5 May 2022
Morgan Sindall Group plc
Ahead of today's Annual General Meeting ('AGM'), Morgan Sindall Group plc ('the Group'), the construction and regeneration group, today announces an update on trading and the outlook for the 2022 financial year.
The positive momentum across the Group coming into 2022 has continued and overall trading in the year to date has been in line with expectations set at that time of the 2021 full year results in February.
Inflationary pressures and supply issues remain a significant challenge across the Group, with an already difficult trading environment being exacerbated by the conflict in Ukraine. Notwithstanding this, however, the impact continues to be minimised on most projects through focused sourcing through the supply chain and ongoing operational efficiency.
Trading by division
Construction & Infrastructure has continued its focus on contract selectivity and operational delivery and both Construction and Infrastructure are anticipated to deliver margins in the year which are in line with their medium-term targets announced in February.
Fit Out trading remains very strong and its forward order book visibility provides confidence for the rest of the year.
Property Services has had a slower start to the year than expected due to lower planned maintenance work, however this is expected to improve through the rest of the year.
Partnership Housing has continued to see good levels of market demand, with further strategic and operational progress driving performance. The average capital employed for the full year continues to be estimated at c£190m.
Progress with Urban Regeneration's developments and schemes has been as planned, with average capital employed for the year expected to be c£115m.
Group secured workload
The total secured workload for the Group at 31 March 2022 was £8.6bn, up 6% from the corresponding prior year position (level with the 2021 year-end position).
This comprised the construction secured order book of £4.5bn, up 14% from the prior year (level with the 2021 year-end position) and the regeneration secured order book of £4.1bn, which was down 1% from the prior year (level with the 2021 year-end position).
Following the announcement by the Secretary of State for the Department of Levelling Up, Housing and Communities ("DLUHC") on Building Safety on 10 January, the Group position set out at the time of the full year results in February was that the industry-wide solution was still being determined and that any liability arising therefrom could not be reliably estimated.
Since then and following the subsequent discussions coordinated by the Home Builders Federation acting on behalf of its members, Partnership Housing signed the Developer Pledge Letter ('the Pledge') which sets out the principles under which life-critical fire-safety issues on buildings that they have developed of 11 metres and above will be remediated.
The additional costs arising from the scope of the Pledge in Partnership Housing and the costs arising across the Group in relation to fire safety and the provisions of the new Building Safety Act are not expected to be material to the Group and will be charged through trading results in the ordinary course.
As previously reported, the Group is also subject to the Residential Property Developer Tax which became effective on 1 April 2022. In addition, the Group also notes the proposal for an additional Building Safety Levy to be charged on all future residential developments.
Balance sheet and net cash
The average daily net cash from 1 January to 30 April was £279m (of which £68m was held in jointly controlled operations or held for future payment to designated suppliers (JVs/PBAs)). The average daily net cash for the same period last year was £290m.
Outlook for 2022
Current market conditions are expected to continue for the foreseeable future, however, on the basis of the performance to date and the current visibility of future workload for delivery in the remainder of the year, the Group is confident of delivering a full year performance which is in line with its previous expectations.
John Morgan, Chief Executive, said:
"Despite the current market headwinds, we're well-positioned for the future with continued positive momentum across the Group.
Our high-quality secured workload and our operational delivery capabilities give us great confidence for the rest of the year and we expect to deliver a full year performance in line with our previous expectations."
Morgan Sindall Group
Tel: 020 7307 9200
Tel: 020 7457 2020
Morgan Sindall Group
Morgan Sindall Group plc is a leading UK Construction & Regeneration group with annual revenue of £3.2bn, employing around 6,900 employees and operating in the public, regulated and private sectors. It reports through five divisions of Construction & Infrastructure, Fit Out, Property Services, Partnership Housing and Urban Regeneration.