TIDMCSP
RNS Number : 8311M
Countryside Properties PLC
14 May 2020
COUNTRYSIDE PROPERTIES PLC
Unaudited results for the half year ended 31 March 2020
14 May 2020
Resilience of mixed tenure model positions the business well
Countryside, a leading UK home builder and regeneration partner,
today announces its unaudited results for the six months ended 31
March 2020.
Results highlights
HY 2020 HY 2019 Change
Completions 2,271 2,362 -4%
Adjusted revenue(1) GBP530.9m GBP563.7m -6%
Adjusted operating profit(2) GBP55.3m GBP89.4m -38%
Adjusted operating margin(3) 10.4% 15.9% -550bps
Adjusted basic earnings per
share(4) 9.1p 15.0p -39%
Dividend per share - 6.0p -100%
Return on capital employed(5) 25.8% 32.9% -710bps
Group total forward order
book GBP1,506m GBP1,037m +45%
Reported revenue GBP481.2m GBP507.0m -5%
Reported operating profit GBP41.0m GBP60.2m -32%
Net debt(6) GBP(127.7)m GBP(42.1)m -GBP85.6m
Basic earnings per share 8.1p 12.9p -37%
COVID-19
-- Solid trading performance from October to February with net
reservation rate 31% ahead of the prior year
-- Closure of sites, factories and sales offices announced on 25
March with the safety of our employees, customers and the general
public our highest priority
-- Lost completions and land sales in March impacted profit by
c. GBP29m and increased net debt by c. GBP83m
-- Phased resumption of site activity commenced on 11 May with new operating procedures
-- Liquidity underpinned by GBP300m RCF and access to CCFF if required
-- Communities Fund of GBP1m established to support the most
vulnerable members of our communities
-- Operationally and financially well positioned due to
Partnerships model with greater proportion of Private Rental Sector
("PRS") and affordable homes
Trading performance
-- 139 active sites(7) (HY 2019: 140) at 31 March. 61 average
open sales outlets (HY 2019: 57 sales outlets)
-- Net reservation rate of 0.93 (HY 2019: 0.86)
-- Private Average Selling Price ("ASP") of GBP368k (HY 2019: GBP377k)
-- 217 gross reservations, 146 net reservations in the six-week
period to 10 May 2020 via remote viewings despite sales offices
remaining closed, 38 private completions
-- Total forward order book of GBP1,506m up 45% (HY 2019:
GBP1,037m), providing significant visibility
-- 6,695 additional plots secured during the first half, 4,965
in Partnerships, 1,730 in Housebuilding
-- Achieved HBF five-star rating for customer satisfaction for the first time
Financing, current trading and outlook
Countryside began a phased return to construction activity on 11
May 2020 following a decision to close sites on 25 March 2020.
While private reservations have been at significantly lower levels
in March and April, we have been encouraged by virtual interest
from potential customers and our mixed-tenure business model
positions us well with continued strong demand from partners for
affordable and PRS homes.
We have worked through a comprehensive mobilisation strategy and
each site will comply with the requirements of Public Health
England advice, with a strict set of site operating guidelines in
place. We have good engagement with our supply chain and continue
to pay suppliers and service providers on normal terms. We have
sufficient liquidity for the foreseeable future with our existing
GBP300m revolving credit facility ("RCF") and a further GBP300m
through our commercial paper programme to facilitate access to the
COVID Corporate Financing Facility ("CCFF").
Commenting on the results, Iain McPherson, Group Chief
Executive, said:
"The first half ended in a period of significant uncertainty for
all of us. Our first priority was to protect our staff, customers,
supply chain and the general public and we took the decision to
temporarily suspend production on our sites and in our factories.
The business had been performing well and our construction
programmes were on track for full year delivery. We were proud to
achieve HBF Five Star Builder status for the first time in the
Group's history.
As we move into the second half of the year, we have cautiously
restarted construction on around 80% of our sites albeit with
significantly reduced build rates as we adjust to new ways of
working. We welcome the revised guidance from Government allowing
anyone looking to move home to be able to do so. Whilst the market
outlook remains highly uncertain, our resilient mixed-tenure
business model and strong forward order book benefit us both
operationally and financially as we work alongside our partners to
restart our operations as efficiently as possible."
Our half year results presentation will be webcast and available
via conference call at 9.30am on Thursday 14 May followed by
Q&A. Please register for the webcast at
https://investors.countrysideproperties.com.
The conference call dial in details are:
Tel: + 44 20 3936 2999
PIN: 050598
Enquiries:
Countryside Properties PLC Tel: +44 (0) 1277 260 000
Iain McPherson - Group Chief Executive
Mike Scott - Group Chief Financial Officer
Victoria Prior - Managing Director, Corporate Affairs
Brunswick Group LLP Tel: +44 (0) 20 7404 5959
Nina Coad
Oliver Sherwood
Note to editors:
Countryside is the UK's leading mixed-tenure developer through
its two divisions, Partnerships and Housebuilding.
Countryside's Partnerships division was established over 30
years ago, specialising in estate regeneration, with operations in
London, the South East, the North West, the Midlands and Yorkshire.
It works mainly on public sector owned and brownfield land, in
partnership with local authorities and housing associations to
develop private, affordable and PRS homes. It recently established
an advanced modular panel manufacturing facility in Warrington to
improve quality, reduce build times and directly manage supply to
sites. Its developments include large scale urban regeneration
projects at Beam Park, Rainham, Acton Gardens, Ealing and Rochester
Riverside, Medway.
Countryside's Housebuilding division benefits from an industry
leading strategic land bank which is focused around outer London
and the Home Counties. It builds family homes, with a focus on
placemaking and selling to local owner occupiers. Its developments
include a number of large-scale projects including Beaulieu Park,
Essex and Springhead Park, Ebbsfleet.
For further information, please visit the Group's website:
www.countrysideproperties.com
Cautionary statement regarding forward-looking statements
Some of the information in this document may contain projections
or other forward-looking statements regarding future events or the
future financial performance of Countryside Properties PLC and its
subsidiaries (the Group). You can identify forward-looking
statements by terms such as "expect", "believe", "anticipate",
"estimate", "intend", "will", "could", "may" or "might", the
negative of such terms or other similar expressions. Countryside
Properties PLC (the Company) wishes to caution you that these
statements are only predictions and that actual events or results
may differ materially. The Company does not intend to update these
statements to reflect events and circumstances occurring after the
date hereof or to reflect the occurrence of unanticipated events.
Many factors could cause the actual results to differ materially
from those contained in projections or forward-looking statements
of the Group, including among others, general economic conditions,
the competitive environment as well as many other risks
specifically related to the Group and its operations. Past
performance of the Group cannot be relied on as a guide to future
performance.
"Countryside" or the "Group" refers to Countryside Properties
PLC and its subsidiary companies.
(1) Adjusted revenue includes the Group ' s share of revenue
from joint ventures and associate of GBP49.7m (HY 2019:
GBP56.7m).
(2) Adjusted operating profit includes the Group's share of
operating profit from joint ventures and associate of GBP9.0m (HY
2019: GBP17.7m) and excludes non-underlying items of GBP5.3m (HY
2019: GBP11.5m). Refer to Note 6.
(3) Adjusted operating margin is defined as adjusted operating
profit divided by adjusted revenue.
(4) Adjusted basic earnings per share is defined as adjusted
profit attributable to ordinary shareholders, net of attributable
taxation, divided by the weighted average number of shares in issue
for the period.
(5) Return on capital employed ("ROCE") is defined as adjusted
operating profit for the last 12 months divided by the average of
opening and closing tangible net operating asset value ("TNOAV")
for the 12-month period. TNOAV is calculated as net assets
excluding net cash or debt less intangible assets net of deferred
tax.
(6) Net debt is defined as bank borrowings less unrestricted
cash. Unamortised debt arrangement fees and lease obligations are
not included in net debt.
(7) An active site is a site where construction has commenced.
An open selling outlet is an active site on which the Group is
selling homes.
The Directors believe that the use of adjusted measures is
necessary to understand the underlying trading performance of the
Group.
COVID-19 - Summary of Impact on our Results
The impact on our results
The timing of the COVID-19 pandemic and the resulting
restrictions on movement and uncertainty meant that our half year
results were significantly impacted. Revenue and profit were both
lower than they otherwise would have been as a significant number
of private completions due for the end of March did not take place
as planned and land sales were postponed. We have estimated the
impact of these items on adjusted operating profit and cashflow
below.
We took the decision to close our sales offices, construction
sites, factories and regional offices on 25 March 2020 following
government and Public Health England guidance as it became
difficult to maintain adequate social distancing without
adjustments being made to the workplaces.
We estimate that around 184 completions, including 79 private
completions, were lost, which alongside the lower levels of
construction activity in March and the cancellation of five land
sales by the counter-parties resulted in lost revenue of around
GBP116m and associated lost operating profit of around GBP29m, on
an adjusted basis.
Our priorities
Our priority through this period has been to focus on the safety
and wellbeing of our employees, customers, supply chain and other
partners. We have ensured that we have maintained good
communication with our employees during what has been an uncertain
time for them and their families and we took the decision to
maintain pay and benefits for all staff to ensure that they were in
the best possible position to resume work when required. Our
contingency planning was activated smoothly, allowing our
office-based employees to make the transition to homeworking and
continue with minimal disruption during the initial lockdown phase.
The level of commitment that we have seen from our employees is a
real testament to the quality and professionalism of the people we
have working for Countryside.
The crisis is impacting the communities in which we operate. We
have established a GBP1m Communities Fund, targeted at helping
vulnerable local people, including supporting local food banks and
community groups. We also announced that the Board and Executive
Committee were reducing their salaries by 20% for two months from
April, with these funds being added to the Communities Fund. We
have already made good progress in allocating these funds and are
working with partners to ensure the most vulnerable people in our
communities get help when they need it.
Measures we have taken to manage liquidity
Following the decision to cease construction activity on 25
March 2020, we took a number of steps to conserve cash in the
business. This included negotiating deferrals to payments for land
and taxation where possible and minimising all other spend across
the business. We have chosen not to claim employee costs under the
government's Job Retention Scheme, as we do not believe these
employees would otherwise have been made redundant in the near
future. All staff who were furloughed by the business have
therefore been given full paid leave for the period of their
absence and all staff are expected to return to the business during
May.
We are also seeking to renegotiate a number of contracts, both
for the purchase of land and some of our longer-term Partnerships
development agreements to defer land payments and provide
additional protection against falls in house prices.
As previously reported, we fully drew down on our GBP300m
revolving credit facility in mid-March. On 28 April 2020, our
eligibility to access the Bank of England COVID Corporate Financing
Facility ("CCFF") was confirmed, and we have put in place a GBP300m
commercial paper facility to access the CCFF should it be required.
We have also agreed a relaxation of the Group's banking covenants
until September 2022 to ensure that we are able remain compliant in
any plausible but severe downside scenario. As a result of the
additional financing and the conservation measures taken above, we
are confident that we have enough liquidity in the business for the
foreseeable future, having considered a range of downside
scenarios.
Countryside Ground Rent Assistance Scheme
We recognise that our customers are also going through a period
of increased uncertainty and we are doing all we can to help them.
In order to further Countryside's commitment as a signatory to the
Government's Leasehold Pledge, we have now created the Countryside
Ground Rent Assistance Scheme and will seek agreement from freehold
owners to vary the leaseholds of Countryside customers who still
own homes with a leasehold ground rent that doubles more frequently
than every 20 years, to be linked instead to the rate of RPI and
reviewed every 15 years . The Scheme is in the early stages of its
development and the associated cost of the Scheme is provisionally
estimated to be up to GBP10m. An appropriate provision for these
costs will be made in the second half of the year.
Looking through the crisis
The impact of COVID-19 on consumer behaviour remains to be seen,
particularly given the use of the Job Retention Scheme by large
numbers of companies which has allowed employees to remain employed
with at least 80% of their wages intact up to a cap of GBP2,500 a
month. The structural undersupply of homes in the UK has not
diminished but the availability of mortgages and valuation of
properties will no doubt take some time to return to pre-pandemic
levels. Whilst we have continued to take reservations during the
lockdown period at pricing in line with pre-pandemic levels, the
impact of the pandemic on future prices or sales rates remains
unknown.
We commenced a phased restart of operations on around 80% of our
sites from 11 May 2020. We have developed a new set of Standard
Operating Procedures based on guidance from the Construction
Leadership Council, which are designed to allow the safe operation
of sites whilst complying with government and Public Health England
guidance on social distancing. Measures we have taken include the
provision of additional site welfare facilities, car parking and
the introduction of Site Compliance Officers to ensure our
procedures are adhered to. We have similar operating guidance in
place for our factories in Leicester and Warrington.
We have adapted our business model to take into account the fact
that life will not return to 'normal' for some time. We have
increased our online presence with both new and existing customers
which included conducting customer visits by video conference, as
well as a number of virtual home tours. In the six-week period to
10 May 2020, these helped us achieve 217 new gross
reservations.
Our modular panel factory has recommenced operations and
provides us with significant advantages. We have greater security
of material supplies, there are fewer people required on site with
this build methodology making it easier to adhere to social
distancing, and the increased build speed allows us to restart
operations and deliver homes more quickly than traditional methods.
Whilst we do not underestimate the short-term impact of this crisis
on our sector, it is important that we continue to plan for the
future and we are progressing our plans for a second, larger
modular panel factory during 2021.
In addition, our mixed tenure business model remains robust and
provides us with a degree of resilience with only around 40% of our
business reliant on the private for sale market. As we recommence
construction activity, we will initially focus on homes where
customers have already exchanged as well as the construction of
affordable and PRS homes which will allow us to generate profits
and cash flow more quickly.
We continue to have a strong pipeline of work with an order book
of GBP1.5bn as at 31 March 2020 of which GBP1,074m relates to
Affordable and PRS sales and GBP432m to private sales. We continue
to have significant growth opportunities through our existing
regional businesses as they grow to scale and we will leverage our
relationships with local authorities and registered providers to
underpin this growth.
Group results for the six months ended 31 March 2020
Completions
Total completions fell by 4% to 2,271 homes (HY 2019: 2,362
homes), as a result of losing around 184 completions at the end of
March and the weighting of our construction programmes to H2 this
year.
Private completions were 8% lower than last year at 753 (HY
2019: 816 homes). Affordable completions were broadly flat at 941
homes (HY 2019: 938 homes) and PRS completions 5% lower at 577
homes (HY 2019: 608 homes). The overall tenure mix was broadly
consistent with the prior year, with one third of homes being
private for sale and the remaining two thirds a blend of Affordable
and PRS.
Revenue
Total adjusted revenue decreased by 6% to GBP530.9m (HY 2019:
GBP563.7m). On a reported basis, revenue decreased by 5% to
GBP481.2m (HY 2019: GBP507.0m).
Private average selling price ("ASP") reduced by 2% to
GBP368,000 (HY 2019: GBP377,000) which reflected the broad trend in
house prices that we saw across the half, with house price
inflation ("HPI") running at (2.3)% (HY 2019: broadly flat). Prior
to ceasing site activity, build cost inflation was running at
around 1%, lower than the prior year (HY 2019: 3%). We remain
focused on driving efficiency in build costs, particularly through
the roll-out of our modular panel product which enhances margins by
up to 2% on the developments on which it is used.
In line with previous years, around half of our sales were to
first time buyers (HY 2019: 46%), the majority of whom come from
the local areas around our developments. Help to Buy usage also
remained stable at 52% of private sales (HY 2019: 48%), or 17% of
total completions.
Affordable ASP, at GBP155,000, increased 5% (HY 2019:
GBP148,000) with PRS ASP increasing by 10% to GBP144,000 (HY 2019:
GBP131,000) driven mainly by site mix and a small number of PRS
completions in Housebuilding where ASPs were higher.
Our net private reservation rate per open sales outlet per week
remained strong throughout H1 at 0.93 (HY 2019: 0.86), particularly
following the General Election in December 2019. Our open sales
outlets increased by 15% to 69 (HY 2019: 60) with total active
sites down fractionally to 139 (H1 2019: 140). Our total forward
order book was up 45% to GBP1,506m (HY 2019: GBP1,037m) which
includes our private forward order book up 49% at GBP432.2m (HY
2019: GBP290.6m) as the year has again been skewed to second half
completions.
Operating profit and margin
Given the timing of the UK lockdown and cessation of site
activity, adjusted operating profit decreased by 38% to GBP55.3m
(HY 2019: GBP89.4m) as 184 completions were lost along with five
land sales at the end of March. On a reported basis, operating
profit decreased by 32% to GBP41.0m (HY 2019: GBP60.2m). The
difference between adjusted and reported results reflects the
proportional consolidation of our joint ventures and associate (see
Notes 11 and 12) and non-underlying items. Overall, adjusted
operating margin decreased by 550bps to 10.4% (HY 2019: 15.9%).
This was due to the impact of negative house price inflation of
(2.3)% and a number of land sales not being completed at the end of
the first half which are typically made at above-average
margins.
Non-underlying items
Non-underlying items of GBP5.3m primarily relate to the
amortisation of acquired intangibles in the current year (HY 2019:
GBP11.5m; including amortisation of acquired intangibles and the
costs associated with the acquisition of Westleigh (GBP4.1m), along
with a one-off non-cash inventory impairment charge of
GBP7.4m).
ROCE
Driven by increased investment in working capital and lower
adjusted operating margin, Group ROCE was 25.8%, down 710bps ( HY
2019: 32.9%), with asset turn falling slightly to 1.8 times (HY
2019: 2.0 times).
Assets and liabilities
Inventories increased by GBP232.8m to GBP1,041.4m (FY 2019:
GBP808.6m) during the period. This was driven by our continued
investment in work in progress to enable the Group's growth plans
and intended second half delivery, and the impact of delayed
completions due to the timing of the UK lockdown. Trade and other
payables increased by GBP53.6m to GBP506.2m (FY 2019: GBP452.6m)
primarily due to an increase in deferred land payments as we
acquired a number of developments for our Housebuilding division in
the period, which also contributed to the increase in
inventories.
The Group's investment in joint ventures reduced to GBP38.3m (FY
2019: GBP62.2m) as a result of dividends received in the period
exceeding the profit generated by the joint ventures.
The adoption of IFRS 16 "Leases" for the first time in the
period had a minimal impact on Tangible Net Asset Value ("TNAV") of
GBP0.3m as at 31 March 2020. The recognition of GBP29.8m of right
of use assets and GBP31.5m of lease liabilities reduced TNAV by
GBP1.7m, which was largely offset by the derecognition of other
working capital balances of GBP1.4m.
Net debt
Given the growth of the business and second half weighting of
completions, net debt had been forecast to increase in the first
half through our continued investment in work in progress. The
combined impact of lost completions and cancelled land sales
referred to above contributed GBP83m to net debt in the first half.
As a result, the Group had net debt at 31 March 2020 of GBP127.7m (
HY 2019: GBP42.1m). This resulted in gearing(1) of 14.4% (HY 2019:
5.2%) and adjusted gearing(2) of 38.9% (HY 2019: 20.0%).
Net finance costs were GBP6.2m (HY 2019: GBP6.5m), with the
reduction mainly driven by a lower charge for the interest unwind
on discounted land creditors, offset by the finance lease expense
resulting from the adoption of IFRS 16. Interest on bank debt was
broadly flat at GBP1.9m (HY 2019: GBP2.1m).
Taxation
The effective tax rate applied to adjusted profit for the period
was 17.3% (HY 2019: 19.3%). This reflects the anticipated full year
effective rate and is lower than the UK headline rate of 19.0% due
to credits arising on the exercise of share options. On a reported
basis, the effective tax rate was 16.7% (HY 2019: 18.2%), the
difference to the adjusted effective tax rate being the impact of
the Group's joint ventures and associate and non-underlying
items.
Earnings per share
Adjusted basic earnings per share were 9.1 pence (HY 2019: 15.0
pence), reflecting the reduction in adjusted earnings in the
period. On a statutory basis, basic earnings per share were 8.1
pence (HY 2019: 12.9 pence).
Dividend
As announced on 25 March 2020, given the uncertainty surrounding
the remainder of our financial year, the Board suspended the
payment of an interim dividend (HY 2019: 6.0 pence per share). The
Group's dividend policy will be reviewed prior to the announcement
of our final results in November 2020.
1 Gearing is defined as net debt divided by net assets.
2 Adjusted gearing is defined as above, except that net debt
includes land creditors.
Partnerships
HY 2020 HY 2019 Change
Completions 1,791 1,889 -5%
Adjusted revenue GBP343.8m GBP342.4m -
Adjusted operating
profit GBP36.3m GBP45.7m -21%
Adjusted margin 10.6% 13.3% -270bps
ROCE 47.1% 66.7% -1,960bps
Land bank (plots) 37,734 36,132 +4%
Reported revenue GBP324.0m GBP329.1m -2%
Reported operating
profit GBP32.5m GBP31.3m +4%
Reported margin 10.0% 9.5% +50bps
Completions
The reduction in total completions was driven by lost business
in the second half of March due to the UK lockdown and cessation of
site activity. Private completions were 6% lower at 462 homes (HY
2019: 489 homes) with both Affordable and PRS completions down 5%
at 763 homes and 566 homes respectively (HY 2019: 806 homes and 594
homes).
Revenue
Private ASP increased 3% to GBP297,000 (HY 2019: GBP288,000)
reflecting slightly stronger house price inflation in the Midlands
and North along with geographical site mix. Affordable ASP was up
8% to GBP152,000 (HY 2019: GBP141,000) reflecting slightly firmer
pricing and the run-off of legacy Westleigh contracts, whilst PRS
ASP was up 12% to GBP141,000 (HY 2019: GBP126,000). Along with the
overall reduction in volume, this led to adjusted revenue broadly
flat at GBP343.8m (HY 2019: GBP342.4m). Reported revenue of
GBP324.0m was also broadly flat on the prior year (HY 2019:
GBP329.1m).
Operating profit and margin
Adjusted operating margin reduced by 270bps in the half to 10.6%
(HY 2019: 13.3%) with some impact from negative house price
inflation from homes reserved prior to the General Election in
December 2019 and overall site mix between our northern and
southern regions. In addition, the first half last year benefitted
from operational efficiency and overage savings which were not
repeated this year. Adjusted operating profit of GBP36.3m (HY 2019:
GBP45.7m) was down 21% in the period as a consequence of the lost
completions at the end of the half and the lower operating margin.
On a reported basis, excluding the contribution from the Acton
Gardens joint venture which had lower profits in the half, our
operating profit increased by 4% to GBP32.5m (HY 2019: GBP31.3m).
Our operating margin increased to 10.0% (HY 2019: 9.5%).
ROCE
The lower operating margin, combined with the additional
investment for the second half weighted delivery, reduced return on
capital employed ("ROCE") to 47.1% (HY 2019: 66.7%). Asset turn
fell to 3.3 times as revenue in the half was lower than expected
(HY 2019: 4.5 times).
Visibility of future work
We had another successful six months in winning new business, to
support our longer-term growth plans. We secured 5,450 new plots in
the period, including 700 homes in Salford, Greater Manchester and
600 homes in Hemel Hempstead, Hertfordshire. In addition, we were
successful in our first public ballot at the Cambridge Road Estate,
Kingston Upon Thames, a large regeneration development with 2,170
plots. We now have 37,734 Partnerships plots under our control and
a future bid pipeline of over 95,000 plots.
At 31 March 2020, we had 38 open selling outlets with a further
59 sites under construction (HY 2019: 31 and 73 respectively).
Housebuilding
HY 2020 HY 2019 Change
Completions 480 473 +1%
Adjusted revenue GBP187.1m GBP221.3m -15%
Adjusted operating
profit GBP20.6m GBP48.1m -57%
Adjusted margin 11.0% 21.7% -1,070bps
ROCE 16.6% 23.8% -720bps
Land bank (plots) 25,607 21,284 +20%
Reported revenue GBP157.2m GBP177.9m -12%
Reported operating
profit GBP15.4m GBP37.4m -59%
Reported margin 9.8% 21.0% -1,120bps
Completions
Total completions were broadly flat at 480 homes (HY 2019: 473
homes) reflecting a planned strong second half weighting to the
year, prior to the impact of COVID-19. Total private completions of
291 homes were down 11% (HY 2019: 327), mainly driven by the timing
of the UK lockdown and cessation of site operations. Affordable
completions were up 35% in the period to 178 homes (HY 2019: 132
homes) reflecting a more normal level of production after a lower
level in the comparable period and we sold a further 11 PRS homes
in the half (HY 2019: 14 homes).
Revenue
Private ASP was down 6% at GBP481,000 (HY 2019: GBP510,000)
reflecting changes in product mix to lower price points and
negative HPI of (2.8)% in the half. Pricing has been firmer since
the General Election in December 2019 with HPI in the order book of
between flat and 1%. Affordable ASP was 10% lower at GBP169,000 (HY
2019: GBP188,000) reflecting site mix. Private sales made up a
lower proportion of total completions in the half which, combined
with the reduction in private ASP, led to adjusted revenue down 15%
to GBP187.1m (HY 2019: GBP221.3m).
Operating profit and margin
Adjusted operating profit was significantly impacted in the half
by the UK lockdown which resulted in around 90 fewer completions
than planned and the withdrawal of counterparties from five land
deals due to be completed in March. Together, these resulted in the
loss of around GBP25m of operating profit, with the out-turn of
GBP20.6m down 57% on the prior year against an unusually strong
comparative (HY 2019: GBP48.1m). Land sale profits in the half were
less than GBP1m (HY 2019: GBP5.8m). Adjusted operating margin of
11.0% was down 1,070bps on the prior period's strong comparative
(HY 2019: 21.7%) as a result of the loss of the land sales,
negative house price inflation on private completions and a strong
comparative margin achieved in 2019. On a reported basis, operating
profit decreased by 59% to GBP15.4m (HY 2019: GBP37.4m) and
operating margin decreased by 1,120bps to 9.8% (HY 2019:
21.0%).
ROCE
ROCE was down 720bps at 16.6% (HY 2019: 23.8%), driven mainly by
lower operating margins with asset turn at 1.1 times broadly in
line with the prior year (HY 2019: 1.2 times).
Visibility of future work
We have grown the land bank in our Housebuilding division and
acquired six sites totalling 1,730 plots during the period. The
Housebuilding land bank now stands at 25,607 plots (HY 2019: 21,284
plots) of which only 23% is owned and the remainder either
controlled by option agreements or under conditional contracts. 79%
has been sourced strategically.
At 31 March 2020, we had 31 open selling outlets with a further
11 sites under construction (HY 2019: 29 and 7 respectively).
Board change
As announced in November 2019, Ian Sutcliffe stepped down as
Group Chief Executive and from the Board on 31 December 2019 and
retired from the Group on 31 March 2020. He developed the Group's
mixed tenure business model, successfully guiding the Company
through its IPO in February 2016, and consistently delivered
strong, profitable growth and returns, leaving the Group well
positioned for the future. The Board wishes Ian well for the
future.
Financing, current trading and outlook
Countryside began a phased return to construction activity on 11
May 2020 following a decision to temporarily close sites on 25
March 2020. We are working with our partners to review our plans
for the remainder of the year and we continue to assess to the best
of our ability the likely full impact of COVID-19 on the private
sales market in particular. While private reservations have been at
significantly lower levels in March and April, we have been
encouraged by continued virtual interest from potential customers
and our mixed-tenure business model positions us well with
continued strong demand from partners for Affordable and PRS homes.
We have sufficient liquidity for the foreseeable future with our
existing GBP300m revolving credit facility and a further GBP300m
through our commercial paper programme to facilitate access to the
COVID Corporate Financing Facility.
Iain McPherson
Group Chief Executive
14 May 2020
Principal risks and uncertainties
The Group's principal risks and a summary of the mitigating
actions for each are listed below. They are monitored by the Risk
Management Committee, the Audit Committee and the Board.
Coronavirus, COVID-19
The defining event of the first six months of this financial
year has been the impact of COVID-19. It is a global crisis that
has led the Group to invoke its business continuity procedures to
manage the immediate impact of the incident. The actions taken so
far to mitigate the impact of COVID-19 on the Group, its employees,
customers and other principal stakeholders have included:
-- Furloughing 67% of all employees from 1 April 2020. All
employees continued to receive full pay and the Group currently
does not intend to make a claim under the government's Job
Retention Scheme;
-- Implementing arrangements so that all staff who can work from
home do so, in accordance with the Government's 'stay at home,
protect the NHS, save lives' objectives;
-- Maintaining regular communications with all key stakeholders
during the temporary closure of all sites whilst appropriate
remobilisation measures were planned and implemented;
-- Creating a GBP1m fund to help support the most vulnerable in
the communities in which we operate;
-- Putting in place a GBP300m commercial paper facility to
access the Government's COVID Corporate Financing Facility, fully
drawing down on our GBP300m revolving credit facility and agreeing
an 18-month relaxation of the Group's banking covenants to enable
compliance through any plausible but severe downside scenario;
and
-- Preparing and implementing a comprehensive re-mobilisation
plan for a return to our sites and factories from 11 May 2020. Such
arrangements have been carefully planned to ensure that suitable
arrangements are in place to ensure social distancing in according
with Public Health England requirements.
Beyond the immediate impact of COVID-19, forecasters warn of
recession in the UK and global economies. On 7 May 2020, the Bank
of England warned that the coronavirus pandemic will push the UK
economy "towards its deepest recession on record" and that COVID-19
was "dramatically reducing jobs and incomes in the UK". Principal
risks 2, 4, 5 and 7 listed below would be exacerbated by such a
recession and its impact on jobs and incomes.
Withdrawal from the EU
Having left the EU on 31 January 2020, the UK and EU have
commenced a 'transition period' during which the UK and EU will
attempt to agree suitable trading arrangements. The UK Government
has said the transition period will cease at the end of 2020. The
Group's principal risks and uncertainties take into account the
potential for the UK and EU to not reach agreement on future
trading arrangements. This may lead to a period of reduced consumer
confidence and potentially exacerbate many of the principal risks,
but particularly risks 2, 3, 4 and 7.
Risk Description Mitigation
1 Infectious diseases of epidemic Maintenance of a strong balance
or pandemic potential sheet able to withstand a sustained
The spread of an infectious disease period of complete or partial
on an epidemic or pandemic scale cessation of business of activity.
can lead to the imposition of Maintenance and regular testing
Government controls on the movement of business continuity and disaster
of people with the associated recovery plans, supported by
cessation of large parts of the investment in information technology
economy for a significant period to enable robust home-working
of time. The cessation of business facilities.
can lead to zero or reduced revenues
until business activity can be
safely recommenced.
---------------------------------------- ----------------------------------------
2 Adverse macro-economic conditions Funds are allocated between the
A decline in macroeconomic conditions, Housebuilding and Partnerships
or conditions in the UK residential businesses. In Housebuilding,
property market, can reduce the land is purchased based on planning
propensity to buy homes. Higher prospects, forecast demand and
unemployment, interest rates market resilience. In Partnerships,
and inflation can affect consumer contracts are phased and, where
confidence and reduce demand possible, subject to viability
for new homes. Constraints on testing. In all cases, forward
mortgage availability, or higher sales, cash flow and work in
costs of mortgage funding, may progress are carefully monitored
make it more difficult to sell to give the Group time to react
homes. to changing market conditions.
---------------------------------------- ----------------------------------------
3 Adverse changes to Government The potential impact of changes
policy and regulation in Government policy and new
Adverse changes to Government laws and regulations are monitored
policy in areas such as tax, and communicated throughout the
housing, and environmental and business. Detailed policies and
building regulations may result procedures are in place to address
in increased costs and/or delays. the prevailing regulations.
Failure to comply with laws and
regulations could expose the
Group to penalties and reputational
damage.
---------------------------------------- ----------------------------------------
4 Constraints on construction resources Optimise use of standard house
Costs may increase beyond budget types and design to maximise
due to the reduced availability buying power. Use of strategic
of skilled labour, or shortages suppliers to leverage volume
of sub-contractors or building price reductions and minimise
materials at competitive prices unforeseen disruption. Robust
to support the Group's growth contract terms to control costs.
ambitions. The Group's strategic
geographic expansion may be at
risk if new supply chains cannot
be established.
---------------------------------------- ----------------------------------------
5 Programme delay (rising project The budgeted programme for each
complexity) site is approved by the Regional
Failure to secure timely planning Board before acquisition. Sites
permission on economically viable are managed as a portfolio to
terms or poor project forecasting, control overall Group delivery
unforeseen operational delays risk. Weekly monitoring at both
due to technical issues, disputes divisional and Group level.
with third party contractors
or suppliers, bad weather or
changes in purchaser requirements
may cause delay or potential
termination of project.
---------------------------------------- ----------------------------------------
6 Inability to source and develop A robust land appraisal process
suitable land ensures each project is financially
Competition or poor planning viable and consistent with the
may result in a failure to procure Group's strategy.
land in the right location, at
the right price and at the right
time.
---------------------------------------- ----------------------------------------
7 Inability to attract and retain Remuneration packages are regularly
talented employees benchmarked against industry
Inability to attract and retain standards to ensure competitiveness.
highly-skilled, competent people Succession plans are in place
at all levels could adversely for all key roles within the
affect the Group's results, prospects Group. Exit interviews are used
and financial condition. to identify any areas for improvement.
---------------------------------------- ----------------------------------------
8 Inadequate Health, Safety and Procedures, training and reporting
Environmental procedures are all carefully monitored to
A deterioration in the Group's ensure that high standards are
Health, Safety & Environmental maintained. Additional social
standards, including additional distancing measures will be put
measures put in place to comply in place in all workplaces to
with Public Health England guidance comply with Public Health England
on social distancing, could put social distancing guidelines.
the Group's employees, contractors An environmental risk assessment
or the general public at risk is carried out prior to any land
of injury or death and could acquisition. Appropriate insurance
lead to litigation or penalties is in place to cover the risks
or damage the Group's reputation. associated with housebuilding.
---------------------------------------- ----------------------------------------
COUNTRYSIDE PROPERTIES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 March 2020
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
Unaudited Unaudited Audited
Note GBPm GBPm GBPm
------------ ------------ --------------
Revenue 4, 5 481.2 507.0 1,237.1
Cost of sales (401.6) (407.0) (983.5)
------------ ------------ --------------
Gross profit 79.6 100.0 253.6
Administrative expenses (38.6) (39.8) (83.2)
------------ ------------ --------------
Operating profit 4 41.0 60.2 170.4
Analysed as:
Adjusted operating profit 55.3 89.4 234.4
Less: Share of joint ventures
and associate operating profit (9.0) (17.7) (46.8)
Less: Non-underlying items 6 (5.3) (11.5) (17.2)
------------ ------------ --------------
Operating profit 41.0 60.2 170.4
--------------------------------- ----- ------------ ------------ --------------
Finance costs 7 (6.5) (7.4) (11.9)
Finance income 7 0.3 0.9 1.0
Share of post-tax profit from
joint ventures and associate
accounted for using the equity
method 8.9 16.6 44.1
------------ ------------ --------------
Profit before income tax 43.7 70.3 203.6
Income tax expense 8 (7.3) (12.8) (35.2)
------------ ------------ --------------
Profit and total comprehensive
income for the period 36.4 57.5 168.4
------------ ------------ --------------
Profit and total comprehensive
income is attributable to:
Owners of the parent 36.4 57.1 167.7
Non-controlling interest - 0.4 0.7
------------ ------------ --------------
36.4 57.5 168.4
------------ ------------ --------------
Earnings per share (expressed
in pence per share):
Basic 9 8.1 12.9 37.7
Diluted 9 8.1 12.8 37.3
Revenue and operating profit arise from the Group's continuing
operations. There were no items of other comprehensive income
during the period ( HY19: GBPNil, FY19: GBPNil).
COUNTRYSIDE PROPERTIES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2020
As at As at As at 30
31 March 31 March September
2020 2019 2019
Unaudited Unaudited Audited
Note GBPm GBPm GBPm
Assets
Non-current assets
Intangible assets 165.8 175.2 170.9
Property, plant and equipment 15.4 10.0 12.8
Right of use assets 21 29.8 - -
Investment in joint ventures 11 38.3 46.7 62.2
Investment in associate 12 3.6 4.8 3.5
Financial assets at fair value
through profit or loss 13 - 4.1 -
Deferred tax assets 4.5 8.9 5.3
Trade and other receivables 18.3 15.0 15.2
275.7 264.7 269.9
Current assets
Inventories 14 1,041.4 779.9 808.6
Financial assets at fair value
through profit or loss 13 - - 5.0
Trade and other receivables 234.2 234.6 232.8
Current income tax receivables 13.6 - -
Cash and cash equivalents 15 172.2 13.2 75.6
1,461.4 1,027.7 1,122.0
Total assets 1,737.1 1,292.4 1,391.9
---------- ---------- -----------
Liabilities
Current liabilities
Overdrafts 15 - (13.1) -
Trade and other payables 16 (367.4) (303.8) (322.6)
Lease liabilities 21 (4.8) - -
Current income tax liabilities - (13.3) (24.7)
Provisions (0.7) (3.5) (1.8)
(372.9) (333.7) (349.1)
Non-current liabilities
Borrowings 15 (298.2) (39.9) (2.2)
Trade and other payables 16 (138.8) (93.6) (130.0)
Lease liabilities 21 (26.7) - -
Deferred tax liabilities (10.4) (11.9) (10.9)
Provisions (0.7) (0.6) (0.6)
(474.8) (146.0) (143.7)
Total liabilities (847.7) (479.7) (492.8)
Net assets 889.4 812.7 899.1
========== ========== ===========
Equity
Share capital 4.5 4.5 4.5
Retained Earnings 882.6 806.2 892.3
Equity attributable to owners
of the parent 887.1 810.7 896.8
Equity attributable to non-controlling
interest 2.3 2.0 2.3
---------- ---------- -----------
Total equity 889.4 812.7 899.1
========== ========== ===========
COUNTRYSIDE PROPERTIES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
For the six months ended 31 March 2020
Share Retained Equity Non-controlling Total
capital earnings attributable interest equity
to owners
of the
parent
GBPm GBPm GBPm GBPm GBPm
------------- ---------- -------------- ---------------- --------
At 30 September 2019 4.5 892.3 896.8 2.3 899.1
Comprehensive income
Profit for the period - 36.4 36.4 - 36.4
Total comprehensive income 4.5 928.7 933.2 2.3 935.5
Transactions with owners
Share based payments, net
of
deferred tax - 0.1 0.1 - 0.1
Dividends paid - (46.2) (46.2) - (46.2)
Total transactions with
owners - (46.1) (46.1) - (46.1)
At 31 March 2020 4.5 882.6 887.1 2.3 889.4
============= ========== ============== ================ ========
At 30 September 2018 4.5 787.6 792.1 1.6 793.7
Comprehensive income
Profit for the period - 57.1 57.1 0.4 57.5
Total comprehensive income - 57.1 57.1 0.4 57.5
Transactions with owners
Share based payments, net
of
deferred tax - 3.7 3.7 - 3.7
Dividends paid - (29.2) (29.2) - (29.2)
Purchase of shares by
Employee Benefit Trust - (13.0) (13.0) - (13.0)
Total transactions with
owners - (38.5) (38.5) - (38.5)
At 31 March 2019 4.5 806.2 810.7 2.0 812.7
============= ========== ============== ================ ========
COUNTRYSIDE PROPERTIES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (AUDITED)
For the six months ended 31 March 2020
Share Retained Equity Non-controlling Total
capital earnings attributable interest equity
to owners
of the
parent
GBPm GBPm GBPm GBPm GBPm
--------- ---------- -------------- ---------------- --------
At 30 September 2018 4.5 787.6 792.1 1.6 793.7
Comprehensive income
Profit for the period - 167.7 167.7 0.7 168.4
Total comprehensive income - 167.7 167.7 0.7 168.4
Transactions with owners
Share based payments,
net of
deferred tax - 6.0 6.0 - 6.0
Purchase of shares by
Employee Benefit Trust - (13.0) (13.0) - (13.0)
Dividends paid - (56.0) (56.0) - (56.0)
Total transactions with
owners - (63.0) (63.0) - (63.0)
At 30 September 2019 4.5 892.3 896.8 2.3 899.1
========= ========== ============== ================ ========
COUNTRYSIDE PROPERTIES PLC
CONSOLIDATED CASHFLOW STATEMENT
For the six months ended 31 March 2020
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
Note Unaudited Unaudited Audited
GBPm GBPm GBPm
------------ ------------ --------------
Cash (used in)/generated from
operations 17 (99.6) (13.3) 86.9
Interest paid (1.9) (1.3) (3.8)
Tax paid (45.4) (18.4) (27.9)
Net cash (outflow)/inflow from
operating activities (146.9) (33.0) 55.2
Cash flows from investing activities
Purchase of intangible assets (1.0) (1.5) (3.1)
Purchase of property, plant and
equipment (3.9) (3.7) (7.8)
Proceeds from disposal of property,
plant and equipment - - 0.3
Proceeds from financial assets
at fair value through profit or
loss 13 5.0 - -
(Increase)/decrease in advances
to joint ventures and associate (37.4) (39.4) 6.8
Repayment of members' interest - - 2.9
Dividends received from joint
ventures and associate 32.5 32.7 43.1
Net cash (outflow)/inflow from
investing activities (4.8) (11.9) 42.2
Cash flows from financing activities
Dividends paid 10 (46.2) (29.2) (56.0)
Payment of lease obligations (3.1) - -
Purchase of shares by Employee
Benefit Trust - (13.0) (13.0)
Borrowings under revolving credit
facility 297.6 40.0 -
Net cash i n flow/( out flow)
from financing activities 248.3 (2.2) (69.0)
Net i n crease/(d e crease) in
cash and cash equivalents 96.6 (47.1) 28.4
Cash and cash equivalents at beginning
of the period 75.6 47.2 47.2
Cash and cash equivalents at the
end of the period 15 172.2 0.1 75.6
============ ============ ==============
COUNTRYSIDE PROPERTIES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 31 March 2020
1. GENERAL INFORMATION
Countryside Properties PLC (the "Company") is a public limited
company incorporated and domiciled in the United Kingdom, whose
shares are publicly traded on the London Stock Exchange. The
Company's registered office is Countryside House, The Drive,
Brentwood, Essex CM13 3AT.
The Group's principal activities are building new homes and
regeneration of public sector land.
2. BASIS OF PREPARATION
The financial information in these condensed consolidated
interim financial statements (the "Financial Information") for the
six months to 31 March 2020 is that of the Company and all of its
subsidiaries (together the "Group"). It has been prepared in
accordance with the Disclosure and Transparency Rules of the UK
Financial Conduct Authority and with International Accounting
Standard 34 "Interim Financial Reporting", as endorsed by the
European Union.
The Financial Information for the six months ended 31 March 2020
and 31 March 2019 is unaudited but has been subject to a review in
accordance with the International Standard on Review Engagements
2410 "Review of Interim Financial Information performed by the
Independent Auditor of the Entity", issued by the Auditing
Practices Board.
The Financial Information does not constitute full statutory
accounts within the meaning of Section 434 of the Companies Act
2006 and should be read in conjunction with the annual consolidated
financial statements of the Group for the year ended 30 September
2019 (the "Group Financial Statements"). The Group Financial
Statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union and filed at Companies House.
The Group Financial Statements have been reported on by the
Company's auditors and are available on the Company's website
https://investors.countrysideproperties.com. The report of the
auditors was unqualified, did not include a reference to any
matters to which the auditors drew attention by way of emphasis
without qualifying their report and did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
The condensed consolidated interim financial statements were
authorised for issue by the Directors on 13 May 2020.
Going concern
Due to the significant uncertainty arising from the COVID-19
pandemic, management has performed a detailed going concern review,
testing the Group's liquidity and banking covenant compliance in a
range of scenarios as outlined below.
The Group has the benefit of a GBP300m revolving credit facility
("RCF") provided by its banking syndicate of four banks, which
expires in May 2023. This facility includes covenants in respect of
gearing, interest cover, tangible net asset value and loan to book
value. In addition, on 28 April 2020, the Group received
confirmation from the Bank of England of its eligibility to
participate in the CCFF. The Group has put in place a commercial
paper programme which will allow up to GBP300m of commercial paper
to be issued. The facility will be used to provide standby
liquidity, should that be required, and is currently undrawn.
The Group announced on 25 March 2020 that all construction
sites, factories and sales offices were to close. A number of
measures were taken to preserve liquidity, including the
renegotiation of land purchases and development agreements and a
general reduction in spend across the Group. During this period,
all land payments which had not been deferred and payments to
suppliers and sub-contractors which fell due were paid as planned.
In addition, some revenue from construction contracts for
Affordable and PRS homes was received, along with deferred receipts
for historical land sales. On 7 May 2020, the Group announced a
phased return to construction activity which commenced from 11 May
2020 and allowed the Group to begin generating cash flows from
construction activity and the sale of private homes.
In stress testing the cash flows of the business, management
applied three scenarios compared against the pre COVID-19 business
plan:
(i) A six-week shutdown of activity, during which no revenue was
received by the business whatsoever, with all payments being made
as they fell due. This was followed by a phased return to
construction activity. Private volumes and selling prices were
modelled to reduce by a combined 20% initially, recovering slowly
to pre-COVID-19 levels by 2022. The private forward order book was
assumed to reduce by half for reserved plots, with the majority of
exchanged plots assumed to complete. No land sales were assumed
until early 2021 and only limited land purchases made throughout
2020 to 2022.
(ii) As above, but including a full three-month shutdown of the
business, with zero revenue from 1 April 2020 to 1 July 2020.
(iii) As above, but including a full six-month shutdown of the
business with zero revenue from 1 April 2020 to 1 October 2020.
The stress testing in scenarios (ii) and (iii) resulted in the
need for a small amount of additional liquidity and in the case of
scenario (iii), a relaxation of the Group's interest cover and
gearing covenants. As a result of the Group's eligibility for the
CCFF and an agreed relaxation of the Group's banking covenants with
its lending banks, there is now sufficient liquidity and covenant
headroom to withstand the full six-month shutdown of the
business.
The Bank of England's standard terms for the CCFF state that the
Bank "reserves the right at its sole discretion to deem any
security ineligible for any reason, and to deem ineligible
securities it has previously purchased and vice versa". The
Directors note that this could represent a material uncertainty
that may cast significant doubt about the Group's ability to
continue as a going concern. We have discussed this matter with the
Bank of England and note that this is the Bank's standard approach
to all of its lending facilities and that HM Treasury and the Bank
of England have publicly committed to keeping the CCFF open until
at least March 2021. The Bank also notes on its website their
intention to keep the CCFF open for as long as steps are needed to
relieve cash flow pressures on firms that make a material
contribution to the UK economy. On this basis, the Directors
believe that liquidity under the CCFF would be available to the
Group should it be required.
The Directors consider that the Group has adequate resources in
place for at least 12 months from the date of these results and
have therefore adopted the going concern basis of accounting in
preparing the interim financial statements.
Critical accounting judgements and estimates
The preparation of the Financial Information under IFRS requires
the Directors to make estimates and assumptions that affect the
application of policies and the reported amounts of assets,
liabilities, income, expenses and related disclosures. The key
source of estimation uncertainty for the Group, as disclosed in the
Group Financial Statements, involves the estimation of site
profitability. This has remained a key source of estimation
uncertainty during the period, especially given the significant
uncertainty around house prices, materials and labour costs arising
from the COVID-19 pandemic. The Directors have performed a detailed
review of the Group's developments and have concluded that no
impairment of inventory is necessary at present and will keep the
assumptions underlying their assessment of site profitability under
review as the impact of COVID-19 on the housing market and wider
economy develops over the coming months.
Accounting policies
The policies applied in the Financial Information are consistent
with those applied in the Group Financial Statements, except in
respect of income tax, which is based on the effective tax rate
that would be applicable to expected annual earnings, and the
impact of IFRS 16 "Leases" which is described below.
New standards, amendments and interpretations
The following amendments to standards and interpretations are
effective for the first time for the financial year beginning 1
October 2019 and have been adopted during the period:
-- IFRS 16 "Leases" addresses the definition of a lease,
recognition and measurement of leases and establishes principles
for reporting useful information to users of financial statements
about the leasing activities of both lessees and lessors. A key
change arising from IFRS 16 is that most operating leases are now
accounted for on balance sheet for lessees. The standard replaces
IAS 17 "Leases" and related interpretations. IFRS 16 has been
applied using the modified retrospective approach with no
restatement of comparative financial information. Information on
the initial application of IFRS 16, including the impact on the
financial position and performance of the Group, has been disclosed
in Note 21.
-- Annual improvements 2015 - 2017 Cycle; and Amendment to IAS
28 "Investments in Associates and Joint Ventures" have not had a
material impact on the Group.
The following amendments to standards and interpretations have
also been issued, but are not yet effective and have not been early
adopted for the six months ended 31 March 2020:
-- Amendments to IAS 1 "Presentation of Financial Statements"
and IAS 8 "Accounting Policies, Changes in Accounting Estimates and
Errors" are not expected to have a material impact on the
Group.
Alternative Performance Measures
In the reporting of financial information, the Directors have
adopted various Alternative Performance Measures ("APMs"). These
measures are not defined by IFRS and therefore may not be directly
comparable with other companies' APMs, including those in the
Group's industry. APMs should be considered in addition to, and are
not intended to be a substitute for, or superior to, IFRS
measurements. Refer to pages 34-38 for a full list of the Group's
APMs.
3. SEASONALITY
In common with the rest of the UK housebuilding industry,
activity occurs throughout the year, with peaks in sales
completions in spring and autumn. This creates a degree of
seasonality in the Group's trading results and working capital. In
addition to this, as a consequence of the government-imposed
lockdown triggered by the COVID-19 pandemic, the Group announced
the temporary cessation of its operations on 25 March 2020 and
commenced a phased restart of most operations on 11 May 2020.
4. SEGMENTAL REPORTING
Segmental reporting is presented in respect of the Group's
business segments reflecting the Group's management and internal
reporting structure and is the basis on which strategic operating
decisions are made by the Group's Chief Operating Decision Maker
("CODM"), which has been identified as the Group's Executive
Committee.
The Group's two business segments are Partnerships and
Housebuilding. The Group operates entirely within the United
Kingdom and there is no trade between segments.
The Partnerships segment specialises in medium to large-scale
housing regeneration schemes delivering private and affordable
homes in partnership with public sector landowners and operates
primarily in and around London, the Midlands, the North West of
England and Yorkshire.
The Housebuilding segment develops large-scale sites, providing
private, PRS and affordable housing on land owned or controlled by
the Group, primarily around London and in the South East of
England, operating under the Countryside and Millgate brands.
(a) Segmental financial performance
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ ---------
Six months ended 31 March 2020
Adjusted revenue including share
of revenue from joint ventures
and associate 343.8 187.1 - 530.9
Less: share of revenue from
joint ventures and associate (19.8) (29.9) - (49.7)
------------- -------------- ------------ ---------
Revenue 324.0 157.2 - 481.2
============= ============== ============ =========
Adjusted operating profit/(loss)
including share of operating
profit/(loss) from joint ventures
and associate 36.3 20.6 (1.6) 55.3
Less: share of operating profit
from joint ventures and associate (3.8) (5.2) - (9.0)
Less: non-underlying items - - (5.3) (5.3)
------------- -------------- ------------ ---------
Operating profit/(loss) 32.5 15.4 (6.9) 41.0
============= ============== ============ =========
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ -----------
Six months ended 31 March 2019
Adjusted revenue including share
of revenue from joint ventures
and associate 342.4 221.3 - 563.7
Less: share of revenue from
joint ventures and associate (13.3) (43.4) - (56.7)
------------- -------------- ------------ -----------
Revenue 329.1 177.9 - 507.0
============= ============== ============ ===========
Adjusted operating profit/(loss)
including share of operating
profit/(loss) from joint ventures
and associate 45.7 48.1 (4.4) 89.4
Less: share of operating profit
from joint ventures and associate (7.0) (10.7) - (17.7)
Less: non-underlying items (7.4) - (4.1) (11.5)
------------- -------------- ------------ -----------
Operating profit/(loss) 31.3 37.4 (8.5) 60.2
============= ============== ============ ===========
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ -----------
Year ended 30 September 2019
Adjusted revenue including share
of revenue from joint ventures
and associate 837.1 585.7 - 1,422.8
Less: share of revenue from
joint ventures and associate (44.8) (140.9) - (185.7)
------------- -------------- ------------ -----------
Revenue 792.3 444.8 - 1,237.1
============= ============== ============ ===========
Adjusted operating profit/(loss)
including share of operating
profit/(loss) from joint ventures
and associate 127.8 114.8 (8.2) 234.4
Less: share of operating profit
from joint ventures and associate (13.3) (33.5) - (46.8)
Less: non-underlying items (7.4) - (9.8) (17.2)
------------- -------------- ------------ -----------
Operating profit/(loss) 107.1 81.3 (18.0) 170.4
============= ============== ============ ===========
(b) Segmental financial position
Segmental Tangible Net Asset Value ("TNAV") represents the net
assets of the Group's two operating divisions. Segmental TNAV
includes divisional net assets less intangible assets (net of
deferred tax) and excludes inter-segment cash funding. Tangible Net
Operating Asset Value ("TNOAV") is the Group's measure of capital
employed, as used in the calculation of Return on Capital Employed
("ROCE"). Refer to pages 34-38 for details of the Group's APMs.
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ -------
TNAV at 1 October 2019 114.2 623.6 - 737.8
Operating profit/(loss) 32.5 15.4 (6.9) 41.0
Add back items with no impact
on TNAV:
Share-based payments, net
of deferred tax - - 0.1 0.1
Amortisation of intangible
assets - - 6.1 6.1
Other items affecting TNAV:
Results of joint ventures
and associate 3.8 5.1 - 8.9
Dividends paid (29.5) (16.7) - (46.2)
Taxation (4.7) (2.6) - (7.3)
Other (5.3) (3.0) 0.7 (7.6)
TNAV at 31 March 2020 111.0 621.8 - 732.8
------------- -------------- ------------ -------
Inter-segment cash funding:
net (cash)/debt 187.7 (60.0) - 127.7
------------ -------
Segmental capital employed
(TNOAV) 298.7 561.8 - 860.5
------------- -------------- ------------ -------
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ -------
TNAV at 1 October 2018 54.2 565.9 - 620.1
Operating profit/(loss) 31.3 37.4 (8.5) 60.2
Add back items with no impact
on TNAV:
Share-based payments, net
of deferred tax - - 3.7 3.7
Amortisation of intangible
assets - - 5.8 5.8
Other items affecting TNAV:
Results of joint ventures
and associate 7.0 9.6 - 16.6
Dividends paid (13.3) (15.9) - (29.2)
Taxation (5.8) (7.0) - (12.8)
Purchase of shares by EBT (5.9) (7.1) - (13.0)
Other (1.1) (1.3) (1.0) (3.4)
TNAV at 31 March 2019 66.4 581.6 - 648.0
------------- -------------- ------------ -------
Inter-segment cash funding:
net (cash)/debt 137.2 (95.1) - 42.1
Segmental capital employed
(TNOAV) 203.6 486.5 - 690.1
============= ============== ============ =======
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ -------
TNAV at 1 October 2018 54.2 565.9 - 620.1
Operating profit/(loss) 107.1 81.3 (18.0) 170.4
Add back items with no impact
on TNAV:
Share-based payments, net
of deferred tax - - 6.0 6.0
Amortisation of intangible
assets - - 11.7 11.7
Other items affecting TNAV:
Results of joint ventures
and associate 13.3 30.8 - 44.1
Dividends paid (29.5) (26.5) - (56.0)
Taxation (18.5) (16.7) - (35.2)
Purchase of shares by EBT (6.8) (6.2) - (13.0)
Other (5.6) (5.0) 0.3 (10.3)
TNAV at 30 September 2019 114.2 623.6 - 737.8
------------- -------------- ------------ -------
Inter-segment cash funding:
net (cash)/debt 62.6 (136.0) - (73.4)
------------- -------------- ------------ -------
Segmental capital employed
(TNOAV) 176.8 487.6 - 664.4
============= ============== ============ =======
(c) Segmental other items
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ ------
Six months ended 31 March 2020
Investment in joint ventures 7.9 30.4 - 38.3
Investment in associate - 3.6 - 3.6
Share of post-tax profit from
joint ventures and associate 3.8 5.1 - 8.9
Capital expenditure - property,
plant and equipment 3.5 0.4 - 3.9
Capital expenditure - software - - 1.0 1.0
Depreciation and amortisation 2.9 1.3 6.1 10.3
Share-based payments - - 0.2 0.2
------------- -------------- ------------ ------
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ ------
Six months ended 31 March 2019
Investment in joint ventures 8.0 38.7 - 46.7
Investment in associate - 4.8 - 4.8
Share of post-tax profit from
joint ventures and associate 7.0 9.6 - 16.6
Capital expenditure - property,
plant and equipment 3.4 0.3 - 3.7
Capital expenditure - software - - 1.5 1.5
Depreciation and amortisation 0.7 0.1 5.7 6.5
Share-based payments - - 3.3 3.3
------------- -------------- ------------ ------
Partnerships Housebuilding Group items Total
GBPm GBPm GBPm GBPm
------------- -------------- ------------ ------
Year ended 30 September 2019
Investment in joint ventures 17.4 44.8 - 62.2
Investment in associate - 3.5 - 3.5
Share of post-tax profit from
joint ventures and associate 13.3 30.8 - 44.1
Capital expenditure - property,
plant and equipment 5.0 2.8 - 7.8
Capital expenditure - software 0.2 - 2.9 3.1
Depreciation and amortisation 1.5 0.7 11.7 13.9
Share-based payments - - 6.7 6.7
------------- -------------- ------------ ------
5. REVENUE
An analysis of Group reported revenue by type is set out
below:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
GBPm GBPm GBPm
Partnerships:
Private 123.5 133.8 355.2
Affordable 112.9 110.5 243.1
PRS 77.0 73.4 167.1
Other 10.6 11.4 26.9
-------------- -------------- ----------------
324.0 329.1 792.3
-------------- -------------- ----------------
Housebuilding:
Private 120.5 134.1 312.2
Affordable 25.0 20.3 70.1
PRS 1.8 4.8 15.4
Other 9.9 18.7 47.1
-------------- -------------- ----------------
157.2 177.9 444.8
-------------- -------------- ----------------
Total revenue 481.2 507.0 1,237.1
============== ============== ================
6. OPERATING PROFIT
Non-underlying items
Certain items which do not relate to the Group's underlying
performance are presented separately in the consolidated statement
of comprehensive income as non-underlying items where, in the
judgement of the Directors, they need to be disclosed separately by
virtue of their size, nature or incidence in order to obtain a
clear and consistent presentation of the Group's underlying
business performance. Group operating profit includes the following
non-underlying items:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
GBPm GBPm GBPm
Non-underlying items included within
cost of sales:
Impairment of inventory - (7.4) (7.4)
Non-underlying items included within
administrative expenses:
Amortisation of acquisition-related
intangible assets (5.1) (5.1) (10.2)
Acquisition and integration costs
relating to Westleigh - (1.4) (1.8)
Deferred consideration relating
to Westleigh (0.2) 2.4 2.2
Total non-underlying items (5.3) (11.5) (17.2)
============== ============== ================
Amortisation of acquisition-related intangible assets
Amortisation of acquisition-related intangible assets is
reported within non-underlying items as the Directors do not
believe this cost should be included when considering the
underlying trading performance of the Group.
Acquisition and integration costs relating to Westleigh
During the year ended 30 September 2019, the Group incurred
integration costs relating to the acquisition of Westleigh,
including those of property moves and employee severance. No
further integration costs have been recorded in non-underlying
items during the period.
Deferred consideration relating to Westleigh
As part of the agreement to purchase Westleigh, deferred
consideration was payable to management who remained with the Group
post acquisition. These costs were accrued over the period to 31
March 2020 with changes to the estimated amount payable recognised
in the consolidated statement of comprehensive income.
Impairment of inventory
During the six months ended 31 March 2019, a non-cash charge of
GBP7.4m was recognised to impair the value of inventory in our
Manchester region. This was the result of costs accrued over a
four-year period not being appropriately recognised in the
consolidated statement of comprehensive income. No further
inventory impairments have been recorded in non-underlying items in
relation to this matter during the period.
Taxation
A total tax credit of GBP1.0m (HY19: GBP2.2m, FY19: GBP3.4m) in
relation to all the above non-recurring items was included within
taxation in the consolidated statement of comprehensive income.
7. NET FINANCE COSTS
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
GBPm GBPm GBPm
------------ ------------ ----------------
Bank loans and overdrafts (1.9) (2.1) (3.4)
Amortisation of debt finance costs (0.3) (0.3) (0.6)
Unwind of discount relating to:
Land purchases on deferred payment terms (3.7) (5.0) (7.9)
Lease liabilities (Note 21) (0.6) - -
------------ ------------ ----------------
Finance costs (6.5) (7.4) (11.9)
------------ ------------ ----------------
Interest receivable 0.1 0.6 0.6
Unwind of discount relating to:
Land sales on deferred settlement terms 0.2 0.3 0.4
------------ ------------ ----------------
Finance income 0.3 0.9 1.0
------------ ------------ ----------------
Net finance costs (6.2) (6.5) (10.9)
============ ============ ================
8. TAXATION
The effective tax rate applied for the period was 16.7% (HY19:
18.2%, FY19: 17.3%). This reflects the anticipated full year
effective rate and is lower than the statutory rate of 19.0% mainly
due to the equity accounting method for joint ventures and
associate and credits arising on the exercise of share options.
The adjusted effective tax rate for the period was 17.3% (HY19:
19.3%, FY19: 18.5%) with the difference between the reported and
adjusted rates reflecting non-underlying items and the treatment of
the Group's joint ventures and associate.
9. EARNINGS PER SHARE
Basic earnings per share ("basic EPS") is calculated by dividing
the profit from continuing operations attributable to ordinary
shareholders by the weighted average number of ordinary shares in
issue during the period, adjusted for the weighted average number
of shares held by the Employee Benefit Trust ("EBT"). For diluted
earnings per share ("diluted EPS"), the weighted average number of
ordinary shares also assumes the conversion of all potentially
dilutive share awards.
(a) Basic earnings per share
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
------------ ------------ ----------------
Profit from continuing operations
attributable to equity holders of
the parent (GBPm) 36.4 57.1 167.7
Basic weighted average number of shares
(millions) 447.9 443.4 445.1
Basic earnings per share (pence per
share) 8.1 12.9 37.7
Diluted weighted average number of
shares (millions) 450.9 446.2 450.1
Diluted earnings per share (pence
per share) 8.1 12.8 37.3
------------ ------------ ----------------
The basic weighted average number of shares of 447.9 million
(HY19: 443.4 million, FY19: 445.1 million) excludes the weighted
average number of shares held in the EBT during the period of 2.1
million (HY19: 6.6 million, FY19: 4.9 million).
(b) Adjusted earnings per share
Adjusted basic and diluted EPS are APMs for the Group. Refer to
pages 34-38 for details of the Group's APMs.
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
------------ ------------ ----------------
Profit from continuing operations attributable
to equity holders of the parent (GBPm) 36.4 57.1 167.7
Add: Non-underlying items, net of tax 4.3 9.3 13.8
------------ ------------ ----------------
Adjusted profit from continuing operations
attributable to equity holders of the
parent (GBPm) 40.7 66.4 181.5
Basic weighted average number of shares
(millions) 447.9 443.4 445.1
Adjusted basic earnings per share (pence
per share) 9.1 15.0 40.8
Diluted weighted average number of
shares (millions) 450.9 446.2 450.1
Adjusted diluted earnings per share
(pence per share) 9.0 14.9 40.3
------------ ------------ ----------------
Non-underlying items net of tax includes costs of GBP5.3m, net
of tax of GBP1.0m (HY19: GBP11.5m, net of tax of GBP2.2m, FY19:
GBP17.2m net of tax of GBP3.4m). Refer to Note 6.
10. DIVID
Dividends of GBP46.2m were paid during the period, reflecting
the final dividend of 10.3 pence per share for the year ended 30
September 2019 (HY19: GBP29.2m paid reflecting the final dividend
of 6.6 pence per share for the year ended 30 September 2018). The
dividend was paid on 7 February 2020 to all shareholders on the
register on 20 December 2019.
The Directors have not recommended the payment of an interim
dividend for the current financial year (HY19: 6.0 pence per share,
paid on 5 July 2019).
11. INVESTMENT IN JOINT VENTURES
The table below presents the movement in the Group's net
investment in joint ventures:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
GBPm GBPm GBPm
------------ ------------ --------------
Opening balance 62.2 62.5 62.5
Share of post-tax profit 8.8 15.1 40.6
Dividends received (32.5) (30.6) (37.6)
Repayment of members' interest - - (2.9)
Other movements (0.2) (0.3) (0.4)
------------ ------------ --------------
Closing balance 38.3 46.7 62.2
============ ============ ==============
The Group's aggregate investment in joint ventures is
represented by:
For the six months ended 31 March Partnerships Housebuilding Group
2020 GBPm GBPm GBPm
------------- -------------- -------
Revenue 39.6 59.7 99.3
Expenses (32.1) (49.3) (81.4)
Operating profit 7.5 10.4 17.9
Finance income - 0.1 0.1
Income tax - (0.4) (0.4)
Profit for the period 7.5 10.1 17.6
------------- -------------- -------
Group's share in % 50.0%
Share of revenue 49.7
Share of operating profit 9.0
Dividends received by the Group 32.5
Investment in joint ventures 38.3
-------
For the six months ended 31 March Partnerships Housebuilding Group
2019 GBPm GBPm GBPm
------------- -------------- -------
Revenue 26.6 81.4 108.0
Expenses (12.6) (63.6) (76.2)
Operating profit 14.0 17.8 31.8
Finance costs - (0.3) (0.3)
Income tax - (1.3) (1.3)
Profit for the period 14.0 16.2 30.2
------------- -------------- -------
Group's share in % 50.0%
Share of revenue 54.0
Share of operating profit 15.9
Dividends received by the Group 30.6
Investment in joint ventures 46.7
-------
For the year ended 30 September 2019 Partnerships Housebuilding Group
GBPm GBPm GBPm
------------- -------------- --------
Revenue 89.6 263.5 353.1
Expenses (63.0) (204.7) (267.7)
Operating profit 26.6 58.8 85.4
Finance costs - (0.5) (0.5)
Income tax - (3.8) (3.8)
Profit for the period 26.6 54.5 81.1
------------- -------------- --------
Group's share in % 50.0%
Share of revenue 176.6
Share of operating profit 42.7
Dividends received by the Group 37.6
Investment in joint ventures 62.2
--------
The aggregate amount due from joint ventures is GBP87.1m (HY19:
GBP95.8m, FY19: GBP49.7m). The amount due to joint ventures is GBP
0.4m (HY19: GBP0.3m, FY19: GBP0.4m). Transactions between the Group
and its joint ventures are disclosed in Note 18.
12. INVESTMENT IN ASSOCIATE
The Group holds 28.5% of the ordinary share capital with pro
rata voting rights in Countryside Properties (Bicester) Limited, a
company incorporated and domiciled in the UK, whose principal
activity is the sale of serviced parcels of land, and for segmental
purposes is disclosed within the Housebuilding division. It is
accounted for using the equity method.
The table below presents the movement in the Group's net
investment in associate:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
GBPm GBPm GBPm
------------ ------------ --------------
Opening balance 3.5 5.4 5.4
Share of post-tax profit 0.1 1.5 3.5
Dividends received - (2.1) (5.5)
Other movements - - 0.1
Closing balance 3.6 4.8 3.5
============ ============ ==============
The Group's investment in associate is represented by:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
GBPm GBPm GBPm
------------ ------------ --------------
Revenue - 9.5 32.1
Expenses - (3.3) (17.6)
Operating profit - 6.2 14.5
Finance income 0.3 0.5 1.0
Income tax - (1.3) (3.1)
Profit for the period 0.3 5.4 12.4
------------ ------------ --------------
Group's share in % 28.5% 28.5% 28.5%
Share of revenue - 2.7 9.1
Share of operating profit - 1.8 4.1
Dividends received by the Group - 2.1 5.5
Investment in associate 3.6 4.8 3.5
------------ ------------ --------------
The amount due from the associate is GBP Nil (HY19: GBPNil,
FY19: GBPNil). Transactions between the Group and its associate are
disclosed in Note 18.
13. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
As at 31 As at 31 As at 30
March 2020 March 2019 September
GBPm GBPm 2019
GBPm
------------ ------------ -----------
Opening balance 5.0 4.1 4.1
Increase in fair value - - 0.9
Settlement (5.0) - -
Closing balance - 4.1 5.0
============ ============ ===========
Financial assets at fair value through profit or loss at 30
September 2019 related solely to a deferred land overage receivable
resulting from agreements where land was sold to a third-party and
the Group was entitled to a share of surplus profits once
development was complete. The overage receivable was held at fair
value, being the Directors' best estimate of the value that could
be achieved in a presumed sale of these assets to a third-party,
after taking into account judgements on the variability of the
expected final cash value, the time value of money and the degree
of completion of the developments. Given that the inputs were
estimated and not observed in a market, the fair value was
classified as Level 3 in the fair value hierarchy.
During the period, the receivable was settled for GBP5.0m with
no gain or loss recognised in the consolidated statement of
comprehensive income.
14. INVENTORIES
As at 31 As at 31 As at 30
March 2020 March 2019 September
GBPm GBPm 2019
GBPm
------------ ------------ -----------
Development land and work in progress 960.0 727.3 741.4
Completed properties unlet, unsold
or awaiting sale 81.4 52.6 67.2
1,041.4 779.9 808.6
============ ============ ===========
Total provisions against inventory at 31 March 2020 were GBP3.4m
(HY19: GBP4.2m, FY19: GBP3.5m) .
During the period, an impairment charge of GBP4.8m was
recognised against inventories (HY19: GBP7.4m, FY19: GBP7.4m).
15. CASH AND BORROWINGS
As at 31 As at 31 As at 30
March 2020 March 2019 September
GBPm GBPm 2019
GBPm
------------ ------------ -----------
Cash and cash equivalents 172.2 13.2 75.6
Overdrafts - (13.1) -
------------ ------------ -----------
Net cash and cash equivalents 172.2 0.1 75.6
============ ============ ===========
Bank loans (297.6) (40.0) -
Bank loan arrangement fees 1.7 2.3 -
Other loans (2.3) (2.2) (2.2)
------------ ------------ -----------
Borrowings (298.2) (39.9) (2.2)
============ ============ ===========
Bank loans
The Group has a GBP300m revolving credit facility with Lloyds
Bank plc, Barclays Bank PLC, HSBC Bank plc and Santander UK plc,
expiring in May 2023. The agreement has a variable interest rate
based on LIBOR. Subject to obtaining credit approval from the
syndicate banks, the Group has the option to extend the facility by
a further GBP100m. This facility is subject to both financial and
non-financial covenants and is secured by floating charges over all
the Group's assets.
As at 31 March 2020, the Group had drawn loans of GBP297.6m
under the facility (HY19: GBP40.0m, FY19: GBPNil).
Bank loan arrangement fees are amortised over the term of the
facility. As at 31 March 2020, unamortised loan arrangement fees
were GBP 1.7 m (HY19: GBP2.3m, FY19: GBP2.0m). As the Group did not
have any bank debt under this facility as at 30 September 2019, the
unamortised loan arrangement fees of GBP2.0m were presented as
prepayments within "trade and other receivables" in the
consolidated statement of financial position.
Finance costs in the statement of comprehensive income include
GBP0.3m of debt finance cost amortisation (HY19: GBP0.3m, FY19:
GBP0.6m). Refer to Note 7.
As at 30 September 2019 the Group had allocated GBP30m of the
facility to a separate overdraft facility. This allocation was
removed at the request of the Group during the period. As a result,
there was no overdraft in the consolidated statement of financial
position as at 31 March 2020 (HY19: GBP13.1m, FY19: GBPNil).
Other loans
During the year ended 30 September 2018, the Group received an
interest free loan of GBP2.5m for the purpose of remediation works
in relation to one of its joint arrangements. The loan is repayable
on the 22 November 2022. The carrying value of the loan is equal to
the fair value and was recognised initially at fair value and
subsequently carried at amortised cost.
Undrawn facilities
As at 31 March 2020, the Group had issued promissory notes under
the revolving credit facility of GBP2.4m (HY19: GBP4.8m, FY19:
GBP2.4m). As a result of this, and the bank loans noted above, the
Group had the following undrawn facilities:
As at 31 As at 31 As at 30
March 2020 March 2019 September
GBPm GBPm 2019
GBPm
------------- ------------ -----------
Floating rate:
Expiring after more than one year - 242.1 297.6
============= ============ ===========
16. TRADE AND OTHER PAYABLES
As at 31 As at 31 As at 30
March 2020 March 2019 September
GBPm GBPm 2019
GBPm
------------ ------------ -----------
Amounts falling due within one year:
Trade payables 84.3 53.4 50.7
Deferred land payments 113.2 83.7 73.0
Overage payable 14.6 7.2 7.4
Accruals and deferred income 122.6 144.0 160.2
Other taxation and social security 6.7 3.0 3.3
Other payables 25.6 12.2 27.6
Amounts due to joint ventures 0.4 0.3 0.4
------------ ------------ -----------
367.4 303.8 322.6
------------ ------------ -----------
Amounts falling due in more than
one year:
Trade payables 17.6 10.7 17.9
Deferred land payments 104.9 36.5 85.3
Overage payable 16.3 28.1 26.5
Accruals and deferred income - 0.5 0.3
Other payables - 17.8 -
------------ ------------ -----------
138.8 93.6 130.0
------------ ------------ -----------
Total trade and other payables 506.2 397.4 452.6
============ ============ ===========
17. NOTES TO THE CASH FLOW STATEMENT
Reconciliation of profit before taxation to cash (used
in)/generated from operations
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
GBPm GBPm GBPm
------------ ------------ --------------
Profit before taxation 43.7 70.3 203.6
Adjustments for:
- Amortisation charge 6.1 5.8 11.7
- Depreciation charge - property, plant
and equipment 1.3 0.7 2.2
- Depreciation charge - right of use 2.9 - -
assets
- Loss on disposal of property, plant
and equipment - 0.7 0.2
- Non-cash items - - (0.1)
- Share of post-tax profit from joint
ventures and associate (8.9) (16.6) (44.1)
- Share based payments (pre-tax) 0.2 3.3 6.7
- Finance costs 6.5 7.4 11.9
- Finance income (0.3) (0.9) (1.0)
- Fair value gain on financial assets
held at fair value through profit or
loss - - (0.9)
Changes in working capital:
- Increase in inventories (232.8) (39.1) (67.8)
- Decrease/(increase) in trade and other
receivables 30.5 (24.7) (66.7)
- Increase/(decrease) in trade and other
payables 52.2 (19.0) 34.1
- (Decrease)/increase in provisions (1.0) (1.2) (2.9)
------------ ------------ --------------
Cash (used in)/generated from operations (99.6) (13.3) 86.9
============ ============ ==============
18. RELATED PARTY TRANSACTIONS
Transactions with joint ventures and associate
Joint Ventures Associate
---------------------------------------- ----------------------------------------
Six months Six months Year ended Six months Six months Year ended
ended ended 30 September ended ended 30 September
31 March 31 March 2019 31 March 31 March 2019
2020 2019 GBPm 2020 2019 GBPm
GBPm GBPm GBPm GBPm
----------- ----------- -------------- ----------- ----------- --------------
Sales during the period 11.7 12.5 29.8 0.1 1.4 2.4
----------- ----------- -------------- ----------- ----------- --------------
Net advances:
Amount due at start
of period 49.3 56.1 56.1 - - -
Net advances/(repayments)
during the period 37.4 39.4 (6.8) - - -
Amount due at end
of period 86.7 95.5 49.3 - - -
=========== =========== ============== =========== =========== ==============
Sales of goods to related parties were made at the Group's
commercial terms. No purchases were made by the Group from its
joint ventures or associate. The amounts outstanding ordinarily
bear no interest and will be settled in cash.
Transactions with key management personnel
During the period, three close family members of Ian Sutcliffe
and Phillip Lyons were employed by a subsidiary of the Group. All
these individuals were recruited through the normal interview
process and are employed at salaries commensurate with their
experience and roles. The combined annual salary and benefits of
these individuals is less than GBP160,000 (HY19: one individual
less than GBP80,000, FY19: two individuals less than
GBP110,000).
19. SHARE PLANS
The Group operates three employee incentive schemes: An
all-employee Save as you Earn ("SAYE") plan and two discretionary
plans - the Long Term Incentive Plan ("LTIP") and the Deferred
Bonus Plan ("DBP"). During the period, 2.3m (HY19: 3.9m, FY19:
3.9m) options were granted over the Company's shares relating to
the LTIP and DBP schemes. 1.9m options were granted under the LTIP
scheme (HY19: 3.5m, FY19: 3.5m) and 0.4m options were granted under
the DBP scheme (HY19: 0.4m, FY19: 0.4m). No options were granted
under the SAYE scheme during the period (HY19: Nil, FY19:
2.1m).
The Group recognised GBP 0.2m (HY19: GBP3.3m, FY19: GBP6.7m) of
employee costs related to share-based payment transactions during
the period, excluding the cost of related national insurance
contributions.
A deferred tax asset of GBP1.6m (HY19: GBP3.3m, FY19: GBP2.3m)
is held in relation to share-based payments. Transactions during
the period resulted in a deferred tax charge to the statement of
comprehensive income of GBP0.2m (HY19: GBP0.7m, FY19: GBP0.6m) and
a charge direct to equity of GBP0.1m (HY19: credit of GBP0.4m,
FY19: charge of GBP0.7m).
20. LITIGATION, CLAIMS AND CONTINGENT LIABILITIES
The Group is subject to various claims, audits and
investigations that have arisen in the ordinary course of business.
These matters include but are not limited to employment and
commercial matters. The outcome of all these matters is subject to
future resolution, including the uncertainties of litigation. Based
on information currently known to the Group and after consultation
with external lawyers, the Directors believe that the ultimate
resolution of these matters, individually and in aggregate, will
not have a material adverse impact on the Group's financial
condition. Where necessary, applicable costs are included within
the cost to complete estimates for individual developments or are
otherwise accrued in the statement of financial position.
During the prior financial year, the Competition & Markets
Authority (CMA) commenced a sector wide inquiry into the sale of
leasehold properties. On 28 February 2020, the CMA announced that
they had found evidence of 'potential mis-selling and unfair
contract terms in the leasehold housing sector and is set to launch
enforcement action'. We have co-operated fully with the inquiry and
to date we have not been contacted by the CMA regarding their
finding of potential mis-selling or unfair contract terms. As a
result, the Directors believe that no liability exists in relation
to this matter as at 31 March 2020.
During the prior financial year, an amendment to Building
Regulations banned the use of combustible materials on the external
cladding of tall buildings. The Directors commissioned an
independent third-party review of historical developments which is
still on-going. In addition, in response to the Ministry of
Housing, Communities & Local Government's (MHCLG) report
"Advice for Building Owners of Multi-storey, Multi-occupied
Residential Buildings", since January 2020 a formal fire safety
assessment must be conducted by a suitably qualified and competent
professional (typically a Fire Engineer) for all buildings above 18
meters. We have engaged an independent third-party to complete
these assessments and the process is on-going. No provision has
been made for fire-safety related works as at 31 March 2020. This
will be reviewed when the third-party reviews have been
concluded.
During the period, the Group signed an agreement to lease a
second modular panel factory in Bardon, Leicestershire. The factory
is under construction and the 20-year lease will commence when the
factory is ready to occupy. This is expected to occur during the
first half of FY21. The Directors expect to recognise a lease
liability of c.GBP36m at the date of commencement along with a
right of use asset of the same value.
21. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS
During the period, the Group has adopted IFRS 16 "Leases", as
issued by the International Accounting Standards Board ("IASB").
The impact of the adoption of IFRS 16 on the Group's financial
statements is explained below.
(a) Changes to accounting policies
Prior to the adoption of IFRS 16, the Group's lease commitments
were all classified as operating leases under IAS 17, with rental
costs recognised in operating profit on a straight-line basis over
the period of the lease.
IFRS 16 requires lessees to recognise right of use assets and
lease liabilities in the statement of financial position for all
leases, except short-term and low value asset leases.
Lease liabilities are initially recognised at the present value
of future lease payments. Future lease payments are included in the
lease liability where they are fixed in value, or variable based on
an index or a fixed annual increase. The lease payments are
discounted at the Group's incremental borrowing rate, which is the
rate that the Group would have to pay to borrow the funds necessary
to obtain an asset of similar value in a similar economic
environment with similar terms and conditions.
Subsequently, the unwind of discount is recorded in finance
costs in the consolidated statement of comprehensive income, and
lease liabilities are remeasured where the Group's assessment of
the expected lease term changes.
Right of use assets are initially measured at cost, comprising
the initial value of the lease liabilities adjusted for rental
payments made at or prior to the start of the lease term, initial
direct costs, lease incentives received and restoration costs.
Subsequently, right of use assets are measured at cost less
accumulated depreciation and any accumulated impairment losses. The
right of use asset is depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis.
Depreciation is recorded in either cost of sales or administrative
expenses in the consolidated statement of comprehensive income
depending on the nature of the asset.
The accounting treatment for short-term and low value assets is
unchanged under IFRS 16, with rental costs recognised on a
straight-line basis as an expense in the consolidated statement of
comprehensive income. Short-term leases are leases with a lease
term of 12 months or less.
(b) Adjustments recognised on adoption of IFRS 16
The Group has recognised lease liabilities and right of use
assets for leases relating to offices, factories, company cars, IT
equipment, and show homes/marketing suites that have been sold and
leased back.
IFRS 16 has been applied using the modified retrospective
approach with no restatement of comparative financial information,
as permitted under the specific transitional provisions in the
standard. The adjustments arising from the adoption of IFRS 16 are
therefore recognised in the opening balances of the consolidated
statement of financial position on 1 October 2019.
In applying IFRS 16 for the first time, the Group has used the
following practical expedients permitted in the standard:
-- the application of a single discount rate to portfolios of leases with reasonably similar characteristics;
-- the accounting for operating leases with a remaining lease
term of less than 12 months as at 1 October 2019 as short-term
leases even though the initial term of the leases from lease
commencement date may have been more than 12 months; and
-- the reliance on previous assessments on whether contracts
contain a lease or leases are onerous.
The adoption of IFRS 16 on 1 October 2019 had the following
impact on the consolidated statement of financial position:
-- Lease liabilities recognised of GBP31.6m
-- Right of use assets recognised of GBP30.3m
-- Accruals derecognised of GBP1.9m
-- Prepayments derecognised of GBP0.6m
-- No impact on net assets, TNAV or TNOAV
The following table reconciles the Group's total operating lease
commitments as at 30 September 2019 to the lease liabilities
recognised under IFRS 16 on 1 October 2019:
GBPm
------
Total operating lease commitments disclosed at
30 September 2019 26.9
Add: adjustments as a result of different treatment
of termination options 10.3
(Less): short-term leases recognised on a straight-line
basis as an expense (0.3)
(Less): low-value leases recognised on a straight-line
basis as an expense (0.3)
36.6
Discounted using incremental borrowing rate (5.0)
------
Total lease liabilities recognised under IFRS
16 at 1 October 2019 31.6
======
Of which:
Current liabilities 4.5
Non-current liabilities 27.1
======
The weighted average incremental borrowing rate applied in
calculating the lease liabilities on 1 October 2019 was 3.4%.
(c) Impact on the consolidated interim financial statements for
the six months ended 31 March 2020
The table below outlines the impact of IFRS 16 on the
consolidated statement of comprehensive income for the six months
ended 31 March 2020.
Results before Adjustments Six months
adjustments in respect ended 31
for the adoption of the adoption March 2020
of IFRS 16 of IFRS As reported
16
--------------------------------------------- ----------------- -------------
Operating profit (GBPm) 40.7 0.3 41.0
Finance costs (GBPm) (5.9) (0.6) (6.5)
Profit before tax (GBPm) 44.0 (0.3) 43.7
Basic earnings per share (pence) 8.2 (0.1) 8.1
Diluted earnings per share (pence) 8.1 - 8.1
------ ----------------- -------------
The table below outlines the impact of IFRS 16 on the
consolidated statement of financial position as at 31 March
2020.
As at 31 Adjustments As at 31
March 2020 in respect March 2020
before adjustments of the adoption As reported
for the of IFRS
adoption 16
of IFRS
16
-------------------- ----------------- -------------
Right of use assets (GBPm) - 29.8 29.8
Trade and other receivables
(GBPm) 253.0 (0.5) 252.5
Lease liabilities (GBPm) - (31.5) (31.5)
Trade and other payables (GBPm) (508.1) 1.9 (506.2)
Retained earnings (GBPm) 882.9 (0.3) 882.6
-------------------- ----------------- -------------
22. POST BALANCE SHEET EVENTS
Countryside Ground Rent Assistance Scheme
Following the Group's earlier commitment to the Government's
Leasehold Pledge, in April 2020 the Group established the
Countryside Ground Rent Assistance Scheme (the "Scheme"). The
Scheme is expected to operate for a period of at least two years.
It will be offered on a voluntary basis and will apply to such
leases where the ground rent payable was not for the ultimate
benefit of either a Local Authority or a Registered Provider of
social housing.
We will seek agreement from all freehold owners to vary the
leaseholds of Countryside customers who still own homes with a
leasehold ground rent that doubles more frequently than every 20
years. Working with our joint venture partners where required,
Countryside aims to achieve agreement from the freehold owners to
vary the leasehold ground rent to increase every 15 years in line
with RPI.
The Scheme is in the early stages of its development and the
associated cost of the Scheme is provisionally estimated to be up
to GBP10m. An appropriate provision for these costs will be made in
the second half of the year.
COVID Corporate Financing Facility ("CCFF")
On 28 April 2020, the Group received confirmation from the Bank
of England of its eligibility to participate in the CCFF. The Group
has put in place a commercial paper programme which will allow up
to GBP300m of commercial paper to be issued. The facility will be
used to provide standby liquidity, should that be required, and is
currently undrawn.
COUNTRYSIDE PROPERTIES PLC
INDEPENT REVIEW REPORT
For the six months ended 31 March 2020
INDEPENT REVIEW REPORT TO COUNTRYSIDE PROPERTIES PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Countryside Properties PLC's condensed
consolidated interim financial statements (the "interim financial
statements") in the unaudited results for the half year ended 31
March 2020 of Countryside Properties PLC for the 6-month period
ended 31 March 2020. Based on our review, nothing has come to our
attention that causes us to believe that the interim financial
statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Emphasis of matter
Without modifying our conclusion on the interim financial
statements, we draw your attention to the disclosure made in note 2
"Basis of Preparation" which explains how the Board has formed a
judgement that it is appropriate to adopt the going concern
assumption as the basis of preparation for the Group.
The Group's forecast cash flows, included within its strategic
plan, contain assumptions over revenue, profitability and cash
generation. These forecasts have been stress-tested for severe but
plausible scenarios that could impact the Group. The analysis shows
that in a reasonable worst-case scenario, additional liquidity over
and above the existing GBP300m RCF Facility is required. The Group
has put in place a commercial paper programme under the Bank of
England's COVID Corporate Financing Facility ("CCFF") which will
allow up to GBP300m of commercial paper to be issued.
Under the Bank of England's standard terms for the CCFF the Bank
reserves the right at its sole discretion to deem any security
ineligible for any reason, and to deem ineligible securities it has
previously purchased and vice versa. The ability of the Bank to
withdraw the CCFF constitutes a material uncertainty which may cast
significant doubt about the Group's ability to continue as a going
concern. The interim financial statements do not include the
adjustments that would result if the Group were unable to continue
as a going concern.
What we have reviewed
The interim financial statements comprise:
-- the consolidated statement of financial position as at 31 March 2020;
-- the consolidated statement of comprehensive income for the period then ended;
-- the consolidated cashflow statement for the period then ended;
-- the consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the unaudited
results for the half year ended 31 March 2020 have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the Directors
The unaudited results for the half year ended 31 March 2020,
including the interim financial statements, is the responsibility
of, and has been approved by, the directors. The directors are
responsible for preparing the unaudited results for the half year
ended 31 March 2020 in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the unaudited results for the half year
ended 31 March 2020 based on our review. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of complying with the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority and for no other purpose. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the unaudited
results for the half year ended 31 March 2020 and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial
statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
14 May 2020
COUNTRYSIDE PROPERTIES PLC
ALTERNATIVE PERFORMANCE MEASURES
For the six months ended 31 March 2020
ALTERNATIVE PERFORMANCE MEASURES (unaudited)
In the reporting of financial information, the Directors have
adopted various Alternative Performance Measures ("APMs"). These
measures are not defined by IFRS and therefore may not be directly
comparable with other companies' APMs, including those in the
Group's industry. APMs should be considered in addition to, and are
not intended to be a substitute for, or superior to, IFRS
measurements.
The Directors believe that the inclusion of the Group's share of
the financial performance of its joint ventures and associate and
the removal of non-underlying items from financial information
presents a clear and consistent presentation of the underlying
performance of the ongoing business for shareholders.
(a) Financial performance
Adjusted revenue
Adjusted revenue includes the Group's share of revenue from
joint ventures and associate. Refer to Note 4 for a reconciliation
to reported revenue.
Adjusted gross margin
Adjusted gross margin is calculated as adjusted gross profit
divided by adjusted revenue. The table below reconciles adjusted
gross profit to reported gross profit and presents the calculation
of adjusted gross margin.
Adjusted gross profit includes the Group's share of gross profit
from joint ventures and associate and excludes non-underlying
items.
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Gross profit 79.6 100.0 253.6
Add: non-underlying items 6 - 7.4 7.4
Add: share of gross profit from
joint ventures and associate 9.4 18.1 47.8
--------------- --------------- -----------------
Adjusted gross profit 89.0 125.5 308.8
Adjusted revenue 4a 530.9 563.7 1,422.8
=============== =============== =================
Adjusted gross profit margin 16.8% 22.3% 21.7%
=============== =============== =================
Adjusted operating profit
Adjusted operating profit includes the Group's share of
operating profit from joint ventures and associate and excludes
non-underlying items. Refer to Note 4 for a reconciliation to
reported operating profit.
Adjusted operating margin
Adjusted operating margin is calculated as adjusted operating
profit divided by adjusted revenue. The table below presents the
calculation of adjusted operating margin.
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Adjusted operating profit 4a 55.3 89.4 234.4
Adjusted revenue 4a 530.9 563.7 1,422.8
Adjusted operating profit margin 10.4% 15.9% 16.5%
=============== =============== =================
Adjusted basic and diluted earnings per share
Adjusted basic and diluted earnings per share exclude the impact
of non-underlying items on profit from continuing operations
attributable to equity holders of the parent . Refer to Note 9 for
a reconciliation to reported basic and diluted earnings per
share.
Return on capital employed ("ROCE")
ROCE is calculated as adjusted operating profit divided by
average tangible net operating asset value ("TNOAV") on a 12-month
rolling basis.
The table below presents the calculation of ROCE for the
Group:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Closing TNOAV 4b 860.5 690.1 664.4
Opening TNOAV (12 months prior
to reporting date) 690.1 649.3 575.1
--------------- --------------- -----------------
Average TNOAV (12-month rolling) 775.3 669.7 619.8
Adjusted operating profit (12-month
rolling) 200.3 220.2 234.4
Group ROCE (%) 25.8% 32.9% 37.8%
=============== =============== =================
The table below presents the calculation of ROCE for the
Partnerships segment:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Closing TNOAV 4b 298.7 203.6 176.8
Opening TNOAV (12 months prior
to reporting date) 203.6 124.7 149.5
--------------- --------------- -----------------
Average TNOAV (12-month rolling) 251.2 164.2 163.2
Adjusted operating profit (12-month
rolling) 118.4 109.6 127.8
Partnerships ROCE (%) 47.1% 66.7% 78.3%
=============== =============== =================
The table below presents the calculation of ROCE for the
Housebuilding segment:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Closing TNOAV 4b 561.8 486.5 487.6
Opening TNOAV (12 months prior
to reporting date) 486.5 524.6 425.6
--------------- --------------- -----------------
Average TNOAV (12-month rolling) 524.2 505.6 456.6
Adjusted operating profit (12-month
rolling) 87.3 120.3 114.8
Housebuilding ROCE (%) 16.6% 23.8% 25.1%
=============== =============== =================
12-month rolling adjusted operating profit used in the
calculation of ROCE above is calculated as follows for the six
months ended 31 March 2020:
Partnerships Housebuilding Group(1)
GBPm GBPm GBPm
Note
---------------- ----------------- ------------
Adjusted operating profit for
the current six-month period 4a 36.3 20.6 55.3
Add: Adjusted operating profit
for the prior financial year 4a 127.8 114.8 234.4
Less: Adjusted operating profit
for the prior six-month period 4a (45.7) (48.1) (89.4)
Adjusted operating profit (12-month
rolling) 118.4 87.3 200.3
================ ================= ============
(1) Group adjusted operating profit includes other Group items
that are not allocated to the two segments. Refer to Note 4.
12-month rolling adjusted operating profit used in the
calculation of ROCE above is calculated as follows for the six
months ended 31 March 2019:
Partnerships Housebuilding Group(1)
GBPm GBPm GBPm
Note
---------------- ----------------- ------------
Adjusted operating profit for
the current six-month period 4a 45.7 48.1 89.4
Add: Adjusted operating profit
for the prior financial year 110.6 109.5 211.4
Less: Adjusted operating profit
for the prior six-month period (46.7) (37.3) (80.6)
Adjusted operating profit (12-month
rolling) 109.6 120.3 220.2
================ ================= ============
(1) Group adjusted operating profit includes other Group items
that are not allocated to the two segments. Refer to Note 4.
Asset Turn
Asset turn is calculated as adjusted revenue divided by average
TNOAV on a 12-month rolling basis.
The table below presents the calculation of asset turn for the
Group:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
GBPm GBPm GBPm
--------------- --------------- -----------------
Adjusted revenue (12-month rolling) 1,390.0 1,325.2 1,422.8
Average TNOAV (12-month rolling) 775.3 669.7 619.8
=============== =============== =================
Group asset turn 1.8 2.0 2.3
=============== =============== =================
The table below presents the calculation of asset turn for the
Partnerships segment:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
GBPm GBPm GBPm
--------------- --------------- -----------------
Adjusted revenue (12-month rolling) 838.5 730.6 837.1
Average TNOAV (12-month rolling) 251.2 164.2 163.2
=============== =============== =================
Partnerships asset turn 3.3 4.5 5.1
=============== =============== =================
The table below presents the calculation of asset turn for the
Housebuilding segment:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
GBPm GBPm GBPm
--------------- --------------- -----------------
Adjusted revenue (12-month rolling) 551.5 594.6 585.7
Average TNOAV (12-month rolling) 524.2 505.6 456.6
=============== =============== =================
Housebuilding asset turn 1.1 1.2 1.3
=============== =============== =================
12-month rolling adjusted revenue used in the calculation of
asset turn above is calculated as follows for the six months ended
31 March 2020:
Partnerships Housebuilding Group
GBPm GBPm GBPm
Note
---------------- ----------------- -----------
Adjusted revenue for the current
six-month period 4a 343.8 187.1 530.9
Add: Adjusted revenue for the
prior financial year 4a 837.1 585.7 1,422.8
Less: Adjusted revenue for the
prior six-month period 4a (342.4) (221.3) (563.7)
Adjusted revenue (12-month rolling) 838.5 551.5 1,390.0
================ ================= ===========
12-month rolling adjusted revenue used in the calculation of
asset turn above is calculated as follows for the six months ended
31 March 2019:
Partnerships Housebuilding Group
GBPm GBPm GBPm
Note
---------------- ----------------- -----------
Adjusted revenue for the current
six-month period 4a 342.4 221.3 563.7
Add: Adjusted revenue for the
prior financial year 634.8 594.7 1,229.5
Less: Adjusted revenue for the
prior six-month period (246.6) (221.4) (468.0)
Adjusted revenue (12-month rolling) 730.6 594.6 1,325.2
================ ================= ===========
(b) Financial position
Tangible net asset value ("TNAV")
TNAV is calculated as net assets excluding intangible assets net
of deferred tax. The table below reconciles TNAV to reported net
assets.
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Net assets 889.4 812.7 899.1
Less: intangible assets (165.8) (175.2) (170.9)
Add: deferred tax on intangible
assets 9.2 10.5 9.6
=============== =============== =================
TNAV 4b 732.8 648.0 737.8
=============== =============== =================
Net debt
Net debt is calculated as borrowings less net cash and cash
equivalents, and excludes bank loan arrangement fees included in
borrowings. The table below presents the calculation of net
debt:
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
Note GBPm GBPm GBPm
--------------- --------------- -----------------
Borrowings 15 298.2 39.9 2.2
Add: bank loan arrangement fees 15 1.7 2.3 -
Less: net cash and cash equivalents 15 (172.2) (0.1) (75.6)
=============== =============== =================
Net debt / (cash) 127.7 42.1 (73.4)
=============== =============== =================
Tangible net operating asset value ("TNOAV")
TNOAV is calculated as TNAV excluding net debt/(cash). The table
below presents the calculation of TNOAV.
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
Note GBPm GBPm GBPm
--------------- --------------- -----------------
TNAV 4b 732.8 648.0 737.8
Add net debt / Less (net cash) 127.7 42.1 (73.4)
=============== =============== =================
TNOAV 4b 860.5 690.1 664.4
=============== =============== =================
Gearing
Gearing is calculated as net debt/(cash) divided by net assets.
The table below presents the calculation of gearing.
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
GBPm GBPm GBPm
--------------- --------------- -----------------
Net debt / (cash) 127.7 42.1 (73.4)
Net assets 889.4 812.7 899.1
=============== =============== =================
Gearing 14.4% 5.2% (8.2)%
=============== =============== =================
Adjusted gearing
Adjusted gearing is calculated as net debt/(cash), including
deferred land payments (excluding overage), divided by net assets.
The table below presents the calculation of adjusted gearing.
Six months Six months Year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
GBPm GBPm GBPm
--------------- --------------- -----------------
Net debt / (cash) 127.7 42.1 (73.4)
Add: deferred land payments 16 218.1 120.2 158.3
--------------- --------------- -----------------
Adjusted net debt / (cash) 345.8 162.3 84.9
Net assets 889.4 812.7 899.1
=============== =============== =================
Adjusted gearing 38.9% 20.0% 9.4%
=============== =============== =================
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FLFEREEIVLII
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