Interim Management Statement

RNS Number : 7321R

Morgan Sindall Group PLC

09 November 2011

 



Morgan Sindall Group plc

9 November 2011

INTERIM MANAGEMENT STATEMENT

Morgan Sindall Group plc ('Morgan Sindall' or the 'Group'), the construction and regeneration group, announces today its Interim Management Statement covering the period 1 July 2011 to 8 November 2011.

Morgan Sindall remains on track to meet its expectations for the current year. The macroeconomic environment continues to be challenging but our financial strength, breadth of capabilities and leading positions across a range of market sectors leave us well placed to emerge from the current market a stronger business than when we entered. In particular the benefit of our emphasis on regeneration is seen in the growth in our regeneration pipeline from £1.8bn to £2.2bn since the half year with a further £0.9bn of regeneration opportunities currently at preferred developer stage.

Construction & Infrastructure

This division's construction markets continue to be competitive and impacted by public sector spending cuts, though commercial activity is beginning to pick up gradually in London and the South-East.  Encouragingly, infrastructure markets remain healthy, and the division expects to see opportunities in power distribution, airports, rail and roads, where it has an established track record.

In the second half of the year the division has continued to secure key opportunities including appointment to a £150m primary school framework for South Lanarkshire Council, a £750m Network Rail framework under which the division will work on the Western route in joint venture with Colas, and a place alongside our Affordable Housing division on a £3bn framework for Birmingham City Council. The division's forward order book is down from the half year, but there are significant opportunities at preferred bidder stage, including a £500m overhead line partnership for National Grid in joint venture with Vinci Energies.

Affordable Housing

Affordable Housing's maintenance and new build social housing markets have continued to be robust in the second half of the year and, following the £560m allocation of funds to Registered Social Landlords, we expect to see a number of new-build social housing opportunities emerge in the coming months.

Conditions in open market housing continue to be constrained by mortgage conditions albeit house sales and values have improved through the summer and into the autumn. We continue to make good progress with the recovery of the work in progress and debt acquired in relation to the Connaught acquisition, the total recovered currently standing at £19m, in line with our expectations. The division's full service offering leaves it well placed to target mixed tenure, new-build social housing and maintenance opportunities and as well as major housing-led regeneration schemes. Its forward order book has increased slightly since the half year.

Fit Out

Fit Out's activity levels remain high and we believe that it continues to take market share, although market conditions remain highly competitive and constrained by the lack of major project opportunities. The division's market leadership has enabled us to continue to focus on profitable work, although we expect that margins will remain subdued in the near term. Since the half year the division's forward order book has recovered and it is in line with the start of the year, with a reasonable level of workload secured for 2012.

Urban Regeneration

With the Group's increased focus on regeneration, we are benefitting from the skills and successful track record in Urban Regeneration. The division has made good progress in recent months, being named as the partner by Basingstoke and Deane Borough Council for a major £200m redevelopment of over 15 acres to produce in excess of 700,000 square feet of office space, and securing 3.5 acres of land in Chester with a view to creating a £115m, 500,000 square foot business quarter.

The division continues to build momentum across its portfolio of regeneration schemes with more than double the amount of construction on site than a year ago and with a number of schemes securing planning in recent months.  This is reflected in its future regeneration pipeline increasing since the half year to £1.8bn from £1.4bn with a further £0.5bn of schemes currently at preferred developer.

Investments

Investments continues to work with our clients on alternative funding structures for regeneration schemes in response to the public sector spending cuts as well as demand from private sector partners. Its regeneration pipeline currently stands at £0.4bn with a further £0.4bn of schemes at preferred developer.

Overall we continue to pursue attractive opportunities across all the Group's market sectors. We remain in a robust position with a £3.3bn forward order book and a number of major contract opportunities currently at preferred bidder, a growing regeneration pipeline of £2.2bn and £0.9bn of regeneration schemes at preferred developer stage, with average cash year to date at £28m, reflecting ongoing investment in regeneration opportunities. There has been no significant change in the Group's financial position since the publication of the Interim Report for the six months to 30 June 2011.

The Group remains confident of meeting its expectations for 2011. Whilst the current market conditions will constrain growth in the near term we remain positive about the medium term prospects for the Group with our increasing emphasis on regeneration.

- Ends -

Morgan Sindall Group plc                                       Tel: [phone]

Paul Smith, Chief Executive

David Mulligan, Finance Director

Blythe Weigh Communications                               Tel: [phone]

Tim Blythe                                                                   Mobile: [phone]

Ana Ribeiro                                                                 Mobile: [phone]

Notes to Editors:

Morgan Sindall Group plc is a leading UK construction and regeneration group operating through five divisions of construction & infrastructure, affordable housing, fit out, urban regeneration and investments.

 

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