Introduction

The development sector and the Government face a number of key challenges in the delivery of sustainable communities, and each of them have been exacerbated by the banking crisis and the resultant recession. Deliverability, affordability and sustainability are fundamentally important, but meeting the nation's housing needs is proving even more difficult to achieve given current economic conditions. However, at Countryside Properties our vision of creating outstanding new homes, workplaces and communities for people to enjoy, now and in the future, remains undiminished.

Although homebuyer demand is conditioned by economic factors and consumer confidence, the underlying need and demand for new homes remains strong. Changes in demographics, increasing population and a restrictive planning system will collectively ensure that unsatisfied pent-up demand will underpin the housing market for many years to come. Indeed, the collapse in new home production in recent years will only intensify this situation, particularly in London and the South East.

In 2009 our decision making processes have been focussed primarily on economic viability, but we continue to fully integrate the environmental and social aspects of sustainability into our practices and projects. Through our proven skills, people, experienced management and financial backing we believe we are responding soundly to the challenges and opportunities that are facing us.

Climate change

The latest scientific evidence has powerfully reinforced the fact that climate change is the greatest threat to our natural environment, social well-being and economic future. It has unprecedented implications for the UK’s historic environment, landscape character and bio diversity. Rising average global temperatures, increasing risks of energy security and water scarcity have potentially significant effects for the homes and workplaces that we build, live and work in. Development can be part of the solution to the climate challenge by shaping decisions which reduce emissions and positively build community resilience. It is of pivotal importance for energy demand reduction, low carbon and renewable energy infrastructure, and for addressing issues such as flood risk and extreme temperatures through future proofed places.

Whilst the Copenhagen change conference did not achieve a legally binding agreement, what emerged was a statement of principle that will, at the very least, cut greenhouse gases, set up an emissions verification system, and gradually reduce deforestation. Given the complexity of the issue, this represents a step forward. It is hoped that the next conference in Mexico later this year will reach a legally binding treaty.

The Government’s target to reduce the UK’s emissions by 80% by 2050 is one of the toughest in the world and translates into targets for all new homes to be zero carbon from 2016 and all non-domestic development to be zero-carbon from 2019. Coupled with ambitious housing supply targets, the daunting challenge for developers to increase the provision of affordable and sustainable new homes is slowly becoming clearer.

Policy and regulation

Property development and in particular housing continues to be a key focus for the Government in terms of legislation. Our operating environment is complex and multi-layered and includes global to local policy, codes and targets; building regulations and building assessment standards. The policy and regulation framework and indeed the accumulative regulatory burden continue to change, evolve and increase. This in turn makes it more challenging to meet the requirements in a measured and cost-effective way.

Government and its advisers need to develop cohesive regulation. This must include a clear, workable definition for zero carbon which gives developers sufficient time to prepare, through rigorous research and development, for the undoubted challenges ahead. Despite this demanding regulatory environment we are continuing to make good progress in meeting the changes that are now demanded of our industry in response to market conditions, and for example climate change and sustainability interventions.

In addition, localist policies are becoming prevalent in the thinking of leading political parties. It is laudable in a number of ways as community led initiatives can make a positive impact on people's lives. However, localist principles that do not respond to local housing needs and national housing policy could well mean reduced levels of development activity.

A leader in design and place making

Countryside Properties has been a leader in design, place making and sustainable development for many years. We seek to create added value through them and we have learnt much from our extensive experience, particularly at a number of landmark projects. It is therefore very pleasing that we hold four CABE Building for Life Gold Standards which is more than any other developer.

Future prospects

Having successfully implemented a new financing structure the Group is in an improved position to take advantage of the substantial land holdings which it has under its control. We are well positioned to meet the short and medium-term challenges ahead, particularly as we are highly skilled in engaging with communities. Our longer-term prospects are considerable, especially given the opportunity that the growing shortfall in housing supply represents. We have an excellent track record in the delivery of sustainable communities and estate regeneration which puts us in a good position to respond to the ever evolving sustainability agenda.

The Group has a pioneering vision and strong key values centred on it being a family company. We will continue the late Alan Cherry’s vision and build upon his legacy.

Our commitment to sustainable development is evidenced by the fact that this is the ninth year that we have reported on our sustainability performance, which is the longer than anyone in our peer group. This Environmental, Social and Ethical Report describes our positive progress against each of the actions and targets that we have set. It also gives details of our relevant policies and highlights our commitment to the creation of sustainable communities with a broad range of case studies.

Andrew Carr-Locke, Executive Chairman

Richard Cherry, Deputy Chairman

Graham Cherry, Chief Executive

Wendy Colgrave, Finance Director

23^rd April 2010

This Report covers the reporting period 1^st October 2008 to 30^th September 2009.

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From Left to right: Andrew Carr-Locke, Richard Cherry, Graham Cherry and Wendy Colgrave

Springhead Park, Ebbsfleet Valley, Kent

Urban Hive, Hackney, London

Accordia, Cambridge