McCarthy & Stone sees pickup after slow start to year

McCarthy & Stone said December's general election caused a slow start to the financial year but that its expectations were unchanged as the retirement home developer posted a 25% fall in annual profit.

Pretax profit for the 14 months to the end of October fell to £43.4m from £58.1m as the company incurred £17m of exceptional costs. Revenue rose 8% to £725m and underlying pretax profit rose 2% to £63.1m.

Exceptional costs included the cost of land that will not be developed, redundancy expenses and fees related to its strategic review. Revenue was supported by a 3% increase in the average property selling price to £308,000 and a rise in completed sales.

McCarthy & Stone said it had a slow start to the financial year because of uncertainty caused by December's general election but that sales leads, visitors and reservations improved in January. Results for the first half of the year will be lower than the year before but with a stronger second half expected guidance for the full-year was unchanged.

The final dividend of 3.5p a share leaves the annual payout unchanged at 5.4p a share, "reflecting the board's confidence in the group's strategy", the FTSE 250 company said. The company's shares rose 1.3% to 155.90p at 0851 GMT.

The company is cutting costs and shifting its business towards rentals and offering care services. It said it was on track to achieve about £40m of cost savings with most benefits expected in 2021 as lower building expenses bear fruit.

Chief executive John Tonkiss said: "The group's new strategy has driven a solid FY19 trading performance in a difficult market. We have a strong balance sheet, a continued focus on delivery of operational improvements across our business and an ongoing commitment to delivering high quality developments and five star customer satisfaction."