Volume house builders and major construction firms have this morning confirmed further site closures and dividend cancellations, following a number of similar announcements yesterday.
Despite the UK government saying construction sites can remain open during the coronavirus outbreak, subject to complying with instructions around social distancing and safety procedures, the majority of house builders are pausing their developments.
The social housing sector’s biggest builder, L&Q, confirmed that it is closing developments as it does not feel social distancing is achievable on its sites.
Persimmon is now closing all its construction sites and sales offices from tomorrow (Thursday 26 March) until further notice.
Persimmon said construction sites “are commencing an orderly shutdown with only essential work taking place, which will be focused on making partly built homes safe and secure and where failure to complete the build could put customers in a vulnerable position”.
It is also looking to conserve cash and maximise financial flexibility, which it says is in the long-term best interests of the business and its stakeholders.
As such, it is cancelling the proposed 125p per share interim dividend payment of surplus capital to shareholders on 2 April 2020 and postponing the proposed annual, final dividend payment of 110p per share on 6 July 2020, which it will reassess later.
Financial markets updates will also be put on hold, in line with Financial Conduct Authority recommendations.
Persimmon entered the current year with cash holdings of £844m, land creditors of £435m (£268m payable over 2020) and industry-leading land holdings of 93,246 plots owned and under control.
It has cash of around £610m (as at 20 March 2020), deferred land commitments of around £195m to the end of the current year, and availability of a £300m revolving credit facility.
Another volume builder, Bellway, also updated the markets today and made no mention of site closures, but has since confirmed plans to shut sites by the end of this week.
It said: “Our priority is the health and well-being of our employees, sub-contractors and customers and we are making every effort to ensure that the group’s operating divisions, construction sites and sales offices are as safe as possible.”
Bellway said it is pausing new site acquisitions and reprioritising production expenditure to focus on plots that are in the later stages of construction programmes.
The house builder will also postpone its interim dividend until later in the calendar year “when there is more certainty with regards to the economic outlook”.
Morgan Sindall – which includes its home builder and partnerships business Lovell – said it is experiencing disruption to its operations in a number of areas.
It said 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”.
It expects that the overall disruption “will inevitably have a material impact on group profitability for the year”.
At 31 December 2019, the construction and regeneration group had year-end net cash of £193m (of which £57m was held in jointly controlled operations or held for future payment to designated suppliers).
Average daily net cash from 1 January to 20 March was £132m, and it has committed bank facilities of £180m.
Morgan Sindall is cancelling the final dividend of 38p per share as announced on 20 February 2020. It said its board may consider paying a second interim dividend in lieu of the cancelled final dividend once there is greater visibility on the impact of coronavirus on the group’s businesses and the economy as a whole.
John Morgan, chief executive of the company, said: “These are clearly challenging times and we continue to take the appropriate action to mitigate the impact of COVID-19.
“The group remains well funded, with good cash liquidity and an order book of c.£7.6bn, underpinning our confidence in the group’s long-term prospects.”