Shares of British construction firm Morgan Sindall Group PLC (LON: MGNS) gapped 9% higher after reporting that it accumulated massive cash reserves in 2020 despite the pandemic lockdowns causing its profits to fall by almost a third.
The company’s cash reserves rose to £333 million compared to the £193 million recorded in 2019. The firm still managed to settle its supply invoices within an average of 27 days, one of the best turnaround times in the construction industry.
Morgan Sindall revealed that its order book currently stood at £8 billion, which will keep it busy throughout the year compared to last year’s total revenues of £3 billion. The firm’s profits fell 31% to £60.8 million compared to 2019’s £88.6 million.
The firm’s profits were higher than expected after its latest guidance issued on November 4, 2020, raised its upper-profit range to £60 million. The company benefitted from the British government allowing construction activities to continue during the lockdown period.
Investors also cheered the company move to reinstate its dividend payout and also repaid £9.5 million it received from the Government as furlough cash at the height of the pandemic lockdowns.
Morgan Sindall’s CEO, John Morgan, said: “While the year has been dominated by the Covid-19 pandemic, these results reflect the resilience across the group and the benefits of actions taken in recent years to maintain contract selectivity, further improve payments to our supply chain and maintain a strong cash position at all times.”
Adding:
“The size and quality of our growing secured workload at well over £8bn leave us well-positioned for the future, and we are on track to deliver a result which is materially ahead of our previous expectations and slightly ahead of that delivered in 2019.”
Morgan Sindall shares price.
Morgan Sindall shares gapped 12.9% higher to trade at 1680p after rising from Wednesday’s closing price of 1488p.