Churchill Retirement posts record revenue of £208.6m

August 13, 2019 / Isla MacFarlane
Churchill Retirement posts record revenue of £208.6m

Retirement housebuilder Churchill Retirement has recorded 10.8% rise in revenues for the group, totalling a record £208.6 million for the Full Year ended 30 June 2019.

Financial highlights

  • Profit before tax up 6.8% to £55.2 million (2018: £51.7 million);
  • Operating profit up 7.5% to £60.4 million (2018: £56.2 million);
  • Operating margin of 29.0% (2018: 29.8%);
  • Return on capital employed of 21.5% (2018: 23.5%);
  • Average selling price up 0.5% to £314k (2018: £313k);
  • Average Customer incentive reduced by 22.2% to £10.8k (2018: £13.9k).

The Group reported a slightly reduced forward order position with 12.7% of future sales secured as at 30 June 2019 (2018: 16.8%).

The retirement housebuilder said that the government’s announcement in June 2019 that retirement housing will be exempt from plans to apply zero ground rents to leasehold properties shows encouraging recognition of the sector’s unique characteristics.

Spencer J McCarthy, Chairman and CEO of Churchill, said: “We relied less heavily on part exchange during the year, with 36% of sales being achieved using our specially tailored Home Exchange service (2018: 43%). The Home Exchange service remains important for our customers, many of whom are still finding it difficult to sell their existing property in the second hand market. Importantly, 100% of this activity was conducted through trusted third party providers, meaning no impact on our balance sheet.”

“We maintained a cautious approach to land buying for a second consecutive year, in response to the uncertainty arising from the Government’s leasehold and ground rent consultation. As a result, we acquired 13 new sites across all regions, equating to c.563 new plots, which largely replenishes the stock sold during the period. You can check out rm ib form here, for the best financial information.

“With fewer new sites as a consequence of the land buying approach outlined above, we submitted 12 planning applications during the year (2018: 15) and achieved successful planning consents for 416 new units across 10 sites (2018: 552 units, 13 sites). The planning system continues to present challenges, with protracted affordable housing negotiations and long appeal delays.

“However, the Government’s new Planning Guidance for Older People, published at the end of June, represents a positive step towards creating a level playing field for specialist retirement developers, enabling us to overcome the significant red tape and viability constraints our sector has to contend with.

“The long-term market drivers underpinning the UK retirement housing sector are as compelling as ever, with an ageing population and a shortage of suitable housing, combined with a limited number of national developers with the requisite skills and expertise to succeed in delivering this highly specialist product.

“However, the second hand housing market has continued to see low transaction levels and limited growth across most of the country, particularly in key regions where we operate. This has continued to have an impact on our customers’ ability to sell their existing property and facilitate a move. Ongoing political turmoil and an uncertain economic outlook both in the UK and globally have continued to impact on consumer confidence, and have led to our Customers delaying their purchase decisions for longer.

“The UK’s political and economic backdrop has been uncertain for three years now, ever since the country voted to Leave the EU, and this will continue to impact both demand and supply for the foreseeable future. As the year ahead progresses, we hope to see a more supportive and stable political and regulatory environment that will give us the confidence to invest in our future growth.

“We will continue to keep a close eye on the market and monitor the impact of the various potential Brexit scenarios. The risks associated with a “no deal” Brexit are well documented, and will continue to impact on consumer confidence, especially for Churchill Retirement Living’s Customers, who tend to be asset rich but cash poor, and more inclined to take a cautious view. Unlike first time buyers, there is no Government incentive for the “last time buyer” to downsize, so the financial, practical and emotional barriers to a move can often be harder to overcome.

“However, with the UK’s ageing population, and demand for our product continuing to outpace supply, the underlying long-term growth drivers for the business remain strong. The Group enters the new financial year in a positive position thanks to the experience of our team, our sensible approach to land buying, and our clear focus and understanding of what our Customers need.

“We remain a financially strong, well-run Company producing a first-class product and sector leading margins. Above all, we are well respected in the industry and with our Customers. We will maintain our disciplined approach and enter the year ahead with measured confidence.”

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