Pre-close trading update (7529J)
July 05 2011 - 2:00AM
UK Regulatory
TIDMMGNS
RNS Number : 7529J
Morgan Sindall Group PLC
05 July 2011
Morgan Sindall Group plc
5 July 2011
PRE-CLOSE TRADING UPDATE
The Board of Morgan Sindall Group today announces its trading
update for the six months to 30 June 2011. The Group's interim
results will be announced on Monday 8 August 2011.
The Group's positive start to the year has continued and we
remain on track to meet our expectations for the current year. The
financial position of the Group remains strong with the forward
order book in line with the start of the year.
Construction & Infrastructure
Construction & Infrastructure is trading in line with
expectations, with revenue consistent with the corresponding period
in 2010. However, as anticipated, operating margins are lower as a
result of the competitive environment. During the period the
division was successful in securing positions on a number of major
construction frameworks including places on two lots of the GBP500m
Smarte East Alliance framework and on the GBP400m, four-year South
East Wales Schools Capital Working Group framework. The division
also secured major civil engineering projects including the GBP50m
Pudding Mill Lane station works for Crossrail and, in joint
venture, the GBP235m Crossrail Whitechapel and Liverpool Street
Station Tunnels contract.
The division remains well positioned to exploit opportunities in
expanding sectors of the market which include power distribution,
airports and rail where growth is being driven by investment in
economic infrastructure, as well as the improving commercial
sector, particularly in London.
Affordable Housing
Affordable Housing has traded well in the first half of the year
demonstrating its full service capabilities by securing major
opportunities across mixed tenure, new build social housing and
planned and response maintenance. Contracts secured include two
mixed tenure development schemes in Doncaster worth GBP20m, a mixed
tenure scheme in Skipton worth GBP30m, a GBP40m programme of
improvements for Cartrefi Cymunedol Gwynedd, and a place on two
major Scottish frameworks valued at up to GBP210m in total for Port
of Leith and West of Scotland housing associations. In addition,
Lovell's joint venture, Compendium, was selected as preferred
bidder for Derby's GBP100m Castleward Urban Village
development.
The slight improvement in market conditions for open market
housing continues despite sales remaining constrained by the lack
of available mortgage finance. Alternative financing options remain
important in supporting house sales. Social housing maintenance,
refurbishment and carbon reduction projects remain resilient and
the division's combined planned and response maintenance offering
means we are well placed to address these opportunities. The
division secured its first photo voltaic (PV) installation
contracts for Flintshire CC and Clwyd Alyn Housing Association, an
important milestone in this emerging sector, and is pursuing a
number of major PV opportunities which may also harness the
Investments division's financing expertise. The maintenance
contracts acquired from Connaught continue to perform as expected
and the collection of debts acquired from the administrator is, to
date, in line with our expectations.
Fit Out
Fit Out has seen increased levels of activity, with revenue
ahead of that in the corresponding period last year albeit
operating margins, as expected, are lower due to the highly
competitive market. Due to the absence of major new commercial
properties being completed, there are few large fit out contracts
available at present. We expect a gradual improvement in the fit
out market next year as new developments are completed. The
division has recently established a technology business to broaden
its offering by delivering data centre and technology-led projects.
As a consequence of the revenue growth we believe the division
continues to take market share, leaving it well placed for the
expected recovery in the market from 2012.
Urban Regeneration
Urban Regeneration remains on track to make further progress
this year. During the period the division was selected by
Warrington Borough Council as its development partner to deliver
the Council's GBP130m Bridge Street regeneration plan. It has also
commenced activity on a number of its projects reflecting an
improving outlook for the commercial sector.
Investments
The Investments division has had a successful six months. It
secured the GBP350m Bournemouth regeneration contract using an
innovative Local Asset Backed Vehicle ('LABV') model, reached
financial close on the next tranche of schools under the Hull BSF
programme and was appointed preferred developer on the GBP450m
Southampton Waterfront scheme. Whilst the pipeline of PFI
opportunities has reduced in the near term, the division is
progressing a number of complex land swap development opportunities
in which it has a strong track record.
The Group's order book remains in line with the start of the
year at GBP3.6bn with the Group's development pipeline increasing
by GBP0.4bn to GBP1.8bn, with a further GBP0.8bn of developments at
preferred bidder. The Group's financial position remains strong,
with average cash for the six months to 30 June 2011 at GBP44m
being above our expectations although lower than that for the
corresponding period in 2010.
Overall we have had a positive first half of 2011 and, with our
track record in growth sectors, broad sector spread and depth of
capabilities, we remain well positioned to face the challenges
ahead and to benefit from opportunities as they arise.
- Ends -
Morgan Sindall Group plc Tel: 020 7307 9200
Paul Smith, Chief Executive
David Mulligan, Finance Director
Blythe Weigh Communications Tel: 020 7138 3204
Paul Weigh Mobile: 07989 129658
Tim Blythe Mobile: 07816 924626
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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