For the six months to 28 June the firm reported a 56% drop in revenues to £754.6 million and an operating loss of £16.1 million compared with profits of £311.9 million a year earlier.
COSTS THROUGH THE ROOF
The operating loss includes £39.2 million of costs directly related to the pandemic, including £29.9 million of site overhead costs incurred during the phased shutdown and closure which would normally be capitalised as work in progress and expensed as plots legally complete, but had to go through the profit and loss account as one-off costs.
It also incurred $4.6 million of incremental costs in ‘responding to Covid-19 including costs to meet our health and safety requirements’ and in order to comply with government guidelines over safe working.
Cash flow was also heavily impacted by the site closures, so although the firm raised £510 million in an equity placing in June for investment in land opportunities over the next year it actually ended the month with less than £500 million of net cash.
SALES TARGET SLASHED
All the building sites and sales offices which were shut during lockdown have since reopened, and the company says it has ‘significant confidence in this year’s completions’, but it warns that sales rates will remain below normal until construction catches up.
What this means in practice is that full year completions are likely to be 40% lower than last year, which will have ‘a significant impact on revenues and margins in 2020 and will have some knock on impact on 2021 delivery’, the firm revealed.
One positive takeaway from the results was that the firm intends to restart dividend payments next year with the final dividend of the 2020 campaign, although the news seemed to be lost on investors.