TIDMMCS
RNS Number : 7501G
McCarthy & Stone PLC
06 March 2018
Tuesday 6 March 2018
McCarthy & Stone plc
Half year trading update
McCarthy & Stone plc (the 'Group'), the UK's leading
retirement housebuilder, is today issuing a trading update for the
half year ended 28 February 2018 ('2018'), ahead of reporting its
half year results on Wednesday 11 April 2018. All comparatives are
to the prior year equivalent six month period ended 28 February
2017 ('2017') unless otherwise stated.
-- Forward sales including legal completions are currently c.16%
ahead of the prior year at GBP487m (2017: GBP418m), supported by 50
new sales releases during the period (2017: 32). Trading has
remained resilient during the first two months of the new calendar
year and the new sales releases have performed well.
-- Total legal completions of 760(1) units (2017: 864(2) ) were
achieved during the period, constrained as expected by the lower
number of new first occupation sites (16) in the first half (2017:
19) and ongoing subdued conditions in the secondary market
impacting older stock.
-- Half year revenue is expected to be c.GBP240m (2017: GBP238m)
supported by a 14% increase in average selling price to GBP296k
(2017: GBP260k) reflecting continuing improvements in the quality
and location of our developments.
-- As previously guided, H1 margins and operating profit are
expected to be lower than the prior year, reflecting the level of
investment required to deliver H2 completions, the additional
marketing activity to promote the high level of current year sales
releases (including a new television advertising campaign) and
increased usage of part exchange to counteract subdued market
conditions in the period.
-- Workflow and build activity remain on track to deliver c.80
new sales releases (2017: 52) and more than 65 first occupations in
the year (2017: 49) with c.49 first occupations scheduled to come
through in H2. The Group's profit will be more heavily weighted to
H2 than previously expected, with H1 operating profit likely to be
in the order of c.12% of current market expectations for the year.
However, the 16% increase in our forward order book together with
the higher level of first occupations in H2 over H1 gives us
confidence in our expectation that the full year outturn will be
within the current range of analyst forecasts, albeit with
continuing uncertainty resulting from the Government announcement
on ground rents.
-- Period end net debt is expected to be c.GBP76m (2017: GBP30m)
reflecting an increased level of investment in build activity in
preparation for H2.
-- In response to the uncertainty resulting from the Government
announcement on ground rents, the Group exercised additional
caution in H1 with 22 land exchanges and 21 planning consents
achieved during the period (2017: 30 land exchanges and 34 planning
consents). This lower level of activity reflects a more measured
approach to land buying and further time taken to renegotiate s.106
contributions with local planning authorities in order to partially
mitigate the potential impact. The Group's land bank remains
strong, however, at more than 4 years' supply (2017: 4.4
years).
-- The Group successfully completed its H1 sale of freehold
reversions during the period and due diligence work has now
commenced on the sale for H2.
Clive Fenton, Chief Executive Officer, commented:
"Trading remained resilient during the first half of FY18
despite ongoing subdued conditions within the secondary market. Our
forward order book is currently showing a 16% increase year on year
and this gives us confidence in our expectation that the full year
outturn will be within the current range of analyst forecasts for
the full year, albeit there remains continuing uncertainty created
by the Government announcement on ground rents.
"We continue to address the increasing market demand for
retirement housing generated by a rapidly ageing population and
welcome the recent CLG Select Committee report from a group of
leading MP's for a new national strategy for older people's
housing. We are working with the Government to build on policies in
this area which have the potential to support the delivery of a
greater range of specialist retirement housing to address the
significant shortfall of supply across the UK.
"As previously stated, we are actively engaging with the
Government in an effort to secure an exemption from the proposed
changes to ground rents announced on 21 December 2017. We believe
that there is a strong case for a very specific exemption for the
retirement housebuilding sector and we are seeking swift
clarification on this matter. Until this is received, we continue
our planning to mitigate the potential impact on the business,
including maintaining discipline around our cash position and
adopting a more measured approach to securing land."
The Group will release its results for the half year ended 28
February 2018 on Wednesday 11 April 2018.
- Ends -
For more information, please contact:
McCarthy & Stone, +44 (0) 1202 292480
Clive Fenton, Chief Executive Officer
Rowan Baker, Chief Financial Officer
Paul Teverson, Director of Communications
Powerscourt, 020 7250 1446 /
mccarthy-stone@powerscourt-group.com
Justin Griffiths
Nick Dibden
Notes to Editors
About McCarthy & Stone plc
McCarthy & Stone plc is the UK's leading retirement
housebuilder with a c.70% share of the owner-occupied market(3) .
The Group has sold over 54,000 properties across c.1,200 retirement
developments since 1977 and is renowned for its focus on the needs
of those in later life. It re-joined the Main Market of the London
Stock Exchange in November 2015 and re-entered the FTSE 250
following its quarterly review on 21 March 2016.
There is a growing need for retirement housing. There are
currently 11.8 million people aged 65 or over, rising to 17.3m by
2037, representing a 47% increase(4) . For those aged 85 or over,
the increase will be larger, from 1.6m to 3.0m, representing an 88%
increase. According to research by Demos, one in four over 60s are
interested in retirement living(5) , yet only c.157,000 units of
specialist retirement housing for homeowners have been built(6)
.
The Group has two established product ranges - Retirement Living
and Retirement Living Plus (formerly known as Assisted Living) -
which provide mainly one and two bedroom apartments across the
country with varying levels of support and care for older
homeowners. In late 2014, McCarthy & Stone launched its
Lifestyle Living (formerly Ortus Homes) product, which is
exclusively for the over 55s and those in the earlier stages of
retirement who are seeking to downsize for their leisure years.
The first Lifestyle Living development at Scarlet Oak in
Solihull won the Best Retirement Scheme at the annual Housebuilder
Awards in November 2015. At the same awards in November 2016, we
were pleased to again receive Best Retirement Scheme for Ramsay
Grange and Lyle Court, our combined Retirement Living Plus and
Lifestyle Living development in Barnton, Edinburgh, as well as Best
Customer Satisfaction Initiative for our approach to ensuring that
we deliver a Five Star service for our homeowners.
The Group was also pleased to win 15 awards at the 2017 NHBC
Pride in the Job awards and 7 Seals of Excellence, marking a 50%
increase in awards from 2016. The scheme is dedicated to
recognising construction site managers who achieve the highest
standards in housebuilding and has been instrumental in driving up
standards in the sector for 37 years.
McCarthy & Stone's commitment to quality and customer
service continues to be recognised by homeowners. In March 2017,
the Group received the full Five Star rating for customer
satisfaction from the Home Builders Federation for the twelfth
consecutive year - making it the only UK housebuilder, of any size
or type, to achieve this accolade.
All developments built since 2010 are managed by the company's
in-house management services team, providing peace of mind that it
will look after customers and their properties over the long term.
This is a key part of how McCarthy & Stone seeks to enrich its
customers' lives. McCarthy & Stone Management Services (MSMS)
provides management services in Retirement Living and Lifestyle
Living developments. YourLife Management Services (YLMS), which is
owned 50/50 by MSMS and Somerset Care Group, a leading
not-for-profit care provider, provides management services,
domestic assistance, catering, personal care and additional support
in Retirement Living Plus developments, and each development is run
by an Estate Manager and a team of staff delivering services 24
hours a day, 365 days a year.
www.mccarthyandstonegroup.co.uk
Forward-looking statements
Some of the information in this document may contain
forward-looking statements regarding McCarthy & Stone plc and
its subsidiaries (the Group). You may be able to identify
forward-looking statements by terms such as "expect", "believe",
"anticipate", "estimate", "intend", "will", "could", "may" or
"might", the negative of such terms or other similar expressions or
by discussions of strategy, plans, objectives, goals, future events
or intentions. These forward-looking statements include all matters
that are not historical facts. McCarthy & Stone plc (the
Company) wishes to caution you that actual events or results may
differ materially from those anticipated. The forward-looking
statements reflect knowledge and information available at the date
of preparation of this document and the Company undertakes no
obligation to update these statements to reflect events and
circumstances occurring after the date hereof or to reflect the
occurrence of unanticipated events. Many factors could cause the
actual results to differ materially from those contained in
forward-looking statements of the Group, including among others,
general economic conditions, the competitive environment as well as
many other risks specifically related to the Group and its
operations. Past
performance of the Group cannot be relied on as a guide to
future performance. Nothing in this document should be construed as
a profit forecast.
(1) Excluding 20 Affordable Housing units and one commercial
unit.
(2) Excluding two commercial units.
(3) Based on 4,778 registrations of cross-tenure properties
specifically designed for the elderly with the NHBC during 18 month
period ended 30 June 2017, of which 3,684 were registered by
McCarthy & Stone
(4) ONS (2017)
(5) ONS (2017, 2014 based figures)
(6) EAC (2017)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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