The UK construction sector had a strong 2014, although it was a "disappointing" one for Morgan Sindall (MGNS), despite an encouraging performance in key growth divisions. The group laboured under unprofitable contracts in its construction division, agreed at fixed rates when the market was flat. Chief executive John Morgan expects Morgan Sindall to work through those lower-margin contracts this year, allowing for gradual improvements through into 2016.
The committed order book had grown 11 per cent to £2.7bn by the end of the year, with major expansion in the fit-out and regeneration divisions. The group's fit-out division, including subsidiary Overbury, posted a 38 per cent jump in adjusted operating profit to £15m on divisional revenues up by a fifth, to £507m. The result underlines a strong strategic focus, aimed at capitalising on large demand for housing in sustainable regeneration locations, which is likely to accelerate with increased political will for new homes.
Analysts at Numis Securities forecast adjusted EPS of 61.2p this year, increasing to 74.2p in 2016.
| MORGAN SINDALL (MGNS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 670p | MARKET VALUE: | £295m | |
| TOUCH: | 662-670p | 12-MONTH HIGH: | 875p | LOW: 570p |
| DIVIDEND YIELD: | 4% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 609p* | NET CASH: | £52m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 2.1 | 40.7 | 78.0 | 42 |
| 2011 | 2.2 | 40.0 | 71.0 | 42 |
| 2012 | 2.1 | 34.2 | 73.0 | 27 |
| 2013 | 2.1 | 13.9 | 35.4 | 27 |
| 2014 | 2.2 | 22.8 | 42.3 | 27 |
| % change | +6 | +64 | +19 | - |
Ex-div: 30 Apr Payment: 29 May *Includes intangible assets of £218m, or 495p a share | ||||
