The Midlands operations of construction company Morgan Sindall have contributed strongly to a 17 per cent surge in first half profits.

The group said the outlook remained positive as its order b ook stood at a record £3.4 billion.

Morgan Sindall has four specialist divisions - fit-out, construction, infrastructure services and affordable housing - which each have a presence in the region.

The company said yesterday pretax profits in the first six months to the end of June rose to a record £21.3 million, from £18.2 million in the same period last year.

Chairman John Morgan said: "The group's order book stands at a record £3.4 billion and all the market sectors in which we operate are attractive at present."

The company's construction arm has offices in Solihull; its fit-out wing has a Birmingham operation; the affordable housing section includes a presence in Tamworth and Halesowen; and its infrastructure arm has offices in Wolverhampton and Rugby.

Construction business Bluestone contributed to the positive picture with new and on-going projects in the West Midlands including a £4 million contract to build Rakegate Primary School, a new Infant and Junior school for Wolverhampton City Council, and a £7 million project to refurbish and extend Thomas Becket Roman Catholic School in Northampton.

It is also working on a £3.6 million contract to build a warehouse for developer Morbaine which will be used by B&Q just outside Hereford.

Other contracts include a £5.1 million project to build a multi-purpose traffic complex for Staffordshire police in Stafford and a £1.4 million contract for a new extension at Dickens Heath Primary School for Solihull Council.

Affordable housing arm Lovell also contributed strongly to the results.

Its key Midlands projects include a £10.2 million mixed tenure housing scheme in partnership with Bromford Housing Group at Huntingdon Gardens, Halesowen, where Lovell is building 29 homes for affordable rent and 35 houses for sale. Other projects include the second phase of a £13.6 million, 150-home development with Midlands Heart at Ley Hill, Northfield.

Managing director Stewart Davenport said: "Lovell has had a very active first six months with demand for mixed tenure housing and large scale housing refurbishments expected to continue."

The company's "fit-out" unit has three sub-sections, including Morgan Lovell, which has an office in Birmingham.

Morgan Lovell focuses on design and building for offices, mainly in the SME sector, a spokeswoman said.

Key schemes included office design and office fit-out projects for internet voice provider Skype, the London borough of Tower Hamlets and PayPoint. More than 60 per cent of new work won has been repeat or referred business.

Regional managing director Paul Downing said: "Morgan Lovell's growth continues to be fuelled by a healthy demand for office design, fit out and refurbishment projects across the country. We expect this trend to continue in the second half of the year with more work outside the capital coming from city centre regeneration projects, particularly in the Birmingham market."

Morgan Sindall's infrastructure arm Morgan Est launched projects including a four year £105 million contract with energy provider Central Networks to service its electrical distribution system across the north Midlands.

Mark Cutler, managing director, said: "Morgan Est has made a strong start to the year securing new orders worth £600 million and we are seeing the highest levels in workload for three years."

The performance was driven by a 29 per cent jump in pretax profits in the company's fit-out business, to £10.2 million £7.9 million, helped by financial and professional services work in the M4 corridor.

Morgan Sindall, whose shares have lagged the UK construction and materials sector by 6.6 per cent over the past six months, proposed an interim dividend of 8p per share, up 14 per cent from a year ago.