McCarthy marks time in 'tentative' recovery: Retirement home group reduces interim losses

McCARTHY and Stone, the retirement home specialist, yesterday reported 'tentative signs' of improvement in the market but said that the next three months would be more important in gauging the impact of recovery.

Martin Towers, finance director, said that the group had not enjoyed the 30 per cent-plus increases reported by its rivals. That was partly because the group had less stock available than last year - when a lot of developments were finished - although more completions were planned for the next few months.

He added that much of the increased activity being reported by house builders was concentrated on the first-time buyer market and might take some time to feed up the chain. 'Elderly people take longer to get going than first-time buyers.' Properties taken in part-exchange for retirement flats were moving more quickly and prices firming.

The group, whose chairman is John McCarthy, managed to cut its losses in the six months to February from pounds 6.9m to pounds 6.1m, or 9.9p a share. It sold 385 flats, up from 333, although that was partly because of a block sale of 41 units to a housing association under the Government's rescue scheme. Average prices fell from pounds 68,500 to pounds 61,000, reflecting both the continued depression in the South-east - its main market - and a switch towards cash purchases, rather than shared equity deals.

The land bank stands at 2,984 units - 1,199 ready for sale - down from 3,237. A decision on provisions will be made at the year-end.

Overall, profits from the British retirement home business were pounds 500,000, compared with break-even last time. But in France, losses grew from pounds 300,000 to pounds 400,000.

The group put its borrowings at pounds 69.1m, up from pounds 60.6m, but that excludes pounds 14.8m of loan stock. Mr Towers said the omission was because of definition. 'I think of borrowings as short-term, and we do not have to repay the loan stock until 2004.' Including that, debt stands at 1.16 times net assets. Interest payable rose from pounds 5.2m to pounds 5.4m.

There is no interim dividend (0.5p) and it has also passed the preference dividend, due a month ago, although it does accumulate. The shares closed 1.5p lower at 31p.

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