Morgan Sindall : 2022 Half year results announcement

4 August 2022

MORGAN SINDALL GROUP PLC

('Morgan Sindall' or 'Group')

The Construction & Regeneration Group

This announcement contains information that qualified, or may have qualified, as inside information for the purposes of Article 17 of the Market Abuse Regulations (EU) 596/2014 (MAR). The person responsible for making this announcement is Steve Crummett, Finance Director.

RESULTS FOR THE HALF YEAR (HY) ENDED 30 JUNE 2022

1 'Adjusted' is defined as before intangible amortisation of £0.9m

(HY 2021: before intangible amortisation of £0.7m and deferred tax charge for future changes in tax rates of £1.9m)

HY 2022 summary:

• Record performance for the Group despite market headwinds o Revenue up 9% to £1.7bn
  o Adjusted profit before tax up 3% to £54.6m
  o Full year performance expected to be slightly above previous expectations
• Continued balance sheet strength

1. Net cash of £274m (HY 2021: £337m)

• 1. Average daily net cash of £264m (HY 2021: £294m)
• High quality order book with secured workload of £8.5bn
• 1. Up 2% on prior year (HY 2021: £8.3bn); down 1% on year end (FY 2021: £8.6bn)
• Interim dividend up 10% to 33.0p per share (HY 2021: 30.0p)

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• Divisional highlights

1. Further margin improvement in Construction & Infrastructure; operating margin up to 3.2% (HY 2021: 2.9%), with operating profit up 7% to £24.1m (HY 2021: £22.6m)

1. Another excellent performance from Fit Out; operating profit up 10% to £21.2m (HY 2021: £19.3m)

1. Property Services' operating profit1 up 4% to £2.5m (HY 2021: £2.4m)

1. Further good progress in Partnership Housing with operating profit up 15% to £13.9m (HY 2021: £12.1m) and operating margin up to 4.9% (HY 2021: 4.5%)

1. Long-termregeneration schemes progressing in Urban Regeneration with operating profit of £7.3m (HY 2021: £8.7m)

Commenting on today's results, Chief Executive, John Morgan said:

"We've had a record first half of the year and these results reinforce the significant strategic and operational progress we have made over the past few years. Whilst early days, this is a good start towards our medium-term targets outlined in February.

With the more challenging economic backdrop, our strong balance sheet including a substantial net cash position is critical to operating efficiently and effectively. It allows us to continue making the right decisions and to best position us in our markets, giving us competitive advantage for continued sustainable long-term growth.

Our market positions and disciplined approach to contract selection continues to drive positive momentum across the Group. Our order book is substantial and of high quality. Following our strong first half performance and with the current visibility we have of the rest of the year, we now expect to deliver a result for the full year which is slightly ahead of our previous expectations".

Presentation

• There will be an analyst and investor presentation at 09.00am at Numis Securities Limited, 45 Gresham Street, London EC2V 7BF. Coffee and registration will be from 08.30am
• A copy of these results is available at: www.morgansindall.com
• Today's presentation will be available via live webcast from 09.00am at www.morgansindall.com. The presentation will be available via playback on our website in the afternoon.

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Note to Editors

Morgan Sindall Group

Morgan Sindall Group plc is a leading UK Construction & Regeneration group with annual revenue of £3.2bn, employing around 7,200 employees and operating in the public, regulated and private sectors. It reports through five divisions of Construction & Infrastructure, Fit Out, Property Services, Partnership Housing and Urban Regeneration.

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Group Strategy

The Group's strategy is focused on its well-established core strengths of Construction and Regeneration in the UK. The Group has a balanced business which is geared toward the increasing demand for affordable housing, urban regeneration and infrastructure and construction investment.

Morgan Sindall's recognised expertise and market positions in affordable housing (through its Partnership Housing division) and in mixed-use regeneration development (through its Urban Regeneration division) reflect its deep understanding of the built environment developed over many years and its ability to provide solutions for complex regeneration projects. As a result, its capabilities are aligned with sectors of the UK economy which are expected to see increasing opportunities in the medium to long term and which support the UK's current and future regeneration and affordable housing needs.

Through its Construction & Infrastructure division, the Group is also well positioned to meet the demand for ongoing investment in the UK's infrastructure, while its geographically diverse construction activities are focused on key areas of education, healthcare and commercial.

The Fit Out division is the market leader in its field and delivers a consistently strong operational performance. Fit Out, together with the Construction & Infrastructure division, generates cash resources to support the Group's investment in affordable housing and mixed-use regeneration. The Group also has an operation in Property Services which is focused on response and planned maintenance activities provided to the social housing and the wider public sector.

Group Structure

Under the two strategic lines of business of Construction and Regeneration, the Group is organised into five reporting divisions as follows:

Construction activities comprise the following operations:

• Construction & Infrastructure: Focused on the education, healthcare, commercial, industrial, leisure and retail markets in Construction; and on the highways, rail, energy, water and nuclear markets in Infrastructure. Infrastructure also includes the BakerHicks design activities based out of the UK and Switzerland
• Fit Out: Focused on the fit out of office space with opportunities in commercial, central and local government offices and further education
• Property Services: Focused on response and planned maintenance activities provided to the social housing and the wider public sector

Regeneration activities comprise the following operations:

• Partnership Housing: Focused on working in partnerships with local authorities and housing associations. Activities include mixed-tenure developments, building and developing homes for open market sale and for social/affordable rent, 'design & build' house contracting and planned maintenance & refurbishment
• Urban Regeneration: Focused on transforming the urban landscape through partnership working and the development of multi-phase sites and mixed-use regeneration

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Medium-term divisional targets

To provide a framework for future performance, each division operates to a medium-term financial target or set of targets (the 'target' or 'targets'). The targets relate to revenue, operating margin, return on capital employed and/or profit and are referred to in the Divisional review.

The medium-term targets are shown in the table below and were first published on 24 February 2022.

Basis of Preparation

In addition to presenting the financial performance of the business on a statutory basis, adjusted performance measures are also disclosed. Refer to the Other Financial Information section which sets out the basis for the calculations. These measures are not an alternative or substitute to statutory UK IAS measures, but are seen as more useful in assessing the performance of the business on a comparable basis and are used by management to monitor the performance of the Group.

In all cases the term 'adjusted' excludes the impact of intangible amortisation of £0.9m (HY 2021: before intangible amortisation of £0.7m and (in the case of earnings per share) a deferred tax charge for future changes in tax rates of £1.9m).

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