Countryside lifts profit expectations as social housing momentum builds

Countryside Properties expects full year profits to be ahead of market forecasts after a strong performance from its partnerships division and a refocus on the middle of the private housing market, with the average selling price for its houses falling 13% but group earnings more the doubling.

The FTSE group built 1,437 houses and generated £435.4m revenue in the six months to 31 March, which was 31% and 39% ahead of the same period last year, respectively.

This fed through to adjusted operating profits up 39% to £70.4m as margins remained unchanged year on year.

Adjusted basic earnings per share increased 128% to 11.4p and a first interim dividend of 3.4p per share was declared, after none was paid last year after the group's flotation in February.

The partnerships division, which works with local authorities and housing associations, had a strong performance, with home completions up 23% to 987 homes and adjusted operating profit up 66% to £38.5m. The increase in completions led management to upgrade its partnerships completion target by 10%.

In housebuilding, 450 homes were built, up 54%, with adjusted operating profit up 24% to £34.5m.

"Our strong performance across the business in the first half exceeded our expectations," said chief executive Ian Sutcliffe.

"In particular, our Partnerships division once again delivered outstanding growth and returns. We continue to be highly successful at winning new business in this division, with three large sites secured in the first half, at Bromley, Maidenhead and Barking."

The company expects profit to be ahead of market expectations thanks to the growth in active sites and increased sales rates, which have resulted in a sharp increase in completions that it said looked set to continue in the second half of the year.

"We enter the second half of 2017 in an excellent position with 81 operational sites and a record private forward order book. With strong operational delivery and an increasing pipeline of future work, we see continued outperformance in the medium‑term and are upgrading our outlook for 2017 and 2018," Sutcliffe said.

On the outlook, the company's low level of debt, up 26% to a net £35m, and accelerated delivery from its mixed tenure model "provide the basis for further growth in both the short and medium term".