McCarthy & Stone swings to loss because of Covid-19

(Sharecast News) - McCarthy & Stone said the impact of Covid-19 would be weighted towards the second half of the year as lower sales during the crisis drove it to a loss in the first half.
The retirement home builder reported a £24.8m underlying operating loss for the six months to the end of April compared with a £21.3m profit a year earlier. Revenue fell 64% to £101.1m.

McCarthy & Stone swung to a pretax loss of £91.3m from a £3.6m profit the year before, mainly because of £63.4m of exceptional items including £60.4m of goodwill and brand impairment. It also announced the abrupt departure of joint chief operating officer Nigel Turner.

The company said the first half was split into three distinct phases. After a weak end to the 2019 calendar year because of the general election business picked up in January and February following the clear election result but then subsided in March and April as the Covid-19 pandemic spread and sales offices and building sites were shut down.

McCarthy & Stone said the peak of the crisis was past but that the effect on its finances would be more severe in the second half. It kept financial guidance on hold.

"Given the significant level of ongoing uncertainty, the board currently have little visibility as to the expected FY20 outturn," the company said. "Guidance therefore remains suspended until we have greater clarity of the Covid-19 impact on the business and wider UK economy."

The company said the Covid-19 crisis had vindicated its model of building homes for people to live independently in retirement because far fewer of its residents had caught the disease than those in care homes. It said reform of social care, the holiday for land stamp duty and proposed planning relaxation showed government was listening to its views.

Chief Executive John Tonkiss said: "Working with government, we want to develop a long-term plan to provide more options to keep older people safe at home, rather than in a home, and ensure this is fully understood by the public. We are pleased that this call is beginning to be heard."

McCarthy & Stone said it had parted company with Turner with immediate effect just 19 months after he joined to oversee the building division. The company said it wanted a smaller team and that many of Turner's projects had been completed. Mike Lloyd will remain COO for sales, customers and services and building managers will report directly to Tonkiss.

Tonkiss said: "I would like to thank Nigel for his hard work and enthusiasm since joining us and he has helped us make significant progress with delivering our new strategy. This includes leading our build cost reduction activity ... and driving material change in our effective management of health and safety. We wish him the very best for the future."

The company's shares fell 1.1% to 73.6p at 10:34 BST.