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12 February 1998
I am pleased to report that the improvement in the Group's results last year is continuing, and I expect the current year's results to be another important step towards re-establishing the Group as a top performer in the Industry.
The number of reservations of the Group's new homes has continued to improve since the start of the current financial year and forward sales are significantly ahead of the position at this time last year.
Whilst house price inflation since last summer has subdued, the Group is nevertheless achieving improved prices as a result of the quality of its developments and the increased customer choice being offered through the distinctive Countryside Residential and Copthorn Homes product ranges.
Our housebuilding operations are continuing to show improving profit margins as well as increasing returns on capital employed.
The Group's strong land position in the South East is considered to be of major importance, in the light of increasing public pressure to further restrict greenfield development. We already have sufficient land in place to meet a substantial amount of our requirements for some time and we are making good progress expanding our operations in the South West and the North.
Land supply is, without doubt, the most difficult problem faced by the housebuilding industry, which is increasingly being encouraged to step up development in urban areas.
The Group has been expanding its urban regeneration activity in inner city and urban locations for some time. We have added further to our programme having recently been selected to redevelop the Marquess Estate in Islington, North London. This scheme comprises 323 new homes for sale, rent and shared ownership. The Group has joined with Taylor Woodrow and two housing associations in competing with three other consortia to develop the Millennium Village project at Greenwich. The mixed use project will include 1,400 homes of mixed tenure, together with associated employment and community facilities.
We continue to maintain a diverse skills' base enabling the Group to successfully develop land of every type. This, we believe, will prove more and more advantageous with the demands now being placed on our industry.
The majority of the Group's current commercial property development programme has been pre-let or forward sold. However, whilst the commercial property market has improved, the Group is continuing its policy of not developing schemes involving significant speculative risks.
The anticipated increased contribution to Group results this year from commercial property development activity is looking more secure following recent pre-lettings and sales.
The Group has recently entered into a joint venture agreement with The British Land Company PLC to undertake the development of a new £20m headquarters office development in Cobham, Surrey. This arrangement shows how we are increasingly able to use our land acquisition, design and project management skills to undertake profitable development whilst limiting our exposure.
The Group, with its skills in product development, strategic land, mixed use, mixed tenure and urban regeneration, is well positioned to create new profitable business for the future.
Whilst we must remain aware that the UK economy is forecast to slow during 1998, the financial statistics pertinent to homebuyers remain favourable and current market conditions appear to be sustainable.
The Directors expect the Group to make further good progress this year and to continue to improve operating margins and return on capital employed.
ALAN H CHERRY MBE
Chairman
12 February 1998
For further information contact:
Alan Cherry, Chairman 01277 690 515
Graham Cherry, Chief Executive 01277 690 516
Switchboard: 01277 260 000
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Information correct as at 12/02/1998