TIDMMCS
RNS Number : 9053P
McCarthy & Stone PLC
06 September 2017
Wednesday 6 September 2017
McCarthy & Stone plc - full year trading update
Strong recovery in the second half
McCarthy & Stone plc (the 'Group'), the UK's leading
retirement housebuilder, is today issuing its trading update for
the full year ended 31 August 2017 (2017), ahead of reporting its
annual results on 14 November 2017. All comparatives are to the
full year ended 31 August 2016 (2016) unless otherwise stated.
Highlights
-- 52 new sales outlets opened during the year (2016: 64).
-- Total legal completions 2,302(1) (2016: 2,296(1) ).
-- Gross average selling price increased by 3% to c.GBP273k
(2016: GBP264k) in line with previous guidance.
-- Revenue increased by 4% to c.GBP660m (2016: GBP636m).
-- Strong recovery in underlying operating margin(2) in H2 (+
c.700bp). As anticipated, full year margins expected to be lower
than prior year due to age mix of stock and higher levels of
incentives.
-- Year end forward order book 21% ahead of the prior year at c.GBP141m (2016: GBP116m(3) ).
-- Workflow on track to support growth strategy and deliver c.80
new sales releases in FY18 (2017: 52).
-- Continuing to maintain a strong balance sheet, with c.GBP30m
of net cash (2016: GBP53m) notwithstanding significant ongoing
investment in land and work in progress.
-- Maintaining industry-leading levels of customer satisfaction
as the only housebuilder to receive the full Five Star rating from
the HBF for twelve consecutive years.
-- New strategic relationship with Places for People to access the growing rental market.
Trading update
The Group delivered a consistent improvement in trading
throughout the year despite the increased uncertainty in the
secondary market following the EU Referendum result in June 2016
and the General Election in June 2017. Total legal completions were
in line with the prior year at 2,302 (2016: 2,296) and forward
sales have steadily improved throughout the year despite the
significantly lower number of new sales releases and first
occupations(4) . All sales lead indicators remain well ahead of the
prior year and an increased level of forward sales of c.GBP141m are
being carried into the new financial year, representing a 21%
improvement on the prior year (2016: GBP116m). Build activity was
delivered in line with management expectations, with 49 first
occupations achieved in the year (2016: 69). The Group opened 52
new sales outlets during the year (2016: 64) and remains confident
of delivering a further c.80 new sales releases in FY18.
As expected, there has been strong upward momentum in average
selling prices and margins during the second half of the year,
reflecting a continuing improvement in sales mix and quality of
sites, and this is set to continue into the next financial year.
Average selling prices have exceeded GBP273k per unit for the first
time in the Group's history (2016: GBP264k) and this has delivered
a record level of revenue of c.GBP660m (2016: GBP635.9m).
Margins have recovered significantly since 1 March, with a
c.700bp improvement in underlying operating profit margin expected
in the second half of the year versus the first half (2017 H1:
10.1%). As previously guided, full year margins are expected to be
lower than the prior year mainly due to the age mix of stock sold
and the increased use of part exchange leading to consistently
higher levels of incentives.
Over the course of the last financial year, the Group has sought
to enhance its business model by developing a strategic
relationship with Places for People. This represents an exciting
new opportunity to access the growing rental market and has the
potential to improve capital turn and enable land investment in
new, previously untapped locations. This strategic relationship
resulted in the sale of 126 apartments (included within the total
legal completions of 2,302) across 27 sites to be held within a
specialist retirement PRS Fund being established and managed by PfP
Capital, the fund management business of Places for People. The
apartments will be offered for private open market rent. We will
update further on this strategic relationship alongside our full
year results announcement in November.
The Group continues to lead the housebuilding sector on customer
satisfaction. It is the only housebuilder, of any size or type, to
have received the full Five Star rating in the Home Builders
Federation customer satisfaction survey for twelve consecutive
years, in which more than 90% of its customers would recommend it
to a friend.
The workflow of the business remains firmly on track to support
its growth strategy. Build activity commenced on 73 sites during
the year (2016: 54) and the Group plans to deliver c.80 new sales
releases next financial year (2017: 52), contributing to both FY18
and FY19 sales. First occupations are planned to increase to c.65
next year (2017: 49) and are expected to be weighted towards the
second half of the year due to the timing of our build programmes.
The demand for high-quality retirement housing remains strong and
the Group remains confident of delivering its medium-term growth
objective of building and selling more than 3,000 units per
annum.
An update on current trading and further guidance for FY18 will
be issued alongside our full year results announcement on 14
November 2017.
- Ends -
(1) Excludes commercial unit sales
(2) Underlying operating margin is calculated by dividing
underlying operating profit for the year by revenue. Underlying
operating profit is calculated by adding amortisation of brand and
exceptional administrative expenses to operating profit
(3) Forward order book reflects revenue due on reservations and
is stated after discounts but before incentive costs. The prior
year comparative stated at 2 September 2016 of GBP114m was stated
net of incentive costs of GBP2m
(4) 'First occupation' is the date of the first legal completion
within a given development
For more information, please contact:
McCarthy & Stone, 01202 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
McCarthy & Stone is the UK's leading retirement housebuilder
with a c.70% share of the owner-occupied market(1) . 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 growing demand for specialist retirement housing, with
the number of people aged 85 and over in the UK expected to more
than double between 2015 and 2035 from 1.5 million to 3.2 million,
and the number of people aged 65 and over expected to increase by
more than 50% from 11.6 million to 17.2 million(2) . According to
research by Demos, 1 in 4 over 60s are interested in retirement
living(3) , yet only c.141,000 units of specialist retirement
housing for homeowners have been built(4) .
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.
McCarthy & Stone is currently selling apartments in this
product range across nine locations, helping the Group to capture a
wider share of the active retiree market.
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, marking a 50% increase in winners 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.
(1) 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
(2) Population projections by the Office for National Statistics
(2014 based)
(3) Demos -- Top of the Ladder (September 2013)
(4) Independent data provided by Elderly Accommodation Counsel
(April 2016)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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