Investment Column: McCarthy

SEPTEMBER'S RATE rise brought to an end the strong run enjoyed by shares in McCarthy & Stone, the retirement home builder.

Yesterday's results showed it continuing to negotiate great deals on land in retirement locations and meeting customers' requirements so well that it was able to hold incentives flat. Margins strengthened from 28 to 30 per cent. Volumes grew 11 per cent to 1,420 as the group opened offices in the North and West. Underlying selling prices grew 6 per cent.

John McCarthy, the chairman, targets volumes of 2,000 within three years. The problem is that appeals on planning decisions are taking longer. Margins are likely to decrease after taxes on subcontractors went up last week. Interest rates are heading upwards.

On analysts' forecasts of pounds 42m pre-tax profits this year, the shares, at 244.5p, are on a sector rating - justified given the negative outlook.