Retirement home developer and manager McCarthy & Stone’s board and leadership team have agreed to voluntarily reduce their basic salaries by 20%, as part of cash-saving measures during the coronavirus pandemic.
The developer will also pause all building activity, with the exception of certain sites that are close to completion, as well as land acquisitions and marketing.
Reservations, rentals and completions will be taken in cases of need, but on-site sales offices are have been temporarily closed.
Employees affected by the above actions will either be redeployed to support the developer’s homeowners, or will qualify for support under the new government job retention scheme.
These immediate steps will result in a total cash saving of around £230m in FY20, according to the developer.
The company said these measures will ensure the business can operate without any sales revenue for around 2.5 years. It added that it is in a position to restart development and sales activity “swiftly and effectively” when the market returns to normal.
The company will hold its annual general meeting today.
Last week the developer said it had drawn down its £200m revolving cash facility and withdrew its 3.5p per share final dividend payment, to ensure it could continue to deliver for its residents.
The group said the draw down meant it will have available cash of £127m.
More than 300 newly completed flats in unoccupied developments have been offered to help government and local authority care providers address the acute shortage of beds for older people during the pandemic. These apartments can house older people as they recover from Covid-19, or NHS keyworkers.
John Tonkiss, chief executive of McCarthy & Stone, said: “As set out on 18 March, we are mindful of the significant impact of Covid-19 on trading in the coming months, so as a board we feel it is imperative to take the right steps as soon as is practicable to ensure the long-term strength of the business.
“We have a strong balance sheet and are now focusing on conserving cash while balancing the long-terms needs of the business, ensuring that we are able to continue to address the chronic under-supply of suitable housing for older people.”
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