A slowdown in secondary housing transaction volumes eroded operating margins for McCarthy & Stone (MCS) during the first-half, as the retirement home providers used discounts and incentives – including part-exchange – to boost sales. Management hopes to make more than £90m in cash savings between 2019 and 2021 by scaling back sales and marketing teams, standardising build designs and closing operations in the south-west of England.
Restructuring and redundancy costs also pushed operating profits down by more than half to £6m. The land bank was also reduced to just over 8,300 plots, from 10,000 in the prior year, reflecting a 17 per cent reduction in the forward order book. Forty-six per cent of legal completions involved some form of part-exchange, up from 40 per cent, although that did increase sales volumes by 11 per cent to 845. An improvement in the quality and locations of developments also helped increase the average selling price to £319,000, from £298,000.
Analysts at Peel Hunt expect adjusted pre-tax profits of £68.5m and EPS of 10.9p for the year to August 2019, up from £62.1m and 9.4p, respectively, in the prior year.
MCCARTHY & STONE (MCS) | ||||
ORD PRICE: | 125.4p | MARKET VALUE: | £674m | |
TOUCH: | 125.3-125.5p | 12-MONTH HIGH: | 144p | LOW: 96p |
DIVIDEND YIELD: | 4.3% | PE RATIO: | 17 | |
NET ASSET VALUE: | 139p | NET DEBT: | 8% |
Half-year to 28 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2018 | 240 | 11 | 1.5 | 1.9 |
2019 | 281 | 4 | 0.5 | 1.9 |
% change | +17 | -66 | -67 | |
Ex-div: | 2 May | |||
Payment: | 11 Jun |