Analyst Presentation 2 December 2009 November IMS Reminder Fit Out - - PDF document

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Analyst Presentation 2 December 2009 November IMS Reminder Fit Out - - PDF document

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Analyst Presentation 2 December 2009 November IMS Reminder Fit Out Revenue likely to reduce by more than a third YOY Market demand fallen by more High level of tendering activity currently Order book consistent with start of year

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Analyst Presentation

2 December 2009

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November IMS Reminder

Fit Out

Revenue likely to reduce by more than a third YOY Market demand fallen by more High level of tendering activity currently Order book consistent with start of year

Construction

Performing strongly Appointed preferred bidder for Tayside Mental Health PFI (£100m) and Hull BSF project (£200m) Order book down on start of year but will improve with financial close of projects above

Infrastructure Services

Market reasonably strong Appointed preferred bidder for Central Networks utilities framework (£500m over 10 years) Progressing number of key tunnelling and utilities bids Order book in line with start of year but should improve by year end

Affordable Housing

Contracting business performing well Improvement in open market housing volume continues Order book down slightly on start of year

Urban Regeneration

Market subdued Should make small contribution in 2009 Continues to progress its major regeneration schemes

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November IMS Reminder

Spread of activities with market leading positions in all of our chosen sectors providing resilience Increased capability to deliver projects of greater scale and complexity leading to a larger preferred bidder pipeline

Current order book £3.4bn (v £3.7bn at start of year) Preferred bidder pipeline £900m: all added 2H09

Responding to challenging conditions: annualised cost savings of £35m since beginning of 2008 Financially strong

Cash positive £100m of financing in place to mid 2012 if required Minimal pension deficit

On track to meet management’s 2009 expectations

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Muse – Earnings Before Interest and Tax

Return subdued in short term Longer term returns over cycle Average return on capital employed 22% (1997 to 2008) Capital employed currently £70m

5,000 10,000 15,000 20,000 25,000 30,000 35,000 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 £’000

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Morgan Sindall Investments

Ernie Battey

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Morgan Sindall Investments

Ernie Battey Richard Dixon

Commercial Director

Mark Stevens

Head of Project Finance

Nick Gyring- Nielsen

Business Development Manager

Nigel Badham

Bid Director

Andrew Livingston

Finance Director

Allister Wood

Senior Commercial Director

Andrew Savege

Senior Development Manager

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Morgan Sindall Investments

Established in 2000 Long-term investors and developers

  • f primary assets

Public sector client focus Target areas of activity

PPP PFI Project Finance Property & Regeneration

Core “integrated” offering

Project development Investment & project finance Property development Asset & Supply chain management

Enhancing Group capabilities

Morgan Ashurst Lovell Partnerships Morgan Est Fit Out MUSE

‘Enabler of infrastructure and regeneration activity for the Group’

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Core Markets Projects Stage Partner

Health & Social Care – Barnsley NHS LIFT – Camden & Islington NHS LIFT – Doncaster NHS LIFT – Solent NHS LIFT – Bury Tameside & Glossop NHS LIFT – PMP Portfolio – Operational – Operational – Operational – Operational – Operational – Operational Morgan Ashurst Emergency Services – Lancashire Fire Stations PFI – Dorset Emergency Services Partnership Initiative (DESPI) – Operational – In construction Morgan Ashurst Education – New North Community School Islington – Operational Morgan Ashurst Leisure – Basildon Sporting Village DBOM – In construction Morgan Ashurst Regeneration – HRA Pathfinder 1 Miles Platting PFI – Wigan Joint Services Centre PFI – In construction – In construction Lovell Partnerships Morgan Ashurst Infrastructure – Newport South Distributor Road PFI – A92 Dundee to Abroath Road PFI – Operational – Operational Morgan Est

PPP & PFI Projects Overview

‘Projects with a development value in excess of £600 million’

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Core Markets Projects Stage Value Partner

Health & Social Care – Tayside Mental Health – North Tyneside Extra Care PFI – NHS LIFT (Framework) – 1 of 1 – 1 of 3 – 1 of 1 – £95m – £100m – £40m Morgan Ashurst Education – Hull BSF – Blackpool BSF – Portsmouth BSF – 1 of 1 – 1 of 2 – 1 of 2 – £360m – £140m – £180m Morgan Ashurst Regeneration – Wickford Town Centre Project PPP – Bournemouth Town Centre PPP – 1 of 1 – 1 of 6 – £160m – £340m Lovell Partnerships Morgan Ashurst

PPP & PFI Bidding Activity

‘Projects in development with value in excess of £1.3 billion’

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Market Outlook

‘Significant role for Private Finance in Public Sector infrastructure markets’

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

VALUE £2bn

Forth Road Crossing

VALUE £16bn

Crossrail

VALUE £9bn

Olympics Defence Estates Upgrade Programme

VALUE £4bn

Building Schools for the Future

VALUE £55bn

Nuclear Programme

VALUE £40bn

Social Housing

VALUE £19bn

Health

VALUE £25bn

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Core Markets Drivers Market Potential Partner

Health & Social Care – Express LIFT – Scottish HUB – Third Party Development (3PD) – Care Homes and Mental Health – £2bn+ Morgan Ashurst Emergency Services – Fire & Rescue Services Round 6 – Police PFI – £600m+ Morgan Ashurst Education – Building Schools for the Future (BSF) – £3bn+ annually Morgan Ashurst Regeneration – Affordable Housing PPP/PFI Round 6 (£1.9bn) – Public sector accommodation financed though enabling assets – £3bn+ annually Lovell Partnerships Infrastructure – Roads & Bridges – Waste – £1.4bn+ annually Morgan Est

PPP & PFI Sector Development

‘Diversified skill base to accommodate Public Sector procurement strategy’

Source: HM Treasury, Partnerships for Schools (PfS), Department for Communities and Local Government, Transport for Scotland, MSIL research

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Public Private Partnerships Project Profile

‘Annuity Income and Long-term value creation’

Net investment Value created Cumulative Investment Cashflow Cumulative Construction O'Head & Profit Group Cumulative Cashflow

Typical PPP Accommodation Project

(Assumes 100% investment & 100% construction) 2007 2012 2017 2022 2027 2032 2036

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Investment Portfolio

‘Growth Opportunity from £36m today’

£0m £10m £20m £30m £40m £50m £60m £70m £80m £90m 2008 2009 2010 2011 2012 Value created Total Committed Total invested Total value – incl PB Total value – closed only

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Challenges / Opportunities

Change in Government policy endorsement of PFI Potential liquidity constraints in senior debt markets Increasingly onerous bank guarantees, covenants and terms Impact of falling asset values on project affordability Potential reduction in capital expenditure

‘Political change is the key short term uncertainty in the PPP/PFI market’

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Potential change of Government policy in 2010

Parliamentary general election by 3 June 2010 Budget deficit £175bn (12.4% of GDP) in 2009 – 2010? Considerable fiscal tightening to balance Public Sector finances Conservative PPP agenda

Alternative models for involving the private sector in infrastructure investment ‘New’ PFI model with transparent accounting and ‘real’ risk transfer ‘Localism’ agenda drives devolution of decision making authority Reduced emphasis on role of quangos to deliver community outcomes Reduced public service favoured over increase in tax revenues

PFI continues to constitute a small proportion of overall capital expenditure Private finance likely to remain robust in the medium term Flexible property & PPP development skill sets to meet contingencies

‘Private finance a key driver of Public Sector Infrastructure investment’

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Funding Public Private Partnerships

Improving availability of debt financing Easing of margins at construction and operational stages Continued financial covenants and guarantees still required Growing risk appetite – albeit club deals still the norm Potential pressures on project affordability remain Limited impact overall on current bidding activity

‘Established relationships and track-record in the funding community’

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Progress in 2009

Hull BSF – selected as preferred bidder Wickford Town Centre – selected as preferred development partner NHS LIFT – achieved five financial closes Tayside Mental Health PFI – selected preferred bidder Basildon Sporting Village – achieved financial close Wigan Joint Services Centre – achieved financial close Dorset Emergency Services Partnership Initiative – building completion, on time and budget, with a ‘delighted client’

‘Basis for future growth’

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Hull Building Schools for the Future

3-way joint venture at equity level Development value £360m Educational facilities - 17 schools Construction services - Morgan Ashurst Long term regeneration programme with potential value of circa £2bn

‘Continued success in education PPP’

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Wickford Town Centre

£165m+ self financing development

  • pportunity

Phased residential development Integrated Service Centre Improvements to the public realm Housing – Lovell Partnerships Construction – Morgan Ashurst Infrastructure – Morgan Est

‘Enhancing Morgan Sindall plc delivery capability’

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Health & Social Care

Bid through CSPC 6 NHS LIFTs and 30 PMPi assets Total development value £168m Construction services - Morgan Ashurst Other health PPP initiatives include:

Express LIFT Scottish Hubs

‘NHS LIFT is one of our core sectors’

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Tayside Mental Health Project

Our largest health project to date £120m hospital project in Scotland Work being performed on 2 separate sites Joint venture with a local partner 4 bank funding club used Construction services - Morgan Ashurst

‘Diversifying our Health Portfolio’

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Basildon Sporting Village

Development value £36m 50 metre 8 lane swimming pool 70+ station health and fitness suite Largest sporting project within the Thames Gateway 8 court multi-use sports hall Gymnastics centre Construction services - Morgan Ashurst Regeneration opportunity combined with Wickford Town Centre Regeneration

‘Presence in the leisure market’

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Wigan Joint Services Centre

Development value £66m Joint venture at equity level Provision of 2 new buildings Listed facade Includes library services, swimming pool, fitness suite public health and clinics Also provides office accommodation for

  • ther council services and the police

Construction services - Morgan Ashurst

‘Enhanced presence in the leisure market’

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Dorset Emergency Services Partnership Initiative PFI

Development value £60m Integrated Fire & Police Stations and HQs Complex delivery Attractive construction margin Construction services through Morgan Ashurst Quality finish - Duchy of Cornwall

‘Leveraging Morgan Sindall plc delivery capability’

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Summary

Vertical integration benefits - maximising Morgan Sindall’s delivery capability particularly since the Amec acquisition Recurring investment returns & portfolio development

Dividend income Subdebt coupons & interest Capital appreciation potential High-margin construction activity

Long-term investment horizon and commitment to our clients and their markets Continued Public Sector investment opportunity in regeneration through Public Private Partnerships and JV’s Flexibility through PPP / PFI and property-led procurement skill sets

‘Significant value creation with further growth anticipated’

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Analyst Presentation

2 December 2009

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You are invited to join us for drinks at …

Bunghole, 57 High Holborn, WC1V 6DT