McCarthy & Stone profits hit by transformation costs
Bottom line pre-tax profit decreased 66% to £3.6 million.
Retirement home group McCarthy & Stone saw profits tumble in the first half as it was stung by exceptional costs linked to a strategy shift.
The firm said bottom line pre-tax profit decreased 66% to £3.6 million in the six months to February 28, as it booked £14 million in charges.
McCarthy blamed “restructuring and redundancy costs, realignment of land bank to deliver steady state volumes and consultancy fees” for the profits fall.
Revenue rose 17% to £280.5 million, but the forward order book is also 17% behind last year at £485 million.
The firm said that shortfall is down to organisational design changes within the sales function and planned lower level of releases.
Last year, McCarthy unveiled a major cost-cutting drive as new chief executive Tonkiss looked to turn around the retirement specialist’s fortunes.
He has ordered a shift in focus from growth to increased returns on investment and improving profit margins.
He said on Wednesday: “We are making significant progress across our strategic objectives, which focus on optimising our operations to deliver strong financial performance and increasing our return on capital employed, margins and cash generation over the next three years.
“We are mindful of the economic and political uncertainty that all businesses are currently facing, but are confident that our full year 2019 expected volume out-turn remains in line with the board’s expectations.”
Shares edged down 0.5% to 125.6p.