Trading Statement (0066U)
December 15 2011 - 2:00AM
UK Regulatory
TIDMMGNS
RNS Number : 0066U
Morgan Sindall Group PLC
15 December 2011
15 December 2011
Morgan Sindall Group plc
Morgan Sindall Group plc ('Morgan Sindall' or the 'Group'), the
construction and regeneration group, provides the following period
end trading update in advance of the announcement of its
preliminary results for the year ended 31 December 2011, on 21
February 2012.
Trading
As previously announced in our Interim Management Statement on 9
November, Morgan Sindall remains on track to achieve its
expectations for the current year. With our growing emphasis on
regeneration, the pipeline has grown significantly over the course
of the year from GBP1.4bn to GBP2.2bn with a further GBP1.0bn at
preferred developer stage. Our forward contracted order book is
slightly below that reported at half year at GBP3.3bn but there are
a number of major opportunities currently at preferred bidder stage
valued at GBP0.3bn.
The Construction & Infrastructure division continues to
trade positively in mixed market conditions. The division's
construction activities are operating in a very competitive and
challenging market place impacted by ongoing reductions in public
sector spending. However, there is a good pipeline of opportunities
in growing sectors of the infrastructure market. The division
continues to be successful in securing key opportunities and, since
the Interim Management Statement, it has been selected, in joint
venture, as preferred bidder for Electricity Transmission Overhead
Line work for National Grid potentially worth GBP500m. It has also
recently secured, in joint venture, the Whitechapel Main Station
Works Crossrail contract worth GBP110m.
Affordable Housing continues to exploit the broader markets
available to it as a result of the Connaught acquisition in 2010.
The collection of outstanding work-in-progress and debt relating to
the acquisition remains on track, contracts are performing as
expected, and the division has built on its broader capability
winning a contract for planned refurbishment and electrical work
with Barnet Council worth GBP103m over 10 years. Although the
market has remained reasonably stable through the year, continuing
constraints on mortgage availability mean that the pace of open
market house sales from mixed tenure sites remains subdued. There
was some encouragement for the sector from the Government's recent
Autumn Statement with additional monies being allocated to support
affordable housing.
Fit Out's level of activity has remained robust in the second
half of this year and the division is performing as expected. The
market is still seeing a lower than normal number of larger
projects at present, which is currently weighing on margins,
although we continue to expect this situation to improve in 2012.
The forward order book has improved, as expected, since the half
year but we remain cautious over the outlook for the division
whilst wider macro-economic issues continue.
Urban Regeneration's market is slowly improving and the division
remains on track to make further progress this year. The medium
term prospects are increasingly encouraging. This is underpinned by
the division being named as Basingstoke and Deane Borough Council's
regeneration partner for a GBP200 million regeneration project.
Earlier this week, Stockport Council announced that Muse was its
preferred development partner for the GBP145 million regeneration
of Stockport Grand Central Station. The division's development
pipeline has increased significantly since the start of the year,
and this is bolstered by significant opportunities at preferred
bidder. We remain confident that the division is making good
progress with positioning schemes to capitalise on demand when
market conditions improve.
The Autumn Statement also reinforced our belief that, in the
current economic environment, owners of assets will need to look at
alternative ways to deliver services and we expect that new
privately funded investment models will emerge. Our Investments
division is ideally placed to develop such innovative approaches,
for example, the Local Asset Backed Vehicle (LABV) model currently
being used at Bournemouth to develop a number of sites in joint
venture with the Borough Council.
Outlook
The Group is delivering in challenging market conditions and we
remain confident of meeting our expectations for 2011. Although we
are cautious about 2012 we believe our medium term prospects have
improved over the course of 2011 with our greater emphasis on
regeneration being reflected in a growing regeneration pipeline.
Our financial position remains strong, with GBP100m of committed
banking facilities through to mid-2015 in addition to a GBP25m
facility in place to mid-2012. The ongoing investment in our
regeneration activities is expected to result in our average cash
for the year being below that in 2010. We continue to develop the
breadth and depth of the Group's capabilities to meet our clients'
requirements, which is reflected in our healthy forward order book.
We remain confident that we are positioning the business to take
advantage of market opportunities and to emerge from the market
downturn in a stronger place.
Enquiries:
Morgan Sindall Group plc Tel: 020 7307 9200
Paul Smith, Chief Executive
David Mulligan, Finance Director
Blythe Weigh Communications Tel: 020 7138 3204
Tim Blythe Mobile: 07816 924626
Ana Ribeiro Mobile: 07980 321505
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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