REG - Morgan Sindall Grp - AGM Trading Update

Morgan SindallAnnouncement

05/05/2022 07:01

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RNS Number : 3516K  Morgan Sindall Group PLC  05 May 2022

 

5 May 2022

 

 

Morgan Sindall Group plc

 

Trading Update

Ahead of today's Annual General Meeting ('AGM'), Morgan Sindall Group plc
('the Group'), the construction and regeneration group, today announces an
update on trading and the outlook for the 2022 financial year.

Group performance

The positive momentum across the Group coming into 2022 has continued and
overall trading in the year to date has been in line with expectations set at
that time of the 2021 full year results in February.

Inflationary pressures and supply issues remain a significant challenge across
the Group, with an already difficult trading environment being exacerbated by
the conflict in Ukraine. Notwithstanding this, however, the impact continues
to be minimised on most projects through focused sourcing through the supply
chain and ongoing operational efficiency.

Trading by division

Construction & Infrastructure has continued its focus on contract
selectivity and operational delivery and both Construction and Infrastructure
are anticipated to deliver margins in the year which are in line with their
medium-term targets announced in February.

Fit Out trading remains very strong and its forward order book visibility
provides confidence for the rest of the year.

Property Services has had a slower start to the year than expected due to
lower planned maintenance work, however this is expected to improve through
the rest of the year.

Partnership Housing has continued to see good levels of market demand, with
further strategic and operational progress driving performance. The average
capital employed for the full year continues to be estimated at c£190m.

Progress with Urban Regeneration's developments and schemes has been as
planned, with average capital employed for the year expected to be c£115m.

Group secured workload

The total secured workload for the Group at 31 March 2022 was £8.6bn, up 6%
from the corresponding prior year position (level with the 2021 year-end
position).

This comprised the construction secured order book of £4.5bn, up 14% from the
prior year (level with the 2021 year-end position) and the regeneration
secured order book of £4.1bn, which was down 1% from the prior year (level
with the 2021 year-end position).

Building safety

Following the announcement by the Secretary of State for the Department of
Levelling Up, Housing and Communities ("DLUHC") on Building Safety on 10
January, the Group position set out at the time of the full year results in
February was that the industry-wide solution was still being determined and
that any liability arising therefrom could not be reliably estimated.

Since then and following the subsequent discussions coordinated by the Home
Builders Federation acting on behalf of its members, Partnership Housing
signed the Developer Pledge Letter ('the Pledge') which sets out the
principles under which life-critical fire-safety issues on buildings that they
have developed of 11 metres and above will be remediated.

The additional costs arising from the scope of the Pledge in Partnership
Housing and the costs arising across the Group in relation to fire safety and
the provisions of the new Building Safety Act are not expected to be material
to the Group and will be charged through trading results in the ordinary
course.

As previously reported, the Group is also subject to the Residential Property
Developer Tax which became effective on 1 April 2022. In addition, the Group
also notes the proposal for an additional Building Safety Levy to be charged
on all future residential developments.

Balance sheet and net cash

The average daily net cash from 1 January to 30 April was £279m (of which
£68m was held in jointly controlled operations or held for future payment to
designated suppliers (JVs/PBAs)). The average daily net cash for the same
period last year was £290m.

Outlook for 2022

Current market conditions are expected to continue for the foreseeable future,
however, on the basis of the performance to date and the current visibility of
future workload for delivery in the remainder of the year, the Group is
confident of delivering a full year performance which is in line with its
previous expectations.

John Morgan, Chief Executive, said:

"Despite the current market headwinds, we're well-positioned for the future
with continued positive momentum across the Group.

Our high-quality secured workload and our operational delivery capabilities
give us great confidence for the rest of the year and we expect to deliver a
full year performance in line with our previous expectations."

 

ENDS

 

ENQUIRIES:

 Morgan Sindall Group  Tel: 020 7307 9200

 John Morgan

 Steve Crummett

 Instinctif Partners   Tel: 020 7457 2020

 Matthew Smallwood

 Bryn Woodward

 

Morgan Sindall Group

Morgan Sindall Group plc is a leading UK Construction & Regeneration group
with annual revenue of £3.2bn, employing around 6,900 employees and operating
in the public, regulated and private sectors.  It reports through five
divisions of Construction & Infrastructure, Fit Out, Property Services,
Partnership Housing and Urban Regeneration.

 

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