McCarthy & Stone says Brexit hit H1 profits

Retirement housebuilder McCarthy & Stone continued to feel the effects of a slowdown in the housing market after last year’s Brexit vote in its first half results, with pre-tax profits down 25 per cent compared to a year earlier.

It said trading in the six months to February 28 was held back by a lower forward order book coming into the financial year.

Pre-tax profits were £21.8m down from £29.0m for the first six months of last year. Revenues were £238.2m, down 5 per cent from £250.2m. The net average selling price was flat.

In previous trading updates the company had said orders took until November to normalise after the UK’s vote to leave the EU in June created uncertainty in the housing market with homeowners struggling to sell their existing properties. That hit demand for the group’s retirement properties because almost all of its customers need to sell their homes first.

But today it said the market was now stable and that leading sales indicators, including sales leads and visitors, were well ahead of the previous year.

The group also blamed fewer sales releases and the timing of legal completions for the hit to revenues and profits in the first six months of the year, with closings on more high margin sites expected to be higher in the second half.

Chief executive Clive Fenton said:

We have made solid progress during this half year despite the headwinds created by the lower forward order book brought into the year and the weighting of expected completions from higher margin new sites into the second half of the year. Our forward order book remains strong and our build activity and planning successes leave us well-placed to deliver targeted FY17 and FY18 sales.

It raised its interim dividend to 1.8p, up from 1.0p last year. Earnings per share for the first half fell 42 per cent from 6.0p to 3.5p.