StockMarketWire.com - Retirement housebuilder McCarthy & Stone reported sales are expected to be approximately £670m (2017: £661m) supported by a 10% increase in average selling price to c.£300,000 (2017: £273,000) in the year ended 31 August 2018.

The jump in sales reflected continuing improvements in the sales mix, as well as quality and location of our developments.

HIGHLIGHTS:

- The group achieved total legal completions of 2,134 units (2017: 2,302) during the period, with volumes and operating profit constrained, as expected, by the heavy H2 weighting of first occupations, continuing economic uncertainty coupled with a slower secondary market and a softening of pricing, particularly in the south, during the second half of the year

- The group's sale of the freehold reversionary interests was successfully completed in August with a total cash value of £25m

- Operating profit for the year is now expected to be within the current analyst forecast range of £65m to £73m (2017 operating profit: £96m)

- Year end net cash is expected to be £4m (2017: net cash of £31m)

- The group delivered 68 first occupations during the year, representing a substantial increase on 49 first occupations in 2017

- Year end forward order book is currently 23% ahead of prior year at £174m (2017: £141m) supported by 69 sales releases during the year (2017: 52)

In response to the uncertainty resulting from the Government's announcement on ground rents, the group exercised additional caution throughout the year with 54 land exchanges (2017: 75) and 37 planning consents (2017: 64) achieved during the period.

This lower level of activity is the result of a more measured approach to land buying and further time taken to renegotiate s.106 contributions with local planning authorities in order to partially mitigate the potential impact of zero-rating future ground rents on new build properties.

Interim CEO John Tonkiss commented: "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 (2017: 49) high-quality developments brought to market during the year.

"In light of the continuing challenging market conditions, the group began a review of its strategy in April.

"As previously announced, our strategic focus will be on pursuing a more measured trajectory and smoothing our workflow to create a more efficient business.

"This will naturally lead to a right-sizing of our cost base, with build cost savings being a key area of focus.

"Additionally, we are continuing to trial a number of strategic initiatives designed to increase customer appeal and offer a broader choice of tenure options, increased flexibility and affordability.

"We will provide the market with more detail on this at our strategy update later this month.

"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.

"We continue to lead the market when it comes to customer satisfaction and remain the only housebuilder of any size or type to have received the full five star rating in the Home Builders Federation customer satisfaction survey for thirteen consecutive years."




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