7th Nov 2019 10:41
(Alliance News) - McCarthy & Stone PLC on Thursday said its performance in the most recently-ended financial year was hurt by "challenging" trading conditions in the UK, created by the political uncertainty.
The company moved its financial year end to October 31 from August 31. It will be reporting its results for the 14 months to Thursday last week on January 28.
The developer and manager of retirement communities said its annual revenue is expected to be GBP720 million for the 14 months compared to GBP672 million generated in the 12 months last year.
Underlying operating profit for the same period is expected to be within the current analyst forecast range of GBP64 million to GBP71 million, McCarthy said, versus GBP67.5 million a year prior.
The Bournemouth-headquartered company explained that underlying trading conditions remained "challenging" during the period due to the impact of ongoing political and economic uncertainty on the secondary housing market.
Meanwhile, uncertainty over potential stamp duty changes dented transaction levels, particularly in the South East, resulting in higher discount and incentive levels compared to the prior year.
These tougher market conditions are expected to continue throughout the new financial year, McCarthy noted, therefore, it is now focusing on increasing land optionality to ensure that the business is "well positioned" to respond when market conditions improve.
The company said it delivered 53 high-quality first occupations, 38 planning consents, 34 land exchanges and 40 build starts during the year, compared to 68, 37, 54 and 53, respectively, last year.
Year-end finished stock levels reduced to 1,650 from 1,785 year-on-year and are expected to reduce further by the end of financial 2020, McCarthy said, given the lower level of planned first occupations and the increased focus on selling down recently released finished inventory.
Meanwhile, additional headcount savings of GBP2 million have been achieved as part of McCarthy's strategy to optimise its sales operating model and focus in its financial 2020 now turns to improving off-plan sales and reducing incentive costs.
"While the long-term demand for our products and services remains strong, we have continued to experience challenging conditions in the secondary housing market resulting from the ongoing political and economic uncertainty," said Chief Executive John Tonkiss.
"The medium-term economic outlook will depend on how the UK's EU withdrawal is delivered, but our new strategy has positioned us well to deliver a solid trading performance in a difficult market and respond positively when trading conditions improve," added Tonkiss.
McCarthy & Stone shares were trading 0.5% higher in London on Thursday at 140.20 pence each.
By Evelina Grecenko; [email protected]
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