Annual profit at retirement home developer and manager McCarthy & Stone has slumped 25%, despite an 8% rise in revenue.
Pre-tax profit for the 14 months to the end of October fell to £43.4m, from the £58.1m reported for the 12 months to the end of August 2018.
The group blamed the profit fall on a challenging market backdrop and strategic structural changes.
It incurred £17m of exceptional costs that included costs related to the reduction of the group’s headcount and the decision not to progress with developing a number of sites.
Revenue rose to £725m, while underlying profit rose 1% to £68.1m.
Underlying operating margins contracted to 9.4%, back from 10.1%, mainly driven by “an increased usage of part-exchange and incentives to counteract subdued market conditions”.
McCarthy & Stone held its full-year dividend steady at 5.4p per share.
John Tonkiss, chief executive of McCarthy & Stone, said the group’s trading had improved since the general election.
“Our reservation rate was impacted in the lead up to the general election,” he said. “In January, we’ve seen things pick up across all metrics.”
The retirement housing specialist has made progress with its push into the rental market. it was achieving about rental reservations a week last year but this has increased to 12 a week in January.
McCarthy & Stone is looking to raise £300m for a new fund that will invest in its growing rental portfolio. Tonkiss said talks are “well progressed”.
Analysts at Jefferies said in a note to investors: “Progress in developing the rental product has been robust, providing confidence this will be a strong component of the group’s future strategy.
“However with no partner signed for the investment vehicle, this update doesn’t provide quite the progression we hoped for.”