McCarthy & Stone (MCS) may be lobbying the government for an exemption from proposals to crack down on ground rents on new leasehold properties, but it is preparing for the worst nonetheless. The retirement housebuilder – which charges an annual ground rent on its apartments – has been renegotiating its planning agreements, as well as taking a more cautious approach to buying land. That meant it completed 22 land exchanges and 21 planning consents during the first half, both down roughly a third on the 2017 half-year comparatives.
A pause in build starts following the EU referendum meant the number of new first occupations fell from 19 to 16. Coupled with a subdued secondary market, this resulted in a 12 per cent decline in legal completions, while gross margins dipped by 4 percentage points to 13 per cent, as build cost inflation persisted.
However, the group managed to increase the average apartment selling price by 15 per cent to £298,000, closing in on its £300,000 target. Management has focused on improving the quality of land purchases; for example buying more sites closer to the M25, which will fetch a higher price. It also completed 126 in-house part-exchange transactions, where dependent properties are temporarily taken on to the balance sheet pending forward sale.
Peel Hunt expects adjusted pre-tax profits of £108m during the 12 months to 31 August, giving EPS of 16.3p (up from £94.1m and 14.2p in 2017).
| MCCARTHY & STONE (MCS) | ||||
| ORD PRICE: | 128.9p | MARKET VALUE: | £693m | |
| TOUCH: | 128.9-129.3p | 12-MONTH HIGH: | 197p | LOW: 124p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 137p | NET DEBT: | 10% | |
| Half-year to 28 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 238 | 21.8 | 3.3 | 1.8 |
| 2018 | 240 | 10.5 | 1.5 | 1.9 |
| % change | +1 | -52 | -55 | +6 |
| Ex-div: | 3 May | |||
| Payment: | 8 Jun |
