6th Sep 2018 10:37
LONDON (Alliance News) - Retirement housebuilder McCarthy & Stone PLC said on Thursday it expects growth in revenue for its recently ended financial year, even with uncertainty surrounding UK ground rents.
Revenue for the year to the end of August is expected to reach GBP670 million, up from GBP661 million, due to a 10% rise in the average selling price of homes to GBP300,000 from GBP273,000, reflecting improvements in the sales mix as well as the quality of developments.
The year-end forward order book is GBP147 million, up 23% from GBP141 million, supported by 69 sales releases during the year from 52.
During the period, total completions decreased to 2,134 units from 2,302, as volumes and profits were constrained by the second half weighting of first occupations, continued UK economic uncertainty, and a slower market and a softening of pricing, particularly in the south of the country.
As a result, operating profit is expected to be within the analyst forecast range of GBP65 million to GBP73 million, down from GBP96 million the year before.
In response to uncertainty surrounding the UK government's announcement on ground rents, McCarthy & Stone exercised caution throughout the year with 54 land exchanges from 75 the year before and 37 planning consents, down from 64.
In December, the UK Department for Communities & Local Government proposed to reduce ground rents on new long leases to zero. McCarthy is currently still in discussions with the government to secure an exemption from this for the retirement housebuilding sector.
"It has been a tough year for the group with ongoing adverse market conditions continuing to impact the business, and without the benefit of any additional government support for the retirement housing sector. Build delivery remained strong, however, with 68 high-quality developments brought to market during the year," said Interim Chief Executive John Tonkiss.
"We are continuing to engage with government in an effort to secure an exemption from the proposed changes to ground rents. We believe that there is a strong case for a specific exemption for the retirement housebuilding sector, and we are awaiting clarification on this matter. Until this is received, we continue our planning to try and mitigate the potential impact on the business, including maintaining discipline around our cash position and adopting a more measured approach to securing land," Tonkiss added.
Shares in McCarthy & Stone were up 2.7% at 114.90 pence on Thursday.
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