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RNS Number : 1615E
Morgan Sindall Group PLC
04 November 2020
4 November 2020
Morgan Sindall Group plc
This announcement contains information that qualified, or may
have qualified, as inside information for the purposes of Article
17 of the Market Abuse Regulations (EU) 596/2014 (MAR). The person
responsible for making this announcement is Steve Crummett, Finance
Director
Trading Update
Morgan Sindall Group plc ("the Group") today provides an update
on current trading and the outlook for the 2020 financial year.
Group performance and outlook
At the time of the half year results on 5 August 2020, the Board
stated that it expected profit before tax for the year to 31
December 2020 would be in the range of GBP50m-GBP60m. Since then,
momentum within the Group's operations has continued to increase
following the COVID-related disruption in the first half.
The Group notes the Prime Minister's announcement of further
national lockdown restrictions across England commencing 5 November
and particularly welcomes the explicit statement that construction
activity should continue throughout. The Group will continue to
operate in line with government advice and that of the devolved
administrations across the UK and with strict adherence to safe
operating procedures across all its sites and activities. On this
basis, any further disruption to the Group as a result of these
newly-announced restrictions is not expected to be material to the
current year's performance.
Based on this and the performance to date, with the Group well
into the last quarter of the year, it is now expected that the
Group will deliver a full year performance which is slightly above
the top end of the previously guided range.
In addition, the Group's cash position has further strengthened
and the average daily net cash for the full year is now expected to
be in excess of GBP150m, again ahead of previous expectations.
Current trading by division
In Construction & Infrastructure, the Infrastructure
activities have continued to trade strongly, with revenue and
margin well ahead of prior year. With the Construction activities
also recovering well, it is expected that the overall divisional
margin for the year will be in excess of 2%, reflecting the high
quality of client relationships, operational delivery and risk
management in the division.
In Fit Out, there have been no significant changes to market
dynamics or customer behaviour. Although the secured order book at
the end of September was 15% lower than at the same time last year,
this is more than offset by the value of projects at preferred
bidder stage. In addition, the value of tenders due in the final
quarter of the year is 18% higher than for the same period last
year.
All contracts have now been remobilised in Property Services and
a more normal run-rate of activity is expected throughout the
fourth quarter.
Partnership Housing has continued to see higher levels of
construction activity as well as unit sales and completions since
the half year and its operating margin for the full year is
expected to be well in excess of 3%. The market opportunity remains
significant, with its secured order book to 30 September up 3% from
the half year to GBP1.3bn (up 16% from the year-end).
Urban Regeneration has performed as expected, with all its
development schemes under construction back on site and active
again. In relation to progressing its pipeline of new development
schemes, the speed of decision-making by potential partners remains
cautious, although has improved since the half year.
In Investments, the operational management for the joint venture
property partnerships and Later Living business is being
transferred across to Urban Regeneration and Partnership Housing
during the fourth quarter and a modest level of reorganisation
costs will be incurred. These costs will be taken as normal through
operating results and consequently the second half is expected to
show a broadly similar loss to that which was reported for the
first half.
Group secured workload
The total secured workload for the Group as at 30 September 2020
was GBP7.9bn, up 5% from the year end position (level with the half
year).
This comprised the construction secured order book of GBP3.8bn,
up 5% from the year end (down 1% from the half year) and the
regeneration secured order book of GBP4.1bn, which was up 4% from
the year end (up 1% from the half year).
Repayment of furlough receipts
At the time of the half year results, the Group announced its
intention to voluntarily repay the claims which it had made under
the Government's CJRS furlough scheme, and that this would be taken
through Central costs.
The total amount of cash received under the scheme of GBP9.5m
was repaid by the end of October. The repayment was structured such
that GBP7.7m was repaid directly (being 81% of the total received)
and will be taken through Central costs, with the remaining GBP1.8m
paid as additional corporation tax as the repayment through Central
costs is not tax deductible.
Balance sheet and liquidity
The Group remains in a very strong financial position.
The average daily net cash from 1 July to 31 October was GBP188m
(of which GBP60m was held in jointly controlled operations or held
for future payment to designated suppliers (JVs/PBAs)).
For the period from 1 January through to 31 October, the average
daily net cash was GBP167m (including GBP60m in JVs/PBAs) which was
GBP58m higher than the prior year and of which GBP21m was as a
result of the permissions to defer VAT, PAYE and other tax payments
previously disclosed.
Based upon this and current forecasts to the year end, the
average daily net cash for the full year is now expected to be in
excess of GBP150m (FY 2019: GBP99m), significantly ahead of
previous guidance and prior year.
During October, the Group also secured a new GBP150m committed
revolving credit facility ('RCF'), replacing the previous GBP150m
facility which was due to expire in early 2022. The new facility
initially extends until late 2023 and includes two further one-year
extension options, with the agreement of the lending banks. This
facility is in addition to the existing GBP30m loan facility, which
together provide the Group with a total of GBP180m of committed
facilities as before.
Interim Dividend
At the time of the half year results, the Board concluded that
there remained sufficient market uncertainty so as not to declare
an interim dividend at that time, however it also committed to
actively consider the resumption of dividend payments when there
was further clarity over the economic outlook and business
interruption risks.
Based upon its current assessment of the performance of the
business, the outlook for the year and the strong cash position,
the Board has declared an interim dividend of 21.0p per share, in
line with 2019's interim dividend.
This will be paid on 8 December 2020 to shareholders on the
register at 13 November 2020. The ex-dividend date will be 12
November 2020.
John Morgan, Chief Executive, said:
"Following the disruption earlier in the year, all of the
Group's activities are now fully operational again and delivering
high levels of productivity. We welcome the Prime Minister's clear
statement that construction activity should continue through the
new lockdown restrictions in England for November and we anticipate
operating safely throughout with minimal impact.
Our high-quality secured workload gives us good visibility for
the rest of the year and as such, we now expect to deliver a full
year performance slightly above the top end of our previous
expectations.
Our strong cash generation, position and balance sheet remain
key differentiators. These, together with the improved outlook for
the year, have enabled us to repay furlough monies and resume
dividend payments as declared today.
Despite the uncertainty that the pandemic brings, we have a
sound platform for future growth with the Group geared towards
future demand for affordable housing, urban regeneration and
infrastructure and construction investment."
ENDS
ENQUIRIES:
Morgan Sindall Group plc Tel: 020 7307 9200
John Morgan, Chief Executive
Steve Crummett, Finance Director
Instinctif Partners Tel: 020 7457 2005
Matthew Smallwood
Rosie Driscoll
Morgan Sindall Group
Morgan Sindall Group plc is a leading UK construction and
regeneration group with revenue of cGBP3bn, employing around 6,200
employees and operating in the public, regulated and private
sectors. It operates through six divisions of Construction &
Infrastructure, Fit Out, Property Services, Partnership Housing,
Urban Regeneration and Investments.
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