Countryside revenue and earnings rise as chief executive steps down

(Sharecast News) - Countryside Properties reported 5,733 completions in its 2019 financial year on Thursday, up 33% from the 4,295 completions it achieved in 2018.
The FTSE 250 housebuilder said its adjusted revenue was up 16% year-on-year for the 12 months ended 30 September, at £1.42bn, while its adjusted operating profit rose 11% to £234.4m.

Its adjusted operating margin was down 70 basis points at 16.5%, while adjusted basic earnings per share were 13% higher at 40.8p.

The company reported a return on capital employed of 37.8%, up 40 basis points on 2018, while the board declared a dividend per share of 16.3p, up 51% on the distribution paid last year.

On a reported basis, revenue was ahead 21% at £1.24bn, operating profit was 14% higher at £170.4m, and basic earnings per share were also 14% firmer at 37.7p.

Sector-leading growth with 33% increase in completions and 11% growth in adjusted operating profit

Looking at its group highlights, Countryside reported a net private reservation rate of 0.84, up from 0.80, with an average of 56 open sales outlets, compared to 53 in 2018, with year-end active sites up 19% to 137.

The company's forward order book was up 30% to £1.17bn, of which £241m was private for sale, rising from £215m year-on-year.

Its modular build factory delivered 376 homes in its first six months, and was on track for 1,400 homes in 2020.

Countryside noted it was trending at a five-star Home Builders Federation status, with 92.5% customer satisfaction.

Looking at its partnerships, Countryside reported 4,425 home completions - up 47% including a full year of trading in former Westleigh regions.

Its adjusted operating profit in partnerships was up 16% at £127.8m, and its adjusted operating margin was 15.3%, which was down 210 basis points, as expected.

Looking at its land bank plus preferred bidder total, Countryside reported 34,842 plots, up 17%.

In housebuilding, completions stood at 1,308 homes up 3%, while its adjusted operating profit rose 5% to £114.8m, and its adjusted operating margin was ahead of expectations, up 120 basis points at 19.6%.

Land bank: 24,303 plots (2018: 19,778) of which 81% has been strategically sourced

Countryside said it had started the new financial year well, with a record order book and robust current trading in both divisions.

Net reservation rates for the first seven weeks of the year were said to be ahead of the same period last year.

With new site openings in the first half, the company said it expected delivery to be weighted to the second half.

Countryside said it had a "robust" balance sheet and continued visibility of future earnings from its partnerships business, and strategic land bank in housebuilding.

Potential economic and political uncertainty aside, the board said it remained confident of delivering further earnings growth in 2020.

"We have continued our excellent growth trajectory during the past year and have exceeded our expectations in operating margins, return on capital employed and cash generation," said group chief executive officer Ian Sutcliffe.

"Our differentiated partnerships division continues to go from strength to strength, while our housebuilding division is benefitting from operational efficiency and continued capital discipline to deliver improved returns.

"With strong demand from first-time buyers and ongoing political support, the board looks forward to delivering continued growth from both of our operating divisions."

In a separate announcement on Thursday, Countryside Properties announced that Ian Sutcliffe was retiring from the group on 31 March.

It said he would step down from the board and be succeeded by Iain McPherson, currently head of the group's Partnerships South business, on 1 January.

The board said McPherson had "extensive" industry experience gained from various roles over the last 23 years, in both housing associations and major housebuilders.

He joined Countryside in 2014 as managing director of the Housebuilding South region, which he successfully created and grew to its current mature position.

As chief executive of Partnerships South, he developed key large scale sites in London and the South East, and was a key member of the firm's executive committee.

"On behalf of the board, I would like to thank Ian for the outstanding job he has done in leading Countryside," said non-executive director David Howell.

"He has built a fantastic team and successfully guided the company through its IPO in February 2016."

Howell said Sutcliffe had consistently delivered strong, profitable growth and returns, leaving the group well positioned for the future.

"We are grateful for Ian's leadership of the Group and wish him all the best in the years ahead.

"We are delighted to welcome Iain McPherson to the board as group chief executive.

"He brings deep industry knowledge and operational experience to lead the business into the future."

At 0831 GMT, shares in Countryside Properties were down 1.92% at 368.4p.