(Alliance News) - Countryside Properties PLC on Thursday reported a severe swing to annual loss, as a result of higher costs and a double-digit decline in revenue and home completions, while it set in motion plans to sell its Housebuilding arm.
Shares in Brentwood, Essex-based Countryside were up 1.0% at 445.20 pence on Thursday in London.
Also on Thursday, the FTSE 250 homebuilder announced the departure of Non-Executive Chair David Howell with effect in 2021. Howell has been part of Countryside Properties for six years in 2014, and in his role as chair for five years since 2015.
Countryside's Nominations Committee will start the process to find a new chair to succeed Howell.
Countryside Properties also publicly responded to shareholder Browning West LP, which on Wednesday proposed its own chief investment officer, Usman Nabi, be added to the Countryside board and a search be initiated to replace Howell as chair.
The investor also proposed any new chair should be tasked with reassessing the current operating plan to see if there is an opportunity to improve return on capital employed and margins in 2021 and 2022. Browning West also wants Countryside to sell its Housebuilding operation to create a stand-alone Partnerships business.
In response, Countryside wrote a letter to Browning West stating that it would not pick its candidate for the role, and expressed disappointment over the shareholder's "public attack" on the company.
However, the company said it already is putting into motion many of the measures raised by Browning West, including the process to sell its Housebuilding business and concentrate on its Partnerships division.
To this end, Countryside said it has appointed Rothschild & Co to advise the board on the process to separate the Housebuilding unit from the group.
"Our board, which has significant experience in complex M&A transactions and capital allocation decisions, is already working very closely with our advisors to ensure the group is ready for any separation by conducting an internal reorganisation of its legal structure to align with its operational structure," the group asserted.
For the year to the end of September, Countryside posted a pretax loss of GBP1.9 million, compared to a profit of GBP203.6 million the year before.
This was due to a 36% rise in administrative expenses to GBP113.5 million from GBP83.2 million, as well as a 28% fall in revenue year-on-year to GBP892.0 million from GBP1.24 billion.
This was as completions fell by 29% to 4,053 from 5,733 in the prior year, due to disruption caused by the Covid-19 pandemic. In addition, the private average selling price dipped to GBP364,000 from GBP367,000.
The average number of sales outlets increased by 13% year-on-year to 63 from 56, however the net reservation rate per outlet per week was 0.78, down from 0.84.
Countryside's total forward order book as at September 30 was GBP1.43 billion, up 23% from GBP1.17 billion the year before.
Countryside declared no dividend for the year as a whole, as the group looks to preserve cash to weather the uncertain economic environment.
Looking ahead, Countryside said for its 2021 financial year it is 70% forward sold; however its net reservation rate for the first nine weeks is lower compared to the same period the year before.
However, the group is on track to achieve the upper end of consensus operating profit expectations, which is between GBP138.7 million and GBP157.8 million.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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