McCarthy & Stone posts plummeting pre-tax profit

Beechfield Court: Photographer Freia Turland

Continuing uncertainty and challenging market conditions dented half-year results at retirement housebuilder McCarthy & Stone, which posted a 66% drop in pre-tax profit.

In the six months to 28 February 2019, the group saw profit before tax fall to £3.6m (2018: £10.5m). This was impacted by £14m of charges in relation to delivery of the company’s business strategy including restructuring and redundancy costs, realignment of its land bank and consultancy fees.

Revenue rose by 17% to £281m (2018: £240m), reflecting an 11% increase in legal completions to 845 (2018: 760) together with a 7% improvement in the average selling price to £319,000 (2018: £298,000).

Its forward order book at 5 April was down on last year at £485m (6 April 2018: £581m).

For the full year the group is expecting 2,300 completions, with an average selling price of £300,000.

Its new strategy of discounts and part-exchange helped the business counteract the challenging secondary market, its financial update said.

John Tonkiss, chief executive officer, said: ‘During the first reporting period of our transformation strategy and against the backdrop of continuing uncertainty and challenging market conditions, we delivered encouraging results.

‘We are making significant progress across our strategic objectives, which focus on optimising our operations to deliver strong financial performance and increasing our return on capital employed, margins and cash generation over the next three years.

‘We are mindful of the economic and political uncertainty that all businesses are currently facing but are confident that our FY19 expected volume out-turn remains in line with the board’s expectations with increased use of discounts and incentives, particularly part-exchange, now expected to continue into H2 to counteract more challenging secondary market conditions.’

During the period, two new chief operating officers joined the group – Nigel Turner and Mike Lloyd, to focus on build and production and sales and services.

Gill Barr has been appointed as a non-executive director of the group, succeeding Mike Parsons as chair of the remuneration committee. She will also join the risk and audit committee.