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Morgan Sindall enjoys improved fit out performance

2 Jul 10 Morgan Sindall's fit out business has benefited from improved market conditions during the first half of 2010, with revenues increasing by 10% compared to the same period in 2009, the firm said in a trading statement today.

Morgan Sindall's fit out business has benefited from improved market conditions during the first half of 2010, with revenues increasing by 10% compared to the same period in 2009, the firm said in a trading statement today.

The growth has been driven “in particular by demand for larger projects”, and Morgan Sindall expects fit out revenue for the second half of the year “to exceed that achieved in the first half”.

It added: “The division's short term outlook remains healthy with the order book increasing by around a third since the start of the year although we expect market conditions to be very competitive in the second half of this year.”

Yesterday, rival ISG reported “some recovery” in the London fit-out market.http://www.theconstructionindex.co.uk/news/the-construction-index-news/ISG-trading-ahead-of-expectations

Overall, Morgan Sindall said its positive start to the year had continued, with improvements in underlying trading expected to offset the estimated £2m cost of merging its Construction and Infrastructure Services divisions.

The Group's net cash at the half year end is expected to be more than £100m.

The statement continued: “In construction, the division has won a good level of new business with some notable contracts being secured including, most recently, the Tayside Mental Health PFI. However, uncertainties remain about the precise impact of the planned cuts in public spending and the Group continues to monitor the situation closely and to develop contingency plans accordingly.

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“Demand from our infrastructure markets for the first half of the year was, as expected, lower than the comparative period last year largely due to the transition from AMP4 to AMP5 in the water sector and delays in the award of some major infrastructure projects.

“Affordable Housing's trading in the first half of the year was in line with the same period last year with demand for new build social housing and refurbishment remaining firm. Market conditions for open market housing are slowly improving but demand remains subdued, constrained by the lack of mortgage availability.

“As expected, Urban Regeneration's market remains subdued due to low levels of occupier demand for commercial property.”

The Group's forward order book currently stands at £3.5bn, compared with £3.2bn at the start of the year.

The statement concluded: “We have had a positive first half of 2010 and with our broad sector spread we remain well positioned to face the challenges ahead and to benefit from opportunities as they present themselves.”

Morgan Sindall's interim results will be announced on Monday 9 August 2010.

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