McCarthy shares rise despite further loss: Builder speeds up construction to meet demand

McCARTHY & STONE, the retirement home developer, made a loss for the fourth consecutive year in the six months to February. But the shares closed 2p higher at 65p following an upbeat trading statement and the promise of a return to dividends next year.

Matthew Thorne, finance director, said the proceeds of a pounds 15.5m rights issue last month would be spent on 'significant purchases of land'. He said the company would accelerate its construction programme to meet rising demand.

In keeping with many housebuilders, McCarthy spent heavily on land during the period, adding 571 plots to its land bank, compared with 121 in the same period of 1993.

Mr Thorne said that McCarthy's target sites had not been bid up by other builders during the recent resurgence of interest in housing land, which had seen some plots in the South-east appreciate by up to 50 per cent in the past year.

He said that competition with still-cautious commercial developers for the town centre sites McCarthy favoured had kept land prices at a reasonable level. Average plot prices were about the same as a year ago.

Sales of homes reached 324 in the first six months, a modest increase on last year, after the exclusion of one-off sales to a housing association and the Salvation Army.

Average prices rose 14 per cent from pounds 56,600 to pounds 64,500 as incentives to prospective buyers reduced. Finished stocks of homes at the end of the first half fell from 1,199 to 921.

After sharply lower interest charges, thanks to the disposal last year of Peverel, a building maintenance subsidiary, there was a loss before tax of pounds 400,000 compared with a pounds 6.1m loss in the first six months of the previous year.

The loss per share of 0.6p was down from an 8.7p deficit and there was no dividend. The first payout on the ordinary shares is expected for the year to August 1995.

The disposal of Peverel and the rights issue cut borrowings to pounds 7.3m compared with shareholders' funds of pounds 81m.