McCarthy & Stone H1 profits fall 52% as Brexit worries bite

Interim pre-tax profits at retirement home builder McCarthy & Stone fell by 52% to £10.5m as Brexit worries and “subdued conditions” hit the bottom line.

Chief executive Clive Fenton also warned the government was “woefully underprepared” for the housing needs of the UK's “rapidly ageing population”.

Revenue rose by 1% to £239.6m, while the dividend was lifted to 1.9p a share from 1.8p last year.

Completions fell by 12%, although average selling prices jumped 15%. A lower level of first half land exchanges and planning consents was likely to result in a "more modest growth trajectory for the business than previously expected over the next two financial years", the company said.

“Trading was constrained by the ongoing subdued conditions in the secondary market and the lower number of new first occupations resulting from a pause in build start activity following the EU Referendum in June 2016,” it added.

Underlying operating profits fell to £14.5m from £24.1m, in line with guidance given in March, “reflecting the lower level of completions, inflationary build cost increases, an increased usage of part-exchange to counteract subdued market conditions” McCarthy & Stone said.

It added that it had spent more on marketing to promote 50 sales releases and deliver second half legal completions.

“We released 54 new sites for sale since the start of full year 2018 and our forward order book, including legal completions, is now around 13% ahead of the prior year,” Fenton said.

“This provides continued confidence in our expectation that the full year outturn will be within the current range of analyst forecasts, albeit there remains some uncertainty created by the government's announcement on ground rents.”

"The growing need for retirement housing caused by our rapidly ageing population also means the long-term prospects for our business continue to be positive.”

Fenton called for a “joined-up policy approach across all government departments to encourage the delivery of better housing options for older people”.

"We recognise the need to support first time buyers but government must not ignore the many benefits of building more retirement housing,” he said.

“This form of housing frees up existing homes for families and young people, and reduces pressure on social care services, which are set to account for half of all taxes raised by local authorities by 2035.”