Morgan Sindall Group Plc · LSE:MGNS
Morgan Sindall — FY2013 Earnings Presentation
29 slides from Morgan Sindall's earnings presentation, Feb 18, 2014
Slide 1: Full year results to 31 December 2013
Full year results to 31 December 2013 Morgan Sindall Group plc Constructing & Regenerating 18 February 2014
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: FY 2013 - Overview
FY 2013 - Overview • Generally tough market conditions throughout the year Signs of increased activity and market confidence through the second half Committed order book up 8%. Regeneration & development pipeline up 23% • Revenue up 2%. Adjusted1 operating profit down 30% • Margins under pressur
Slide 4: Financial Review
Financial Review Steve Crummett Finance Director 4
Slide 5: Headline adjusted income statement
Headline adjusted1 income statement £m FY 2013 FY 2012 % change Revenue 2,095 2,047 +2% Gross profit1 171.3 186.7 -8% Gross margin1 8.2% 9.1% -90bps Operating profit1 33.6 48.1 -30% Operating margin1 1.6% 2.3% -70bps Net Interest (2.3) (1.0) Profit before tax1 31.3 47.1 -34% Tax (5.3) (8.0) Effectiv
Slide 6: Segmental analysis
Segmental analysis1 £m Revenue Operating Operating Profit1 Margin FY13 % FY13 % FY13 change change change Construction & 1,234 +6% 12.7 -36% 1.0% -70bps Infrastructure Fit Out 427 -2% 10.9 -4% 2.6% Level Affordable Housing 381 -1% 8.6 -25% 2.3% -70bps Urban Regeneration 62 - 1.0 -63% 1.6% n/a Invest
Slide 7: Operating profit – key movements
Operating profit1 – key movements 1.6 Impact of gross margin down 90 bps to 8.2%, offset in part 1.1 (4.8) 4.4 (19.8) by effective cost management 48.1 5.2 (0.6) 33.6 £m 7 1 Before intangible amortisation (£2.7m) and exceptional operating items (£14.7m) (FY 2012: intangible amortisation (£2.9m) and
Slide 8: Exceptional operating items
Exceptional operating items • £14.7m charge taken in period, shown as ‘exceptional’ Impairment to trade & other receivables • Relates to four old construction contracts • Same contracts as identified at half year Commercial resolution achieved on one in H2 Carrying value reduced to nil on anot
Slide 9: Cash flow
Cash flow 1.6 • Positive operating cash flow of £14.9m 33.6 (4.4) • Free cash flow of £11.9m compared to 0.6 (8.4) prior year outflow of £53.0m £m (4.8) (1.1) 14.9 (1.2) (1.8) 11.9 0 9 1 Before intangible amortisation (£2.7m) and exceptional operating items (£14.7m) 2 Excludes exceptional operating
Slide 10: Net cash and debt reconciliation
Net cash and debt reconciliation 1.6 23.6 (4.7) • Year end net cash £70m 69.7 • Improvement in average daily 11.9 (11.5) net debt to £19m • Dividend covered by free cash Net cash £m 50.4 4.5 flow • £140m committed bank facilities: £110m expires in Sept 15 £15m expires in May 16 £15m expires in
Slide 11: Balance sheet
Balance sheet £m FY 2013 FY 2012 Key movements: Intangibles 220.5 223.2 • Reduction in investments driven by disposals PP&E 18.3 20.1 Investments (incl JVs) 64.4 73.9 • Reported net working capital of (£67.0m) reflects £14.7m non- Shared equity loan receivables 19.7 19.2 cash exceptional impairment
Slide 12: Order book and regeneration & development pipeline
Order book and regeneration & development pipeline • Committed order book of £2.4bn, up 8% from FY Order Book 2012 £1.3bn • £1.3bn covered for 2014 322 • Regeneration & development pipeline1 of £3.0bn, 1,000 up 23% from FY 2012 Includes development value of open market £m 322 housing schemes 322
Slide 13: Strategic and Operational Review
Strategic and Operational Review John Morgan Chief Executive 13
Slide 14: Group strategy
Group strategy Construction Regeneration Construction Affordable Affordable Urban & Fit Out Housing Housing Investments Regeneration Infrastructure Construction Mixed-tenure Strategic focus on: • Two distinct business activities in ‘Construction’ and ‘Regeneration’ Cash generation from Constructio
Slide 15: Construction & Infrastructure
Construction & Infrastructure £m FY 2013 FY 2012 Change % Revenue 1,234 1,168 +6% Operating profit1 12.7 19.7 -36% Margin % 1.0% 1.7% -70bps • Market remains competitive, although second half saw increasing overall level of activity Margin impacted by competitive pressure and cost inflation (in H2
Slide 16: Construction & Infrastructure – Heathrow Runway Rehabilitation
Construction & Infrastructure Heathrow Runway Rehabilitation Project • Expertise in challenging environments • £31m contract to repair and replace existing wearing course on southern and northern runways • Work on southern runway completed in 2013 • Activity on northern runway scheduled for 2014 Out
Slide 17: Fit Out
Fit Out £m FY 2013 FY 2012 Change % Revenue 427 437 -2% Operating profit1 10.9 11.3 -4% Margin % 2.6% 2.6% - • Market conditions broadly stable through the year Increasing confidence in Q4 • Price sensitive market, but margins held level with last year at 2.6% • Order book of £142m, down 16% since
Slide 18: Fit Out – PwC Embankment Place HQ
Fit Out PwC Embankment Place HQ • Refurbishment of iconic Embankment Place, London • Carried out over 93 weeks with over 50% of staff still working uninterrupted in building • Achieved landmark BREEAM1 Outstanding rating Outlook • Measured market recovery anticipated in 2014 and beyond Driven by l
Slide 19: Affordable Housing
Affordable Housing £m FY 2013 FY 2012 Change % Revenue 381 386 -1% Operating profit1 8.6 11.5 -25% Margin % 2.3% 3.0% -70bps • Mixed performances within overall portfolio of activities • Regeneration activities (28% of revenue) Comprises mixed-tenure schemes including open market housing developme
Slide 20: Affordable Housing – revenue and margin mix
Affordable Housing % of revenue Regeneration Activities • Strategic focus on complex regeneration mixed- Response Maintenance Planned tenure schemes. 44% of divisional gross margin 18% Maintenance 30% Driven by house completions up 36% on 2012 and ASP Regeneration of £177k, up 14% on FY 2012 avera
Slide 21: Affordable Housing – Beacon Barracks, Stafford
Affordable Housing Beacon Barracks, Stafford • In addition to the year end order book as awarded in January 2014 • New Build Housing Contracting - £51m contract to build 346 new homes for MOD • Complete by Summer 2015 when troops from 16 Signal Regiment and 1 Armoured Division Signal Regiment will m
Slide 22: Urban Regeneration
Urban Regeneration £m FY 2013 FY 2012 Change % Capital employed 76 64 +19% Revenue 62 62 - Operating profit1 1.0 2.7 -63% • Positive market backdrop of Government focus on residential development and private rental sector investment market • 35 active projects, with increased activity on-site Prof
Slide 23: Urban Regeneration – Basing View, Basingstoke
Urban Regeneration Basing View, Basingstoke • Agreement signed with John Lewis Partnership to deliver a 113,000 sq ft combined Waitrose and John Lewis at Home store • Planning approval now being sought • Construction programme to commence in spring 2014 Outlook Pipeline1 < 1 year • Current pipeline
Slide 24: Investments
Investments £m FY 2013 FY 2012 Operating profit1 6.1 7.4 Directors’ portfolio valuation 13.8 32.0 (discount rate 7-9%) Current carrying value 12.8 18.2 • Maximise construction opportunities for Group from existing frameworks and schemes Slough and Bournemouth LABVs delivering inter-group opportuni
Slide 25: FY 2013 Summary and Outlook
FY 2013 Summary and Outlook • Generally difficult market conditions, although some improvement seen in H2 • Margins impacted by competitive pressures FY 2013 • Positive operating cash generation allowing further investment in assets, skills & resources • Total dividend held level with prior year • F
Slide 26: Questions
Questions MORGAN SINDALL GROUP 26
Slide 27: Appendices
Appendices MORGAN SINDALL GROUP 27
Slide 28: Cash flow – FY 2012
Cash flow – FY 2012 48.1 (8.6) 1.6 (76.9) 0.6 £m (42.7) (53.0) 0 (3.5) (1.8) (8.1) (2.2) 28 1 Before intangible amortisation and exceptional items 2 ‘Other’ includes JV dividends and interest income of £2.8m, less other movements including additional pension payments of £0.6m
Slide 29: Urban Regeneration order book, regeneration pipeline and preferred bidder
Urban Regeneration Order book, regeneration pipeline and preferred bidder Remaining GDV £m* 2014 2015 2016 2017 2018 2019 Aberdeen Office 90 Basingstoke Office / retail 190 Blackpool Office / leisure 70 Chester CBQ Office / residential 140 Lewisham Gateway Residential 200 Leeds - Sovereign Street Of