Morgan Sindall sees softer public spending

23rd Feb 2010 07:57

Construction and regeneration specialist Morgan Sindall saw profits slide in 2009 but the cash rich company is drawing comfort from its strong order book which should enable the company to ‘offset some of the effect of weakening public spending demand.’ Profit before tax and amortisation for 2009 dived 28% to £51.5m from £71.4m in 2008, but was ahead of market expectations of £49.33m.Revenue dipped 13% to £2,214m from £2,548m, and was beneath market expectations of £2,349.7m.The forward book stood at £3.2bn, down from £3.7bn at the end of 2008 but unchanged from the time of the company’s interim management statement on 17 December. Cash at the end of the year stood at £118m, down marginally from £120m at the end of 2008. The average cash balance throughout the year tumbled to £31m from £77m the year before, reflecting the higher levels of working capital required as construction activity tailed off.The group’s Construction and Infrastructure Services divisions delivered record results while the Affordable Housing division maintained its revenue and ‘generated an excellent operating profit’ of £14,9m, down from £21m the year before. The Urban Regeneration division contributed a small profit, which the group described as ‘a satisfactory performance’.‘Whilst we expect that our markets will remain challenging in 2010, as many of them continue to be impacted by the effects of the economic downturn, we are seeing some signs of recovery in demand for open market housing and demand for fit out from the financial services sector,’ the group said.A second interim dividend of 30p, payable on 1 April before the higher rate tax change kicks in, has been declared. The second interim dividend is unchanged from last year’s total dividend, while the full year dividend is unchanged at 42p.