4th Nov 2020 11:58
(Alliance News) - Morgan Sindall Group PLC on Wednesday resumed dividend payments and said it now expects to exceed its own profit guidance for 2020 thanks to increasing momentum.
Shares in Morgan Sindall were up 5.2% at 1,224.48 pence in London in late morning trading.
The London-based FTSE 250-listed construction firm had reported its half-year results back in August showing an interim pretax profit of GBP13.6 million, down 62% from GBP35.5 million a year prior.
At that time, it forecast a pretax profit for full 2020 of between GBP50 million and GBP60 million. Pretax profit for 2019 was GBP88.6 million, suggesting a fall of as much as 44%.
However, in its most recent update, Morgan Sindall said that: "Since then, momentum within the group's operations has continued to increase following the Covid-related disruption in the first half."
It also noted the UK's announcement of additional lockdown restriction in England starting Thursday and welcomed news that construction activity can continue throughout, with any more disruptions from new restrictions "not expected to be material to the current year's performance".
As such, and with Morgan Sindall well into the final quarter, it is now expecting to deliver an annual performance slightly exceeding the top end of prior guidance.
Its cash position has strengthened further with average daily net cash for the full year now forecast to exceed GBP150 million, again exceeding prior expectations.
Within its Construction & Infrastructure division, the Infrastructure revenue and margin are "well ahead" of 2019, with Construction also making a recovery. Overall division margin is expected to exceed 2%.
Fit Out's secured order book was 15% lower than at the same time a year before, but Morgan Sindall said this was "more than offset by the value of projects at preferred bidder stage" and noted that the value of tenders due in the final quarter was 18% higher than the year before.
All Property Services contracts have been remobilised and a more normal run-rate of activity is predicted throughout the fourth quarter.
In Partnership Housing, construction activity and unit sales were up since the half-year, as were completions. The operating margin is forecast is "well in excess of 3%" with the division's secured order book to September 30 up 3% from the half-year at GBP1.3 billion, a 16% rise from the 2019 year-end.
In Investments, Morgan Sindall commented: "Operational management for the joint venture property partnerships and Later Living business is being transferred across to Urban Regeneration and Partnership Housing during the fourth quarter and a modest level of reorganisation costs will be incurred. These costs will be taken as normal through operating results and consequently the second half is expected to show a broadly similar loss to that which was reported for the first half."
Group secured workload at September 30 was GBP7.9 billion, up 5% from the end of 2019 and level with the first half. This comprised a GBP3.8 billion secured order book in construction, up 5% year-on-year, plus a secured order book in regeneration up 4% from year-end at GBP4.1 billion.
Average daily net cash from July 1 to October 31 was GBP188 million. From January until October 31, it was GBP167 million, a GBP58 million increase from 2019.
Due to this and current forecasts, annual daily net cash is predicted to exceed GBP150 million compared to 2019's GBP99 million, significantly beating previous guidance and the year before.
Morgan Sindall has declared a 21.0p per share interim dividend, in line with 2019. At the time of its half-year results, it had opted not to declare a dividend due to market uncertainty at the time.
Chief Executive John Morgan said: "Our strong cash generation, position and balance sheet remain key differentiators. These, together with the improved outlook for the year, have enabled us to repay furlough monies and resume dividend payments as declared today.
"Despite the uncertainty that the pandemic brings, we have a sound platform for future growth with the group geared towards future demand for affordable housing, urban regeneration and infrastructure and construction investment."
By Anna Farley; [email protected]
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