McCarthy & Stone fast-track build initiative saves £12m

Aaron Morby 8 years ago
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Retirement homes specialist McCarthy & Stone expects to save £12m in building costs over the next four years after revamping its procurement process.

Clive Fenton, Chief Executive Officer, says  firms is on track to deliver 3,000 completions a year
Clive Fenton, Chief Executive Officer, says firms is on track to deliver 3,000 completions a year

The firm said the new build initiative to accelerate build timescales and reduce build costs and enhance margins was on course to deliver big savings.

McCarthy & Stone has rolled out a new framework of critical controls to support its more robust build programmes and budgets.

The initiative is also targeting margin improvements through improved procurement, a more structured approach to supplier partnership and value engineering of individual developments.

The firm said it had also focused on speeding up planning.

Fifteen developments started this year have taken, on average, 19.7 months from land exchange to build start, compared with an average of 23 months across standard build starts last year and 25.2 months the year before the first regional implementation of the development initiative.

In its first half-year results since floating on the Stock Exchange in March, the builder said it was on course to deliver up to 3,000 completions a year by 2019.

Revenue rose a third in the first six months to £250m, helped by a 19% rise in completions to 923 homes and average selling prices up 12% at £253,000.

Pre-tax profit was flat at £29m after taking into account £9m cost relating to the float and investment in three new regional offices in the South West, East Midlands and North West.

Clive Fenton, Chief Executive Officer, added: “The group’s operating performance during the period has seen significant growth in reservations, legal completions, revenue and profitability and we are carrying a strong order book into the second half, with reservations at attractive margins well ahead of last year.

“Our land bank now includes sufficient land with full planning consent to deliver all targeted sales to 2017, and sufficient land under control to deliver all targeted sales to 2019. 

“In the first half, we have put in place the regional infrastructure and management capability necessary to help deliver these sales, which gives us confidence in the progress we are making in achieving our strategic objective of building and selling more than 3,000 units per annum.

“We are also starting to see tangible benefits from our three strategic initiatives focusing on improving sales rates, reducing time taken between securing land and starting build and implementing build programme efficiencies, reflected in the acceleration of our capital cycle, and we continue to target ROCE of at least 25% over the medium term.” 

 

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