Red pens come out for builder McCarthy & Stone

THERE was good news last week for developers when it emerged that Chancellor Rishi Sunak was poised to suspend stamp duty on properties worth less than £500,000.

The efforts to turbocharge the housing market were cheered loudly by John Tonkiss, chief executive of FTSE 250 member McCarthy& Stone, when they were confirmed by the Chancellor on Wednesday.

McCarthy & Stone, which builds retirement homes, needed a lift more than most, with older buyers less likely to be moving home during t he pandemic. While the measure helped, there were none aimed at encouraging people to downsize.

On Wednesday, the company releases its first-half results, which will underline the problem. Analysts at UBS and Peel Hunt have pulled out their red pens and predict a small loss for the six months ended April after business ground to a halt in March. They reckon this has been caused by a drop in revenues of around 40 per cent.

The firm was on t he verge of signing an investor to fund £300 million of new rental properties for pensioners, but the deal fell through. Any news on finding new backers could help put a floor under the battered shares.

AS WITH s o many companies that are reporting their results at the moment, the trick is to work out just how bad business has been during the lockdown.

That certainly goes for home furnishings company Dunelm, whose sales will have plunged between April and June, the last three months of its financial year. Analysts at Peel

Hunt have pencilled in a fall in sales of around 58 per cent in that period compared to the same quarter last year, even after a jump in online sales.

But the scribblers also say that they reckon there’s a chance Dunelm might actually beat its forecasts and do better than expected – or should that be less badly?

NOW is the time for the private equity firms to start circling beleaguered companies with an eye on snapping them up on the cheap.

This newspaper revealed four weeks ago that Advent, the US firm that bought Dorset-based aerospace and defence giant Cobham earlier this year, eyed a bid for Clinigen, the AIM-listed drugs company that has grown into a £1 billion business.

Clinigen’s shares have come under pressure and the bid talk did little to help them recover.

But perhaps an upbeat trading update tomorrow could provide the ammo needed.

Even if it doesn’t, a further share price fall could lure in more prospective bidders.