RNS Number:4413I
Morgan Sindall PLC
14 August 2001
MORGAN SINDALL PLC
("Morgan Sindall" or "the Group")
Interim Results for the six months to 30 June 2001
Morgan Sindall Plc, the construction brands group, today announces interim
results for the six months to 30 June 2001.
6 months to 6 months to Percentage Year to
30 June 2001 30 June 2000 Increase % 31 December 2000
Turnover (#m) 407.3 288.8 + 41 654.8
Profit before tax (#m) 10.1 5.8 + 75 15.4
Earnings per share (p) 19.45 11.08 + 76 29.75
Interim dividend (p) 4.00 3.00 + 33 10.50
- Record results driven by improved performances from all Divisions
- Acquisitions of Miller Civil Engineering Services ("MCES") and
Carillion Housing demonstrate strategic development of Group
- Lovell now the market leader and largest specialist provider of
affordable housing
- Infrastructure Services market has exciting potential - MCES will be a
leading player
- Fit Out and Construction Divisions ahead of previous year
- Balance sheet remains strong showing net cash of #15 million
John Morgan, Executive Chairman of Morgan Sindall plc, said:
"This year has seen significant growth both organically and through
acquisition. Our core Divisions continued to perform well, yet again achieving
record performances. We are particularly delighted with the acquisitions of
MCES and Carillion Housing and believe that both businesses will drive growth
into new areas and bring substantial rewards."
14 August 2001
Enquiries:
Morgan Sindall Tel: 020 7307 9200
John Morgan, Executive Chairman
John Bishop, Finance Director
College Hill Tel: 020 7457 2020
Kate Pope/Matthew Smallwood
Chairman's Statement
We have seen a successful start to the year with record profits and two
acquisitions being the key highlights. Profits before tax increased to #10.1
million (2000: #5.8 million) on turnover of #407 million (2000: #289 million),
predominately driven by improved performances from our existing businesses.
The acquisition of Miller Civil Engineering Services Ltd ("MCES"), completed
on 10 May, made a small contribution but more importantly gives the Group a
strong entry to the Infrastructure Services market.
The acquisition of Carillion Housing, was completed on 31 July and will expand
our range of expertise in Affordable Housing. The consideration was #6.25
million satisfied from cash resources. This will prove to be a major
strategic development for the Division.
Our balance sheet remains strong and shows net cash of #15 million. The #20
million cost of purchasing MCES was in part funded by an issue of ordinary
shares which raised #8.4m. This placement helped restore tangible net worth
which was reduced by the goodwill content of the acquisition.
Earnings per share are 19.45p (2000: 11.08p) and the Board has agreed to
declare an interim dividend of 4.00p (2000: 3.00p).
Operating Performance
Affordable Housing
Lovell has made an excellent start to the year with turnover of #66 million
(2000: #50 million) and operating profit of #1.90 million (2000: #1.1
million). The acquisition of Carillion Housing will add approximately #80
million per annum of turnover and makes Lovell the largest specialist provider
of affordable housing. It also gives a unique skill set capable of meeting
all the demands of the social housing market embracing PFI, design and build,
refurbishment and open market development. This increased breadth of expertise
will be particularly advantageous with large stock transfer schemes and those
financed by PFI.
Construction
Turnover increased 35% to #193million (2000: #143 million) and profits were
also ahead by 39% to #2.37 million (2000: #1.70 million). Whilst I am pleased
to see the strong growth in volume, we continue to seek further improvement in
margin and accept that changes may well be needed to achieve the goal of a
consistent minimum margin of 3% in all brands.
Fit Out
Operating profits for the six months to June were #5.66 million (2000: #4.24
million) on turnover of #113 million (2000: #97 million). This record
performance has been achieved by working closely with a client base that has
been built up over the last twenty years and ensuring that we set ourselves
ever-higher standards of delivery. Opportunities to expand both geographically
and into other niche fit out markets will ensure this Division keeps moving
steadily forward.
Infrastructure Services
MCES is a highly experienced infrastructure services provider operating in
three distinct sectors: water, tunnelling and civils. In the two months
following acquisition MCES contributed a modest #0.56 million of operating
profit from #24 million turnover, which met our expectation that the company
would be earnings enhancing from acquisition. We believe that the
infrastructure services market is strong and growing and will be dominated by
a smaller number of bigger well-funded operators. The MCES staff are confident
that, with their track record and the support of Morgan Sindall, they will be
one of the leading providers to this sector.
Investments
The improvement in property profits and interest of #2.13 million (2000: #0.78
million) reflects the successful sale of our refurbished property in Shepherds
Bush. Our redeveloped building in Wigmore Street, where the office element
became income producing in February, is now fully let. Our joint venture,
Primary Medical Properties, has completed its six year development programme.
It will now focus on managing its investment portfolio which will yield an
increasing profit stream over the coming years. Together with returns from
future PFI investments we will have a more predictable income stream from our
balance sheet investment.
The Board
As previously announced, Jack Lovell, a founding director of Morgan Sindall,
relinquished his executive responsibilities from the end of July. The Group
will retain his input and counsel as he remains a Non-Executive Director and
substantial shareholder. I would particularly like to record my thanks to
Jack with whom I have worked for twenty-four years and wish him well as he
pursues new interests.
Outlook
With record results and two acquisitions broadening our offering, Morgan
Sindall is in good shape. Whilst we cannot be immune to the economy we operate
within, our order book is strong, future potential work shows no sign of
abating and we have strength in those areas where government expenditure is
growing rapidly.
John Morgan
Executive Chairman
14 August 2001
Group Profit and Loss Account (Unaudited)
Unaudited Unaudited Audited
Six Six Year to
months to months to December
June 2001 June 2000 2000
#'000s #'000s #'000s
Turnover
Continuing operations 384,287 289,003 655,980
Acquisitions 23,641 - -
Less share of joint venture turnover (672) (249) (1,144)
407,256 288,754 654,836
Cost of sales (365,842) (257,799) (588,180)
Gross profit 41,414 30,955 66,656
Administrative expenses (32,263) (25,433) (52,804)
Other operating income 587 394 897
Operating profit
Continuing operations 9,179 5,916 14,749
Acquisitions 559 - -
Total operating profit 9,738 5,916 14,749
Share of losses of joint venture (255) - -
Net interest receivable 612 553 1,295
Exceptional loss on closure of
discontinued operation - (684) (684)
Profit on ordinary activities
before taxation 10,095 5,785 15,360
Tax charge on ordinary activities (2,625) (1,590) (3,964)
Profit on ordinary activities after
taxation 7,470 4,195 11,396
Dividends on equity and
non-equity shares (1,644) (1,238) (4,163)
Retained profit for the period 5,826 2,957 7,233
Earnings per ordinary share 19.45p 11.08p 29.75p
Diluted earnings per ordinary share 18.47p 10.67p 28.58p
Group Balance Sheet (Unaudited)
Unaudited Unaudited Audited
June 2001 June 2000 December 2000
#'000s #'000s #'000s
Fixed assets
Intangible assets 29,615 11,426 11,218
Tangible assets 19,850 12,981 11,865
Share of joint venture gross assets 19,209 15,291 17,929
Share of joint venture gross (18,375) (14,498) (16,840)
liabilities
Investment in joint venture 834 793 1,089
Investments 1,293 1,213 1,245
51,592 26,413 25,417
Current assets
Stocks 39,970 33,813 35,355
Debtors 147,747 104,384 117,964
Cash at bank and in hand 15,441 14,057 23,474
203,158 152,254 176,793
Creditors: amounts falling
due within one year (193,722) (137,765) (156,510)
Net current assets 9,436 14,489 20,283
Total assets less current liabilities 61,028 40,902 45,700
Creditors: amounts falling due after
more than one year (729) - -
Net assets 60,299 40,902 45,700
Capital and reserves
Called up share capital 5,794 6,714 5,686
Share premium account 21,729 11,810 13,064
Revaluation reserve 4,259 3,963 4,259
Profit and loss account 28,517 18,415 22,691
Total shareholders' funds 60,299 40,902 45,700
Shareholders' funds are attributable
to:
Equity shareholders' funds 56,506 36,049 41,907
Non-equity shareholders' funds 3,793 4,853 3,793
60,299 40,902 45,700
Group Cash Flow Statement (Unaudited)
Unaudited Unaudited Audited
June 2001 June 2000 December 2000
#'000s #'000s #'000s
Net cash inflow/(outflow) from
operating activities 4,412 (4,475) 8,211
Returns on investments and
servicing of finance
Interest received 812 677 1,411
Interest paid (549) (281) (615)
Dividends paid to preference (107) (136) (253)
shareholders
Interest paid on finance lease (6) - -
charges
150 260 543
Taxation
Corporation tax paid (1,820) (214) (2,563)
Capital expenditure and financial
investment
Receipts from sale of tangible 163 104 8
fixed assets
Payments to acquire tangible fixed (1,223) (1,434) (2,288)
assets
Payments to acquire fixed asset (194) (43) (155)
investments
(1,254) (1,373) (2,435)
Acquisitions and disposals
Purchase of subsidiary undertakings (20,162) - 750
Net cash acquired 4,720 - -
(15,442) - 750
Equity dividends paid (2,852) (2,199) (3,316)
Net cash (outflow)/inflow before (16,806) (8,001) 1,190
financing
Financing
Issue of share capital, net of 8,773 16 242
expenses
Net cash inflow from financing 8,773 16 242
activities
(Decrease)/increase in cash (8,033) (7,985) 1,432
Statement of Movements in Shareholders' Funds (Unaudited)
Unaudited Unaudited Audited
June 2001 June 2000 December 2000
#'000s #'000s #'000s
Opening shareholders' funds 45,700 37,929 37,929
Retained profit for the period 5,826 2,957 7,233
Options exercised 408 16 242
New shares issued net of 8,365 - -
expenses
Surplus on revaluation - - 296
Closing shareholders' funds 60,299 40,902 45,700
Notes to the Interim Report
1. Analysis of turnover and operating profit
Unaudited six months to Unaudited six months to
June 2001 June 2000
#'000s #'000s #'000s #'000s
Turnover Profit/ Turnover Profit/
(losses) (losses)
Construction 193,107 2,371 142,585 1,699
Fit out 113,334 5,662 96,578 4,235
Affordable housing 66,167 1,899 49,591 1,103
Infrastructure 23,641 559 - -
Services
Investments 11,007 1,513 - 223
Group activities - (2,266) - (1,344)
407,256 9,738 288,754 5,916
2. Acquisition of Miller Civil Engineering Services Limited
On 10 May 2001 the Company acquired Miller Civil Engineering Services Limited.
Consideration of #20 million was paid in cash on completion and there were
costs of approximately #0.2 million which have been capitalised. Tangible net
assets acquired were nil and in addition provisional fair value adjustments
have been made recognising assets totalling #1.3 million. The resultant
goodwill capitalised of #18.9 million is provisional and will be subject to
any subsequent adjustments to fair value of the net assets acquired.
3. Earnings per share
The calculation of the earnings per ordinary share is based on the weighted
average number of 37,850,000 ordinary shares in issue during the period and on
the profit for the period attributable to ordinary shareholders of #7,363,000.
In calculating the diluted earnings per share, earnings are adjusted for the
preference dividend of #107,000 giving adjusted earnings of #7,470,000. The
weighted average number of ordinary shares are adjusted for the dilutive
effect of the convertible preference shares by 1,517,000, share options by
691,000 and contingent awards under the Long Term Incentive Plan of 383,000
giving an adjusted number of ordinary shares of 40,441,000.
4. Taxation
Taxation on current period profits is charged at 26% being the estimated
effective rate of taxation for the year.
5. Reconciliation of operating profit to net cash inflow/(outflow)
from operating activities
Unaudited Unaudited Audited
Six Six Year to
months to months to December
June 2001 June 2000 2000
#'000s #'000s #'000s
Operating profit 9,738 5,916 14,749
Depreciation of tangible fixed 1,334 1,006 2,082
assets
Amortisation of goodwill 472 342 650
Loss/(profit) on sale of fixed 5 (21) (360)
assets
Increase in stocks and work in (3,876) (8,844) (10,044)
progress
Increase in debtors (543) (15,564) (28,564)
(Decrease)/Increase in creditors (2,718) 13,374 30,382
Exceptional loss - (684) (684)
Net cash inflow/(outflow) from 4,412 (4,475) 8,211
operating activities
6. Reconciliation of net cash flow to movement in net cash
2001 2000
Net cash Net cash
#'000s #'000s
At 1 January 2001 23,474 22,042
Cash (outflow)/inflow (8,033) 1,432
Cash at bank at 30 June 2001 15,441 23,474
7. Interim dividend
The interim dividend of 4.00p per share (2000: 3.00p) will be paid on 17
September 2001 to shareholders on the register at 24 August 2001. The
ex-dividend date will be 22 August 2001.
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