Morgan Sindall Group Plc · LSE:MGNS
Morgan Sindall — FY2012 Earnings Presentation
34 slides from Morgan Sindall's earnings presentation, Feb 19, 2013
Slide 1: 2012 Preliminary results
2012 Preliminary results Morgan Sindall Group plc Constructing and Regenerating 19 February 2013
Slide 2: Morgan Sindall Group
MORGAN SINDALL GROUP
Slide 3: 2012 Overview
2012 Overview > Board Changes > Adrian Martin as Chairman > John Morgan as Chief Executive > Steve Crummett joins as Finance Director > Liz Peace as NED, Audit Committee Chair from AGM > Consistent strategy > UK construction and regeneration; focus on segments where we can achieve market-leading pos
Slide 4: 2012 Overview
2012 Overview > Emphasis on > Greater collaboration between divisions > Margin improvement > Develop new and emerging opportunities > Market and performance > Market remains challenging; four years of declining output > Solid performance in 2012 against this backdrop > Dividend and future prospects
Slide 5: David Mulligan, Finance Director
David Mulligan Finance Director 5
Slide 6: Results in line with expectations
Results in line with expectations £m 2012 2011 Change Revenue 2,047 2,227 -8% Underlying profit from operations 48.1 46.1 +4% Non-recurring items (10.0) (1.4) Net finance exposure (1.0) (0.8) Adjusted profit before tax 1 37.1 43.9 -15% Amortisation (2.9) (3.9) Profit before tax 34.2 40.0 -15% Adjust
Slide 7: Segmental analysis
Segmental analysis £m December 2012 December 2011 Revenue Profit Margin Revenue Profit Margin Construction and Infrastructure 1,168 19.7 1.7% 1,268 21.1 1.7% Fit Out 427 11.3 2.6% 438 12.4 2.8% Affordable Housing 386 11.5 3.0% 462 18.5 4.0% Urban Regeneration 62 2.7 4.3% 57 3.9 6.9% Investments 4 7.
Slide 8: 2012 non-recurring items
2012 non-recurring items £m Construction Redundancies 3.6 Property closures 3.2 Affordable Housing Redundancies 2.5 Other 0.7 10.0 > Major reorganisation of construction and affordable housing activities undertaken in 2012 > Property cost covers remaining lease term of properties no longer in use 8
Slide 9: Tax
Tax £m 2012 2011 Current tax UK tax 5.4 10.0 Prior period adjustment (0.8) (25.1) Current tax exposure 4.6 (15.1) Deferred tax Current year (1.3) (1.0) Prior period adjustment 0.2 23.3 Deferred tax expense (1.1) 22.3 Income tax expense 3.5 7.2 Effective tax rate 12.3% 18.1% > Tax charge below normal
Slide 10: Balance sheet
Balance sheet £m December December YOY 2012 2011 Movement Intangible fixed assets 223.2 226.6 -3.4 Tangible fixed assets 20.1 21.6 -1.5 Investments (inc joint ventures) 73.9 61.3 +12.6 Shared equity loan receivables 19.2 17.6 +1.6 Inventories 159.4 146.0 +13.4 Other working capital (271.2) (316.6) +
Slide 11: Cashflow
Cashflow £m Year to Year to December 2012 December 2011 Profit from operations 35.2 40.8 Non-cash and other adjustments (5.8) 13.1 Working capital movement (78.1) (56.9) Net investment in PPE (2.4) (0.8) Income tax (8.1) (6.8) Dividends (17.8) (17.8) Net interest paid (0.8) (0.6) Disposal of JVs 26.
Slide 12: John Morgan, Chief Executive
John Morgan Chief Executive 12
Slide 13: Priorities
Priorities > Target schemes requiring integrated approach where we have competitive advantage > Construction and Infrastructure – hold construction margins and expand infrastructure > Fit Out – focus on improving margin > Affordable Housing – target larger mixed-tenure schemes > Urban Regeneration –
Slide 14: Construction and Infrastructure
Construction and Infrastructure
Slide 15: Construction and Infrastructure Market and Trading Highlights
Construction and Infrastructure Market and Trading Highlights Revenue Adjusted Operating Profit 2012 2011 Change 2012 2011 Change £1,168m £1,268m -8% £19.7m £21.1m -7% > Rebalanced business following reorganisation of construction capacity > Infrastructure revenue £550m (2011: £521m) increasing as e
Slide 16: Construction and Infrastructure Outlook
Construction and Infrastructure Outlook > In short-term expect market to remain highly competitive > Expect revenue and profit to reduce further in 2013 > Continuing focus on growth infrastructure markets into medium- term > Increase workload from existing frameworks > Forward order book at £1.5bn (
Slide 17: Fit Out
(foverbury Morgan Lovell Inspiring office transformation Fit Out MORGAN SINDALL GROUP
Slide 18: Fit Out Market and Trading Highlights
Fit Out Market and Trading Highlights Revenue Adjusted Operating Profit 2012 2011 Change 2012 2011 Change £427m £438m -3% £11.3m £12.4m -9% > Maintained market-leading position and increased market share > Market remains very competitive with margins tighter at 2.6% (2011: 2.8%) > Resilient pipeline
Slide 19: Fit Out Outlook
Fit Out Outlook > Positive start to 2013 but market remains fluid > Expect market conditions in 2013 to be similar to 2012 > Increasing number of significant lease events (6x long-term average) over next five years; ‘Big Bang’ leases coming to an end > Focus on Perfect Delivery to underpin market le
Slide 20: Affordable Housing
LOVELL Affordable Housing MORGAN SINDALL
Slide 21: Affordable Housing Market and Trading Highlights
Affordable Housing Market and Trading Highlights Revenue Adjusted Operating Profit 2012 2011 Change 2012 2011 Change £386m £462m -17% £11.5m £18.5m -38% > Challenging year in a demanding market > Restructured the business in response to hardening market conditions > Performance held back by lower th
Slide 22: Affordable Housing Market Sectors
Affordable Housing Market Sectors 2010 2011 2012 130 185 171 162 147 108 47 71 25 47 82 60 Revenue £387m £462m £386m Planned Maintenance Response Maintenance Open Market New Building Social Housing 22
Slide 23: Affordable Housing Outlook
Affordable Housing Outlook > No material change expected in housing market, with Government initiatives continuing to lend support for first time buyers > Possible increase in new build social housing as clients seek to meet deadlines > Target larger R&M opportunities > Increasing importance of majo
Slide 24: Urban Regeneration
*e,e° Wh Urban Regeneration r whl i ly x | 4 i We i) el | i : a WAN | gi iy mn ii A ul nL ~ MORGAN SINDALL GROUP
Slide 25: Urban Regeneration Market and Trading Highlights
Urban Regeneration Market and Trading Highlights Revenue Adjusted Operating Profit 2012 2011 Change 2012 2011 Change £62m £57m +9% £2.7m £3.9m -31% > Increase in revenue and activity > Development agreements signed at Stockport (£150m) and Basingstoke (£200m) > Acquisition for £18.5m of further 25%
Slide 26: Urban Regeneration Outlook
Urban Regeneration Outlook > Well placed to harness Government regeneration initiatives > Expect to commence construction across ten schemes in 2013; 40% increase in activity > Invest approximately £10m of working capital in 2013 to drive medium-term growth as schemes are developed > Targeting 15% a
Slide 27: Investments
MORGAN)ASIN DALL INVESTMENTS Investments MORGAN SINDALL
Slide 28: Investments Market and Trading Highlights
Investments Market and Trading Highlights £m 2012 2011 Invested to date 20.0 19.1 Directors’ portfolio valuation at discount rates (7-9%) 32.0 49.3 Committed but not invested 2.3 10.4 Current carrying value 18.2 23.2 > Adjusted operating cost £7.1m (2011: £5.5m) and income from JVs £5.7m (2011: £1.6
Slide 29: Investments Outlook
Investments Outlook > Opportunities for Construction and Infrastructure and Affordable Housing divisions within Slough and Bournemouth LABVs > Further land-swap regeneration opportunities; capitalise on joined-up skills of the Group given size and complexity > Continue to realise maturing investment
Slide 30: Closing Remarks
Closing Remarks
Slide 31: Forward order book
Forward order book £m 1400 1200 • £3.1bn forward order book 1000 • 68% covered for next 12 months • 23% of order book in frameworks 800 • In addition, regeneration pipeline of £2.1bn 600 400 200 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 Construction and Infrastructure Fit Out Affordable Housing
Slide 32: Outlook and Prospects
Outlook and Prospects > Expect market in 2013 to remain challenging > 2014 outlook improving > Infrastructure schemes secured > Urban Regeneration increasing activity on-site > Affordable Housing focused on major, mixed-tenure schemes > Confirmed confidence in strategy > Develop new and emerging opp
Slide 33: Notes
Notes MORGAN SINDALL GROUP 33
Slide 34: Morgan Sindall Group plc contact details
Morgan Sindall Group plc, Kent House, 14-17 Market Place, London W1W 8AJ Tel: 020 7307 9200 [email protected] @morgansindall morgansindall.com 34