McCarthy & Stone full year results statement

05 October 2015

McCarthy & Stone delivers continued strong growth in 2015 and increases investment target to £2.5bn 

McCarthy & Stone (‘the Group’), the UK’s leading retirement housebuilder, announces its financial results for the year ended 31 August 2015.  The Group delivered a further year of strong growth and significant investment progress, generating underlying profit before tax* of £88.4m. 

 Financial highlights

  • Underlying profit before tax* increased by 40% to £88.4m (2014: £63.2m)
  • Revenue growth of 25% to £485.7m (2014: £387.8m)
  • Legal completions up 15% to 1,923 (2014: 1,677) and net average selling price up 12% to £239k (2014: £214k)
  • Improved underlying operating margin* of 20% (2014: 19%) and return on average capital employed* increased to 20% (2014: 17%)
  • Strong balance sheet and robust financial position with reported net debt* at year end of £33.1m (2014: £48.9m), equivalent to gearing* of 6% (2014: 10%)
  • Forward sales strongly ahead at £177m (2014: £129

 Strategic and operational highlights

  • On track to double the size of the business to more than 3,000 unit sales per annum over the medium term
  • A record 90 new development sites acquired (2014: 74); land bank of 10,087 plots, equivalent to 5.2 years’ supply for future development at attractive margins.Terms agreed on a further c.468 plots
  • Increase in targeted investment in land and build to £2.5 billion over the next four financial years, up from £2 billion
  • Three new regions launched on 1 September 2015 covering the North West, South West and East Midlands
  • Successful first sales releases at five sites for the Group’s new product, Ortus Homes, which is exclusively for the over 55s and those in the early stages of retirement
  • The only housebuilder, of any size or type, to achieve the 5 star Home Builders Federation (HBF) customer satisfaction rating for 10 consecutive years

John White, Group Chairman, said: “It has been another strong year of profitable growth for McCarthy & Stone. We continue to capitalise on the increasing demand for specialist retirement housing, driven by a rapidly ageing population and a structural under-supply of this form of accommodation in the UK.

“The Group is well-positioned to benefit from this unprecedented market opportunity, and the scale and quality of our land bank provides significant visibility over the medium-term for our potential rapid growth.  Against this backdrop, we have increased our investment target for land and build to £2.5 billion over the next four years and remain on track to deliver 3,000 specialist retirement apartments per year over the medium term, doubling the size of the business.

 In parallel, we continue to make operational improvements to the business to deliver improved capital turn, ensuring that our increasing margins and profit translate into higher returns. The Group also increased its order book of forward sales at the end of the financial year and the early weeks of trading have been encouraging, with our weekly net reservation rate 23% ahead of last year for the first five weeks. Total forward sales, including legal completions in the year to date, stood at £177 million on 2 October 2015.

“The strong fundamentals for the specialist retirement market ensure McCarthy & Stone is well-positioned for the future and I remain confident of further progress in 2016 and beyond.”

Read the full document here.

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For more information please contact:

McCarthy & Stone, 01202 292480

Clive Fenton, Group Chief Executive Officer
Nick Maddock, Group Chief Financial Officer
Paul Teverson, Director of Communications

Brunswick Group, 020 7404 5959

Azadeh Varzi / Alison Kay

Note to Editors

McCarthy & Stone is the UK’s leading retirement housebuilder, with a c.70% share(1) of the owner-occupied market.  The Group buys land and then designs, builds, sells and manages high-quality retirement developments.  The Group has sold c.50,000 homes across more than 1,000 schemes since 1977.

UK demographics remain strongly in favour of the specialist retirement housing market, with the number of people aged 85 and over in the UK expected to more than double between 2014 and 2033 from 1.5 million to 3.5 million, and the number of people aged 65 and over expected to increase by more than 50% from 11.4 million to 17.2 million(2). According to recent research, 1 in 4 over 60s are interested in retirement living(3), yet only c.128,000 units of specialist retirement housing for homeowners have been built(4).

*Underlying operating profit, underlying operating margin and underlying profit before tax are stated before exceptional items and amortisation of brand (£2.1m). 2015 statutory operating profit £87.8m (2014: £70.5m), statutory profit before tax £80.9m (2014: £57.1m). Return on average capital employed is calculated as underlying operating profit / average tangible gross asset value.  Reported net debt excludes land-related promissory notes.  Gearing is calculated as reported net debt / net assets.  Tangible gross asset value is calculated as net assets, less intangible assets and reported net debt.  Forward sales includes legal completions year-to-date.

Note (1) Based on 1,919 registrations of properties specifically designed for the elderly with the NHBC during the calendar year of 2014 of which 1,355 were registered by McCarthy & Stone 
Note (2) Population projections by the Office for National Statistics (2012 based).
Note (3) Demos (September 2013)
Note (4) Age UK - Buying retirement housing fact sheet (April 2014). Properties built relate to England and Wales as at April 2014