Morgan Sindall Group plc · LSE:MGNS
Morgan Sindall — H1 2013 Earnings Presentation
28 slides from Morgan Sindall's earnings presentation, Aug 5, 2013
Slide 1: Half year results to 30 June 2013
Half year results to 30 June 2013 Morgan Sindall Group plc Constructing & Regenerating 5 August 2013
Slide 2: Disclaimer
Disclaimer Certain statements included or incorporated by reference in this presentation are forward-looking statements in respect of Morgan Sindall Group plc’s operations, performance, prospects and/or financial condition. These forward-looking statements speak only as at the date of this presentat
Slide 3: HY 2013 - Overview
HY 2013 - Overview • Revenue up 2% and order book up 1% in difficult market conditions • Margins under pressure in all divisions • Good cash management with average debt levels showing improvement on 2012. Net cash of £40m at period end • Exceptional charge of £13.0m taken as provision against recov
Slide 4: Financial Review
Financial Review Steve Crummett Finance Director 4
Slide 5: Headline adjusted income statement
Headline adjusted1 income statement £m HY 2013 HY 2012 % change Revenue 1,019 1,000 +2% Gross profit1 82.6 92.7 -11% Gross margin1 8.1% 9.3% -120bps Operating profit 1 16.2 20.8 -22% Operating margin1 1.6% 2.1% -50bps Net Interest (0.8) (0.5) -60% Profit before tax 1 15.4 20.3 -24% Tax1 (2.1) (4.0)
Slide 6: Segmental analysis
Segmental analysis1 £m Revenue Operating Operating Profit1 Margin2 HY13 change HY13 change HY13 change Construction & 593 +2% 6.4 -25% 1.1% -40bps Infrastructure Fit Out 203 +6% 5.0 -9% 2.5% -40bps Affordable Housing 185 -8% 2.7 -64% 1.5% -220bps Urban Regeneration 34 +48% 0.4 -73% 1.2% -530bps Inve
Slide 7: Operating profit – key movements
Operating profit1 – key movements 1.6 4.1 (3.3) 2 1.8 (11.6) 20.8 4.7 (0.3) 16.2 £m 7 1 Before intangible amortisation (£1.4m) and exceptional operating items (£13.0m) 2Community Solutions Management Services Ltd and Community Solutions Partnership Services Ltd became subsidiaries from 20 July 2012.
Slide 8: Exceptional operating items
Exceptional operating items • £13.0m provision taken in period, shown as ‘exceptional’ • Relates to small number of older construction contracts • Based upon revised assessment of recoverability reflecting Commercial assessment of alternative resolutions Takes into account cost, time and risk of
Slide 9: Cash flow
Cash flow 1.6 16.2 (3.3) • Operating cash flow of (30.9) (£19m), a significant 0.6 improvement on prior £m year outflow of (£98m) (19.2) (21.1) 0 (2.2) 1.0 (0.9) (1.0) 9 1 Before intangible amortisation (£1.4m) and exceptional operating items (£13.0m) 2 Excludes exceptional operating items (£13.0m)
Slide 10: Net cash and debt reconciliation
Net cash and debt reconciliation 1.6 50.4 (21.1) • Period end net cash £40m. 16.8 39.7 • Average daily net debt of £32m, an improvement on last year from Net cash £m £36m 4.5 (6.4) • Includes disposal of investments Miles Platting PFI £8.2m (plus £0.2m deferred) Access for Wigan £6.6m • £125m co
Slide 11: Balance Sheet
Balance Sheet FY HY £m HY 2013 2012 2012 Intangible FA 221.8 223.2 225.1 • Reduction in Investments Tangible FA 19.2 20.1 20.5 driven by disposals Investments (incl JVs) 64.4 73.9 70.8 • Net working capital2 reduced Shared equity loan to (£28.0m) from (£23.6m) at 19.2 19.2 18.0 receivables HY 2012 N
Slide 12: Order book
Order book 1,000 • Group secured order book of £3,079m, up 1% from FY 2012 322 • 94% covered for FY 2013 (Construction & Infrastructure fully covered) • Ongoing industry challenge to convert orders and volumes into acceptable returns £m 322 322 • Risk management of Terms & Conditions 500 critical 20
Slide 13: Strategic and Operational Review
Strategic and Operational Review John Morgan Chief Executive 13
Slide 14: Strategic priorities and operational focus
Strategic priorities and operational focus • Strategic focus on: • Complex construction and development schemes requiring an integrated ‘Group’ approach • Maximising returns from existing schemes - regeneration developments and construction frameworks • Pooling resources and capabilities from across
Slide 15: Strategic developments
Strategic developments Sellafield Infrastructure Strategic Alliance • Significant JV for C&I in important strategic market – up to £1.1bn to the JV • Mobilisation completed and projects commencing in H2 Woolwich, Royal Borough of Greenwich • £269m mixed-tenure regeneration scheme for Affordable Hous
Slide 16: Strategic developments
Strategic developments Civic and Cultural Quarter, Doncaster • Regeneration of Doncaster town centre led by Urban Regeneration. GDV £110m • Phase 2 to deliver new homes in conjunction with Affordable Housing Leyton Mount, Bournemouth (LABV) • Partnership between Investments and local council built o
Slide 17: Construction & Infrastructure
Construction & Infrastructure £m HY 2013 HY 2012 Change % Revenue 593 583 +2% Operating profit1 6.4 8.5 -25% Margin % 1.1% 1.5% -40bps • Market remains highly competitive • Order book of £1,558m, up 3% from FY 2012 • Construction revenue (56% of division) Regional variations - London/South East po
Slide 18: Construction & Infrastructure revenue by market
Construction & Infrastructure Revenue by market - HY 2013 • 30% of revenue under framework agreements Other Commercial 11% Maximise returns from existing 10% frameworks Water • Professional Services growth 14% of 14%, albeit from low base Education 26% • Major market focus: Transport Key targe
Slide 19: Fit Out
Fit Out £m HY 2013 HY 2012 Change % Revenue 203 191 +6% Operating profit1 5.0 5.5 -9% Margin % 2.5% 2.9% -40bps • No change in market conditions Competitive tendering impacting margins • Order book of £136m, down 20% since year end. Timing, not a trend • Maintaining strong market position and mark
Slide 20: Affordable Housing
Affordable Housing £m HY 2013 HY 2012 Change % Revenue 185 202 -8% Operating profit1 2.7 7.5 -64% Margin % 1.5% 3.7% -220bps • Difficult period with specific challenges within portfolio of activities • Order-book2 of £1,294m, down 1% from FY 2012 • Significant strategic business wins July 2013 of
Slide 21: Affordable Housing revenue by type
Affordable Housing Revenue by type 1 • Strategic focus on complex regeneration Response mixed-tenure schemes Maintenance 18% Planned Maintenance Key segment for revenue growth and 34% margin enhancement Mixed Tenure 24% House completions up 36% on H1 2012 and New Build Housing ASP of £172k, up 1
Slide 22: Urban Regeneration
Urban Regeneration £m HY 2013 HY 2012 Change % Capital employed 64 58 +10% Revenue 34 23 +48% Operating profit1 0.4 1.5 -73% • Positive market backdrop of Government focus on residential development and emerging private rental sector investment market • Increased activity “on-site” driving revenue i
Slide 23: Regeneration development profile
Regeneration development profile Remaining 2013 2014 2015 2016 2017 2018 GDV £m* Basingstoke Office and retail 190 Blackpool Sainsbury's/office/leisure 170 Chester CBQ Office 130 Lewisham Gateway Residential 190 Leeds - Sovereign Street Offices - pre-let to KPMG 20 Logic Leeds Distribution 100 Manch
Slide 24: Investments
Investments £m HY 2013 HY 2012 Invested to date 11.0 24.8 Directors’ portfolio valuation 24.0 56.0 (discount rate 7-9%) Current carrying value 13.1 31.7 • Development pipeline of c£300m • Slough and Bournemouth LABVs delivering inter-group opportunities Pipeline of opportunities following similar
Slide 25: HY 2013 Summary and Outlook
HY 2013 Summary and Outlook • Difficult market conditions. Margins impacted by competitive pressures HY 2013 • Cash improvement and greater cash discipline • Interim dividend held level with prior year • Focus on maximising returns from existing Strategic frameworks and development schemes focus • O
Slide 26: Questions
Questions MORGAN SINDALL GROUP 26
Slide 27: Appendices
Appendices MORGAN SINDALL GROUP 27
Slide 28: Cash flow – HY 2012
Cash flow – HY 2012 20.8 (2.2) 1.6 (116.0) 0.6 £m (98.1) (104.6) 0 (2.0) (1.3) (5.3) (1.2) 28 1 Before intangible amortisation and non-underlying items