With the costs associated with two old construction contracts now out of the way, Morgan Sindall (MGNS) roared back into the black in the first half, and the specialist construction group now expects full-year profit to be slightly ahead of expectations. The shares jumped more than 6 per cent on the news, and management confidence prompted a useful hike in the half-year dividend.
Of the divisions seen as most vulnerable to the EU referendum vote, the fitting-out division increased its profit by 11 per cent to £11.5m, and its order book grew by 9 per cent to £373m. Crucially, £152m of this relates to work secured for 2017, providing significantly higher earnings visibility than in previous years.
The other stand-out performance came from Partnership Housing, where adjusted operating profit grew by 21 per cent to £4.6m. Lower planned maintenance revenue was more than offset by housing regeneration work, with important projects currently under way including the Trinity Woolwich contract in partnership with Greenwich Council, which will see 1,500 homes built. Elsewhere, Property Services moved back to break-even, helped by improved efficiencies, and earnings will benefit from securing a £300m contract delivering repairs and maintenance work for Basildon Council.
Analysts at Numis have upgraded their forecasts for the year to December 2016, and now expect pre-tax profit of £43m and EPS of 79.8p (from £34.4m and 63.1p in 2015).
| MORGAN SINDALL (MGNS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 605p | MARKET VALUE: | £270m | |
| TOUCH: | 605-620p | 12-MONTH HIGH: | 840p | LOW: 560p |
| DIVIDEND YIELD: | 5% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 569p* | NET CASH: | £36.4m | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 1.15 | -27.2 | -49.4 | 12 |
| 2016 | 1.15 | 15.4 | 28.5 | 13 |
| % change | - | - | - | +8 |
Ex-div: 13 Oct Payment: 24 Oct *Includes intangible assets of £217m, or 486p a share | ||||
