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Morgan Sindall financial results hit by Faslane losses

Morgan Sindall has revealed it made a pre-tax loss of £27.2M in the first six months of 2015, with the company taking a one-off hit of £39.4M from two contracts in Scotland.

The exceptional operating item of £39.4M relates to two construction projects which it took over when it bought Amec’s design and project services division in 2007. They are for the design and construction of a floating jetty and construction of living accommodation and infrastructure, both around the Faslane Naval Base in West Scotland.

Overall group revenue for the first half of 2015 was up 15%, and the adjusted operating profit up 2% to £15.5M. Fulll year expectations are unchanged. Total committed orders on 30 June 2015 was £2.6bn.

The company said its construction and infrastructure division’s adjusted operating profit fell to £300,000 from £5.9M for the same time last year. It said performance has been impacted by older construction contracts in London and the South.

“Construction and Infrastructure continues to be impacted by the poor performance of its older and lower margin construction contracts in London and the South and, whilst these are working through to completion, this is happening at a slower rate than previously anticipated which will hold back the divisional performance in the second half of the year,” said Morgan Sindall chief executive John Morgan.

The company said that because of on-going poor performance, construction activities in the London and the South East had been scaled back, with new business activity limited to frameworks or bidding opportunities involving investments or urban regeneration.

The company’s infrastructure division was boosted by increased work at Sellafield and a contract for Heathrow Airport to work on the £16M improvement of phase one of its Sierra Taxiway. It has also started work as part of the joint venture building the £290M A6 Manchester Airport relief road. It is also in the joint venture which is preferred bidder status for the west section of the Thames Tideway Tunnel.

Stronger performing divisions were Fit Out, with operating profit up 89% to £10.4M with growth expected to continue.

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