Trading Update

Press release, Monday 1 February 2016

McCarthy & Stone plc - trading update

Further progress with investment and growth strategy

McCarthy & Stone, the UK's leading retirement housebuilder, is today issuing a trading update for the period from 1 September 2015 to 29 January 2016.

Clive Fenton, Chief Executive Officer, commented:

"It has been another period of solid growth and investment since our successful IPO last year, with continued demand for our specialist retirement products. Our three new regional offices created on 1 September 2015 are all trading well and are already contributing both profit and land to the group. They are expected to support improving margins in the second half. In parallel, we continue to drive operational improvements throughout the business to accelerate capital turn and improve returns.

"We remain on track to build and sell more than 3,000 specialist retirement homes per annum over the medium term and to deliver our targets for FY 2016 in line with expectations set for investors at the time of our listing. We continue to target ROCE in excess of 25% over the medium term."

Current trading and outlook

The ageing population in the UK continues to generate a pressing need for more retirement housing. A recent YouGov poll found that one in three of UK homeowners aged 55 and over are considering or expect to consider downsizing, but a lack of suitable housing options is preventing them from moving[1]. 

The Group continues to capitalise on this demographic opportunity to deliver sustained growth. Over the first 22 weeks of this financial year, the Group has released 25 new sales outlets (totalling 955 units), contributing to a 27% increase in the Group's weekly net reservation rate above 2015 and supporting an increase in the order book of forward sales at 29 January 2016 to c.£354 million (2015: £252 million), including legal completions in the year to date.

Additionally, the business has made further progress in building its land bank in support of its strategy to invest £2.5bn in the retirement housing market over four financial years. The business has acquired 21 new development sites since 1 September 2015 (totalling 890 units). The three new regional offices established on 1 September 2015, in the South West, East Midlands and North West, have acquired 6 of these new sites (237 units) and have a further 11 sites (492 units) on which terms have been agreed.

As indicated at the time of listing, the Group has incurred incremental costs associated with the opening of these new regional offices to drive and support growth. As guided previously, these costs will suppress margins in the first half, with the regions' contribution beginning to be more fully realised in the second half.

The Group reiterates its expectations of a c.20% increase in sales volumes and a c.100 bp improvement in ROCE in 2016, and as such remains on track to deliver in line with previous guidance for the full year. It remains the Group's intention to pay a first dividend pro rata from admission to 29 February 2016 in the third quarter of the financial year. McCarthy & Stone will release a trading update for the half year ending 29 February 2016 on Thursday 3 March.

Site visit

Clive Fenton, Chief Executive Officer, and Nick Maddock, Chief Financial Officer, will be hosting a site visit for analysts to Centenary Place, the first Retirement Living development opened by the new North London region, at Southchurch Boulevard, Southend-on-Sea, on Friday 12 February, during which no new financial information will be given. 

- Ends -

For more information, please contact:

McCarthy & Stone, +44 (0) 1202 292480

Clive Fenton, Chief Executive Officer

Nick Maddock, Chief Financial Officer

Paul Teverson, Director of Communications

Brunswick, +44 (0) 20 7404 5959

Alison Kay

Emily Trapnell

Notes to Editors:

About McCarthy & Stone

McCarthy & Stone is the UK's leading retirement housebuilder with a 70% share of the owner-occupied market[2]. The Company has sold 50,000 properties across more than 1,000 developments since 1977, and is renowned for its focus on the needs of those in later life.

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 1.5 million to 3.5 million, and the number of over 65 year olds expected to increase by more than 50% from 11.4 million to 17.2 million. According to recent research, 1 in 4 over 60s are interested in retirement living (Demos, 2013), yet only c. 128,000 units of specialist retirement housing for homeowners have been built[3].

In addition to its established Retirement Living and Assisted Living products, the Company has also launched a new product, Ortus Homes. Ortus Homes presents an exciting opportunity for the future and is exclusively for the over-55s and those in the early stages of retirement who are seeking to downsize for their leisure years. The first Ortus Homes development at Scarlet Oak in Solihull reserved out within 10 months of first occupation and won Best Retirement Scheme at the 2015 Housebuilder Awards. McCarthy & Stone is currently selling this new product range across a further five locations, helping the Company to capture a wider share of the active retiree market.

www.mccarthyandstonegroup.co.uk

Forward-looking statements

Certain statements in this announcement are forward-looking statements which are based on McCarthy & Stone plc's expectations, intentions and projection regarding its future performance, anticipated events or trends and other matters that are not historical facts. Forward-looking statements sometimes use words such as 'aim', 'anticipate', 'target', 'expect', 'estimate', 'intend', 'plan'. 'goal', 'believe' or other words of similar meaning. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as at the date of such statements and, except as required by applicable law, McCarthy & Stone plc undertakes no obligation to update or revised publicly any forward-looking statements, whether as a result of new information, future events or otherwise.