Half-year figures from convenience chain McColl's (MCLS) were somewhat overshadowed by the group's recently announced plan to buy 298 stores from grocery rival The Co-operative Group for £117m. The acquisition was revealed just one week before half-year numbers hit the market, and helped mask a 2.2 per cent dip in like-for-like sales during the six months to May.
McColl's strategy is increasingly based on such buy-and-build growth - something made all the more evident by a 1 per cent improvement in underlying sales from recently acquired and converted stores during the reported period. But chief executive Jonathan Miller said the Co-op deal was a "once in a lifetime" chance to significantly expand the company's store estate and drive up future sales and profits.
Chief financial officer Simon Fuller said he envisaged future shareholder returns increasing significantly as a result of improved cash flows post-deal. The half-year dividend is flat, but were it not for the enlarged share capital following the Co-op deal fundraising, it would represent a 10 per cent increase.
Broker Numis is restricted from updating research on McColl's due to their involvement in the transaction, but previously had expected pre-tax profit of £20.5m for the year ending November 2016, giving EPS of 15.6p, compared with £21.7m and 16.5p in FY2015.
MCCOLL'S (MCLS) | ||||
---|---|---|---|---|
ORD PRICE: | 148p | MARKET VALUE: | £170m | |
TOUCH: | 145-153p | 12-MONTH HIGH: | 175p | LOW: 126p |
DIVIDEND YIELD: | 6.9% | PE RATIO: | 9 | |
NET ASSET VALUE: | 108p* | NET DEBT: | 34% |
Half-year to 29 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2015 | 459 | 7.6 | 5.6 | 3.4 |
2016 | 469 | 8.2 | 6.1 | 3.4 |
% change | +2 | +8 | +9 | - |
Ex-div: 11 Aug Payment: 9 Sep *Includes intangible assets of £147m, or 128p a share |