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Tue September 29 2020

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Regeneration work helps Morgan Sindall stay on track

9 Nov 11 A strong performance by its Muse urban regeneration division is helping Morgan Sindall Group remain on track to meet its expectations for the current year.

In an interim management statement covering the period 1 July to 8 November 2011, the board said that its regeneration pipeline had grown from £1.8bn to £2.2bn since the half year with a further £900m of regeneration opportunities currently at preferred developer stage.

Muse has been named as the partner by Basingstoke and Deane Borough Council for a major £200m redevelopment of over 15 acres to produce in excess of 700,000 square feet of office space, and securing 3.5 acres of land in Chester with a view to creating a £115m, 500,000 square foot business quarter.

Total group forward order book stands at £3.3bn and a number of major contract opportunities are at preferred bidder stage.

The board said: “The macroeconomic environment continues to be challenging but our financial strength, breadth of capabilities and leading positions across a range of market sectors leave us well placed to emerge from the current market a stronger business than when we entered.”

Morgan Sindall said that construction markets are still competitive and impacted by public sector spending cuts, but commercial activity is beginning to pick up gradually in London and the southeast.

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The company’s construction and infrastructure division's forward order book is down from the half year, but there are significant opportunities at preferred bidder stage, the board said, including a £500m overhead line partnership for National Grid in joint venture with Vinci Energies.

Since the half year the fit-out division's forward order book has recovered and it is in line with the start of the year, with a reasonable level of workload secured for 2012.

On housing, the board said: “Affordable Housing's maintenance and new build social housing markets have continued to be robust in the second half of the year and, following the £560m allocation of funds to Registered Social Landlords, we expect to see a number of new-build social housing opportunities emerge in the coming months.

“Conditions in open market housing continue to be constrained by mortgage conditions albeit house sales and values have improved through the summer and into the autumn. We continue to make good progress with the recovery of the work in progress and debt acquired in relation to the Connaught acquisition, the total recovered currently standing at £19m, in line with our expectations. The division's full service offering leaves it well placed to target mixed tenure, new-build social housing and maintenance opportunities and as well as major housing-led regeneration schemes. Its forward order book has increased slightly since the half year.”

The board concluded: “Whilst the current market conditions will constrain growth in the near term we remain positive about the medium term prospects for the group with our increasing emphasis on regeneration.”

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