John Morgan, the executive chairman of Morgan Sindall, said this week that the group’s construction division still had “a long way to go” despite posting an interim profit.

The business made a £4.95m loss in 2002 but the company has rebuilt the division and it registered a £1.6m pre-tax profit in the first half of this year. Turnover was £162m.

Morgan said: “The margin is 1% but we expect it to lift slightly.” He did not elaborate but it is understood that the company aims to raise the construction division’s margin to 1.5% in the next two years. Morgan Sindall believes it can do this by being more selective in its work, focusing on framework agreements.

Morgan Sindall posted an overall group turnover of £665m for the first half of 2006, up from £615m in the same period last year. Pre-tax profit was £21.3m, up from £18.2m.

The margin is 1%, but we expect it to lift slightly

John Morgan

The group’s infrastructure services arm was the only poor performer, with pre-tax profit down £100,000 to £2.7m. However, costs incurred in reorganising the business, which included the appointment of a managing director, totalled £750,000.

The fit out and affordable housing divisions both made pre-tax profits of £10.2m, up from £7.9m and £7.7m respectively.