Full-year earnings for McCarthy & Stone (MCS) were constricted by £17m in exceptional costs linked to undeveloped land, redundancies and a strategic review. The retirement home builder notes that reservations during November and December were subdued, presumably due to the prospect of an interventionist Labour administration. Activity has picked up in the early part of 2020, but management anticipates that the first-half results will come up short of the comparable period.
Completions and revenue roughly matched the prior year once the change in the year-end is factored in, while the rise in average selling price was in line with inflation. But earnings were hampered by “increased usage of part-exchange and incentives to counteract subdued market conditions”, which led to a 70 basis point reduction in the underlying operating margin to 9.4 per cent.
Management is now banking on increased activity in the latter half of 2020 through an intensified focus on rentals and the development of “retirement communities”.
Peel Hunt forecasts adjusted earnings per share of 9.9p for the current financial year, rising to 12.9p in FY2021.
MCCARTHY & STONE (MCS) | ||||
ORD PRICE: | 146p | MARKET VALUE: | £785m | |
TOUCH: | 146-146.7p | 12-MONTH HIGH: | 160p | LOW: 121p |
DIVIDEND YIELD: | 3.7% | PE RATIO: | 22 | |
NET ASSET VALUE: | 143p | NET CASH: | £27.1m* |
Year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2016 | 636 | 92.9 | 13.9 | 4.5 |
2017 | 661 | 92.1 | 13.8 | 5.4 |
2018 | 672 | 58.1 | 8.60 | 5.4 |
Year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2019 (14 months) | 725 | 43.4 | 6.50 | 5.4 |
% change | +8 | -25 | -24 | - |
Ex-div: | 5 Mar | |||
Payment: | 3 Apr | |||
*Does not include £34.1m in land payments (land payables relate to payments due in respect of land which has been purchased under an unconditional contract). |