2 November 2022

Morgan Sindall Group plc

Trading Update

Morgan Sindall Group plc ("the Group") today provides an update on current trading and the outlook for the 2022 financial year.

Group performance and outlook

Since the time of the half year results on 4 August 2022, increased general market uncertainty together with continued inflationary headwinds have provided for a more challenging economic backdrop. Notwithstanding this, trading across the Group has been robust and with its high-quality secured workload giving good forward visibility, the Group is on track to deliver a full year performance in line with its expectations.

Trading has been as expected in Construction & Infrastructure. The Construction activities are expected to deliver an operating margin for the full year within its target range of 2.5%-3% and the operating margin in the Infrastructure activities is also expected to be within its target range of 3.5%-4%.

Fit Out's continued focus on operational delivery and customer experience, together with its order book for the rest of the year, means it is well-placed to deliver a very strong full year performance.

In Property Services, contract phasing and mobilisations is, as anticipated, driving slightly higher second half activity, although its operating margin continues to be impacted by general cost and labour inflation.

Partnership Housing has experienced a recent reduction in sales activity in line with the rest of the UK housing industry, however its focus on long-term partnerships with the public sector provides forward visibility and resilience. Average capital employed for the year is expected to be c£190m-£200m.

Urban Regeneration's active development schemes have progressed to plan, however inflation and interest rate increases are providing some scheme viability challenges. Average capital employed for the year is expected to be c£90m-£95m.

There has been no change to the previously announced estimate of building safety costs and the costs of applying the principles of the Building Safety Developer's Pledge across Partnership Housing and Urban Regeneration. These are still expected to be in the range of £40m-£50m and will be shown separately as exceptional provisions/expenses in the appropriate period(s).

Group secured workload

The Group has a sizeable and high-quality workload. The total secured workload for the Group at 30 September 2022 was £8.8bn, up 2% from the year end position (up 3% from the half year).

Within this, the construction secured order book of £4.6bn was up 2% from the year end (down 1% from the half year) and the regeneration secured order book of £4.2bn was up 3% from the year end (up 8% from the half year). 

Balance sheet

The Group's balance sheet remains strong and in an uncertain trading environment, the holding of a significant cash balance is more of a competitive advantage than ever.

The average daily net cash for the period from 1 January to 28 October was £260m (of which £62m was held in jointly controlled operations or held for future payment to designated suppliers).

As previously guided at the time of the half year results, the average daily net cash for the full year is expected to be around £250m.

In addition, the Group has significant undrawn bank facilities available to it. These total £180m, of which £165m mature in 2025 and £15m in 2024.

John Morgan, Chief Executive, said:

"In recent months, increased general market uncertainty together with continued inflationary headwinds have provided for a more challenging economic backdrop.

Despite this, trading across the Group has been robust and with our high-quality secured workload giving good forward visibility, we're on track to deliver a full year performance in line with our expectations."                                         

ENDS

Note to Editors

Morgan Sindall Group

Morgan Sindall Group plc is a leading UK Construction & Regeneration group with annual revenue of £3.2bn, employing around 7,200 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.