5 Jul 2017 07:00
Press release, Wednesday 5 July 2017
McCarthy & Stone plc - trading update
Continued progress in rebuilding order book; well positioned for medium term growth
McCarthy & Stone plc (the 'Group'), the UK's leading retirement housebuilder, is today issuing a trading update for the period from 1 March 2017 to 4 July 2017 (the 'period'), which supplements the update provided with the 2017 half year results on 5 April 2017 and ahead of the year end on 31 August 2017.
Current trading and forward sales
The Group continues to capitalise on the attractive demographic opportunity presented by a rapidly ageing population, the structural shortage of suitable housing options for older people and its leading position as the UK's largest and only national retirement housebuilder.
Underlying trading conditions remained stable during the period with some slowing of sales momentum experienced in recent weeks due to the uncertainty created by the General Election. Notwithstanding this, the Group has continued to make steady progress in increasing its forward order book and reservation rates have remained broadly in line with the prior year despite the previously highlighted lower number of new sales releases so far this year (2017: 39, 2016: 58).
As anticipated, the Group has seen upward momentum in average selling prices and margins since 1 March, reflecting a continuing improvement in sales mix which is set to continue into the next financial year. Average selling prices have exceeded £280k per unit during the period (2016: £265k) and the Group's total forward order book has increased by £241m (2016: £219m) since 1 March. Total forward sales including legal completions to date are now in line with the prior year at £659m (2016: £659m), representing a significant improvement since the start of the financial year.
Outlook
Throughout the year, the Group has been making good progress in rebuilding the forward order book to address the shortfall brought into the year following the EU Referendum. In light of the current uncertainty in the market however, it is possible that there may be a modest impact on the timing of conversion of existing reservations into completions.
The workflow of the business remains firmly on track to support its growth strategy and there are sufficient sites in stock or in build to deliver all targeted legal completions to the end of FY18. The Group therefore remains confident of delivering 80 new sales releases next financial year, a c.80% increase over the 44 sales releases forecast for the current year. Strong progress on planning has continued to support output for FY19, with detailed consents secured on 55 sites year to date (2016: 43 sites).
The Group remains committed to maintaining its very high standards of quality and customer satisfaction and is focused on retaining a strong balance sheet and positioning its workflow to deliver future growth.
Clive Fenton, Chief Executive Officer, commented:
"The Group has made good progress in rebuilding its forward order book despite the lower number of new sales releases this year. The market for high-quality retirement housing remains strong notwithstanding any potential uncertainty as a result of the UK General Election outcome and the underlying housing market continues to be supported by low interest rates, good mortgage availability and low levels of unemployment. In light of this attractive backdrop and our strong workflow position, we remain confident of our ability to deliver our growth objective of building and selling more than 3,000 units per annum."
McCarthy & Stone will release a further trading update for the full year ending 31 August 2017 on 6 September 2017.
- Ends -
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 market1. The Group has sold over 53,000 properties across more than 1,100 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 million2. According to research by Demos, 1 in 4 over 60s are interested in retirement living3, yet only c.141, 000 units of specialist retirement housing for homeowners have been built4.
The Group has two established product ranges - Retirement Living and Retirement Living Plus (formerly known as Assisted Living) - which provide 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 House Builders Federation ('HBF') for the twelfth consecutive year - making it the only UK housebuilder, of any size or type, to achieve this accolade.
1 Based on 3,453 registrations of cross-tenure properties specifically designed for the elderly with the NHBC during calendar year 2015, of which 2,672 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)