As these interims highlighted, losses on the problematic legacy London contracts that have dogged Morgan Sindall (MGNS) for much of the past year were worse than expected. A £39.4m exceptional charge - higher than the £35m write-down flagged in a May trading update - took the sheen off some positive divisional updates for the construction firm, sending the shares lower in morning trading.
The 'fit out' division enjoyed a particularly strong six months, growing operating profit 89 per cent to £10.4m and the operating margin 70 basis points to 3.5 per cent. At the same time, the urban regeneration segment - which is concentrated on mixed-use and multi-phase sites - grew operating profit from £3.5m to £5m despite a fall in revenues.
The order book slimmed by 3 per cent to £2.6bn, though the higher-margin regeneration pipeline remains at £3.2bn. A 9 per cent improvement in the construction and services order book - where the legacy loss-making contracts emerged - should help move the division to break-even by 2016 as the company chases more profitable business.
Broker Peel Hunt is forecasting full-year adjusted pre-tax profit of £33m and EPS of 59.6p, up from £25.2m and 46.7p in the 12 months to December 2014.
MORGAN SINDALL (MGNS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 785p | MARKET VALUE: | £347.8m | |
| TOUCH: | 785-805p | 12-MONTH HIGH: | 865p | LOW: 570p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | na | |
| NET ASSET VALUE: | 547p* | NET DEBT: | 3% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 0.99 | 13.0 | 26.5 | 12.0 |
| 2015 | 1.15 | -27.2 | -49.4 | 12.0 |
| % change | +16 | - | - | - |
Ex-div: 1 Oct Payment: 23 Oct *Includes intangible assets of £218m, or 491p a share | ||||
