McCarthy & Stone PLC (LON:MCS) saw its shares rise today after the UK's leading retirement housebuilder said it “delivered a consistent improvement in trading throughout the year” despite increased uncertainty created by Brexit worries and the UK general election in June, with revenue at record levels as selling prices hit an all-time high.
In a trading update for the full year ended 31 August 2017, the FTSE 250-listed firm pointed out that average selling prices exceeded £273,000 per unit for the first time in the group's history, up from £264,000 in 2016, and this has delivered a record level of revenue of around £660mln, up from £635.9m last year.
In early morning trading, McCarthy & Stone shares wqere 1.6%, or 2.6p higher at 163.0p.
READ: McCarthy & Stone says underlying trading conditions remain stable
The group said its total legal completions in the period were 2,302, were broadly unchanged from the 2,296 seen in 2016, while forward sales have steadily improved throughout the year despite a significantly lower number of new sales releases and first occupations.
The firm added that all sales lead indicators remain well ahead of the prior year and an increased level of forward sales of around £141mln are being carried into the new financial year, representing a 21% improvement on the prior year’s £116mln figure.
McCarthy & Stone said it opened 52 new sales outlets during the year, against 64 in 2016, and remains confident of delivering a further new sales releases of around 80 in full year 2018.
The group said: “As expected, there has been strong upward momentum in average selling prices and margins during the second half of the year, reflecting a continuing improvement in sales mix and quality of sites, and this is set to continue into the next financial year.”
Margins have recovered significantly
It added that margins have recovered significantly since 1 March, with around a 700 basis points improvement in underlying operating profit margin expected in the second half of the year versus the first half.
However, as previously guided, the firm said full year margins are expected to be lower than the prior year “mainly due to the age mix of stock sold and the increased use of part exchange leading to consistently higher levels of incentives.”
The statement concluded: “The demand for high-quality retirement housing remains strong and the Group remains confident of delivering its medium-term growth objective of building and selling more than 3,000 units per annum.”
The group will issue its full year results on 14 November 2017.
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