A fall in profits in the year to August 2018 was well flagged by McCarthy & Stone (MCS), with a slowdown in transactional volume in the existing home market reducing legal completions for the retirement homes specialist from 2,302 to 2,134.
Without growth, the company has set itself several new strategic targets. Volume will be kept at around 2,100 units, while the emphasis will switch from growth to enhanced return on capital employed - over 15 per cent by 2021 – and total cost savings of more than £40m by the same date. This is expected to result in cumulative cash savings of over £90m between 2019 and 2021. Greater efficiency is also expected to reduce capital employed by at least £70m between 2018 and 2021.
This makes sense given that the forward order book since the period-end is down 4 per cent from a year earlier, and the focus now will be on offering increased affordability and choice. And while still at the consultation stage, there are hopes that it will avoid proposals to put a cap on ground rents.
The next set of results will be for a 14-month period because the year end is changing to 31 October. Analysts at Peel Hunt are forecasting adjusted pre-tax profits of £77m and EPS of 11.7p.
| MCCARTHY & STONE (MCS) | ||||
| ORD PRICE: | 138.8p | MARKET VALUE: | £ 746m | |
| TOUCH: | 138.6-139.7p | 12-MONTH HIGH: | 172p | LOW: 96p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 142p | NET CASH | £4m | |
| Year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 486 | 80.9 | 3.4 | - |
| 2016 | 636 | 92.9 | 13.9 | 4.5 |
| 2017 | 661 | 92.1 | 13.8 | 5.4 |
| 2018 | 672 | 58.1 | 8.6 | 5.4 |
| % change | +2 | -37 | -38 | - |
| Ex-div: | 03 Jan | |||
| Payment: | 01 Feb |
