John Morgan, the executive chairman of Morgan Sindall, has said the percentage of public sector work on its order book will fall below 50% as a result of the coalition cuts
Speaking after the company announced a 14% drop in turnover to £980m in the six months to 30 June, Morgan said: “The order book was 60% government work and now it’s 50%. Next year it will be 40% although it’s difficult to tell exact figures ahead of the Comprehensive Spending Review in October.”
Talking about the extent of the cuts so far imposed by the government, including the scrapping of the Building Schools for the Future scheme, Morgan said: “We don’t like the cuts but they’re not different to anything we should have expected.”
Despite the impact of the cuts, Morgan Sindall reported that its order book was up £500m to £3.7bn and the company ended the period with cash of £138m - having had an average cash reserve of £61m over the six months.
But pre-tax profit was down 10% from £20.5m to £18.4m and the company said the outlook for the rest of the year remained challenging, but added that its “broad spread of activities provides resilience”.
The turnover of its newly combined construction and infrastructure division fell by almost a quarter from £797m to £612m.
Meanwhile, turnover was up 12% at its Overbury fit-out division, to £179m, driven by greater demand for larger projects from professional and financial services sectors in London.
Asked whether the company would pursue more acquisitions following the deal in June to buy the Powerminster response maintenance firm from MJ Gleeson for £6.6m, Morgan said more could follow in the same area. “I wouldn’t rule out any acquisitions. We are always hungry,” he said.
Morgan Sindall has also been named preferred partner for the Bournemouth Town Centre Master Vision regeneration scheme worth up to £500m. The 20-year scheme is a joint venture public private partnership with Bournemouth council.