Morgan Sindall sees FY results ahead of previous expectations

Construction services business Morgan Sindall said on Wednesday that it's on track to deliver full-year results slightly ahead of its previous expectations as trading in the second half has continued to be strong.

In an update for the period from 1 July to date, the company said trading in the second half was driven by a further improvement in margin in Construction & Infrastructure and further margin growth in Fit Out.

The margin improvement in Construction & Infrastructure came from the ongoing focus on operational delivery and contract selectivity. Meanwhile, the company said it expects to see a "very strong" second half margin and profit in Fit Out based on visible workload for the year and its current contract delivery performance.

As a result, the group reckons results for the year will be ahead of the expectations set out in the half-year results in August, while average daily net cash for the full year will be in excess of £100m, ahead of previous guidance of not less than £75m.

On the downside, however, Morgan Sindall said that Property Services will take a hit from restructuring. The division is proposing to exit its legacy insurance services business to better serve its core local authority customer base and the cost of this, along with the cost of further streamlining its contract portfolio, will impact operation profit with a loss for the year of around £1m expected.

At 0930 GMT, the shares were up 3.4% to 1,493.40p.