Morgan Sindall Group Plc · LSE:MGNS
Morgan Sindall — H1 2022 Earnings Presentation
36 slides from Morgan Sindall's earnings presentation, Aug 4, 2022
Slide 1: Half Year Results to 30th June 2022
Half Year Results to 30th June 2022 4th August 2022
Slide 2: Agenda
Agenda Introduction | John Morgan Financial & Operational Review | Steve Crummett Outlook | John Morgan HY Results 2022 2
Slide 3: Introduction
Introduction Record first half results despite inflation and market headwinds Continued balance sheet strength with significant daily cash Operational rigour, contract discipline and risk management a key focus for the Group High-quality order book with good prospects in the pipeline Inter
Slide 4: Financial & Operational Review
Financial & Operational Review Steve Crummett
Slide 5: Summary Income Statement
Summary Income Statement Adjusted* basis £m HY 2022 HY 2021 Change Record first half Revenue 1,698 1,559 +9% performance for the Group Operating profit 56.9 54.8 +4% Operating margin 3.4% 3.5% -10bps Net Interest (2.3) (1.7) -£0.6m Profit before Tax 54.6 53.1 +3% Tax (10.9) (10.2) -£0.7m Profit afte
Slide 6: Summary by division
Summary by division Operating Operating Revenue Profit/(Loss)1 Margin1 £m change £m change % change Construction & Infrastructure 764 -1% 24.1 +7% 3.2% +30bps Fit Out 457 +20% 21.2 +10% 4.6% -50bps Property Services 76 +10% 2.5 +4% 3.3% -20bps Partnership Housing 284 +5% 13.9 +15% 4.9% +40bps Urban
Slide 7: Cash flow
Cash flow £84.7m 11.9 -12.2 Working capital outflow 56.9 -27.3 Operating cash outflow of £40.4m Net working capital outflow of £84.7m £m -57.4 Includes working capital investment in Regeneration activities of £57.4m. Mainly inventories -40.4 No significant change to underlying receivable or
Slide 8: Daily net cash balance
Daily net cash balance MAX: £368m MIN: £206m Average daily net cash (HY 2021: £294m) £ 264m Net cash at period end of £274m (HY 2021: £337m) Average daily net cash for the FY expected to be slightly lower £m 1 Jan 30 Jun 31 Dec than HY position Driven by expected investment in Regeneration and
Slide 9: Balance Sheet
Balance Sheet £m HY 2022 HY 20212 FY 2021 Intangibles 221.5 222.2 221.9 PP&E 66.9 62.7 66.6 Investments (including JVs) 92.6 96.5 94.9 Shared equity loan receivables 0.5 4.4 1.5 Net working capital (69.4) (192.8) (153.6) Current and deferred tax (1.1) (14.2) (5.3) Net cash 273.5 337.1 358.0 Lease li
Slide 10: Secured Workload
Secured Workload +2% on HY 2021 £8.5bn Group Secured Workload -1% on FY 2021 +14% -9% 4.7bn Construction 3.8bn Regeneration on HY 2021 on HY 2021 £ +3% on FY 2021 £ -5% on FY 2021 includes Construction & Infrastructure, Fit Out and includes Partnership Housing and Urban Regeneration Property Ser
Slide 11: Divisional Performances
Divisional Performances
Slide 12: Construction & Infrastructure
Construction & Infrastructure £m HY 2022 Change Construction Infrastructure Revenue 764 -1% +16% -14% Revenue up to £392m Revenue down to £372m Operating profit 24.1 +7% 51% of divisional total 49% of divisional total Operating margin (%) 3.2% +30bps Secured order book 2,535 - 2.9% 3.4% Operating ma
Slide 13: Fit Out
Fit Out £m HY 2022 Change £869m 78% of revenue Secured order book Commercial office Revenue 457 +20% Includes some larger ‘multi-year’ contracts HY 2021: 73% Operating profit 21.2 +10% Operating margin (%) 4.6% -50bps £394m 62% of revenue orders for H2 2022 within London region Secured order book 86
Slide 14: Property Services
Property Services £m HY 2022 Change c£400m new contracts >80% of order book Revenue 76 +10% won & mobilised in 2022 for 2024 & beyond Operating profit* 2.5 +4% Moat, Longhurst Group and Welwyn Hatfield Borough Long term visibility Operating margin* (%) 3.3% -20bps Council Secured order book 1,279 +3
Slide 15: Partnership Housing
Partnership Housing £m HY 2022 Change -12% +30% Revenue 284 +5% Mixed-tenure revenue Contracting revenue Operating profit 13.9 +15% to £140m (49% of total) to £144m (51% of total) Operating margin (%) 4.9% +40bps 755 mixed-tenure units £261k Secured order book 1,633 +10% completed (incl JVs) ASP in
Slide 16: Urban Regeneration
Urban Regeneration £m HY 2022 Change Period end capital employed of £99.4m Revenue 126 +85% £2.2bn Order book Up £15.4m from FY 2021 Operating profit 7.3 -16% Secured order book 2,235 -19% Long term visibility 77% for 2024 & beyond c£100m Average capital employed 91.9 -£18.1m average capital employe
Slide 17: Building Safety
Building Safety New Building Safety Act came into force in H1 Partnership Housing signed ‘Developer’s Pledge’ (DP) – although, along with rest of industry, the full legal form of contract remains under discussion Costs in H1 – not material in Partnership Housing, £7m in Urban Regeneration. Tak
Slide 18: Summary
Summary Group is in good shape Record H1 performance despite market headwinds Continued balance sheet strength High-quality order book Interim dividend up 10% to 33p per share HY Results 2022 18
Slide 19: Outlook
Outlook John Morgan
Slide 20: Inflation
Inflation Strong headwinds but manageable Prices increased for materials c23% and labour c10% in last 12 months Affects different divisions in different ways General mitigation Reimbursable cost contracts Contracts with inflation clauses Forward ordering materials for future contracts
Slide 21: Construction
Construction Medium-term target: Operating margin between 2.5% and 3% pa Revenue of £1bn Market Inflation headwinds slowing contract awards conditions Demand remains strong £760m – up 17% on prior year Order book Preferred bidder £701m, up 8% on prior year All work delivered through negoti
Slide 22: Infrastructure
Infrastructure Medium-term target: Operating margin between 3.5% and 4% pa Revenue of £1bn Market Inflation headwinds slowing order intake conditions Strong pipeline of opportunities £1,775m - down 6% on prior year Order book Around 95% through frameworks 78% of order book for 2023 and bey
Slide 23: Fit Out
Fit Out Medium-term target: Operating profit of £40m-£45m pa (average through the cycle) Strong market on the back of lease renewals, new build Market completions, and making existing buildings energy efficient conditions Expect strong demand over the next couple of years as offices are repurpos
Slide 24: Property Services
Property Services Medium-term target: Operating profit of £15m Very stable market Market conditions Strong enquires for more long-term contracts Inflation and labour shortages a strong headwind £1,279m - up 31% on prior year Order book Over 80% of order book for 2024 and beyond Order boo
Slide 25: Partnership Housing
Partnership Housing Medium-term target: Operating margin of 8% Return on capital up towards 25% Market Scale and number of schemes visible at record levels conditions Cost inflation currently mitigated by house price inflation £1,633m - up 10% on prior year Order book Mixed-tenure order book
Slide 26: Urban Regeneration
Urban Regeneration Medium-term target: 3-year rolling average ROCE up towards 20% Large number of significant schemes available Market conditions Inflation affecting the viability of some schemes Building safety issues felt strongest in Urban Regeneration £2.2bn - down 19% on prior year Orde
Slide 27: Summary
Summary No change to organic growth strategy Focus on delivering upgraded medium-term targets set back in February Expect inflationary and other market challenges to remain for the second half of the year and beyond Strong balance sheet becoming even more important Expect to deliver a resu
Slide 28: Appendices
Appendices
Slide 29: Net finance expense
Net finance expense £m HY 2022 HY 2021 Interest payable on drawings on bank facilities - - Amortisation of fees & non-utilisation fees (1.1) (1.3) Interest expense on lease liabilities (IFRS 16) (1.0) (0.7) Interest from JVs - 0.4 Other (0.2) (0.1) Total (2.3) (1.7) HY Results 2022 29
Slide 30: Adjusted earnings per share
Adjusted earnings per share £m HY 2022 HY 2021 Profit after tax 43.0 40.4 Adjusted for: Amortisation of intangibles (net of tax) 0.7 0.6 Impact of change in tax rate on deferred - 1.9 tax balances Adjusted earnings 43.7 42.9 Average number of shares 45.6m 46.1m Adjusted earnings per share 95.8p 93.1
Slide 31: Tax
Tax £m HY 2022 HY 2021 Profit before tax 53.7 52.4 Less: share of net JV profit (3.1) (5.7) Profit subject to tax 50.6 46.7 Statutory tax rate 19.0% 19.0% Current tax charge at statutory rate (9.6) (8.9) Tax on joint venture profits1 (0.6) (1.0) Change in tax rate on deferred tax balances - (1.9) Re
Slide 32: Net Cash Movement
Net Cash Movement 358.0 -55.7 Half year net cash of £273.5m -28.3 -0.5 273.5 £m Operating cash flow (£40.4m) Net Interest (non JV) (£0.4m) Tax (£14.9m) Free cash flow (£55.7m) Opening Free cash Dividends Other Closing net cash flow net cash ‘Other’ includes the purchase of shares in the Company by
Slide 33: Payment practices
Payment practices 6m to 30th June 2022 Average time Invoices not Invoices paid to pay paid within within 60 Strong relationships with our supply chain are as invoices agreed terms days important as ever in the current environment 26 days 4% 99% Construction & Continued to pay >95% of invoices wi
Slide 34: Capital employed in Regeneration
Capital employed in Regeneration £m Partnership Urban Regeneration Housing Regeneration Total net land & regeneration WIP 288.9 204.1 84.8 Unsold completed units (excl. joint ventures) 8.0 6.0 2.0 Amounts invested in joint ventures 91.8 55.1 36.7 Shared equity loans and investment properties 1.3 1.3
Slide 35: Slide 35
Slide 36: Morgan Sindall Group
MORGAN SINDALL GROUP