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Statement by Alan H Cherry MBE at the Company’s Annual General Meeting

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11 February 1999

Recent cuts in interest rates have stimulated the housing markets, particularly in the South East Region, the principal area of the Group's operations.

Since the start of the Group's current financial year in October, sales enquiries for our new homes have increased by 9 per cent and reservations are up 14 per cent on the comparative period a year ago. These improvements have been particularly strong since November.

The average selling price of the new homes sold by the Group during the first quarter of the current financial year was £149,000 compared to an average price of £138,000 for the previous year. The increase in prices being achieved is partly the result of a change in mix, and also in response to our new and improved products introduced to the market in recent months.

Housing is already at highly affordable levels in an historical context and is likely to become more so if interest rates fall further. This is good news for the housing markets in light of the predicted slow down in general economic activity.

Affordability is only one influence on demand. Changes in consumer confidence probably have a greater effect on the fortunes of the housing markets and confidence has risen during recent weeks as economic downturn now appears less likely. However, any sudden and significant increase in unemployment and job insecurity could dampen consumer confidence. We therefore continue to proceed with caution whilst being encouraged by recent improvements in our markets.

We have since the start of the current financial year taken opportunities to further increase our stocks of developable land. The Group currently owns or controls land with planning permission for 5,000 new homes. In addition, we now have options and conditional contracts to acquire sites which we believe have a realistic prospect of obtaining planning permission with the potential for 8,500 new homes.

Our land resources are a major advantage for the Group particularly having regard to the increasingly restrictive planning policies being adopted in Regional, County and Local Authority development plans.

Whilst our land position is a major strength we have also firmly established the Group as a leader in Urban Regeneration. Our skills and experience in this activity will be most important to our future as Government led policies are expected to bring about an Urban Renaissance in the UK and less greenfield development.

Our Design and Build contracting work for housing associations and other social housing agencies continues to be a most successful activity for the Group. Our current order book is strong with a substantial amount of further work soon expected to be confirmed.

The Group's current commercial property development programme retains its low risk profile. Nevertheless, further progress is expected to be made from our activities in this field this year.

I am pleased to inform shareholders that operating margins and returns on capital employed are expected to further improve during the current year. Despite a slow down in the wider economy I expect us to make continued progress this year towards our objective of re-establishing the Group as a top performer in the industry.

11 February 1999

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Information correct as at 11/02/1999