McCarthy & Stone regains momentum despite political uncertainty

The FTSE 250 company said it continued 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 that, the group said it continued to make “steady progress” in increasing its forward order book, and reservation rates remained broadly in line with the prior year despite the previously-highlighted lower number of new sales releases so far this year at 39, compared to 58 last year.

As anticipated, the group saw upward momentum in average selling prices and margins since 1 March, reflecting a continuing improvement in sales mix which the board said was set to continue into the next financial year.

Average selling prices exceeded £280k per unit during the period, up from £265k year-on-year, and the group's total forward order book increased by £241m since 1 March, compared to the £219m improvement at the same time last year.

Total forward sales including legal completions to date were now in line with the prior year at £659m, which still represented a “significant improvement” since the start of the financial year.

“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,” the board noted in its statement.

“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.”

McCarthy’s board said the workflow of the business remained “firmly on track” to support its growth strategy, and there were sufficient sites in stock or in build to deliver all targeted legal completions to the end of the 2018 financial year.

The group, as a result, remained “confident” of delivering 80 new sales releases next financial year - an 80% increase over the 44 sales releases forecast for the current year.

Strong progress on planning had continued to support output for the 2019 financial year, the board added, with detailed consents secured on 55 sites year-to-date - up from 43 sites at the same time last year.

“The group has made good progress in rebuilding its forward order book despite the lower number of new sales releases this year,” said chief executive Clive Fenton.

“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.”