Morgan Sindall Group plc · LSE:MGNS
Morgan Sindall — H1 2021 Earnings Presentation
33 slides from Morgan Sindall's earnings presentation, Aug 4, 2021
Slide 1: Half Year Results
Half Year Results to 30th June 2021 4th August 2021
Slide 2: Agenda
Agenda Introduction | John Morgan Financial & Operational Review | Steve Crummett Capital Allocation | John Morgan HY Results 2021 2
Slide 3: Introduction
Introduction Momentum has increased throughout the Group 3 profit upgrades in the first 6 months Trading well-ahead of pre-pandemic levels Very strong cash performance Good market conditions at present ESG remains a core focus. Annual update at FY results HY Results 2021 3
Slide 4: Financial & Operational Review
Financial & Operational Review Steve Crummett
Slide 5: Summary Income Statement
Summary Income Statement Change vs Change vs Adjusted* basis £m HY 2021 HY 2020 HY 2019 HY 2020 HY 2019 Revenue 1,559 1,363 +14% 1,421 +10% Operating profit 54.8 18.1 +203% 37.5 +46% Operating margin 3.5% 1.3% +220bps 2.6% +90bps Net Interest (1.7) (2.4) +£0.7m (1.2) -£0.5m Profit before Tax 53.1 15
Slide 6: Summary by division
Summary by division Operating Operating Revenue Profit/(Loss)1 Margin1 £m vs HY 20 vs HY 19 £m vs HY 20 vs HY 19 % vs HY 20 vs HY 19 Construction & Infrastructure 774 -2% +14% 22.6 +97% +63% 2.9% +140bps +90bps Fit Out 380 +20% -7% 19.3 +77% +18% 5.1% +170bps +110bps Property Services 69 +30% +25% 2
Slide 7: Cash flow
Cash flow 8.9 -9.3 54.8 -11.1 Operating cash inflow (HY 2020: outflow £15.3m) £ 44.1m £m -2.1 2.9 44.1 -1.0 -11.3 Net working capital outflow of 31.8 £13.2m £13.2m Working capital outflow Higher receivables and contract assets (£74.7m) Increase in payables and contract liabilities (£52.1m) - m
Slide 8: Daily net cash balance
Daily net cash balance Average daily net cash (HY 2020: £153m) £ 294m MAX: £354m Average includes c£20m impact of MIN: £245m reverse charge VAT Period end net cash £337m (HY 2020: £146m) £m Includes benefit of £67m from 1 Jan 30 Jun 31 Dec reverse charge VAT. Paid end July FY average daily n
Slide 9: Payment practices
Payment practices 6m to 30th June 2021 Average time Invoices not Invoices paid Maintained the improved average time to pay to pay paid within within 60 invoices agreed terms days invoices in Construction & Infrastructure reduced to 27 days for the last 12 27 days 9% 98% Construction & months. In
Slide 10: Balance Sheet
Balance Sheet £m HY FY HY 2021 2020 2020 Intangibles 222.2 222.1 222.1 PP&E 62.7 65.8 72.9 Investments (including JVs) 96.5 94.1 98.1 Shared equity loan receivables 4.4 5.5 6.9 Net working capital (182.9) (195.6) (49.8) Current and deferred tax (14.2) (13.5) (7.4) Net cash 337.1 332.8 146.1 Lease li
Slide 11: Secured Workload
Secured Workload 8.3bn £ Group Secured Workload Level with FY 2020 £ 4.1bn Construction +5% on FY 2020 £ 4.2bn Regeneration -3% on FY 2020 includes Construction & Infrastructure, Fit Out includes Partnership Housing and Urban Regeneration and Property Services long term in nature with c70% for
Slide 12: Divisional Performances
Divisional Performances
Slide 13: Materials availability and inflation
Materials availability and inflation Increased lead times and prices for specific product categories Managed mainly at a divisional and local site level Focused sourcing through preferred supply chain No significant disruption to operations Financial impact mitigated Protection through c
Slide 14: Construction & Infrastructure
Construction & Infrastructure Construction Infrastructure £m HY 2021 vs HY 20 vs HY 19 +17% -13% Revenue 774 -2% +14% Revenue up to £339m Revenue down to £435m Operating profit 22.6 +97% +63% 44% of divisional total 56% of divisional total Operating margin (%) 2.9% +140bps +90bps Secured order book1
Slide 15: Fit Out
Fit Out £m HY 2021 vs HY 20 vs HY 19 +170bps increase 73% of revenue Revenue 380 +20% -7% margin up to 5.1% Commercial office Operating profit 19.3 +77% +18% + 110bps from HY 2019 HY 2020: 77% Operating margin (%) 5.1% +170bps +110bps Secured order book1 581 +42%1 £581m 46% of revenue 1 Change vs FY
Slide 16: Property Services
Property Services £m HY 2021 vs HY 20 vs HY 19 3.5% margin >80% of order book Revenue 69 +30% +25% +60bps from HY 2019 for 2023 & beyond Operating profit* Compared to loss of £0.5m in 2.4 +580% +50% HY 2020 Long term visibility Operating margin (%) 3.5% +440bps +60bps Secured order book1 973 0%1 1 C
Slide 17: Partnership Housing
Partnership Housing £m HY 2021 vs HY 201 vs HY 191 +79% +28% Revenue 270 +53% +13% Mixed-tenure revenue Contracting revenue Operating profit 12.1 +476% +98% to £159m (59% of total) to £111m (41% of total) Operating margin (%) 4.5% +330bps +190bps Secured order book2 1,478 +2%2 815 mixed-tenure £1,47
Slide 18: Urban Regeneration
Urban Regeneration £m HY 2021 vs HY 201 vs HY 191 £2.8bn Order book Diverse portfolio Revenue 68 +94% +51% down 6% from FY 2020 52% residential, 34% commercial 14% industrial/leisure/retail Operating profit 8.7 +295% +5% 56% SE & London, 35% NW, 8% c75% for 2023 & beyond York & NE, 1% rest Secured o
Slide 19: Summary
Summary Trading substantially ahead of pre-pandemic levels Improved operating results across all divisions High quality secured order book maintained Average daily net cash for FY 2021 expected to be broadly similar to HY position Interim dividend of 30p per share, up 43% HY Results 2021 1
Slide 20: Capital Allocation
Capital Allocation John Morgan
Slide 21: Capital Allocation
Capital Allocation Committed to maintaining a strong balance sheet and to holding significant cash balances at all times Capital allocation framework comprises: maintaining balance sheet to enhance our competitive advantage ensuring downside protection maximising investment to drive growth
Slide 22: Enhancing our competitive advantage
Enhancing our competitive advantage Important in winning long-term work Supply chain want to work with companies with a strong balance sheet Recruiting and retaining talented people Enables the right long-term decisions HY Results 2021 22
Slide 23: Ensuring downside protection
Ensuring downside protection If revenue falls, cash goes ‘out of the door’ very quickly ‘Bad’ jobs can tie up cash in work-in-progress Important to keep making the right long-term decisions in the event of a recession Ensures contract selection disciplines are maintained during any downturn
Slide 24: Maximising investment to drive growth
Maximising investment to drive growth We operate in the sectors that expect growth, providing opportunities to invest Any investment needs to accelerate organic growth Investment in regeneration activities are a priority Would consider acquiring existing schemes from third parties to acceler
Slide 25: Maintaining an attractive dividend policy
Maintaining an attractive dividend policy Dividend is an important component of shareholder returns Formally adopted dividend policy of 2.0-2.5x covered (vs previous informal policy of 2.5-3.0x) Will prioritise investment opportunities and ensure continued support for ordinary dividend Will
Slide 26: Summary
Summary Going into the 2nd half with increased momentum Plenty of organic growth in our existing businesses Committed to maintaining an attractive dividend policy Maintaining a strong balance sheet at all times HY Results 2021 26
Slide 27: Appendices
Appendices
Slide 28: Net finance expense
Net finance expense £m HY 2021 HY 2020 Interest payable on drawings on bank facilities - (1.1) Amortisation of fees & non-utilisation fees (1.3) (0.5) Interest expense on lease liabilities (IFRS 16) (0.7) (0.8) Interest from JVs 0.4 0.2 Other (0.1) (0.2) Total (1.7) (2.4) Higher interest charge in
Slide 29: Adjusted earnings per share
Adjusted earnings per share £m HY 2021 HY 2020 Profit after tax 40.4 10.7 Adjusted for: Amortisation of intangibles (net of tax) 0.6 1.7 Impact of change in tax rate on deferred 1.9 - tax balances Adjusted earnings 42.9 12.4 Average number of shares 46.1m 45.2m Adjusted earnings per share 93.1p 27.4
Slide 30: Tax
Tax £m HY 2021 HY 2020 Profit before tax 52.4 13.6 Less: share of net JV (profit)/loss (5.7) 0.3 Profit subject to tax 46.7 13.9 Statutory tax rate 19.0% 19.0% Current tax charge at statutory rate (8.9) (2.6) Tax on joint venture profits1 (1.0) - Change in tax rate on deferred tax balances (1.9) - O
Slide 31: Net Cash Movement
Net Cash Movement 31.8 -18.5 -9.0 332.8 337.1 £m Half year net cash of £337.1m Opening Free cash Dividends Other Closing net cash flow net cash ‘Other’ includes the purchase of shares in the Company by the employee benefit trust (£12.3m) less net loan receipts from interests in joint ventures (£1.
Slide 32: Capital employed in Regeneration
Capital employed in Regeneration £m Partnership Urban Regeneration Housing Regeneration Total net land & regeneration WIP 247.0 176.0 71.0 Unsold completed units (excl. joint ventures) 6.1 5.9 0.2 Amounts invested in joint ventures 95.4 45.7 49.7 Shared equity loans and investment properties 5.5 5.5
Slide 33: Comparatives by division
Comparatives by division Operating Operating Revenue Profit/(Loss)1 Margin1 change change £m 2020 2019 £m 2020 2019 % vs. 20 vs. 19 Construction & Infrastructure 774 790 679 22.6 11.5 13.9 2.9% 1.5% 2.0% Fit Out 380 317 407 19.3 10.9 16.4 5.1% 3.4% 4.0% Property Services 69 53 55 2.4 (0.5) 1.6 3.5%