Connaught purchase to boost Morgan Sindall

9th Nov 2010 15:56

Morgan Sindall, the construction and regeneration specialist that recently bought some assets of collapsed rival Connaught, said trading conditions have remained challenging in the second half of the year.Despite the tough conditions, the group remains on track to meet full year expectations and believes it is well placed to gain market share.The decision to integrate the Construction and Infrastructure divisions appears to be paying off, with the division currently bidding and delivering a number of integrated construction and infrastructure projects.Revenue in the Fit Out division has increased in the second half of the year, as expected by management. The market outlook has softened over the past few months, however, with a weakening of the longer term pipeline of major projects in particular. The division's current forward order book is in line with the start of the year.On the Affordable Housing side of things the Connaught transaction has led to new agreements with 45 local authority and housing association clients and has created a significant number of new opportunities for the division. In all, the group expects the purchase of the Connaught assets will add around £100m to revenue in 2011, though the full benefit will not be felt on the bottom line until 2012 when the company has fully integrated the new business.Urban Regeneration's market remains subdued although management expect the division to make progress this year. The division's future development pipeline remains in line with the start of the period at £1.4bn and underpins the outlook for the division in the medium term.For the group overall, the order book stands at £3.7bn, and average cash in the year to date has been £64m, ahead of the £60m average seen in the first half of the year.Broker Panmure Gordon is standing pat on its full year projections and its positive stance on the stock. The broker is high on the group's "infrastructure exposure and enhanced opportunities in the social housing segment." "We are encouraged by the progress in both of these divisions. The balance sheet remains strong and the valuation attractive," the broker said.