TIDMCSP
RNS Number : 4447Y
Countryside Properties PLC
13 May 2021
COUNTRYSIDE PROPERTIES PLC
Unaudited results for the six months ended 31 March 2021
13 May 2021
Solid revenue growth; further investment in Partnerships
Countryside, a leading UK home builder and regeneration partner,
today announces its unaudited results for the six months ended 31
March 2021.
Results highlights
HY 2021 HY 2020 Change
Completions 2,591 2,271 +14%
Adjusted revenue(1) GBP755.0m GBP530.9m +42%
Adjusted operating profit(2) GBP78.6m GBP55.3m +42%
Adjusted operating margin(3) 10.4% 10.4% +0bps
Adjusted basic earnings per
share(4) 11.1p 9.1p +22%
Return on capital employed(5) 8.9% 25.8% -
Reported revenue GBP661.0m GBP481.2m +37%
Reported operating profit GBP24.7m GBP41.0m (40)%
Net cash/(debt)(6) GBP105.9m GBP(127.7)m +GBP233.6m
Basic earnings per share 6.1p 8.1p (25)%
Highlights
-- Group completions up 14%, with adjusted revenue up 42%,
driven by increased private for sale completions
-- Adjusted operating profit up 42%
-- Net cash of GBP106m: GBP109m net investment in Partnerships
in the first half; further net investment of GBP100m expected in
the second half, executing our medium term growth plans
-- Provision of GBP25m for remedial work on historical high-rise developments
-- New sustainability approach with our pathway to net zero
carbon to be published in the second half of 2021
-- 5 star HBF rating for the second year, with ongoing commitment to build quality
-- Good progress on internal reorganisation to facilitate housebuilding separation
Outlook
The net reservation rate for the last six weeks has been strong
at 0.82 and we are over 90% forward sold across all tenures for the
year. At the end of March the total forward order book stood at
GBP1,203m supporting delivery in the second half, despite delays in
the planning system as a result of the pandemic. There is no change
to the Board's expectations for the full year.
Iain McPherson, Group Chief Executive, said:
"We have seen a good recovery from 2020, with trading in line
for the full year. We remain focused on executing our growth plans
in Partnerships, with investment into three new operating regions
and a strong bid pipeline, in line with our longer term plans. Our
track record working with partners across Local Authorities,
Housing Associations and private homeowners, together with our
framework agreements and forward order book, position us well to
deliver our medium-term growth targets."
Our half year results presentation will be webcast and available
via conference call at 8.30am on Thursday 13 May followed by
Q&A. Please register for the webcast at
https://investors.countrysideproperties.com
The conference call dial in details are:
Tel: + 44 20 3936 2999
PIN: 457640
Enquiries:
Countryside Properties PLC Tel: +44 (0) 1277 260 000
Iain McPherson - Group Chief Executive
Mike Scott - Group Chief Financial Officer
Victoria Prior - Managing Director, Corporate Affairs
Brunswick Group LLP Tel: +44 (0) 20 7404 5959
Nina Coad
Robin Wrench
Note to editors:
Countryside is the UK's leading mixed-tenure developer through
its two divisions, Partnerships and Housebuilding.
Countryside's Partnerships division was established over 30
years ago, specialising in estate regeneration, with operations in
London, the South East, the South West, 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 an advanced modular panel manufacturing
capability to improve quality, reduce build times and directly
manage supply to sites. Its developments around London include
large scale urban regeneration projects at Beam Park, Rainham,
Acton Gardens, Ealing and Rochester Riverside, Medway, as well as
typically smaller sites with a mix of settings in our regions
outside of London.
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 and Springhead Park, Ebbsfleet.
For further information, please visit the Group's website:
www.countrysideproperties.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 from
joint ventures and associate of GBP94.0m (HY 2020: GBP49.7m).
(2) Adjusted operating profit includes the Group's share of
operating profit from joint ventures and associate of GBP21.7m (HY
2020: GBP9.0m) and excludes non-underlying items of GBP32.2m (HY
2020: GBP5.3m). Refer to Note 6.
(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
for the period.
(5) Return on capital employed ("ROCE") is defined as adjusted
operating profit for the last 12 months divided by the average of
opening and closing tangible net operating asset value ("TNOAV")
for the 12-month period. TNOAV is calculated as net assets
excluding net cash or debt less intangible assets net of deferred
tax.
(6) Net debt is defined as bank borrowings less unrestricted
cash. Unamortised debt arrangement fees and lease obligations are
not included in net debt.
(7) An active site is a site where construction has commenced.
An open selling outlet is an active site on which the Group is
selling homes.
The Directors believe that the use of adjusted measures is
necessary to understand the underlying trading performance of the
Group.
Group results for the six months ended 31 March 2021
Performance recovered well in the first half and we continue to
make good progress on our key strategic initiatives to support
delivery over the medium term. Demand for all tenures of homes was
good, underpinned by continued government support for housing. In
particular, the private for sale market strengthened since the
start of the year. Some delays to the planning process impacted
start on site and delivery of Affordable and PRS homes in the first
half. Underlying demand for these tenures remains strong and these
delays are not expected to impact delivery over the
medium-term.
Completions
Total completions increased 14% to 2,591 homes (HY 2020: 2,271
homes), driven by a strong increase in private delivery as we
completed on homes deferred as a result of Covid-19 from the prior
year. Overall, private completions were 71% higher than last year
at 1,289 (HY 2020: 753 homes). Affordable completions were broadly
flat at 932 homes (HY 2020: 941 homes) with PRS completions 36%
lower at 370 homes (HY 2020: 577 homes), reflecting delays to site
starts as we recognise completions on an equivalent unit basis in
line with construction activity.
Revenue
Total adjusted revenue increased 42% to GBP755.0m (HY 2020:
GBP530.9m). On a reported basis, revenue increased 37% to GBP661.0m
(HY 2020: GBP481.2m).
Private average selling price ("ASP") increased 6% to GBP389,000
(HY 2020: GBP368,000) reflecting a higher proportion of private
sales from our Housebuilding sites at 41% (HY 2020: 39%), a greater
weighting to the south in Partnerships and house price inflation
("HPI") of 1.6% (HY 2020: (2.3%)).
Help to Buy usage increased to 62% of private completions (HY
2020: 52%), or 31% of total completions (HY 2020: 17%).
Affordable ASP, at GBP153,000 was flat on the prior year (HY
2020: GBP155,000) with PRS ASP increasing 3% to GBP149,000 (HY
2020: GBP144,000) driven mainly by site mix with a greater
proportional delivery coming from our Southern Partnerships
business where ASPs are higher.
Our net private reservation rate per open sales outlet per week
remained within our target range at 0.68 (HY 2020: 0.93), lower
than the prior year as expected as a result of our strong forward
sales position as we entered the year. Our open sales outlets
decreased 7% to 64 (HY 2020: 69) with new sales launches expected
during the summer months. Total active sites were down 19% to 112
(H1 2020: 139) reflecting a move away from smaller sites.
Overall, our total forward order book at GBP1,203m (HY 2020:
GBP1,506m, FY: GBP1,432m) was 16% lower than the position at the
start of the year reflecting the delivery of homes deferred from
the prior year as a result of the Covid-19 lockdown and delays to
starting on site. Total forward order book is 16% ahead of HY
2019.
Land and commercial sales
Gross profit from land and commercial sales contributed GBP10.6m
(HY 2020: GBP0.8m). Further land sales are expected to complete in
the second half along with a number of small commercial sales.
Operating profit and margin
Adjusted operating profit increased 42% to GBP78.6m (HY 2020:
GBP55.3m) including the land sales in Housebuilding. Build cost
inflation increased to around 3% (HY 2020: 1%) with inflation seen
across several categories including timber and steel and these
inflationary pressures are increasing. We continue our focus on
operational efficiency to minimise the impact of cost increases
through use of standard house types, use of Group buying deals and
leveraging our off-site manufacturing capabilities. On a reported
basis, operating profit decreased 40% to GBP24.7m (HY 2020:
GBP41.0m). The difference between adjusted and reported results
reflects the proportional consolidation of our joint ventures and
associates (see Notes 11 and 12) and exclusion of non-underlying
items (see below). Overall, adjusted operating margin remained
unchanged at 10.4% (HY 2020: 10.4%) and reported operating margin
decreased by 480bps to 3.7% (HY 2020: 8.5%).
Non-underlying costs
The quality and safety of the homes we deliver is of the utmost
importance to the Group. Since December 2020, EWS1 surveys have
identified 20 developments, constructed between 2008 and 2017,
where the current building owner believes there are defects in the
building which need to be remediated. We have made a provision of
GBP25m (FY 2020: GBPnil) in respect of these costs.
Total non-underlying costs of GBP32.2m (HY 2020: GBP5.3m) also
include the ongoing reorganisation of the Group to support the
separation of Housebuilding of GBP3.3m and other costs of GBP3.9m
(HY 2020: GBP5.3m) (see note 6 to the financial statements)
In March 2021, the CMA announced that it had commenced the
consultation stage of its inquiry into the sale of leasehold
properties with which we are fully cooperating.
Assets and liabilities
Inventories increased GBP25.0m to GBP1,084.1m (FY 2020:
GBP1,059.1m) during the period. This was driven by our continued
investment to support the growth of the Partnerships division with
GBP73.1m spent on land purchases and construction. With the
completion of deferred units in Housebuilding, there was a net
reduction of GBP48.1m in inventory.
The right of use asset under IFRS 16 has increased to GBP67.8m
(FY 2020: GBP26.3m) driven largely by the Bardon Modular Panel
Factory with a corresponding increase seen in lease liabilities to
GBP68.8m (FY 2020: GBP30.5m).
The Group's investment in joint ventures reduced to GBP33.8m (FY
2020: GBP40.9m) as a result of dividends received in the period
exceeding the profit generated by the joint ventures.
Net cash/debt
We ended the half with net cash at 31 March 2021 of GBP105.9m
(HY 2020: net debt GBP127.7m) with GBP109m investment in
Partnerships in the first half and a further net investment of
GBP100m expected in the second half as we continue to execute our
growth plans. After the period end, deferred land payments of
GBP58m were made by the Housebuilding division. We expect to end
the current financial year with a modest amount of net debt.
Net finance costs were GBP6.0m (HY 2020: GBP6.2m), with interest
on bank debt decreasing by 32% to GBP1.3m (HY 2020: GBP1.9m).
Taxation
The effective tax rate applied to adjusted profit for the period
was 19.3% (HY 2020: 17.3%), broadly in line with the UK headline
rate of 19.0%. On a reported basis, the effective tax rate was
17.7% (HY 2020: 16.7%).
Earnings per share
Adjusted basic earnings per share were 11.1 pence (HY 2020: 9.1
pence), reflecting the increase in adjusted earnings in the period,
offset by the higher number of shares in issue following the
placing in July 2020. On a reported basis, basic earnings per share
were 6.1 pence (HY 2020: 8.1 pence).
Group structure and dividend
In December 2020, we announced that we were reviewing the
separation of our Housebuilding division. Since that time, we have
made excellent progress on the internal reorganisation of the
Group. The Group is reviewing the appropriate capital structure and
dividend policy for the business going forward and expects to
complete this during the second half of the year. The Board has not
proposed an interim dividend, pending the outcome of that
review.
Group sustainability update
At Countryside we are proud to create places that people love.
As well as building quality homes, we focus on critical social and
digital infrastructure, transport and green spaces needed to
nurture vibrant, connected and healthy communities. We have a
responsibility to create a more sustainable world. The places where
we live and work have a big impact on our climate and
biodiversity.
We will shortly be launching a new sustainability approach that
will help tackle some of the big challenges ahead including
shortage of affordable homes, becoming a low carbon society and the
significant loss of biodiversity in the UK. Our new approach is
focused on three key areas:
-- The homes we build and our operations;
-- Creating sustainable communities leaving a lasting positive legacy; and
-- Supporting our people to continue to deliver beautiful places that people love.
In the second half of 2021 we will also announce our Pathway to
Net Zero Carbon supported by science-based reduction targets. We
are working collaboratively with the industry to meet the Future
Homes Standard and the delivery of Net Zero Carbon Ready Homes. We
have joined the HBF Future Homes Task Force and become a partner of
the Supply Chain Sustainability School as we look to work across
the sector to bring government, housebuilders, utility providers,
material suppliers and environmental groups together, while also
supporting our supply chain.
We continue to support local communities through our GBP1m
Communities Fund, created in 2020 and renewed for a second year,
which is specifically aimed at helping the most vulnerable people
in the areas where we work. The fund is supported by a team of
volunteers within Countryside, who reach out to partners and the
local community to identify areas that need support.
Board change
David Howell announced his intention to step down from the Board
in 2021. On 13th April 2021 we announced the appointment of John
Martin to the Board as Non-executive Chair designate and he
succeeded David Howell as Chair on 1 May 2021.
Partnerships
HY 2021 HY 2020 Change
Completions 1,938 1,791 +8%
Adjusted revenue GBP420.6m GBP343.8m +22%
Adjusted operating
profit GBP36.6m GBP36.3m +1%
Adjusted margin 8.7% 10.6% (190)bps
ROCE 9.3% 47.1% -
Land bank (plots) 40,805 37,734 +8%
Reported revenue GBP395.8m GBP324.0m +22%
Reported operating
profit GBP7.2m GBP32.5m (78)%
Reported margin 1.8% 10.0% (820)bps
Investment in growth
We have a strong platform for our growth plans with three new
operating regions - Chilterns, South West and South London - now
established and operational. In addition, construction of our
second modular panel factory is complete and in the process of
internal fit out. In the first half we invested GBP109m into
Partnerships with plans to invest further in the second half to
support our growth plans.
Completions
Total completions increased to 1,938 (HY 2020: 1,791) in the
first half, with strong private sales the main driver, with private
completions 64% higher at 756 homes (HY 2020: 462 homes). This was
supported by homes deferred from the last financial year.
Affordable completions were up 8% at 827 homes (HY 2020: 763 homes)
and PRS completions down 37% at 355 homes (HY 2020: 566 homes),
with both non-private tenures being impacted by delays to site
starts which meant that revenue and completions could not be
recognised on construction activity as planned.
Revenue
Private ASP increased 4% to GBP310,000 (HY 2020: GBP297,000)
reflecting slightly stronger house price inflation in the Midlands
and North and a greater proportion of delivery from the South.
Affordable ASP remained broadly flat at GBP151,000 (HY 2020:
GBP152,000), whilst PRS ASP was up 1% to GBP143,000 (HY 2020:
GBP141,000). Along with the overall increase in volume, this led to
adjusted revenue up 22% at GBP420.6m (HY 2020: GBP343.8m). Reported
revenue of GBP395.8m was also up 22% on the prior year (HY 2020:
GBP324.0m).
Operating profit and margin
Adjusted operating margin reduced 190bps in the half to 8.7% (HY
2020: 10.6%), with all schemes having been impacted by increased
costs as a result of extended build programmes and Covid-19 safety
measures on sites. We have also seen a period of building the
management structures and operating infrastructure for our new
regions as we invest for future growth. Adjusted operating profit
of GBP36.6m (HY 2020: GBP36.3m) was up 1%. On a reported basis,
operating profit decreased 78% to GBP7.2m (HY 2020: GBP32.5m) and
operating margin decreased to 1.8% (HY 2020: 10.0%), as a result of
the provision for remedial work on historical high-rise
developments.
ROCE
Our ROCE methodology uses twelve months rolling profit and the
result was therefore impacted by the performance in the second half
of 2020. This, combined with the increased investment into
Partnerships in the first half led to ROCE for the half of 9.3% (HY
2020: 47.1%). Over the next three years, our operating margin will
improve as the drag from Covid-19 costs reduces and our newer
regions achieve operational scale. This, combined with the
normalisation of the asset turn, underpins our target ROCE of 40%
over the medium term.
Visibility of future work
During the period we secured 3,133 new plots including 400 homes
at Lower Herne, Kent, our first scheme for our new South West
region at Sulis Down, Bath, and four sites with Homes England
across the Midlands and Yorkshire. We have an excellent pipeline of
40,805 plots under our control, including sites where we have been
awarded preferred bidder status, and a future bid pipeline of over
103,000 plots.
Housebuilding
HY 2021 HY 2020 Change
Completions 653 480 +36%
Adjusted revenue GBP334.4m GBP187.1m +79%
Adjusted operating
profit GBP44.7m GBP20.6m +117%
Adjusted margin 13.4% 11.0% +240bps
ROCE 9.5% 16.6% -
Land bank (plots) 25,583 25,607 -
Reported revenue GBP265.2m GBP157.2m +69%
Reported operating
profit GBP27.4m GBP15.4m +78%
Reported margin 10.3% 9.8% +50bps
Completions
Total completions increased by 36% at 653 homes (HY 2020: 480
homes) reflecting a strong sales performance early in the half,
with homes deferred from the last financial year. Total private
completions were up 83% to 533 homes (HY 2020: 291). Affordable
completions were down 41% in the period to 105 homes (HY 2020: 178
homes).
Revenue
Private ASP was up 4% at GBP501,000 (HY 2020: GBP481,000) as a
result of mix of sites and positive HPI of 0.7% in the half on
completions. Affordable ASP was 1% higher at GBP171,000 (HY 2020:
GBP169,000) also reflecting site mix. Private sales made up a
higher proportion of total completions in the half which, combined
with the increase in private ASP, led to adjusted revenue up 79% to
GBP334.4m (HY 2020: GBP187.1m).
Operating profit and margin
Adjusted operating profit was up 117% to GBP44.7m (HY 2020:
GBP20.6m). Additionally, we were able to complete land and
commercial sales, with profits in the half of GBP10.3m (HY 2020:
GBP0.8m). Adjusted operating margin of 13.4% was up 240bps on the
prior period's comparative (HY 2020: 11.0%) as a result of land
sales, but also due to overhead efficiency set against a strong H1
delivery. On a reported basis, operating profit increased by 78% to
GBP27.4m (HY 2020: GBP15.4m) and operating margin increased by
50bps to 10.3% (HY 2020: 9.8%).
ROCE
Our ROCE methodology uses twelve months rolling profit and the
result was therefore impacted by the performance in the second half
of 2020. ROCE was down 710bps at 9.5% (HY 2020: 16.6%) and compares
to 4.9% for FY2020. Over the next three years, our operating margin
will improve as the drag from Covid-19 costs reduces and this
underpins our return to target ROCE of 25% over the medium
term.
Visibility of future work
We secured 1,700 plots to broadly offset the utilisation, with
the landbank standing at 25,583 plots (HY 2020: 25,607 plots). 26%
of the landbank is owned and the remainder either controlled by
option agreements or under conditional contracts.
Iain McPherson
Group Chief Executive
13 May 2021
Principal risks and uncertainties
The Group's principal risks are monitored by the Risk Management
Committee, the Audit Committee and the Board. A summary of each
risk and the mitigating actions is provided below, with further
detail provided on pages 66 to 69 of the Annual Report 2020.
1. A major incident impacts the United Kingdom or countries where
key suppliers are located and significantly impacts the business
The impact of a catastrophic event, such as flooding, failure
of the National Grid, or the spread of an infectious disease on
an epidemic or pandemic scale, can lead to the imposition of Government
controls on the movement of people with the associated cessation
of large parts of the economy for a significant period of time.
The cessation of business can lead to zero or reduced revenues
until business activity can be safely recommenced.
2. Adverse macroeconomic conditions
A decline in macroeconomic conditions, or conditions in the UK
residential property market, can reduce the propensity to buy
homes. Higher unemployment, interest rates and inflation can affect
consumer confidence and reduce demand for new homes. Constraints
on mortgage availability, or higher costs of mortgage funding,
may make it more difficult to sell homes.
3. Adverse changes to Government policy and regulation
Adverse changes to Government policy in areas such as tax, housing,
planning, the environment and building regulations may result
in increased costs and/or delays. Failure to comply with laws
and regulations could expose the Group to penalties and reputational
damage.
4. Constraints on construction resources
Costs may increase beyond budget due to the reduced availability
of skilled labour or shortages of sub-contractors or building
materials at competitive prices to support the Group's growth
ambitions. The Group's strategic geographic expansion may be at
risk if new supply chains cannot be established.
5. Programme delay (rising project complexity)
Failure to secure timely planning permission on economically viable
terms or 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.
6. Inability to attract and retain talented employees
Inability to attract and retain highly skilled, competent people,
with adequate diversity and inclusion, at all levels could adversely
affect the Group's results, prospects and financial condition.
7. Inadequate health, safety and environmental procedures
A deterioration in the Group's health, safety and environmental
standards could put the Group's employees, contractors or the
general public at risk of injury or death and could lead to litigation
or penalties or damage the Group's reputation.
8. Cyber security
A failure of the Group's IT systems or a security breach of the
internal systems, website or loss of data could significantly
impact the Group's business.
9. Reputational damage
The perception of Countryside, its brand and values deteriorate
in the eyes of investors, customers, suppliers, local authorities,
housing associations, banks, analysts or auditors which could
lead to increased operational and financial risks.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that these condensed interim financial
statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months 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 financial year;
and
-- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
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 might have occurred to the interim financial
statements since they were initially presented on the website.
The Directors of Countryside Properties PLC are listed in the
Countryside Properties PLC annual report for 30 September 2020. A
list of current Directors is maintained on the Countryside
Properties PLC website:
https://investors.countrysideproperties.com.
By order of the Board
Iain McPherson
Group Chief Executive Officer
13 May 2021
Mike Scott
Group Chief Financial Officer
13 May 2021
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 unaudited results of Countryside Properties Plc
for the 6 month period ended 31 March 2021 (the "period").
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 2021;
-- 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 unaudited
results for the half year ended 31 March 2021 of Countryside
Properties Plc 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 2 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 unaudited results for the half year ended 31 March 2021,
including the interim financial statements, is the responsibility
of, and have been approved by the Directors. The Directors are
responsible for preparing the unaudited results for the half year
ended 31 March 2021 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 unaudited results for the half year
ended 31 March 2021 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,
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 unaudited
results for the half year ended 31 March 2021 and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial
statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
13 May 2021
COUNTRYSIDE PROPERTIES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
Unaudited Unaudited Audited
Note GBPm GBPm GBPm
------------ ------------ --------------
4,
Revenue 5 661.0 481.2 892.0
Cost of sales (584.2) (401.6) (783.9)
------------ ------------ --------------
Gross profit 76.8 79.6 108.1
Administrative expenses (52.1) (38.6) (113.5)
------------ ------------ --------------
Operating profit/(loss) 4 24.7 41.0 (5.4)
Analysed as:
Adjusted operating profit 4 78.6 55.3 54.2
Less: Share of joint ventures and 11,
associate operating profit 12 (21.7) (9.0) (17.2)
Less: Non-underlying items 6 (32.2) (5.3) (42.4)
------------ ------------ --------------
Operating profit/(loss) 4 24.7 41.0 (5.4)
--------------------------------------- ----- ------------ ------------ --------------
Finance costs 7 (6.3) (6.5) (14.2)
Finance income 7 0.3 0.3 0.7
Share of post-tax profit from joint
ventures and associate accounted 11,
for using the equity method 12 20.1 8.9 17.0
------------ ------------ --------------
Profit/(loss) before income tax 38.8 43.7 (1.9)
Income tax expense 8 (6.9) (7.3) (2.1)
------------ ------------ --------------
Profit/(loss) and total comprehensive
income/(loss) for the period 31.9 36.4 (4.0)
------------ ------------ --------------
Profit/(loss) and total comprehensive
income/(loss) is attributable to:
Owners of the parent 31.9 36.4 (3.7)
Non-controlling interest - - (0.3)
------------ ------------ --------------
31.9 36.4 (4.0)
------------ ------------ --------------
Earnings/(loss) per share (expressed
in pence per share):
Basic 9 6.1 8.1 (0.8)
Diluted 9 6.0 8.1 (0.8)
There were no items of other comprehensive income during the
period (HY20: GBPNil, FY20: GBPNil).
COUNTRYSIDE PROPERTIES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at As at 30
31 March 31 March September
2021 2020 2020
Unaudited Unaudited Audited
Note GBPm GBPm GBPm
Assets
Non-current assets
Intangible assets 140.3 165.8 143.1
Property, plant and equipment 15.2 15.4 15.1
Right of use assets 67.8 29.8 26.3
Investment in joint ventures 11 33.8 38.3 40.9
Investment in associate 12 0.8 3.6 1.3
Deferred tax assets 4.4 4.5 4.1
Trade and other receivables 14 31.9 18.3 19.6
294.2 275.7 250.4
Current assets
Inventories 13 1,084.1 1,041.4 1,059.1
Trade and other receivables 14 196.8 234.2 199.2
Current income tax receivables 6.9 13.6 0.6
Cash and cash equivalents 15 108.8 172.2 100.5
1,396.6 1,461.4 1,359.4
Total assets 1,690.8 1,737.1 1,609.8
---------- ---------- -----------
Liabilities
Current liabilities
Borrowings 15 (0.5) - -
Trade and other payables 16 (311.2) (367.4) (344.6)
Lease liabilities (4.8) (4.8) (5.9)
Provisions 17 (37.5) (0.7) (10.9)
(354.0) (372.9) (361.4)
Non-current liabilities
Borrowings 15 (2.4) (298.2) (2.3)
Trade and other payables 16 (141.1) (138.8) (124.5)
Lease liabilities (64.0) (26.7) (24.6)
Deferred tax liabilities (9.3) (10.4) (10.5)
Provisions 17 (0.6) (0.7) (0.5)
(217.4) (474.8) (162.4)
Total liabilities (571.4) (847.7) (523.8)
Net assets 1,119.4 889.4 1,086.0
========== ========== ===========
Equity
Share capital 5.2 4.5 5.2
Share premium 5.3 - 5.3
Retained earnings 1,108.6 882.6 1,075.2
Equity attributable to owners
of the parent 1,119.1 887.1 1,085.7
Equity attributable to non-controlling
interest 0.3 2.3 0.3
---------- ---------- -----------
Total equity 1,119.4 889.4 1,086.0
========== ========== ===========
COUNTRYSIDE PROPERTIES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended 31 March 2021 (Unaudited)
Share Share Retained Equity Non-controlling Total
capital premium earnings attributable interest equity
to owners
of the
parent
GBPm GBPm GBPm GBPm GBPm GBPm
--------- --------- ---------- -------------- ---------------- --------
At 1 October 2020 5.2 5.3 1,075.2 1,085.7 0.3 1,086.0
Comprehensive income
Profit and total comprehensive
income for the period - - 31.9 31.9 - 31.9
Transactions with owners
Share based payments,
net of
deferred tax - - 1.5 1.5 - 1.5
At 31 March 2021 5.2 5.3 1,108.6 1,119.1 0.3 1,119.4
========= ========= ========== ============== ================ ========
Six months ended 31 March 2020 (Unaudited)
Share Share Retained Equity Non-controlling Total
capital premium earnings attributable interest equity
to owners
of the
parent
GBPm GBPm GBPm GBPm GBPm GBPm
--------- --------- ---------- -------------- ---------------- --------
At 1 October 2019 4.5 - 892.3 896.8 2.3 899.1
Comprehensive income
Profit and total comprehensive
income for the period - - 36.4 36.4 - 36.4
Transactions with owners
Share based payments,
net of
deferred tax - - 0.1 0.1 - 0.1
Dividends paid - - (46.2) (46.2) - (46.2)
Total transactions with
owners - - (46.1) (46.1) - (46.1)
At 31 March 2020 4.5 - 882.6 887.1 2.3 889.4
========= ========= ========== ============== ================ ========
Year ended 30 September 2020 (Audited)
Share Share Retained Equity Non-controlling Total
capital premium earnings attributable interest equity
to owners
of the
parent
GBPm GBPm GBPm GBPm GBPm GBPm
--------- --------- ---------- -------------- ---------------- --------
At 1 October 2019 4.5 - 892.3 896.8 2.3 899.1
Comprehensive income
Loss and total comprehensive
loss for the year - - (3.7) (3.7) (0.3) (4.0)
Transactions with owners
Issue of shares, net of
transaction costs 0.7 5.3 237.0 243.0 - 243.0
Share based payments, net
of
deferred tax - - 0.4 0.4 - 0.4
Purchase of shares by
Employee Benefit Trust - - (2.0) (2.0) - (2.0)
Dividends paid to owners
of the parent - - (46.2) (46.2) - (46.2)
Dividends paid to non-controlling
interests - - - - (4.3) (4.3)
Reclassification - - (2.6) (2.6) 2.6 -
Total transactions with
owners 0.7 5.3 186.6 192.6 (1.7) 190.9
At 30 September 2020 5.2 5.3 1,075.2 1,085.7 0.3 1,086.0
========= ========= ========== ============== ================ ========
COUNTRYSIDE PROPERTIES PLC
CONSOLIDATED CASHFLOW STATEMENT
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
Note Unaudited Unaudited Audited
GBPm GBPm GBPm
------------ ------------ --------------
Cash used in operations 18 (13.1) (99.6) (144.9)
Interest paid - lease liabilities (0.7) (0.6) (1.1)
Interest paid - other (1.3) (1.3) (5.4)
Interest received 0.1 - 0.2
Tax paid (14.2) (45.4) (27.2)
Net cash outflow from operating
activities (29.2) (146.9) (178.4)
Cash flows from investing activities
Purchase of intangible assets (2.2) (1.0) (2.9)
Purchase of property, plant and
equipment (1.2) (3.9) (4.8)
Proceeds from disposal of financial
assets at fair value through profit
or loss - 5.0 5.0
Decrease/(increase) in advances
to joint ventures and associate 19 17.8 (37.4) (19.8)
Repayment of members' interest from
joint venture 2.8 - 4.4
Dividends received from joint ventures
and associate 24.1 32.5 35.8
Net cash inflow/(outflow) from investing
activities 41.3 (4.8) 17.7
Cash flows from financing activities
Dividends paid to owners of the
parent 10 - (46.2) (46.2)
Dividends paid to non-controlling
interests - - (4.3)
Repayment of lease liabilities (4.3) (3.1) (4.9)
Purchase of shares by Employee Benefit
Trust - - (2.0)
Net proceeds from the issue of share
capital - - 243.0
Borrowings under the revolving credit
facility - 297.6 297.6
Repayment of borrowings under the
revolving credit facility - - (297.6)
Proceeds from other borrowings 15 0.5 - -
Net cash ( out flow)/inflow from
financing activities (3.8) 248.3 185.6
Net increase in cash and cash equivalents 8.3 96.6 24.9
Cash and cash equivalents at beginning
of the period 100.5 75.6 75.6
Cash and cash equivalents at the
end of the period 15 108.8 172.2 100.5
============ ============ ==============
COUNTRYSIDE PROPERTIES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 31 March 2021
1. GENERAL INFORMATION
Countryside is a leading UK mixed-tenure developer that operates
through its two divisions, Partnerships and Housebuilding.
Countryside's Partnerships division specialises in developing
mixed tenure communities and estate regeneration, with operations
in London, the South East, the South West, the North West, the
Midlands and Yorkshire. It works on a mixture of public sector
owned and brownfield land, as well as land acquired from private
and public landowners, in partnership with local authorities and
housing associations to develop private, affordable and private
rented sector ("PRS") homes. It also operates a modular panel
manufacturing operation.
Countryside's Housebuilding division benefits from an industry
leading strategic land bank which is focused around outer London
and the Home Counties. It builds high quality homes, with a focus
on placemaking and selling to local owner occupiers.
2. BASIS OF PREPARATION
Countryside's ultimate parent company, Countryside Properties
PLC (the "Company") is a public limited company incorporated and
domiciled in the United Kingdom, whose shares are publicly traded
on the London Stock Exchange. The Company's registered office is
Countryside House, The Drive, Brentwood, Essex CM13 3AT.
The financial information in these condensed consolidated
interim financial statements (the "Financial Information") for the
six months to 31 March 2021 is that of the Company and its
subsidiaries (together the "Group") and includes the Group's
interest in its jointly controlled entities. It has been prepared
in accordance with the Disclosure Guidance and Transparency Rules
of the UK Financial Conduct Authority and with International
Accounting Standard 34 "Interim Financial Reporting", as adopted by
the European Union.
The Financial Information for the six months ended 31 March 2021
and 31 March 2020 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 does not constitute full statutory
accounts within the meaning of Section 434 of the Companies Act
2006 and should be read in conjunction with the annual consolidated
financial statements of the Group for the year ended 30 September
2020 (the "Group Financial Statements"). The Group Financial
Statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union and are filed at Companies House.
The Group Financial Statements have been reported on by the
Company's auditors and are available on the Company's website
https://investors.countrysideproperties.com. The report of the
auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006.
These condensed consolidated interim financial statements were
approved for issue by the Directors on 12 May 2021.
Going concern
The Group has the benefit of a GBP300m revolving credit facility
("RCF") provided by its banking syndicate of four banks, which
expires in May 2023. At 31 March 2021, the facility was undrawn,
and the Group held net cash of GBP105.9m and a further GBP934.3m of
net current assets.
The facility includes covenants in respect of gearing, interest
cover, tangible net asset value and loan to book value. In response
to the initial outbreak of Covid-19, the Group's gearing and
interest cover covenants were relaxed until September 2022 to
provide additional headroom under the RCF, and the Group operated
within the prevailing covenants during the period.
Internal forecasts are regularly updated, and the latest
Board-approved strategic plan reflects the Group's experience and
expectations of the impact of Covid-19 on the Group. The forecast
cash flows have been sensitised to assess the Group's resilience to
the principal risks facing the Company, including those risks that
would threaten Countryside's business model, future performance,
solvency and liquidity.
The most severe but plausible downside scenario is a severe and
prolonged economic downturn, where it is assumed, at its worst,
that:
- Private sale rates reduce by 15% to reflect lower demand and consumer confidence;
- Average selling prices across all tenures are reduced by 10%; and
- Land sales are delayed and are achieved at a 10% discount.
The impact of the above assumptions is somewhat mitigated in the
severe but plausible downside scenario as follows:
- Build spend is reduced to match reduced demand;
- Uncommitted land purchases are delayed; and
- Discretionary overhead spend is reduced.
The Directors have assessed the Group's going concern status
over the next 12 months, which incorporates the severe but
plausible downside scenario noted above. The assessment performed
has shown that the Group has sufficient cash reserves to remain
liquid, without breaching covenants, for at least 12 months from
the date of these financial statements. Accordingly, these
financial statements have been prepared on a going concern basis.
The principal risks facing Countryside and how the Group addresses
such risks are described on page 8.
2. BASIS OF PREPARATION (continued)
Critical accounting judgements and estimates
The preparation of the Financial Information under IFRS requires
the Directors to make judgements, estimates and assumptions that
affect the application of policies and the reported amounts of
assets, liabilities, income, expenses and related disclosures.
In the process of applying the Group's accounting policies,
which are described in the Group Financial Statements, the
Directors have made no individual judgements that have a
significant impact on the Financial Information, apart from those
involving estimates which are described below.
Key sources of estimation uncertainty
-- Estimation of site profitability:
A key source of estimation uncertainty for the Group involves
the estimation of site profitability. As disclosed in the Group
Financial Statements, the extent of estimation uncertainty has
increased over the last 12 months as a result of the Covid-19
pandemic. Other external factors such as the impact of Brexit,
changes to industry regulations and changes to government policy
also increase the uncertainty for the Group. The Directors have
performed a detailed review of the Group's developments, and an
impairment charge of GBP3.2m was recorded for the six months ended
31 March 2021 (HY20: GBP4.8m, FY20: GBP4.8m).
-- Remediation costs for multi-occupancy buildings:
As a result of progress made in the Group's review of expected
remediation costs for multi-occupancy buildings, a provision of
GBP25.0m has been recognised. This amount is recognised without
taking into account potential recoveries from insurance or other
third parties. The estimation of the expected future outflows in
relation to these properties, together with any potential recovery
of costs, is complex, resulting in significant estimation
uncertainty. Refer to Note 17 for further detail.
Accounting policies
The policies applied in the Financial Information are consistent
with those applied in the Group Financial Statements, except in
respect of the following:
-- Income tax - the income tax charge for the six months to 31
March 2021 is based on the effective tax rate that would be
applicable to expected annual earnings, adjusted for the tax effect
of non-underlying items expected to be incurred in the second half
of the financial year.
New standards, amendments and interpretations
The following amendments to standards and interpretations are
effective for the first time for the financial year beginning 1
October 2020 and have been adopted during the period:
-- Amendments to IAS 1 "Presentation of Financial Statements"
and IAS 8 "Accounting Policies, Changes in Accounting Estimates and
Errors";
-- Amendment to IFRS 3, Business Combinations;
-- Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest rate benchmark reform; and
-- Amendment to IFRS 16 Leases Covid-19-Related rent concessions.
The adoption of these amendments in the period did not have a
material impact on the financial statements.
The following amendments to standards and interpretations have
also been issued, but are not yet effective and have not been early
adopted for the financial year beginning 1 October 2020:
-- Amendments to IFRS 4, Insurance contracts; and
-- Amendments to IFRS 9, IAS 39 and IFRS 7, IFRS 4 and IFRS 16 -
Interest rate benchmark reform - Phase 2.
The adoption of these amendments is not expected to have a
material impact on the Group.
Alternative Performance Measures
In the reporting of financial information, the Directors have
adopted various Alternative Performance Measures ("APMs"). These
measures are not defined by IFRS and therefore may not be directly
comparable with other companies' APMs, including those in the
Group's industry. APMs should be considered in addition to, and are
not intended to be a substitute for, or superior to, IFRS
measurements. Refer to pages 33 to 38 for a full list of the
Group's APMs.
3. SEASONALITY
In common with the rest of the UK housebuilding industry,
activity occurs throughout the year, with peaks in sales
completions typically observed in spring and autumn. This creates a
degree of seasonality in the Group's trading results and working
capital. In addition to this, the current and prior financial year
results have been impacted by the Covid-19 pandemic and the related
government-imposed lockdown measures, which have caused further
fluctuations in the trading performance and working capital
cycle.
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 the basis on which strategic operating
decisions are made by the Group's Chief Operating Decision Maker
("CODM"), which has been identified as the Group's Executive
Committee. The Group's two business segments are Partnerships and
Housebuilding.
The Partnerships segment specialises in developing mixed tenure
communities and estate regeneration, with operations in London, the
South East, the South West, the North West, the Midlands and
Yorkshire. It works on a mixture of public sector owned and
brownfield land, as well as land acquired from private and public
landowners, in partnership with local authorities and housing
associations to develop private, affordable and PRS homes. It also
operates a modular panel manufacturing operation.
The Housebuilding segment benefits from an industry leading
strategic land bank which is focused around outer London and the
Home Counties. It builds high quality homes, with a focus on
placemaking and selling to local owner occupiers.
Segmental adjusted operating profit and segmental operating
profit include items directly attributable to a segment as well as
those that can be allocated on a reasonable and consistent basis.
Central head office costs that are directly attributable to a
segment are allocated where possible, or otherwise allocated
between segments based on an appropriate allocation methodology,
such as headcount.
Segmental measures for Tangible Net Asset Value ("TNAV") and
Tangible Net Operating Asset Value ("TNOAV") include assets and
liabilities that are directly attributable to the segment as well
as those that can be allocated on a reasonable basis.
The Group operates entirely within the United Kingdom and there
is no trade between segments.
4. SEGMENTAL REPORTING (continued)
(a) Segmental financial performance
The Group's measures of segmental financial performance are
presented on a reported and adjusted basis below. Adjusted revenue
and adjusted profit are APMs for the Group. Further detail on the
Group's APMs is provided on pages 33 to 38. Refer to Note 5 for an
analysis of segmental reported revenue by type.
Partnerships Housebuilding Group items Total
Note GBPm GBPm GBPm GBPm
------------- -------------- ------------ --------
Six months ended 31 March
2021
Adjusted revenue 420.6 334.4 - 755.0
Less: share of revenue from
joint ventures and associate (24.8) (69.2) - (94.0)
------------- -------------- ------------ --------
Revenue 5 395.8 265.2 - 661.0
============= ============== ============ ========
Adjusted operating profit/(loss) 36.6 44.7 (2.7) 78.6
Less: share of operating profit
from joint ventures and associate (4.4) (17.3) - (21.7)
Less: non-underlying items 6 (25.0) - (7.2) (32.2)
------------- -------------- ------------ --------
Operating profit/(loss) 7.2 27.4 (9.9) 24.7
============= ============== ============ ========
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ --------
Six months ended 31 March
2020
Adjusted revenue 343.8 187.1 - 530.9
Less: share of revenue from
joint ventures and associate (19.8) (29.9) - (49.7)
------------- -------------- ------------ --------
Revenue 5 324.0 157.2 - 481.2
============= ============== ============ ========
Adjusted operating profit/(loss) 36.3 20.6 (1.6) 55.3
Less: share of operating profit
from joint ventures and associate (3.8) (5.2) - (9.0)
Less: non-underlying items 6 - - (5.3) (5.3)
------------- -------------- ------------ --------
Operating profit/(loss) 32.5 15.4 (6.9) 41.0
============= ============== ============ ========
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ ----------
Year ended 30 September 2020
Adjusted revenue 629.4 359.4 - 988.8
Less: share of revenue from
joint ventures and associate (44.1) (52.7) - (96.8)
------------- -------------- ------------ ----------
Revenue 5 585.3 306.7 - 892.0
============= ============== ============ ==========
Adjusted operating profit/(loss) 32.8 25.0 (3.6) 54.2
Less: share of operating profit
from joint ventures and associate (8.3) (8.9) - (17.2)
Less: non-underlying items 6 (8.3) (5.2) (28.9) (42.4)
------------- -------------- ------------ ----------
Operating profit/(loss) 16.2 10.9 (32.5) (5.4)
============= ============== ============ ==========
4. SEGMENTAL REPORTING (continued)
(b) Segmental financial position
Segmental TNAV represents the net assets of the Group's two
operating divisions. Segmental TNAV includes divisional net assets
less intangible assets (net of deferred tax) and excludes
inter-segment cash funding. TNOAV is the Group's measure of capital
employed, as used in the calculation of Return on Capital Employed
("ROCE"). Refer to pages 33 to 38 for detail of the Group's APMs,
including calculations of ROCE for the Group's segments.
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ --------
TNAV at 1 October 2020 288.1 663.6 - 951.7
Operating profit/(loss) 7.2 27.4 (9.9) 24.7
Add back items with no impact
on TNAV:
- Share-based payments, net
of deferred tax - - 1.5 1.5
- Amortisation of intangible
assets - - 5.0 5.0
Other items affecting TNAV:
- Results of joint ventures
and associate 4.2 15.9 - 20.1
- Taxation (1.4) (5.5) - (6.9)
- Other (2.6) (9.7) 3.4 (8.9)
TNAV at 31 March 2021 295.5 691.7 - 987.2
------------- -------------- ------------ --------
Inter-segment cash funding: net
(cash)/debt 114.6 (220.5) - (105.9)
------------ --------
Segmental capital employed (TNOAV) 410.1 471.2 - 881.3
------------- -------------- ------------ --------
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ -------
TNAV at 1 October 2019 114.2 623.6 - 737.8
Operating profit/(loss) 32.5 15.4 (6.9) 41.0
Add back items with no impact
on TNAV:
- Share-based payments, net
of deferred tax - - 0.1 0.1
- Amortisation of intangible
assets - - 6.1 6.1
Other items affecting TNAV:
- Results of joint ventures
and associate 3.8 5.1 - 8.9
- Dividends paid (29.5) (16.7) - (46.2)
- Taxation (4.7) (2.6) - (7.3)
- Other (5.3) (3.0) 0.7 (7.6)
TNAV at 31 March 2020 111.0 621.8 - 732.8
------------- -------------- ------------ -------
Inter-segment cash funding: net
(cash)/debt 187.7 (60.0) - 127.7
Segmental capital employed (TNOAV) 298.7 561.8 - 860.5
============= ============== ============ =======
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ -------
TNAV at 1 October 2019 114.2 623.6 - 737.8
Operating profit/(loss) 16.2 10.9 (32.5) (5.4)
Add back items with no impact
on TNAV:
- Share-based payments, net
of deferred tax - - 0.4 0.4
- Impairment of goodwill - - 18.5 18.5
- Amortisation of intangible
assets - - 12.2 12.2
Other items affecting TNAV:
- Share issue, net of transaction
costs 196.5 46.5 - 243.0
- Share of post-tax profit from
joint ventures and associate 8.0 9.0 - 17.0
- Dividends paid to owners of
the parent (29.5) (16.7) - (46.2)
- Dividends paid to non-controlling
interests (4.3) - - (4.3)
- Taxation (1.2) (0.9) - (2.1)
- Purchase of shares by EBT (1.2) (0.8) - (2.0)
- Other (10.6) (8.0) 1.4 (17.2)
TNAV at 30 September 2020 288.1 663.6 - 951.7
------------- -------------- ------------ -------
Inter-segment cash funding: net
(cash)/debt 39.4 (137.6) - (98.2)
------------- -------------- ------------ -------
Segmental capital employed (TNOAV) 327.5 526.0 - 853.5
============= ============== ============ =======
4. SEGMENTAL REPORTING (continued)
(c) Segmental other items
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ ------
Six months ended 31 March
2021
Investment in joint ventures 8.0 25.8 - 33.8
Investment in associate - 0.8 - 0.8
Share of post-tax profit from
joint ventures and associate 4.2 15.9 - 20.1
Capital expenditure - property,
plant and equipment 0.7 0.5 - 1.2
Capital expenditure - intangible
assets - - 2.2 2.2
Right of use asset additions 36.8 7.4 - 44.2
Depreciation - property, plant
and equipment 0.8 0.3 - 1.1
Depreciation - right of use
assets 2.0 0.7 - 2.7
Amortisation - intangible
assets - - 5.0 5.0
Share-based payments - - 1.0 1.0
------------- -------------- ------------ ------
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ ------
Six months ended 31 March 2020
Investment in joint ventures 7.9 30.4 - 38.3
Investment in associate - 3.6 - 3.6
Share of post-tax profit from
joint ventures and associate 3.8 5.1 - 8.9
Capital expenditure - property,
plant and equipment 3.5 0.4 - 3.9
Capital expenditure - intangible
assets - - 1.0 1.0
Right of use asset additions 1.2 1.2 - 2.4
Depreciation - property, plant
and equipment 0.9 0.4 - 1.3
Depreciation - right of use
assets 2.0 0.9 - 2.9
Amortisation - intangible assets - - 6.1 6.1
Share-based payments - - 0.2 0.2
------------- -------------- ------------ ------
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ ------
Year ended 30 September 2020
Investment in joint ventures 12.1 28.8 - 40.9
Investment in associate - 1.3 - 1.3
Share of post-tax profit from
joint ventures and associate 8.0 9.0 - 17.0
Capital expenditure - property,
plant and equipment 4.2 0.6 - 4.8
Capital expenditure - intangible
assets - - 2.9 2.9
Right of use asset additions 3.1 1.3 - 4.4
Depreciation - property, plant
and equipment 1.8 0.7 - 2.5
Depreciation - right of use
assets 4.6 3.2 - 7.8
Amortisation - intangible assets - - 12.2 12.2
Impairment of goodwill - - 18.5 18.5
Share-based payments - - 1.0 1.0
------------- -------------- ------------ ------
5. REVENUE
An analysis of Group reported revenue by type is set out
below:
Six months Six months Year ended
ended 31 ended 30 September
March 2021 31 March 2020
GBPm 2020 GBPm
GBPm
Partnerships:
Private 220.6 123.5 251.7
Affordable 117.4 112.9 196.6
Private Rented Sector 49.5 77.0 116.5
Other 8.3 10.6 20.5
-------------- ------------- ----------------
395.8 324.0 585.3
-------------- ------------- ----------------
Housebuilding:
Private 203.0 120.5 205.1
Affordable 14.5 25.0 46.2
Private Rented Sector 4.3 1.8 7.2
Land 32.4 0.2 30.8
Other 11.0 9.7 17.4
-------------- ------------- ----------------
265.2 157.2 306.7
-------------- ------------- ----------------
Total revenue (reported) 661.0 481.2 892.0
============== ============= ================
Share of revenue from joint ventures
and associate:
Partnerships 24.8 19.8 44.1
Housebuilding 69.2 29.9 52.7
Total revenue (adjusted) 755.0 530.9 988.8
============== ============= ================
6. OPERATING PROFIT/(LOSS)
Non-underlying items
Certain items which do not relate to the Group's underlying
performance are presented separately in the consolidated statement
of comprehensive income 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 31 ended 31 30 September
March 2021 March 2020 2020
GBPm GBPm GBPm
Non-underlying items included within
cost of sales:
Remediation costs for multi-occupancy (25.0) - -
buildings
Non-underlying items included within
administrative expenses:
Amortisation of acquisition-related
intangible assets (3.9) (5.1) (10.2)
Costs associated with Housebuilding (3.3) - -
separation
Impairment of goodwill - - (18.5)
Restructuring costs - - (3.5)
Ground Rent Assistance Scheme - - (10.0)
Deferred consideration relating
to Westleigh - (0.2) (0.2)
Total non-underlying items (32.2) (5.3) (42.4)
============== ============== ================
6. OPERATING PROFIT/(LOSS) (continued)
Remediation costs for multi-occupancy buildings
As a result of progress made in the Group's review of expected
remediation costs for multi-occupancy buildings, a provision of
GBP25.0m has been recognised. Refer to Note 17 for further
detail.
Amortisation of acquisition-related intangible assets
Amortisation of acquisition-related intangible assets is
reported within non-underlying items as the Directors do not
believe this cost should be included when considering the
underlying trading performance of the Group.
Costs associated with Housebuilding separation
As announced on 3 December 2020, the Group appointed Rothschild
& Co to examine the separation of its Housebuilding division.
As part of this process, during the first half of the year a
reorganisation of the Group's legal structure commenced to align it
to the Group's operational structure. The costs incurred during the
period in relation to this reorganisation include legal, tax and
accounting advisory services and other expenses.
Impairment of goodwill
During September 2020, the Directors announced the Board's
decision to close the Millgate business with the remaining Millgate
sites being transferred to the Housebuilding West region. The
goodwill previously recognised on the acquisition of Millgate was
tested for impairment and, as a consequence of reduced cash flows
from the business in future years, an impairment charge of GBP18.5m
was recognised.
Restructuring costs
Restructuring costs of GBP3.5m were recognised in the year ended
30 September 2020 in relation to the closure of the Millgate
business, restructuring in the Partnerships division, and the
closure of the Group's London office.
Ground Rent Assistance Scheme
Following the Group's commitment to the Government's Leasehold
Pledge, in April 2020 the Group established the Countryside Ground
Rent Assistance Scheme and recognised a provision of GBP10.0m.
Refer to Note 17.
Taxation
A total tax credit of GBP5.8m (HY20: GBP1.0m, FY20: GBP4.7m) in
relation to the above non-recurring items is included within
taxation in the consolidated statement of comprehensive income.
7. NET FINANCE COSTS
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
GBPm GBPm GBPm
------------ ------------ ----------------
Bank loans and overdrafts (1.3) (1.9) (5.3)
Amortisation of debt finance costs (0.4) (0.3) (0.7)
Unwind of discount relating to:
Land purchases on deferred payment terms (3.8) (3.7) (7.0)
Lease liabilities (0.7) (0.6) (1.1)
Other loans (0.1) - (0.1)
------------ ------------ ----------------
Finance costs (6.3) (6.5) (14.2)
------------ ------------ ----------------
Interest receivable 0.1 0.1 0.2
Unwind of discount relating to:
Land sales on deferred settlement terms 0.2 0.2 0.5
------------ ------------ ----------------
Finance income 0.3 0.3 0.7
------------ ------------ ----------------
Net finance costs (6.0) (6.2) (13.5)
============ ============ ================
8. TAXATION
The effective tax rate applied for the period was 17.7% (HY20:
16.7%, FY20: (107.7)%). This reflects the anticipated full year
effective rate excluding the tax effect of non-underlying items
expected to be incurred in the second half of the financial year,
and is lower than the statutory rate of 19.0% mainly due to the
Group's joint ventures and associate being accounted for using the
equity method.
The adjusted effective tax rate for the period was 19.3% (HY20:
17.3%, FY20: 17.2%) with the difference between the reported and
adjusted rates reflecting non-underlying items and the treatment of
the Group's joint ventures and associate.
On 3 March 2021, the Chancellor announced that the standard rate
of UK Corporation Tax would increase from 19% to 25% from April
2023. However, as this change in rate has yet to be substantively
enacted, it is not reflected in this Financial Information and
therefore the Group's deferred tax assets as at the reporting date
have been calculated using the prevailing corporation tax rate of
19%. The impact had this rate change been enacted by the balance
sheet date is not expected to be material.
9. EARNINGS PER SHARE
Basic earnings per share ("basic EPS") is calculated by dividing
the profit from continuing operations attributable to ordinary
shareholders by the weighted average number of ordinary shares in
issue during the period, adjusted for the weighted average number
of shares held by the Employee Benefit Trust ("EBT"). For diluted
earnings per share ("diluted EPS"), the weighted average number of
ordinary shares also assumes the conversion of all potentially
dilutive share awards.
(a) Basic earnings per share
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
------------ ------------ ----------------
Profit from continuing operations
attributable to equity holders of
the parent (GBPm) 31.9 36.4 (3.7)
Basic weighted average number of shares
(millions) 523.4 447.9 462.1
Basic earnings per share (pence per
share) 6.1 8.1 (0.8)
Diluted weighted average number of
shares (millions) 528.3 450.9 464.5
Diluted earnings per share (pence
per share) 6.0 8.1 (0.8)
------------ ------------ ----------------
The basic weighted average number of shares of 523.4 million for
the six months ended 31 March 2021 (HY20: 447.9 million, FY20:
462.1 million) excludes the weighted average number of shares held
in the EBT during the period of 1.2 million (HY20: 2.1 million,
FY20: 1.2 million).
(b) Adjusted earnings per share
Adjusted basic and diluted EPS are APMs for the Group. Refer to
pages 33 to 38 for details of the Group's APMs.
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
------------ ------------ ----------------
Profit from continuing operations attributable
to equity holders of the parent (GBPm) 31.9 36.4 (3.7)
Add: Non-underlying items, net of tax
(GBPm) 26.4 4.3 37.7
------------ ------------ ----------------
Adjusted profit from continuing operations
attributable to equity holders of the
parent (GBPm) 58.3 40.7 34.0
Basic weighted average number of shares
(millions) 523.4 447.9 462.1
Adjusted basic earnings per share (pence
per share) 11.1 9.1 7.4
Diluted weighted average number of
shares (millions) 528.3 450.9 465.3
Adjusted diluted earnings per share
(pence per share) 11.0 9.0 7.3
------------ ------------ ----------------
Non-underlying items net of tax is composed of costs of
GBP32.2m, net of tax of GBP5.8m (HY20: GBP5.3m, net of tax of
GBP1.0m, FY20: GBP42.4m net of tax of GBP4.7m). Refer to Note
6.
10. DIVIDS
As a result of the impact that the Covid-19 pandemic had on the
Group's financial performance, no dividends were declared during
the year ended 30 September 2020.
The Board of Directors does not recommend the payment of an
interim dividend for the current financial year (HY20: Nil).
Dividends of GBP46.2m, or 10.3 pence per share, were recognised
as distributions and paid in the first half of the year ended 30
September 2020, reflecting the final dividend declared for the year
ended 30 September 2019.
11. INVESTMENT IN JOINT VENTURES
The table below reconciles the movement in the Group's aggregate
investment in joint ventures:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
GBPm GBPm GBPm
------------ ------------ --------------
Opening balance 40.9 62.2 62.2
Share of post-tax profit 20.1 8.8 16.9
Dividends received (23.6) (32.5) (33.5)
Repayment of members' interest (2.8) - (4.4)
Other movements (0.8) (0.2) (0.3)
------------ ------------ --------------
Closing balance 33.8 38.3 40.9
============ ============ ==============
The tables below present the financial performance of the
Group's joint ventures during the period:
For the six months ended 31 March Partnerships Housebuilding Total
2021 GBPm GBPm GBPm
------------- -------------- --------
Revenue 49.6 138.4 188.0
Expenses (40.8) (103.8) (144.6)
Operating profit 8.8 34.6 43.4
Finance costs (0.4) (0.2) (0.6)
Income tax expense - (2.6) (2.6)
------------- -------------- --------
Profit for the period 8.4 31.8 40.2
============= ============== ========
Group's share in % 50.0% 50.0% 50.0%
Group's share of revenue 24.8 69.2 94.0
Group's share of operating profit 4.4 17.3 21.7
============= ============== ========
11. INVESTMENT IN JOINT VENTURES (continued)
For the six months ended 31 March Partnerships Housebuilding Total
2020 GBPm GBPm GBPm
------------- -------------- -------
Revenue 39.6 59.7 99.3
Expenses (32.1) (49.3) (81.4)
Operating profit 7.5 10.4 17.9
Finance income - 0.1 0.1
Income tax expense - (0.4) (0.4)
------------- -------------- -------
Profit for the period 7.5 10.1 17.6
============= ============== =======
Group's share in % 50.0% 50.0% 50.0%
Group's share of revenue 19.8 29.9 49.7
Group's share of operating profit 3.8 5.2 9.0
============= ============== =======
For the year ended 30 September 2020 Partnerships Housebuilding Total
GBPm GBPm GBPm
------------- -------------- --------
Revenue 88.2 105.4 193.6
Expenses (71.7) (87.6) (159.3)
Operating profit 16.5 17.8 34.3
Finance income / (costs) (0.6) 0.2 (0.4)
Income tax credit / (expense) 0.1 (0.2) (0.1)
------------- -------------- --------
Profit for the year 16.0 17.8 33.8
============= ============== ========
Group's share in % 50.0% 50.0% 50.0%
Group's share of revenue 44.1 52.7 96.8
Group's share of operating profit 8.3 8.9 17.2
============= ============== ========
The aggregate amount due from joint ventures is GBP51.8m (HY20:
GBP87.1m, FY20: GBP69.5m). The amount due to joint ventures is
GBP0.5m (HY20: GBP0.4m, FY20: GBP0.4m). Transactions between the
Group and its joint ventures are disclosed in Note 19.
12. INVESTMENT IN ASSOCIATE
The Group holds 28.5% of the ordinary share capital with pro
rata voting rights in Countryside Properties (Bicester) Limited, a
company incorporated and domiciled in the UK, whose principal
activity is the sale of serviced parcels of land, and for segmental
purposes is disclosed within the Housebuilding division. It is
accounted for using the equity method.
The table below reconciles the movement in the Group's
investment in associate:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
GBPm GBPm GBPm
------------ ------------ --------------
Opening balance 1.3 3.5 3.5
Share of post-tax profit - 0.1 0.1
Dividends received (0.5) - (2.3)
Closing balance 0.8 3.6 1.3
============ ============ ==============
The table below presents the financial performance of the
Group's associate during the period:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
GBPm GBPm GBPm
------------ ------------ --------------
Revenue - - -
Expenses - - -
Operating profit - - -
Finance income - 0.3 0.5
Income tax expense - - (0.1)
------------ ------------ --------------
Profit for the period - 0.3 0.4
============ ============ ==============
Group's share in % 28.5% 28.5% 28.5%
Group's share of revenue - - -
Group's share of operating profit - - -
============ ============ ==============
As at 31 March 2021, no amounts were due to or from the
associate (HY20: GBPNil, FY20: GBPNil). Transactions between the
Group and its associate are disclosed in Note 19.
13. INVENTORIES
As at 31 As at 31 As at 30
March 2021 March 2020 September
GBPm GBPm 2020
GBPm
------------ ------------ -----------
Development land and work in progress 1,017.9 960.0 965.0
Completed properties unlet, unsold
or awaiting sale 66.2 81.4 94.1
1,084.1 1,041.4 1,059.1
============ ============ ===========
Total provisions against inventory at 31 March 2021 were GBP4.8m
(HY20: GBP3.4m, FY20: GBP4.8m).
During the period, an impairment charge of GBP3.2m was
recognised against inventories (HY20: GBP4.8m, FY20: GBP4.8m).
14. TRADE AND OTHER RECEIVABLES
As at 31 As at 31 As at 30
March 2021 March 2020 September
GBPm GBPm 2020
GBPm
------------ ------------ -----------
Amounts falling due within one year:
Trade receivables 52.8 41.0 44.5
Amounts recoverable on construction
contracts 45.7 65.4 40.4
Advances to joint ventures 51.8 87.1 69.5
Other taxation and social security 7.1 10.0 6.0
Other receivables 2.1 2.3 1.5
Prepayments and accrued income 37.3 28.4 37.3
------------ ------------ -----------
196.8 234.2 199.2
------------ ------------ -----------
Amounts falling due in more than
one year:
Trade receivables 12.6 - -
Amounts recoverable on construction
contracts 19.3 18.3 19.6
------------ ------------ -----------
31.9 18.3 19.6
------------ ------------ -----------
Total trade and other receivables 228.7 252.5 218.8
============ ============ ===========
15. CASH AND BORROWINGS
As at 31 As at 31 As at 30
March 2021 March 2020 September
GBPm GBPm 2020
GBPm
------------ ------------ -----------
Cash and cash equivalents 108.8 172.2 100.5
Bank loans - (297.6) -
Bank loan arrangement fees - 1.7 -
Other loans (2.9) (2.3) (2.3)
------------ ------------ -----------
Borrowings (2.9) (298.2) (2.3)
============ ============ ===========
Bank loans
The Group has a GBP300m revolving credit facility with Lloyds
Bank plc, Barclays Bank PLC, HSBC Bank plc and Santander UK plc,
expiring in June 2023. The agreement has a floating interest rate
based on LIBOR. As at 31 March 2021, the Group had no drawings
under the facility (HY20: GBP297.6m, FY20: GBPNil).
Subject to obtaining credit approval from the syndicate banks,
the Group 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.
The Group also has the option to issue promissory notes under
the facility, with any notes issued reducing the available funds
such that total borrowings under the facility do not exceed
GBP300m. As at 31 March 2021 the Group had no promissory notes in
issue (HY20: GBP2.4m, FY20: GBPNil).
Bank loan arrangement fees are amortised over the term of the
facility. As at 31 March 2021, unamortised loan arrangement fees
were GBP1.8m (HY20: GBP1.7m, FY20: GBP2.2m). Amortisation of
GBP0.4m (HY20: GBP0.3m, FY20: GBP0.7m) is included in finance costs
in the statement of comprehensive income (Note 7).
As the Group did not have any bank debt under this facility as
at 31 March 2021 and 30 September 2020, the unamortised loan
arrangement fees are presented as prepayments within "trade and
other receivables" in the consolidated statement of financial
position.
Covid Corporate Financing Facility ("CCFF")
On 28 April 2020, the Group received confirmation from the Bank
of England of its eligibility to participate in the CCFF. The Group
put in place a commercial paper programme which allowed up to
GBP300m of commercial paper to be issued to provide standby
liquidity if required. The Group did not issue any commercial paper
under the Facility and the availability of the CCFF ended on 22
March 2021.
15. CASH AND BORROWINGS (continued)
Other loans
During the year ended 30 September 2018, the Group received an
interest free loan of GBP2.5m for the purpose of funding
remediation works in relation to one of its joint operations. The
loan was initially recognised at fair value and subsequently
carried at amortised cost. The loan is repayable on 22 November
2022 and the carrying amount of GBP2.4m (HY20: GBP2.3m, FY20:
GBP2.3m) is presented within non-current liabilities in the
consolidated statement of financial position.
During the year ended 30 September 2020, a local authority made
available a forward funding loan arrangement of GBP2.5m that the
Group can draw upon if required under the development agreement for
the purposes of infrastructure development. At 31 March 2021,
GBP0.5m (HY20: GBPNil, FY20: GBPNil) had been drawn down by the
Group under this arrangement, and is presented within current
liabilities in the consolidated statement of financial
position.
Interbank Offered Rates ("IBOR") reform
On 5 March 2021, the Financial Conduct Authority announced that
LIBOR settings for certain currencies, including Sterling and Euro,
would cease from 31 December 2021. The Directors do not anticipate
that these changes and the adoption of alternative interest rate
benchmarks will have a material impact on the Group's finance costs
and are working with the Group's lenders to consider the impact of
transition to an alternative benchmark rate.
16. TRADE AND OTHER PAYABLES
As at 31 As at 31 As at 30
March 2021 March 2020 September
GBPm GBPm 2020
GBPm
------------ ------------ -----------
Amounts falling due within one year:
Trade payables 50.0 84.3 71.9
Deferred land payments 115.6 113.2 109.5
Overage payable 7.4 14.6 11.5
Accruals and deferred income 128.4 122.6 141.7
Other taxation and social security 3.3 6.7 4.9
Other payables 6.0 25.6 4.7
Advances from joint ventures 0.5 0.4 0.4
------------ ------------ -----------
311.2 367.4 344.6
------------ ------------ -----------
Amounts falling due in more than
one year:
Trade payables 22.9 17.6 21.4
Deferred land payments 100.7 104.9 83.3
Overage payable 17.5 16.3 19.8
141.1 138.8 124.5
------------ ------------ -----------
Total trade and other payables 452.3 506.2 469.1
============ ============ ===========
17. PROVISIONS
Remediation Six months Six months Year
costs for Ground ended ended ended
multi-occupancy Rent Assistance 31 March 31 March 30 September
buildings Scheme Other 2021 2020 2020
GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ----------------- ------ ----------- ----------- --------------
Opening balance - 10.0 1.4 11.4 2.4 2.4
Charged in the
period 25.0 - 2.2 27.2 - 10.7
Released in the
period - - - - (1.0) (1.0)
Utilised in the
period (0.4) - (0.1) (0.5) - (0.7)
Closing balance 24.6 10.0 3.5 38.1 1.4 11.4
================= ================= ====== =========== =========== ==============
Current 24.6 10.0 2.9 37.5 0.7 10.9
Non-current - - 0.6 0.6 0.7 0.5
Total provisions 24.6 10.0 3.5 38.1 1.4 11.4
================= ================= ====== =========== =========== ==============
Remediation costs for multi-occupancy buildings
In October 2019, the Directors appointed an independent third
party to review all multi-occupancy buildings delivered by the
Group during the previous 15 years. This review found that none of
those buildings were assessed to have a high fire risk.
In December 2019, the External Wall Fire Review (EWS1) process
was introduced by the Royal Institute of Chartered Surveyors
("RICS") and others to support mortgage valuation processes for
buildings over 18 metres tall, or where specific fire safety
concerns exist. In January 2020, the Ministry of Housing,
Communities & Local Government's ("MHCLG") mandated that a
formal fire safety assessment must be conducted by a suitably
qualified and competent professional for all multi-occupancy
buildings.
As disclosed in the 2020 Annual Report, the review of buildings
delivered by Countryside using the EWS1 assessment did not at that
time identify any buildings with issues that would have resulted in
a potential liability for remediation costs for Countryside. As a
result, at 30 September 2020, no provision was recognised and this
matter was disclosed as a contingent liability.
Since December 2020, as the extent of a number of EWS1 surveys
at various sites has progressed, the Directors have become aware of
buildings on 20 development schemes, constructed between 2008 and
2017, where the current building owner believes that there are
defects in the building which need to be remediated. Countryside
are currently engaging with the building owners and others to
conduct intrusive building surveys to assess the extent of remedial
works required to ensure that these buildings will be capable of
being issued an EWS1 certificate.
As a result of significant progress made since 31 March 2021 to
reliably estimate the potential liability to the Group, a provision
of GBP25.0m has been recognised in respect of these costs (HY20:
GBPNil, FY20: GBPNil). This has been treated as an adjusting event
after the reporting period.
The quantification of the cost of these remediation works is
inherently complex and depends on a number of factors, including
the size of the building, the cost of investigation and replacement
materials and associated labour and the potential cost of managing
the disruption to residents. As an illustration, if changes to
assumptions resulted in an increase to forecast cash outflows of
10%, profit before tax would have reduced by GBP2.5m.
In addition, whilst the Directors believe that Countryside may
be able to recover some of these costs via insurance or, in the
case of defective workmanship, from subcontractors, no recoveries
have been assumed in arriving at the amount provided.
As the timing of utilisation is uncertain, the provision has
been included within current liabilities.
The Countryside Ground Rent Assistance Scheme
The Countryside Ground Rent Assistance Scheme (the "Scheme") was
established in April 2020 following the Group's earlier commitment
to the Government's Leasehold Pledge and applies to leases where
the ground rent payable was not for the ultimate benefit of either
a local authority or a registered provider of social housing.
The Group is seeking agreement from all freehold owners to vary
the leaseholds of Countryside customers who still own homes with a
leasehold ground rent that doubles more frequently than every 20
years. Working with the joint venture partners where required, the
Group aims to achieve agreement from the freehold owners to vary
the leasehold ground rent to increase every 15 years in line with
RPI. In parallel, where any customer has received an offer from
their freehold owner to vary their lease terms in compliance with
the Pledge, Countryside will reimburse the price payable by the
customer plus any reasonable legal fees incurred. The Scheme is
expected to be in place until April 2022 and the associated cost
has been estimated at GBP10.0m.
As the timing of utilisation is uncertain, the provision has
been included within current liabilities.
Other provisions
The remaining provisions and movements during the year primarily
relate to legal provisions and amounts in respect of expected
dilapidations on office buildings that are leased by the Group.
18. NOTES TO THE CASH FLOW STATEMENT
The table below provides a reconciliation of profit/(loss)
before income tax to cash used in operations.
Six months Six months Year ended
ended ended 30 September
31 March 31 March 2020
2021 2020 GBPm
GBPm GBPm
----------- ----------- --------------
Profit/(loss) before income tax 38.8 43.7 (1.9)
Adjustments for:
- Amortisation - intangible assets 5.0 6.1 12.2
- Depreciation - property, plant and
equipment 1.1 1.3 2.5
- Depreciation - right of use assets 2.7 2.9 7.8
- Impairment of goodwill - - 18.5
- Share of post-tax profit from joint
ventures and associate (20.1) (8.9) (17.0)
- Share based payments (pre-tax) 1.0 0.2 1.0
- Finance costs 6.3 6.5 14.2
- Finance income (0.3) (0.3) (0.7)
- Other non-cash items 0.8 - -
Changes in working capital:
- Increase in inventories (25.0) (232.8) (250.5)
- (Increase)/decrease in trade and other
receivables (27.9) 30.5 48.2
- (Decrease)/increase in trade and other
payables (22.2) 52.2 11.8
- Increase/(decrease) in provisions 26.7 (1.0) 9.0
----------- ----------- --------------
Cash used in operations (13.1) (99.6) (144.9)
=========== =========== ==============
19. RELATED PARTY TRANSACTIONS
Transactions with joint ventures and associate
Joint Ventures Associate
---------------------------------------- ----------------------------------------
Six months Six months Year ended Six months Six months Year ended
ended ended 30 September ended ended 30 September
31 March 31 March 2020 31 March 31 March 2020
2021 2020 GBPm 2021 2020 GBPm
GBPm GBPm GBPm GBPm
----------- ----------- -------------- ----------- ----------- --------------
Sales during the period 7.9 11.7 14.8 - 0.1 0.2
----------- ----------- -------------- ----------- ----------- --------------
Net advances:
Amount due at start
of period 69.1 49.3 49.3 - - -
Net (repayments)/advances
during the period (17.8) 37.4 19.8 - - -
Amount due at end
of period 51.3 86.7 69.1 - - -
=========== =========== ============== =========== =========== ==============
Sales of goods and services to related parties related
principally to the provision of services to the joint ventures and
associate at contractually agreed prices. 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
As at the reporting date, two of the Group's employees have a
close family member on the Executive Committee. These individuals
were recruited through the normal interview process and are
employed at salaries commensurate with their experience and roles.
The combined annual salary and benefits of these two individuals is
less than GBP60,000 (HY20: three individuals, less than GBP160,000;
FY20: three individuals, less than GBP190,000).
20. 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").
During the period, 2.3 million (HY20: 1.9 million, FY20, 1.9
million) options were granted over the Company's shares relating to
the LTIP scheme. No options were granted under the DBP (HY20: 0.4
million, FY20: 0.4 million) or SAYE schemes during the period
(HY20: Nil, FY20: 2.2 million).
The Group recognised GBP 1.0m (HY20: GBP0.2m, FY20: GBP1.0m) of
employee costs related to share-based payment transactions during
the period, excluding the cost of related national insurance
contributions.
A deferred tax asset of GBP1.5m (HY20: GBP1.6m, FY20: GBP0.9m)
is held in relation to share-based payments. Transactions during
the period resulted in a deferred tax credit to the statement of
comprehensive income of GBP0.1m (HY20: charge of GBP0.2m, FY20:
charge of GBP0.8m) and a credit direct to equity of GBP0.5m (HY20:
credit of GBP0.1m, FY20: charge of GBP0.6m).
21. LITIGATION, CLAIMS AND CONTINGENT LIABILITIES
The Group is subject to various claims, audits and
investigations that have arisen in the ordinary course of business.
These matters include but are not limited to employment and
commercial matters. The outcome of all these matters is subject to
future resolution, including the uncertainties of litigation. Based
on information currently known to the Group and after consultation
with external lawyers, the Directors believe that the ultimate
resolution of these matters, individually and in aggregate, will
not have a material adverse impact on the Group's financial
condition. Where necessary, applicable costs are included within
the cost to complete estimates for individual developments or are
otherwise accrued in the statement of financial position.
During the prior financial year, the Competition & Markets
Authority ("CMA") commenced a sector-wide inquiry into the sale of
leasehold properties. On 28 February 2020, the CMA announced that
it had found evidence of "potential mis-selling and unfair contract
terms in the leasehold housing sector" and on 4 September 2020, the
CMA announced it was launching enforcement action against four
housing developers that it believes may have broken consumer
protection law in relation to leasehold homes, one of which was
Countryside. On 19 March 2021 the CMA notified Countryside that it
would require the Group to remove certain terms from its existing
leasehold contracts. The Group is in the process of responding to
the CMA's concerns and will continue to engage constructively with
the CMA to resolve this complex issue. Alongside these discussions,
its resolution will require the engagement of a number of other
parties, including certain freehold owners, for a satisfactory
solution to be found. Given the stage of the matter and the
uncertainty regarding outcomes, the Directors are unable to make a
reliable estimate of any potential liability and accordingly have
not recorded a provision in relation to this matter as at 31 March
2021.
22. EVENTS AFTER THE REPORTING PERIOD
The Group made significant progress after 31 March 2021 to
reliably estimate the expected liability for remediation costs on
multi-occupancy buildings. The progress made after the reporting
period resulted in the Directors approving the recognition of a
provision of GBP25.0m in April 2021 in respect of these costs. This
has been treated as an adjusting event after the reporting period.
Refer to Note 17 for further detail.
COUNTRYSIDE PROPERTIES PLC
ALTERNATIVE PERFORMANCE MEASURES
For the six months ended 31 March 2021
ALTERNATIVE PERFORMANCE MEASURES (unaudited)
In the reporting of financial information, the Directors have
adopted various Alternative Performance Measures ("APMs"). These
measures are not defined by IFRS and therefore may not be directly
comparable with other companies' APMs, including those in the
Group's industry. APMs should be considered in addition to, and are
not intended to be a substitute for, or superior to, IFRS
measurements.
The Directors believe that the inclusion of the Group's share of
joint ventures and associate and the removal of non-underlying
items from financial information presents a clear and consistent
presentation of the underlying performance of the ongoing business
for shareholders.
(a) Financial performance
Adjusted revenue
Adjusted revenue includes the Group's share of revenue from
joint ventures and associate. Refer to Note 4a for a reconciliation
to reported revenue.
Adjusted gross margin
Adjusted gross margin is calculated as adjusted gross profit
divided by adjusted revenue. The table below reconciles adjusted
gross profit to reported gross profit and presents the calculation
of adjusted gross margin.
Adjusted gross profit includes the Group's share of gross profit
from joint ventures and associate and excludes non-underlying
items.
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Gross profit 76.8 79.6 108.1
Add: non-underlying items 6 25.0 - -
Add: share of gross profit from
joint ventures and associate 22.3 9.4 18.2
--------------- --------------- -----------------
Adjusted gross profit 124.1 89.0 126.3
Adjusted revenue 4a 755.0 530.9 988.8
=============== =============== =================
Adjusted gross margin 16.4% 16.8% 12.8%
=============== =============== =================
Adjusted operating profit
Adjusted operating profit includes the Group's share of
operating profit from joint ventures and associate and excludes
non-underlying items. Refer to Note 4 for a reconciliation to
reported operating profit.
Adjusted operating margin
Adjusted operating margin is calculated as adjusted operating
profit divided by adjusted revenue. The table below presents the
calculation of adjusted operating margin.
The table below presents the calculation of adjusted operating
margin for the Group:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Adjusted operating profit 4a 78.6 55.3 54.2
Adjusted revenue 4a 755.0 530.9 988.8
Adjusted operating profit margin 10.4% 10.4% 5.5%
=============== =============== =================
ALTERNATIVE PERFORMANCE MEASURES (continued)
The table below presents the calculation of adjusted operating
margin for the Partnerships segment:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Adjusted operating profit 4a 36.6 36.3 32.8
Adjusted revenue 4a 420.6 343.8 629.4
Adjusted operating profit margin 8.7% 10.6% 5.2%
=============== =============== =================
The table below presents the calculation of adjusted operating
margin for the Housebuilding segment:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Adjusted operating profit 4a 44.7 20.6 25.0
Adjusted revenue 4a 334.4 187.1 359.4
Adjusted operating profit margin 13.4% 11.0% 7.0%
=============== =============== =================
Adjusted basic and diluted earnings per share
Adjusted basic and diluted earnings per share exclude the impact
of non-underlying items on profit from continuing operations
attributable to equity holders of the parent . Refer to Note 9 for
a reconciliation to reported basic and diluted earnings per
share.
Return on capital employed ("ROCE")
ROCE is calculated as adjusted operating profit divided by
average tangible net operating asset value ("TNOAV") on a 12-month
rolling basis. Group ROCE for the six months ended 31 March 2021,
and the year ended 30 September 2020, was materially reduced as a
result of operating losses in the second half of the prior year
arising from the Covid-19 pandemic.
The table below presents the calculation of ROCE for the
Group:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Closing TNOAV 4b 881.3 860.5 853.5
Opening TNOAV (12 months prior
to reporting date) 860.5 690.1 664.4
--------------- --------------- -----------------
Average TNOAV (12-month rolling) 870.9 775.3 759.0
Adjusted operating profit (12-month
rolling) 77.5 200.3 54.2
Group ROCE (%) 8.9% 25.8% 7.1%
=============== =============== =================
The table below presents the calculation of ROCE for the
Partnerships segment:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Closing TNOAV 4b 410.1 298.7 327.5
Opening TNOAV (12 months prior
to reporting date) 298.7 203.6 176.8
--------------- --------------- -----------------
Average TNOAV (12-month rolling) 354.4 251.2 252.2
Adjusted operating profit (12-month
rolling) 33.1 118.4 32.8
Partnerships ROCE (%) 9.3% 47.1% 13.0%
=============== =============== =================
ALTERNATIVE PERFORMANCE MEASURES (continued)
The table below presents the calculation of ROCE for the
Housebuilding segment:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Closing TNOAV 4b 471.2 561.8 526.0
Opening TNOAV (12 months prior
to reporting date) 561.8 486.5 487.6
--------------- --------------- -----------------
Average TNOAV (12-month rolling) 516.5 524.2 506.8
Adjusted operating profit (12-month
rolling) 49.1 87.3 25.0
Housebuilding ROCE (%) 9.5% 16.6% 4.9%
=============== =============== =================
12-month rolling adjusted operating profit used in the
calculation of ROCE above is calculated as follows for the six
months ended 31 March 2021:
Partnerships Housebuilding Group(1)
GBPm GBPm GBPm
Note
---------------- ----------------- ------------
Adjusted operating profit for
the six months ended 31/03/21 4a 36.6 44.7 78.6
Add: Adjusted operating profit
for the prior financial year 4a 32.8 25.0 54.2
Less: Adjusted operating profit
for the six months ended 31/03/20 4a (36.3) (20.6) (55.3)
Adjusted operating profit (12-month
rolling) 33.1 49.1 77.5
================ ================= ============
(1) Group adjusted operating profit includes other Group items
that are not allocated to the two segments. Refer to Note 4.
12-month rolling adjusted operating profit used in the
calculation of ROCE above is calculated as follows for the six
months ended 31 March 2020:
Partnerships Housebuilding Group(1)
GBPm GBPm GBPm
Note
---------------- ----------------- ------------
Adjusted operating profit for
the six months ended 31/03/20 4a 36.3 20.6 55.3
Add: Adjusted operating profit
for the prior financial year 127.8 114.8 234.4
Less: Adjusted operating profit
for the six months ended 31/03/19 (45.7) (48.1) (89.4)
Adjusted operating profit (12-month
rolling) 118.4 87.3 200.3
================ ================= ============
(1) Group adjusted operating profit includes other Group items
that are not allocated to the two segments. Refer to Note 4.
Asset Turn
Asset turn is calculated as adjusted revenue divided by average
TNOAV on a 12-month rolling basis.
The table below presents the calculation of asset turn for the
Group:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
GBPm GBPm GBPm
--------------- --------------- -----------------
Adjusted revenue (12-month rolling) 1,212.9 1,390.0 988.8
Average TNOAV (12-month rolling) 870.9 775.3 759.0
=============== =============== =================
Group asset turn 1.4 1.8 1.3
=============== =============== =================
ALTERNATIVE PERFORMANCE MEASURES (continued)
The table below presents the calculation of asset turn for the
Partnerships segment:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
GBPm GBPm GBPm
--------------- --------------- -----------------
Adjusted revenue (12-month rolling) 706.2 838.5 629.4
Average TNOAV (12-month rolling) 354.4 251.2 252.2
=============== =============== =================
Partnerships asset turn 2.0 3.3 2.5
=============== =============== =================
The table below presents the calculation of asset turn for the
Housebuilding segment:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
GBPm GBPm GBPm
--------------- --------------- -----------------
Adjusted revenue (12-month rolling) 506.7 551.5 359.4
Average TNOAV (12-month rolling) 516.5 524.2 506.8
=============== =============== =================
Housebuilding asset turn 1.0 1.1 0.7
=============== =============== =================
12-month rolling adjusted revenue used in the calculation of
asset turn above is calculated as follows for the six months ended
31 March 2021:
Partnerships Housebuilding Group
GBPm GBPm GBPm
Note
---------------- ----------------- -----------
Adjusted revenue for the six
months ended 31/03/21 4a 420.6 334.4 755.0
Add: Adjusted revenue for the
prior financial year 4a 629.4 359.4 988.8
Less: Adjusted revenue for the
six months ended 31/03/20 4a (343.8) (187.1) (530.9)
Adjusted revenue (12-month rolling) 706.2 506.7 1,212.9
================ ================= ===========
12-month rolling adjusted revenue used in the calculation of
asset turn above is calculated as follows for the six months ended
31 March 2020:
Partnerships Housebuilding Group
GBPm GBPm GBPm
Note
---------------- ----------------- -----------
Adjusted revenue for the six
months ended 31/03/20 4a 343.8 187.1 530.9
Add: Adjusted revenue for the
prior financial year 837.1 585.7 1,422.8
Less: Adjusted revenue for the
six months ended 31/03/19 (342.4) (221.3) (563.7)
Adjusted revenue (12-month rolling) 838.5 551.5 1,390.0
================ ================= ===========
ALTERNATIVE PERFORMANCE MEASURES (continued)
(b) Financial position
Tangible net asset value ("TNAV")
TNAV is calculated as net assets excluding intangible assets net
of deferred tax. The table below reconciles TNAV to reported net
assets.
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Net assets 1,119.4 889.4 1,086.0
Less: intangible assets (140.3) (165.8) (143.1)
Add: deferred tax on intangible
assets 8.1 9.2 8.8
=============== =============== =================
TNAV 4b 987.2 732.8 951.7
=============== =============== =================
Net cash/(debt)
Net cash/(debt) includes borrowings and net cash and cash
equivalents and excludes lease liabilities and debt arrangement
fees included in borrowings.
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Borrowings 15 (2.9) (298.2) (2.3)
Less: bank loan arrangement
fees 15 - (1.7) -
Add: net cash and cash equivalents 15 108.8 172.2 100.5
=============== =============== =================
Net cash/(debt) 105.9 (127.7) 98.2
=============== =============== =================
Tangible net operating asset value ("TNOAV")
TNOAV is calculated as TNAV excluding net cash/(debt). The table
below presents the calculation of TNOAV.
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
Note GBPm GBPm GBPm
--------------- --------------- -----------------
TNAV 4b 987.2 732.8 951.7
Add: net debt / Less: (net cash) (105.9) 127.7 (98.2)
=============== =============== =================
TNOAV 4b 881.3 860.5 853.5
=============== =============== =================
Gearing
Gearing is calculated as net debt/(cash) divided by net assets.
The table below presents the calculation of gearing.
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
GBPm GBPm GBPm
--------------- --------------- -----------------
Net debt/(cash) (105.9) 127.7 (98.2)
Net assets 1,119.4 889.4 1,086.0
=============== =============== =================
Gearing (9.5)% 14.4% (9.0)%
=============== =============== =================
ALTERNATIVE PERFORMANCE MEASURES (continued)
Adjusted gearing
Adjusted gearing is calculated as net debt/(cash), including
deferred land payments (excluding overage), divided by net assets.
The table below presents the calculation of adjusted gearing.
Six months Six months Year ended
ended 31 ended 31 30 September
March 2021 March 2020 2020
GBPm GBPm GBPm
--------------- --------------- -----------------
Net debt/(cash) (105.9) 127.7 (98.2)
Add: deferred land payments
(excluding overage) 16 216.3 218.1 192.8
--------------- --------------- -----------------
Adjusted net debt 110.4 345.8 94.6
Net assets 1,119.4 889.4 1,086.0
=============== =============== =================
Adjusted gearing 9.9% 38.9% 8.7%
=============== =============== =================
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IR SFMFMEEFSEEI
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