The market gave these results from Morgan Sindall a muted response, as the group's three main divisions were held in check by an uncertain commercial environment. A combination of margin pressure, lower order levels and the eurozone crisis prompted analysts to pare back upper-end earnings estimates for 2013.
Both revenues and profits declined within the group's construction and infrastructure, fit-out and affordable housing divisions, while a 15 per cent increase in group operating profits was linked to a £3.7m associate income gain. There is cause for concern within construction and infrastructure, which accounts for over half of group revenues. Operating profits here slipped by 11 per cent to £8.5m on a wafer-thin (but maintained) margin of 1.5 per cent, so there's little room for leeway at a time of "downward pressure on margins across the industry".
Morgan Sindall's forward order book is also heading the wrong way, down by £300m to £3.2bn, while higher capital expenditure and lower cash generation from construction activities meant that the group's £104m year-end cash pile was wiped out, although post the June half year-end it has turned cash-positive again through the £24m sale of its medical properties interests.
Liberum Capital expects full-year EPS to decline from 81.4p to 77.2p, falling again to 73.5p in 2013.
| MORGAN SINDALL (MGNS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 673p | MARKET VALUE: | £291m | |
| TOUCH: | 671-684p | 12-MONTH HIGH: | 725p | Low: 505p |
| DIVIDEND YIELD: | 6.2% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 553p* | NET CASH: | 7% | |
| Half-yearto 30 June | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 1.09 | 16.7 | 35.1 | 12.0 |
| 2012 | 1.00 | 18.8 | 35.8 | 12.0 |
| % change | -8 | +13 | +2 | - |
Ex-div: 26 Sep Payment: 26 Oct *Includes intangible assets of £225m, or 521p a share. | ||||
