3 November 2021

Morgan Sindall Group plc

This announcement contains information that qualified, or may have qualified, as inside information for the purposes of Article 17 of the Market Abuse Regulations (EU) 596/2014 (MAR).  The person responsible for making this announcement is Steve Crummett, Finance Director

Trading Update

Morgan Sindall Group plc ("the Group") today provides an update on current trading and the outlook for the 2021 financial year.

Group performance and outlook

Since the time of the half year results on 4 August 2021, trading has continued to be strong. Inflation in the supply chain and the availability of materials and labour have remained manageable. Based on the performance to date and with good visibility of secured workload through to the end of the year, it is now expected that the Group will deliver a full year performance which is slightly above its previous expectations.

Current trading by division

Trading has remained strong in Construction & Infrastructure; the Construction activities are expected to deliver a full year operating margin of c3%, while the operating margin in the Infrastructure activities is expected to be well in excess of 3.5%. Both activities are benefiting from the continued focus on long-term client relationships, operational delivery and risk management.   

Fit Out has had a record period of winning work and converting projects from preferred bidder stage into contract. At the end of September, its order book was £944m, up 62% from the half year position and up 130% from the year end.  Within this, the division secured a number of larger contracts which will generate revenue over a number of years, thereby giving the division better long-term visibility compared to its usual project cycle.

Property Services is still seeing slightly lower planned maintenance activity than expected, however notwithstanding this, its operating margin for the year is expected to be in excess of 3%.

Partnership Housing has continued to see high levels of unit sales and completions as well as construction activity and is well-placed to meet its medium-term return on capital target of 20% for the year. Average capital employed for the year is expected to be c£155m-£160m.

Urban Regeneration's active development schemes have progressed as planned, however viability challenges exist on some projects not yet commenced. Average capital employed for the year is expected to be c£100m and the return on capital expected to be around the low-teens.

Group secured workload

The Group has had a significant period of winning work, with the total secured workload for the Group at 30 September 2021 standing at £8.9bn, up 7% from the year end position (up 11% versus the prior year and up 7% from the half year).

Within this, the construction secured order book of £4.7bn was up 20% from the year end (up 21% versus the prior year and up 14% from the half year), driven by Fit Out (as referred to above) and the Construction activities in Construction & Infrastructure. The regeneration secured order book of £4.2bn, which is longer term in nature, was down 4% from the year end (up 2% versus the prior year and down 1% from the half year). 

Balance sheet

The average daily net cash from 1 July to 29 October was £294m (of which £67m was held in jointly controlled operations or held for future payment to designated suppliers (JVs/PBAs)).

For the period from 1 January through to 29 October, the average daily net cash was £294m (including £69m in JVs/PBAs).

The average daily net cash for the full year is expected to be around £290m.

John Morgan, Chief Executive, said:

"Trading remains strong across the Group and our high-quality and growing workload leaves us well set for the future.

Inflation in the supply chain remains manageable and based upon our current performance and the visibility we have for the rest of the year, we expect to deliver a full year performance which is slightly above our previous expectations."                                           

ENDS

Note to Editors

Morgan Sindall Group

Morgan Sindall Group plc is a leading UK Construction & Regeneration group with annual revenue of £3.0bn, employing around 6,600 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.