Morgan Sindall Group plc · LSE:MGNS

Morgan Sindall — FY2009 Earnings Presentation

49 slides from Morgan Sindall's earnings presentation, 2010

  1. Slide 1: Preliminary Results 2009

    Dynamic business Solid basis Preliminary Results 2009

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  3. Slide 3: 2009 Highlights

    2009 Highlights  Robust performance in challenging market conditions  Profit before tax and amortisation at £51.5m (2008: £71.4m) on revenue of £2.2bn (2008: £2.5bn); record performance from Construction and Infrastructure Services  Benefiting from enhanced construction capability and capacity to

  4. Slide 4: Financial Summary

    Financial Summary £m December December 2009 2008 Revenue 2,214 2,548 Profit before tax and amortisation 51.5 71.4 Profit before tax 44.7 62.3 Effective tax rate 26% 28% Tax charge 11.8 17.5 Profit after tax 32.9 44.8 Net assets 209.3 192.3 Adjusted EPS 93.9p 127.8p Dividend per share 42.0p 42.0p 4

  5. Slide 5: Segmental Analysis

    Segmental Analysis 2009 2008 £m Revenue Profit Margin Revenue Profit Margin Fit Out 291 13.8 4.7% 474 25.8 5.4% Construction 744 13.0 1.7% 813 9.5 1.2% Infrastructure Services 770 17.1 2.2% 799 14.4 1.8% Affordable Housing 374 14.9 4.0% 377 21.0 5.6% Urban Regeneration 32 0.7 84 7.8 Investments 3 (3

  6. Slide 6: Balance Sheet Year on Year Movement

    Balance Sheet Year on Year Movement £m 250 34.7 2.6 17.7 0.4 1.3 209.3 200 192.3 1.4 5.7 9.0 1.0 150 100 Net assets at Decrease in Decrease in Decrease in Increase in Increase in Decrease in Increase in tax Decrease in Decrease in Net assets at 31/12/08 tangible fixed intangible investment shared eq

  7. Slide 7: Cashflow Year to December 2009

    Cashflow Year to 31 December 2009 £m 200 15.7 31.3 175 43.7 9.0 9.3 10.2 150 3.1 17.7 125 120.3 117.7 100 75 50 Cash at Profit from Depn, amort & Increase in net Increase in Tax & net int Net capex & Net investment Dividends paid Cash at 31/12/08 operations non cash adj working capital shared equity

  8. Slide 8: Market Overview

    Market Overview 2009 est. Market Sectors £bn Infrastructure 7.8 Infrastructure Services Private Industrial & Commercial 19.3 Public Non-Residential 13.3 Construction Private Housing 10.7 Urban Regeneration Public Housing (incl R&M) 11.3 Private Housing R&M 14.0 Affordable Housing Public Non-Resident

  9. Slide 9: Year End Order Book Profile

    Year End Order Book Profile £m 1,600 Urban Regeneration pipeline MS Group incl Investments 1,400 Fit Out 1,200 Construction Infrastructure Services 1,000 Affordable Housing 800 600 400 200 0 2010 2011 2012 2013 2014 2015 2016 2017+ 9

  10. Slide 10: Market

    Market Challenging market will continue into 2010  11% fall in overall construction market in 2009 (Source: ONS; Experian)  Commercial demand subdued, tentative recovery from financial services  Reacting to weaker public sector demand  Competitive environment tougher, with clients more price sen

  11. Slide 11: Strategic Developments

    Strategic Developments Remain focused on maximising potential from our market-leading positions in our chosen sectors  Larger, more complex schemes  Growing importance of Investments unit in pursuing PFI/PPP opportunities  Strategic JVs for delivery of large infrastructure projects  Perfect Deli

  12. Slide 12: Operations

    Operations  Overhead savings: £38m annualised savings realised over last two years  Working capital management  Supply chain improvements 12

  13. Slide 13: Fit Out

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  14. Slide 14: Fit Out – Market & Trading Highlights

    Fit Out – Market & Trading Highlights  Challenging market conditions persisted throughout 2009  Smaller number of larger projects although regional markets and demand for smaller projects held up relatively well  Public sector and education market offset subdued financial services market  Fit Ou

  15. Slide 15: Fit Out – Financial History

    Fit Out – Financial History £m Revenue Operating Profit 492 5.3% 5.4% 474 25.9 25.8 291 Full Year 4.7% First Half 13.8 225 12.4 11.5 205 160 7.4 2007 2008 2009 2007 2008 2009 15

  16. Slide 16: Fit Out – Projects

    Fit Out – Projects Client: Talk Talk Group Project: 83,000 sq ft fit out Contract value: £4 million Location: London Client: Addleshaw Goddard Project: 155,000 sq ft fit out Contract value: £18 million Location: London Other Other key key projects: projects: City City University University (£430k),

  17. Slide 17: Fit Out – Outlook

    Fit Out – Outlook  Improving tender values with firmer demand from financial services; increased number of larger project opportunities  Expect market to remain challenging and price sensitive  Targeting opportunities in retail banking, education and public sector  Continued focus on cost contro

  18. Slide 18: Construction

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  19. Slide 19: Construction – Market & Trading Highlights

    Construction – Market & Trading Highlights  Market weakened over the course of the year  Year of operational progress; Perfect Delivery driving margin performance  £22m of annualised savings achieved over past two years  Larger and more complex projects giving longer forward visibility to worklo

  20. Slide 20: Construction – Financial History

    Construction – Financial History £m Revenue Operating Profit 813 1.7% 744 13.0 621 1.2% 9.5 Full Year First Half 418 0.8% 378 5.7 4.9 4.1 199 2.2 2007 2008 2009 2007 2008 2009 20

  21. Slide 21: Construction – Projects

    Construction – Projects Client: Network Rail Infrastructure Project: Replacement of existing roof structure and glazing Contract value: £27 million Location: Paddington Station, London Client: Shire Pharmaceuticals Project: Extension to occupied building and refurbishment works to provide new commer

  22. Slide 22: Construction – Outlook

    Construction – Outlook  Market continues to be tough and expect significant further public spending cuts  Pursuing a number of education opportunities  Seeking to build on track record and expertise by expanding position in prisons, defence, rail and airports  Continued focus on operational impr

  23. Slide 23: Infrastructure Services

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  24. Slide 24: Infrastructure Services – Market & Trading Highlights

    Infrastructure Services – Market & Trading Highlights  Infrastructure market healthy but projects taking longer to secure  Key projects secured  £250m Severn Trent AMP5 utilities framework (+ £250m extension for AMP6)  £209m A1 Dishforth to Barton (£105m to Morgan Est)  Preferred bidder stage 

  25. Slide 25: Infrastructure Services – Financial History

    Infrastructure Services – Financial History £m Revenue Operating Profit 2.2% 799 770 17.1 1.8% 14.4 575 1.8% 10.6 Full Year 9.3 First Half 395 419 7.6 220 4.0 2007 2008 2009 2007 2008 2009 25

  26. Slide 26: Infrastructure Services – Projects

    Infrastructure Services – Projects Client: Welsh Water Dwr Cymru Project: Welsh Water Investment Framework Contract value: £151 million (over 10 years) Location: South East Wales Client: BAA plc Project: BAA Airfield Infrastructure Framework Contract value: £40 million per annum Location: BAA South

  27. Slide 27: Infrastructure Services – Outlook

    Infrastructure Services – Outlook  Significant growth opportunities in the medium to long-term  Power generation  Railway electrification  Waste and renewable energy projects  Market outlook reasonable with ongoing investment in utilities and transport infrastructure  Strategic JVs formed for

  28. Slide 28: Affordable Housing

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  29. Slide 29: Affordable Housing – Market & Trading Highlights

    Affordable Housing – Market & Trading Highlights  Demand for social housing refurbishment and new build has partly offset weakness in open market housing  Open market housing improving which helped to reduce WIP to £109m (2008: £139m)  Launch of responsive maintenance business, Lovell Respond, to

  30. Slide 30: Affordable Housing – Statistics

    Affordable Housing – Statistics  Open market house sales increased 47% to 476 (2008: 323) at average selling price of £142k (2008: £162k)  New build affordable housing units 1,118 (2008: 1,183)  Units refurbished 20,096 (2008: 19,951)  Open market gross margin maintained at 13% (2008: 13%, 2007:

  31. Slide 31: Affordable Housing – Market Sectors

    Affordable Housing – Market Sectors 2007 full year 2008 full year 2009 full year 101 102 134 175 191 204 122 68 52 Revenue £398m £377m £374m Refurbishment Open Market Social Housing 31

  32. Slide 32: Affordable Housing – Financial History

    Affordable Housing – Financial History £m Revenue Operating Profit 398 377 374 6.4% 25.5 5.6% 21.0 4.0% Full Year 14.9 First Half 192 178 176 11.5 8.8 7.1 2007 2008 2009 2007 2008 2009 32

  33. Slide 33: Affordable Housing – Projects

    Affordable Housing – Projects Client: Dunedin Canmore Housing Association Project: Design & build mixed-use partnering project Contract value: £17 million Location: Oxgangs, Edinburgh Client: Manchester City Council Project: Miles Platting Regeneration (PFI) Contract value: £230 million Location: Ma

  34. Slide 34: Affordable Housing – Outlook

    Affordable Housing – Outlook  Sector remains Government priority with ongoing funding from HCA  Appointed to the HCA Developer Partner Panel  Refurbishment and new build social housing opportunities remain robust  Open market recovery with volumes improving and prices firming  Expect mixed tenu

  35. Slide 35: Urban Regeneration

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  36. Slide 36: Urban Regeneration – Market & Trading Highlights

    Urban Regeneration – Market & Trading Highlights  Market conditions remain challenging with weak occupier demand  Secured Blackpool (£220m) and Doncaster (£300m) regeneration developments  Improvement in residential elements of mixed-use schemes  Operating profit of £0.7m (2008: £7.8m), on reven

  37. Slide 37: Urban Regeneration – Historic Performance

    Urban Regeneration – Historic Performance £m 35 30 25 20 15 10 5 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009  Return subdued in short term  Longer-term returns over cycle  Average return on capital employed 20% (1997 to 2009)  Capital employed currently £65m 37

  38. Slide 38: Urban Regeneration – Projects

    Urban Regeneration – Projects Partners: Blackpool City Council, ReBlackpool & North West Artist’s impression Development Agency Project: Mixed use, pedestrian-friendly development Contract value: £220 million Location: Talbot Gateway, Blackpool Partnership: English Cities Fund (incl Muse) Project: 1

  39. Slide 39: Urban Regeneration – Outlook

    Urban Regeneration – Outlook  Market will remain subdued through 2010 and eventual recovery will be driven by improvement in occupier demand  Focus on public sector and grant-funded opportunities  Well positioned to exploit regeneration opportunities when market recovers with high quality portfol

  40. Slide 40: Investments

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  41. Slide 41: Investments – Strategy

    Investments – Strategy  Primary purpose to gain access to higher-margin construction opportunities for the Group such as BSF, social housing PFIs, NHS LIFT  Investment-led construction  Target sectors that match our competitive strengths  Income from an investment portfolio, complementing profit

  42. Slide 42: Investments – Overview

    Investments – Overview Sector Project Capital value MS equity/loan Equity £m stock £m % Health Barnsley LIFT 27 0.5 30% Camden & Islington LIFT 40 0.5 30% Doncaster LIFT 36 0.4 30% Solent LIFT 29 0.4 15% Bury Thameside & Glossop LIFT 36 1.1 30% Plymouth LIFT - 0.1 9% PMP portfolio 74 - 50% Emergency

  43. Slide 43: Investments – Market & Trading Highlights

    Investments – Market & Trading Highlights  Presented as business segment for the first time  Financial close achieved at Wigan Life Centre (PFI)  Appointed preferred bidder on Tayside Mental Health and Hull BSF  NHS LIFT developments at Doncaster and Barnsley 2009 2008 £m £m Operating cost (3.0)

  44. Slide 44: Investments – Projects

    Investments – Projects Artist’s impression Client: NHS Tayside Project: Two new developments, Murray Royal and Stracathro Hospital Development value: £121 million Location: Tayside, Scotland Client: Hull City Council Project: PPP to transform education through partnership working and regeneration of

  45. Slide 45: Investments – Outlook & Prospects

    Investments – Outlook & Prospects Development Construction  Preferred bidder Value Value  Tayside Acute Adult Mental Health £121m £100m  NHS LIFT further phases £44m £40m  Hull BSF £400m £200m  Shortlisted  North Tyneside Homes for the Future  Portsmouth BSF  Blackpool BSF  Other opportunit

  46. Slide 46: Summary – Outlook & Prospects

    Summary – Outlook & Prospects  Continued success of strategy in developing market-leading positions in our chosen sectors  Market challenging and will remain so for foreseeable future  Fit Out and Affordable Housing’s markets improving which may help to offset expected fall in public sector deman

  47. Slide 47: Notes

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  48. Slide 48: Notes

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  49. Slide 49: Preliminary Results 2009

    Dynamic business Solid basis Preliminary Results 2009

Morgan Sindall Group — FY2009 Earnings Presentation on 6ix