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18 May 1999
(all current half year figures compare with the six months ended 31 March 1998)
| * |
Record Turnover |
up 16% to £106.4m (£91.7m) |
| * |
Pre-tax profits |
up 21% to £7.7m (£6.3m) |
| * |
Earnings per share on higher tax rate of 30% |
up 11% to 7.0p (6.3p) |
| * |
Return on shareholders’ funds |
21.2% (17.7%) |
| * |
Unit sales |
380 new homes (322) |
| * |
Average Selling Price |
£148,000 (£137,000) |
| * |
Prime land bank |
4,750 plots (with planning permission) |
|
|
8,700 plots (subject to planning permission) |
| * |
Social housing completions |
432 (343) |
| * |
Social housing order book worth £163m |
|
Regarding the Results, Alan Cherry, Chairman, said:
"The Group has performed well during the first half of the current financial year
despite the slowdown in the housing and property markets experienced in the last six
months of 1998. We have experienced a significant uplift in both enquiries and
reservations since early January following interest rate reductions and improving
homebuyer confidence. Forward sales of new homes are currently twice the level held at
this time last year, reflecting both improved market conditions and the response to our
ever improving product range. We have taken advantage of exceptional land buying
opportunities, and increased production, in the light of improving market
conditions."
Regarding Prospects, Mr. Cherry said:
"Having regard to our strong forward sales position, the continuing high level of
enquiries and reservations, a rewarding design and build contracting programme and the
potential from our commercial property projects, the Directors expect the Group to achieve
further good progress this year."
| Further information: |
|
|
| Alan Cherry, Chairman |
Countryside Properties PLC |
|
| Graham Cherry, Chief Executive |
Countryside Properties PLC |
01277 260 000 |
| Mike Pearce, Finance Director |
Countryside Properties PLC |
|
| Peter Binns/John Wade |
Issued by Binns & Co |
0171 786 9600 |
Chairman’s Statement
RESULTS
The Group has performed well during the first half of the current financial year
despite the slowdown in the housing and property markets experienced in the last six
months of 1998.
The Group achieved a record turnover of £106.4m, up 16% (1998 - £91.7m) and Group
operating profit increased by 24% to £10.3m. Pre-tax profit was up 21% to £7.7m.
Earnings rose to 7.0p per share (1998 - 6.3p per share) despite an increase in the
effective tax rate from 24% to 30%. Return on capital employed on an annualised basis was
17.8% (1998 - 15%).
Borrowings rose during the period to £53.3m, representing gearing of 67%. This enabled
the Group to take advantage of exceptional land buying opportunities and to increase
production in the light of improving market conditions. Return on shareholders’ funds
on an annualised basis increased to 21.2% (1998 - 17.7%).
DIVIDEND
In view of these results and the Board’s confidence in the trading outlook, the
interim dividend has been increased by 20% to 1.5p per share. It will be paid on 1st
September 1999 to shareholders on the register on 30th July 1999.
RESIDENTIAL
Turnover from our residential operations encompassing speculative house building and
design and build contracting, was £98.1m (1998 - £77m). Pre-tax profit increased by 25%
to £6.6m (1998 - £5.3m).
Housebuilding
Pre-tax profit from speculative housebuilding operations was up 30% to £5.5m (1998 -
£4.2m) on turnover of £67.7m (1998 - £51.5m). During the period the Group completed the
sale of 380 new homes (1998 - 322) at an average selling price of £148,000 (1998 -
£137,000). The increase in average selling price was due partly to a change in mix and
also to a range of new house designs introduced during the period. In addition, 50 new
homes (1998 - 34) were sold during the period on behalf of our joint ventures.
We have experienced a significant uplift in both enquiries and reservations since early
January following interest rate reductions and improving home-buyer confidence. Forward
sales of new homes are currently twice the level held at this time last year, reflecting
both improved market conditions and the response to our ever improving product range.
During the past few months the Group has further increased its land holdings with the
acquisition of a number of prime sites. At the half year end, the Group directly, and
through joint ventures, owned or controlled high quality land with the benefit of planning
permission for some 4,750 new homes (1998 - 4,500). In addition, we had arrangements by
way of options and conditional contracts to buy land where there is a realistic prospect
of obtaining planning permission, for some 8,700 new homes (1998 - 5,100) of which about
900 are already included in draft local plan allocations.
The Directors believe that development land in locations where there is strong demand
for new housing is becoming increasingly scarce and that exceptional opportunities should
be taken up whenever possible.
Our land holdings and interests are considered to be a very potent asset from which
considerable benefit will arise in the future.
Design and Build Contracting
During the period 432 homes (1998 - 343) were completed for housing associations and
others under design and build contracts. Turnover from these activities totalled £30.4m
(1998 - £25.4m). Although operating margins fell slightly from the exceptional level
achieved in the comparative period, profit before tax was maintained at £1.1m. The
current order book totals £76m of committed contracts with a further £87m of work agreed
subject to contract. This represents over two years future work at anticipated production
levels.
COMMERCIAL
Turnover from commercial property development for the half year was £8.3m (1998 -
£14.7m) and pre-tax profit was £1.1m (1998 - £1m).
We are cautiously optimistic about the prospects for our commercial property
development programme. Most of our projects are the subject of a pre-funding or joint
venture arrangement enabling us not only to retain a limited risk profile, but also to
improve our return on capital. We have good occupier interest in our current schemes in
Cobham and Reading and, with the new schemes recently secured in Croydon, Chertsey,
Alperton, Crayford and Chelmsford, we are anticipating an increasing contribution from
these activities.
PROSPECTS
Having regard to our strong forward sales position, the continuing high level of
enquiries and reservations, a rewarding design and build contracting programme and the
potential from our commercial property projects, the Directors expect the Group to achieve
further good progress this year.
Alan H Cherry MBE Chairman
17th May 1999
Group Profit and Loss Account
half year to 31st March 1999
|
Unaudited
Half year
ended 31.3.99
£000
--------------- |
Unaudited
Half year
ended 31.3.98
£000
--------------- |
Audited
Year ended
30.9.98
£000
--------------- |
| Turnover: group and share of joint ventures |
110,369 |
94,483 |
209,501 |
|
less share of joint ventures’ turnover |
(3,976)
--------------- |
(2,804)
--------------- |
(5,527)
--------------- |
| Group turnover |
106,393 |
91,679 |
203,974 |
| Cost of sales |
(89,202)
--------------- |
(77,213)
--------------- |
(172,638)
--------------- |
| Gross profit |
17,191 |
14,466 |
31,336 |
| Administration expenses |
(6,935)
--------------- |
(6,213)
--------------- |
(12,536)
--------------- |
| Group operating profit |
10,256 |
8,253 |
18,800 |
| Share of operating profit/(loss) of joint
ventures |
117
--------------- |
(17)
--------------- |
192
--------------- |
| Operating profit including share of joint
ventures |
10,373 |
8,236 |
18,992 |
| Interest payable |
(2,716)
--------------- |
(1,930)
--------------- |
(4,385)
--------------- |
| Profit on ordinary activities before taxation |
7,657 |
6,306 |
14,607 |
| Taxation |
(2,286)
--------------- |
(1,518)
--------------- |
(3,669)
--------------- |
| Profit on ordinary activities after taxation |
5,371 |
4,788 |
10,938 |
| Dividends |
(1,111)
--------------- |
(956)
--------------- |
(2,855)
--------------- |
| Retained profit for the period |
4,260
========= |
3,832
========= |
8,083
========= |
| Earnings per 25p share |
7.0p |
6.3p |
14.3p |
| Diluted earnings per 25p share |
7.0p
--------------- |
6.2p
--------------- |
14.2p
--------------- |
There are no recognised gains or losses other than those shown in the Profit and Loss
Account above.
Group Balance Sheet
at 31st March 1999
|
Unaudited
31.3.99
£000
--------------- |
Unaudited
31.3.98
£000
--------------- |
Audited
30.9.98
£000
--------------- |
| Net Assets Employed |
|
|
|
| Fixed Assets |
|
|
|
| Tangible assets |
2,322 |
1,481 |
1,928 |
| Investments |
|
|
|
| Investments in joint ventures |
--------------- |
--------------- |
--------------- |
|
Share of gross assets |
13,343 |
7,694 |
10,708 |
|
Share of liabilities - borrowings |
(8,325) |
(3,691) |
(6,708) |
|
- other creditors |
(4,897)
--------------- |
(1,683)
--------------- |
(3,845)
--------------- |
|
121 |
2,320 |
155 |
| Other investments |
1,112
--------------- |
1,291
--------------- |
1,186
--------------- |
|
3,555
--------------- |
5,092
--------------- |
3,269
--------------- |
| Current assets |
|
|
|
| Stocks |
172,379 |
130,902 |
141,960 |
| Debtors |
11,906 |
8,041 |
12,350 |
| Cash at bank and in hand |
14
--------------- |
294
--------------- |
13
--------------- |
|
184,299 |
139,237 |
154,323 |
| Current liabilities |
|
|
|
| Creditors: due within one year |
|
|
|
| Borrowings |
(53,285) |
(36,072) |
(40,862) |
| Creditors |
(49,555)
--------------- |
(35,296)
--------------- |
(39,226)
--------------- |
|
(102,840)
--------------- |
(71,368)
--------------- |
(80,088)
--------------- |
| Net current assets |
81,459
--------------- |
67,869
--------------- |
74,235
--------------- |
| Total assets less current liabilities |
85,014 |
72,961 |
77,504 |
| Creditors: due after more than one year |
(5,233) |
(2,103) |
(2,103) |
| Provisions for liabilities and charges |
(412)
--------------- |
-
--------------- |
(292)
--------------- |
|
79,369
========= |
70,858
========= |
75,109
========= |
| Capital and Reserves |
|
|
|
| Called up share capital |
19,120 |
19,120 |
19,120 |
| Reserves |
|
|
|
| Share premium account |
28,095 |
28,095 |
28,095 |
| Capital reserves |
56 |
56 |
56 |
| Profit and loss account |
32,098
--------------- |
23,587
--------------- |
27,838
--------------- |
| Total shareholders’ funds |
79,369
========= |
70,858
========= |
75,109
========= |
Approved by the Board on 17th May 1999.
Summarised Group Cash Flow Statement
half year to 31st March 1999
|
Unaudited
Half year
ended 31.3.99
£000
--------------- |
Unaudited
Half year
ended 31.3.98
£000
--------------- |
Audited
Year ended
30.9.98
£000
--------------- |
| Net cash (outflow)/inflow from operating activities |
(9,176) |
3,909 |
4,671 |
| Returns on investments and servicing of finance |
|
|
|
| Interest paid to finance development activities |
(2,498) |
(2,014) |
(4,160) |
| Taxation |
|
|
|
| UK corporation tax paid |
(238) |
(192) |
(933) |
| Capital expenditure and financial investment |
|
|
|
| Purchase of tangible fixed assets |
(641) |
(666) |
(1,313) |
| Equity share scheme loans repaid |
56 |
75 |
183 |
| Repayments from/(advances to) joint ventures |
75 |
(2,101) |
(2,029) |
| Equity dividends paid |
-
--------------- |
-
--------------- |
(2,478)
--------------- |
| (Decrease) in cash |
(12,422)
========= |
(989)
========= |
(6,059)
========= |
Reconciliation of operating profit to net cash inflow from operating activities
|
Unaudited
Half year
ended 31.3.99
£000
--------------- |
Unaudited
Half year
ended 31.3.98
£000
--------------- |
Audited
Year ended
30.9.98
£000
--------------- |
| Group operating profit |
10,256 |
8,253 |
18,800 |
| Depreciation |
247 |
127 |
326 |
| Interest charged to cost of sales for commercial
developments |
- |
482 |
661 |
| Profit on fixed assets disposals |
(1) |
(3) |
(2) |
| (Increase) in stock |
(30,357) |
(5,634) |
(16,848) |
| Decrease in debtors |
368 |
3,812 |
1,531 |
| Increase/(decrease) in creditors |
10,311
--------------- |
(3,128)
--------------- |
203
--------------- |
| Net cash (outflow)/inflow from operating activities |
(9,176)
========= |
3,909
========= |
4,671
========= |
Notes
Notes to the Interim Report
| 1 |
Review report by the auditors to the Board of
Countryside Properties PLC We have reviewed the interim financial information for the
six months ended 31 March 1999 set out in the attached interim results announcement which
is the responsibility of, and has been approved by, the directors. Our responsibility is
to report on the results of our review.
Our review was carried out having regard to the Bulletin, Review of Interim Financial
Information, issued by the Auditing Practices Board. This review consisted principally of
applying analytical procedures to the underlying financial data, assessing whether
accounting policies have been consistently applied, and making enquiries of Group
management responsible for financial and accounting matters. The review excluded audit
procedures such as tests of controls and verification of assets and liabilities and was
therefore substantially less in scope than an audit performed in accordance with Auditing
Standards. Accordingly we do not express any audit opinion on the interim financial
information.
On the basis of our review: |
|
- |
in our opinion the interim financial information
has been prepared using accounting policies consistent with those adopted by Countryside
Properties PLC in its financial statements for the year ended 30 September 1998; and |
|
- |
we are not aware of any material modifications
that should be made to the interim financial information as presented. |
|
PricewaterhouseCoopers Chartered Accountants 17
May 1999. |
| 2 |
Comparative figures for the year ended 30th
September 1998 are an abridged version of the Group’s latest published accounts which
have been delivered to the Registrar of Companies. The report of the auditors on those
accounts was unqualified. |
| 3 |
Analysis by Activity |
|
|
Unaudited
Half year
ended 31.3.99
£000
--------------- |
Unaudited
Half year
ended 31.3.98
£000
--------------- |
Audited
Year ended
30.9.98
£000
--------------- |
|
Turnover |
|
|
|
|
Residential |
- Group |
98,069 |
76,948 |
175,331 |
|
|
- Joint ventures |
3,976
--------------- |
2,804
--------------- |
5,527
--------------- |
|
|
102,045 |
79,752 |
180,858 |
|
Commercial |
- Group |
8,324
--------------- |
14,731
--------------- |
28,643
--------------- |
|
|
110,369
========= |
94,483
========= |
209,501
========= |
|
Operating profit/(loss) |
|
|
|
|
Residential |
- Group |
9,196 |
7,234 |
17,544 |
|
|
- Joint ventures |
117
--------------- |
(17)
--------------- |
192
--------------- |
|
|
9,313 |
7,217 |
17,736 |
|
Commercial |
- Group |
1,060
--------------- |
1,019
--------------- |
1,256
--------------- |
|
|
10,373
========= |
8,236
========= |
18,992
========= |
| 4 |
Earnings per share The calculation of earnings
per share is based on earnings of £5,371,000 for the half year (1998 - £4,788,000) and
on the 76,481,558 shares in issue during the half year (1998 - 76,481,558 shares). |
| Year 2000 |
|
The Group has implemented a new accounting system
which is year 2000 compliant and has conducted programmes to identify and mitigate other
risks associated with potential year 2000 problems. These programmes are now completed,
save for minor matters which are not considered critical to the day-to-day operations of
the Group. It is expected that these minor matters will be completed by end July 1999. No
significant risks have been identified and we have received written assurances from
principal suppliers that they have taken appropriate steps to ensure year 2000 compliance.
The cost of achieving year 2000 compliance, which can only be broadly estimated as
compliance has been achieved as part of other improvement projects, is not considered to
be material. |