Morgan Sindall on track to meet FY expectations

Construction group Morgan Sindall PLC (LSE: MGNS) said it remains on track to meet its expectations for the current year and is trading positively, despite continuing to face challenging conditions in some of the construction and regeneration markets in which it operates.

In a pre-close trading update for the six months to June 30 2009, it said that, s expected, Fit Out is experiencing tougher market conditions, with revenue falling by around a quarter in comparison to the same period last year. It expects these conditions to continue in the second half of this year although the current forward order book, which extends into 2010, remains broadly in line with the start of the year.

Construction's performance continues to improve and the division has traded in line with company expectations over the first half of the year. Public sector spending remains robust although competition in the market has intensified.

Infrastructure Services' performance is in line with that in the same period last year although the level of bidding activity for utilities and civil engineering contracts, particularly tunnelling opportunities, has increased significantly. In particular the division was successful in the first half of the year in securing its first AMP5 utilities contract with Severn Trent valued at £500m over ten years. Consequently the division's order book has improved since the start of the year and is expected to strengthen further during the second half.

Affordable Housing's revenue from refurbishment and new build social housing contracts remains robust.

Urban Regeneration's market remains quiet, as expected. Nevertheless, the division has been successful in the first half of the year in securing two large regeneration schemes at Doncaster, valued at £300 million over 6 years, and at Blackpool, valued at £220 million over 10 years.

The group's forward order book currently stands at £3.6 billion, broadly consistent with the start of the year. The group's financial position remains strong, with net cash and £75 million of banking facilities that have been recently renewed through to mid 2012.

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