Profit tumbles at retirement specialist McCarthy & Stone
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Profit at UK retirement home-builder McCarthy & Stone dropped sharply last year against the backdrop of “a challenging market” and costs related to a new strategy, the firm announced today.
Shares in the company were up 0.5 per cent in morning trading at 154.6p, however, indicating that investors were anticipating weak results.
The figures
Profit before tax fell 25 per cent to £43.4m in the 14 months to 31 October 2019, down from £58.1m in the 12 months to 31 August 2018.
McCarthy & Stone said the sharp drop in profit was largely due to around £17m of exceptional costs to do with land that will no longer be developed.
The slump in profit took basic earnings per share down from 8.6p to 6.5p.
Despite this, the firm – which also manages retirement communities – saw revenue grow eight per cent to £725m, up from £671.6m in 2018.
Legal completions also grew from 2,134 in 2018 to 2,301 last year.
McCarthy ended the year with £24.7m in net cash, well above the £4m it had at the end of 2018.
The total dividend per share stayed the same as last year, at 5.4p.
Why it’s interesting
The UK construction industry was rocked in 2019 by prolonged Brexit uncertainty and slowing economic growth, making it a tough year for many builders.
On top of this, McCarthy & Stone is in the midst of a streamlining programme aimed at saving cash in various areas of the business.
McCarthy cautioned that its first-half performance is “expected to be lower than prior year, impacted by slower start to the financial year due to the General Election”.
Yet it said the “full year out-turn remains in line with expectations, weighted towards” the second half.
What McCarthy & Stone said
Chief executive John Tonkiss said: “The group’s new strategy has driven a solid full-year 2019 trading performance in a difficult market.”
“We are also making excellent progress across our key strategic initiatives as set out in September 2018, particularly rental, where our initial pilots have confirmed strong demand for renting in later life.”