TIDMCSP
RNS Number : 1256C
Countryside Properties PLC
15 October 2020
15 October 2020
Countryside Properties PLC
FY 2020 Trading Statement
Well positioned for the next phase of growth
Countryside Properties plc (the "Group"), a leading UK
mixed-tenure developer, is today issuing a trading update for the
year from 1 October 2019 to 30 September 2020. The Group will
report its full year results on Thursday 3 December 2020.
Highlights
-- Ended the year in line with the Board's expectations,
delivering adjusted operating profit of approximately GBP54m
-- Total completions of 4,053 homes (2019: 5,733 homes)
-- Private average selling price ("ASP") of GBP364,000 (2019: GBP367,000)
-- Net reservation rate(1) of 0.78, in line with our target range (2019: 0.84)
-- Average open sales outlets at 63 (2019: 56)
-- Total forward order book up 17% at GBP1.4bn (2019: GBP1.2bn)
-- Net cash of GBP98.2m (2019: GBP73.4m)
-- Successful placing of 74.6m new ordinary shares in July 2020,
raising gross proceeds of GBP250m
-- Two new Partnerships Framework Agreements signed, underpinning mixed-tenure delivery
(1) Net reservations per open outlet per week
Group Performance
Although the COVID-19 pandemic has caused significant disruption
to the business, particularly in the second half of our financial
year, our mixed-tenure model has proved resilient and we have
continued to see strong demand for all tenures of housing. We
returned to phased construction activity from 11 May 2020, with an
increased focus on affordable and private rented sector ("PRS")
homes. This focus gave us confidence to return to site, allowed us
to generate revenue as soon as construction activity recommenced
and provided greater certainty of work for our supply chain. Our
sites are now operating at around 95% of their normal delivery
level, assisted by longer opening hours and sharp focus on the
phasing of activity on site.
During the year we completed 4,053 homes (2019: 5,733 homes) of
which 1,454 were private (2019: 2,177 homes), 1,691 were Affordable
(2019: 2,179 homes) and 908 were PRS (2019: 1,377 homes). We were
active on a total of 124 sites as at 30 September 2020 (2019: 137
sites) of which 62 were open selling outlets (2019: 58).
Despite the national lockdown, our private sales activity
remained robust throughout the year. Our net reservation rate of
0.78 for the full year (2019: 0.84) was at the upper end of the
Group's target range of 0.6 to 0.8, despite an elevated
cancellation rate due to customer uncertainty caused by COVID-19.
The healthy levels of activity seen earlier in the year gradually
returned as we reopened in June 2020 and since then we have seen a
sustained period of demand during the summer as the market
recovered from the lockdown.
We have excellent visibility of future work through our strong
forward sales position of over 6,800 homes (2019: 6,112 homes) at a
value of GBP1.4bn (2019: GBP1.2bn). Our private forward order book
at GBP528m is 119% higher than the same period last year (2019:
GBP241m) partly as a result of homes completing later than
originally planned due to COVID-19. In addition, our Affordable and
PRS order book has been maintained at GBP0.9bn despite our
increased focus on delivering these tenures through the second half
of the year.
In July the Group successfully raised GBP250m through the
placing of 74.6m new ordinary shares. GBP100m of the proceeds were
used to strengthen the Group's balance sheet, with the remaining
GBP150m earmarked to accelerate the growth of the Partnerships
division as we open three new regional businesses and accelerate a
further eight Partnerships developments which were already in our
pipeline. These plans remain on track with our management teams
focused on delivering the enhanced growth plan over the coming
years. As outlined during the placing, this growth will result in
our Partnerships division growing to around 75% of Group
profits.
Our mixed-tenure growth plans have been further underpinned by
two new framework agreements signed in Q4. This includes the
expansion of our partnership with Sigma alongside their new
investment partner EQT Real Estate, to deliver 367 homes as the
initial phase of a larger London PRS framework. In addition, we
signed a new PRS framework agreement with Goldman Sachs to deliver
up to 1,000 PRS homes over the next three years. This will
initially include 410 homes across three sites in Bicester, West
Bromwich and Wolverhampton .
Divisional Performance
Our Partnerships division delivered total completions of 3,213
homes (2019: 4,425 homes). We had another strong year for new
business, adding 11,374 plots which resulted in our secured work
increasing to 42,442 plots (2019: 34,842 plots) equivalent to over
9 years work based on 2019 volumes. In addition, we have visibility
over a further 100,000 plots that we are tracking in our
pipeline.
As announced in July, as we continue to grow our Partnerships
division, our Partnerships North business has been separated into
two: Partnerships North, covering Manchester, Merseyside and
Yorkshire and Partnerships Midlands which will incorporate regions
in the East, West and South Midlands. We are adding to these with
our new Chilterns and South West regions following our placing in
July. We are making good progress on strengthening our management
teams to ensure our growth plans are carefully managed and will
provide more detail at our full year results in December 2020.
We continue to focus on operational efficiency. Key to this is
the GBP20m investment in our second modular panel factory in
Bardon, Leicestershire, which remains on track to become
operational in Autumn 2021. Once fully operational in 2022 it is
expected to have the capacity to deliver over 3,000 homes per
year.
Our Housebuilding division delivered total completions of 840
homes (2019: 1,308 homes). During the period we secured new options
for 350 homes in Bedfordshire and 400 homes in Knebworth,
Hertfordshire as well as securing outline planning for 1,138 homes
in Maldon, Essex and 468 homes in Burgess Hill, West Sussex in
collaboration with Homes England. Overall, our land bank stood at
25,042 plots at 30 September 2020 (2019: 24,303). As we reposition
the Housebuilding division to be more balanced around London and
continue to manage our exposure to higher price points in the South
East, we have announced the merger of our Millgate business with
our existing Housebuilding West region and the closure of the
Millgate offices in Twyford as we combine the regional teams.
As previously announced in March 2020, the sales of five parcels
of land were put on hold due to COVID-19. We completed two of those
land sales in the second half with terms agreed on a further two,
as part of our ongoing programme of land sales which will deliver
GBP15-GBP20m of profit in FY2021.
Outlook
We are reassured by the improving performance of the Group that
was evident in the second half as we emerged from lockdown.
Whilst the broader economic outlook remains uncertain, we are
well positioned for the current financial year with a strong
forward order book. We continue to monitor market activity closely
and, as outlined in the summer, we have taken steps to de-risk
delivery in FY21 by increasing the proportion of affordable and PRS
homes to be delivered, accepting that this lower risk will result
in lower margins in the short-term. Our current intention is to
reinstate guidance for FY21 with our year end results in December
2020.
The Board is confident in Countryside's resilient mixed-tenure
business model and the growth opportunities within its Partnerships
division, underpinned by the future cash-generative qualities of
the Housebuilding division, and believes the Group will continue to
benefit from good underlying demand for housing of all tenures over
the medium-term. Our strong relationships and track record of
working with a wide range of private and public sector partners
positions us well despite the near-term economic uncertainty.
Iain McPherson, Group Chief Executive, commented:
" We have seen significant disruption to our business this year
as a result of COVID-19 and I would like to thank all our staff for
the way they have adapted to new ways of working in these
unprecedented times. We have been pleased by robust customer demand
throughout the second half and our mixed tenure model continues to
prove resilient, positioning us well in the current market. We are
focused on delivering our enhanced growth plan, building on our
strong pipeline of work and our relationships to further expand our
geographical footprint. We will continue to work with our partners
to deliver sustainable communities across the country."
There will be a conference call for analysts and investors this
morning at 0830hrs (BST). Details are set out below:
Date: Thursday 15 October 2020
Time: 0830hrs
Dial in (Int'l): +44 (0)20 7192 8338
Dial in UK FreeCall: 0800 279 6619
Dian in UK LocalCall: 0844 481 9752
Conference ID / passcode: 4258418
- Ends -
Enquiries:
Countryside Properties - 01277 260 000
Iain McPherson - Group Chief Executive
Mike Scott - Group Chief Financial Officer
Victoria Prior - Managing Director, Corporate Affairs
Brunswick Group LLP - 020 7404 5959
Nina Coad
Oliver Sherwood
Note to editors:
Countryside is a leading UK mixed-tenure developer through its
two divisions, Partnerships and Housebuilding.
Countryside's Partnerships division was established over 40
years ago, specialising in estate regeneration, with operations in
London, the South East, the North West, the Midlands and Yorkshire.
It works mainly on public sector owned and brownfield land, in
partnership with local authorities and housing associations to
develop private, affordable and PRS homes. It recently established
a modular panel manufacturing facility in Warrington to improve
quality and reduce build times on site. Its developments include
large scale urban regeneration projects at Beam Park, Rainham,
Acton Gardens, Ealing and Rochester Riverside, Medway.
Countryside's Housebuilding division benefits from an industry
leading strategic land bank which is focused around outer London
and the Home Counties. It builds family homes, with a focus on
placemaking and selling to local owner occupiers. Its developments
include a number of large-scale projects including Beaulieu Park,
Essex, Springhead Park, Ebbsfleet and Tattenhoe Park, Milton
Keynes.
For more information see www.countrysideproperties.com or follow
@CountrysideProp on Twitter.
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