KEY projects in the North-East helped construction group Morgan Sindall post a sharp rise in half-year profits yesterday.

The group, which has interests ranging from affordable housing to the Channel Tunnel rail links, said it had never been better placed after earnings jumped by 39 per cent to £18.2m, and its order book rose to a record £2.9bn.

Affordable housing company Lovell, which has offices in Stockton, helped contribute to the results through projects such as a huge housing modernisation programme in Sunderland.

Lovell's forward order book alone is worth a record £1.4bn, with projects in the region including the £25m project in Sunderland to modernise 2,000 homes.

The company is also due to start work on a £30m housing refurbishment of 3,000 properties for Your Homes in Newcastle.

"This strong start to the year by Lovell underlines the company's position as the market leader in the affordable housing sector," said Lovell managing director Stewart Davenport.

"We are working on a number of high-profile housing modernisation schemes in Yorkshire and the North-East and are well placed for further growth in the second half of 2005."

Morgan Sindall said its increase in earnings was mainly down to housing fit-out schemes.

Morgan, which was formed in 1994 from the reverse takeover by William Sindall of Morgan Lovell, described the affordable housing sector as fast growing and said significantly better margins of 4.3 per cent helped profits rise by 36 per cent to £7.7m.