Morgan Sindall halves profits on Covid-19
The construction and development firm reported a pre-tax profit of £13.6m for the six months ended 30 June, down 62% from £35.5m a year earlier due to the “inevitable” effects of the pandemic.
Revenue also dipped, to £1.3bn for the period from £1.4bn in the first half of 2019, Morgan Sindall Group said in a stock exchange filing today.
However, the group said it increased its liquidity throughout the turbulent six months, to a daily average of £153m of cash in the bank, up from £123m in the year-earlier period.
John Morgan, chief executive of Morgan Sindall, said: “These results reflect the inevitable impact on our business of the Covid-19 pandemic during which the business is having to continually adapt in this changing environment.
“Throughout this challenging period the group has demonstrated its resilience, with an improved cash position strengthening our balance sheet and providing significant available liquidity.
“We now have greater clarity of the extent of the impact of Covid-19 on the current year’s performance and, we expect profit before tax for 2020 to be in the range of £50m-£60m.”
However, he warned that this prediction was “on the assumption of no further significant business interruptions arising from any widespread secondary lockdown”.
In February, Morgan Sindall posted an £88.6m pre-tax profit for the year to end of December 2019.
In the second half of the year, the board will consider resuming dividend payments – which it suspended earlier this year amid the pandemic – pending further clarity over the economic outlook and business interruption risks, according to the statement today.
Regional developer Muse Developments is part of Morgan Sindall. Although the financial statement does not breakdown financial performance for group subsidiaries, Muse managing director Matt Crompton said: “Our teams across the business have showed real stoicism and tenacity as we progress many of our key regeneration schemes.
“While the half year results have been impacted by the effects of coronavirus, we remain in a strong position.”
He added: “One of our key focus areas is…[working closely] with local authorities to help them repurpose their towns and cities by looking at adaptable, complementary and sustainable places that also maximise social value for communities.”
Muse has 17 projects on site with a gross development value of £392m, it said today. The company expects to begin construction on a further 11 projects in the second half of 2020.
During the first half of the year, it won planning consent for four projects with a total development value of £70m.
The Morgan Sindall Group, which has 6,700 employees nationally, includes Muse Developments, housebuilder Lovell, fit-out contractor Overbury, an investments division, and contractor Morgan Sindall Construction.
Lovell’s regional managing director for the North West, Lee Sale, said: “As we announced our year end results back in February we could not have anticipated the deep and sudden impact of Covid-19.
“As we emerge from the pandemic, the strategy we put in place at the start of this year to work with leading housing associations and local authorities in long-term, trusted partnerships remains unchanged.”
Morgan Sindall’s share price stood at 1.162p on Wednesday, up 11% since before the results were announced.