Morgan Sindall cancels dividend, draws down cash

The parent company of Muse Developments, Lovell, Overbury and Morgan Sindall Construction is “experiencing disruption” across a number of sites and has cancelled a planned dividend payment.

The group has committed bank facilities of £180m and as a precautionary measure has drawn on these facilities “in full to provide control over its own cash resources”.

The final dividend payment of 2019 to shareholders was set to increase by 12% to 38p due to Morgan Sindall’s strong performance last year, however this payment has now been cancelled. The board may consider a second interim dividend “once there is greater visibility on the impact of Covid-19 on the group’s businesses and the economy as a whole”.

The construction and regeneration group released a statement to the stock market this morning on progress in light of the Covid-19 crisis.

Morgan Sindall Group’s full-year results to December 2019 were announced in February and revealed a £3bn turnover and pre-tax profits of £88m.

In the following 10 weeks the group “continued to trade well”, and as the coronavirus outbreak took over, the statement said “a wide range of continuity and mitigation planning has been put in place to ensure, as far as possible, the safe operational continuity of the business in line with Government guidance”.

However “the group is now experiencing disruption to its operations in a number of areas. Certain construction sites have already closed under instruction from the relevant clients and this is expected to increase across a number of divisions and activities.

“In addition, activity on other sites and projects is slowing and progress with some development schemes in the regeneration activities is becoming more uncertain.”

As a consequence, Morgan Sindall alerted the stock market there would be “a material impact on group profitability for the year”.

Morgan Sindall has a £7.6bn order book nationally. The share price jumped by 8% to 1,256p following the news this morning, however the share price had dropped over the past weeks from the 1,970p peak when the full-year results were announced on 20 February.

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