Liberty House, Raynes Park, Assisted Living McCarthy & Stone plc Half year results to 29 February 2016 Strong growth delivers increased profits
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Clive Fenton, Chief Executive Officer Horizons, Poole, Assisted Living
The UK’s leading retirement housebuilder Only national retirement housebuilder with c.70% market share of the owner-occupied market 1 The UK's leading retirement housebuilder Experienced management team with deep sector and financial expertise Structural under-supply of retirement housing Exceptional growth market Uniquely placed to serve the fastest growing demographic in the UK with positive demographics Strategic objective to build and sell more than 3,000 units per annum by 2019 Over 38 years, the Company has sold almost 51,000 apartments across more than 1,100 developments Experienced housebuilder with proven business model Differentiated business processes provide competitive advantage in an industry marked by real barriers to entry Strong financial track record with robust balance sheet Strong financial position Land bank of c.10,800 units equivalent to 5.6 years' supply 2 for future development with high-quality land bank at attractive margins Targeting ROCE of at least 25% over the medium turn 1 Based on 3,453 registrations of cross-tenure properties specifically designed for the elderly with the NHBC during calendar year 2015, of which 2,672 were registered by McCarthy and Stone plc 2 Based on financial year ended 31 August 2015 legal completions of 1,923 units 4
Medium-term financial outlook Strategic objectives Legal completions 3,000 by 2019 Net ASP £300k by 2019 Gross profit margin Margin embedded in land bank comparable with 2015 ROCE At least 25% ROCE in medium term Gearing Maintain strong balance sheet Dividend Initial 30% pay-out ratio (pro rata interim 2016) 5
H1 Performance highlights Legal completions increased to 923 units (+19%); net average selling price of £253k (+12%); revenue £250.2m (+33%) Underlying profit before tax £39.1m (+23%) despite first half investment in new regional offices and operational infrastructure Strong balance sheet; gearing reduced substantially to 4% (2015: 16%) Further improvements in capital turn to 1.0x (2015: 0.9x) as a result of strategic initiatives HBF 5 Star satisfaction award for an industry-record eleventh consecutive year Successful IPO on the London Stock Exchange, entered the FTSE 250 on 21 March 2016 6
Nick Maddock, Chief Financial Officer Ocean House, Carlyon Bay, Ortus Homes
Financial performance: Overview Key financial metrics H1-16 H1-15 Change Revenue £250.2m £188.5m 33% Legal completions 923 776 19% Net average selling price £253k £226k 12% Underlying profit before tax 1 £39.1m £31.8m 23% Profit before tax £29.0m £29.1m 0% Underlying basic earnings per share 1 6.0p 5.3p 13% Underlying operating profit 1 £40.2m £36.5m 10% Underlying operating profit margin 1 16% 19% (3ppt) Operating profit £30.1m £33.8m (11%) Gearing 2 4% 16% (12ppt) Return on capital employed 3 (ROCE) 18% 18% 0ppt Interim dividend per share 1.0p - - 1 Underlying operating profit (including underlying operating profit margin and underlying basic earnings per share) and underlying profit before tax are calculated by adding amortisation of brand and exceptional administrative expenses to operating profit and profit before tax respectively 2 Gearing is calculated by dividing net debt by net assets 3 Return on capital employed (ROCE) is calculated by dividing underlying operating profit for the previous 12 months by the average tangible gross asset value at the beginning and end of the 12 month period. Tangible gross asset value is calculated as net assets excluding goodwill and intangible assets, excluding net debt 8
Financial performance: Revenue Full year 1,677 1,923 completions (units) +19% +19% New outlets Legal and improved completions reservation (units) 923 rates 776 659 H1-14 H1-15 H1-16 Full year 214 239 Net ASP +12% (£k) Quality, Net average location and selling price 253 253 incentive (£k) 226 discipline 205 H1-14 H1-15 H1-16 Full year 388 486 revenue (£m) +33% Strong top-line Revenue (£m) growth 250 188 150 H1-14 H1-15 H1-16 Source: FY14 unaudited management information prepared in accordance with UKGAAP, FY15 and FY16 unaudited management information prepared in accordance with IFRS 9
Financial performance: Profit Full year 75 95 (£m) +10% Underlying First half operating investment profit (£m)¹ 40 36 24 H1-14 H1-15 H1-16 Full year 19% 20% (%) (3ppt) Underlying New regional operating offices and profit additional 19% 16% 16% margin (%) 1 operational infrastructure H1-14 H1-15 H1-16 Full year 63 88 (£m) +23% Underlying Before profit before exceptional tax (£m) 1 39 items and 32 18 amortisation H1-14 H1-15 H1-16 Source: FY14 unaudited management information prepared in accordance with UKGAAP, FY15 and FY16 unaudited management information prepared in accordance with IFRS 10 1 Underlying operating profit (including underlying operating profit margin and underlying basic earnings per share) and underlying profit before tax are calculated by adding amortisation of brand and exceptional administrative expenses to operating profit and profit before tax respectively
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