Group performance and outlook
Trading in the second half of the year has continued to be strong, driven by a further improvement in margin in Construction & Infrastructure and further margin growth in Fit Out. As a result, the Group is on track to deliver a full year performance slightly ahead of its previous expectations which were set at the time of the half year results on 8 August 2017. In addition, the Group expects that its average daily net cash for the full year will be in excess of £100m, ahead of previous guidance of not less than £75m.
The Group’s committed order book as at 30 September 2017 was £3.8bn, up 5% from the year end position (up 1% from the half year), whilst the regeneration & development pipeline of £3.3bn was up 2% from the year end (level with the half year).
- Construction & Infrastructure has further improved performance, with its margin benefiting from the ongoing focus on operational delivery and contract selectivity.
- Construction’s recovery has continued and accelerated, with considerable progress towards achieving its medium term margin target of 2% expected in the second half. Infrastructure has performed as expected and its mix of work in the second half should drive the expected margin increase, ahead of its first half result.
- Fit Out has achieved further margin progression ahead of its strong first half result and, based on its visible workload for the rest of the year together with its current contract delivery performance, very strong second half margin and profit is expected. Its order book as at 30 September 2017 was £540m, up 16% from the year end (down 5% from the half year) of which £333m is for 2018, thereby providing a strong underpin to next year’s trading.
- Property Services is proposing to exit its legacy insurance services business to better serve its core local authority customer base and the cost of this, together with the cost of further streamlining its contract portfolio by exiting underperforming contracts, will impact its operating result with a loss for the year of c£1m expected.
- Partnership Housing is focused on delivering construction and sales completions in its mixed-tenure business and a significant number of units are scheduled for fourth quarter completion. Average capital employed for the year is expected to be c£100m, less than previously expected and primarily as a result of deferred commencements of schemes.
- The scheduled timing of scheme completions in Urban Regeneration remains on track and in line with plans. Average capital employed for the year is expected to be c£90m, in line with previous guidance.
Investments is expected to deliver a small profit for the year (less than £1m), derived mainly from its strategic property partnership joint ventures with local authorities.
The Group’s cash position remains strong. From 1 July to 27 October, the Group has been in an average daily net cash position of £98m and from the start of the year to 27 October, the average daily net cash was £119m.
Based upon this, the Group is now expected to show average daily net cash for the year in excess of £100m. This is significantly better than previous guidance as set out at the time of the half year results of average daily net cash being not less than £75m.
This announcement contains inside information. The person responsible for the release of this announcement on behalf of Morgan Sindall Group plc is Steve Crummett, Group Finance Direct