-out division's profits to £10.2m, and the improved 5.6 per cent profit margin against 5.2 per cent last year. Lovell, meanwhile, as the UK's leading provider of affordable housing, grew its profits by almost a third to a record £10.2m. In fact, Lovell showed particular strength in schemes that mix housing with commercial premises, and this specialism protects its margins from competition.
The performances of the remaining two divisions - construction and infrastructure - were less exciting, but prospects for both appear to be improving. Construction is focused on the growing areas of health and education, and a shift to framework contracts is improving margins. At the same time, infrastructure, which includes the Gleeson rail business acquired in March, won £600m of new orders during the first half.
Kepler Teather & Greenwood Merrion now expects full-year adjusted pre-tax profits of £47.3m and EPS of 76p (from £41.7m and 70.7p, respectively, in 2005).
| Ord price: 1,099p | Market value: £465m |
|---|---|
| Touch: 1,100-1,109p | 12-month High: 1,274p Low: 775p |
| Dividend yield: 2.4% | PE ratio: 14 |
| Net asset value: 297p* | Net cash: £18m |
*Includes intangible assets of £72.2m, or 171p a share
| Half-year | Turnover | Pre-tax | Earnings per | Dividend per |
|---|---|---|---|---|
| to 30 Jun | (£m) | profit (£m) | share (p) | share (p) |
| 2005 | 615 | 18.2 | 29.7 | 7 |
| 2006 | 674 | 21.3 | 35.4 | 8 |
| % change | +10 | +17 | +19 | +14 |
