TIDMCSP
RNS Number : 8020T
Countryside Properties PLC
22 July 2020
22 July 2020
Countryside Properties PLC
Q3 2020 Trading Statement
Resilience from our mixed tenure model
Countryside Properties plc (the "Group"), a leading UK
mixed-tenure developer, is today issuing a trading update for the
13-week period from 1 April 2020 to 30 June 2020.
Q3 Operation al Highlights
-- Total completions of 449 homes (Q3 2019: 1,055 homes)
-- Private average selling price ("ASP") of GBP398,000 (Q3 2019: GBP374,000)
-- Net reservation rate(1) of 0.53 (Q3 2019: 1.00) with our
sales teams working virtually until 1 June.
-- Average open sales outlets at 67(Q3 2019: 56)
-- Strong total forward order book up 34% at GBP1.5bn (Q3 2019:
GBP1.1bn) comprising GBP1.0bn in Partnerships (Q3 2019:
GBP720m)
-- Planning secured on second modular factory to further improve build times and efficiency
(1) Net reservations per open outlet per week
Group Performance
Following the closure of our sites and factories in response to
COVID-19 on 25 March, we returned to phased construction activity
from 11 May 2020. During the period we completed 449 homes (Q3
2019: 1,055 homes) of which 129 were private (Q3 2019: 294 homes),
221 were affordable (474 homes) and 99 were private rental sector
(287 homes). We have now recommenced construction on all of our
sites and re-opened our two factories. We were active on a total of
131 sites as at 30 June 2020 (Q3 2019: 135 sites) of which 66 are
open selling outlets (Q3 2019: 56). Our sites are currently
operating at over 85% of capacity on average and we envisage this
progressing back towards 100% over the course of the coming months
as we follow revised Government and Construction Leadership Council
guidance and extend site operating hours.
Our mixed-tenure model has proved increasingly resilient with
strong demand for all tenures. We have been able to restart our
operations more quickly with affordable and private rented sector
homes allowing us to generate cash as soon as construction activity
recommenced as well as providing greater certainty of work for our
subcontractor supply chain.
Our private sales levels have remained robust, as we operated
virtually during the quarter until reopening our sales offices on 1
June 2020. Demand continues to be strong across all tenures,
reflected in a high level of customer interest and a net
reservation rate of 0.70 in the last 4 weeks(2) , in line with the
Group's target range of 0.6 to 0.8 with little change seen in
pricing from pre-COVID levels. The private for sale market has
remained robust across the country with continuing government
support from recent stamp duty changes, and the Help to Buy Scheme,
which will be particularly beneficial for first time buyers who
represent around half of our private purchasers. The shortage of
good-quality affordable homes has underpinned demand in the
Partnerships division, along with the strong Private Rented Sector
market which is seeing increasing participation from institutional
investors.
We have excellent visibility of future work through our strong
forward sales position of 7,504 homes compared to 5,723 homes at
the same point last year at a value that is up 34% at GBP1.5bn (Q3
2019: GBP1.1bn). Within this order book, our sales performance
during lockdown contributed to a 25% increase in the private
forward order book on the prior year to GBP514m (Q3 2019:
GBP411m).
(2) Trading period covering 4 weeks ended 12(th) July
Increasing Partnerships growth potential
We continue to see attractive opportunities for growth in
Partnerships given the strength of our secured work, equivalent to
nine years' work at FY 2019 volumes, and the resilience of our
mixed-tenure model. We are positioning the Partnerships business
for growth over the medium-term and today announce that
Partnerships North, our largest division, will become two new
divisions, each with three regions: Partnerships North, covering
the Manchester, Merseyside and Yorkshire regions and Partnerships
Midlands which will incorporate regions in the East, West and South
Midlands. This better positions the business to take advantage of
the growth opportunities within our increasing bid pipeline.
During the period we secured a further 3,376 plots including c.
600 plots for our newer East Midlands and Yorkshire regions. As at
30 June 2020, we had 40,267 plots secured within Partnerships, up
9% on the prior year (Q3 2019: 36,844 plots) with c. 100,000
further plots identified as opportunities.
Separately, we have been granted planning permission for our
second modular panel factory in Bardon, Leicestershire, which is
intended to open in Autumn 2021 and is expected to have the
capacity to deliver up to 3,500 homes per year once fully
operational. This is in addition to our existing modular panel
factory in Warrington which has the capacity to deliver up to 1,500
homes per year and our traditional timber frame factory in
Leicester. This progresses our strategy to have greater security
over delivery and increased build speed. As manufacturing becomes a
more significant activity in the Group, a new Manufacturing
operating division will be established during 2021.
Land and planning
Land sales remain part of our strategy to deliver value from our
strategic land bank while managing balance sheet exposure and
operational risk. At 30 June 2020, our Housebuilding land bank
stood at 25,502 plots (Q3 2019: 24,400 plots). As previously
announced, during the first half of the year the sales of five
parcels of land were put on hold due to COVID-19. We exchanged
contracts on two of these five sales in the fourth quarter of this
year and we have ongoing dialogue with third parties on the
remaining three parcels. The Group is targeting c.GBP15m - GBP20m
of profit per annum from its ongoing land sale programme.
We welcome the recent changes to the planning system announced
by the Government, which will support the housebuilding sector in
the medium-term. While we expect some planning delays in the short
term as local authorities and the industry returns to more normal
levels of operations we have been encouraged by our ability to
commence construction on three new sites during the period.
Balance Sheet
Since March we have taken decisive steps to strengthen our
liquidity and manage our cash position in response to COVID-19.
This has included a focus on our PRS and Affordable delivery to
prioritise receipt of cash throughout the construction period,
along with the renegotiation of the payment profile of certain land
creditors, suspending the payment of a dividend and a 20% reduction
in base salary and fees for all of the Executive Committee and
Board of Directors for two months. Overall, we ended Q3 with net
debt of GBP232.1m (Q3 2019: GBP128.2m).
We have an existing GBP300m revolving credit facility and have
secured eligibility for the Bank of England's COVID Corporate
Financing Facility which we would be able to access should we need
additional liquidity. We have also agreed a relaxation of the
Group's banking covenants until September 2022.
We recognise the importance of dividends for shareholders and
the Board will review the Group's dividend policy later in the
year.
Our employees and our communities
We remain conscious of the impact that COVID-19 has had on our
employees, customers and communities and we signed up to the C-19
Business Pledge at the start of the quarter. We are proud of the
way that our employees have responded throughout the pandemic and
their commitment remains testament to the talent we have within our
business. While a number of employees were placed on furlough leave
while our sites were closed during April and early May, all
employees were paid 100% of salary by the Group and we have not
taken support from the Government's Job Retention Scheme.
We have adapted our business model to take into account the fact
that life will not return to 'normal' for some time. We have
increased our online presence with both new and existing customers
which included conducting customer visits by video conference, as
well as a number of virtual home tours. To ensure that we continue
to deliver the highest levels of customer service we have extended
our new homes warranty by three months.
As previously announced, at the start of the pandemic we
launched a GBP1m Communities Fund to support the most vulnerable
people within our communities. Over GBP750,000 of this has already
been allocated to support local foodbanks, hardship funds,
homelessness and other local charities and groups.
Outlook
Whilst we believe the broader economic outlook remains
uncertain, we continue to monitor market activity closely and the
Group is encouraged by trading performance in recent weeks. The
Board is confident in Countryside's resilient mixed-tenure business
model and the growth opportunities within its Partnerships division
and believes the Group will continue to benefit from good
underlying demand for housing of all tenures over the medium-term.
The combination of this demand and our mixed-tenure model gives us
the confidence to develop our Partnerships operations. Our strong
relationships and track record of working with a wide range of
partners positions us well despite the near-term economic
uncertainty. We will provide an update on our strategic priorities
with our full year results scheduled for 19 November 2020.
Iain McPherson, Group Chief Executive, commented:
"Whilst we have seen significant disruption through the quarter,
our return to site was well executed and we have seen increased
interest from customers in recent weeks. Our Partnerships business
and its focus on Affordable and PRS homes continues to show
particular resilience. The creation of the Midlands division along
with progress on our second modular panel factory will create the
platform to continue to grow our business in the medium-term. This,
together with our strong forward order book, positions the Group
well for the future."
Year-to-date net reservation rate*
Year to 30 Q3 discrete 4 weeks ended
June 12 July
FY2020 0.79 0.53 0.70
----------- ------------ -------------
FY2019** 0.91 1.00 1.28
----------- ------------ -------------
* Number of reservations per open selling outlet per week
** Equivalent period in FY2019
There will be a conference call for analysts and investors held
tomorrow at 0830hrs ( BST ). Details are set out below:
Date: Thursday 23 July 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: 6727159
- 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.
Following six years of continuous growth in volumes, Countryside
delivered 5,733 homes in the twelve months to September 2019 -
4,425 through its Partnerships division and 1,308 through its
Housebuilding division, with a mix of private for sale, PRS and
affordable homes. Revenues were GBP1,422.8m with 92.5% customer
satisfaction equivalent to HBF 5-star rating. It was listed on the
London Stock Exchange in February 2016 as a constituent of the FTSE
250.
For more information see www.countrysideproperties.com or follow
@CountrysideProp on Twitter.
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END
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