TIDMCSP
RNS Number : 3492F
Countryside Properties PLC
17 May 2017
COUNTRYSIDE PROPERTIES PLC
Unaudited results for the half year ended 31 March 2017
This announcement contains inside information.
Delivering strong growth ahead of expectations, upgrading
outlook
Countryside, a leading UK home builder and regeneration partner,
today announces its unaudited results for the six months ended 31
March 2017.
Results highlights
HY 2017 HY 2016 Change
Completions 1,437 1,095 +31%
Adjusted revenue(1) GBP435.4m GBP312.8m +39%
Adjusted operating profit(2) GBP70.4m GBP50.8m +39%
Adjusted operating margin(3) 16.2% 16.2% -
Adjusted basic earnings per
share(4) 11.4p 5.0p +128%
Return on capital employed(5) 25.7% 23.1% +260bps
Reported revenue GBP351.1m GBP286.2m +23%
Reported operating profit GBP53.2m GBP34.8m +53%
Net debt(6) GBP35.0m GBP8.7m +GBP26.3m
Basic earnings per share 11.1p 3.1p +258%
Group operational highlights
-- Trading in the first half ahead of expectations with good momentum into the second half
-- Net reservation rate of 0.89 (HY 2016: 0.79) from 48 sales
outlets (HY 2016: 37 sales outlets)
-- Private Average Selling Price ("ASP") of GBP441,000, down 13%
as expected (HY 2016: GBP505,000) with underlying house price
inflation of 6%
-- Group private forward order book of GBP347.1m, up 69% (HY 2016: GBP205.3m)
Partnerships highlights
-- Completions: 987 homes (HY 2016: 803) up 23%
-- Adjusted operating profit: GBP38.5m (HY 2016: GBP23.2m) up 66%
-- Adjusted operating margin: 17.2% (HY 2016: 16.7%) up 50 bps
-- Land bank plus preferred bidder: 17,528 plots, up 18% (HY 2016: 14,914)
Housebuilding highlights
-- Completions: 450 homes (HY 2016: 292) up 54%
-- Adjusted operating profit: GBP34.5m (HY 2016: GBP27.8m) up 24%
-- Adjusted operating margin: 16.3% (HY 2016: 16.0%) up 30bps
-- Land bank: 20,472 plots (HY 2016: 18,273) of which 85% has been strategically sourced
Outlook and current trading
The growth in active sites and increased sales rates have
resulted in a sharp increase in completions which looks set to
continue in the second half of the year. As a result, we expect
profit to be ahead of market expectations. Our financial strength
and accelerated delivery from our mixed tenure model provide the
basis for further growth in both the short and medium term. We are
achieving our ambition of increasing scale in our Housebuilding
division. The further momentum within Partnerships leads us to
upgrade our FY18 completion targets by 10 per cent in this
division.
Commenting on the results, Ian Sutcliffe, Group Chief Executive,
said:
"Our strong performance across the business in the first half
exceeded our expectations. In particular, our Partnerships division
once again delivered outstanding growth and returns. We continue to
be highly successful at winning new business in this division, with
three large sites secured in the first half, at Bromley, Maidenhead
and Barking. We enter the second half of 2017 in an excellent
position with 81 operational sites and a record private forward
order book. With strong operational delivery and an increasing
pipeline of future work, we see continued outperformance in the
medium--term and are upgrading our outlook for 2017 and 2018."
There will be an analyst and investor meeting at 9.00am BST
today at Numis Securities, The London Stock Exchange Building, 10
Paternoster Square, London, EC4M 7LT hosted by Group Chief
Executive, Ian Sutcliffe. The presentation will also be available
via a live webcast through the Countryside corporate website
http://investors.countryside-properties.com/
A playback facility will be provided shortly after the
presentation has finished.
Enquiries:
Countryside Properties PLC Tel: +44 (0) 1277 260 000
Ian Sutcliffe - Group Chief Executive
Rebecca Worthington - Group Chief Financial Officer
Victoria Prior - Investor Relations & Strategy Director
Brunswick Group LLP Tel: +44 (0) 20 7404 5959
Simon Sporborg
Will Rowberry
Note to editors:
Countryside is a leading UK home builder and regeneration
partner specialising in place making and urban regeneration. Our
business is centred around two complementary divisions,
Partnerships and Housebuilding. Our Partnerships division
specialises in urban regeneration of public sector land, delivering
private and affordable homes by partnering with local authorities
and housing associations. The Housebuilding division, operating
under Countryside and Millgate brands, develops sites that provide
private and affordable housing, on land owned or controlled by the
Group. Countryside was founded in 1958. It operates in locations
across outer London, the South East, the North West of England and
the West Midlands.
For further information, please visit the Group's website:
www.countryside-properties.com
Cautionary statement regarding forward-looking statements
Some of the information in this document may contain projections
or other forward-looking statements regarding future events or the
future financial performance of Countryside Properties PLC and its
subsidiaries (the Group). You can identify forward-looking
statements by terms such as "expect", "believe", "anticipate",
"estimate", "intend", "will", "could", "may" or "might", the
negative of such terms or other similar expressions. Countryside
Properties PLC (the Company) wishes to caution you that these
statements are only predictions and that actual events or results
may differ materially. The Company does not intend to update these
statements to reflect events and circumstances occurring after the
date hereof or to reflect the occurrence of unanticipated events.
Many factors could cause the actual results to differ materially
from those contained in projections or forward-looking statements
of the Group, including among others, general economic conditions,
the competitive environment as well as many other risks
specifically related to the Group and its operations. Past
performance of the Group cannot be relied on as a guide to future
performance.
"Countryside" or the "Group" refers to Countryside Properties
PLC and its subsidiary companies.
(1) Adjusted revenue includes the Group's share of revenue of
joint ventures and associate of GBP84.3m (HY 2016: GBP26.6m).
(2) Adjusted operating profit includes the Group's share of
operating profit from joint ventures and associate of GBP15.6m (HY
2016: GBP6.8m) and excludes non-underlying items of GBP1.6m (HY
2016: GBP9.2m).
(3) Adjusted operating margin is defined as adjusted operating
profit divided by adjusted revenue.
(4) Adjusted basic earnings per share is defined as adjusted
profit attributable to ordinary shareholders, net of attributable
taxation, divided by the weighted average number of shares in
issue. In the prior period, the number of shares in issue from the
date of the IPO to 31 March 2016 was applied (see note 8).
(5) Return on capital employed ("ROCE") is defined as adjusted
operating profit divided by average tangible net operating asset
value. Tangible net operating asset value ("TNOAV") is calculated
as net assets plus net debt of less intangible assets net of
deferred tax. In prior periods, loans from the Group's principal
shareholder and accrued loan interest were added back to tangible
net operating asset value.
(6) Net debt is defined as bank borrowings less unrestricted
cash. Unamortised debt arrangement fees are not included in net
debt.
The Directors believe that the use of adjusted measures is
necessary to understand the trading performance of the Group.
Chief Executive's Operating Statement
We have delivered an excellent set of results for the first half
of the year in both of our operating divisions. Both Partnerships
and Housebuilding are trading ahead of our expectations for 2017
and beyond. Revenue and profit have performed strongly which,
together with an improved visibility of future growth, has led us
to upgrade our expectations.
Group
Our strong growth trajectory from 2016 continued into the first
half of 2017, with total completions of 1,437 homes (HY 2016: 1,095
homes), an increase of 31 per cent.
Private unit completions increased by 42 per cent to 629 homes
(HY 2016: 444 homes). Private average selling price ("ASP") has
reduced as planned by 13 per cent to GBP441,000 (HY 2016:
GBP505,000), driven by a smaller proportion of sales from our
premium brand Millgate and managing our product mix to ensure it
remains affordable for local owner occupiers. Underlying house
price inflation was approximately six per cent in the half year,
while underlying build cost inflation was around three to four per
cent. Help to Buy remains an important sales tool at lower price
points, being used on 23 per cent of total completions within the
period.
Affordable completions were up 24 per cent to 808 homes (HY
2016: 651 homes) reflecting the increased number of sites under
construction. This included 325 Private Rental Sector ("PRS")
homes, up 4 per cent in the period (HY 2016: 314 homes). Affordable
ASPs increased by 24 per cent to GBP135,000 (HY 2016: GBP109,000),
reflecting a greater proportion of completions in our Housebuilding
division.
As a result, total adjusted revenue increased by 39 per cent to
GBP435.4m (HY 2016: GBP312.8m). Adjusted operating profit increased
by 39 per cent to GBP70.4m (HY 2016: GBP50.8m), reflecting strong
performance in the south in both divisions and a higher proportion
of commercial and land activity compared with the prior period
where land sales were second half weighted. On a reported basis,
revenue increased by 23 per cent to GBP351.1m (HY 2016: GBP286.2m)
and operating profit increased by 53 per cent to GBP53.2m (HY 2016:
GBP34.8m). The difference between adjusted and reported results
reflects the proportional consolidation of associate and joint
ventures (see notes 10 and 11), non-underlying items relating to
the outsourcing of certain central functions in the current year
and in the prior year, the Group's IPO and legacy management
incentive plan, partially offset by the reversal of a receivable
impairment. Adjusted operating margin was flat at 16.2 per cent (HY
2016: 16.2 per cent).
Our net reservation rate per open outlet per week was ahead of
expectations at 0.89 (HY 2016: 0.79) on an increased number of
sales outlets at 48 (HY 2016: 37). As a consequence, our private
forward order book was up 69 per cent to a record GBP347.1m (HY
2016: GBP205.3m) giving us strong momentum into the second
half.
Partnerships
Our Partnerships division has had a very strong start to the
first half, with total completions up 23 per cent to 987 homes (HY
2016: 803 homes) with adjusted revenue up 61 per cent to GBP223.3m
(HY 2016: GBP138.8m). An improved sales mix and underlying house
price inflation in the period resulted in an increase in private
ASP of 25 per cent to GBP368,000 (HY 2016: GBP295,000).
We saw substantial growth in private completions, up 43 per cent
on the prior period to 358 homes (HY 2016: 251 homes), with
Affordable completions up 14 per cent at 629 homes (HY 2016: 552
homes). This includes 325 PRS homes, up 4 per cent on the prior
period (HY 2016: 314). Affordable ASP was GBP123,000, up 21 per
cent (HY 2016: GBP102,000), reflecting a greater proportion of
affordable completions in the south compared with the prior
period.
Adjusted operating profit of GBP38.5m was up 66 per cent in the
period (HY 2016: GBP23.2m), with all our regions across the country
performing well. The adjusted operating margin increased by 50 bps
to 17.2 per cent (HY 2016: 16.7 per cent) due to higher sales
values and overhead efficiency. As a result of the increased profit
and reflecting the low capital Partnerships model, return on
capital employed ("ROCE") improved by 1,640 bps to 67.0 per cent
(HY 2016: 50.6 per cent).
Demand for our product has remained strong and is almost
exclusively owner occupier driven. Our mixed tenure regeneration
accelerates volume and creates attractive places for people to
live.
Following the opening of the West Midlands office in 2016, we
now have two open sales outlets in the region, with affordable
income recognised in the period and the first private completions
due in the second half of the year. We are due to start on a third
site this summer and are actively building the pipeline. Whilst it
is early days in the growth of the West Midlands office, this early
momentum signals the region's longer term potential.
Housebuilding
Our Housebuilding division performed well in the first half,
underpinned by the continuing strong customer demand for quality
homes, particularly in our strongholds of the Home Counties and
outer London Boroughs. Total completions were up 54 per cent at 450
homes (HY 2016: 292 homes) in line with expectations. Our premium
brand, Millgate, delivered 32 private homes, down from 49 in the
prior period which, along with a change in product mix, contributed
to a 31 per cent decrease in private ASP to GBP538,000 (HY 2016:
GBP779,000). We continue to see strong sales at the price points
below GBP600,000, which represented 75 per cent of the
Housebuilding division's sales in the half year period. Total
private completions of 271 homes were up 40 per cent (HY 2016: 193
homes). Adjusted revenue was GBP212.1m (HY 2016: GBP174.0m), up 22
per cent.
Affordable completions were up 81 per cent in the period to 179
homes (HY 2016: 99 homes) reflecting an increase in the number of
sites under construction, while affordable ASPs increased by 16 per
cent to GBP172,000 (HY 2016: GBP148,000).
Adjusted operating profit of GBP34.5m was up 24 per cent (HY
2016: GBP27.8m) reflecting the strength of growth in the
Housebuilding division, as well as a stronger first half weighting
of commercial activities and land sales than in the prior period
which delivered profit of GBP9.7m (HY 2016: GBP3.1m). The adjusted
operating margin of 16.3 per cent was up 30bps on the prior period
(HY 2016: 16.0 per cent). ROCE was up 50 bps at 16.8 per cent (HY
2016: 16.3 per cent), as we continue to focus on capital
efficiency.
We continue to open new sales outlets within a 50 mile radius of
London and had 29 open sales outlets at 31 March 2017 (HY 2016:
22), with a further 10 sites under construction. Additionally we
completed three commercial sales, two at Cambridge Medipark and the
final parcel at Great Notley in Essex.
Excellent visibility of future work and upgrade to medium term
outlook
Partnerships
We had another successful six months in winning new business in
the Partnerships division which cements our longer-term growth
plans. In addition to those sites already in the land bank
including preferred bidder status, we secured 4,225 new plots in
the period. These include the previously announced wins at Bromley
(384 plots) and Barking (911 plots) and a further success in
Maidenhead (1,260 plots) with four sites around a new Crossrail
station.
We now have 17,528 Partnerships plots under our control (HY
2016: 14,914 plots), representing approximately nine years of
supply at current volumes and providing significant visibility.
These projects were awarded to Countryside as a result of our
proven track record in delivering complex, multi-phase schemes
alongside design excellence. We see no slow down in new
opportunities and our bid pipeline currently stands at over 35,000
plots.
Housebuilding
We have maintained the land bank in our Housebuilding division
and acquired 1,840 plots on nine sites during the period. We have
also completed the planned sales of two surplus sites (321 plots)
at Silsden and Bury St Edmunds. The Housebuilding land bank now
stands at 20,472 plots (HY 2016: 18,273 plots) of which only 31 per
cent is owned and the remainder either controlled or under option
agreements. 85 per cent has been sourced strategically.
Group
Government focus on the National Planning Policy Framework has
facilitated an increase in outline planning consents, although
clearing pre-start conditions remains challenging. Overall, we now
have 19,060 plots with some form of planning permission across both
divisions (HY 2016: 14,652).
Given the sustained momentum in Partnerships, in particular
regarding both the continued bid win rate and operational delivery,
we now expect total completions to be higher in the medium-term as
we continue to win new work and accelerate delivery on existing
sites.
Maintaining our capital discipline
As we maintained our focus on building efficiency during the
first half, the increase in operating profit combined with an
improvement in asset turn to 1.6 times (HY 2016: 1.5 times)
improved ROCE by 260 bps to 25.7 per cent (HY 2016: 23.1 per
cent).
The Group's net debt at 31 March 2017 has grown with the
increased site activity to GBP35.0m (HY 2016: GBP8.7m). This
resulted in gearing(1) of 5.6 per cent (HY 2016: 1.6 per cent) and
adjusted gearing(2) of 21.7 per cent (HY 2016: 11.4 per cent).
Net finance costs
Net finance costs were GBP7.0m (HY 2016: GBP20.8m),
significantly lower than the prior period reflecting the absence of
interest on shareholder loans which were repaid in full at the time
of the IPO. Interest on bank debt decreased by 48 per cent to
GBP1.4m (HY 2016: GBP2.7m) reflecting the overall lower average net
debt in the period. The GBP300 million revolving credit facility
was approved for five years in May 2016 with the potential for two
one-year extensions. The first of these was exercised in May 2017,
extending the maturity of the facility to 2022.
During the period, the Group agreed to waive interest on
outstanding loans from its joint venture, Countryside Annington
(Mill Hill) Limited and as a result an impairment charge of GBP2.1m
was recognised within finance costs.
Taxation
The effective tax rate applied to adjusted profit for the period
was 19.0 per cent (HY 2016: 19.1 per cent). This reflects the
anticipated full year effective rate and is slightly lower than the
UK headline rate of 19.5 per cent. On a statutory basis, the
effective tax rate was 17.4 per cent (HY 2016: 21.5 per cent, the
difference to the adjusted effective tax rate being the impact of
the Group's joint ventures.
Earnings per share
Adjusted basic earnings per share were 11.4 pence (HY 2016: 5.0
pence), reflecting the strong growth in earnings in the period. On
a statutory basis, basic earnings per share were 11.1 pence (HY
2016: 3.1 pence).
Dividend
The Board has recommended an interim dividend of 3.4 pence per
share, payable on 7 July 2017, in line with our dividend policy of
paying 30 per cent of adjusted retained earnings in dividends. In
the prior period, no dividend was recommended due to the proximity
of the half year date to the Group's listing in February 2016.
Outlook and current trading
The growth in active sites and increased sales rates have
resulted in a sharp increase in completions which looks set to
continue in the second half of the year. As a result, we expect
profit to be ahead of market expectations. Our financial strength
and accelerated delivery from our mixed tenure model provide the
basis for further growth in both the short and medium term. We are
achieving our ambition of increasing scale in our Housebuilding
division. The further momentum within Partnerships leads us to
upgrade our FY18 completion targets by 10 per cent in this
division.
Ian Sutcliffe
Group Chief Executive
16 May 2017
Principal risks and uncertainties
The Group is subject to a number of risks and uncertainties as
part of its day to day operations. The principal risks and
uncertainties facing the Group for the remaining six months of the
year have not materially changed since our Annual Report was
published in November 2016 as those set out in detail on pages 38
to 39 of the 2016 Annual Report, which is available from
www.countryside-properties.com/investors. The Board regularly
considers these and seeks to ensure that appropriate processes are
in place to manage, monitor and mitigate these risks.
The key business risks, which are not listed in order of
importance, include the following:
-- A decline in macroeconomic conditions, or conditions in the
UK residential property market, can reduce the propensity to buy
homes. Higher unemployment and/or interest rates affect consumer
confidence and can reduce demand for new homes. Constraints on
mortgage availability, or higher costs of mortgage funding, may
make it more difficult to sell homes.
-- Adverse changes to Government policy in areas such as tax,
housing and the environment may result in increased costs and/or
delays. The discontinuation of Government-backed purchase
assistance programmes may adversely affect the Group's sales.
-- Build costs may increase beyond budget due to the reduced availability of skilled lab
-- our, increases in sub-contractor or material costs, errors,
omissions or unforeseen technical conditions.
-- Poor project forecasting, unforeseen operational delays due
to technical issues, disputes with third party contractors or
suppliers, bad weather or changes in purchaser requirements may
cause delay or potentially termination of a project.
-- Competition or poor planning may result in a failure to
procure land in the right location, at the right price and at the
right time.
-- Poor forecasting of market demand, or inability to react
quickly enough to changes in market demand, in terms of product,
location, time and price will impact the Group's competitiveness
and reduce sales or sales prices.
-- Failure to deliver high quality product and customer service
may reduce sales, adversely affect the Group's brand and reputation
and potentially lead to third party liabilities.
-- Inability to attract and retain highly skilled, competent
people at all levels could adversely affect the Group's results,
prospects and financial condition.
-- Failure to secure timely planning permission on economically
viable terms is critical to the value of the Group's land bank.
-- A deterioration in the Group's health, safety and
environmental standards could put the Group's employees and
contractors or the general public at risk of injury or death and
could lead to litigation or penalties or damage the Group's
reputation.
Responsibility statement of the directors in respect of the
unaudited results for the half year ended 31 March 2017
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU;
-- the interim results report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
The directors of Countryside Properties PLC are listed in the
Annual Report for the year ended 30 September 2016.
For and on behalf of the Board
Gary Whitaker
Company Secretary
16 May 2017
COUNTRYSIDE PROPERTIES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
As at 31 March 2017
Six months Six months Year ended
ended 31 ended 31 30 September
March 2017 March 2016 2016
Note Unaudited Unaudited Audited
------ ------------ ------------ --------------
GBPm GBPm GBPm
Revenue 4 351.1 286.2 671.3
Cost of sales (273.5) (222.5) (527.2)
------------ ------------ --------------
Gross profit 77.6 63.7 144.1
Administrative expenses (24.4) (28.9) (56.8)
------------ ------------ --------------
Group operating profit 5 53.2 34.8 87.3
Analysed as:
Adjusted Group operating profit 70.4 50.8 122.5
Less: Share of associate and joint
ventures operating profit (15.6) (6.8) (25.3)
Less: Non-underlying items 5 (1.6) (9.2) (9.9)
Group operating profit 53.2 34.8 87.3
------------------------------------------- ------ ------------ ------------ --------------
Finance costs 6 (7.3) (22.3) (30.5)
Analysed as:
Adjusted finance costs (7.3) (22.3) (27.3)
Less: non-underlying finance cost - - (3.2)
Finance costs (7.3) (22.3) (30.5)
------------------------------------------- ------ ------------ ------------ --------------
Finance income 0.3 1.5 2.3
Share of profit from associate
and joint ventures 14.1 4.1 19.6
------------ ------------ --------------
Profit before income tax 60.3 18.1 78.7
Income tax expense 7 (10.5) (3.9) (17.3)
------------ ------------ --------------
Profit for the period 49.8 14.2 61.4
------------ ------------ --------------
Profit is attributable to:
Owners of the parent 49.8 13.7 61.1
Non-controlling interest - 0.5 0.3
------------ ------------ --------------
49.8 14.2 61.4
Other comprehensive income
Items that may be reclassified
to profit and loss
Changes in the fair value of available-for-sale
financial assets - - (1.5)
------------ ------------ --------------
Total comprehensive income for
the period 49.8 14.2 59.9
============ ============ ==============
Total comprehensive income for the period
attributable to:
Owners of the parent 49.8 13.7 59.6
Non-controlling interest - 0.5 0.3
------------ ------------ --------------
49.8 14.2 59.9
------------ ------------ --------------
Earnings per share (expressed
in pence per share):
Basic earnings per share 8 11.1 3.1 13.6
Diluted earnings per share 8 11.1 3.1 13.6
COUNTRYSIDE PROPERTIES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2017
As at 31 As at 31 As at 30
March 2017 March 2016 September
2016
Note Unaudited Unaudited Audited
----- ------------ ------------ -----------
GBPm GBPm GBPm
Assets
Non-current assets
Intangible assets 59.2 58.9 58.9
Property, plant and equipment 2.6 2.6 2.7
Investment in joint ventures 10 48.6 50.2 53.9
Investment in associate 11 5.2 4.0 5.2
Available-for-sale financial assets 12 8.4 10.3 8.7
Deferred tax assets 2.2 4.7 3.3
Trade and other receivables 18.0 11.9 10.8
144.2 142.6 143.5
Current assets
Inventories 13 675.8 485.5 583.6
Trade and other receivables 154.5 134.2 147.9
Cash and cash equivalents 14 5.1 41.3 38.3
835.4 661.0 769.8
Total assets 979.6 803.6 913.3
------------ ------------ -----------
Liabilities
Current liabilities
Overdrafts 14 (0.1) - (26.3)
Trade and other payables (218.6) (141.9) (177.5)
Current income tax liabilities (8.6) (2.3) (6.1)
Provisions (0.5) (0.9) (0.8)
(227.8) (145.1) (210.7)
Non-current liabilities
Borrowings 14 (37.7) (46.6) -
Trade and other payables (82.5) (64.8) (109.0)
Provisions (2.1) (0.9) (0.7)
(122.3) (112.3) (109.7)
Total liabilities (350.1) (257.4) (320.4)
Net assets 629.5 546.2 592.9
============ ============ ===========
Equity
Share capital 4.5 4.5 4.5
Reserves 624.5 541.0 587.9
Equity attributable to owners
of the parent 629.0 545.5 592.4
Equity attributable to non-controlling
interest 0.5 0.7 0.5
------------ ------------ -----------
Total equity 629.5 546.2 592.9
============ ============ ===========
COUNTRYSIDE PROPERTIES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
For the six months 31 March 2017
Share Share Retained Available-for-sale Equity Non-controlling Total
capital premium earnings financial attributable interest Equity
assets to owner
--------- --------- ---------- ------------------- -------------- ---------------- --------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 October 2016 4.5 - 587.8 0.1 592.4 0.5 592.9
Comprehensive
income
Profit for the
period - - 49.8 - 49.8 - 49.8
Total
comprehensive
income - - 49.8 - 49.8 - 49.8
Transactions with
owners
Share based
payment
expense, net of
deferred
tax - - 2.1 - 2.1 - 2.1
Dividends paid - - (15.3) - (15.3) - (15.3)
Total transactions
with owners - - (13.2) - (13.2) - (13.2)
At 31 March 2017 4.5 - 624.4 0.1 629.0 0.5 629.5
========= ========= ========== =================== ============== ================ ========
At 1 October 2015 - 1.1 10.3 1.6 13.0 0.2 13.2
Comprehensive
income
Profit for the
period - - 13.7 - 13.7 0.5 14.2
Total
comprehensive
income - - 13.7 - 13.7 0.5 14.2
Transactions with
owners
Share based
payment
expense - pre-IPO - - 1.9 - 1.9 - 1.9
Share based
payment
expense -
post-IPO,
net of deferred
tax - - 0.2 - 0.2 - 0.2
Group
reorganisation 4.5 (1.1) 513.3 - 516.7 - 516.7
Total transactions
with owners 4.5 (1.1) 515.4 - 518.8 - 518.8
At 31 March 2016 4.5 - 539.4 1.6 545.5 0.7 546.2
========= ========= ========== =================== ============== ================ ========
COUNTRYSIDE PROPERTIES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(AUDITED)
For the six months 31 March 2017
Share Share Retained Available-for-sale Equity Non-controlling Total
capital premium earnings financial attributable interest Equity
assets to owner
--------- --------- ---------- ------------------- -------------- ---------------- --------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 October 2015 - 1.1 10.3 1.6 13.0 0.2 13.2
Comprehensive
income
Profit for the
period - - 61.1 - 61.1 0.3 61.4
Other
comprehensive
income - - - (1.5) (1.5) - (1.5)
Total
comprehensive
income - - 61.1 (1.5) 59.6 0.3 59.9
Transactions with
owners
Share based
payment
expense - pre-IPO - - 1.9 - 1.9 - 1.9
Share based
payment
expense -
post-IPO,
net of deferred
tax - - 1.3 - 1.3 - 1.3
Group
reorganisation 4.5 (1.1) 513.2 - 516.6 - 516.6
Total transactions
with owners 4.5 (1.1) 516.4 - 519.8 - 519.8
At 30 September
2016 4.5 - 587.8 0.1 592.4 0.5 592.9
========= ========= ========== =================== ============== ================ ========
COUNTRYSIDE PROPERTIES PLC
CONSOLIDATED CASHFLOW STATEMENT
For the six months ended 31 March
2017
Six months Six months Year ended
ended 31 ended 31 30 September
March 2017 March 2016 2016
Note Unaudited Unaudited Audited
----- ------------ ------------ --------------
GBPm GBPm GBPm
Cash used in operations 15 (40.2) (44.5) (14.8)
Interest paid (1.6) (3.8) (7.2)
Tax paid (6.6) (4.9) (12.8)
Net cash outflow from operating
activities (48.4) (53.2) (34.8)
Cash flows from investing activities
Purchase of intangible assets (1.1) - (0.7)
Purchase of property, plant and
equipment (0.5) (0.5) (0.9)
Proceeds from disposal of available
for sale financial assets 0.9 1.2 2.9
Acquisition of subsidiary (net
of cash acquired) - - (2.0)
Increase in loans to associate
and joint ventures (3.8) (28.0) (31.0)
Interest received - 0.8 1.5
Dividends received from joint
venture investments 21.2 4.8 13.6
Net cash inflow/(outflow) from
investing activities 16.7 (21.7) (16.6)
Cash flows from financing activities
Proceeds from issue of ordinary
shares - 130.0 130.0
Transactional costs from issue
of ordinary shares - (4.6) (4.6)
Dividends paid on ordinary shares (15.3) - -
Borrowing facility arrangement
fee - - (2.8)
Proceeds from borrowings 40.0 - 91.3
Repayment of borrowings - (90.0) (231.3)
Net cash inflow/(outflow) from
financing activities 24.7 35.4 (17.4)
Net decrease in cash and cash
equivalents (7.0) (39.5) (68.8)
Net cash and cash equivalents
at beginning of the period 12.0 80.8 80.8
Net cash and cash equivalents
at the end of the period 14 5.0 41.3 12.0
============ ============ ==============
COUNTRYSIDE PROPERTIES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 31 March 2017
1. BASIS OF PREPARATION
Countryside Properties PLC (the "Company") is a public company
incorporated and domiciled in the United Kingdom, whose shares are
publicly traded on the London Stock Exchange.
The financial information in these condensed consolidated
interim financial statements (the "Financial Information") for the
six months to 31 March 2017 is that of the Company and all of its
subsidiaries (together the "Group"). It has been prepared in
accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and International Accounting Standard
34, Interim Financial Reporting, as endorsed by the European
Union.
The financial information for the six months ended 31 March 2017
and 31 March 2016 is unaudited, but has been subject to a review in
accordance with the International Standard on Review Engagements
2410, Review of Interim Financial Information performed by the
Independent Auditor of the Entity, issued by the Auditing Practices
Board.
The Financial Information should be read in conjunction with the
annual consolidated financial statements of the Group for the year
ended 30 September 2016 (the "Group Financial Statements"), which
have been prepared in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the European Union and
filed at Companies House. The Financial Information does not
constitute full statutory accounts within the meaning of Section
434 of the Companies Act 2006. The Group Financial Statements have
been reported on by the Company's auditors and are available on the
Company's website www.countryside-properties.com/investors. The
report of the auditors was unqualified, did not include a reference
to any matters to which the auditors drew attention by way of
emphasis without qualifying their report and did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
Except as described in note 2, the accounting policies applied are
consistent with those of the Group Financial Statements.
During the year to 30 September 2016, the IFRS Interpretations
Committee received a request to clarify an issue related to IAS 32:
Financial Instruments: Presentation in connection with whether
particular cash pooling arrangements meet the requirement for
off-setting in accordance with IAS 32. Following the observations
published by the Interpretations Committee the Group has reassessed
the treatment of its cash pooling arrangements and concluded that
the comparative financial information for the half year ended 31
March 2016 should be amended.
Initial Public Offering ("IPO") and associated Group
reorganisation
In the prior year, the Group undertook an internal
re-organisation prior to listing its shares on the London Stock
Exchange. These transactions are detailed in the Group Financial
Statements.
Going concern
The Group has the benefit of a committed credit facility, which
provides the Group with sufficient available funds to finance its
operations. The Directors review forecasts of the Group's liquidity
requirements based on a range of scenarios to ensure it has
sufficient cash to meet operational needs while maintaining
sufficient headroom on its committed borrowing facilities at all
times so that the Group does not breach borrowing limits or
covenants within its borrowing facilities.
The Directors have reviewed the cash flow forecasts of the Group
and consider that the Group has adequate resources to continue in
operational existence for at least 12 months from the date of this
Financial Information. The Directors therefore consider it is
appropriate to adopt the going concern basis of accounting in
preparing the Financial Information.
Critical accounting judgements and estimates
The preparation of this Financial Information required the
Directors to make estimates and assumptions that affect the
reported amounts of assets and liabilities. The estimates and
assumptions are based on historical experience and other factors
that are considered to be relevant and are reviewed on an ongoing
basis. Actual results may differ from these estimates. In preparing
this Financial Information, the significant judgements made by
management in applying the Group's accounting policies and the key
sources of estimation uncertainty were principally the same as
those disclosed in the Group's Financial Statements.
The condensed consolidated interim financial information was
authorised for issue by the Directors on 16 May 2017.
2. ACCOUNTING POLICIES
The policies applied in the Financial Information are consistent
with those applied the Group's Financial Statements other than set
out below.
Income taxes
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected annual earnings.
2. ACCOUNTING POLICIES (continued)
Earnings per share
The Group presents basic and diluted earnings per share ("EPS")
data for its ordinary shares. Basic EPS is calculated by dividing
the profit attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the period.
For diluted EPS, the weighted average number of ordinary shares is
adjusted to assume conversion of all dilutive potential ordinary
shares.
As explained in note 1, the Group undertook a reorganisation in
the prior year. As explained in the Group Financial Statements, the
2016 weighted average number of shares has been stated as the
weighted average number of shares in the period from the date of
the Group reorganisation to the balance sheet date.
New standards, amendments and interpretations
New standards, amendments and interpretations that have been
published and are mandatory for the Group's accounting periods
beginning on or after 1 October 2016 are disclosed in the Group's
Financial Statements. None of those standards have a material
impact on the results of the Group for the year ending 30 September
2017.
IFRS 15 'Revenue from contracts with customers' is effective for
the Group for the year ending 30 September 2019. Implementation of
IFRS 15 requires a thorough review of existing contractual
arrangements. The due diligence in relation to the Group's revenue
streams is in progress and the Directors will provide further
details in the Annual Report and Accounts for the year ending 30
September 2017.
3. SEASONALITY
In common with the rest of the UK housebuilding industry,
activity occurs throughout the year, with peaks in sales
completions in spring and autumn. This creates a degree of
seasonality in the Group's trading results and working capital.
4. SEGMENTAL REPORTING
Segmental reporting is presented in respect of the Group's
business segments reflecting the Group's management and internal
reporting structure and is on the basis on which strategic
operating decisions are made by the Group's Chief Operating
Decision Maker ("CODM"), which has been determined to be the Group
Executive Committee. The Group's two business segments are
Housebuilding and Partnerships. There have not been any changes to
the Group's segments in the six months to 31 March 2017.
The Group operates entirely within the United Kingdom.
(a) Segmental income statement
Housebuilding Partnerships Group items Total
-------------- ------------- ------------ --------
GBPm GBPm GBPm GBPm
Six months ended 31 March 2017
Adjusted revenue including share
of joint ventures' revenue 212.1 223.3 - 435.4
Share of joint ventures' revenue (44.4) (39.9) - (84.3)
Revenue 167.7 183.4 - 351.1
-------------- ------------- ------------ --------
Segment Result:
Adjusted operating profit including
share of operating profit from
associate and joint ventures 34.5 38.5 (2.6) 70.4
Less: share of operating profit
from associate and joint ventures (8.1) (7.5) - (15.6)
Less: non-underlying items - - (1.6) (1.6)
-------------- ------------- ------------ --------
Operating profit/(loss) 26.4 31.0 (4.2) 53.2
============== ============= ============ ========
4. SEGMENTAL REPORTING (continued)
Six months ended 31 March 2016
Housebuilding Partnerships Group items Total
-------------- ------------- ------------ --------
GBPm GBPm GBPm GBPm
Adjusted revenue including share
of joint ventures' revenue 174.0 138.8 - 312.8
Share of joint ventures' revenue (19.9) (6.7) - (26.6)
Revenue 154.1 132.1 - 286.2
-------------- ------------- ------------ --------
Adjusted operating profit including
share of operating profit from
associate and joint ventures
Less: share of operating profit
from associate and joint ventures 27.8 23.2 (0.2) 50.8
Less: non-underlying items (5.6) (1.2) - (6.8)
Operating profit/(loss) - 2.2 (11.4) (9.2)
-------------- ------------- ------------ --------
22.2 24.2 (11.6) 34.8
============== ============= ============ ========
Housebuilding Partnerships Group items Total
-------------- ------------- ------------ --------
GBPm GBPm GBPm GBPm
Year ended 30 September 2016
Adjusted revenue including share
of joint ventures' revenue 427.1 349.9 - 777.0
Share of joint ventures' revenue (69.0) (36.7) - (105.7)
Revenue 358.1 313.2 - 671.3
-------------- ------------- ------------ --------
Segment Result:
Adjusted operating profit including
share of operating profit from
associate and joint ventures 68.1 56.8 (2.4) 122.5
Less: share of operating profit
from associate and joint ventures (18.3) (7.0) - (25.3)
Less: non-underlying items - 2.6 (12.5) (9.9)
-------------- ------------- ------------ --------
Operating profit/(loss) 49.8 52.4 (14.9) 87.3
============== ============= ============ ========
(b) Segmental capital employed
Housebuilding Partnerships Group items Total
-------------- ------------- ------------ -------
GBPm GBPm GBPm GBPm
As at 31 March 2017
Net Assets 510.1 98.0 21.4 629.5
TNOAV 510.1 98.0 - 608.1
As at 31 March 2016
Net Assets 378.8 117.2 50.2 546.2
TNOAV 378.8 117.2 - 496.0
As at 30 September 2016
Net Assets 422.2 103.3 67.4 592.9
TNOAV 422.2 103.3 - 525.5
4. SEGMENTAL REPORTING (continued)
(c) Segmental other items
Housebuilding Partnerships Group items Total
-------------- ------------- ------------ ------
GBPm GBPm GBPm GBPm
Six months ended 31 March 2017
Investment in associate 5.2 - - 5.2
Investment in joint ventures 47.8 0.8 - 48.6
Share of post-tax profit from
associate and joint ventures 6.6 7.5 - 14.1
Capital expenditure - property,
plant and equipment 0.3 0.2 - 0.5
Capital expenditure - software - - 1.1 1.1
Depreciation and amortisation 0.2 0.2 0.8 1.2
Share-based payments - - 1.8 1.8
Six months ended 31 March 2016
Investment in associate 4.0 - - 4.0
Investment in joint ventures 49.6 0.6 - 50.2
Share of post-tax profit from
associate and joint ventures 2.9 1.2 - 4.1
Capital expenditure - property,
plant and equipment 0.3 0.2 - 0.5
Depreciation and amortisation 0.1 0.2 0.6 0.9
Share-based payments - - 2.1 2.1
Housebuilding Partnerships Group items Total
-------------- ------------- ------------ ------
GBPm GBPm GBPm GBPm
Year ended 30 September 2016
Investment in associate 5.2 - - 5.2
Investment in joint ventures 47.5 6.4 - 53.9
Share of post-tax profit from
associate and joint ventures 13.0 6.6 - 19.6
Capital expenditure - property,
plant and equipment 0.5 0.4 - 0.9
Capital expenditure - software - - 0.7 0.7
Acquisitions 2.3 - - 2.3
Depreciation and amortisation 0.4 0.3 1.3 2.0
Share-based payments - - 3.0 3.0
5. NON-UNDERLYING ITEMS
Certain items which do not relate to the Group's underlying
performance are presented separately in the Income Statement as
non-underlying items where, in the judgement of the Directors, they
need to be disclosed separately by virtue of their size, nature or
incidence in order to obtain a clear and consistent presentation of
the Group's underlying business performance. Group operating profit
includes the following non-underlying items:
Six months Six months Year ended
ended ended 30 September
31 March 31 March 2016
2017 2016
------------- ------------- ----------------
GBPm GBPm GBPm
Restructuring expense (1.6) - -
Advisory costs - (9.5) (10.6)
Reversal of impairment of non-trade
receivable - 2.2 2.6
Share based payments - pre-IPO - (1.9) (1.9)
Total non-underlying items included
within administrative expenses (1.6) (9.2) (9.9)
Impairment of unamortised loan arrangement
fees - - (3.2)
Total non-underlying items (1.6) (9.2) (13.1)
============= ============= ================
Restructuring expense
During the period, certain Group operations were restructured,
principally the out-sourcing of architecture and design services.
As a result of this, a number of people left the Group at a cost of
GBP1.6m.
Advisory fees
During the prior period, the Group engaged in corporate activity
in relation to the listing of its ordinary shares on the London
Stock Exchange. Advisory costs of GBPnil (HY16: GBP9.5m, FY16:
GBP10.6m) were incurred in relation to this activity. These costs
primarily relate to the fees of professional advisors.
Reversal of impairment of non-trade receivable
During 2015 a non-recurring charge of GBP2.7m was recorded in
relation to a receivable which management believed to be
irrecoverable. In the six months to 31 March 2016, GBP2.2m was
received resulting in a partial reversal of the impairment. A
further GBP0.4m was received in the second half of 2016.
Share based payments - pre-IPO
In the year ended 30 September 2013, a management incentive plan
("Plan") was approved by the Board in which certain senior
employees of Countryside Properties (UK) Limited, a subsidiary
company, were invited to acquire shares issued by a group company.
Further shares were issued under the Plan during the years ended 30
September 2014 and 2015. The Directors believed that this Plan
should be treated as a non-underlying item, as this allows the
underlying performance of the Group to be measured from period to
period due to the fact unconditional access is obtained following
an exit event, such as a trade sale or Initial Public Offering.
The Plan ended in 2016 as a result of the IPO as such no costs
were incurred in relation to the plan in 2017 (HY16: GBP1.9m FY16:
GBP1.9m, of which GBP1.0m arose as a result of the IPO).
Impairment of unamortised loan arrangement fees
As described in note 14, the Group refinanced in May 2016. As a
result, unamortised debt finance costs in relation to the previous
facility as at the refinancing date of GBP3.2m were expensed as a
non-underlying finance cost in the year to September 2016. No costs
were incurred in relation to this item in either March 2016 or
March 2015.
A total tax credit of GBP0.3m (HY16: GBP0.4m FY16: GBP1.0m) in
relation to all of the above non-recurring items was included
within the taxation in the Income Statement.
5. NON-UNDERLYING ITEMS (continued)
Reconciliation of adjusted operating profit to Group operating
profit
Six months Six months Year ended
ended 31 ended 31 30 September
March 2017 March 2016 2016
--------------- --------------- -----------------
GBPm GBPm GBPm
Adjusted Group operating profit 70.4 50.8 122.5
Less: Share of associate and joint ventures'
operating profit (15.6) (6.8) (25.3)
Less: Non-underlying items (1.6) (9.2) (9.9)
Group operating profit 53.2 34.8 87.3
=============== =============== =================
6. FINANCE COSTS
Six months Six months Year ended
ended 31 ended 31 30 September
March 2017 March 2016 2016
------------ ------------ --------------
GBPm GBPm GBPm
Bank loans and overdrafts 1.4 2.7 5.2
Amortisation of debt finance costs 0.3 0.4 0.8
Unwind of discount 3.5 2.7 4.8
Impairment of interest receivable from 2.1 - -
joint venture
Interest on mandatory redeemable preferred
shares - 16.5 16.5
Write off unamortised debt arrangement
fees(3) - - 3.2
Total finance costs 7.3 22.3 30.5
============ ============ ==============
Impairment of interest receivable from joint venture
During the period, the Group has agreed to waive interest
receivable from its joint venture Countryside Annington (Mill Hill)
Limited. As a result of this agreement, the accrued interest
receivable of GBP2.1 million has been impaired (HY16: GBPnil, FY16:
GBPnil).
Mandatory redeemable preferred shares
Prior to their redemption, the mandatory redeemable preferred
shares accrued interest annually. As described in the Group
Financial Statements, the balance of the mandatory redeemable
preference shares of GBP287 million and the associated accrued
return of GBP111 million was redeemed prior to the Group's IPO.
7. TAXATION
The effective tax rate applied for the period was 17.4 per cent
(HY16: 21.5 per cent, FY16: 22.0 per cent). This reflects the
anticipated full year effective rate and is lower than the
statutory rate of 19.5 per cent mainly due to the equity accounting
method for associate and joint ventures. The adjusted effective tax
rate applied for the period was 19.0 per cent (HY16: 19.1 per cent,
FY16: 20.3 per cent). We expect the Group's adjusted tax rate to be
broadly in line with the statutory rate in future years.
8. EARNINGS PER SHARE
Basic and diluted earnings per share are calculated by dividing
the earnings attributable to ordinary shareholders by the weighted
average number of ordinary shares in issue from the date of the IPO
to 31 March 2017. The weighted average number of shares for the
prior year has been stated as if the Group reorganisation had
occurred at the beginning of the comparative year.
When calculating diluted earnings per share, the weighted
average number of ordinary shares in issue is adjusted to assume
conversion of all potentially dilutive ordinary shares. These
represent share options granted to employees under the Group's Save
as you Earn plans (0.8 million shares (2016: 0.2 million
shares)).
(a) Basic earnings per share
Six months Six months Year ended
ended 31 ended 31 30 September
March 2017 March 2016 2016
------------ ------------ --------------
Profit from continuing operations attributable
to equity holders of the parent (GBPm) 49.8 13.7 61.1
Basic weighted average number of shares
(millions) 450.0 450.0 450.0
Adjusted basic earnings per share (pence
per share) 11.1 3.1 13.6
Diluted weighted average number of
shares (millions) 450.1 450.2 450.2
Adjusted diluted earnings per share
(pence per share) 11.1 3.1 13.6
(b) Adjusted earnings per share disclosure
Six months Six months Year ended
ended 31 ended 31 30 September
March 2017 March 2016 2016
------------ ------------ --------------
Profit from continuing operations attributable
to equity holders of the parent (GBPm) 49.8 13.7 61.1
Add: Non-underlying items, net of tax 1.3 8.8 12.1
Adjusted profit from continuing operations
attributable to equity holders of the
parent (GBPm) 51.1 22.5 73.2
Basic weighted average number of shares
(millions) 450.0 450.0 450.0
Adjusted basic earnings per share (pence
per share) 11.4 5.0 16.3
Diluted weighted average number of shares
(millions) 450.1 450.2 450.2
Adjusted diluted earnings per share
(pence per share) 11.4 5.0 16.3
Non-underlying items net of tax includes costs of GBP1.6m, net
of tax GBP0.3m (HY16: GBP9.2m net of tax of GBP0.4m, FY16:
GBP13.1m, net of tax of GBP1.0m).
9. DIVID
A final dividend for the previous financial year of 3.4 pence
per share was paid on 3 February 2017 of GBP15.3m (HY16: GBPnil
FY16: GBPnil). The Directors have recommended the payment of an
interim dividend for the current financial year of 3.4 pence per
share to be paid on 7 July 2017 (HY16: GBPnil FY16: GBPnil).
10. INVESTMENT IN JOINT VENTURES
Six months ended 31 Six months ended Year ended 30 September
March 2017 31 March 2016 2016
----------------------------------------- ---------------------------------------- -----------------------------------------
House-building Partner-ships Group House-building Partner-ships Group House-building Partner-ships Group
--------------- -------------- -------- --------------- -------------- ------- --------------- -------------- --------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 88.8 79.8 168.6 39.8 13.4 53.2 138.2 73.3 211.5
Expenses (72.7) (64.8) (137.5) (28.2) (11.0) (39.2) (104.7) (59.4) (164.1)
Operating
profit 16.1 15.0 31.1 11.6 2.4 14.0 33.5 13.9 47.4
Finance
costs (0.6) - (0.6) (3.4) (0.1) (3.5) (6.1) (0.7) (6.8)
Income tax (2.4) - (2.4) (1.9) - (1.9) (3.4) - (3.4)
Profit for
the
period 13.1 15.0 28.1 6.3 2.3 8.6 24.0 13.2 37.2
--------------- -------------- -------- --------------- -------------- ------- --------------- -------------- --------
Group's share in
per cent 50.0% 50.0% 50.0%
Share of
revenue 84.3 26.6 105.7
Share of operating
profit 15.6 7.0 23.7
Dividends received by the
Group 21.2 4.8 13.6
Investments in joint
ventures 48.6 50.2 53.9
The aggregate amount due from joint ventures is GBP86.7m (HY16:
GBP89.8, FY16: GBP84.5m). The amount due to joint ventures is
GBP0.3m (HY16: GBP0.3m, FY16: GBP0.3m). Transactions between the
Group and its joint ventures are disclosed in note 16.
The table below reconciles the movement in the Group's net
investment in joint ventures:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2017 March 2016 2016
------------ ------------ --------------
GBPm GBPm GBPm
Opening balance 53.9 50.1 50.1
Share of post-tax profit 14.1 4.3 18.6
Dividends received from joint ventures (21.2) (4.8) (13.6)
Other movements 1.8 0.6 (1.2)
Closing balance 48.6 50.2 53.9
============ ============ ==============
11. INVESTMENT IN ASSOCIATE
The Group holds 28.5 per cent of the ordinary share capital with
pro rata voting rights in Countryside Properties (Bicester)
Limited, a company incorporated in the United Kingdom, whose
principal activity is housebuilding. It is accounted for using the
equity method.
The Group's investment in its associate is represented by:
31 March 31 March 30 September
2017 2016 2016
--------- --------- -------------
GBPm GBPm GBPm
Revenue - - 17.7
Expenses - (0.6) (12.0)
Operating (loss)/profit - (0.6) 5.7
Finance costs - - 0.1
Income tax - - (2.0)
(Loss)/profit for the period - (0.6) 3.8
--------- --------- -------------
Group's share in per cent 28.5% 28.5% 28.5%
Share of operating (loss)/profit - (0.2) 1.6
Dividends received by the Group - - -
Investment in associate 5.2 4.0 5.2
12. AVAILABLE FOR SALE FINANCIAL ASSETS
As at 31 As at 31 As at 30
March 2017 March 2016 September
2016
------------ ------------ -----------
GBPm GBPm GBPm
Opening balance 8.7 10.5 10.5
Additions from acquisitions - - 0.6
Decrease in fair value - - (1.5)
Unwind of discount 0.3 0.3 0.7
Redemptions (0.6) (0.5) (1.6)
Closing balance 8.4 10.3 8.7
============ ============ ===========
The available for sale financial assets comprise loans advanced
to home buyers to assist in the purchase of their property under
shared equity schemes. The loans are secured by either a first or
second legal charge over the property and are either interest-free
or have interest chargeable from the fifth year onwards or tenth
year onwards dependent upon the scheme under which the loans were
issued.
The inputs used are by nature estimated and the resultant fair
value has been classified as Level 3 under the fair value
hierarchy.
13. INVENTORIES
As at 31 As at 31 As at 30
March 2017 March 2016 September
2016
------------ ------------ -----------
GBPm GBPm GBPm
Development land and work in progress 639.1 473.1 550.6
Completed properties unlet, unsold or
awaiting sale 36.7 12.4 33.0
675.8 485.5 583.6
============ ============ ===========
14. BORROWINGS
As at 31 As at 31 As at 30
March 2017 March 2016 September
2016
------------ ------------ -----------
GBPm GBPm GBPm
Cash and cash equivalents 5.1 41.3 38.3
Overdrafts (0.1) - (26.3)
Net cash and cash equivalents 5.0 41.3 12.0
Bank loans (40.0) (50.0) -
Net (debt)/cash (35.0) (8.7) 12.0
Bank loan arrangement fees 2.3 3.4 -
Total (borrowings)/cash (32.7) (5.3) 12.0
============ ============ ===========
Revolving credit facility
In May 2016, the Group signed a new five-year GBP300m revolving
credit facility with Lloyds Bank plc, Barclays Bank PLC, HSBC Bank
plc and Santander UK plc. The agreement has a variable interest
rate based on LIBOR and was initially due to expire in May 2021,
although the Group had the opportunity to extend the term of the
facility by a further two years. Subject to obtaining credit
approval from the syndicate banks, the Group also has the option to
extend the facility by a further GBP100m. This facility is subject
to both financial and non-financial covenants and is secured by
floating charges over all the Group's assets. As described in note
18, a 12 month extension to the facility was signed on 3 May 2017,
taking expiry to May 2022.
The carrying value of the loans drawn under the facility is
equal to their fair value. As the impact of discounting is not
significant, the fair values are based on discounted cash flows and
are within Level 2 of the fair value hierarchy.
Bank loan arrangement fees are amortised over the term of the
facility. At 31 March 2017 GBP0.3m (HY16: GBP0.4m, FY16: GBP0.8m)
had been amortised during the period, leaving a remaining balance
of GBP2.3m (HY16: GBP3.4m, FY16: GBP2.5m). Unamortised loan
arrangement fees at 30 September 2016 were disclosed within
prepayments.
14. BORROWINGS (continued)
The Group has the following undrawn facilities:
As at 31 As at 31 As at 30
March 2017 March 2016 September
2016
------------ ------------ -----------
GBPm GBPm GBPm
Floating rate:
Expiring after more than one year 259.9 215.0 300.0
============ ============ ===========
Redemption of MRPs
Prior to the Group's IPO in February 2016, the balance of the
mandatory redeemable preference shares of GBP287 million and the
associated accrued return of GBP111 million was repaid. Further
details are included in the Group's Financial Statements.
15. NOTE TO THE CASH FLOW STATEMENT
Reconciliation of operating profit to cash generated from
operations
Six months Six months Year ended
ended 31 ended 31 30 September
March 2017 March 2016 2016
------------ ------------ --------------
GBPm GBPm GBPm
Cash flows from operating activities
Profit before taxation 60.3 18.1 78.7
Adjustments for:
- Amortisation charge 0.8 0.6 1.3
- Depreciation charge 0.4 0.3 0.7
- Non-cash items (0.3) (1.2) 0.7
- Share of post-tax profit from joint
ventures and associate (14.1) (4.1) (19.6)
- Share based payment 1.8 2.1 3.0
Finance costs 7.3 22.3 27.3
Impairment of debt amortisation fees - - 3.2
Finance income (0.3) (1.5) (2.3)
Profit on disposal of available-for-sale
financial assets (0.3) (0.7) (1.3)
Changes in working capital:
- Increase in inventories (62.4) (8.5) (38.5)
- Increase in trade and other receivables (14.1) - (13.0)
- Decrease in trade and other payables (19.0) (71.4) (54.2)
- Decrease in provisions (0.3) (0.5) (0.8)
Cash used in operations (40.2) (44.5) (14.8)
============ ============ ==============
16. RELATED PARTY TRANSACTIONS
Transactions with Group joint ventures and associate
Joint Ventures Associate
-------------------------------------- --------------------------------------
As at As at As at As at As at As at
31 March 31 March 30 September 31 March 31 March 30 September
2017 2016 2016 2017 2016 2016
---------- ---------- -------------- ---------- ---------- --------------
GBPm GBPm GBPm GBPm GBPm GBPm
Sales during the year 15.6 12.6 26.2 0.1 - 0.1
---------- ---------- -------------- ---------- ---------- --------------
Advances:
Opening 84.2 62.1 62.1 - - -
Net advances/(repayments)
during the period 2.2 27.4 22.1 - - -
Closing 86.4 89.5 84.2 - - -
========== ========== ============== ========== ========== ==============
Sales of goods to related parties were made at the Group's
commercial terms. No purchases were made by the Group from its
joint ventures or associate. The amounts outstanding ordinarily
bear no interest and will be settled in cash.
Transactions with key management personnel
In 2014, properties were sold at market value by the Group to
parties related to key management personnel who continue to lease
them back to the Group resulting in the following payments during
the six months to 31 March 2017:
-- Close family members of Ian Sutcliffe received GBP8,760
(HY16: GBP8,625; FY16: GBP17,520).
-- A company of which Graham Cherry is a director and
shareholder received GBP10,500 (HY16: GBP10,500; FY16:
GBP21,000).
In 2016 a close family member of Ian Sutcliffe jointly purchased
a property from Acton Gardens LLP, an entity in which the Group has
a 50% interest, at market value for GBP530,000.
In 2015 a close family member of Ian Sutcliffe and a close
family member of Graham Cherry were employed by a subsidiary of the
Group. Both individuals were recruited through the normal interview
process and are employed at salaries commensurate their experience
and roles. The current combined annual salary and benefits of these
individuals is less than GBP100,000 (HY16: GBP100,000, FY16:
GBP100,000).
17. SHARE PLANS
The Group operates three employee incentive schemes: An
all-employee Save as you Earn ("SAYE") plan and two discretionary
plans - the Long Term Incentive Plan ("LTIP") and the Deferred
Bonus Plan ("DBP").
On 15 December 2016 2.67 million options and on 16 March 2016
0.74 million options were granted under the SAYE plan to those
employees who had elected to participate.
On 18 February 2016 the Group granted conditional share awards
under the Group's LTIP to Executive Directors and 80 senior
managers. The maximum number of shares which could vest under this
grant is 3.87 million. On 15 December 2016, the Group granted
additional conditional share awards under the LTIP to Executive
Directors and 75 senior managers. The maximum number of shares
which could vest under this grant is 3.59 million.
On 31 December 2016, 0.5 million shares were granted under the
DBP. This was the first grant under this plan.
Further details of the Group's remuneration policy and share
schemes are set out in the Group Financial Statements for the year
ended 30 September 2016.
18. POST BALANCE SHEET EVENTS
An amendment to the Group's banking facility was signed on 3 May
2017 which extends the existing facility for a further 12 months
until May 2022.
COUNTRYSIDE PROPERTIES PLC
INDEPENT REVIEW REPORT
For the six months ended 31 March 2017
Independent review report to Countryside Properties PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Countryside Properties PLC's condensed
consolidated interim financial statements (the "interim financial
statements") in the Interim review announcement of Countryside
Properties PLC for the 6 month period ended 31 March 2017. Based on
our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in
all material respects, in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the Consolidated Statement of Financial Position as at 31 March 2017;
-- the Consolidated Statement of Comprehensive Income for the period then ended;
-- the Consolidated Cashflow Statement for the period then ended;
-- the Consolidated Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim review
announcement have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Interim review announcement, including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the Interim
review announcement in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the Interim review announcement based on
our review. This report, including the conclusion, has been
prepared for and only for the Company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and
Ireland) and, consequently, does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the Interim
review announcement and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
16 May 2017
a) The maintenance and integrity of the Countryside Properties
PLC website is the responsibility of the directors; the work
carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for
any changes that may have occurred to the interim financial
statements since they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
(1) Gearing is defined as net debt divided by net assets. In the
prior period, gearing is defined as net debt divided by net assets
excluding shareholder loans and accrued shareholder loan
interest.
(2) Adjusted gearing is defined as above, except that net debt
includes land creditors.
(3) Disclosed as a non-underlying item at 30 September 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFUFWMFWSEII
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May 17, 2017 02:00 ET (06:00 GMT)
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