Morgan Sindall Group Plc · LSE:MGNS
Morgan Sindall — H1 2012 Earnings Presentation
35 slides from Morgan Sindall's earnings presentation, Aug 6, 2012
Slide 1: 2012 Half Year Results
Morgan Sindall Group plc Constructing and Regenerating 2012 Half Year Results @morgansindall 6 August 2012 morgansindall.com
Slide 2: John Morgan, Executive Chairman
John Morgan Executive Chairman
Slide 3: 2012 performance
2012 performance • Solid performance in line with our expectations – Revenue of £1,000m (2011: £1,087m), adjusted profit1 of £20.3m (2011: £19.5m) with margin at 2.0% (2011: 1.8%) – Adjusted EPS2 of 39.3p (2011: 35.1p), with a maintained interim dividend of 12.0p (2011: 12.0p) – Net debt of £12m (20
Slide 4: Business environment
Business environment • Construction and Infrastructure – Competitive with margins under continual pressure – Public sector workloads reducing as expected – Investment in economic infrastructure • Fit Out – Reduced number of larger project opportunities – Healthy pipeline of smaller refurbishment opp
Slide 5: Business environment (cont'd)
Business environment (cont’d) • Urban Regeneration – Macro economic factors still impacting on occupier demand – Investment decisions being deferred and decision-making prolonged – Residential market in London and South East reasonably buoyant • Investments – Awaiting news on PFI – Focussing on land
Slide 6: Forward order book
Forward order book £m 1200 1000 • £3.2bn forward order book • 70% covered for next 12 months 800 • 20% of order book in frameworks 600 400 200 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021+ Construction and Infrastructure Fit Out Affordable Housing 6
Slide 7: Urban Regeneration and Investments pipeline
Urban Regeneration and Investments pipeline £m 800 700 600 500 400 300 200 100 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021+ Urban Regeneration £1.6bn Investments £0.2bn Preferred bidder £0.6bn • £1.8bn (2011: £1.8bn) regeneration pipeline plus £0.6bn at preferred bidder • 33% offices, 30% li
Slide 8: David Mulligan, Finance Director
David Mulligan Finance Director
Slide 9: Results in line with expectations
Results in line with expectations £m Six months Six months Change to June 2012 to June 2011 Revenue 1,000 1,087 -8% Adjusted operating profit 20.8 19.6 +6% Adjusted profit before tax1 20.3 19.5 +4% Non-recurring items - (0.9) Amortisation (1.5) (1.9) Profit before tax 18.8 16.7 +13% Adjusted earning
Slide 10: Segmental analysis
Segmental analysis £m Six months to June 2012 Six months to June 2011 Revenue Profit Margin Revenue Profit Margin Construction and Infrastructure 583 8.5 1.5% 617 9.5 1.5% Fit Out 191 5.5 2.9% 222 6.1 2.7% Affordable Housing 202 7.5 3.7% 228 8.3 3.6% Urban Regeneration 23 1.5 6.5% 19 1.0 5.3% Invest
Slide 11: Balance sheet
Balance sheet £m June 2012 June 2011 YOY Movement Intangible FA 225.1 229.0 -3.9 Tangible FA 20.5 25.5 -5.0 Investments (incl. joint ventures)1 70.8 53.8 +17.0 Shared equity loan receivables 18.0 15.7 +2.3 Inventories 158.9 157.7 +1.2 Other working capital (214.6) (294.3) +79.7 Current and deferred
Slide 12: Cashflow
Cashflow £m Six months to Six months to June 2012 June 2011 Profit from operations 19.3 16.8 Non-cash and other adjustments (1.1) 7.5 Working capital movement (115.6) (86.2) Net investment in PPE (1.9) (3.4) Income tax (5.3) (3.6) Dividends (12.7) (12.7) Interest (0.3) (0.2) Payment for acquisitions
Slide 13: Paul Smith, Chief Executive
MORGAN SINDALL Paul Smith Chief Executive
Slide 14: Market overview
Market overview 2012 Market sectors Trend est. £bn Construction and Infrastructure (inc R&M) 18.9 Infrastructure Private Industrial & Commercial 26.7 Public Non-Residential 9.4 Urban Regeneration Private Housing 14.4 Public Housing (incl. R&M) 9.0 Affordable Housing Private Housing R&M 10.6 Public N
Slide 15: Strategy
Strategy • Further develop construction market position • Growing market shares – Reduce public sector exposure • 70% public exposure in 2009, 50% in – Focus on complex projects – Grow infrastructure 2011 and trending to 45% by end 2012 – Focus on margin • Invest in regeneration • Regeneration pipel
Slide 16: Regeneration
Regeneration • £17bn of land and assets suitable for development held by public sector • Working in long-term partnerships with our clients to use their land and property assets to achieve large-scale social and economic renewal • Usually a complex scheme delivered in joint venture, typically using
Slide 17: Construction and Infrastructure
Construction and Infrastructure
Slide 18: Construction and Infrastructure Market and Trading Highlights
Construction and Infrastructure Market and Trading Highlights Revenue Adjusted Operating Profit 2012 2011 Change 2012 2011 Change £583m £617m -6% £8.5m £9.5m -11% • Construction revenue £341m (2011: £402m) and infrastructure revenue £242m (2011: £215m) • Margin at 1.5% (2011: 1.5%) • Growing strengt
Slide 19: Construction and Infrastructure Outlook
Construction and Infrastructure Outlook • Market will remain highly competitive for foreseeable future • Counter margin pressure by – Further improvements in Perfect Delivery quality programme – Tight control on costs – Continued contract selectivity • Target further growth in infrastructure sectors
Slide 20: Fit Out
MORGAN SINDALL Fit Out Soverbury Morgan Lovell Inspiring office transformation
Slide 21: Fit Out Market and Trading Highlights
Fit Out Market and Trading Highlights Revenue Operating Profit 2012 2011 Change 2012 2011 Change £191m £222m -14% £5.5m £6.1m -10% • Margins at 2.9% despite highly competitive market (2011: 2.7%) • Market characterised by smaller refitting opportunities; 50% from repeat or framework clients • Lack o
Slide 22: Fit Out Outlook
Fit Out Outlook • Market expected to remain highly competitive • Opportunities tight due to shortage of Grade-A office space • Medium-term outlook driven by lease events and new developments • Continue to focus on broadening sector spread, particularly retail banking, technology and education 22
Slide 23: Affordable Housing
MORGAN SINDALL Affordable Housing LOVELL
Slide 24: Affordable Housing Market and Trading Highlights
Affordable Housing Market and Trading Highlights Revenue Adjusted Operating Profit 2012 2011 Change 2012 2011 Change £202m £228m -11% £7.5m £8.3m -10% • Revenue softened due to fall in planned maintenance • Margin steady at 3.7% (2011: 3.6%) • Sold 165 open market units (2011: 155) at ASP of £150k (
Slide 25: Affordable Housing Market Sectors
Affordable Housing Market Sectors 2010 half year 2011 half year 2012 half year 64 81 85 83 55 82 39 24 3 21 25 41 Revenue £173m £228m £202m Planned Maintenance Response Maintenance Open Market New Building Social Housing 25
Slide 26: Affordable Housing Outlook
Affordable Housing Outlook • Expect current market conditions to persist • Market rent model continues to evolve • Various strategies to counter subdued market – Increasing investment in mixed-tenure regeneration using land released by public sector – Registered with NewBuy and will use to promote s
Slide 27: Urban Regeneration
Urban Regeneration
Slide 28: Urban Regeneration Market and Trading Highlights
Urban Regeneration Market and Trading Highlights Revenue Adjusted Operating Profit 2012 2011 Change 2012 2011 Change £23m £19m +21% £1.5m £1.0m +50% • Investor and tenant demand remains subdued • Five major planning consents secured • On site with £102m construction (2011: £110m) • Housing scheme se
Slide 29: Urban Regeneration Outlook
Urban Regeneration Outlook • Pace of recovery will be driven by tenant demand and investor confidence which in turn is driven by economic improvement • Continue to progress schemes across portfolio of 30 development agreements • Long-term goal remains; targeting 15% average ROCE over cycle 29
Slide 30: Investments
MORGAN SINDALL Investments MORGANS INDALL INVESTMENTS
Slide 31: Investments Market and Trading Highlights
Investments Market and Trading Highlights £m 2012 2011 Invested to date 24.8 14.4 Directors’ portfolio valuation at discount rates (7-9%) 56.0 42.0 Committed but not invested 2.3 12.0 Current carrying value 31.7 19.0 • Operating profit £1.3m (2011: loss of £2.1m); includes sale of Dorset Fire and Re
Slide 32: Investments Outlook
Investments Outlook • Awaiting PFI announcement • Further LABV opportunities • Focus on public sector clients to help them realise under-utilised assets, drawing on joined-up skills of the Group given size and complexity • Continue to realise mature investments 32
Slide 33: Summary and outlook
Summary and outlook • Eurozone concerns delaying recovery; market remains challenging with little sign of improvement • Continue to respond to market opportunities – Growing infrastructure sectors – Public sector land release driving regeneration – Strengthen market position in construction – Integr
Slide 34: Notes
MORGAN SINDALL
Slide 35: 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 35 morgansindall.com