Countryside Properties posts more than 50% rise in revenues

In its results for the year ended 30 September 2021, Countryside Properties has reported an impressive uptick in revenues as it focuses on Partnerships.

Highlights

• Strong recovery from Covid-impacted 2020 results with adjusted revenue +54%, adjusted operating profit +209% and ROCE of 18.6%
• Partnerships teams established and securing development sites in all regions, including good progress establishing the Home Counties division
• Partnerships land bank of 52,903 plots supporting future growth
• Retained HBF 5-star builder status for the second year running
• New factory constructed to support Group’s Modern Methods of Construction (MMC) objectives
• £450m legacy asset realisation programme on track with proceeds of £50m realised and £49m of share buybacks completed to date
• Provision for building safety and quality of £41m
• Agreed voluntary undertakings with the CMA resulting in a £3.8m increase to the Ground Rent Assistance Scheme provision
• New medium-term plan to capitalise on the significant opportunity for sustained profitable growth
• Excellent opportunities to invest in Partnerships, so the Board does not recommend a final dividend

Outlook

“We are 48% forward sold for 2022 including £426m from private sales (as at 30 September 2021) with a private net reservation rate in the nine weeks to 28 November 2021 at 0.94.

“As the growth plans set out last year progress and our attractive market conditions are expected to continue, we expect to deliver adjusted operating profit in the range of £200m to £210m in the year to 30 September 2022, including a c.£40m contribution from legacy housebuilding operations.

New medium-term plan

“Following the decision to focus 100% on Partnerships in the future, the Group has announced a new medium-term plan to deliver sustainable double-digit growth at attractive targeted return rates.

“The Group has invested considerably in Partnerships land and work in progress over the last 5 years with assets employed increasing from £103m to £610m over that period, including £209m from the former Housebuilding division. We have also invested significantly in the regional teams and central support functions to generate capacity for profitable future growth. Over the next two to three years the Group expects to employ Tangible Net Operating Assets (“TNOAV”) in the range of £750m (+/- £50m) until the targeted ROCE of 40%+ is achieved. Over the same period, we expect to grow operating margins to at least 13%.

“After achieving the targeted ROCE, we will target organic double-digit profit growth, expected to be in the range 10% to 15% per annum to capitalise on the significant multi-year growth opportunity.

Capital structure

“The Group will maintain a prudent approach to managing the balance sheet and seek to maintain net cash or net debt in the range of +/- one times adjusted operating profit. There are substantial opportunities for re-investment to deliver sustainable, profitable double-digit organic growth in Partnerships. This will take precedence over shareholder returns for the foreseeable future.”

John Martin, Chair said: “Countryside has a clear path to becoming 100% focused on our differentiated and market-leading mixed tenure Partnerships business. Since we announced the strategy earlier this year, we have made excellent progress in establishing the new division in the Home Counties where we have a wealth of opportunities to bring our award-winning proposition to a new generation of home-owners and tenants in an area where it is sorely needed. We will stay focused on developing places where people love to live in the most environmentally sustainable way. We have also made good progress in the realisation of legacy assets and the return of proceeds to shareholders.

“Countryside is uniquely positioned to fulfil the considerable demand for homes in mixed-tenure developments and we believe that this represents a multi-year growth opportunity. We have made significant investments to align our resources – both capital and people – with this market opportunity and we believe that this will generate attractive returns for our shareholders in a sustainable, low-risk way. Our management team will present this new plan, and our associated expectations, at a Capital Markets Event later today.”

Iain McPherson, Group Chief Executive, added: “We have achieved a strong recovery from Covid, with adjusted revenue growing by 54%, with a continued focus on quality of delivery. This is testament to the effort and commitment of our employees and the strength of our relationships with our partners. After a strategic review of the business, we have the structure and the team to continue to grasp the compelling opportunity that is ahead of us. This will see us create places people love, whilst delivering strong growth and attractive returns for shareholders over the medium term.”