Further progress with growth strategy

Wednesday 29 June 2016

McCarthy & Stone plc - trading update

Further progress with growth strategy

McCarthy & Stone, the UK's leading retirement housebuilder, announces its customary trading update for the period from 1 September 2015 to 24 June 2016, which supplements the update provided with the 2016 half year results on 19 April 2016.

Year to date trading

With a rapidly ageing population and only c.141,000 units of specialist retirement housing for homeowners ever built in the UK1, the Group continues to capitalise on the attractive demographic opportunity and structural shortage of supply of retirement housing to deliver sustained growth.

In the first 43 weeks of this year, the Group has released 58 new sales outlets (totalling 2,137 units), contributing to a 18% increase in the Group's weekly net reservation rate above the same period in 2015 and supporting a 23% increase in the order book of forward sales at 24 June 20162 to c.£426 million (c.£328 million at 26 June 2015). The Group now holds all of the reservations it needs to deliver full year completions in line with market expectations.

The business has also made further progress in building its land bank to support its growth strategy. So far this year, the business has acquired 58 high-quality development sites (2015: 58), equivalent to c.2,345 additional plots (2015: 2,166 plots), and has achieved 43 full planning consents (2015: 38). The business now has sufficient sites in stock or in build to deliver all targeted legal completions to the end of financial year 2017.

Full year outlook

The Group would expect the current order book of forward sales to be sufficient, in normal market conditions, to deliver its targeted c.20% increase in sales volumes over the full year. Notwithstanding this, the result of last week's EU referendum has introduced some uncertainty into the broader UK economy and the housing market in particular. This may have an impact on the timing and cost of the conversion of our strong order book of reservations into completions, which the Group will continue to monitor.

Clive Fenton, Chief Executive Officer, commented:

"We are making further good progress with the roll-out of our substantial and profitable land bank and the delivery of operational improvements to accelerate capital turn and improve returns. All of our new regions are profitable and we have continued to see improved sales rates. We are now holding all of the reservations we need to deliver a full year out-turn in line with market expectations.

"Notwithstanding any short term market impact of last week's referendum result, the business remains in good shape to deliver on its medium term strategy. We now have sufficient sites in build to deliver our 2017 targeted sales and sufficient land under our control to deliver on our strategic objective of building and selling more than 3,000 specialist retirement homes in 2019, although we will continue to review our investment plans and monitor housing market developments following the referendum result. We continue to target ROCE in excess of 25% over the medium term."

McCarthy & Stone will release a further trading update for the full year ending 31st August 2016 on Monday 5th September 2016.

1 Independent data provided by Elderly Accommodation Counsel (April 2016)

2Forward sales includes legal completions between 1 March 2016 and 24 June 2016 and reservations held as at 24 June 2016. Corresponding figures for 2015 include legal completions between 1 March 2015 and 26 June 2015 and reservations held as at 26 June 2015.

- Ends -

For more information, please contact:

McCarthy & Stone, 01202 292480

Clive Fenton, Chief Executive Officer

Nick Maddock, Chief Financial Officer

Paul Teverson, Director of Communications

Powerscourt, 020 7250 1446 / [email protected]

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 market3. The Group has sold almost 51,000 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.

UK demographics remain strongly in favour of the specialist retirement housing market, with the number of people aged over 85 in the UK expected to more than double between 2014 and 2033 from 1.5m to 3.5m, and the number of over 65 year olds expected to increase by more than 50% from 11.4m to 17.2m4. According to recent research, 1 in 4 over 60s are interested in retirement living5, yet only c.141,000 units of specialist retirement housing for homeowners have been built6.

Older people are also the one group where rates of homeownership have risen in recent years. Homeownership among those aged 65 to 74 increased from 50% in 1981 to 78% in 2012 and among the over 75s it rose from 47% to 73%. However, for those aged 25 to 34, it has fallen from 62% in 1981 to 43% in 2012 and for 35 to 44 year olds it fell from 69% to 63%7.

The Group has two established product ranges - Retirement Living and 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 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 its first apartments in this new product range across eight locations, helping the Group to capture a wider share of the active retiree market. In addition, the first Ortus Homes development at Scarlet Oak in Solihull won the Best Retirement Scheme at the annual Housebuilder Awards in November 2015.

McCarthy & Stone's commitment to quality and customer service continues to be recognised by homeowners. In March 2016, the Group received the full Five Star rating for customer satisfaction from the HBF for the eleventh consecutive year - making it the only UK housebuilder, of any size or type, to achieve this accolade.

www.mccarthyandstonegroup.co.uk 

3Based 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 and Stone

4 Population projections by the Office for National Statistics (2012 based)

5Demos (September 2013)

6Independent data provided by Elderly Accommodation Counsel (April 2016)

7Office for National Statistics - Housing and home ownership in the UK (2015)