(Alliance News) - McCarthy & Stone PLC said Wednesday it has taken a series of cash-saving measures that will allow the company to operate with no sales revenue for about two and a half years.
The FTSE 250-listed retirement community developer and manager said its tangible net asset value as of February 28 stood at GBP687 million.
McCarthy & Stone said its cost-cutting plans will save the company about GBP230 million in 2020.
These include: suspending all building; halting land acquisitions; pausing marketing; and closing on-site sales offices. The company also noted its board has taken a 20% pay cut, starting April 1 until further notice.
Finally, the company has cancelled its final 3.5 pence dividend, saving about GBP19 million.
"These are unusual and difficult times. I would like to take this opportunity to thank our services colleagues who have gone above and beyond over the past couple of weeks. Despite the challenging conditions we all face, their dedication and professionalism in continuing to ensure the health and wellbeing of our residents across the country has been truly admirable," Chief Executive John Tonkiss said.
McCarthy & Stone had liquid assets, at the end of February, of about GBP350 million. The company is also in discussions about selling its rental assets.
The firm said it has no long-term debt and has already fully drawn its GBP200 million revolving credit facility, giving it available cash of about GBP127 million as of March 18.
Tonkiss continued: "We continue to make every effort we can to reduce the risk of infection across our developments and have called upon government to ensure that our front-line care staff have access to sufficient personal protective equipment to enable them to carry out their important role in caring for more vulnerable people. In addition, we have offered more than 300 of our newly built apartments to the government to assist the NHS with their efforts to accommodate older people as they recover from Covid-19 or NHS keyworkers."
McCarthy & Stone said it has put in place strict hygiene practices across all of its developments and has requested homeowners to limit access to all but essential visitors and observe social distancing.
The company has set up a "buddy system", allowing residents to pick a friend to bring medical and food supplies if they develop symptoms.
"We are mindful of the significant impact of Covid-19 on trading in the coming months, so as a board we feel it is imperative to take the right steps as soon as is practicable to ensure the long-term strength of the business. We have a strong balance sheet and are now focusing on conserving cash while balancing the long-terms needs of the business, ensuring that we are able to continue to address the chronic under-supply of suitable housing for older people," Tonkiss added.
Shares in McCarthy & Stone were 12% higher in London on Wednesday morning at 54.20 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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